Plaintiffs v Defendant

1 At the conclusion of the trial of this proceeding I made orders quashing each of the purported decisions of the Minister's delegate made on 21 December 2017 varying the conditions of the Mirboo Permits and the Petro Tech Authorities, but otherwise dismissing the proceeding. As to costs, I made directions requiring each party to file and serve short written submissions. Those written submissions have now been exchanged and filed.

(a) the plaintiffs pay the Minister's costs of the proceeding (including the costs of proceeding S CI 2016 04381 which were incorporated by consent as costs in the cause within this proceeding) except in relation to the costs of what has been described as 'the variation claim'; and

(b) the Minister pay the plaintiffs' costs of the variation claim.

3 The plaintiffs, on the other hand, seek an order that each party bear their own costs of the whole proceeding, including the incorporated costs of proceeding S CI 2016 04381.

4 It is not disputed that there were three principal issues agitated at trial - the administrative moratorium claim, the statutory moratorium claim, and the variation claim. It is also not disputed that the costs associated with the earlier proceeding, S CI 2016 04381, are appropriately treated as forming part of the 'administrative moratorium claim'.

5 Nor are the applicable legal principles in dispute. Relevantly, they are:

(a) As a general rule, costs should follow the event, and a successful party should obtain all of the costs of the proceeding even if it fails to establish some of the alternative heads of its claim (or defence).[1] However, where there is a multiplicity of issues and mixed success has been enjoyed by the parties, the Court may take a pragmatic approach in framing the order for costs, taking into consideration the success (or lack of success) of the parties on an 'issues basis'.[2]

(b) Under r 63.04 of the Supreme Court (General Civil Procedure) Rules 2015, the Court may award costs in relation to particular questions or parts of the proceeding.[3] Rule 63.04(1) permits the Court to make an order not only as to a distinct question or issue in the pleading sense, but also to any part of the proceeding.[4]

(c) The court may, in its discretion, decline to order costs in favour of a successful party, or may order the successful party to pay the costs of the unsuccessful party, where the party failed to establish discrete heads of claim or failed to establish issues which it pursued in its claim, although ultimately succeeding on the basis of another discrete head of claim.[5]

(d) In fixing costs, the Court may treat 'heads of controversy as units of litigation' and may give directions to the taxing master in relation to them, such units not being circumscribed by pleadings, causes of action or issues capable in themselves of leading to the granting of relief.[6]

(e) To avoid the complications of taxation resulting from making orders recognising the entitlements to costs of a party on each action on which they were successful, the orders may be notionally set off against each other, or other adjustments made, so as to produce an order for a proportion of one party's costs to be paid by the other party.[7]

(f) The exercise of apportioning costs between different claims or issues defies arithmetical precision and necessarily requires an impressionistic discretionary evaluation.[8] The Court is entitled to take into account the importance of the matters upon which the parties have been successful or unsuccessful, the time occupied and the ambit of the submissions made, as well as any other relevant matter.[9]

6 The Minister succeeded, and the plaintiffs correspondingly failed, in relation to the administrative moratorium claim and the statutory moratorium claim, whereas the plaintiffs succeeded, and the Minister correspondingly failed, in relation to the variation claim.

7 The Minister contends that the fairest way of dealing with the costs of this outcome is, as indicated above, to award the Minister the costs of the two issues on which he succeeded and award the plaintiffs the costs of the one issue on which they succeeded.

8 The plaintiffs, on the other hand, have a number of arguments as to why that outcome would be inappropriate and an award that each party bear their own costs is preferable. Those arguments are:

(a) That although the three issues can be separately identified, they were intertwined and, for costs purposes, they were not of equal magnitude and complexity;

(b) Further to (a), although the outcome of the issue on the statutory moratorium was influential, it was mainly a matter of construction, whereas both the administrative moratorium claim and the variation claims were factually more complex and onerous;

(c) The Court could and should be satisfied that the costs of the issues on which the Minister succeeded and the costs of the issue on which the plaintiffs succeeded would be broadly equivalent;

(d) Taking into account the importance of the matters on which each party has been successful or unsuccessful would favour an order that each party should bear their own costs (i.e. because the two groups of issues were of equivalent importance);

(e) An order that each party bear their own costs would be simple and would avoid the messy and costly exercise of isolating and assessing costs associated with the variation claim on a taxation;

(f) Assuming the Minister does not seek the costs of damages claims which were discontinued when extinguished by the introduction of s 251A of the Petroleum Act 1998 (Vic), if the Minister's proposal is adopted there will be the additional difficulty of disentangling the damages component of that claim from the balance of it.

9 Rule 63.04 allows the Court to make an order for costs in relation to a particular question or a particular part of a proceeding but, where it does so, the rule requires the Court to fix the proportion of the total costs of the proceeding which is attributable to the particular question in, or the particular part of, the proceeding.[10]

10 The Minister's initial submission does not deal with the question of whether, and if so how, I should fix the proportion of costs attributable to each issue if I were to accept his submission. In reply to the plaintiffs' submission the Minister adheres to his primary submission; that is, he disputes any difficulty in separating out the costs of the various issues because, he argues, they are each sufficiently discrete. However, if (contrary to his primary submission) an apportionment and notional set-off was to take place as the plaintiffs argue, the Minister denies that the respective cost entitlements of the two parties are 'broadly equivalent' (as the plaintiffs contend). Instead, if a single costs award was to be made, the Minister submits that an order that the plaintiffs pay 50 per cent of the Minister's costs of the proceedings (including S CI 2016 04381) would be appropriate having regard to the overall outcome and the parties' respective successes.

11 I agree with the plaintiffs that a notional set-off and apportionment is preferable in this particular case. But I agree with the Minister that the cost entitlements of the parties are not broadly equivalent. I also agree with the Minister that an order that the plaintiffs pay 50 per cent of the Minister's costs of both proceedings would be a fair and just outcome having regard to all the circumstances.

12 In brief, my reasons for that conclusion are as follows:

(a) Despite the general rule that costs should follow the event and a successful party receive all its costs even if it fails to establish some of its defences, here there were three distinct claims on which each party enjoyed mixed success;

(b) However, although each of the three claims was distinct in that the plaintiffs sought discrete remedies for each of them, the principal, practical goal the plaintiffs sought was the ability to resume onshore petroleum exploration and on that they failed;

(c) The critical claim in that regard was the statutory moratorium claim such that, without success on that issue, success on either of the other two claims would not deliver the practical outcome sought (as demonstrated by the particular combination of actual outcomes in the proceeding);

(d) The relative importance of the statutory moratorium claim in the proceeding is further reflected in the attention given to it in both submissions and in my reasons for judgment;[11]

(e) If follows that to the extent the importance of the issues on which the parties succeeded is a guide to the apportionment of costs, that consideration favours the Minister;

(f) Of the other two issues, the administrative moratorium claim (on which the Minister would have succeeded had it been necessary to finally resolve it), in my judgment, was more factually complicated and had a greater bearing on the outcome of the statutory moratorium claim than the variation claim;

(g) It would be preferable to avoid the complications of taxation that would result from making separate costs orders for both sides in respect of the issue or issues on which they succeeded;

(h) Having regard to the overall importance of the different issues, their relative factual complexities, the amount of evidence adduced for them, and the time and attention given to them in argument and analysis, I judge that the appropriate apportionment of the total costs of the proceeding for the issues on which the Minister succeeded to be of the order of 75 per cent and that, correspondingly, the like apportionment for the plaintiffs to be of the order of 25 per cent;

(i) Making the assumption that each side has been equally efficient in its preparation for trial, I consider that I should apply a notional set-off of costs entitlements and make a single order that the plaintiffs pay 50 per cent of the Minister's costs of both proceedings.

13 In conclusion, I order that the plaintiffs pay the Minister 50 per cent of his costs of the proceeding (including the reserved costs of proceeding S CI 2016 04381).

[1] ASIC v Flugge (No 2) (2017) 342 ALR 478, 501 [130(5)]; Spear v Hallenstein (No 2) [2018] VSC 207 (2 May 2018) [5]; See also Supreme Court (General Civil Procedure Rules) 2015 r 63.31.

[2] Chen v Chan [2009] VSCA 233 (8 October 2009) [10(3)].

[3] McFadzean v Construction Mining and Energy Union [2007] VSCA 289; (2007) 20 VR 250, 291 [157].

[4] ASIC v Flugge (No 2) (2017) 342 ALR 478, 501 [130(6)].

[5] Ibid [130(7)]; McFadzean v Construction Mining and Energy Union [2007] VSCA 289; (2007) 20 VR 250, 289 [152].

[6] McFadzean v Construction Mining and Energy Union [2007] VSCA 289; (2007) 20 VR 250, 291 - 292, [158].

[7] Ibid; Chen v Chan [2009] VSCA 233 (8 October 2009) [10(3)].

[8] Chen v Chan [2009] VSCA 233 (8 October 2009) [10]; James v Surf Road Nominees Pty Ltd (No 2) [2005] NSWCA 296 (2 September 2005) [36] citing Dodds Family Investments Pty Ltd v Lane Industries Pty Ltd [1993] FCA 259; (1993) 26 IPR 261.

[9] Chen v Chan [2009] VSCA 233 (8 October 2009) [10] citing Major Engineering Pty Ltd v Helios Electroheat Pty Ltd (No 2) [2006] VSCA 114 (26 May 2006) [5].

[10] Supreme Court (General Civil Procedure Rules) 2015 r 63.04(2).

[11] Mirboo Ridge Pty Ltd v Minister for Resources [2018] VSC 557.