Reliance Rail Pty Limited v Permanent Custodians Limited (No. 2)

[2018] NSWSC 337

Supreme Court

New South Wales

Medium Neutral Citation:	Reliance Rail Pty Limited v Permanent Custodians Limited (No. 2) [2018] NSWSC 337
Hearing dates:	On the papers.
Date of orders:	16 March 2018
Decision date:	16 March 2018
Jurisdiction:	Equity - Commercial List
Before:	McDougall J
Decision:	Plaintiffs to pay third and fourth defendants’ costs; make no other order as to costs.
Catchwords:	COSTS – costs follow the event – where both parties partly successful on various issues – where defendants entirely successful on the fundamental commercial question – whether success is determined by reference to the former or the latter – plaintiffs ordered to pay defendants’ costs
Legislation Cited:	Uniform Civil Procedure Rules 2005 (NSW)
Cases Cited:	Management Service Australia Pty Ltd v PM Works Pty Ltd (No. 2) [2018] NSWSC 336 Reliance Rail Pty Limited v Permanent Custodians [2017] NSWSC 1111
Category:	Costs
Parties:	Reliance Rail Pty Limited (First Plaintiff) Reliance Rail Finance Pty Limited (Second Plaintiff) Reliance Rail Holdings Pty Limited (Third Plaintiff) Dexia Credit Local Sa (Third Defendant) FMS Wertmanagement Aör (Fourth Defendant)
Representation:	Counsel: MJ Darke SC / S Lawrance / E Bathurst (Plaintiffs) IM Jackman SC / DFC Thomas (Third and Fourth Defendants)   Solicitors: Gilbert + Tobin (Plaintiffs) Herbert Smith Freehills (Third and Fourth Defendants)
File Number(s):	2017/185479

Judgment

1. HIS HONOUR:   These reasons deal with applications for costs which arise out of proceedings that I heard and decided last year: Reliance Rail Pty Limited v Permanent CustodiansLimited [2017] NSWSC 1111. I shall assume that the reader of these reasons is familiar with what I said in those reasons.

2. The fundamental question dividing the parties was whether the plaintiffs were able to refinance a very substantial amount of debt. The answer to that question required attention to a number of agreed issues, which were set out at [21] of my earlier reasons. Some of those issues were answered in favour of the plaintiffs. Others were answered in favour of the third and fourth defendants (respectively, Dexia and FMS). However, the outcome of my decision was that the plaintiffs failed on the fundamental question.

3. The plaintiffs seek an order that they, Dexia and FMS should bear their own costs. Dexia and FMS seek orders that the plaintiffs should pay their costs, or at least some proportion (they suggest 75%) of those costs. No other defendant seeks a costs order.

4. In the usual way, the arguments on costs canvassed the issues that were raised in the substantive proceedings, and sought to characterise the parties’ respective successes and failures on those issues. The issues were complex. It may well be the case that the very speed with which the proceedings were brought on for hearing[1] and heard (and decided) prevented some rationalisation of the issues, as might have happened had the parties had a little more time to prepare. However, that luxury was not available, because of the urgency of the need for a decision.

   1. To the extent that there were no “pleadings”; the parties defined the issues for decision through a statement that set out the issues to which I referred at [2] above.

5. I add that for the reasons I set out in Management Services Australia Pty Ltd v PM Works Pty Limited (No.2) [2] at [27] to [29], I am a little hesitant to use the results of a direction given to facilitate prompt resolution of proceedings as a weapon in the armoury of costs disputants.

   2. [2018] NSWSC 336

6. It is correct to say, as the plaintiffs now submit, that they succeeded in many of the issues. It is equally correct to say, as Dexia and FMS now submit, that those parties succeeded on many issues.

7. More fundamentally, it is correct to say, as Dexia and FMS now submit, that their success (to the extent they did succeed) on particular issues meant that the plaintiffs could not refinance their debt. Thus, through their partial success (measured on an issue by issue basis), Dexia and FMS vindicated their fundamental position: that the plaintiffs could not refinance.

8. I accept that the fundamental purpose of the discretion as to costs is to achieve, so far as costs can, some further measure of justice as between the parties. I accept, further, that whilst costs are in the discretion of the court[3] , UCPR r 42.1 provides some guide to the way in which the discretion should be exercised: costs generally should follow the event.

   3. Of course, subject to any legislative requirement: see Civil Procedure Act 2005 (NSW), s 98(1).

9. In many cases, there will be no difficulty in identifying the relevant event. In this case, the task of identification really depends on the level of abstraction to which one is prepared to descend. If one were to approach the task on an issue by issue basis (and for the reasons indicated at [4], [5] above that may be even less appropriate than usual), there is much to be said for the submissions put on behalf of the plaintiffs as to costs. But in my view, that level of abstraction is unnecessarily deep. Its use would ignore practicality. The proper approach, in my view, is to look at what was the real question deciding the parties, and to see who succeeded and who failed on that issue.

10. Viewing the matter in that way, the answer is obvious. The plaintiffs failed. Dexia and FMS succeeded. I stress (in case it is not apparent from what I have said) that I take the proper approach to “success” and “failure” in this case to require consideration of the fundamental commercial question to be decided, and not the technical legal issues by reference to which that question was argued.

11. Accordingly, I am of opinion that Dexia and FMS should have their costs.

12. I make the following further orders:

1. order the plaintiffs to pay the third and fourth defendants’ costs of the proceedings.

2. Make no other order as to costs.

**********

Endnotes

Decision last updated: 19 March 2018