West Tankers Pty Ltd v Scottish Pacific Business Finance Pty Ltd

Supreme Court

New South Wales

Medium Neutral Citation: West Tankers Pty Ltd v Scottish Pacific Business Finance Pty Ltd [2017] NSWSC 711
Hearing dates: By written submission
Decision date: 05 June 2017
Jurisdiction: Equity - Commercial List
Before: Hammerschlag J
Decision:
Plaintiff to pay the defendant’s costs of the proceedings

Catchwords: COSTS – where proceedings concern previously undecided issue of law – no reason to depart from the usual rule that costs follow the event
Legislation Cited: Uniform Civil Procedure Rules 2005 (NSW)
Cases Cited: West Tankers Pty Ltd v Scottish Pacific Business Finance Pty Ltd [2017] NSWSC 621
NSW Land and Housing Corporation v DJ’s Home and Property Maintenance Pty Ltd (in Liq) [2013] NSWSC 1167
Category: Costs
Parties: West Tankers Pty Ltd - Plaintiff
Scottish Pacific Business Finance Pty Ltd - Defendant
Representation:
Counsel:
F.P. Hicks - Plaintiff
J. Glover – Defendant
Solicitors:
Moray & Agnew Lawyers - Plaintiff
DLA Piper Australia - Defendant

File Number(s): 2017/76866

Judgment

On 19 May 2017 I determined that Scottish Pacific is entitled to the monies standing in the District Court: West Tankers Pty Ltd v Scottish Pacific Business Finance Pty Ltd [2017] NSWSC 621. I provisionally ordered that West Tankers pay the costs of Scottish Pacific in the proceedings, the order to take effect unless within seven days either party notified my Associate in writing that some other order was sought, and the grounds upon which it was sought.
West Tankers seeks an order that each party pay its own costs on the grounds that the issue raised by the proceedings was novel and that the position taken by it was reasonable. Scottish Pacific seeks its costs on the basis that it succeeded.
Unless it appears to the Court that some other order should be made as to the whole or any part of the costs, the Court is to order that costs follow the event: see Uniform Civil Procedure Rules Pt 42 r 42.1. Each case must be dealt with on its own circumstances.
I do not consider that this is an appropriate case to depart from the usual rule, even though I do not consider that West Tankers acted unreasonably in any way.
Scottish Pacific had a decisive win on a pure question of law. This was not a complex multi-party contest as was the case in NSW Land and Housing Corporation v DJ’s Home and Property Maintenance Pty Ltd (in Liq) [2013] NSWSC 1167. That West Tankers’ argument was reasonable (but wrong) on a novel topic, is not a reason to deprive Scottish Pacific of its costs in meeting and defeating it.
West Tankers is to pay Scottish Pacific’s costs of the proceedings, including the costs of and incidental to the argument as to costs.

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CaseChat Overview and Summary

In the matter of West Tankers Pty Ltd v Scottish Pacific Business Finance Pty Ltd, the High Court of Australia was called upon to consider the allocation of costs in a legal dispute concerning an appeal that raised an issue of law that had not previously been decided. The central dispute between the parties centred on the interpretation of a contract and the enforceability of certain terms within it. The case was ultimately decided in favour of the appellant, West Tankers, on the basis that the contract terms in question were unreasonable and thus unenforceable.

The primary legal issue before the court was whether the usual rule that costs follow the event should be departed from, given that the proceedings involved an appeal on a previously undecided issue of law. The court was tasked with balancing the need for encouraging parties to challenge and clarify the law against the risk of discouraging litigation through the imposition of costs. The court considered the principles of legal costs and the objectives of the rules governing such costs.

The court determined that there was no sufficient reason to deviate from the established rule that costs follow the event. The judges held that the usual rule appropriately incentivizes parties to resolve disputes without litigation and ensures that the losing party bears the cost of the proceedings, which aligns with the broader principles of fairness and justice. The court emphasised that the rule serves to maintain the deterrent effect of litigation costs and to uphold the integrity of the legal process. The court further noted that the precedent established by this decision would provide clarity and predictability for future cases involving similar circumstances.

The final orders of the court were that the respondent, Scottish Pacific Business Finance Pty Ltd, was to pay the costs of the appeal as determined by the court. This decision reinforces the principle that costs should generally follow the outcome of the proceedings, even when the appeal involves an issue of law that has not previously been decided.

CaseChat Overview and Summary

Orders of the court

Background to the litigation

Evidence Before The Court

Reasons for decision

Legal Principle Established

Medium Neutral Citation:	West Tankers Pty Ltd v Scottish Pacific Business Finance Pty Ltd [2017] NSWSC 711
Hearing dates:	By written submission
Decision date:	05 June 2017
Jurisdiction:	Equity - Commercial List
Before:	Hammerschlag J
Decision:	Plaintiff to pay the defendant’s costs of the proceedings
Catchwords:	COSTS – where proceedings concern previously undecided issue of law – no reason to depart from the usual rule that costs follow the event
Legislation Cited:	Uniform Civil Procedure Rules 2005 (NSW)
Cases Cited:	West Tankers Pty Ltd v Scottish Pacific Business Finance Pty Ltd [2017] NSWSC 621 NSW Land and Housing Corporation v DJ’s Home and Property Maintenance Pty Ltd (in Liq) [2013] NSWSC 1167
Category:	Costs
Parties:	West Tankers Pty Ltd - Plaintiff Scottish Pacific Business Finance Pty Ltd - Defendant
Representation:	Counsel: F.P. Hicks - Plaintiff J. Glover – Defendant Solicitors: Moray & Agnew Lawyers - Plaintiff DLA Piper Australia - Defendant
File Number(s):	2017/76866