Australia Pacific LNG Pty Ltd v Santos Toga Pty Ltd

King & Wood Mallesons for the respondent plaintiffs

• [1] For the reasons given in the judgment delivered on 27 March 2025,[1] I ordered parts of the plaintiffs' second further amended statement of claim be struck out and granted leave to replead. I further directed that the plaintiffs should file a third further amended statement of claim addressing other pleading issues identified in the reasons for judgment.
• [2] When judgment was delivered, I directed that the parties file written submissions addressing the costs of the defendants' application and any other consequential orders that should be made. Those submissions have now been filed. Two issues remain to be resolved. The first is the costs of the defendants' application. The second is whether directions for the filing of an amended defence should be made at this stage.

• [3] Pursuant to r 681(1) of the Uniform Civil Procedure Rules 1999 (Qld) (UCPR), the general rule is that costs of a proceeding, including an application in a proceeding, are in the discretion of the court but follow the event unless the court orders otherwise.
• [4] In Courtney v Chalfen, the Court of Appeal summarised the principles which govern the exercise of the discretion to order costs as follows:[2]

"[4] The general rule is that costs follow the event and that should only be departed upon in the event of special or exceptional circumstances. The underlying rationale of that approach is that costs are not awarded to punish an unsuccessful party, but as a means of indemnifying the successful party.

[5] This Court has endorsed the principles that: (i) ordinarily costs follow the event; (ii) costs can be awarded under r 684 UCPR on discrete issues if they are definable and severable and they occupied a substantial proportion of the trial or hearing; (iii) there must be special or exceptional circumstances to warrant depriving a successful party of its costs; and (iv) the mere fact that the successful party has been unsuccessful on some issues will ordinarily not be sufficient to do so."

• [5] The defendants seek an order that the plaintiffs' pay their costs of the application to be assessed on the standard basis. They submit they enjoyed substantial success on the application. Although they did not obtain all the relief they sought and did not succeed on every argument they advanced, they succeeded in establishing that the second further amended statement of claim was deficient and required amendment. They submit it was necessary for them to bring the application because they raised complaints about deficiencies in the second further amended statement of claim in two letters sent pursuant to r 444 of the UCPR and the plaintiffs refused to make any further amendments.
• [6] The plaintiffs submit that the appropriate order is that the costs of the application be the defendants' costs in the cause. Such an order would properly account for the relative success of the parties on the application having regard to aspects of the defendants' arguments which were not accepted. Further, the plaintiffs submit that the application and its outcome should be characterised as an aspect of the management of the case through the interlocutory stages. They argue that the defendants should not have their costs of such a step if they lose the case, especially if the plaintiffs succeed on their failure to provide information case which was the basis of the information asymmetry argument on the application.

• [7] The costs order the plaintiffs seek, and the submission they advance in support of that position - that the application and its outcome should be regarded as part of the case management of the proceeding - would, if accepted, mean the defendants will only recover their costs of the application if they succeed at trial. In substance, the plaintiffs seek to have the defendants' entitlement to the costs of the application determined by the outcome of the substantive issues in dispute in the proceeding. This would amount to a departure from the general rule set out in r 681(1) that the costs of an application in a proceeding should follow the event (that is, the outcome of the application) unless the court orders otherwise. I am not persuaded that it is appropriate to depart from the general rule in the way the plaintiffs propose. That is because the plaintiffs' characterisation of the outcome of the application as an aspect of case management ignores the extent of the defendants' success on the issues that were argued on the application.
• [8] The defendants' enjoyed substantial success on an application which they were required to bring after the plaintiffs refused the invitation to address complaints made about the second further amended statement of claim in the two r 444 letters. They should be compensated for having had to bring the application to obtain the success that they did. That conclusion is not altered by the fact that not all the complaints raised in the r 444 letters, and not all the arguments the defendants advanced on the application, were ultimately accepted. The order the plaintiffs seek would not properly reflect the parties' comparative successes and failures in the outcome of the application.
• [9] I have considered whether, based on an overall impression of the significance of the various issues argued on the application and the way they were determined, I should order that the plaintiffs pay only a proportion of the defendants' costs.[3] Ultimately, I have concluded that the fact the defendants did not succeed on every issue does not provide a sufficient basis to deprive them of part of their costs of the application.
• [10] Accordingly, I will make the costs order which the defendants seek in respect of the application. There is no dispute that an order should also be made requiring the plaintiffs to pay the defendants' costs thrown away as a result of the plaintiffs' further amendments with those costs not to be assessed or recovered until after the proceeding ends: see UCPR r 386.

• [11] It is common ground between the parties that I should make a direction requiring the plaintiffs to file and serve a third further amended statement of claim by 6 June 2025. That is the date which the plaintiffs' proposed, taking into account the availability of their legal representatives (including counsel) to prepare and settle the necessary amendments.
• [12] The plaintiffs submit that directions should also be made which fix the time for filing an amended defence and an amended reply. They propose the amended defence be filed within 28 days from service of the third amended statement of claim and a further 28 days for the filing of an amended reply. They submit this timetable is appropriate in circumstances where the proceeding has been on foot for over two years, a defence has already been filed and the reasons for judgment on the strike out application means that the amendments should not come as a surprise to the defendants.
• [13] The defendants oppose any direction fixing a time for filing an amended defence being made at this stage. They submit that until they see the third amended statement of claim they cannot say how long it will take them to plead in response. In circumstances where the plaintiffs seek more than two months to file the third amended statement of claim, the defendants argue that a period of 28 days to file an amended defence is likely to be insufficient. As to the time the proceeding has been on foot, the defendants emphasise that although the plaintiffs commenced the proceeding over two years ago, they did not serve the defendants for a period of almost 12 months.
• [14] I will make directions now which fix the time for filing an amended defence and an amended reply. The period of 28 days which the plaintiffs propose for filing the amended defence seems unreasonable in circumstances where, at their own request, they will be afforded more than two months to file the third amended statement of claim. I will fix the date for filing and serving the amended defence at 6 August 2025, two months after the third further amended statement of claim is to be filed and served. If, upon reviewing the third further amended statement of claim, the defendants consider that two months is not sufficient for them to plead in response to the amendments they can seek a variation of the direction to extend the time. I will fix the date for filing and service of an amended reply at 3 September 2025, being 28 days after filing and service of the amended defence.

• [15] For the reasons set out above, the orders I make are:
  1. The plaintiffs are to pay the defendants' costs of and incidental to the defendants' application filed on 21 October 2024 to be assessed on the standard basis if not agreed.
  2. By 4:00pm on 6 June 2025, the plaintiffs are to file and serve a third further amended statement of claim.
  3. By 4:00pm on 6 August 2025, the defendants are to file and serve an amended defence.
  4. By 4:00pm on 3 September 2025, the plaintiffs are to file and serve an amended reply.
  5. The plaintiffs are to pay the defendants' costs thrown away by reason of any amendment made pursuant to order 2 of these orders, to be assessed on the standard basis if not agreed, such costs to be neither assessed nor recovered until the proceeding ends.
  6. There be liberty to apply.

[1] Australia Pacific LNG Pty Ltd v Santos Toga Pty Ltd [2025] QSC 49.

[2] [2021] QCA 25, [4]-[5] (citations omitted).

[3] Speets Investment Pty Ltd v Bencol Pty Ltd (No 2) [2021] QCA 39, [17].