FEDERAL COURT OF AUSTRALIA

Neptune Hospitality Pty Ltd v Ozmen Entertainment Pty Ltd (costs) [2020] FCAFC 74

ORDERS

THE COURT ORDERS THAT:

1.    The appellant pay the costs of the respondents on a party/party basis, to be assessed if not agreed.

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

REASONS FOR JUDGMENT

THE COURT:

1    In Neptune Hospitality Pty Ltd v Ozmen Entertainment Pty Ltd [2020] FCAFC 47 (Neptune No 1), we dismissed the appeal and invited the parties to make submissions in relation to costs given that the appellant had not failed on all issues.

2    Neptune Hospitality Pty Ltd relied on 22 grounds of appeal and was ultimately successful on seven of the grounds (grounds 3 to 9). Neptune makes the point that the seven grounds on which it was successful represent two of the three grounds of termination at first instance. It argues, therefore, that it was substantially successful on the appeal in relation to the grounds on which the joint venture agreement (JVA) was terminated.

3    Although not relevant to the appeal, Neptune also argues that the respondents (Ozmen Entertainment Pty Ltd and Kanki Sea Tourism Hospitality & Entertainment Pty Ltd), failed at first instance on their claims of breach of fiduciary duty, which took up a considerable amount of the hearing at first instance, yet despite that, costs at first instance were ordered entirely against Neptune.

4    Neptune argues that it ought to have its costs of the appeal proportionate to the extent to which it was successful. It contends that costs of the appeal ought to be apportioned one-third to Neptune and two-thirds to the respondents on a party/party basis.

CONSIDERATION

5    There is a wide discretion in awarding costs pursuant to s 43 of the Federal Court of Australia Act 1976 (Cth). However, it is well accepted that in the absence of special circumstances justifying some other order, generally the discretion is to be exercised by requiring costs to follow the event. The real question is whether there is any proper basis to justify departure from the usual order in this case.

6    A realistic view of the appeal is that it failed. It is not accurate, in our view, to describe Neptune as having succeeded on a third of the issues. In reality and in terms of practical outcomes, the respondents succeeded in resisting the appeal. In our reasoning in Neptune No 1 (at [175]), we described Neptune’s success on the appeal as being minor. We concluded that the primary judge was correct in the orders that were made at first instance and that those orders should not be disturbed. We accept Kanki’s submission that, contrary to Neptune’s contention, the Court should not ‘cast undue analysis upon whether a successful party has been unsuccessful on “particular issues” in the context of its predominant success in the controversy overall’: N.V. Sumatra Tobacco Trading Company v British American Tobacco Services Limited [2011] FCA 1295 per Greenwood J (at [17]). Generally speaking, a court will only deprive the successful party of the usual order for costs to follow the event when an issue was dominant or separable: Monie v Commonwealth (No 2) [2008] NSWCA 15 per Mason P, Beazley and Campbell JJA (at [63]-[66]).

7    We would also take into account, as contended by Kanki, those observations of the Full Court in The State of Victoria v Sportsbet Pty Ltd (No 2) [2012] FCAFC 174 where Emmett, Kenny and Middleton JJ (at [8]), said:

We do not consider that the outcome of the issue as to whether the impugned provisions burdened transactions in trade and commerce between Victoria and the Northern Territory justifies departure from the ordinary position. The outcome of this issue did not relevantly qualify the success of either appellant on its appeal. Both appellants were ultimately wholly successful. 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. It cannot be supposed that the issue in question was unreasonably raised at trial or on appeal. There is nothing else disclosed in the circumstances of the case that would support the proposition that the court should depart from the usual order as to costs: compare Tomanovic v Global Mortgage Equity Corporation Pty Ltd (No 2) (2011) 288 ALR 385 at 402–403 [99]–[100] (Campbell JA, with whom Macfarlan and Young JJA agreed).

8    This approach has been pursued more recently in PKT Technologies Pty Ltd (formerly known as Fairlight.au Pty Ltd) v Peter Vogel Instruments Pty Ltd (No 2) [2020] FCAFC 46 per Besanko, Banks-Smith and Stewart JJ.

9    Although Neptune raised and argued 22 grounds of appeal asserting that the primary judge erred by arriving at the various findings he did, the seven grounds on which Neptune succeeded comprised two discrete issues. Grounds 3 and 4 were simply a small subset of the ‘financial information’ grounds of appeal and grounds 5 to 9 were all directed to the ‘catering agreement’ grounds. These grounds occupied a very small part of the overall argument in support of the appeal, both orally and in written form. Certainly, they could not be described as constituting clearly dominant or separate claims. Little time was spent on them and the success on them did not affect the outcome of the appeal.

10    As to the complaints about the primary judge’s exercise of discretion to award costs below, this can have no bearing on this issue. If there was an error on that issue on the part of the primary judge, it should have been raised as a ground of appeal and dealt with separately. In saying that, we do not accept that there was any error.

CONCLUSION

11    Having regard to these factors, the only consideration for the Court would be whether there should be a small discount of costs awarded in favour of the respondents. It is clear that the respondents not only achieved entire success in a practical sense, but succeeded in all substantive arguments on the appeal. In those circumstances, we would not disturb the usual order.

12    Neptune will be ordered to pay the costs of the respondents on a party/party basis, to be assessed if not agreed.

Associate:

Dated:    29 April 2020