Oil Basins Limited v Bass Strait Oil Company

REASONS FOR JUDGMENT 1 On 16 October 2012 substantive reasons for judgment were published: Oil Basins Limited v Bass Strait Oil Company [2012] FCA 1122 (the Substantive Decision). The parties were directed to confer and to seek to agree orders as to costs. They were unable to reach agreement. Each defendant seeks an order that the plaintiff (OBL) pay their costs of the proceeding. OBL submits that the first defendant (BAS) should pay OBL's costs of the proceeding and there should be no order as to costs in respect of the second defendant (Somerton). Somerton submitted that OBL should pay its costs. 2 In Andrews v Australia and New Zealand Banking Group Limited [2012] FCA 59 at [4], the relevant principles were summarised as follows: … The Court's discretion to order costs under s 43 of the Federal Court of Australia Act 1976 (Cth) (the FCA) is at large and ought not be read down otherwise than in accordance with accepted principle: Cirillo v Consolidated Press Property Ltd (No 2) [2007] FCA 179 at [3]. Costs ordinarily follow the event. An order for costs is intended to compensate the successful party, not to punish the unsuccessful party: Demetriou v Gusdote Pty Ltd (ACN 089 937 253) (2010) 78 ACSR 566 at 576, referring to Brennan CJ in Oshlack v Richmond River Council (1998) 193 CLR 72 at 75. Fairness should dictate how the discretion is exercised: Bowen Investments Pty Ltd v Tabcorp Holdings Ltd (No 2) [2008] FCAFC 107 at [5]. Of course, the circumstances of each individual case must be considered. Those circumstances include an evaluation of the real degrees of success and failure. 3 OBL was successful in its primary claim in the proceedings - that BAS placed what were described as the "Somerton Securities" in breach of ASX Listing Rule 7.1 and its Constitution - and obtained appropriate relief: see [76]-[128] of the Substantive Decision. OBL submitted, and I accept, that where a plaintiff seeks a range of remedies but is only successful in respect of one remedy, that does not of itself displace the usual rule that costs follow the event. 4 On the other hand, OBL was unsuccessful in its other substantive claims and in defending the cross-claim: see [8]-[44], [55]-[71] and [129]-[132] of the Substantive Decision. The fact that a plaintiff is successful in respect of a part of its claim also does not of itself displace the usual rule that costs follow the event. Moreover, a court may in appropriate circumstances apportion costs against a successful party: Hughes v Western Australian Cricket Association (1986) ATPR 40-748 at 48,136 and IFTC Broking Services Ltd v Commissioner of Taxation [2010] FCAFC 22 at [8]. There is no hard and fast rule. There are examples where apportionment has been justified and examples where it was not: cf Dr Martens Australia Pty Ltd v Figgins Holdings Pty Ltd (No 2) [2000] FCA 602 at [54]; Cretazzo v Lambardi (1975) 13 SASR 4 at 12 and 16; Ruddock v Vadarlis (No 2) (2001) 115 FCR 229 at [15]; Stena Rederi Aktiebolag v Austal Ships Sales Pty Ltd [2007] FCA 1141 at [10]-[12] and Esso Australia Resources Pty Ltd v Commissioner of Taxation (No 2) [2011] FCA 521 at [20]. However, whatever order is made should not involve the parties in extensive and expensive work seeking to allocate particular costs to particular issues that a party won or lost: cf Andrews at [12]. 5 In the circumstances of this case, BAS should be ordered to pay OBL's costs of and incidental to the proceedings. OBL was successful in its primary claim. The substantive issue that arose for determination in that primary claim involved a breach of the ASX Listing Rules by BAS, a publicly listed company. The other issues raised in the proceeding added to the length and cost of the proceeding. However, this is not a case where apportionment of costs by issue is justified. The additional cost, time and complexity raised by those other issues were not large. The hearing took just one day. And, as OBL submitted: (1) a significant part of the evidence relevant to at least some of those other issues was relevant to the hearing and determination of OBL's primary claim of contravention of the ASX Listing Rules; and (2) important aspects of BAS' contentions in relation to those other issues were rejected by the Court: see [45]-[54] and [72]-[75] of the Substantive Decision. 6 The costs order that BAS should pay OBL's costs of and incidental to the proceeding includes the costs of the interlocutory application heard on 16 August 2012. I accept that, if BAS had promptly informed OBL (and the market) of the fact that the disputed shares had already been placed with Somerton, the application would have been unnecessary. 7 That leaves the question of Somerton's costs of the proceedings. Counsel for Somerton appeared at the directions hearing on 18 September 2012 and informed the Court that Somerton would not participate in the proceedings. If any costs have been incurred by Somerton, then those costs should also be paid by BAS. I certify that the preceding seven (7) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Gordon.