Mainteck Services Pty Limited v Stein Heurtey SA and Stein Heurtey Australia Pty Ltd

Judgment 1In the costs judgment handed down in this matter on 23 August 2013, I invited the parties to prepare short minutes of order giving effect to my reasons (Mainteck Services Pty Limited v Stein Heurtey SA and Stein Heurtey Australia Pty Ltd [2013] NSWSC 1165). The substantive proceedings proceedings between the parties involved a number of distinct issues, including what have been labelled the "Representation Claims", the "Disruption Claims" and the "Variation Claims" (see principal judgment handed down on 28 March 2013, Mainteck Services Pty Limited v Stein Heurtey SA and Stein Heurtey Australia Pty Ltd [2013] NSWSC 266). Orders were made on 31 May 2013 giving effect to my reasons in the principal judgment and disposing of at least some of the cost issues in relation to the Variation Claims. 2The orders the defendants sought in relation to the outstanding costs issues were articulated in a notice of motion they filed on 13 June 2013. This included a proposed order that: ... the Plaintiff pay the entirety of the First and Second Defendants' costs of the proceedings on an indemnity basis after 28 September 2008, or alternatively 2 July 2010. 3For reasons expressed in the costs judgment, I accepted that a Calderbank offer, made by the defendants to the plaintiff on 2 July 2010 offering to settle the entirety of the proceedings, triggered indemnity cost consequences against the plaintiff from after 2 July 2010. 4However, counsel for the defendants provided written submissions on costs, dated 9 July 2013, which include the following paragraph: [6.5] This question of the construction of the 2nd Consortial Agreement and the Technical Specification was quite separate from any Representation Claims issues. It was the question on which the majority of Mainteck's contested variation claims depended. The costs of those Variation Claims were the subject of the 31 May 2013 Orders. Neither the Stein Heurtey parties, nor Mainteck, seek to have any further order made in relation to the Variation Claims costs. 5From the submissions of the plaintiff and defendants, I incorrectly understood, perhaps as a result of the paragraph just quoted, that the parties were not agitating any issue relating to the costs of the Variation Claims, and that the defendants did not seek any costs orders in relation to the Variation Claims, and I therefore carved out from the indemnity cost consequences commencing from after 2 July 2010, the costs incurred by the parties in relation to the Variation Claims. In my view, for the reasons below, the error is one capable of being corrected under rule 36.17 of the Uniform Civil Procedure Rules 2005. 6A criterion which has been applied since at least 1892 (Hatton v Harris [1892] AC 547 at 558 per Lord Herschell) to determine whether a proposed correction under the slip rule is justified, is the hypothetical enquiry as to whether the supposed error, if it had been drawn to the attention of the court or the parties at the relevant time, would have been corrected as a matter of course. As Rogers CJ of the Commercial Division observed in Yore Contractors Pty Ltd v Holcon Pty Ltd (NSWSC, Rogers CJ, Comm Div, 17 July 1989, unreported, BC8901954), the slip rule enables a judgment to be corrected if the judge misinterpreted the facts or was misled or misunderstood counsel's submissions. His Honour reviewed in some detail the relevant authorities and firmly arrived at the following views (at BC8901954 at 13-14, 20 and 26): I believed that there was, on the material put before me, no contest as to this amount apart from the point I have already mentioned and proceeded to deal with the application ... I then turned to make orders to enable a determination of the outstanding issues in the dispute between the parties. I have to add that if, in what I said, I misunderstood the contentions of the counsel for the defendants, he certainly did not say anything at the time to suggest this. ... ... I therefore have to deal with the question whether there is jurisdiction to set aside the judgment, which I consider to be final, where, however justifiably, I had misunderstood the counsel for the defendant. ... In my opinion, I have power to correct the mistake made by me in entering judgment due to my misunderstanding of the position taken by counsel for the defendant. Apart from anything else, how would a Court of Appeal be able to say whether or not I acted under a mistaken impression? Surely it is the person whose mind was afflicted by the mistake who is the one to identify it and correct it. There is possibly another way of looking at the problem. If one accepts the former counsel for the defendants, as I certainly do, then the defendants were denied natural justice in that they were denied a hearing in which they would oppose judgment against them on the merits as distinct from the argument which had been put. 7His Honour also quoted with approval the following passage from the decision of the English Court of Appeal in Mutual Shipping Corporation of New York v Bayshore Shipping Co of Monrovia [1985] 1 All ER 520, where the court was considering the distinction between a case where the slip rule may apply because there had been an accidental slip or omission and one where a court is precluded from changing its judgment because the court was merely having second thoughts: It is the distinction between having second thoughts or intentions and correcting an award of judgment to give true effect to first thoughts or intentions which creates the problem. Neither a judge nor an arbitrator can make any claim to infallibility. If he assesses the evidence wrongly or misconstrues or misappreciates the law, the resulting judgment will be erroneous but it cannot be corrected. The remedy is to appeal. 8More recently, Stevenson J said in Georgouras v Bombardier Investments No. 2 Pty Ltd [2013] NSWSC 1549 (at [9]-[11]): [9] On an application under the slip rule, two questions arise (see Newmont Yandal Operations Pty Ltd v The J Aron Corporation and the Goldman Sachs Group Inc [2007] NSWCA 195; (2007) 70 NSWLR 411): (a) was there an error arising from an accidental slip or omission; and (b) should the Court exercise its discretion to correct the error? [10] In exercising its discretion the Court must give effect to the overriding purpose of the Civil Procedure Act 2005 and the Uniform Civil Procedure Rules, as set out in s 56(1) of the Civil Procedure Act (see Newmont at [27]). It should also proceed on the basis that variation of an order of the Court after entry of judgment is an exceptional course (see Newmont at [29]). [11] In Hanave Pty Ltd v LFOT Pty Ltd [2004] FCAFC 180; (2004) 136 FCR 566, Wilcox and Allsop JJ held: "The nature and extent of the desired variation of the judgment, the delay in bringing the variation forward, the explanation going to the existence of the accidental slip or omission and for the delay are fundamental considerations... Once litigation is over people should generally consider themselves free from further agitation of an already quelled controversy. This is the policy of finality of litigation." (at [4]). 9In their submissions, the defendants in fact submitted that the indemnity cost consequences triggered by the Calderbank offer of 2 July 2010 should apply to the costs of the entirety of the proceedings (including costs incurred in relation to the Variation Claims) after 2 July 2010. The plaintiff submits that each party should bear its own costs in relation to the Variation Claims. The relevant order in the orders of 31 May 2013 is as follows (with highlighting as per original formatting): An order, subject to ... any existing order for the payment of costs, and any further order including an order pursuant to UCPR 42.5 & 42.15A, that each party bears its own costs of the proceedings. (Note: The intent of this order is that each party should bear their own costs of the Variation claims addressed in paragraphs 28 to 175 of the December 2011 Report, and any costs that have previously been reserved). Note: The Plaintiff reserves its position in respect of the highlighted orders above and maintains that if an order for ordinary assessed costs is made, the SH parties are not entitled to a further costs order under CPA s.98(4). 10In relation to the Variation Claims, the plaintiff submitted that, during the course of the reference, the defendants conceded nineteen Variation Claims having a total value of $349,498.44. The plaintiff seeks to rely on the principle that, where the matters upon which a party is unsuccessful took up a significant part of the trial, either by way of evidence or argument (Sabah Yazgi v Permanent Custodians Limited (No 2) [2007] NSWCA 306 at [24] per Beazley, Ipp and Tobias JJA) or where a particular issue or group of issues on which a party is unsuccessful is clearly dominant or separable from those on which it was successful (Elite Protective Personnel Pty Ltd and Anor v Salmon (No 2) [2007] NSWCA 373 at [6] per Beazley, McColl and Basten JJA) the costs of the proceedings may be apportioned among the parties. 11For two reasons, I do not consider that the plaintiff's submission should be accepted. First, despite the defendants' concessions in relation to some of the Variation Claims during the course of the reference, the plaintiff was largely unsuccessful on the Variation Claims that remained live during the reference and before me. Therefore the plaintiff's overall performance on the Variation Claims, having regard, not only to those which were conceded, but also to those which were ultimately agitated, was a mixture of success and failure. Secondly, the Calderbank offer made by the defendants was a global one, that is, seeking to settle the entirety of the proceedings, and therefore the indemnity cost consequences flowing from an unreasonable rejection of the offer (which I have found to be the case here) should reflect the scope of the offer by applying in respect of all issues in the proceedings. 12In my opinion, it is appropriate in this case to apply the slip rule to correct the costs judgment (Mainteck Services Pty Limited v Stein Heurtey SA and Stein Heurtey Australia Pty Ltd [2013] NSWSC 1165) to remove the segregation of the Variation Claims from the indemnity cost consequences that would otherwise attach to the costs of those claims from after 2 July 2010. My misunderstanding of the position taken by counsel for the defendants led me to incorrectly isolate the costs in relation to the Variation Claims from the indemnity cost consequences that would otherwise have resulted from after 2 July 2010. 13As I understand, this resolves all issues between the parties. The parties should provide short minutes of order accordingly.