Green Line Investor Services Ltd v Cresvale Securities Ltd [1999] FCA 68

FEDERAL COURT OF AUSTRALIA

Green Line Investor Services Ltd v Cresvale Securities Ltd [1999] FCA 68

GREEN LINE INVESTOR SERVICES LIMITED v CRESVALE SECURITIES LIMITED & ANOR NG 1340 OF 1998 THE HON JUSTICE MARCUS EINFELD AO 27 JANUARY 1999 SYDNEY

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY NG 1340 OF 1998

BETWEEN: GREEN LINE INVESTOR SERVICES LIMITED

Applicant

AND: CRESVALE SECURITIES LIMITED

First Respondent

VIOLETA CAVDAROVSKA

Second Respondent

JUDGE: THE HON JUSTICE MARCUS EINFELD AO

DATE: 27 JANUARY 1999

PLACE: SYDNEY

REASONS FOR JUDGMENT 1 By consent without admission I make the orders set out in paragraph 7, 8, 9 and 11. I note the undertakings given by the first respondent in paragraphs 1 and 2 qualified by paragraph 3. I note the undertaking of the applicant's solicitors in paragraph 4 and the agreement and acknowledgments referred to in paragraphs 5 and 6. The parties are not agreed as to costs and have at the court's direction made submissions on that issue. The applicant has sought an order that its costs be paid presumably by the respondents jointly although it does not expressly say so. The first respondent seeks firstly an order that the applicant pay its costs, or alternatively that each party pay its and her own costs. 2 The case is in a sense extraordinary. It was commenced by an application on 10 December 1998 and by 23 December the parties had reached agreement on all matters except costs. Yet by that time the costs could not have been particularly great. The parties have subsequently expended significant further additional further costs in arguing the point which tends to underline some of the scepticism in the community about the games that lawyers play. The applicant's submissions are in nine closely typed pages with annexures of almost 70 pages from articles, books and cases. The first respondent has added another three and a half closely typewritten pages. The second respondent has been gracious enough to supply me with more than five pages of submissions. The costs involved in the application for costs far outweigh the possible benefits of any order to be made. 3 The applicant has argued that in the orders I have just made by consent it has, so to speak, succeeded in its action. That is an exaggerated statement of what has in fact occurred. The application filed on 10 December sought a range of relief covering some 11 substantive paragraphs plus interest, costs and any other orders sought that the court might think appropriate. Of those but a few have actually found their way into the substance of the agreement between the parties, none in precise form, but a small number in substance. The major relief actually sought in the application in the facts of the case was damages but there is no part of the agreement for the conclusion of the matter that provides for the payment of any damages. I agree with one or other of the respondents in its submissions that in the circumstances of the case damages were at all relevant times on the facts in this matter very unlikely. 4 The submissions refer to decided authority about what the court should do in relation to the costs of matters which have been settled. I will not refer in detail to those decisions except to say that two competing principles have been identified, one is that the Court should, of course, encourage parties to reach agreement and settle litigation, and it should be ready to make orders for costs to facilitate such a conclusion. In particular it ought not refuse costs in an appropriate case and thus risk forcing the parties to litigation. The other principle is that in the absence of a hearing on the merits, it is difficult to understand how an order in favour of one party to a settlement can be made except perhaps in the circumstance where the respondent is agreeing to all or the substance of the applicant's original application for relief, the launching of which was justified by the facts. 5 Despite the earnest submissions of the applicant that this is an open and shut case which the applicant could not have lost, and that therefore it should not be, as it has been put, "deprived of the success which it has had", the fact is that that statement does not reflect what has actually happened. Having heard no evidence, and being reliant upon a statement of agreed facts, a consideration of evidence not all agreed and a reading of the submissions which have been made, it is clearly inappropriate for me to make the findings for which the applicant has argued. 6 It is certainly true that had this litigation gone to a hearing the number of agreed facts would probably have exceeded the number of disputed facts but the relief would have been opposed and there are many discretions open to a court on costs even in consent litigation. It is not at all certain that a successful party in litigation will obtain an order for costs, or all its costs, especially if the litigation was commenced prematurely. 7 I have previously written in several judgments that the so called "usual order" is a throw back to a time when the relevant legislation provided for orders for costs in favour of successful parties. Today the legislation makes provision that costs are in the discretion of the court and there can be no concept of a "usual order" in such an environment. On the other hand, principles have been laid down for the exercise of the Court's discretion in particular circumstances. Clearly, if a party has brought proceedings which have been entirely successful and which little or nothing can be said to denigrate because of the facts surrounding circumstances, that party is likely to receive an order for costs. But where a case has been settled not very long after it has been commenced, even agreement as to the facts could not found an order for costs without considering a whole range of other circumstances. 8 Judges of this Court have often said that parties should not commence litigation as the remedy of first resort. If only in the interests of preserving their money, they should, prior to commencing litigation, make efforts to settle the litigation by raising the disputes with the other parties and investigate whether the matter can be resolved. In a case such as this, that is particularly pertinent. It is true that a letter of demand was written at the outset of this matter but, as it turns out, there was little by way of urgency involved except to draw the attention of the other parties to the possibility that they might breach duties of confidentiality. 9 Thus all that was necessary while the matter was being looked at was to obtain an undertaking that there would be no use or publication made of the material in dispute until there had been an opportunity to negotiate a satisfactory outcome of the matter or obtain an order from the court. In fact, what happened was that the litigation was commenced very shortly after the letter of demand and, as has been pointed out in one of the submissions, even in the letter there was reference to the intention to commence proceedings. Litigation is far too costly and far too troublesome and uncertain to encourage parties to commence proceedings, especially of this kind, without investigating all possibilities of dealing with the matter without litigation. 10 When litigation is commenced, especially when it is commenced seeking the extensive relief contained in this application, it is impossible for the Court to inject itself into the arena and attempt to make an assessment of how successful the application would have been had it been contested. Yet such a course would be necessary if the order sought by the applicant was to be granted. 11 In all the circumstances, it is my view that the appropriate order in the case is that each party pay its and her own costs. I certify that the preceding eleven (11) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Marcus Einfeld AO.