The Owners Strata Plan 87231 v 3A Composites GmbH (No 8)

[2024] FCA 854

FEDERAL COURT OF AUSTRALIA

The Owners – Strata Plan 87231 v 3A Composites GmbH (No 8) [2024] FCA 854   

File number(s):

NSD 215 of 2019

Judgment of:

WIGNEY J

Date of judgment:

1 August 2024

Catchwords:

COSTS – representative proceedings pursuant to Pt IVA

Federal Court of Australia Act 1976 (Cth) – interlocutory application for “Merck” orders regarding three disputed common questions – where respondents opposed interlocutory application that was ultimately successful – costs to be costs in the cause for the applicant

Cases cited:

The Owners – Strata Plan 87231 v 3A Composites GmbH (No 7) [2024] FCA 788

The Owners – Strata Plan No 87231 v 3A Composites GmbH (No 5) [2020] FCA 1576

Division:

General Division

Registry:

New South Wales

National Practice Area:

Commercial and Corporations

Sub-area:

Regulator and Consumer Protection

Number of paragraphs:

8

Date of hearing:

19 June 2024

Counsel for the Applicant 

Mr J Entwisle

Solicitor for the Applicant 

William Roberts

Counsel for the First Respondent

Mr L Shipway with Ms A Smith

Solicitor for the First Respondent

King & Wood Mallesons

Counsel for the Second Respondent

Mr S Adair

Solicitor for the Second Respondent

Wotton & Kearney

ORDERS

NSD 215 of 2019

BETWEEN:

THE OWNERS - STRATA PLAN NO 87231

Applicant

AND:

3A COMPOSITES GMBH

First Respondent

HALIFAX VOGEL GROUP PTY LTD

Second Respondent

ORDER MADE BY:	WIGNEY J
DATE OF ORDER:	1 AUGUST 2024

BY CONSENT, THE COURT ORDERS THAT:

1.Order 3 of the orders made by the Court on 16 December 2020 is set aside.

2.The matters to be determined at the initial trial will be:

(a)the entirety of the Applicant’s and The Owners – Strata Plan 98297’s respective cases; and

(b)the issues of fact and law as identified in the questions in Annexure A to these orders.

THE COURT ORDERS THAT:

3.The costs of and incidental to the interlocutory hearing on 19 June 2024 concerning common questions 57 to 59 proposed by the applicant and sub-group representative be the applicant’s costs in the cause.

Note:   Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

WIGNEY J:

1. On 19 July 2024, I handed down a judgment which resolved a dispute that had arisen between the parties concerning the identification of the questions of fact and law which are common to the claims of the group members in this representative proceeding: The Owners – Strata Plan 87231 v 3A Composites GmbH (No 7) [2024] FCA 788. The applicant contended that the common questions should include three questions which, in summary, concerned whether the composite panels allegedly supplied by the respondents were of merchantable or acceptable quality. The respondents contended that those three questions were not common questions because the answers to them would require the consideration of the individual circumstances of the supplies to each group member. I ultimately resolved the issue concerning the common questions in favour of the applicants.

2. The parties subsequently reached agreement in respect of the orders which would give effect to my judgment, other than in respect of costs.  I will make the orders that were agreed between the parties.  This judgment deal with the question of costs.   

3. The applicant, on the one hand, contended that a costs order should be made in their favour.  It submitted that the hearing was only necessary because the respondents opposed the inclusion of the disputed common questions.  The respondents were unsuccessful in their opposition and, in the applicant’s submission, costs should follow the event.  The applicant also noted that the costs order that it proposed was consistent with the costs order I made following an earlier judgment which also dealt with a dispute concerning the common questions: see The Owners – Strata Plan No 87231 v 3A Composites GmbH (No 5) [2020] FCA 1576.

4. The respondents, on the other hand, contended that the appropriate order in respect of costs was that the costs of and incidental to the hearing concerning the common questions be costs in the cause.  I should note, in this context, that in my judgment (at [76]) I indicated that my inclination was that the costs of the hearing should be costs in the cause, or perhaps the applicant’s costs in the cause.

5. The Court has a broad discretion in relation to costs.  The costs order that is appropriate in any given case will depend on the particular facts and circumstances of the case, including whether the issue concerning costs arose in the context of an interlocutory dispute and the nature and circumstances of that dispute and how it was resolved.  The circumstances of the relevant interlocutory dispute and its resolution in this case are somewhat unique.  It is true that I found that the disputed questions could and should be included in the list of common questions which is taken to the initial trial.  In my judgment, however I reiterated (at [75]), that the list of common questions remained subject to review as the case progressed and that the inclusion of the disputed questions at this stage does not necessarily mean that those questions can or must be answered at the initial trial. 

6. In those circumstances, in my view the appropriate costs order in respect of the interlocutory dispute is that the costs of and incidental to the interlocutory hearing should be the applicant’s costs in the cause.  The fact that the order is that the costs be the applicant’s costs in the cause, rather than costs in the cause generally, reflects and takes into account that the applicant’s contentions and submissions concerning the disputed questions prevailed.  Given the interlocutory nature of the dispute and the fact that the issue concerning the common questions may be revisited and may change as the case progresses, I do not consider it appropriate to simply order that the respondent pay the applicant’s costs of the interlocutory dispute.

7. I recognise that, at first blush at least, the costs order which I propose to make differs from the costs order that I made following my earlier judgment concerning the common questions.  It is, however, possible to reconcile the two costs orders.  The initial dispute concerning the common questions arose at a much earlier stage of the proceeding, well before the issues had been clearly defined by the pleadings and evidence as filed.  Perhaps more significantly, the disputed questions at that stage were disallowed in part because they had been drafted in a way that did not fully or properly reflect the statutory test of merchantable or acceptable quality.  The applicant acknowledged as much in its submissions in respect of the current interlocutory dispute.  It follows that the circumstances of the present interlocutory dispute and its resolution are different to and distinguishable from those that existed at when the issue concerning the disputed questions was first raised and determined.

8. It follows that, as have already indicated, that the appropriate costs order is that the costs of and incidental to the interlocutory hearing on 19 June 2024 concerning common questions 57 to 59 proposed by the applicant and sub-group representative are the applicant’s costs in the cause.          

I certify that the preceding eight (8) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Wigney.

Associate:

Dated:       1 August 2024