Bitannia Pty Ltd v Parkline Constructions Pty Ltd [2009] NSWCA 32 | Case summary

Bitannia Pty Ltd v Parkline Constructions Pty Ltd [2009] NSWCA 32 | Case summary | Zoe

We will copy your correspondence to Parkline to inform them that any future approvals or agreements with regard to the Ettalong Hotel project must be directed to yourselves for determination. 11 A copy of that letter and Mr Brown's letter was sent to Parkline. 12 On 15 February 2005, Parkline sent a facsimile to Mr Brown with the following message: Please find attached claim for retention release and variations as previously forwarded to S&S Quirk. 13 This facsimile showed that a copy had been sent to Quirk. 14 The claim attached to the facsimile was dated 14 February 2005 and it stated that it was made under the Building and Construction Industry Security of Payments Act 1999 (the Act) for an amount of $525,669.10. 15 In fact, the attached claim was not "as previously forwarded to" Quirk, being for a slightly greater amount and purporting to be a new payment claim; and neither it nor the covering facsimile were sent to Quirk. 16 No payment schedule was served within the time limited by the Act; and on 24 May 2005, Parkline sued the applicants for $525,669.10. 17 The applicants put on a defence and later an amended defence, denying that the document served on 15 February 2005 was a payment claim because Parkline was not entitled to progress payments, and alleging that the payment claim had not been made in good faith and that the proceedings were an abuse of process. 18 On 10 August 2005 the applicants commenced proceedings in the Supreme Court against Parkline claiming damages for breach of the building contract; and also against Quirk claiming damages, alleging inter alia that Parkline had served a payment claim dated 14 February 2005 on Quirk and that Quirk in breach of its duties to the applicants had failed to prepare and serve a payment schedule within the time limited by the Act. 19 On 2 November 2005, the District Court proceedings came before the primary judge. Mr Patetsos was cross-examined, and this evidence was given: MARGO: Q. Mr Patetsos, when you sent your claim to the defendants on 15 February 2005 you said in the covering letter, "Please find enclosed claim for retention release and variations as previously forwarded to S&S Quirk," do you remember that? A. That's correct.

Q. On you go, what were you saying? A. Solely that the standard fax coversheet that we had had both the client and S&S Quirk in various circumstances where we had copied both parties into the correspondence. In this instance it seems that we left S&S Quirk on the coversheet and it had just gone onto the coversheet of the claim and I can't remember whether I typed this coversheet, I certainly signed it but I can't remember whether I typed this coversheet or not or whether it was my secretary. But it had gone in by mistake to be copied by S&S Quirk because at the time we had been advised that S&S Quirk were no longer representing or we were not to have S&S Quirk as the client's representatives any further. The date, I think, to help Evan out I think was 22 or 23 January. 20 The evidence in the case was concluded on that day, and the proceedings were stood over to 30 November 2005 for submissions. 21 On 10 November 2005, there was a notice of motion filed by the applicants to re-open the case, and to file an amended defence and to put on a cross-claim relying on misleading conduct and seeking remedies under the Trade Practices Act 1974 (Cth). One paragraph of the proposed amended defence sought to rely on the matters arising under the Trade Practices Act referred to in the cross-claim as a defence. 22 This notice of motion was heard by the primary judge on 9 and 16 February 2006. Mr Brown's affidavit of 8 November 2005 was read, and it included the following evidence: 12. On or about 16 February 2005, I saw in my in-tray at 1 Lackey Street a facsimile dated 15 February 2005 from Mr Patetsos/ Parkline to me, a true copy of which is Annexure D to this affidavit ( the 15 February facsimile ). It had been received by facsimile at the premises of the Ettalong Hotel in Ettalong on 15 February 2005 and the manager on duty there had forwarded it to me by facsimile at the defendants' Summer Hill offices. The system in place at those offices at the time was for the Summer Hill office administrator, Tracey, to collect facsimiles from the facsimile machine and distribute them into the in-trays of the addressees. I assume that this occurred on that occasion as the document arrived by facsimile, was addressed to me, and I found it in my in-tray.

In relation to this issue, as well as to the other applications to re-open, I should say something very briefly about the exercise of discretion. While a cross-claim can be filed at any time up to and including the giving of judgment, there are discretionary factors to be taken into account. The first and most important of these is the hopelessness of the application to reopen the case. I am satisfied that the defendants' argument concerning good faith is misconceived and I have rejected the argument that s. 15(4) of the NSW Act should be struck out because of inconsistency. I should briefly note that an additional factor, although one of very little weight, is the lateness of the application. Notwithstanding the defendants' assertion that the defendants only became aware that S & S Quirk never received a copy of the payment claim after Mr Patetsos gave evidence that contrary to what the fax cover sheet said, the schedule had only been served on Mr Brown at the defendants' office and not on S & S Quirk. Bearing in mind that this particular progress claim did contain some new material, it is hard to see how Mr Brown's failure to check with S & S Quirk that the appropriate objection had been lodged was anything other than negligent, particularly given S & S Quirk's practice of reporting such matters to Mr Brown, which is what happened with the two prior claims that were rejected. I note Mr Brown's concessions in cross- examination to Mr Rudge SC in this regard. 25 The primary judge then dismissed the applicant's notice of motion and gave judgment for Parkline for $525,699.10. 26 The applicants appealed to the Court of Appeal, and the appeal was allowed, not on the basis that s 15(4) of the Act was invalid and that a cross-claim could be brought, but on the basis that the defence based on the Trade Practices Act could be raised: Bitannia Pty Limited v Parkline Constructions Pty Limited [2006] NSWCA 238; (2006) 67 NSWLR 9. 27 On 12 September 2006, the applicants filed a further amended defence alleging misleading conduct in relation to the service of the payment claim and relying on the Trade Practices Act. This defence, in addition to alleging at length all the material relied on in relation to the Trade Practices Act, also contained an allegation that the proceedings were an abuse of process and should be dismissed or permanently stayed. 28 The matter then proceeded towards a hearing, until 30 January 2007 when the new solicitors acting for Parkline proposed to discontinue the District Court proceedings on a basis set out in a letter of that date. 29 In their reply to that letter dated 13 February 2007, the applicants' solicitors sought costs in relation to the District Court proceedings, which they said totalled $299,782.15, but which they were prepared to compromise at $179,568.09. 30 After further correspondence, Parkline brought a notice of motion to discontinue the District Court proceedings and seeking a special costs order; and that notice of motion was heard by the primary judge on 12 September 2007, giving rise to the orders noted above.

It was made clear to me that the Court of Appeal had some other evidence before it (unknown to me at first instance) which may have been of assistance to the Court on the subject of whether or not the amendment was hopeless. In the course of submissions, Mr Margo referred to a witness who claimed Mr Patetsos had boasted to him of having sent the payment claim in such a way as to trick Mr Brown. In the course of endeavouring to ascertain why the hearing in the District Court would take four days, I enquired about witnesses for the defendants and in particular as to whether this person would be a witness in the hearing. Mr Margo SC told me that this witness might not come up to proof and, when the availability of s 38 of the Evidence Act 1995 (NSW) for such witnesses was discussed, then indicated there might not be a statement from this witness. On applications such as these, the general principle is that the court must not have regard to the merits of the case. However in the present case, I exercised my discretion not to allow the amendment because, having heard Mr Brown cross-examined, I thought the claim hopeless, but my finding that the amendment is hopeless has been set aside by the Court of Appeal. Clearly the Court of Appeal must have had evidence before it indicating that the defendants' claim was not hopeless. It is not apparent to me from Basten JA's judgment what that evidence is. However, I think it only fair to the defendants to assume that their case is far from hopeless, and accordingly I propose to disregard submissions by the plaintiff that the defendants' claim has an "air of unreality". 34 She referred to the applicants' argument that they had a valid abuse of process defence, and held that the Court of Appeal in its previous decision had not overturned her previous rejection of that defence. She noted that the amendment would have required a lengthy further hearing, and continued: 42. The defendants submit that it was the plaintiff's misleading and deceptive conduct which caused the delay (written submissions paragraph 38). This effectively asks me to make a finding of fact that the plaintiff did in fact mislead the defendants. The defendants had been authorising payment claims on a monthly basis for some time; they had rejected the last two payments; Mr Brown knew that there was likely to be another payment claim in the pipeline. It is clear from the Court of Appeal's judgment setting aside my exercise of discretion to permit this new defence that the Court of Appeal took a view on this evidence contrary to mine.

Errors by primary judge 38 Extensive and elaborate written submissions have been provided by both sides and it is not necessary to set them out. 39 In my opinion it is clear that the primary judge has made errors which vitiate her exercise of discretion. 40 First, there is her statement in par [32] that the claim by the applicants that they first became aware that the payment claim had not been served on Quirk when Mr Patetsos gave evidence was "not supported by any evidence". In fact, this claim was directly supported by par 16 of Mr Brown's affidavit of 8 November 2005. It was submitted by Mr Miller, counsel for Parkline, that Mr Brown was not an officer or employee of either of the applicants, and could not speak for them. However, Mr Brown was the person administering the contract on behalf of the applicants, and there was no suggestion in the cross-examination of Mr Brown that there was anyone else connected with the applicants who might have known of the matter at some earlier time. In these circumstances, Mr Miller's contention has little force; and in any event, it was too late to raise it for the first time in February 2006. 41 Second, there is the primary judge's statement in par [33] that there was no secret that Mr Patetsos did not forward a copy of the payment claim to Quirk, or that Quirk denied receiving it. Mr Brown had given evidence that he did not know this, and the applicants' statement of claim filed on 10 August 2005 asserted that the payment claim had been forwarded to Quirk; and there was no evidence before the primary judge that Quirk had put on any defence to this statement of claim or had otherwise conveyed to the applicants that they had not received the payment claim (or that Parkline had conveyed this to the claimants). Although it would not have been appropriate for the primary judge to make a final decision that Mr Brown's evidence was to be accepted, equally it would not have been appropriate for her to reject this evidence, and there was no reasonable basis on which she could do so. 42 Third, there is the primary judge's assertion in par [33] that Mr Patetsos understood from Quirk's letter to him of 28 January 2005 that Quirk had ceased to act as the applicants' representative on the project. There is in fact nothing in the correspondence of 28 January 2005 that asserted this: what was asserted was that "any decisions" concerning the project must be referred to Waugh "for approval PRIOR TO agreement between" Quirk and Parkline and/or any subcontractor. Mr Patetsos asserted that his understanding was that Quirk had ceased to act as the applicants' representative; but that assertion was in fact inconsistent with the correspondence (the correspondence still contemplated agreement between Quirk and Parkline after approval by Waugh) and was a matter that would no doubt have been explored in a final hearing. 43 Fourth, there is her assertion in par [58] that Parkline acted reasonably in commencing the proceedings. This was a judgment that could not be made without a final hearing. There was an unresolved question whether the applicants' failure to provide a payment schedule had been brought about by Parkline's misleading conduct. It was in fact clear that Parkline's communication of 15 February 2005 was objectively false in at least two substantial respects: in asserting that a copy had been sent to Quirk, when it had not; and in asserting that the "attached claim for retention release and variations" was "as previously forwarded to S & S Quirk", when it was not but was a new and different payment claim intended to be relied on as such. Thus the communication had a clear potential to be misleading, and Mr Brown had given evidence that he had been misled. Mr Patetsos had given an explanation for not sending the documents to Quirk which, as noted above, was not in accord with the communication sent to him. The question whether there had been misleading conduct and whether, if there had been, Parkline had a satisfactory explanation for it, and thus whether Parkline acted reasonably in commencing the proceedings, could only be resolved at a final hearing. 44 In my opinion, although the primary judge said she assumed the applicants' case was "far from hopeless", these errors materially affected her decision. 45 In addition to those four errors, there are also indications of further errors in pars [58] and [59] of the primary judge's judgment. 46 The views expressed in the last three sentences of par [58] indicate misconception. The primary judge originally completed the case in one day, because a defence under the Trade Practices Act, the factual basis of which was (according to the evidence) unknown to the applicants, had not yet been raised. It was that defence, rather than the single paragraph suggesting abuse of process, that required a longer hearing; and that defence could not reasonably be considered as introducing unnecessary complexity. 47 The assertion in par [59] that the case was a classic example of the circumstances in which costs should be ordered against the party making the late amendment begs the question, what costs? Usually, the costs in question would extend to the costs of the application itself, so long as the opposition to it was not unreasonable and did not add to costs by raising issues apart from lateness on which the opposition failed, and also any costs wasted because of the late application. The former could include the costs of the hearing on 9 and/or 16 February 2006; and the latter would probably include the costs of the hearing on 2 November 2005. However, otherwise the relevant costs would not include the costs incurred up to 10 November 2005. 48 A further error in par [59] is that Parkline did not have an accrued right to those costs, in the absence of Parkline's decision to discontinue. A possible result of the final hearing was that Parkline was guilty of misleading conduct, that this was deliberate, and that the applicants did not find out about this until 2 November 2005; in which case Parkline's dishonesty would carry more weight than any possible lack of diligence by the applicants in not finding out about the deception, and Parkline would probably have been ordered to pay all costs. 49 Parkline's decision to discontinue deprived the applicants of the possibility of achieving this result; and this, together with the effect of UCPR 42.19 (set out below) and the relevant authorities, does provide reason for denying the costs in question to Parkline. 50 Having regard to these errors and to the amount of costs suggested to be involved, in my opinion it was appropriate to grant leave to appeal, and for this Court to exercise the discretion as to costs afresh.

(2) Unless the court orders otherwise or the notice referred to in rule 12.1 (2) otherwise provides, the plaintiff must pay such of the defendant's costs as, at the date on which the notice of discontinuance was filed, had been incurred by the defendant in relation to each claim in respect of which the proceedings have been discontinued. 53 It has been said that UCPR 42.19 does not give rise to a presumption that costs will be ordered against the discontinuing party: Fordyce v Fordham [2006] NSWCA 274; (2006) 67 NSWLR 497; Foukkare v Angreb Pty Limited [2006] NSWCA 335 at [65]. 54 However, like UCPR 42.20, UCPR 42.19 states what the order for costs is to be unless there is a discretionary decision to order otherwise: Australiawide Airlines Limited v Aspirion Pty Limited [2006] NSWCA 365 at [53]. This means there is an onus on the discontinuing party to make an application in respect of costs if it does not propose to pay the costs of the other parties: Foukkare at [65]. In my opinion, it also means that there must be "some sound positive ground or good reason for departing from the ordinary course": Australiawide Airlines at [54]. 55 UCPR 42.19 would, unless the Court otherwise ordered, give the applicants such of their costs as they had incurred "in relation to each claim in respect of which the proceedings have been discontinued". The applicants had incurred the costs of the hearing of 2 November 2005 and the costs of the late amendment application "in relation to" Parkline's discontinued claim, so those costs would be included as costs to be paid by Parkline to the applicants unless the Court otherwise ordered. 56 In my opinion, it is not appropriate to make a separate determination of costs to which either Parkline or the applicants would be entitled if Parkline were not discontinuing, and then to consider if that should be changed because Parkline is discontinuing. Discontinuance both precludes full consideration of matters that could be relevant to previously undecided costs, and also provides a framework in which all undecided costs questions should be considered. 57 As mentioned earlier, there should not be a finding that Parkline acted reasonably in commencing proceedings: that was a question that could not be determined until the final hearing, which is precluded by the discontinuance. I accept that it would be wrong to treat this case as one in which the discontinuance is tantamount to capitulation by Parkline: the lapse of time due to the protraction of the District Court proceedings, and the progress towards resolution of the Supreme Court proceedings, did take away a substantial part, at least, of the utility to Parkline of the District Court proceedings, although in my opinion not all of it. Further, there is force in the consideration that it is undesirable that serious issues of credit concerning the same transaction be determined by different courts. In my opinion however, these considerations on their own would not justify departure from the ordinary course. They do not alter the fact that the applicants were brought to court and caused to incur costs by proceedings which they claim are unjustified, and the applicants are being denied the chance to make good this claim by Parkline's decision to discontinue. 58 Matters which could possibly justify departure from the ordinary course are the late application for amendment, and the attempt after the earlier Court of Appeal decision to rely on matters going beyond the Trade Practices Act defence endorsed by that decision. 59 As regards the latter, in my opinion it did not have any substantial impact on costs, because it did not introduce any factual matter for consideration that was not already relevant to the Trade Practices Act defence. 60 As regards the former, there was, as mentioned earlier, evidence that the applicants did not know that the payment claim had not been sent to Quirk until 2 November 2005. However, there was no satisfactory evidence explaining how it was that they did not know this. One would have thought that the applicants, acting reasonably in their own interests, would at least in May 2005 have asked Quirk why Quirk did not provide a payment schedule; and would prior to bringing proceedings against Quirk in August 2005 have communicated to Quirk the allegation that, having received the payment claim, Quirk failed to provide a payment schedule. In either case, one would expect that the applicants would have been informed by Quirk that it had not received the payment claim. 61 In the absence of evidence going to these matters, in my opinion it is very difficult for the Court to come to the conclusion that the applicants had offered a full and satisfactory explanation for the lateness of the application, even if it were to be accepted on a final basis that Mr Brown, and the applicants, did not in fact know that the payment claim had not been sent to Quirk until 2 November 2005. 62 In my opinion, those considerations would justify exclusion from a costs order in favour of the applicants of the largely wasted costs of the hearing of 2 November 2005. In my opinion, the circumstance that it was the decision of Parkline to discontinue the proceedings, and thus prevent final determination of issues, means that it would not be appropriate to make an order in favour of Parkline in respect of those costs. 63 As regards the costs of the late application itself, it seems to me that, even if the application to amend had been made much earlier, as may have been the case if the applicants had been exercising reasonable diligence, there is every likelihood that there would have been the same opposition and the same incurring of costs. In those circumstances, I would not deprive the applicants of the costs of the application itself. In all other respects, in my opinion, there should be an order that Parkline pay the applicants' costs of the proceedings. The question whether those costs will be assessed in the very large sum suggested by the applicants is not a matter for decision by this Court.

Conclusion 64 For those reasons, I propose the following orders: (1) Appeal allowed. (2) Orders 2 to 5 below set aside. (3) In lieu thereof, order that Parkline pay the applicants' costs of the proceedings not dealt with by any previous costs order, excluding the costs of the hearing on 2 November 2005. (4) Order that Parkline pay the applicants' costs of the leave application and the appeal, and have a certificate of the Suitors' Fund Act 1951 if otherwise eligible. 65 TOBIAS JA: I agree with Hodgson JA. 66 BASTEN JA: As explained by Hodgson JA, this application concerns the costs of proceedings brought in the District Court seeking payment of an amount under the Building and Construction Industry Security of Payment Act 1999 (NSW). Following an appeal to this Court, which permitted the defendant in the District Court to resist a summary judgment on the basis of misleading and deceptive conduct by the plaintiff in the service of the relevant payment claim, the plaintiff discontinued proceedings in the District Court. The question is whether it should have to pay the costs, in whole or in part, of those proceedings. 67 In order to answer that question, the starting point is r 42.19 of the Uniform Civil Procedure Rules 2005 (NSW) ("UCPR"), the terms of which are set out at [52] above. There is a precondition to the operation of the rule, namely, that proceedings are discontinued by a plaintiff as referred to in r 12.1, which provides for discontinuance by filing a notice of discontinuance either with the consent of the other party or with leave of the Court. The filing of such a notice is a precondition to the engagement of the costs consequence provided by r 42.19(2). That consequence is that, subject to two exceptions, "the plaintiff must pay … the defendant's costs as, at the date on which the notice of discontinuance was filed, had been incurred by the defendant …". The first exception arises where discontinuance is by consent, but the consent of the defendant is given on terms which vary the cost consequences. The second exception is where the court "orders otherwise". 68 If the plaintiff is unable to obtain consent to a different costs order, but intends to discontinue in any event, the plaintiff has two options: either it can accept an unconditional consent and seek by motion some other order with respect to costs, or it can file a notice of motion seeking leave to discontinue and seek an alternative costs order in that motion. Which course is adopted may depend upon whether it is thought to be better to file the notice of discontinuance, thereby stopping the accrual of costs which will be payable automatically, absent an alternative order, or to allow costs to accrue for the purpose of the leave application on the basis that they will be dealt with by the court in due course in any event. In the present case, the plaintiff appears to have delayed on the basis that discontinuing by consent might be taken as some degree of acceptance of the default consequences for costs under the rule. That fear, however, appears to be groundless as a matter of principle. 69 The substantial issue in dispute is the correct approach of the Court in considering whether to make some different order as to costs, thus varying the consequence prescribed by the rule. That is a question which has been considered by the courts on a number of occasions. 70 The first proposition, which should be uncontroversial, is that the discontinuing plaintiff must be the moving party on an application for an alternative costs order. If it is necessary to establish a factual basis for such an order, the plaintiff will bear the onus of proving the relevant facts. Similarly, if it is necessary to draw particular inferences from primary facts, the plaintiff will also bear that burden. Finally, the plaintiff will bear the burden of persuading the court that some other order is appropriate. 71 A significant fact underlying each notice of discontinuance will be that the party which commenced the proceedings has abandoned them, though without prejudice to its entitlement, such as it may be, to claim the same relief in fresh proceedings: r 12.3. 72 One question raised in these proceedings is the relevance of the default provision with respect to the exercise of the discretion to otherwise order. In Fordyce v Fordham [2006] NSWCA 274; 67 NSWLR 497, McColl JA (Beazley JA agreeing) concluded that the "default orders do not create a presumption" that the plaintiff ought to pay the costs of the proceedings: at [84]. Her Honour also indicated that the default order is "a relevant, but not determinative, consideration". 73 The use of the term "presumption" in this context is unclear and was properly rejected. In some circumstances, a presumption may do no more than indicate on which party lies the onus of proof of primary facts. In other cases it will supply evidence of the fact presumed: see McCormack v Federal Commissioner of Taxation [1979] HCA 18; 143 CLR 284 at 314 (Jacobs J). In other cases again, clearly not relevant to the present circumstance, it may be a way of stating a rule of law, as with respect to the capacity of a young child to form a relevant criminal intent. In other circumstances, the burden of persuasion may be expressed in terms of a presumption. For example, in Australian Coal & Shale Employees' Federation v The Commonwealth [1953] HCA 25; 94 CLR 621 at 627, Kitto J expressed the principle limiting appellate review of discretionary judgments in terms that "there is a strong presumption in favour of the correctness of the decision appealed from, and that that decision should therefore be affirmed unless the court of appeal is satisfied that it is clearly wrong". This range of meanings undoubtedly renders adoption of such terminology undesirable. 74 However, it is less clear what was intended in Fordyce by stating that the default order constituted a material consideration in exercise of the discretion to otherwise order. No doubt it is true to say that the default order is relevant in the sense that it identifies that from which the court is invited to depart. Beyond that, the existence of the default consequence is not itself helpful in deciding whether to depart from it. Rather, it is the underlying reason for the default position with respect to costs that may bear upon the exercise of the discretion. A party which seeks to discontinue must generally, in a relevant sense with respect to costs, be treated as an unsuccessful party. The general costs rule set out in s 98 of the Civil Procedure Act 2005 (NSW) does not identify the limits of the court's discretion with respect to costs. The most important limitation for present purposes is the requirement that, again subject to the court otherwise ordering, costs should follow the event: see r 42.1. If that rule were to be applied, absent persuasion that the court should otherwise order, the plaintiff would be required to pay the costs of discontinuance. It seems likely that it is consistency with that general principle which underlies the default consequence provided in r 42.19. If that rule has application with respect to a discontinuance (and no reason was proffered as to why it should not) the discretion to make a costs order under r 42.19 will be confined by that general principle. In that respect, it may be misleading to describe the discretion under r 42.19 as "unconfined": see Fordyce at [87]. In some cases (though not necessarily all) discontinuance will involve the termination of proceedings without the court knowing what the result would have been had they been determined on the merits. In one sense, the existence of a hearing on the merits may be largely irrelevant, just as the actual result of a hearing on the merits will not be affected by the fact that the proceedings might have been run differently and might then have achieved a different result. 75 There are, nevertheless, circumstances in which it is entirely appropriate for the court, by order, to depart from the consequence provided by the rule. For example, discontinuance may result from the plaintiff obtaining a favourable result in other proceedings, in circumstances where it had not been unreasonable to commence the discontinued proceedings. Such cases frequently arose in challenges to decisions made under the Migration Act 1958 (Cth), when the scope for judicial review in the Federal Court was limited and it was commonplace for applicants to commence proceedings in both the Federal Court and in the original jurisdiction of the High Court. 76 Another example may arise where the unsuccessful plaintiff has been induced to commence proceedings by the unreasonable conduct of the defendant: see Ritter v Godfrey [1920] 2 KB 47. Indeed, any of the circumstances which might deprive a successful party of its costs after a contested hearing will apply in relation to a discontinuance. 77 Even if it be otherwise appropriate to allow the defendant its costs of discontinued proceedings, there may be specific issues upon which the defendant has failed and should either pay, or not recover costs. This principle applies in the present case. As explained by Hodgson JA, the belated reliance by the defendant upon a claim under the Trade Practices Act 1974 (Cth), the availability of which was affirmed by this Court on the first appeal, involved unnecessary expense which the plaintiff should not be required to pay. 78 This approach is not entirely consistent with that outlined in Re Minister for Immigration and Ethnic Affairs; Ex parte Lai Qin [1997] HCA 6; 186 CLR 622 at 624-625, where McHugh J concluded that where "both parties have acted reasonably in commencing and defending the proceedings and the conduct of the parties continued to be reasonable until the litigation was settled or its further prosecution became futile, the proper exercise of the cost discretion will usually mean that the court will make no order as to the cost of the proceedings". However, the rule pursuant to which the applicant sought costs in the High Court conferred an open discretion: see High Court Rules 1952 (Cth), O 71, r 39, set out at 623. Further, his Honour held that where there had been no hearing on the merits, "a court is necessarily deprived of the factor that usually determines whether or how it will make a costs order": at 624. UCPR rr 42.1 and 42.19 indicate that a different approach may properly be taken by this Court in respect of both issues upon which his Honour relied: see also Australiawide Airlines Ltd v Aspirion Pty Ltd [2006] NSWCA 365 at [64]. 79 In some circumstances it may be argued that a discontinuance does not involve a surrender or abandonment by the plaintiff, but recognition that "some supervening event" has militated against success, rendered the proceedings futile, or wholly removed the plaintiff's cause of action: see One.Tel Ltd v Commissioner of Taxation [2000] FCA 270; 101 FCR 548 at 553 (Burchett J); Edwards Madigan Torzillo Briggs Pty Ltd v Stack [2003] NSWCA 302 at [5] (Davies AJA, Mason P and Meagher JA agreeing); Australiawide Airlines at [50]-[52] (Bryson JA, McColl JA agreeing). 80 There may be cases in which the distinction sought to be drawn in One.Tel Ltd is of assistance: however, neither category can be precisely defined, nor is the boundary between them clear. For example, in Newcastle Wallsend Coal Co Pty Ltd v Industrial Relations Commission of NSW [2006] NSWCA 129; 153 IR 386 discontinuance could be explained by reference to a legislative amendment which removed the applicant's hopes of success. Amending legislation may readily be characterised as a supervening event, but in Newcastle Wallsend, a further question arose as to whether discontinuance in fact flowed from reliance upon the amending legislation, or from an earlier decision of the Court which indicated that the applicant would be unsuccessful if it pursued its claim. In the present claim, it could be said that the applicant's success on the first appeal in this Court may have rendered the summary proceedings available under the statute of limited benefit to the respondent, being a benefit which was further diminished by the effluxion of time and the likelihood that an essentially interlocutory remedy would be overtaken by a final decision with respect to the issues in dispute. 81 As has been noted on more than one occasion, the variety of relevant factors renders it difficult to reduce the exercise of discretion by characterisation of the reason for discontinuance: see, eg, O'Neill v Mann [2000] FCA 1680 at [13] (Finn J). There is also a risk that the subjective motivations of the plaintiff in discontinuing may be put forward as a basis for some other order. Except to the extent that such views may have been put before the defendant, for example as a basis for settlement, and be established as such on the evidence, subjective considerations of one party will generally be immaterial, so that the discretion will be exercised on the basis of the objective circumstances established on the evidence. 82 Bearing these considerations in mind, I agree with the reasons of Hodgson JA and with the orders his Honour has proposed. **********

Bitannia Pty Ltd v Parkline Constructions Pty Ltd

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Judgment (115 paragraphs)

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Legislation Cited (7)

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Cited By (50)