Federal Court of Australia

Mining Standards International Pty Ltd v Atlantic Nickel Mineracao Ltda (No 3) [2024] FCA 1315

ORDERS

THE COURT ORDERS THAT:

1.    The respondent pay the applicant’s costs, including reserved costs, of the respondent’s interlocutory application dated 9 June 2023, to be taxed immediately.

2.    The third and fourth cross-respondents (Receivers) pay the applicant’s costs, including reserved costs, of the Receivers’ interlocutory application dated 9 June 2023, to be taxed immediately.

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

REASONS FOR JUDGMENT

DERRINGTON J:

Introduction

1    On 24 June 2024, judgment was delivered in relation to two applications brought by the respondent to the main proceedings, Atlantic Nickel Mineracao Ltda (Atlantic Nickel) and by the third and fourth cross-respondents (the Receivers), respectively. Each application sought the dismissal of the claims of the applicant, Mining Standards International Pty Ltd (MSI), on the ground that they constituted an abuse of process. On any view, the applications dealt with substantial matters and the combined applications were heard over two sitting days. Numerous pages of submissions were filed for the purposes of the applications. For instance, MSI’s initial submissions extended to some 67 pages, with approximately 80 pages of further annexures. In addition, substantial material was filed and relied on by all parties. The issues raised by those parties seeking the dismissal of the proceedings ranged through numerous grounds, as the 78 page judgment reveals.

2    Ultimately the applications were unsuccessful and were dismissed. The parties subsequently filed written submissions on the question of costs and it was determined that the matter would be dealt with on the papers. These are the reasons in relation to costs.

Costs of the applications

3    There is no dispute that, in the first instance, the question of costs should be determined on the usual basis that they follow the event, with the consequence being that the primary costs order should be that the applicants for dismissal, being Atlantic Nickel and the Receivers, pay MSI’s costs in relation to their respective interlocutory applications.

4    Rather, MSI submitted that the orders for costs in its favour should include additional orders that the costs be taxed immediately. That became the main issue to resolve.

Should the costs be taxed immediately?

5    The general position under r 40.13 of the Federal Court Rules 2011 (Cth) (the Rules) is that where an order for costs is made on an interlocutory application, “the party in whose favour the order is made must not tax those costs until the proceedings in which the order is made is finished”.

6    The Court has the ability to depart from that general position by exercise of the power under r 1.35 of the Rules, which allows it to make an order that is inconsistent with the Rules. However, it must be accepted that the starting point is that it is usually inappropriate to require an unsuccessful party to an interlocutory application to pay costs immediately given that they might ultimately succeed in the action. Nevertheless the rule is not immutable and, where the interests of justice require it, the Court has been prepared to make appropriate orders: see, for example, Tour Squad Pty Ltd v Fifth Amendment Entertainment Inc [2020] FCA 1649 (Tour Squad).

7    Some relatively recent cases have identified a number of circumstances where courts have been prepared to depart from the usual position. They include:

(a)    where the final determination of the proceedings is expected to take some time;

(b)    where a discrete issue has been resolved;

(c)    where a party has been required to incur significant costs over and above those which it would have incurred had the opposing party acted in handling the proceeding with competence and diligence, or where the conduct of the unsuccessful party was unreasonable;

(d)    where there is some reason to think that interlocutory disputation is having the effect of draining the ability of one side to conduct the litigation.

See Tour Squad [10], [14]; Hastie Group Ltd (in liq) v Multiplex Constructions Pty Ltd (Formerly Brookfield Multiplex Constructions Pty Ltd) (No 4) (2022) 165 ACSR 287, 316 – 317 [122]; Federal Treasury Enterprise (FKP) Sojuzplodoimport v Spirits International B.V. (No 5) [2018] FCA 19 [9] (Federal Treasury Enterprise).

8    Of course, the circumstances in which an order for the immediate taxation of costs might be made are not closed.

The time required for the final determination of the matter

9    On no realistic view could it be suggested that the final determination of these proceedings is not far away. The proceedings were commenced on 1 November 2021 and, as MSI submitted, the matter has not yet progressed beyond the pleadings. To date there have been a number of interlocutory applications of substantial size. That includes the two applications to stay the proceedings, the costs of which are considered in these reasons. It is likely that there will be more.

10    It is undoubted that there exists added complexity in this matter. That arises partly from the nature of the claim being advanced but, in truth, also by the nature of the cross-claim being pursued. In that latter respect, the cross-claimant (Atlantic Nickel) and the cross-respondents are presently involved in heated disputation as to the veracity of the cross-claim and its viability. That matter alone is likely to delay the proceedings.

11    It must also be taken into account that Atlantic Nickel and the Receivers have appealed the orders resulting from the stay applications. They are of course entitled to take that step and no criticism can be made of them for doing so. However, the necessary consequence will be further delay in the finalisation of the proceedings. Although the case management orders have required that the matter proceed, it is inevitable that the occurrence of the appeal will further delay the progress of the action to some extent.

12    Atlantic Nickel submitted that the appeal might be successful and that would have the result that the costs orders would be taxed sooner than might otherwise be thought. That is not an appropriate matter to consider on this question of costs. The present legal position is that the applicants for the stay were unsuccessful and it is on that basis that the cost orders are to be fashioned.

13    A further cause of delay in the proceedings is likely to be the difficulties which may be encountered in discovery. Many of the documents to be discovered are overseas and in a foreign language, such that they require translation.

14    MSI submitted that it is not unreasonable to think that the proceedings are unlikely to conclude within the next 12 months and there is substantial force in that observation. Indeed, the history of the matter suggests that it will not be finalised until some significant time after that. This is a circumstance weighing in favour of making the order sought.

The proceedings are progressing slowly

15    It can be accepted that there is no evidence that Atlantic Nickel or the Receivers were intentionally delaying the proceedings by making the applications. However, it must be undoubted that, to date, Atlantic Nickel and the Receivers have pursued the litigation in a generally self-indulgent manner and in a way which is not attuned to efficiency or saving costs. That may be because they are in a financial position to do so, though the actual reason is not a matter on which any determination can be made.

Issues resolved in the application

16    Although the resolution of the applications to stay the proceedings necessitated a consideration of the allegations made in the claim and cross-claim and the steps taken by the parties, the Receivers submitted that, in the course of the reasons for judgment, the Court made observations relevant to the trial of the substantive proceedings. That should be rejected. The observations on which reliance is placed were merely observations as to the issues which would be addressed in the proceedings and, to a small extent, the evidence. There is nothing in the reasons which touches on the likely conclusions to be reached in the proceedings. All observations made were on the basis of allegations made and some of the documentary evidence. Necessarily, they were all of a preliminary nature. The interlocutory application is not one which goes some way to the resolution of any of the substantive issues.

17    Relevant to this issue, none of the conclusions reached in the reasons for judgment on the application will be revisited at the final hearing.

The incurring of unnecessary costs

18    Prima facie, the submission made on behalf of MSI that the applications to dismiss the proceedings on the basis that they were an abuse of process required them to incur unnecessary costs is correct. The applications were brought and they required substantial time, effort and costs to defend them. Ultimately, they were dismissed. On that basis it is apparent that the costs have been wasted.

19    MSI further relied upon the fact that the stay applications were of a broad and scattergun nature. That too is correct. The applications raised a number of different issues, none of which were successful and all of which added to what must necessarily be substantial expense for MSI.

20    MSI also claimed that the interlocutory disputation had a substantial draining effect on its financial ability to conduct the litigation. It points to the fact that it is conducting the litigation with the assistance of a funding agreement with Omni Bridgeway Limited, and that the consequence of the unsuccessful applications has been to reduce the amount of funds available to it in preparation for the trial.

21    Although the evidence in relation to the funding of MSI’s action is limited, in a broad and general sense it can be accepted that the incurring of costs in relation to the application would have both short and medium term effects on MSI’s available funds. That is to say, it is axiomatic that the further MSI draws down on its funding, the less funds it will have and the greater the costs will be as a result of incurring funding premiums and the like. This is not unimportant in the circumstances where a not insignificant element of the stay applications was the severe financial constraints under which MSI was required to act in defending the Receivers’ proceedings in the Supreme Court of Western Australian. Although those circumstances have changed, it is appropriate to acknowledge that MSI will necessarily have more limited cash resources.

22    By contrast, it can be accepted that Atlantic Nickel is well resourced and will not be prejudiced by an immediate taxation. It is a substantial international mining company with large resources and it is noted that it has retained two sets of solicitors to act for it in this litigation. Simliarly, the Receivers have shown that they are well resourced, having retained substantial amounts of money for the purposes of meeting this ongoing litigation.

23    In the context of the relative impact of the costs action, it is appropriate to note that Atlantic Nickel submitted that the costs of the application for a stay are “relatively small in the context of the overall proceeding”. That submission was intended to advance the proposition that MSI will not be overly damaged by having to wait until the end of the action to recover the costs. Equally, however, it may also be taken as an acknowledgment by Atlantic Nickel that it will not be unduly hampered by having to pay the costs now, rather than at a later time. Having made the submission that the impact of the costs of the application is small, it can hardly suggest that any obligation to pay them immediately will be difficult for it.

The complexity of the matters in issue

24    The Receivers submitted that part of the complexity of this matter arises from the nature of the claims made. Whilst there is some complexity, it arises from the factual context, rather than the causes of action which are unremarkable. This is not a factor of any weight in this case.

25    The Receivers also submitted that this was not a case where an unduly complex and hopeless case has been advanced over a period of time and then abandoned: cf Federal Treasury Enterprise [11]. Whilst that may be so, it is not relevant to the analysis of this matter. Each case turns on its own facts and circumstances and the mere fact that the present is not of the nature identified does not necessarily weigh against an order for immediate taxation being made.

The potential for countervailing costs orders

26    It can be accepted that the proceedings are at an early stage and that there exists the possibility of countervailing costs orders being made before it concludes. However, it is not likely that any other interlocutory applications will be nearly as complicated or as financially demanding as the stay applications were. That being so, the potential for the making of costs orders against MSI is of lesser weight than it might have been.

27    It must also be kept in mind that MSI may not be successful in its claim against Atlantic Nickel. However, that possibility is diminished by the fact that the outcome of the litigation will not be known for some substantial time.

Conclusion

28    In the particular circumstances of this case, MSI has established that an order should be made that it be entitled to tax its costs immediately. Of particular relevance is that it has been required to contest two substantial applications at an early stage of the proceedings, which are not likely to complete in the medium term. Indeed, it is likely that satisfaction of the costs order will not occur for some extended period. Though the stay applications cannot be said to have been frivolous, they were unsuccessful despite the several grounds advanced, and it can be observed that they were not advanced with an eye to efficiency, as the reasons for judgment reveal. In this respect it can be concluded that the costs incurred were unnecessary and were substantially more than might properly have been the case. Additionally, the applications did not touch on or resolve any part of the substantive proceedings. Whilst there exists the possibility of countervailing costs orders being made at an interlocutory stage or at the completion of the proceedings, that factor carries little weight in the circumstances described.

29    It follows that an order should be made that the costs orders on each application be taxed immediately.

Associate:    

Dated:    15 November 2024

SCHEDULE OF PARTIES