FEDERAL COURT OF AUSTRALIA
Bitech Engineering v The Muir Electrical Company Proprietary Limited
[2010] FCA 1078
Citation: Bitech Engineering v The Muir Electrical Company Proprietary Limited [2010] FCA 1078 Parties: BITECH ENGINEERING v THE MUIR ELECTRICAL COMPANY PROPRIETARY LIMITED (ACN 004 453 945) and BARRINGTON-SMITH MUIR'S PTY LTD (ACN 101 052 975) File number: NSD 44 of 2007 Judge: FOSTER J Date of judgment: 30 September 2010 Catchwords: COSTS – proper exercise of the Court’s discretion as to costs upon the discontinuance of the whole of the proceeding by the leave of the Court – arrangements agreed amongst the parties, in light of the decision in other related matters, tantamount to success for the applicant – applicant justified in commencing the proceeding and not guilty of disentitling misconduct – applicant entitled to an order for costs in respect of most of the costs incurred by it Legislation: Federal Court Rules, O 22 r 2(1)(d) Cases cited: Bitech Engineering v Garth Living Pty Ltd [2010] FCAFC 75 related
Bitech Engineering v Garth Living Pty Ltd (2009) 84 IPR 78 related
Oshlack v Richmond River Council (1998) 193 CLR 72 cited
Rickus v Motor Trade Association of Australia Superannuation Fund Proprietary (2010) 265 ALR 112 appliedPlace: Sydney Division: GENERAL DIVISION Category: Catchwords Number of paragraphs: 32 Counsel for the Applicant: Mr PA Maddigan Solicitor for the Applicant: DLA Phillips Fox Solicitor for the Respondents: Minter Ellison
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION
NSD 44 of 2007
BETWEEN: BITECH ENGINEERING
ApplicantAND: THE MUIR ELECTRICAL COMPANY PROPRIETARY LIMITED (ACN 004 453 945)
First RespondentBARRINGTON-SMITH MUIR'S PTY LTD (ACN 101 052 975)
Second Respondent
JUDGE:
FOSTER J
DATE OF ORDER:
30 SEPTEMBER 2010
WHERE MADE:
SYDNEY
THE COURT ORDERS THAT:
1.The applicant’s Tender Bundle be marked as Exhibit A.
2.The applicant have leave to file in Court its Written Submissions on Costs dated 30 September 2010.
3.The respondents have leave to file in Court their Written Submissions on Costs dated 30 September 2010 and to read and rely upon the affidavit of Scott Anthony Reid sworn on 29 September 2010.
4.Pursuant to O 22 r 2(1)(d) of the Federal Court Rules, the applicant have leave to discontinue the whole of this proceeding as against the respondents.
5.Any Notice of Discontinuance sought to be filed pursuant to the leave granted in Order 4 above be filed and served by 8 October 2010.
6.The respondents pay the applicant’s costs of and incidental to the proceeding up to and including 19 February 2007.
7.The respondents pay the applicant’s costs of and incidental to the appearances before the Court on 3 April 2007, 3 July 2007, 14 August 2007, 16 December 2009 and 28 July 2010.
8.The respondents pay the applicant’s costs of and incidental to the argument concerning costs which took place before Foster J on 30 September 2010.
9.There be no other orders as to costs.
Note: Settlement and entry of orders is dealt with in…
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- Case
- [2010] FCA 1078
- Decision Date
CaseChat Overview and Summary
The court was required to decide the legal issues concerning the proper exercise of the Court’s discretion as to costs upon the discontinuance of the whole of the proceeding by the leave of the Court. The court referred to the decision in Rickus v Motor Trade Association of Australia Superannuation Fund Proprietary and other related cases to guide the exercise of that discretion. The court found that the applicant was justified in commencing the proceeding and not guilty of disentitling misconduct. The court held that the applicant was entitled to an order for costs in respect of most of the costs incurred by it.
The court considered the circumstances in which the proceeding was discontinued and found that the arrangements agreed amongst the parties, in light of the decision in other related matters, amounted to success for the applicant. The court held that the applicant was entitled to an order for costs in respect of most of the costs incurred by it, up to and including certain court appearances and argument concerning costs. The respondents were ordered to pay the applicant’s costs of and incidental to the proceeding.
In summary, the court exercised its discretion in favour of the applicant and ordered the respondents to pay the majority of the costs incurred by the applicant in relation to the proceeding.
Orders
Orders of the court
1. The applicant’s Tender Bundle be marked as Exhibit A.
2. The applicant have leave to file in Court its Written Submissions on Costs dated 30 September 2010.
3. The respondents have leave to file in Court their Written Submissions on Costs dated 30 September 2010 and to read and rely upon the affidavit of Scott Anthony Reid sworn on 29 September 2010.
4. Pursuant to O 22 r 2(1)(d) of the Federal Court Rules, the applicant have leave to discontinue the whole of this proceeding as against the respondents.
5. Any Notice of Discontinuance sought to be filed pursuant to the leave granted in Order 4 above be filed and served by 8 October 2010.
6. The respondents pay the applicant’s costs of and incidental to the proceeding up to and including 19 February 2007.
7. The respondents pay the applicant’s costs of and incidental to the appearances before the Court on 3 April 2007, 3 July 2007, 14 August 2007, 16 December 2009 and 28 July 2010.
8. The respondents pay the applicant’s costs of and incidental to the argument concerning costs which took place before Foster J on 30 September 2010.
9. There be no other orders as to costs.
Background
Background to the litigation
Full text does not contain this section.
Evidence
Evidence Before The Court
Full text does not contain this section.
Decision
Reasons for decision
Full text does not contain this section.
Ratio Decidendi
Legal Principle Established
Since 14 August 2007, there have been three listings before me, one on 16 December 2009, one on 28 July 2010 and one this morning. The first of those involved the management of the matter in light of the fact that an appeal was then on foot. The second was made necessary by the success of the appeal and involved requiring the respondents to file an affidavit dealing with the financial information which had previously been provided in February 2007. The matter was listed today in order finally to dispose of the matter and to deal with the question of costs. CONSIDERATION Both parties accept that the question of costs thrown up by the circumstances which I have outlined above is a matter within the discretion of the Court. The Rules do not provide for any automatic consequence insofar as costs are concerned by reason of the discontinuance of a proceeding pursuant to the leave of the Court. There are, however, some helpful statements of principle which should guide the exercise of that discretion. In Rickus v Motor Trade Association of Australia Superannuation Fund Proprietary (2010) 265 ALR 112 at [117]–[119], the Full Court said: [117] In Re Minister for Immigration and Ethnic Affairs; Ex parte Lai Qin (1997) 186 CLR 622; 143 ALR 1 (Ex parte Lai Qin), McHugh J discussed some general principles applicable to the award of costs in Australian courts. At 624, his Honour said that, after a hearing on the merits, as a general rule, the successful party is entitled to his or her costs. It is success in the action that usually controls the exercise of the court’s discretion in respect of costs. At CLR 624–5; ALR 3–4, his Honour also said: 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 (Australian Securities Commission v Aust-Home Investments Ltd (1993) 44 FCR 194 at 201; 116 ALR 523 at 530; 11 ACSR 136 at 143). 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 (Australian Securities Commission v Aust-Home Investments Ltd (1993) 44 FCR 194 at 201; 116 ALR 523 at 530; 11 ACSR 136 at 143). 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. Thus, for example, in R v Gold Coast City Council; Ex parte Raysun Pty Ltd [1971] QWN 133, the Full Court of the Supreme Court of Queensland gave a prosecutor seeking mandamus the costs of the proceedings up to the date when the respondent council notified the prosecutor that it would give the prosecutor the relief that it sought. The Full Court said that the prosecutor had reasonable ground for complaint in respect of the attitude taken by the respondent in failing to consider the application by the prosecutor for approval of road and drainage plans.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. This is perhaps the best explanation of the unreported decision of Pincus J in South East Queensland Electricity Board v Australian Telecommunications Commission (unreported, Federal Court of Australia, 10 February 1989) where his Honour ordered the respondent to pay 80% of the applicant’s taxed costs even though his Honour found that both parties had acted reasonably in respect of the litigation. 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 (footnotes omitted).[118] In Mineralogy Pty Ltd v National Native Title Tribunal [1998] FCA 1700, the Full Court accepted that, when this court is considering the question of costs in relation to an application for leave to discontinue proceedings pursuant to O 22 r 2(1)(d) of the Federal Court Rules, the appropriate test to apply is that which was explained by McHugh J in Ex parte Lai Qin at CLR 625; ALR 3–4. The Full Court held that, in most cases where there has been no trial on the merits, it is not appropriate in determining an issue of costs to make a prediction as to the outcome of the hypothetical case. That approach was followed by Rares J in Clark v ING Life Ltd [2007] FCA 1960 at [16]. See also O’Neill v Mann [2000] FCA 1680 at [11]–[13] (per Finn J) and J H Lever & Co Pty Ltd v Maniotis (2005) 215 ALR 773 ; [2005] FCA 252 at [3] per Mansfield J.[119] In our judgment, the question of costs thrown up by the grant of leave to the trustee to discontinue the trustee’s proceedings and the subsequent discontinuance of those proceedings was one which had to be determined in light of that discontinuance and having regard to the circumstances in play at the time that that discontinuance was put into effect. As at 28 July 2008, there had been no hearing of the appellant’s cross-claim and no determination on the merits of the issues raised in that cross-claim. If the question of costs occasioned by the discontinuance of the trustee’s proceedings had been determined at that time, that question would have been considered in circumstances where there had been no hearing on the merits of the claims made by the trustee in its proceedings and would have fallen squarely within the principles enunciated by McHugh J in Ex parte Lai Qin. In a case such as the present, it would have been inappropriate for a judge to enter into a detailed examination of all relevant facts and circumstances in order to determine whether or not the bringing and maintaining of the trustee’s proceedings up to 28 July 2008 had been reasonable.