Berhero Pty Ltd v Hinds (No 2)
[2024] ACTSC 377
•25 November 2024
SUPREME COURT OF THE AUSTRALIAN CAPITAL TERRITORY
Case Title: | Berhero Pty Ltd v Hinds (No 2) |
Citation: | [2024] ACTSC 377 |
Hearing Date: | On the papers |
Final Submissions Received: | 3 November 2023 |
Decision Date: | 25 November 2024 |
Reasons Date: | 19 December 2024 |
Before: | Loukas-Karlsson J |
Decision: | (1) The Plaintiff is to pay the Defendants’ costs of and incidental to the application in proceeding filed and heard on 12 October 2023 a party-to-party basis. |
Catchwords: | COSTS – PRACTICE AND PROCEDURE – Whether a party acted ‘so unreasonably’ – where application consented to –plaintiff no longer had a caveatable interest – further order required to remove caveats under an earlier court order – earlier court orders sought and obtained by plaintiff – plaintiff’s solicitor represented plaintiff through town agents at the time – requirement for further order unappreciated by the plaintiff’s solicitors until informed by defendants’ solicitors – plaintiff behaved ‘so unreasonably’ – plaintiff to bear the defendants’ costs on party-to-party basis |
Legislation Cited: | Court Procedures Act 2004 (ACT) ss 5A, 5A(1)(b), 5A(2) Court Procedures Rules 2006 (ACT) rr 1706, 1721, 1721(1), 6006(2)(a) |
Cases Cited: | Australian Capital Territory v SMEC Australia Pty Ltd [2018] ACTSC 252; 337 FLR 390 Australian Securities Commission v Aust-Home Investments Ltd (1993) 44 FCR 194 Berhero Pty Ltd v Hinds [2019] ACTSC 378 Berhero Pty Ltd v Hinds [2023] NSWSC 1022 Brennand v Hartung [2012] ACTSC 150 Business Acquisitions Australia Pty Ltd v Renshall - Costs [2006] NSWSC 1399 EMI Songs Australia Pty Ltd v Larrikin Music Publishing Pty Ltd [2011] FCAFC 92 Esposito v Commonwealth (1988) 80 ACTR 9 Gang v You (No 2) [2023] ACTSC 32 GJ v AS (No 4) [2017] ACTCA 7 Gribbles Pathology Pty Ltd v Health Insurance Commission (1997) 80 FCR 284 Haines v Croft [2001] ACTSC 77; 146 ACTR 59 In the Estate of Edna Ann Levy [2018] ACTSC 150 Kane’s Hire Pty Ltd v Anderson Aviation Pty Ltd [2023] FCA 381 Lombardo v Bahnan (No 2) [2014] VSC 438 Marhaba v Chen (No 2) [2024] ACTSC 288 Michael Wilson & Partners Ltd v Emmott [2024] NSWSC 1489 Michael Wilson & Partners Ltd v Nicholls (No 9) [2022] ACTCA 70 Nichols v NFS Agribusiness Pty Ltd [2018] NSWCA 84; 97 NSWLR 681 O’Neill v Williams [2007] NSWSC 51 Oliver v Roberts (No 2) [2018] ACTCA 44 Oshlack v Richmond River Council [1998] HCA 11; 193 CLR 72 Petersons v Pitches [2024] ACTSC 298 Punchbowl Casual Dining Pty Ltd v Rashays Cafes & Restaurants Pty Ltd [2024] FCA 1265 Renton v Kelly [2018] NSWSC 1377 Rural & General Insurance Broking Pty Ltd v Australian Prudential Regulation Authority [2009] ACTSC 67; 231 FLR 199 Supabarn Supermarkets Pty Ltd v Cotrell Pty Ltd (No 4) [2020] ACTSC 131 VTS IT Pty Ltd v Russell [2015] ACTSC 230 Wild v Meduri [2024] NSWCA 230 |
Parties: | Berhero Pty Ltd ( Plaintiff) Paul Francis Hinds ( First Defendant) Melissa Sian Hinds (Second Defendant) Registrar-General of Land Titles of the Australian Capital Territory (Third Defendant) |
Representation: | Counsel N Simpson ( Plaintiff) J Larkings ( First and Second Defendants) No appearance (Third Defendant) |
| Solicitors ClarkeKann Lawyers ( Plaintiff) James Conomos Lawyers (now JCL Law Partners) ( First and Second Defendant) No appearance (Third Defendant) | |
File Number: | SC 166 of 2019 |
LOUKAS-KARLSSON J:
Introduction
1․This decision concerns a rather unusual costs case. This unfortunate and fractious dispute concerning costs was infinitely avoidable. The question of costs arises from an application in proceeding lodged by the Defendants. The application was filed, served and heard on 12 October 2023. By way of background, in 2018 the Plaintiff lodged caveats pursuant to a finance contract on the First Defendant’s and the Second Defendant’s (the Defendants) properties. The Third Defendant is the Registrar-General of the ACT.
2․I heard the application on 12 October 2023. On this date orders were made by consent for the Third Defendant (who is not an active party to these proceedings) to remove the caveats registered on the titles of a number of properties owned by the Defendants and to remove the court order concerning the caveats that was registered on the titles of these properties.
3․On 12 October 2023, the question of the costs of the application was reserved. I granted leave to the parties to file further evidence and written submissions. The parties were content to have the application for the costs of the application determined on the papers.
4․The Defendants in their submissions on costs dated 26 October 2023 sought costs of, and incidental to, the application be payable by the Plaintiff on a party-party basis. The Plaintiff sought that each party bear their own costs in relation to the application and that the Defendants pay the Plaintiff’s costs of the cost application on a party-party basis.
5․On 25 November 2024, I announced my decision and stated that the reasons would be published at a later date. For the reasons that follow, the Plaintiff, in my view , should pay the costs of and incidental to the application in proceeding, heard on 12 October 2023.
Affidavits
6․The following affidavits were read in relation to this matter:
(a)The affidavit of Mr Conomos sworn 6 October 2023 (the first Conomos affidavit).
(b)The affidavit of Mr Conomos sworn 19 October 2023 (the second Conomos affidavit).
(c)The affidavit of Ms Cho sworn 20 October 2023 (the Cho affidavit).
7․In this judgment, I will collectively refer, where appropriate, to Ms Cho, Mr Fasullo and other solicitors acting for the Plaintiff as the Plaintiff’s solicitors. I will also refer, where appropriate, to Mr Conomos and other solicitors acting for the Defendants as the Defendants’ solicitors.
Timeline
8․Before turning to a consideration of the relevant legal principles and the submissions in this matter, it is necessary to provide a brief timeline of the procedural history of the dispute between the Plaintiff and Defendants. Despite the contentious nature of this costs application, there is a significant degree of agreement between the parties concerning the history of the proceedings.
9․On 6 November 2013, the Plaintiff and the First Defendant entered into a loan term sheet and a costs agreement for finance brokerage services. This agreement included a provision that authorised the Plaintiff to “lodge a caveat over any or all of [the First Defendant’s] properties noting the [Plaintiff]’s interest in [those] properties and preventing any dealings on the title of those properties until the fees owed to the [Plaintiff] including any interest owed on the costs owed is paid in full.” The Plaintiff asserted that the First Defendant owed a debt which formed a charge over the properties, pursuant to the terms of the agreement between the parties. The Second Defendant is included in the proceedings as the properties are owned by the First and Second Defendants as joint tenants.
10․The First Defendant paid the brokerage fee to the Plaintiff in monthly instalments until 1 August 2016.
11․Between 29-30 May 2018, the Plaintiff lodged caveats on the Defendants’ properties in the ACT: see Berhero Pty Ltd v Hinds [2019] ACTSC 378 at [10] (Burns ACJ) (Berhero (No 1)). On 1 April 2019, the Defendants served lapsing notices in respect of the caveats: see Berhero (No 1) at [11].
12․On 8 April 2019, the Plaintiff commenced proceedings in the ACT Supreme Court to extend the caveats, which gave rise to the court order that was registered on the titles of the Defendants’ properties. On 9 April 2019 the Court made interim orders for the Third Defendant not to remove the caveats “until further order of the Court”. Subsequently, Burns ACJ determined the Plaintiff’s application on 31 May 2019 and made orders for the caveats to be extended “until further order of the Court”: see Berhero (No 1). There was no undertaking as to damages: see Berhero (No 1) at [20].
13․It is important to underline at this juncture, that the Court made the orders concerning caveats that the Plaintiff had sought and the order concerning the caveats was extant “until further order of the Court”. This fact is of significance in relation to the resolution of the costs dispute before me. Additionally, it is important to underline that the Plaintiff’s current solicitors, ClarkeKann Lawyers of Sydney, were indeed also the Plaintiff’s solicitors at that time. Meyer Vandenberg of Canberra were the town agents for ClarkeKann Lawyers on 9 April 2019. Bradley Allen Love Lawyers, of Canberra, were the town agents for ClarkeKann Lawyers on 31 May 2019. I note in this context that the Defendants’ current solicitors (based in Brisbane) were not the Defendants’ solicitor at that time in April and May 2019.
14․Further by way of background, in or about 2019, the Plaintiff commenced proceedings against the First Defendant in the Supreme Court of New South Wales (NSW Supreme Court proceedings). On 30 August 2023, Rees J dismissed the Plaintiff’s claim: see Berhero Pty Ltd v Hinds [2023] NSWSC 1022.
15․Prior to the decision being handed down in the NSW Supreme Court proceedings on 30 August 2023, the Defendants on 9 August 2023 entered into a contract of sale for one of their properties, with a settlement date of 18 October 2023. Two other properties owned by the Defendants were listed for sale and, as at 15 August 2023, contracts for sale were likely to be signed and exchanged imminently. Contracts of sale for these two properties were executed on 18 and 22 August 2023 respectively, with a completion date being set for 60 days after. Additionally, as at 15 August 2023, the Defendants owed a debt to Westpac Banking Corporation (Westpac) that was required to be paid down.
16․On 31 August 2023, being the next day after the decision was handed down in the NSW Supreme Court proceedings, the Defendants’ solicitors promptly and appropriately wrote to the Plaintiff’s solicitors to demand that the caveats be removed in order to allow title to pass to purchasers of the Defendants’ properties.
17․On 4 September 2023, the Plaintiff’s solicitors advised that instructions were held to withdraw the caveats and that forms were being prepared by the Plaintiff’s solicitors to effect this withdrawal. Between 4 September and 28 September 2023, there was further correspondence between the parties about the actual logistics of removing the caveats. Importantly, the Court notes that at this point in time, neither side appreciated that a court order was required to remove the caveats, as referred to earlier in this timeline at [12]-[13].
18․The Plaintiff’s solicitors sent withdrawal of caveats documents to Access Canberra on 11 September 2023 (with a letter dated 8 September 2023) accompanied by a bank cheque to pay for the associated lodgement fees. In her affidavit, Ms Cho, one of the plaintiff’s solicitors, stated that a senior paralegal at the firm had done so as it was consistent with the Plaintiff’s solicitors’ previous practice of lodging documents with Access Canberra. Regrettably, this was clearly done in ignorance of the April and May 2019 orders.
19․On 27 September 2023, the Defendants’ solicitors sent a letter to the Plaintiff’s solicitors’ office. The letter noted that Ms Tobiano for the Defendants’ solicitors spoke to Mr Anderson for the Plaintiff’s solicitors over the phone on 26 September 2023. The letter recorded that Mr Anderson advised Ms Tobiano that the Plaintiff’s solicitors were “experiencing difficulty organising withdrawal of the caveats” and that Mr Anderson was enquiring as to the possibility of using the Defendants’ town agent in Canberra (BD&N) to file the withdrawals on the Plaintiff’s behalf. The letter noted that the Defendants did not agree to this course, and advised the Plaintiff’s solicitors to engage their own town agents. As previously noted, the Plaintiff’s solicitors had retained their own town agents in Canberra for the 2019 proceedings, concerning the caveats in April and May 2019.
20․On 28 September 2023, the Plaintiff’s solicitors received a letter from Access Canberra dated 18 September 2023. The letter advised that Access Canberra had received the withdrawal forms by mail on 15 September 2023, but that lodgement had been rejected on the basis that Access Canberra no longer accepted payment of lodgement fees by cheque.
21․On 28 September 2023, the Plaintiff’s solicitors sent to the Defendants’ solicitors copies of the forms. The Plaintiff’s solicitors apparently believed (without further inquiry) that lodgement of the forms with Access Canberra was all that was required to effect the withdrawal of the caveats. In further correspondence on this day via email, the Defendants’ solicitors stated that in the absence of the effective removal of the caveats by the Plaintiff, instructions were held to make an application to the ACT Supreme Court for the removal of the caveats. In response, the Plaintiff’s solicitors stated that they were only required to provide the Defendants with withdrawals of caveat in registerable form, which had been done by sending the forms. This was, as can be seen earlier in this timeline at [12]-[13], obviously not correct in circumstances where a court order was required.
22․In a reply sent on the same day, 28 September 2023, the Defendants’ solicitors foreshadowed that the Plaintiff’s solicitors needed to “urgently” do what was agreed and necessary to remove the caveats to avoid “an application including indemnity costs”. The Defendants’ solicitors also confirmed that counsel was briefed and an “application will be filed as soon as practicable”. I underline at this point that the Defendants’ solicitors had briefed counsel and properly informed the Plaintiff’s solicitors that an application to the Court will be filed, as the caveats had not as yet been removed.
23․Thus, even at this late stage, it appears that it was still the case that neither the Plaintiff’s solicitors nor the Defendants’ solicitors appreciated that a court order was required because of the orders of 9 April 2019 and 31 May 2019. This should have been obvious to the Plaintiff’s solicitors because the court orders concerning the caveats had been made while the Plaintiff was represented by the very same firm of solicitors, ClarkeKann Lawyers. The Plaintiff’s current solicitors were the Plaintiff’s solicitors when the relevant caveat orders were granted on 9 April 2019 and 31 May 2019 “until further order of the Court”. Thus the requirement for a “further order of the court” self-evidently should have been clear to the Plaintiff’s solicitors. It bears repeating that the Plaintiff’s solicitors represented the Plaintiff (via town agents) before Burns ACJ on both 9 April 2019 and 31 May 2019.
24․Concerningly, nothing further was heard from the Plaintiff’s solicitors in relation to the caveats after Thursday, 28 September 2023 for almost a week, despite the Defendants’ solicitors stressing that counsel was briefed and an “application will be filed as soon as practicable”.
25․Consequently, therefore on Thursday, 5 October 2023, as there was no action concerning the caveats from the Plaintiff’s solicitors, the Defendants’ solicitors sent a letter to the Plaintiff seeking an undertaking from the Plaintiff to pay the Defendants’ costs of lodging the withdrawal forms. The letter stated that a response was required from the Plaintiff before 12.00pm on 6 October 2023, in order to avoid a costly court application to remove the caveats. Importantly, that letter again noted that the Defendants had briefed counsel, who was at that time settling an application and supporting materials that would be filed “imminently”. I interpolate to underline that at this point of the timeline that on 5 and 6 October 2023, it still remained the case that neither the Plaintiff nor the Defendants appeared to appreciate that due to the operation of the court orders of 9 April 2019 and 31 May 2019, a further court order was required to remove the caveats.
26․Further, I note an email included in the second Conomos affidavit sent 6 October 2023 at 10.39am from the Plaintiff’s solicitors to the Defendants’ solicitors. The email apparently deals with settling issues of costs and with the removal of the writs (see [43] of this judgment). It also includes a sentence concerning the expenses of lodging the removal of caveats with Access Canberra:
[The Plaintiff] will offset from the amount payable by [the Defendants] $886.19 on account of the courier and lodg[e]ment fees associated with the removal of the caveats over the ACT properties as per your 5 October 2023 letter.
This email and the responses on the same day from Mr Conomos sent 2.29pm and 2.37pm were not referred to in the submissions of either party. It nevertheless appears to be the only evidence of communication between the parties concerning the caveats between 28 September 2023 to 9 October 2023.
27․On 9 October 2023 at 4.53pm, the Defendants’ solicitors sent an email to the Plaintiff’s solicitors relevantly enclosing a letter dated 9 October 2023, an unsealed copy of the application to the Court, proposed consent orders, and a proposed letter to the Registrar of the ACT Supreme Court seeking an urgent listing of this matter. I note that there appears to be a dispute as to whether the first Conomos affidavit was annexed to the letter. Nothing, in my view, turns on this for the purposes of this costs application. The matters covered in the affidavit concerned events from 2019 to 28 September 2023. I further note that the letter of 5 October 2023 from the Defendants’ solicitors to the Plaintiff’s solicitors stated that counsel was briefed and settling the court application and supporting documents.
28․In the letter to the Plaintiff’s solicitors of 9 October 2023, the Defendants’ solicitors stated that, in accordance with the court orders of 2019, a further order of the Court was required to effect the removal of the caveats from the relevant property titles. The letter also included proposed consent orders, with the Defendants’ solicitors noting that if the Plaintiff agrees to the consent orders the Defendants will agree to a costs order that the Plaintiff pay the costs of obtaining the court order on a party-party basis.
29․On 9 October 2023, the Plaintiff’s solicitor, Ms Cho, had a telephone conversation with the Defendants’ solicitor, Mr Conomos. The Cho affidavit stated that the Defendants’ solicitor, Mr Conomos, indicated ‘words to the effect’ that Access Canberra will not accept the withdrawal of the caveats without a court order. I note that the precise time of this phone call on 9 October 2023 is not stated in the Cho affidavit.
30․I pause momentarily to note the recent judicial discourse in the Federal Court of Australia and the Supreme Court of NSW on the practice of converting the gist of a conversation, that is ‘words to the effect’, to direct speech in affidavit evidence: Kane’s Hire Pty Ltd v Anderson Aviation Pty Ltd [2023] FCA 381 at [118]-[130] (Jackman J); Wild v Meduri [2024] NSWCA 230 at [244]-[254] (Bell CJ), [352]-[356] (Kirk JA), cf [281]-[284] (White JA); Punchbowl Casual Dining Pty Ltd v Rashays Cafes & Restaurants Pty Ltd [2024] FCA 1265 at [29]-[33] (Jackman J). As intellectually stimulating and diverting as that discourse may be, this is not the occasion for this Court to join this discourse as I am satisfied on the evidence that the need for a further court order was finally appreciated by both sides on 9 October 2023, that is, whether expressed as direct speech or otherwise.
31․Thus, finally by 9 October 2023 (and about time it must be said) both the Plaintiff’s solicitors and the Defendants’ solicitors were aware of the legal requirement that where a court order in relation to caveats is in place and that very same court order states “until further order of the Court”, that self-evidently means that a court order is required. It is there in black and white.
32․Mr Conomos stated in his second affidavit that he only became aware of the necessity for a court order when advised by counsel from the ACT he had briefed, Mr Larkings. Counsel had advised the Defendants’ solicitors that a court application “was needed to at least remove the dealing on title”.
33․On the afternoon of 10 October 2023, the Defendants’ solicitors sent an email to the Plaintiff’s solicitors. Mr Conomos stated in his second affidavit that Ms Cho had enquired in an earlier telephone call as to what costs the Defendants would accept if “consent was agreed” to the balance of the proposed consent orders. In the email, Mr Conomos confirmed that while the Defendants would prefer an order for costs, the Defendant would agree to fix the costs at $10,000.00 “conditional on the Court accepting the consent order[s] urgently and mak[ing] the orde[rs] immediately”. Without this, it was indicated that, the Defendants would proceed with the application and seek indemnity costs.
34․Later on 10 October 2023, another solicitor for the Plaintiff, Mr Fasullo, responded to the Defendants’ letter of 9 October 2023, and consented to the proposed orders that the Third Defendant remove the court order and caveats from the titles of the Defendants’ properties.
35․However, the Plaintiff did not agree with the balance of the proposed consent orders. It is proper and convenient to set out the relevant extract of the email of solicitor for the Plaintiff, Mr Fasullo:
In circumstances where you failed to promptly communicate to us the contents of Access Canberra’s response on lodg[e]ment of the withdrawal of caveats, we do not agree to the matters contained your Letter.
This is particularly so in that had Access Canberra’s response been communicated to our client in a timely fashion then, as the caveator, our client would have prepared the appropriate forms and court orders and thus preventing the necessity to seek urgent orders from the Court.
In any event, we do not consider it necessary for the parties to incur the costs of an originating application when we understand the proceedings can be re-activated by virtue of a communication to the Court… our client consents to proposed orders 3,4, and 6…
We do not agree to the balance of the proposed orders in circumstances where the costs your clients have incurred was of their own volition and could have been prevented had your office communicated to us Access Canberra’s response… We consider the appropriate order on costs, if there is such an order to be made, is for each party to bear their own costs.
(emphasis added)
36․The Defendants’ solicitors replied to this email with a letter on 10 October 2023. Relevantly, the letter explained that the Defendants were now seeking indemnity costs concerning the application, and invited the Plaintiff to consent to costs on a party-party basis to avoid the Defendants seeking an order for indemnity costs.
37․Subsequently, on 11 October 2023, the Plaintiff’s solicitor, Ms Cho, sent an email replying to the Defendants’ letter of 10 October 2023. Among other things, the Plaintiff’s solicitors made the following points and invited the Defendants to withdraw “its insistence on costs”:
The withdrawal of caveat sent to your office on 28 September 2023 were in registrable form, and our office provided its express authority for you to date them. They were not blank. Mr Miles Anderson also sent an email to Ms Tobiano of your office, copied to you, on the same day in this regard.
Your clients agreed to offset the fees to lodge the withdrawals of caveat from the fees payable by them with respect to the withdrawal of the writs.
You and I had expressly, albeit briefly, discussed on Monday, 9 October 2023 the withdrawal of caveat. To this end, you said words to the following effect “Access Canberra would not accept them and required Court orders. I have a letter ready to send to you separately about that, but first I want to resolve the removal of the writs.” It was also during the discussion that we both acknowledged that the ACT, specifically Access Canberra, had different processes and procedures and that neither of our offices contemplated that Access Canberra would require further court orders.
The fact that neither parties contemplated the additional Court orders required by Access Canberra is consistent with the fact that the numerous, lengthy, and aggressive correspondence received from your office with respect to withdrawals did not ever mention a demand for Court orders to effect them. Instead, such correspondence were focused on the lodgement of the withdrawal of the caveats, which our office has complied with.
Whether or not you had lodged the withdrawals of caveat with Access Canberra is irrelevant, although from the above discussion, it is reasonable to conclude that your office did. The fact remains is that your office was subsequently made aware of the further Court orders required by Access Canberra, and therefore took it on yourself to unnecessarily incur costs. At no point did your office inform us of the further Court orders required until we received your proposed application to the ACT Supreme Court at 5.04pm on Monday [9 October 2023].
The truth is, had your office taken a less combative approach with respect to the withdrawal of caveat, and informed us of the Court orders required by Access Canberra promptly, our office would have prepared such orders and arranged for them to be made accordingly. This would have prevented the significant costs your clients have unnecessarily incurred in the numerous and lengthy correspondence you have issued to date, which correspondence have threatened Court proceedings at every opportunity.
(emphasis added)
38․What these email communications from the Plaintiff’s solicitors (both Mr Fasullo and Ms Cho) ignore is that it was the Plaintiff’s solicitors who sought the court orders on 9 April 2019 and 31 May 2019. These were the court orders the Plaintiff’s solicitors ought to have known about rather than making an illogical statement (bolded at [37] above) that “had [the Defendant’s solicitors] taken a less combative approach … and informed us of the Court orders required by Access Canberra promptly, our office would have prepared such orders and arranged for them to be made accordingly” (and a similar statement bolded at [35]). In my view, there appears to be something of a misconception in these communications. The requirement said to be required by Access Canberra was not a requirement of Access Canberra as such. It was a legal requirement in the very words of the orders of the Court of April and May 2019; “until further order of the Court”.
39․On the same day, Mr Conomos for the Defendants replied to the email. The Defendants’ solicitors maintained their invitation for the Plaintiff to consent to party-party costs, and provided the following specific replies to the Plaintiff’s email by way of an in-line reply (in bold):
[Plaintiff’s solicitor:] The withdrawals of caveat sent to your office on 28 September 2023 were in registrable form, and our office provided its express authority for you to date them. They were not blank. Mr Miles Anderson also sent an email to Ms Tobiano of your office, copied to you, on the same day in this regard. – [Defendants’ solicitor:] We do not accept this because in any event an order of the Court is needed to remove the caveats[.]
Your clients agreed to offset the fees to lodge the withdrawals of caveat from the fees payable by them with respect to the withdrawal of the writs. [Defendants’ solicitor:] - we were never asked and we never agreed to this and in any event, we have already fully paid your invoices for the withdrawal of the writs.
[Plaintiff’s solicitor:] You and I had expressly, albeit briefly, discussed on Monday, 9 October 2023 the withdrawal of caveat. To this end, you said words to the following effect “Access Canberra would not accept them and required Court orders. I have a letter ready to send to you separately about that, but first I want to resolve the removal of the writs.” It was also during the discussion that we both acknowledged that the ACT, specifically Access Canberra, had different processes and procedures and that neither of our offices contemplated that Access Canberra would require further court orders [Defendant’s solicitor:] - we do not accept your version of what was discussed.
[Plaintiff’s solicitor:] The fact that neither parties contemplated the additional Court orders required by Access Canberra is consistent with the fact that the numerous, lengthy, and aggressive correspondence received from your office with respect to withdrawals did not ever mention a demand for Court orders to effect them. Instead, such correspondence were focused on the lodgement of the withdrawal of the caveats, which our office has complied with. [Defendants’ solicitor:] - this makes no sense. The chronology of what has occurred is set out in our letter yesterday. The fact is that you agreed to remove the caveats and did not, then sent us withdrawals and we obtained advice from counsel leading us to [realise] that a court order was needed.
[Plaintiff’s solicitor:] Whether or not you had lodged the withdrawals of caveat with Access Canberra is irrelevant, although from the above discussion, it is reasonable to conclude that your office did. The fact remains is that your office was subsequently made aware of the further Court orders required by Access Canberra, and therefore took it on yourself to unnecessarily incur costs. At no point did your office inform us of the further Court orders required until we received your proposed application to the ACT Supreme Court at 5.04pm on Monday [9 October 2023]. [Defendants’ solicitor:] - our client was under no obligation to tell you of the need for further court order (noting you are lawyers and ought to know the law, having lodged the caveats in the first place). After you abandoned removal of the caveats, our client has been forced to make an application for urgent removal of caveats and that costs money.
[Plaintiff’s solicitor] The truth is, had your office taken a less combative approach with respect to the withdrawal of caveat, and informed us of the Court orders required by Access Canberra promptly, our office would have prepared such orders and arranged for them to be made accordingly. This would have prevented the significant costs your clients have unnecessarily incurred in the numerous and lengthy correspondence you have issued to date, which correspondence have threatened Court proceedings at every opportunity. [Defendants’ solicitor:] - we have not taken a combative approach. Your client failed to do what it agreed to do and then abandoned the removal of the caveats, without ascertaining how the caveats could be removed. Having obtained advice, and given the urgency in respect of contracts to settle next week (as you knew, as contracts were provided to you earlier) an application has been necessary and we submit your client is liable for the costs.
40․On 12 October 2023, subsequent to this correspondence of 10 and 11 October 2023, outlined above, the application and the first Conomos affidavit totalling approximately 140 pages were filed and served. The application was listed before me on the same day on an urgent basis. Consent orders were made by me concerning the removal of the court order and caveats. The question of costs was reserved to be dealt with on the papers as sought by the Plaintiffs with the agreement of both parties.
41․The next day, 13 October 2023, the Defendants’ town agent, BD&N, attended to the lodgement of the document concerning the dischargement of the court order and the caveat withdrawal forms with Access Canberra.
42․On 17 and 18 October 2023, the Plaintiff made offers to the Defendants to settle the matter of the costs between the parties. On 17 October 2023, the Plaintiff made an open offer to pay the Defendants’ costs of the application up to $2,000.00 within 7 days of acceptance, with the offer remaining open for acceptance until 10.00am on 18 October 2023. The Defendants did not accept this offer and proposed that the Plaintiff pay their costs in the sum of $10,000.00, and also extracted a previous email sent by the Defendants on 10 October 2023 noting that the Defendants will seek indemnity costs if the Plaintiff did not agree on an order for costs or for costs to be fixed at $10,000.00. On 18 October 2023, the Plaintiff offered to pay the Defendants costs of the application up to $5,000.00. This offer was open for acceptance until 3.00pm on 18 October 2023 but was ultimately rejected.
43․For completeness, as writs have been mentioned at [26] and [39], I note that following the proceedings before Burns ACJ on 31 May 2019 the Plaintiff made an application for assessment of costs and a Certificate of Assessment was made in favour of the Plaintiff. This resulted in the Plaintiff lodging writs against the titles of the Defendants’ properties (the Writs) on 9 May 2023. The Writs were formally registered on the titles of the Defendants’ properties on 10 May 2023. An agreement was reached separately between the parties as to the terms for the removal of the Writs.
Consideration
Principles relevant to the question of costs
44․The starting point for the awarding of costs is r 1721 of the Court Procedures Rules 2006 (ACT) (Court Procedures Rules) which provides:
1721Costs – general rule
(1) The costs of a proceeding or of an application in a proceeding are in the discretion of the court.
(2) The costs of the proceeding include the costs of an application in the proceeding, unless the court otherwise orders.
45․In Michael Wilson & Partners Ltd v Nicholls (No 9) [2022] ACTCA 70 at [12]-[13]. I summarised the general principles applicable to the determination of costs. Importantly, while the Court’s discretion is unfettered, the discretion must be exercised judicially:
12.In terms of awarding costs, the Court’s discretion is unfettered save that the discretion must be exercised judicially: Perisher Blue Pty Limited v Chubb Fire Safety Limited [2014] ACTCA 43 at [41]-[42]. Determining the appropriate costs order requires a broad evaluative judgment of what justice requires in the particular circumstances of the case. So much is apparent from the comments of French CJ, Hayne, Bell, Gageler and Keane JJ in Gray v Richards (No 2) [2014] HCA 47; 252 CLR 601 at [2], where their Honours stated:
The disposition of costs is within the general discretion of the court. Ordinarily, that discretion will be exercised so that costs are awarded to the successful party, but other factors may have a significant claim on the discretion of the Court. The disposition which is ultimately to be made in any case where there are competing considerations will reflect a broad evaluative judgment of what justice requires.
(Emphasis added, citations omitted)
13. The ordinary consequence is that costs follow the event: Oshlack v Richmond River Council [1998] HCA 11; 193 CLR 72 (Oshlack) at [67], [134]. That is to say, that the successful party will generally be entitled to its costs on a party-party basis.
46․Significantly in this case, I was not required to determine the outcome of the application substantively. Relevantly, r 1706 of the Court Procedures Rules provides that:
1706 Costs – if unnecessary to continue proceeding
(1) If, for any reason, it becomes unnecessary to continue a proceeding other than for deciding who is to pay the costs of the proceeding, any party to the proceeding may apply to the court for an order for the costs.
Note Pt 6.2 (Applications in proceedings) applies to an application for an order under this rule.
(2) The court may make the order it considers just.
(emphasis added)
Reasonable or ‘So Unreasonable’?
47․In Australian Capital Territory v SMEC Australia Pty Ltd [2018] ACTSC 252; 337 FLR 390, McWilliam AsJ (as her Honour then was) made reference to the statements of McHugh J in Re Minister for Immigration and Ethnic Affairs; Ex parte Lai Qin (1997) 186 CLR 622 (Lai Qin). These statements of principle are often quoted in the context of costs where a court has not determined the outcome of the substantive application as such. That is of course germane in this case. I have not determined the outcome of the application as the orders removing the caveats were consented to, as inevitably the orders should have been on the facts of this case. The following extract from McWilliam AsJ’s decision at [11] usefully sets out the law and extracts relevant portions of Lai Qin:
It is not disputed that the Court was ultimately not required to determine the outcome of the application, and that consequently, there has been no hearing on the merits of the application. As a result, the oft-cited principles in Re Minister for Immigration & Ethnic Affairs (Cth); Ex Parte Lai Qin (1997) 186 CLR 622 (Lai Qin) per McHugh J, relied on by the Territory, have some relevance, including to costs of an interlocutory proceedings, although the principles there-stated are not necessarily determinative: see Fordyce v Fordham [2006] NSWCA 274; 67 NSWLR 497 at [86]-[87]. The extract relied upon in Lai Qin is at 624-625, as follows:
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 [citing Australian Securities Commission v Aust-Home Investments Ltd (1993) 44 FCR 194 at 201 (Aust-Home)]. 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 [citing Aust-Home at 201]. In administrative law matters, for example, it may appear that the defendant has acted unreasonably in exercising or refusing to exercise a power and that the plaintiff had no reasonable alternative but to commence a litigation. …
Moreover, in some cases 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. … But such cases are likely to be rare.
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. This approach has been adopted in a large number of cases [citing, among other cases, Aust-Home].
(citations omitted, my emphasis)
48․At this juncture, I interpolate to elaborate on the test elucidated by McHugh J in Lai Qin sitting alone as the High Court. His Honour expressed the ‘so unreasonably’ test and referred to Australian Securities Commission v Aust-Home Investments Ltd (1993) 44 FCR 194 (Aust-Home). After reviewing the authorities, the Federal Court (Hill J) in Aust-Home referred to assessing the reasonableness of a party’s conduct (at 201):
These cases seem to support the following propositions being made
(1)Where neither party desires to proceed with litigation the Court should be ready to facilitate the conclusion of the proceedings by making a cost order: Stratford and the SEQEB case.
(2)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: Stratford. This will particularly be the case where a trial on the merits would involve complex factual matters where credit could be an issue.
(3) In determining the question of costs it would be appropriate, however, for the Court to determine whether the applicant acted reasonably in commencing the proceedings and whether the respondent acted reasonably in defending them (SEQEB).
(4) In a particular case it might be appropriate for the Court in its discretion to consider the conduct of a respondent prior to the commencement of the proceedings where such conduct may have precipitated the litigation: cf Sunday Times Newspaper Co Ltd v McIntosh (1933) 33 SR (NSW) 371.
…
(emphasis added)
49․Aust-Home and the reasonableness approach was discussed without disapproval in an unsuccessful appeal to the Full Court (Miles CJ, Gray and Ryan JJ) in Haines v Croft [2001] ACTSC 77; 146 ACTR 59 at [14] (Haines). The Full Court did not refer to Lai Qin: see Haines at [6]. Reference was made to Gribbles Pathology Pty Ltd v Health Insurance Commission (1997) 80 FCR 284, where Finkelstein J observed that the third proposition of Hill J emphasised above is wide enough to allow a costs order where party’s claim is “patently hopeless” (at 287).
50․The ‘so unreasonable’ test was most recently applied in this Court by McWilliam J in Petersons v Pitches [2024] ACTSC 298: at [16]-[23]; see also In the Estate of Edna Ann Levy [2018] ACTSC 150 at [16]-[17] (McWilliam AsJ); VTS IT Pty Ltd v Russell [2015] ACTSC 230 at [52]-[53], [58], but see [40] (Refshauge J). Penfold J in Rural & General Insurance Broking Pty Ltd v Australian Prudential Regulation Authority [2009] ACTSC 67; 231 FLR 199 emphasised that if both parties behaved reasonably there is no issue regarding costs. On the other hand, if there had been unreasonableness that may be considered in exercising the costs discretion:
56.If both parties have behaved reasonably in the period leading up to discontinuance, it seems that their behaviour during that period is not an element that needs to be weighed in the costs decision…
58. If there has been unreasonable behaviour by one or both parties, then that behaviour may be considered in the exercise of the costs discretion but does not either determine the exercise of discretion or exclude consideration of other matters.
51․Further, I note in this context that in Renton v Kelly [2018] NSWSC 1377, Ward CJ in Eq (as her Honour then was) stated at [56] that:
[T]he use of the word “so” indicat[es] a level of unreasonableness which is established by the circumstances in which the costs were incurred.
(emphasis added)
52․Finally, I note the observations of Basten JA in Nichols v NFS Agribusiness Pty Ltd [2018] NSWCA 84; 97 NSWLR 681 (Nichols), a decision referred to by the Plaintiff. This decision is relevant to the proper approach to costs where parties have resolved their differences. In the usual course there will be no award of costs. It was also observed that disputes ought not be manufactured in order to resolve a question (at [2]-[3]):
2.Where the parties resolve their differences, except as to the costs already incurred in litigation, they should usually expect that the court will not award costs… But where there has been no trial there is no “event” because, except in unusual cases, it is not possible to say that one party has been successful and the other unsuccessful. The orders made by consent may or may not demonstrate capitulation by the “unsuccessful” party.
3.In unusual cases, it may be possible to identify success which is manifest on the face of the record. However, to manufacture a dispute in order to resolve that question is to disregard the statutory obligation imposed on the parties, their legal representatives and the court to conduct civil proceedings so as to facilitate the just, quick and cheap resolution of the “real issues in the proceedings”.
(emphasis added, footnotes omitted)
Contested Applications
53․Additionally, counsel for the Defendants referred to Business Acquisitions Australia Pty Ltd v Renshall - Costs [2006] NSWSC 1399 (Renshall), where an order for costs was made against a caveator following a contested application by the registered proprietors to remove caveats from affected parcels of land. Barrett J stated at [5]:
There was no basis whatsoever for the caveats. They should never have been lodged and Mr Renshall and Mr Frederick should never have been put to the trouble and expense of proceedings to obtain their removal.
54․Reference was also made by the Defendants to Lombardo v Bahnan (No 2) [2014] VSC 438 (Lombardo) where an application for costs was made, following the hearing of a contested application to remove a caveat. Warren CJ stated at [10]:
This Court has said on many occasions that the lodging of a caveat is a serious business as it can affect commercial transactions and the financial interests of others. In addition to the financial cost of bringing proceedings to remove a caveat there may be a significant emotional and psychological cost involved. A party who lodges a caveat on a basis which is bound to fail should incur the costs of the Court proceedings instituted to remove them.
(emphasis added, footnotes omitted.)
55․I emphasise that the cases of Renshall and Lombardo both dealt with costs associated with contested applications. In contradistinction, the case before me concerned an uncontested application. Consent orders were made on 12 October 2023 by me. These cases therefore are of limited utility on the question that confronts this Court in this case.
56․The costs application I must determine concerns a case where there has been no hearing on the merits. The removal of the court order and caveats was consented to. In conclusion, on the law I summarise the overarching principles below, and in particular the test I must apply at [57](f)).
Summary of Principles
57․What emerges from the rules and the relevant authorities concerning costs including those discussed above at [44]-[56] are the following propositions:
(a)Costs are in the discretion of the Court: Court Procedures Rules r 1721(1).
(b)The costs discretion is a wide discretion to be exercised judicially: Oshlack v Richmond River Council [1998] HCA 11; 193 CLR 72 at [34]-[35]; GJ v AS (No 4) [2017] ACTCA 7 at [26].
(c)The purpose of the costs discretion is to compensate the successful party. The purpose is not to punish an unsuccessful party: EMI Songs Australia Pty Ltd v Larrikin Music Publishing Pty Ltd [2011] FCAFC 92 at [9] (Emmett, Jagot and Nicholas JJ).
(d)Costs usually follow the event.
(e)Such an order may be departed from, as for example:
1․ Where a substantially exaggerated claim has been made and there is success on the action only to a limited extent: see Marhaba v Chen (No 2) [2024] ACTSC 288 at [20] (McWilliam J), citing O’Neill v Williams [2007] NSWSC 51 at [5] (Brereton J).
2․ Where there had been success on only a limited part of the claim: see Oliver v Roberts (No 2) [2018] ACTCA 44 at [13]-[15] (Murrell CJ, Loukas-Karlsson and Charlesworth JJ).
3․ Nominal damages were awarded: Oshlack at [70] (McHugh J), cited in Supabarn Supermarkets Pty Ltd v Cotrell Pty Ltd (No 4) [2020] ACTSC 131 at [165] (Penfold J).
(f)Where there has been no hearing on the merits, in an appropriate case there may be an order for costs where one of the parties acted ‘so unreasonably’ that the other party should be awarded costs: Lai Qin.
The Plaintiff’s solicitors ought to have known a court order was required
58․The Plaintiff submitted that a costs order should not be made in favour of the Defendants. The submissions crystallised into five main points.
59․First, it was submitted that the Defendants’ submissions are premised on the basis (contrary to legal authority) that there is an entitlement to costs if it can be demonstrated that the application was reasonable.
60․I have discussed the legal authorities above from [44] to [57]. The test to be is applied is summarised at [57](f), namely whether one of the parties acted ‘so unreasonably’ that the other party should be awarded costs: see Lai Qin; Nicholls at [8] (Basten JA).
61․Second, it was submitted that the decisions of Renshall and Lombardo, relied on by the Defendants in their submissions, are not relevant in this case as they relate to costs orders made after fully contested hearings.
62․I note concerning this second submission, in accordance with my discussion of the law at [55] that as the application in this matter did not proceed to a contested hearing, the authorities of Renshall and Lombardo are of limited utility on the question that confronts this Court.
63․Third, the Plaintiff submitted that all reasonable steps were taken following the decision in the NSW Supreme Court proceedings to remove the caveats. It was submitted that, prior to 28 September 2023, neither party was aware of the requirement to obtain a court order to withdraw the caveats.
64․This third submission disregards the fact that it was the Plaintiff’s solicitors through town agents that had sought and obtained the relevant court orders of 9 April 2019 and 31 May 2019. Therefore, the Plaintiff’s solicitors ought to have known that there was a patently obvious legal requirement to obtain a court order to withdraw the caveats. So much is self-evident from the timeline and background of the proceedings discussed from [8] to [43].
65․Further, the Plaintiff submitted concerning this third argument that when the Defendants became aware of this necessity, the Defendants were said to have “spent unnecessary time and money” preparing an application and an accompanying 140-page affidavit. The Plaintiff submitted that this was discourteous and contrary to s 5A(1)(b) of the Court Procedures Act 2004 (ACT) (CPA). It was further submitted that the Defendants could have explored a more cost-effective method to effect the removal of the caveats, given that the Plaintiff did not contest the withdrawal of the caveats and court order.
66․In relation to this further submission, I accept that there could have been a more cost-effective method to effect the removal of the caveats. This is particularly so taking into account that the Plaintiff did not contest the withdrawal of the court order and the caveats. There are however, at least, three significant and related problems with the plaintiff’s submissions concerning costs:
(a)First, it was the Plaintiff’s solicitors, through town agents, who obtained the court orders concerning caveats of 9 April 2019 and 31 May 2019 “until further order of the Court” on behalf of the Plaintiff.
(b)Second, the Plaintiff held no caveatable interest as at 30 August 2023;
(c)Third, the Plaintiff’s solicitors did not progress the removal of the caveats. It is not reasonable for the Plaintiff’s solicitors to assert or profess ignorance of the orders obtained by their firm, for the Plaintiff. The Plaintiff’s solicitors held instructions, from their client, to remove the caveats as at 4 September 2023. One month later the caveats were still on the titles of the properties. This conduct cannot, in my view, be said to be in any way reasonable.
67․As to the discourtesy submission, in the experience of the courts, it is clear that discourtesy tends to undermine the aims of s 5A. The aims of the just resolution of disputes, not only according to law but also, quick, inexpensive and efficient are aims that are not assisted by discourtesy. Discourtesy in the experience of the courts tends to escalate legal tensions, rather than de-escalate legal tensions. Nevertheless, the resolution of this case does not turn on discourtesy as such. This case turns on whether the test of ‘so unreasonably’ is met on the facts.
68․Fourth, the Plaintiff submitted that the Defendants placed themselves, and the Plaintiff, under unnecessary urgency by exchanging contracts for sale prior to a final decision being handed down in the NSW Supreme Court proceedings. The matter of the contracts is a matter noted at [15] of this judgment. The Plaintiff submitted that this was not a basis to contend that the Plaintiff had acted unreasonably to the extent alleged by the Defendants.
69․As to the fourth submission concerning the “unnecessary urgency” relating to the contracts for sale, this is not an answer to the question that confronts this Court, in circumstances where the Plaintiff no longer held a caveatable interest as at 30 August 2023. It was indeed the Plaintiff’s current solicitors who were the Plaintiff’s solicitors at the time of the orders of 9 April 2019 and 31 May 2019 concerning the caveats ordered to be “until further order”. Further, it was the Plaintiff’s solicitors who despite this did not understand or appreciate in 2023, that a further order was required. In my view, on the facts of this case, this was clearly unreasonable on the part of the plaintiff’s solicitors. The would-be “unnecessary urgency” point cannot overcome this fact.
70․Fifth, the Plaintiff submitted that, when the application was always going to be consented to by the Plaintiff, the Defendants cannot rely on the exception to the rule in Lai Qin as to certainty of success. It was submitted that there was never any dispute between the parties in relation to removing the caveats, merely that the mechanics as to how to effectively remove the caveats was not known to either party until a later time. Counsel for the Plaintiff submitted that to allow such dispute to ground a costs order would “permit litigation to feed upon itself and allow manufactured disputes to multiply”. This it appears is a reference to Nicholls at [1], [3]. I do not accept that allowing a costs order in this case for the Defendants falls into that category. This was not a matter of mere mechanics.
71․As to the fifth submission, the courts are not beguiled by litigation involving manufactured disputes. Undoubtedly, the solicitors of both parties had an obligation to inform themselves as to the proper process to remove the caveats in order to give correct legal advice. Nevertheless egregiously, these were the court orders that the Plaintiff’s solicitors had obtained for the Plaintiff “until further order of the Court” and these were the court orders that the Plaintiff’s solicitors appear to complain, that the Defendants’ solicitors should have enlightened them about. The trials and tribulations of this interminable legal misunderstanding concerning the caveats need not have occurred at all. The Plaintiff’s solicitors ought to have known that a court order was required because they were the solicitors for the Plaintiff as at 9 April 2019 and 31 May 2019. On the other hand, the Defendants’ solicitors were not the Defendants’ solicitors in 2019 and briefed counsel who properly advised that a court order was required. It is clear from the evidence that even as late as 6 October 2023, neither party appreciated the fact that the caveat orders in April and May 2019 (see [24] to [26]) were “until further order of the Court”.
Costs of the Costs Application
72․In my view, the question of the costs of the application in proceeding and the question of the costs of the costs application are self-evidently inextricably intertwined on the facts of this case as outlined in the timeline from [8] to [43]. Despite this, I will next separately deal with the Plaintiff’s specific submissions concerning the costs of the costs application.
73․The Plaintiff submitted that a supplementary costs order should be made in the favour of the Plaintiff. The Plaintiff noted that the circumstances which gave rise to the urgency of the filing of the application were of the Defendants own doing, in that the Defendants entered into contracts of sale prior to a judgment being delivered in the NSW Supreme Court proceedings. The Plaintiff submitted that the Defendants entered into these contracts accepting the risk that the caveats over the titles of these properties would remain in place and delay or prevent the completion of these transactions. I underline again in this regard what I stated at [21] and [66]. This argument cannot be accepted in circumstances where the Plaintiff no longer held a caveatable interest as at 30 August 2023 and did not make proper enquiries as to how the caveat should be removed and stated on 28 September 2023 that there was only a requirement to provide withdrawal of caveats in registrable form. That was wrong. A court order was required and the Plaintiff’s solicitors ought to have known that. Additionally, it is trite to observe that the Plaintiff’s solicitors (as the Defendants’ solicitors did) could have sought advice concerning the caveats if there had been some sort of issue with the reading of their own files.
74․The Plaintiff submitted that it was in the Defendants’ commercial interest to voluntarily incur the costs of the application, so the Defendants could pay their debt to Westpac. It was therefore submitted that the Defendants did not act reasonably in the manner and timeframe in which they brought the application and that if the Plaintiff had been notified that Access Canberra required additional court orders to effect the removal of the caveats, the Plaintiff would have promptly attended to this. This submission cannot be accepted as discussed below at [75].
75․What appears to be the rationale for this submission is that the Plaintiff’s solicitors did not have to make their own inquiries. It is difficult for the Court to accept this submission, in circumstances where the Plaintiff’s solicitors themselves had obtained an extension to the caveats “until further order of the Court” on 9 April 2019 and 31 May 2019. So much is clear. “Until further order of the Court” means what it says, that is, a further order of the Court is required. That has to be self-evident. That has to be obvious. This should have been obvious to the Plaintiff’s solicitors. For the Plaintiff’s solicitors to argue that if they had been “informed [by the Defendants’ solicitors] of the Court orders required by Access Canberra”, they would have promptly attended to it is, in my view, nonsensical in context. The Plaintiff cannot be absolved by this Court from a finding of having acted ‘so unreasonably’ in circumstances where the Plaintiff on any reasonable interpretation of the facts ought to have been aware of the court order having acted for the plaintiff at the relevant time and now.
76․Finally, the Plaintiff submitted that offers were made to resolve the application by consent and to resolve the costs application. The Plaintiff submitted that, if either costs offer had been accepted, this application for costs would not have been required. What this submission ignores is that the Plaintiff’s solicitors with knowledge of the court orders of April and May 2019 (which they ought reasonably to have known about) could have organised consent orders in early September 2023.
Has the Plaintiff acted ‘so unreasonably’?
77․Counsel for the Defendants submitted that from 30 August 2023, being the date of the judgment of Rees J in the NSW Supreme Court proceedings, the Plaintiff no longer had a caveatable interest in the relevant properties: Gang v You (No 2) [2023] ACTSC 32. It was therefore appropriate for the Plaintiff to remove the court order and the caveats and the Plaintiff agreed to do so.
78․In my view, the proposition that there was no caveatable interest at this time, as at 30 August 2023 is unassailable. It was in my view, appropriate for the Plaintiff to thereafter agree to promptly remove the court order and the caveats.
79․The Defendants submitted that the Plaintiff should have been on notice that a further court order would be required to effect the withdrawal of the caveats, as the Plaintiff’s solicitors had acted for the Plaintiff in the original ACT Supreme Court proceedings; it was the Plaintiff’s own application seeking an order that the caveats be extended “until further order of the Court” and the Court made such an order on an interim basis on 9 April 2019 and then on a final basis on 31 May 2019. As discussed from [63] to [76], in my view, it is an unassailable proposition that the Plaintiff ought to have known that a court order was required.
80․I interpolate here, that the Plaintiff’s solicitors were unaware of this during the relevant period of time from 30 August 2023 until 9 October 2023. It is difficult for this Court to conclude that this lack of awareness is anything but unreasonable in circumstances where the Plaintiff’s solicitors were the solicitors for the Plaintiff at the time the orders concerning the caveats were granted “until further order of the Court” on 9 April 2019 and 31 May 2019. I therefore accept without reservation, that the Plaintiff’s solicitors ought to have known that a further court order was required. I emphasise again that Defendants’ solicitors were not acting for the Defendants before Burns ACJ at that time. On the other hand, the Plaintiff’s current solicitors were the Plaintiff’s solicitors in April and May 2019.
81․The Defendants submitted that the Plaintiff should have made enquiries as to the proper process concerning the removal of the caveats and that there is no evidence of any attempt to seek advice as to this proper process. There is considerable force to this submission on the evidence before me in this case.
82․I note as referred to in the timeline at [21] that on 28 September 2023, the Plaintiff provided the Defendants with caveat withdrawal forms, stating to the Defendants that the Plaintiff was only required to provide the Defendants with withdrawals of caveat in registrable form.
83․The Plaintiff’s position was not correct concerning the forms. A court order was required and on any view, the Plaintiff’s solicitors ought to have known this.
84․The Defendants further submitted that, when the Plaintiff consented to the proposed orders, the Defendants had already incurred the costs of preparing the application. Again, there is considerable force to this submission as can be gleaned from the timeline I have discussed and the findings I have made therein from [22] onwards.
85․The Defendants submitted that the application, to obtain a court order to remove the caveats, was appropriate. I agree on the facts of this case as the court order and caveats continued in place for more than a month after the determination of the NSW Supreme Court proceedings. This was appropriate as the Plaintiff’s solicitors merely prepared caveat withdrawal forms that were legally inadequate to remove the court order and caveats in this matter. The court orders expressly stated that the caveats were to remain in place “until further order of the Court”. This I repeat, yet again, is something that the Plaintiff’s solicitors ought to have been aware of. Being unaware of this cannot be said to be reasonable. As I stated earlier, in my view, on the facts of this case it is patently unreasonable. The facts of this case including the desultory actions of the Plaintiff’s solicitors as further discussed below, meet the test of ‘so unreasonably’.
86․Given that a further court order was required to remove the court order and caveats, the Defendants properly submitted that they were “forced” to initiate this application and subsequently to incur the cost of seeking advice and having documents prepared in relation to the application. It was further submitted that this was the proper course for seeking further court orders in the matter, relying on r 6006(2)(a) of the Court Procedures Rules. In my view, those submissions are made good on the basis of the facts of the timeline I have discussed at length set out above at [22] to [29].
87․Further, I note in this regard that an application in proceeding was not a legally incorrect course for the Defendants to take. It is the usual course. Other than during the course of a hearing or in urgent circumstances, an application to the Court should be made by way of a written application in proceeding, supported by evidence in the form of an affidavit: see Esposito v Commonwealth (1988) 80 ACTR 9 at 10 (Miles CJ). This is so that both the other party and the Court are fully apprised as to the nature and factual basis of the application: cf Esposito at [10]. There are, of course, circumstances where drafting an application in proceeding would be unnecessary: see Brennand v Hartung [2012] ACTSC 150 at [3] (Master Harper). I observe in this regard, as I noted earlier in this judgment at [22], that on 28 September 2023 the Defendants’ solicitors stated that in the absence of removal of the caveats by the Plaintiff, the Defendants’ solicitors were instructed to make an application to the Supreme Court for the removal of the caveats. This, in my view, was not an unreasonable course for the Defendants’ solicitors to adopt on the facts of this case concerning the removal of the caveats. Had the Plaintiff’s solicitors made themselves aware of the court orders of 9 April 2019 and 31 May 2019 (orders that were obtained by them for their client), consent orders could have been drafted by the Plaintiff’s solicitors as early as 4 September 2023, that being the date on which the Plaintiff’s solicitors received instructions from their client to remove the caveats.
88․In addition, the Defendants submitted there was a necessity to act to remove the caveats in circumstances where the sale of the properties was imminent and where the Plaintiff had asserted that the Plaintiff was only obliged to provide withdrawal forms. Again, there is in my view considerable force to this submission on the facts of this case in light of what I consider to be the unreasonable lack of knowledge on the part of the Plaintiff’s solicitors concerning the proper process for removing the caveats. This is taking into account the critical fact that they were in fact the Plaintiff’s solicitors when the orders concerning the caveats were made in 2019.
89․The Defendants properly noted that their costs could have been avoided if the Plaintiff had attended to an application to the Court to have the court order and caveats removed. There is undeniable force to this submission in circumstances where the Plaintiff’s solicitors:
(a)on 9 April 2019 and 31 May 2019, through their town agents, had sought and obtained the court order that extended the caveats “until further order of the Court”;
(b)held no caveatable interest from the date of 30 August 2023; and
(c)as at 4 September 2023 had instructions from their client to remove the caveats.
90․In my view, this is an appropriate case for the Court to award costs albeit that there has not been a hearing on the merits. This is because the Plaintiff has acted ‘so unreasonably’ that the Defendants should be awarded costs.
Conclusion to Consideration
91․I note at the outset that s 5A of the CPA provides that the main purpose of the civil procedure provisions is to facilitate the just resolution of disputes according to law and as quickly, inexpensively, and efficiently as possible:
5AMain purpose of civil procedure provisions
(1)The main purpose of the civil procedure provisions is to facilitate the just resolution of disputes—
(a)according to law; and
(b)as quickly, inexpensively and efficiently as possible.
(2)Without limiting subsection (1), the main purpose includes the following objectives:
(a) the just resolution of the real issues in civil proceedings;
(b)the efficient use of the judicial and administrative resources available for the purposes of the court;
(c)the efficient disposal of a court’s overall caseload;
(d)the timely disposal of civil proceedings;
(e)the resolution of disputes at a cost that is proportionate to the importance and complexity of the matters in dispute.
(3)The civil procedure provisions must be interpreted and applied, and any power or duty imposed by them (including the power to make rules) must be exercised or carried out, in the way that best promotes the main purpose.
(4)The parties to a civil proceeding must help the court to achieve the objectives.
(emphasis added)
92․Regrettably, the resolution of this costs dispute has not met the aims of s 5A. The important matters highlighted at ss 5A(1)-(2) are undoubtedly assisted by parties resolving issues without unnecessary resort to the courts where possible. It is uncontroversial to observe that judicial and court resources are limited and Supreme Court judicial caseloads include not only civil cases but also serious criminal cases that concern the liberty of the subject. Further, as observed recently by Hammerschlag CJ in Eq in Michael Wilson & Partners Ltd v Emmott [2024] NSWSC 1489 at [76], the courts are not the plaything of parties or practitioners.
93․In accordance with Lai Qin it is clear that success in an action is what in the usual case is paramount in the exercise of the Court’s costs discretion. Here, however, in the case before this Court there has been no hearing on the merits.
94․Nevertheless, it is well established that in an appropriate case a Court may make a costs order. Thus in this case the Court may make an order for costs, albeit that there has been no hearing on the merits and that the order was consented to by the parties. The ultimate question is: am I able to conclude that one of the parties has acted “so unreasonably that the other party should obtain the costs of the action”: see Lai Qin at 624-5. In this case I so find.
95․In this case, for the reasons set out from [58] to [90], I am persuaded that the Plaintiff acted “so unreasonably that the other party should obtain the costs of the action”.
96․The Plaintiff in brief summary, as discussed at length above, acted ‘so unreasonably’ because of the following two critical matters. First, the Plaintiff’s solicitors ought to have known a court order was required for the reasons discussed at [58] to [90]. For the plaintiff’s solicitors to profess ignorance of this requirement was patently unreasonable. Second, the Plaintiff’s solicitors were not as a result, in a position to complain about “unnecessary time and money” being spent by the Defendants’ solicitors to bring the application to the Court when consent orders could have been drawn up by the Plaintiff’s solicitors as far back as 4 September 2023. These critical factors coalesce in my finding that the Plaintiff acted ‘so unreasonably’ that the Defendants should be awarded costs: Lai Qin at 624-625.
Orders
97․Accordingly, I made the following order on 25 November 2024:
(1)The Plaintiff is to pay the Defendants’ costs of and incidental to the application in proceeding filed and heard on 12 October 2023 on a party-to-party basis.
| I certify that the preceding ninety-seven [97] numbered paragraphs are a true copy of the Reasons for Judgment of her Honour Justice Loukas-Karlsson. Associate: Date: 20 December 2024 |
Corrigendum
20 December 2024 Replaced “have” with “had” Paragraphs: [22]
20 December 2024 Replaced “concerning caveats” with “concerned events” Paragraphs: [27]
20 December 2024 Added “at 624-625” after “Lai Qin” Paragraphs: [96]
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