Black v Mills (No.3)

In *Black v Mills (No.3)*, the Federal Circuit Court of Australia considered an application by Mr Black for an order that Ms Mills pay his costs. This application arose after Mr Black's creditor's petition against Ms Mills was dismissed by consent on 13 October 2015, following Mr Black satisfying a Local Court judgment through garnishee process. The court's decision on costs was to be read in conjunction with previous reasons where it was concluded that Ms Mills had reasonable prospects of successfully resisting the petition, including arguments regarding her solvency and substantial reasons to question the existence of a debt due to Mr Black.

The primary legal issue before the court was whether to exercise its discretion to award costs to Mr Black, despite the creditor's petition not being determined on its merits. The court was required to consider the principles governing costs orders in circumstances where a matter is resolved by consent or withdrawal before a hearing on the merits, drawing guidance from established case law.

The court applied the principles articulated by McHugh J in *Re Minister for Immigration & Ethnic Affairs; Ex Parte Lai Qin*, which states that while success on the merits typically dictates costs orders, a court may still award costs when there has been no hearing on the merits if one party has acted unreasonably. In this instance, the court noted that it could not try a hypothetical action and that parties who avoid litigation through settlement or extra-curial action should not be burdened with the costs of a litigated action. However, the court retained the ability to award costs if it could conclude that one party's conduct was so unreasonable as to warrant such an order.

The court ultimately dismissed Mr Black's application for costs. It found that the dismissal of the creditor's petition by consent, following the satisfaction of the judgment debt, meant that the merits of the petition were not determined. Applying the principles from *Lai Qin*, the court concluded that it was not appropriate to make a costs order in these circumstances, as there was no finding of unreasonable conduct by Ms Mills that would justify departing from the general rule that costs follow the event, or in this case, the absence of a determination on the merits.