Minister for Works v CIMIC Group Ltd - [2021] WASC 440

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS

CITATION:   MINISTER FOR WORKS -v- CIMIC GROUP LTD [2021] WASC 440
CORAM:   HILL J
HEARD:   ON THE PAPERS
PUBLISHED           :   9 DECEMBER 2021
FILE NO/S:   CIV 2340 of 2019
BETWEEN:   MINISTER FOR WORKS
Plaintiff

AND

CIMIC GROUP LTD
First Defendant

JOHN HOLLAND PTY LTD
First Third Party

JOHN HOLLAND HOLDINGS PTY LTD
Second Third Party

Catchwords:

Practice and procedure - Costs - Application for costs following discontinuance of the proceedings by the plaintiff - Whether parties acted reasonably in commencing and defending proceedings - Turns on own facts

Legislation:

Rules of the Supreme Court 1971 (WA) O 23 r 2

Result:

Costs in the cause of CIV 3025 of 2019

Category: B

Representation:

Counsel:

Plaintiff	:	No appearance
First Defendant	:	No appearance
First Third Party	:	No appearance
Second Third Party	:	No appearance

Solicitors:

Plaintiff	:	Herbert Smith Freehills
First Defendant	:	DLA Piper Australia - Perth
First Third Party	:	Pinsent Masons (Australia) - Melbourne
Second Third Party	:	Pinsent Masons (Australia) - Melbourne

Cases referred to in decision:

ACN 116 149 092 Pty Ltd v Coopers Brewery Ltd [2006] FCA 1119
IBN Corporation Pty Ltd v Banjyma Aboriginal Corporation [2009] WASC 279
McClure v Mayor and Councillors of the City of Stirling [No 3] [2009] WASC 247; (2009) 170 LGERA 138
One.tel Ltd v Deputy Commissioner of Taxation [2000] FCA 270; (2000) 101 FCR 548
Re The Minister for Immigration and Ethnic Affairs of the Commonwealth of Australia; Ex parte Lai Qin [1997] HCA 6; (1997) 186 CLR 622
Walter v Buckeridge [No 4] [2011] WASC 313

HILL J:

On 31 July 2019, the State commenced these proceedings against CIMIC Group Limited (CIMIC). By the proceedings, the State claims approximately $17 million under a parent company guarantee provided by CIMIC to the State as part of the contractual arrangements for the construction of the Perth Children's Hospital (PCH). The claim arises from the failure by John Holland Pty Ltd to pay liquidated damages which the State contends are payable as a result of the delay in achieving practical completion of PCH by 13 April 2017.
On 20 August 2019, CIMIC issued third party notices to John Holland Pty Ltd and John Holland Holdings Pty Ltd (collectively, John Holland). CIMIC claimed an indemnity from John Holland for any amount it was found liable to pay the State.
On 26 November 2019, John Holland Pty Ltd commenced proceedings (being CIV 3025 of 2019) against the State seeking damages of an amount in excess of $180 million in connection with the construction of PCH. On 14 October 2020, in CIV 3025 of 2019, the State filed a defence and counterclaim against John Holland Pty Ltd and CIMIC. The counterclaim against CIMIC seeks payment of an amount of approximately $17 million under the parent company guarantee. On 27 November 2019, CIMIC filed third party notices in those proceedings against John Holland claiming an indemnity for any amount…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2021] WASC 440
Decision Date: 9 DECEMBER 2021

CaseChat Overview and Summary

The case of Minister for Works v CIMIC Group Ltd dealt with an application for costs following the discontinuance of proceedings by the plaintiff, the Minister for Works. The dispute centred around the reasonableness of both parties in commencing and defending the proceedings, which were ultimately discontinued. The Federal Court of Australia was tasked with determining the appropriate exercise of discretion regarding costs.

The legal issues before the court were whether both parties had acted reasonably in initiating and defending the proceedings until their discontinuance, and if so, whether the court should exercise its discretion to make no order for costs. The court was also required to consider the reasons for the discontinuance of the proceedings and how they might influence the costs order.

The court considered the principles set out in Re The Minister for Immigration and Ethnic Affairs of the Commonwealth of Australia; Ex parte Lai Qin, which emphasised that if both parties acted reasonably throughout the litigation and the proceedings were discontinued without a hearing on the merits, the court should usually make no order for costs. However, the court also noted that even if a party acted reasonably in commencing proceedings, it did not necessarily mean no costs order should be made if the proceedings were discontinued. The court had to consider both parties' perspectives and the reason for discontinuance, as illustrated in One.tel Ltd v Deputy Commissioner of Taxation and ACN 116 149 092 Pty Ltd v Coopers Brewery Ltd.

Ultimately, the court found that both parties had acted reasonably in the proceedings, and since the litigation was discontinued without a hearing on the merits, the proper exercise of the discretion as to costs meant that no order should be made regarding the costs of the proceedings.

Orders

Orders of the court

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Background

Background to the litigation

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Evidence

Evidence Before The Court

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Decision

Reasons for decision

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Ratio Decidendi

Legal Principle Established

If both parties have acted reasonably in commencing and defending the proceedings and continued to act reasonably until the discontinuance of the proceedings, the proper exercise of the discretion as to costs will usually mean that the court makes no order as to costs. As was stated by McHugh J in Re The Minister for Immigration and Ethnic Affairs of the Commonwealth of Australia; Ex parte Lai Qin, where there has been no hearing on the merits of the case:[3]The court cannot try a hypothetical action between the parties. To do so would burden the parties with the costs of a litigated action which by settlement or extra-curial action they had avoided. …If it appears that both parties have acted reasonably in commencing and defending the proceedings and the conduct of the parties continued to be reasonable until the litigation was settled or its further prosecution became futile, the proper exercise of the cost discretion will usually mean that the court will make no order as to the cost of the proceedings.[3] Re The Minister for Immigration and Ethnic Affairs of the Commonwealth of Australia; Ex parte Lai Qin [1997] HCA 6; (1997) 186 CLR 622, 624 - 625. However, even if a party acts reasonably in commencing proceedings, it does not follow there should be no order for costs in the event the proceedings are discontinued. The question must be looked at from the perspective of both the plaintiff and the defendant.[4][4] Walter v Buckeridge [No 4] [2011] WASC 313 [13] - [14], [19]. In considering the appropriate costs order, it is necessary to consider the reason for the discontinuance of the proceedings. As was noted by Burchett J in One.tel Ltd v Deputy Commissioner of Taxation:[5]In my opinion, it is important to draw a distinction between cases in which one party, after litigating for some time, effectively surrenders to the other, and cases where some supervening event or settlement so removes or modifies the subject of the dispute that, although it could not be said that one side has simply won, no issue remains between the parties except that of costs. In the former type of case, there will commonly be lacking any basis for an exercise of the Court's discretion otherwise than by an award of costs to the successful party. It is the latter type of case which more often creates problems, since there may be difficulty in discerning a clear reason why one party, rather than the other, should bear the costs.[5] One.tel Ltd v Deputy Commissioner of Taxation [2000] FCA 270; (2000) 101 FCR 548 [6]. In ACN 116 149 092 Pty Ltd v Coopers Brewery Ltd,[6] Finn J granted leave to the plaintiff to discontinue the proceedings but ordered it to pay the defendant's costs. Finn J stated:[7]As I foreshadowed, I am satisfied that an order for costs is appropriate. While it cannot be said that the institution of this proceeding was in any way unreasonable - it was one of a complex of legal manoeuvres in a hostile takeover bid ‑ it was done in the full knowledge that, consequent upon the decision of Perry ACJ, Coopers would act to alter its constitution to remove Lion Nathan Australia's pre‑emptive rights and exemptions unless either that decision was reversed on appeal or the holding of the necessary extraordinary general meeting could be prevented. Neither of these contingencies eventuated. From its inception this matter contained the seeds of its own futility, yet ACN was prepared to proceed and to put Coopers to its defence. In so doing ACN assumed the risk of the proceedings becoming futile. It cannot escape the consequences of that by the assertion that it nonetheless conducted itself reasonably. It gambled and it lost. It is entirely appropriate that it pay Coopers' costs occasioned by the discontinued claim including reserved costs and its costs of this motion.[6] ACN 116 149 092 Pty Ltd v Coopers Brewery Ltd [2006] FCA 1119.[7] ACN 116 149 092 Pty Ltd v Coopers Brewery Ltd [22].