XY v UV [No 2][2024] QSC 283

SUPREME COURT OF QUEENSLAND

1. [1]
   By its originating application dated 18 October 2024, the applicant sought an order that it be relieved from producing documents, to either the arbitrator or the respondent, in the pending arbitration between the parties.  On 25 October 2024, the respondent filed an application seeking that the proceeding be permanently stayed.
2. [2]
   These applications raised two issues for determination:

   1. whether s 5 of the Commercial Arbitration Act 2013 (Qld) (CAA), properly construed, has expressly or impliedly displaced the court’s inherent jurisdiction to determine the applicant’s claims to parliamentary privilege or public interest immunity in circumstances where those claims are raised in an arbitration conducted pursuant to the CAA;
   2. if the court’s jurisdiction has not been displaced, whether the court should exercise that jurisdiction to determine the applicant’s claims or, as the respondent argued, otherwise dismiss or stay the proceeding.
3. [3]
   On 1 November 2024, I gave judgment dismissing the originating application.  The basis for that decision was that, although I concluded that s 5 of the CAA has not displaced the inherent jurisdiction of the court to determine the applicant’s claims, I did not consider it appropriate to exercise the discretion to grant the relief sought by the applicant in the circumstances of this case.
4. [4]
   The parties have now filed written submissions on costs.  The respondent seeks an order that the applicant pay its costs of the proceeding.  The applicant submits that there should be no order for costs in circumstances where each party succeeded on one of the two principal issues.

Principles

5. [5]
   In Courtney v Chalfen,^[1] the Court of Appeal summarised the relevant principles as follows:

3. “[4]
   The general rule is that costs follow the event and that should only be departed upon in the event of special or exceptional circumstances.  The underlying rationale of that approach is that costs are not awarded to punish an unsuccessful party, but as a means of indemnifying the successful party. 

3. [5]
   This Court has endorsed the principles that: (i) ordinarily costs follow the event; (ii) costs can be awarded under r 684 UCPR on discrete issues if they are definable and severable and they occupied a substantial proportion of the trial or hearing; (iii) there must be special or exceptional circumstances to warrant depriving a successful party of its costs; and (iv) the mere fact that the successful party has been unsuccessful on some issues will ordinarily not be sufficient to do so.”

6. [6]
   The applicant relies upon the principle that one circumstance in which it might be appropriate to award costs of a particular question or part of a proceeding is where that matter is definable and severable and has occupied a significant part of the proceeding.  It submits, and I accept, that significant time was spent during the hearing on the question of the court’s jurisdiction whereas the question of the appropriate exercise of the court’s discretion took up comparatively little time.  It refers to the observation by Sofronoff P in Speets Investments Pty Ltd v Bencol Pty Ltd (No 2),^[2] concerning the court’s ability to net-off the costs of issues determined in different directions to reflect fairly the parties’ comparative success or failure in the outcome that was obtained. 
7. [7]
   In circumstances where the respondent failed on the jurisdiction issue, the applicant submits that each party bearing its own costs would most appropriately recognise the parties’ mixed success on the two issues in dispute.
8. [8]
   I do not accept that submission.  Although the respondent did not succeed on both issues in dispute, it was successful in having the applicant’s proceeding dismissed.  In Todrell Pty Ltd v Finch,^[3] Chesterman J (as his Honour was then) observed that the weight of authority is against depriving a successful defendant even where it has raised unsuccessful defences, although there may be exceptional cases where the defendant’s conduct makes it appropriate that it should not be awarded its costs.
9. [9]
   I am not persuaded that this is such an exceptional case.  As the respondent submits, the applicant does not suggest that it acted unreasonably in arguing that the court lacked jurisdiction to grant the relief sought by the applicant.  The oral argument took less than half a day.  If argument had been restricted to the question of the exercise of discretion, it would still have been necessary for the parties to address matters concerning the operation of, and duties imposed by, the CAA which, in the way the matter was argued, were raised in arguing the jurisdiction issue.  Put another way, I do not consider that the respondent’s conduct in raising the jurisdiction issue added unduly to the length of the hearing.  In my view, an order which deprives the respondent of its costs would not fairly reflect the outcome of the proceeding. 
10. [10]
    For these reasons, I have concluded that the ordinary rule that costs follow the event should apply in this case.
11. [11]
    I order that the applicant pay the respondent’s costs of and incidental to the proceeding to be assessed on the standard basis if not agreed.