Siemens Gamesa Renewable Energy Pty Ltd v Bulgana Wind Farm Pty Ltd (Orders and Costs)
[2020] VSC 267
•15 May 2020
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMERCIAL COURT
COMMERCIAL LIST
S ECI 2019 4613
| SIEMENS GAMESA RENEWABLE ENERGY PTY LTD (ACN 614 784 575) | Plaintiff |
| v | |
| BULGANA WIND FARM PTY LTD (ACN 162 201 569) | First Defendant |
| NEOEN AUSTRALIA PTY LTD (ACN 160 905 706) | Second Defendant |
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JUDGE: | RIORDAN J |
WHERE HELD: | Melbourne |
DATE OF HEARING: | Determined on the papers |
DATE OF JUDGMENT: | 15 May 2020 |
CASE MAY BE CITED AS: | Siemens Gamesa Renewable Energy Pty Ltd v Bulgana Wind Farm Pty Ltd (Orders and Costs) |
MEDIUM NEUTRAL CITATION: | [2020] VSC 267 |
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COSTS – Plaintiff’s proceeding dismissed at first instance – Plaintiff’s appeal partially successful and decision at first instance set aside – Plaintiff’s application for interlocutory injunction dismissed by Court of Appeal on balance of convenience – Plaintiff ultimately successful at trial – Whether plaintiff should pay the costs of a contention not pressed at trial – Principles to be applied – No reason to depart from usual order as to costs.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | J P Moore and C Van Proctor | Clayton Utz |
| For the Defendants | T K Jeffrie | White & Case |
HIS HONOUR:
On 20 March 2020, I published my reasons for judgment in this proceeding. On 26 March 2020, I ordered that by 9 April 2020, each party file written submissions with respect to the orders they seek, consequential upon the published reasons.
Procedural history
The procedural history was summarised in the first defendant’s (‘the defendant’) submissions as follows:
By Originating Motion dated 8 October 2019, [the plaintiff] sought an interlocutory injunction to prevent [the defendant] from exercising its rights under clause 13.8 of the EPC Contract in calling on the Performance Securities.
By leave granted by Justice Digby during the First Hearing, [the plaintiff] amended its Originating Motion to seek an order for a permanent injunction in the alternative to an interlocutory injunction.
Following the First Hearing, Justice Digby determined [the plaintiff’s] application on an “as if” final basis and dismissed [the plaintiff’s] Amended Originating Motion. In summary, his Honour held that:
a. he could determine the matter on an “as if final” basis;
b. paragraph 3 of the 30 September Agreement was patently ambiguous;
c. due to the ambiguity, the Court could take into account the following evidence to understand the text, context and purpose of the 30 September Agreement:
i. the EPC Contract and Consent Deed;
ii. some of the communications between the parties prior to the 30 September Agreement; and
iii. evidence of Thomas Hertling and Lauren Francisci regarding a discussion that occurred at around midday on 30 September 2019.
d. the Court would not take into account the following in construing the 30 September Agreement:
i. the drafts of the 30 September Agreement and associated communications; and
ii. the evidence of Mr Hertling in relation to his interpretation of the … discussion with Mr Francisci at midday, and Mr Hertling’s account of a phone call with Mr Francisci that occurred at approximately 5.20pm;
By Application for Leave to Appeal, [the plaintiff] sought leave to appeal Justice Digby’s decision on three broad grounds:
a. given there was relevant contested, but untested, witness evidence about the 30 September Agreement, the judge erred in determining the construction of paragraph 3 of that agreement on an “as if” final basis, as opposed to determining the construction of the clause on a prima facie case basis;
b. the judge erred in his assessment of the witness evidence, disregarding parts of it as having no, or no material, weight and wrongly assessing the difference between the parts to which he did give weight as minor and inconsequential; and
c. the judge erred in his construction of paragraph 3 of the 30 September Agreement, whether on a prima facie case basis or on an “as if” final basis.
[The defendant] filed a Notice of Contention on the ground that if the trial judge should have determined the matter on an interlocutory basis, his Honour was still correct in dismissing the application as the balance of convenience favoured such a result.
On appeal, [the plaintiff] submitted that his Honour erred by finding that only Mr Francisci’ s evidence was probative to interpreting the 30 September Agreement. [The plaintiff] contended that several aspects of Mr Hertling’s evidence in relation to the midday call and his evidence about the 5.20pm call were both relevant to the interpretation of the agreement. Further, [the plaintiff] argued that his Honour erred in finding that the inconsistencies between the evidence of Mr Hertling and Mr Francisci were inconsequential.
The Court of Appeal granted leave to appeal and allowed the appeal, however the Court dismissed the application for an interlocutory injunction and remitted the matter back to this Court to make a determination regarding the application for a permanent injunction. In summary, the Court held that:
a. his Honour erred in determining the matter on an “as if final” basis in circumstances where there was contested evidence and no cross-examination of witnesses;
b. as his Honour erred on the question of a final determination, it did not need to assess whether his Honour was in error regarding the interpretation of the 30 September Agreement. The Court did note, however, that both [the plaintiff’s] and [the defendant’s] interpretations of the 30 September Agreement were equally arguable; and
c. on the balance of convenience, the course which carried the lesser risk of injustice was to refuse the application for an interlocutory injunction. In doing so, the Court of Appeal placed little weight on [the plaintiff’s] claim that it would suffer irremediable reputational damage, noted that such damage could be avoided by [the plaintiff’s] choice to pay delay damages, and found that damages would be an adequate remedy.
Following the handing down of its reasons, the Court of Appeal ordered that the costs of the application in the trial division, the application for leave to appeal and the appeal be “each party’s costs in the proceeding”.
Issues for determination
The plaintiff seeks the following orders on its claim:
1.The first defendant is restrained, via its employees, agents or otherwise, from making any demand under or pursuant to the following bank guarantees or any of them in connection with any disputed claim to “Delay Liquidated Damages” under the engineering, procurement and construction contract between the plaintiff and the first defendant dated 18 September 2017 (EPC Contract):
(a)the unconditional bank guarantee no. GO322753073 issued by Australia and New Zealand Banking Group Limited and dated 28 March 2018 (First Bank Guarantee); and
(b)the unconditional bank guarantee no. GO322763073 issued by Australia and New Zealand Banking Group Limited and dated 28 March 2018 (Second Bank Guarantee),
collectively, the Bank Guarantees.
2.Within 14 days of the date of these orders, the first defendant pay the plaintiff the amount of $9,694,120.00, subject to compliance by the plaintiff with paragraph 3 below.
3.Within 14 days of the date of these orders, the plaintiff procure the issue to the first defendant of a replacement bank guarantee in the amount of $9,694,120.00, on the same terms as the First Bank Guarantee and not expiring before 20 February 2021 (Third Bank Guarantee).
4.The first defendant is restrained from making any demand under or pursuant to the Third Bank Guarantee issued pursuant to order 3 above in connection with any disputed claim to “Delay Liquidated Damages” under the EPC Contract.
The defendant does not dispute that the plaintiff’s proposed orders are appropriate, consequential on the reasons published 20 March 2020. Accordingly, the remaining issue between the parties is as to the costs of:
(a) the application before Digby J (‘the First Hearing’);
(b) the application for leave to appeal and the appeal in proceeding S EAPCI 2019 0127 (‘the Appeal Proceeding’); and
(c) the trial before me (‘the Second Hearing’).
The plaintiff seeks an order that the defendant should pay such costs, while the defendant contends that each party should bear its own costs.
Plaintiff’s submissions
The plaintiff submits that a costs order should be made in its favour for the following reasons:
(a) The Court of Appeal determined that the costs in the First Hearing and Appeal Proceeding should be costs in the proceeding, and therefore, those costs should follow the event. Reliance is put on Spear v Hallenstein (No 2), where Niall JA said:
The starting point is that the power to award costs pursuant to s 24(1) of the Supreme Court Act 1986 is discretionary. However, the usual rule is that costs follow the event, and departure from the usual rule is only warranted in special circumstances.[1]
(b) There are no special circumstances in this case because the only issue before the Court was the proper construction of the 30 September Agreement, in respect of which the plaintiff was wholly successful. The fact that the conclusion reached by me was different to that reached by Digby J is not a special circumstance, particularly where the Court of Appeal already ordered that the costs incurred by the parties in the First Hearing before Digby J should be costs in the proceeding.
[1][2018] VSC 207, [5]. See also Kheirs Financial Services Pty Ltd v Aussie Home Loans Pty Ltd (2010) 31 VR 46, 50 [15], citing Donald Campbell & Co Ltd v Pollak [1927] AC 732, 809, 811.
Defendant’s submissions
The defendant contends that there are three overlapping issues in this case regarding the costs of the proceeding, being:
(a) the costs in relation to the interlocutory injunction;
(b) the costs in relation to the permanent injunction; and
(c) the costs of the application for leave to appeal and the appeal.
In support of its contention that there should be no order as to costs, the defendant submits as follows:
(a)The general position is that a plaintiff who fails in an application for an interlocutory injunction should pay the costs of the defendant.[2]
(b)The Court of Appeal decision was a partial victory for both parties and it is well recognised that where parties have had mixed success on different issues in the Court of Appeal, the Court may make an order apportioning costs.
(c)Although the plaintiff’s success in obtaining a permanent injunction would ordinarily entitle it to the costs of the Second Hearing, the defendant’s success in resisting the interlocutory injunction and partial success in the Appeal Proceeding, mean that the appropriate order is for each party to bear its own costs.
[2]Citing Ausino International Pty Ltd v Apex Sports Pty Ltd [2006] NSWSC 1119, [55]-[56].
Further, the plaintiff should pay the costs incurred as a result of the plaintiff withdrawing its submission that the Court should have regard to evidence of extrinsic communications between the parties in construing the agreement.
Principles with respect to costs
The relevant principles in determining applications for costs are as follows:
(a)The power to award costs under s 24(1) of the Supreme Court Act 1986 (Vic) is in the discretion of the Court, which must be exercised judicially.[3]
[3] Oshlack v Richmond River Council (1998) 193 CLR 72, 86 [34] (Gaudron and Gummow JJ).
(b)The usual rule is that costs follow the event and departure from the usual rule is only warranted in special circumstances.[4]
[4]Kheirs Financial Services Pty Ltd v Aussie Home Loans Pty Ltd (2010) 31 VR 46, 50 [15] (Maxwell P, Tate JA and Habersberger AJA).
(c) The touchstone for departing from the general rule is what is required to do justice between the parties.[5] Circumstances which may justify a departure from the usual rule include where the successful party:
[5]Live Group Pty Ltd v Rabbi Ulman [2018] NSWSC 393, [50].
(i) contested many issues on which they failed;
(ii) required the losing party to contest issues abandoned during trial;
(iii) took unnecessarily technical points;
(iv) inappropriately prolonged the litigation;
(v) pressed a substantially exaggerated claim;
(vi) caused the real issues to be obscured or unnecessary evidence to be led; or
(vii) facilitated the loss of the opportunity to expeditiously dispose of the case.[6]
[6]Smith v Gould (No 2) [2012] VSC 541, [11] (Dixon J).
(d)Costs should follow the event even where the successful party failed to establish some of its claims, defences or other issues.[7] However the failure to establish such issues is a basis on which the court may decline to order costs in favour of the successful party, or may order that the successful party pay the costs of the unsuccessful party.[8]
(e)The apportionment of costs between different claims or issues may be based on an impressionistic discretionary evaluation, rather than a precise arithmetical calculation.[9]
(f) Costs are compensatory and are awarded to indemnify the successful party against expenses incurred in legal proceedings. Costs orders are not intended to punish.[10]
[7]ASIC v Flugge (No 2) (2017) 342 ALR 478, 501 [130](5) (Robson J); McFadzean v CFMEU (2007) 20 VR 250, 290 [153] (Warren CJ, Nettle and Redlich JJA).
[8]Supreme Court (General Civil Procedure) Rules 2015 (Vic) r 63.04(1).
[9]Mirboo Ridge v Minister for Resources [2018] VSC 668, [5](f).
[10]Latoudis v Casey (1990) 170 CLR 534, 543 (Mason CJ), 562-3 (Toohey J), 566-7 (McHugh J).
Conclusion
In my opinion, the defendant should pay the costs of and incidental to this proceeding, being the Second Hearing, together with the costs of the First Hearing and the Appeal Proceeding for the following reasons:
(a)I do not accept the defendant’s contention that the usual order, on the failure of an application for an interlocutory injunction, is for the plaintiff to pay the costs of the application. Plainly, the costs on such an application are subject to the discretion of the court and the court may make a number of orders, including that such costs be costs in the proceeding or reserved.
(b)The court will normally have regard to the reasons for the refusal of the application. In particular, if the plaintiff fails to establish a prima facie case in the sense used in Australian Broadcasting Corporation v O'Neill,[11] the costs are more likely to be awarded against the plaintiff. However, if the plaintiff establishes a prima facie case, the application may be refused on the basis that refusal carries ‘the lower risk of injustice if it should turn out [that the court was] “wrong”’.[12] In these circumstances, the just result may well be for the costs of the failed interlocutory application to be costs of the proceeding or reserved pending final determination. If the moving party is vindicated at trial, it would often be unjust for the vindicated plaintiff not to recover the costs of the application or to be required to pay the costs of the application.
[11](2006) 227 CLR 57, 82 [65] (Gummow and Hayne JJ).
[12]Bradto Pty Ltd v Victoria (2006) 15 VR 65, 73 [35] (Maxwell P and Charles JA).
I adopt the statement of Beech J in Topseal Concrete Services Pty Ltd v Sika Australia Pty Ltd:
In determining the appropriate costs order upon the refusal of an interlocutory injunction, it is obviously necessary to have regard to the grounds for the refusal of the injunction application. For example, where an applicant for an injunction establishes a prima facie case, but where the injunction is declined on grounds of balance of convenience or other discretionary grounds, it will often, if not usually, be appropriate to order that costs be in the cause or be reserved to the trial judge.[13]
[13][2008] WASC 57, [6] (citation omitted), cited with approval in Perdaman Chemicals and Fertilisers Pty Ltd v Griffin Coal Mining Co Pty Ltd(No 7) (2012) 92 ACSR 281, 336-7 [300] (Edelman J) and Dale v Clayton Utz (No 3) [2013] VSC 593, [18] (Hollingworth J).
This position is supported in this case by the fact that the Court of Appeal, having refused interlocutory relief on the balance of convenience, ordered that the costs should be costs of the proceeding. I do not consider that there are any special circumstances which justify departing from the usual order that the defendant pay the costs of the Appeal Proceeding.
Similarly, with respect to the costs of the First Hearing, the plaintiff has been ultimately successful and the Court of Appeal has ordered that those costs should be costs of the proceeding. I do not consider that there are any special circumstances which justify departing from the usual order that the defendant pay the costs of the First Hearing.
I also reject the defendant’s contention that the plaintiff should pay the costs associated with its abandoned contention that the Court should have regard to extrinsic circumstances in construing the contract, for the following reasons:
(a) The question of the meaning of the ‘true rule’ in Codelfa Construction Pty Ltd v State Rail Authority of New South Wales[14] and the extent to which regard may be had to evidence of extrinsic material is vexed.[15] The plaintiff was entitled to make submissions in support of its earlier contention and there is no suggestion of any improper motive in doing so.
[14](1982) 149 CLR 337, 352 (Mason J).
[15]See the discussion in Siemens Gamesa Renewable Energy Pty Ltd v Bulgana Wind Farm PtyLtd [2020] VSC 126, [89]-[109].
(b) I am not satisfied that any significant additional cost resulted from the plaintiff’s submissions with respect to this issue.
(c) Counsel are obliged under the Civil Procedure Act2010 (Vic) (‘Civil Procedure Act’) ‘to facilitate the just, efficient, timely and cost-effective resolution of the real issues in dispute’.[16] The fact that counsel decides not to press a submission does not, without more, justify an order for costs with respect to that issue. For the court to readily order that the costs of a discontinued issue should be paid separately would:
[16]Civil Procedure Act 2010 (Vic) ss 7(1), 10.
(viii) be inconsistent with the principle that the successful party is generally entitled to its costs, even if it has failed to establish some of its claims; and
(ix)provide a strong disincentive to counsel to abandon claims as the case is reanalysed for trial, and to reduce the issues for determination by the court. This would not further the overarching obligations under the Civil Procedure Act.
Order
I propose to enter judgment for the plaintiff and order as follows:
1.The first defendant is restrained, via its employees, agents or otherwise, from making any demand under or pursuant to the following bank guarantees or any of them in connection with any disputed claim to ‘Delay Liquidated Damages’ under the engineering, procurement and construction contract between the plaintiff and the first defendant dated 18 September 2017 (EPC Contract):
(a)the unconditional bank guarantee no. GO322753073 issued by Australia and New Zealand Banking Group Limited and dated 28 March 2018 (First Bank Guarantee); and
(b)the unconditional bank guarantee no. GO322763073 issued by Australia and New Zealand Banking Group Limited and dated 28 March 2018 (Second Bank Guarantee);
collectively, the Bank Guarantees.
2.Within 14 days of the date of these orders, the first defendant pay the plaintiff the amount of $9,694,120.00, subject to compliance by the plaintiff with paragraph 3 below.
3.Within 14 days of the date of these orders, the plaintiff procure the issue to the first defendant of a replacement bank guarantee in the amount of $9,694,120.00, on the same terms as the First Bank Guarantee and not expiring before 20 February 2021 (Third Bank Guarantee).
4.The first defendant is restrained from making any demand under or pursuant to the Third Bank Guarantee issued pursuant to paragraph 3 above in connection with any disputed claim to ‘Delay Liquidated Damages’ under the EPC Contract.
5. The first defendant pay the plaintiff's costs of and incidental to:
(a)this proceeding, including the hearings before the Honourable Justice Digby; and
(b)the application for leave to appeal and the appeal in proceeding no. S EAPCI 2019 0127.
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