FEDERAL COURT OF AUSTRALIA

COSTS - application for summary judgment - second respondents’ motion dismissed - whether costs should be in the cause - whether order should be made for payment of costs.

JOSEPH COCI, HELEN JOY COCI, ERNEST RAMPELLINI, JENNIFER ANNE RAMPELLINI v NILANT & ORS

WAG 7064 of 1997

THE COURT ORDERS THAT:

The second respondents pay the applicants’ costs of the motion.

Note:      Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

REASONS FOR COSTS JUDGMENT

HIS HONOUR:  In this case a motion was brought by the second respondents (“the creditors”) to dismiss the proceedings pursuant to O 20 r 2 of the Federal Court Rules (“FCR”).  In reasons previously published, I concluded the motion should be dismissed with costs.

On hearing from counsel in relation to the proposed order as to costs, submissions were made that costs should be ordered in the cause.  This was made on the basis that in the case of an application for summary judgment which is not successful but properly brought, costs are generally ordered in the cause:  see the authorities cited in Halsburys Laws of Australia vol 20 at par 325-7075.  That paragraph would not appear to be accurate in two respects, namely the description of the meaning of “costs in the cause” and the effect of O 63 r 20 of the Rules of the Supreme Court of Victoria, neither of which affects this matter.

Examination of the authorities referred to in that paragraph show the following principles appear from the decided cases:

1.                  There is no general rule and the circumstances in each case must determine the exercise of the court’s discretion:  International Harvester Co v Mullavey [1906] VLR 659 at 660‑661 per Hodges J and Dawson v Watson [1929] VLR 263 at 264 per MacFarlan J.

2.                  If an application is properly brought, as will be an application denying facts, costs should prima facie be in the cause:  Dawson at 264.  The reason is that should the defendant ultimately fail he or she will probably be ordered to pay the applicant’s costs of the action including the costs of the application for summary judgment:  see Blackburn CJ in Harry Smith Car Sales Pty Ltd v Claycom Vegetable Supply Co Ltd (1978) 29 ACTR 21 at 23-24.

3.                  Where the application should not have been taken out, that is the applicant should have known there was no reasonable chance of getting final judgment, this is the exceptional case where the discretion will be exercised to award costs against the applicant: International Harvester at 661 and Dawson at 264; Harry Smith Car Sales at 23‑24.  See also Colonial Bank of Australia Ltd v Martin [1912] VLR 383 per Maddon CJ.

4.                  Such may be the position also where the case does not turn upon facts but upon some arguable question of law:  Allen v Birkbeck [1931] VLR 140 per Irvine CJ following (and thus confining) Cooney v Doepel [1928] VLR 54 but cf Purcell v Thomas [1904] QWN 33.

It is common ground there is no determinative provision in the FCR.

I therefore consider I should approach the question of costs in the instant matter on the basis of the above principles.

As appears from the reasons for decision to which I have referred in this matter, the effect of the judgment of French J was in my view very clear.  It did not provide a proper basis upon which to base any of the arguments brought by the creditors.  The fact the creditors succeeded in establishing privity is of to no account when the decision which related to that interest did not extend in the manner contended for on behalf of them.  That position was clear from a plain reading of the decision of French J.  In those circumstances the application was brought on a condition of fact which was not open to argument.  The result was it should have been known to the creditors there was no reasonable chance of success.

Accordingly, I consider the circumstances of the case are such that costs should not be ordered in the cause and there is a proper foundation for ordering the creditors to pay the costs of the applicants.

Associate:

Dated:              20 February 1998