FEDERAL COURT OF AUSTRALIA

Eden Construction Pty Ltd v State of New South Wales (No 3) [2007] FCA 946

EDEN CONSTRUCTION PTY LTD v STATE OF NEW SOUTH WALES

NSD 833 OF 2004

GRAHAM J

20 JUNE 2007

SYDNEY

THE COURT ORDERS THAT:

1.                   The applicant pay the respondent’s costs of proceedings NSD 833 of 2004 on a party and party basis.

Note:    Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

REASONS FOR JUDGMENT

1                     These proceedings have a lengthy history.  They were commenced in the Supreme Court of New South Wales in the Technology and Construction List.  Following their transfer into this Court separate questions were identified for determination in accordance with Order 29 rule 2 of the Federal Court Rules.  Those questions were originally ordered on 23 May 2006.  On 2 August 2006 those questions were replaced by other questions which themselves were modified on 29 August 2006.  The hearing of the separate questions commenced on 1 August 2006 and concluded on the day on which the questions were refined and modified, namely, 29 August 2006.

2                     On 9 May 2007 judgment was delivered on the separate questions, answers being provided to the seven identified questions.  The costs of the determination of the separate questions were reserved.  When the matter came back before the Court for directions on 8 June 2007 certain orders were made which were unopposed providing for a final disposition of the proceedings.  The question of costs in relation to the proceedings was adjourned for consideration today. 

3                     On 8 June 2007 the applicant provided a written submission on costs which was handed up to the Court by Mr Cameron, the solicitor for the applicant.

4                     That submission was accompanied by a series of documents.  A submission on costs was also provided by counsel for the respondent bearing date 7 June 2007.  On 8 June 2007 a chronology was handed up by counsel for the respondent to form part of the respondent’s submissions.  Bundles of correspondence referable to the issue of costs were tendered and became exhibits CA-1 and CA-2. 

5                     I have today had the benefit of oral argument in support of the written submissions.  The applicant submits that there should be no order as to costs.  The respondent submits that there should be an order that the applicant pay the respondent’s costs of proceedings NSD 833 of 2004 on a party and party basis.

6                     In relation to the separate questions, the applicant failed in relation to each of them. 

7                     The matters which are relied upon by the applicant to support the submission that costs should not follow the event are threefold.  Firstly, it is submitted that the respondent’s conduct significantly contributed to or caused the costs incurred.  In that regard it is not contended that the respondent’s conduct of its defence unreasonably prolonged the case. 

8                     The second matter relied upon is that the applicant contends that the issue upon which the respondent was ultimately successful was never argued by the respondent.  In that regard reference is made to [25] to [28] of my reasons for judgment of 9 May 2007 (see Eden Construction Pty Ltd v State of New South Wales (No 2) [2007] FCA 689).  Given the separate questions, this point does not warrant analysis.

9                     The third basis on which the special order for costs has been proposed by the applicant is that the points raised in the proceedings were ‘landmark points of relevance to the building and construction industry as a whole’.  It is submitted that the respondent as a model litigant should not be awarded its costs. 

10                  The Court’s power to award costs is to be found in s 43(1) of the Federal Court of Australia Act 1976 (Cth).  Section 43(2) of the Federal Court of Australia Act provides:

‘43(2)  Except as provided by any other Act, the award of costs is in the discretion of the Court or Judge.’

11                  The relevant principles in respect of the award of costs in relation to hearings at first instance in this Court are clearly stated in Ruddock v Vadarlis (No 2) (2001) 115 FCR 229 at [9]-[15], [18]-[23], [25], [33] and [35]-[36] (see also [45]-[46]).

12                  I see no reason for departing from the ordinary rule that costs should follow the event in this case.  No occasion has arisen for the apportionment of costs on an issue by issue basis.  The proceedings have no public interest element.  They were not brought for any reason other than the personal or financial gain of the applicant (see [18] in the joint reasons of Black CJ and French J in Ruddock v Vadarlis (No 2)).  The proceedings do not answer the description of being a test case such as was under consideration in CSR Limited v Eddy (2005) 226 CLR 1 (see the joint reasons for judgment of Gleeson CJ, Gummow and Heydon JJ at [80]-[82]).  As previously indicated, it is not submitted by the applicant that the proceedings were unreasonably prolonged by the respondent’s conduct of its defence.

13                  I have been reminded of the observations which I made in my reasons for judgment of 9 May 2007 at [417]-[418].  Those matters warrant repetition.  However, they do not in my view lead to the conclusion that the respondent engaged in conduct which, to use the applicant’s expression, ‘significantly contributed to or caused’ the institution of the proceedings in which claims for relief were made by the applicant which failed. 

14                  The issue as to whether, in the light of the findings that have been made by the Court, the respondent should press for payment of any costs that may be ordered in its favour is a distinct question from the question of its entitlement to an order.  The former question is not one upon which it would be proper for the Court to pass judgment. 

15                  Applying the principles enunciated in Ruddock v Vadarlis (No 2), costs should follow the event.   

Associate:

Dated:         25 June 2007