Pacific National Constructions Pty Ltd v Geurts Trucks Besloten Venootschap

[2024] NSWSC 944

Supreme Court

New South Wales

Medium Neutral Citation:

Pacific National Constructions Pty Ltd v Geurts Trucks Besloten Venootschap [2024] NSWSC 944

Hearing dates:

On the Papers

Date of orders:

02 August 2024
In Chambers

Decision date:

02 August 2024

Jurisdiction:

Common Law

Before:

Wilson J

Decision:

(1) Application for indemnity costs refused.

(2) Order 2 of 9 July 2024 for costs on an ordinary basis is confirmed.

Catchwords:

COSTS – indemnity costs – whether usual order should be displaced – where exclusive jurisdiction clause challenged and no expert evidence adduced

Legislation Cited:

Civil Procedure Act 2005 (NSW)

Land and Environment Court Act 1979 (NSW)

Uniform Civil Procedure Rules 2005 (NSW)

Cases Cited:

John Holland Pty Limited v Kellogg Brown & Root Pty Ltd [No 2] [2015] NSWSC 564

Oshlack v Richmond River Council (1998) 193 CLR 72; [1998] HCA 11

Category:

Costs

Parties:

Pacific National Constructions Pty Ltd (CAN 104 808 844) trading as Nowra Cranes (Plaintiff)
Geurts Trucks Besloten Venootschap (Defendant)

Representation:

Solicitors:
Cornwalls (Plaintiff)
Koffels Solicitors and Barristers (Defendant)

File Number(s):

2023/206663

Publication restriction:

Nil

JUDGMENT

1. HER HONOUR: On 9 July 2024 the Court made the following orders in this matter:

(1) The Claim filed by Pacific National Constructions Pty Ltd (CAN 104 808 844) trading as Nowra Cranes on 27 June 2023 bearing Case number 2023/00206663 is permanently stayed;

(2) Subject to order (3) costs of the Motion filed by Geurts Trucks Besloten Venootschap on 25 March 2024 are in favour of the defendant;

(3) Should either party seek an order for costs different to that given at order (2), written submissions and any evidence in support are to be filed and served on the opposing party within 7 days of the date of these orders. Submissions and any evidence in reply are to be filed and served 7 days thereafter. Any such application will be determined on the papers.

2. Pursuant to order 3 above, on 16 July 2024 the defendant filed and served and application in submissions seeking an order for indemnity costs, in lieu of order 2 above. On 23 July 2024 the plaintiff filed its submissions in response to the defendant’s application, an application it opposes.

The Submissions with respect to Indemnity Costs

3. The defendant submits that an order for indemnity costs should be made because the plaintiff commenced its claim knowing it was in breach of a contractual exclusive jurisdiction clause, thereafter, failing to adduce any expert evidence to support its argument that the clause should be set aside.

4. In making its application the defendant accepts that indemnity costs may only be awarded where there is “a special entitlement or some relevant unreasonable action including relevant misconduct in connection with the conduct of the proceedings”: John Holland Pty Limited v Kellogg Brown & Root Pty Ltd [No 2] [2015] NSWSC 564, at [32]. It submits that unreasonableness arises here because of the deliberate breach by the plaintiff of the exclusive jurisdiction clause, compounded by its failure to call any expert evidence in support of a conclusion that the clause should be set aside, thus presenting an argument so weak as to be insupportable.

5. The plaintiff submits that it should not be “punished” by an order for indemnity costs simply because it filed a claim that was later stayed. It argues that to approach indemnity costs in that way, where there is no relevant delinquency, would be to deter litigants from putting forward a case that may be attended by uncertainty.

6. Further, the plaintiff argues that it advanced a cogent case, with a real issue to be determined, and which was not solely reliant upon expert evidence. In those circumstances, indemnity costs would be punitive against it only because of a shortcoming in a single aspect of its case.

Determination

7. The Court has wide powers with respect to costs in the context of the speedy and just resolution of the matter. Sections 56(1) and (2) of the Civil Procedure Act 2005 (NSW) (“the CP Act”) provide:

(1)    The overriding purpose of this Act and of rules of court, in their application to civil proceedings, is to facilitate the just, quick and cheap resolution of the real issues in the proceedings.

(2)    The court must seek to give effect to the overriding purpose when it exercises any power given to it by this Act or by rules of court and when it interprets any provision of this Act or of any such rule.

8. Section 98(1) of the CP Act provides:

98   Courts powers as to costs

(1) Subject to rules of court and to this or any other Act:

(a)    costs are in the discretion of the court, and

(b)    the court has full power to determine by whom, to whom and to what extent costs are to be paid, and

(c)    the court may order that costs are to be awarded on the ordinary basis or on an indemnity basis.

9. The section gives the Court a wide discretion. In Oshlack v Richmond River Council (1998) 193 CLR 72; [1998] HCA 11 at [22], Gaudron and Gummow JJ, considering s 69(2) of the Land and Environment Court Act 1979 (NSW), which is in the same terms as s 98(1) of the CP Act, observed:

“The terms of s 69(2) contain no positive indication of the considerations upon which the Court is to determine by whom and to what extent costs are to be paid. The power conferred by the section is to be exercised judicially, that is to say not arbitrarily, capriciously or so as to frustrate the legislative intent. However, subject to such considerations, the discretion conferred is, to adapt the words of Dixon J, unconfined except in so far as "the subject matter and the scope and purpose" of the legislation may enable an appellate court to pronounce the reasons given by the primary judge to be "definitely extraneous to any objects the legislature could have had in view".

10. Part 42 of the Uniform Civil Procedure Rules 2005 (NSW) ("UCPR") also provide for costs orders. Rule 42 of Division 1 relevantly provides:

42.1   General rule that costs follow the event

Subject to this Part, if the court makes any order as to costs, the court is to order that the costs follow the event unless it appears to the court that some other order should be made as to the whole or any part of the costs.

42.2   General rule as to assessment of costs

Unless the court orders otherwise or these rules otherwise provide, costs payable to a person under an order of the court or these rules are to be assessed on the ordinary basis.

11. The accepted starting point then is that costs are on the ordinary basis. That accepted starting point is displaced where there is some unreasonableness or other delinquency such that the successful party should receive all its costs.

12. There was no delinquency in the plaintiff’s conduct of its claim in my view. It was not unreasonable to ask the Court to consider setting aside the exclusive jurisdiction clause and to hear its claim in this jurisdiction. Whilst the failure to call expert evidence as to the ability of the Dutch courts to deal with its claim may have weakened an aspect of its argument, it did not render its case fatally weak.

13. Indemnity costs orders should not be used simply to penalise an unsuccessful litigant in my opinion, but only where there is a compelling need for such an order, to ensure a truly just outcome for the successful party who has been gravely disadvantaged by an unreasonable litigant. I am not prepared to vary order 2.

order

14. The order of the Court is:

1. Application for indemnity costs refused.

2. Order 2 of 9 July 2024 for costs on an ordinary basis is confirmed.

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Decision last updated: 02 August 2024