Spirits International B.V. v Federal Treasury Enterprise

REASONS FOR JUDGMENT 1 The remaining issue in this matter is costs. 2 On 15 February 2013 the primary judge refused to grant to the cross-respondent leave to file a rejoinder to the reply of the cross-claimant contending that a decision of a foreign court on which the cross-claimants relied to found an estoppel was affected by actual and/or apprehended bias and thus could not be relied on for that purpose (Federal Treasury Enterprise (FKP) Sojuzplodoimport v Spirits International B.V. (No 3) [2013] FCA 85). 3 On 18 September 2013 the Full Court granted leave to the cross-respondent to appeal against the orders of the primary judge, set aside those orders, and allowed the appeal but only to the extent of a grant of leave to the cross-respondent to file an amended rejoinder, differently particularised, and confined to an allegation of apprehended bias (Spirits International B.V. v Federal Treasury Enterprise (FKP) Sojuzplodoimport [2013] FCAFC 106). 4 As explained in the reasons for judgment of Jacobson and Jessup JJ in the Full Court at [6]-[8], the particulars to the rejoinder before the primary judge were inadequate with the consequence that the primary judge was right to reject the rejoinder but the conventionally expressed particulars provided before the second day of the hearing of the appeal (the appeal having been adjourned to enable their preparation) enabled the appeal to be determined as a matter of substance rather than form. Accordingly, with the consent of the parties, the Full Court determined whether leave should be granted to the filing of the rejoinder as amended. The cross-respondent, as noted, succeeded in part in the appeal. 5 The position of the cross-respondents is that costs usually follow the event. In this case, the event is best seen as the capacity of the cross-respondent to file a rejoinder contending bias. At first instance, leave was refused. On appeal, leave was granted. The cross-respondent thus succeeded in substance. No apportionment is justified by reason of the fact that the cross-respondent was granted leave to plead apprehended and not actual bias. However, the fact that the particulars were amended during the hearing of the appeal is relevant. Contrary to the cross-claimant's submission, the rejoinder as amended was not materially different from that before the primary judge as the content of the expert reports referred to in the original version was the same as the facts particularised in the amended version. On that basis, there should be no order as to the costs of the hearing at first instance and the cross-claimants should pay 50% of the cross-respondent's costs of the appeal and application for leave to appeal. 6 The position of the cross-claimants is that, as the Full Court found the primary judge was correct to reject the proposed rejoinder, the cross-respondent should pay the cross-claimant's costs of the hearing at first instance. The fact that the parties and the Full Court adopted the pragmatic approach of enabling the cross-respondent to prepare wholly different particulars to the proposed rejoinder and the cross-respondent, in part, succeeded in obtaining leave to file the pleading limited to an allegation of apprehended bias cannot alter or affect the correctness of the orders of the primary judge. In terms of the costs of the appeal, the cross-respondent succeeded in part only after the Full Court had made clear its significant concerns about the particularisation of the proposed rejoinder leading to the cross-respondent preparing (for the second day of the hearing) a materially different document from that the primary judge considered. As such, each party should pay its own costs of the appeal and application for leave to appeal. 7 The cross-claimant's position better reflects the conduct and overall outcome of this case, at both first instance and on appeal, than the position of the cross-respondent. The opportunity that was granted to the cross-respondent during the hearing of the appeal was an indulgence (albeit an appropriate one) to ensure that the opportunity to resolve the substance of the dispute was not wasted. That does not alter the fact that the primary judge was presented with a proposed rejoinder which failed to identify the material facts on which the cross-respondent relied to found its allegations of bias and was right to reject the pleading. If the matter had been left there the application for leave to appeal and/or the appeal necessarily would have been refused and the cross-respondent ordered to pay the costs below and of the application for leave and/or the appeal. As explained, the matter was not left there for good reason and the cross-respondent obtained part of the relief it sought by reference to a differently particularised rejoinder. The cross-respondent thus succeeded to that extent in circumstances where the cross-claimant maintained its objection to the filing of any rejoinder alleging either actual or apprehended bias. That said, the cross-respondent's contention that the amended particulars were not materially different from the version before the primary judge is untenable. The submission, in truth, cavils with the findings of the Full Court that the first version was "wholly inadequate" and it was not "good enough...to send the reader off to expert reports" so that the particulars presented to the primary judge "were not particulars at all" (at [6]). 8 These circumstances call for emphasis of the principles that costs are compensatory and the primary factor guiding the exercise of the discretion to order costs is the the result or outcome of the proceeding (Oshlack v Richmond River Council (1998) 193 CLR 72; [1998] HCA 11 at [1], [66]-[67]). To ignore the fact that the cross-respondent rightly failed to obtain leave before the primary judge and only obtained leave (in part) to the filing of its rejoinder in the Full Court because of a wholesale redrafting of its particulars would be unrealistic and thus inconsistent with the need for the discretion to be exercised judicially and not arbitrarily or capriciously. An exercise of the discretion which recognises the conduct and outcome of the proceeding indicates that orders should be made as the cross-claimant proposes, and we so order. Associate: Dated: 29 October 2013 I certify that the preceding eight (8) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justices Jacobson, Jessup and Jagot.