United Resource Management Pty Ltd v Par Recycling Services Pty Ltd

The claims of the parties

1. In the underlying proceedings, Par made two claims by its statement of claim: the first was for unpaid gate fees totalling $687,352 due under the Somersby agreement, and the second was for $503,665 paid by Par to URM in June 2018 under the CDS Agreement. The latter amount was initially said to be recoverable by Par because no part of it had been shared with the SHOROC Councils.
2. These claims were formulated and made before Par became aware that the Somersby agreement had terminated in October 2014. On that fact becoming "known" to the parties in 2020, two further claims were made in the underlying proceedings. The first was made by URM and URME by their first cross-claim, and the other by Par's amended second cross-claim.
3. URM's first cross-claim sought CDS refund amounts due under the CDS Agreement and damages for breach of an implied term of that agreement. Together, those claims were directed to the whole of the period from 1 December 2017 to 30 June 2019 and initially were for an amount in excess of $2 million. As finally pressed, this claim was for $1.824 million.
4. Par's amended second cross-claim was for damages for misleading or deceptive conduct by URM in representing that the Somersby agreement had continued to exist and apply. That claim was formulated in two ways. The first was for damages on the basis that from October 2014 and in the absence of the Somersby agreement Par would have negotiated and charged higher gate or processing fees for taking URM's container waste until 30 June 2019. The damages claimed exceeded $8 million. The second was that if in January 2018 it had known that the Somersby agreement had terminated Par would not have entered into the CDS Agreement, and consequently would not have paid $503,665 or any other amount to URM. The repayment of that amount was already the subject of the claim brought by Par's statement of claim.
5. The orders made following the conclusion of the appeal included that the appeal and cross-appeal be allowed, that the amended second cross-claim be dismissed, and that there be judgments in favour of Par on the statement of claim ($501,976 plus interest) and in favour of URM on the first cross-claim ($74,637 plus interest).

The costs orders sought

1. URM contends that the final costs orders be as follows: (a) as to the appeal proceeding: (i) PAR pay the appellants' costs of the appeal. (ii) the URM parties pay PAR's costs of the cross-appeal. (b) as to the first instance (i.e. trial) proceeding: (i) URM and [Mr] Johnston pay PAR's costs of the statement of claim. (ii) PAR pay URM and URME's costs of the first cross-claim. (iii) PAR pay the URM parties' costs of the amended second cross-claim.
2. In the alternative, URM submits in relation to the costs at first instance that "at worst for the URM parties" it might be said that each of the Par and URM parties has had "an equal measure of success in the first instance proceeding such that they should each bear their own costs of the first instance proceeding".
3. In response, Par contends that in relation to the costs of the trial it ought have "all, or at least a significant portion, of its costs of the trial on the ordinary basis to 19 August 2022 and on an indemnity basis from and including 20 August 2022" following its service of a Calderbank offer made by letter dated 18 August 2022. By that time, URM's first cross-claim and Par's second cross-claim had been filed and served. In relation to the costs of the appeal, Par initially contended that it had "substantial success in the appeal" but did not contend for any specific order should be made in respect of the appeal. In its final submissions in reply, Par submits that it should receive a "significant percentage of [its] costs of the proceedings at first instance and on appeal".

Disposition

1. Par's claim to unpaid gate fees was in respect of seven invoices. Par was ultimately successful (i.e., after the determination of the appeal) in its claim in relation to the first four of those invoices. As to the remaining invoices, URM was entitled to retain the benefit of the unpaid $185,376 refund share which had been set off against part of the amount due from URM to Par under invoices 5 to 7. The balance due on those invoices ($198,691) had been paid by URM to Par. The judgment in Par's favour for unpaid gate fees was for $501,976 plus interest. That judgment took account of URM's ultimate success in relation to Par's claim that it would not have entered into the CDS Agreement. That Par would have entered into that agreement meant that URM was entitled to the payment of $185,376, which was set off against unpaid gate fees.
2. The primary judge also held that Par was entitled to recover the refund share payments totalling $503,665 as damages for URM's misleading or deceptive conduct. The overturning on appeal of the finding that Par would not have entered into the CDS Agreement meant that URM was entitled to that amount of $503,665. For that reason, Par's claim to that amount was ultimately dismissed.
3. URM's first cross-claim was for its share of refund amounts due under the CDS Agreement and to damages for breach of an implied term of that agreement said to have required Par to secure a refund sharing agreement with the SHOROC Councils by 30 November 2018. URM's claim was made on the basis that the period during which the CDS Agreement applied was 1 December 2017 to 30 June 2019. The primary judge upheld that claim, but nevertheless dismissed URM's first cross-claim on the basis that any moneys payable by Par would in turn have been recoverable by Par as damages for URM's misleading or deceptive conduct.
4. On appeal (URM's appeal), it was held that Par had not established a counterfactual in which it would not have entered into the CDS Agreement. It was also held (Par's cross-appeal) that the period for which the CDS Agreement applied was only from 1 February to 30 November 2018. It followed from these conclusions that the primary judge's basis for rejecting URM's claim to a share of refunds fell away, but that claim could only be made for the shorter period. The parties agreed that the refund share amount remaining outstanding to URM for that 10-month period was $74,637. The question whether URM was entitled to damages for breach of any implied term of the CDS Agreement did not arise because the sharing arrangement concluded on 30 November 2018. URM's argument that its refund share was to be calculated by reference to the nature of the relevant waste delivered was rejected by the primary judge and not maintained in oral argument in the appeal.
5. Par's amended second cross-claim was for damages for misleading or deceptive conduct. The primary judge rejected the claim as formulated to recover damages from October 2014, and upheld the claim as formulated to recover $503,665 on the basis that but for that conduct Par would not have been liable to pay that amount. As the latter finding was overturned on appeal, it followed that Par's second amended cross-claim was to be dismissed.
6. At this point, the following observations are relevant.
7. First, Par's claim to unpaid gate fees was upheld, although for an amount less than that claimed. The amount as determined, $501,976, was not controversial in the sense that it related to four invoices, none of which had been paid. The difference between that amount and the amount claimed was ultimately resolved by the rejection of Par's "no CDS Agreement" case and by giving effect to the set off agreement between Par and URM.
8. Secondly, Par's claim to recover the $503,665 paid in June 2018 was also resolved (and dismissed) because of the rejection of Par's "no CDS Agreement" case.
9. Thirdly, the disposition of Par's amended second cross-claim, both at first instance and on appeal, required a detailed consideration of the relationship between Par and URM over the period from 2011 when the Somersby agreement was made to June 2019 when that relationship terminated. The principal issues arising in that second cross-claim were whether there was misleading conduct, and if so whether either of Par's damages claims was made out. Ultimately, the latter of those issues were decided in URM's favour and that claim was dismissed, notwithstanding that Par had success in establishing misleading or deceptive conduct.
10. Fourthly, the ultimate outcome of URM's cross-claim for amounts due under the CDS Agreement depended on the resolution of a number of issues. Some were resolved in URM's favour, and some were not. They included the rejection of Par's cross-claim on the basis that it failed to establish that it would not have entered into the CDS Agreement; this Court's upholding of Par's cross-appeal that URM was only entitled to a share of CDS refunds between 1 February and 30 November 2018; and the primary judge's rejection of URM's argument that the 60/40 split of CDS refunds was to be calculated by reference to the nature of the waste delivered rather than its weight. The ground of appeal challenging that finding was not pressed. In the result, as noted above, the parties agreed that $74,637 (plus interest) was the unpaid CDS revenue share due to URM for that shorter period.
11. These observations show that each of the parties had some success on the claims made at first instance, and that at the same time each failed to make out the substantial claims brought by the two cross-claims. In addition, it shows that, although Par was successful on its initial claim for unpaid gate fees, the factual basis for that claim was confined and not significantly controversial. That position is to be contrasted with the outcome of the cross-claims, in which Par ultimately had no success and URM had little success. Par's second cross-claim required a detailed factual consideration of the relations and dealings between the parties over a period of more than 8 years; whereas URM's cross-claim focused on moneys due under the CDS Agreement from December 2017.
12. Whilst Par initially had successes on particular issues and claims at trial, with the exception of the major part of its claim for unpaid invoices those successes did not survive on appeal. Furthermore, it is also apparent that much of the factual material led at trial was relevant to the resolution of more than one of the three principal claims made at first instances. One consequence of this is that some costs will have been incurred in relation to issues on which a party may have been both successful and unsuccessful, depending upon the claim to which the issue related. This circumstance may make any assessment of costs apportioned solely by reference to a party's success or otherwise in relation to a particular claim unreliable as a measure of that party's overall success in the proceedings.
13. When account is taken of (1) Par's success at first instance on a claim which for the most part was not itself controversial, (2) the limited success that URM had on its considerable money claim under the CDS Agreement, and (3) the fact that Par's more broadly ranging cross-claim was dismissed, it is difficult to resist the correctness of the overall assessment contended for by URM that, taking account of the result on appeal, the parties have had a roughly equal measure of success in the proceedings at first instance. Agreeing as we do with that assessment, it follows that each party should bear its or their own costs of the underlying proceedings. In other words, there should be no order as to the costs of those proceedings.
14. In reaching that conclusion, we have considered and rejected Par's contention that any costs order made in relation to the costs of the trial should involve a significant portion of its costs on the ordinary basis up to 19 August 2020 and on an indemnity basis from that time. That Calderbank offer was that URM pay $660,000 in full and final settlement of the parties' claims and counter-claims and bear its own costs of prosecuting and defending those claims. The primary judge assessed URM's rejection of that letter as unreasonable where Par did "considerably better at trial than it had offered to accept".
15. However, that was not the position after the appeal. Taking account of interest, following the appeal, Par recovered $501,976 plus interest of $114,180 (total $616,156) from which had to be deducted $74,637 plus interest of $13,486 (total $88,123), leaving $528,033 (including interest) to be contrasted with its Calderbank offer of $660,000 (including interest). Thus, after the appeal, Par had not done as well as or better than that offer, and in the light of that outcome it was not unreasonable for the URM parties to reject it. For that reason alone, the Calderbank offer can be disregarded when assessing the appropriate costs order at first instance.
16. As to the costs of the appeal, Par had success on its cross-appeal, which was brought at the end of argument in this Court, and which was disposed of shortly. However, the major part of the appeal was concerned with URM's successful challenge to the primary judge's finding which upheld Par's misleading or deceptive conduct claim with respect to its entry into the CDS Agreement. Allowing for these respective successes of the parties in the appeal and cross-appeal, and the fact that far more time was taken dealing with the issues in the appeal than in the cross-appeal, we consider that URM should recover 50% of its costs of the appeal, and that there should be no order in relation to the costs of the cross-appeal.
17. For these reasons, the Court makes the following orders: 1. Make no order as to the costs of the proceedings at first instance with the intent that the parties pay their own costs of those proceedings. 2. Order that the respondent (Par) pay 50% of the appellants' (URM, URME and Mr Johnston) costs of the appeal (as distinct from the cross-appeal) and make no order as to the costs of the cross-appeal.

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