Garsec v His Majesty the Sultan of Brunei

[2007] NSWSC 1201

NEW SOUTH WALES SUPREME COURT

CITATION:      Garsec v His Majesty The Sultan of Brunei  [2007]  NSWSC 1201

JURISDICTION:        Equity Division
Commercial List

FILE NUMBER(S):    50183/06

HEARING DATE{S):            18, 19 and 20 June 2007

JUDGMENT DATE: 31 October 2007

PARTIES:
Garsec Pty Limited (Plaintiff)
His Majesty Sultan Haji Hassanal Bolkiah Mu'izzaddin Waddaulah the Sultan and Yang Di-Pertuan of Brunei Darussalam (First Defendant)
Pehin Orang Kaya Shah Bandarhj Awang Mohd Nawawi bin Pehin Orang Kaya Shah Bandar Hj Awang Mohd Taha (Second Defendant)

JUDGMENT OF:      McDougall J     

LOWER COURT JURISDICTION: Not Applicable

LOWER COURT FILE NUMBER(S):       Not Applicable

LOWER COURT JUDICIAL OFFICER:     Not Applicable

COUNSEL:
N C Hutley SC / D R Pritchard SC / S J Free (Plaintiff)
J T Gleeson SC / S A Kerr (First and Second Defendants)

SOLICITORS:
Swaab Attorneys (Plaintiff)
Clayton Utz Lawyers (First and Second Defendants)

CATCHWORDS:
COSTS - Of successful application for permanent stay of proceedings - Where discrete issues - Costs apportioned - No question of principle.

LEGISLATION CITED:

CASES CITED:

DECISION:
See paragraph [22] of judgment

JUDGMENT:

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION
COMMERCIAL LIST

McDOUGALL J

31 October 

50183/06GARSEC PTY LIMITED v HIS MAJESTY THE SULTAN OF BRUNEI

JUDGMENT       (On costs)

1. HIS HONOUR:    This judgment deals with the question of costs, consequent upon my decision of 15 August 2007 ([2007] NSWSC 882) that the proceedings should be stayed permanently. The parties have provided written submissions on costs, and have agreed that I should decide the questions of costs without hearing oral submissions. They do not rely on any further evidence on the question of costs.

The competing positions

1. The defendants submit that they have succeeded on the substantial issue – whether the proceedings should be allowed to go forward in this state – that was decided by my earlier judgment.  Thus, they submit, costs should follow the event and they should have their costs of the notice of motion (the defendants’ notice of motion filed in court on 8 December 2006).  Alternatively, the defendants submit (acknowledging the fact that they failed on one discrete issue raised by their notice of motion), they should have 90% of their costs of the notice of motion. 

1. In addition, the defendants submit that, since the proceedings have been permanently stayed, they should have their costs of the proceedings to date to the extent that those costs are not covered by any costs order already made. 

1. Garsec accepts that it should pay some of the defendants’ costs of the notice of motion.  It submits that the appropriate fraction, which recognises its partial success and partial failure, is two-thirds. 

1. Further, Garsec submits, the defendants should pay its costs up until 8 December 2006, and there should be no order for costs thereafter.  It seeks to support this order by what it says was the defendants’ delay in bringing their application, leading (it submits) to substantial detriment because of wasted costs (see, on this topic, para [59] of my earlier judgment). 

2. No party sought a special costs order.

The notice of motion

1. The substantial question that I posed and decided in my earlier judgment involved at least three different, although overlapping, issues:

(1)Whether the defendants should be given leave to withdraw their appearance?

(2)        Whether the Court has jurisdiction over the defendants?

(3)If the court does have jurisdiction, whether it should decline to exercise that jurisdiction on forum non conveniens grounds?

1. I decided the first issue in favour of Garsec.  It followed in relation to the second issue that, the defendants having filed an unconditional appearance and having been refused to withdraw it, the Court had jurisdiction.  I decided the third issue in favour of the defendants. 

Relevant considerations

1. Relevant considerations include the following:

   (1)        The defendants succeeded overall.

   (2)        Along the way, the defendants failed on a discrete issue. 

   (3)The issues – as I have grouped them in para [7] above – overlapped. 

   (4)Likewise, to an extent, the evidence on the various issues overlapped. 

   (5)Nonetheless, in relation to the issue on which the defendants failed, there was a discrete and substantial body of evidence. 

   (6)Equally, in relation to the issue on which the defendants succeeded, there was a discrete and substantial body of evidence and written and oral submissions.

   (7)Garsec’s case as originally pleaded included an allegation, now withdrawn, that the contract on which it sued was made in this State; the abandonment of that allegation occurred after the defendants had appeared, and on any view constituted a substantial change in the plaintiff’s case (see, as to the change in case, para [54] of my earlier judgment).

   (8)Garsec incurred of the order of $42,000.00 in costs and disbursements in the period from 16 November 2006 (when the change in its case was notified to the defendants) and 8 December 2006 (when the defendants filed in court their notice of motion).

Analysis: costs of the notice of motion

1. As to the notice of motion, it would be possible to order that Garsec have its costs of the withdrawal of appearance issue, that the defendants have their costs otherwise (or of the forum non conveniens issue) and that those costs be set off.  Any such order apportioning costs would lead to substantial difficulties in assessment, particularly where, although there were discrete bodies of evidence and submissions dealing with the withdrawal of appearance and forum non conveniens issues, the jurisdiction issue overlaps both, and there was an intermediate and overlapping body of evidence and submissions. 

2. Thus, in my view, the appropriate order to make is one that recognises in principle that costs should follow the event but, nonetheless, allows for the fact that Garsec succeeded on one fundamental issue raised by the notice of motion.

3. The parties have provided, although not with complete agreement, a quantitative analysis of the evidence and submissions.  To some extent, that quantitative analysis is not reflected in my reasons, but I do not regard this as significant.

4. Balancing the various considerations to which I have referred, and acknowledging the submissions that the parties have put on the question, I think that substantial justice would be done by an order that Garsec pay 80% of the defendants’ costs of their notice of motion.  That order recognises, although admittedly in a broad brush way, Garsec’s partial success and substantial failure.  It gives primacy to the proposition that costs should follow the event, whilst recognising, in a way which I acknowledge reflects intuitive rather than logical analysis, Garsec’s success on what was in substance a separate and distinct issue.

Analysis: costs of the proceedings

1. The result of my earlier orders is that the proceedings will not go forward in this State.  The reality, as Garsec acknowledges, is that they will not go forward in any guise in any jurisdiction.  Thus, in substance, the defendants have succeeded; all they lack is a judgment authoritatively declaring their success.

2. In those circumstances, prima facie, costs should follow the substantive event.  Garsec urges that this position should not apply because it incurred substantial costs in getting its proceedings to the position where they were when the defendants’ notice of motion was filed.  I do not accept that submission.  The claim as initially propounded by Garsec was hopeless, and its first attempt to reformulate it was equally so (see para [15] of my earlier judgment).  In accordance with the leave granted by Bergin J (as referred to in para [15] of my earlier judgment) Garsec tried again.  In accordance with the terms on which her Honour granted that leave, it filed not merely a commercial list summons and statement but also supporting affidavits.  

3. The defendants’ response to that was not to move for leave to withdraw their appearance, but for summary judgment (see para [42] of my earlier judgment).  That application was dismissed on 23 November 2006 (see para [43]). 

4. A number of costs orders have been made already: including in relation to the successful strikeout application and the unsuccessful summary judgment application.

5. In a broad sense, the proceedings to date have involved the following:

   (1)Three attempts – two unsuccessful and one, finally, successful – by Garsec to formulate its claim; 

   (2)Two applications – one successful and one unsuccessful - by the defendants to dispose of Garsec’s claim as from time to time formulated; and

   (3)        The notice of motion with which I dealt in my earlier judgment.

6. No doubt, the bulk of the costs incurred by the parties have been incurred in relation to one or other of the matters to which I have just referred.  But I do not think that all costs would have been so incurred.  For example: the defendants would have incurred costs in relation to their decision, and consequent instructions, to appear.  As is now known, that decision was taken on the basis of a claim that is not now pressed, and that must be taken to have been incorrectly formulated when it was made.  I do not see why the defendants should not have their costs relating to their appearance, to the extent that they are not picked up by orders already made (or by the order that I have indicated I will make). 

7. Equally, to the extent that Garsec has incurred costs other than costs in relation to the matters to which I have referred, I do not see why the defendants should be required to pay those costs in circumstances where, in all but form, the defendants have succeeded because the claim will not be pressed against them.  For example, why should Garsec have its costs of its last (and successful) attempt to formulate its claim when one takes into account the reality to which I have referred in para [14] above?

8. Thus, contrary to the submission for Garsec, I conclude that it is appropriate to order that the defendants have their costs of the proceedings generally, but without disturbing any costs order made to date.

Orders

1. I make the following orders:

   1.Order the plaintiff to pay 80% of the defendants’ costs of the defendants’ notice of motion filed in court on 8 December 2006.

   2.For the avoidance of doubt, note that the costs so payable include the defendants’ costs of that notice of motion as amended.

   3.Subject to and without disturbing order 1 or any other costs order hitherto made, order the plaintiff to pay the defendants’ costs to date of the proceedings.

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LAST UPDATED:     31 October 2007