Plaintiff v First Defendant

1 These proceedings follow publication of reasons on 18 February 2026, Downer Utilities Australia Pty Ltd v Murra Warra Asset Co Pty Ltd[1] (the "Reasons") in proceedings S ECI 2025 06007 and S ECI 2025 06236 (the "Proceedings"). Unless otherwise indicated, the terminology and reference to parties is as applied in those reasons as previously published.

2 As stated in the Reasons, I proposed to make declarations along the lines sought by Squadron which I set out.[2] I also stated that I proposed to make confidentiality orders along the lines proposed by Downer. I also requested the parties bring in orders to give effect to the Reasons and to identify paragraphs of those reasons that ought be redacted in order to uphold the confidentiality orders. The Reasons, as published, were redacted as requested by the parties.

3 On 3 March 2026, following the hearing of a summons dated 27 February 2026 issued by Squadron (the "Summons"), I made orders by way of declarations in terms set out in the Reasons,[3] and also confidentiality orders in terms indicated in those Reasons. The ambit of the confidentiality orders as made was, however, not as broad as contended for by Squadron; as a result of the dismissal of the Summons and the consequent irrelevance, in terms of the Proceedings, of a number of added documents sought to be included in the confidentiality orders. The question of costs of the Proceedings and of the Summons was reserved on the basis that these issues would be dealt with on the papers.

4 As I observed in the Reasons,[4] both Squadron and Downer have had some success on their respective applications at trial of the Proceedings and their respective submissions on costs reflect this position. The position in relation to the Summons was, however, that it was dismissed and the contentions raised by Squadron rejected. It is to these matters that I now turn.

5 Downer contends that each party should bear its own costs of the Proceedings on the basis that Squadron succeeded only in one of the four issues that arose and that it should not recover its costs on the other issues. It is contended that this is because both parties had some success on their respective applications. More particularly, Downer says that its proceeding (06007) raised the proper construction of the Arbitration Agreement in cl 42.5(a)[5] and whether various documents in the proceeding are confidential.[6]

6 In addition to the construction issue,[7] Squadron's proceeding (06236) raised issues concerning (a) whether the arbitrations are domestic or international;[8] and (b) whether the commencement of the Downer's arbitration was inconsistent with Insolvency Model Law or, alternatively, it should be stayed because of Senvion's insolvency.[9] In this context, it is said that Squadron succeeded only on the constructional choice issue and that the Court declined to determine the domestic or international arbitration point and the insolvency stay issues.[10] Downer contends that considerable time was spent on the insolvency stay issue and for that issue Downer briefed separate senior counsel.

7 Downer says that it succeeded on the confidentiality issue[11] and, further, that this issue involved urgent applications before Delany J and that the cost of these applications was reserved. It is said that Squadron's resistance on the confidentiality issue resulted in wasted costs for Downer.

8 On these bases, Downer contends that each party should bear its own costs or, alternatively, costs should be apportioned on an issue‑by‑issue basis, with Downer to receive its costs of the confidentiality issue.

9 Squadron seeks orders that Downer pay its costs in relation to the Proceedings on a standard basis. In support of this position, Squadron observes that it succeeded on its application in relation to the constructional question of the Arbitration Agreement, which was the issue that dominated the hearing on 10 December 2025. Noting the wide discretion the Court has as to costs, it submitted that the 'general rule' is that a successful party should obtain all of the costs of the action even though it failed to establish some of its alternative heads of claim. It is said that courts, as a general rule, attempt to differentiate between the issues on which a party was successful and those on which it failed.[12]

Costs - Governing principles and their application

10 The governing principles with respect to the award of costs are most helpfully set out by Nichols J in GJB Building Pty Ltd v AI&PB Property Pty Ltd.[13] It is clear that the Court, in the exercise of its discretion under s 24(1) of the Supreme Court Act 1986, may apportion costs on a 'issue by issue basis'. Having set out the broad principles enunciated by the Court of Appeal in Chen & Ors v Chan & Ors,[14] Nichols J said:[15]

Noting the wide discretion as to costs, the 'general rule' is that a successful party should obtain all of the costs of the action even though it failed to establish some of its alternative heads of claim.[16] Courts do not then, as a general rule, attempt to differentiate between the issues on which a party was successful and those on which it failed.[17]

However, there may be reasons why differentiation between issues is appropriate.

The prima facie rule is that costs 'follow the event'. In this context, the 'event' is not confined to the final result of the proceedings, but may include the findings on individual issues litigated in the Court of the proceedings.[18] An 'issue' need not go to the entire cause of action but includes 'any issue which has a direct and definite event in defeating the claim to judgment in whole or in part.'[19] It need not be a precise issue in a technical pleading sense, but may be any disputed question of fact or law.[20]

In deciding whether and how to apportion cost, the following factors have, with some consistency, been accorded significance:

(a) A Court will be reluctant to apportion costs between different issues depending on success or failure on those issues where it is likely to be difficult, if not impossible, to allocate items of costs between the different issues.[21] Accordingly, the severability of the issues is an important factor.[22] The issues should be 'sufficiently distinct'[23] or 'separable'.[24]

(b) Unless the issues proposed to be apportioned are substantial, and consumed significant litigious effort, the exercise of apportionment of costs may lack real utility.[25]

(c) It is relevant to consider whether the issues on which a party failed were major issues in the action which involved substantial questions of fact and law, or substantially increased the costs of the action. It might be relevant to consider whether a party has succeeded on a 'technicality' but has not been 'generally successful'.[26]

(d) Unreasonable or inappropriate conduct of the successful litigant in relation to particular issues might present a good reason not to follow the 'usual rule.'[27]

(e) It is not necessary as a precondition to making an apportionment of costs, that the issue concerned was raised unreasonably or inappropriately by the party. But one relevant consideration is that a party should not be dissuaded from canvassing issues which might be material to the decision in the case by the risk of costs.[28]

11 In the present context, I am of the opinion, as contended by Squadron, that the relevant and principal 'event' for the purpose of determining the costs of the Proceedings was the constructional question of the Arbitration Agreement. In my opinion, the issues concerning whether the arbitrations were domestic or international and whether the commencement of the Downer's arbitration was inconsistent with the Insolvency Model Law were subsidiary issues, the fate of which depended upon resolution of the constructional question. In my view, the same applies with respect to the confidentiality issue, both in terms of the Proceedings and also in the applications before Delany J which must, in context of these proceedings, be regarded as preliminary matters intrinsically connected with the hearing and determination of the Proceedings. Moreover, I am of the view that the reality is that although the various issues the subject of the hearing on 10 December 2025 were, formally, contained in two separate proceedings, they were in substance part of a single set of controversies and ought in the present context be viewed as such.

12 In conclusion, with respect to the Proceedings, I determine that, for these reasons, and having regard to her Honour's articulation of the governing principles with respect to the apportionment of costs,[29] Downer must pay Squadron's costs on a standard basis.

13 Squadron's Summons sought further declaratory relief together with injunctive relief with respect to requests for joinder under art 7 of the ICC Rules and a request for consolidation made under art 10 of the ICC Rules sent by Downer to the Resolution Institute on 25 February 2026. Squadron contends that these requests are contrary to the position reached in the Reasons, and particularly the declarations which I foreshadowed would be made in those reasons.[30] In effect, the relief sought would involve the Court in entering into the conduct of the arbitration by the Resolution Institute. This is, however, contrary to approach and content of matters set out in the Reasons which make it clear that these matters are for the arbitral tribunal and the Resolution Institute to determine.

14 It is not necessary for present purposes to rehearse the reasons which I expressed at the hearing of the Summons on 3 March 2026 in the course of ordering its dismissal. It is sufficient, for present purposes, to reaffirm the view I expressed that there is no ambiguity or lack of clarity in the declarations proposed to be made as sought by Squadron as set out in the Reasons. On this view, there was no basis, as contended by Downer, that further declaratory provisions should be included in the declarations or, as sought be Squadron, that any injunctive relief ought be granted with respect to Downer's request or other dealings between it and the Resolution Institute. Indeed, as I observed, were the Court to accede to the additional declarations or so called "clarifications", or injunctive relief as sought, it would be intruding into the management of the arbitral process and the proper function of both the arbitral tribunal and the Resolution Institute, at odds with the position as set out in the Reasons. If it were necessary to emphasise the point, to depart from the position as indicated in the Reasons would be at odds with the approach of the UNCITRAL Model Law, with respect to court involvement in the arbitral process and its management; not to mention its impinging on the central principle of Kompetenz‑Kompetenz of the arbitral tribunal.[31]

15 In terms of costs, it follows from the dismissal of the Summons that Squadron should pay Downer's costs of and incidental to the summons. In all the circumstances, it is not, in my view, appropriate to make a costs order in this respect other than on a standard basis.

16 It was helpful to the Court that the Resolution Institute was present at the hearing on 3 March 2026 as an amicus curiae to provide a general outline of the approach of the Institute to the conduct of an arbitration in accordance with the declaratory relief granted in the Proceedings.

17 The Resolution Institute did not seek any recompense for this helpful contribution and no party has sought costs against the Resolution Institute in the Proceedings or the Summons.

(a) Downer is to pay Squadron's costs of and incidental to the Proceedings, to be taxed on a standard basis; and

(b) Squadron is to pay Downer's costs of and incidental to the Summons, to be taxed on a standard basis.

[1] [2026] VSC 48.

[3] As previously stated, Reasons, [111].

[5] Reasons, [3(b)(i)], [36(b)]. Each of Downer and Squadron had also sought a stay of the other's arbitration, consequent on their preferred constructions of the arbitration agreement.

[7] Reasons, [3(a)(i)-(iii)], [36(b)].

[10] See Reasons, [78]-[81] and [110], respectively.

[12] See GJB Building Pty Ltd v AI&PB Property Pty Ltd [2024] VSC 790, [6] (Nichols J) and the reasons which follow.

[13] [2024] VSC 790, [4]-[17].

[14] [2009] VSCA 233, [10] (Maxwell P, Redlich JA and Forrest AJA).

[15] GJB Building Pty Ltd v AI&PB Property Pty Ltd [2024] VSC 790, [6]-[9] (emphasis in original).

[16] GT Corporation Pty Ltd v Amare Safety Pty Ltd (No 3) [2008] VSC 296, [59].

[17] Bostik Australia Pty Ltd v Liddiard (No 2) [2009] NSWCA 304, [38].

[18] Fuller v Municipal Tramways Trust [1921] SAStRp 11; [1921] SASR 109, 111.

[19] Wheeler v Riverside Coal Transport Trust [1964] Qd R 113, 117.

[20] Cretazzo v Lombardi [1975] SASC 2512; (1975) 13 SASR 4, 12; Hughes v Western Australian Cricket Association Inc & Ors [1986] FCA 382, [9].

[21] Siemens WLL v BIC Contracting LLC [2024] FCA 201, [8]; PKT Technologies Pty Ltd (formerly known as Fairlight.au Pty Ltd) v Peter Vogel Instruments Pty Ltd (No 2) [2020] FCAFC 46, [14]-[15].

[22] Cretazzo v Lombardi [1975] SASC 2512; (1975) 13 SASR 4, 16.

[23] Chevron Australia Holdings Pty Ltd v Commissioner of Taxation (No 5) [2015] FCA 1310, [15].

[24] Bostik Australia Pty Ltd v Liddiard (No 2) [2009] NSWCA 304, [38].

[25] James v Royal Bank of Scotland (No 2) [2015] NSWSC 970, [69].

[26] Wenpac Pty Ltd v Allied Western Finance Limited (1994) 123 FLR 1, 69-70.

[27] BHP Billiton Iron Ore Pty Ltd v National Competition Council (No 2) [2007] FCA 557, [23].

[28] Mickleberg v Western Australia [2007] WASC 140, [43].

[29] GJB Building Pty Ltd v AI&PB Property Pty Ltd [2024] VSC 790, [6]-[9].

[30] See the declaration set out in Reasons, [111].

[31] As provided for in the Model Law, whether manifested in the provisions of the IAA or the CAA; especially in Article 16 of Section 16 in the latter manifestation.