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Bathurst Resources Limited v LMCHB Limited

Bathurst Resources Limited v LMCHB Limited

Case [2024] NZHC 1058 3 May 2024

Arbitration & Alternative Dispute Resolution

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ORDER MADE THAT NO PERSON MAY SEARCH, INSPECT, OR COPY ANY DOCUMENTS ON THE COURT FILE RELATING TO THESE

PROCEEDINGS (EXCLUDING THIS JUDGMENT) WITHOUT THE LEAVE OF A JUDGE.

IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY

I TE KŌTI MATUA O AOTEAROA TE WHANGANUI-A-TARA ROHE

CIV-2023-485-000575

[2024] NZHC 1058

UNDER the Arbitration Act 1996 and in the matter of an arbitration before the Hon Robert Fisher KC

BETWEEN

BATHURST RESOURCES LIMITED

Applicant

AND

LMCHB LIMITED

Respondent

Hearing: 26 February 2024

Counsel:

T G H Smith and L J Hardcastle for Applicant

D R Kaldermis with N K Swan and D J Keogh for Respondent

Judgment:

3 May 2024

JUDGMENT OF LA HOOD J

Table of Contents

An application to set aside an arbitral award on costs  [1]
Background  [3]
The previous litigation  [5]
The arbitration and the Partial Award  [8]
The Costs Award  [11]

Issues to be determined [16]

Applicable principles [18]

Article 34 in a costs setting [21]

General art 34 principles [28]
Natural justice under art 34 [29]

BATHURST RESOURCES LTD v LMCHB LTD [2024] NZHC 1058 [3 May 2024]

Issue one: was the Costs Award in conflict with public policy because the [40] senior Courts’ costs decisions in the previous litigation gave rise to an issue estoppel, or were binding precedent?

Did the arbitrator fail to appreciate that a declaration was sought in the     [42]
High Court?
Was LMCH estopped from contending for a different approach to costs in     [49]
the arbitration because the outcome of the previous litigation and the arbitration was materially the same?
Even if no estoppel arises, was the arbitrator bound to follow the approach [58]
to costs taken in the Supreme Court and Court of Appeal?
Further comments on issue one  [60]

Issue two: breach of natural justice [65] The ancillary issue of whether an order should be made that the [77] proceedings be conducted in private

Legal principles  [80]
Decision  [82]
Conclusion  [86]
Costs  [87]

An application to set aside an arbitral award on costs

[1] The applicant, Bathurst Resources Limited (Bathurst) seeks to set aside an arbitral award on costs issued in a long-running commercial dispute between Bathurst and LMCHB Limited (LMCH).1 In a decision dated 16 June 2023, the arbitrator determined that the parties had broadly similar success in the arbitration and therefore the parties’ costs, totalling approximately $9 million, should lie where they fall.

[2] For the reasons set out below, I find that Bathurst has failed to establish that the Costs Award was in conflict with the public policy of New Zealand, and therefore, I decline to set it aside under art 34(2)(b)(ii) of sch 1 of the Arbitration Act 1996 (the Act). In summary, Bathurst’s contentions fail because:

(a)The Supreme Court and Court of Appeal’s approach to costs in the previous litigation between the parties, in particular the finding that Bathurst was the successful party, do not give rise to issue estoppel for the purposes of the arbitrator determining costs in the subsequent arbitration,…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Continue reading Bathurst Resources Limited v LMCHB Limited

Details

AGLC: Bathurst Resources Limited v LMCHB Limited [2024] NZHC 1058
Case: [2024] NZHC 1058
Decision Date: 3 May 2024

CaseChat Overview and Summary

Bathurst Resources Limited sought to set aside an arbitral award on costs issued in a long-running commercial dispute between Bathurst and LMCHB Limited. Bathurst contended that the Costs Award was in conflict with the public policy of New Zealand because it deviated from the approach to costs taken by the Courts in the previous litigation. Bathurst also argued that the arbitrator's assessment of the practical value of the change in control declaration constituted a breach of natural justice. LMCH opposed the application, arguing that there was no issue estoppel or binding precedent on the arbitrator and that the arbitrator's assessment of the declaration's value was necessary to evaluate the parties' respective success.

The court found that Bathurst had failed to establish that the Costs Award was in conflict with the public policy of New Zealand. The court held that the Supreme Court and Court of Appeal's approach to costs in the previous litigation did not give rise to issue estoppel or binding precedent for the purposes of the arbitrator determining costs in the subsequent arbitration. The court also found that it was not unfair or a breach of the rules of natural justice for the arbitrator to assess, and make a finding about, the practical value of the change in control declaration. The court concluded that the arbitrator's reasons for departing from the Supreme Court and Court of Appeal's approach were clearly open to him and did not amount to a conflict with public policy.

The court declined to order that the proceedings be conducted in private, noting that the dispute had already been the subject of public judgments of the most senior courts of New Zealand and that there was a public interest in the resolution of this major commercial dispute arising in the context of New Zealand's mining industry.

The court dismissed the application to set aside the arbitral costs award and noted that LMCH intended to seek an order for increased costs. The court indicated that increased costs may not be appropriate and that LMCH should be entitled to scale costs on a 2B basis with certification for second counsel. If LMCH wished to pursue an application for increased costs, it should file a memorandum within 10 working days of receipt of the decision, Bathurst should file a memorandum in response within 10 working days, and LMCH should file a reply within five working days. The court would then determine costs on the papers.

Orders