Siemens WLL v BIC Contracting LLC (costs)
[2024] FCA 201
•6 March 2024
FEDERAL COURT OF AUSTRALIA
Siemens WLL v BIC Contracting LLC (costs) [2024] FCA 201
File number: NSD 1152 of 2021 Judgment of: STEWART J Date of judgment: 6 March 2024 Catchwords: COSTS – application to vary costs order – consideration of procedural history – application dismissed Legislation: Federal Court of Australia Act 1976 (Cth) s 43 Cases cited: Bostik Australia Pty Ltd v Liddiard (No 2) [2009] NSWCA 304
Findex Group Ltd v McKay (No 3) [2020] FCA 259
Firebird Global Master Fund II Ltd v Republic of Nauru (No 2) [2015] HCA 53; 90 ALJR 270
PKT Technologies Pty Ltd v Peter Vogel Instruments Pty Ltd (No 2) [2020] FCAFC 46
Siemens WLL v BIC Contracting LLC (garnishee order) [2023] FCA 1664
Division: General Division Registry: New South Wales National Practice Area: Commercial and Corporations Sub-area: Commercial Arbitration Number of paragraphs: 27 Date of last submission: 1 March 2024 Date of hearing: Determined on the papers. Counsel for the Applicants: E Ball Solicitor for the Applicants: Clayton Utz Counsel for the Respondent: The Respondent did not appear. Counsel for the garnishee, LMENA Pty Ltd: D Harris Solicitor for the garnishee, LMENA Pty Ltd: Allens ORDERS
NSD 1152 of 2021 BETWEEN: SIEMENS W.L.L.
First Applicant
SIEMENS AKTIENGESELLSCHAFT
Second Applicant
AND: BIC CONTRACTING LLC
Respondent
LMENA PTY LTD
Garnishee
ORDER MADE BY:
STEWART J
DATE OF ORDER:
6 MARCH 2024
THE COURT ORDERS THAT:
1.The applicants’ application to vary the costs order made on 22 December 2023 be dismissed with costs.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
REASONS FOR JUDGMENT
STEWART J:
On 22 December 2023, I set aside a garnishee order issued in favour of the applicants (Siemens) against LMENA Pty Ltd: Siemens WLL v BIC Contracting LLC (garnishee order) [2023] FCA 1664 (J). The set-aside order was made in an interlocutory application brought by LMENA to set aside the garnishee order which had been issued pursuant to orders made in an ex parte application brought by Siemens. In setting aside the garnishee order, I ordered that Siemens pay LMENA’s costs on the basis that the costs follow the event, but I gave the parties leave to apply for a variation of the costs order because I had not heard submissions on costs.
Siemens now applies for a variation of the costs order. It submits that the appropriate order is that LMENA pay Siemens’s costs in respect of issues of UAE law, which it helpfully defines as those involving the preparation of the expert report, affidavits and exhibits relating to matters of UAE law, certified translations of documents and solicitor and counsel fees incidental to those matters.
Alternatively, Siemens submits that each party should bear its own costs or, as a further alternative, Siemens should only be required to pay LMENA’s costs from after LMENA served its reply submissions on 8 December 2023.
Siemens advances the following contentions in favour of the variation of the costs order and in support of the orders that it seeks.
First, Siemens says that LMENA initially framed its case largely by reference to matters of UAE law despite Siemens identifying, early in the proceedings, that the relevant agreements were governed by English law and querying the relevance of UAE law.
Secondly, Siemens says that it was not until the filing of LMENA’s reply submissions on 8 December 2023 that LMENA accepted Siemens’s point about the relevance of English law and then raised the jurisdictional argument that became its primary ground of challenge. The jurisdictional argument did not rely on UAE law.
Thirdly, Siemens says that the matters of UAE law initially relied on by LMENA in its evidence and written opening were barely pressed at the hearing. Siemens submits that LMENA otherwise lost on the UAE law matters. As I understand it, that is said to be on the basis that the experts agreed that proceedings against LMENA in the UAE would be dismissed or stayed in favour of London arbitration and that LMENA’s claim that there were extant bankruptcy proceedings in the UAE lost its force because the experts agreed that a winding-up was merely speculative at this stage.
The applicable principles are not in dispute and are well-known. Under s 43 of the Federal Court of Australia Act 1976 (Cth), costs are in the discretion of the Court. The discretion is broad but is to be exercised judicially. The fundamental purpose of the discretion is to compensate the successful party, not to punish the unsuccessful party. In general, a successful party will obtain an order for costs in its favour. However, a successful party who has failed on certain issues may not only be deprived of the costs of those issues but may be ordered as well to pay the other party’s costs of them. However, the mere fact that a court does not accept all of a successful party’s arguments does not make it appropriate to deal with costs on an issue by issue basis. A court will be reluctant to adopt an approach of apportioning costs between different issues depending on success or failure on those issues where it is likely to be difficult, if not impossible, to allocate items of costs between the different issues. See PKT Technologies Pty Ltd v Peter Vogel Instruments Pty Ltd (No 2) [2020] FCAFC 46 at [14]-[15].
The court may depart from the general rule and exercise its discretion to apportion costs on an issue by issue basis where there are special circumstances to warrant a departure (Firebird Global Master Fund II Ltd v Republic of Nauru (No 2) [2015] HCA 53; 90 ALJR 270 at [6]), such as where there has been disentitling conduct of the successful party, where the raising of the unsuccessful issue was not justified, or it was so unreasonable that it is fair and just to make the order apportioning costs (Findex Group Ltd v McKay (No 3) [2020] FCA 259 at [9]), or where the particular issue was clearly dominant or separable (Bostik Australia Pty Ltd v Liddiard (No 2) [2009] NSWCA 304 at [38]).
For the reasons that follow, I am not persuaded that the circumstances are such as to warrant departure from the usual position that costs follow the event.
It is convenient to identify the way in which LMENA’s case against the garnishee order developed.
In its initial outline of submissions, filed on 25 October 2023, LMENA submitted that the garnishee order was inappropriate and should be set aside because:
(1)There were extant and pending foreign bankruptcy proceedings against the judgment debtor, BICC, so that any payment by LMENA under the garnishee order would confer a preference on Siemens and put LMENA at risk of a claim from the bankruptcy trustee notwithstanding having paid under the garnishee order;
(2)Various third parties had an interest in the garnished debts which would be interfered with or prejudiced by the garnishee order continuing;
(3)LMENA faced the risk of having to make a payment of the garnished debts twice, in particular in response to any claim made by LMENA’s contractual counterparties other than BICC; and
(4)There was a risk of other commercial harm to LMENA and related entities.
It is particularly in relation to issue (1) that LMENA’s submissions made reference to the evidence upon UAE law, although UAE law was also potentially relevant to other issues.
Siemens’s submissions, which were filed on 4 December 2023, responded to each of the points advanced by LMENA. The submissions referred to the UAE law evidence at some length in relation to issues (1) and (3).
LMENA filed reply submissions on 8 December 2023. Those submissions referred to the evidence on UAE law in respect of what was said to be extant and pending foreign bankruptcy proceedings against BICC and the risk of double payment. They also raised, for the first time although not as fully or clearly as later developed orally, the argument on which it was ultimately successful. That was that because the agreements under which the garnished debt arose were governed by English law and London arbitration clauses, the location of the debt was England and, in any event, not Australia. It was said, which was ultimately accepted, that for those reasons the debt was beyond the reach of this Court’s garnishee jurisdiction. That was a legal argument that did not depend in any way on the evidence on UAE law. This can be referred to as the “situs” argument.
The hearing, which included examination of each side’s expert on UAE law, took place on 13 and 14 December 2023.
LMENA developed, and gave primacy to, its situs argument in oral submissions. Siemens did not accept the validity of the argument. It firmly resisted it, citing extensive authority. After the hearing, with leave, Siemens filed a brief note dealing further with the argument, to which LMENA then replied.
The result of Siemens’s resistance to the situs argument was that LMENA persisted with its other arguments in the alternative, including those relying on UAE law. In particular, LMENA pressed contentions with regard to existing bankruptcy and other proceedings against BICC in the UAE and the risk that it might have to pay twice, both of which drew on the evidence on UAE law.
Ultimately, as mentioned, the principal ground on which LMENA succeeded was that the situs of the debt was not in Australia. I also concluded that I would in any event have set aside the garnishee order as an exercise of discretion on the basis that there was a real or substantial risk that the garnishee and other third parties would face commercial harm if I did not do so (J [86]). I did not find in favour of LMENA on its contention that the debt had been assigned to the Emirates National Bank of Dubai (J [90]), although the risk of that would have weighed in favour of the exercise of the discretion to set aside the garnishee order (J [91]), or that bankruptcy proceedings against BICC in Dubai were more than speculative (J [92]).
It is to be observed with reference to the four principal contentions advanced by LMENA in its original written submissions (identified at [12] above), that I would ultimately have upheld three of them. That is to say, I was satisfied that three of the four reasons advanced in support of a conclusion that the garnishee order was inappropriate were established.
Turning now to Siemens’s contentions in favour of a variation of the costs order (see [5]-[7] above), in relation to the first of those contentions it is to be observed that Siemens did not take a position early in the proceeding that UAE law was irrelevant. Although it initially queried the relevance of UAE law, to which it may not have felt that it got an adequate response, it thereafter fully engaged in issues of UAE law including the briefing of expert witnesses and successfully applying for a rescheduling of the trial to enable the finalisation of its evidence. At the trial, Siemens argued the questions of UAE law, and UAE law was relevant to the discretionary basis on which I would have set aside the garnishee order.
With regard to Siemens’s second contention, LMENA did not accept any contention by Siemens that UAE law was irrelevant. As mentioned, both parties adduced, cross-examined on, and made submissions on UAE law.
With regard to Siemens’s third contention, it is true that LMENA’s principal focus in submissions at trial was the situs argument. However, the evidence and written submissions on UAE law were still relied on. In the end, I found the evidence on UAE law, for the most part, unhelpful. Neither party was, however, to know that in advance, and both parties pressed their UAE law-based submissions.
Whilst I understand the frustration that Siemens may feel having had its garnishee order set aside on the basis of a legal argument raised only late in the piece, with the result that the considerable time and energy spent by the parties on UAE law was technically wasted, I do not see that to be a basis to vary the costs order. Given Siemens’s stance on the situs argument which, as mentioned, included filing a note days after the trial, LMENA had little option but to continue to press its alternative arguments that relied to one degree or another on UAE law. Given the relatively unsettled position in Australian law on the legal point underlying the situs argument, as reflected in my reasons for judgment, I am neither critical of Siemens for resisting the argument nor of LMENA for not relying only on that argument and dropping all the others – it would have been particularly gutsy to have done that.
As the above survey of how the case progressed and what points were argued demonstrates, it is apparent that the questions of UAE law were not discrete to particular grounds of challenge. They were relevant, at least potentially so, in one way or another to several of the grounds. Moreover, they were particularly relevant to the discretionary grounds that I would have upheld.
In the circumstances, I am satisfied that the usual rule that the costs follow the event should apply. That is the costs order that will best do justice between the parties.
I will therefore order that Siemens’s application to vary the costs order made on 22 December 2023 be dismissed with costs.
I certify that the preceding twenty-seven (27) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Stewart. Associate:
Dated: 6 March 2024
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