Kentgreen Dural Pty Ltd -V- Hornsby Shire Council [1999] NSWLEC 158

The Applicant's decision to discontinue was entirely its decision, in the sense that it was unaffected by any action taken by the Council in the litigation or by any supervening action beyond the parties' control. It may be readily inferred that the Applicant, in discontinuing the proceedings, acted entirely responsibly in the litigation, in the light of the professional advice it received after it had commenced the litigation. However, it had sought the early hearing of the appeal and the professional advice that it obtained, which obviously and profoundly affected its decision to terminate the litigation, was received only three weeks before the fixed hearing date, at a time when the Council had presumably incurred costs in preparing its case.

In my judgment, the circumstances of the discontinuance in the present case, do not justify a decision not to exercise the costs power expressly conferred by Pt 11 r 5 of the Rules of Court, and governing the situation when the proceedings are discontinued without the consent of the other party. The express power to order costs having been thereby enlivened, I am of the opinion, that the preponderance of authority in this Court (including the cases decided since the Manly Wharf case) is that the discontinuance is relevantly to be regarded as constituting "exceptional circumstances" sufficient to award costs in accordance with the Court's Practice Direction - par 10, it not being established that the discontinuance was induced by any action of the Council or supervening action beyond the control of the parties; rather it being deliberate and no doubt, responsible decision of a litigant, acting on professional advice concerning prospects of success in the proceedings.

F. SHOULD THE COSTS TO BE AWARDED BE ON THE INDEMNITY BASIS?

In my judgment, the circumstances of the present case do not justify the award of costs on the indemnity basis. Although I have concluded that the Applicant's case was beset with difficulties, I would by no means regard it as a hopeless case, or a case that was ill-advisedly commenced or persisted in. On the contrary, albeit late in the very brief litigation history, the Applicant, on obtaining more comprehensive professional advice (legal and planning), promptly decided to discontinue the proceedings. I do not accept the Council's submission that the Applicant ought to have obtained the professional advice it ultimately obtained before it filed its appeal or before it sought an early hearing of its appeal. In my judgment, the Applicant acted responsibly in the litigation in which it had an arguable case.

Accordingly, I find that the Council has not established its case to an award of costs on the indemnity basis.

For all the foregoing reasons, I am of the opinion that the Council is entitled to costs pursuant to Pt 11 r 5(2) of the Rules of Court (ie costs reasonably incurred prior to the discontinuance).

Such costs should be in the sum as agreed, or failing agreement, as assessed.

However, the Council has failed to make out its claim to costs on the indemnity basis.

Since the Council has succeeded in its claim to costs (which was resisted by the Applicant) but has failed in its claim to costs on the indemnity basis, I think it fair and reasonable that each party pay its own costs of the hearing of the present Notice of Motion.

Accordingly, I make the following orders:

1. Pursuant to Pt 11 r 5, of the Rules of Court the Applicant is ordered to pay the costs of the Respondent, being the costs reasonably incurred by the Respondent in the proceedings prior to the discontinuance of the proceedings on 21 May 1999, such costs being in the sum agreed or failing agreement, as assessed.
2. Each party pay its own costs of the hearing on the Respondent's Notice of Motion seeking costs on the indemnity basis.

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