Lovegrove Turf Services Pty Ltd v Minister for Education
[2003] WASC 66 (S)
LOVEGROVE TURF SERVICES PTY LTD & ANOR -v- MINISTER FOR EDUCATION [2003] WASC 66 (S)
| SUPREME COURT OF WESTERN AUSTRALIA | Citation No: | [2003] WASC 66 (S) | |
| Case No: | CIV:1181/2003 | 18 MARCH 2003 | |
| Coram: | JOHNSON J | 26/03/03 | |
| 23/07/07 | |||
| 13 | Judgment Part: | 1 of 1 | |
| Result: | Plaintiffs' application for costs dismissed | ||
| B | |||
| PDF Version |
| Parties: | LOVEGROVE TURF SERVICES PTY LTD D & E PARKER PTY LTD MINISTER FOR EDUCATION |
Catchwords: | Costs on discontinuance of action |
Legislation: | Nil |
Case References: | Australian Securities Commission v Aust-Home Investments Ltd (1993) 44 FCR 194 Castlemaine Tooheys Ltd v The State of South Australia (1986) 161 CLR 148 Lion Nathan Australia Pty Ltd v Coopers Brewery Ltd (No 3) [2006] FCA 1023 Lovegrove Turf Services Pty Ltd v Minister for Education [2003] WASC 66 Pinto v Kinkela [2003] WASC 126 Re Minister for Immigration and Ethnic Affairs; Ex parte Lai Qin (1997) 186 CLR 622 |
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
- IN CHAMBERS
DECISION : 23 JULY 2007 FILE NO/S : CIV 1181 of 2003 BETWEEN : LOVEGROVE TURF SERVICES PTY LTD
- First Plaintiff
D & E PARKER PTY LTD
Second Plaintiff
AND
MINISTER FOR EDUCATION
Defendant
Catchwords:
Costs on discontinuance of action
Legislation:
Nil
(Page 2)
Result:
Plaintiffs' application for costs dismissed
Category: B
Representation:
Counsel:
First Plaintiff : Mr A R MacPherson
Second Plaintiff : Mr A R MacPherson
Defendant : Mr N A Egan
Solicitors:
First Plaintiff : Hotchkin Hanly
Second Plaintiff : Hotchkin Hanly
Defendant : State Solicitor for Western Australia
Case(s) referred to in judgment(s):
Australian Securities Commission v Aust-Home Investments Ltd (1993) 44 FCR 194
Castlemaine Tooheys Ltd v The State of South Australia (1986) 161 CLR 148
Lion Nathan Australia Pty Ltd v Coopers Brewery Ltd (No 3) [2006] FCA 1023
Lovegrove Turf Services Pty Ltd v Minister for Education [2003] WASC 66
Pinto v Kinkela [2003] WASC 126
Re Minister for Immigration and Ethnic Affairs; Ex parte Lai Qin (1997) 186 CLR 622
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1 JOHNSON J: On 12 October 2006 Master Newnes made orders, pursuant to O 43 r 16 and by consent, discontinuing the plaintiffs' action. Those orders included the discharge of the injunction granted by me on 27 March 2003, the release of the plaintiffs from their undertaking referred to in the injunction, and the dismissal of the plaintiffs' action. The issue of costs was referred to me for determination.
2 Despite the fact that the merits of the plaintiffs' claim have never been determined, the plaintiffs seek their costs of the interlocutory injunction application but otherwise accept that any award of costs in the action made to a specific party should remain undisturbed. Other than in relation to those matters, the agreed position is that each party are to bear their own costs.
3 The reason behind the discontinuance of the plaintiffs' action, and the basis of the plaintiffs' claim for costs, is said to be that the plaintiffs have secured from the other party the relief sought.
4 In Pinto v Kinkela [2003] WASC 126 at [35] I set out in some detail the principles to be applied in determining an application for costs in a discontinued action. The following is a summary of those principles:
(1) Where a discontinuance results from an acknowledgment by a party of likely defeat and amounts to an effective surrender to the other party, then a costs order in favour of the other party will ordinarily be made. Securing from the other party the relief sought in the proceedings may create an entitlement to costs but only where obtaining the relief amounts to a forensic win or a capitulation by the other party;
(2) Where a case terminates before a hearing, the Court should not resolve the issue of costs by engaging in the nature of a hypothetical trial;
(3) The reasonableness of the conduct of the parties in bringing and defending the claim is frequently the determining factor in deciding the award of costs. However, as a party can act reasonably in commencing proceedings which are ultimately found to have no legitimate legal basis, the real question is whether one of the parties has acted so unreasonably that the other party should obtain the costs of the action.
5 Before applying these principles to the plaintiffs' application it will be useful to briefly outline the relevant aspects of the plaintiffs' action. The action, with respect to which the injunctive relief was sought, arose
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- from a tender process for the provision of lawn mowing services at schools throughout the metropolitan area. At the time of the tender process the plaintiffs were contracted to the defendant to provide lawn mowing services. The period of the existing contracts was soon to expire and the plaintiffs participated in the tender process in order to also supply future services. Despite the plaintiffs allegedly being advised that they were the preferred tenderer, the tenders were recalled.
6 A significant aspect of each of the plaintiffs' causes of action was the report of Dr Michael who was engaged by the Department of Education to review a complaint concerning the tender evaluation process. It was Dr Michael who recommended in his report that the tenders be recalled. The defendant's conduct in accepting the recommendation and acting on it was the catalyst for the plaintiffs' application for an interlocutory injunction restraining the defendant from advertising or awarding tenders for the lawn mowing services to any party other than the plaintiffs.
7 The plaintiffs' action was based on three alternative causes of action: breach of contract, a failure to accord procedural fairness and administrative review of the exercise of a statutory power. The basis of each of the three causes of action was that the defendant failed to act fairly.
8 In the Writ of Summons the following relief was claimed by the plaintiff:
(a) A permanent injunction restraining the defendant from awarding contracts the subject of the Request for Tender otherwise than in accordance with the recommendation to award such contracts to the plaintiffs;
(b) A declaration that the defendant breached its duty to act fairly in making the Decision to Recall;
(c) A declaration that the Decision to Recall is void;
(d) An order for specific performance of the Process Contract requiring the defendant to award contracts the subject of the Request for Tender to the plaintiffs in accordance with the recommendation to that effect;
(e) Further and in the alternative, damages or equitable compensation;
(f) Interest.
9 It can be seen that there were two essential components of the relief sought in order for the plaintiffs to achieve their aim of continuing to
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- supply the lawn mowing services; the first was the injunction to restrain the defendant from awarding contracts to any other entity and the second was the order for specific performance of the Process Contract, the effect of which would be to award the relevant contracts to the plaintiffs.
10 The application for an interlocutory injunction was heard on 18 March 2003 and judgment delivered on 27 March 2003. A more detailed factual basis of the claim is set out in the judgment: Lovegrove Turf Services Pty Ltd v Minister for Education [2003] WASC 66. As required by the decision of the High Court in CastlemaineTooheys Ltd v The State of South Australia (1986) 161 CLR 148 at 153, the decision to grant to the plaintiffs the injunction sought was based, in part, on the conclusion that there was a serious question to be tried in relation to each of the causes of action. In its terms the injunction restrained the defendant until after judgment in the action from advertising or causing to advertise for further tenders for lawn mowing contracts or otherwise taking any steps to award a tender for any lawn mowing contracts other than by accepting the first and second plaintiff's tenders.
11 After the interlocutory injunction was granted, an arrangement was reached between the plaintiffs and the defendant to the effect that the plaintiffs would provide the lawn mowing services to which the tender process applied. The Court has not been provided with any details of the nature of the arrangement and was simply advised that the effect was that the plaintiffs would continue to carry out the lawn mowing services, presumably until the action was resolved or the period of time for which the services subject to the tender process were to be performed.
12 There was then a further interlocutory application with respect to a discovery issue which was the subject of an appeal to the Full Court. As a result of the time involved in dealing with issues arising in the action, the time period to which the tender process related passed. As a result of the agreement between the parties, the plaintiffs had actually supplied the services for that period.
13 In support of the plaintiffs' application, Richard Anthony Lovegrove, a director of the first plaintiff, in his affidavit of 7 March 2007, stated that the primary relief sought by the plaintiff was to prevent the defendant undertaking a tender process other than in accordance with previous recommendations in favour of the plaintiff. It is said that that relief was obtained by way of the interlocutory injunction granted on 27 March 2003. According to Mr Lovegrove, because of the passage of time, and expiration of the contracts in accordance with their terms, the protection
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- afforded by the injunction was no longer required. It was on that basis the injunction was lifted and the proceedings dismissed by consent.
14 Counsel for the plaintiffs submitted that, where proceedings terminate after interlocutory relief has been granted, the Court may take into account that interlocutory relief when determining costs. The decision of Hill J in Australian Securities Commission v Aust-Home Investments Ltd (1993) 44 FCR 194 at 201 is cited in support of that proposition. The precise terms of the proposition on which the plaintiffs rely, together with the remaining propositions identified by Hill J are as follows:
"(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 [JT Stratford & Son Ltd v Lindley (No 2) [1969] 1 WLR 1547] and the SEQEB case [South East Queensland Electricity Board v Australian Telecommunications Commission,unreported; Federal Court; 10 February 1989].
(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.
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- (5) Where the proceedings terminate after interlocutory relief has been granted, the Court may take into account the fact that interlocutory relief has been granted: cf Re Asiatic Electric Co Pty Ltd [1973] 1 NSWLR 603 at 606, a case which, however, depended upon the specific wording of the statute under consideration."
15 Hill J also noted that, where interlocutory relief has been granted, that fact carries no implication as to the ultimate merits of the case but does ordinarily suggest that the court granting interlocutory relief has accepted or found that there is an arguable issue to be tried between the parties and that the balance of convenience favours the grant of that relief. The matters said to be suggested from the grant of relief are two of the three matters required by the High Court in CastlemaineTooheys Ltd v The State of South Australia to be established before an injunction may be granted.
16 Applying the principles referred to above, the conclusion drawn by Hill J with respect to the circumstances of the case being determined by him was expressed in these terms:
"Having regard to my view that it was reasonable both for the Commission to commence the proceedings and for the respondents to defend them, that there has been no determination of the merits, that there is nothing in the evidence which ultimately displays behaviour of Mr and Mrs Bunt which should prejudice the exercise of discretion for costs, the fact that the order for interlocutory relief was continued by consent and that the parties acquiesced in the matter ultimately not being litigated for a considerable time, I am of the view that the appropriate order is that each side bear its own costs. In my view the costs should fall as they fall and accordingly I would make no order as to the costs of the proceedings."
17 The Court was also taken to the decision in Re Minister for Immigration and Ethnic Affairs; Ex parte Lai Qin (1997) 186 CLR 622. In that case, McHugh J observed (at 624) that where there has been no hearing on the merits, a Court is necessarily deprived of the factor that usually determines whether or how it will make a costs order. However, McHugh J acknowledged that 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. An example of such a situation is where the Court is able to conclude that one of the
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- parties has acted so unreasonably that the other party should obtain the costs of the action. Whilst the Court cannot try a hypothetical action between the parties, his Honour also noted that in some cases a Judge may feel confident that one party was almost certain to have succeeded if the matter had been fully tried: at 624 - 625. McHugh J recognised that such cases are likely to be rare: at 625. His Honour concluded that, in the absence of any such factors, the proper exercise of the cost discretion will usually mean that the court will make no order as to the costs of the proceedings: at 625.
18 The plaintiffs rely particularly on the decision of Goldberg J in Lion Nathan Australia Pty Ltd v Coopers Brewery Ltd(No 3) [2006] FCA 1023 as authority for the proposition which is central to their claim for costs; that the interlocutory application was effectively an application for final relief, and as that relief was granted, the applicant may be awarded the costs of obtaining that relief.
19 In Lion Nathan Australia Pty Ltd v Coopers Brewery Ltd (No 3) the injunctive relief sought was firstly an injunction restraining Coopers Brewery from taking any further steps pursuant to a notice of meeting issued by it on 21 September 2005, including the conducting of the meeting proposed to be held on 20 October 2005. Secondly, an injunction was sought requiring Coopers Brewery and its director to send a notice in writing to the shareholders of Coopers Brewery containing certain material relating to the effect of the proposed modifications to the constitution and certain other matters: at [3]. The interlocutory relief sought was an order that until the hearing and determination of the application or further order, the defendants be restrained from taking any further steps pursuant to the notice of meeting issued on 21 September, including the conducting of the meeting proposed to be held on 20 October 2005.
20 When the application for interlocutory relief was heard, Goldberg J granted the order sought. The reason for doing so was that Goldberg J concluded that the explanatory memorandum which had been sent out to shareholders was deficient in the information contained in it and a further explanatory memorandum which had been propounded by the defendants in the course of the hearing did not cure all the defects and deficiencies. Subsequently, the defendants came back to court pursuant to a liberty to apply order previously made and the injunction was discharged conditional on the defendant's undertaking to post to shareholders a modified explanatory memorandum in the form handed up to the court. The meeting of shareholders was held.
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21 That part of the judgment on which the plaintiffs rely is par [8] where Goldberg J refers to the statement of Hill J in Australian Securities Commission v Aust-Home Investments Ltd (at 201) to the effect that, where the proceedings terminated after interlocutory relief has been granted, the Court may take into account the fact that interlocutory relief has been granted. Goldberg J also referred, with approval, to the decision of McHugh J in Re Minister for Immigration and Ethnic Affairs; Ex parte Lai Qin before making the comment that the authorities to which he had been referred did not specifically address the situation which occurred in the case before him. Goldberg J described the application for interlocutory relief as being, in a sense, an application for final relief involving issues which were not likely to arise again in the litigation: at [13], 16]. He also acknowledged that the parties had both acted reasonably in the conduct of the claim.
22 Goldberg J concluded [17]:
"The initial meeting had been restrained; the relief sought in relation to propounding further more comprehensive information before the shareholders had been obtained. If the matter were to go to trial now across the board there would be no practical issue to be determined in relation to the injunctive relief which was sought in the final form in the application, because the interlocutory injunctive relief which had been granted effectively resolved that issue. It seems to me in those circumstances that this is a case which is one which is, in a sense, a gloss on the observation of McHugh J in Re Minister for Immigration and Ethnic Affairs; Ex parte Lai Quin where he referred to the fact that a judge could feel confident that one party was almost certain to have succeeded if the matter had been fully tried. I consider that gloss is the situation where the grant of interlocutory injunction effectively resolves the application for final relief."
23 It seems to me that it is the conjunction of those two conclusions, confidence that one party was almost certain to succeed if the action was tried and the effective final resolution of the claim at an interlocutory stage, which led to the decision to award costs to the plaintiff. I also consider it to be of particular significance that the granting of the injunctive relief was based on findings of deficiencies with respect to the defendant's notice and it was on that basis that Goldberg J could confidently conclude that the plaintiff was almost certain to succeed if the action were tried. There was in that sense both some conduct on the part
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- of the defendant which necessitated the action and a forensic win on the part of the applicant. On the basis that the relief sought was to restrain the defendant from taking further steps in relation to the notice of meeting including holding the meeting, the action taken by the defendant at the direction of the Court, and as a result of the finding that the notice of meeting was defective, to provide additional information and then hold the meeting, was obviously a complete solution to the issues on which the action was based.
24 If I am wrong in my interpretation of the reasoning in Lion Nathan Australia Pty Ltd v Coopers Brewery Ltd (No 3) then I would decline to follow the decision of Goldberg J. In my view, if by the grant of an interlocutory injunction a party achieves the desired result or achieves a sufficient result, and therefore does not wish to proceed further, in many cases an award of costs to that party would result in unfairness. In cases where there has been no wrongdoing on the part of the opposing party and the merits of the plaintiff's claim have never been tested, the unfairness is obvious.
25 On the basis that it is accepted that the discontinuance of the action was neither a defeat nor an acknowledgment of defeat, the first issue for consideration is whether it was almost certain that the plaintiffs would have succeeded if the matter had proceeded to trial. In determining that issue I believe it would be useful to consider the observations made and conclusions drawn by me in relation to the causes of action on which the plaintiffs relied in the injunction application.
26 In determining that there was a serious question to be tried, I made the following comment in relation to Dr Michael's report and to reasons given on behalf of the defendant for recalling the tenders (at [53] - [54]):
"… I have some difficulties with the conclusions reached by Dr Michael in his report. However, it is not the court's role on an interlocutory injunction application to finally determine matters of fact and for that reason I make no finding as to whether Dr Michael's report is flawed. Suffice to say that I consider there to be some substance in the position taken on behalf of the plaintiff with respect to that report.
In considering whether the decision to recall the tenders was reasonably based consideration must also be given to the reasons given by Mr Di Pietro. Again, I consider there to be some substance to the submission that at least some factors
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- taken into account by Mr Di Pietro were inappropriate and could not provide are reasonably basis for the decision to recall the tenders."
27 With respect to the allegation of breach of contract, the defendant conceded that it was a necessary incident of a contract with a public body that it will deal fairly with the tenderers in the performance of its tender process contract with them: at [36] - [37]. However, the defendant maintained that the terms of the process contract itself precluded the claim and hence there was no serious question to be tried. The conclusion I drew was that the provisions of the process contract were not a complete answer to any claim brought for breach of contract so as to conclude that there was not a serious question to be tried: at [55].
28 In relation to the procedural fairness cause of action, the plaintiffs' relied, inter alia, on the defendant's failure to give them the opportunity to be heard before recalling the tenders. However, to establish a cause of action based on that proposition it would be necessary for the plaintiffs to establish that they had a "legitimate expectation" they would be given the opportunity to be heard on the decision to recall the tenders. In that regard, I drew the following conclusion (at [61]):
"The real question then is whether the particular circumstances of this case, not found in any of the decided authorities, are such as to take the case beyond that of a mere hope and into the realm of a legitimate expectation. It may be a 'somewhat slender point' but it does, in my view, constitute a serious question to be tried."
29 As to the final cause of action and whether there was a serious question to be tried, the conclusion I drew was that there was a reasonable argument that terminating the tender in the relevant circumstances, which included a failure to advise or invite comment from the entities directly and significantly adversely affected by that decision, breached the duty of fairness owed by government agencies applying policies which had the force of law.
30 As I also concluded that the plaintiff would suffer injury for which damages would not be an adequate compensation and that the balance of convenience favoured the grant of an injunction, the injunction was duly granted.
31 In relation to the defendant's conduct, I have extracted the only parts of the judgment where I have made any comment on the factual basis of
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- the plaintiffs' claim. It is apparent that no finding adverse to the defendant was made by me in relation to the defendant's conduct. In my view, this is not a case where, irrespective of the merits of the claim, some inappropriate or unnecessary conduct by the defendant caused the injunction application to be brought.
32 As to the merits of the claim, I believe it is apparent from the comments that I have made when addressing the causes of action that I found the legal bases of the plaintiffs' claim to be no more than arguable. I did not then, nor do I now, consider that the plaintiffs were almost certain to succeed in their action. As it is clear from the authorities that it is not appropriate to conduct a hypothetical trial in order to ascertain the merits of the plaintiffs' claim, the basis for ordering costs that the plaintiffs were almost certain to succeed does not apply in this case.
33 As I considered the plaintiffs' case to be arguable, it follows that they acted reasonably in bringing the action. Further, as I presided over the injunction application I can confidently state that I consider the plaintiffs acted reasonably in the conduct of the injunction proceedings which is the relevant part of the claim for present purposes. For the same reason, I can make the same finding in relation to the defendant. As it was not the case that I considered the plaintiffs' claim to be almost certain of success I can also say that the defendants acted reasonably in defending the claim and the injunction application.
34 In terms of the principles which apply in considering an application for costs on a discontinued action, the only remaining issue is whether the interlocutory application for injunctive relief was effectively an application for final relief. As I have already noted, the injunctive relief sought and granted related to only one of the two central components of the relief sought in the action. The injunction prevented the defendants from awarding the lawn mowing contract to another. The injunction did not direct the defendant to confer the contracts on the plaintiffs. The factors that makes it unnecessary for the plaintiffs to pursue this action is that it reached an agreement with the defendant to provide the services and the time taken on interlocutory proceedings was such that the plaintiffs actually provided the services for the period of the contracts to be awarded as a result of the tender process. There was therefore nothing further than could be obtained from the action.
35 However, the fact that there was no further benefit to be gained from pursuing the action is not the result of the injunction being granted, it was as a result of the other factors to which I have referred. One way of
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- establishing whether the relief granted was indeed the relief claimed is to consider whether, if the matter had proceeded to trial shortly after the grant of the injunction, there would have been further relief to be obtained that would justify proceeding with the trial. The answer in this case is that there clearly was because the plaintiffs required an order that the contracts be awarded to them. If the plaintiffs had not succeeded at that trial then the injunction would have provided little benefit other than delaying the outcome and preventing an award of the contracts to another. It is also the case that, if the injunction had indeed provided the relief sought in the Writ, the action could have been discontinued long before now.
36 Indeed counsel for the plaintiffs concedes there remain issues in dispute between the parties which have not yet been resolved, but submits that the plaintiffs have achieved their primary relief at an interlocutory level. As I have indicated, in my opinion the plaintiffs may well have considered that there was no further benefit to be gained in pursuing the action but they had, in fact, achieved only one of the two primary types of relief as a result of the injunction application.
37 For these reasons I am not persuaded that it is appropriate to exercise my discretion to award costs of the application to the plaintiff.
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