FEDERAL COURT OF AUSTRALIA

Danthanarayana v GR8 Constructions Pty Ltd (No 2) [2012] FCA 250

THE COURT ORDERS THAT:

The application made by the applicants that the order for costs made by Foster J on 15 March 2012 in Danthanarayana v GR8 Constructions Pty Ltd [2012] FCA 231 be varied is refused.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

1    After I delivered judgment in this matter today (Danthanarayana v GR8 Constructions Pty Ltd [2012] FCA 231) (the principal judgment) and announced orders, Counsel for the applicants made an application that I hear him on the question of costs. That application was made in circumstances where I had already announced an order for costs in respect of the applicants’ application. Notwithstanding that fact, I said that I would hear Counsel, and I have done so.

2    Counsel submitted to me that I should vacate the order for costs which I just made and should reserve the question of costs until the final determination of the whole proceeding. Counsel submitted that the proprietors’ undertaking had been given in order to procure the removal of a caveat lodged against the title to the property by the builder in circumstances where the interest claimed by the builder to support that caveat was the equitable charge afforded to it under the building contract. Counsel submitted that the builder had contended that its equitable charge had been enlivened because a sum of money of at least $250,000 was due to it under the contract. Counsel argued that, in the event that it should transpire that the builder was not owed that amount or anything at all as at the date the caveat was placed on the title, then the basis upon which the caveat had been lodged would fall away. In the event that the applicants demonstrate that nothing was owed to the builder as at 2 March 2011 when the caveat was lodged against the title to the property, the applicants will have been shown to have been correct in attempting to have their undertaking released. Furthermore, in that event, the builder’s failure to consent to the proprietors being released from their undertaking will be shown to have been unreasonable.

3    Counsel also submitted that it was an abuse of process for the builder to lodge the caveat on 2 March 2011 because the building contract had terminated in June 2009. He submitted that the caveat had been lodged “late”.

4    It was submitted that costs should be reserved in order to enable the applicants to argue these points at the end of the case. It was said that it was more appropriate to deal with these arguments then.

5    As to the first of these arguments, it seems to me that the argument ignores the fact that, as was conceded by the applicants at the hearing of the present application, the builder had a prima facie case or, as Counsel put it, a triable issue in respect of its contention that $250,000 was due under the building contract as at 2 March 2011. According to the terms of the building contract, that amount was secured by the equitable charge granted in favour of the builder.

6    The appropriate starting point for my consideration of the applicants’ argument is the fact that, at the time when the caveat was lodged and an extension of its operation sought, the builder had established a prima facie case that the builder’s equitable charge had been engaged. That being so, it was incumbent upon the proprietors to approach both the builder’s application for an extension of the caveat and their recent application to be released from their undertaking upon the basis that, prima facie, the builder’s equitable charge had been engaged at least to the extent of $250,000. Both applications had to be considered in that light. It is not to the point that, in the end, the proprietors may succeed overall in the proceedings. Each interlocutory application had to be considered on its merits at the time when it was made.

7    The other matter raised, being the abuse of process point, seems to me to be misconceived. I do not think that it is an abuse of process for a party to lodge a caveat in order to protect a claimed interest in land just because a dispute has arisen between the parties as to whether that interest does or does not exist. There is no doubt that, under the building contract, the applicants had granted a charge to the builder to secure moneys due under the building contract. There is also no doubt that, as at 3 June 2011, the amount of unpaid instalments which the builder argued were by then due under the contract was more than $250,000.

8    I have dealt, in the principal judgment, with the proposition that the caveat may have ceased to have effect after the termination of the contract and rejected that argument.

9    It seems to me that the present application was an application made as a discrete matter designed to deal with circumstances which, according to the evidence, had arisen and which the applicants contended were causing them some difficulty. The applicants have lost the application and there seems to me to be no reason why I should not therefore order them to pay the costs of the exercise.

10    I propose, therefore, not to alter the costs order which I have already made. The applicants’ application that I vary that costs order is refused.

11    There will be orders accordingly.

Associate:

Dated:    19 March 2012