Cannon v Cannon

Supreme Court of NSW|2007-02-06|Before: Barrett J, Beazley JA, Hill J

CATCHWORDS : PROCEDURE - costs - where no determination on the merits - no matter of principle

Edwards Madigan Torzillo Briggs Pty Ltd v Stack [2003] NSWCA 302 CASES CITED : Fordyce v Fordham [2006] NSWCA 274 Foukkare v Angreb Pty Ltd [2006] NSWCA 335 Newcastle Wallsend Coal Co Pty Ltd v Industrial Relations Commission of NSW [2006] NSWCA 129

COUNSEL : Mr I.D. Faulkner SC - Plaintiff Mr B.M. Antcliffe - Defendant

SOLICITORS : Warren McKeon Dickson - Plaintiff Callachor & Helby - Defendant

IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION

6807/04 BARRY GEORGE CANNON v RAYMOND OWEN CANNON JUDGMENT ON COSTS 1 Orders disposing of the substantive claims in these proceedings were made by consent on 28 November 2006. The orders were, in essence, that the defendant grant and execute the lease sought by the plaintiff; that a caveat lodged by the plaintiff continue in force to protect the plaintiff's interest as lessee; and that the plaintiff do everything necessary to cause a parcel of land known as "Tergene" to be transferred to the defendant. The first two orders were made upon the plaintiff's summons and statement of claim. The third order was made upon the defendant's amended cross-claim. 2 While the parties were eventually able to agree on these substantive outcomes, they were not able to agree on the matter of costs. The plaintiff says that the defendant should pay the plaintiff's costs of the claim and that the costs of the defendant (cross-claimant) incurred solely on the amended cross-claim should be paid by the plaintiff (cross-defendant) in the fixed sum of $200 plus GST. The defendant's position is that the parties should bear their own costs of both the claim and the cross-claim and that there should accordingly be no order as to costs. 3 The plaintiff's principal contentions are that he obtained, upon his claim, the relief he sought and that, on the amended cross-claim, he consented to the grant of the alternative relief sought by the amendment as soon as the amendment was effected. 4 The notion that costs should follow the "event" - embraced by the plaintiff in the first of these contentions - is, in the circumstances, too simplistic. There has been no "event", in the sense of a decision by the court between competing contentions of the parties. There has been no hearing on the merits, with the result that regard must be had to approaches most recently discussed by the Court of Appeal in Foukkare v Angreb Pty Ltd [2006] NSWCA 335 (28 November 2006), Fordyce v Fordham [2006] NSWCA 274 (27 October 2006) and Newcastle Wallsend Coal Co Pty Ltd v Industrial Relations Commission of NSW [2006] NSWCA 129 (30 May 2006). I quote paragraphs [66] to [68] of the judgment of Beazley JA in the Foukkare case: "66 In Australian Securities Commission v Aust-Home Investments Limited (1993) 44 FCR 194 Hill J summarised the principles that have emerged from the case law as to how the Court should approach the exercise of discretion in respect of costs when there has been no hearing on the merits. He said (at 201): '(1) Where neither party desires to proceed with litigation the Court should be ready to facilitate the conclusion of the proceedings by making a cost order … (2) It will rarely, if ever, be appropriate, where there has been no trial on the merits, for a Court determining how the costs of the proceeding should be borne to endeavour to determine for itself the case on the merits or, as it might be put, to determine the outcome of a hypothetical trial … This will particularly be the case where a trial on the merits would involve complex factual matters where credit could be an issue. (3) In determining the question of costs it would be appropriate, however, for the Court to determine whether the applicant acted reasonably in commencing the proceedings and whether the respondent acted reasonably in defending them … (4) In a particular case it might be appropriate for the Court in its discretion to consider the conduct of a respondent prior to the commencement of the proceedings where such conduct may have precipitated the litigation … (5) Where the proceedings terminate after interlocutory relief has been granted, the Court may take into account the fact that interlocutory relief has been granted …' 67 The same question was considered in Re the Minister for Immigration and Ethnic Affairs of the Commonwealth of Australia; ex parte Lai Qin (1997) 186 CLR 622. McHugh J said at 624 -625: 'In an appropriate case, a court will make an order for costs even when there has been no hearing on the merits and the moving party no longer wishes to proceed with the action. The court cannot try a hypothetical action between the parties. To do so would burden the parties with the costs of a litigated action which by settlement or extra-curial action they had avoided. In some cases, however, the court may be able to conclude that one of the parties has acted so unreasonably that the other party should obtain the costs of the action. In administrative law matters, for example, it may appear that the defendant has acted unreasonably in exercising or refusing to exercise a power and that the plaintiff had no reasonable alternative but to commence a litigation. Thus, for example, in R v Gold Coast City Council; Ex parte Raysun Pty Ltd [1971] QWN 13, the Full Court of the Supreme Court of Queensland gave a prosecutor seeking mandamus the costs of the proceedings up to the date when the respondent Council notified the prosecutor that it would give the prosecutor the relief that it sought. The Full Court said that the prosecutor had reasonable ground for complaint in respect of the attitude taken by the respondent in failing to consider the application by the prosecutor for approval of road and drainage plans.' (Footnotes omitted)

68 The principles discussed in these cases apply where a court is asked to make an order under UCPR 42.19. This was recognised in Fordyce v Fordham , where McColl JA (Beazley and Santow JJA agreeing) said, after pointing out the default orders provided for under the rules governing discontinuance (see UCPR 42.19): '84 [ UCPR 42.19 is] a relevant, but not determinative, consideration. Other relevant considerations were, as the primary judge concluded, usefully gathered in Lai Qin and Australian Security Commission v Aust-Home Investments Ltd & Ors (1993) 44 FCR 194, notwithstanding, as the discussion below reveals, that they were decided in a different statutory context. … 87 Once it is recognised, however, that the costs discretion conferred by UCPR 42.19 … is unconfined, the matters referred to in the Lai Qin line of authority are plainly pertinent, although, again, not necessarily determinative.'" 5 The general principle is well summarised in the judgment of Davies AJA in a somewhat earlier decision of the Court of Appeal, Edwards Madigan Torzillo Briggs Pty Ltd v Stack [2003] NSWCA 302: "When proceedings are brought to an end without a determination after a trial, the judge may find it difficult, even impossible, to make an award of costs. If the judge does make an award, it will generally be because the judge is satisfied that one party has had a substantial victory and the other a substantial loss, or that there has been a marked difference in the reasonableness of the actions taken by the parties, so that one party should be rewarded for its reasonable actions and the other party should suffer a detriment in costs." 6 Davies AJA also said:

"In my opinion, it is important to draw a distinction between cases in which one party, after litigating for some time, effectively surrenders to the other, and cases where some supervening event or settlement so removes or modifies the subject of the dispute that, although it could not be said that one side has simply won, no issue remains between the parties except that of costs. In the former type of case, there will commonly be lacking any basis for an exercise of the Court's discretion otherwise than by an award of costs to the successful party. It is the latter type of case which more often creates problems, since there may be difficulty in discerning a clear reason why one party, rather than the other, should bear the costs." 7 In the light of these observations, it would be inappropriate for me to attempt to make any finding about the outcome that would (or might) have eventuated if the matter had gone to trial. But I must, of necessity, give an outline of the undisputed factual background. 8 The plaintiff and the defendant are brothers. After the death of their mother, they and their four sisters adopted a particular consensual arrangement regarding division of the mother's estate which had been left to the six children in equal shares. As part of this arrangement, the plaintiff and the defendant made two agreements in writing on 17 May 2001. By those agreements, the defendant undertook to transfer certain land ("Part Portion 2") to the plaintiff but, if the necessary subdivision could not be effected, the defendant was to grant a lease of that land to the plaintiff as from 30 June 2001. The defendant, for his part, was to assume ownership of the separate "Tergene" parcel. The local authority in due course refused permission to subdivide in the way necessary to make Part Portion 2 separately transferable. 9 The plaintiff then sued for a declaration that the defendant was obliged to lease Part Portion 2 to the plaintiff, plus an order for specific performance of the alleged agreement to lease. The statement of claim was filed on 17 December 2004. The defendant admitted having signed the agreements but denied that they were binding on him. He filed a cross-claim seeking relief accordingly. Almost two years later, the cross-claim was amended by leave granted on 28 November 2006. This was some six days before the start of a two day hearing appointed to commence on 4 December 2006. By the amended cross-claim, the defendant sought, as additional relief (but, in the circumstances, what could only be alternative relief), an order compelling transfer to him of the "Tergene" land. 10 With the pleadings in that state - that is, with the plaintiff seeking to compel the defendant to lease to him Part Portion 2 and the defendant seeking to compel transfer of "Tergene" to him - the parties decided to compromise the matter on the basis that both those claims would succeed. In other words, the defendant eventually acceded to the plaintiff's claim regarding Part Portion 2 while the plaintiff acceded to the defendant's claim regarding "Tergene". But, of course, the first claim had been on foot since the filing of the statement of claim on 17 December 2004 but the latter claim had been on foot, in a formal sense, only since 28 November 2006. It was only at the latter date that the defendant modified his initial stance which was one of unconditional opposition to the grant of the relief sought by the plaintiff in respect of Part Portion 2. As from 28 November 2006, the defendant abandoned that unconditional opposition by making it clear that, if an order regarding "Tergene" was made in his favour, he would agree to the order the plaintiff sought in respect of Part Portion 2. 11 The case may thus be seen to be one where the defendant, after almost two years, gave up his opposition to the grant of the relief sought - but, it must be emphasised, at a point where the plaintiff in turn agreed to a requirement that the defendant had sought fit to enunciate by way of amended cross-claim at the end of the two years. 12 While the position I have described emerges from the pleadings, it would be wrong to think that the question of (and claim for) reciprocal transfer of "Tergene" did not enter the picture until November 2006. In May 2002, Ms Tomkins, solicitor, acting for the defendant, submitted to the plaintiff for signature documents in connection with the transfer of "Tergene" to the defendant. The request that the documents be signed by the plaintiff was not met. The plaintiff says that he refused to sign documents because the defendant refused to grant him the lease of Part Portion 2. 13 In substance, therefore, the situation was one in which each party was aware, from 2002 or thereabouts, of the other's claims and that each resisted, until late November 2006, the claims of the other. While, in a formal sense, the defendant's claim to have "Tergene" transferred to him did not form part of the proceedings until 28 November 2006, the fact was that the defendant had, at least since May 2002, considered himself entitled to such a transfer and had asserted a right to the transfer. The plaintiff, moreover, had been aware of the defendant's attitudes in that respect. The position that was not fully articulated in pleadings until November 2006 had, in substance, existed from 2002. 14 I am in no position to judge the merits of the case. Nor am I in a position to conclude either that the plaintiff (to whom a lease of Part Portion 2 was not proffered) acted unreasonably in commencing the proceedings or that the defendant (to whom transfer of "Tergene" was not proffered) acted unreasonably in defending them. 15 In accordance with the approaches indicated by the Court of Appeal, each party should bear his own costs. I therefore make no order as to costs. **********

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Cases Cited (6)