Caltex Petroleum Pty Ltd v Charben Haulage Pty Ltd

REASONS FOR JUDGMENT - COSTS 1 These reasons concern the costs of two related appeals from a judgment of Wilcox J by Caltex Petroleum Pty Ltd ("Caltex") and Environmental & Earth Sciences Pty Ltd ("EES") in which, subject to some exceptions mentioned below, each appeal was successful. The reasons for judgment were delivered on 22 December 2005 and no order for costs was made. The appeals raised interrelated issues and were heard together over a period of six days. The parties were subsequently directed to file submissions in relation to costs. It is appropriate that the question of costs be determined having regard to the fact that there was a joint hearing of both appeals. 2 Caltex was successful in its appeal and the judgment below in favour of Charben Haulage Pty Ltd ("Charben") was set aside. The Full Court ordered that in lieu of orders below, the proceedings be dismissed as against Caltex and that the Caltex cross-claim as against EES be dismissed. 3 The parties were directed to file and serve short submissions on costs. The last written submission on costs was filed by Charben in reply on 3 April 2006. On 21 April 2006, a letter was sent to the Court indicating that an administrator had been appointed to Charben under the Corporations Act 2001 (Cth). Under the cover of that letter of 21 April 2006, the solicitors for Caltex enclosed a draft copy of proposed short minutes of order in relation to costs. 4 It is well settled that the Court has a broad discretion to award costs pursuant to s. 43(2) of the Federal Court Act 1976 (Cth), and that the discretion must be exercised judicially in light of the decisions which indicate the way in which the discretion should be approached. The general rule is that costs follow the event and that a successful litigant is entitled to a costs order in the absence of special circumstances justifying some other order. It is within the discretion of the trial judge to award only a proportion of the successful party's costs if the conduct of the party in the trial unreasonably prolongs proceedings. Usually the circumstances in which the successful party is denied part of its costs relates to the conduct of the proceedings. 5 Of relevance in relation to the present case are the observations of Goldberg J in Dr Martens Australia Pty Ltd v Figgins Holdings Pty Ltd (No.2) [2000] FCA 602 at [54]: 'A Court should be reluctant to embrace the proposition that, as a general rule, it is appropriate to undertake an enquiry as to who was successful in relation to particular issues in a case to determine whether there should be an apportionment of costs against a successful party. A court should not be too ready to disallow costs simply because a party has failed upon an issue, unless it is a quite separate and distinct issue from the issues in respect of which it succeeded, or unless there be some element of unreasonableness or inappropriate conduct in relation to that issue.' 6 EES seeks costs from Charben on the general principle. As against Charben, EES contends that as the successful party, it should receive all the costs of its appeal because costs should follow the outcome. It also says that it should have the costs of the proceedings below. 7 Charben submits that in relation to the EES appeal that extended over six days in total, EES should be ordered to pay Charben's costs of the first part of the hearing during the period of 14 February 2005 to 17 February 2005. Charben also contends it should be indemnified against costs it may be liable to pay Caltex for these hearing days. The basis for this is said to be that the Notice of Appeal and the written submissions of EES were manifestly unsatisfactory. Also Charben points out that Notice of Appeal was in many respects incomprehensible, and the written and oral submissions addressing the grounds of appeal were not only of little assistance to the Court but were confused and lacked focus. As a consequence, after four days of hearing the proceedings, the Court adjourned the proceedings and took the exceptional course of making special directions requiring the proper formulation and preparation of a second Notice of Appeal that outlined the grounds of appeal in a succinct and clear fashion. The Court also directed that the written submissions of EES be reformulated to specifically and succinctly address these new grounds of appeal. In making those directions, the Court observed that insufficient attention had been paid by the appellant to the proper and concise formulation of the appeal, and that the written and oral submissions had ranged over matters not raised in the Notice of Appeal or the pleadings. As a consequence, EES recast its Notice of Appeal and written submissions. Because of these manifest deficiencies in the conduct of the appeal, a substantial amount of hearing time was wasted. Charben also points out that EES failed to comply with a number of directions as to the preparation of the Appeal Books. A significant proportion of the material in the fifteen volumes of Appeal Books proved to be irrelevant. 8 On 19 July 2005, an application was made by Charben to strike out the reformulated Notice of Appeal and the Amended Submissions on the ground that they did not comply with the directions given by the Court. This application was dismissed, and the matter proceeded with a further two days of hearing on 10 and 11 August 2005. The Court notes and has taken into account that on 1 February 2005, EES moved to vacate the hearing date by Notice of Motion and that this application was dismissed on 4 February 2005. 9 The orders proposed by Charben on the EES appeal are on the basis that one and one half days of total hearing time was lost by the Court having to engage in fruitless exchanges with EES in an endeavour to understand the live issues. Charben claim that EES should pay Charben's costs thrown away in the preparation of its original submissions in answer to the inadequate initial written submissions of EES which were later required to be reformulated. Charben also contend that the appeal costs of EES should be reduced by an appropriate proportion to reflect the additional expense and delay occasioned by the way EES conducted the appeal. It proposes that there be a 50 percent reduction, and that EES should pay Charben for the costs related to the reformulated Notice of Appeal and costs of the Notice of Motion to strike out this later Notice of Appeal. 10 In our view, having regard to the circumstances outlined, it is not appropriate in the present case to descend into detailed analysis of the individual issues and endeavour to award costs in respect of each. Nevertheless, we consider that while EES should be awarded the costs of the appeal, a substantial reduction - although not a 50 percent reduction - should be made as a consequence of the way the appeal was prosecuted and conducted. We consider that Charben should be ordered to pay eighty percent of the costs of the appeal incurred by EES. The order of the court is therefore that Charben pay 80 percent of EES's costs on the appeal and that Charben pay the costs of EES in the proceedings below. 11 On the Caltex appeal, it is common ground that Caltex was successful and should have its costs. However, it is submitted by EES that there should be some variation to this position. 12 Caltex contends that having been successful on the appeal, Charben should pay the costs of the proceedings in the court below subject to an allowance in respect of Caltex's cross-claim. Caltex also submits that Charben pay Caltex's costs of proceedings on the appeal for the first four days of the hearing up to and including 17 February 2005, and that thereafter EES should pay the costs of its proceedings in the Full Court and Caltex's costs of the EES costs appeal. 13 These orders are said to be appropriate on the basis that having regard to the matters referred to above in relation to the EES prosecution of its appeal, the hearing days after the first four days should be attributable to EES. Having considered the history of the matter and the circumstances referred to above, the Court considers that subject to Caltex paying Charben's costs of the Caltex cross-claim in the proceedings below, Charben should pay Caltex's costs of the proceedings below. In relation to the appeal, and taking into account the conduct of EES, Charben should pay eighty percent of Caltex's costs and EES should pay twenty percent of those costs. 14 In relation to the cross-appeal by EES against Caltex which was abandoned, EES should pay Caltex's costs of that cross-appeal. 15 Charben should pay the costs of EES and Caltex on this application.