Masters in Building Training Pty Ltd v State of New South Wales (No 2)

Case •

[2022] NSWSC 697

•

30 May 2022

No judgment structure available for this case.

Supreme Court


New South Wales

Medium Neutral Citation: Masters in Building Training Pty Ltd v State of New South Wales (No 2) [2022] NSWSC 697
Hearing dates: On the papers
Date of orders: 30 May 2022
Decision date: 30 May 2022
Jurisdiction:Equity
Before: Ward CJ in Eq
Decision:

1.   Vary:

(i)   the order made by Kunc J on 17 May 2021 that the costs of the interlocutory hearing on 31 March 2021 be the plaintiff’s costs in the cause; and

(ii)   Order 4 of the orders made by Parker J on 22 June 2021 that the costs of the plaintiff’s notice of motion filed 28 May 2021 be the plaintiff’s costs in the cause

   by replacing those orders with Order 2 below.

2.   Order that MIBT pay the Department’s costs of the interlocutory hearings before Kunc J and Parker J (other than as already the subject of costs orders in the Department’s favour) on the party/party basis.

3.   Other than as ordered by Order 2 above, order that the Department pay MIBT’s costs of the statement of claim in this proceeding on the party/party basis.

4.   Order that the Department pay 60% of MIBT’s costs of the Department’s cross-claim and that MIBT pay 40% of the Department’s costs of the Department’s cross-claim, each on the party/party basis; such costs to be set off against each other (with the balance to be payable to the party in whose favour the set-off results).

Catchwords:

COSTS — Apportionment of costs on an issue-by-issue basis

Legislation Cited:

Civil Procedure Act 2005 (NSW), s 56

Cases Cited:

Bassett v Cameron (No 2) [2021] NSWSC 419

Bostik Australia Pty Ltd v Liddiard (No 2) [2009] NSWCA 304

Cretazzo v Lombardi (1975) 13 SASR 4

Eastlings Pty Ltd v Calidu Import Export Pty Ltd (No 3) [2021] NSWSC 466

In the matters of Earth Civil Australia Pty Ltd, RCG CBD Pty Ltd, Bluemine Pty Ltd, Diamondwish Pty Ltd and Rackforce Pty Ltd (all in liq) (No 2) [2021] NSWSC 1161

James v Surf Road Nominees Pty Ltd (No 2) [2005] NSWCA 296

Masters in Building Training Pty Ltd v State of New South Wales (No 2) [2021] NSWSC 747

Masters in Building Training Pty Ltd v State of New South Wales [2021] NSWSC 454

Masters in Building Training Pty Ltd v State of New South Wales [2022] NSWSC 499

Mobis Parts Australia Pty Ltd v XL Insurance Company SE (No 2) [2019] NSWCA 19

Sabah Yazgi v Permanent Custodians Limited (No 2) [2007] NSWCA 306

State of New South Wales v Stanley [2007] NSWCA 330

Waters v P C Henderson (Australia) Pty Ltd (1994) 254 ALR 328; [1994] NSWCA 338

Category:Costs
Parties: Masters in Building Training Pty Ltd (Plaintiff)
State of New South Wales (Defendant)
Representation:

Counsel:
D Lloyd SC, CP O’Neill and K Beattie (Plaintiff)
N Simpson (Defendant)

Solicitors:
VTS Lawyers (Plaintiff)
Sparke Helmore Lawyers (Defendant)
File Number(s): 2021/90347
Publication restriction: Nil

Judgment

  1. HER HONOUR: On 29 April 202, I published my principal reasons in this matter (Masters in Building Training Pty Ltd v State of New South Wales [2022] NSWSC 499). I made orders (since amended under the slip rule on the application and with the consent of the parties) and I made directions for the filing of brief written submissions as to costs (but indicated the preliminary view that costs should follow the event and that as the plaintiff had been successful, the defendant should pay the plaintiff’s costs). Submissions on costs have now been received and these reasons deal with that final issue in the proceeding. For convenience, I adopt the same abbreviations as used in the principal judgment.

  2. In summary, the respective parties’ position as to costs is as follows.

  3. The Department seeks an order apportioning the costs as between the parties that it says would reflect the mixed success between the parties on both the statement of claim and the cross-claim. In that regard, it is submitted that the appropriate orders are for the Department to pay 50% of MIBT’s costs of its statement of claim and for MIBT to pay the Department’s costs of the cross-claim, as agreed or assessed (in each case on a party/party basis). In the alternative, the Department proposes a modification to the order sought in relation to its cross-claim (namely that MIBT pay 50% of the Department’s party/party costs of the cross-claim, as agreed or assessed (but with no modification to the 50% order sought in respect of the statement of claim)).

  4. MIBT seeks an order (as foreshadowed in the principal judgment) that the Department pays its costs of the proceeding. As to the Department’s position, MIBT submits that the Department was responsible for the incurring of costs on the question as to the validity of the termination of the Contract, and ought therefore to pay MIBT’s costs with respect to that issue. Finally, as to the cross-claim, MIBT submits that the Department’s “modest success” on the cross-claim is not a sufficiently persuasive reason to depart from the proposal, in the principal judgment, that MIBT have its costs.

Costs principles

  1. There is no dispute as to the applicable costs principles.

  2. As to the apportionment of costs on an issue by issue basis, reference is made to Bostik Australia Pty Ltd v Liddiard (No 2) [2009] NSWCA 304 at [38] per the Court (Beazley JA (as Her Excellency then was), Ipp and Basten JJA) and the authorities referred to therein.

  3. It is noted that issues in proceedings may be differentiated on the question of costs when an issue or group of issues is clearly “dominant or separable” (see Waters v P C Henderson (Australia) Pty Ltd (1994) 254 ALR 328; [1994] NSWCA 338 at 331 per Mahoney JA and Mobis Parts Australia Pty Ltd v XL Insurance Company SE (No 2) [2019] NSWCA 19 at [5] per the Court (Beazley P, as Her Excellency then was, Meagher and Leeming JJA)); that a dominant or separable issue can relate to “any disputed question of fact or law” before a court on which a party fails, notwithstanding that they are otherwise successful in terms of the ultimate outcome of the matter (see James v Surf Road Nominees Pty Ltd (No 2) [2005] NSWCA 296 (James v Surf Road Nominees) at [34] per the Court (Beazley, Tobias and McColl JJA)); that it may be appropriate to deprive a successful party of costs or a portion of the costs if the matters upon which that party was unsuccessful took up a significant part of the trial, either by way of evidence or argument (see Sabah Yazgi v Permanent Custodians Limited (No 2) [2007] NSWCA 306 at [24] per the Court (Beazley, Ipp and Tobias JJA)); and that departing from the usual rule depends on the circumstances of the case viewed against the wide discretionary powers of the court, which powers should be liberally construed (see State of New South Wales v Stanley [2007] NSWCA 330 at [18] per Hislop J with whom Beazley, Tobias JJA agreed).

  4. Further, it is noted that the question of apportionment where there is a mixed outcome in proceedings is a matter of discretion, impression and evaluation (see James v Surf Road Nominees at [36]).

Department’s submissions

  1. It is noted by the Department that the hearing of the proceeding occupied four days (26-28 October 2021 and 1 November 2021) and that the issues raised by MIBT’s claim, as initially identified, were summarised (at [234]) as follows:

… whether the Contract was validly terminated on 25 March 2021 (i.e., whether the Department lawfully exercised its right to terminate the Contract in the manner it did); what damages or moneys (if any), are payable by the Department to MIBT; and, to the extent that any Subsidies and Loadings are payable to MIBT, whether the Department is entitled to withhold payment.

  1. The Department notes that further separable issues advanced by MIBT in its statement of claim included: whether the Department had breached the Contract; and whether MIBT should be granted declaratory relief that the Department had breached the Contract by its failure to pay all fees due and owing under the Contract and by issuing the notice of termination.

  2. The Department in its cross-claim put in issue: its entitlement to withhold the payment of Subsidies and Loadings; and available set-offs to the Department as against MIBT in form of overpayments. At [235], these were summarised as:

… as to the amounts which the Department contends that MIBT is obliged to repay: first, the repayment of amounts paid by the Department to MIBT pursuant to a “payment continuity strategy” occasioned by the COVID-19 pandemic (PCS Repayment) which is not disputed by MIBT; and, second, a series of overpayments identified by MIBT in its internal Operation Fish investigation (the Operation Fish Overpayment), as to which the only issue is as to the quantum of that amount.

  1. The Department says that there were mixed results between the parties in relation to those issues and that this warrants a departure from the usual rule so as to apportion the costs fairly between the parties (referring to the summary set out in the principal judgment at [10]-[14] which I do not here repeat).

  2. In particular, in relation to the issue as to the validity of termination of the Contract, the Department argues that the declaration that the termination was invalid was entirely unnecessary and says, further, that MIBT should not have its costs paid on the termination issue given its lack of success on that issue.

  3. As to the first of those submissions, the Department says that a significant amount of time in the hearing was dedicated to the question of termination, either in evidence or submissions, pointing to the procedural history of the matter, to which I have referred in the principal judgment.

  4. Relevantly, it is noted that, in the reasons delivered on 30 April 2021 by Kunc J for the grant of interlocutory relief made in favour of MIBT on 9 April 2021, reference was made to the grounds that had there been advanced by the Department to support the termination, which included MIBT’s non-compliance with the standards administered by ASQA (see Masters in Building Training Pty Ltd v State of New South Wales [2021] NSWSC 454 at [74](4), [75] per Kunc J).

  5. The statement of claim alleged that the notice of termination dated 25 March 2021 was invalid (see at [30]-[52]) and that the invalid termination notice constituted a breach of the Contract resulting in loss to MIBT ([53]-[56], including at [56] a separate category of loss and damage referable to the notice of termination); and the statement of claim sought payment flowing from performance under the Contract as a separate head of loss ([57]-[68]). The Department denied the notice of termination was invalid (see [33] and [54] of its defence) and provided further particulars of [33] by its letter dated 20 May 2021.

  6. The Department notes that MIBT continued to press its claim for declaratory relief on the notice of termination after 30 June 2021 (when the Contract in any event expired) and that in its outline of written submissions dated 22 October 2021, MIBT sought damages for the termination of the Contract, in addition to amounts payable to MIBT for work undertaken (referring to [13] of the outline of submissions). Ultimately, however, MIBT’s claim for loss or damage flowing from the notice of termination was abandoned during the last day of the trial (T 255.31-44).

  7. The Department says that the declaration that the notice of termination was invalid was unnecessary given that the claim framed loss in two categories (being loss occasioned by the termination and loss for failure to pay for services rendered) and the Department points out that although it raised a defence as to why it was not required to pay MIBT (including its entitlement to withhold moneys during the period of a lawful suspension of the Contract and its entitlement to set-off moneys owing to it), there was neither a pleading nor a submission made to the effect that a finding that the Contract was validly terminated meant that MIBT was not entitled to payment during the intervening period of 25 March 2021 and 30 June 2021 for work performed. (Pausing here, this was one of the apparent misunderstandings between the parties to which I referred in this principal judgment. It did not become apparent until submissions at T 289.9-24, for example, that from the Department’s point of view, nothing turned, for the balance of the plaintiff’s claim, on the validity of termination of the Contract.)

  8. The Department submits that approximately half, if not more, of the four-day hearing was spent on the question of termination, particularly by reference to the cross-examination of Mr Lawrence and Mr Buddeke; and it is said that much of the time spent during the hearing (as well as matters preparatory to it) could have been avoided had the issue of termination not been pursued. The Department says that the most significant and supportive evidence of MIBT was that which emerged from Mr Lawrence’s affidavit of 22 October 2021 (being material served in the proceeding some four days prior to the commencement of the hearing) thereby making many of the intervening affidavits since Mr Lawrence’s affidavit of 30 March 2021 largely irrelevant.

  9. It is submitted that, as a pure debt claim (which is what the Department says the case ultimately became), the matter could have been heard within two days, thereby significantly reducing the burden on the Court’s time.

  10. The Department thus maintains that the question of the validity of the termination notice was an unnecessary point to run during the proceeding; that it did not assist MIBT’s claim; and that it should have been abandoned (as were MIBT’s claims for damages flowing from the termination). (Pausing here, MIBT’s position (see T 318.26-38) when tested on this issue was that where the claim for declaratory relief as to the invalidity of termination was acknowledged otherwise to serve no purpose it was said to be of potential significance on the question of costs (as has arguably now transpired to be the case).)

  11. As to the second of those submissions, the Department says, in the alternative, that it should not be responsible for MIBT’s costs on the termination point, noting that the Department’s success on the point was raised at the first instance before Kunc J and that the Department continued to rely on that point to the conclusion of the hearing (referring to the Department’s letter dated 20 May 2021 providing further and better particulars regarding [33] of the defence and the Department’s Outline of Submissions dated 22 October 2021). The Department submits that it should not bear the costs associated with the question of the lawfulness of termination considering MIBT’s lack of success on this issue.

  12. As to the Department’s cross-claim, it is noted that this amounted to $925,429.99 of which the Department was successful in obtaining the amount of $712,137.83. It is noted that MIBT conceded that there was an amount owing with respect to the COVID-19 payment continuity strategy sum and a lesser amount with respect to Operation Fish but that there was a contest as to the balance of the Department’s heads of claim, and it is said that the Department was predominantly successful on those claims (referring to [389] of the principal judgment as to the Duplicated CIDs and [394] of the principal judgment as to the Rollback of Overpayments).

  13. Further, it is noted that although the declaratory relief sought by the Department that it was justified in withholding subsidies and loadings payable to MIBT during the currency of the Contract was not granted (given that it lacked utility post termination), there was a finding that the Department was entitled to withhold Subsidies and Loadings while the relevant suspensions were in force (at [13] of the principal judgment).

  14. The Department submits that the appropriate costs order should therefore reflect success on the Department’s part in relation to its set-off and entitlement to withhold Subsidies and Loadings (both of which were disputed by MIBT – see amended cross-claim at [60A]-[60H], which allegations were denied in corresponding paragraphs of the defence to amended cross-claim), save where concessions were made (referring to [47] of the amended cross-claim, cf [47](b) of the defence to amended cross-claim).

MIBT’s submissions

  1. As adverted to above, MIBT submits that costs should follow the event (as proposed at [408] of the principal reasons). As to the issues by reference to which the Department contends there should be an apportionment of costs (i.e., the validity of termination and its cross-claim), MIBT says the following.

  2. First, as to the issue of termination, in support of which it says most of Mr Lawrence's evidence was filed, MIBT notes that this was relevant to its successful injunction applications (in connection with which it proffered the usual undertaking as to damages). MIBT apprehends that this undertaking might have been an issue (but for its overall success in the proceeding) and might also have been an issue had the Department not in final address resiled from the position that termination formed the basis upon which the Department was entitled to withhold moneys for work performed after termination (referring to T 289.16-42; and to paragraph 6 of the answer to request for particulars of the defence in the letter dated 20 May 2021 from Sparke Helmore). (In that letter, the Department’s solicitors referred not only to an express right to withhold amounts during a period of suspension, but also at [6.2] to the Department being empowered to withhold funds pursuant to clause 17.4(c) of the Contract even if the relevant training data has been accepted.) MIBT says that the issue of termination only arose by reason of the matters noted at [6] of the principal reasons and says that once the case became simply one in debt it was not MIBT’s intention to continue to agitate the issue (it having achieved the injunctive relief that it had sought). MIBT refers in this regard to what was said in this respect on the last day of the hearing (T 318.11-50, 319.1-16). (Pausing here, the difficulty to which this submission highlights is that the Department’s position became clear only on the last day of the hearing; by which time the relevant costs had already been incurred.)

  3. MIBT says that the issue of termination was a false issue at the trial and that it had no bearing (and no possibility of bearing) on the relevant event at the hearing. Thus, it is contended that, had the Department had acted in accordance with s 56 of the Civil Procedure Act 2005 (NSW), it would not have litigated the termination issue at all at the trial (and no costs would have been incurred in relation to that issue).

  4. Second, as to the issues in the cross-claim, MIBT accepts that the Department had limited success (partially on the issue of duplicated CIDs and on the issue of Rollback of Payment Outcomes) but says the Department was unsuccessful in its contention for a greater amount than was conceded by MIBT in relation to the Operation Fish issue. It is noted that MIBT had accepted in its defence that it owed the sum claimed in respect of the COVID-19 payment continuity strategy sum. MIBT says that the Department was unsuccessful on all other matters of quantum in its cross-claim (the withdrawn outcomes, TNC data, rejections for failure to provide evidence and rejections for failure to provide responses to requests).

  5. It is said that in relation to the amounts claimed by the Department (other than the payment continuity strategy and Operation Fish amounts), the Department's case only became clear upon the late service of evidence from the Department on 1 October and 6 October 2021. MIBT points out that its concessions meant that, of the claimed $925,429.99, only $470,272.83 was in contest; and that, of that amount, the Department was only successful in the amount of an award for an additional $256,980 (in relation to matters that MIBT said had only confronted it close to the hearing).

  6. Thus, MIBT says that there was only a modest success (on the disputed issues in the cross-claim) and that this, coupled with the various respects in which the cross-claim failed along with an unnecessary declaration that was not made, does not qualify as “an event” in the litigation for the Department. MIBT says that the issues in the cross-claim were not dominant; and says that it had overwhelming success in the proceeding.

  1. MIBT maintains that the fundamental issues in dispute, as identified in the principal reasons at [7] were all determined in MIBT’s favour and that they arose from the Department’s “mismatch of expectation or understanding as to what was required to be provided by MIBT in order to address the Department's queries in the course of its clarification or verification process, exacerbated by the view formed by the Department (seemingly, after the event or at least not expressed until then) as to the quality or otherwise of the training provided by MIBT (and, in particular, what was expected for satisfaction and reporting of the requirement for student “Participation in Subsidised Training”)” to which I referred in the principal reasons at [8].

Determination

  1. I have summarised the relevant principles as to costs elsewhere (see for example in Eastlings Pty Ltd v Calidu Import Export Pty Ltd (No 3) [2021] NSWSC 466 at [37]-[43]; Bassett v Cameron (No 2) [2021] NSWSC 419 at [16]-[29]); and it does not appear that there is any real dispute as to those principles. Insofar as the general rule is that costs follow the event, it has been said that the “event” is not limited to issues in the technical pleading sense but extends to all disputed questions of law and fact (see Cretazzo v Lombardi (1975) 13 SASR 4 at 12 per Bray CJ, with whom Zelling and Jacobs JJ agreed).

  2. Here, the relevant issue is as to whether the costs should be apportioned relevant to success on particular issues. I considered the circumstances where costs may be apportioned where there is a mixed outcome in the proceeding or on the particular applications in In the matters of Earth Civil Australia Pty Ltd, RCG CBD Pty Ltd, Bluemine Pty Ltd, Diamondwish Pty Ltd and Rackforce Pty Ltd (all in liq) (No 2) [2021] NSWSC 1161 as follows (at [83]-[85]):

83.   …Costs may be apportioned where there has been a mixed outcome in the issues in proceedings (see Corbett Court Pty Ltd v Quasar Constructions (NSW) Pty Ltd [2008] NSWSC 1423 at [30], where Hammerschlag J referred to the authorities collated by White J, as his Honour then was, in Short v Crawley (No 40) [2008] NSWSC 1302 at [25]–[32]).

84.   Relevantly, the circumstances in which apportionment of costs as between different issues may be appropriate include: where, in respect of one or more issues, the successful party has “unfairly, improperly, or unnecessarily increased the costs” (Waddell J, as his Honour then was, in Windsurfing International Inc v Petit (1987) AIPC 90-441 ); where the bulk of the time has been taken on an issue on which the unsuccessful party had succeeded (see, for example, Waters v PC Henderson at 5 per Mahoney JA; Hughes v Western Australian Cricket Association Inc (1986) ATPR 40-748 per Toohey J); or where a particular issue or group of issues is clearly dominant or separable (see, for example, Waters v PC Henderson at 5 per Mahoney JA; Elite Protective Personnel Pty Ltd v Salmon (No 2) [2007] NSWCA 373 at [6] per Beazley JA, as Her Excellency then was, McColl and Basten JJA).

85.   Where the apportionment of the costs attributable to such issues is considered appropriate, the question of apportionment is recognised to be a matter of discretion, the exercise of which “will often depend upon matters of impression and evaluation” (Dodds Family Investments Pty Ltd (formerly Solar Tint Pty Ltd) v Lane Industries Pty Ltd (1993) 26 IPR 261 at 272 per Gummow, French and Hill JJ).

  1. In the present case, it is relevant to note (particularly insofar as MIBT has referred in its costs submissions to the interlocutory applications that were made and the undertaking as to damages proffered by it) the costs orders that have already been made in relation to the interlocutory applications in this matter.

  2. On 17 May 2021, Kunc J by consent ordered that the costs of and incidental to the interlocutory hearing in relation to paragraph 9(b) of the summons filed on 31 March 2021 be MIBT’s costs in the cause. This related to the initial application by MIBT for urgent interlocutory relief (by way of mandatory injunction) to compel the Department to continue to perform the Contract notwithstanding the purported termination of the Contract (see the subsequent reasons published on 30 April 2021 of Kunc J in Masters in Building Training Pty Ltd v State of New South Wales [2021] NSWSC 454, as referred to in my principal judgment. Kunc J then, on 27 May 2021, made orders on a without admissions basis (in accordance with short minutes that his Honour had amended) for the payment of a sum of money into Court ($459,038.85) pending the final determination of the substantive proceeding; and ordered that the costs of the Department’s notice of motion filed 11 May 2021 (which was then adjourned to be heard as part of the final hearing of the proceeding) be the Department’s costs in the cause.

  3. Then on 22 June 2021 (in connection with the further interlocutory application by MIBT – see Masters in Building Training Pty Ltd v State of New South Wales (No 2) [2021] NSWSC 747, in which an order was made on an interlocutory basis restraining the exercise by the Department of the right to withhold Subsidies and Loadings due to MIBT), Parker J made orders for the release to the Department of the sum that had been paid into Court and ordered that the costs of the notice of motion filed on 28 May 2021 be MIBT’s costs in the cause.

  4. Those respective costs in the cause orders would not ordinarily be disturbed by costs orders made at the conclusion of the proceeding, although they would necessarily be affected by the outcome of the proceeding (being variously expressed to be MIBT’s or the Department’s costs in the cause and hence the entitlement to those costs by MIBT or the Department is dependent on success in the cause).

  5. The issue as it first arose in this Court on an interlocutory basis was as to the validity of termination of the Contract (an issue on which the Department ultimately succeeded) and then as to whether the Department was entitled to withhold payment of Subsidies and Loadings in accordance with the Contract (an issue on which I concluded again in favour of the Department during the suspension of the Contract). It was well understood at the time of the first interlocutory application (since Kunc J recorded it in his reasons in relation to that application) that the determination of the first interlocutory injunction in effect amounted to final relief (since the Contract expired in any event on 30 June 2021, not having been renewed by the Department).

  6. The relevance of the undertakings as to damages proffered by MIBT (as acknowledged in its submissions in this costs application) goes to the fact that if the Contract were (as it was) to have been found validly to have been terminated by the Department’s notice of termination, then the interlocutory injunction that had been obtained (that required the Department in effect to treat the Contract on foot) would be relief which (absent some other claim) MIBT would not have obtained had there been a final hearing at that point. Thus, I accept that there was a potential exposure to MIBT under the usual undertaking for damages (in relation to which the issue of the validity of termination would have been relevant).

  7. However, what became apparent during the course of oral submissions at the final hearing (as adverted to above) was that, on the one hand, MIBT was not seeking any damages for loss occasioned by the termination (not having suffered any such loss once the Contract was to all practical intents and purposes reinstated by reason of the interlocutory injunction) and, on the other hand, the Department was not contending that (if it be the case that the Contract was validly terminated) the fact of termination would entitle it not to pay amounts to which MIBT was otherwise entitled for services that it had rendered. Hence, as I attempted to explain in the principal reasons, at the start of the hearing the parties appeared to have been at cross-purposes in relation to the issue as to the validity of the termination. In this regard, I do not consider that blame can be laid solely at the feet of either of the parties (and hence the cost of that misapprehension should not sound in any particular costs order).

  8. The evidence as to termination of the Contract seems to me largely to have been served in relation to the interlocutory hearings. As a matter of impression, the evidence served after that time related more to the issue of the entitlement claimed by MIBT for Subsidies and Loadings (and the contentions raised by the Department as to whether that entitlement had been established, including by reference to whether there had been training that complied with the requirement for “Participation in Subsidised Training”). Again, as a matter of impression, it seemed to me that the bulk of the hearing time (including the cross-examination of Mr Lawrence and Mr Buddeke to which the Department has referred) went to the issue as to the acceptability of the Training Activity Data uploaded by MIBT (and whether the Department was entitled to reject that data). That certainly seems to have been the purpose of the review carried out (and to which Ms Nguon deposed and was cross-examined). Therefore, while I accept that this ultimately became akin to a debt claim, it is not immediately apparent that the duration of the hearing would have been greatly reduced had the issue as to validity of termination been abandoned at the outset of the hearing rather than in closing submissions.

  9. The question to my mind, therefore, as to the costs associated with the issue of validity of the termination of the Contract, is whether, in circumstances where it has now been held that the Contract was validly terminated by the Department’s notice of termination (see at [12] of the principal judgment), the costs ordered to be the plaintiff’s costs in the cause (pursuant to the order made by Kunc J) which related to the application for injunctive relief premised on MIBT’s argument that the Contract had been invalidly terminated, should be understood to be costs that MIBT cannot now recover (as it did not succeed on this issue) or whether in any event there should be a different outcome, such that MIBT pays the Department’s costs of the issue as to the validity of termination of the Contract (and of the not unrelated issue as to the ability to withhold payment of Subsidies and Loadings during the suspension of the Contract).

  10. In this regard, as noted above, I do not consider that the Department is solely responsible for the fact that the parties appear to have been at cross-purposes in relation to the issue of validity of termination of the Contract; and I do not find that there has been a breach of the obligations on litigants under s 56 of the Civil Procedure Act in this regard (as MIBT contends). Further, the fact that the validity of termination is accepted as of potential relevance to the undertakings as to damages makes it difficult to proceed on an assumption that MIBT would not have contested the issue as to the validity of termination (as opposed to the issue as to any claim for loss arising from an invalid termination) had the Department’s position as to the obligation to pay Subsidies and Loadings after termination of the Contract been made clearer at an earlier stage.

  11. Thus, while I do not accept that the bulk of the time at the hearing was taken up on the issue as the validity of the Department’s termination of the Contract or the issue as to the withholding of Subsidies and Loadings during a suspension of the Contract, I do consider that these were separate issues as to which it would be appropriate for there to be a discrete costs treatment (on the basis that these were separate and distinct “events”). Moreover, it seems to me that if there is not an apportionment of costs in relation to those issues, then the apparent intent of the earlier “costs in the cause” order may not be satisfied.

  12. On a broad brush basis, I would treat the costs of the interlocutory injunction applications before Kunc J and Parker J as largely referable to the above group of issues (and the final hearing, in contrast, as largely referable to the claims made by MIBT in relation to the submission of Training Activity Data and the Department’s cross-claim relating to amounts it contended it was entitled to set-off against moneys otherwise owing to MIBT or which were not payable to it).

  13. Thus, while I have concluded that it would be appropriate for there to be a separate order for costs referable to the issue of validity of termination of the Contract (and entitlement to withhold payments while the Contract was suspended – although that issue seems to me only to have involved a question of construction of the Contract), I do not consider that a 50/50 apportionment of the costs of the statement of claim is appropriate. Instead, I consider the appropriate order (including to remove only doubt in the ultimate event) to be to vary the plaintiff’s costs in the cause orders and to order that MIBT pay the Department’s costs of the interlocutory hearings before Kunc J and Parker J (other than as already the subject of costs orders in the Department’s favour) and then to order the Department to pay the balance of the costs of the statement of claim. (It is not necessary to add “as agreed or assessed” as this will follow axiomatically from the making of the orders.)

  14. As to the costs of the cross-claim, I accept that there was mixed success on various of the disputed amounts (although overall MIBT had a substantial measure of success). Part of the difficulty in this regard lay in the fact that much of the material in relation to the claimed Subsidies and Loadings (and the review of that material) was the subject of evidence that came relatively late in the proceeding. That said, there was also a large amount of information supplied by MIBT (in relation to information that had been requested concerning the rejected Training Activity Data or data that was not able to be uploaded after termination of the Contract).

  15. Adopting a broad brush approach, and noting both that a large bulk of evidence and time at the hearing related to the dispute over what was meant by Participation in Subsidised Training (on which MIBT succeeded) and some of the cross-claim was conceded by MIBT (and hence occupied no relevant hearing time), I would assess the success across the relevant issues that were ultimately in dispute as being closer to 60/40 in MIBT’s favour than the 50/50 that the Department’s alternative order suggests; and I propose to adopt that figure on the basis that this will avoid the incurring of additional costs in an assessment of costs on an issue-by-issue basis (and hence will be consistent with the overriding statutory mandate set by s 56 of the Civil Procedure Act).

Orders

  1. For the above reasons I make the following orders:

  1. Vary:

  1. the order made by Kunc J on 17 May 2021 that the costs of the interlocutory hearing on 31 March 2021 be the plaintiff’s costs in the cause; and

  2. Order 4 of the orders made by Parker J on 22 June 2021 that the costs of the plaintiff’s notice of motion filed 28 May 2021 be the plaintiff’s costs in the cause

by replacing those orders with Order 2 below.

  1. Order that MIBT pay the Department’s costs of the interlocutory hearings before Kunc J and Parker J (other than as already the subject of costs orders in the Department’s favour) on the party/party basis.

  2. Other than as ordered by Order 2 above, order that the Department pay MIBT’s costs of the statement of claim in this proceeding on the party/party basis.

  3. Order that the Department pay 60% of MIBT’s costs of the Department’s cross-claim and that MIBT pay 40% of the Department’s costs of the Department’s cross-claim, each on the party/party basis; such costs to be set off against each other (with the balance to be payable to the party in whose favour the set-off results).

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Decision last updated: 30 May 2022

Most Recent Citation
Cases Cited

19

Statutory Material Cited

1

Bassett v Cameron (No 2) [2021] NSWSC 419
Bostik Australia Pty Ltd v Liddiard (No 2) [2009] NSWCA 304
Latoudis v Casey [1990] HCA 59