Brad’s on Tap Plumbing Pty Ltd v The Owners – Strata Plan No 56443 [2016] NSWSC 512

Supreme Court New South Wales

Medium Neutral Citation: Brad's on Tap Plumbing Pty Ltd v The Owners – Strata Plan No 56443 [2016] NSWSC 512 Hearing dates: 08 April 2016 Date of orders: 08 April 2016 Decision date: 08 April 2016 Jurisdiction: Equity - Commercial List Before: McDougall J Decision: Order plaintiff to provide security for the defendant's costs by instalments. Proceedings to be stayed if security not given. Catchwords: PRACTICE AND PROCEDURE – security for costs – discretion to order security for costs enlivened – no relevant delay - security for costs order made – quantum - UCPR r 42.21 – s 1335(1) Corporations Act 2001 (Cth) Legislation Cited: Corporations Act 2001 (Cth) Strata Schemes Management Act 1966 (NSW) Uniform Civil Procedure Rules 2005 (NSW) Category: Procedural and other rulings Parties: Brad's on Tap Plumbing Pty Ltd (Plaintiff) The Owners – Strata Plan No 56443 (Defendant) Representation: Counsel: EA Walker (P) DD Knoll AM (D)

Solicitors: Barraket Stanton Lawyers (P) Grace Lawyers (D) File Number(s): 2015/251082

Judgment 1. HIS HONOUR: I am concerned today with an application for security for costs.

Background 1. The defendant (the Owners Corporation) is the owners corporation of a large strata title complex in Pitt Street, Sydney. It is said to be the largest such complex in this country. 2. The plaintiff (Brad's) says that it entered into a contract with the Owners Corporation under which, for a fixed period of five years, Brad's undertook to provide plumbing and handyman services to the Owners Corporation. There was a stipulated annual fee for each of those services and a stipulation for the fee to increase by four per cent annually. 3. Brad's says between January 2014 and February 2015 it invoiced the Owners Corporation for about $190,000 worth of work, but that it was not paid. 4. On 12 June 2015, Brad's notified the Owners Corporation, purportedly pursuant to cl 7.1(b) of the contract, that the Owners Corporation was liable to pay the amounts in question. The Owners Corporation did not do so and accordingly Brad's purported to terminate the contract. 5. Under the contract, if it were terminated in circumstances such as those just described, the Owners Corporation was liable to pay the balance of the fees for each of the services calculated up until the end of the contract. Brad's claims about $2 million for future fees, and in addition about $190,000 for the unpaid invoices. Brad's also claims on a quantum meruit basis for other services that it says it provided. 6. The Owners Corporation says there was no contract or no enforceable contract. That is so, it says, because the contract on which Brad's sued was a caretaker agreement as defined in s 40A of the Strata Schemes Management Act 1966 (NSW) and, not having been authorised in general meetings, is unenforceable. 7. Alternatively, and in relation to the claim for the balance of fees from the date of termination for the rest of the life of the contract, the Owners Corporation says that the relevant contractual provision is void as being a penalty. There are other arguments raised, including that it was the Owners Corporation itself which validly terminated the contract and hence that in any event (if the contract were otherwise enforceable) there is no obligation to pay the fees following termination.