New South Wales Supreme Court CITATION : Eastmark Holdings Pty Ltd v Owners Strata Plan 74602 [2009] NSWSC 1483 HEARING DATE(S) : 11 December 2009 JURISDICTION : Equity Division Expedition List JUDGMENT OF : Brereton J EX TEMPORE JUDGMENT DATE : 11 December 2009 DECISION : In lieu of plaintiff paying defendant's costs upon discontinuance, no order as to costs. CATCHWORDS : COSTS – where plaintiff seeks leave to discontinue proceedings in light of action taken by defendant after proceedings instituted which removes need for further proceedings – where plaintiff's success is only partial – whether to depart from ordinary costs consequences of discontinuance. LEGISLATION CITED : (NSW) Uniform Civil Procedure Rules 2005, r 42.19 CATEGORY : Principal judgment Britannia Pty Limited v Park Lane Constructions Pty Limited [2009] NSWCA 32 CASES CITED : Cummings v Australian Jockey Club Limited [2009] NSWSC 254 Re Minister for Immigration and Ethnic Affairs; Ex parte Lai Qin (1997) 186 CLR 622 PARTIES : Eastmark Holdings Pty Ltd (plaintiff) Owners Strata Plan 74602 (defendant) FILE NUMBER(S) : SC 4456/09 COUNSEL : Mr S Garcia (sol) (plaintiff) Mr N Kidd (defendant) SOLICITORS : Herbert Geer (plaintiff) Allens Arthur Robinson (defendant) IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION BRERETON J Friday, 11 December 2009 4456/09 Eastmark Holdings Pty Limited v Owners Strata Plan 74602 JUDGMENT (ex tempore) 1 HIS HONOUR: By Statement of Claim filed on 7 September 2009, the plaintiff Eastmark Holdings Pty Limited claimed declaratory and injunctive relief in respect of decisions of the defendant Owners Strata Plan 74602, to retain solicitors and consultants and strike a levy for the purposes of considering and launching a legal, political and media campaign against a development proposed to be undertaken by Eastmark on land neighbouring the Owners' strata property, in which Eastmark is also a lot owner. On 22 September, and again on 10 November 2009, Eastmark filed a motion for an expedited hearing of its claim. 2 Negotiations between the parties ensued, in which from time to time both gave some ground – on the part of Eastmark as to the extent of the relief sought, and on the part of the Owners as to the time frame within which they proposed to take action. Ultimately, however, those negotiations did not result in a consensus. Subsequently, on 19 and 24 November 2009, the Owners' executive committee and the Owners in extraordinary general meeting respectively adopted resolutions which modified the proposed retainer of their solicitors (by providing that in the first instance an advice be obtained as to what if any steps could properly be taken in opposition to the development, a course to which Eastmark does not take objection), and that upon receipt of that advice the executive committee then be authorised to instruct the solicitors to proceed with the other (contentious) activities; reduced the proposed levy from $214,000 to $160,000; and terminated the retainer of the consultants, and the media campaign. However, although in the negotiations Eastmark had additionally sought undertakings not to renew the appointments of the consultants, the resolutions ultimately adopted by the Owners leave open their ability to do so, depending inter alia on the initial advice received from their solicitors. 3 By Notice of Motion filed on 4 December 2009, Eastmark seeks leave to discontinue the proceedings, and an order pursuant to UCPR r 42.19 that, rather than the ordinary costs consequence of discontinuance (that the discontinuing plaintiff pay the defendant's costs in relation to its claim in respect of which the proceedings have been discontinued), instead that the defendant pay the plaintiff's costs. 4 While UCPR r 42.19 provides what is in effect a default position upon discontinuance, it does not create a presumption, and if it can be shown, for example, that the plaintiff has discontinued because it has, by reason of action taken by the defendant in the meantime, achieved practical success in the proceedings, the court may nonetheless order the defendant to pay the costs [see, for example, Cummings v Australian Jockey Club Limited [2009] NSWSC 254, [22] - [23]]. On the other hand, where there is in effect a capitulation by the plaintiff, it will not be appropriate to depart from the default position [see Britannia Pty Limited v Park Lane Constructions Pty Limited [2009] NSWCA 32]. 5 In this case, as it seems to me, neither has Eastmark wholly achieved practical success, nor has it capitulated; the position is an intermediate one. Eastmark has obtained a measure of success, but far from complete success in respect of the relief it sought in its statement of claim or, indeed, in respect of the outcome it was pursuing by way of the subsequent negotiations. In particular, the special levy has not been quashed, but only reduced to $150,000; and the retainer of the Owners' solicitors has not been revoked, but merely limited - and limited only in the first instance, in that it remains open to the Owners to instruct them to take further action after obtaining their initial advice. While the retainers of the consultants have been terminated, that has been on a basis that they can be renewed in the future, whereas in the statement of claim, and for that matter in the negotiations, Eastmark was seeking a perpetual restraint. 6 On the other hand, by reason of the steps taken by the Owners since the litigation was instituted, further litigation may never be required, and certainly no longer has the urgency which previously attended it. If the Owners' solicitors give certain advice, then the proposed campaigns will probably not proceed, and litigation will be unnecessary. In that context, Eastmark has not unreasonably formed the view that, in light of the steps that the Owners have now taken in response to the statement of claim, there is no present need for these proceedings to be pursued. Thus Eastmark has quite reasonably formed the view that, in the light of the position that the Owners have now adopted, the further prosecution of these proceedings at this time is unwarranted, while, on the other hand, the Owners have not capitulated to Eastmark's demands but have preserved their right to proceed with their plans in the future. 7 In Re Minister for Immigration and Ethnic Affairs; Ex parte Lai Qin (1997) 186 CLR 622, McHugh J explained that where proceedings are resolved by negotiated settlement but the parties are unable to agree on costs, it will rarely be appropriate to determine outstanding costs issues by investigation of the merits of respective claims and contentions, and usually the appropriate course will be to leave each party to bear its own costs. In the present case, although the parties have not reached consensus so that it does not fall strictly within those observations, nonetheless it seems to me that an equivalent approach is appropriate. In substance, both parties have reasonably given some ground in the interim, and both have sought to preserve their respective positions for the future. On the one hand, a plaintiff who having not unreasonably initiated proceedings, in the light of a subsequent change of position by the defendant reasonably decides that they no longer warrant prosecution for the time being, should not be subjected to an adverse costs order; any other approach would discourage responsible judgments about the need to prosecute proceedings. On the other hand, where such a plaintiff's success has been, in substance, only partial, in that the defendant's response has not wholly met what the plaintiff was seeking, the defendant ought not have to pay the plaintiff's costs. 8 I grant leave to the plaintiff to discontinue the proceedings, on the basis that there be no order as to costs, the intent that each party bear its own costs in the proceedings. 9 At 4.40 pm yesterday, the defendant Owners made an offer to the plaintiff Eastmark in terms not less favourable to Eastmark than the result which has eventuated from this morning's hearing. That offer was expressed to be on a without prejudice basis, "save for costs". Ordinarily, the making of such an offer would provide a powerful basis for making a special costs order adverse to Eastmark in respect of today's proceedings. However, it was made only on the evening before the hearing, and remained open only for 20 minutes. 10 In this respect, some guidance can be derived from the rules of court in respect of offers of compromise, which require that they have been open for a reasonable time before a failure to accept one will have costs consequences. I cannot bring myself to think that 20 minutes at the end of the day before the hearing was, for that purpose, a reasonable time. For that reason, I am not prepared to make any special costs order in respect of the costs of today, which will be covered by the general costs order I have already made. ********** DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. 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