Federal Court of Australia JKC Australia LNG Pty Ltd v AkzoNobel NV (No 6) [2023] FCA 1616 File numbers: WAD 448 of 2017 WAD 162 of 2021 Judgment of: BANKS-SMITH J Date of judgment: 15 December 2023 Catchwords: COSTS - transfer application - whether costs should follow the event in relation to interlocutory application - whether costs to be taxed and paid forthwith - where transfer application discrete and stand-alone - orders made Legislation: Federal Court of Australia Act 1976 (Cth) s 43 Federal Court Rules 2011 (Cth) rr 1.34, 1.35, 40.13 Cases cited: Alstom Power Ltd v Yokogawa Australia Pty Ltd (No 2) [2006] SASC 87 Australian Flight Test Services v Minister for Industry, Science and Technology [1996] FCA 288 Axent Holdings Pty Ltd v Compusign Australia Pty Ltd (No 3) [2018] FCA 6 BHP Billiton Limited v Schultz [2004] HCA 61; (2004) 221 CLR 400 Federal Treasury Enterprise (FKP) Sojuzplodoimport v Spirits International B.V. (No 5) [2018] FCA 19 JKC Australia LNG Pty Ltd v AkzoNobel NV (No 5) [2023] FCA 1248 The Owners - Strata Plan No 87231 v 3A Composites GmbH (No 4) [2020] FCA 1573 Watson v Kriticos (Costs Payable Forthwith) [2022] FCA 4 W Hoy Pty Ltd v W.T.H Pty Ltd (No 2) [2018] FCA 506 Division: General Division Registry: Western Australia National Practice Area: Commercial and Corporations Sub-area: Regulator and Consumer Protection Number of paragraphs: 28 Date of hearing: 5 December 2023 For WAD 448 of 2017: Counsel for the Applicant: Mr MJ Smith Solicitor for the Applicant: Solomon Brothers Counsel for the Respondents: Mr B Dharmananda SC with Mr MJ Sims SC and Mr PA Walker Solicitor for the Respondents: Clayton Utz Counsel for the Interested Parties: Mr J Gleeson SC with Ms G Crafti SC Solicitor for the Interested Parties: Corrs Chambers Westgarth For WAD 162 of 2021: Counsel for the Applicants: Mr J Gleeson SC with Ms G Crafti SC Solicitor for the Applicants: Corrs Chambers Westgarth Counsel for the Respondents: Mr B Dharmananda SC with Mr MJ Sims SC and Mr PA Walker Solicitor for the Respondents: Clayton Utz Counsel for the Cross-Claimants: Mr B Dharmananda SC with Mr MJ Sims SC and Mr PA Walker Solicitor for the Cross-Claimants: Clayton Utz Counsel for the First and Second Cross-Respondents: Mr J Gleeson SC with Ms G Crafti SC Solicitor for the First and Second Cross-Respondents: Corrs Chambers Westgarth Counsel for the Third Cross-Respondent: Mr MJ Smith Solicitor for the Third Cross-Respondent: Solomon Brothers ORDERS WAD 448 of 2017 BETWEEN: JKC AUSTRALIA LNG PTY LTD (ACN 154 383 409) Applicant AND: AKZONOBEL NV First Respondent INTERNATIONAL PAINT LIMITED Second Respondent INPEX OPERATIONS AUSTRALIA PTY LTD First Interested Party ICTHYS LNG PTY LTD Second Interested Party order made by: BANKS-SMITH J DATE OF ORDER: 15 december 2023 THE COURT ORDERS THAT: 1. The respondents pay the applicant's costs of the respondents' transfer application filed 20 April 2023 forthwith. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011. ORDERS WAD 162 of 2021 BETWEEN: INPEX OPERATIONS AUSTRALIA PTY LTD First Applicant ICHTHYS LNG PTY LTD Second Applicant AND: AKZONOBEL NV First Respondent INTERNATIONAL PAINT LIMITED Second Respondent AKZO NOBEL PTY LIMITED Third Respondent AND BETWEEN: AKZONOBEL NV First Cross-Claimant INTERNATIONAL PAINT LIMITED Second Cross-Claimant AKZO NOBEL PTY LIMITED Third Cross-Claimant AND: INPEX OPERATIONS AUSTRALIA PTY LTD First Cross-Respondent ICHTHYS LNG PTY LTD Second Cross-Respondent JKC AUSTRALIA LNG PTY LTD Third Cross-Respondent order made by: BANKS-SMITH J DATE OF ORDER: 15 december 2023 THE COURT ORDERS THAT: 1. The respondents pay the applicants' costs of the respondents' transfer application filed 20 April 2023 forthwith. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011. REASONS FOR JUDGMENT BANKS-SMITH J: 1 In accordance with previous reasons published in these proceedings, I will refer to the parties as JKC, INPEX and ANIP. 2 ANIP brought a transfer application, seeking to have the proceedings transferred to the Supreme Court of Western Australia, where there are other extant proceedings involving ANIP and INPEX. 3 On 10 October 2023 I dismissed the application: JKC Australia LNG Pty Ltd v AkzoNobel NV (No 5) [2023] FCA 1248 (JKC No 5). 4 INPEX has applied for an order that the ANIP parties pay the costs of the transfer application forthwith. JKC seeks a similar order, and in effect adopted the submissions of INPEX. 5 In the context of a case management hearing on 5 December 2023 that dealt with a number of matters, the parties made oral submissions as to the costs of the transfer application. 6 Whilst recognising that it is not common that the Court makes orders as sought, I consider it appropriate to do so on this occasion. 7 Pursuant to s 43(2) of the Federal Court of Australia Act 1976 (Cth), the award of costs is at the discretion of the Court. The discretion must, of course, be exercised judicially. 8 It is well recognised that the general rule is that costs follow the event. However it does not follow that the costs of an interlocutory application should follow the result of that application: The Owners - Strata Plan No 87231 v 3A Composites GmbH (No 4) [2020] FCA 1573 at [9]-[10] (Wigney J) and cases cited. 9 On an interlocutory application, a range of costs orders may be made, such as orders that costs follow the result of the principal litigation, or that they be the applicant's or respondent's costs in the cause: Strata Plan No 87231 at [10]. 10 Further, even if an order is made in favour of a party on an interlocutory application, it does not follow that those costs are to be paid forthwith. Rather, r 40.13 of the Federal Court Rules 2011 (Cth) provides: Taxation of costs awarded on an interlocutory application If 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 proceeding in which the order is made is finished. Note: The Court may order that costs of an interlocutory application be taxed immediately. 11 The discretion referred to in the note probably has its source in r 1.35 which allows the Court to make an order inconsistent with the Federal Court Rules, or from r 1.34 which allows the Court to dispense with compliance with any of the rules, but there is no doubt that it exists: as Perram J observed in Watson v Kriticos (Costs Payable Forthwith) [2022] FCA 4 at [5]; and Federal Treasury Enterprise (FKP) Sojuzplodoimport v Spirits International B.V. (No 5) [2018] FCA 19 at [5]-[6]. 12 In Axent Holdings Pty Ltd v Compusign Australia Pty Ltd (No 3) [2018] FCA 6, Kenny J said the following as to why orders to pay costs of an interlocutory application are discouraged (at [15]): Rule 40.13 discourages interlocutory applications and recognises that it is usually inappropriate to require the unsuccessful party in interlocutory proceedings to pay costs immediately, since that party might ultimately succeed in the substantive proceeding: Australian Mud Company Pty Ltd v Coretell Pty Ltd (No 4) [2013] FCA 567 (Coretell) at [29]; Courtney v Medtel Pty Ltd (No 3) [2004] FCA 347 (Courtney v Medtel) at [20]; and Telstra Corporation Ltd v Phone Directories Company Pty Ltd (No 3) [2014] FCA 949 (Telstra) at [29]. Important reasons for r 40.13 are that it avoids the need for multiple taxations in a proceeding and the unfairness that results where a party is unable to set off an order for costs in its favour against an earlier liability to pay costs: Telstra at [28]; Brasington v Overton Investments Pty Ltd [2001] FCA 571 at [13]; Orrcon Operations Pty Ltd v Capital Steel and Pipe Pty Ltd (No 2) [2008] FCA 24 at [18]. Rule 40.13 is also designed to avoid the inconvenience and possible oppression involved in a series of taxations where there are successive interlocutory applications: Coretell at [29]; Courtney v Medtel at [20]. 13 However, in FKP Perram J set out examples of where the exercise of the discretion may be justified (at [9]): … a range of factors may justify departure from the ordinary rule: where the final determination of the proceedings is far away: Allstate Life Insurance Co v Australia and New Zealand Banking Group Ltd (No 13) [1995] FCA 1459 at [5] ('It would be wrong if the successful parties do not enjoy the fruits of their order for costs for such a long time.'); 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 (Life Airbag Company of Australia Pty Ltd v Life Airbag Company (New Zealand) Ltd [1998] FCA 545 ('Life Airbag')); where, following a successful amendment application, a case is essentially a new proceeding (McKellar v Container Terminal Management Services Ltd [1999] FCA 1639 at [19] and [40]); where a discrete issue has been resolved (Australian Flight Test Services v Minister for Industry, Science and Technology [1996] FCA 1425 at [7]); or 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 (Clipsal at [12]). 14 In the earlier decision of Alstom Power Ltd v Yokogawa Australia Pty Ltd (No 2) [2006] SASC 87, Debelle J acknowledged that there may be a departure from the general rule where an interlocutory proceeding resolves a discrete issue, citing Australian Flight Test Services v Minister for Industry, Science and Technology [1996] FCA 288 (the incorrect citation was cited in Alstom). His Honour applied this principle in the context of a transfer application under the Jurisdiction of Courts (Cross-vesting) Act 1987 (Cth), ordering that the party that successfully resisted the transfer application was at liberty to have its costs taxed and paid forthwith. For another example of such an order in this Court, although in relation to an interlocutory decision of a different nature, see W Hoy Pty Ltd v W.T.H Pty Ltd (No 2) [2018] FCA 506. 15 Not surprisingly, INPEX relied on Alstom in support of its application. The matters that Debelle J took into account in Alstom included that: (a) a transfer application is a discrete application; (b) transfer applications are usually made at an early stage of the proceeding and, under the relevant Act, are not subject to appeal; (c) it may be a reasonably lengthy period of time before the successful party may enjoy the benefit of the costs order; (d) the parties liable for costs were companies of financial substance; and (e) the order would not cause financial disadvantage or otherwise stifle the proceedings. 16 INPEX submitted that similar factors apply in this case. The application was self-contained, and any costs assessment would not be aided by the outcome of the underlying proceedings. Although the trial is listed for June, July and August in 2024, it will inevitably be some time until the outcome of such a complex and large trial is known (and it is currently proposed that any quantum assessment be deferred by way of reference out). INPEX should have the benefit of payment now. The Court is well placed to deal with costs now while the transfer application outcome is relatively fresh and submissions have been heard - in these circumstances it would be inefficient to defer the question of costs until many months down the track. Finally - it was said that these are mature proceedings, in the sense that it is unlikely that there will be a number of significant interlocutory disputes between now and trial, and so whilst there might be a taxation of these costs now, the prospect of it being some form of precedent or there being a number of other contested taxations in the proceedings is not great. 17 ANIP, on the other hand, submitted that the resolution of the costs of the transfer application should remain reserved and await the outcome of trial, stating that the Court would be best placed to determine the question of costs after the proceedings have unfolded. In the alternative, it submitted that the costs should be in the cause, or, 'at a pinch', INPEX and JKC should have their costs but in the cause (so that they receive their costs but only if they succeed at trial). It submitted that as a transfer application is essentially a matter of case management to be resolved in the interests of justice, and so the costs should be addressed in the same way as the costs of a case management hearing, where the usual order is that costs are reserved or in the cause. It was submitted that the transfer application had assisted the Court by 'crystallising issues'; that it was undesirable to have ANIP exposed to the risk of multiple taxations which are likely to be 'substantial and complicated'; that any delay until resolution would not be so 'inordinately long' as to justify a taxation at this point; that ANIP should have the benefit of any set-off of costs obligations; and that the costs of the transfer application will be fairly insignificant in the context of the proceedings as a whole. 18 ANIP also argued that the transfer application was not discrete, as that term is to be understood, as it did not resolve any substantive separate issue in terms of the merits of the case in advance of trial. ANIP contended that Alstom should not be followed. 19 ANIP relied predominantly on the decision in Strata Plan No 87231, where the costs order on an interlocutory application was that the costs should be the successful parties' costs in the cause. 20 The circumstances of Strata Plan No 87231 were somewhat different. It related to an application in a class action for a 'class closure order'. Wigney J said (at [2]): … Owners opposed the making of the class closure order and any of the alternatives proposed by 3A. It ultimately acknowledged, however, that some form of registration regime, which also involved registering group members providing relevant information concerning their claims, may be appropriate in the circumstances. The interlocutory application was strongly contested and occupied three hearing days. Ultimately, I concluded that the Court did not have the power to make the proposed class closure orders and that, even if it did, it would not in any event have been appropriate to make the orders in all the circumstances: The Owners - Strata Plan No 87231 v 3A Composites GmbH (No 3) [2020] FCA 748. I also declined to make any of the alternative orders sought by 3A. I did, however, conclude that there was a proper basis for 3A's concern about the potential expiry of limitation periods in respect of possible contribution claims and that some form of voluntary group member registration regime involving the provision of information was warranted. I also addressed a number of ancillary issues. 21 It was submitted by the unsuccessful party (3A) that each party had a measure of success. However, Wigney J determined (at [7]) that: … the preferable view is that, while it may be that each of the parties had some measure of success, the interlocutory application was primarily resolved in favour of Owners. The main and most contentious issues were essentially resolved in its favour. The issues that were resolved in 3A's favour were either ancillary issues, or issues that, but for 3A's push for some form of class closure, would have been considered and dealt with as a matter of ordinary case management as opposed to in the context of a fully contested interlocutory application. 22 As is apparent from that extract, the circumstances of this application are different. Importantly, and in contrast to the circumstances in Strata Plan No 87231, I consider that the transfer application was discrete. I was not called upon to determine ancillary issues relating to the conduct of the proceedings. INPEX and JKC were wholly successful. In my view, it is clear that ANIP should pay INPEX's and JKC's costs of the transfer application. Whilst it is true that whether or not a matter should be transferred is a 'nuts and bolts' management decision (BHP Billiton Limited v Schultz [2004] HCA 61; (2004) 221 CLR 400 at [13], and see JKC No 5 at [30]), it is a substantive application, far removed from the average case management hearing, where the single question for the Court is which court, in the interests of justice, is more appropriate to hear and determine the substantive dispute. It is inevitable that a number of matters relating to that question, and of a case management nature, must be considered in determining such an application, but (at least in this case) none of those matters stood to be resolved by it. The benefit that might have been obtained from an airing of those matters before the Court does not outweigh the fact that the parties and the Court were obliged to spend considerable time addressing the transfer application. Once that application was determined, the parties have continued towards trial in the manner previously anticipated. The transfer application was for all intents and purposes a stand-alone application that was an intervention in the usual progression towards trial. That is not a criticism - ANIP was entitled to bring such an application. Rather, it is a description of the nature of the application. 23 I do not accept ANIP's criticism to the effect that Debelle J in Alstom failed to properly apply any principles as to whether a transfer application was 'discrete'. The fact that previous cases dealt with different types of applications does not undermine the applicability of that term to a transfer application. To my mind, for the reasons given, it is readily apparent that the transfer application in this case was indeed discrete. 24 The real question is whether those costs should be paid forthwith. Alstom stands as a precedent for such an order to be made in a case such as this, albeit that any order as to costs involves an exercise of discretion in the particular circumstances of the matter at hand. 25 I consider this is one of those more unusual occasions where it is appropriate that an order be made that the costs be taxed and paid forthwith, primarily for the reasons relied upon by INPEX and, by adoption, JKC. 26 I accept that the outcome of this proceeding is some time off. Matters relevant to assessing the quantum of costs remain relatively fresh in the minds of the parties and their legal representatives at this time. There is no suggestion that ANIP will be financially prejudiced by payment of the costs of the transfer application - this litigation is clearly well-resourced on all sides. I do not anticipate that there will other separate taxations of interlocutory costs prior to trial. I do not consider it onerous to have a separate taxation on this particular occasion. Furthermore, upon making these orders, I propose to direct the parties to confer and attempt to resolve the question of the quantum of costs payable by ANIP, and even if it appears necessary for there to be a formal taxation, I would invite the Registrar of this Court to attempt to mediate the question of quantum prior to undertaking any taxation. This process has the potential to reduce the costs that might otherwise be involved in a taxation. 27 In circumstances where INPEX and JKC should have their costs of a transfer application that was clearly discrete and self-contained and that has no impact upon the final outcome, I prefer this approach to deferring the resolution of costs to some distant date. 28 There will be orders accordingly. I certify that the preceding twenty-eight (28) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Banks-Smith. Associate: Dated: 15 December 2023