Rivercity Motorway Finance Pty Ltd (Administrators Appointed) (Receivers and Managers Appointed) v AECOM Australia Pty Ltd

The respondent/cross-claimant (AECOM) is to pay the cross-respondents to each of the second to twelfth cross-claims its or his costs of and incidental to the cross-claims filed on 25 July 2013 and the amended interlocutory application filed by AECOM on 17 December 2013.
AECOM is to pay the applicants (who include the thirteenth to twentieth and proposed twenty-first cross-respondents) their costs of and incidental to the cross-claims filed on 25 July 2013 and the interlocutory applications (as amended) filed by AECOM on 2 August and 17 December 2013.
The costs referred to in orders 1 and 2 be taxed and payable forthwith.
Costs as between AECOM and the cross-respondent to the first cross-claim (NIEIR) are reserved. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011. IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY GENERAL DIVISION NSD 697 of 2012

REASONS FOR JUDGMENT 1 The matter now before me concerns the interlocutory judgments in Rivercity No 2 and the costs of AECOM's cross-claims, AECOM's applications for leave to amend such cross-claims, AECOM's applications to join various entities and persons as respondents, and AECOM's applications for leave to proceed. Reasons for decision relating to those matters were published by me on 18 July 2014. Substantive orders giving effect to those reasons were made by me on 29 July 2014. 2 The applicants in the RCM Proceedings and Portigon Proceedings and the cross-respondents referred to in [84] of Rivercity No 2 (which do not include NIEIR) all sought costs. For convenience I shall refer to the former as the "applicants" and the latter as the "third party cross-respondents". A glossary of other terms used in these reasons is attached. 3 Each of the cross-claims against the applicants and the third party cross-respondents was struck out, with leave to amend and re-plead refused. The various interlocutory applications filed on 2 August, 16 December and 17 December 2013 referred to herein relate to AECOM's applications for such leave, AECOM's applications for orders joining the third party cross-respondents as respondents and AECOM's applications for leave to proceed against the applicants. All such applications were refused. 4 The applicants and the third party cross-respondents sought orders that AECOM pay their costs of: AECOM's first to twentieth cross-claims filed 25 July 2013 in the RCM Proceeding; AECOM's first to tenth cross-claims filed 25 July 2013 in the Portigon Proceedings; AECOM's related interlocutory applications in the RCM Proceeding and the Portigon Proceeding filed 2 August, 16 December and 17 December 2013. I should make clear that I am not presently concerned with any question of costs in connection with the cross-claims brought by AECOM against NIEIR (the first cross-claim in the RCM Proceedings and the first cross-claim in the Portigon Proceedings). AECOM's cross-claims against NIEIR were struck out, but AECOM was required to re-plead its cross-claim against NIEIR to take account of my previous reasons: see [9] and [124] of Rivercity No 2. I propose to reserve all questions of costs as between AECOM and NIEIR. 5 Each of the applicants and the third party cross-respondents submitted that any costs awarded to them should be taxable and payable forthwith. One of the third party cross-respondents (Mr Long) sought an order that some of his costs be awarded on an indemnity basis. I shall put the application for indemnity costs aside for the moment and return to it later in these reasons. 6 AECOM did not suggest that the third party cross-respondents were not entitled to costs orders in their favour. However, it did submit that if it was required to pay the third party cross-respondents' costs, then they should be substantially reduced (ie. by 50%) to take account of particular issues upon which the third party cross-respondents were unsuccessful. 7 Most of the debate in relation to costs was about who should pay them. AECOM's primary position was that the applicants should pay the third party cross-respondents' costs and AECOM's costs. AECOM submitted that if the Court was not minded to make orders to that general effect, then the Court should make the following orders: (1) The Applicant(s) pay: (a) the Respondent's costs of, and incidental to, the interlocutory applications filed by the Respondent to file amended (or proposed) cross-claims against the Cross-Respondents and to join various Cross-Respondents as Respondents to each proceeding; and (b) the Respondent's costs of, and incidental to, the cross-claims and the proposed cross-claims. (2) The Respondent pay: (a) 50% of the Cross Respondents' costs of, and incidental to, the interlocutory applications filed by the Respondent to file amended (or proposed) cross-claims against the Cross-Respondents and to join various Cross-Respondents as Respondents to each proceeding; and (b) the Cross Respondents' costs of the cross-claims and the proposed cross-claims. (3) The Applicant(s) are to indemnify the Respondent for the costs that the Respondent is ordered to pay to the Cross-Respondents: (a) of, and incidental to, the interlocutory applications filed by the Respondent to file amended (or proposed) cross-claims against the Cross-Respondents and to join various Cross-Respondents as Respondents to each proceeding; and (b) of, and incidental to, the cross-claims and the proposed cross-claims. (4) The Applicant(s) are to pay such amount or amounts as are payable to the Respondent pursuant to order 3 above within 28 days of the Respondent providing to the Applicant(s) proof of payment to one or more of the Cross-Respondents. 8 The applicants opposed the making of any order which would see them made liable, directly or indirectly, for any part of AECOM's or the third party cross-respondents' costs. The third party cross-respondents also opposed any order which might require them to look to the applicants rather than AECOM for any part of the costs awarded to them because the applicants are in administration and presumably insolvent. Both the applicants and the third party cross-respondents opposed any reduction of their costs as sought by AECOM in its proposed order (3) or by any other amount. 9 The relevant legal principles are not in dispute. The power of the Court to award costs pursuant to s 43 of the FCA Act is conferred in broad terms and the discretion exercised by the Court when awarding costs is also broad. Costs do not automatically follow the event, although they will ordinarily do so in the absence of special circumstances justifying a different approach: see Roadshow Films Pty Ltd v iiNet Ltd (No 2) (2011) 91 IPR 482 at [3], Dodds Family Investments Pty Ltd v Lane Industries Pty Ltd (1993) 26 IPR 261 at 271 to 272 and Ruddock v Vadarlis (No 2) (2001) 115 FCR 229. In the latter case Black CJ and French J said at [11]: • Ordinarily costs follow the event and a successful litigant receives costs in the absence of special circumstances justifying some other order. • Where a litigant has succeeded only upon a portion of the claim, the circumstances may make it reasonable that the litigant bear the expense of litigating that portion upon which he or she has failed. • A successful party who has failed on certain issues may not only be deprived of the costs of those issues but may be ordered as well to pay the other parties' costs of them. In this sense "issue" does not mean a precise issue in the technical pleading sense but any disputed question of fact or law. See Hughes v Western Australian Cricket Association (Inc) (1986) ATPR ¶40-748 at 48,136; approved by the Full Court in Queensland Wire Industries Pty Ltd v Broken Hill Pty Co Ltd (1987) 17 FCR 211 at 222. 10 In its submissions, AECOM relied on the Court's acceptance in Rivercity No 2 that it was at least arguable that the relevant claims for damages under s 87 for contravention of s 52 were not apportionable claims (the s 87 point). AECOM also emphasised in its submissions that the applications for leave to amend and to strike-out the relevant cross-claims, were dismissed upon the applicants providing the undertakings, and making the amendments, to the effect recorded at [47] and [48]. 11 AECOM submitted that it raised the s 87 point with the applicants in a letter dated 24 October 2013, that the applicants did not accept that the s 87 claims were not apportionable claims, and that they did not take any steps in response to that letter to either discontinue the s 87 claims or to provide undertakings of the kind ultimately accepted by the Court. It is not in dispute that undertakings of the kind referred in [47] were not proffered until the applicants filed their written submissions in reply approximately two weeks before the hearing of the interlocutory applications. Nor is it in dispute that the possibility of any amendment to their originating applications was not raised by them at all, and was first raised by the Court at the hearing of the interlocutory applications. 12 As to the joinder applications, AECOM submitted that these were refused on terms that required the applicants to undertake not to commence any further proceeding against any of the third party cross-respondents in relation to any of the alleged breaches of duty referred to in AECOM's Further Amended Defence: see Rivercity No 2 at [96]. It is not disputed by the applicants that no such undertakings were proffered by the applicants until after Rivercity No 2 was published. 13 On the matter of the joinder applications, there is one consideration which I regard as of particular importance. The terms upon which the joinder applications were refused were never sought by AECOM and were not terms imposed to protect AECOM. The Court has an interest in the efficient use of its resources, and the undertakings referred to in Rivercity No 2 at [96] were designed to avoid potential future proceedings by the applicants against any of the third party cross-respondents. If after judgment in the RCM Proceedings and the Portigon Proceedings the applicants sought to commence further proceedings against a third party cross-respondent for contravention of s 52 or negligence - assuming such proceedings were otherwise maintainable - it would not be open to any such cross-respondent to obtain contribution from AECOM: see s 87CF and s 87CG of the TPA reproduced in Rivercity No 2 at [25]. 14 In the result, I do not think AECOM's argument that the applicants, rather than AECOM, should be required to pay the costs associated with AECOM's unsuccessful joinder application has any merit. 15 The arguments with respect to the costs associated with AECOM's cross-claims are more substantial. As pointed out in Rivercity No 2 at [49], the entire argument as to whether the applicants' s 87 claims were apportionable claims would never have arisen had those claims either not been made to begin with, or had they been discontinued at some later time. 16 Various reasons were given by the applicants for wishing to maintain their s 87 claims. None of these reasons struck me as very persuasive. On the other hand, the possibility that the s 87 claims were made in the hope that the applicants might recover from AECOM damages free of any deduction for proven contributory negligence or concurrent wrongdoing seems to me unlikely. The applicants' responses from the moment AECOM first articulated the s 87 point suggests that they were not seeking to use s 87 for that purpose. In any event, the applicants' position became more explicit over time and culminated in the undertakings proffered in their submissions in reply. 17 There is no reason to think that the applicants would not have made their intentions clear if asked to do so at a directions hearing or case management conference before AECOM filed and served its cross-claims. Certainly it would have been preferable for AECOM to raise its concerns as to the possible implications of the s 87 claims before rather than after the cross-claims were filed and served. 18 The evidence does not show when the s 87 point first occurred to AECOM and its legal representatives or what role it played in AECOM's decision to issue the cross-claims. The Court raised the utility of the cross-claims with AECOM when the third party cross-respondents first appeared at a directions hearing held on 8 August 2013. Nothing was said about s 87 at the time. Senior Counsel for AECOM submitted that this was the result of an oversight. 19 Be that as it may, the cross-claims were never only intended to protect AECOM against the s 87 point. It is significant, in my view, that the s 87 point was merely one of a number of justifications relied upon by AECOM in support of its decision to file its cross-claims. Other arguments relied upon by AECOM are referred to in its letters of 24 October 2013 and 18 November 2013, and in Rivercity No 2 at [59] to [74] and [76]. In its written submissions filed prior to the interlocutory hearing, AECOM contended that it would be entitled to maintain its cross-claims against the third party cross-respondents even if the applicants were to abandon their claims to s 87 relief. Thus, while the undertakings proffered by the applicants may have met the s 87 point, they did not meet any of the other points raised by AECOM as justification for its cross-claims. I am satisfied that AECOM would have pressed on with its cross-claims even if the applicants had volunteered their undertakings as soon as the s 87 point was first brought to their notice. 20 AECOM contended that the decision to file its cross-claim was primarily aimed at minimising the risk that it might be found liable for something more under s 87 than under s 82 or that it might be found liable for damages in excess of its assessed proportionate share of responsibility: see [44] and [60] of Rivercity No 2. To the extent that AECOM was seeking to guard itself against such possibilities, then I think justice requires that AECOM pay the costs that stem from what seems to me to have been an exceedingly cautious approach. 21 I do not think this is an appropriate case to make any adjustment to take account of the applicants' or third party cross-respondents' lack of success on any particular issue. I say this in circumstances where the s 87 point, which was the only point upon which the applicants or the third party cross-respondents had any lack of success, was fully met by the applicants' undertakings and amendments. 22 I therefore propose to make costs orders substantially as sought by the applicants and the third party cross-respondents. 23 It was submitted on behalf of a number of the third party cross-respondents that, for the avoidance of doubt, there should be an order making their costs taxable and payable forthwith. As against them, the RCM Proceedings and the Portigon Proceedings are now concluded, in which case such orders are perhaps otiose. However, in light of the arguments put to me and for the avoidance of doubt, I propose to order that the third party cross-respondents' costs be taxed and payable forthwith. 24 As to the applicants' costs, I think there should also be an order that they be taxed and payable forthwith. The costs incurred were no doubt substantial, and the issues decided were discrete. And since the trial of the proceedings is not scheduled to occur until late 2015 the applicants are likely to be out of pocket for some considerable time if the order sought is not made. I note that Heerey J made such an order in not dissimilar circumstances in Caterpillar v John Deere Limited [1999] FCA 669; see in particular his Honour's observations at [4] to [5]. 25 As previously mentioned, it was submitted on behalf of one third party cross-respondent (Mr Long) that he should have his costs on an indemnity basis from 21 November 2013. This submission was based upon AECOM's failure to accept a Calderbank offer of that date which was expressed to be open for 14 days. This was, of course, some months before the applicants proffered their undertakings. In the circumstances, I am not persuaded that AECOM's non-acceptance of the Calderbank offer was unreasonable. Mr Long's application for indemnity costs is refused. 26 There is one final matter to deal with. As mentioned at [10] above, the applicants were required to make amendments to their originating applications as a condition of the Court making orders, disposing of the cross-claims and related interlocutory applications. In its submissions AECOM said that it was entitled to an order that the applicants pay the costs thrown away by reason of such amendments. I should perhaps make it clear that I do not consider that any of the costs to which the orders I propose to make relate would be costs thrown away by reason of the amendments which the applicants were required to make to their originating applications. Since I am not satisfied that AECOM is likely to have thrown away any costs as a consequence of the amendments to the originating applications, I do not propose to make the order sought. 27 Orders accordingly. I certify that the preceding twenty-seven (27) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Nicholas.

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