Grocon Constructors Pty Ltd v Kimberley Securities Ltd

I am dealing with the question of costs in consequence of my judgments of 16 and 18 June 2009: Grocon Constructors Pty Ltd v Kimberley Securities Ltd [2009] NSWSC 541; Grocon Constructors Pty Ltd v Kimberley Securities Ltd [2009] NSWSC 572.

The principal protagonists have apparently come to an accommodation with respect to costs. None of them seeks a costs order. The only application for a costs order is the application of Building Insurers’ Guarantee Corporation (“BIGC”), a person granted leave under rule 2.13 of the Supreme Court (Corporations) Rules 1999 to be heard without becoming a party. BIGC seeks an order that the first and fourth to sixth defendants pay its costs. The application is opposed.

BIGC acknowledges that its application will, as a matter of the court’s discretion, succeed only if the court finds “some very special factor outside the ordinary and expected course of events and engendering a justifiable expectation of compensation in the mind of a non-party”: Re HIH Casualty and General Insurance Ltd [2006] NSWSC 6, applying Re Pan Pharmaceuticals Ltd; Selim v McGrath [2004] NSWSC 129; (2004) 48 ACSR 681.

BIGC contends that such a finding is justified in relation to it. BIGC says that it tendered relevant evidence (an affidavit of its solicitor, Mr Geary), was heard in oral argument “on a key point” and produced the consent of the liquidators who were ultimately appointed by the court.

The contributions made by BIGC do not constitute a “very special factor” of the kind referred to above. Mr Geary’s short affidavit could easily have been furnished to the plaintiff and read in its case. The points made in oral argument were not novel and did not introduce any element of significance. Nor was the tendering of the liquidators’ consent a major contribution: the court’s eventual indication that it would not appoint either the plaintiff’s nominee or one of the deed administrators produced a situation where, in the absence of BIGC’s nominee, the other parties would in all probability have agreed a compromise candidate or the court itself would have chosen a name at random and directed that a consent be sought from that person.

No costs order will be made in favour of BIGC. A person who elects to participate in proceedings on the rule 2.13 basis is not susceptible to a costs order in the ordinary course. Such a person could be ordered to pay costs only in the special circumstances (and to the limited extent) referred to in rule 2.13(2) or by reference to the general principles concerning the award of costs against non parties (see Uniform Civil Procedure Rules 2005, rule 42.3.2). It is for this reason that an award of costs in favour of such a person is exceptional.

The overall outcome, therefore, is that there is no order as to costs, to the intent that each party should bear his or its costs.