AED Oil Limited & Anor v Puffin FPSO Limited

2 A further application is made by AED Oil and AED Services to amend the Court's reasons.

3 Rule 64.24(1) of the Supreme Court (General Civil Procedure) Rules 2005 gives the Court of Appeal discretion to make "such order for the whole or any part of the costs of an appeal as it thinks fit". The settled rule is that in the absence of special circumstances, a successful litigant should receive its costs;[1] a rule which also applies to appeals.[2] Unless there are special circumstances, on a successful appeal, the successful litigant will be entitled not only to its costs of the appeal, but also its costs of the proceeding below.[3]

4 On 5 March 2010, the Court granted the stay application sought by AED Oil and AED Services and reserved the question of costs in order to permit the parties to make submissions as to the order which should be made.

5 The consequence of the orders made by the Court is that AED Oil and AED Services were wholly successful in their appeal and the dispute the subject of the proceedings below is now to be determined by arbitration. Accordingly, AED Oil submitted, all of the costs incurred in the proceeding below by it from 2 October 2009 or, alternatively, 9 October 2009 were unnecessarily incurred and have been wasted as a result of Puffin pressing that proceeding.

6 At a directions hearing before the trial judge on 2 October 2009, AED Oil foreshadowed that it intended to make an application for a stay and submitted that an order for the filing of a defence to Puffin's counterclaim should not be made in the circumstances. This was opposed by Puffin and orders were made on 2 October 2009 for AED Oil to file and serve a defence to counterclaim and a date was set for the stay application. From 2 October 2009 to 1 December 2009, when the stay application was dismissed by the trial judge, AED Oil submitted that it incurred costs in preparing a defence to counterclaim and considering a further amended counterclaim served by Puffin on 13 November 2009. Further directions hearings were held before the trial judge on 3 December 2009 and there were further directions hearings, mentions and procedural steps taken until March 2010. AED Services was also a party arguing for the stay in the proceeding below.

7 Puffin concedes that it should pay the costs of the appeal and of the application for a stay in the proceeding below. It contends, however, that such an order should be made in favour of only one of the appellants. In support of this submission, Puffin says that AED Services is a wholly owned subsidiary of AED Oil and that the critical figure in both companies is the same individual. Consequently, it says that the interests of the AED parties were, both below and on appeal, relevantly identical. Both sought the stay of the proceeding and then to overturn the decision below refusing the stay. Further, it says that the arguments of the two AED parties in favour of that result were relevantly the same.

8 Puffin also submitted that the fact that there are different shareholders of each of the AED parties is not a sufficient justification for each of them to be separately represented and for each of them to seek an order for costs in its favour. It says that one argument raised by Puffin against AED Oil in relation to waiver was not open to be argued by AED Services, but that this was not a sufficient reason for separate representation by separate large firms of solicitors and separate teams of senior and junior counsel.

9 Having regard to the nature of the proceeding and the arguments put on behalf of the applicants, AED Oil and AED Services, the Court is of the opinion that separate representation, both by different law firms and different teams of senior and junior counsel was reasonable and appropriate in the circumstances.

10 Consequently, the Court is of the opinion that the application for costs by the applicants should be acceded to, but in the form of the orders sought by AED Oil which are appropriate in the particular circumstances of this matter. In relation to the costs of the proceeding below, the critical date is, in the Court's view, 2 October. In this respect, there is no reason to make a separate costs order in more general or other form in favour of AED Services as it relevantly had the same involvement as AED Oil in the proceeding below.

11 Both AED Oil and AED Services sought clarification in respect of the first sentence of paragraph 4 of the Court's reasons for judgment which stated: "AED Services terminated the charter contract in mid-2008 as a result of a sharp decline in production from the oil field". The parties all agree that a correction should be made. In the Court's view, and consistently with the agreement of the parties, the appropriate correction is that this sentence should read: "Puffin alleges that AED Services terminated the charter contract in mid-2009 as a result of a sharp decline in production for the oil field".

12 For these reasons, the Court makes orders as follows:

(1) The respondent pay the first and second appellants' costs of -

(b) the proceeding below (but subject to paragraph (2) of these orders) from the date that AED Oil foreshadowed its application for a stay of the proceedings on 2 October 2009 on a party/party basis.

(2) The costs of AED Oil's injunction proceedings below be reserved pending the final determination of the claims the subject of the Court's injunction at arbitration.

(3) The respondent be granted a certificate under the Appeal Costs Act 1998 in respect of the costs of the appeal.

[1] Oshlack v Richmond River Council [1998] HCA 11; (1998) 193 CLR 72 at 97 (McHugh J) and 120-1 (Kirby J).

[2] Jamal v Secretary Department of Health (1998) 14 NSWLR 252 at 271.

[3] Solomon v Miller (1865) 2 WW & A'B (E) 135; and Nikolaou v Papasavas, Phillips & Co (1989) 82 ALR 174.