DBCT Management Pty Ltd v McConnell Dowell Constructors

1. The objection of BM Alliance Coal Operations Pty Ltd (BMA) to any party to the proceedings uplifting or inspecting the document entitled "HPX3 ICAM Investigation Report" dated 4 July 2014 and the five attachments to the document (Report) produced in answer to the subpoena served by the first and second applicants on Ashurst Australia (Ashurst) on 6 November 2020 and the subpoena served by the first and second applicants on BMA on 3 August 2020 is upheld.
2. The applicants and the second respondent pay BMA and Ashurst the costs of and incidental to the application before Abraham J, being BMA's objection to uplift or inspection of the Report, to be agreed or taxed. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

ABRAHAM J: 1 This application for costs is consequent on my decision of DBCT Management Pty Ltd v McConnell Dowell Constructors (Aust) Pty Ltd and Geosea Australia Pty Ltd Joint Venture [2021] FCA 512 (Judgment), delivered on 14 May 2021. That Judgment addressed the claim for legal professional privilege by BM Alliance Coal Operations Pty Ltd (BMA) and Ashurst Australia (Ashurst) (together, the Subpoenaed Entities). The terms of the order made to reflect the result of that Judgment is not in issue. 2 The Subpoenaed Entities seek their costs in respect to the following subpoenas: (1) a subpoena served on Ashurst, DBCT Management Pty Ltd (DBCT Management) and Dalrymple Bay Coal Terminal Ltd (DBCT) on 6 November 2020 (Ashurst Subpoena); and (2) a subpoena served on BMA on 3 August 2020 (BMA Subpoena) (together, the Subpoenas). 3 The Subpoenaed Entities seek their costs of compliance with the subpoenas, incurred to date on an indemnity basis. Those costs include (but are not limited to) the Subpoenaed Entities' costs of and incidental to BMA's objection to uplift or inspection (including the privilege hearing) of the HPX3 ICAM Investigation Report dated 4 July 2014 (the ICAM Report), the subject of, inter alia, the Ashurst Subpoena. 4 In a nutshell, the Subpoenaed Entities contend that although the reasonable costs and expenses of complying with a subpoena are to be determined in the circumstances of each case, generally the starting point is that reasonable costs of compliance with a subpoena under r 24.22 of the Federal Court Rules 2011 (Cth) (Federal Court Rules) can extend to the judicial determination of a privilege claim, and the costs of compliance are usually assessed on a solicitor and client (i.e. indemnity) basis: citing Titan Enterprises (Qld) Pty Ltd v Cross [2016] FCA 1275 at [12] (Titan). The Subpoenaed Entities submit that r 24.22 should not be interpreted narrowly: Ann Street Mezzanine Pty Ltd v Beck [2013] FCA 960; (2013) 215 FCR 150 at [59] (Ann Street Mezzanine). Relying on, inter alia, Charlick Trading Pty Ltd v Australia National Railways Commission (1997) 149 ALR 647 (Charlick), the Subpoenaed Entities submitted that reasonable costs of compliance with the Subpoenas include, in circumstances where BMA was entirely successful in its objection to inspection of the ICAM Report, the Subpoenaed Entities' costs of and incidental to BMA's privilege claim: c.f. Titan at [13], [19]. The Subpoenaed Entities submitted that a subpoena recipient is ordinarily entitled to its costs and expenses of compliance on a solicitor and client basis, the rationale being that a stranger to the litigation should be fully compensated for what it has in fact cost that party to comply with the subpoena: citing Fuelxpress Ltd v L M Ericcson Pty Ltd (1987) 75 ALR 284 at 286 (Fuelxpress); Titan at [12]. The Subpoenaed Entities submitted that the reference to a "solicitor and client basis" in Fuelxpress should be understood as a reference to costs on an indemnity basis: Taylor v Dixon Advisory Limited [2010] ACTSC 161; (2010) 5 ACTLR 136 at [42]-[47]. 5 The Subpoenaed Entities submitted in the alternative, that the applicants and the second respondent (Work Boats) should pay those costs on an indemnity basis in any event. This is said to be based on the procedural history and the conduct of the applicants and Work Boats. It is submitted that it is clear that BMA had a very strong claim to privilege over the ICAM Report, and that so much appears to have been accepted by the applicants in their decision no longer to press for compliance with the subpoena first issued by BMA in July 2018 (2018 Subpoena). 6 The applicants submitted that no costs order should be made respecting compliance with the Subpoenas generally, with orders giving effect to the reasons for Judgment. That related to a specific issue referred to me, whether specific documents were properly the subject of a claim for legal professional privilege. The costs order following the Judgment should accordingly be limited to those costs concerned with that application. This is in the context where the Subpoenas have been returnable before Registrar Cridland and these proceedings are otherwise case managed by Rares J. The applicants submitted that there is no evidence before the Court (because it was not an issue) as to the nature of any costs incurred by the Subpoenaed Entities that would fall within the scope of their proposed orders. It submitted that in any event, contrary to the Subpoenaed Entities' submission, the costs incurred by a subpoenaed party in advancing a claim for privilege do not form part of the costs of complying with a subpoena to which r 24.22 of the Federal Court Rules applies. The applicants take issue with the Subpoenaed Entities submission as to the state of the law, referring, inter alia to Cadbury Schweppes Pty Ltd v Amcor Ltd (No 3) [2008] FCA 1668, Fuelxpress, Charlick, Titan and Ann Street Mezzanine. 7 The applicants submitted that the usual costs principles apply, as regulated by Part 40 of the Federal Court Rules; the Subpoenaed Entities, having been successful in their application, should be awarded their costs on the usual basis, which is party and party costs: see r 40.01. They submitted that the Subpoenaed Entities' application was opposed equally by the applicants and the second respondent, and as such those costs should be borne equally by the applicants and second respondent. It submitted that there is also no basis for awarding indemnity costs. Contrary to the Subpoenaed Entities' submission, there is no support in the evidence for a finding that DBCT ever accepted BMA's privilege claim in 2018. It submitted its opposition to the privilege claim was not so "unreasonable" as to have had "no chance of success" or to be a "hopeless case". It is insufficient that a losing party's case may have been weak or tenuous; there must have been a high degree of certainty concerning the deficiencies of the case that were sufficiently manifest and clear: citing Australian Competition and Consumer Commission v Colgate-Palmolive Pty Ltd (No 5) [2021] FCA 246 (ACCC v Colgate-Palmolive (No 5)) at [11]; Viagogo AG v Australian Competition and Consumer Commission (No 2) [2021] FCA 411 (Viagogo AG v ACCC (No 2)) at [5]. 8 Work Boats submitted that it is not affected by the Subpoenaed Entities' primary submission as to orders, but only the alternative basis. Work Boats opposed the award of costs on an indemnity basis but if the Court is minded to order it (as well as the applicants) to pay costs of the hearing on the basis that they do not form part of the costs of complying with the Subpoenas, those costs ought to be on the usual party and party basis. Work Boats observed, inter alia, that it was first joined to the proceedings in mid-2019, had no involvement in earlier correspondence or subpoenas, and was not party to the procedural history and conduct on which the Subpoenaed Entities rely on against the applicants to found the indemnity basis for the claim. It submitted that the Subpoenaed Entities' assertion that the objection had no prospects of success is not borne out. Work Boats submitted, if (contrary to the Subpoenaed Entities' primary submission, see paragraph [4] above) the costs of the hearing on the privilege argument are not to be regarded as costs of complying with the Subpoena. Further, it was submitted, there is no special or unusual feature in the circumstances of the application determined by the Judgment that warrant a departure from the usual rule that costs follow the event on a party and party basis. 9 The Subpoenaed Entities reply primarily addressed why the costs sought should be ordered at this time, and responded to the submissions advanced by the applicants as to the interpretation of the relevant authorities, namely that the costs of the privilege application are properly regarded as part of its costs of compliance. 10 I agree with the applicants' submission that there was only a very discrete issue referred to me for determination, and that in those circumstances, the costs awarded should be directed to that issue. Although the Subpoenaed Entities submitted the costs of compliance will largely be the costs incurred in relation to production and privilege of the ICAM Report, being the very issue decided by the Judgment, there is no evidence before me as to what was involved in compliance; it being a matter primarily addressed by the Registrar. This matter was before me only because the nature of the application, being one of legal professional privilege, gave rise to a possibility the material the subject of the claim would need to be inspected. 11 In those circumstances, it is unnecessary to resolve the dispute between the parties as to whether the cost of the privilege argument forms part of the costs of compliance. 12 In Viagogo AG v ACCC (No 2) at [3]-[5], I summarised the principles in relation to the award of costs, including on an indemnity basis, and it is unnecessary to repeat them here. The Subpoenaed Entities have not established why, in the circumstances of this case, there should be a departure from the ordinary rule. Having been successful in their application, the Subpoenaed Entities should be awarded their costs on the usual basis, which is party and party costs. 13 Having considered the principles in relation to the award of costs, the Subpoenaed Entities have not established that the costs should be awarded on an indemnity basis. As the applicants submitted, it is insufficient that a losing party's case may have been weak or tenuous; there must have been a high degree of certainty concerning the deficiencies of the case that were sufficiently manifest and clear: ACCC v Colgate-Palmolive (No 5) at [11]; Viagogo AG v ACCC (No 2) at [5]. I note also that although the Subpoenaed Entities relied on correspondence between them and the applicant, Work Boats was not a party to that, and could not form any basis for an indemnity order against them. 14 I order that the applicants and the second respondent pay BMA's and Ashurst's costs of and incidental to BMA's objection to uplift or inspection of the ICAM Report, on the usual basis, to be agreed or taxed. I certify that the preceding fourteen (14) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Abraham.