SUPREME COURT OF QUEENSLAND

CITATION:	Hestbay Pty Ltd v One Sector Pty Ltd and another [2025] QSC 4	
PARTIES:	Hestbay Pty Ltd (CAN 010 851 073) as trustee for the J & F Property Trust
(Plaintiff)
v
One Sector Pty Ltd (CAN 139 990 891)
(Defendant)
and
Excel Concrete Pty Ltd (CAN 010 981 773)
(Third Party)	
FILE NO/S:	Brisbane 9563/21	
DIVISION:	Trial	
PROCEEDING:	Costs hearing after trial	
ORIGINATING COURT:	Supreme Court of Queensland at Brisbane	
DELIVERED ON:	17 January 2025	
DELIVERED AT:	Brisbane	
HEARING DATE:	26 November 2024	
JUDGE:	Ryan J	
ORDERS:	The plaintiff is to pay the defendant’s costs of the claim and counter-claim on the standard basis, up to and including 20 September 2023 and on the indemnity basis thereafter.
The defendant’s costs, in so far as counsels’ costs are concerned, are limited to the costs of two counsel.
The defendant is to pay the third party’s costs, including reserved costs. 
The defendant is to pay the plaintiff’s costs of the hearing of 14 June 2023.
	
CATCHWORDS:	PROCEDURE – CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS – COSTS – OFFERS OF COMPROMISE, PAYMENTS INTO COURT AND SETTLEMENTS – INFORMAL OFFERS AND CALDERBANK LETTERS – GENERALLY – where defendant made a Calderbank offer to settle which was rejected by the plaintiff – where defendant bettered its offer at trial – where parties agree that costs post the offer ought to be paid on an indemnity basis
PROCEDURE – CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS – COSTS – GENERAL RULE: COSTS FOLLOW THE EVENT – OTHER PARTICULAR CASES AND MATTERS – whether it is appropriate to make an order for the plaintiff to pay the defendant’s costs incurred prior to the Calderbank offer on an indemnity basis
PROCEDURE – CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS – COSTS – GENERAL RULE: COSTS FOLLOW THE EVENT – PARTIAL SUCCESS – where the plaintiff submitted that the defendant had only been successful in part in its claim and counterclaim – whether the costs payable to the defendant ought to be reduced to reflect its lack of success in relation to certain issues
PROCEDURE – CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS – COSTS – GENERAL RULE: COSTS FOLLOW THE EVENT – OTHER PARTICULAR CASES AND MATTERS – where the defendant was represented by a silk and two juniors at trial and at this costs hearing – whether costs recoverable by the defendant ought to be limited to the costs of two counsel – whether matter sufficiently complex as to warrant three counsel
PROCEDURE – CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS – PARTIES AND NON-PARTIES – COSTS IN PROCEEDINGS WHERE MULTIPLE PARTIES – GENERALLY – where defendant joined the third party early in the piece – whether the defendant ought to pay the third party’s costs – where defendant said plaintiff’s claim was the catalyst for joining third party – where defendant said it discontinued against the third party after the plaintiff amended its statement of claim and obtained different expert evidence – whether the plaintiff ought to pay the third party’s costs, directly or indirectly – whether the defendant acted reasonably in joining the third party in the first place –– whether conduct of plaintiff warranted an order that it pay the costs of the third party proceedings
Uniform Civil Procedure Rules 1999 rr 307(1) and (2), 353(3), 360, 361A(1) and (2), 386(1), 681(1), 692(2)
AGL Sales (Qld) Pty Ltd v Dawson Sales Pty Ltd (No 2) [2009] QSC 75
Australand Corporation (Qld) Pty Ltd v Johnson & Ors [2007] QSC 128
Australian Competition and Consumer Commission v NSW Ports Operations Hold Co Pty Ltd (No 2) [2021] FCA 1040
Balmoral Group Ltd v Borealis (UK) Ltd [2006] EWHC 2531 (Comm)
Bond Brewing New South Wales Ltd v Whitehouse Properties Pty Ltd [unreported, NSWSC 16 March 1990]
Built Qld Pty Limited v Pro-Invest Australian Hospitality Opportunity (ST) Pty Ltd (No 2) (2023) 15 QR 142
Burke v Gillett [1996] 1 VR 196
Civil Mining & Construction Pty Ltd v Wiggins Island Coal Export Terminal Pty Ltd [2017] QSC 85
Colgate-Palmolive Co v Cussons Pty Ltd (1993) 118 ALR 248
Edington v Clark [1964] 1 QB 367 
Fairfield Services Pty Ltd (in liq) v Leggett [2020] 5 QR 50
Ford v Nominal Defendant (No 2) [2023] 105 MVR 276 
GEC Marconi Systems Pty Ltd (t/a Easams Australia) v BHP Information Technology Pty Ltd v Ors 201 ALR 55
Gold Coast Bakeries Queensland Pty Ltd v Heat and Control Pty Ltd [1992] 1 Qd R 162
Goomborian Transport Pty Ltd v Hanson and Ors [2018] QSC 182
Gould v Vaggelas [1985] 157 CLR 215 
Hestbay Pty Ltd v One Sector Pty Ltd [2024] QSC 180
Hestbay Pty Ltd v One Section Pty Ltd [2023] QSC 154
Hestbay Pty Ltd v One Sector Pty Ltd [2022] QSC 25
James & Ors v Surf Road Nominees Pt Limited & Ors (No 2) [2005] NSWCA 296
Johnson v Ribbins [1977] 1 All ER 806
Klawansky v Premier Petroleum Co Ltd [1911] WN 94
Lombard Insurance Co (Australia) Ltd v Pastro (1994) 175 LSJS 448
Speets Investments Pty Ltd v Bencol Pty Ltd (No 2) [2021] QCA 39
Sundell v Queensland Housing Commission (1954) 94 CLR 531
Swisstex Finance Pty Ltd v Lamb [1993] 2 Qd R 463
Thomas v Times Book Co Ltd; Cox (Third Party) and Cleverdon (Fourth Party) [1966] 1 WLR 911
Virgtel Ltd & Anor v Zabusky & Ors [2012] QSC 42
White Industries (Qld) Pty Ltd v Flower & Hart (a firm) (1998) 156 ALR 169
	
COUNSEL:	SB Whitten with CH Matthews for the plaintiff
MD Ambrose KC with Dr AJ Greinke and SF Lamb for the defendant
PR Franco KC for the third party
	
SOLICITORS:	Hickey Lawyers for the plaintiff
Doyles Construction Lawyers for the defendant
Wotton & Kearney for the third party	

[1]	
Background
[1]	On 22 August 2024, I delivered judgment in Hestbay Pty Ltd v One Sector Pty Ltd [2024] QSC 180.  The case concerned the strength, thickness, and abrasion resistance of a concrete floor slab (the “Stage 2 slab”) in a warehouse which had been constructed by the defendant, One Sector, for the plaintiff, Hestbay, under a design and construct contract.  Hestbay alleged that the slab was deficient in a variety of ways because of One Sector’s construction method and that the deficient slab caused Hestbay loss and damage in the order of (on one basis of calculation) $6.82 million.  One Sector counter-claimed for relatively small amounts under the contract.  
[2]	Having regard to the nature and size of the claim, the litigation was supervised, pre-trial, by Freeburn J, who presided over many reviews and interlocutory applications.  
[3]	Hestbay’s claim and statement of claim were filed on 19 August 2021.  Early in the piece, on 18 October 2021, One Sector joined the third party, Excel.  On 4 May 2023, Freeburn J granted the defendant leave to discontinue against Excel prior to trial and, later, reserved the costs of the third party proceedings to me.
[4]	I made the following orders on the day I delivered judgment:
(a)	The plaintiff’s claim is dismissed.
(b)	The defendant’s counterclaim is allowed in part.
(c)	The parties are to confer and produce a draft order which gives effect to my findings within 14 days.
(d)	I will hear the parties, and the third party, Excel Concrete Pty Ltd, as to costs.
[5]	On 6 September 2024, I made formal orders dismissing the plaintiff’s claim and giving judgment for the defendant on the counterclaim in the amount of $157,549.46, inclusive of interest.  
[6]	This is the costs judgment. 

One Sector’s offer to settle
[7]	Relevant to costs, prior to the trial, on 20 September 2023, One Sector made an offer to Hestbay to settle the claim and counterclaim.  The offer complied with rule 353(3) of the Uniform Civil Procedure Rules 1999 (UCPR).  The terms of the offer were – 
(a)	Judgment in favour of Hestbay on its claim for $5000, inclusive of interest;
(b)	Hestbay to pay 75% of One Sector’s costs in defending the claim, to be assessed on the standard basis on the Supreme Court scale;
(c)	Judgment in favour of One Sector on its counterclaim for $18,000, inclusive of interest;
(d)	Hestbay to pay One Sector’s costs of the counterclaim, to be assessed on the standard basis at Scale C of the Magistrates Court Scale of Costs.  
[8]	Hestbay rejected the offer on 22 September 2023.  
[9]	One Sector obviously bettered its offer at trial.  Insofar as the claim was concerned, rule 361A “Costs if offer by defendant – dismissal of plaintiff’s proceeding” applied.  As per rule 361A(2), upon my being satisfied of the matters listed in rule 361A(1) (as I was) – 
Unless a party shows another order for costs is appropriate in the circumstances, the court must order the plaintiff to pay the defendant’s costs – 
(a)	calculated on the standard basis, up to and including the day of service of the offer; and
(b)	calculated on the indemnity basis, after the day of service.
[10]	One Sector contended that another order for costs was appropriate in the circumstances, namely an order that Hestbay pay all of its costs of the claim (pre and post the offer) on the indemnity basis.  
[11]	As to the counterclaim, rule 360 “Costs if offer by plaintiff” applied which is to similar effect as rule 361A.  One Sector did not contend for another order for costs in relation to the counterclaim.  
The 2020 reports and tests 
[12]	As noted above, Hestbay’s claim and statement of claim were filed on 19 August 2021.
[13]	At that time, Hestbay was relying upon an expert report from Structural Diagnostics Pty Ltd dated 20 April 2020; compressive strength testing of concrete core samples taken from the Stage 2 slab by Griffith University School of Engineering in June 2020; and a short report from Edge Consulting Engineers dated 23 July 2020 (the “2020 reports and tests”).  
[14]	The 2020 reports and tests were not relied upon by Hestbay at trial, but the content of the 2020 reports and tests was relevant to the question whether One Sector acted reasonably in joining Excel as third party to the litigation, which was, in turn, relevant to the question whether One Sector or Hestbay ought to pay Excel’s costs.  
[15]	The Structural Diagnostics’ report was described as a “first impressions report” and its scope was limited to “non-invasive visual observations of the ground slabs in Unit 12 and 13”.  It stated that its content was to be taken as “indicative, rather than definitive”.  It listed its limitations, including that it was based solely on a visual inspection of exposed or readily accessible areas.  At the time of Structural Diagnostics’ visual inspection, there had been no concrete sampling, nor testing of the hardness or abrasion resistance of the surface of the slab.  Structural Diagnostics’ report noted that the slab was trafficked by non-pneumatic tyred vehicles (which it was not engineered to bear) and set out the defects in the slab which it observed – namely, surface abrasion wear, map cracking, plastic settlement cracking, and early age and drying shrinkage cracking.  Among other things, the report said:
(a)	There was excessive surface wear of the heavily trafficked area of the slab.  
(b)	It was unlikely that the wearing surface achieved the specified design compressive strength requirement of 32 MPa.  
(c)	A visual inspection of the slab surface indicated that the slab surface would fail an abrasion test.  
(d)	To verify the compressive strength of the surface layer, an abrasion test was required.  
(e)	The concrete beneath the surface layer was “still well hydrated and maintain[ed] its volume and strength”.  
(f)	The curing of concrete was “critical in achieving the required concrete surface strength for wearing and abrasion resistance”.  
(g)	In relation to shrinkage cracking, in addition to the concrete mix design, placing, compaction and curing were all important factors in minimising drying shrinkage and the associated potential for shrinkage cracking.  
(h)	The observed defects were consistent with poor placement, compaction, finishing or curing of the concrete slabs.  
(i)	Concrete cylinder compressive strength test results do not indicate surface layer strength (including because the samples might be trimmed or ground at either end).   
[16]	The report emphasised issues with the wearing surface of the slab.  This may be contrasted with the opinion expressed about the well hydrated and strong concrete beneath the surface layer.  Also, with respect to shrinkage cracking, whilst concrete mix design was nominated as a potential reason for it, the report favoured construction deficits as its cause (see (h) above).
[17]	Griffith University conducted compressive strength testing but did not conduct an abrasion test.  According to its test results, the average compressive strength of the cores sampled was 23.9 MPa, with a standard deviation of 3.5 and a maximum compressive strength of 29.1 MPa.  Also, its testing revealed that, at several locations, the slab depth did not satisfy the design specification of 175 mm.  
[18]	The brief Edge Report referred to the findings of the Structural Diagnostics’ report about the shortcomings of the surface hardness of the slab as well as its cracking.  It referred to the results of the compressive strength testing and concluded that the slab “as built” did not meet the design specifications from the original engineering designs by Westera Partners; and that the slab needed to be replaced. 
[19]	On the basis of the 2020 reports and tests, Hestbay asserted (among other things) in its statement of claim that One Sector was in breach of contract because the slab “had a maximum compressive strength of 29.1 MPa” and had “otherwise varied compressive strength across the slab, with an average compressive strength of 23.35 MPa”, when a slab of 32 MPa was required.  
The involvement of the third party, Excel 
[20]	Excel, is a supplier of pre-mix concrete.  As required by the design and construct contract, One Sector ordered “N32” pre-mix concrete from Excel – that is, concrete which would have, if poured and cured in accordance with relevant Australian Standards, a compressive strength of 32 MPa at 28 days after its pour.  Excel delivered the N32 concrete mix used in the Stage 2 slab in multiple loads.  One Sector managed its pour and constructed the slab, including by adding water to some of the loads of concrete mix on site.  
[21]	On 8 October 2021, One Sector wrote to Excel enclosing, inter alia, a copy of Hestbay’s claim and statement of claim and drawing Excel’s attention to Hestbay’s pleading about the compressive strength of the concrete slab.  One Sector told Excel that it did not necessarily accept the results of Hestbay’s testing or the accuracy of Hestbay’s reports.  It said it was carrying out further investigations and was seeking proper access to the premises “for recording the loads applied and the performance of the concrete”.  
[22]	It told Excel that it had constructed the slab in an appropriate and skilful way and denied all liability.  However, if the compressive strength of the slab was less than 32 MPa and otherwise non-compliant with Australian Standard 1379, as Hestbay claimed, then One Sector would hold Excel liable as the supplier of the concrete.  
[23]	As it foreshadowed, One Sector jointed Excel as a third party on 18 October 2021.  
[24]	Excel filed its Notice of Intention to Defend and Defence on 31 January 2022.
[25]	One Sector complained about certain “defective” aspects of the Notice of Intention to Defend and Defence on 17 February 2022 (including Excel’s assertion that One Sector added extra water to the concrete mix on site, which had the effect of reducing its compressive strength) and sought particulars of others.
[26]	Excel’s letter to One Sector of 8 March 2022 explained why its Defence was short on particulars in advance of Excel’s foreshadowed application for security for costs.  It also explained the reasons why it amended its defence as it did.  
[27]	On 9 November 2022 at a review of the matter before Freeburn J attended by Mr Matthews for Hestbay, Mr Doyle (solicitor) for One Sector and Mr Riley (solicitor) for Excel, the parties discussed a timetable or program for the provision of evidence.  Mr Doyle for One Sector said to his Honour that his program did not provide for specific steps to be taken by Excel.  He said, “The reason for that is that we find in the report of the concrete expert for the plaintiff [Dr Woolcock] a comment that he has no problem with the concrete supply”.  Mr Doyle said, in effect, that counsel and his experts would need to consider whether there was any real complaint about the concrete supplied.  
[28]	Also at that review, his Honour discussed shortcomings in Hestbay’s pleading with Mr Matthews and gave Hestbay two weeks to amend it.  
[29]	In its third further amended statement of claim (3FASOC), filed on 1 December 2022, Hestbay revised its allegations about the concrete slabs because – 
(a)	later, more accurate testing of the slab by “CMT Labs” established that the average strength of it was 32.13 MPa; and
(b)	Dr Woolcock opined that Excel had supplied concrete with the specifications ordered by One Sector.    
[30]	In its 3FASOC, Hestbay: complained about One Sector’s workmanship, care and skill; alleged the slabs were not fit for purpose; and asserted that their deficiency was due to the uncontrolled addition of water by One Sector to the cement mix at pour (as per the opinion of Dr Woolcock).  Hestbay alleged that the slab was not at its required strength at 28 days after pour, or by the date of practical completion, relying upon Dr Woolcock’s retrospective assessment of the slab’s strength when it was laid.  
[31]	On 1 February 2023, there was a “without prejudice” telephone conversation between the lawyers for One Sector and the lawyers for Excel.  During that conversation, it was communicated to Excel that One Sector was considering its position on the third party claim and that Excel may not be required to actively defend the claim.
[32]	Excel told One Sector on 9 February 2023 that it was not for One Sector to tell Excel how it ought to defend (or not) the third party claim.  Excel explained that it would conduct itself on the basis that the third party claim remained on foot and, after outlining its costs and projected costs, invited One Sector to “cut its losses” by discontinuing the third party claim “now” and paying Excel’s costs on the standard basis.
[33]	On 20 February 2023, there was further correspondence between One Sector and Excel about the work Excel was required to do.  One Sector told Excel that it proposed to consider whether Excel’s involvement was necessary when the expert reports became available.  
[34]	Excel wrote to One Sector on 8 March 2023, emphasising that (as it saw things) Hestbay never alleged that there was any issue with the concrete supplied by Excel – Hestbay’s complaints had always been about the slab as constructed.  At paragraphs 5 – 8 of that letter, Excel said – 
5.	For completeness, although it is apparent on the face of the pleadings, we confirm that:
5.1	the Plaintiff does not allege (and never has alleged) that the 	concrete supplied by [Excel] does not have the required compressive strength;
5.2	the Plaintiff’s allegations have always been limited to the compressive strength of the concrete slabs as constructed by [One Sector]; and
5.3	the compressive strength of the concrete slabs as constructed by [One Sector] is not necessarily reflective of the strength of the concrete which was supplied by our client because the manner in which the concrete is installed, finished and/or cured directly affects the strength.
6.	In particular, in paragraph 21 of its pleading, the Plaintiff says that:
6.1	the concrete slabs as constructed did not meet the contract specifications in that they do not have the required thickness, compressive strength and cover to reinforcement;
6.2	[One Sector] did not otherwise use proper workmanship and/or due skill and care in its placement, compacting or in the alternative curing of the concrete; and
6.3	as a result, the slabs have suffered from surface deterioration and cracking.
7.	The Plaintiff’s expert has since concluded that, in addition to the workmanship issues referenced in the pleadings, [One Sector] added uncontrolled amounts of water to the concrete after it was delivered by our client to the project site.
8.	[Excel’s] evidence (lay and expert) will confirm that:
8.1	there was no problem with the concrete supplied by our client; and
8.2	the alleged loss and damage is due to the workmanship issues referenced in the pleadings and also in the addition of water noted immediately above.
[35]	Excel invited One Sector to discontinue against it and to pay its costs on the standard basis.
[36]	On 28 April 2023, One Sector informed Excel that it did not intend to press the third party claim “[d]ue to the plaintiff’s substantial amendments to its claim and the content of its expert evidence”.  It informed Excel that it would discontinue the third party claim.  Its position was that Excel’s costs were payable by the plaintiff, but that was something to be argued after the determination of the proceedings.  It sought Excel’s agreement to a consent order, providing for leave to discontinue with costs to be reserved.  
[37]	Because One Sector and Excel could not reach agreement on a consent order, the application for leave (which was uncontroversial) and costs (which was controversial) were left to be dealt with by Freeburn J at the directions hearing/review scheduled for 4 May 2023.  
The 4 May 2023 review and the issue of the costs of the third party proceeding
[38]	At the review on 4 May 2023, Hestbay and Excel were represented by counsel.  One Sector was represented by Mr Doyle.  Freeburn J gave One Sector leave to discontinue the third party proceedings. 
[39]	Proceedings having been discontinued against it, Excel then applied for costs against One Sector.  For the reasons discussed in the following paragraph, his Honour adjourned Excel’s application for a costs order “associated with the discontinuance of the third party claim” to a date to be fixed after 2 June 2023; and made orders for the exchange of the written outlines of all parties (including the plaintiff) on the costs issue.  
[40]	As the transcript of the review on 4 May 2023 reveals, One Sector and Excel differed about when and how Excel’s costs ought to be dealt with.  One Sector wished to have costs dealt with at the same time as it might contend for an order that the plaintiff, not One Sector, pay Excel’s costs – that is, after the trial.  Excel preferred to have costs determined in advance of the trial, even if the defendant wished to recoup Excel’s costs from the plaintiff.  
[41]	Excel agreed that his Honour could not, at the review that day, deal with One Sector’s contention that it joined Excel because of the breadth of Hestbay’s case and then sought leave to release Excel because of the “contraction” of Hestbay’s case, which was relevant to a decision about which party ought to bear Excel’s costs, but submitted that that issue was irrelevant to Excel.  However, His Honour said he preferred to deal with the costs issue on the basis of more thorough written submissions and with more time than the 15 minute review allowed.  His Honour suggested that the matter might be dealt with on the papers, because it was unappealing to have a costs’ hearing which concluded with an order that costs be reserved until after the trial.  But One Sector did not want the matter determined on the papers and his Honour allowed for an oral hearing involving all three parties: One Sector, Excel and Hestbay.  
[42]	One Sector suggested that the plaintiff appeared unnecessarily at the hearing of the third party costs application (which it said was also relevant to the issue of who should bear the costs of the third party proceedings).  That is not a fair representation of the plaintiff’s position, and I will deal with it now.
[43]	Having read the transcript of the review of 4 May 2023, it seemed to me that his Honour was initially contemplating a costs’ hearing involving One Sector and Excel only.  But One Sector made it plain that it would be seeking, at the costs hearing, as an alternative to an order that costs be reserved until after the trial, an order that Hestbay pay Excel’s costs “now”.  Obviously, Hestbay was entitled to be heard on that point.  In those circumstances, it was reasonable, indeed, necessary, for Hestbay to appear at the third party costs hearing.  
[44]	Excel’s application for costs was heard by Freeburn J on 14 June 2023.  His Honour reserved his decision.
[45]	As it turned out, the unappealing outcome anticipated by his Honour on 4 May 2023 was the outcome which eventuated.  His Honour found himself unable to make a decision about the costs of the third party proceedings and reserved that issue, and the issue of the costs of Excel’s application for costs itself, to the trial judge: see Hestbay Pty Ltd v One Section Pty Ltd [2023] QSC 154, delivered 14 July 2023, and the transcript of the hearing of judgment delivery.
[46]	In giving his reasons for reserving the costs of the third party proceedings, his Honour said inter alia – 
(a)	The defendant’s claim against the third party had been discontinued, and from a practical perspective, the third party had been successful.
(b)	The defendant wished to argue that the third party ought to be deprived of part of its costs because of the manner in which it conducted its defence – that is, by “recycling” untenable claims made by the plaintiff.  However, his Honour was unable to assess the complaints about the manner in which the third party conducted its defence prior to a trial of the issues, let alone whether the third party’s conduct ought to affect its costs.
(c)	There was, at that time, “an unresolved controversy about the compressive strength of the concrete, and the causes of any shortfall in strength” but it was difficult for his Honour to assess whether the plaintiff was likely to succeed.  His Honour said ([48] – [49]) (my emphasis):
… it is difficult to assess whether the plaintiff is likely to succeed against the defendant, and on what basis.  And it is impossible to properly assess the nexus between the plaintiff’s claim and the third party claim.  Importantly it is impossible to assess whether it was reasonable for the defendant to join the third party in the absence of a hearing on the merits.  The only assessment that can be made is that the allegations that the plaintiff made at the outset were sufficiently broad to encompass a complaint about the quality of the concrete mix, which may have implicated the third party. 
The third party says that the plaintiff never alleged that the concrete mixture supplied by the third party was defective.  That much is true.  However, as explained, the plaintiff merely specified that the concrete slabs did not meet the specification of 32 MPa.  That allegation of a failure of an outcome was sufficiently broad to encompass the third party claim.  In any event, the trial judge’s findings about the facts, and particularly the cause, or causes, of any problems will be a factor relevant to the costs’ discretion.  
(d)	Thus, there were two important issues which could be properly assessed at the trial, namely, whether it was reasonable for the defendant to join the third party and the proper character of the defendant’s decision to seek the court’s leave to discontinue.  His Honour’s ability to make a proper assessment of those two broad issues was “impaired by an incomplete picture of the evidence”.
The positions of the parties 
Claim and counter claim
[47]	One Sector, sought orders that Hestbay – 
(a)	pay its costs of the claim and counter-claim on an indemnity basis after service of its Part 5 Chapter 9 offer, made on 20 September 2023;
(b)	pay its costs of the proceedings (excluding the counterclaim) from the outset of the proceeding on an indemnity basis.
[48]	Hestbay initially sought orders that it – 
(a)	pay One Sector’s costs of the claim – 
(i)	to be assessed on the standard basis, up to and including the day of service of the offer on 20 September 2023; and
(ii)	to be assessed on the indemnity basis from 21 September 2023.
(b)	pay One Sector’s costs of the counterclaim – 
(i)	to be assessed on the standard basis, up to and including the date of service of the offer on 20 September 2023; and 
(ii)	to be assessed on the indemnity basis from 21 September 2023.  
[49]	Additionally, in relation to the claim and counterclaim, Hestbay submitted that I ought to order that One Sector’s recoverable costs (pre and post offer) were to be – 
(a)	limited to 85% on the claim and 60% on the counterclaim, on account of the plaintiff’s relative success on some “events or issues”; and
(b)	limited to two counsel – not three.
The revised position of Hestbay on the claim and counterclaim
[50]	At the hearing of the costs argument, Hestbay accepted that, insofar as One Sector’s costs post-offer were concerned, it could not argue that they ought to be determined on an issues basis.  That concession was made by Mr Whitten for Hestbay upon his consideration of Ford v Nominal Defendant (No 2) [2023] 105 MVR 276 and Built Qld Pty Limited v Pro-Invest Australian Hospitality Opportunity (ST) Pty Ltd (No 2) (2023) 15 QR 142.
[51]	In Ford, Applegarth J said that there must be good reasons as to why rule 360 “Costs if offer by plaintiff” ought not to have its usual effect.  At [9] his Honour said, citing Shaw v Jarldorn (1999) 76 SASR 28 at [6], “Such a rule operates on the premise that if an offer is made by the plaintiff, the defendant will weigh up the advantages and disadvantages of not accepting the offer.  In doing so, the defendant must take into account the ordinary risks of litigation”.  In Built Qld v Pro-Invest at [28], the Court of Appeal said that where rule 360 or 361 (or, by extension, rule 361A) apply, “it will be more difficult for a party to show that a costs order which has regard to separate parts or questions in litigation is appropriate”.  
[52]	As it was put by Giles J in Bond Brewing New South Wales Ltd v Whitehouse Properties Pty Ltd [unreported, NSWSC 16 March 1990 at 22-23]: In this context, the point is not who won or lost on the issues – but whether there ought not to have been any litigation of the issues at all:
… By the scheme [in relation to offers of compromise], even if a plaintiff be completely successful on all issues, if the judgment he obtains is not more favourable than the defendant’s offer he should pay the defendant’s costs from the date of the offer.  By the scheme, even if the defendant be successful on most issues, if the judgment is no less favourable to the plaintiff than the plaintiff’s offer then the defendant should pay the plaintiff’s costs on a party and party basis to the date of the offer and on an indemnity basis from the date of the offer.
Generally, the point is not who won or lost on some issues, but that there should not have been litigation of the issues at all.  So in the present case: that Whitehouse may not have been successful on the majority of the issues in contention does not mean that Pt52 r17(4) should not apply, because the issues should not have been litigated at all after the making of the offer.  Of course, in some circumstances it might be unjust to require a party to pay the cost of litigating issues upon which it was successful, even in the face of an unaccepted offer … [But that was not so in the case considered by Giles J.]
[53]	I considered Mr Whitten’s concession an appropriate one.
[54]	Thus, the issues in contention for me on the claim were – 
(a)	whether One Sector was entitled to its pre-offer costs on an indemnity basis;
(b)	whether costs ought to be determined on an issues basis insofar as pre-offer costs were concerned; and
(c)	whether three counsel were warranted.
[55]	The issues in contention for me on the counterclaim were – 
(a)	whether costs pre-offer ought to be determined on an issues basis; and
(b)	whether three counsel were warranted.
Third party proceeding
[56]	There was no dispute that Excel was entitled to its costs.  The critical issue was whether they were payable by One Sector or by Hestbay.  A related issue was whether Hestbay ought to pay One Sector’s costs of the third party proceeding.
[57]	One Sector sought orders that – 
(a)	Hestbay pay One Sector’s costs of the third party proceeding, including Excel’s costs;
(b)	Excel and Hestbay pay its costs of the hearing on 14 July 2023 (before Freeburn J);
(c)	Excel’s recoverable costs excluded the cost of repleading its defence; and 
(d)	Excel pay One Sector’s costs, thrown away by the adjournment of Excel’s application for costs.
[58]	Excel’s primary position was that One Sector ought to pay its costs of the proceedings, including reserved costs, to be assessed on the standard basis; and that no special order was warranted in relation to the amendments to its defence or the hearing before Freeburn J on 14 June 2023.
[59]	Hestbay sought an order that One Sector pay Excel’s costs, including its reserved costs, on the standard basis.  I was unable to find Hestbay’s submissions about its own costs of the hearing on 14 June 2023, but I proceeded on the basis that it sought them.  
Indemnity costs prior to offer relating to the claim
[60]	In my discretion, I may order Hestbay to pay One Sector’s costs, on an indemnity basis, prior to One Sector making its offer.
One Sector’s submissions
[61]	One Sector submitted that whether I made such an order came down to my impression of the way in which Hestbay ran its case.  While One Sector could not say that there was an improper plea or that Hestbay brought a case it could not win, the case nevertheless fell into the relevant “special category” of cases warranting an order for indemnity costs.  It did so because Hestbay conducted its proceeding on an unreasonable basis.  One Sector relied upon the following – 
(a)	Before it commenced proceedings, Hestbay refused One Sector’s early offer to share, with Hestbay and its tenants, the costs of the application of a concrete surface hardener to the slab.  One Sector referred to my finding at trial that, at best for Hestbay, had it succeeded in its claim, I would have awarded damages by reference to the cost of applying a surface hardener to the whole of the slab; and submitted that the consequence of Hestbay’s refusing One Sector’s early offer was expensive litigation, which imposed upon One Sector a serious financial cost.
(b)	Without explanation, Hestbay abandoned reliance on its initial allegations about the concrete’s compressive strength, which relied upon the 2020 reports and tests.  Those reports suggested that the concrete was seriously understrength.  Later testing by CMT, which was relied upon by Hestbay at trial, suggested otherwise.  Hestbay commenced proceedings on a “fundamentally flawed” basis and maintained the case on that basis until the service of Dr Woolcock’s report on 19 October 2022.  Further, it maintained its original case in the face of One Sector’s identification of deficiencies in the expert evidence during One Sector’s unsuccessful application to strike out paragraphs of Hestbay’s further amended statement of claim: see Hestbay Pty Ltd v One Sector Pty Ltd [2022] QSC 25, Freeburn J, delivered 4 March 2022.  
(c)	One Sector “properly” (sic; promptly??) complained about Hestbay’s repeated amendment of its case and abandonment of the original expert reports; and gave Hestbay notice of its intention to seek indemnity costs.
(d)	There were deficiencies in Hestbay’s case – principally in the evidence of its expert Dr Woolcock and in its failure to prove the factual foundation for his opinions – cf Balmoral Group Ltd v Borealis (UK) Ltd [2006] EWHC 2531 (Comm) at [16].  
(e)	Although Hestbay alleged that the Stage 2 slab was not of the surface hardness or abrasion resistance required, no evidence was led about surface hardness or abrasion resistance even though one of Hestbay’s original experts, Structural Diagnostics, warned Hestbay that compressive strength tests did not assist in this regard and that an abrasion resistance test had to be undertaken.  
(f)	From 16 August 2021, Hestbay obstructed One Sector’s access to the site to do its own testing.  The matter of access was ultimately resolved by Freeburn J’s orders for access and inspection made on 8 June 2022.  But it took 10 months to resolve the issue because of Hestbay.
[62]	As to (f): In oral submissions, while One Sector complained about the time taken up by the issue of One Sector’s access to the site (the correspondence about it was voluminous); it accepted that it was difficult to argue the point beyond saying that: the effluxion of time reflected less than best practice; the matter was hotly contested; and Freeburn J ultimately made orders about it.  One Sector conceded that, if this was the last thing I was thinking about as justifying an order for indemnity costs, then it alone would not satisfy me that indemnity costs ought to be ordered.  
[63]	As to (b): Before Freeburn J, One Sector asserted that Hestbay relied upon “three obviously inadequate reports” which did not support its pleaded case; a few selected tests (10 out of 40 samples); and “untenable assumptions”.  One Sector contended that Hestbay failed to carry out any proper investigation or provide proper pleadings or particulars of the allegations it made.  One Sector complained that it was, in effect, impermissible for Hestbay to plead that the particulars it provided were the best it could then give and that it would provide further particulars of the defects after (among other things) the taking of additional samples and the provision of further expert reports.  Also, One Sector made numerous complaints about the way in which the rectification sought by Hestbay was pleaded.
[64]	None of One Sector’s arguments succeeded.  Freeburn J noted that there were “some curiosities with the testing” including that only 10 of the 40 samples taken were the subject of compressive strength testing.  But his Honour recognised that there might be explanations for the curiosities.  And regardless, the 10 samples failed to meet the contractual standard for compressive strength, which provided Hestbay with “a rational basis for concluding that the slab does not meet the contractual strength requirement”.  His Honour was not convinced by One Sector’s argument that the case was weak insofar as the compressive tests were concerned.  His Honour recognised as a “noble but unrealistic view” the contention that a pleading ought not to be based on the idea that improvements could be made in the future.  His Honour acknowledged that, while there must exist sufficient evidence to support the claims made by the plaintiff, refinements and even substantial amendments may be required.  His Honour considered it entirely conventional to expect that the then existing expert reports might be supplemented.  And the matter was still, at the time, in the pleading stage.  His Honour was unable to evaluate the adequacy of the expert reports in the absence of expert evidence to the contrary.  The test results were not challenged.  With respect to One Sector’s complaints about the way in which rectification/damages were pleaded, his Honour could not conclude that no reasonable case had been pleaded in that regard.  In my view, the submission that the proceedings were commenced on a fundamentally flawed basis was not supported by Freeburn J’s conclusions about One Sector’s application for strike out.  
[65]	As to (d): One Sector relied upon the fact Hestbay had Dr Woolcock’s report for about a year prior to trial but in the absence of proof of the factual foundations for Dr Woolcock’s opinions, Hestbay’s case was bound to fail.  (I dealt with the failure to prove the factual foundations for Dr Woolcock’s opinion in several places in my judgment, including at [19] – [23]; [365] – [371] and [423] – [426]).  I asked Mr Ambrose KC what I was to make of One Sector’s failure to object to Dr Woolcock’s evidence to the extent that his opinions were unsupported by proven facts.  Had that objection been taken, the trial would likely have looked very different.  Mr Ambrose KC submitted that the decision not to object was strategically not unreasonable.  Had an objection been taken, it might not have succeeded.  Hestbay might have persuaded me to allow it to obtain relevant evidence.  One Sector did not want to take that risk.  I accepted that One Sector was entitled to defend the case made against it as it saw fit, which included making a strategic decision to not object to Dr Woolcock’s evidence.  
[66]	Further as to (d): I considered the Balmoral case, to which One Sector (and Hestbay) referred.  It illustrated that the discretion to award costs is wide and is to be determined in the light of all of the circumstances of the case.  Balmoral lost is action against Borealis “badly”.  However, Balmoral’s claim was not considered frivolous, and the court was not persuaded that justice demanded that Balmoral’s “resounding defeat” should carry with it an award of indemnity costs.  But the deficiencies in Balmoral’s expert evidence were considered to fall into a different category.  It was not reasonable for the expert evidence to have been prepared and presented in the way it was, and the costs order ultimately made in favour of Borealis took this into account.  
Hestbay’s submissions 
[67]	Hestbay relied upon the well-known principles that, ordinarily, special circumstances are required to justify an order for indemnity costs and that, in general, a departure from an order that costs are to be paid on the standard basis is only warranted in an exceptional case.  Hestbay submitted that its conduct of the claim was not so unreasonable or infected by misconduct as to support an order for indemnity costs of the entire proceeding.  It acknowledged that whether conduct was considered unreasonable or not was a matter of judgment and impression, about which reasonable minds might differ.  It relied upon the distinction between a case run inadequately and one run unreasonably – referring to White Industries (Qld) Pty Ltd v Flower & Hart (a firm) (1998) 156 ALR 169.  It submitted that (at worst) its conduct fell into the former category.
[68]	The White Industries case provides a serious example of unreasonable conduct on the part of lawyers who failed in their duty to the court and were required to pay costs on an indemnity basis.  Hestbay relied upon it for its explanation of “unreasonableness”.
[69]	The parent company of Caboolture Park Shopping Centre was a long time client of Flower & Hart (“F&H”), solicitors.  Caboolture Park entered into a cost-plus contract with White Industries for the construction of a shopping centre.  After construction had been underway for some time, Caboolture Park decided that the cost was too high and well above what it expected to pay.  It did not want to pay any more money to White.  It knew that White was likely to sue it for millions owing under the contract.  It sought legal advice from F&H.  Essentially, it was told that its contractual position was weak and that it could not win if White were to bring a claim against it, but that it could achieve for itself a temporary bargaining stance or some breathing space if it were to bring an application against White first, claiming damages and other relief in relation to conduct said to be in breach of section 52 of the Trade Practices Act 1975 (Cth); or to constitute a fraudulent misrepresentation or negligent misstatement.  F&H told Caboolture Park that it could not win this litigation either, if put to the test.  
[70]	Caboolture Park commenced Federal Court proceedings on 23 December 1986, at which time F&H believed that, if the application went to trial and judgment, Caboolture Park would fail.  Caboolture Park’s case, which commenced on 31 August 1988, went badly.  Queen’s Counsel advised F&H (mid-trial) that Caboolture Park had no case and that the whole point of the application had been to provide “breathing space” for Caboolture Park.  Queen’s Counsel advised that to further pursue the application would be detrimental to Caboolture Park, financially and reputationally.  He recommended that Caboolture Park settle by way of payment of a significant sum to White.  It is enough to say that no settlement was reached; the allegations of fraud were not withdrawn; and Caboolture Park continued to pursue its application badly until a receiver was appointed to it on 17 August 1989.  On that date, its application was dismissed, with the trial judge stating: 
Having regard to the evidence of Caboolture Park’s own witnesses … I consider that Caboolture Park, properly advised, should have known before instituting its application or early in the lengthy process of amendment needed to torture the statement of claim into disclosing causes of action in fraud and under s 52 and to provide appropriate particulars, that it had no chance of successfully proving those causes of action.
[71]	When judgment was entered, Caboolture Park was in liquidation and White took no action to recover its costs from it.  Later, White sought its costs from F&H on an indemnity basis, arguing that it commenced and maintained Caboolture Park’s proceeding with the belief that Caboolture Park had substantially no prospects of success and for an ulterior purpose.  
[72]	Goldberg J found that Caboolture Park’s application was made to delay the payment of amounts owed by Caboolture Park under the contract.  The contention that White had made misrepresentations or misstatements was contrary to information provided by Caboolture Park to F&H.  The allegation of fraud was made without a factual basis.  Proceedings were not commenced to vindicate Caboolture Park’s rights but rather to stall White in its quest to be paid what it was due under the contract by striking the first blow.  Interlocutory steps were taken for “tactical” and delaying purposes – with counsel appreciating that Caboolture Park was anxious to make the matter as “difficult generally” as it could for White and to ensure that Caboolture Park’s application would not be brought on for trial quickly and separately from other related litigation.  F&H were ordered to pay White’s costs, on an indemnity basis.
[73]	The jurisdiction to award costs (under the Federal Court of Australia Act 1976 (Cth)) was discussed by Goldberg J from page 229 onwards.  The focus of his Honour’s discussion was upon the jurisdiction to award costs against solicitors to enforce the duties they owed to the court.  At page 231, his Honour considered whether the commencement or maintenance of proceedings with no substantial prospects of success enlivened the jurisdiction to order a solicitor to pay the costs of a party.  In this context, his Honour observed that there were “limitations on the proposition that commencing or maintaining proceedings which have no, or substantially no, prospects of success may result in a costs order being made against a practitioner”.  His Honour was of the view that something more was necessary, such as an ulterior purpose, an abuse of process or a serious dereliction of duty.  Other authorities, referred to by Goldberg J, emphasised that what was required was something more than the fact that litigation failed, or that the case was hopeless; or that there had been an error of judgment or the negligent exercise of judgment.  The jurisdiction was not invoked unless a solicitor conducted themselves unreasonably.  
[74]	Elaborating on what “unreasonably” meant, his Honour said at page 236:
… It is not clear what is encompassed by “unreasonably” initiating or continuing proceedings that have no or substantially no chance of success.  It seems to me that it involves some deliberate or conscious decision taken by reference to circumstances unrelated to the prospects of success with either a recognition that there is no chance of success but an intention to use the proceedings for an ulterior purpose or with a disregard of any proper consideration of the prospects of success.
[75]	For the same reasons as the jurisdiction was enlivened, and in the circumstances identified by Sheppard J in his “fifth principle” in Colgate-Palmolive Co v Cussons Pty Ltd (1993) 46 FCR 223-4; 118 ALR 248 at 257, F&H were required to pay White’s costs on an indemnity basis.  
[76]	The circumstances referred to in the fifth principle were – 
(a)	Making allegations of fraud, knowing them to be false;
(b)	Making irrelevant allegations of fraud;
(c)	Misconduct which causes a loss of time to the court and to other parties;
(d)	Commencing or continuing proceedings with an ulterior motive;
(e)	Commencing or continuing proceedings in wilful disregard of known facts or clearly established law;
(f)	Making allegations which ought never to have been made;
(g)	Unduly prolonging the case by groundless contentions; 
(h)	Imprudently refusing an offer to compromise’
(i)	Acting contemptuously.
[77]	Relying on the statement quoted above about the meaning of “unreasonably”, Hestbay submitted that it had brought its claim reasonably and succeeded on some points.  It might have conducted its case inadequately, but that was some distance away from the high threshold set by Caboolture Properties for unreasonableness.  Indeed, Hestbay’s conduct did not fall outside the “norm” for cases of this type.  It was not unusual for a construction-case plaintiff’s contentions to change upon the receipt of additional expert evidence.  Hestbay assumed its original experts were suitable experts who gave reliable evidence.  It was not until it engaged Dr Woolcock that it appreciated that there were problems with the initial reports.  Hestbay did not abandon its concrete strength allegations.  The substantive allegation – that the concrete was not as hard as contracted for – never changed.  Any deficiency in its case was an “every day” deficiency – including its failing to persuade me to accept the evidence of its expert, Dr Woolcock.  After its unsuccessful application for a strike out, One Sector did not ever put to Hestbay that its case was doomed to fail.  While Hestbay did not place much weight on it, it submitted that One Sector’s strategic failure to object to Dr Woolcock’s report was relevant.  Hestbay also referred to the Balmoral decision to make the point about just how seriously unreasonable a party’s litigious conduct had to be to warrant an order for indemnity costs.  
[78]	Hestbay’s pre-action conduct (in refusing One Sector’s offer to tip in money to add a densifier to the slab) was not unreasonable because Hestbay did not know what was wrong with the slab at that point in time.  Also, the email evidence did not go so far as to prove that Mr Ray offered to share the costs of coating the whole of the slab with a densifier with Hestbay and its tenants.  Nor could Hestbay accept the offer when the tenants were involved in it too.  
[79]	Its refusing site access was irrelevant to this issue.  And in any event, Hestbay had not been unreasonable given that it had to consider its tenants, who had rights under their leases.  
Conclusion: The costs pre-offer relating to the claim are to be paid by Hestbay on the standard basis.
[80]	In my view, Hestbay conducted its case inadequately but not to the standard of unreasonableness required for an order that it pay One Sector’s costs of the whole proceeding on an indemnity basis.  
[81]	Criticisms may certainly be made of the evidential inadequacies of Hestbay’s case, and it might even be said that it “lost badly”.  However, I do not find that Hestbay commenced or maintained the proceedings for any purpose unrelated to its prospects of success.  Indeed, it seemed to me that Hestbay was very confident of its position, but did not have a solid grasp of the evidence or a well thought through case theory, as my judgment reveals.  Among other things, it misunderstood what it had to prove to render Dr Woolcock’s opinion about the cause of the slab’s alleged deficiency of any persuasive weight.  And it failed to prove that any alleged deficiency in the slab led to the loss and damage it claimed.  But in my view, Hestbay’s evidential and factual errors and misunderstandings reflected inadequacy rather than unreasonableness.  Further, it could not fairly be said that Hestbay ought to have anticipated, prior to trial, that I would prefer Dr Khan (for the defendant) over Dr Woolcock on other critical issues, such as whether it was permissible to count-back from the slab’s current compressive strength to estimate its compressive strength at an earlier time.  
[82]	As to the other matters relied upon by One Sector – 
(a)	on the evidence before me at this costs’ hearing, no firm offer was put by Mr Ray to Hestbay to resolve things prior to the commencement of proceedings (see, e.g. footnote 6 above);
(b)	One Sector’s application for strike out did not succeed;
(c)	Hestbay’s initial reliance on its 2020 experts was reasonable and its change to its pleadings in the light of Dr Woolcock’s report was understandable;
(d)	I have considered the voluminous correspondence about One Sector’s access to the site to conduct its own testing.  While it is regrettable that the issue took up so much time, I do not consider anything in Hestbay’s conduct in that regard – taken alone, or in combination with anything else – to warrant an order for indemnity costs.  
[83]	I will allow rule 361A to take effect in accordance with its terms.  
Costs on an issues basis?
[84]	In arguing for costs on an issues basis, Hestbay submitted inter alia (and uncontroversially) that the touchstone of the general rule, that costs follow the event, is “fairness”.  
[85]	It referred to James & Ors v Surf Road Nominees Pt Limited & Ors (No 2) [2005] NSWCA 296 for its statements of principle, and discussion of the relevant authorities, about the circumstances in which a court might order costs on an issues basis.  This decision assisted me by setting out the relevant considerations but, as will emerge, its application did not help Hestbay.  Omitting citations, the Court of Appeal of New South Wales said (my emphasis):
[32]	[In accordance with the rules concerning costs] … an unsuccessful party may be ordered to pay the entirety of the costs of the successful party, even though the successful party did not succeed on all issues.  However, as is specified by the rule itself, the Court is entitled to make a different order.  That may occur where there are multiple issues involved.  This was the subject of comment in Waters v P C Henderson (Aust) Pty Limited … where Mahoney JA said:
		“Where the proceedings involve multiple issues the application of the rule that costs follow the event may involve hardship where a party succeeds on some issues and fails on others.  Particularly is this so where, for example, a defendant succeeds on issues that occupied the bulk of the time taken by the proceedings.  Nevertheless, unless a particular issue or groups of issues is clearly dominant or separable, it will ordinarily be appropriate to award the costs of the proceedings to the successful party without attempting to differentiate between those particular issues on which it was successful and those on which it failed.”
[33]	Similarly, Toohey J made the following observations in Hughes v Western Australian Cricket Association …
		“1	Ordinarily, costs follow the event and a successful 	litigant receives his costs in the absence of special 	circumstances justifying some other order.
		2	Where a litigant has succeeded only upon a portion of 	his claim, the circumstances may make it reasonable that he 	bear the expense of litigating that portion upon which he has 	failed.
		3	A successful party who has failed on certain issues 	may not only be deprived of the costs of those issues but may 	be ordered as well to pay the party’s costs of them.  In this 	sense, “issue” does not mean a precise issue in the technical 	pleading sense but any disputed question of fact or of law.”
[34]	Where a matter involves multiple issues and the question before the court is whether it should make some other order as to costs other than the order that costs follow the event, a distinction is commonly drawn between cases which involve clearly discrete issues for determination, and those in which all issues are inseparable, or at least sufficiently linked, with respect to the overall disposition of a particular matter … 
[35]	In Madden v Connell … Hamilton J referred to there being a “rule” that where there are “discrete issues and the time taken on each issue at the hearing can be identified or realistically estimated”, an order for costs may be made against the party which fails on such issues, or alternatively, that party may be deprived of its costs for that portion of the matter.  In the Court’s opinion it is preferable not to speak in terms of “rules”.  However, the underlying approach to the “rule” stated by his Honour may be an available approach to the exercise of the court’s discretion as to costs in a particular case, depending upon all of the circumstances.
[36]	Where the court does exercise its discretion to apportion costs, the apportionment itself involves the exercise of discretion.  As Gummow, French and Hill JJ recognised in Dodds Family Investments v Lane Industries Pty Ltd …:
		“Where there is a mixed outcome in proceedings, the 	question of apportionment is very much a matter of 	discretion for the trial judge.  Mathematical precision is 	illusory and the exercise of the discretion will often depend 	upon matters of impression and evaluation.”  
[86]	Referring to Speets Investments Pty Ltd v Bencol Pty Ltd (No 2) [2021] QCA 39, Hestbay submitted that where there are multiple issues which are determined in different directions as between the parties, a court might form an overall impression having regard to the significance of the issues, the way they were determined, and the amount of time and cost spent on them, and order one party to pay a proportion of another party’s costs as a way to reflect fairly the parties’ comparative success or failure in the outcome which was obtained.  It urged me to do so in this case.  
Claim
[87]	In writing, Hestbay claimed success in relation to the following findings made by me at trial which were in its favour and upon which it relied for an issues-based approach to costs:
(a)	The contract terms for Stage 2 included those contained in AS4902-200 and the Tender Letter of 23 May 2015.
(b)	The Stage 2 contract terms did not include One Sector’s Commercial Contract terms and conditions.
(c)	The Stage 2 slab degraded, cracked and dusted to an extent beyond that which would be expected with normal wear and tear. 
(d)	It was more probable than not that the slab was not quite 32 MPa 28 days after the pour, as required under the Stage 2 contract.
[88]	It submitted that the time it took me to resolve an issue, as reflected in my judgment, provided a sense of the time it took the parties to prepare for the issue, even though it might be thought that the issue did not occupy “great slabs of time” at trial.  
[89]	I will deal immediately with the issue referred to in (c) above, although the plaintiff ultimately did not appear to rely on it for its argument that costs ought to be awarded on an issues basis.  While it is accurate to state that I summarised my factual finding about the degradation et cetera as set out in (c) above – see paragraph [611](f) of the judgment – I made it plain in the body of my judgment that: 
(a)	I found it difficult to make confident findings of fact about the state of the Stage 2 slab and the extent or seriousness of its deterioration, cracking, and dusting: e g. [11].  
(b)	The best evidence about the state of the slab was inconsistent: e.g. [13].  
(c)	Nevertheless, given that the real factual issue was what caused deterioration in the slab (its deficient construction or the tenants’ hard-wheeled vehicles), I was prepared to proceed on the basis that it was damaged beyond that which would be expected with ordinary wear and tear, had it been traversed by pneumatic-tyred vehicles only: e.g. [14].  
In my view, it could not be said that the plaintiff “succeeded” on this issue.  Rather, I took a pragmatic approach to its determination to the benefit of the plaintiff.  
[90]	Hestbay submitted that the contract’s terms ((a) and (b) above); whether there was a requirement for the concrete to be at 32 MPa at 28 days after its pour; and whether the slab had achieved that requirement ((d) above) were significant, separate and distinct issues in the overall context of the dispute between the parties.  It submitted that it would be fair to reduce by 15% the costs payable to One Sector by Hestbay to reflect One Sector’s losses on these issues. 
[91]	In his oral submissions, Mr Whitten for Hestbay acknowledged that my resolution of the issue about the contract’s terms was not wholly informed by Hestbay’s submissions to me about it.  I relied upon matters which were not mentioned by Hestbay (or by One Sector), such as the omission of the superintendent from the AS4902 contract for Stage 2 (see [312]); and I did not accept the evidence of Hestbay’s witness on this point (see [313] – [316]).  However, Hestbay relied upon the fact that One Sector had maintained for some time that its commercial contract prevailed, referring me to One Sector’s pleadings.  
[92]	In its oral submissions, Hestbay did not press for apportionment on the basis of its success in relation to issue (d) above.  And it submitted that, although it contended for a reduction of 15 per cent in its written submissions, I might consider a reduction in costs somewhere between 5 and 15 per cent as appropriate.  
[93]	In response to Hestbay’s argument that One Sector’s costs ought to be limited to 85% of its claim, One Sector submitted that limiting costs on an issues basis was not warranted because Hestbay’s claim was entirely dismissed.  A defendant ought not to be discouraged from raising all appropriate grounds of defence out of fear that it might not succeed on all of them.  The “issues” upon which Hestbay “succeeded” fell within the ordinary vicissitudes of litigation and did not warrant a reduction in the costs payable to One Sector.  One Sector did not act in bad faith, or litigate an irrelevant or collateral matter, such as might warrant a special costs order: cf AGL Sales (Qld) Pty Ltd v Dawson Sales Pty Ltd (No 2) [2009] QSC 75 at [18].  The issue of the contract’s terms had to be litigated, particularly with respect to the counterclaim.  Further, One Sector guarded against a finding that the AS4902-200 contract applied by making an offer to settle.  
[94]	Although Hestbay did not press its position in relation to (d) above, One Sector submitted that the relevant finding was to the effect that Hestbay failed to demonstrate anything more than limited non-compliance with the contractual term at an inconsequential point in time.  In a real sense, One Sector succeeded on this issue.  Nor was it sensible to divide the expert evidence, which was directed to whether the slab achieved 32MPa and when, into different issues.  
Conclusion: There is to be no apportionment of costs (pre-offer) in relation to the claim.
[95]	In the exercise of my discretion, I will not order a reduction of the costs of the claim payable by Hestbay to One Sector to reflect the issue upon which Hestbay succeeded which was pressed – namely, the issue of the governing contract.  That issue was not dominant or determinative.  While One Sector’s arguments about the contract it said applied were not at all strong, and while it too overlooked relevant matters (like the omission of a named Superintendent from the AS contract sent by Mr Ray to Mr Hutchins for Stage ), its conduct concerning this issue was not such as to deprive it of costs in relation to it.  Hestbay’s win on this issue, but loss on the substantive issue, fell within the ordinary vicissitudes of litigation.
[96]	Hestbay’s “wins” reflected in my finding that the contract did require the slab to be of 32 MPa at 28 days after pour, and my finding that it was not quite of that strength at that time were not decisive wins.  Nor were they separatable.  Those findings were part and parcel of my findings on the significant issues, on which Hestbay lost. 
Counterclaim
[97]	Hestbay argued that there were four issues raised by the counter-claim, namely: (1) whether One Sector’s commercial contract applied (rather than AS4902); and whether One Sector could make variation claims in relation to (2) Q-Leave, (3) piling and piering, and (4) the extra height of the western rock boundary wall.
[98]	Hestbay submitted that One Sector only succeeded in relation to (2) and (3) and that therefore a 40 per cent reduction of One Sector’s costs reflected the time spent on issues upon which the defendant did not succeed. 
[99]	In response, One Sector submitted that limiting costs on an issues basis was not warranted because the matter upon which it did not succeed (the rock wall) took up very little time at trial and because the contractual issue had to be litigated.

Conclusion: There is to be no apportionment of costs (pre-offer) in relation to the counterclaim.
[100]	I have dealt with the contract issue above.  It could not be said that the rock wall issue assumed any particular significance at trial.  Nor did it take up much time.  In my view, there is no reasonable basis for apportioning the costs of the counterclaim. 
Two counsel limitation
[101]	In response to Hestbay’s argument that One Sector’s costs ought to be limited to the costs of two counsel, One Sector submitted that the question for me was whether “a reasonable and prudent litigant acting with ordinary prudence” would have retained three counsel (or “ventured into court” without them), referring to Sundell v Queensland Housing Commission (1954) 94 CLR 531 at 535.  It referred me to the authoritative text, Dal Pont, Law of Costs, at pages 676 to 684.  At [17.77], after noting that there is no exhaustive list of features which justify the retainer of more than one counsel, the author set out matters which courts have found to be influential in this context.  Relevantly they included:
(a)	the volume of material to be handled;
(b)	the nature or extent of the cross-examination required;
(c)	the anticipated length of the case;
(d)	the complexity or difficulty of the issues of fact or law to be undertaken;
(e)	the level of court at which the matter is heard;
(f)	the importance of the outcome to the parties – in terms of its value and significance.
[102]	One Sector submitted that the matter involved complex and difficult matters of fact and law, warranting the engagement of three counsel.  Further, the outcome was very significant for One Sector including because of its desire to protect its reputation.  Thus, it was reasonable and prudent for One Sector to engage three counsel.
[103]	One Sector explained that its silk had been retained for the purposes of the trial only and its two juniors undertook all of the work prior to trial, including preparing witness statements and liaising with experts.  This was done to save costs.  (The detail of the arrangement is set out in the affidavit of Tara O’Connell, affirmed on 19 November 2024).  One Sector submitted that because the juniors had the background knowledge, it was not unreasonable to have them both at the bar table, to provide direct instructions to the silk.  Also, having three counsel saved One Sector’s senior solicitors from appearing in the court at Brisbane.  The three barristers – especially Mr Ambrose KC and Dr Greinke – divided the issues between themselves and did not “double up” by being in court when they were not cross-examining.  Nor did they double up in their conferences with witnesses – in that only the barrister leading the relevant expert was present for pre-trial conferences with the expert.  
[104]	Hestbay submitted that the present matter was not so complex as to warrant three counsel and I ought to limit One Sector’s recoverable costs to the costs of two counsel.  It contrasted the present case with the complex cases in which three counsel had been considered reasonably necessary and appropriate such as Australand Corporation (Qld) Pty Ltd v Johnson & Ors [2007] QSC 128; and Civil Mining & Construction Pty Ltd v Wiggins Island Coal Export Terminal Pty Ltd [2017] QSC 85.  
[105]	Hestbay was represented by a senior junior and a junior.  Hestbay submitted, in effect,  that there was no reason why two counsel could not have done for One Sector what three counsel did for One Sector.  One Sector only had to cross-examine one engineering expert, whereas Hestbay had to cross-examine three engineering (or engineering-adjacent) experts, plus Mr Ray, who had technical expertise.  Hestbay called lay witnesses, which One Sector had to cross-examine, but their cross-examination was focused.  One Sector’s submission that briefing three counsel was necessary because their solicitors were in Sydney was not persuasive.  There were plenty of Brisbane-based solicitors with appropriate expertise whom it could have engaged.  The costs consequences of its choosing interstate solicitors ought not to be sheeted home to Hestbay.  Hestbay further noted that One Sector’s “profligacy” in the use of three counsel extended to their use in this costs’ argument and submitted that that was clearly neither reasonably necessary nor appropriate.  
Conclusion:  The costs payable by Hestbay are limited to the costs of two counsel.
[106]	In reaching a decision on this issue, I considered Sundell and noted the ways in which the relevant test was expressed in that case, including the need for something “wholly special and peculiar” or “extraordinarily complicated and difficult” about the case to warrant three counsel.  I also noted the observations in Sundell to the effect that only one percent of cases warranted three counsel and that while a court might accept that it was very prudent for the successful party to have engaged three counsel, that did not mean that the unsuccessful party was liable for the costs of three counsel.  I took into account the age of the Sundell decision; the discussion in Dal Pont, and the detail of the other matters to which I was referred in which the costs of three counsel were recoverable.  I asked myself whether One Sector’s three counsel were reasonably necessary and appropriate in the present case.
[107]	From the point of view of recoverable costs, in my view, this case did not warrant the engagement of three counsel by One Sector.  It did not involve difficult or numerous matters of law.  Nor did it involve conceptually difficult matters of fact.  
[108]	With respect to the law: the only evidential principle genuinely engaged in the case was the basic rule of expert evidence that, to render an expert’s opinion admissible (or, if no objection is taken to it, to render an expert’s opinion of weight), the factual assumptions upon which the opinion is based must be proven by admissible evidence.  That principle is not at all complex.  Nor was there argument about it between the parties (although I discussed it in submissions with Mr Whitten for Hestbay).  Nor was the “last shot” doctrine, the only other matter of law which received attention, difficult to understand. 
[109]	With respect to the facts – 
(a)	The resolution of the issue of the applicable contract required a careful study of the relevant documents against the background of the evidence of Mr Hutchins and Mr Ray (to the extent that I accepted it).  Ultimately, its resolution came down to the evidence of Mr Ray (including in response to my questions – see e.g. [320] and [333]) and my independent analysis of the relevant documents.  My analysis was “independent” in the sense that I was not assisted by the work of either party in conducting it (see generally [280] – [350]).  
(b)	Identifying whether the slab was in fact deficient and, if so, how and why, required a thorough and careful analysis of the competing expert evidence and of the authoritative technical sources upon which their evidence was based.
(c)	Determining whether any deficiency in the slab caused any loss or damage required a search for evidence of any causal link.
[110]	While a laborious analysis of the voluminous facts, the expert evidence and the authoritative technical sources was required in this case, the analysis was not conceptually difficult.  While the documentary material was voluminous, its volume was not out of the ordinary for matters of this kind.  While technical cross-examination of the engineers was required, the subject matter of that cross-examination was not extraordinarily complex or difficult.  While the case went for several days, it did not move at a pressured pace.  
[111]	I acknowledge that the damages sought were significant and that there were reputational issues at stake.  But as to those reputational issues, the matter was always unlikely to attract media attention and did not in fact attract media attention.  Nor did “saving” One Sector’s reputation require great technical legal skill on the part of One Sector’s lawyers.  It required a workmanlike approach to the analysis of evidence; and a discernment as to whether there was evidence of the critical elements of the cause of action – that is, a breach of a contractual obligation and whether it was causative of damage. 
[112]	I have no doubt that junior counsel assisted the silk and senior junior engaged by One Sector, but my impression of the trial was that cross-examination of each witnesses required individual preparation by the One Sector counsel assigned to deal with that witness.  Similarly, my impression was that the divided issues were considered individually by the counsel who made submissions about them to me.  But the issues themselves were not so large or complex or difficult as to say they were too much for one counsel, particularly one counsel assisted by a junior.
[113]	Insofar as the costs of One Sector’s counsel are concerned, the costs payable by Hestbay will be limited to the costs of two counsel.  

Submissions in relation to the costs of the third party claim
Generally 
[114]	Excel referred me first to rules 307(1) and (2); and 681(1), which left me to make the order for its costs I considered appropriate.
[115]	It sought an order that One Sector pay its costs, whether or not Hestbay was found to be ultimately responsible for them, referring to the decision of Ryan J in Swisstex Finance Pty Ltd v Lamb [1993] 2 Qd R 463 at 465, which followed Goff LJ in Johnson v Ribbins [1977] 1 All ER 806 at 810-811, which it submitted provided a useful starting point.
[116]	Swisstex sued Mr and Mrs Lamb.  On 4 October 1985, the Lambs joined Eastern Motor Corporation Pty Ltd (receiver and manager appointed) as third party.  On 9 October 1985, on the defendants’ notice of motion, Mr Armstrong was appointed as the receiver ad litem of the third party.  On 20 February 1990, the Lambs told their lawyers that they had no further use for Mr Armstrong and they had no objection to his release.  Nor did the plaintiff have an objection to his release.  On 26 June 1991, a liquidator was appointed to the plaintiff in pursuance of a special resolution that the plaintiff be wound up voluntarily.  Mr Armstrong was released on 30 October 1992.  No steps were taken by Swissstex against the defendants and they were entitled to their costs.  No steps were taken by the defendants to prosecute the third party action.  
[117]	In relation to the third party’s costs, Ryan J said at 465 (citations omitted, my emphasis):
… The third party is entitled to an order that the defendant pay its costs of and incidental to the proceedings, including its costs relating to the application for appointment of the receiver ad litem.  Though I was not referred to any authorities on the matter, I consider that I should follow the statement of Goff LJ in Johnson v Ribbins … that “the court should … normally order the defendant, though successful in the action, to pay the costs of the third party if he also be successful.  Then, if in the circumstances of the case, those costs ought fairly to be borne by the plaintiff, the court will further order that they be added to the defendant’s costs of the action as against the plaintiff”.  His Lordship then … added that “it cannot be right to deprive a third party of an order for costs to which he is otherwise entitled against the defendant, because the defendant when looking to the plaintiff for reimbursement finds a person not worth powder and shot”.  
Those remarks seem to me to be applicable here.  The third party is entitled to an order for costs against the defendant.  It is not to be deprived of the benefit of such an order by an order that the impecunious plaintiff pay the third party costs directly.
[118]	Excel relied upon the statement in bold above that normally a defendant is ordered to pay a third party’s costs.  Acknowledging that there was no “hard and fast” rule, Excel submitted that there was nothing in the facts of the case before me which warranted an order that the defendant not pay its costs.  Further, any delay in Excel recovering its costs would be particularly unfair because it had been out of pocket for years, without any entitlement to interest.  The quickest and cleanest route was an order that the defendant pay its costs.  Whether its costs were passed on to the plaintiff or not was not something which concerned Excel.  
[119]	Excel’s position was, in effect, that One Sector had acted in haste and unreasonably in joining it and had to “surrender” once it obtained clarification of Hestbay’s allegations about the cement mix supplied. 
[120]	With respect to the reasonableness of One Sector’s conduct, it was not suggested that Excel’s entitlement to costs against One Sector was displaced by a conclusion that One Sector had acted reasonably in joining Excel (cf Burke v Gillett [1996] 1 VR 196 at 200) but Excel’s position, that One Sector had not acted reasonably, was also relevant to whether One Sector or Hestbay ought to be liable for its costs.  
[121]	Excel submitted that One Sector sued Excel on a basis not alleged by Hestbay (that is, unreasonably).  Hestbay’s pleading did not criticise the concrete mix supplied.  Nor did the 2020 reports or tests say anything about the quality of the concrete supplied.  The submission by One Sector (see below) that it was reasonable for it to infer that it was alleged by Hestbay that there was an issue with the concrete supplied because of the shortfall in strength alleged was not supported by evidence.  Nor did it have intuitive appeal.  The concrete’s strength was not solely dependent on the strength of the concrete mix delivered by Excel.  Its strength was affected by how much water was added onsite during its pour by One Sector; how it was installed or trowelled; and how long it was left to cure.  If the pleading was ambiguous to One Sector, then the reasonable thing for One Sector to do was simply to ask the plaintiff whether it was alleging that there was something wrong with the concrete supplied.  Had it asked, the answer would have been no.  Nor did One Sector get its own advice before joining the third party.  It apparently spoke to Dr Khan (one of its trial experts) before discontinuing.  It should have spoken to him before joining Excel.  Bearing in mind One Sector’s own limitation period, it had six months to do so.  Mr Ray’s assertion that he was an experienced concreter (see below) told me nothing.  Indeed, it cut both ways.  An experienced concreter would have identified a problem with the concrete mix supplied, if there was a problem with it.  Mr Ray made no complaint about the mix supplied by Excel, which suggested that he thought it was fine: not the opposite. 
[122]	On the issue of One Sector’s “surrender”, Excel referred me to Fairfield Services Pty Ltd (in liq) v Leggett [2020] 5 QR 50, in which Bond J, as his Honour then was, set out the considerations which influence the exercise of the discretion to award costs in a case where one party withdraws from the prosecution of a proceeding by discontinuing without any hearing on the merits.  His Honour differentiated between cases in which one party effectively surrendered to the other and those in which some supervening event or settlement so removed or modified the subject of the dispute that no issue remained between the parties except that of costs.  His Honour said that surrender or capitulation will usually provide a strong reason to award costs against the party who has surrendered or capitulated.  His Honour emphasised that each case depended on its own facts, but it may be relevant to consider the reasonableness of the conduct of the parties and the reason for the discontinuance, viewed objectively.  
[123]	As to why One Sector discontinued against Excel, and whether it could be said to have surrendered to it, Excel noted that there was no sworn evidence before me about the reason for discontinuance, nor for joinder for that matter.  Excel submitted that the absence of sworn evidence did not assist the defendant.  (I will deal here with One Sector’s reply to this argument.  It was, essentially, that when it suited any party, it made submissions based on inference, not evidence.  That was certainly how it appeared to me.)
[124]	Excel submitted that practical considerations and procedural efficiency favoured an order that One Sector rather than Hestbay pay its costs.  Such an order would – 
(a)	allow Excel’s relatively discrete costs to be assessed more quickly and less expensively than would be the case if they were assessed as part of the broader costs assessment involving both the primary and the third party proceedings; and
(b)	allow Excel to enforce its costs entitlement quickly, by cashing the $185,000 bank guarantee given by One Sector in settlement of Excel’s application for security for costs.  
If liability for Excel’s costs were shifted to the plaintiff, then Excel would be deprived of the agreed-upon bargain, and enforcement of its costs would be more protracted.
[125]	One Sector submitted that Hestbay should pay Excel’s costs (either directly, or by way of a “pass on” order) because Hestbay had “caused the litigation” and ought to pay “all costs reasonably incurred by the successful party in connection with the litigation” – referring to relevant authorities, including Lombard Insurance Co (Australia) Ltd v Pastro (1994) 175 LSJS 448 at [4].  In that case, it was said that where the nature of the plaintiff’s claims, or the allegations in support thereof, render it reasonable for the defendant to bring in the third party, and the third party claim is unsuccessful solely by reason of the failure of the plaintiff to sustain its claim or the relevant allegations, the defendant should ordinarily recover from the plaintiff the costs of the third party claim, including those which the defendant is ordered to pay the third party.  I note however that it has been said that Lombard expressed the position too emphatically (see e.g. Jagot J in Australian Competition and Consumer Commission v NSW Ports Operations Hold Co Pty Ltd (No 2) [2021] FCA 1040 at [16], in which her Honour said that the only principles are that (1) costs ordinarily follow the event including that a respondent must pay the cross-respondent’s costs of an unsuccessful cross-claim and (2) the interests of justice may require a different costs order, depending on the relationship between the main claim and the cross-claim.)
[126]	In writing, One Sector submitted:
[43]	The Court should find that it was the initial allegations of Hestbay which made it necessary for One Sector to join Excel as a third party, and its abandonment of these allegations was the catalyst for One Sector discontinuing its claims against Excel.  Had those original allegations remained, such that One Sector could not safely discontinue against Excel, the dismissal of Hestbay’s claim would lead to the same outcome as to those third party costs.  One Sector has, reasonably, mitigated Hestbay’s exposure to those third party costs by discontinuing in a timely fashion after the amendments to the statement of claim and abandonment of the original expert reports.
[44]	In these circumstances, the principled exercise of discretion is that Excel’s costs “ought fairly to be borne” by Hestbay [citing Johnson v Ribbins [1977] 1 WLR 1458 at 1464].  
[127]	One Sector submitted that, given his experience and confidence in his workmanship, it was reasonable for Mr Ray to infer that the reason for the seriously understrength concrete alleged by Hestbay had something to do with the concrete supplied by Excel.  One Sector acted on its instructions from Mr Ray that deficiencies in the slab could not have been due to his building techniques.  So, it was Hestbay’s allegation of seriously understrength concrete which was the catalyst for the joinder of Excel.  The results of the testing by Griffith University suggested that there was some issue with the concrete supplied by Excel because it was significantly weaker than it should have been.  The Edge report contended that the strength and quality of the concrete rendered it unfit for purpose and claimed there was a need to replace the whole slab.  The issue between One Sector and Excel was not a “private issue” (as that expression is used in relevant authorities).  Once One Sector received Dr Woolcock’s report and appreciated that there was no issue about the quality of the concrete supplied, it notified Excel to wind down because it was intending to discontinue after further investigations.  It could not be said that One Sector surrendered to Excel.  It was Hestbay’s abandonment of its original case by service of Dr Woolcock’s report which triggered discontinuance.  One Sector acted in a timely and reasonable way in giving notice to Excel on 9 February 2023 to reduce its involvement in the matter, and on 20 February 2023, that it did not require Excel to take an active part in case management.  
[128]	Hestbay’s primary position was that it was not reasonable for One Sector to have joined Excel as third party and that, for that reason, it would not be just to order Hestbay to pay Excel’s costs or any other costs of the third party proceeding.
[129]	Additionally, relying upon Gould v Vaggelas [1985] 157 CLR 215 at 229 – 230, GEC Marconi Systems Pty Ltd (t/a Easams Australia) v BHP Information Technology Pty Ltd v Ors 201 ALR 55 at [69] – [75] and Gold Coast Bakeries Queensland Pty Ltd v Heat and Control Pty Ltd [1992] 1 Qd R 162 at 173 – 175, Hestbay submitted that, even if I were to conclude that it was reasonable for One Sector to have joined Excel, that was not enough to warrant an order that Hestbay pay One Sector.  Something more was required which made it “fair” to impose liability for Excel’s costs upon Hestbay and that something was not present here.  
[130]	Gibbs CJ said in Gould (footnotes and citations omitted, my emphasis):
The third question for decision is whether the Full Court was right in setting aside an order made by Connolly J whose effect was that the unsuccessful defendants to the counterclaim … should pay to the plaintiffs by counterclaim … the costs ordered to be paid by them to the successful defendants.  It is sometimes said that the court may make an order of that kind – a Bullock order – where it was reasonable in all the circumstances for the plaintiff to bring the action against two or more defendants … In my respectful opinion, however, the mere fact that the joinder of two defendants was reasonable does not mean that the unsuccessful defendant should be ordered to pay, directly or indirectly, the costs of the successful defendant.  Obviously, a judge should make a Bullock order only if he considers it just that the costs of the successful defendant should be borne by the unsuccessful defendant, and, if nothing that the unsuccessful defendant has said or done has led the plaintiff to sue the other defendant, who ultimately was not held liable, it is difficult to see any reason why the unsuccessful defendant should be required to pay for the plaintiff’s error or overcaution.  
… In my respectful opinion, the true position was clearly stated by Blackburn CJ in Steppke v National Capital Development Commission, when he said that “there is a condition for the making of a Bullock order, in addition to the question whether the suing of the successful defendant was reasonable, namely that the conduct of the unsuccessful defendant has been such as to make it fair to impose some liability on it for the costs of the successful defendant”.
[131]	In GEC Marconi, Finn J said that the ultimate question is whether, in the circumstances, the costs of the successful third party “ought fairly to be borne” by the unsuccessful applicant.  “The circumstances” included whether it might be said that the joining of the third party was an inevitable consequence of the plaintiff’s action; or whether the allegations made by the plaintiff rendered it reasonable for the defendant to join the third party or provided the catalyst for the joinder of the third party.  
[132]	The Court of Appeal in Gold Coast Bakeries stated that the award of third party costs is entirely within the discretion of the court and noted that the authorities provided examples of factors which have been taken into account in the exercise of that discretion.  In Gold Coast Bakeries itself, relevant factors were that the third party proceedings involved private issues and that the third party had not been necessarily joined because of the nature of the plaintiff’s claim.  The Court referred to Edington v Clark [1964] 1 QB 367, Thomas v Times Book Co Ltd; Cox (Third Party) and Cleverdon (Fourth Party) [1966] 1 WLR 911 and Klawansky v Premier Petroleum Co Ltd [1911] WN 94 for that proposition.
[133]	In Edington, the plaintiff was a squatter.  The defendants were tenants of the freeholders, who dispossessed the plaintiff.  The plaintiff sued the tenants for trespass.  The defendants joined as third parties the freeholders of the property, to whom the plaintiff had written twice, years before the alleged trespass, offering to buy the property from them.  The issue at trial was whether the plaintiff’s letters constituted an acknowledgment of the freeholders’ title to the land.  The Court of Appeal confirmed the decision of the primary judge that they did.  The Court also held that the primary judge had jurisdiction to order the plaintiff to pay the third parties’ costs (the primary judge held that he had no such jurisdiction).  The Court said that it was “abundantly clear that the real and only fight was between the plaintiff as the alleged owner by adverse possession and the true owners, the third parties”, which would have made it appropriate for the court to order the plaintiff to pay the third parties’ costs, had such an order been sought on appeal.  
[134]	The “Thomas” in Thomas v Times Book Co Ltd; Cox and Cleverdon was the widow of the poet Dylan Thomas.  Before his death, Dylan Thomas lost the original manuscript to his play, “Under Milkwood”.  He thought he’d left it in a public house or in a taxi.  He told Cleverdon, the producer of a broadcast production of the play, that if he found it, he could keep it.  Cleverdon found the manuscript and kept it.  After Dylan Thomas’s death, he sold it to Cox who sold it to the defendant.  When Dylan Thomas’ widow learnt that the original manuscript was in existence, she sued the defendant for it, claiming that it had not been gifted to Cleverdon.  The defendant joined Cox and Cleverdon as third and fourth parties.  The plaintiff’s action failed and she was ordered to pay the costs of the third and fourth parties.  Such an order was appropriate because the plaintiff’s claim rendered the third and fourth party proceedings inevitable.  It was clear that the real issue was whether Dylan Thomas had made a gift of the manuscript to Cleverdon.
[135]	Without much elaboration, in Klawansky it was held that, considering the facts, “justice demanded” the imposition upon the plaintiff of an order requiring him to pay the costs of the fourth, but not the third, party.
[136]	Hestbay submitted that its pleading did not render the third party proceedings inevitable.  One Sector’s decision to join Excel was in no way related to the allegations Hestbay made on the strength of its early evidence.  One Sector’s decision to join Excel was immaterial to the plaintiff and solely for the benefit of the defendant.  One Sector commenced and continued the third party litigation on the basis of its own belief that the concrete supplied by Excel was in some way deficient.  Hestbay had not ever alleged that One Sector sourced concrete of an inadequate strength; nor did it criticise the MPa of the concrete mix supplied by Excel.  The failures alleged in the early expert evidence were construction failures – such as poor placement, compaction, finishing or curing.  One Sector ought not to have understood the pleading as including any assertion that it had not obtained N32 concrete from Excel.  The connection between the third party claim and the plaintiff’s claim was limited.  The fact that Hestbay’s allegations about the concrete’s strength changed did not matter.  The “nub” of its case had always been that the defendant failed to properly construct the slab.  Just because Mr Ray took the view that there were no issues with his construction method was not something which ought to weigh heavily in my decision about whether One Sector’s joining Excel was reasonable.  One Sector surrendered its position to the third party upon discontinuance of the third party claim.  
Conclusion: One Sector – not Hestbay – is liable for the costs of the third party proceeding.
[137]	Paragraph 21 of the original statement of claim asserted (grammatic errors as per original):
In breach of the Defendant’s obligations under the Contract, as pleaded in paragraphs 8(b) – to (g) and 17 above:
(a)	the Internal Concrete Slabs constructed by the Defendant did not 	meet the Concrete Specifications in the following respects:
	(i)	it did not have a thickness equal to or greater than 175 mm 		across the entire area of the slab;
	(ii)	it had a maximum compressive strength of 29.1 MPa;
	(iii)	it otherwise had varied compressive strength across the slab, 		with an average compressive strength of 23.35 MPa; and
	(iv)	it had cover to reinforcement ranging from 30 mm to 80 mm.
(b)	The Defendant did not carry out the Works using proper and 	tradesman like workmanship;
(c) 	The Defendant did not carry out the Works with due skill, care and 	diligence;
(d)	The Defendant did not complete the Works so that they were fit 	for purpose.  
[138]	Five “Concrete Specifications” were listed in paragraph 16, namely – 
(a)	slab thickness of 175 mm
(b)	SL 92 fabric top
(c)	Maximum water/cement ratio not greater than 0.65
(d)	Grade N32 concrete
(e)	30 mm cover to reinforcement. 
[139]	As discussed above, Grade N32 concrete is a concrete mix which will, if properly laid and cured, achieve a strength of 32 MPa 28 days after its pour.  
[140]	I note the phrase in 21(a), “The Internal Concrete Slabs constructed by the Defendant” (my emphasis); and the matters listed in 21(b), (c) and (d), which allege deficiencies in One Sector’s workmanship.
[141]	On one view, there is a disconnect between the “Concrete Specifications” as defined in paragraph 16 and the ways in which the slab was said not to conform to them in paragraph 21(a)(ii) and (iii).  The specifications as defined referred to “Grade N32 concrete” yet the complaint was about the strength the concrete achieved.  In other words, it was not alleged that the slab did not meet the “Concrete Specifications” by One Sector’s failure to use Grade N32 concrete.  There was no other specification (as defined in the statement of claim) which referred to concrete strength.  
[142]	I note that by clause 28 of the contract between Hestbay and One Sector, One Sector was obliged to supply everything necessary for the proper performance of its obligations, and by clause 29, One Sector was obliged to provide suitable new materials.  But the statement of claim does not suggest that anything supplied or provided by One Sector, such as the concrete mix used in the slab, was deficient.
[143]	Although the pleading was imperfect and ambiguous, read as a whole, on balance, in my view, the reasonable interpretation of it was that it alleged deficiencies in One Sector’s construction methods in failing to use the N32 concrete mix supplied to achieve a slab of 32 MPa.  In my view, on balance, it was not reasonable to interpret it as alleging an issue about the concrete mix supplied by Excel.  Nor, in my view, was it reasonable to interpret anything in the 2020 reports and tests as raising any concerns about the concrete supplied by Excel.
[144]	One Sector did not step me through – by way of evidence or in submissions – the way in which it said it in fact came to the view that the original statement of claim included an allegation that there was a deficiency in the concrete mix supplied by Excel.  Instead, One Sector relied upon the outcome of Griffith University’s testing; emphasised Mr Ray’s skills and experience and his position that there was no way One Sector’s construction method was deficient; and invited me to infer that it was reasonable for One Sector to infer that there had to be something wrong with the concrete supplied. 
[145]	Mr Ray may well have been so confident in his ability as to think it impossible that he (or his business) could have constructed a defective slab – but that was what Hestbay’s litigation was all about.  He may well have been prepared to take Excel on about the quality of the concrete supplied – given his confidence in his workmanship – but in my view, that was not an inevitable consequence of the allegations made by Hestbay.  
[146]	At best for One Sector, the original statement of claim may be thought to be ambiguous, but if One Sector found it so, I agree with Excel that the reasonable thing for One Sector to have done before suing Excel was to simply ask Hestbay what it was intending to allege about the concrete mix supplied by Excel.  
[147]	In my view, it cannot be said that Hestbay’s statement of claim was, reasonably, the catalyst for the third party proceeding such as to fairly render Hestbay liable for Excel’s costs.
[148]	I find that One Sector acted unreasonably in joining Excel without at least clarifying Hestbay’s position, if not also obtaining independent expert evidence.  Once it received the clarification which it could have easily obtained before joining Excel, it sought leave to discontinue against it, and in that sense “surrendered”.  One Sector is therefore liable to pay Excel’s costs.  
[149]	Even if it was reasonable for One Sector to have joined Excel when it did, and discontinued against it when it did, I find nothing in Hestbay’s conduct which rendered it just to order Hestbay to pay Excel’s costs nor One Sector’s costs of the third party proceeding.

Costs in relation to the amended defence are to be determined by the costs assessor.
[150]	On 17 February 2022, One Sector wrote to Excel, outlining alleged deficiencies in its defence.  On 18 February 2022, Excel filed an amended defence, which responded to One Sector’s complaints and abandoned some of its allegations.  
[151]	One Sector submitted that I should make an order that Excel’s recoverable costs should exclude the costs of its repleading its defence, referring to rules 386 and 692.
[152]	Rule 386(1) states: “The costs thrown away as a result of an amendment made under rule 378 [that is, amendments made before a request for trial date, which may be made without leave] are to be paid by the party making the amendment unless the court orders otherwise”.  Rule 692(2) states: “A party who amends a document must pay the costs thrown away by the amendment unless the court orders otherwise”.  
[153]	On the issue of its amended defence and the costs thrown away by the amendment, Excel noted that – 
(a)	the amendments were limited/minor;
(b)	the defendant did not plead to Excel’s defence, meaning that the costs thrown away were limited to a consideration of the two sentences that were omitted;
(c)	there was, in any event, no need for a specific order for payment of costs thrown away as a result of an amendment.  Such a course would defeat the purpose of rule 386 (see below).
[154]	Excel’s position that the defendant’s costs were dealt with by the rules and did not require a specific order was the position taken by Bond J (as his Honour then was) in Goomborian Transport Pty Ltd v Hanson and Ors [2018] QSC 182 at [48].
[155]	Further, as to whether Excel ought to be deprived of its costs of preparing the amended defence, Excel referred me again to rule 386 and noted that an earlier version of the rules provided that the amending party was to bear the costs “of and resulting from” the amendment.  The reason for the amendment was explained in the Explanatory Notes to the relevant bill – that is, to give clarity to the position that the amending party is to pay (only) the costs thrown away.  There was no presumption in the rules that the amending party was to bear its own costs of the amendment. 
[156]	Excel argued that because the bulk of the amendment comprised particulars which had been sought by One Sector, One Sector could “hardly be heard to say that it should not pay the costs incurred by the successful defendant [that is, Excel] in responding to the defendant’s request for particulars” – whether those particulars were provided separately, or (as here) by way of an amended pleading, which was an efficient and convenient course for Excel to take.
[157]	Excel submitted that an argument by One Sector that Excel’s costs were not necessary or proper could be taken up with the costs assessor – referring to Daubney J’s comments about the role of the costs assessor and the role of a judge in Virgtel Ltd & Anor v Zabusky & Ors [2012] QSC 42 at [13] – [15].  In short, his Honour made the point that it was not the proper role of a judge to act as a costs’ assessor – who was required to undertake their assessment in accordance with the process provided by, and in accordance with, the relevant rules. 
[158]	For the reasons given by Daubney J, and having regard to the relevant rules, I will make no separate order about the costs of the amended defence – leaving that to the UCPR and the costs assessor. 
There will be no separate order in relation to the costs of the hearing on 14 June 2023 insofar as it concerns Excel.  
One Sector is to pay Hestbay’s costs of that hearing (on the standard basis)
[159]	Relying on rule 681, One Sector submitted that Excel and Hestbay ought to pay its costs of and incidental to the application heard by Freeburn J on 14 June 2023 (on the standard basis) because One Sector prevailed against the opposition of the other parties – in that the question of costs was reserved to me.  
[160]	Excel submitted that One Sector ought not to recover its costs of the hearing on 14 June 2023, because there was no “event” on that date.  His Honour said that the general rule that costs followed the event was not engaged – because there had been no event between the plaintiff and the defendant or the defendant and the third party.  The only event his Honour could have had in mind in relation to the defendant and Excel was the outcome of the “fight” over whether the defendant paid its costs.  The hearing was not simply about whether that argument ought to be heard by Freeburn J or at the end of the trial.  Excel submitted that the costs of 14 June 2023 should form part of the broader order for the costs of the proceeding.  
[161]	Alternatively, if I were to order that Hestbay and Excel were to pay One Sector’s costs of the hearing, then this should be limited to 50 per cent of the costs including because the issue could and should have been dealt with on the papers – as his Honour proposed.  The defendant insisted upon an oral hearing, which increased costs.  Also, the defendant did not need to be represented by two counsel at the hearing; and the key submissions made by the defendant had been proven to be incorrect. 
[162]	One Sector submitted that the issue before Freeburn J was whether a costs order should be made immediately in favour of Excel or whether the issue of Excel’s costs ought to be postponed until judgment of the claims of Hestbay and One Sector.  One Sector did not oppose an order granting costs to Excel – rather just the timing of the making of such an order.  Excel failed in having its costs determined by Freeburn J.  One Sector succeeded – this was the event.  Nor was there any proper basis for a reduction in One Sector’s costs given that the oral hearing was directed by Freeburn J, which was appropriate to address the case law and complex history of the litigation and expert reports.  
[163]	In my view, it was an overstatement to suggest that the litigation had a complex history.  Nor were the 2020 reports and tests complex.  Nor was the relevant part of Dr Woolcock’s report complex.  Further, this submission by One Sector has simply ignored Freeburn J’s obvious preference for an on the paper’s hearing, because of his concern that he might have to reserve costs to the trial judge (as he ultimately did), and that it was One Sector who pushed for an oral one.  Nor does this submission recognise that One Sector wished to argue about Hestbay’s liability for Excel’s costs at this hearing if it came to it.  One Sector submitted that the plaintiff had no interest in the outcome of the application – yet turned up and argued against One Sector; taking the same position as Excel.  This submission does not truly represent what occurred.  I have already stated my view that Hestbay was required to attend the hearing on 14 June 2023 because One Sector intended to seek an order against it as an alternative if his Honour were to order it to pay Excel’s costs that day.  
[164]	In my view, there was no “event” at the end of the hearing on 14 June 2023 upon which One Sector might be said to have succeeded which warranted an order that the other parties pay its costs.  The substantive arguments made then by the parties were (with some modifications) made again before me.  
[165]	I have already concluded that One Sector – not Hestbay – is responsible for Excel’s costs.  That should include the costs of the hearing on 14 June 2023 which were reserved.  
[166]	In the exercise of my discretion, I will not make a separate order about the hearing on 14 June 2023 insofar as it concerns Excel.
[167]	In the exercise of my discretion, I will order One Sector to pay Hestbay’s costs of the hearing of 14 June 2023 given the circumstances which rendered it necessary for Hestbay to attend.