Pipeline Services WA Pty Ltd v Atco Gas Australia Pty Ltd
[2014] WASC 10 (S)
PIPELINE SERVICES WA PTY LTD -v- ATCO GAS AUSTRALIA PTY LTD [2014] WASC 10 (S)
| SUPREME COURT OF WESTERN AUSTRALIA | Citation No: | [2014] WASC 10 (S) | |
| Case No: | CIV:1877/2013 | ON THE PAPERS | |
| Coram: | MARTIN CJ | 7/05/14 | |
| 16 | Judgment Part: | 1 of 1 | |
| Result: | Plaintiffs pay the defendant's costs of the stay application on an indemnity basis | ||
| A | |||
| PDF Version |
| Parties: | PIPELINE SERVICES WA PTY LTD ATCO GAS AUSTRALIA PTY LTD |
Catchwords: | Costs Application for a stay of proceedings under Commercial Arbitration Act 2012 (WA) Whether costs should be awarded on indemnity basis for proceedings brought in breach of an arbitration agreement Whether principle in A v B should be applied in Western Australia |
Legislation: | Commercial Arbitration Act 1985 (WA), s 53 Commercial Arbitration Act 2012 (WA), s 1C, s 2A, s 5, s 8 International Arbitration Act 1974 (Cth), s 7 Rules of the Supreme Court 1971, O 1 r 4B, O 66 r 1 |
Case References: | A v B [2007] EWHC 54 Ansett Australia Ltd v Malaysian Airline System Berhad (No 2) [2008] VSC 156 Aon Risk Services Australia Ltd v Australian National University [2009] HCA 27; (2009) 239 CLR 175 Berry v British Transport Commission [1962] 1 QB 306 Cape Lambert Resources Ltd v MCC Australia Sanjin Mining Pty Ltd [2013] WASCA 66 Civil Properties Pty Ltd v Miluc Pty Ltd [2011] WASCA 195 Colgate-Palmolive v Cussons [1993] FCA 801; (1993) 46 FCR 225 Flotilla Nominees Pty Ltd v Western Australian Land Authority [2003] WASC 122 (S) J-Corp Pty Ltd v Australian Builders Labourers Federated Union of Workers (WA) (No 2) [1993] FCA 70; (1993) 46 IR 301 Kyrgyz Mobil Tel Ltd v Fellowes International [2005] EWHC 1314 Mio Art Pty Ltd v Mango Boulevard Pty Ltd (No 3) [2013] QSC 95 Oshlack v Richmond River Council [1998] HCA 11; (1998) 193 CLR 72 Pipeline Services WA Pty Ltd v Atco Gas Australia Pty Ltd [2014] WASC 10 Quancorp Pty Ltd v McDonald [1999] WASCA 101 Swansdale Pty Ltd v Whitecrest Pty Ltd [2010] WASCA 129 (S) Unioil International Pty Ltd v Deloitte Touche Tohmatsu (1997) 18 WAR 190 University of Western Australia v Gray (No 28) [2010] FCA 586; (2010) 185 FCR 335 |
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
- IN CHAMBERS
- Plaintiff
AND
ATCO GAS AUSTRALIA PTY LTD
Defendant
Catchwords:
Costs - Application for a stay of proceedings under Commercial Arbitration Act 2012 (WA) - Whether costs should be awarded on indemnity basis for proceedings brought in breach of an arbitration agreement - Whether principle in A v B should be applied in Western Australia
Legislation:
Commercial Arbitration Act 1985 (WA), s 53
Commercial Arbitration Act 2012 (WA), s 1C, s 2A, s 5, s 8
International Arbitration Act 1974 (Cth), s 7
Rules of the Supreme Court 1971, O 1 r 4B, O 66 r 1
Result:
Plaintiffs pay the defendant's costs of the stay application on an indemnity basis
Category: A
Representation:
Counsel:
Plaintiff : Mr C V Eastwood
Defendant : Mr S Cho
Solicitors:
Plaintiff : Eastwood Sweeney Law
Defendant : Corrs Chambers Westgarth
Case(s) referred to in judgment(s):
A v B [2007] EWHC 54
Ansett Australia Ltd v Malaysian Airline System Berhad (No 2) [2008] VSC 156
Aon Risk Services Australia Ltd v Australian National University [2009] HCA 27; (2009) 239 CLR 175
Berry v British Transport Commission [1962] 1 QB 306
Cape Lambert Resources Ltd v MCC Australia Sanjin Mining Pty Ltd [2013] WASCA 66
Civil Properties Pty Ltd v Miluc Pty Ltd [2011] WASCA 195
Colgate-Palmolive v Cussons [1993] FCA 801; (1993) 46 FCR 225
Flotilla Nominees Pty Ltd v Western Australian Land Authority [2003] WASC 122 (S)
J-Corp Pty Ltd v Australian Builders Labourers Federated Union of Workers (WA) (No 2) [1993] FCA 70; (1993) 46 IR 301
Kyrgyz Mobil Tel Ltd v Fellowes International [2005] EWHC 1314
Mio Art Pty Ltd v Mango Boulevard Pty Ltd (No 3) [2013] QSC 95
Oshlack v Richmond River Council [1998] HCA 11; (1998) 193 CLR 72
Pipeline Services WA Pty Ltd v Atco Gas Australia Pty Ltd [2014] WASC 10
Quancorp Pty Ltd v McDonald [1999] WASCA 101
Swansdale Pty Ltd v Whitecrest Pty Ltd [2010] WASCA 129 (S)
Unioil International Pty Ltd v Deloitte Touche Tohmatsu (1997) 18 WAR 190
University of Western Australia v Gray (No 28) [2010] FCA 586; (2010) 185 FCR 335
- MARTIN CJ:
Summary
1 Earlier in these proceedings, on the application of the defendant, ATCO Gas Australia Pty Ltd (ATCO), I granted a stay of the proceedings and ordered that the issues raised in the proceedings be referred to arbitration pursuant to s 8 of the Commercial Arbitration Act 2012 (WA) (the 2012 Act) (Pipeline Services WA Pty Ltd v ATCO Gas Australia Pty Ltd [2014] WASC 10). ATCO has applied for an order that the plaintiff, Pipeline Services WA Pty Ltd (Pipeline), pay its costs of the application for a stay of proceedings on an indemnity basis. These are my reasons for concluding that such an order should be made.
General principles relating to indemnity costs
2 The court has a general discretion with respect to orders made relating to the costs of the parties to proceedings before the court (Supreme Court 1935 (WA), s 37). However, the court will usually exercise its discretion to order that the successful party to proceedings recover costs from the unsuccessful party (Rules of the Supreme Court 1971, O 66 r 1(1)). Ordinarily the amount of costs to be paid by the unsuccessful party will, in default of agreement between the parties, be either fixed by the court or taxed by a taxing officer of the court by reference to the relevantly applicable scale of costs.
3 However, the court has power, in an appropriate case, to order that the unsuccessful party pay the successful party's costs on an indemnity basis - that is to say, an order to the effect that the successful party is to recover from the unsuccessful party its actual costs, provided that those costs were not unreasonably incurred, nor unreasonable in amount: Swansdale Pty Ltd v Whitecrest Pty Ltd [2010] WASCA 129 (S) [10]. Such an order will only be made if there is some special or unusual feature in the case to justify departure from the ordinary practice, although jurisdiction exists to make such an order whenever the interests of justice require it: Flotilla Nominees Pty Ltd v Western Australian Land Authority [2003] WASC 122 (S) [8]; Unioil International Pty Ltd v Deloitte Touche Tohmatsu (1997) 18 WAR 190, 191 (Ipp J). Although the range of circumstances in which the interests of justice may require that an order for costs be made on an indemnity basis is not restricted to specific categories or classes of case, the power will most often be exercised in circumstances in which the conduct of the party ordered to pay costs merits sanction by the court (Oshlack v Richmond River Council [1998] HCA 11; (1998) 193 CLR 72 [44] (Gaudron & Gummow JJ), [69] (McHugh J)) because it involves some element of improper, or at least unreasonable conduct: Flotilla [9]; Colgate-Palmolive v Cussons [1993] FCA 801; (1993) 46 FCR 225, 233 (Sheppard J).
4 Persistence in a hopeless case can justify an order for indemnity costs, without necessarily imputing to the party responsible for that conduct an improper or collateral motive, and without the proceedings necessarily being characterised as an abuse of process - see J-Corp Pty Ltd v Australian Builders Labourers Federated Union of Workers (WA) (No 2) [1993] FCA 70; (1993) 46 IR 301, 303. However, courts should not be too ready to use the benefit of hindsight to characterise a case as hopeless, lest a party be discouraged from pursuing causes of action or lines of defence which are uncertain or novel: see Quancorp Pty Ltd v McDonald [1999] WASCA 101 [7] (Wheeler J); Civil Properties Pty Ltd v Miluc Pty Ltd [2011] WASCA 195 [84] - [85] (Newnes JA, Murphy JA & Hall J agreeing).
5 These principles are well established and, to that extent, relatively trite. Their application in a particular case will, like all issues relating to the practice and procedure of the court, be informed by the objects enunciated in O 1 r 4B of the rules, including the efficient and timely disposal of the business of the court, the maximisation of the efficient use of available judicial and administrative resources and the proportionality principles. There is no tension between these principles and the interests of justice (Aon Risk Services Australia Ltd v Australian National University [2009] HCA 27; (2009) 239 CLR 175), as the interests of justice embrace the avoidance of delay and the efficient utilisation of public and private resources deployed in the conduct of litigation [5] (French J). The judicious and appropriate exercise of the power to order indemnity costs will discourage the unreasonable conduct of litigation, including unreasonable conduct which has the effect of unnecessarily absorbing the resources of the parties and the court, and the effect of delaying the resolution of proceedings before the court. It follows that the appropriate use of the power to order indemnity costs has the capacity to further the achievement of the objectives specified in O 1 r 4B, and thereby further the interests of justice, not only as between the parties, but also in the broader sense acknowledged by the High Court in Aon. These are considerations which should be borne in mind whenever the exercise of the power to order indemnity costs is being considered.
Applications for a stay in proceedings governed by an arbitration agreement
6 ATCO relies upon the decision of Colman J in A v B[2007] EWHC 54 to support the proposition that one circumstance in which indemnity costs should generally be ordered is the circumstance in which a party commences legal proceedings in breach of a contractual obligation to refer the dispute to arbitration.
7 Although there were some unusual and complex features of that case, it is clear that Colman J approached the question of costs from the perspective of general principle, before turning to the particular circumstances of the case before him. In that context, Colman J referred to the rule in Berry v British Transport Commission [1962] 1 QB 306 which precludes a party claiming damages in respect of unrecovered costs arising from prior proceedings, at least in respect of proceedings between the same parties in the same jurisdiction [6]. He referred also to Kyrgyz Mobil Tel Ltd v Fellowes International [2005] EWHC 1314 (Comm), where Cooke J observed that in his experience courts would generally order a party commencing proceedings in a non-chosen jurisdiction in breach of a jurisdiction clause in an agreement, to pay indemnity costs as a form of damages flowing from the breach of the agreement [8].
8 Colman J then observed:
I am bound to say that I have not previously encountered the practice as to costs orders where there has been breach of a jurisdiction agreement said by Cooke J to be that which is generally adopted by the Commercial Court and by courts generally. Nevertheless, the rationale which he describes certainly provides some sensible foundation for such a practice. Thus, if a costs order in favour of a successful applicant for a stay or for an anti-suit injunction directed to giving effect to an arbitration agreement or an English jurisdiction clause must, save in exceptional cases be confined to costs on the standard basis, there would necessarily be a part of the successful applicant's costs of the application which it had properly incurred but could not recover by such an order because of the restrictive process of assessment. This unindemnified portion of costs would then be loss which could only be recovered as damages for breach of the jurisdiction or arbitration agreement, if such a damages claim were permissible. Where the cause of action for relief enforcing the agreement by stay or injunction in the English court and the cause of action for damages for breach of that agreement are, as they normally will be, the same, the effect of those authorities such as Berry v British Transport Commission, referred to in Union Discount v Zoller [2001] EWCA Civ 1755, will be to prevent separate proceedings for damages by reference to unrecovered costs, notwithstanding the breach of the arbitration or jurisdiction agreement.
This would give rise to a fundamentally unjust situation. There can be no question but that the procedural consequence of conduct by a party to an arbitration or jurisdiction agreement which amounts to a breach of it and causes the opposite party reasonably to incur legal costs ought to be that the innocent party recovers by a costs order and/or by an award of damages the whole, and not merely part, of its reasonable legal costs. Against that background, it is necessary to ask whether there is any sustainable policy consideration which would require that unless there were some special circumstances, excluding the fact that it was an arbitration or jurisdiction agreement that had been broken, the successful party should have to forgo part of its costs or alternatively to bring a separate claim for damages to cover any shortfall on assessment of costs. The relevant considerations point very strongly indeed against either result. To forgo part of the loss would be unjust. To be placed in a position where the balance of the recoverable damages could not be quantified until after the costs had been formally assessed would involve delay in obtaining compensation properly due and a formalistic and cumbersome procedure which would in itself involve more costs and judicial time. Where the defendant who had been improperly impleaded in the English courts was outside the jurisdiction, no claim for damages could be brought in the English courts without submitting to the jurisdiction.
In my judgment, provided that it can be established by a successful application for a stay or an anti-suit injunction as a remedy for breach of an arbitration or jurisdiction clause that the breach has caused the innocent party reasonably to incur legal costs, those costs should normally be recoverable on an indemnity basis [9] - [11].
9 However, Colman J made it clear that the general principle he espoused should not be regarded as a mandatory or inflexible rule applicable to all cases. He observed:
The conduct of a party who deliberately ignores an arbitration or a jurisdiction clause so as to derive from its own breach of contract an unjustifiable procedural advantage is in substance acting in a manner which not only constitutes a breach of contract but which misuses the judicial facilities offered by the English courts or a foreign court. In the ordinary way it can therefore normally be characterised as so serious a departure from 'the norm' as to require judicial discouragement by more stringent means than an order for costs on the standard basis. However, although an order for indemnity costs will usually be appropriate in such cases, there may be exceptional cases where such an order should not be made. Although the requirement that the successful party should establish that the claimed costs were caused to be reasonably incurred … by the breach of the jurisdiction clause or arbitration clause will normally cater for those cases where the true cause of the expenditure on costs is the conduct of the successful party, there may be other cases in which an order for indemnity costs would not be appropriate. Without wishing to confine this flexibility in any way, it is not difficult to envisage that departure from the normal approach might be justified in a case where conduct on the part of the successful party has led the party in breach to believe that the chosen forum can be ignored. Further there may be cases in which the general conduct of the successful party, although not breaking the chain of causation, would nevertheless justify its being deprived of an order for indemnity basis costs. In such cases the need to reflect judicial disapproval of such conduct might justify an order for costs on the standard basis [15].
10 As far as I have been able to ascertain, the decision in A v B has only been referred to in Australia on three occasions. In University of Western Australia v Gray (No 28) [2010] FCA 586; (2010) 185 FCR 335, Barker J cited the decision in the context of a consideration of the extent to which legal costs actually incurred over and above those recoverable on a party and party basis can be recovered as damages. The case was not concerned with commercial arbitration, and sheds little light upon the general applicability of the principle enunciated by Colman J in Australia.
11 In Ansett Australia Ltd v Malaysian Airline System Berhad (No 2) [2008] VSC 156, Hollingworth J granted a stay pursuant to s 7 of the International Arbitration Act 1974 (Cth) on the application of the defendant. The defendant applied for its costs of the application on an indemnity basis, asserting that the proceedings were commenced in breach of an arbitration agreement, relying upon the principles enunciated by Colman J in A v B. However, her Honour observed that costs were unnecessarily incurred because of the manner in which the defendant conducted the application. In that context her Honour observed:
I doubt whether the statement of principle enunciated by Mr Justice Coleman [sic] in A v B represents the law in Victoria.
Even if, contrary to that conclusion, it did represent the law, it would not be a basis for awarding costs on an indemnity basis here. Mr Justice Coleman's [sic] remarks were concerned with the situation in which one party's breach of an arbitration clause has caused the other party 'reasonably to incur legal costs' [22] - [23] (footnotes omitted).
12 So, although the applicability of the principles enunciated in A v B was questioned, it was held that even if those principles did apply, the defendant's unreasonable conduct of the application would bring the case within the exceptions acknowledged by Justice Colman, with the result that indemnity costs would not be ordered.
13 In Mio Art Pty Ltd v Mango Boulevard Pty Ltd (No 3) [2013] QSC 95 the court was required to determine whether a price had in fact been fixed for shares which were purchased by the first defendant or whether the price had not in fact been fixed, and could only be fixed after following a dispute resolution mechanism stipulated by the contract, which involved mediation and in the event of a failure to agree, arbitration. Following the determination of those issues, questions arose to the costs of the proceedings. Philip McMurdo J refused an application for indemnity costs. In that context he observed:
The plaintiff also seeks to liken this case to a decision of Colman J, sitting in the Commercial Court in the Queen's Bench Division, in 2007. In that case, proceedings which were brought in the court in breach of an arbitration agreement were stayed. Colman J accepted that there should be an award of indemnity costs to compensate for the damage flowing from the breach of the agreement to go to arbitration, because:
The conduct of a party who deliberately ignores an arbitration or a jurisdiction clause so as to derive from its own breach of contract an unjustifiable procedural advantage is in substance acting in a manner which not only constitutes a breach of contract but which misuses the judicial facilities offered by the English courts or a foreign court. In the ordinary way it can therefore normally be characterized as so serious a departure from 'the norm' as to require judicial discouragement by more stringent means than an order for costs on the standard basis.
In Ansett Australia Ltd v Malaysian Airlines System Berhad, Hollingworth J doubted whether that statement represented the law in Victoria. For present purposes, it is sufficient to say that this case is of quite a different kind. There is, of course, an arbitration agreement here. But the overall question was whether events had occurred which, on the proper construction of the parties' contract, obliged the parties to go to mediation and, failing that, to arbitration. Those questions had to be decided by a court. This was not a general provision requiring any dispute between the parties, upon any matter in relation to their contract, to be decided by arbitration [12] - [13] (footnotes omitted).
14 So, in that case, after referring to the doubts expressed by Hollingworth J with respect to the applicability of the principles in Victoria, Philip McMurdo J, like Hollingworth J, found it unnecessary to resolve the question of principle because the circumstances of the case before him were not analogous.
15 It must be emphasised that the court's general discretion with respect to the award of costs cannot and should not be fettered by arbitrary and inflexible rules. To the contrary, the discretion must be exercised by reference to the particular circumstances of the case, and much will depend upon those circumstances. However, it is appropriate that the exercise of the discretion in any particular case be guided by the enunciation and development of principles of the kind which I have set out above, not least because the enunciation of those principles enables parties to litigation to make an assessment of the possible financial consequences of the decisions which they make with respect to the manner in which that litigation is conducted.
16 The circumstances of this case are of the very kind considered by Colman J in A v B. As I held in my earlier reasons, ATCO did not waive its entitlement to rely upon the arbitration agreement in the relevant contract, nor did it induce Pipeline to believe that it would not rely upon that provision. ATCO's application for a stay of proceedings was promptly brought and properly pursued. For reasons which I will develop below, there can be no suggestion that ATCO's conduct of the application for a stay was unreasonable. To the contrary, it was Pipeline's opposition to the application for a stay, especially after it became apparent that the proceedings were governed by the 2012 Act, rather than the Commercial Arbitration Act 1985 (WA) (the 1985 Act), which caused the parties to incur costs which might otherwise have been avoided, and which caused the resolution of ATCO's application for a stay to be delayed.
17 It is therefore necessary for me to determine whether the general principles enunciated by Colman J in A v B should guide the exercise of my discretion in this case. There are four reasons why I have concluded that they should.
18 First, the process of reasoning adopted by Colman J is, with respect, impeccable, and should be followed. A stay will only be granted, and a reference to arbitration ordered (in Western Australia under s 8 of the 2012 Act) if the court finds that the dispute the subject of the proceedings falls within the scope of an arbitration agreement, by which the parties have agreed that their disputes will be referred to arbitration. It necessarily follows that the party commencing the court proceedings has done so in breach of the arbitration agreement. Unless the other party has conducted itself in such a way as to induce that breach (for example, by representing by words or conduct that it would not rely upon the arbitration agreement), the legal costs incurred by the innocent party in enforcing the arbitration agreement (at least so far as those costs are reasonably incurred), will ordinarily be the direct consequence of the breach of the arbitration agreement and would therefore be recoverable as damages for breach of contract in accordance with ordinary principle. However, it is at least arguable that the rule in Berry v British Transport Commission would preclude the innocent party from claiming the difference between costs allowed after taxation on a party and party basis, and reasonable costs actually incurred by way of damages in subsequent proceedings. Further and in any event, requiring the innocent party to commence subsequent proceedings to recover that gap in costs would be productive of unnecessary litigation, inefficient and unjust. Accordingly, the preferable course is to enable the innocent party to recover reasonable costs actually incurred in the enforcement of the arbitration agreement by way of an award of costs on an indemnity basis in the stay proceedings.
19 Second, at least since the enactment of the 2012 Act, the object and purpose evinced by the legislation of this State relating to commercial arbitration accords with that evinced in the legislation of the Commonwealth relating to commercial arbitration (International Arbitration Act), and requires the courts to support and enforce arbitration agreements. Sections 1C and 2A of the 2012 Act provide:
1C. Paramount object of Act
(1) The paramount object of this Act is to facilitate the fair and final resolution of commercial disputes by impartial arbitral tribunals without unnecessary delay or expense.
(2) This Act aims to achieve its paramount object by -
(a) enabling parties to agree about how their commercial disputes are to be resolved (subject to subsection (3) and such safeguards as are necessary in the public interest); and
(b) providing arbitration procedures that enable commercial disputes to be resolved in a cost effective manner, informally and quickly.
(3) This Act must be interpreted, and the functions of an arbitral tribunal must be exercised, so that (as far as practicable) the paramount object of this Act is achieved.
(4) Subsection (3) does not affect the application of the Interpretation Act 1984 section 18 for the purposes of interpreting this Act.
…
2A. International origin and general principles (cf. Model Law Art 2A)
(1) Subject to section 1C, in the interpretation of this Act, regard is to be had to the need to promote so far as practicable uniformity between the application of this Act to domestic commercial arbitrations and the application of the provisions of the Model Law (as given effect by the International Arbitration Act 1974 (Commonwealth)) to international commercial arbitrations and the observance of good faith.
(2) …
(3) Without limiting subsection (1), in interpreting this Act, reference may be made to the documents relating to the Model Law of -
(a) the United Nations Commission on International Trade Law; and
(b) its working groups for the preparation of the Model Law.
(4) Subsection (3) does not affect the application of the Interpretation Act 1984 section 19 for the purposes of interpreting this Act.
20 There is also a clear policy evident in the legislation to the effect that courts are not to interfere with the arbitral process save in the specific respects identified by the Act itself, which generally require courts to support the arbitral process by providing mechanisms for the production and taking of evidence and the enforcement of awards, and by the enforcement of arbitration agreements. Those policies are evident in s 5 and s 8 of the 2012 Act which provide:
5. Extent of court intervention (cf. Model Law Art 5)
In matters governed by this Act, no court must intervene except where so provided by this Act.
…
8. Arbitration agreement and substantive claim before court (cf. Model Law Art 8)
(1) A court before which an action is brought in a matter which is the subject of an arbitration agreement must, if a party so requests not later than when submitting the party’s first statement on the substance of the dispute, refer the parties to arbitration unless it finds that the agreement is null and void, inoperative or incapable of being performed.
(2) Where an action referred to in subsection (1) has been brought, arbitral proceedings may nevertheless be commenced or continued, and an award may be made, while the issue is pending before the court.
21 As I observed in my substantive decision, [32], the legal regime governing the stay of legal proceedings relating to disputes the subject of an arbitration agreement is quite different under the 2012 Act as compared to the 1985 Act. Section 53 of the 1985 Act conferred a discretion upon the court with respect to the stay of legal proceedings commenced in respect of a dispute falling within an arbitration agreement. However, s 8 of the 2012 Act does not confer any discretion upon the court. Unless the court finds that the arbitration agreement is null and void, inoperative or incapable of performance, the dispute must be referred to arbitration and, inferentially, a stay of the court proceedings granted. It follows that in any case in which an application is made for a stay of a dispute falling within the scope of an arbitration agreement prior to the submission of that party's first statement on the substance of the dispute to the court, it will be a rare case in which the dispute is not referred to arbitration and a stay granted.
22 A guiding principle to the effect that a party commencing legal proceedings in relation to a dispute falling within an arbitration agreement should generally be ordered to pay reasonable costs incurred by an innocent party applying for a stay of those proceedings appears to me to be entirely consistent with, and to operate to reinforce the object and purpose of the 2012 Act. It should be emphasised that any such principle will only guide the exercise of the discretion in relation to costs, and that the ultimate exercise of that discretion will depend critically upon the particular circumstances of the case. There will undoubtedly be circumstances which will justify a refusal to award costs on an indemnity basis, including circumstances of the kind identified by Colman J in A v B and the circumstance to which Hollingworth J referred in Ansett Industries (unreasonable conduct of the application for a stay).
23 Third, s 2A of the Act makes abundantly clear the legislative purpose of aligning the legal regime governing domestic commercial arbitration in Western Australia with the legal regime governing international commercial arbitration in Australia. Both regimes now have at their heart the UNCITRAL Model Law on International Commercial Arbitration 1985 published by an international body which has achieved a significant degree of international acceptance and recognition. In that context, principles enunciated by courts supervising the enforcement of arbitration agreements in other comparable jurisdictions have a particular significance, and merit particular attention (see, for example, Cape Lambert Resources Ltd v MCC Australia Sanjin Mining Pty Ltd [2013] WASCA 66, where reliance was placed upon decisions in England and Wales, Singapore and Hong Kong). In this particular context, the principles which have been enunciated and apparently adopted in England and Wales with respect to the costs of a successful application for a stay of proceedings merit particular attention given the considerable experience that has been developed in that jurisdiction with respect to the supervision of commercial arbitration.
24 Fourth, adoption of the principles enunciated in A v B would enhance the achievement of the objectives identified in O 1 r 4B of the Rules of Court. Given the very limited circumstances in which a stay of proceedings relating to a dispute falling within an arbitration agreement can be refused under the 2012 Act, and the likely consequences of contesting an application for a stay, in terms of the costs to the parties, the delay in the resolution of the dispute, and the utilisation of the limited resources of the court, parties considering contesting an application for a stay should be aware of the likely consequence of failure, in terms of the costs they are likely to be ordered to pay.
25 For these reasons, the principles enunciated by Colman J in A v B should be applied in Western Australia.
The circumstances of this case
26 It remains to consider whether there is anything in the circumstances of this case which would sustain the conclusion that Pipeline should not be ordered to pay ATCO's costs on an indemnity basis. Those circumstances are set out in full in my earlier decision and need not be repeated. Salient features of the circumstances relevant to the exercise of the discretion with respect to costs can, however, be identified.
27 There were various communications between the parties prior to the commencement of legal proceedings. At no point in any of those communications did either party refer to the dispute resolution clause in the agreement. However, Pipeline was the party asserting a claim, and there is no reason why one would have expected ATCO to have initiated action pursuant to the dispute resolution clause, or to have referred the matter to arbitration, as it was not the moving party in the dispute. There was nothing in ATCO's conduct which suggested or implied to Pipeline that it had waived its rights under the dispute resolution clause, or would acquiesce in the resolution of any dispute by legal proceedings rather than pursuant to the provisions of the dispute resolution clause, including, in the event of failure of resolution as between the parties, by way of arbitration.
28 After Pipeline commenced legal proceedings, ATCO promptly applied for a stay of those proceedings. It did so before taking any substantive step in the proceedings, and the only steps taken by ATCO in the proceedings were in support of its application for a stay.
29 As ATCO's application came to be governed by the 2012 Act, it was not necessary to determine the manner in which the discretion conferred by s 53 of the 1985 Act would have been exercised. However, as soon as ATCO's application for a stay was brought, Pipeline should have reconsidered its forensic strategy, having regard to the real likelihood that a stay of proceedings would be ordered. That likelihood firmed considerably into a high probability as soon as the 2012 Act came into operation. Nevertheless, Pipeline persisted in its opposition to ATCO's application for a stay.
30 Not only did Pipeline persist in its opposition to ATCO's application for a stay, but as I observed in my substantive reasons, it relied upon a range of arguments, many of which could be described as technical, and some of which I described as being 'redolent of desperation'. Although not all the arguments advanced by Pipeline would be described as 'hopeless' in the sense in which that expression is used in the cases dealing with applications for indemnity costs orders, Pipeline's apparent strategy of running every conceivable argument in opposition to the application for a stay, irrespective of its strength or prospects of success, is not consistent with the achievement of the objectives enunciated in O 1 r 4B of the rules.
31 After it was realised that ATCO's application was governed by the 2012 Act rather than the 1985 Act, Pipeline contended that ATCO had to bring a fresh application under the 2012 Act, and that ATCO's earlier application had to be dismissed. Pipeline's position in this respect was unreasonable and pedantic, and, if accepted, would have resulted in the multiplication of proceedings, the needless dissipation of the resources of the parties and the inefficient utilisation of the limited resources of the court.
32 Pipeline advanced five separate lines of argument in support of the proposition that a stay should not be granted under s 8 of the 2012 Act [33]. The proposition that the arbitration agreement did not survive termination of the contract as a whole was contrary to a long line of authority and derived little support from the arbitration agreement itself, although it did derive some limited support from other provisions in the contract. Pipeline's contention that the arbitration agreement was void for uncertainty also stood contrary to a long line of authority, and was entirely unsupported by any aspect of the arbitration agreement. Pipeline's assertion that ATCO had waived its entitlement to insist upon the arbitration agreement was entirely unsupported by the facts. Finally, Pipeline's assertions to the effect that the dispute the subject of the proceedings was incapable of being resolved by arbitration and that ATCO had submitted a statement on the substance of the dispute to the court before applying for a stay were entirely without substance and would, in my view, be categorised as hopeless.
33 There is much to be said for the proposition that, at least after it was appreciated at ATCO's application was governed by the 2012 Act, Pipeline's opposition to that application was so inconsistent with the achievement of the objectives enunciated in O 1 r 4B as to justify the award of indemnity costs from that time onwards, irrespective of any specific principles governing the award of costs in proceedings relating to commercial arbitration. However, as it is my view that the principles enunciated in A v B should be applied in this State, and in particular should be applied in this case, it is neither necessary nor appropriate to confine the award of indemnity costs to a particular period in time. Rather, there should be a general order to the effect that Pipeline pay ATCO's costs of the application for a stay, to be taxed in default of agreement on the basis that ATCO is to recover its actual costs incurred provided that those costs were not unreasonably incurred and are not unreasonable in amount.
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