Orrcon Operations Pty Ltd v Capital Steel & Pipe Pty Ltd (No 2)

• Jurisdiction: Australia Federal only
• Court: Federal Court
• Judgment Date: 24 January 2008
• Neutral Citation: [2008] FCA 24

FEDERAL COURT OF AUSTRALIA

Orrcon Operations Pty Ltd v Capital Steel & Pipe Pty Ltd (No 2)

[2008] FCA 24

PROCEDURE – COSTS – where application for interlocutory relief dismissed – where applicant failed to establish serious question to be tried – where balance of convenience favoured refusal of relief – where applicant succeeded on one allegation – whether applicant should pay first and second respondent’s costs of application for interlocutory relief – whether costs order should reflect applicant’s success on one allegation pursuant to s 43(2) Federal Court of Australia Act 1976 (Cth)

Held: applicant should pay first and second respondent’s costs of application for interlocutory relief – not appropriate to reflect applicant’s success on one allegation in costs order because allegation only one element of issue

PROCEDURE – COSTS – where dismissal of application for interlocutory relief determined discrete issue – where conduct of unsuccessful applicant not unreasonable – where first and second respondents may lack financial resources to meet any final judgment against it – whether costs should be taxed and paid forthwith pursuant to O 62 r 3 Federal Court Rules

Held: Not appropriate to order that costs be taxed and paid forthwith

PROCEDURE – COSTS – where applicant alleged knowledge of defective goods against second respondent – where applicant failed to establish serious question to be tried that respondents engaged in unconscionable conduct – whether applicant made unsuccessful allegation of fraud – whether applicant persisted with hopeless case – whether costs should be taxed on indemnity basis

Held: Allegation of knowledge an element of plea of unconscionable conduct and not an allegation of fraud – application not a hopeless case – costs to be taxed on usual party and party basis

PROCEDURE – COSTS – where fourth respondent made submissions at hearing – where orders sought by applicant reformulated as hearing proceeded – whether submissions of fourth respondent were or could have been made by first and second respondents – whether fourth respondent should have its costs of application for interlocutory relief

Held: Fourth respondent entitled to protect its interests at hearing – applicant should pay fourth respondent’s costs

Federal Court of Australia Act 1976 (Cth) s 43(2)

Federal Court Rules O 62 r 29, O 6 r 8

Supreme Court Rules 1970 (NSW) Pt 52A, r 9

Australian Agricultural Co Ltd v AMP Life Ltd [2003] FCA 1134 referred to

Bailey v Beagle Management Pty Ltd (2001) 105 FCR 136 referred to

Colgate-Palmolive Co v Cussons Pty Ltd (1993) 46 FCR 225 referred to

Cretazzo v Lombardi (1975) 13 SASR 4 referred to

Fiduciary Limited v Morning Star Research Pty Ltd (2002) 55 NSWLR 1 referred to

His Eminence Metropolitan Petar Diocesan Bishop of the Macedonian Orthodox Church of Australia and New Zealand v The Macedonian Orthodox Community Church St Petka Inc (No 2) [2007] NSWCA 142 referred to

Inn Leisure Industries Pty Ltd (Provisional Liquidator Appointed) v DF McCloy Pty Ltd (No 2) (1991) 28 FCR 172 referred to

News Limited v Australian Rugby Football League Limited (1996) 64 FCR 410 referred to

NMFM Property Pty Ltd v Citibank Ltd (No 11) (2001) 109 FCR 77 referred to

Orrcon Operations Pty Ltd v Capital Steel & Pipe Pty Ltd [2007] FCA 1319 referred to

Trade Practices Commission v Nicholas Enterprises Pty Ltd (1979) 28 ALR 201 referred to

Wilcox, Re; Ex parte Venture Industries Pty Ltd (No 2) (1996) 72 FCR 151 referred to

ORRCON OPERATIONS PTY LTD v CAPITAL STEEL & PIPE PTY LTD, EDWARD STUDDY, WESTPAC BANKING CORPORATION AND COMMONWEALTH BANK OF AUSTRALIA

NSD1346 OF 2007

BESANKO J

24 JANUARY 2008

ADELAIDE (HEARD IN SYDNEY)

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	NSD1346 OF 2007

BETWEEN:	ORRCON OPERATIONS PTY LTD Applicant
AND:	CAPITAL STEEL & PIPE PTY LTD First Respondent EDWARD STUDDY Second Respondent WESTPAC BANKING CORPORATION Third Respondent COMMONWEALTH BANK OF AUSTRALIA Fourth Respondent

JUDGE:	BESANKO J
DATE OF ORDER:	24 JANUARY 2008
WHERE MADE:	ADELAIDE (HEARD IN SYDNEY)

THE COURT ORDERS THAT:

1. The applicant pay the first and second respondents’ costs of its application for interlocutory relief dated 13 July 2007 to be taxed on a party and party basis in default of agreement.

2. The applicant pay the Commonwealth Bank of Australia’s costs of its application for interlocutory relief dated 13 July 2007 to be taxed on a party and party basis in default of agreement.

3. There be no order as to the costs of the applicant’s application for interlocutory relief dated 13 July 2007 as between the applicant and the Westpac Banking Corporation.

Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	NSD1346 OF 2007

BETWEEN:	ORRCON OPERATIONS PTY LTD Applicant
AND:	CAPITAL STEEL & PIPE PTY LTD First Respondent EDWARD STUDDY Second Respondent WESTPAC BANKING CORPORATION Third Respondent COMMONWEALTH BANK OF AUSTRALIA Fourth Respondent

JUDGE:	BESANKO J
DATE:	24 JANUARY 2008
PLACE:	ADELAIDE (HEARD IN SYDNEY)

REASONS FOR JUDGMENT

1 Orrcon Operations Pty Ltd (“Orrcon”) issued a proceeding in this Court on 13 July 2007. In its application Orrcon sought both interlocutory relief and final relief. The claim for interlocutory relief came on for hearing before me on 14, 15 and 16 August 2007. On 22 August 2007, I made an order that the application for interlocutory relief be dismissed. I delivered reasons: Orrcon Operations Pty Ltd v Capital Steel & Pipe Pty Ltd [2007] FCA 1319. I reserved the question of costs and these reasons deal with the question of costs.

2 Capital Steel & Pipe Pty Ltd (“Capital Steel”) seeks the following orders:

1. That Orrcon pay its costs of the interlocutory application;

2. That such costs be taxed and paid forthwith before the principal proceeding is concluded; and

3. That such costs be taxed on an indemnity basis.

3 In support of its application, Capital Steel tendered an affidavit of Paul Joseph Dillon sworn on 30 August 2007. Mr Dillon is a solicitor acting on behalf of Capital Steel.

4 Orrcon opposes the making of such orders. It submits that its costs and those of Capital Steel should be reserved, or, in the alternative, that the costs of the interlocutory application should be Capital Steel’s costs of the cause.

5 The Commonwealth Bank of Australia (“Commonwealth Bank”) is the fourth respondent to the proceeding. It opposed Orrcon’s application for interlocutory relief and it seeks an order that Orrcon pay its costs of and incidental to the application for interlocutory relief. Orrcon opposes that order and submits that there should be no order as to the costs of the Commonwealth Bank.

6 Solicitors for the Westpac Banking Corporation appeared at the hearing to submit to any order of the Court, save as to costs. The Westpac Banking Corporation and the applicant have agreed that the appropriate order as between them would be that there be no order as to costs.

The costs of Capital Steel

7 Orrcon referred to O 62 r 29 of the Federal Court Rules (“the Rules”) which is as follows:

Subject to this Order, the costs of any application or other step in any proceedings shall, unless the Court otherwise orders, be deemed to be part of the costs of the cause of the party in whose favour the application or other step is determined and shall be paid and otherwise dealt with in accordance with the provisions of this Order.

8 Orrcon submits that if its costs and those of Capital Steel are not reserved, then the appropriate order is that the costs be Capital Steel’s costs of the cause. The effect of such an order would be that if Capital Steel is successful, it will receive the costs of the interlocutory application. If Capital Steel is unsuccessful, it will not have to pay Orrcon’s costs of the interlocutory application.

9 Orrcon referred to His Eminence Metropolitan Petar Diocesan Bishop of the Macedonian Orthodox Church of Australia and New Zealand v The Macedonian Orthodox Community Church St Petka Inc (No 2) [2007] NSWCA 142 in support of its submission. However, the discussion in that case (at [16]-[32]) focused on the question of whether there was a general rule in circumstances where an applicant for an interlocutory injunction succeeds, and not where he or she fails.

10 In Australian Agricultural Co Ltd v AMP Life Ltd [2003] FCA 1134 Sackville J considered it appropriate to award costs against an unsuccessful applicant for an interlocutory injunction where the applicant had failed, not only on the balance of convenience ground, but also on the serious question to be tried ground.

11 Orrcon submits that it succeeded on a substantial matter involved in its interlocutory application in that it succeeded in establishing that there was a serious question to be tried in relation to the allegation that the pipe was defective. (See [42]-[49] of my previous reasons.) However, the fact is that in terms of the interlocutory relief it sought, Orrcon failed to establish a serious question to be tried and, in any event, the balance of convenience favoured the refusal of relief. In addition, my decision means that Orrcon’s claim for final relief in relation to the Westpac letter of credit is otiose. In those circumstances, I think it is appropriate to order that Orrcon pay Capital Steel’s costs of the application for interlocutory relief.

12 Orrcon submits that if, contrary to its primary submission, I award costs in favour of Capital Steel, then I should reflect in...