Federal Court of Australia Hayson, as trustee of the Hayson Family Trust v City Residential Property Pty Ltd [2020] FCA 1813 File number: NSD 1278 of 2019 Judgment of: JAGOT J Date of judgment: 18 December 2020 Catchwords: COSTS – application for costs – whether conduct after circulating "for execution" settlement deed unreasonable – application dismissed Legislation: Federal Court of Australia Act 1976 (Cth) s 37M(1)(b) Division: General Division Registry: New South Wales National Practice Area: Commercial and Corporations Sub-area: Commercial Contracts, Banking, Finance and Insurance Number of paragraphs: 7 Date of last submissions: 7 December 2020 Date of hearing: Determined on the papers Solicitor for the First and Second Applicants: JemmesonFisher Solicitor for the First, Second and Fifth Respondents: CLS Legal Solicitor for the Third and Fourth Respondents: Gillis Delaney ORDERS NSD 1278 of 2019 BETWEEN: MATTHEW PAUL HAYSON AS THE TRUSTEE OF THE HAYSON FAMILY TRUST First Applicant DANIEL CHARLES COBDEN AS THE TRUSTEE OF COBDEN FAMILY TRUST Second Applicant AND: CITY RESIDENTIAL PROPERTY PTY LTD ACN 103 484 519 AS THE TRUSTEE OF THE CITY RESIDENTIAL UNIT TRUST First Respondent KRISTIAN NELSON-MARSHALL Second Respondent BRIGITTE BLACKMAN (and others named in the Schedule) Third Respondent order made by: JAGOT J DATE OF ORDER: 18 DECEMBER 2020 THE COURT ORDERS THAT: 1. The applicants' application for costs be dismissed. 2. Each party bear its own costs of and in connection with the applicants' application. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011. REASONS FOR JUDGMENT JAGOT J: 1 This proceeding involved a hearing over five days. The length of the hearing, and the resources which the parties devoted to the proceeding, was alarmingly disproportionate to the amounts of money in dispute. The matter exposes the financial harm to which parties can expose themselves by an unrealistically optimistic view of what litigation involves, the length of time which litigation may take, and their own prospects of ultimate success. It shows that, in a commercial dispute, to lose sight of a commercial outcome is contrary to both the private interests of the parties and the public interest in ensuring the resolution of disputes as quickly, inexpensively and efficiently as possible: s 37M(1)(b) of the Federal Court of Australia Act 1976 (Cth). 2 In the present case the commercial intransigence of one or more of the parties (it is not possible to identify whom or which other than that it has nothing to do with the third and fifth respondents) survived the substantive settlement of the proceeding. The applicants now seek an order that the first, second and fourth respondents pay the applicants' costs incurred after 6.42pm on 24 November 2020, being the time by which the applicants and third and fifth respondents had signed both the settlement deed and consent orders disposing of the proceeding. In the event, consent orders reflecting the settlement of the proceeding were not made until 26 November 2020 (after two additional appearances in Court and numerous emails between the parties). By 26 November 2020 the first, second and fourth respondents yielded to the applicants' demands and signed the settlement deed in the same terms as signed by the applicants and third and fifth respondents. By 26 November 2020 the parties had also signed an addendum to the deed because they recognised that the settlement deed omitted provisions fundamental to the agreement which they had reached. 3 The applicants contend that the conduct of the first, second and fourth respondents in refusing to execute the settlement deed in accordance with its terms as forwarded to them "for execution" was unreasonable. The first, second and fourth respondents contend that the applicants acted unreasonably in not agreeing to include all potentially relevant releasing parties in the settlement deed despite this being the common intention of the parties during the settlement negotiations. 4 I encouraged the applicants and the first, second and fourth respondents to resolve the dispute about costs. However, in keeping with their overall conduct of this proceeding (involving two failed formal mediations), they were unable to do so. In so failing they (or one or more of them) apparently remain oblivious to the fact that a sincere belief in the reasonableness of one's own conduct and the unreasonableness of the conduct of another party neither makes it so nor makes it provable. 5 The applicants have not proved that the conduct of the first, second and fourth respondents in refusing to execute the settlement deed in accordance with its terms as forwarded to them "for execution" was unreasonable. It is inherently unlikely that any party intended any related entity of a party to be able to make a claim against a party despite the settlement. As such, the worst that can be said about the conduct of the first, second and fourth respondents is that they prematurely identified a version of the deed as being "for execution" when, in fact, there had not been a complete meeting of the minds of the parties about the terms of settlement. Further, the fact that the first, second and fourth respondents ultimately yielded by signing the settlement deed in the terms signed by the applicants and third and fifth respondents does not prove that the conduct of the first, second and fourth respondents was unreasonable. It may do no more than support a possible inference that the applicants' conduct in refusing to amend the settlement deed to ensure it reflected the presumed mutual intentions of the parties was unreasonable. The fact that, in any event, the executed settlement deed had to be the subject of an addendum which all parties accepted also demonstrates that as at 24 November 2020 there had not in fact been a complete meeting of the minds of the parties about the terms of settlement. 6 Whatever the true position as to the reasonableness or unreasonableness of the applicants as compared to the first, second and fourth respondents, it cannot be determined on the available evidence. In particular, cannot infer that there has been any conduct on the part of the first, second and fourth respondents which would mean that it is in the interests of justice that there should be a costs order against them for costs incurred by the applicants from 6.42pm on 24 November 2020. That said, I do not consider that the first, second and fourth respondents should have their costs of this failed application by the applicants. Whether reasonable or not, the applicants would have had no occasion to adopt a commercially intransigent position had the first, second and fourth respondents not forwarded the settlement deed "for execution". This clearly involved some kind of error on the part of the lawyers for the first, second and fourth respondents. In all of the (regrettable) circumstances of this case the interests of justice require that all burdens of costs should continue to lie where they have fallen. 7 The applicants' application for costs must be rejected. The first, second and fourth respondents should not obtain the benefit of a costs order on account of the failed application against them. I certify that the preceding seven (7) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Jagot. Associate: Dated: 18 December 2020 SCHEDULE OF PARTIES NSD 1278 of 2019 Respondents Fourth Respondent: MILK & HONEY PROPERTY INVESTMENTS PTY LTD ACN 161 624 362 AS THE TRUSTEE OF THE GIFFORD FAMILY TRUST Fifth Respondent: BIJBLACK PTY LTD ACN 109 466 962 AS THE TRUSTEE OF THE BIJBLACK MANAGEMENT TRUST