Case: Re Minister for Immigration and Ethnic Affairs; Ex parte Lai Qin [1997] HCA 6 ; (1997) 186 CLR 622
Outcome: discussed
A court should not engage upon a determination of the merits of the case where the only outstanding claim is as to costs. See Re Minister for Immigration and Ethnic Affairs; Ex parte Lai Qin [1997] HCA 6 ; (1997) 186 CLR 622 and One.Tel Ltd v Commissioner of Taxation [2000] FCA 270 ; (2000) 101 FCR 548 at 552-553. Those cases also demonstrate that a court may inquire as to the reasonableness of the conduct of the parties to ascertain whether or not orders for costs should be made. Those cases would have no point if it were open to a party to ask the court to make a judgment in the very general form suggested by counsel. That in the present actions against Giant Marine, the Adsteam payments have disposed of all issues other than costs appears from the decision of the High Court in Baxter v Obacelo Pty Ltd [2001] HCA 66 ; (2001) 205 CLR 635 per Gleeson CJ and Callinan J at [38], [39], [40], [43], [46] and [47] and per Gummow and Hayne JJ at [55] and [56]. In particular it should be noted that Gummow and Hayne JJ approved the statement of "general principle" contained in the passage cited at [56] from the judgment of Auld LJ in Jameson v Central Electricity Generating Board [1998] QB 323. That general principle is: Where accord and satisfaction cannot be relied upon, as where a claimant settles with only one of two concurrent tortfeasors, the tortfeasor facing a claim will nevertheless have a defence if the plaintiff's settlement with the other has fully compensated him for the separate wrongs done to him. 18 Finally, the plaintiffs seek to distinguish Lai Qin and One.Tel upon the basis that they presently ask for summary judgment or judgment on admissions and not a trial. I see no merit in that argument. In preparing for such an application costs will be incurred by both sides. In some cases those costs may be relatively insignificant. In others they may be substantial. The policy considerations supporting the decisions to which I have referred are as relevant to these applications as they are to trials. 20 The plaintiffs submit that if they are not entitled to summary judgment they are nonetheless entitled, in claiming costs, to seek to demonstrate that they would probably have won had the actions gone to judgment. They rely on the same matters as they rely upon in connection with the summary judgment application plus some aspects of the evidence filed in anticipation of a trial. Their position seems to be that Giant Marine ought to have responded to that evidence, and that its failure to do so demonstrates that their evidence ought to be accepted. There is an incongruity between such an approach and the decisions in Lai Qin and One.Tel to which I have previously referred. If the parties are to call and cross-examine witnesses, then the process starts to look very much like a trial on the merits for the sole purpose of deciding questions of costs. The plaintiffs' approach also ignores the possibility that even in the absence of contrary evidence, their evidence may have been discredited in cross-examination. 21 In Lai Qin (supra), McHugh J said: In an appropriate case, a court will make an order for costs even when there has been no hearing on the merits and the moving party no longer wishes to proceed with the action. The court cannot try a hypothetical action between the parties. To do so would burden the parties with the costs of a litigated action which by settlement or extra-curial action they had avoided. In some cases, however, the court may be able to conclude that one of the parties has acted so unreasonably that the other party should obtain the cost of the action. In administrative law matters, for example, it may appear that the defendant has acted unreasonably in exercising or refusing to exercise a power and that the plaintiff had no reasonable alternative but to commence the litigation. ... Moreover, in some cases a judge may feel confident that, although both parties have acted reasonably, one party was almost certain to have succeeded if the matter had been fully tried. This is perhaps the best explanation of the unreported decision of Pincus J in South East Queensland Electricity Board v Australian Telecommunications Commission ... where his Honour ordered the respondent to pay 80 per cent of the applicant's fixed costs even though his Honour found that both parties had acted reasonably in respect of the litigation. But such cases are likely to be rare. 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 costs discretion will usually mean that the Court will make no order as to the cost of the proceeding. This approach has been adopted in a large number of cases. 22 McHugh J was speaking in the context of a case in which the ultimate relief sought by the applicant had been obtained without the need for continued litigation. The court was fully aware of the basis upon which the matter was to be discontinued. In many cases the court will be told simply that the matter has been settled without any reference to the terms of settlement. In other cases the terms of settlement may say little or nothing about the relative merits of the case had it gone to trial. It seems unlikely that McHugh J, in referring to the likelihood of success, meant to suggest that such likelihood should be assessed by detailed reference to the evidence which would have been called had the matter gone to trial. Such an approach would be inconsistent with the second and third sentences in the above extract. McHugh J probably had in mind a settlement which occurred after a substantial part of the evidence had been heard. 23 In any event, even on the plaintiffs' approach, I am far from satisfied that they would probably have succeeded. Such anticipated success is said to be based upon the fact that Giant Marine admitted that the damage to the two vessels was ultimately caused by the failure of the discharge pipe and/or the defective fender and that Adsteam had failed to take reasonable care in the management of the tug by failing to detect such defects. The plaintiffs assert that Giant Marine is liable for Adsteam's negligence by virtue of the Standard Conditions. It is common ground that such conditions were part of the contract between Giant Marine and Adsteam. Clauses 3 and 4 are as follows: 3. Whilst towing or whilst at the request, express or implied, of the Hirer, rendering any service other than towing, the mater and crew of the tug or tender shall be deemed to be the servants of the Hirer and under the control of the Hirer and/or his servants and/or his agents and anyone on board the Hirer's vessel who may be employed and/or paid by the Tugowner shall likewise be deemed to be the servant of the Hirer and the Hirer shall accordingly be vicariously liable for any act or omission by any such person so deemed to be the servant of the Hirer. 4. Whilst towing, or whist at the request, either express or implied of the Hirer, rendering any service of whatsoever nature other than towing:- (a) The Tugowner shall not be responsible for or be liable (i.) for damage of any description done by or to the tug or tender, or done by or to the Hirer's vessel or done by or to any cargo or other thing on board or being loaded on board or intended to be loaded on board the Hirer's vessel or the tug or tender or by or to any other object or property; or (ii.) for loss of the tug or tender or the Hirer's vessel or of any cargo or other thing on board or being loaded on board or intended to be loaded on board the Hirer's vessel or the tug or tender or any other object or property; or (iii.) for any personal injury or loss of life howsoever and wheresoever caused including personal injury or loss of life of the master and/or crew of and/or any person on board the tug or tender; or (iv.) for any claim by a person not a party to that agreement for loss or damage of any description whatsoever. arising from any cause, including (without prejudice to the generality of the foregoing) negligence at any time of the Tugowner's servants or agents, unseaworthiness, unfitness or breakdown of the tug or tender, its machinery, boilers, towing gear, equipment, lines, ropes or hawsers, lack of fuel, stores, speed or otherwise, and (b) The Hirer shall be responsible for, pay for and indemnify the Tugowner against and in respect of any loss or damage and any claims of whatsoever nature or howsoever arising or caused whether covered by the provisions of clause 4(a) hereof or not (including any arising from or caused by the negligence of the Tugowner or his servants or agents) including the loss of or damage to the tug or tender, provided that the Hirer shall not be liable to the Tugowner for or in respect of loss, damage or claims which the Hirer proves (the burden of proof being on the Hirer) to have been solely caused by the failure of the Tugowner, and due to the actual fault or privity of the Tugowner, to make his tug or tender seaworthy for the towage or service other than towage. Provided however, notwithstanding anything, hereinbefore contained, the Tugowner shall under no circumstances be responsible for or be liable for any loss or damage caused or contributed to, by or arising out of any delay or detention of the Hirer's vessel or of the cargo on board or being loaded on board or intended to be loaded on board the Hirer's vessel or of any other object or property or of any person, or any consequences thereof, whether or not the same shall be caused or arise whilst towing or whilst at the request, either express or implied of the Hirer, rendering any service of whatsoever nature other than towing or at any other time whether before during or after the making of this agreement. 24 The following definitions contained in cl 1 are also relevant: "towing" is any operation in connection with the holding, pushing, pulling, moving, escorting or guiding of the Hirer's vessel and the expression "to tow", "being towed" and "towage" shall be defined likewise. The expression "whilst towing" shall cover the period commencing when the tug or tender is in a position to receive orders direct from the Hirer's vessel to commence pushing, holding, moving, escorting or guiding the vessel or to pick up ropes or lines or when the tow rope has been passed to or by the tug or tender whichever is the sooner and ending when the final orders from the Hirer's vessel to cease pushing, holding, moving, escorting or guiding the vessel or to cast off ropes or lines has been carried out or how the tow rope has been finally slipped, whichever is the later, and the tug or tender is safely clear of the vessel. 41 I deal firstly with costs incurred prior to Adsteam's payments. Clearly, the reasonableness of the parties' conduct is a relevant consideration in determining the question of costs. McHugh J said as much in Lai Qin (supra). The plaintiffs submit that Giant Marine was unreasonable in not admitting negligence, unseaworthiness of the tug and damages. Giant Marine submits that the plaintiffs were unreasonable in failing to join Adsteam at an earlier stage in the proceedings. These two matters are closely related. Giant Marine also seeks to rely upon certain offers to settle made in the correspondence between the solicitors. 42 At one stage I expressed surprise at Adsteam's absence from the proceedings. At some time thereafter Adsteam was joined. My concern arose largely out of the fact that it seemed clear that the collision had been, at least substantially, caused by mechanical failure on the tug. The plaintiffs assert that their failure to join Adsteam at an earlier stage was the product of reasonable caution, designed to avoid the incurrence of unnecessary costs, given that they considered their cases against Giant Marine to be strong. That view was based upon an unrealistic assessment of the likelihood of establishing vicarious liability in Giant Marine. Although I disagree with the view taken by the plaintiffs, it was a matter of judgment. In any event, even if Adsteam had been joined earlier, it may not have paid earlier. Giant Marine's costs were incurred in defending proceedings brought against it. I am unable to conclude that such costs would not have been incurred had Adsteam been joined at an earlier stage. 43 Giant Marine's conduct in defending the actions must also be seen in light of the late joinder of Adsteam. From an early stage it was obvious that mechanical failure on the tug was the primary, if not the sole, cause of the plaintiffs' losses. It is reasonable to infer that Giant Marine would, if held liable, have looked to Adsteam for contribution or indemnity, subject to issues arising out of the Standard Conditions and any complications arising out of insurance arrangements. In those circumstances, Giant Marine could not safely make concessions as to liability or damages without reference to Adsteam. Adsteam's absence from the proceedings did not prevent Giant Marine from raising such matters with it, but Adsteam may have been reluctant to become involved. Further, despite the plaintiffs' views concerning the strengths of their respective cases, Giant Marine had reasonable prospects of success in resisting any finding of liability. In those circumstances I cannot see that it acted unreasonably in putting the plaintiffs to proof on all issues.