Pacific National Constructions Pty Ltd v Geurts Trucks Besloten Venootschap

1. [1]

   HER HONOUR: On 9 July 2024 the Court made the following orders in this matter:

2. [2]

   Pursuant to order 3 above, on 16 July 2024 the defendant filed and served and application in submissions seeking an order for indemnity costs, in lieu of order 2 above. On 23 July 2024 the plaintiff filed its submissions in response to the defendant’s application, an application it opposes.

The Submissions with respect to Indemnity Costs

1. [3]

   The defendant submits that an order for indemnity costs should be made because the plaintiff commenced its claim knowing it was in breach of a contractual exclusive jurisdiction clause, thereafter, failing to adduce any expert evidence to support its argument that the clause should be set aside.

2. [4]

   In making its application the defendant accepts that indemnity costs may only be awarded where there is “a special entitlement or some relevant unreasonable action including relevant misconduct in connection with the conduct of the proceedings”: John Holland Pty Limited v Kellogg Brown & Root Pty Ltd [No 2] [2015] NSWSC 564, at [32]. It submits that unreasonableness arises here because of the deliberate breach by the plaintiff of the exclusive jurisdiction clause, compounded by its failure to call any expert evidence in support of a conclusion that the clause should be set aside, thus presenting an argument so weak as to be insupportable.

3. [5]

   The plaintiff submits that it should not be “punished” by an order for indemnity costs simply because it filed a claim that was later stayed. It argues that to approach indemnity costs in that way, where there is no relevant delinquency, would be to deter litigants from putting forward a case that may be attended by uncertainty.

4. [6]

   Further, the plaintiff argues that it advanced a cogent case, with a real issue to be determined, and which was not solely reliant upon expert evidence. In those circumstances, indemnity costs would be punitive against it only because of a shortcoming in a single aspect of its case.

Determination

1. [7]

   The Court has wide powers with respect to costs in the context of the speedy and just resolution of the matter. Sections 56(1) and (2) of the Civil Procedure Act 2005 (NSW) (“the CP Act”) provide:

2. [8]

   Section 98(1) of the CP Act provides:

3. [9]

   The section gives the Court a wide discretion. In Oshlack v Richmond River Council (1998) 193 CLR 72; [1998] HCA 11 at [22], Gaudron and Gummow JJ, considering s 69(2) of the Land and Environment Court Act 1979 (NSW), which is in the same terms as s 98(1) of the CP Act, observed:

4. [10]

   Part 42 of the Uniform Civil Procedure Rules 2005 (NSW) ("UCPR") also provide for costs orders. Rule 42 of Division 1 relevantly provides:

5. [11]

   The accepted starting point then is that costs are on the ordinary basis. That accepted starting point is displaced where there is some unreasonableness or other delinquency such that the successful party should receive all its costs.

6. [12]

   There was no delinquency in the plaintiff’s conduct of its claim in my view. It was not unreasonable to ask the Court to consider setting aside the exclusive jurisdiction clause and to hear its claim in this jurisdiction. Whilst the failure to call expert evidence as to the ability of the Dutch courts to deal with its claim may have weakened an aspect of its argument, it did not render its case fatally weak.

7. [13]

   Indemnity costs orders should not be used simply to penalise an unsuccessful litigant in my opinion, but only where there is a compelling need for such an order, to ensure a truly just outcome for the successful party who has been gravely disadvantaged by an unreasonable litigant. I am not prepared to vary order 2.

8. [14]

   The order of the Court is:

   1. (1)

      Application for indemnity costs refused.

   2. (2)

      Order 2 of 9 July 2024 for costs on an ordinary basis is confirmed.