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File Number(s): 2024/384008

JUDGMENT

Background and the applicable principles

1. On 30 March 2026, I made orders dismissing these proceedings for want of prosecution, for the reasons set out in my ex tempore judgment delivered on that date. I expressed the preliminary view there should be no order as to the costs of the proceedings, but allowed both parties an opportunity to be heard as to costs and made directions for both parties to serve submissions as to costs.

2. I bear in mind that s 98 of the Civil Procedure Act 2005 (NSW) (“Civil Procedure Act”) provides that costs are in the discretion of the Court. That section confers on the Court a wide discretion with respect to costs, and the Court has discretion to determine by whom, to whom and to what extent costs are to be paid; and costs will ordinarily follow the event unless it appears to the Court that some other order should be made as to the whole or any part of the costs, in accordance with r 42.1 of the Uniform Civil Procedure Rules 2005 (NSW). However, that principle has no application where there has been no application on the merits and there is no event to follow.

3. In their submissions, which I note below, Ms Macnab and Mr Deverell paid little attention to the applicable authorities where proceedings end without a determination on the merits. In Re Minister for Immigration & Ethnic Affairs of the Commonwealth of Australia; Ex p**arte Lai Qin (1997) 186 CLR 622 at 624; [1997] HCA 6, McHugh J observed that:

*“*In most jurisdictions today, the power to order costs is a discretionary power. Ordinarily, the power is exercised after a hearing on the merits and as a general rule the successful party is entitled to his or her costs. Success in the action or on particular issues is the fact that usually controls the exercise of the discretion. A successful party is prima facie entitled to a costs order. When there has been no hearing on the merits, however, a court is necessarily deprived of the factor that usually determines whether or how it will make a costs order.

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. The court cannot try a hypothetical action between the parties. 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.”

4. Exceptions to that general principle may arise if a party capitulated or acted unreasonably. In One.Tel Ltd v Cmr of Taxation (2000) 101 FCR 548; [2000] FCA 270 at [6], Burchett J observed that a costs order may be made where a party effectively surrenders to the other party, and that qualification was noted with approval by the Court of Appeal in Nadilo v Eagleton [2021] NSWCA 232 at [9]. In Nichols v NFS Agribusiness Pty Ltd (2018) 97 NSWLR 681 at 683–684; [2018] NSWCA 84, Basten JA observed that:

“… although it is possible to make an order for costs against one party if it can be shown that it has invited the litigation by its unreasonable behaviour, or has unreasonably pursued the litigation, such an order should only be made where that judgment is manifest by reference to known circumstances, not in dispute between the parties. If the question cannot be answered without reviewing large swathes of evidence and resolving, on a tentative basis, disputed questions of fact, the task should not be embarked upon.”

5. I have here drawn on my summary of these principles in Zemann v Solos Ltd & Ors [2026] NSWSC 211 at [4]ff.

The parties’ submissions and determination

6. Ms Macnab served submissions on 13 April 2026 which did not comply with the Court’s orders to either the font in which they should be served or their spacing, and exceeded the length of submissions permitted by the Court’s orders. Ms Macnab there relied on earlier affidavits served in the proceedings. She referred to the circumstances in which the Second and Third Defendants had been established and to the allegations that she had made in the proceedings which have now been dismissed for want of prosecution. She contended that she did not have legal representatives “on the [record]” in the proceedings until 9 March 2026, but had previously received “off the [record]” legal assistance and had incurred costs in doing so. It is not necessary to decide, in the present circumstances, whether a litigant should be allowed costs in respect of a legal representative which does not file a notice of appearance in the proceedings.

7. Ms Macnab also referred to the history of the proceedings and asserted that Mr Deverell’s former legal representatives had pursued a litigation strategy in breach of his obligations under ss 56–58 of the Civil Procedure Act. Ms Macnab also referred to the substantial legal costs that Mr Deverell claimed to have incurred in the proceedings and rightly observed that those costs are “remarkably high”, having regard to the lack of progress in the proceedings in the District Court and this Court, which has now resulted in their dismissal. Ms Macnab also contended that she had previously made attempts to advance the proceedings, which were obstructed by Mr Deverell. I have, however, previously held that the conduct of both parties warrants the dismissal of the proceedings, for the reasons indicated in my earlier judgment. Ms Macnab also contended that orders for costs should be made against Mr Deverell on an indemnity basis, although the parties’ previous conduct of the proceedings has prevented their determination on the merits. I do not accept that submission for the reasons noted below.

8. Mr Deverell in turn advanced numerous allegations adverse to Ms Macnab, which have also not been determined on their merits, and claimed that he made attempts to resolve the proceedings which were not successful. He responded to Ms Macnab’s allegations against him as to the conduct of the underlying businesses and advanced further allegations against her in that regard. He referred to costs that he previously incurred in proceedings in the District Court and in this Court including, remarkably, the costs of purchase of computers and a vacuum cleaner as well as costs of legal representation. I also do not accept Mr Deverell’s submission that he has established a basis for an order for costs against Ms Macnab for the reasons noted below.

9. There is no basis here to find that either party “capitulated” to the other, or that one party acted more unreasonably than the other, where each has failed to conduct the proceedings in a manner that would allow their proper determination on the merits. There is no basis to think that either party was “almost certain to have succeeded if the matter had been fully tried”, where the parties’ allegations against each other could not be tested or determined on the merits, given the manner in which they have conducted the proceedings. Here, there has been no determination of the proceedings on the merits; it is not possible to conclude that either party would almost certainly have succeeded, or to characterise the outcome as a capitulation by either party, absent a determination on the merits; and I am not satisfied that the conduct of either Ms Macnab or Mr Deverell was more unreasonable than the other’s conduct to warrant an order for costs in his or her favour. For these reasons, I make no order as to the costs of the proceedings.

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