FEDERAL COURT OF AUSTRALIA

No TasWind Farm Group Inc v Hydro-Electric Corporation (No 3) [2014] FCA 349

THE COURT ORDERS THAT:

1.    The costs of the Hydro-Electric Corporation of and incidental to its application for security for costs are the Hydro-Electric Corporation’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

1        At the conclusion of my giving oral reasons in No TasWind Farm Group Inc v Hydro-Electric Corporation (No 2) [2014] FCA 348 I indicated my preliminary disposition to order that the costs of the respondent’s application for security for costs be costs in the cause but permitted submissions as to the costs of the application.

2        The Hydro-Electric Corporation submitted that as it had been successful in obtaining an order for security, albeit in a lesser sum than it had sought, costs should follow the event. Counsel for No TasWind Farm Group Inc submitted that the respondent had been only partly successful and costs should be in the cause or, alternatively, the respondent’s costs in the cause as had been the course followed by Greenwood J in Newtimber (Operations) Pty Ltd v Tarong Energy Corporation Limited (No 2) [2011] FCA 363. Each party sought leave to make additional written submissions. I granted leave for each to file and serve short written submissions.

3        Both parties filed short submissions.

4        Mr Barclay for the respondent referred to the respondent’s preliminary correspondence in which it had invited the applicant to provide security for costs on certain terms or other terms as might be agreed. The applicant had responded by stating it would not provide security on any agreed terms and that any application for an order as to security would be opposed.

5        The respondent’s interlocutory application sought inter-alia orders for security for costs in the total amount of $165,000.00 or on such other terms as the court considered appropriate.

6        The court had ordered the applicant to give security for the respondent’s costs in the amount of $35,000.00. Mr Barclay submitted that the usual rule is that costs follow the event. The respondent accepted that any execution on costs awarded in its favour should be stayed until the conclusion of the substantive proceedings. There was no reason in those circumstances why the usual order should not be made.

7        In the alternative Mr Barclay submitted that the court should order that the costs of the application be in the respondent’s cause.

8        Mr Wood for No TasWind Farm Group Inc submitted the applicant had been successful on most grounds in opposing the respondent’s application for security for costs, including the contentions of the respondent that it had not been in trade or commerce and that No TasWind Farm Group Inc was merely a nominal plaintiff and had only a weak case.

9        There was nothing to the respondent’s argument that it was only seeking orders on such terms as the court might think appropriate.

10        The respondent had sought security for costs in the sum of $165,000.00 and the court had limited its order for security to the sum of $35,000.00. Neither party had succeeded in obtaining precisely what it sought but the orders that had been made were closer to those it had submitted for it than the Hydro-Electric Corporation.

11        In the circumstances the appropriate order was that costs should be costs in the cause.

12        Alternatively the court might follow the course it had foreshadowed in oral argument (referred to at [2] above) and order that the costs of the application for security be the respondent’s costs in the cause.

Consideration

13        There is much merit in the positions advanced by each of the parties.

14        I accept the applicant’s contention that the respondent Hydro-Electric Corporation was not successful on many of the most significant grounds it relied on in support of its application for security for costs.

15        I also accept the gravamen of the applicant’s submission that it is to set up a “straw man” to suggest that the respondent’s application was pressed to obtain an order on “such other terms” as the court might determine. The respondent maintained until the court’s judgment in No TasWind Farm Group Inc v Hydro-Electric Corporation (No 2) that security should be awarded in the sum of $135,000.00. The Court accepted that to make that order, in the circumstances of the present matter, would have the inevitable consequence of stultifying the proceedings.

16        Those considerations weigh in favour of the court taking the position that neither side was wholly successful and maintaining its preliminary disposition to order that the costs of the respondent’s application for security for costs be costs in the cause.

17        However, after a contested hearing, the court did ultimately make an order for security for costs in a lesser sum in the respondent’s favour. It did so against the background that the applicant had told the respondent that No TasWind Farm Group Inc refused to consider any agreement and would contest any application.

18        Further as the reasons of this court in No TasWind Farm Group Inc v Hydro-Electric Corporation (No 2) reveal there was unsatisfactory and potentially misleading disclosure of the applicant’s financial position until that hearing.

19        For those reasons, and taking into account the parties’ oral and written submissions, I have been persuaded that it would be wrong, notwithstanding the respondent’s failure on most of the substantive grounds it argued, to require the respondent to meet the applicant’s costs in respect of these proceedings if ultimately it was to fail in the substantive proceedings, as would be the result of an order that the costs of the application for security be costs in the cause.

20        I am persuaded that the justice of the case, taking into account both the result and the circumstances of the application, would be best met by my making an order akin to that made by Greenwood J in Newtimber (Operations) Pty Ltd v Tarong Energy Corporation Limited (No 2) [2011] FCA 363 (which both parties have advanced as the alternative to the orders they seek) that the costs of the respondent’s application for security for costs be the respondent’s costs in the cause. The effect of that order will be that if the respondent is successful in defending the substantive proceedings the respondent will be able to recover those costs; if it is not it will not be burdened by having to meet those of the applicant.

Associate:

Dated:    8 April 2014