Martech International Pty Ltd v Energy World Corporation Limited

REASONS FOR JUDGMENT ON COSTS AND PRE-JUDGMENT INTEREST Introduction 1 Between 1985 and November 2001 Fletcher Brand was the Chief Executive of Energy World Corporation Ltd (Energy). He provided his services as Chief Executive through his private company, Martech International Pty Ltd (Martech). Mr Brand's resignation as Chief Executive in November 2001 gave rise to proceedings in which his company, Martech, made a variety of claims against Energy. One of the claims was for a shortfall of remuneration following a unilateral but temporary reduction in the fees payable to Martech under a service contract for the period from 1 March 2000 to 30 September 2000. That shortfall was claimed in the amount of $71,663.65. Martech also claimed a substantial termination payment in excess of $800,000 which, it said, was due under the contract by reason of a change in Mr Brand's status from Managing Director to Executive Director and the associated change in his duties. Claims for damages for misleading or deceptive conduct were also made. 2 Energy and its subsidiary, Australian Energy Equity Pty Ltd (AEE) cross-claimed against Martech and Mr Brand by reason of a "milestone" payment made in respect of a power station development in India known as the Vypeen Combined Cycle Power Project. Their complaint was that Mr Brand authorised the payment despite the fact that a condition of a sale and purchase agreement, under which the payment was to be made, had not been satisfied. The relevant condition was that approvals had been obtained from the Indian Government for the importation of condensate fuel for use as an interim fuel in the proposed power station. A clearance from one ministry of the Indian Government was later contradicted by another. Energy and AEE alleged that Mr Brand failed in his duty to them by authorising the payment without taking reasonable care or exercising due diligence to ensure that it was due. 3 On 4 August 2006 I delivered judgment in both the claim and the cross-claim. Martech was awarded the sum of $71,663.65 representing the shortfall in fees for the period from 1 March 2000 to 30 September 2000. Its claim for a termination payment in excess of $800,000 was dismissed. So too were the other claims for damages for misleading or deceptive conduct. 4 The Energy and AEE cross-claim against Martech and Mr Brand was also dismissed. The costs order made on the cross-claim was that the cross-claimants were to pay the cross-respondents' costs of the cross-claim to be taxed if not agreed. 5 I directed that the parties to the Martech claim file written submissions as to pre-judgment interest and costs following the judgment. They have done so. The contentions 6 Martech submitted that the discretion to award costs is guided by the principle that, absent some special circumstance, a successful litigant is entitled to its costs. It acknowledged that where a litigant has succeeded on some issues but failed on others, an apportionment may be appropriate. That is a matter for discretion for the trial judge. It was submitted that the Court's power to order a successful applicant to pay the costs of an issue on which it has failed ought to be exercised only where the Court, on a consideration of all the circumstances, has concluded that the raising of that issue by the applicant was so unreasonable that it is fair and just to make the order. Reliance was placed upon Mok v Minister for Immigration (No 2) (1993) 47 FCR 81 at 84D. 7 Martech submitted that while the pleadings in its claim raised a number of causes of action there were two broad issues pursued by it. These were: