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Pentroth Pty Ltd v Kirschild Pty Ltd

Pentroth Pty Ltd v Kirschild Pty Ltd

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Case Copied 24 November 2006 20 min read

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SUPREME COURT OF SOUTH AUSTRALIA
(Full Court)
PENTROTH PTY LTD v KIRSCHILD PTY LTD
[2006] SASC 356
Judgment of The Full Court
(The Honourable Justice Duggan, The Honourable Justice Gray and The Honourable Justice White)
24 November 2006
PROCEDURE - COSTS - APPEALS AS TO COSTS
Appeal against order of a master as to costs - respondent discontinued proceedings commenced in Supreme Court - master ordered that the respondent pay the appellant's costs for only part of the proceedings - appellant seeks order for costs for whole of discontinued proceedings - Supreme Court Rules 1987, r 52.03 - whether r 52.03 creates a presumptive entitlement in a defendant to costs of discontinued proceedings - whether master erred in failing to recognise existence of presumptive entitlement - whether master erred in the exercise of the discretion - whether master made an error of fact.
Held: r 52.03 does not create a presumptive entitlement - master did not erroneously fetter his discretion - master made no error of fact - appeal dismissed.
Supreme Court Act 1935 (SA), s 40, s 50; Supreme Court Rules 1987 r 52.01, r 52.03; Supreme Court Civil Rules 2006 r 281; Statutes Amendment (New Rules of Civil Procedure) Act 2006 (SA); Trade Practices Act 1974 (Cth), s 52; Uniform Civil Procedure Rules 2005 (NSW), referred to.
O'Neill v Mann [2000] FCA 1680; Fordyce v Fordham [2006] NSWCA 274; Re the Minister for Immigration and Ethnic Affairs, Ex parte Lai Qin (1997) 186 CLR 622, applied.
Mills & Anor v Rothmore Farms Pty Ltd (In Liq) [2002] SASC 134; Mills & Anor v Rothmore Farms Pty Ltd (In Liq) (2002) 221 LSJS 306; Boscaini Investments Pty Ltd & Ors v The Corporation of the City of Kensington and Norwood [1999] SASC 327; Wood v Heard [2001] SASC 276; Fraser v Chakravarti [2001] SASC 276; Gribbles Pathology Pty Ltd v Health Insurance Commission (1997) 80 FCR 284; J H Leaver & Co Pty Ltd v Maniotis (2005) 215 ALR 773, considered.

PENTROTH PTY LTD v KIRSCHILD PTY LTD
[2006] SASC 356
Full Court: Duggan, Gray and White JJ

DUGGAN J: In my view the appeal should be dismissed. I agree with the reasons prepared by White J.
GRAY J: I would dismiss this appeal. I do not wish to add to the reasons of White J.
WHITE J: This appeal concerns the liability for costs of discontinued proceedings.
On 5 April 2006 the respondent to this appeal discontinued proceedings commenced in this Court on 14 April 2004 by which it sought an injunction and an award of damages. At the same time, it sought an order that each party should bear its own costs of the discontinued proceedings.
A master ordered that there be no order in respect of the costs incurred by either party up to and including 10 July 2005 but that the respondent pay the costs incurred by the appellant thereafter until the filing of…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2006] SASC 356
Decision Date: 24 November 2006

CaseChat Overview and Summary

The case of Pentroth Pty Ltd v Kirschild Pty Ltd involved an appeal against a Master's order regarding costs in a matter that had been discontinued. The appellant, Pentroth Pty Ltd, sought an order for the costs of the whole of the discontinued proceedings, while the respondent, Kirschild Pty Ltd, had already been ordered to pay some of the costs. The Supreme Court was tasked with determining whether the Master erred in his decision and whether there was a presumptive entitlement to costs under Supreme Court Rules 1987, r 52.03.

The primary legal issue was whether r 52.03 of the Supreme Court Rules 1987 created a presumptive entitlement to costs for a defendant in a discontinued proceeding. Additionally, the Court had to assess whether the Master erred in his exercise of discretion by failing to recognise the presumptive entitlement and whether he had made any errors of fact. The appellant argued that the Master's decision was influenced by errors of principle and fact.

The Court held that r 52.03 did not create a presumptive entitlement to costs for a defendant in a discontinued proceeding. The Court found that the Master had not erroneously fettered his discretion by failing to recognise the presumptive entitlement. Furthermore, the Court determined that the Master had not made any error of fact. Consequently, the appeal was dismissed. The Court reasoned that the Master's decision was based on the reasonableness of the parties' actions and that no presumptive entitlement existed under r 52.03. The Master's discretion was exercised appropriately, taking into account the circumstances of the case.

Orders

Orders of the court

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Background

Background to the litigation

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Evidence

Evidence Before The Court

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Decision

Reasons for decision

As already noted, at the same time that it filed its Notice of Discontinuance, the plaintiff sought an order from the court that each party should bear its own costs of the proceedings. The Decision of the Master The master was satisfied that it was appropriate to “otherwise order” in respect of the period before 10 July 2005, and he ordered that there be no order in respect of the costs incurred in that period. However, he considered the plaintiff’s pursuit of its claims after 11 July and in particular by the filing of an Amended Statement of Claim was not reasonable. Hence he ordered the plaintiff to pay the defendant’s costs incurred after 10 July 2005. It is clear enough that the master determined that no order should be made in respect of the costs incurred before 10 July 2005 because he was satisfied that the institution of the proceedings by the plaintiff, and their continuance to that date, had been reasonable. So much appears from the following passage in the master’s reasons:The ordinary consequence of a discontinuance in this Court is that the party discontinuing pays the costs of the party against whom the action has been brought. That rule in my view covers circumstances where the party discontinuing has not obtained any relief either interlocutory or otherwise but has brought an action which, by discontinuing, it effectively acknowledges to be futile. To bring a futile action or to maintain an action which has become futile cannot be said to be reasonable. That is not the case in this particular matter. There is clear authority to enable the Court in actions where further proceedings are moot to make orders for costs between the parties that reflect the soundness and reasonableness of the actions taken by both plaintiff and defendant. Here the plaintiff in its initial action achieved undertakings and a confinement of the escape of noise from the defendant’s premises. The actions of the plaintiff in instituting the proceedings and the defendant in defending them are in my view reasonable. Bleby J made no order for the costs of that process. In my view no order for costs should be made in respect of that part of the action.Rule 52.03 and a Presumptive Entitlement to Costs Mr Robertson, who appeared for the defendant, submitted that the master’s decision with respect to the costs incurred before 10 July 2005 was affected by two errors of principle, and by one error of fact. He submitted that the master should have found that the plaintiff’s discontinuance of the proceedings was a recognition by it of the futility of its claims, so that the plaintiff should have been required to pay all of the defendant’s costs. Mr Robertson submitted that r 52.03 created a presumptive entitlement in a defendant to the costs of discontinued proceedings. The existence of the presumptive entitlement displaced the usual unfettered discretion of the court with respect to costs. In exercising the discretion which r 52.03 undoubtedly vested in him to order otherwise, the master had failed to recognise the existence of the presumptive entitlement and to recognise that his discretion had to be exercised having regard to that presumptive entitlement. It was submitted that this was the first error of principle.

Ratio Decidendi

Legal Principle Established

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