Londsdale Investments Pty Ltd v OM (Manganese) Ltd [No 3]
[2012] WASC 185 (S)
•8 OCTOBER 2012
LONDSDALE INVESTMENTS PTY LTD -v- OM (MANGANESE) LTD [No 3] [2012] WASC 185 (S)
| SUPREME COURT OF WESTERN AUSTRALIA | Citation No: | [2012] WASC 185 (S) | |
| Case No: | CIV:1830/2006 | ON THE PAPERS | |
| Coram: | CORBOY J | 8/10/12 | |
| 18 | Judgment Part: | 1 of 1 | |
| Result: | Order to be made awarding the plaintiff by counterclaim 75% of its costs of the consolidated proceedings | ||
| B | |||
| PDF Version |
| Parties: | LONDSDALE INVESTMENTS PTY LTD PROMET ENGINEERS PTY LTD OM (MANGANESE) LTD JAMES DINSDALE CRIBBES DEREK MACAULEY |
Catchwords: | Practice and procedure Costs Plaintiff by counterclaim succeeded on some but not all causes of action alleged Whether costs should be awarded on each cause of action alleged or whether a single costs order should be made in the consolidated proceedings discounted to reflect the extent to which the plaintiff by counterclaim had failed on certain causes of action Turns on its own facts |
Legislation: | Rules of the Supreme Court 1971 (WA), O 66 r 2(a) |
Case References: | Chen v Chan [2009] VSCA 233 Frigger v Professional Services of Australia Pty Ltd [No 2] [2011] WASCA 103 (S) Keet v Ward (As Executors of the Estate of the late LUKIN) [2011] WASCA 139 Lonsdale Investments v OM (Manganese) [No 3] [2012] WASC 185 Permanent Building Society v Wheeler (No 2) (1993) 10 WAR 569 Singh v Kaur Bal [2011] WASC 303 (S) |
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
- IN CIVIL
- Consolidated by Order dated 1 May 2007
- First Plaintiff
PROMET ENGINEERS PTY LTD
Second Plaintiff
AND
OM (MANGANESE) LTD
Defendant
(BY ORIGINAL ACTION)
OM (MANGANESE) LTD
Plaintiff by Counterclaim
AND
LONDSDALE INVESTMENTS PTY LTD
First Defendant by Counterclaim
PROMET ENGINEERS PTY LTD
Second Defendant by Counterclaim
JAMES DINSDALE CRIBBES
Third Defendant by Counterclaim
(BY COUNTERCLAIM)
FILE NO/S : CIV 2283 of 2006 BETWEEN : OM (MANGANESE) LTD
- Plaintiff
AND
LONDSDALE INVESTMENTS PTY LTD
First Defendant
JAMES DINSDALE CRIBBES
Second Defendant
DEREK MACAULEY
Third Defendant
- Plaintiff
AND
OM (MANGANESE) LTD
Defendant
Catchwords:
Practice and procedure - Costs - Plaintiff by counterclaim succeeded on some but not all causes of action alleged - Whether costs should be awarded on each cause of action alleged or whether a single costs order should be made in the consolidated proceedings discounted to reflect the extent to which the plaintiff by counterclaim had failed on certain causes of action - Turns on its own facts
Legislation:
Rules of the Supreme Court 1971 (WA), O 66 r 2(a)
(Page 3)
Result:
Order to be made awarding the plaintiff by counterclaim 75% of its costs of the consolidated proceedings
Category: B
Representation:
CIV 1830 of 2006
Consolidated by Order dated 1 May 2007
Original Action
Counsel:
First Plaintiff : Mr G R Hancy
Second Plaintiff : Mr G R Hancy
Defendant : Mr J M Healy
Solicitors:
First Plaintiff : Sparke Helmore
Second Plaintiff : Sparke Helmore
Defendant : Middletons
Counterclaim
Counsel:
Plaintiff by Counterclaim : Mr J M Healy
First Defendant by Counterclaim : Mr G R Hancy
Second Defendant by Counterclaim : Mr G R Hancy
Third Defendant by Counterclaim : Mr G R Hancy
Solicitors:
Plaintiff by Counterclaim : Middletons
First Defendant by Counterclaim : Sparke Helmore
Second Defendant by Counterclaim : Sparke Helmore
Third Defendant by Counterclaim : Sparke Helmore
CIV 2283 of 2006
Counsel:
Plaintiff : Mr J M Healy
First Defendant : Mr G R Hancy
Second Defendant : Mr G R Hancy
Third Defendant : Mr G R Hancy
Solicitors:
Plaintiff : Middletons
First Defendant : Sparke Helmore
Second Defendant : Sparke Helmore
Third Defendant : Sparke Helmore
CIV 1227 of 2010
Counsel:
Plaintiff : Mr G R Hancy
Defendant : Mr J M Healy
Solicitors:
Plaintiff : Sparke Helmore
Defendant : Middletons
Case(s) referred to in judgment(s):
Chen v Chan [2009] VSCA 233
Frigger v Professional Services of Australia Pty Ltd [No 2] [2011] WASCA 103 (S)
Keet v Ward (As Executors of the Estate of the late LUKIN) [2011] WASCA 139
Lonsdale Investments v OM (Manganese) [No 3] [2012] WASC 185
Permanent Building Society v Wheeler (No 2) (1993) 10 WAR 569
Singh v Kaur Bal [2011] WASC 303 (S)
(Page 5)
- CORBOY J:
The application
1 The plaintiffs in CIV 1830 of 2006 (the ProMet parties; separately, ProMet 1 and ProMet 2) commenced proceedings against the defendant (OMM) to recover the cost of work done in designing a plant to process manganese ore (CIV 1227 of 2010 was consolidated with CIV 1830 of 2006).
2 In CIV 2283 of 2006, OMM claimed for loss and damage allegedly caused by the negligence of the ProMet parties in designing aspects of the plant; further or alternatively, by the plant failing to achieve certain design criteria in breach of warranties that had been given by ProMet 1; further or alternatively, by ProMet 1 engaging in conduct that was misleading or deceptive, principally by making representations about the state of the design work. OMM also alleged that the second defendant, Mr Cribbes and the third defendant, Mr Macauley were knowingly concerned in the contravention of s 52 of the Trade Practices Act 1974 (Cth) and/or s 10 Fair Trading Act 1987 (WA) (TPA/FTA) by ProMet 1.
3 The proceedings were consolidated and OMM abandoned several claims prior to the trial, including the claim against Mr Macauley. It was held at trial that:
(a) ProMet 1 breached its duty of care and a duty to exercise reasonable skill and care that it owed in contract. Damages for those breaches were assessed at $5,474,450.59.
(b) ProMet 2 breached its duty of care in designing the location of a rock breaker. Damages were assessed at $256,425.
(c) ProMet 1 breached certain warranties that it had given in a deed of novation made with Henry Walker Eltin Contracting Pty Ltd (HWE) and OMM and in a contract made between it and OMM (E1184 Rev P7). However, OMM had failed to prove that it had suffered loss or damage by reason of those breaches.
(d) ProMet 1 had not engaged in conduct that was misleading or deceptive. Further, it had not been established that the conduct primarily relied on to allege a contravention of the TPA/FTA had caused OMM loss and damage.
(e) Consequently, Mr Cribbes had not been knowingly involved in any contravention of the TPA/FTA.
(Page 6)
- (f) ProMet 1 was entitled to $1,999.02 for design work that it had performed but for which it had not been paid by OMM.
(g) ProMet 2 was not entitled to recover the cost of design work that it had performed.
4 The parties were unable to agree the orders for costs that should be made in the consolidated proceedings in circumstances where OMM had predominantly succeeded in each of the consolidated matters but it had, nevertheless, failed on some of the causes of action that it had alleged. Further, OMM had largely succeeded only against ProMet 1. It had failed on an alternative claim in tort made against ProMet 2, except for the claim that ProMet 2 had negligently designed the location of the rock breaker.
Awarding costs by causes of action
5 Order 66 r 2(a) of the Rules of the Supreme Court1971 provides that in the absence of any special costs order, 'where the statement of claim contains more than one cause of action and the plaintiff succeeds on one or more causes of action and the defendant succeeds on another or others, costs shall be allowed to the plaintiff on the cause or causes of action on which he succeeds and to the defendant on that or those on which he succeeds, in the same manner as if separate actions had been brought'.
6 The ProMet parties and Mr Cribbes contended that they were entitled to the costs of those causes of action alleged against them on which OMM had failed under that rule - that is, causes of action that alleged that:
(a) ProMet 1 had contravened the TPA/FTA;
(b) Mr Cribbes had been knowingly involved in contraventions of the TPA/FTA;
(c) ProMet 1 had breached the warranties given in the deed of novation and E1184 Rev P7;
(d) ProMet 1 had breached an obligation to exercise reasonable skill and care imposed by E1184 Rev P7;
(e) ProMet 2 had breached its duty of care in performing design work for the ROM bin, the crushed ore stockpile and the location of the sump pumps.
7 The ProMet parties proposed that orders be made for judgment on each cause of action alleged by the parties in the consolidated
(Page 7)
- proceedings, with a separate cost order for each cause on which a judgment was pronounced.
8 I raised with the parties when OMM's application for costs was first heard whether the just and efficient way for determining and taxing costs was for a single order to be made in the consolidated proceedings in favour of OMM, incorporating a discount to reflect the extent to which it had failed on some of the causes of action alleged. I made that suggestion in light of the complexity of the proceedings; the legal and factual connections between the causes of action alleged; the difficulties that I apprehended might arise in a taxation conducted by separate causes of action and the further costs that would be incurred in a taxation undertaken on that basis. I also suggested that the parties might consider mediating their differences over costs given those matters.
9 OMM referred in supplementary submissions served after the first hearing of its application to the observations of Beech J in Singh v Kaur Bal [2011] WASC 303 (S) to the effect that a court may take a 'pragmatic approach' in framing costs orders where there had been a multiplicity of issues and the parties have enjoyed mixed success [15]. OMM accepted that a pragmatic approach could be taken to the costs of the proceedings, particularly as that would avoid the necessity for separate taxations in respect of each cause of action that had been litigated. It suggested that the following orders should be made:
(a) ProMet 1 pay 85% of OMM's costs of action CIV 2283 of 2006 (the OMM Action), including any reserved costs, except that OMM should not be entitled to recover the costs of the expert reports provided by Mark Davidson and Bruce Wedderburn (experts that OMM called on the loss it claimed had been caused by the ProMet 1's breaches of warranty and misleading or deceptive conduct);
(b) The ProMet parties be jointly and severally liable for payment of OMM's costs of actions CIV 1830 of 2006 and CIV 1227 of 2010 (the ProMet Action), including any reserved costs.
10 Those orders did not seek a single order for the costs of the consolidated proceedings; rather, they drew a distinction between the OMM Action and the ProMet Action.
11 The ProMet parties contended in their supplementary submissions that the percentage of costs of the OMM Action to be recovered by OMM on its proposed orders had not been substantiated by evidence and would
(Page 8)
- not result in a fair outcome. They urged that the parties be directed to mediate the issue of costs if the court was not prepared to order costs on the causes of action on which OMM had failed. However, OMM advised at the resumed hearing of its application that it did not wish to pursue mediation.
12 The Court of Appeal identified in Keet v Ward (As Executors of the Estate of the late LUKIN) [2011] WASCA 139 several propositions about the application of O 66 r 2(a) RSC [24]:
(a) the expression 'cause of action' in O 66 r 2(a) is a reference to a factual situation, the existence of which entitles the plaintiff to obtain a remedy.
(b) O66 r 2(a) does not provide an inflexible rule which prescribes a mandatory approach to the awarding of costs in cases where there are multiple causes of action. The opening words 'in the absence of any special order' indicate that the court retains a discretion to make a special order departing from the rule in O 66 r 2(a).
(c) However, where there are multiple causes of action and a party has succeeded on only one or some, the other party is prima face entitled to costs on the other causes but the court will always attempt to do substantial justice in the circumstances.
(d) It will not be appropriate to make a costs order in accordance with O 66 r 2(a) where there is, in substance, one contest; that is, whether the courses of action arise from the one course of dealings, the one transaction or the same facts.
13 Beech J referred in Singh v Kaur Bal to various principles relevant to the award of costs identified by the Victorian Court of Appeal in Chen v Chan [2009] VSCA 233. The Victorian Court of Appeal referred to three principles that have particular relevance to this matter (at [10]):
(a) A court may when fixing costs in a claim where there has been mixed success take into account, when considering the overall interests of justice, complications that it considers will arise in the taxation of costs.
(b) Where a court determines to make an order apportioning costs, it does so primarily as a matter of impression and evaluation, rather than with mathematical precision, having considered the importance of the matters upon which the parties have been
- successful or unsuccessful, the time occupied, the ambit of the submissions made and other relevant factors.
- (c) Where a number of parties have had the same representation, there is a 'rule of thumb' as to the apportionment of costs - where some of the parties have been successful and others have not, each successful party is only entitled to his or her proportion of the costs incurred on the part of all, plus the cost, if any, incurred exclusively on his or her behalf. The primary issue for determination in such a case is that of fairness as between the parties, having regard to the manner in which the trial had been conducted.
14 Finally, the Court of Appeal referred in Frigger v Professional Services of Australia Pty Ltd [No 2] [2011] WASCA 103 (S) to costs being awarded across issues to reflect 'the realities' the case (at [12]):
Deciding what amounts to success is not always revealed merely by reading the orders of the court. Where an appellant has been successful in obtaining what is, in effect, a variation in their favour of orders below, there may remain valid reasons to not award costs in favour of the appellant where the appellant has not been successful in the underlying, real contest … Where appellants have only won a nominal victory, then the court may not award costs. Success in proceedings is to be determined by the 'reality' of the circumstances involved …
15 Although those comments concerned the costs of an appeal and were directed to proceedings in which multiple issues rather than causes of action were raised for determination, it is necessary that success for the purpose of awarding costs in any proceedings reflect the realities of the case if justice is to be done between the parties: see also, Permanent Building Society v Wheeler (No 2) (1993)10 WAR 569.
The TPA/FTA claim
16 OMM alleged that ProMet 1 engaged in misleading or deceptive conduct by making representations between about February and June 2005 about the work being performed to design the process plant. The representations primarily concerned the state of the design work - that is, the extent to which the work had been completed at the times that the representations were alleged to have been made. There was, however, a further allegation to the effect that ProMet 1 had represented that it would exercise the necessary skill and competence to design the process plant in order to achieve design specifications and criteria (the skill and competence representation).
(Page 10)
17 The representations regarding the state of the design work were alleged to have been made in meetings between ProMet 1 and OMM and in various documents provided by ProMet 1 to OMM. There was no doubt that the allegations of contravention and the claims of resulting loss and damage constituted separate causes of action that were distinct from the balance of the issues litigated in the consolidated proceedings. However, the skill and competence representation raised matters that were substantially similar to other causes of action alleged by OMM.
18 The evidence relevant to the allegations that ProMet 1 had engaged in misleading or deceptive conduct by making representations about the state of the design work comprised:
(a) Evidence of what had been said at various meetings between ProMet 1 and OMM and what was conveyed by documents provided by ProMet 1 to OMM.
(b) Expert evidence concerning the state of the design work at various times during 2005 and possible delays in completing the work - evidence given by Mr Wedderburn and Mr T I Williams.
(c) Evidence relating to the question of reliance/causation.
(d) Evidence on the loss and damage allegedly suffered by OMM. As pleaded, OMM's claim included as a head of damage what were referred to in the trial as 'production shortfall losses'. Those losses were also claimed for the alleged breaches of warranty by ProMet 1 and were the subject of expert evidence. OMM abandoned its claim to production shortfall losses for the alleged contravention of the TPA/FTA in closing. Rather, it claimed as its loss the amounts that it had paid to ProMet 1 in early and mid-2005 for design work on the basis that it would not have continued to allow ProMet 1 to perform the work had it known what it alleged was the true state of the work.
19 OMM accepted that it should bear its costs incurred in obtaining Mr Wedderburn's report on the state of the design work. Clearly, that concession was rightly made. However, it apparently factored the cost to the ProMet parties of obtaining the expert evidence of Mr T I Williams into the 15% allowance that it proposed in the order to be made in its favour.
20 Witnesses who gave evidence on matters that were relevant to other causes of action on which OMM had succeeded also provided much of the
(Page 11)
- evidence on what occurred at the meetings between ProMet 1 and OMM and on the issue of reliance. That was a matter that would clearly complicate how the costs of the cause of action for contravention of the TPA/FTA should be quantified.
Breaches of warranty
21 As has already been noted, OMM alleged that ProMet 1 breached warranties given in a deed of novation made between HWE, OMM and ProMet 1 and in E1184 Rev P7. It was alleged that the process plant had failed to achieve certain design criteria specified in the warranties for a period following commissioning.
22 The primary issue contested on this cause of action was whether OMM had suffered a 'production shortfall loss' for which it was entitled to be compensated. Again, OMM rightly conceded that it should bear its costs of obtaining expert evidence from Mr Davidson on that issue. However, it apparently factored the costs to the ProMet parties of obtaining expert evidence from Mr T B Williams in the order for costs that it proposed to be made in its favour.
23 It was, of course, necessary for OMM to provide evidence about the performance of the process plant to establish that the relevant design criteria had not been achieved. Mr Botica gave evidence about this issue in a witness statement that was tendered by consent. Other witnesses who gave relevant evidence were not cross-examined on the design criteria (Mr Reddell, Mr Delahey, Mr Laing and Mr Hearse). Those witnesses, apart from Mr Delahey, gave evidence on other matters.
The causes of action for 'defective' design work
24 The remaining causes of action alleged by OMM concerned the design of the process plant. Allegations were made about two aspects of the design. First, it was alleged that the material handling components of the process plant had been designed on an assumption that the ore to be processed would be dry and free-flowing ore when in fact, the ore mined at Bootu Creek was wet and cohesive. It was alleged that the ProMet parties had been negligent in assuming that the ore would be free flowing for the purpose of the design. Second, it was alleged that certain (non-material handling) parts of the process part had been negligently designed - a scrubber, the location of a rock breaker, guards on the 'pinch points' of the conveyors and the location of the sump pump. OMM abandoned its claims for loss caused by the design of the conveyor pinch point guards and the scrubber in closing.
(Page 12)
25 It was also alleged that the ProMet parties had been negligent by reason of the failure of the process plant to achieve the design criteria that were the subject of the breach of warranty claims.
The materials handling components – the Pt A particulars
26 The pleaded allegations relating to the 'defective' design work performed by the ProMet parties were reviewed at [281] and following in Pt B of Lonsdale Investments v OM (Manganese) [No 3] [2012] WASC 185. It was noted at [281] that OMM had pleaded several causes of action and that the pleading had been complicated by changes in the contractual relationships that had occurred following the appointment of the administrators to HWE and the reorganisation of the ProMet parties in August 2005.
27 The causes of action alleged against ProMet 1 that concerned the design of the material handling components of the process plant were:
(a) Damages for an alleged contravention of s 52 TPA/s 10 FTA. It was alleged that the reasonable skill and competence representation was misleading or deceptive by reason of the matters pleaded in Pt A Sch 1 to OMM's statement of claim (the Pt A particulars). Those particulars concerned the characteristics of the ore likely to be mined at Bootu Creek and the design of the process plant to handle that kind of ore. The allegations made in the particulars were summarised at [294] of the reasons.
(b) Breach of a contractual obligation to exercise reasonable skill and care in performing the design work that was imposed by a contract that preceded E1184 Rev P7, E1151 Rev P3, and breach of an identical obligation contained in E1184 Rev P7. The obligations were alleged to have been breached by reason of the matters pleaded in the Pt A particulars.
(c) Breach of an obligation imposed by E1184 Rev P7 regarding the delivery of further design work and the undertaking of supervision work. It was alleged that ProMet 1 was incapable of delivering the further design work and undertaking the supervisory work by reason of the matters pleaded in the Pt A particulars.
(d) Breach of a duty of care. It was alleged that ProMet 1 breached a duty of care that it owed to OMM by reason of the matters pleaded in the Pt A particulars.
(Page 13)
28 The claim made by OMM against ProMet 2 was for breach of a duty of care. The duty was alleged to have been breached by the matters pleaded in the Pt A particulars.
29 The loss and damage claimed against ProMet 1 was identical for each of the causes of action alleged. The damages claimed against ProMet 2 were more circumscribed.
30 The ProMet parties denied many of the allegations made by OMM and raised a number of other factual and legal issues - see Lonsdale Investments v OM (Manganese) at [295] - [297]. Much of the trial was occupied by evidence and argument concerning the matters raised in the Pt A particulars.
31 It was held in relation to the causes of action relating to the design of the material handling components of the process plant that:
(a) ProMet 1 had breached its duty of care in performing design work for the process plant. The finding of breach reflected the gist of the allegations made in the Pt A particulars. The breach caused loss and damage.
(b) ProMet 1 had breached the duty to exercise reasonable skill and care imposed by E1151 Rev P3 for the same reasons that it had breached its duty of care.
(c) ProMet 1 had not breached the obligation imposed by E1184 Rev P7 to exercise reasonable skill and care in performing design work pursuant to that contract. It was alleged that ProMet 1 had breached that obligation by reason of the matters pleaded in the Pt A particulars. However, those matters referred to steps that ought to have been taken by ProMet 1 while undertaking the design work required by E1151 Rev P3 and not when performing the work specified in E1184 Rev P7.
(d) ProMet 2 had not breached its duty of care by reason of any of the matters alleged in the Pt A particulars.
The specific design 'defects'
32 It was held that ProMet 1 had breached its duty of care and its contractual obligation to exercise skill and care in designing the location of the sump pumps for plant. It was also held that ProMet 2 had breached its duty of care in designing the location of the rock breaker.
(Page 14)
Two matters to note about the design 'defect' findings
33 Two aspects of the findings made on the causes of action alleging that the design of the process plant was defective require further explanation.
34 First, OMM's pleaded case did not distinguish between the work to be performed by ProMet 1 under E1151 Rev P3 and E1184 Rev P7. In effect, the contracts were pleaded as alternatives, with the same matters being relied on to allege breaches of the obligations of reasonable skill and care contained in each contract (see par 37 of the defence and counterclaim). It was found that this approach did not reflect the work that was to be performed by ProMet 1 according to each contract. That was significant because of the way in which the ProMet parties had pleaded and relied upon various provisions in E1184 Rev P7 as limitations and exclusions on its liability. Accordingly, it was necessary to determine what work was performed pursuant to which contract.
35 Second, OMM pleaded its claims against ProMet 1 and ProMet 2 in the alternative. Again, no distinction was drawn in the pleaded case between the work performed by each company. ProMet 1 and ProMet 2 were alleged to have breached their duties of care by reason of the same matters - the matters pleaded in the Pt A particulars (see pars 42 and 47 of the defence and counterclaim).
The ProMet Action
36 As previously noted, the ProMet parties claimed the cost of performing work made at the request of OMM to vary the design of the process plant. OMM admitted requesting some variations. However, it denied that a number of the variations claimed were variations to the design and that other variation work had been actually performed. More fundamentally, it denied making any request to ProMet 2 to perform design work, contending that it only ever dealt with ProMet 1.
37 It was found against OMM that it had requested a number of the variations claimed in the ProMet Action and that the work required was not part of the design work to be performed under E1184 Rev P7. However, ProMet 2 had performed nearly all of the work and OMM had not requested that company to undertake any design work.
38 I accept that the claim made in the ProMet Action was distinct from the claims made in the OMM Action (although there was overlap in the evidence given by Mr Andrews on the ProMet Action and the claim by
(Page 15)
- OMM for misleading and deceptive conduct). However, that does not necessarily mean that separate orders should be made in each action given that the proceedings were consolidated.
Conclusion and reasons
39 Some attempt has been made by the parties to identify a means by which the various causes of action that had been alleged in the consolidated proceedings could be differentiated for the purpose of allocating costs – the amounts claimed and awarded in damages, the time spent by witnesses in giving evidence at trial split between the OMM action and the ProMet Action and the extent to which different causes of action were considered in the judgment. Those rather tentative attempts confirmed my preliminary view that it would be difficult for the parties and a taxing officer to fairly divide and allocate the costs reasonably incurred by the parties between different causes of action.
40 This was a case of some magnitude. Multiple causes of action were pleaded in the alternative; witnesses gave evidence on various issues that ranged across those causes of action and a number of amendments were made to the pleadings, including as a result of consolidating the various actions. I do not know the extent of discovery but over 2,700 exhibits were tendered and I inferred that discovery and inspection would have been time consuming and that it would be difficult to determine the hours that had been spent on those procedures by reference to different causes of action. It was also not apparent how the time devoted to getting up and by counsel could be reasonably and fairly divided and allocated between the various causes of action alleged having regard to how the proceedings were conducted. It appeared to me that those problems would still be encountered even if a distinction was made only between the OMM Action and the ProMet Action as OMM proposed.
41 In my view, an order that the costs of the consolidated proceedings be awarded and taxed by reference to the various causes of action that had been litigated would be onerous for the parties and for the taxing officer having regard to those matters. I also doubt, as a matter of impression, whether the end result of that process would better achieve a fair and reasonable outcome as between the parties.
42 Accordingly, I consider that a single order for costs should be made. I also consider that the order should be for the costs of the consolidated proceedings rather than that orders should be made separately for the costs of the OMM Action and the ProMet Action. I do not consider that I should decline to further deal with the question of costs having reached
(Page 16)
- that conclusion so that the parties can confer in mediation as the ProMet parties requested. However, there are some matters relating to costs that should be either compromised between the parties or the subject of further submissions if no agreement can be reached.
43 An order will be made that OMM is entitled to recover 75% of the costs of the consolidated proceedings, subject to it paying:
(a) the costs ordered to be paid by the orders made on 3 May 2010;
(b) the costs of the claim made against Mr Cribbes;
(c) the costs incurred by the ProMet parties in obtaining and adducing at trial the expert evidence of Mr T B Williams and Mr T I Williams - those costs are to include the reasonable costs of instructing the experts, assistance in the preparation of their reports and any expert conferrals.
44 I have concluded that an order to that effect will fairly reflect the realities of the parties' cases as litigated at trial having regard to the following matters:
(a) The fact that the proceedings had been consolidated and the way in which they were conducted at trial.
(b) The extent to which OMM had succeeded in the consolidated proceedings.
(c) The amount of damages that were awarded to OMM and the amount that it claimed for the breaches of warranty on which it had failed. The total sum awarded to OMM in damages (exclusive of interest) was $5,730,876. OMM claimed $1,392,900 in respect of the breach of the warranty given in the deed of novation and $1,447,037 for the breach of the warranty given in E1184 Rev P7 (however, those sums covered substantially the same production shortfall losses). It claimed $918,404 as loss caused by the representations allegedly made in respect of the state of the design work and it abandoned, in closing, claims for specific defects in the design of the plant for which it had sought $60,009 in damages. OMM recovered approximately 70% of the damages that it had claimed.
(d) The fact that there was evidence on the breach of warranty claims in addition to the expert evidence - the Promet parties only
- adduced expert evidence but OMM should not have the cost of preparing and adducing its evidence on that claim.
- (e) The fact that both parties adduced evidence on the misleading or deceptive conduct claim in addition to the expert evidence. The ProMet parties are entitled to the costs associated with obtaining and adducing that evidence and OMM should not be compensated for their costs in giving evidence on the claim. However, the ProMet parties did not undertake the analysis of the work that had been performed by ProMet 1 at the relevant times that appeared in the reasons for decision. That observation is not intended to be a criticism. Rather, it merely indicates that ProMet 1 approached the misleading and deceptive conduct case at a higher level of generality and that its approach would have been reflected in the time spent in working up its defence to the claim.
(f) The need to make some allowance for other interlocutory work undertaken in relation to the breach of warranty and misleading or deceptive conduct claims.
(g) The way in which the claims were pleaded and conducted against ProMet 1 and ProMet 2 and how the claims were contested - no real distinction was made at trial between their respective positions on the causes of action alleged by OMM in negligence.
(h) The way in which the claims made by the ProMet parties for the cost of variations were conducted at trial and the basis on which OMM succeeded - ProMet 1 only succeeded in the ProMet Action in a minor respect but OMM failed on a number of factual allegations and some allowance should be made for how those issues were contested at trial.
45 I have also taken into account that, contrary to the orders proposed, I have directed that OMM pay the costs incurred by the ProMet parties in adducing the expert evidence of Mr T I Williams and Mr T B Williams.
46 The remaining issues relating to costs of which I am aware concern whether special costs orders should be made and the extent to which each of the ProMet parties should be jointly and severally liable for the costs that are to be awarded to OMM. OMM foreshadowed applying for special costs orders but has not yet made an application. It has also sought an order that each of the ProMet parties should be jointly and severally liable for the costs of the ProMet Action but that only ProMet 1 should be liable for the costs of the OMM Action. That proposal will
(Page 18)
- need to be further reviewed in light of the order that I propose to make. I have in mind that the ProMet parties should be jointly and severally liable for a percentage of the costs of the consolidated proceedings with ProMet 1 to be solely responsible for the balance. It will be necessary for further submissions on the matter if it cannot be agreed between the parties.
47 I have indicated the general order for costs that will be made. However, I do not propose to make an order for at least one month. That will allow the parties time to consider how they wish to resolve the outstanding issues relating to costs in light of these reasons and if necessary, to make any further application. Directions will be made on the publication of these reasons that will facilitate a speedy determination of any application.
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