Martin v Highlake Resources Pty Ltd

Mr Martin's submissions 9Mr Martin relies on the circumstance that the exploration licence having expired through no fault on his part, the proceedings are otiose. That is the event costs should follow and he should have his costs of the proceedings.

Highlake's submissions 10Highlake seeks its costs relying on r 42.20 of the Uniform Civil Procedure Rules 2005 (UCPR) that where proceedings are dismissed the plaintiff must pay the defendant's costs of the proceedings to the extent they have been dismissed. The relevant principles are summarised in the decision of McNamara v Bao Son [2010] NSWSC 809 per Hallen AJ at [12]. Highlake has incurred expense in meeting the case mounted by Mr Martin over an extended period for which it should be compensated.

Consideration 11Under s 98 of the Civil Procedure Act 2005 costs are discretionary. Rules such as r 42.20 can apply to guide the court's consideration. The presumption in r 42.20 would mean that in the absence of disentitling conduct Highlake would be awarded its costs, the proceedings having been dismissed. I adopt the principles helpfully identified in McNamara at [12]: The following principles may be regarded as relevant in determining who is to bear the burden of costs in a case where the proceedings are dismissed before a final hearing: (a) Costs discretions are truly discretionary: see Oshlack v Richmond River Council [1998] HCA 11; (1998) 193 CLR 72 at 84 and there are no absolute rules; (b) The purpose of a costs order is to compensate, or indemnify, the person in whose favour it is made, not to punish the person against whom it is made: Ohn v Walton (1995) 36 NSWLR 77 at 79 per Gleeson CJ; (c) Rule 42.20 of the UCPR does not give rise to a presumption that costs will be ordered against the Plaintiff: Fordyce v Fordham [2006] NSWCA 274; (2006) 67 NSWLR 497; Foukkare v Angreb Pty Limited [2006] NSWCA 335 at [65]; Pentroth Pty Ltd v Kirschild Pty Ltd [2006] SASC 356; (2006) 96 SASR 129; Australiawide Airlines Ltd v Aspirion Pty Ltd [2006] NSWCA 365 at [53]; Bitannia Pty Ltd v Parkline Constructions Pty Ltd [2009] NSWCA 32. However, the rule does create a starting point by requiring "... the plaintiff must pay the defendant's costs of the proceedings ..." unless that outcome is displaced by a discretionary decision ("unless the court otherwise orders"); (d) Generally, there must be some proper justification, sound positive ground, or a good reason, for departing from the ordinary position: Fordyce v Fordham at [2] per Santow JA; Australiawide at [54] per Bryson JA; circumstances in which it has been held appropriate to depart from the ordinary position include where the proceedings have been rendered unnecessary by circumstances beyond the plaintiff's control; where the plaintiff achieved practical success in the proceedings, or where costs have been significantly increased by the unreasonable conduct of the defendant. (e) The Plaintiff should be the moving party on an application for an alternative costs order: Bitannia at [70] per Basten JA. If facts are to be relied upon to found the court making a different order, the Plaintiff will bear the onus of proving the relevant facts; (f) Where the proceedings are dismissed prior to any hearing on the merits, "the Court cannot try a hypothetical action between the parties" to determine the question of costs: Australian Securities Commission v Aust-Home Investments Ltd [1993] FCA 585; (1993) 44 FCR 194 at 201; Minister for Immigration and Ethnic Affairs; ex parte Lai Qin [1997] HCA 6; (1997) 186 CLR 622 at 624; Metro Chatswood Pty Ltd v CRI Chatswood Pty Ltd [2007] NSWSC 1120 at [35]; (g) It may be necessary to analyse the whole of the proceedings to determine the appropriate costs order: Fordyce at [67] per McColl JA. A relevant consideration is whether the Plaintiff acted reasonably in commencing the proceedings and whether the defendant acted reasonably in defending them: Australian Securities Commission v Aust-Home Investments Ltd at 201 (cited with approval in Foukkare); all the relevant circumstances, and not just the fact of dismissal, should be considered; (h) It is also important to draw a distinction between cases in which one party, after litigating for some time, effectively surrenders to the other, and cases where some supervening event, or settlement, so removes, or modifies, the subject of the dispute that, although it could not be said that one side has simply won, no issue remains between the parties except that of costs. In the former type of case, there will commonly be lacking any basis for an exercise of the court's discretion otherwise than by an award of costs by the successful party. It is the latter type of case that usually creates problems, since there may be difficulty in discerning a clear reason why one party, rather than the other, should bear the costs: One.Tel Ltd v Deputy Commissioner of Taxation [2000] FCA 270; (2000) 101 FCR 548 at 553; cited with approval in Edwards Madigan Torzillo Briggs Pty Ltd v Stack [2003] NSWCA 302 per Davies AJA (with whom Mason P and Meagher JA agreed) at [5]; (i) The distinction between the two categories referred to above is often helpful in exercising the costs discretion, notwithstanding that neither category can be precisely defined, the boundary between them is unclear and other factors may be relevant: Bitannia per Basten JA at [79]-[81]; Perre v State of New South Wales [2009] NSWLEC 51 at [49]; (j) The rule requires the court to make such order as it thinks just in the particular circumstances of the case. 12The parties' arguments particularly focussed on the principles set out at [12(d)] in McNamara that generally there must be proper justification for departing from the ordinary position per Fordyce v Fordham [2006] NSWCA 274; (2006) 67 NSWLR 497. Whether circumstances beyond the plaintiff's control have rendered proceedings unnecessary can be relevant to consider if the usual approach should apply. 13Mr Martin submitted that the fact that EL 7613 expired in the course of the proceedings was beyond his control and he should not be liable for costs. The expiration of EL 7613 was the event and costs should follow in his favour. Alternatively there should be no order as to costs. Reliance was placed on Martin v Minister for Resources and Energy [2012] NSWLEC 241. Lloyd J held that the circumstance whereby the recipient of the challenged exploration licence applied to have it cancelled was an intervening event over which the plaintiff had no control and made no order as to costs. The facts here are different. Further, I was unable to discern from Mr Martin's submissions why I should make an order for costs in his favour given the history of the matter. 14The whole of the proceedings should be considered. As the history of the proceedings identifies, it was made known to Mr Martin from at least 11 February 2011, and he claims before me today to have known anyway, that the exploration licence was for a term of two years. As Mr Martin stated that is clear from its terms. It was therefore in the interests of Mr Martin to pursue the proceedings efficiently and expeditiously in order for the issues he wished to raise to be brought before the Court in time for useful adjudication on those matters. 15Costs are compensatory; Re the Minister for Immigration and Ethnic Affairs; Ex parte Lai Qin [1997] HCA 6; 186 CLR 622. Highlake has had to respond throughout the proceedings to numerous interlocutory actions by Mr Martin which included filing multiple appeals and motions to reinvolve the Third and Fourth Respondents after they were removed on their application. Claims were made by Mr Martin on numerous bases included seeking damages of many millions of dollars. 16As the history of the proceedings summarised in par 5-7 identifies, the expiration of the period of the licence while proceedings were pending is not a result of Highlake's actions. Rather Mr Martin has pursued numerous appeals which have resulted in delay in the matter proceeding in this Court. 17I must note that whilst unsuccessful in two appeals, Mr Martin was successful in his appeal against the order I made that security for costs be paid before further pleadings could be filed. This meant that Mr Martin could have the matter remitted to this Court and replead it if he so chose and there was utility in doing so. However, it is unclear to me why Mr Martin filed further pleadings last year on 9 November 2012 after the expiration of the challenged licence. 18Mr Martin chose to file amended pleadings raising additional issues despite knowing that the licence had expired. He had the opportunity to discontinue proceedings on 15 November 2012 when the transcript shows this option was clearly raised by Dixon C. Highlake also had to respond to the amended pleadings filed last year by Mr Martin which raised serious allegations concerning breach of confidence, alleged breaches of a former exploration licence, invalidity of delegation and alleged criminal conduct. Highlake was entitled to respond to the content of the amended pleadings some of which allegations bordered on scurrilous in my view. 19There is no disentitling conduct by Highlake suggesting it should not have a costs order in its favour. 20I agree with Highlake's submission that the proceedings have been rendered unnecessary as a result of the Applicant's behaviour in the proceedings. I consider I should exercise my discretion and award costs in Highlake's favour pursuant to r 42.20. 21I should note that the parties agree that as a consequence of the Court of Appeal decision in Martin v Minister (No 14) that my costs order in Highlake's favour dated 11 August 2011 is overturned. I note that Highlake consents to the costs order of 11 August 2011 being set aside.

Orders 22The Court makes the following orders:

1. The Applicant Mr Martin is to pay the Second Respondent Highlake Resources Pty Ltd's costs of the proceedings including the costs of this motion as agreed or assessed.
2. The order made on 11 August 2011 is set aside. Note: The Second Respondent consents to order 2.

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 21 March 2013