On 8 December I made final orders in these proceedings, including orders as to costs. In this judgment I give reasons for those orders.
Although there was initially some disagreement on the form of orders needed to give effect to the substantive conclusions in my judgment, that disagreement fell away during the course of the hearing on 8 December. In the end I made declarations in a form with which both parties were content.
[2]
Background and Procedural History
The plaintiff, Human Appeal International Australia ("Human Appeal"), is a charity and a company limited by guarantee. It commenced the proceedings to challenge a decision made by the defendant, Beyond Bank Australia Limited ("Beyond Bank"), to terminate its banking facilities (known as "de-banking"). Beyond Bank is a customer-owned bank, and also a company limited by guarantee. In what follows, I will refer to it simply as "the Bank".
I have summarised the background to, and procedural history of, the proceedings in an earlier judgment (Human Appeal International Australia v Beyond Bank Australia Limited (No 2) [2023] NSWSC 1161) ("J2") at [1]-[12]. Slattery J delivered an earlier judgment, concerning two interlocutory applications brought by the Bank, seeking the dismissal of the proceedings (Human Appeal International Australia v Beyond Bank Australia Limited [2023] NSWSC 382) ("J1"). This judgment assumes familiarity with those judgments.
The following summary will suffice for present purposes. Human Appeal became a customer and member of the Bank in March 2021. In mid-August, the Bank notified Human Appeal that it was closing its accounts, which then had a total credit balance of around $6.1 million (J2 [6]). The Bank did not provide a reason beyond noting that, as a result of a review, it had concluded that the banking business of Human Appeal was not suited to the Bank (see J2 [59]). Correspondence ensued to seek an extension of the closing date. Human Appeal's solicitors sought an extension to the following February. The Bank was only willing to offer until the end of September (J2 [7]).
Human Appeal commenced proceedings on 17 September of that year. An injunction was made by consent, requiring the Bank to continue to provide the banking facilities then in place, until further order of the Court (J2 [8]). With that regime in place, little progress was made in the proceedings for some time. The delay triggered the applications which were the subject of Slattery J's judgment (and his Honour described the intervening period in some detail at J2 [25]-[40]). The Bank sought summary dismissal based on want of due dispatch, or based on Human Appeal's claims for relief not disclosing a maintainable cause of action (see J1 [2]). Human Appeal cross-applied for leave to file a statement of claim (J1 [2]) (described as an "amended" statement of claim, because an earlier iteration had been served, but it had not been filed (J1 [44])).
Slattery J heard those applications in February. His Honour declined to dismiss the proceedings, and Human Appeal was given leave to file a statement of claim (J1 [83]). The judgment (at [82]) also dealt with the costs of the applications (his Honour suggested that the appropriate order was that each party should bear their costs of those applications, and no party later contended to the contrary).
Slattery J also suggested (J1 [73]-[74]) that the proceedings might warrant expedition. This was later applied for and granted. The matter was listed for hearing in late August. I heard the matter on 30 August and 6 September, and the parties provided closing written submissions in the interim (J2 [12]). I delivered my judgment later in September.
Human Appeal amended its statement of claim during the course of the hearing. It did so first on 30 August, without objection. It did so again on 6 September, triggering complaints from counsel for the Bank. But I observed in my judgment (at [12]) that counsel were able to address the merits of the amendments in their submissions and that counsel did not suggest that they had been prejudiced.
I observed (at [13]) that Human Appeal advanced two claims for relief in final submissions. The first claim was for a declaration that the termination of Human Appeal's banking facilities had been invalid. An earlier argument in support of that claim was based on the terms of the Bank's constitution (see J1 [58]-[67]). But although counsel pursued the argument in their opening written submissions, it was not pursued (at least not as a stand-alone argument) in opening submissions at the hearing (see J2 [14]). Rather, it was argued in support of the claim that the Bank owed contractual duties to Human Appeal, as its customer, including a duty of cooperation and good faith (J2 [14]). It was argued that the Bank's contractual obligations prevented it from terminating Human Appeal's facilities without reasonable grounds, and counsel contended that there was insufficient evidence of such grounds (J2 [15]).
The second claim, if it is properly regarded as a separate claim (see below), was for a declaration that the Bank's terms did not comply with an industry Code of Practice, which the Bank's terms were expressed as incorporating and being subject to (J2 [16]-[17]). Human Appeal also sought orders requiring the Bank to vary its terms to be compliant. The claimed non-compliance was said to arise from the Bank's terms allowing for termination without justification or reasons.
Human Appeal succeeded on both claims (see J2 [147]). A key development on the first claim was a concession made by counsel for the Bank in closing submissions. Counsel conceded, in answer to a question, that the Bank could only terminate Human Appeal's banking facilities if it had "a valid commercial reason" (J2 [112]). This meant that it was unnecessary to decide whether such a requirement attached to all banker-customer relationships. But I noted that a customer of the Bank in question might have been in a stronger position than the customer of a commercial bank, based on the provisions of the constitution as a "statutory contract", forming part of the contractual context (J2 [117]-[119]) (although, I then made clear at [119] that this had not been argued and did not need to be further discussed given the Bank's concession).
The first claim, in the end, turned on an evidentiary question. I concluded that although Human Appeal bore the legal onus of proving the absence of a valid commercial reason (J2 [120]) (which was common ground), the Bank bore an evidentiary onus, and yet advanced no admissible evidence. It had initially argued that it did not need a reason, and later argued, in the alternative, that it might have had one (J2 [135]). I concluded that the Bank lacked reasons which would sustain scrutiny (J2 [135]).
On the second claim, I concluded that the termination provision in the Bank's terms did not strike a "fair balance" between the parties' interests, as required by a clause in the Code of Practice (J2 [142]-[146]). Again, the Bank's concession, that termination under the Bank's terms was only effective where the Bank had a valid commercial reason for doing so, was relevant. The utility of that requirement was limited, in circumstances where the clause of the Bank's terms did not require the provision of reasons; the customer would be unable to examine whether there was a valid commercial reason, other than by commencing proceedings (J2 [142]). The clause of the Bank's terms was also defective in failing to make plain that a valid commercial reason was needed (J2 [144]).
After setting out my conclusions, I noted that mandatory injunctions would normally be granted, but that I was inclined to accept the Bank's submission that I could be confident that the Bank would comply with declaratory relief (J2 [148]).
A timetable was set for written submissions on final orders and costs. As already mentioned, I heard argument on 8 December.
[3]
Costs
As I have already noted, there was no need to consider the costs of the applications before Slattery J (see above), his Honour having already dealt with those. It remained to deal with the general costs of the proceedings.
[4]
Submissions
Counsel for Human Appeal pressed for an order that the Bank pay Human Appeal's costs of the proceedings, owing to their client's success at the hearing before me.
Counsel for the Bank made clear that their client did not seek a costs order in their favour. Rather, they sought an order depriving Human Appeal of some of its costs. Counsel for the Bank's primary position was that Human Appeal should not be awarded its costs prior to the commencement of the hearing before me. Counsel submitted that a 50% deduction would account for that. Alternatively, counsel for the Bank sought a deduction restricted only to the costs of the claim based on the Bank's constitution. For that, counsel suggested a figure of 20-25%, but submitted that an order could be made targeting paragraphs in the amended statement of claim.
In support of both the primary and alternative positions, counsel for the Bank invoked the decision of the English Court of Appeal in Beoco Ltd v Alfa Laval Co Ltd [1995] QB 137. Counsel for the Bank also took me to the decision of Bergin J in Leading Edge Events Australia Pty Ltd v Te Kanawa [2007] NSWSC 568. Counsel relied on both that decision, and an earlier decision of Mansfield J in Australian Prudential Regulation Authority v Hollaway (2000) 35 ASCR 276, as authority for the question of a deduction being not a prescriptive one, but one dependent on the facts and merits of each case.
Counsel handed me a schedule of references to the written submissions. The schedule appeared to be an attempt to capture differences in the way that Human Appeal put its case in its opening written submissions, as compared with the way it put its case at the hearing. The headings were:
Focus on good faith with passing reference to unconscionability in Plaintiff's opening written submissions and claim for relief para 3 compared with focus on good faith and express provisions especially clause 4.2 in Code of Practice in opening at hearing.
Absence of focus on reasons in written opening submissions compared with opening at hearing.
Abandonment of central constitutional claim.
Need for amended relief.
Defendant raises new focus.
Counsel expanded on the first heading by submitting that the claim for relief at the outset of the hearing did not mirror what was being opened on, and that there was no reference in the earlier material to the express provisions of the Code of Practice (especially clause 4.2) (counsel submitting that this was "landed" "with a bit of teasing out" from interchange with the Court). On the second, counsel submitted that there had been a lack of focus from Human Appeal on the Bank's reasons and whether it had a reason, as distinct from the notice needing (or not needing) to specify a reason. On the third, counsel submitted that there had been an abandonment of a previously central claim, including in the applications before Slattery J, which was based on specific constitutional provisions (and not other provisions raised by the Court later). On the fourth, counsel submitted that the Court had actively explored matters leading to the need to amend. On the fifth, counsel submitted that they had, at the hearing, raised this shift in focus.
Counsel added to those submissions the following matters. First, that the constitution claim, despite having been a large part of the claim and preparation, had been abandoned without notice. Second, that it was not clear whether Human Appeal would have succeeded on the question of good faith as an implied term, with passing reference to unconscionability, which is what they had actually focussed on. Third, that statutory obligations in s 912A of the Corporations Act 2001 (Cth), despite having been a significant part of Human Appeal's case, were virtually not raised at all. Counsel submitted that Human Appeal had "finally found a case in the express provisions".
Counsel submitted that the variation in Human Appeal's position still fell within the scope of Beoco, as explained by Mansfield J in Holloway. That was because Human Appeal achieved overall success, but only through a very late reliance on certain provisions. Counsel submitted that the costs order should reflect the resulting wastage of costs on other matters.
[5]
Disposition
When I announced my decision, I explained the approach that I generally take to determining questions of costs, where there is mixed success on different arguments or contentions: see Business Finance Pty Ltd v Casula Projects Pty Ltd (No 2) [2022] NSWSC 1608 at [26] (and the earlier decisions referred to there). The approach seeks to reconcile two principles that, on their face, appear to be in tension.
The first principle is the distributive application of the rule that costs follow the event to separate claims for relief. That principle can be problematic in cases calling for the allocation of the general costs of the proceedings, where different parties have succeeded on different claims. But that problem did not arise in this case.
The second principle is that where a party has succeeded on one issue, but failed on another, the costs of those issues should not be separated unless they are clearly dominant or separable. That principle is well-recognised, including at appellate level.
I have reconciled the potential tension between those principles by distinguishing claims from issues. By claims, I am referring to prayers for relief. By issues, I am referring to points which have to be determined, either factually or legally, along the way to deciding a claim for relief. By way of illustration, if a party succeeded in a contractual claim, despite failing on some issue of construction arising in that claim, the Court would not award the costs of the construction issue, or make some discount for the costs of that issue, unless the issue could be characterised as clearly dominant or separable.
I applied the same approach in this case. It is necessary first to ascertain what the claims for relief were. I have characterised those above. By the time of closing submissions, they were, in short: first, a claim for a declaration that the Bank's termination was invalid; second, a claim for a declaration that the Bank's terms did not comply with the Code of Practice (in a particular way).
A number of different arguments were advanced on behalf of Human Appeal in support of the first claim, some of which were not, in the end, pressed. But the overall claim was always part of Human Appeal's case. It is also relevant that the acceptance of that claim ultimately turned on an evidentiary analysis. The forensic environment for that analysis was affected by counsel for the Bank's concession, in closing argument, that the Bank needed to have had a valid commercial reason for termination. In those circumstances, I considered that no discount was properly attributable to the additional arguments that counsel for Human Appeal raised, which might ultimately have been necessary to decide and were part of reaching the same ultimate conclusion.
I was fortified in this conclusion by the fact that it would have been very difficult to derive a just deduction to account for distinct arguments. So far as I could see, the arguments were matters of submission, and did not affect the evidence. For that reason alone, I thought it would not be appropriate to deprive Human Appeal of its entitlement to the general costs of the actions, including the preparation of evidence.
The hearing was no doubt lengthened, to an extent, by additional arguments, and that the written submissions may have also been lengthened by these. But there is a practical challenge in identifying the additional costs associated with this. It was not at all likely that if the additional arguments had not been raised, the hearing would have been confined to a single day. Even if counsel had spent less time writing and delivering submissions, that does not mean that they would have charged less. The Court should not embark on an enquiry into whether counsel was charging on an hourly rate, or at a daily rate. These matters only underline the importance of only dealing separately with issues that are clearly dominant or separable. In my view, the issues relied on by counsel for the Bank did not meet this description.
It is arguable that what I have referred to as the second claim for relief is so closely related to the first that it should be regarded as forming part of it. But I accepted, for the sake of argument, that it is a separate claim. Even so, I did not make any deduction on account of it. I did not consider that Beoco was at all applicable, because Human Appeal did not fail on its first claim. Rather, Human Appeal added, during the course of the proceedings, a second claim, on which it has also succeeded. The first claim on which it succeeded, was one which Human Appeal advanced since the commencement of the proceedings. There is no reason to deprive the plaintiff of the usual consequence of having succeeded on an additional claim, even if, contrary to my view, one could identify some appreciable initial cost in mounting that claim.
For these reasons, I did not propose to make any discount to the costs order.
Human Appeal also sought the costs of the present application. That was not opposed. Those costs are covered by the order that I made.
[6]
Orders
The orders of the Court made on 8 December were:
1. Declare that the purported termination of the plaintiff's banking facilities with the defendant, notified by letter dated 11 August 2021, is invalid.
2. Declare that clause 25 of the Beyond Bank Australia Limited Product Guide contravened the defendant's obligations pursuant to the Customer Owned Banking Code of Practice to the extent that it did not, in the circumstances of this case, require the defendant to specify the reasons for the closure of the plaintiff's bank accounts.
3. Order the defendant to pay the plaintiff's cost of the proceedings.
[7]
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Decision last updated: 19 December 2023