Clarence City Council v Commonwealth of Australia

1. In each proceeding, the applicant pay the second respondent's costs of the proceeding, including the costs of the second respondent's cross-claim against the first respondent. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011

O'CALLAGHAN J: 1 On 13 December 2022, I made orders dismissing both proceedings. See Clarence City Council v Commonwealth of Australia [2022] FCA 1492 (Judgment). 2 The issue of costs now arises. The parties agreed that the issue may be decided on the papers. 3 The Commonwealth seeks no order for costs. The only issue that arises is in respect of the costs as between the councils and the lessees in respect of both the claims brought by the councils' and the lessees' cross-claims. 4 The councils submit that they should pay two-thirds of the costs of the lessees in each proceeding because: (1) The issues of standing, justiciable controversy and matter, as demonstrated by the reasoning of the Full Court of the Federal Court and the High Court, were readily identifiable as separate issues upon which the lessees failed; (2) The lessees were unsuccessful in their contention that cl 26.2(a) of the leases only created an obligation to use reasonable endeavours to enter into an agreement with the respective council; (3) The lessees failed in respect of their accord and satisfaction cross-claims against the Commonwealth; and (4) In the Launceston proceeding, the lessees failed in their estoppel cross-claim against the Commonwealth. 5 The one-third carve out was said to be appropriate because it reflected an apportionment by reference to the number of pages of transcript occupied by each relevant issue. 6 The lessees in both proceedings submit that there should be no carve out. 7 They point to the fact that an order was made that the councils' claims for relief in respect of the construction and application of the leases be dismissed, because the "trading operations" to which cl 26.2(a)(ii) of the leases referred were "objectively speaking, intended to refer to trading operations which do not involve the provision of relevant aeronautical services and facilities" and which were instead "contestable" (Judgment at [223]); that the areas identified in the councils' pleading were not areas on which "trading or financial operations" were undertaken within the meaning of cl 26.2(a)(ii) to the extent that those areas identified parts of the Airport Sites on which aeronautical services and facilities are provided (Judgment at [245]-[246]); and that, contrary to the councils' contention, the lessees were not required by cl 26.2(a) to make payments in accordance with the valuations of the Airport Site made by the Valuer- General (Judgment at [278], [280]-[281], [286], [288], [291]-[292]). 8 The lessees submitted that "[e]ach of those findings reflected an acceptance of the submissions advanced by [them] in defence of the [c]ouncil's claim, and a concomitant rejection of the [c]ouncil's case. For the purposes of awarding costs, the 'event' is therefore properly characterised as [the lessees'] success in defeating the claim for relief brought against it by the [c]ouncil[s]". 9 They submitted that it is irrelevant for costs purposes that they failed in respect of the matters identified at [4] above. As the lessees submitted, I have previously accepted their argument that the cross-claims against the Commonwealth was at all times advanced solely to support its defence to the councils' claims. Accordingly, the cross-claims ought not be treated as separate events and warrants no reduction in costs. See Clarence City Council v Commonwealth of Australia [2019] FCA 1721 at [7]-[16]. 10 The lessees further submitted, correctly in my view, that the decision in Hobart International Airport Pty Ltd v Clarence City Council [2022] HCA 5; (2022) 96 ALJR 234 does not warrant any reduction in costs. This is because the lessees relied upon the same matters in support of their contentions as to the discretion to grant relief, in circumstances where findings in favour of the lessees vis-à-vis the proper construction of the leases meant that discretion was not enlivened. 11 In my view, there is no sufficient basis for making an order of the type contended for by the councils. The overarching issue in the proceedings was the proper construction of cl 26.2(a) of the leases. None of the other matters identified at [4] were clearly dominant or separable so as to warrant an apportionment of costs (cf Bostik Australia Pty Ltd v Liddiard (No 2) [2009] NSWCA 304 at [38] (Beazley, Ipp and Basten JJA)); nor could those issues be said to have substantially increased the time or cost associated with the proceedings so as to render it fair and reasonable in all of the circumstances for the lessees to be denied a portion of their costs. 12 Accordingly, I will order in each proceeding that the council pay the lessee's costs of the proceeding, including their costs of their cross-claims against the Commonwealth. I certify that the preceding twelve (12) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice O'Callaghan.