The Owners—Strata Plan 93105 v Richard Crookes Constructions Pty Ltd [2025] NSWSC 935

The New South Wales Supreme Court has recently considered an application by a defendant for a gross costs order, for its costs thrown away of an aborted mediation.

While ultimately the court held that the defendants are entitled to their costs of and related to the aborted mediation, it did not award those costs on a gross sum basis. Instead, the costs are to be determined in the usual way.  

The decision provides useful guidance on the requirements of a gross sum costs order and a reminder to parties that they must attend attend a mediation in good faith or risk costs consequences. 

CASE SUMMARY

The Plaintiff, an owners corporation, brought a claim against the Defendant builder and developer of the owners corporation’s strata scheme, for the installation of combustible Aluminium Composite Cladding on the common property.

During the course of these proceedings, the parties were ordered to attend mediation.  The order for mediation was made pursuant to Part 4 of the Civil Procedure Act 2005 (Cth) (CPA).

Legal representatives, counsel and a representative for each of the Defendants attended the mediation, whilst only legal representatives and counsel attended for the Plaintiff. The Plaintiff’s legal representatives asserted that they were able to obtain instructions from the owners corporation representative via telephone or AVL, however all attempts to make contact were unsuccessful. Accordingly, the Mediator terminated the mediation.

The Defendants sought a gross cost order for costs they deemed to be both wholly and partly thrown away due to the Plaintiff’s failure to prepare for mediation and subsequent inability to negotiate in good faith. 

DECISION 

1. In deciding whether a gross costs order was applicable to the facts of the case, the Court needed to determine first whether the Plaintiff had not adequately participated in the mediation process. By way of summary, the Court found that the Plaintiff had not adequately participated in the mediation process as:
   the Plaintiff failed to participate in the preliminary steps of the mediation;
2. the Plaintiff failed to have anyone attend the mediation on its behalf whether in person or otherwise; and
3.  the Plaintiff’s actions resulted in another mediation having to be ordered.

The Court accepted that because a mediation order had been made (under s 26(1) of the Civil Procedure Act 2005 (NSW)) requiring the parties to attend, the failure by the Owners Corporation’s personal representative to attend either in person or by videoconference meant that the mediation event was aborted.

Because of that failure, the defendants were found to have been put to the wasted costs of preparing for and attending the mediation, and therefore were entitled to recover their costs related to that aborted mediation.

Why not gross sum basis

• Although the defendants sought a “gross sum” costs order (which is often a fixed sum covering legal costs, rather than by detailed assessment), the Court declined this.
• The rationale was that while the mediation was aborted, and the failure of attendance was the plaintiff’s responsibility, the Court did not consider that the absent personal representative’s non-attendance alone justified the more drastic cost order of a gross sum. Instead, held that the costs are to be assessed in the ordinary way (i.e., more detail, potentially with assessment).
• In forming its decision the court has regard to the principles set out in Manatari Plumbing Pty Ltd v Universal Property Group Pty Ltd (No 2) [2025] NSWCA 185.  That is, a party seeking a gross costs order must point to the particular circumstances of their case which warrants the practicality of making such an order. These circumstances may include the complexity of the proceedings in relation to the costs sought, the need to avoid delay in the proceedings arising from a costs assessment, and whether the party from which the gross costs order is sought is able to fulfil the costs liability.

In this particular case, the Court found that the the Defendants failed to evidence the appropriate quantum sought under the gross costs order and noted several inconsistencies in the Defendants’ affidavit evidence including:

1. inconsistencies in the quantum under the gross costs order;
2. duplicated work included in the proposed quantum;
3. failure to explain whether, if any, discounts had been applied to the quantum; and
4. failure to explain whether the incurred invoices were split evenly between the parties or whether the Defendants had incurred those costs. 

TAKEAWAYS

• Mediation orders matter: When a court orders a mediation (or attendance at mediation) under s 26(1) CPA, parties must ensure the proper person attends in the manner required (in person or by video, if that is what’s ordered). Failure may lead to costs consequences.
• Discretion remains for gross sum versus detailed assessment: Even when costs liability is triggered, the Court will evaluate whether a fixed “gross sum” costs order is appropriate. It may instead require a full assessment of costs, depending on the circumstances.
• The threshold to award a gross costs order is high, and that a party seeking such must sufficiently evidence the quantum sought under the order and why it is practical for such an order to be made. If insufficient evidence is provided, an ordinary costs order will likely be made instead which requires costs assessment.