BETWEEN : MARIANNE DEBORAH PINTO as trustee for the MARVIAN FAMILY TRUST

VIANNEY PINTO as trustee for the MARVIAN FAMILY TRUST

FRANK IVAN KINKELA as trustee for the KINKELA FAMILY TRUST

LEE HOON KINKELA as trustee for the KINKELA FAMILY TRUST

Costs - Rule as to costs where a proceeding terminates without a hearing - Confidentiality of mediation

Surveillance Devices Act 1998 (WA)

First-Named Plaintiff : Mr J T Schoombee and Mr O D Feinauer

Second-Named Plaintiff : Mr J T Schoombee and Mr O D Feinauer

Australian Broadcasting Corp v Lenah Game Meats Pty Ltd [2001] HCA 63

Hooper v Rogers [1975] 1 Ch 43

O'Brien v Komesaroff [1982] HCA 33; (1982) 150 CLR 310

Paxhaven Holdings Ltd v Attorney-General [1974] 2 NZLR 185

1 COMMISSIONER JOHNSON QC: The genesis of the plaintiffs' claim for damages and injunctive relief is the second-named plaintiff's discovery that the second-named defendant had installed three hidden monitoring devices in the ceiling of the common areas of the premises from which they both operated their respective dental practices ("the premises").

2 Shortly after the hearing of this matter commenced, counsel for the defendants advised that the defendants were prepared to give undertakings to the Court and to the plaintiffs that they and each of them would not by themselves, their agents, servants or otherwise re-install any of the three monitoring devices which the second-named defendant had previously caused to be installed in the premises where he and the second-named plaintiff conduct their dental practices and would further undertake not to install any other or further monitoring devices in the common areas of the premises without the prior written permission of the plaintiffs. On the basis of the undertakings, counsel for the plaintiffs advised the Court that the plaintiffs did not intend to proceed with their claim.

3 It then remained for the Court to determine the appropriate way to formally dispose of the claim. The plaintiffs seek orders that they be granted leave to discontinue the action and that the defendants pay the plaintiffs' costs. The defendants submit that the plaintiffs' claim should be dismissed and that costs be awarded to the defendants.

4 In the course of determining the appropriate way to formally dispose of this claim the issue arose as to the admissibility of evidence of the Court-ordered mediation held in this matter. The plaintiffs' position was that the evidence was not admissible. The defendants took a contrary position.

5 The Court was referred by counsel for the plaintiffs to s 71 of the Supreme Court Act 1935 ("the Act"). The relevant portion of s 71 is as follows:

(a) anything said or done;

(b) any communication, whether oral or in writing; or

(c) any admission made,

in the course of or for the purposes of an attempt to settle a proceeding by mediation under direction is to be taken to be in confidence and is not admissible in any proceedings before any Court, tribunal or body.

(2) ...

(3) Subsections (1) and (2) do not affect the admissibility of any evidence or document in proceedings if -

...

(c) the proceedings in relation to a costs application and under the Rules of Court, the evidence or document is admissible for the purposes of determining any question of costs."

6 Section 71(1) confers a statutory confidentiality or privilege on the mediation process. It renders inadmissible any evidence of the substance of the process. Subsection 3(c) creates an exception in relation to costs applications but that exception is qualified by reference to admissibility of the evidence under the Rules of Court for the purposes of determining any question of costs. The Rules deal specifically with evidence of the substance of a mediation conference only in O 29. Rule 3 prohibits the Mediation Registrar from reporting to the Court on a mediation conference but entitles the Registrar to report "any failure by a party to co-operate in a mediation conference". Such report is not to be disclosed to the trial judge except for the purpose of determining any question as to costs: O 29 r 3(b). The Rules do not elsewhere address the admissibility of evidence of the substance of a mediation conference for the purposes of determining costs or, indeed, for any other purpose.

7 Counsel for the plaintiffs submits that the effect of s 71 of the Act and O 29 r 3(b) is that the only evidence of the substance of a mediation conference which is admissible in a proceeding is the report from the Registrar on the failure of a party to co-operate, and then only with respect to the issue of costs.

8 Counsel for the defendant contends for a less restrictive interpretation of s 71(3)(c) and submits that the qualification that the evidence must be admissible under the Rules of Court is satisfied by reference to those parts of the Rules which deal with evidence generally; for example, O 36.

9 In my view, the correct interpretation of s 71(3)(c) is that advanced by the plaintiffs. In particular, I consider that the inclusion in s 71(3)(c) of the phrase "for the purposes of determining any question of costs" requires that the Rule of Court said to justify the admission of the evidence relates specifically to admissibility in proceedings to determine costs. Otherwise, the inclusion of the phrase would have no purpose.

10 In reaching that conclusion I have considered the fact that, if Parliament had intended to create such a narrow exception to the confidentiality conferred on the mediation process, it would have been far easier to refer specifically to O 29 r 3(b) or to the circumstances therein mentioned. However, I believe the simple answer to that proposition is that the drafting of s 71 is consistent with a Parliamentary intention to restrict the use of the evidence to costs applications and leave the Court to determine whether the use of the evidence should be further limited. As counsel for the plaintiff observed, such an approach is common in legislation where a power to make subsidiary legislation is conferred.

11 The defendants' primary submission was also supported by the more general proposition that, in relation to the issue of costs, an inability to refer to the substance of the mediation may render incomplete the relevant history of events, thereby creating an unsafe basis for the ultimate decision and potential "unfairness" to a particular party.

12 Similar submissions made in relation to other types of privileged information have consistently been rejected by the Courts on public interest grounds: see Commissioner of Australian Federal Police v Propend Finance Pty Ltd (1997) 188 CLR 501, at 583, per Kirby J. The benefits to litigants and to the community of alternative dispute resolution are well established and the inclusion of the privilege in s 71 of the Act and the obligation of confidentiality imposed on the mediator in s 72 indicate that, in other than the specific situations identified in Part VI, those benefits are considered by Parliament to outweigh any disadvantage which may result to a particular litigant. Further, the statutory confidentiality imposed by s 71 of the Act necessarily creates a situation where parties are on notice that their conduct during the course of the litigation will be viewed without recourse to any matter which transpired in the course of the mediation and can adapt their subsequent conduct of the claim accordingly.

13 For these reasons, I declined to allow either party to refer to any matter pertaining to the mediation process other than the fact and timing of its occurrence.

14 As to the appropriate disposition of the action, O 23 r 2(3) requires a plaintiff to obtain leave of the Court to discontinue an action and empowers the Court to grant leave on such terms as may be just including appropriate orders as to costs. It is usually considered appropriate to impose a condition that the plaintiff should not be at liberty to bring another action.

15 It is a well-established principle that it is not desirable for a plaintiff to be compelled to litigate against his or her will, particularly in a case where the plaintiff has secured from the defendant sufficient of the relief sought in the proceedings not to wish to proceed further: Covell Matthews & Partners v French Wools Ltd [1977] 1 WLR 876, at 879; APM Investments Pty Ltd v Trade Practices Commission (1984) 2 FCR 116, at 182 - 183; O'Neill v Mann [2000] FCA 1680, 29 November 2000, at [11]. Further, it was submitted on behalf of the plaintiffs that in light of the evident acrimony between the parties an order dismissing the plaintiffs' claim created the potential for the term "dismissed" to be misused if the second-named defendant were to give an account of or comment upon the outcome of the case. I accept that this is a factor to be taken into account, albeit a very minor one. Without in any way accepting that the second-named defendant would conduct himself in that way, I consider it preferable to avoid the potential for there to be any misunderstanding as to the actual meaning of the order that I make.

16 In my view, no sufficiently cogent argument has been put before me to warrant, in the circumstances of this case, the making of an order dismissing the claim rather than granting leave to discontinue.

17 The issue of costs is a more difficult one to determine. The terms of O 23 r 2(3) are wide enough to enable the Court to make any costs order which is required by the justice of the case. There are many factors which may be taken into account in the exercise of the discretion to award costs including the conduct of the parties in the matter and the reasons for the discontinuance: One-Tel Ltd v Deputy Commissioner of Taxation [2000] FCA 270 (13 March 2000), per Burchett J, at [5]; Re the Minister for Immigration and Ethnic Affairs of the Commonwealth of Australia; Ex Parte Lai Qin [1997] HCA 6; (1997) 186 CLR 622, per McHugh J, at 625. Therefore, some knowledge of the circumstances of this claim is required in order to make an appropriate determination as to costs.

18 The plaintiffs claimed relief based on the following causes of action:

(a) the installation and, or, use of the monitoring devices constituted a breach of a term of a contract between the parties;

(b) the installation and, or, use of the monitoring devices went beyond any rights at common law or equity that the first named Defendant had in respect of the premises;

(c) the installation and, or use of the monitoring devices constituted a nuisance;

(d) the use of the monitoring devices constituted "unlawful acts" within the meaning of the Surveillance Devices Act 1998;

(e) the use of the monitoring devices impinged on the confidential information and communications of the first named plaintiff.

(a) an injunction to restrain the defendants from using the monitoring devices;

(b) an injunction restraining the defendants from installing any other or further monitoring device;

(c) an order that the defendants remove the monitoring device;

(d) an order that the defendants deliver up any tape recordings made with the monitoring device;

(e) equitable damages in lieu of an injunction;

(f) damages including punitive and/or exemplary damages.

20 The monitoring devices were installed by the second-named defendant in the premises in late May or early June 2001 without the knowledge of the plaintiffs. The second-named plaintiff discovered the devices on 10 November 2001.

21 On 12 November 2001 the plaintiffs' solicitors advised the defendants' solicitors that their clients were aware of the existence of the monitoring devices. The letter included a demand that the devices be removed and all tapes be delivered up. The defendants' solicitors were advised that a failure to do so would result in the bringing of an application in the Supreme Court for such orders. On the same day legal proceedings were commenced. At the hearing before Parker J on 13 November an undertaking was offered by the defendants not to use the monitoring devices and not to destroy any tapes. In fact, the Court was informed that no tapes actually existed. The defendants later delivered up two videotapes to the Court and otherwise made discovery of three more videotapes.

22 In response to the plaintiffs' plea that the use of the devices pleaded herein constitutes unlawful acts within the meaning of the Surveillance Devices Act ("the SDA"), the defendants in par 15 of the defence assert that the cameras were not relevantly used. The defendants also pleaded at par 17(h) of the third amended defence that "the 2 tapes delivered up by the defendants to this Honourable Court did not have recorded on them any discernable image of any object or person." Both statements are plainly inaccurate. The two videotapes delivered up to the Court show clearly discernable video footage of the premises including footage of two people moving about the premises.

23 It is relevant to note that, notwithstanding the terms of the request contained in the letter of 12 November 2001, the defendants did not make, or proffer, an undertaking to remove the devices. The monitoring devices were removed in approximately April or May of 2002, some five to six months after their existence came to the attention of the plaintiffs. No attempt was made to immediately advise the plaintiffs that this had occurred. It was not until some five to six weeks later that the plaintiffs were even advised of the removal of the monitoring devices.

24 On 25 March 2002 an offer was made by the plaintiffs under O 24A that they would accept as full and final satisfaction of their claim that the defendants submit to orders that they remove the monitoring devices and attached cabling, restore the ceiling or any other affected area and, significantly, an order restraining them from installing monitoring devices without the prior written permission of the plaintiffs.

25 It is apparent from subsequent correspondence that this offer was not accepted by the defendants. On 28 June 2002 the plaintiffs made an open O 24A offer to the effect that they would agree to the action being dismissed if the defendants undertake in writing not to reinstall nor reactivate the monitoring devices or to install any other or further monitoring device.

26 On 5 July 2002 the defendants provided their response to the plaintiffs' offers to settle by making an offer that the first named defendant would undertake not to reinstall or reactivate the monitoring devices nor to install any other or further monitoring devices in the common areas without the plaintiffs' prior permission. The offer included a requirement that the plaintiffs agree to the action being dismissed and the parties bearing their own costs of the action. It should be noted that this was the first occasion upon which there was an offer of an undertaking to refrain from reinstalling the monitoring devices at some future time.

27 On 21 August 2002 the plaintiffs made a further open offer requiring the same undertaking as to the monitoring devices but also requiring the defendants to pay a contribution to the plaintiffs' costs in the sum of $30,000. A draft bill of costs for taxation was annexed to the offer.

28 The defendants replied to that offer by letter dated 11 September 2002. The letter emphasised a number of points including the assertion that the removal of the monitoring devices was not to be taken as an admission that the defendants were not perfectly legally entitled to install the devices in the premises in the manner and in the location in which they were installed. The defendants went on to reject the open offer and counter offer in terms of the prior offer of 5 July 2002 but with an offer to pay the plaintiffs the sum of $5,000.

29 Ultimately the matter proceeded to trial with the defendant making the undertaking referred to at the beginning of these reasons at the commencement of the hearing.

30 Before considering the legal principles which apply to the issue of costs where a proceeding terminates without hearing, I propose to deal with the submission made on behalf of the plaintiffs that they are entitled to indemnity costs by operation of O 24A. Order 24A r 10(4) states:

"Where an offer is made by a plaintiff and not accepted by the defendant, and the plaintiff obtains judgment on the claim to which the offer relates no less favourable to him than the terms of the offer, then, unless the Court otherwise orders, the plaintiff shall be entitled to an order against the defendant for his costs in respect of the claim from the date on which the offer was made, taxed on an indemnity basis in addition to his costs incurred before that date, taxed on a party and party basis."

31 The substance of the plaintiffs' submission was that, in assessing whether the plaintiffs' offer has been achieved at trial, the Court must look to the effect of the judgment overall and at the practical outcome of the action. It was said that O 24A r 10(4) should in this case be given a wide interpretation and apply in favour of the plaintiffs because the undertaking given by the defendants is the equivalent, in all practical respects, of the permanent injunction sought by the plaintiffs . In effect, the plaintiffs have emerged as "the substantial winners": Stambulich v Ekamper [2001] WASCA 283; (2001) 48 ATR 159, at 171 (FC); Timms v Clift [1997] QCA 61; [1998] 2 Qd R 100, at 107 (CA).

32 Even if that underlying proposition is accepted, it is still necessary to look to the precise terms of O 24A r10. Subsection (4) clearly states that the entitlement is dependent on the plaintiff obtaining "judgment on the claim". Counsel for the plaintiffs was unable to identify any authority in support of the proposition that the expression "judgment on the claim" extends to an order for leave to discontinue where the plaintiffs have secured from the defendants sufficient of the relief sought in the proceeding not to wish to proceed further. In my view, O 24A r 10(4) applies only in the circumstances where the party has obtained a judgment on the claim from the Court. Where an action is disposed of by an order granting leave to discontinue, O 23 r 2(3) sets out the circumstances in which a costs order may be made and O 24A has no application.

33 I turn now to the legal principles which govern an award of costs on a grant of leave to discontinue an action. As McHugh J observed in The Minister for Immigration and Ethnic Affairs of the Commonwealth of Australia; Ex parte Qin (at 625):

"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: Latoudis v Casey [1990] HCA 59; (1990) 170 CLR 534. 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: Latoudis v Casey at 543, 566 - 568. 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."

34 However, the terms of O 23 r 2(3) are wide enough to enable the Court to make any costs order which is required by the justice of the case. The conduct of the parties in the matter and the reasons for the discontinuance can bear heavily on the exercise of the discretion as to costs: O'Neill v Mann, at [13], applying McHugh J in Re the Minister for Immigration and Ethnic Affairs of the Commonwealth of Australia; Ex parte Qin, at 625.

35 The following is a summary of the relevant principles to be applied:

(1) Where a discontinuance results from an acknowledgement by a party of likely defeat and amounts to an effective surrender to the other party, then a costs order in favour of the other party will ordinarily be made: O'Neill v Mann, at [13].

A number of authorities express the principle as it applies to plaintiffs in terms of an entitlement to costs from the defendant where the plaintiff "has secured from the defendant the relief sought in the proceedings": Garwolin Nominees Pty Ltd v Statewide Building Society [1984] VicRp 38; [1984] VR 469, at 472; see also Re the Minister for Immigration and Ethnic Affairs of the Commonwealth of Australia; Ex parte Qin per McHugh J, at 624.

However, it is apparent from the facts of these cases and other relevant principles set out in them that the entitlement to costs arises only where the obtaining of the relief sought amounts to a capitulation by the defendant or a forensic win by the plaintiff: Homestyle Pty Ltd v The Western Australian Builders Labourers, Painters & Plasterers Union of Workers [2002] WASC 57; Supreme Court of Western Australia, 27 March 2002.

As Hodgson J observed in Tsaprazis v Goldcrest Properties Pty Ltd [2000] NSWSC 765, at [33]:

"There is a distinction to be drawn between a case in which one part effectively surrenders to the other party, and a case in which a supervening event renders the matter moot. In the former case, it is very often appropriate to make an award of costs in favour of the party receiving the effective surrender. In the latter case, I accept that the usual order would be that each party pay its own costs."

See also One-Tel Ltd v Deputy Commissioner of Taxation (13 March 2000) per Burchett J; The South East Queensland Electricity Board v Australian Telecommunications Commission Qld, unreported; Federal Court, per Pincus J; G168 of 1997; 10 February 1989, at [16].

(2) In a case which terminates before there has been a hearing, the Court should not resolve the issue of costs by engaging in the nature of a hypothetical trial: One-Tel Ltd v Deputy Commissioner of Taxation (13 March 2000) per Burchett J, at [5]; ASC v Aust-Home Investments Ltd, at 201; Re the Minister for Immigration and Ethnic Affairs of the Commonwealth of Australia; Ex parte Lai Qin, at 624; O'Neill v Mann per Finn J, at [13].

However, this principle is not absolute. It will rarely be appropriate for a Court to endeavour to determine for itself the case on the merits in order to determine the issue of costs: ASC v Aust-Home Investments Ltd (at 201). In particular, the Court should not attempt to come to a decision on any seriously disputed question of fact in circumstances where there has not been a full hearing of the proceedings: Tsaprazis v Goldcrest Properties Pty Ltd, at [35]. But, in an appropriate case, a Court will make an order for costs even when there has been no hearing on the merits: Re The Minister for Immigration and Ethnic Affairs of the Commonwealth of Australia; Ex parte Lai Qin per McHugh J, at 624.

For example, in Tsaprazis v Goldcrest Properties Pty Ltd, Hodgson J, having stated the basic principle, added at [36]:

"On the other hand, it seems to me that, where there are substantial costs involved, it may in some cases be appropriate to consider questions of law and questions of interpretation raised by the case, and to come to decisions on those questions; and also, to come to decisions of fact where the facts are clear."

In One-Tel Ltd v Deputy Commissioner of Taxation (13 March 2000) Burchett J identified the two primary circumstances in which it would be appropriate to make an order for costs in a case which terminates before there has been a hearing, at [5]:

"But this does not mean that a Court can never make an order for costs. Often, it will be unable to do so; but in other cases an examination of the reasonableness of the conduct of the parties respectively, may provide the basis of an order, or 'a judge may feel confident that, although both parties have acted reasonably, one party was almost certain to have succeeded if the matter had been fully tried.'"

See also Tsaprazis v Goldcrest Properties Pty Ltd, at [38] and [51].

However, awards of costs based on certainty of success are likely to be rare: Ex parte Lai Qin, at 625, McHugh J. If an assessment is to be made as to merit, such assessment should only be made in the clearest of cases, for example involving only the resolution of a legal issue and/or where the facts upon which the determination is based are clear or not in dispute: Tsaprazis v Goldcrest Properties Pty Ltd, at [51]; Homestyle Pty Ltd v The Western Australian Builders Labourers, Painters & Plasterers Union of Workers.

(3) The reasonableness of the conduct of the parties in bringing and defending the claim is frequently the determining factor in determining the award of costs: One-Tel v Deputy Commissioner of Taxation (13 March 2000) per Burchett J, at [5]; Re Minister for Immigration and Ethnic Affairs; Ex parte Lai Qin per McHugh J, at 624 - 625; Reddy v Hughes (1996) 37 IPR 413, at 415, per Branson J; ASC v Aust-Home Investments Ltd, at 201.

As McHugh J observed in Re Minister for Immigration and Ethnic Affairs; Ex parte Lai Qin, at 625:

"If both parties acted reasonably in commencing and defending the proceedings and continued to be reasonable until the litigation was settled or its further prosecution became futile, the proper exercise of the costs discretion will usually mean that the Court will make no order as to the costs of the proceedings."

In fact, as Pincus J pointed out in The South East Queensland Electricity Board v Australian Telecommunications Commission Qld, at [9]:

"The Court has to go further than merely find that the applicant acted reasonably in commencing proceedings as that description may apply even where the Court decides, in the end, that there is no cause of action."

In essence, the real question is whether one of the parties has acted so unreasonably that the other party should obtain the costs of the action: Re Minister for Immigration and Ethnic Affairs; Ex parte Lai Qin, at 625; Australian Securities Commission v Aust-Home Investments Ltd [1993] FCA 585; (1993) 44 FCR 194, at 201.

In determining whether a party has acted unreasonably, a Court is entitled to take into account the conduct of a respondent prior to the commencement of the proceedings where the conduct may have precipitated the litigation: ASC v Aust-Home Investments Ltd, at 201.

36 On the one hand the plaintiffs have not discontinued this action because of a realisation that their case is weak. They were prepared to proceed and had commenced the trial. They elected not to proceed because of the undertaking given by the defendants that the offending conduct which gave rise to this litigation would not be repeated. As the undertaking is the equivalent of a permanent injunction, the plaintiffs submit that they have obtained full relief which is equivalent to a surrender or capitulation. It is said that it is therefore unnecessary to go further and look at the issue of whether the parties have acted unreasonably or whether the plaintiff would have succeeded at trial.

37 The defendants insist that the giving of the undertaking does not arise from any recognition of the weakness of their case or from a concession that they were not lawfully entitled to install the monitoring devices. They further dispute that the giving of the undertaking at trial provided to the plaintiffs the relief which they sought in the action. It was pointed out that the plaintiffs' prayer for relief included a claim for damages, including punitive and exemplary damages, which was abandoned when the application for leave to discontinue was made.

38 I accept that an undertaking given to the Court is equivalent to an injunction: Australian Consolidated Press Limited v Morgan and Anor [1965] HCA 21; (1964) 112 CLR 483, at 496; Witham v Holloway (1995) 183 CLR 525, at 529 and 532. That being the case, it is only damages which the plaintiffs have elected to forego and even counsel for the defendants acknowledge that any damages awarded would have been minimal. If one looks at the offers to settle it was always apparent that the plaintiffs were willing to forego damages providing it obtained the appropriate undertaking and, at least at a later point in time, also preserved its position as to costs. There is, in my view, considerable strength in the submission that the plaintiffs have received a substantially complete remedy. However, that is not necessarily the same as saying that the giving of the undertaking constitutes a surrender or capitulation on the part of the defendants.

39 By way of example of a complete capitulation which would entitle a plaintiff to judgment and costs, counsel for the plaintiffs referred to an action on a debt where payment is made on the day of trial. I accept that as an example of circumstances entitling a plaintiff to costs. However, that is not this case. An undertaking not to repeat the conduct of which complaint is made is not necessarily a concession that the conduct was in any way unlawful or improper. Undertakings of this type are commonly and properly given by defendants without any concession that the outcome of the action might be judgment for the plaintiff. While I accept that the plaintiff has received a substantially complete remedy I do not consider that the undertaking amounts to a surrender or capitulation of itself justifying an award of costs to the plaintiffs.

40 The defendants submit that they should not be made the subject of an award of costs in relation to a claim which will now never be established and was not going to succeed in any event. If I conclude that the defendants' conduct was reasonable, in order for the plaintiffs to recover their costs of the action it is essential that I form the view that the plaintiffs' action would have succeeded. Of the causes of action pleaded I consider that there is only one which is remotely capable of falling into the rare category of cases where it is possible to determine the merits without proceeding to trial; the alleged breach of the SDA.

41 It was submitted on behalf of the defendants that there were five obstacles to the plaintiffs succeeding on this plea:

(1) the allegation rests on the use of the monitoring devices for which there is no evidence;

(2) even if the monitoring devices had been used (which is denied), their use in all of the circumstances did not constitute a breach of the SDA;

(3) alternatively to (2) that neither the plaintiffs collectively nor the second-named plaintiff individually have standing to complain as to a breach of the SDA;

(4) further to (3) the SDA does not provide a private right in favour of the plaintiffs;

(5) alternatively to (1) - (4), even if there was a breach of the SDA and the plaintiffs could complain of it, no remedy flows. There are no extraordinary or exceptional circumstances which would warrant the Court granting an injunction in this case, particularly in view of the fact that the cameras have been removed and there is no threatened re-installation.

42 Section 6(1)(a) of the SDA relevantly provides that a person shall not install, use, or maintain, or cause to be installed, used, or maintained, an optical surveillance device to record visually or observe a private activity to which that person is not a party.

43 The expression "private activity" is defined in s 3 to mean "any activity carried on in circumstances that may reasonably be taken to indicate that any of the parties to the activity desires it to be observed only by themselves, but does not include an activity carried on in any circumstances in which the parties to the activity ought reasonably to expect that the activity may be observed".

44 The terms of the SDA were considered by Owen J in Re Surveillance Devices Act 1998; Ex parte TCN Channel Nine Pty Ltd [1999] WASC 246. In that case, Owen J described the definition of "private activity" as extremely broad, at [13], and a little loose, at [14]. Owen J found the definition of "private activity" to have a subjective and an objective element, at [19]. The test under the first part is primarily subjective, that is, the person must actually hold the desire that the activity not be observed, although the circumstances must also be such as to make the indication of desire reasonable. It is the exclusion in the last three lines of the definitions of "private activity" which constitutes the objective element.

"In all cases it will be necessary to look at the circumstances as a whole. Obviously, the location and physical environment in which the incident takes place will be of great significance in deciding what the parties expected and, with the degree of objectivity that the word 'reasonably' imports, should be expected."

46 It was contended on behalf of the defendants that the footage recorded by the monitoring devices lasted for approximately 50 seconds only and the monitoring were not relevantly used. I reject that argument. The short duration of the footage does not alter the fact that the tape was used.

47 It was also contended that the second-named plaintiff had no standing to seek relief in relation to a breach of the SDA and further that the circumstances did not justify the granting of injunctive relief. The plaintiffs refute the validity of both propositions by reference to the decisions in John Fairfax Publications Pty Ltd v Doe (1994) 37 NSWLR 81 and Bridgetown/Greenbushes Friends of the Forest Inc & Anor v Executive Director of the Department of Conservation and Land Management (1997) 18 WAR 126.

48 John Fairfax Publications Pty Ltd v Doe is authority for the following proposition (per Gleeson CJ at 84 and per Kirby P, at 104):

"Whilst it is the Attorney-General who has the standing to seek the aid of the civil Courts to obtain an injunction to prevent disclosure contrary to s 63 of the Telecommunications (Interceptions) Act 1979 (Cth), in special circumstances a private individual will have the necessary standing by showing that he will suffer injury above that of an ordinary member of the public. In the circumstances the private individual had sufficient standing to obtain an injunction to protect the privacy and confidentiality of the record of his own intercepted telephone communications".

49 In Bridgetown/Greenbushes Friends of the Forest Inc & Anor v Executive Director of the Department of Conservation and Land Management, Murray J described the circumstances in which injunctive relief may be granted to a private individual, at [141]:

"The grant of [injunctive] relief is, of course, discretionary, but it has been recognized that it is a discretion which will only be exercised by a Court at the suit of a plaintiff who has standing to being the action in extraordinary or exceptional circumstances, which clearly call for the intervention of the Court, rather than leave the process of enforcement of the obligation to the ordinary application of the criminal law and the prosecution process."

50 Counsel for the plaintiffs contends the second-named plaintiff, as registered proprietor and operator of a business from the premises, has a right of access to the premises and is directly affected, both personally and professionally, by any hidden monitoring devices. It is said that these factors give her standing and entitle her to the relief sought. I consider the plaintiffs' argument on the issue of standing and entitlement to injunctive relief to have considerable force. However, for the reasons which follow I consider it unnecessary to resolve the issue.

51 The primary aspect of the defendants' submissions with respect to the SDA was that the circumstances did not fall within the definition of "private activity" and hence there has been no breach the SDA. Factors said to be in support of that proposition included:

• that the areas under surveillance were the common areas of the premises;

• that there were windows to the premises and the area under surveillance could be viewed from the street;

• that the plaintiff and the defendant both had keys to the premises and, therefore, one was not able to exclude the other from the premises;

• that the areas under surveillance were frequented by staff and members of the public at various times.

52 I understand the submission to devolve to this proposition: A person ought reasonably expect their activities to be observed if there is some possibility that the activities might be observed by another and therefore such activity is not a private activity for the purposes of the SDA. I have some difficulty with this submission. It is significant to note that the definition of "private activity" turns on circumstances and not location. Although a particular location may be accessed by others without notice, there may still be circumstances in which a person might have a reasonable expectation that their activities will not be observed. In other words, the fact that the expectation may on a particular occasion turn out to be flawed does not make it unreasonable.

53 Although I have some serious reservations about the defendants' interpretation of the SDA, at the end of the day, because of the decision of the plaintiffs which arose from the undertaking offered, there will not now be a full hearing and I will not have the benefit of full legal argument put in the context of all available evidence. I am particularly mindful of Owen J's observation in Re Surveillance Devices Act 1998; Ex parte TCN Channel Nine Pty Ltd, at [18] that in all cases it is necessary to look at the surrounding circumstances including the location and the physical environment. I am concerned that, in order to make an award of costs, I am being urged to do that which is prohibited by the authorities, determining hypothetically the outcome of the plaintiffs' claim. I cannot say with confidence that a decision on whether there has been a breach of the SDA would be unaffected by the evidence adduced if this action had proceeded to trial. In all the circumstances, I find that I am unable to conclude on the agreed material alone that the plaintiffs would have succeeded.

54 However, likelihood of success is only one of the factors identified in the authorities as entitling a party to its costs of the action. The reasonableness of the conduct of the parties in bringing and defending the claim is frequently the decisive factor in determining the award of costs. Further, in determining whether a party has acted unreasonably, a Court is entitled to take into account conduct prior to the commencement of the proceedings where the conduct may have precipitated the litigation.

55 The defendants did not complain to the police who have the power to install monitoring devices if, as the second-named defendant asserted in his statement, he had a legitimate belief that his property was being stolen. Neither did he advise the people affected by the installation of the camera that their activities would henceforth be monitored. It would be disquieting for any person to become aware that their activities, including personal activities which they assumed would not be observed, had been secretly monitored. However, I think the level of disquiet is heightened in the case of women who might be understandably concerned about the motive behind the secret surveillance. I do not suggest that there was any motive other than that put forward by the second-named defendant. However, having decided to install the monitoring devices without notice to those affected by their installation, the defendants are responsible for the reasonable reactions of those who are not privy to their motives at the time they discover they have been secretly monitored.

56 In my view, the installation of the monitoring devices without notice to the second-named plaintiff was an inappropriate and invasive act. It was obvious to any reasonable person that, if the hidden monitoring devices were discovered, the second-named plaintiff would consider their installation in her workplace to be an invasion of her privacy and cause her extreme distress. In view of the level of hostility between the parties at the time of the installation of the devices, the installation was bound to be viewed as a highly provocative act and the institution of legal proceedings as a result of their discovery was almost inevitable.

57 It is the case that from the moment the second-named defendant was advised by the second-named plaintiff that she had discovered the monitoring devices and expressed her concern about their installation, the second-named defendant, who was solely responsible for their installation, could have immediately rectified the situation, thus overcoming any need for legal proceedings. He could have immediately removed the devices, agreed to make good any physical damage to property caused by them and undertaken not to re-install similar devices without notice.

58 By way of reply to that proposition the defendants say that the installation of the devices was lawful and that the plaintiffs did not initially seek an undertaking that the monitoring devices not be re-installed. The claim for that relief was not made until 25 March 2002. The defendants cannot, therefore, be criticized either for acting lawfully or for not providing that which was not actually sought. On my understanding of the authorities, lawfulness and unreasonableness are not mutually exclusive concepts in the context of a costs application.

59 On the undisputed facts I have no difficulty in coming to the conclusion that the defendants acted inappropriately and unreasonably in their conduct before the commencement of the proceedings and, indeed, during the course of the proceedings by failing to immediately give all necessary undertakings to rectify the situation created by the installation of the devices and assuage the plaintiffs' concerns; undertakings that they were ultimately prepared to give but not until costs had been incurred and considerable inconvenience caused to the second-named plaintiff.

60 However, as the basis of the finding of unreasonable conduct on the part of the defendants is the failure to give appropriate undertakings, there can, in my view, be no entitlement to costs after 5 July 2002 unless I can be satisfied that the plaintiffs would have succeeded in the action. For the reasons to which I have already referred I am unable to be so satisfied.

61 Accordingly, the defendants having undertaken to the plaintiffs and to the Court that they will not by themselves, their agents, servants or otherwise reinstall any of the three monitoring devices which the first-named defendant had previously caused to be installed in the premises where he and the second-named plaintiff conduct their dental practices and further undertake not to install any other monitoring devices in the common areas of the said premises without the prior written permission of the plaintiffs, the orders disposing of this action will be in the following terms:

(1) The plaintiffs be granted leave to discontinue the action on condition that they or any one of them do not bring further proceedings dealing with the matters in issue in the present action.

(2) The defendants do pay the plaintiffs' costs of the action to 5 July 2002 including any reserved costs and costs ordered to be in the cause, to be taxed.

(3) The parties are to bear their own costs incurred after 5 July 2002.