Lo v Australian Community Pharmacy Authority [2013] FCA 639 | Case summary

The facts 21 Early last year the applicants entered into negotiations with Coles Group Property Developments Ltd ("Coles") to lease premises at Fletcher Village from which to operate a pharmacy. On 12 March 2012 they received a letter of offer from Coles but concluded that they would not be able to obtain approval from the Secretary to supply pharmaceutical benefits from the premises and so declined it. 22 On 14 June 2012 Mr Stone and Mr Banh signed an agreement with Coles to enter into a lease of shop 10. On 25 June 2012 they applied for approval to supply pharmaceutical benefits from the shop. The applicants were notified of their application and wrote to the Authority objecting to it. The Authority decided not to recommend approval. Messrs Stone and Banh made two further applications, in September and November 2012, and in each case the Authority came to the same decision. 23 A fourth application was made on 17 December 2012. In January 2013 the Authority recommended that it be approved. This is the decision the subject of the proceedings. 24 The application was supported by a number of documents. They included a copy of what was purportedly the agreement to lease shop 10 and a statutory declaration of Richard Jonathan Peachey, National Speciality Leasing Manager for Coles. Amongst other things, Mr Peachey declared that Coles was the registered proprietor of Fletcher Village, that the shopping centre contained a supermarket, that the supermarket and speciality shops were scheduled to open the week commencing 10 February 2013 and that the shopping centre would comprise "16 other commercial establishments … in addition to the new concept Coles supermarket". 25 On 21 January 2013 Ms Le wrote to the Authority submitting that the application did not meet the requirements of item 133 as the shopping centre contained only 11 commercial establishments. But on the basis of the material submitted by Mr Stone and Mr Banh the Authority decided otherwise. 26 On 13 February 2013 Coles Supermarket began trading at Fletcher Village. Six days later, on 19 February 2013, Messrs Stone and Banh executed an agreement to lease shop 11. 27 Mr O'Neill submitted that this was a re-execution of an agreement entered into at an earlier time. He pointed to the fact that the date was handwritten over a typed "2012" and that the agreement referred to dates that preceded 19 February 2013. There is little doubt that the document had been drawn up in 2012 but it is by no means clear whether or not it was executed in that year. No earlier agreement was produced, no explanation given for its absence and in correspondence with Coles on 24 April 2013, Esplins (the solicitors for Mr Stone and Mr Banh) referred to the agreement having been entered into on 19 February 2013. I am unable to come to a concluded view about whether the agreement was entered into before 19 February 2013. Ultimately, however, nothing turns on this. 28 On 22 February 2013 the applicants filed their originating application. Mr Stone and Mr Banh were not initially named as respondents but on 27 February 2013 they were served with the application. The next day, 28 February, the applicants filed an interlocutory application seeking orders that the Authority's decision be suspended or that the Secretary be restrained from approving the application until the judicial review application had been determined. 29 The interlocutory application was listed before the duty judge on 1 March 2013. His Honour ordered that Mr Stone and Mr Banh be joined as parties. The applicants did not pursue their interlocutory application having extracted an undertaking from Mr Stone and Mr Banh that they give them at least three days' notice of their intention to enter the proposed premises and begin shop fit-out works. 30 On 8 March 2013, precisely one week after Mr Stone and Mr Banh had been joined as respondents, their solicitor, Mr Rush of the firm, Esplins, wrote to Mr Peachey advising him of the proceedings. Amongst other things, Mr Rush pointed out: Subsequent to the determination of ACPA some of the proposed tenants have withdrawn from their proposed leases and some of the proposed tenancies have been amalgamated. As at today there is a real risk that ultimately there may not be 15 other commercial establishments in Fletcher Village. Accordingly, there is a real prospect that the Federal Court application of the Court Applicants will be successful and the recommendation by ACPA for approval of the Proposed Lessee's application will be set aside and of no effect. On this basis we believe either Coles or the Proposed Lessees can terminate the Agreements for Lease of (Shops 10 and 11 within thirty (30) days of 13 February 2013. The Proposed Lessees wish to proceed with their proposed leases of Shops 10 and 11 provided they can get a pharmacy approval which is not liable to be set aside. To this end please confirm that Coles will agree to extend the Approval Date in the Agreements for Lease to allow sufficient time to prove there will be at least 15 other commercial establishments in Fletcher Village and to get a new pharmacy approval. 31 Mr Rush went on to propose that, if Coles were agreeable to this course, Mr Stone and Mr Banh would consent to the orders sought in the originating application, formalise arrangements with "3 - 5 subtenants of Shop 11 so that these will represent 3 - 5 commercial establishments", begin fit-out works to create those establishments and, after Coles concluded leasing and fit-out arrangements for two separate commercial establishments in Shop 3, lodge a new application for approval under item 133. Mr Rush expressed the hope that they would be in a position to do so by 15 April 2013 and the Authority could make a decision at its meeting on 24 May 2013. 32 This letter was produced by Coles on 11 April 2013 in answer to a subpoena issued by the applicants on 4 March 2013. 33 On 11 March 2013 the proceedings were listed for directions. I made orders for an agreed statement of facts and issues to be filed by 25 March 2013, for the applicants to file and serve a court book and any additional evidence by 4 April 2013, and listed the matter for hearing on 28 May 2013. I also fixed a timetable for the filing of submissions. 34 On 18 March 2013 Mr Peachey replied to Mr Rush's letter. He noted that either party to the lease could terminate the agreements within 30 days of 13 February 2013 and that Coles was prepared to extend "the sunset date" to 31 May 2013. At this stage it is clear that Messrs Stone and Banh had a two-pronged approach - to defend the judicial review proceedings but at the same time to ensure that, if the Authority's recommendation was going to be set aside, they had a back-up plan. 35 On 25 March 2013 Esplins emailed the solicitors for the Commonwealth a copy of the development consent for Fletcher Village, and the floor plan referred to in that consent which identified the centre as containing a supermarket and 11 other shops. Mr Flaherty, the applicants' solicitor, was copied into the email. 36 On 3 April 2013 the parties filed an agreed statement of facts and issues. On the same day the applicants circulated a copy of their draft amended originating application. 37 On 9 April 2013 Mr Rush wrote to the solicitors for the other parties, referring to the draft amended originating application, and stating: Our clients sought to be joined to the Proceedings in order to be heard as contradictors to the Applicants' case. However, the Amended Originating Application considerably expands the issues in the Proceedings. It therefore also significantly expands the likely time and costs involved in our clients' participation. As a result, our clients instruct us that they are no longer in a commercial position to actively participate in these Proceedings and are instead content for the First and Second Respondents to defend the decision to approve our clients' application. 38 On 12 April 2013, Mr Stone and Mr Banh circulated an unsealed interlocutory application, seeking orders that the proceedings be discontinued against them or alternatively leave to file a submitting notice. Natalya Boyarkina, a solicitor employed at Esplins, swore an affidavit in support. The affidavit did not mention the correspondence with Coles. Amongst other things, Ms Boyarkina repeated what Mr Rush had said in his 9 April letter and stated (without alteration): 14. In particular, the new allegations of relating to the decision being affected by fraud will likely require the preparation of evidence of intention and matters that were known by the Third and Fourth Respondents as at the time their application was presented to the First Respondent. While I am instructed that those allegations are vigorously denied by the Third and Fourth Respondents the expansion of the pleaded case beyond the scope of the Originating Application causes my clients concern as to: (a) the time and costs of our clients in connection with the Proceedings; (b) the adverse effect it would have on our clients' existing pharmacies; and (c) the fact that it is unlikely that the Proceedings would be fully determined in sufficient time to satisfy the condition precedent in our clients' agreements for lease from the landlord of the Fletcher Village Shopping Centre. 15. I am instructed that the Third and Fourth Respondents are therefore not in a position to participate in the Proceedings. 16. By way of explanation, the Third and Fourth Respondents entered agreements for lease of Shops 10 and 11 in the Fletcher Village Shopping Centre with Coles Group Property Developments Ltd, the landlord of the Fletcher Village Shopping Centre ("Coles"). 17. Entering agreements for lease regarding Shops 10 and 11 was conditional upon receiving the First Respondent's approval to operate a pharmacy and supply pharmaceutical benefits from Shop 10 (the proposed premises for a pharmacy). Although such approval has been granted by the First Respondent (namely the First Respondent made the decision to recommend approval to the Second Respondent), it is challenged by the Applicants in the Proceedings. In light of that challenge the Third and Fourth Respondents do not have, and cannot obtain approval from the Second Respondent to open a pharmacy in Shop 10. The Third and Fourth Respondents therefore cannot commence the supply of pharmaceutical benefits from Shop 10. 18. On the Third and Fourth Respondents' request, in light of the Proceedings and the hearing listed on 28 May 2013, Coles extended the date by which the condition precedent in the agreements for lease had to be satisfied to 31 May 2013. 19. The expansion of the issues in the Proceedings is likely to impact the hearing date and will jeopardise the Third and Fourth Respondents securing leases over Shops 10 and 11. 39 There was, I hasten to point out, no previous suggestion that the hearing date was in jeopardy. 40 On 16 April 2013 the solicitors for the Secretary served on the applicants an interlocutory application seeking an order that she be released from the implied undertaking not to use or disclose the contents of Esplins' letter to Coles of 8 March 2013. 41 The interlocutory application brought by Mr Stone and Mr Banh was listed for hearing on 17 April 2013. The Secretary did not end up moving on her interlocutory application. I granted leave to Mr Stone and Mr Banh, who had previously been active contradictors, to file a submitting notice, reserving the question of costs. A submitting notice was filed the next day. I also made orders, amongst other things, extending the time for the filing of the court book to 29 April 2013, for an amended statement of facts and issues to be filed by the same date, for the applicant to file additional evidence and submissions by 6 May 2013, for the respondents to file their submissions by 14 May 2013 and for the applicant to file submissions in reply by 20 May 2013. I further ordered that the respondents notify the applicants within two days of any further application Mr Stone and Mr Banh might make to supply pharmaceutical benefits from premises in Fletcher Village. 42 Also on 17 April 2013 Esplins wrote to Mr Dean, the solicitor for the Commonwealth. In that letter they stated that during the week commencing 4 March 2013 Mr Peachey had advised Mr Rush that two of the proposed lease agreements or lease offers referred to in his statutory declaration had "fallen through". 43 On 24 April 2013 Esplins wrote a letter to Coles, addressed to its Senior Legal Counsel, Sue Jones, confirming that they had filed a submitting notice in these proceedings. They went on to say: Our clients decided to file a submitting [notice] as a consequence of the documents produced by Coles under the Applicants' Subpoena which disclosed that there appeared to be insufficient or incomplete evidence to support the Statutory Declaration by Mr R. Peachey sworn on 11 December 2012. 44 This explanation was not given by Ms Boyarkina in her affidavit or by Mr Rush in his correspondence with the other lawyers. 45 Documents were first produced by Coles under subpoena on 15 March 2013. Further material was produced on 19 March and 26 March and on 27 March the registrar stood over the subpoena to 3 April. The registrar granted access to the parties to inspect documents on 20 March, 27 March and 3 April. There is no evidence about what was produced on any of these occasions but one thing is almost certain - when Mr Rush wrote to the other solicitors on 9 April and Ms Boyarkina swore her affidavit on 12 April they had inspected the documents produced under subpoena. 46 The 24 April letter from Esplins to Coles went on to state (without alteration): As a result of the evidence produced by Coles the Applicants have now expanded their Application to claim fraud. In view of the insufficient and incomplete evidence and the expansion of the Proceedings referred to above our clients are of the opinion that a decision will not be obtained by the extended approval date of 31 May 2013. Additionally, in view of the difficulties in obtaining at least fifteen (15) additional commercial establishments in the Fletcher Village our clients are unwilling to expend considerable sums of money necessary to defend the Proceedings. Accordingly, Mr Duc Dung Banh and Mr Andrew Stone hereby give notice to Coles that they terminate: 1. Agreement for lease dated 14 June 2012, entered between Coles as the Lessor and Mr Duc Dung Banh and Mr Andrew Stone as the Lessees for Shop 10 pursuant Clause 2A of that Agreement; 2. Deed of Variation of Agreement for Lease dated 17 September 2012 entered between Coles as the Lessor and Mr Duc Dung Banh and Mr Andrew Stone as the Lessees for Shop 10; and 3. Agreement for Lease dated 19 February 2013, entered between Coles as the Lessor and Mr Duc Dung Banh and Mr Andrew Stone as the Lessee for Shop 11 pursuant to Clause 1A of that Agreement. 47 Esplins did not inform the applicants that they had written this letter or that they had asked Coles to terminate the agreements for lease. It was not until 3 May 2013 that they informed the other respondents (and then only in response to a direct inquiry from Mr Dean) that Messrs Stone and Banh had terminated their agreements with Coles. In a letter to Mr Dean sent by email that day, Esplins said, amongst other things: As our clients no longer have a legal right to occupy any premises in Fletcher Village the current Proceedings are of no utility and our clients have no objection to your clients and the Applicants seeking orders to set aside the ACPA decision. 48 Still, they did not contact the applicants or copy them in to the email. That same day, 3 May, blissfully unaware of what had occurred or of this correspondence, Mr Flaherty filed a further affidavit, 10 pages in length, to which two ring binders of materials were annexed. 49 The first the applicants knew of these matters was on 6 May 2013 when Mr Flaherty received a letter from Ms Jones, informing him that Coles had accepted the termination of the agreements for lease. 50 In the meantime the applicants were preparing for the hearing on 28 May 2013 in accordance with the orders I had made at the parties' request on 17 April 2013. 51 On 6 May 2013, the same day Ms Jones informed Mr Flaherty that the agreements for lease had been terminated, the applicants filed and served the court book, their additional evidence and two sets of submissions. 52 The next day the Secretary's delegate was given copies of correspondence from Coles indicating that it had agreed to the termination notice. 53 On 9 May 2013 Esplins wrote to the solicitors for the other parties advising them of what had occurred. It stated: Our clients no longer have a legal right to occupy any premises in the Fletcher Village. If the First and Second Respondents are successful in the Proceedings and the ACPA decision on the Application NA2088 stands, our clients may wish to again approach Coles to endeavour to secure a legal right to occupy Shop 10 to obtain the benefit of the ACPA decision. As our clients have filed a submitting appearance and at this point no longer wish to adopt an active role in the Proceedings, they will not be in a position to object to any agreement between the Applicants and the First and Second Respondents to set aside the ACPA's decision… 54 On 10 May 2013 the Secretary's delegate wrote to Mr Stone and Mr Banh to advise that she proposed not to approve their application. She invited them to make a written submission on her proposal or to withdraw their application. In view of the impending hearing, Mr Dean sent an email the same day to Esplins seeking their urgent response to the delegate's letter. On 14 May 2013 Esplins replied to Mr Dean, advising him that in view of the termination of the lease Mr Stone and Mr Banh had no legal right to occupy Shop 10, and accordingly they "cannot object", amongst other things, to any decision the delegate wishes to make on their substantive application. 55 On Friday 17 May 2013 a delegate of the Secretary advised Messrs Stone and Banh that, as they had terminated their agreement with Coles, the application did not meet "Rule 133 under the Pharmacy Location Rules" and that the application to supply pharmaceutical benefits at Shop 10 was rejected. 56 At 3.15 pm the same day Mr Dean informed Mr Flaherty by email of the Secretary's decision. He foreshadowed an application to have the proceedings dismissed as futile in the circumstances but indicated that would be unnecessary if the applicants withdrew their application at the earliest opportunity, which he suggested was not later than Tuesday 21 May 2013. He foreshadowed that, unless the proceedings were withdrawn by then, they would seek a costs order against them. 57 There is little doubt that by this time everyone had agreed that the proceedings were now futile and that the originating application should be withdrawn. The stumbling block was costs.

What order should be made? 58 Ordinarily, costs follow the event. Ordinarily, however, there is a hearing on the merits and it is the determination of the merits that dictates who should pay the costs. It is well accepted that where proceedings come to an end before hearing, a court should not decide costs by engaging in a hypothetical trial. As McHugh J explained in Re Minister for Immigration and Ethnic Affairs; ex parte Lai Qin (1997) 186 CLR 622 at 624-625: The Court cannot try a hypothetical 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 became 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. Cf. Australian Securities Commission v Aust-Home Investments Ltd (1994) 44 FCR 194 ("ASC v Aust-Home Investments") per Hill J and One Tel Ltd v Commissioner of Taxation (2000) 101 FCR 548 per Burchett J. 59 The Court has a very broad discretion in relation to costs: see FCA Act, s 43(1). Where a party wishes to discontinue proceedings, however, FCR r 26.12(7) provides: Unless the terms of a consent or an order of the Court provide otherwise, a party who files a notice of discontinuance under subrule (2) is liable to pay the costs of each other party to the proceeding in relation to the claim, or part of the claim, that is discontinued. 60 This rule, which in substance is the same as r 42.19 of the Uniform Civil Procedure Rules 2005 (NSW), establishes a default or prima facie position (Armstrong v Australian Community Pharmacy Authority [2012] FCA 577 per Rares J at [9]). It does not create a presumption that costs will be awarded against the discontinuing party, but it puts an onus on it to make an application to the Court where, absent an agreement to the contrary, it does not propose to pay the costs of the other parties (Foukkare v Angreb Pty Ltd [2006] NSWCA 335 at [65]). And the Court will require "some sound positive ground or good reason for departing from the ordinary course": Australiawide Airlines Ltd v Aspirion Pty Ltd [2006] NSWCA 365 at [54], Bitannia Pty Ltd v Parkline Constructions Pty Ltd [2009] NSWCA 32 at [54]. 61 Here, there is good reason why the default position should not apply. This is not a typical case. The applicants did not effectively surrender. To the contrary, it was Mr Stone and Mr Banh who surrendered. The Secretary's decision was the optimum result for the applicants. They argued that this situation only came about because of their decision to bring the proceedings and because of the manner in which and the vigour with which they prosecuted them. 62 At first the applicants urged me to find that they would almost certainly have succeeded had their amended originating application proceeded to a hearing. Quite properly, however, they resiled from this position during oral argument. Ultimately, they submitted that the respondents had both behaved unreasonably, Mr Stone and Mr Banh from the outset, but especially from 24 April 2013, and the Commonwealth from 3 May 2013. For these reasons the applicants argued that the respondents should pay their costs. 63 The Commonwealth submitted that there should be no order as to costs up to 20 May 2013 because all parties had acted reasonably until then. On 20 May the Commonwealth's offer (made on 17 May 2013) that the applicants discontinue with no order as to costs expired. The applicants did not accept that offer and, according to the Commonwealth's submission, continued to prosecute their application. That conduct, the Commonwealth contended, "effectively forced" the Commonwealth to file an interlocutory application to have the proceedings dismissed, to prepare submissions and appear at an interlocutory hearing. Consequently, the Commonwealth asks for an order that the applicants pay the Commonwealth's costs on and from 21 May 2013. 64 In my view, between 24 April 2013, when Messrs Stone and Banh asked Coles to terminate the agreements for lease and 17 May 2013, when the Secretary's delegate decided to reject the Authority's recommendation, Mr Stone and Mr Banh should pay the applicants' costs. Otherwise, there should be no order as to costs. I have come to this view for the following reasons. 65 First, in ASC v Aust-Home Investments Hill J observed at 201: It will rarely, if ever, be appropriate, where there has been no trial on the merits, for a Court determining how the costs of the proceeding should be borne to endeavour to determine for itself the case on the merits or, as it might be put to determine the outcome of a hypothetical trial… This will particularly be the case where a trial on the merits would involve complex factual matters where credit could be an issue. 66 In Gribbles Pathology Pty Ltd v Health Insurance Commission (1997) 80 FCR 284 Finkelstein J said at 287 that, save in special circumstances, it was difficult to see how, in the absence of a hearing on the merits, any order could be made other than that the parties bear their own costs. His Honour said that if a claim was "patently hopeless" or a defence was "bound to fail", that would be a good reason to make an order for costs. But he suggested that there would be very few cases where the issues would be sufficiently clear without a hearing for a costs order to be made in favour of a party. 67 In the present case, no-one contended that the application was "patently hopeless". The case did raise some complex factual matters and, having regard to the fraud allegation, credit would undoubtedly have been an issue. The Commonwealth never conceded that the applicants' case had merit. Even after Messrs Stone and Banh filed a submitting appearance, they maintained their opposition. On the other hand, the letter Mr Rush wrote to Coles on 8 March 2013 suggests that the decision by Mr Stone and Mr Banh to apply for a termination of the agreements for lease was actuated, at least in part, by a recognition that the proceedings were likely to succeed. Moreover, despite what was said in correspondence with the other parties and in Ms Bokarina's affidavit, I suspect that the decision to file a submitting appearance was motivated by the same consideration. But I cannot act on suspicion. And none of this material amounts to an admission that victory for the applicants was inevitable. Nor am I independently persuaded that the applicants were bound to succeed. 68 Secondly, I accept that the applicants acted reasonably throughout. There was a proper basis to call into question the Authority's decision and the applicants prosecuted the proceedings diligently. 69 The Commonwealth contended that "in hindsight" it would have been preferable for the applicants to wait to see what the Secretary did, or apply for an order to restrain the Secretary from acting on the Authority's recommendation. It submitted that the applicants had made a tactical decision to challenge the Authority's recommendation in the absence of a restraining order against the Secretary and it was always open to the Secretary to decide not to accept the Authority's recommendation. Yet, they conceded that the applicants did not act unreasonably in commencing the proceedings. In these circumstances the submission goes nowhere. A similar submission was made on behalf of Mr Stone and Mr Banh but they, too, did not contend that the applicants' decision to bring the proceedings was unreasonable. 70 It is true that the applicants could have waited for the Secretary to decide whether or not to accept the Authority's recommendation, but it was certainly reasonable for them not to. During that time it is at least possible, if not likely, that Mr Stone and Mr Banh would sign the lease (which was for a five-year term) and spend money fitting out the shop and acquiring stock so that they could be ready to open for business. Consequently, even if the applicants were able to prove that the Authority's decision was affected by error of a relevant kind, there might be powerful discretionary reasons why they would not get the relief sought. It is true that they could have pursued their application to restrain the Secretary from making a decision before the determination of the proceedings, but Mr Dean told Mr Flaherty that the Secretary's usual practice was to wait until the matter had been determined or six months after the date of the recommendation. 71 The Secretary's decision vindicated the applicants' forensic choice. I accept that in substance this means that they have won their battle against Mr Stone and Mr Banh. But the win occurred not because the Secretary accepted that the Authority's recommendation was flawed but because of the termination of the agreements for lease. True it is, it was because of the proceedings that Messrs Stone and Banh decided to ask for the agreements to be terminated. But they might have done so in any event because of the withdrawal of prospective tenants after the Authority made its recommendation. 72 Thirdly, until 24 April 2013 I am not satisfied that the respondents acted unreasonably. 73 The applicants were critical of the Commonwealth's decision to oppose the application after Mr Stone and Mr Banh had been joined and especially after they filed a submitting appearance. This raises issues similar to those considered in The Queen v Australian Broadcasting Tribunal; ex parte Hardiman (1980) 144 CLR 13, but I do not think the proceedings are truly analogous. The Authority is not a tribunal. Even so, as the Commonwealth submitted, in the absence of a contradictor it had a role to play in assisting the Court and its written submissions were essentially directed to questions of law, not fact. There is nothing unreasonable about the Secretary proceeding to determine the application by rejecting the Authority's recommendation. 74 Although the evidence does raise a number of questions about the conduct of Messrs Stone and Banh and they could have put on evidence to answer them, no inference should be drawn from the absence of such evidence. The significance to be attributed to the failure of a witness to give evidence ultimately depends on "whether, in the circumstances, it is to be inferred that the reason why the witness was not called was because the party expected to call him feared to do so": Fabre v Arenales (1992) 27 NSWLR 437 at 449. In the present circumstances, where the only question is who should pay costs and where there has been no hearing on the merits, where Mr Stone and Mr Banh filed a submitting notice before any occasion arose for them to put on evidence, and where they provided an explanation for doing so, there is no basis for such an inference. 75 In the course of their submissions the applicants pointed to discrepancies between the material submitted to the Authority and other documents. In particular, they compared the proposed floor plan for the shopping centre attached to the development consent from the Council with the floor plan Mr Stone and Mr Banh submitted to the Authority. The former showed one tenancy in a rectangle marked T11. In contrast, the latter showed three in the same space (marked T11, T12 and T13). But the floor plan annexed to the development consent was dated 10 October 2011. The floor plan submitted with the application to the Authority was undated. A table appearing in annexure A to Mr Peachey's statutory declaration purportedly showed the names of the tenants who had accepted signed lease offers for the three areas marked T11, T12 and T13, as at 11 December 2012, fourteen months after the date of the floor plan annexed to the development consent. There is therefore no necessary inconsistency. Additional tenants could have come on board since the development consent was obtained. 76 Indeed, emails passing between Mr Stone and Mr Peachey in 2012 refer to plans by Mr Stone to convert T11 into up to four premises for "medical tenancies" including a general medical practice. And evidence was tendered to show that on 9 and 10 December 2012 (just before Mr Peachey signed his statutory declaration) Mr Stone entered into three separate agreements to sub-lease shop 11, dividing the area previously occupied by shop 11 into three separate premises. 77 The inescapable inference is that these agreements were entered into for the purpose of ensuring that Mr Stone and Mr Banh could satisfy the Authority that Fletcher Village contained the requisite number of commercial establishments. Mr Flaherty said in an affidavit filed on 14 May 2013 that the documents Coles produced on subpoena showed that these agreements were forwarded to Coles by email on 14 March 2013. These circumstances are curious, but there is no evidence to indicate that the agreements were not genuine. On the contrary, in an email from Mr Stone to Mr Peachey dated 1 February 2013 (that is after the Authority had made its recommendation), Mr Stone referred to "officially start[ing] design/documentation" the previous day, with a view to what he described as "the medical tenancies" opening at the same time as the pharmacy. 78 The applicants also pointed to emails indicating that Mr Stone had been intimately involved in the preparation of Mr Peachey's statutory declaration. Of itself, that circumstance is innocuous. Mr Peachey could not be expected to know what information a pharmacist would require in order to meet the requirements of the ACPA rules. Either Mr Stone or someone on his behalf would have to liaise with him to ensure that the statutory declaration covered all relevant matters. 79 Thus, as I said, before 24 April 2013, I am not satisfied that any of the respondents behaved unreasonably. The position is different, however, after 24 April 2013. 80 I accept that generally speaking a party who files a submitting notice can expect not to have to pay costs from the date the notice is filed. Doubtless the reason for this is that, by playing no active part in the proceedings, the submitting party makes no contribution to the costs incurred by the other parties. But that is not this case. 81 Once the decision was made to ask Coles to terminate the agreements for lease, it was inevitable that these proceedings would be brought to a swift end. Messrs Stone and Banh must have known that. They also knew that at the same time they wrote to Coles asking it to terminate the agreements, the other parties were preparing for a trial, that the applicants were due to file the court book within six days and their further evidence and submissions within two weeks. Yet, they took no steps to inform the other parties of their decision. At the very least, that was thoughtless or inconsiderate. As the applicants put it, Messrs Stone and Banh effectively stood by, knowing that in the likely event their proposal were accepted, they had no legal right to occupy any premises in Fletcher Village. As the applicants submitted, if they had been informed on or about 24 April 2013, they could have approached the Court for orders to excuse them from having to prepare the additional documents. In large part the costs that were incurred after 24 April were incurred unnecessarily and only because the parties, especially the applicants, were kept in the dark about what Messrs Stone and Banh were doing. 82 Section 37M(1) of the Federal Court of Australia Act 1976 (Cth) provides that the overarching purpose of the civil practice and procedure provisions is to facilitate the just resolution of disputes according to law and as quickly, inexpensively and efficiently as possible. The power to award costs must be exercised in the way that best promotes that purpose (s 37M(3)). As Messrs Stone and Banh accepted, all parties are required to conduct the proceeding in a way that is consistent with that purpose (s 37N(1)). In exercising the discretion to award costs in a civil proceeding I am bound to take into account any failure to comply with that obligation (s 37N(4)). In my view, from 24 April 2013 Mr Stone and Mr Banh did not conduct the proceeding in a way that is consistent with the overarching purpose. While they set out to ensure that they, themselves, did not incur unnecessary costs, they proceeded without regard to the costs they knew or must have known the other parties were running up. The failure to promptly inform the other parties (particularly the applicants) of their actions was unreasonable. 83 For these reasons Mr Stone and Mr Banh should pay the applicants' costs from 24 April 2013 until 17 May 2013, when the Secretary's decision was made. 84 The applicants also submitted that the Commonwealth acted unreasonably in not informing them of the termination of the agreements for lease on 3 May 2013, when Esplins wrote to Mr Dean. But that was a Friday and on the Monday (6 June), the same day Ms Jones informed the applicants, she emailed the respondents to let them know what she had done. The email was copied to Mr Flaherty. On this basis the Commonwealth was therefore entitled to work on the assumption that by then the applicants knew as much as it did. 85 After 17 May, however, the picture is not so clear. 86 The applicants contended that the Commonwealth could have consented to the orders sought. That is undoubtedly true. The applicants had repeatedly invited them to do so in a number of Calderbank offers. As the Commonwealth pointed out, however, the sting in the tail was that the applicants required the respondents to pay their costs. None of these offers, I would point out, involved any genuine element of compromise on the applicants' part. On 17 May 2013, three days after the applicants' second Calderbank offer, the Commonwealth wrote to the applicants to inform them of the Secretary's decision and to propose a different means of resolving the proceedings with different costs consequences. The letter reads: Without prejudice save as to costs We are instructed that the delegate had today rejected the Third and Fourth Respondents' s 90 application. Please find attached a copy of the letter from the delegate to a representative of the Third and Fourth Respondents, dated 17 May 2013. In the circumstances, your clients (sic) Amended originating Application for Judicial Review no longer serves any purpose, and in our clients' submission there is no relief that the Court can grant with respect to the decision under review that would have any substantive impact or effect. On that basis, we anticipate our clients will instruct us to move the Court for an order that your clients' application be dismissed for lacking utility. However, such a motion will only be necessary in the event that your clients press their Amended Originating Application for Judicial review. Accordingly, our clients invite your clients to withdraw their application at the earliest opportunity (which, in our view, will be no later than 21 May 2013). We are instructed that, in the event that your clients withdraw their application, our clients will not seek a costs order against them. If this offer is not accepted by close of business on 20 May 2013, the offer is withdrawn, and we will be likely to seek the instructions that are foreshadowed above. (Emphasis added.) 87 The offer was not accepted. As I mentioned earlier, the Commonwealth submitted that the applicants "continued to prosecute their application" and "this course of action effectively forced [the Commonwealth] to file [the interlocutory application] to have the proceedings dismissed, and to prepare submissions and appear at an interlocutory hearing". Consequently, the Commonwealth sought an order that the applicants pay its costs on and from 21 May 2013. 88 I reject the submission. Although the applicants did not accept the Commonwealth's offer, it is not correct to say that they continued to prosecute the proceedings. There was no dispute that the proceedings should be brought to an end and that the hearing scheduled for 28 May 2013 should not go ahead. The dispute was about the means of doing so and above all, about who should pay costs. The parties could have reached an agreement about discontinuing the proceedings. Indeed, they did so on 28 May. But they were never going to reach an agreement about costs. I can understand the applicants' desire that the respondents pay their costs. In the unusual circumstances of this case, I do not think that they were unreasonable to refuse an offer that would have seen them recover no costs. I also understand the Commonwealth's desire to bring the matter to a head, but I consider that to do so by applying for summary dismissal was heavy handed. In any event, when the application was listed for hearing the Commonwealth did not press for the relief sought. In those circumstances, the Commonwealth should pay the costs of its interlocutory application for summary dismissal filed on 21 May 2013. To avoid doubt, this should include the filing of the interlocutory application, affidavits in support and submissions on the interlocutory application but not the costs of the hearing on 28 May 2013 as the applicants were pressing to bring the matter back before the Court in any event. Each party has had a measure of success on the question of who should pay costs but there is no obvious victor. 89 There remains the question of the reserved costs. Mr Stone and Mr Banh should pay the costs of their interlocutory application heard on 17 April 2013 and filed in the registry the following day (18 April 2013). No order should be made with respect to the Secretary's application of 16 April 2013. 90 All costs should be paid on the ordinary basis. Although, as I have said, it was unreasonable for Messrs Stone and Banh not to let the parties know what they were doing on 24 April 2013, I do not think that their neglect is such as to warrant an award of indemnity costs. 91 There will be orders accordingly. I certify that the preceding ninety-one (91) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Katzmann.

Lo v Australian Community Pharmacy Authority

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