Consideration
36 The following UCP rules are relevant:
"12.1(1) The plaintiff in any proceedings may, by filing a notice of discontinuance, discontinue the proceedings, either as to all claims for relief or as to all claims for relief so far as they concern a particular defendant:
(a) with the consent of each other active party in the proceedings, or
(b) with the leave of the Court.
42.19(1) This rule applies to proceedings that are discontinued by the plaintiff as referred to in rule 12.1.
(2) Unless the Court orders otherwise, or the notice referred to in rule 12.2(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."
37 The effect of those rules and their relationship has now been clarified in a series of Court of Appeal decision (Fordyce v Fordham [2006] NSWCA 274; Prodomos Anastasi Foukkare v Angreb Pty Limited [2006] NSWCA 335, Australiawide Airlines Limited v Aspiron Pty Limited [2006] NSWCA 365 and Bitannia Pty Limited v Parkline Constructions Pty Limited [2009] NSWCA 32). Even though Australiawide Airlines related to rule 42.20(1), the approach in each sub-rule is similar, i.e. unless the Court exercises its discretion to otherwise order, the plaintiff must pay the defendant's costs.
38 The effect of those decisions is that in the case of an application to seek leave to file a notice of discontinuance, rule 42.19(2) represents a default position in the absence of further order by the Court. As Basten JA said in Australiawide:
"65 In order to avoid the statutory order, it was necessary for the plaintiff to show more than justification, in the sense that it commenced proceedings in the exercise of a statutory right available to it. It would have needed to show some additional factor, such as that conduct of the defendant led it to the reasonable belief that litigation would be necessary to enforce its right to payment in a timely fashion or that winding up the defendant was an appropriate means of obtaining payment. As Bryson JA has shown, by detailed reference to the facts before the Court, Aspiron was unable to demonstrate any such basis for the Court to otherwise order."
39 The "additional factor" relied upon by the plaintiff in this case was that he had substantially obtained the relief which he was seeking when the Council passed its rescission resolutions on 11 November 2008. I accept the plaintiff's submission on this issue. It seems to me that in a practical sense, the plaintiff did so succeed.
40 It is true that the plaintiff did not obtain all that he was seeking in the proceedings and that the findings and resolutions of the Conduct Committee remained untouched. Even so, given the change in approach by the Council, and the unanimous passing of the rescission resolutions, the prospect of the Conduct Committee findings and resolutions being subsequently relied upon was in a real sense remote. This is particularly so when the complaints procedure and constitution of the Conduct Committee had been significantly altered as a result of the adoption of the new Model Code of Conduct by the Council on 22 July 2008.
41 What was obviously of concern to the plaintiff were the censure motions of July 2008 and their possible consequences when referred to the Department of Local Government. The effect of the rescission resolutions on 11 November 2008 was to remove those issues. Despite assertions to the contrary by the plaintiff's solicitors in correspondence, the rescission resolutions had the effect of removing most of the raison d'etre of the litigation.
42 Had a motion in the form of the amended motion been filed in late November or early December 2008, I would have had little difficulty in making an order in favour of the plaintiff that he receive his costs of the proceedings. That did not happen.
43 What happened was the filing of a misconceived application in the form of the motion of 2 December 2008. Despite its purported reliance upon rule 12.1(1)(b) UCPR, it was not an application for leave to file a notice of discontinuance. It was an application for the payment of costs with a condition that if the application were unsuccessful, the substantive matter would proceed. As the defendant submitted, it was the very sort of application which was expressly disapproved of by the Court of Appeal in Prodomos Anastasi Foukkare v Angreb Pty Limited.
44 Beazley JA identified the problem with such an application in Foukkare as follows:
"48 Further, the process involved in discontinuance is precisely provided for in the UCPR. First, a party files a Notice of Discontinuance, either by consent or leave of the Court: UCPR 12.2. If a party discontinues it must pay the costs unless some other order is made by the Court. A Court, as a practical matter on an application for Leave to Discontinue, upon being told that the real issue is costs, might not formally make the order for leave until it has heard and determined the costs question. However, not even that practical process accommodates his Honour's understanding of para 6(c). In my opinion, the offer in para 6(c) was postulated on there being no order made in the proceedings. As I say below, I consider that the offer was carefully drafted to avoid the normal consequences of discontinuance. It follows on this approach, that had the appellant agreed to para 6(c), he would have agreed to the Court being asked to determine the issue of costs in proceedings which had no conclusion.
49 Costs orders are not made in gross and in my opinion, the " offer " contained in para 6(c), is not one that could have been, or at least ought to have been, entertained by the Court. Accordingly, the very matter upon which his Honour based his finding of unreasonableness was an offer that required an agreement in respect of a process which could not, or at least, should not, have been undertaken by the Court. For that reason alone, the appellant's failure to agree to para 6(c) could not, in my opinion, be characterised as unreasonable and his Honour's discretion miscarried.
…
70 As I have already indicated, I do not consider that the offer in para 6(c) had the effect of asking for a discontinuance. But even if para 6(c) is properly understood in that way, there was no obligation on the appellant to agree to that formula - it is not one for which provision is made by the Rules of Court - and it would not have been unreasonable for the appellant to have refused such a proposal when it was at all times available for the respondents to take a simple procedural step of filing an application for leave to discontinue and an order for costs under UCPR 42.19. The respondents' continuance of the proceedings and in taking the many steps they did in the Supreme Court proceedings was, in my opinion, the overwhelmingly unreasonable conduct in this litigation. …"
45 Comments to similar effect were made by Basten JA in Bitannia:
"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. ..."
46 Had the original motion proceeded to a hearing, the plaintiff would have failed because as Beazley JA pointed out, the Court would have refused to entertain it. The problems created by the form of the notice of motion can be seen in the difficulties experienced by both sides and the Registrar in trying to articulate their positions in relation to it on 11 December 2008. The motion was quite inappropriate and was always liable to be struck out.
47 Shortly before the matter came on for hearing, the plaintiff's legal advisers recognised the problem and the amended motion was filed and served. That motion is in the conventional form and complies with UCPR 12.1(1).
48 For the reasons already given, I am of the opinion that the plaintiff is entitled to succeed on his amended motion in that the rescission resolutions of 11 November 2008 had the effect of giving to the plaintiff practical success in the proceedings. The problem confronting the Court is how to deal with the plaintiff's misconceived position which he maintained between 2 December 2008, when the motion was filed, and 2 April 2009 when it was amended.
49 It is clear from the exchange before the Registrar on 11 December that needless time and money has been wasted by the parties in pursuing and in getting ready to meet the false issues raised by that motion. In those circumstances, not only should the plaintiff not have his costs of the proceedings between those dates, but he should pay those of the defendant.
50 In relation to the amended motion, the plaintiff is entitled to succeed. The plaintiff should be given leave to file a Notice of Discontinuance and is entitled to an order in relation to costs which is different to the default position provided by r 42.19(2). That costs order, however, should only apply to the period up to but not including the filing of the motion on 2 December 2008.
51 The final question to be resolved is the costs of the hearing of the amended motion. On the basis I have indicated, the plaintiff has succeeded on that motion. Normally costs would follow the event. In this case, however, there are countervailing considerations.
52 The amendment to the motion was made late and only after receipt of the defendant's written submissions. Until the motion was amended, the defendant had every right to expect that it would succeed on the motion as it then stood. By the time the motion was amended, the defendant had already incurred costs in defending it. In those circumstances I consider it would be unfair for the plaintiff to have his costs of the motion. The most appropriate order is that each party pay his or its own costs of the motion.