Case: Re Minister for Immigration and Ethnic Affairs; Ex parte Lai Qin [1997] HCA 6 ; (1997) 143 ALR 1
Outcome: referred to
basis of ACN's no costs contention is that, in commencing the proceeding, it has acted reasonably and that its conduct has continued to be reasonable until the further prosecution of the litigation became futile. That futility, it is said, is evidenced by the amendments to Coopers' articles removing Lion Nathan's pre-emptive and exemption rights. In support of this, counsel relies on the observations of McHugh J in Re Minister for Immigration and Ethnic Affairs; Ex parte Lai Qin [1997] HCA 6 ; (1997) 143 ALR 1 to the effect that where further prosecution of proceedings becomes futile, the questions for the court are (i) whether one side or the other was almost certain to succeed or (ii) whether there had been some unreasonableness in the behaviour of one of the parties. In contrast, Coopers contends that the facts demonstrate that ACN went into the litigation with knowledge of the real risk that the amendment to the articles would take place should the EGM proceed. As such, the plaintiff cannot now rely on the realisation of that risk (which has had the effect of ending the litigation) to avoid a costs order. Order 22 of the Federal Court Rules , insofar as presently relevant, provides: " 2 Discontinuance -- Form 29 (1) Subject to subrules 2 and 3 a party making a claim for relief may discontinue a proceeding so far as concerns the whole or any part of any claim for relief, by notice in accordance with Form 29: (a) at any time before the directions hearing appointed in the application -- without the leave of the Court or the consent of any other party; (b) where after the directions hearing the proceeding continues on pleadings but the pleadings are not closed -- without the leave of the Court or the consent of any other party; (c) where judgment has not been entered -- with the consent of all the parties; and (d) at any time -- with the leave of the Court. ... 3 Costs (1) A party who discontinues pursuant to paragraph 2 (1) (a) or (b) shall be liable to pay the costs of the other party or parties occasioned by the whole or the relevant part of the proceeding. (2) A party who discontinues under paragraph 2 (1) (c) is liable to pay the costs of the other party or parties occasioned by the whole or the relevant part of the proceeding, unless the terms of the consent provide otherwise." (iii) The reasons for, and circumstances of, a discontinuance can be so various that there are some number of factors which can be of (varying) utility in informing the Court's discretion. These include the following: (a) While it is not the function of the Court to make a prediction as to the outcome of the litigation concerned, the Court may nonetheless in particular circumstances feel confident that, although both parties have acted reasonably, "one party was almost certain to have succeeded if the matter had been fully tried": Ex parte Lai Qin , at 3; (b) If one party has acted unreasonably in occasioning the need for the litigation or for the incurring of expense in it, that can entitle the other party to costs. (c) As McHugh J observed in Ex parte Lai Qin at 3-4: "If it appears that both parties have acted reasonably in commencing and defending the proceedings and the conduct of the parties continued to be reasonable until the litigation was settled or its further prosecution became futile, the proper exercise of the cost discretion will usually mean that the court will make no order as to the cost of the proceedings. This approach has been adopted in a large number of cases." (d) A common species of futility is where a change in "objective": O'Neill v Mann at [13]; or "extrinsic": Smith at [48] circumstances renders the further prosecution of a proceeding futile.