Case: Tervonen v Minister for Home Affairs (No 2) [2008] FCA 872
Outcome: cited
the exercise of this discretion, one matter to be considered is whether or not there has been any hearing on the merits. In the absence of a hearing, it has been said that each party must bear its own costs " except in special circumstances ": Gribbles Pathology Pty Ltd v Health Insurance Commission (1997) 80 FCR 284. Finkelstein J at 287 there cited with approval the following propositions formulated by Hill J in Australian Securities Commission v Aust-Home Investments Ltd [1993] FCA 585 ; (1993) 44 FCR 194 at 201 (citations omitted): These cases seem to me to support the following propositions being made. (1) Where neither party desires to proceed with litigation the Court should be ready to facilitate the conclusion of the proceedings by making a cost order ... (2) It will rarely, if ever, be appropriate, where there has been no trial on the merits, for a Court determining how the costs of the proceeding should be borne to endeavour to determine for itself the case on the merits or, as it might be put, to determine the outcome of a hypothetical trial ... This will particularly be the case where a trial on the merits would involve complex factual matters where credit could be an issue. (3) In determining the question of costs it would be appropriate, however, for the Court to determine whether the applicant acted reasonably in commencing the proceedings and whether the respondent acted reasonably in defending them ... (4) In a particular case it might be appropriate for the Court in its discretion to consider the conduct of a respondent prior to the commencement of the proceedings where such conduct may have precipitated the litigation ... (5) Where the proceedings terminate after interlocutory relief has been granted, the Court may take into account the fact that interlocutory relief has been granted ... The third proposition formulated by Hill J has, however, attracted repeated comment &#8212; both in this Court and in State courts. Thus, for instance, in Gribbles, Finkelstein J observed at 287: For my own part I should wish to emphasise that in the absence of a hearing on the merits it is difficult to see how any order, other than an order that each party bear its own costs, can be made except in special circumstances. To do otherwise would require some prediction of the outcome of the case. It seems to me that the third proposition stated by Hill J was intended to cover the situation where the Court was in fact able to form a clear view about the merits of a case without a trial. So, if a claim is patently hopeless that would be a good reason to make an order for costs against the claimant. Likewise if a defence was bound to fail that would be good reason for awarding costs in favour of the claimant. But I venture to suggest that there will be very few cases where the issues will be sufficiently clear, in the absence of a hearing, for an order for costs to be made in favour of a party. And in Boscaini v Corporation of Kensington and Norwood [1999] SASC 327 , Debelle J observed: [22] I immediately acknowledge the assistance of Hill J but suggest that proposition (3) is of limited assistance. The fact that a party has not conducted himself reasonably may disentitle him to costs. But, beyond that, the reasonableness of the conduct of the parties is not likely to assist in determining whether the applicant should recover his costs. The real question is whether the applicant had reasonable prospects of success. It seems preferable, therefore, to express proposition (3) in different terms. Depending on circumstances, where the applicant has acted reasonably in commencing proceedings, has an arguable case, and it is reasonable to conclude that the respondent has acted in consequence of the commencement of proceedings, the court may be prepared to make an order as to costs in favour of the applicant. Both of these observations were most recently addressed by Lander J in Consolidated Byrnes Holdings Ltd v Hardel Investments Pty Ltd [2009] FCA 399 at [353] to [354], 176 FCR 348 at 364. His Honour said at [359], 176 FCR at 364: ... I disagree with respect with Debelle J's decision in Boscaini ... A party may behave so unreasonably in the bringing or conducting of proceedings so that an order for costs against that party is required in the interests of justice without ever deciding whether the party had a good cause of action. See also: Residential Property Conveyancers v Bagnato [2009] SASC 71 at [22] to [25] per Layton J. Reservation has also been expressed as to the constraint suggested by Finkelstein J in Gribbles that in the absence of a hearing on the merits it is difficult to see how any order, other than an order that each party bear its own costs, can be made except in " special circumstances ": Champagne View Pty Ltd v Shearwater Resort Management Pty Ltd [2000] VSC 214 at [47]. Each case, it was there correctly observed, " must depend upon its own circumstances ". See also: Tervonen v Minister for Home Affairs (No 2) [2008] FCA 872 at [19] .