Ringrow Pty Ltd v BP Australia Pty Ltd

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FEDERAL COURT OF AUSTRALIA

Ringrow Pty Limited v BP Australia Pty Limited
[2006] FCA 1446

COSTS – legal costs – whether successful party in litigation able to recover costs as damages under contractual arrangements – effect of curial costs order – interpretation of contractual indemnity - where issues litigated at trial and on appeal differ

CONTRACTS – general contractual principles – construction and interpretation of contracts – interpretation of indemnity providing for recovery of costs

Held – cross-claimant entitled to recovery of costs of defending and cross-claiming in proceedings in Federal Court but not the costs of appeals in the Full Federal Court and High Court; costs recoverable on an indemnity basis and recovery limited to costs incurred ‘properly and in good faith’

Andar Transport Pty Ltd v Brambles Ltd (2004) 217 CLR 424 followed
Ankar Pty Ltd v National Westminster Finance (Australia) Ltd (1987) 162 CLR 549 applied
Cotterell v Stratton (1872) LR 8 Ch App 295 applied
Dryden v Frost (1838) 3 My & Cr 670 at 675 considered
Dunlop Pneumatic Tyre Co Ltd v New Garage and Motor Co Ltd [1915] AC 79 cited
Elders Trustee & Executor Co Ltd v EG Reeves Pty Ltd (1998) 84 ALR 734 considered
Elders Trustees & Executor to Ltd v Eagle Star Nominees Ltd (1986) 4 BPR 9205 applied
Gomba Holdings (UK) Ltd v Minories Finance Ltd (No 2) [1993] Ch 171 discussed and applied
Maggbury Pty Ltd v Hafele Australia Pty Ltd (2001) 210 CLR 181 applied
Maher v Network Finance Ltd (1986) 4 NSWLR 694 considered
McCann v Switzerland Insurance Australia Ltd (2000) 203 CLR 579 cited
National Provincial Bank of England v Games (1886) 31 Ch D 582 applied
Pan Australia Shipping Pty Ltd v The Ship ‘Comandate’ (No 2) [2006] FCA 1112 considered
Port of Melbourne Authority v Anshun Pty Limited (1981) 147 CLR 589 applied
Potter v Dickenson (1905) 2 CLR 668 considered
Re Shanahan (1941) 58 WN (NSW) 132 considered
Ringrow Pty Ltd v BP Australia Pty Ltd (2004) 209 ALR 32 discussed and explained
Ringrow Pty Ltd v BP Australia Pty Ltd (2005) 222 ALR 306 discussed and explained
Ringrow Pty Ltd v BP Australia Pty Ltd [2003] FCA 1466 considered
Sandtara Pty Ltd v Australian European Finance Corporation Ltd (1990) 20 NSWLR 82 applied
Skalkos v T&S Recoveries Pty Ltd (2004) 65 NSWLR 151 cited

Wilkie v Gordian Runoff Ltd (2005) 221 CLR 522 cited

RINGROW PTY LIMITED AND ORS v BP AUSTRALIA PTY LIMITED
NSD 766 OF 2006

RARES J
7 NOVEMBER 2006
SYDNEY


IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY

NSD 766 OF 2006

BETWEEN:

RINGROW PTY LIMITED
First Applicant

ULTIMATE FUEL PTY LIMITED
Second Applicant

NADER-ONE PTY LIMITED
Third Applicant

JOSEPH NADER
Fourth Applicant

RICHARD NADER
Fifth Applicant

ZIAD NADER
Sixth Applicant

ROCHELLE NADER
Seventh Applicant

JOSEPH PETER AYOUB
Eighth Applicant

AND:

BP AUSTRALIA PTY LIMITED
Respondent

JUDGE:

RARES J

DATE OF ORDER:

7 NOVEMBER 2006

WHERE MADE:

SYDNEY

THE COURT:

Answers the questions asked…

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Details
Case
[2006] FCA 1446
Decision Date

CaseChat Overview and Summary

In the case of Ringrow Pty Ltd v BP Australia Pty Ltd, the dispute centered on contractual indemnity obligations between the parties. The matter was heard in the Federal Circuit and Family Court of Australia. The primary issue was whether BP Australia Pty Ltd could recover certain legal costs and disbursements from Ringrow Pty Ltd under the terms of a contract known as the BP Lansvale POSA. This contract included indemnity clauses that obligated Ringrow to compensate BP for costs incurred in various legal proceedings.

The court needed to decide several specific legal questions. Firstly, it had to determine if BP was estopped from claiming costs from Ringrow due to prior cost orders made by the Federal Court. Secondly, the court needed to clarify the scope and limits of the indemnity obligations under clauses A14.2(f) and A16.9(a) of the BP Lansvale POSA. This included whether Ringrow was liable for all costs incurred by BP in specific proceedings and the exercise and execution of the BP Lansvale Option, and if these costs were limited to those that were properly, reasonably, and properly incurred. Additionally, the court had to ascertain if certain individuals, Richard Nader and Rochelle Nader, were also liable to BP under the indemnity provisions of the contract.

The court ruled that BP was not estopped from claiming costs from Ringrow due to the prior Federal Court orders. Regarding the indemnity obligations, the court found that Ringrow was liable to indemnify BP for all costs incurred in specified legal proceedings and in exercising the BP Lansvale Option, provided these costs were properly and reasonably incurred. The court also concluded that Richard Nader and Rochelle Nader were liable to BP under the indemnity provisions of the contract. These findings led to the determination of the categories of costs and the limits of indemnity under the contract.

The final orders of the court directed Ringrow to indemnify BP for the specified costs, subject to the conditions of proper and reasonable incurance. Additionally, Richard Nader and Rochelle Nader were directed to compensate BP for any amounts Ringrow was liable to pay under the indemnity clauses.

Orders

Orders of the court

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Background

Background to the litigation

I have ordered that the following separate questions be determined under O 29 r 2. (1)Whether BP is estopped, by virtue of the costs orders made by the Federal Court of Australia, from claiming its costs and disbursements from Ringrow pursuant to any contractual entitlement under the BP Lansvale POSA. (2)Whether pursuant to clause A14.2(f) of the BP Lansvale POSA, Ringrow is liable to indemnify BP in respect of:(a)all of the costs and disbursements incurred by BP in each of proceedings: N278 of 2003 before the Federal Court of Australia, N2519 of 2003 before the Full Court of the Federal Court of Australia and S291 of 2005 (including S339 of 2004) before the High Court of Australia; and(b)all of the costs and disbursements incurred by BP in the exercise and execution of the BP Lansvale Option. (3)If the answer to (2)(a) is no, whether pursuant to clause A14.2(f) of the BP Lansvale POSA, Ringrow is liable to indemnify BP in respect of all of the costs and disbursements incurred by BP in each of proceedings: N278 of 2003 before the Federal Court of Australia, N2519 of 2003 before the Full Court of the Federal Court of Australia and S291 of 2005 (including S339 of 2004) before the High Court of Australia, save for those costs and disbursements incurred in litigating the validity of the BP Lansvale Option. (4)Whether pursuant to clause A16.9(a) of the BP Lansvale POSA, Ringrow is liable to indemnify BP in respect of:(a)all of the costs and disbursements incurred by BP in each of proceedings: N278 of 2003 before the Federal Court of Australia, N2519 of 2003 before the Full Court of the Federal Court of Australia and S291 of 2005 (including S339 of 2004) before the High Court of Australia; and(b)all of the costs and disbursements incurred by BP in the exercise and execution of the BP Lansvale Option. (5)If the answer to (4)(a) is no, whether pursuant to clause A16.9(a) of the BP Lansvale POSA, Ringrow is liable to indemnify BP in respect of all of the costs and disbursements incurred by BP in each of proceedings: N278 of 2003 before the Federal Court of Australia, N2519 of 2003 before the Full Court of the Federal Court of Australia and S291 of 2005 (including S339 of 2004) before the High Court of Australia, save for those costs and disbursements incurred in litigating the validity of the BP Lansvale Option. (6)If the answer to any of questions (2), (3), (4) and (5) above is in the affirmative:(a)which category of costs and disbursements (party/party or solicitor and own client or some other, and which) is referred to in cll A14.2(f) and A16.9(a)?(b)are those costs and disbursements limited to what was incurred:(1) properly;(2) reasonably and properly;(3) reasonably and in good faith?(7)Whether pursuant to clauses C3 and C4.1 of the BP Lansvale POSA, Richard Nader and Rochelle Nader and each of them are liable to pay to BP such sum as Ringrow may be liable to pay pursuant to the indemnity referred to in any of questions (2), (3), (4) and (5). BACKGROUND

Evidence

Evidence Before The Court

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Decision

Reasons for decision

RARES J

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Ratio Decidendi

Legal Principle Established

Established by: RARES J

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