Masters in Building Training Pty Ltd v State of New South Wales

Determination

I have summarised the relevant principles as to costs elsewhere (see for example in Eastlings Pty Ltd v Calidu Import Export Pty Ltd (No 3) [2021] NSWSC 466 at [37]-[43]; Bassett v Cameron (No 2) [2021] NSWSC 419 at [16]-[29]); and it does not appear that there is any real dispute as to those principles. Insofar as the general rule is that costs follow the event, it has been said that the "event" is not limited to issues in the technical pleading sense but extends to all disputed questions of law and fact (see Cretazzo v Lombardi (1975) 13 SASR 4 at 12 per Bray CJ, with whom Zelling and Jacobs JJ agreed).
Here, the relevant issue is as to whether the costs should be apportioned relevant to success on particular issues. I considered the circumstances where costs may be apportioned where there is a mixed outcome in the proceeding or on the particular applications in In the matters of Earth Civil Australia Pty Ltd, RCG CBD Pty Ltd, Bluemine Pty Ltd, Diamondwish Pty Ltd and Rackforce Pty Ltd (all in liq) (No 2) [2021] NSWSC 1161 as follows (at [83]-[85]): 83. …Costs may be apportioned where there has been a mixed outcome in the issues in proceedings (see Corbett Court Pty Ltd v Quasar Constructions (NSW) Pty Ltd [2008] NSWSC 1423 at [30], where Hammerschlag J referred to the authorities collated by White J, as his Honour then was, in Short v Crawley (No 40) [2008] NSWSC 1302 at [25]-[32]). 84. Relevantly, the circumstances in which apportionment of costs as between different issues may be appropriate include: where, in respect of one or more issues, the successful party has "unfairly, improperly, or unnecessarily increased the costs" (Waddell J, as his Honour then was, in Windsurfing International Inc v Petit (1987) AIPC 90-441 ); where the bulk of the time has been taken on an issue on which the unsuccessful party had succeeded (see, for example, Waters v PC Henderson at 5 per Mahoney JA; Hughes v Western Australian Cricket Association Inc (1986) ATPR 40-748 per Toohey J); or where a particular issue or group of issues is clearly dominant or separable (see, for example, Waters v PC Henderson at 5 per Mahoney JA; Elite Protective Personnel Pty Ltd v Salmon (No 2) [2007] NSWCA 373 at [6] per Beazley JA, as Her Excellency then was, McColl and Basten JJA). 85. Where the apportionment of the costs attributable to such issues is considered appropriate, the question of apportionment is recognised to be a matter of discretion, the exercise of which "will often depend upon matters of impression and evaluation" (Dodds Family Investments Pty Ltd (formerly Solar Tint Pty Ltd) v Lane Industries Pty Ltd (1993) 26 IPR 261 at 272 per Gummow, French and Hill JJ).
In the present case, it is relevant to note (particularly insofar as MIBT has referred in its costs submissions to the interlocutory applications that were made and the undertaking as to damages proffered by it) the costs orders that have already been made in relation to the interlocutory applications in this matter.
On 17 May 2021, Kunc J by consent ordered that the costs of and incidental to the interlocutory hearing in relation to paragraph 9(b) of the summons filed on 31 March 2021 be MIBT's costs in the cause. This related to the initial application by MIBT for urgent interlocutory relief (by way of mandatory injunction) to compel the Department to continue to perform the Contract notwithstanding the purported termination of the Contract (see the subsequent reasons published on 30 April 2021 of Kunc J in Masters in Building Training Pty Ltd v State of New South Wales [2021] NSWSC 454, as referred to in my principal judgment. Kunc J then, on 27 May 2021, made orders on a without admissions basis (in accordance with short minutes that his Honour had amended) for the payment of a sum of money into Court ($459,038.85) pending the final determination of the substantive proceeding; and ordered that the costs of the Department's notice of motion filed 11 May 2021 (which was then adjourned to be heard as part of the final hearing of the proceeding) be the Department's costs in the cause.
Then on 22 June 2021 (in connection with the further interlocutory application by MIBT - see Masters in Building Training Pty Ltd v State of New South Wales (No 2) [2021] NSWSC 747, in which an order was made on an interlocutory basis restraining the exercise by the Department of the right to withhold Subsidies and Loadings due to MIBT), Parker J made orders for the release to the Department of the sum that had been paid into Court and ordered that the costs of the notice of motion filed on 28 May 2021 be MIBT's costs in the cause.
Those respective costs in the cause orders would not ordinarily be disturbed by costs orders made at the conclusion of the proceeding, although they would necessarily be affected by the outcome of the proceeding (being variously expressed to be MIBT's or the Department's costs in the cause and hence the entitlement to those costs by MIBT or the Department is dependent on success in the cause).
The issue as it first arose in this Court on an interlocutory basis was as to the validity of termination of the Contract (an issue on which the Department ultimately succeeded) and then as to whether the Department was entitled to withhold payment of Subsidies and Loadings in accordance with the Contract (an issue on which I concluded again in favour of the Department during the suspension of the Contract). It was well understood at the time of the first interlocutory application (since Kunc J recorded it in his reasons in relation to that application) that the determination of the first interlocutory injunction in effect amounted to final relief (since the Contract expired in any event on 30 June 2021, not having been renewed by the Department).
The relevance of the undertakings as to damages proffered by MIBT (as acknowledged in its submissions in this costs application) goes to the fact that if the Contract were (as it was) to have been found validly to have been terminated by the Department's notice of termination, then the interlocutory injunction that had been obtained (that required the Department in effect to treat the Contract on foot) would be relief which (absent some other claim) MIBT would not have obtained had there been a final hearing at that point. Thus, I accept that there was a potential exposure to MIBT under the usual undertaking for damages (in relation to which the issue of the validity of termination would have been relevant).
However, what became apparent during the course of oral submissions at the final hearing (as adverted to above) was that, on the one hand, MIBT was not seeking any damages for loss occasioned by the termination (not having suffered any such loss once the Contract was to all practical intents and purposes reinstated by reason of the interlocutory injunction) and, on the other hand, the Department was not contending that (if it be the case that the Contract was validly terminated) the fact of termination would entitle it not to pay amounts to which MIBT was otherwise entitled for services that it had rendered. Hence, as I attempted to explain in the principal reasons, at the start of the hearing the parties appeared to have been at cross-purposes in relation to the issue as to the validity of the termination. In this regard, I do not consider that blame can be laid solely at the feet of either of the parties (and hence the cost of that misapprehension should not sound in any particular costs order).
The evidence as to termination of the Contract seems to me largely to have been served in relation to the interlocutory hearings. As a matter of impression, the evidence served after that time related more to the issue of the entitlement claimed by MIBT for Subsidies and Loadings (and the contentions raised by the Department as to whether that entitlement had been established, including by reference to whether there had been training that complied with the requirement for "Participation in Subsidised Training"). Again, as a matter of impression, it seemed to me that the bulk of the hearing time (including the cross-examination of Mr Lawrence and Mr Buddeke to which the Department has referred) went to the issue as to the acceptability of the Training Activity Data uploaded by MIBT (and whether the Department was entitled to reject that data). That certainly seems to have been the purpose of the review carried out (and to which Ms Nguon deposed and was cross-examined). Therefore, while I accept that this ultimately became akin to a debt claim, it is not immediately apparent that the duration of the hearing would have been greatly reduced had the issue as to validity of termination been abandoned at the outset of the hearing rather than in closing submissions.
The question to my mind, therefore, as to the costs associated with the issue of validity of the termination of the Contract, is whether, in circumstances where it has now been held that the Contract was validly terminated by the Department's notice of termination (see at [12] of the principal judgment), the costs ordered to be the plaintiff's costs in the cause (pursuant to the order made by Kunc J) which related to the application for injunctive relief premised on MIBT's argument that the Contract had been invalidly terminated, should be understood to be costs that MIBT cannot now recover (as it did not succeed on this issue) or whether in any event there should be a different outcome, such that MIBT pays the Department's costs of the issue as to the validity of termination of the Contract (and of the not unrelated issue as to the ability to withhold payment of Subsidies and Loadings during the suspension of the Contract).
In this regard, as noted above, I do not consider that the Department is solely responsible for the fact that the parties appear to have been at cross-purposes in relation to the issue of validity of termination of the Contract; and I do not find that there has been a breach of the obligations on litigants under s 56 of the Civil Procedure Act in this regard (as MIBT contends). Further, the fact that the validity of termination is accepted as of potential relevance to the undertakings as to damages makes it difficult to proceed on an assumption that MIBT would not have contested the issue as to the validity of termination (as opposed to the issue as to any claim for loss arising from an invalid termination) had the Department's position as to the obligation to pay Subsidies and Loadings after termination of the Contract been made clearer at an earlier stage.
Thus, while I do not accept that the bulk of the time at the hearing was taken up on the issue as the validity of the Department's termination of the Contract or the issue as to the withholding of Subsidies and Loadings during a suspension of the Contract, I do consider that these were separate issues as to which it would be appropriate for there to be a discrete costs treatment (on the basis that these were separate and distinct "events"). Moreover, it seems to me that if there is not an apportionment of costs in relation to those issues, then the apparent intent of the earlier "costs in the cause" order may not be satisfied.
On a broad brush basis, I would treat the costs of the interlocutory injunction applications before Kunc J and Parker J as largely referable to the above group of issues (and the final hearing, in contrast, as largely referable to the claims made by MIBT in relation to the submission of Training Activity Data and the Department's cross-claim relating to amounts it contended it was entitled to set-off against moneys otherwise owing to MIBT or which were not payable to it).
Thus, while I have concluded that it would be appropriate for there to be a separate order for costs referable to the issue of validity of termination of the Contract (and entitlement to withhold payments while the Contract was suspended - although that issue seems to me only to have involved a question of construction of the Contract), I do not consider that a 50/50 apportionment of the costs of the statement of claim is appropriate. Instead, I consider the appropriate order (including to remove only doubt in the ultimate event) to be to vary the plaintiff's costs in the cause orders and to order that MIBT pay the Department's costs of the interlocutory hearings before Kunc J and Parker J (other than as already the subject of costs orders in the Department's favour) and then to order the Department to pay the balance of the costs of the statement of claim. (It is not necessary to add "as agreed or assessed" as this will follow axiomatically from the making of the orders.)
As to the costs of the cross-claim, I accept that there was mixed success on various of the disputed amounts (although overall MIBT had a substantial measure of success). Part of the difficulty in this regard lay in the fact that much of the material in relation to the claimed Subsidies and Loadings (and the review of that material) was the subject of evidence that came relatively late in the proceeding. That said, there was also a large amount of information supplied by MIBT (in relation to information that had been requested concerning the rejected Training Activity Data or data that was not able to be uploaded after termination of the Contract).
Adopting a broad brush approach, and noting both that a large bulk of evidence and time at the hearing related to the dispute over what was meant by Participation in Subsidised Training (on which MIBT succeeded) and some of the cross-claim was conceded by MIBT (and hence occupied no relevant hearing time), I would assess the success across the relevant issues that were ultimately in dispute as being closer to 60/40 in MIBT's favour than the 50/50 that the Department's alternative order suggests; and I propose to adopt that figure on the basis that this will avoid the incurring of additional costs in an assessment of costs on an issue-by-issue basis (and hence will be consistent with the overriding statutory mandate set by s 56 of the Civil Procedure Act).

At a glance

Court

Decision date

Before

Source

Judgment (7 paragraphs)

Parties

Legislation Cited (1)

Cases Cited (18)

Cited By (4)