Peng v Long

[2021] VCC 559

IN THE COUNTY COURT OF VICTORIA

AT MELBOURNE

COMMERCIAL DIVISION

 Revised
Not Restricted
Suitable for Publication

GENERAL LIST

Case No. CI-21-00801

ZIQIN (OLIVIA) PENG	First Plaintiff
APRIL GOLD PTY LTD (ACN 640 545 446)	Second Plaintiff
v
ZHAO ZHEN LONG	First Defendant
SNOWY MEDISPA PTY LTD (ACN 635 325 905)	Second Defendant

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JUDICIAL OFFICER:	Judicial Registrar Burchell
WHERE HELD:	Melbourne
DATE OF HEARING:	on the papers
DATE OF RULING:	10 May 2021
CASE MAY BE CITED AS:	Peng & Anor v Long & Anor
MEDIUM NEUTRAL CITATION:	[2021] VCC 559

RULING
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Subject:Costs — discontinuance — dismissal without adjudication on the merits

Cases Cited:Re Minister for Immigration and Ethnic Affairs; Ex parte Lai Qin (1997) 186 CLR 622 —Ferny Sky Pty Ltd v Capital Finance Aust [2006] VSC 366 —Telstra Corp Ltd v Australian Telecommunications Authority (1995) 133 ALR 414

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APPEARANCES:	Counsel	Solicitors
For the Plaintiffs	Mr C Henderson	Carbone Lawyers
For the Defendants	Mr C Twidale	Fumens Lawyers

JUDICIAL REGISTRAR:

1By a request for a directions hearing in this proceeding on 31 March 2021, the plaintiffs sought orders of the Court that the proceeding be dismissed and the defendants pay the plaintiffs’ costs of and incidental to the proceeding. 

2The plaintiffs confirmed that they had inspected all of their property the subject of the agreement annexed to the orders of Judge Marks made on 3 March 2021 and although there was some damage, the plaintiffs did not intend to pursue any further relief of the extant proceeding, being various declarations and damages. 

3By reason of the agreement with respect to the plaintiffs’ claim for access to retrieve the property the subject of this proceeding, the claim had settled. As such, the plaintiffs contended that the relief sought by them pursuant to their originating motion dated 1 March 2021 had been successful. 

4The plaintiffs, however, sought a further order that the defendants pay the plaintiffs’ costs of the proceeding on an indemnity basis and the costs of the defendants’ summons that the proceeding be stayed on a standard basis. The defendants wished to be heard on the question of costs of the proceeding.

5As a result of the correspondence by the parties, a timetable was ordered to allow the parties the opportunity to provide further written submissions addressing the outstanding question of the costs of the proceeding. Unless objection was received, the costs ruling would be made on the papers.

6The parties filed their written submissions on 4 and 7 May 2021. The defendants submit that the normal order should be made on a discontinuance, namely, an order that the plaintiffs pay the defendants’ costs of and incidental to the proceeding. The defendants say they should have their costs either from the proceedings’ inception (ie, 1 March 2021), or alternatively on and after 10 March 2021.

7The parties are in dispute concerning the costs of the proceeding. The case is squarely within the principles explained by McHugh J in Re Minister for Immigration and Ethnic Affairs; Ex parte Lai Qin (“Qin”):[1]:

“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”[2]

[1] (1997) 186 CLR 622.

[2] Ibid 625.

8For the reasons which follow, there should be no order as to costs.

Submissions

9Pursuant to r 25.02(2) of the County Court Civil Procedure Rules 2018 (Vic) (“the Rules”), a plaintiff may discontinue a proceeding before the close of pleadings or at any time by leave of the Court or with the consent of all other parties. Pursuant to r 25.05 and r 63A.15 of the Rules, unless the Court otherwise orders, a party who discontinues shall pay the costs of the party to whom the discontinuance relates. That is, the usual rule is the plaintiff pay the defendant’s costs of the proceeding, unless the Court otherwise orders.

10The plaintiffs contend that the defendants ought to pay their costs because they have been wholly successful in relation to the claim and because it was necessary for them to bring the proceeding in circumstances of the defendants’ conduct. They seek indemnity costs on the basis of the alleged conduct of the defendants in the proceeding before and after the orders of Judge Marks made on 3 March 2021.

11The defendants claim that the plaintiffs’ issuing of the proceeding was unjustified and premature in circumstances where the defendants had written to the plaintiffs to arrange for collection of their property. The property was collected by the plaintiffs on 10 March 2021 in accordance with the agreement made by the parties on 3 March 2021.

12The parties consented that the proceeding be listed for directions hearing on 19 March 2021 at the hearing before Judge Marks. The parties did not attend a separate and distinct hearing with respect to defendants’ stay application, and the defendants submit that parties would have incurred costs in attending court on 19 March 2021, irrespective of whether the defendants applied to stay the proceeding. The plaintiffs at that stage were still reserving their rights in relation to the balance of the relief sought, which was not abandoned until 31 March 2021. So the matter proceeded. 

13The Court has a wide discretion in relation to costs. An order that the plaintiffs pay the defendants’ costs upon discontinuance is not automatic. The Court, in the exercise of its discretion, will take into account the conduct of the parties. 

14The Court does have the power to order that a defendant pay the plaintiffs’ costs of the proceeding if they have in effect succeeded in securing the relief they sought in the proceeding. However, if the defendant had a defence, the plaintiffs would not normally be given their costs. 

15The High Court in Qin is authority for the principle that where there has been no hearing on the merits, the Court is necessarily deprived of the factor that usually determines whether or how it will make an order as to costs.[3]

[3] Ibid.

16Further, Whelan J in Ferny Sky Pty Ltd v Capital Finance Aust (“Ferny Sky”)[4] summarised the principles to be applied:

“In the absence of a trial on the merits it will usually not be appropriate for a court considering the issue of costs to determine the merits or to attempt to assess the likely outcome of a hypothetical trial. But in some cases, a judge may feel confident that one party was almost certain to have succeeded if the matter had been fully tried and, in such circumstances, the judge is justified in determining costs on that basis. In some cases, the discontinuance itself can be seen as an acknowledgement of likely or even certain defeat or as what has been described as a step amounting to ‘effective surrender.’ Cases where external events overtake a proceeding or render it futile are in a different category. Such cases are not relevant here”[5]

[4] [2006] VSC 366 at [25] (“Ferny Sky”).

[5] Ibid [25].

17In Telstra Corp Ltd v Australian Telecommunications Authority,[6] the plaintiff, by commencing its proceeding, had secured the commercial outcome it sought to achieve, upon the discontinuance of the proceeding it was ordered that each party bear their own costs.

[6] (1995) 133 ALR 414.

18In the present case, there are contested issues in dispute between the parties that have had no final adjudication on the merits, being the injunctive relief, declarations and damages.

19Consistently with Qin, it is not appropriate that I attempt to resolve the merits of the dispute between the plaintiffs and the defendants. However, I reject any assertion that the defendants have acted unreasonably in this proceeding. 

20In all the circumstances, it is appropriate that there be no order as to the costs of the proceeding.

21As set out in Ferny Sky, where the parties desire to conclude the litigation, the Court should facilitate the finalisation of the proceeding by making an appropriate costs order.[7] The Court takes into account the public policy of encouraging parties to expeditiously and reasonably resolve their disputes. This is not a case of capitulation by the plaintiffs nor an admission of liability by the defendants in light of the affidavit material and submissions filed by the parties (Judge A Ryan further made orders on 19 March 2021 for the proceeding to commence as if by Writ which did not require a defence to be filed until 10 May 2021 and the parties have reserved their rights in relation to any breach of contract or Intellectual Property claim/s). The Court cannot be confident, without the benefit of a full trial, to determine the merit of the parties’ case or assess the likely outcome of a hypothetical hearing. In the circumstances, the appropriate costs order should be that each party bear their own costs.

[7] Ferny Sky [25].

22For the reasons set out above, I will order that the proceeding is dismissed without adjudication on the merits and with no order as to costs. 

Certificate

I certify that these 6 pages are a true copy of the judgment of Judicial Registrar Burchell delivered on 11 May 2021.

Dated: 11 May 2021

Julia Despard

Associate to Judicial Registrar Burchell