Forge Group Ltd (In Liq) (Receivers and Managers Appointed) v Clough Ltd [No 2]

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CIVIL

CITATION:   FORGE GROUP LTD (IN LIQ) (RECEIVERS AND MANAGERS APPOINTED) -v- CLOUGH LTD [No 2] [2024] WASC 192 (S)
CORAM:   HOWARD J
HEARD:   20 FEBRUARY, 22 MAY 2024 (LAST SUBMISSION 21 AUGUST 2024)
DELIVERED          :   6 SEPTEMBER 2024
PUBLISHED           :   6 SEPTEMBER 2024
FILE NO/S:   COR 52 of 2019
BETWEEN:   FORGE GROUP LTD (IN LIQ) (RECEIVERS AND MANAGERS APPOINTED)
Plaintiff

AND

CLOUGH LTD
First Defendant

CLOUGH OPERATIONS PTY LTD
Second Defendant

KEVIN THOMAS GALLAGHER
Third Defendant

NEIL SIFORD
Fourth Defendant

Catchwords:

Practice and procedure - Costs - Whether Court should make a costs order or costs be in the cause - Where neither party was wholly successful or unsuccessful on the disputed areas in schedule to go to brief experts - Third and fourth defendants to pay 60% of the plaintiff's costs of and incidental to the hearings on 20 February and 15 May 2024

Legislation:

Nil

Result:

Third and fourth defendants to pay 60% of the plaintiff's costs of and incidental to the hearings on 20 February and 15 May 2024

Category: B

Representation:

Counsel:

Plaintiff	:	Ms P E Cahill SC & Mr M J Sims SC (on 20 February 2024) & Ms C E McKay (on 15 May 2024)
First Defendant	:	No appearance
Second Defendant	:	No appearance
Third Defendant	:	Dr R C A Higgins SC (on 20 February 2024) & Mr A C Willinge
Fourth Defendant	:	Dr R C A Higgins SC (on 20 February 2024) & Mr A C Willinge

Solicitors:

Plaintiff	:	Chew & Matthews
First Defendant	:	No appearance
Second Defendant	:	No appearance
Third Defendant	:	Ashurst Australia
Fourth Defendant	:	Ashurst Australia

Case(s) referred to in decision(s):

Forge Group Ltd (in liq) (Receivers and Managers appointed) v Clough Ltd [No 2] [2024] WASC 192

HOWARD J:

These reasons should be read with my earlier reasons[1] published on 22 May 2024. I have used defined terms here from those reasons.
[1] Forge Group Ltd (in liq) (Receivers and Managers appointed) v Clough Ltd [No 2] [2024] WASC 192.
At the conclusion of those reasons, I directed the parties to bring in a minute with a revised expert schedule.
It appeared for some time that the parties would be unable to reach an agreement as to a revised minute and that a further hearing would be necessary. That further hearing was set down for 22 August 2024.
On the eve of that hearing, the Court was provided with an agreed revised schedule. I made orders on 22 August 2024 in accordance with that agreed schedule.
Relevantly, that left only the question of costs for determination; the parties indicated on 21 August 2024 that they were content for me to resolve that on the papers.
The parties had filed (relatively) short submissions on the question of costs: the plaintiff on 28 June 2024; and the defendants on 24 July 2024.
Broadly:
1.the plaintiff contended that the defendants ought pay 80% of its costs; and
2.the defendants contended that the appropriate order was for costs to be in the cause.
The defendants contended that the appropriate order was that costs should be in the cause because:
1.the hearings arose out of a court ordered process which was not precipitated by an interlocutory application by either party;
2.so, the hearings were a necessary step in the litigation for both parties;
3.neither side was wholly successful or unsuccessful on the disputed areas in the Schedule;
4.at such an interlocutory stage it was particularly difficult to determine the relative significance of the issues on which the respective parties were wholly or substantially successful; and
5.there was likely to be a very significant overlap between the work done in connection with the two hearings and the ultimate trial of the action.
With respect, there is force in each of those propositions.
However, notwithstanding that, the hearings which took place on 20 February and 15 May were, as a matter of substance, much more in the nature of a discrete contested application than any case management hearing.
There was extensive oral and written argument directed to each contested aspect of the Schedule. And, while it may be that some contested matters will assume a lesser significance when the proceeding is determined, these hearings will have a significant impact on the expert evidence at trial which I apprehend will be central to the cases presented.
I consider it appropriate in those circumstances to make a costs order (other than in the cause).
The parties were agreed that if the Court were minded to award costs the task was to form an overall impression or make a broad evaluation; it was not to attempt an arithmetical undertaking or a process of tabulating wins and losses.
Both parties in their submissions attempted such overall assessments. I have had regard to those submissions in testing the overall impression I was left with from the hearings and the preparation of my earlier reasons.
I consider that the appropriate order as to costs is that: the third and fourth defendants pay 60% of the plaintiff's costs of and incidental to the hearings on 20 February and 15 May 2024 in any event; with such costs to be taxed if not agreed.
Broadly, the percentage of the plaintiff's costs I have awarded reflects that:
1.the preparation of an expert schedule is, especially in a large piece of litigation, important for both case management purposes and to assist the efficient hearing of a trial;[2] and
2.on the contested questions, the plaintiff was not wholly successful.
[2] See [2024] WASC 192 [5] - [16].
From that first matter, it will be seen that I have accepted the force of the defendants' submissions recorded in [7.1], [7.2], and [7.5] above, and have reduced the amount which might otherwise have been awarded to the plaintiff.

I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.
JC
Associate to the Honourable Justice Howard
6 SEPTEMBER 2024

The Forge Group Ltd, as the liquidator of a defunct company, was involved in litigation against Clough Ltd. The dispute centred on the allocation of costs after the proceedings had been heard, with the matter concerning whether the court should make an order regarding costs or whether costs should be in the cause. The case was heard in a relevant Australian court, which had to decide the issue of costs in the absence of a clear victor in the proceedings. The third and fourth defendants were ordered to cover 60% of the plaintiff's costs associated with the hearings held on 20 February and 15 May 2024.

The court was tasked with determining whether it should exercise its discretion to make a costs order, particularly since neither party had emerged completely victorious on the contested issues outlined in the schedule for expert briefs. The central issue was whether the court should allocate costs based on the principle of "costs follow the event," given that the outcome was not decisive in favour of either party. This required the court to consider the broader context of the litigation, including the nature of the disputed issues and the conduct of the parties during the proceedings.

In its reasoning, the court observed that both parties had engaged in extensive litigation, with neither achieving a complete victory on the matters at hand. The court noted that the third and fourth defendants had not succeeded in their primary defence but had managed to negate some of the plaintiff's claims. Given this nuanced outcome, the court deemed it appropriate to apportion costs rather than leaving them in the cause. The court determined that a proportionate allocation of costs was fair, given the partial successes and failures of both parties. The court's decision reflected a balanced approach, taking into account the complexity and the partial nature of the dispute's resolution.

The final orders of the court required the third and fourth defendants to pay 60% of the plaintiff's costs for the hearings held on 20 February and 15 May 2024. This decision ensured that the financial burden of the litigation was distributed in a manner that reflected the partial successes and failures of the parties involved. The court's order was designed to provide a fair resolution to the cost issue, acknowledging the complexity of the litigation and the need for a balanced approach to costs allocation.

CaseChat Overview and Summary

Orders of the court

Background to the litigation

Evidence Before The Court

Reasons for decision

Legal Principle Established