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.
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