BHP Coal Pty Ltd and Ors v O & K Orenstein & Koppel AG and Ors (No 2) [2009] QSC 64

SUPREME COURT OF QUEENSLAND CITATION: BHP Coal Pty Ltd and Ors v O & K Orenstein & Koppel AG and Ors (No 2) [2009] QSC 64 PARTIES: BHP Coal Pty Ltd (ACN 010 595 721) First Plaintiff Mitsubishi Development Pty Ltd (ACN 009 779 873) Second Plaintiff UMAL Consolidated Limited (ACN 000 767 386) Third Plaintiff BHP Queensland Coal Investments Pty Ltd (ACN 098 876 825) Fourth Plaintiff QCT Investment Pty Ltd (ACN 010 487 831) Fifth Plaintiff QCT Mining Pty Ltd (ACN 010 487 840) Sixth Plaintiff QCT Management Pty Ltd (ACN 010 472 036) Seventh Plaintiff v O & K Orenstein & Koppel AG First Defendant Thyssenkrupp Engineering (Australia) Pty Ltd (ACN 000 515 333) (Formerly known as Krupp Engineering (Australia) Pty Ltd) Second Defendant Frank Thiel Third Defendant FILE NO/S: 6288 of 2003 DIVISION: Trial Division PROCEEDING: Application ORIGINATING COURT: Supreme Court, Brisbane DELIVERED ON: 31 March 2009 DELIVERED AT: Brisbane HEARING DATE: 21 November 2008 JUDGE: McMurdo J -- 1 of 13 -- 2 ORDER: 1. The defendants pay to the first, second, third, fifth, sixth and seventh plaintiffs 90 per cent of their costs of the proceedings, including reserved costs. 2. There be no order for costs between the fourth plaintiff and the defendants CATCHWORDS: PROCEDURE – COSTS – GENERAL RULE - COSTS FOLLOW THE EVENT – COSTS OF ISSUES PROCEDURE – COSTS – DEPARTING FROM THE GENERAL RULE – where plaintiffs failed on specific questions in the proceedings – whether costs otherwise recoverable by the plaintiffs should be reduced PROCEDURE – COSTS – DEPARTING FROM THE GENERAL RULE – CONDUCT OF THE PARTIES – where substantive reports compiled by plaintiff witness were not accepted as evidence – whether plaintiffs should be subjected to costs order PROCEDURE – COSTS – DEPARTING FROM THE GENERAL RULE – CONDUCT OF THE PARTIES – where plaintiffs did not proceed with a pleading in the alternative – where defendant brought witnesses from Europe to counter this pleading – where substantive reports compiled by a plaintiff witness were not accepted as evidence – whether plaintiffs should be subjected to costs order PROCEDURE – COSTS – DEPARTING FROM THE GENERAL RULE – ORDER FOR COSTS ON INDEMNITY BASIS – where successful plaintiffs seek costs in relation to issues raised by the defendants including contributory negligence – whether plaintiffs could recover costs on the indemnity basis Trade Practices Act 1974 (Cth), s 82 Uniform Civil Procedure Rules 1999 (Qld), rr 681, 684, 702 Australand Corporation (Qld) Pty Ltd v Johnson & Ors [2007] QSC 128 Cachia v Hanes (1991) 23 NSWLR 304 Colburt v Beard [1992] 2 Qd R 67 Colgate- Palmolive Co v Cussons Pty Limited (1993) 46 FCR 225 Cretazzo v Lombardi (1975) 13 SASR 4 Di Carlo v Dubois & Ors [2002] QCA 225 Fountain Selected Meats (Sales) Pty Ltd v International Produce Merchants Pty Ltd (1988) 81 ALR 397 -- 2 of 13 -- 3 Hughes v Western Australian Cricket Association [1986] ATPR 40-748 J-Corp Pty Ltd v Australian Builders Labourers Federated Union of Workers, Western Australian Branch & Anor (No. 2) (1993) 46 IR 301 Mobile Innovations Ltd v Vodaphone Pacific Ltd [2003] NSWSC 423 Mok v Minister for Immigration, Local Government and Ethnic Affairs (1993) 47 FCR 81 Oshlack v Richmond River Council (1998) 193 CLR 72 Rosniak v Government Insurance Office (1997) 41 NSWLR 608 Smeaton Hanscomb & Co. Ltd v Sassoon I Setty, Son & Co. (No. 2) [1953] 1 WLR 1481; [1953] 2 All ER 1588 Todrell Pty Ltd v Finch (No 2) [2008] 2 Qd R 95; [2007] QSC 386 Victoria v Masters Builders Association of Victoria unreported, Full Court of the Supreme Court of Victoria, 15 December 1994 Waters v P C Henderson (Aust) Pty Ltd [1994] NSWCA 338 COUNSEL: GA Thompson SC with AW Duffy and CM Muir for the plaintiffs P Morrison QC with P Roney and G Thomas for the defendants SOLICITORS: Mallesons Stephen Jaques for the plaintiffs Baker & McKenzie for the defendants [1] When I gave judgment in this case last year,1 I was asked to put over the question of costs to another day. The parties have since presented extensive written and oral submissions together with detailed analyses of the time said to have been taken on various issues in the course of this trial which occupied 92 days. [2] In broad terms, this litigation involved two claims, which I described in the judgment as the design case and the inspection case. All but the fourth plaintiff recovered substantial damages on each case. On the design case, there were several awards which together totalled $34,065,992 (before interest), compared with an amount claimed of $50,166,920. On the inspection case, where the same amount was claimed, the successful plaintiffs were awarded damages of $37,070,593 (before interest). In neither case was there any reduction of the damages for 1 [2008] QSC 141. -- 3 of 13 -- 4 contributory negligence. On any view the plaintiffs (other than the fourth plaintiff which failed entirely) were substantially successful. [3] The plaintiffs seek these orders: (a) the successful plaintiffs should recover the costs of the proceedings; (b) their costs associated with certain issues should be awarded upon the indemnity basis; (c) otherwise the costs should be on the standard basis; (d) there should be no order for costs in relation to the fourth plaintiff. [4] For the defendants, it is submitted that the orders should be: (a) the plaintiffs pay the defendants’ costs associated with the defence of certain parts of the case; (b) alternatively, the amount of costs to be paid to the plaintiffs be reduced overall by 50 per cent; (c) no costs be awarded on the indemnity basis. [5] No offer to settle appears to have been made in this litigation. The plaintiffs’ argument for indemnity costs and the defendants’ argument for the costs of certain issues is in each case upon the suggested basis that the other party’s conduct of the case in some respects was so unreasonable as to warrant that order. [6] It is convenient to go first to the defendants’ submissions. The starting point is the general rule, now expressed in UCPR r 681(1), that costs should follow the event. But by r 684, an order may be made for the costs of a particular question in, or a particular part of, a proceeding and by r 684(2), a court may declare what percentage of the costs of the proceeding is attributable to that question or part. In the defendants’ submission, r 684 provides a wider discretion to depart from the general rule than was the case under previous rules or equivalents in other jurisdictions. This is in answer to the plaintiffs’ argument that a departure from the general rule should be made only where there are “special or exceptional circumstances”, for which the plaintiffs cite Waters v P C Henderson (Aust) Pty Ltd2 ; Hughes v Western Australian Cricket Association3 ; Cretazzo v Lombardi4; J-Corp Pty Ltd v Australian Builders Labourers Federated Union of Workers, Western Australian Branch & Anor (No. 2)5; Victoria v Masters Builders Association of Victoria6 and Mok v Minister for Immigration, Local Government and Ethnic Affairs7 . They particularly rely upon what McHugh J (with whom Brennan CJ agreed) said in Oshlack v Richmond River Council8 , where his Honour 2 [1994] NSWCA 338. 3 [1986] ATPR 40-748 at 48,136. 4 (1975) 13 SASR 4 at 16. 5 (1993) 46 IR 301 at 302 per French J. 6 Unreported, Full Court of the Supreme Court of Victoria, 15 December 1994 per Eames J. 7 (1993) 47 FCR 81 at 84. 8 (1998) 193 CLR 72 at 96. -- 4 of 13 -- 5 endorsed a statement of Devlin J in Smeaton Hanscomb & Co. Ltd v Sassoon I Setty, Son & Co. (No. 2)9 that: “Prima facie, a successful party is entitled to his costs. To deprive him of his costs or to require him to pay a part of the costs of the other side is an exceptional measure.” [7] As Chesterman J said in Todrell Pty Ltd v Finch & Ors,10 r 684 does provide a wider discretion than the previous rule in Queensland,11 in that it refers to “a particular question … or a particular part of, a proceeding”, whereas the previous rule referred to several “issues”, a term which had tended in some cases to confine the discretion as Thomas J discussed in Colburt v Beard.12 However, r 684 has not so broadened the discretion as the defendants argue. The general rule remains that costs should follow the event and r 684 provides an exception. Necessarily the circumstances which would engage r 684 are exceptional circumstances, and the enquiry must be: what is it about the present case which warrants a departure from the general rule? That this remains the approach under r 681 and r 684 comes not only from the terms of the rules themselves but also from the recognised purposes for it. In Oshlack v Richmond River Council, McHugh J explained the basis for the usual order as to costs as follows:13 “The expression the “usual order as to costs” embodies the important principle that, subject to certain limited exceptions, a successful party in litigation is entitled to an award of costs in its favour. The principle is grounded in reasons of fairness and policy and operates whether the successful party is the plaintiff or the defendant. Costs are not awarded to punish an unsuccessful party. The primary purpose of an award of costs is to indemnify the successful party. If the litigation had not been brought, or defended, by the unsuccessful party, the successful party would not have incurred the expense which it did. As between the parties, fairness dictates that the unsuccessful party typically bears the liability for costs of the unsuccessful litigation. As a matter of policy, one beneficial by-product of this compensatory purpose may well be to instil in a party contemplating commencing, or defending, litigation a sober realisation of the potential financial expense involved. Large scale disregard of the principle of the usual order as to costs would inevitably lead to an increase in litigation with an increased, and often unnecessary, burden on the scarce resources of the publicly funded system of justice.” [8] Thus in Todrell Pty Ltd v Finch & Ors,14 Chesterman J approved this passage from the judgment of Einstein J in Mobile Innovations Ltd v Vodafone Pacific Ltd:15 9 [1953] 1 WLR 1481 at 1484; [1953] 2 All ER 1588 at 1590. 10 [2008] 2 Qd R 95 at [13]. 11 O 91 r 3 of the former Rules of the Supreme Court. 12 [1992] 2 Qd R 67 at 69-71. 13 (1998) 193 CLR 72 at 97. 14 [2008] 2 Qd R 95 at [21]. 15 [2003] NSWSC 423 at [4]. -- 5 of 13 -- 6 “Notwithstanding that the court has power to deprive a successful party of costs, or even order a successful party to pay costs, that is a course to be taken in unusual cases and with a degree of hesitancy.” I adhere to the view I expressed in Australand Corporation (Qld) Pty Ltd v Johnson& Ors16 that ordinarily the fact that a successful plaintiff fails on particular issues does not mean that the plaintiff should be deprived of some of its costs, although it may be appropriate to award costs of a particular question or part of a proceeding where that matter is definable and severable and has occupied a significant part of the trial.17 [9] I go then to the particular questions or parts of this litigation for which the defendants say that they should have the costs, or which warrant a reduction in the costs to be paid by them. The first is the plaintiffs’ claim, in both the design case and the inspection case, for an award of special damages for the temporary loss of use of the BWE. The plaintiffs failed entirely in this respect. The amount claimed for this alleged loss was originally $14,344,373 but during the trial it was reduced to $7,554,848. Accordingly, it was always a substantial part of the claim, and until fairly late in the case, it amounted to about a quarter of the claim. [10] The plaintiffs failed on this question for two reasons. The first was that they did not prove that they had deliberately increased the output of their fleet of trucks and shovels in response to the loss of the BWE. This is discussed in my judgment at [2008] QSC 141 at [906] through [918]. That issue involved an extensive, and no doubt expensive, factual enquiry within this trial. Each side had obviously paid much attention in its preparation to the question and counsel examined and cross-examined in detail as to which trucks or shovels were where on various days. I said that although there was some relevance in all of that evidence, it begged the question of why the truck and shovel activity was being increased.18 [11] The first of my reasons for rejecting the plaintiffs’ evidence on this question was that the work at the “Airstrip Pit” was unconnected with the collapse of the BWE, which was conceded only well into the trial. That substantially damaged the plaintiffs’ case that they had decided it was necessary to maintain the same rate of overburden removal despite the absence of the BWE. 19 Nevertheless, the defendants still had to mount a substantial response to the case that the plaintiffs had to some extent increased their output from trucks and shovels to meet the loss of use of the BWE. [12] The second reason why no special damages were recovered under this head was because of a more fundamental flaw in the plaintiffs’ case which appeared from facts which were undisputed. It was that the plaintiffs were claiming the extra cost of excavating ground which could not have been excavated by the BWE, but which the plaintiffs would have excavated, with these trucks and shovels, in any case. 20 16 [2007] QSC 128 at [17]. 17 Adopting the words of Brereton J in Waterman v Gerling Australia Insurance Co Pty Ltd (No. 2) [2005] NSWSC 1111 at [10]. 18 [2008] QSC 141 at [917]. 19 [2008] QSC 141 at [909]. 20 [2008] QSC 141 at [886] through [900]. -- 6 of 13 -- 7 [13] Some of the evidence adduced by the plaintiffs to support this claim was also relevant to a claim upon which they succeeded, which was for the (assumed) unavailability of the BWE in 2002-2003. I awarded $1,990,000 for this component. 21 However, that component did not involve anything like the substantial factual enquiry which was required by the claim for special damages for loss of use in the two years to 30 June 2002. I noted that some of the extensive evidence given by Mr Maiden in the plaintiffs’ case and by Mr Hyde Page in the defendants’ case, as to the scheduling of operations at the mine and the impact of various alternatives upon the rate of recovery of coal, had some relevance also for this (successful) component. However, I also held that the more reliable evidence as to this came from what BHP had actually done at the relevant location at the relevant time, which was a matter which was not and should never have been controversial.22 [14] The plaintiffs also argued that much of this evidence was relevant to their alternative claim for general damages for temporary loss of the use of the BWE. I do not accept that submission, because the general damages were quantified on a basis for which the evidence on special damages was of little (if any) relevance. Put another way, if the plaintiffs had not made the claim for special damages, there is no real prospect that there would have been anything like the same factual enquiry simply for the general damages claim. [15] There is more force in the plaintiffs’ argument that it would be undesirable for the parties to be subjected to the expense of a dispute, to be resolved by a costs assessor, as to how much was spent or should be attributed to this unsuccessful claim for special damages. Any such exercise of apportionment inevitably would be very approximate, one reason being that many of the relevant witnesses, particularly the plaintiffs’ forensic accountant, were also relevant for other parts of the case. It is desirable to avoid yet a further time consuming and expensive round of evidence and argument in this litigation. I am able to declare what percentage of the costs is attributable to this claim for special damages. 23 I have the advantage of having tried the case, although I was not a witness to its preparation. The fact that any apportionment in this respect would have to be by a broad approach does not mean that it should be avoided, if it is otherwise in the interests of justice that the result on this particular claim should have an impact upon the orders for costs. [16] In the circumstances, there is a strong basis for departing from the general rule so far as the costs of this claim for special damages are concerned. It is not that the claim simply failed, but that it was inevitably flawed quite apart from the outcome of the substantial factual contest which it produced. And it did occupy a significant part of the trial. In my conclusion some allowance for this should be made by reducing the costs otherwise recoverable by the plaintiffs. [17] The plaintiffs suggest that quantum issues occupied only 11 or so of the 92 days of trial and, of course, only some of that was attributable to this special damages claim. The defendants have had their solicitors undertake an apparently detailed analysis of the evidence from which they would suggest that the contribution from the quantum issues was relatively greater. Any such exercise is not merely arithmetical but involves some judgment and approximation. For example, much of the presently 21 [2008] QSC 141 at [782]-[786]. 22 [2008] QSC 141 at [788]. 23 r 684(2). -- 7 of 13 -- 8 relevant cross-examination of witnesses in the plaintiffs’ case was also generally directed towards discrediting their evidence, which was relevant in some respects to both liability and quantum, and as to quantum to both this special damages claim and to other claims. And there is the further matter that the parties undoubtedly incurred very substantial costs in the preparation of this part of the case, and that the total costs of this particular claim, as a proportion of the total costs of the litigation, may or may not correspond with the proportion of time spent on it at the hearing. So were I to read again the 6,789 pages of transcript for this purpose, the assessment would necessarily be inexact. To a considerable extent this apportionment exercise is a matter of impression. An apportionment of five per cent of the overall costs to this claim would reflect the fact that its contribution to the overall cost was substantial rather than minimal, and would broadly accord with my view of the extent to which this claim probably increased the length of the trial. On that basis, and upon the reasonable premise that the costs of each side on this question would have been about the same, it is just to reduce the costs otherwise recoverable by 10 per cent. [18] The next argument for the defendants is that the costs should be further reduced because the plaintiffs failed in their claim for the cost of the shovel and sizer and succeeded on their alternative and lesser claim for the cost of a repair of the BWE. The defendants point out that this alternative claim was introduced only shortly prior to the commencement of the trial. They also argue that the costs order should reflect the plaintiffs’ failure to establish that the cost of a repair would have been as high as the plaintiffs claimed. [19] Undoubtedly the claim upon the replacement basis, and the claim for a contingency allowance of 20 per cent on top of the alternative cost of a repair, each added some time to the trial and inevitably to its preparation. And there is the further matter that the claim for the 20 per cent contingency was largely based upon opinion evidence24 which I rejected. [20] However, this argument has less force than the previous one dealing with special damages for the temporary loss of the BWE. Essentially the difference is that the claim for damages upon the replacement basis, although ultimately unsuccessful, was fairly arguable. After all the plaintiffs had in fact responded to the loss of the BWE by spending the amount of the money which, broadly speaking, they sought to recover on the replacement claim. As to the fact that the plaintiffs were allowed a five per cent rather than a 20 per cent allowance for contingencies, this hardly demonstrates that the plaintiffs’ conduct of the case was “exceptional” in the relevant sense. Rather, it is simply an example of a claim for damages where an assessment, necessarily upon a hypothetical basis, has resulted in an award which was less than was sought. If plaintiffs were to be at risk of adverse costs consequences simply by unsuccessfully advancing arguable points, then in a great deal of litigation the orders for costs would be quite different and with many unjust outcomes. The general rule as to costs following the event should not be departed from simply because a plaintiff’s alternative case for a higher award is not accepted. In contrast to this matter, the claim for special damages for the temporary loss of the BWE had that fundamental flaw upon uncontroversial facts. 24 Of Mr Matz. -- 8 of 13 -- 9 [21] Next the defendants point to part of the inspection case where the plaintiffs pleaded, in the alternative, that the defendants owed and breached a duty of care defined as that to be reasonably expected of a competent structural engineer with expertise in the field of inspecting bucket wheel excavators. The plaintiffs led evidence from several experts to the effect that a competent structural engineer acting as the inspector would have known that the area at the top of the stiffeners had a particular weakness and accordingly would have paid particular attention to it. Part of this argument seemed to be that the exercise of reasonable care required Krupp to employ an inspector who was such a structural engineer. But in their final submissions at the trial, the plaintiffs did not press that case. They did not have to do so for reasons which appear in the judgment. As I have said, this was an alternative case. [22] The defendants complain that they had to bring several witnesses from Europe to counter this point. But it is far from clear that these witnesses were brought here only for that reason. In any case there was an arguable basis for the pleaded case that reasonable care demanded the employment of a competent structural engineer as the inspector. The fact that the plaintiffs did not have to ultimately press that argument, or that it might not have succeeded, does not mean that they should be subjected to an unfavourable costs order. [23] The defendants’ next complaint is in relation to the witness Mr Matz. The plaintiffs served five reports prepared by Mr Matz together with some 25 of his drafts. Only one of his five reports was tendered and, in substance, I did not accept that evidence. It seems that the other reports of Mr Matz, in total, consisted of more than 1,000 pages of material. It may be accepted that the defendants were put to significant expense in preparing their response to them. I do not know whether any of that evidence would have been probative. It may be that the plaintiffs simply made a forensic decision that they could rely upon other expert evidence of the same subject matter. The fact that they foreshadowed the tender of these reports, but did not tender them, does not inevitably lead a conclusion that the plaintiffs should bear the costs. Indeed, that would tend to discourage the discriminating approach to be expected of advocates. [24] At the hearing of these costs arguments, counsel for the defendants sought to tender these other reports by Mr Matz. I declined to accept that tender. It would not be an appropriate exercise for the court to receive such a vast amount of material and to hear argument as to what would have been its impact (if any) on the outcome of the trial. It may seem to an unsuccessful party to be unfair that it should be burdened with expenses which, with the benefit of hindsight, were avoidable. But the paramount consideration is that the expenses would not have been incurred by the plaintiffs but for the defendants’ resistance to their claim. [25] Lastly, the defendants point to the fact that one of the seven plaintiffs was entirely unsuccessful. From that basis alone, the defendants suggest, the plaintiffs’ costs ought to be reduced by one seventh. That submission cannot be accepted. The inclusion of the fourth plaintiff did not add significantly to the evidence at the trial. Nor is it likely to have added significantly to the costs of preparing for trial. I say this because each side seemed to commence the trial without having paid attention to whether the plaintiffs had several or joint causes of action and, in particular, whether the fourth plaintiff could recover anything. There was no specific plea by the defendants as to the fourth plaintiff’s lack of entitlement to sue. Within the -- 9 of 13 -- 10 extensive and detailed written submissions for the defendants, nothing was said about these matters. So on the plaintiffs’ side, the costs could not have been significantly increased by the inclusion of the fourth plaintiff and on the defendants’ side, there are unlikely to have been any costs from it. Accordingly, the inclusion of the fourth plaintiff provides no basis for denying the successful plaintiffs the costs which they had to incur, with or without the inclusion of the fourth plaintiff. [26] The successful plaintiffs seek costs in relation to some issues raised by the defendants, most of them relating to the contributory negligence case, on the indemnity basis. [27] In 2002 in Di Carlo v Dubois & Ors,25 White J noted the then “growing practice” of seeking costs on this basis.26 Undeniably that practice has continued to grow and it is still explained largely by what Sheppard J said in Colgate-Palmolive Company v Cussons Pty Limited27 was the notorious divergence between costs incurred and costs actually recovered upon the equivalent of the standard basis. Sheppard J there wrote:28 “The divergence arises in relation to litigation in most, if not all, courts. The problem is by no means peculiar to the Federal Court. To a successful party to litigation, the practice must seem extraordinary. The provisions of the Court’s Rules (which are not dissimilar from those of other courts) appear to intend a full indemnity, but this is not what is recovered. It is not profitable to explain the reason for the disparity. One would need to make an extensive study of the history of the matter before being satisfied that one understood the reasons why things have developed as they have. For present purposes it is enough to say that the position is as it is because members of the profession, both solicitors and counsel, and also professional witnesses, have refused to accept as a proper or sufficient guide to their costs and fees the provisions of scales of costs and charges provided for in schedules such as the Second Schedule to the Federal Court Rules. Taxing officers have been obliged to tax bills on the basis of the Rules and the Schedule. The fact that the scales themselves provide ranges of fees or charges for various items depending on degrees of difficulty, levels of responsibility and time involved, has not overcome the practical problem which exists.” [28] The usual measure of standard or party and party costs is defined by rules of court, as it is in UCPR r 702(2), as “all costs necessary or proper for the attainment of justice or for enforcing or defending the rights of the party whose costs are being assessed”.29 On the face of such a rule, any costs reasonably incurred ought to be recoverable. But as Sheppard J discussed, courts have long recognised that taxed costs are not the same as costs reasonably incurred. In some cases, courts have said that this divergence has a sound basis in policy. So in Cachia v Hanes,30 in a 25 [2002] QCA 225. 26 [2002] QCA 225 at [32]. 27 (1993) 46 FCR 225. 28 (1993) 46 FCR 225, 226-227. 29 In almost identical terms to the corresponding rule in the Federal Court considered by Sheppard J in Colgate-Palmolive Company v Cussons Pty Limited. 30 (1991) 23 NSWLR 304. -- 10 of 13 -- 11 passage set out by Sheppard J in Colgate-Palmolive Company v Cussons,31 Handley JA said:32 “Litigation is already very expensive. The limited indemnity provided to a successful represented litigant for expense incurred and time lost reflects a compromise between the interests of successful and unsuccessful litigants. It is also an important spur to settlement.” [29] Of course the impact of this difference between actual and recovered costs is far greater in larger complex litigation. The extent of that divergence in the present case makes this present question of more practical importance than many of the issues which were extensively investigated and argued at the trial. Nevertheless the principles relevant to the recovery of indemnity costs are well established and must be applied. They are found, for example, in the judgement of White J, with whom the other members of the court agreed, in Di Carlo v Dubois & Ors, where her Honour, applying Colgate Palmolive Company v Cusson, Fountain Selected Meats (Sales) Pty Ltd v International Produce Merchants Pty Ltd33 and Rosniac v Government Insurance Office,34 said that this divergence between actual and recovered costs “does not mean that it is open to an individual judge to award costs having regard to his or her own view as to the adequacy of party and party costs so fixed.” 35 [30] In Rosniak, Mason P36 said that the discretion to depart from the usual basis for costs is not confined to the situation of what Gummow J had described as the “ethically or morally delinquent party”, but he held that “nevertheless the court requires some evidence of unreasonable conduct, albeit that it need not rise as high as vexation.” 37 Chesterman J has said that he regards that test as inexact, preferring a criterion of “something irresponsible about the conduct of the losing party which exposed its opponent to costs which should, in fairness, be ordered on the indemnity basis.”38 Any difference between “unreasonableness” and “irresponsibility” is not significant in the present matter. What is clear is that an award of indemnity costs is exceptional, and that it is not to occur simply because the successful party will be out of pocket or because, by reference to the outcome, it can be seen that an argument should not have been advanced. [31] I go then to the particular arguments for indemnity costs. The first is the contention that many of the allegations of contributory negligence were bound to fail on the law or on the facts. An example of the former is the plea of contributory negligence as a defence to the claim for damages under s 82 of the Trade Practices Act 1974 (Cth). It was bound to fail because, as mentioned in the judgment,39 the causes of action accrued before the commencement of s 82(1B). I also held that contributory negligence could not avail Krupp in relation to the claim for breach of contract.40 However, neither of those points was significant for the costs overall. And the 31 (1993) 46 FCR 225, 227. 32 (1991) 23 NSWLR 304, 318. 33 (1988) 81 ALR 397. 34 (1997) 41 NSWLR 608. 35 [2002] QCA 225 at [36]. 36 (1997) 41 NSWLR 608, 616 citing Botany Municipal Council v Secretary, Department of the Arts, Sport, The Environment, Tourism and Territories (1992) 34 FCR 412, 415. 37 (1997) 41 NSWLR 608, 616. 38 Todrell Pty Ltd v Finch (No 2) [2008] 2 Qd R 95 at [4]. 39 [2008] QSC 141 at [476]. 40 [2008] QSC 141 at [479]. -- 11 of 13 -- 12 unavailability of contributory negligence for the contract case was not so straight forward as to be unarguable. Further, the plaintiffs pleaded causes of action in negligence in both the design and inspection cases. [32] The first of the allegations of contributory negligence which was said to have no foundation in fact is that in relation to manometers. The plaintiffs argue that “there was no shred of evidence adduced by the defendants” in support of a contention that there had been a deliberate interference with the settings on, or bridging out of, the manometers. They also point out that a witness called in the defendants’ case, Mr Grayson, said that he had seen no evidence of any interference with the safety devices or any electrical bridging. But there was more to Mr Grayson’s evidence about manometers, as I discussed.41 And contrary to the plaintiffs’ argument, there was some evidence which supported the defendants’ case in this respect, again as the judgment shows. The defendants sought to make out this point not by direct evidence but by inference from other facts, and their case was not unreasonable or irresponsible in the relevant sense. [33] The plaintiffs point to the argument that they had been negligent by walking the machine without its gear box. This was a particularly weak case for the defendants.42 But at least considered alone, it was not such a serious departure from the proper conduct of litigation as to warrant indemnity costs. [34] Next is the defendants’ case about teeth. Again this was a relatively very weak case but its major difficulty was that it depended upon the evidence of Dr Fleischhaker. The fact that a party fails on a particular issue because its witness is not believed would not ordinarily provide a basis for indemnity costs. [35] The plaintiffs complain about the case that the BWE was overworked or that in some other way, its manner of operation caused or contributed to its collapse. They complain about the related allegation of poor reporting systems and maintenance. Again, these were relatively weak contentions by the defendants, but that is not sufficient to warrant the order which is sought. [36] Lastly the plaintiffs complain of the assertion that Dr Fleischhaker was seconded to O&K Australia in a way in which the first defendant could not have been legally responsible in the design case. The defendants’ argument was not strong but there was an arguable point there. [37] The result is that I am not persuaded in any respect that costs should be awarded on the indemnity basis. [38] There is no argument by either side that there should be some differentiation between the defendants in making these orders for costs. Nor is there any argument that any reserved costs should be the subject of separate orders rather than being treated as part of the costs of the proceedings. Conclusion [39] The orders will be: 41 [2008] QSC 141 at [497], [498]. 42 [2008] QSC 141 at [481]-[483]. -- 12 of 13 -- 13 1. The defendants will pay to the first, second, third, fifth, sixth and seventh plaintiffs 90 per cent of their costs of the proceedings, including reserved costs. 2. There will be no order for costs between the fourth plaintiff and the defendants. -- 13 of 13 --