SUPREME COURT OF SOUTH AUSTRALIA
(Civil)
MURRAY & ORS v LESICAR & ORS
[2014] SASC 43
Judgment of The Honourable Justice Stanley
28 March 2014
PROCEDURE - COSTS - INTERLOCUTORY PROCEEDINGS
PROCEDURE - COSTS - DEPARTING FROM THE GENERAL RULE - NATURE OF PROCEEDINGS - INCONCLUSIVE PROCEEDINGS
PROCEDURE - COSTS - GENERAL RULE - COSTS FOLLOW THE EVENT - COSTS OF ISSUES
Application for costs.
This is an application for costs of part of the proceedings only.
The proceedings are yet to be finalised. The parties seek an award of costs for part of the proceedings regardless of the final result of the action.
The plaintiffs commenced proceedings against the defendants seeking a declaration as to the existence of a partnership, the date of its dissolution and for the taking of an account upon the determination of the partnership.
A Master of this Court referred the trial of the issue of whether a partnership existed to a Judge of this Court.
Prior to the commencement of the trial, the parties filed extensive affidavits canvassing a range of issues extending beyond the question of the existence of a partnership. A number of interlocutory hearings were heard before a Judge of this Court. Certain issues were resolved between the parties. Ultimately, the trial of the remaining live issue was vacated. The parties agreed the basis upon which the matter could proceed for the taking of an account. The matter is to be remitted to a Master of this Court for the purposes of taking the account and finally disposing of the action.
The parties seek an order for the costs of the proceedings to date.
Held: In the circumstances of this case, it would not be appropriate to make an award of costs in relation to part of the proceedings, which proceedings are yet to be finally determined (at [28] - [31]).
Supreme Court Civil Rules 2006 (SA) r 263, referred to.
Rasch Nominees Pty Ltd v Bartholomaeus [2013] SASCFC 105; Residential Property Conveyancers v Bagnato & Ors [2009] SASC 71, discussed.
Vergola Pty Ltd v Vergola Asia Pacific (2002) 217 LSJS 198; Cretazzo Lombardi (1975) 13 SASR 4; Oshlack v Richmond River Council (1998) 193 CLR 72; Bowen Investments Pty Ltd v Tabcorp Holdings Ltd (No. 2) [2008] FCAFC 107; Boscani Investments Pty Ltd v Corporation of the City of Kensington and Norwood [1999] SASC 327; Gribbles Pathology Pty Ltd v Health Insurance Commission (1997) 80 FCR 283; O'Keeffe Nominees Pty Ltd v BP Australia (1995) 55 FCR 591, considered.
WORDS AND PHRASES CONSIDERED/DEFINED
"event"
MURRAY & ORS v LESICAR & ORS
[2014] SASC 43STANLEY J
Introduction
This is an application for costs.
It is an application for costs of part of the proceedings only.
The proceedings are yet to be finalised. The parties seek an award of costs in any event. That is to say an award of costs for part of the proceedings no matter what the final result of…
Continue reading Murray v Lesicar
Sign in free to access the full text
- AGLC
- Murray v Lesicar [2014] SASC 43
- Case
- [2014] SASC 43
- Decision Date
CaseChat Overview and Summary
The legal issues before the court included determining whether the discontinuing party should bear the costs of the proceedings and the principles to be applied in such circumstances. The court was required to consider whether the conduct of the parties was reasonable, the likely prospects of success, and whether making an order as to costs would involve presuming the outcome of the case.
The court reasoned that the fact of discontinuance alone did not determine whether the discontinuing party should pay the costs. The court must consider whether the party acted reasonably in commencing and continuing the action. It was noted that where neither party desires to proceed with litigation, the court should facilitate the conclusion of the proceedings by making a cost order. However, it is rarely appropriate for a court to determine the outcome of a hypothetical trial without a hearing on the merits, particularly where credit could be an issue. The court concluded that it was not possible to determine the likely prospects of success of the application before it due to issues concerning the credit of witnesses and the contents of complex documentation. Therefore, making any order as to costs would be to presume the outcome, and it was not possible to make any order as to costs.
In conclusion, the court remitted the matter to the Master for the taking of an account and the ultimate disposition of the action, reserving the question of the costs of the part of the proceedings heard by the court to the Master. The court emphasized that the Master would need to consider how to treat that part of the proceedings in deciding the question of costs, guided by the reasons provided.
Orders
Orders of the court
Full text does not contain this section.
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
Ratio Decidendi
Legal Principle Established
In Residential Property Conveyancers v Bagnato & Ors[15] Layton J considered the principles to be applied to the question of costs when an action has been discontinued. She said:[16][15] [2009] SASC 71.[16] Residential Property Conveyancers v Bagnato & Ors [2009] SASC 71 at [19] – [25].In Pentroth Pty Ltd v Kirschild Pty Ltd,[17] White J considered r 52.03 of the Supreme Court Rules 1987, which provided that a discontinuing party was to bear the costs of the proceedings unless the court ordered otherwise. His Honour found that this did not create a presumptive entitlement for costs against the discontinuing party and adopted the approach suggested by McHugh J in Re The Minister for Immigration and Ethnic Affairs; ex parte Lai Qin[18] (“Lai Qin”), in which McHugh J stated:[19][17] [2006] SASC 356.[18] (1997) 186 CLR 622.[19] Re The Minister for Immigration and Ethnic Affairs; ex parte Lai Qin (1997) 186 CLR 622, 624-5 as cited in Pentroth Pty Ltd v Kirschild Pty Ltd [2006] SASC 356, [34].“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. …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. [Citations omitted]”In applying this approach, White J commented:[20][20] Pentroth Pty Ltd v Kirschild [2006] SASC 356, [35].This approach suggests that the court should not, in effect, try an action simply for the purposes of determining an appropriate outcome for costs. There may be cases in which the court considers that a party’s conduct in commencing the litigation, or in continuing it, was unreasonable or in which it can, conveniently, form a view as to the probable outcome. In such cases, an order that the discontinuing party pay costs may be appropriate. Much may depend on any explanation provided to the court for the discontinuance, as well as the circumstances surrounding its commencement and continuance generally. However, when the court is satisfied that the conduct of the parties has been reasonable, it will usually be appropriate for the court to make no order as to costs.Therefore, the fact that a discontinuance is filed does not of itself determine whether the discontinuing party should pay the costs of the person against whom the action is discontinued. It is still necessary to consider whether the party has acted reasonably in commencing and continuing the action. In Boscaini Investments Pty Ltd & Ors v The Corporation of the City of Kensington and Norwood,[21] Debelle J referred to Australian Securities Commission v Aust-Home Investments Ltd,[22] in which Hill J extracted the following principles from the relevant authorities:[23] [21] [1999] SASC 327.[22] (1993) 116 ALR 523.[23] Australian Securities Commission v Aust-Home Investments Ltd (1993) 116 ALR 523, 530 as cited in Boscaini Investments Pty Ltd & Ors v The Corporation of the City of Kensington and Norwood [1999] SASC 327, [21].“(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.(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. 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.(5) Where the proceedings terminate after interlocutory relief has been granted, the court may take into account the fact that that interlocutory relief has been granted. [Citations omitted]Debelle J cited other authorities which followed these propositions, and agreed with the following comments made by Finkelstein J in Gribbles Pathology Pty Ltd v Health Insurance Commission:[24] “For my own part I should wish to emphasise that in the absence of a hearing on the merits it is difficult to see how any order, other than an order that each party bear its own costs, can be made except in special circumstances. To do otherwise would require some prediction of the outcome of the case. It seems to me that the third proposition stated by Hill J was intended to cover the situation where the Court was in fact able to form a clear view about the merits of a case without a trial. So, if a claim is patently hopeless that would be a good reason to make an order for costs against the claimant. Likewise if a defence was bound to fail that would be good reason for awarding costs in favour of the claimant. But I venture to suggest that there will be very few cases where the issues will be sufficiently clear, in the absence of a hearing, for an order for costs to be made in favour of a party.”Debelle J agreed that the third proposition enunciated by Hill J was of limited assistance, as the reasonableness of the conduct of the parties is not likely to assist in determining whether an applicant should recover their costs. In the view of Debelle J, “the real question is whether the applicant had reasonable prospects of success.”[25] However, his Honour acknowledged a party who does not act reasonably may be disentitled to costs. His Honour therefore suggested the third proposition should be varied as follows:[26]Depending on circumstances, where the applicant has acted reasonably in commencing proceedings, has an arguable case, and it is reasonable to conclude that the respondent has acted in consequence of the commencement of proceedings, the court may be prepared to make an order as to costs in favour of the applicant.In concluding that is was not possible to determine the likely prospects of success of the application before him, Debelle J referred to issues concerning the credit of witnesses and the contents of complex documentation. His Honour concluded that, “to make any order as to costs would be to presume the outcome. It is not possible, therefore, to make any order as to costs”.[27][24] Gribbles Pathology Pty Ltd v Health Insurance Commission (1997) 80 FCR 284, 287 as cited in Boscaini Investments Pty Ltd & Ors v The Corporation of the City of Kensington and Norwood [1999] SASC 327, [21].[25] Boscaini Investments Pty Ltd & Ors v The Corporation of the City of Kensington and Norwood [1999] SASC 327, [22].[26] Ibid.[27] Ibid. Consideration