New South Wales Supreme Court CITATION : Owners Corporation - Strata Plan 61732 v T R Druce Pty Ltd [2009] NSWSC 1024 This decision has been amended. Please see the end of the judgment for a list of the amendments. HEARING DATE(S) : 11 September 2009 JUDGMENT DATE : 11 September 2009 JURISDICTION : Equity JUDGMENT OF : White J EX TEMPORE JUDGMENT DATE : 11 September 2009 DECISION : Refer to paras 58-60, 64 and 65 of judgment. CATCHWORDS : PROCEDURE – security for costs – cross-defendants seek orders that cross-claim filed by first defendant be dismissed under r 42.21(3) of the Uniform Civil Procedure Rules for failure to comply with order requiring provision of security for costs – consideration of all relevant circumstances - cross-claim dismissed - PROCEDURE – cross-defendants seek orders that cross-claims filed by second defendant be dismissed under r 13.4(1) of the Uniform Civil Procedure Rules – onus on cross-defendants to show no triable issue that there was a reasonable cause of action against them – onus not discharged - application by first cross-defendant dismissed – alternative application made by second cross-defendant that cross-claim totally disproportionate to costs incurred and to be incurred – misconception by second cross-defendant as to nature of claims - application by second cross-defendant dismissed Home Building Act 1989 (NSW) LEGISLATION CITED : Trade Practices Act 1974 (Cth) Civil Procedure Act 2005 (NSW) CATEGORY : Procedural and other rulings Idoport Pty Ltd v National Australia Bank Limited [2002] NSWSC 18 Porter v Gordian Runoff Ltd (No. 3) [2005] NSWCA 377 Wickstead v Browne [1992] NSWCA 272; (1992) 30 NSWLR 1 Termijtelen v Van Arkel [1974] 1 NSWLR 525 CASES CITED : Webster v Lampard [1993] HCA 57; (1993) 177 CLR 598 Chellenberg v British Broadcasting Corporation [2000] EMLR 296 Wallis v Valentine [2003] EMLR 8 Jameel (Yousef) v Dow Jones & Co Inc [2005] QB 946 Bezant v Rausing [2007] EWHC 1118 (QB) Port of Melbourne Authority v Anshun Pty Ltd [1981] HCA 45; (1981) 147 CLR 589 Owners Corporation - Strata Plan 61732 PARTIES : v T R Druce Pty Limited & Ors FILE NUMBER(S) : SC 55098/08 Plaintiff: F Metz (sol'r) COUNSEL : Applicant/1st cross-defendant: S J Walsh Applicant/2nd cross-defendant: G Sirtes SC with A Kuklik Respondent/Defendant: D Sachs (sol'r) Plaintiff: Mills Oakley Lawyers SOLICITORS : Applicant/1st cross-defendant: Thompson Cooper Lawyers Applicant/2nd cross-defendant: James G Sloan Respondent/Defendant: Sachs Gerace Lawyers IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION TECHNOLOGY & CONSTRUCTION LIST WHITE J Friday, 11 September 2009 55098/08 Owners Corporation - Strata Plan 61732 v T R Druce Pty Limited & Ors JUDGMENT 1 HIS HONOUR: The cross-defendants seek orders that the defendants' cross-claims against them be dismissed. In respect of the cross-claim filed by the first defendant, they seek those orders pursuant to r 42.21(3) of the Uniform Civil Procedure Rules on the ground of the first defendant's failure to provide security for costs. 2 Alternatively, they seek summary dismissal of the first cross-defendant's cross-claim pursuant to r 13.4(1). They seek the summary dismissal of the cross-claim filed by the second defendant pursuant to r 13.4(1). The Plaintiff's Claims 3 The plaintiff is an owners' corporation. It sues the first defendant, TR Druce Pty Ltd ("TR Druce") as the builder of a residential apartment complex in Drummoyne. It sues the second defendant, Trelat Pty Ltd ("Trelat") as the developer. It sues for the alleged breach of warranties implied by s 18B of the Home Building Act 1989 (NSW) in the contract which it says Trelat entered into with TR Druce for the carrying out of the residential building work. 4 It claims the benefit of s 18D of that Act to enforce against TR Druce the warranties implied in the contract between TR Druce and Trelat. It claims under s 18C of that Act that Trelat is liable as if it were the holder of the contract, or the licensee who had done the building work, and was thus subject to the same warranties. 5 Annexed to the plaintiff's amended statement of claim is a schedule of alleged defects. This is in the form of a Scott Schedule and itemises 48 alleged defects in different locations. The schedule attributes causes for each alleged defect and the proposed method of rectification. The Cross-Claims 6 TR Druce and Trelat filed a cross-claim against a subcontractor who had agreed to supply and install aluminium windows and doors to the premises. It is the first cross-defendant (Hanlon Windows (Australia) Pty Ltd ("Hanlon")). It also sues as second cross-defendant, Concrete Waterproofing Manufacturing Pty Ltd, which trades as Xypex Australia ("Xypex"). 7 TR Druce and Hanlon entered into a subcontract for the supply and installation of aluminium windows and doors at the premises on or about 8 March 1999. That is admitted on the pleadings. TR Druce alleges that Hanlon breached implied terms as to the manner in which the work should be carried out by installing the external aluminium doors and windows without sill flashing; by failing to ensure the presence of a suitable seal between the window and door frames and the adjacent building material; and by providing installed doors and windows which were not reasonably fit for a habitable dwelling. 8 Both TR Druce and Trelat bring further claims against Hanlon in negligence and for alleged breach of s 52 of the Trade Practices Act 1974 (Cth). They allege that Hanlon owed a duty of care to TR Druce and to Trelat to perform the works under the subcontract in a proper and workmanlike manner and in accordance with the standards of an expert in the supply and installation of windows and doors. They also allege that Hanlon owed a duty of care to TR Druce and Trelat to notify TR Druce of any deficiencies in the doors and windows, or their installation. 9 The same matters which are alleged to be a breach of contract are said to give rise to a breach of the duty of care. In addition it is said that Hanlon breached the alleged duty of care by failing to advise TR Druce that the window and door frames' sub-sills were an inadequate substitute for flashing, and by failing to advise TR Druce of any action necessary to prevent water penetration around the door and window frames. 10 Substantially the same matters are relied upon in relation to the s 52 claim. TR Druce and Trelat allege that by accepting payment of its invoice and leaving the site Hanlon represented that it had properly completed the installation of the doors and windows. They say that, in reliance on that representation, TR Druce took no subsequent action to ensure that the doors and windows were properly installed so as to prevent penetration of water. They say the representation was misleading. 11 Xypex is not sued as a subcontractor. Rather, it is alleged that TR Druce subcontracted to Sydney Superseal Pty Ltd ("Superseal") the work of waterproofing concrete block walls and concrete deck areas over the car park and habitable areas using Xypex products. 12 Both TR Druce and Trelat bring a claim of negligence against Xypex contending that it represented that its products were suitable for the waterproofing of roofs, exposed decks, floor slabs, balconies, retaining walls and the like. They also allege that Xypex knew, or ought to have known, that builders such as TR Druce and developers such as Trelat would be exposed to claims for breach of statutory warranty, breach of contract and negligence if its products failed to perform so as to prevent water penetration of treated surfaces. 13 Both TR Druce and Trelat bring a claim for breach of ss 52 and 53(C) of the Trade Practices Act. They allege that Xypex represented that Superseal was competent to apply Xypex products properly so as to provide an impervious waterproof barrier and obviate the need to apply waterproof membrane to the concrete. 14 The claim that Xypex represented that its products were suitable to waterproofing roofs, exposed decks, floor slabs, balconies, retaining walls and the like was particularised. It was said that the representation was conveyed orally by a Xypex representative to Mr Terry Druce, a director of both the cross-claimants. 15 The alleged representations as to Superseal's competence are also alleged to have been made orally by a Xypex representative to Mr Druce, and also to have been made in writing in a form of a letter that Xypex approved particular applicators. 16 A separate claim for the alleged breach of s 74C of the Trades Practices Act is made by TR Druce. It alleges that it was a consumer, as defined by the Trade Practices Act, of Xypex products and that Xypex supplied its products to Superseal for resupply; that that supply was in trade or commerce; that Xypex described the goods as being suitable for waterproofing roofs, exposed decks, floor slabs, balconies, retaining walls and the like; that Superseal supplied the Xypex products to TR Druce by the above description; and the products did not correspond with that description. 17 The claim for alleged breach of s 74C is brought by TR Druce alone. Failure to Provide Security for Costs 18 On 19 March 2009 Einstein J made orders that TR Druce pay into court the sum of $45,000 in respect of the first cross-defendant (Hanlon) within 28 days as security for Hanlon's costs of the proceedings. His Honour ordered TR Druce to pay a further sum of $45,000 into court within 28 days as security for Xypex's costs of the proceedings. His Honour ordered that if TR Druce failed to comply with the orders for provision of security, its cross-claim against the cross-defendants be stayed until further order. No security has been paid into court as required by his Honour's orders. The cross-claims brought by TR Druce are, therefore, currently stayed. The cross-claims brought by Trelat are not. 19 I will deal first with the cross-defendants' application under r 42.21(3) for the dismissal of the cross-claims brought by TR Druce arising from its failure to comply with the orders of Einstein J of 18 March 2009. 20 No evidence was adduced on this application for TR Druce to explain the reasons for its failure to provide security for costs. It should be inferred that the reason security for costs was not provided is that TR Druce is unable to provide the security. 21 It does not automatically follow that because a plaintiff, or cross-claimant, fails to comply with an order for provision of security that its proceeding should be dismissed. On an application for dismissal under r 42.21(3) the court has to consider all of the relevant circumstances. Five circumstances commonly considered on such applications were identified by Einstein J in Idoport Pty Ltd v National Australia Bank Limited [2002] NSWSC 18 at [24] although, as his Honour says, those five matters are by no means exhaustive of all the relevant circumstances to be taken into account. His Honour said (at [24]): " [24] I accept as correct the defendant's submission that the following five matters at the least, require to be taken into account on the issue of whether the Court should now dismiss the Main Proceedings. The list is by no means exhaustive as all relevant circumstances require to be taken into account, including the Court straining wherever practicable consistently with the interests of justice to avoid taking the radical step of denying a plaintiff its day in Court. Clearly the proper exercise of the Court's discretion requires all relevant factors to be weighed in balance, the ultimate decision reflecting the interests of justice. The principles were generally set out in para 23 – para 37 of the November judgment. The five factors identified by the defendants are: (1) the period that has elapsed since security was ordered; (2) the fact that the plaintiff has been on notice of the application for dismissal; (3) the seeming inability of the plaintiff to further fund the Main Proceedings; (4) the prejudice to the defendants; (5) the position of the Court. " (See also Porter v Gordian Runoff Ltd (No. 3) [2005] NSWCA 377 at [24]-[27].) 22 Of course, as Einstein J recognised at [24], the prejudice to the plaintiff of having its proceedings dismissed without their being tried on the merits is a matter of great importance to be weighed in the balance with the other factors of the kind identified. The factors which appear to me to be of significant weight on the present application are the degree of prejudice to TR Druce if its proceedings are dismissed, (which is to be considered with the prejudice to those standing behind TR Druce), the apparent inability of TR Druce to provide the security, and the prejudice to the cross-defendants if the claim is not dismissed. 23 It was submitted by Mr Sachs for the cross-claimants that TR Druce's cross-claims should not be dismissed because the cross-defendants will have to meet the same, or substantially the same, claims in defending Trelat's cross-claim. Mr Sachs accepted that it was likely that if the plaintiff succeeded against one defendant, it would succeed against both defendants by reason of the provisions of the Home Building Act which subjected the developer to the same liability for breach of the implied statutory warranties as the builder. There are, however, some significant differences in the claims brought by each cross-claimant. 24 In particular TR Druce has a claim for breach of contract against Hanlon which Trelat does not maintain, and it has a claim for breach of s 74C of the Trade Practices Act against Xypex which Trelat does not maintain. 25 To the extent both cross-claims are common, success by Trelat on its cross-claim will, in a practical sense, operate to TR Druce's advantage. That is because it was common ground that the same persons stand behind each of the cross-claimants. I was told that both companies are controlled by the Druce family. Hence any recovery that Trelat might obtain from the cross-defendants which goes in reduction of any amount that Trelat and TR Druce are required to pay the plaintiff will be for TR Druce's benefit. 26 I should add in this respect that the claims of both cross-claimants against the cross-defendants are for damages in respect of any moneys that the cross-claimants might be required to pay the plaintiff, as well as compensation for the costs of defending the plaintiff's claim. In this way the prejudice to TR Druce from the dismissal of the proceeding, or at least the prejudice to those standing behind TR Druce, is not as severe as is commonly the case on applications under this rule. 27 Although there was no positive evidence that TR Druce will not be able to provide the security I infer from its failure to adduce such evidence that that is the fact. 28 Accordingly, unless the stay were lifted, it is likely that its cross-claim will remain stayed. In my view, the cross-defendants, in preparing their case for trial, should know precisely what claims they are facing and what claims they might potentially face. I do not consider that they ought to be required to serve statements of evidence with half a mind to the possibility of facing additional claims, that is to say, the additional claims raised on TR Druce's cross-claim which is stayed. Moreover, it would be unjust for the cross-defendants to have to go to trial on the cross-claim brought by Trelat and then face, after that trial, the prospect of further proceedings arising out of the same events on TR Druce's cross-claim if it came about that some months or years after the event TR Druce was able to provide the security or applied for the stay to be lifted. 29 In my view it is appropriate to exercise the discretion under r 42.21(3), and I will in due course order that TR Druce's claims for relief in the statement of first cross-claim be dismissed. Trelat's Cross-Claim Against Hanlon 30 I turn then to the claim for summary dismissal of Trelat's cross-claims. Those applications are brought under r 13.4(1)(b) and (c). The rule provides: " 13.4 Frivolous and vexatious proceedings (1) If in any proceedings it appears to the court that in relation to the proceedings generally or in relation to any claim for relief in the proceedings: (a) the proceedings are frivolous or vexatious, or (b) no reasonable cause of action is disclosed, or (c) the proceedings are an abuse of the process of the court, the court may order that the proceedings be dismissed generally or in relation to that claim. (2) The court may receive evidence on the hearing of an application for an order under subrule (1). " 31 I deal first with Hanlon's application under that rule. 32 Various orders have been made for the service of evidence. On 29 May 2008, when these proceedings were listed in the District Court, an order was made that the defendants serve any remaining evidence upon which they seek to rely by 23 July 2008. The proceedings were subsequently transferred to this court. I am told that that was because, as a result of rectification work done by the plaintiff, the quantum of the plaintiff's claim against the defendants exceeds $750,000. 33 Because rectification work is ongoing, or was ongoing, the precise claim of the plaintiff against the defendants was subject to change. 34 On 20 February 2009 Bergin J (as her Honour then was) ordered that the defendants serve their affidavits and expert reports by 19 June 2009. 35 On 26 June 2009 Hammerschlag J ordered that the defendants serve all evidence upon which they intend to rely by 24 July 2009 and that the defendant not be entitled to rely upon any evidence not served in accordance with that direction without the specific leave of the court. 36 On 23 July 2009 the defendants'/cross-claimants' solicitors served on the solicitors for both cross-defendants three experts reports on which they said the defendants/cross-claimants would be relying. They also advised that for the purposes of the cross-claims, the defendants would be relying upon certain specified expert reports and affidavits of the plaintiff which had previously been served. There were 16 such reports and affidavits. They advised that they were in the process of finalising an affidavit by Mr Terry Druce, but that he was interstate and it was unlikely that his affidavit would be available before 24 July 2009. They advised that his affidavit would be served as soon as it was complete. No such affidavit has been served and leave would need to be given to Trelat if it were to be able to rely upon any such affidavit. 37 Hanlon refers to the three experts' reports served for the defendants. It submits that they contain no evidence that Hanlon had any contractual or other obligation to install sill flashing, or to provide a suitable seal between the window and door frames and the adjacent building material. 38 It is submitted for Hanlon that the evidence served by the defendant does not go to the issue of who, as between the defendants on the one hand and Hanlon on the other, was responsible for supplying the necessary flashings or seals. Mr Walsh of counsel for Hanlon submitted that, in the absence of any evidence to support the cross-claimants' allegation that Hanlon was under a duty to affix sill flashings and sealants, the cross-claims should be dismissed. 39 In my view that approach misconceives the test under r 13.4 for summary dismissal of the proceedings. As Handley and Cripps JJA said in Wickstead v Browne [1992] NSWCA 272; (1992) 30 NSWLR 1 (at 11-12): "... By launching such an application [viz an application for summary dismissal of the plaintiff's action] a defendant undertakes the burden of establishing that there is no triable issue. On such an application the defendant bears the onus of proof and where the facts are peculiarly within the defendant's knowledge the plaintiff's action should not be dismissed because of gaps in the case if the necessary evidence might be obtained as a result of discovery or interrogatories. However for another reason ... the respondent as one of a number of defendants cannot be entitled to summary dismissal before trial because of evidentiary deficiencies in the plaintiff's case. If at the close of the plaintiff's case at the trial there was no evidence against this respondent he would not be entitled at that stage to judgment if any of the other defendants intended to go into evidence ... At the close of the plaintiff's case there may be evidence against some defendants but not against others. The court will not entertain a motion for judgment by some only of the defendants because any gaps in the plaintiff's case against those defendants may be filled when the other defendants go into evidence. In particular one or more of the defendants going into evidence may seek to exculpate themselves by inculpating defendants against whom the plaintiff had no admissible evidence at the close of his case. If the respondent would not be entitled to succeed on a no evidence point at the trial until all the evidence has been called, including that from other defendants, it is clear that there can be no such entitlement on an application by one of several defendants for summary dismissal. " (Citation of authority omitted.) To similar effect is the Court of Appeal's decision in Termijtelen v Van Arkel [1974] 1 NSWLR 525 (albeit the issue in that case was different). 40 By parity of reasoning there could be no summary dismissal of the defendants' cross-claims on the ground that the evidence they have served fails to make out their claims when, at trial, those defendants will be entitled to rely upon any evidence that is led, including evidence from the plaintiffs to make out their claims. 41 Indeed, it appears from the reports the defendants served which respond to reports served by the plaintiff, the latter of which were not before me, that the plaintiff's experts assert a failure to install the requisite flashings or sealants. I can infer that the plaintiff's evidence will be that this gave rise to a breach of the implied statutory warranties that work be performed in a proper and workmanlike manner and in accordance with the plans and specifications. 42 In my view, for Hanlon to be entitled to an order for summary dismissal under r 13.4, it would be necessary for it to call evidence to show that there was no triable issue that there was a reasonable cause of action against it. (See also Webster v Lampard [1993] HCA 57; (1993) 177 CLR 598 at 602-603.) 43 That onus is not discharged by pointing to alleged deficiencies in the evidence served by the defendants. Indeed it is to be borne in mind that it may still be open to the defendants to adduce additional evidence beyond that which has thus far been served. It is true that to do that, the defendants will need leave, but it is not possible to assess the prospects of such leave being obtained on this application. 44 I will therefore dismiss the application for summary dismissal of Trelat's cross-claim against Hanlon. Trelat's Cross-Claim Against Xypex 45 Xypex's application for summary dismissal of Trelat's claim against it was partly put on a similar basis. It was submitted for Xypex that the defendants' evidence did not include any evidence that Xypex had made the alleged representations, or that the cross-claimants had relied upon alleged representations. Again, that approach misconceives the onus on an applicant for summary relief under r 13.4. 46 There was no evidence adduced by Xypex to show that it did not make the alleged representation, let alone to show that there was no triable issue about that. It was also submitted for Xypex that the expert evidence served by the cross-claimants exonerated Xypex, but the report served by the cross-claimants could not be said to be the whole of the evidence on the question of the suitability of the Xypex product. 47 On its cross-claim against Xypex, Trelat would be entitled to rely upon the plaintiff's evidence. No attempt was made on this application to show that there was no triable issue as to the suitability of the Xypex product. 48 Xypex's application was put on an alternative basis. Namely, it was said that on the current pleadings the cross-claim against it was only for a sum of $1,425. 49 This, it was said, was totally disproportionate to the size of the plaintiff's claim and was totally disproportionate to the costs which had been incurred and would be incurred in the future in defending the cross-claim. 50 I was referred to a number of English authorities which consider rules of court substantially to the same effect as ss 56 and 60 of the Civil Procedure Act 2005 (NSW) in which it has been held that there is power to strike out a claim as an abuse of process where the costs and complexity of the claim are disproportionate to any benefit the plaintiff would derive from success in litigation (Chellenberg v British Broadcasting Corporation [2000] EMLR 296 at 318-319; Wallis v Valentine [2003] EMLR 8 at [27]-[28] and [33]; Jameel (Yousef) v Dow Jones & Co Inc [2005] QB 946 at 969-970, [69]-[70]; and Bezant v Rausing [2007] EWHC 1118 (QB) at [129]). 51 It is unnecessary to decide whether that approach should be followed here had the claim against Xypex been limited to the sum of $1,425. An alternative course would be to remove the cross-claim to the Small Claims Division of the Local Court, at least if Xypex undertook not to raise a defence under the principles of Port of Melbourne Authority v Anshun Pty Ltd [1981] HCA 45; (1981) 147 CLR 589 and possibly if it also agreed to be bound by findings made as between the plaintiff and the defendants. 52 I need not consider the implications of the English authorities to which counsel for Xypex referred. During the course of submissions it emerged that there was a misconception as to the nature of the claims which the plaintiff presses against the defendants and in respect of which Trelat seeks compensation from Xypex. Confusion arose because on 26 February 2009 Xypex's solicitor wrote to the plaintiff's solicitor seeking clarification of the claims made by the plaintiff so far as they concerned Xypex. A Scott Schedule dated 13 February 2009 had been served and was in evidence on this application. Xypex's solicitor noted that he believed that that Scott Schedule was complete. He asked whether the plaintiff was claiming any amounts for items listed in the schedule of defects marked "A" attached to the amended statement of claim and identified numerous such items. He said that as best as he could ascertain, the only item for which the defendant made a claim in the cross-claim against Xypex which was listed in the Scott Schedule was item 45 in the amount of $1,105. 53 In response, the plaintiff's solicitor confirmed that the plaintiff maintained its claim for defect numbers 21 and 45 in the schedule, (that is the schedule to the amended statement of claim), and did not maintain a claim against the defendants for numerous other identified items of the schedule to the statement of claim. 54 The Scott Schedule of 13 February 2009 omitted many of the item numbers which appeared in the schedule which was the annexure to the statement of claim. But whereas the schedule to the statement of claim finished at item number 48, the Scott Schedule of 13 February 2009 included items numbered 50-89. 55 There were also various other items which were the subject of comments which were not self-explanatory. 56 What seems clear from a comparison with items originally included in the schedule to the amended statement of claim and the Scott Schedule of 13 February 2009 is that some item numbers have been moved. The plaintiff's solicitor made it clear on this application that the plaintiff maintained against the defendant claims for damages in respect of all of the items in the Scott Schedule of 13 February 2009. It is clear that these extend beyond the two items which Xypex's legal representatives thought were the only items being maintained by the plaintiff which affected Xypex. 57 What the true quantification of Trelat's claim against Xypex is does not appear on this application. Mr Sachs, who appeared for Trelat, said that he was not in a position to quantify that claim today or to identify which of the items on the Scott Schedule of 13 February 2009 are the subject of the cross-claim. It does not appear that the quantum of the claim against Xypex is so small that it is out of proportion to the costs and complexity of the dispute so as to warrant summary dismissal on that ground, assuming that that would be a proper ground for summary dismissal of the claim. For these reasons, I will dismiss Xypex's application for summary dismissal of Trelat's claim. 58 Subject to hearing counsel as to the precise form of the orders, I propose the following. 1. The cross-claim filed by the first defendant on 7 March 2008 against the first and second cross-defendants be dismissed pursuant to r 42.21(3) of the Uniform Civil Procedure Rules . 2. The first defendant (first cross-claimant) pay the costs of the first and second cross-defendants of its cross-claim against them. 3. The notices of motion, both filed on 21 August 2009, of the first cross-defendant and the second cross-defendant be otherwise dismissed. 4. The exhibits on this application may be returned. [The parties' legal representatives addressed.] 59 I make those orders. I will hear the parties on costs and deal with directions. [The parties' legal representatives addressed on costs.] 60 I order that the first defendant (first cross-claimant) pay the costs of the first and second cross-defendants of their applications for the dismissal of the first defendant's cross-claim pursuant to r 42.21(3). The costs payable by the first defendant to the first and second cross-defendants may be assessed forthwith and will be payable forthwith after agreement or assessment. 61 So far as the costs of the cross-defendants against Trelat are concerned, prima facie costs follow the event. Accordingly, prima facie Trelat is entitled to its costs of the unsuccessful applications. I do not think there is anything in the application brought by Hanlon which arguably displaces that prima facie position. 62 So far as the claim brought by Xypex is concerned, it is submitted that it ought not to be ordered to pay costs because it was under a misconception as to the quantum of the claim that was being pursued against it, and that it must have been clear to the defendants, at least after the service of Mr Sloan's affidavit of 27 August 2009, that the correspondence from the plaintiff's solicitors had led Xypex's solicitors into error. 63 It has not been shown that the defendants or their solicitors are responsible for that error. No costs application is made against the plaintiff. (I am not suggesting it should have been made against the plaintiff.) In the circumstances and given that the disproportionality aspect of the claim was not the only ground upon which the application for summary dismissal of Trelat's cross-claim was brought by Xypex, I do not consider that I should depart from the prima facie position. 64 I order that the first cross-defendant pay the second defendant's costs of and incidental to the first cross-defendant's notice of motion of 21 August 2009 and I order that the second cross-defendant pay the second defendant's costs of and incidental to the second cross-defendant's notice of motion of 21 August 2009. [Parties' legal representatives addressed in relation to directions to be made.] 65 I have amended order 5 to substitute "cross-defendants" for "second cross-defendant". With that amendment I make orders in accordance with the short minutes of order which I initial and date today and place with the papers. The matter is stood over to 13 November 2009. I note it is also before the court next Friday. ****** 30/10/2009 - Correction to title of plaintiff in coversheet and judgment heading. - Paragraph(s) 0 DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.