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[2026] QSC 34
General information, not legal advice.
Supreme Court of Queensland
2026-03-12
Copley J
Original judgment source is linked above.
Robinson Locke Litigation Lawyers for the first and second applicants
[1] Two applications for orders for costs have been made.
[2] By application filed on 10 September 2025 the applicants sought an order pursuant to r 685 of the Uniform Civil Procedure Rules 1999 (Qld) (UCPR) that the respondent pay the applicants' costs of the whole proceeding, including the costs of this application, on the standard basis.
[3] By application filed on 30 September 2025 the respondent sought an order pursuant to r 685 of the UCPR that the applicants pay the respondent's costs of the proceeding, including the costs of this application.
[4] At the commencement of the hearing the applicants' counsel said their application was now being agitated only by the first applicant. Counsel for the respondent said the respondent's application was pursued only against the second applicant and it was an application for costs on the indemnity basis. Counsel for the respondent also sought an order pursuant to r 681 that the first applicant pay the respondent's costs of an interlocutory application filed on 4 December 2020 on the standard basis.
[5] The first applicant contends that the respondent capitulated or surrendered. The respondent denies this and contends that supervening events occurred rendering it unnecessary for him to continue to defend the claim made by the first applicant. The respondent contends that the second applicant capitulated or surrendered on its claim against the respondent. The second applicant denies this and contends that supervening events rendered it unnecessary for it to continue the claim against the respondent.
[6] Rule 685 of the UCPR provides:
"685 Costs if further proceedings become unnecessary
(1) If, for any reason, it becomes unnecessary to continue a proceeding other than for deciding who is to pay the costs of the proceeding, any party to the proceeding may apply to the court for an order for the costs.
(2) The court may make the order the court considers just."
[7] It is not in dispute that the applicants' proceeding has become unnecessary and the parties agree that the Court should, when making orders about costs, order that the proceeding be discontinued.
[8] Both parties submitted that the Court would be assisted by statements made in the following cases.
[9] In ONE.TEL Ltd v Commissioner of Taxation Burchett J said:[1]
"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."
[10] In Fairfield Services Pty Ltd (in liq) v Leggett[2] Bond J, as his Honour then was, identified some considerations relevant to the exercise of the costs discretion in cases where a proceeding has ended prior to a hearing on the merits due to a plaintiff's decision to discontinue. His Honour said costs are discretionary, that there are no absolute rules and where a proceeding was discontinued before it was heard on the merits, r 681 could not be applied in terms. His Honour said:[3]
"Fourth, it may nevertheless be appropriate to make an order that costs are borne by one side. Each case will depend on its own facts, but it may be relevant to consider the following:
(a) (in a particular case) the conduct of the defendant prior to the commencement of the proceeding, where such conduct may have precipitated the litigation (Johnson v Clancy [2010] NSWSC 1301, [21](h));
(b) the whole of the proceeding, including whether the plaintiff has acted reasonably in commencing and continuing to prosecute the proceeding and whether the defendant has acted reasonably in defending it (Johnson v Clancy [2010] NSWSC 1301, [21](g) and Ralph Lauren 57 Pty Ltd v Byron Shire Council [2014] NSWCA 107; (2014) 199 LGERA 424, 433 [33] per Preston CJ of LEC (with whom Beazley P and Ward JA agreed)), but bearing in mind that the question of reasonableness may not be one capable of determination absent a full hearing on the merits (see Bitannia Pty Ltd v Parkline Constructions Pty Ltd [2009] NSWCA 32, [43], [57] per Hodgson JA (with whom Tobias and Basten JJA agreed)); and
(c) the reasons for discontinuance (Johnson v Clancy [2010] NSWSC 1301, [21](g)), but bearing in mind that the subjective considerations of one party not put before the other party will generally be immaterial so that the discretion will be exercised on the basis of the objective circumstances established on the evidence (see Bitannia Pty Ltd v Parkline Constructions Pty Ltd [2009] NSWCA 32, [81] (Basten JA); Ralph Lauren 57 Pty Ltd v Byron Shire Council [2014] NSWCA 107; , 433 [34] per Preston CJ of LEC (with whom Beazley P and Ward JA agreed)).
Fifth, when evaluating the relevant considerations, there is an important distinction between: (1) cases in which one party, after litigating for some time, effectively surrenders to the other; and (2) 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: ONE.TEL Ltd v Commissioner of Taxation [2000] FCA 270; (2000) 101 FCR 548, 553 [6]. As to this:
(a) In the former type of case, the surrender or capitulation will usually provide a strong reason to award costs against the party who has surrendered or capitulated: Zhao v Suzhou Haishun Investment Management Co Ltd [2020] VSCA 34. It seems to me that this must be a partial reflection of the principles and policies which underlie the r 681 general rule, as identified by McHugh J in Oshlack v Richmond River Council [1998] HCA 11; (1998) 193 CLR 72. A classic illustration of the type of case where one party has effectively surrendered to the other is a case where proceedings are dismissed or discontinued because the applicant chooses not to proceed with them: Kiama Council v Grant [2006] NSWLEC 96; (2006) 143 LGERA 441, 453-454 [57] (Preston CJ)."
[11] The parties recognise that in determining these applications the Court cannot conduct a hypothetical trial.
[12] The proceeding commenced by originating application on 16 November 2020 when the first applicant applied for an injunction to restrain the sale of real property situated at Crestmead. On 4 December 2020 the first applicant applied for an interlocutory injunction to restrain the sale of this property until trial of the proceeding.
[13] On 10 December 2020 the application for the interlocutory injunction was heard and dismissed by Boddice J (as his Honour then was). Orders were made for the proceeding to continue as if commenced by claim and statement of claim and costs were reserved.
[14] On 30 April 2021 the first applicant filed a statement of claim. At that stage he was the only applicant. The relief sought against the respondent included his removal as trustee of the Doolan Trust and an order restraining him and others from selling the Crestmead property.
[15] On 25 June 2021 the Crestmead property was sold.
[16] On 28 October 2021 an amended statement of claim was filed. By then the party who had been a respondent had been joined as the second applicant. The amended statement of claim pleaded that despite request, the respondent had failed to resign as trustee of the Doolan Trust save on conditions. The conditions were set out at paragraph 35 of the amended statement of claim. The conditions pleaded were:
"a. Mr Doolan agree on the terms for the purchase of Harfin's 30 shares in Allied Rural, Harfin's 5712 units in CHUT and Harfin's 1428 units in the Rural Fund on terms satisfactory to Mr Blennerhassett;
b. Mr Doolan consent to the sale of 52 Magnesium Drive;
[17] It was pleaded that by refusing to resign as trustee except on terms satisfactory to him the respondent had preferred his own interests over his duties as trustee. Also, that by seeking an indemnity against any claim that might be made against him by the first applicant or any third party in relation to the affairs of the trust, the respondent had preferred his own interests over his duty to account to the trust. An order for his removal as trustee was sought. The amended statement of claim also pleaded that the respondent breached various duties owed to the second applicant, the breaches caused loss and damage to the second applicant and the respondent was liable for damages and compensation to the second applicant. The second applicant also sought a declaration that the respondent had contravened ss 180, 181 and/or 182 of the Corporations Act 2001 (Cth).
[18] On 3 December 2021 an amended defence was filed. The respondent admitted he had not resigned as trustee of the Doolan Trust. He pleaded that a replacement trustee had not been sourced who would provide the standard releases and indemnities to the respondent on behalf of the Doolan Trust.
[19] On 17 January 2022 a reply was filed. It pleaded that a replacement trustee had been identified. Further, the request for releases and indemnities was not a basis for a refusal to resign because standard releases and indemnities existed within the trust deed, that continuation of the indemnity after ceasing as trustee would exist as a matter of law and continuation of the indemnity had been offered in correspondence dated 9 July 2021.
[20] On 6 June 2022 a mediation concluded with no settlement achieved.
[21] On 26 September 2022 the respondent resigned as trustee of the Doolan Trust.
[22] On 25 November 2022 the applicants advised the respondent that they intended to apply for costs on the indemnity basis.
[23] On 3 September 2025 the applicants obtained an order for leave to proceed to pursue an order for costs.[4] Leave was required because a step had not been taken in the proceeding for more than two years.
Submissions relevant to the first applicant's case for costs
[24] In support of his application for costs, the first applicant submitted the pleaded case was that the respondent had made his resignation as trustee conditional on achieving collateral commercial outcomes across a broader relationship with the first applicant thereby preferring his own interests ahead of his fiduciary duties. The case for removal was the insistence on the conditions, not whether the conditions should or should not be met. It was not relevant whether they were met or not. However, the indemnities sought (the subject of paragraph 35 g. in the amended statement of claim) were never granted prior to the respondent's resignation as trustee. The first applicant submitted it was relevant to notice the ambit of the indemnities sought, "Mr Blennerhassett be released and indemnified in respect of liabilities to Mr Doolan, Allied Rural and associates of Mr Doolan, including those the subject of the Originating Application herein (Mr Blennerhassett's conditions)".[5] The respondent never communicated a position that he no longer insisted on all of the conditions being met prior to resigning and he resigned without obtaining the indemnities, so it was a case of capitulation. There was no supervening event. The case was within the first category of case recognised in ONE.TEL.
[25] The respondent submitted no order as to costs should be made against him. His resignation as trustee in September 2022 was due to supervening events. The Court will not be able to discern circumstances requiring him to pay the first applicant's costs. The Court will not be able to conclude that the first applicant won, so the second category of case recognised in ONE.TEL is engaged.
[26] He submitted the supervening events were the satisfaction of conditions he had raised as early as February 2019 when he proposed a number of steps he considered needed to be taken to separate his broader business dealings from the broader business dealings of the first and second applicants. The conditions he proposed back then were reflected in paragraph 35 a. to g. of the amended statement of claim and the matters the subject of paragraph 35 a., b., c. and f. were resolved prior to 26 September 2022. He also submitted that shortly after his resignation, the conditions reflected in paragraph 35 d. and e. were satisfied, as well as some other aspects of dealings the subject of paragraph 35 a.. However, I do not regard what occurred after the resignation as relevant to the question of costs because such events cannot be regarded as supervening events as they occurred after the alleged capitulation. Lastly, the respondent submitted that he had acted reasonably and properly in seeking to separate his affairs from the applicants' affairs and his resignation was the culmination of a necessarily involved process.
Submissions relevant to the respondent's case for costs
[27] In relation to his application for costs against the second applicant, the respondent submitted that the second applicant capitulated on its claims against him so in this circumstance costs should be awarded against it. He pointed out that no evidence had been adduced to explain why the second applicant had abandoned its case.
[28] He submitted costs should be on the indemnity basis because serious allegations were made in the amended statement of claim. They included that the respondent's decision to place the second applicant into voluntary administration in March 2022 was not due to a genuine or a bona fide belief that the second applicant was either insolvent or likely to become insolvent, and that the respondent caused a voluntary administrator to be appointed to the second applicant for the collateral or dominant purpose of forcing the first applicant to accept the conditions he had laid down attaching to his resignation as trustee or to otherwise resolve his broader dispute with the respondent. By April 2023, after judgment in Allied Rural Pty Ltd v Stimpson,[6] the second applicant was aware that there was a basis to think that the second applicant was either insolvent or likely to be insolvent as at March 2021 and that no improper purpose attended the respondent's conduct. Despite this, the second applicant did not amend the amended statement of claim to remove the allegations. It did nothing. The allegations were maintained until now.
[29] The second applicant contended that it simply chose not to continue the proceeding against the respondent. It submitted that no longer choosing to prosecute a proceeding was not the same as capitulation. Neither party could be determined to have succeeded or failed. The supervening event was the respondent's resignation as trustee. It then became unnecessary to prove all aspects of the proceeding as there had been the disentanglement achieved.
[30] The second applicant contended that in the event costs were ordered against it the costs should not be on the indemnity basis. The current proceeding had come to a close in 2022. No costs were incurred from then so the findings made in 2023 in Allied Rural Pty Ltd v Stimpson did not oblige the second applicant to discontinue that part of the claim. Any delay in seeking costs was satisfactorily explained by an observation made by Martin SJA when he granted leave to the applicants to proceed after no step had been taken for more than two years: "The 'threat' made by [the respondent] ... would cause anybody to, at least, withdraw from the field of battle for some time". [7]
Submissions relevant to costs of the interlocutory application
[31] The respondent submitted the first applicant should be ordered to pay the costs of the unsuccessful interlocutory application on the basis that costs should follow the event. The first applicant submitted each party should bear their own costs of the interlocutory application as the issue formed part of a broader controversy.
[32] For the following reasons the first applicant should pay the costs of the interlocutory application, otherwise each party should bear their own costs.
[33] Costs are in the discretion of the Court but follow the event unless the Court otherwise orders.[8] The originating application was confined to a claim for relief against the disposal of real property. The application for interlocutory relief failed. The outcome of the interlocutory application was a separate event from the claim for the removal of the respondent as trustee. That claim was not even filed until approximately four months after the interlocutory application had been dismissed. In these circumstances the unsuccessful party should pay the costs of this separate and distinct event.
[34] In his written submissions counsel for the applicant said the parties have "a long and intertwined business relationship". In his written submissions counsel for the respondent said the first applicant and the respondent had "a long and closely connected business relationship".
[35] Regard may be had to a defendant's conduct prior to the commencement of a proceeding where that conduct may have precipitated the litigation. In about February 2019 the respondent informed the first applicant of his intention to end his involvement with the second applicant (of which he was a director and shareholder) and with the Doolan Trust. At that time he said this would necessitate the sale of shares held by Harfin in the second applicant to another party, a new director becoming the guarantor of bank loans and trade creditors' accounts which he then guaranteed for the second applicant, and the "tidy up" of loans owed by him to the second applicant and loans owed to him and Harfin by the second applicant. In relation to the trust, he said it would be necessary to appoint a new principal and trustee, to transfer shares he held as trustee to the new trustee and arrange for the new trustee to become guarantor of loans he then guaranteed for the trust. Although the respondent's resignation had been sought prior to December 2020, even by then no arrangements had been agreed to see the respondent released from the guarantees. I accept the respondent's submission that he identified a number of common-sense steps required to be taken to disentangle a complicated relationship. I accept that the respondent acted reasonably in seeking to engage with the first applicant prior to the filing of the originating application.
[36] Short of conducting a trial of the issues I cannot conclude that the first applicant acted obviously unreasonably in pursuing a claim that the respondent preferred his own interests over his duty to the trust in linking resignation as trustee to the resolution of all issues between the respondent and the first applicant.
[37] However, clearly, other events occurred prior to the respondent's resignation. The loans due from the second applicant to the respondent and the respondent's entities were offset against loans due by the respondent to the second applicant. The loans condition was the subject of paragraph 35 c. in the amended statement of claim. Shares in Harfin were transferred to the second applicant. The shares transfer condition was the subject of paragraph 35 a. in the amended statement of claim. The Crestmead property was sold, a condition the subject of paragraph 35 b. in the amended statement of claim. Loans related to other entities were paid and guarantees were released after the sale of the property, these matters were the subject of condition 35 f. in the amended statement of claim. These events were events of mutual benefit to the parties. Based on these events, which are objective circumstances established on the evidence, I am unable to conclude that the second applicant capitulated just as I am unable to conclude that the respondent capitulated. It is by no means clear that any side won in the untangling of an intertwined or connected business relationship. I cannot discern a clear reason why one party, rather than another, should bear the costs.
[4] William Doolan v Hugh William Blennerhassett [2025] QSC 208.
[5] Amended statement of claim, paragraph 35 g.
[7] William Doolan v Hugh William Blennerhassett [2025] QSC 208 at [33].
Doolan & Anor
Blennerhassett [2026] QSC 34
(2000) 101 FCR 548
(2014) 199 LGERA 424
(1998) 193 CLR 72
(2006) 143 LGERA 441