Granville and Districts Soccer Football Association Inc. & Anor v Parramatta Melita Eagles Sports Club Limited

Judgment (ex tempore) 1HIS HONOUR: In the substantive proceedings, which were commenced by summons filed on 6 September 2011, the first plaintiff Granville and Districts Soccer Football Association Inc. Registration No Y0182102, claimed a declaration that the second plaintiff the Police and Community Centre Youth Clubs NSW Limited, had validly assigned to it its right, title and interest in Melita Stadium South Granville under the terms of a sublease between the second plaintiff and the defendant Parramatta Melita Eagles Sports Club Limited; and an order that the defendant restore the first plaintiff into possession of the premises and do all things necessary to record and effect the assignment to the first plaintiff. 2The proceedings were set down for hearing for two days commencing on 19 October 2011. That hearing did not proceed in circumstances where the parties had apparently negotiated a compromise. Indeed both parties agree that a compromise was negotiated, although they differ as to its precise terms. At first, the proceedings were adjourned to 26 October for mention and directions if necessary, it having been foreshadowed that there was some potential dispute as to the terms and implementation of the settlement. The essential problem was that the assignment of the lease required the consent of the Parramatta City Council. 3On 26 October 2011, the plaintiff filed a motion claiming the following relief: An order that the Defendant specifically perform and carry into execution under the supervision of the Court the agreement in respect of the settlement of these proceedings entered into between the Plaintiffs and the Defendant on 7 October 2011 and in particular that: (a) the Defendant execute the Sub-Lease between it and the First Plaintiff in respect of the land comprised in Folio Identifiers B/415520 and 1/222670 being those premises known as Melita Stadium, Everley Road, South Granville in the form provided to the Defendant on 21 October 2011; and (b) the Defendant execute the Participation Agreement in the form provided to the Defendant on 21 October 2011 or in a form substantially similar. 4The motion was ultimately set down to be heard on Friday 5 November 2011, and the parties exchanged written submissions in preparation for it. It then became apparent that the Council was to meet on 28 November 2011, and that if it then gave its consent, the motion - and the dispute -would be moot. 5The Council did duly give its consent, and the defendant thereupon executed a sublease which it delivered to the first plaintiff's solicitors "in escrow", pending receipt of formal evidence of the council's consent. In those circumstances, the proceedings were adjourned to today. 6The parties are agreed that the substantive proceedings should now be dismissed with no order as to costs. They are also agreed that the motion of 26 October 2011 should be dismissed. The sole remaining dispute is as to the costs of that motion. 7As Mr Vincent for the plaintiffs has submitted, in circumstances where parties compromise proceedings but do not reach agreement on the question of costs, the starting position is that each party will be left to bear its own costs and the Court will ordinarily not enter into a close examination of entitlement to costs, based on who would have succeeded had the proceedings been heard and determined. To do so would frustrate the purpose and benefit of the settlement in the first place. Furthermore, to do so in an abbreviated way would risk visiting potentially substantial costs liabilities on a party in circumstances of a truncated hearing from which an appeal would be available only by leave. Justice is mostly better served in those circumstances by leaving each party to bear its own costs. But the cases recognise that there are exceptions to this, where one or other party has acted unreasonably or has unnecessarily caused costs to be incurred. 8A concise exposition of the law in this area was provided by McHugh J in Re The Minister for Immigration and Ethnic Affairs of the Commonwealth of Australia; Ex Parte Lai Qin (1997) 186 CLR 622 (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... 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. ... If it appears that 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 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. 9[See also Australian Securities Commission v Aust-Home Investments Ltd (1993) 44 FCR 194 and Gribbles Pathology Pty Ltd v Health Insurance Commission (1997) 80 FCR 284]. 10In this case, relevant considerations are that the outcome, ultimately, is that the motion is dismissed. Ordinarily, that would tell in favour of a costs order in favour of the successful respondent. Against that, the motion will be dismissed because, as a matter of fact in the course of events, the plaintiff has obtained in substance the relief that it sought in the motion. Ordinarily, that would tell in favour of the plaintiff recovering costs on the motion, because it had obtained practical success. 11The defendant submitted in its written submissions, prepared for the hearing of the motion, that an order for specific performance would not have been made, and submits today that the application was without any prospect of success. I do not accept that it is clear that no order for specific performance would be made. As the defendant's submissions record, the circumstance that the consent of a third party might be required will result in an order being expressed in terms of requiring the defendant to do all things necessary on its part to obtain the relevant consent and thereafter perform the relevant contract [ International Advisor Systems Pty Ltd v XYYX Pty Ltd [2008] NSWSC 2 (at [48]), Dougan v Ley (1946) 71 CLR 144, 151-152 (Dixon J)]. The requirement for such a consent is not an obstacle to a decree of specific performance, at least in that form and to that extent. The plaintiff might well have obtained at least such an order. 12The plaintiff submits that the real issue was whether the settlement agreement itself was subject to a condition precedent, namely the Council's consent. As I understand the submission, the plaintiff contends that the effect of the settlement agreement was that the defendant was bound to grant a sublease and that, while the Court would not specifically order it to do so without the requisite consent, its failure to do so would be a breach of contract, either sounding in damages or entitling the plaintiff to rescind and proceed with the litigation. 13It may be that that was an issue, but that is not the relief that the motion claimed. I have already set out that relief above. Such relief could only have been granted to the extent, at the highest, of requiring the defendant to do all things necessary on its part to obtain the Council's consent and then execute and deliver the sublease. 14In a letter from the defendant's solicitors to the plaintiff's solicitors of 25 October 2011, the day before the motion was filed, the defendant said that if Council consented, it would execute the sublease. Previously, on 24 October, the defendant's solicitors had written to the Council requesting consent, and on 20 October had informed the plaintiff's solicitors that, while not accepting a construction of the settlement agreement that obliged the defendant to do so, they would nonetheless, without admission, write to Council seeking consent. 15It seems to me that the effect of the letters of 20 October, 24 October and 25 October, to which I have referred, taken together, is that the defendant had in effect offered the plaintiff all the relief it could expect to obtain on the motion it then filed. The motion was unnecessary. 16For that reason, I have come to the conclusion that the plaintiffs must pay the defendant's costs of the motion. 17My orders are as follows: (1)By consent, order that the proceedings be dismissed. (2)By consent, order that the notice of motion filed on 26 October 2011 be dismissed. (3)Order that the plaintiffs pay the defendant's costs of the notice of motion filed 26 October 2011, and that otherwise there be no order as to the costs of the proceedings to the intent that each party bear its own costs.