Federal Court of Australia

Southern Cross Industrial Group Pty Ltd v Mickala Mining Maintenance Pty Ltd (Costs) [2025] FCA 1465

ORDERS

THE COURT ORDERS THAT:

1.    The applicant/cross-respondent pay the respondents’/cross-claimant’s costs on the standard basis up until 11am on the second business day after 28 February 2023 and on an indemnity basis thereafter.

2.    The District Registrar of the Queensland Registry is directed to release bank guarantee no. 723145107 dated 15 November 2019 in the amount of $200,000 to the respondents.

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

ORDERS

THE COURT ORDERS THAT:

1.    The applicant/cross-respondent pay the respondents’/cross-claimant’s costs on the standard basis up until 11am on the second business day after 28 February 2023 and on an indemnity basis thereafter.

2.    The District Registrar of the Queensland Registry is directed to release bank guarantee no. 887647963 dated 16 August 2022 in the amount of $200,000 to the respondents.

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

REASONS FOR JUDGMENT

DOWNES J:

1    On 11 November 2025, I published reasons for judgment in Southern Cross Industrial Group Pty Ltd v Mickala Mining Maintenance Pty Ltd (Liability Trial) [2025] FCA 1363 (LJ) and sought submissions from the parties on the question of costs. This judgment addresses that question. Definitions used in the liability judgment will also be adopted in these reasons.

Background

2    The relevant background is set out at [1]–[10] LJ. The outcome of the liability trial is recorded at [11] LJ.

3    By Order dated 19 November 2025, the claims by Southern Cross in each proceeding were dismissed.

4    There is no dispute that Southern Cross should pay the respondents’ costs of the claims and cross-claims on the basis that costs follow the event.

5    The dispute which has arisen is in relation to two questions:

(1)    whether any part of the costs should be paid on the indemnity basis;

(2)    whether security for the respondents’ costs should be released to the respondents prior to the taxation process.

6    In relation to the first question, the respondents made three settlement offers, and contend that either r 25.14(1) or r 25.14(3) of the Federal Court Rules 2011 (Cth) apply to each offer. Rule 25.14(3), however, cannot apply. That rule is confined to circumstances where an offer is made by an applicant and rejected by a respondent. Although the respondents were also cross-claimants, a cross-claimant is not an applicant for the purposes of r 25.14(3). That conclusion follows from the definition of “applicant” in the Dictionary to the Federal Court Rules, which makes clear than an applicant is a party claiming relief other than a cross-claimant: see Rakman International Pty Ltd v Boss Fire & Safety Pty Ltd (No 2) [2022] FCA 1113 at [32] (Yates J); NOCO Company v Brown and Watson International Pty Ltd (No 2) [2025] FCA 1176 at [29] (Moshinsky J).

7    Rule 25.14(1) also has no application. That rule is engaged only where an offer is made by a respondent and not accepted by an applicant, and the applicant obtains a judgment that is less favourable than the terms of the offer. Here, however, the claims by Southern Cross (the applicant) were dismissed by the Order dated 19 November 2025. In those circumstances, r 25.14(2) is the operative rule, as it applies where an applicant’s claim is dismissed: see Sandoz Pty Ltd v H Lundbeck A/S (No 2) [2021] FCAFC 47 at [16] (Nicholas, Yates, and Beach JJ).

8    I turn then to consider the offers.

9    An offer was made by the respondents/cross-claimants in QUD 470 of 2019 on 31 October 2019 by way of a “Notice of offer to compromise” in accordance with Form 45 (2019 offer).

10    Southern Cross submits that no defence or cross-claim had been filed in this proceeding by the date of the 2019 offer. However, that is not the case. By that date, both the defence and cross-claim had been filed. Indeed, Southern Cross filed its reply to the defence, and its defence to the cross-claim, on the day after the date of the 2019 offer. However, the statement of cross-claim as it then was did not cite the Exsto Towers as novelty destroying prior art. It was certain of the Exsto Towers alone which were found to have anticipated both claims 1 and 4: see [182] and [190] LJ. It was therefore not unreasonable for Southern Cross to fail to accept the 2019 offer.

11    An offer was made by the respondents in QUD 447 of 2021 on 9 August 2022 by way of a “Notice of offer to compromise” in accordance with Form 45 (2022 offer).

12    The 2022 offer proposed that a previous costs order in favour of each of the parties be set aside with the proceeding being otherwise dismissed and with no order as to costs.

13    Although the Exsto Towers were cited in the statement of cross-claim, that pleading was only filed on 15 August 2022, being some six days after the 2022 offer (which offer did not refer to any cross-claim). It was therefore not unreasonable for Southern Cross to fail to accept the 2022 offer.

14    The final offer was made by the respondents/cross-claimants in both proceedings pursuant to r 25.01(1) on 28 February 2023 on the basis that both proceedings be dismissed and for the applicant to pay the respondents’ costs in a fixed amount of $300,000 (being $150,000 for each proceeding) (2023 offer). As at that date, the respondents had incurred nearly $700,000 in legal costs, and so the 2023 offer was a significant compromise on their part.

15    At this stage of both proceedings and having regard to the pleadings as they then were, Southern Cross unreasonably failed to accept the 2023 offer. By its costs submissions, Southern Cross did not submit otherwise. It follows that Southern Cross will be ordered to pay the respondents’/cross-claimants’ costs on the standard basis until 11am on the second business day after the 2023 offer and on an indemnity basis thereafter.

16    As to the second issue, the respondents’ costs in the proceedings exceed $1.9 million. Southern Cross has provided security for the respondents’ costs in the amount of $785,000 by way of three bank guarantees (being two in the amount of $200,000 and one in the amount of $385,000).

17    Contrary to the submissions by the respondents, it is not appropriate to order the release of all three bank guarantees to them. However, considering the solicitor-client costs incurred to date, and the indemnity costs order made in favour of the respondents in each proceeding for the period post-February 2023, it is highly likely, if not certain, that the costs payable to the respondents will exceed the amount of $400,000.

18    For that reason, I will order the release of the two bank guarantees which are each in the amount of $200,000, with the third guarantee to continue to be held by the Court pending the outcome of the taxation process.

Associate:

Dated:    25 November 2025