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  • Unreported Judgment

Kennedy v Griffiths

 

[2014] QSC 43

 

SUPREME COURT OF QUEENSLAND

  

CITATION:

Kennedy and Anor v Griffiths and Anor [2014] QSC 43

PARTIES:

BRUCE JAMES KENNEDY

(first plaintiff)

BARBARA MARJORY HUNT

(second plaintiff)

v

PAMELA ANNE GRIFFITHS

(defendant)

IAN CHARLES GRIFFITHS

(respondent)

FILE NO/S:

1268 of 2010

DIVISION:

Trial

PROCEEDING:

Application

ORIGINATING COURT:

Supreme Court of Queensland

DELIVERED ON:

17 March 2014

DELIVERED AT:

Brisbane 

HEARING DATE:

3 March 2014

JUDGE:

Boddice J

ORDERS:

  1. Leave is granted to the Plaintiffs to discontinue the application for contempt, conditioned on the Plaintiffs not bringing any further application for contempt, or any other court proceedings, based on the same or similar allegations the subject of the contempt application, without the leave of the Court;
  1. There be no order as to costs.

CATCHWORDS

PROCEDURE – SUPREME COURT PROCEDURE – QUEENSLAND – PROCEDURE UNDER THE UNIFORM CIVIL PROCEDURE RULES AND PREDECESSORS – DISCONTINUANCE – where the Plaintiffs brought an application to punish the Defendant and Respondent for contempt – where the Plaintiffs sought leave to discontinue or withdraw the application for contempt at a late stage – where leave to discontinue or withdraw was opposed by the Defendant and Respondent – whether leave to discontinue or withdraw the application for contempt be granted – whether, if leave to discontinue or withdraw the application for contempt be granted, conditions to leave be imposed

PROCEDURE – COSTS – RECOVERY OF COSTS - where the Defendant and Respondent sought costs of the application on an indemnity basis – what order as to costs should be made

Uniform Civil Procedure Rules 1999 (Qld) rr 8, 304, 307, 367, 685, 926

Supreme Court of Queensland Act 1991 (Qld) s 85

ABN Amro Morgans Ltd v Alders & Ors [2008] QSC 160, cited

Blake v Norris (1990) 20 NSWLR 300, cited

Covell Matthews and Partners v French Bulls Ltd [1977] 1 WLR 876, applied

Fuller v Toms [2010] QCA 283, applied

Ibrahim v Peri Australia Pty Ltd  [2013] NSWCA, applied

Mango Boulevarde Pty Ltd v Spencer [2010] QCA 207, cited

Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589, cited

R v Deemal (2010) 2 Qd R 70, cited

Re Mempoll Pty Ltd  [2013] NSWSC 301, distinguished

Re Sailport Pty Ltd [1992] 2 Qd R 395, applied

Re Minister for Immigration and Ethnic Affairs of the Commonwealth of Australia; ex parte Lae Qin  (1997) 186 CLR 622, applied

Wickham v Bell Securities Pty Ltd  [2006] QSC 167, cited

COUNSEL:

A J H Morris QC, with T W Quinn, for the plaintiffs

P J Davis QC, with Mr W Dietz, for the respondent

P G Lynch (sol), for the defendant

SOLICITORS:

Broadley Rees Hogan Lawyers, for the plaintiffs

Tucker and Cowen Solicitors, for the respondent

Lynch Andrews Lawyers, for the defendant

  1. By application filed on 12 June 2013, the Plaintiffs sought orders that the Defendant and the Respondent be punished for contempt. The First Plaintiff and the Defendant are brother and sister. The Second Plaintiff is their sister, through the first marriage of their father. The Respondent is the husband of the Defendant.
  1. On the morning of the listed first day of trial of the application, the Plaintiffs sought leave to discontinue or withdraw the application. They had previously indicated in correspondence their intention to seek such an order, advising the application would not proceed to trial if leave was refused by this Court. The Plaintiffs also seek an order that the Defendant and the Respondent pay their costs of the application.
  1. The Defendant and the Respondent oppose leave being given, contending the application should be dismissed. They also oppose an order for costs. They seek orders that the Plaintiffs pay their cost, on an indemnity basis.
  1. The issues in dispute are:
  1. the Court’s power to give leave to discontinue or withdraw the application;
  1. whether the Court ought to give such leave;
  1. whether any leave should be on the condition the Plaintiffs not bring further contempt proceedings, without the leave of the Court, or on the condition the Plaintiffs bring any further proceedings whatsoever based on the allegations the subject of the contempt application;
  1. costs, including whether any costs ordered should be on a standard or on an indemnity basis.

Background

  1. The application for contempt was filed in a proceeding commenced in 2010 by the Plaintiffs against the Defendant claiming relief pursuant to agreements said to have been entered into between the Plaintiffs and the Defendant to the effect that irrespective of the terms of the Will of the mother of the First Plaintiff and the Defendant (who had inherited the estate of their father), her estate would be shared equally between the three of them.
  1. At the heart of that dispute was a property located at Moffat Beach in the State of Queensland.  It had been the property of the mother of the First Plaintiff and the Defendant.  Subsequent to her death, it had been transferred to the Defendant as part of the distribution of the mother’s estate.  The Moffat Beach property was unencumbered at the date of death.  However, after the proceeding was commenced by the Plaintiffs, the Defendant mortgaged the property in order to acquire another property at Minyama.
  1. After that mortgage had been registered in favour of the Bank of Queensland, the Plaintiffs brought an application seeking interlocutory relief to preserve the equity in the Moffat Beach property, pending trial.  As part of the orders made in that interlocutory application, the Defendant gave an undertaking in the following terms:

“Upon the undertaking of the Defendant given by her counsel that until the determination of this action at trial she will not by her servants, agents or otherwise howsoever dispose of or further encumber her interest in the land at 34 McIlwraith Street, Moffat Beach, Caloundra and the dwelling at 25 Myoora Court, Minyama.”

  1. The proceeding went to trial in 2011. Judgment was reserved on 22 August 2011, and subsequently delivered on 30 November 2011. The effect of that judgment was that the Plaintiffs succeeded in establishing the existence of an agreement between the Plaintiffs and the Defendant to share the mother’s estate equally. Orders were made entitling the Plaintiffs to a significant portion of the Moffat Beach property. 

Contempt application

  1. On 12 June 2013, the Plaintiffs filed an application for contempt, in the proceeding. The application alleged the Defendant had breached her undertaking to the Court not to “further encumber” her interest in the Moffat Beach and Minyama properties.  It further alleged the Respondent had aided and abetted the Defendant in that breach of the undertaking.
  1. The breach was alleged to arise in the following circumstances. On 26 August 2011, four days after judgment had been reserved in the proceeding, the Defendant and the Respondent executed a joint application for a home loan advance of $300,000. The stated purpose of the loan was superannuation contributions. The security for the loan was the existing mortgage over the Moffat Beach property, and the Minyama property. 
  1. The Plaintiffs alleged the effect of that conduct was that the Defendant and the Respondent obtained the sum of $300,000, which was paid into their joint account, and thereby reduced the equity in the properties the subject of the undertaking. This amounted to further encumbering the Defendant’s interest in those properties, in breach of the undertaking.
  1. Subsequent to the filing of the application, various directions hearings were held. On 17 July 2013, Mullins J declined to order the Defendant and Respondent swear affidavits in their defence, recognising their privilege against self-incrimination and against self-exposure to civil penalties. However, orders were made for the provision of further evidence by the Plaintiffs. On 23 August 2013, Philip McMurdo J ordered the application be set down for hearing for seven days commencing on 3 March 2014. The Plaintiffs were ordered to file any further affidavit material by 31 October 2013. No further affidavits were filed following that order, or the earlier orders.
  1. On 17 February 2014, the Plaintiffs’ solicitors advised the Respondent’s solicitors they had received instructions to apply for leave to discontinue or withdraw the application, and to seek an order that the Defendant and the Respondent pay their costs of the application on a standard basis. On 20 February 2014, the Plaintiffs’ solicitors confirmed that in the event leave was not granted, the Plaintiffs would not pursue the contempt application.
  1. Subsequent to that indication, the Defendant and the Respondent, through their respective solicitors, indicated an intention to oppose leave, or to seek as a condition of any leave that the Plaintiffs not be permitted to commence any further proceedings against the Defendant or the Respondent based upon any of the allegations in the contempt application. The Defendant and the Respondent also indicated their intention to apply for costs.
  1. On 21 February 2014, a further affidavit was filed by the male Plaintiff. As a consequence, notice was given to the Plaintiffs of an intention on the part of the Defendant and the Respondent to seek indemnity costs.
  1. On 25 February 2014, the Plaintiffs’ solicitors indicated a willingness to agree to a condition of leave to the effect they not, without leave of the Court, commence any further contempt proceedings against the Defendant or the Respondent based on the same allegations. Such a condition was not accepted by the Defendant or the Respondent.

Plaintiffs’ submissions

  1. The Plaintiffs submit they ought to be given leave to discontinue or withdraw the contempt application as the Plaintiffs will not be able to obtain satisfaction of the orders made in their favour in the substantive proceedings, and have no prospects of recovering any costs incurred by them in pursuing the contempt application. In those circumstances, it is not commercial to pursue the application for contempt but it is inappropriate for the application to be dismissed as conduct of the Defendant and the Respondent in breach of court orders ought not to be condoned by an order dismissing the contempt application.
  1. The Plaintiffs submit this Court has power, pursuant to Rule 304 of the Uniform Civil Procedure Rules 1999 (Qld) (“UCPR”), permits discontinuance or withdrawal of the application.  Alternatively, Rule 367 provides the Court with a power to make orders that are just in the circumstances.  The Plaintiffs submit it is just that leave be granted as the application for contempt was properly brought having regard to the actions of the Defendant and the Respondent.  Further, the Plaintiffs’ conclusion it is not appropriate to pursue the application is reasonable.
  1. The Plaintiff’s submit that whilst the decision not to pursue the application was made on the eve of trial, it was reasonable as it occurred in circumstances where the Defendant is bankrupt and the Respondent, through his solicitors, indicated by letter dated 20 December 2013 that he has no assets to meet any costs order. That position was confirmed by searches undertaken on behalf of the Plaintiffs in February 2014.
  1. The Plaintiffs accept any leave should be conditioned on them not being permitted to commence fresh proceedings for contempt based on the same allegations, without the leave of the Court. They submit it would not be appropriate to order any leave be conditioned on the Plaintiffs not being allowed to bring any further proceedings whatsoever based on the allegations the subject of the contempt application. That would deprive the Plaintiffs of the opportunity to pursue legitimate proceedings in the future should it be established that steps taken by the Defendant or the Respondent in the past were for the purposes of frustrating court orders.
  1. Finally, the Plaintiffs submit this Court should order the Defendant and the Respondent pay their costs of the application, notwithstanding that that application was not pursued to finalisation. That outcome is as a consequence of the actions of the Defendant and the Respondent.

Defendant’s and Respondent’s submissions

  1. The Defendant and the Respondent submit there is no power under Rule 304 for this Court to give leave to discontinue or withdraw the contempt application. Rule 304 applies only to a proceeding. Under the UCPR, proceeding refers to something commenced either by filing a claim, or by filing an originating application.  The contempt application was not commenced by an originating application.  It was commenced by filing an application in the original proceeding. Rule 926 of the UCPR allows that course. However, the consequence is that Rule 304 has no application. 
  1. The Defendant and the Respondent accept Rule 367 empowers this Court to give leave but submit such leave can only be given in the interests of justice. Leave is not to be granted if it will cause injustice to the other party.[1] As a discontinuance does not constitute a defence to another proceeding,[2] and does not give rise to a res judicata or issue estoppel,[3] the Defendant and the Respondent submit they will suffer injustice if leave is given. 
  1. The Defendant and the Respondent further submit leave ought not to be given as the contempt application was misconceived and bound to fail, was brought for purposes other than those disclosed in the application, and gives rise to double jeopardy considerations. It also should be refused on general discretionary factors.
  1. If leave is to be given, the Defendant and the Respondent submit it should be conditioned on the Plaintiffs not being able to bring any further proceedings based on the same or similar allegations. To do otherwise, would be to allow commercial considerations to override the legitimate need of the Defendant and the Respondent for finality in litigation. It is also submitted that to do otherwise would place the Defendant and the Respondent at risk of further proceedings being instituted which would constitute an abuse of process and interfere with their legitimate right to rely on the privilege against self-incrimination.
  1. Finally, the Defendant and the Respondent submit if the application be dismissed, costs should follow the event. Even if leave be given to discontinue or withdraw the application, the general rule that the party discontinuing pay the costs of the other party should be followed. Having regard to the lateness of the application, and its limited prospects of success had it proceeded, costs should be assessed on an indemnity basis.

Discussion

Is there power to grant leave?

  1. Rule 304 UCPR imposes a restriction on the ability of a party to discontinue a proceeding or withdraw part of that proceeding without the leave of the Court.  Relevantly, Rule 304 provides:

“1.A Plaintiff or Applicant may discontinue a proceeding or withdraw part of it before being served with:

(a)for a proceeding started by claim – the first defence of any Defendant; or

(b)for a proceeding started by application – the first affidavit in reply from a Respondent;

“2.However, after being served with the first defence or first affidavit in reply, a Plaintiff or Applicant may discontinue a proceeding or withdraw part of it only with the court’s leave of the consent of the other parties …”

  1. The term “proceeding” is not defined in the dictionary in the UCPR.  It is defined in Schedule 5 to the Supreme Court of Queensland Act 1991 (Qld) as:

“‘Proceeding’ means a proceeding in a court (whether or not between parties), and includes:

(a)an incidental proceeding in the course of, or in connection with, a proceeding; and

(b)an appeal or stated case.”

  1. The UCPR are made pursuant to the rule making power in s 85 of the Supreme Court of Queensland Act. Principles of statutory interpretation render the definition of “proceeding” in Schedule 5 to that Act relevant to the interpretation of that word in the Rules. 
  1. However, that definition is not necessarily definitive as the word “proceeding” is capable of a variety of meanings.[4] Relevant in this respect, is Rule 8 UCPR, which provides that a proceeding starts when the originating process is issued by the Court, and that there are two types of originating processes, a claim and an application.  Whilst Rule 8(3) UCPR expressly provides that an application in a proceeding is not an originating process, that stipulation is made in the context of a rule dealing with the commencement of proceedings. It does not follow that the term “proceeding”, when used in Rule 304 does not encompass an application in a proceeding.  The term “application” is defined in the dictionary to the UCPR as referring to both an application starting a proceeding and another application.
  1. Rule 304 also gives a power to discontinue or withdraw a part of a proceeding. An application brought in a proceeding whilst not an originating process, arguably forms part of that originating proceeding. Whilst the Defendant and Respondent contend the reference to “part” relates to an aspect of the claim or the originating application, to impose such a restricted meaning on the word “part” would be to apply the Rules in a technical way not consistent with the philosophy identified in Rule 5(2) UCPR.  Having regard to that philosophy, an application filed in a proceeding is properly to be considered, in the context of Rule 304 to be a part of that proceeding.
  1. Even if that conclusion be incorrect, Rule 367 UCPR gives this Court power to make any order about the conduct of a proceeding, even though that order may be inconsistent with another provision of the Rules.  In deciding whether to make such an order the interests of justice are paramount.  Should it be in the interests of justice that a Plaintiff be allowed to discontinue or withdraw an application in a proceeding, Rule 367 would provide this Court with the power to grant such leave, and to impose any such conditions which are necessary to ensure the interests of justice.

Should leave be granted?

  1. There is a public interest in the hearing and determination of contempt proceedings. Such proceedings are designed to ensure compliance with orders made by the Court, or undertakings given to the Court. There is also a public interest in ensuring that parties who have brought an application for contempt on reasonable grounds not be required to pursue that application if it be reasonable not to do so. In that event, there is a public interest in ensuring a Respondent to such applications does not, by reason of an order of dismissal of those proceedings, receive an advantage which is inappropriate having regard to the public interest in ensuring compliance with court orders.
  1. The importance of the difference between discontinuing and dismissing an application for contempt was discussed by McPherson J (as his Honour then was) in Re Sailport Pty Ltd:[5]

“The importance of the difference between discontinuing and dismissing the application rests with their consequences.  If the application is discontinued, its discontinuance will not have the effect of a judgment on the merits.  If, however, it is dismissed it may very well have such an effect.  I realise that in SCI Operations Pty Ltd v Trade Practices Commission (1984) 53 ALR 283 Mr Justice Shepherd inclined to the opposite view.  However, I am, with respect, not altogether persuaded that that is so in Queensland.  At the very least, it is a consideration to be borne in mind in deciding between the application for a grant of leave to discontinue, and the submission that the originating application ought to be dismissed.

Among the reasons for thinking that dismissal may give rise to estoppels is that the dismissal of a bill of complaint in equity formerly had such an effect.  In the pre-Judicature era an application like this would have fallen within the Court’s equity jurisdiction.  In that jurisdiction, the Defendant might apply to have a bill dismissed for want of prosecution, but such an order if made did not have the effect of a decree on the merits and was originally not a bar to the presentation of a further bill.  See Daniell’s Chancery Practice (5th ed., 1871) vol. 1 at 569-570, 714, citing Brandlyn v Ord (1738) 1 Atk. 51; 26 E R 359; Moss v Anglo Egyptian Navigation Company (1865) L R 1 Ch App 108, 115-116.  Where the Plaintiff applied to dismiss his own bill, or it was dismissed upon his default when the matter was called upon in open court, the dismissal was said by Daniell (ibid, at 693) to be equivalent to a dismissal on the merits that might be pleaded in bar to another suit for the same matter.”

The importance of ensuring orders not lead to injustice to a party was also recognised by this Court in ABN Amro Morgans Ltd v Alders & Ors[6] and Wickham v Bell Securities Pty Ltd.[7]

  1. In Sailport, McPherson J considered the prospect of raising some form of estoppel too drastic in its effects found that there was a need to ensure an applicant could not in such circumstances readily invoke or abuse court processes in the future.  Accordingly, leave to discontinue was granted on terms the applicant not, without the leave of the Court or a judge, make a further application for relief of the same or a similar kind based upon the same or similar grounds as those relied upon in the previous application. 
  1. Whilst the discretion to grant or refuse leave is not fettered, a central consideration in the exercise of that discretion is whether the granting of leave will cause injustice to the other party. The relevant principles, adopted in Fuller v Toms,[8] were enunciated in Covell Matthews & Partners v French Wools Ltd:[9]

“The principles to be culled from these cases are, in my judgment, that the court will, normally, at any rate, allow a Plaintiff to discontinue if he wants to, provided no injustice will be caused to the Defendant.  It is not desirable that a Plaintiff should be compelled to litigate against his will.  The court should therefore grant leave, if it can, without injustice to the Defendant, but in doing so should be careful to see that the Defendant is not deprived of some advantage which he has already gained in the litigation and should be ready to grant him adequate protection to ensure that any advantage he has gained is preserved.”

  1. In the present case, the Defendant and the Respondent contend the granting of leave will lead to injustice as there would be nothing preventing the Plaintiffs from choosing to refile proceedings seeking the same or similar relief in the future. That legitimate concern can, however, be adequately met by a condition on the grant of any leave to the effect the Plaintiffs not be permitted to commence fresh proceedings seeking the same or similar relief, either absolutely or except with the leave of the Court. Such a condition would also adequately address the double jeopardy considerations relied upon by the Defendant and the Respondent.
  1. The Defendant and the Respondent further contend leave ought not to be given as the application for contempt was misconceived and always bound to fail, and was brought and prosecuted for purposes other than those disclosed in the application. Central to this contention is an assertion the undertaking, not to further encumber the properties, was not breached because no new mortgage was placed on the properties. The further advance relied on an existing mortgage.
  1. However, a consideration of the application, and its particulars, establishes there was a reasonable basis for the institution of the contempt application against both the Defendant and the Respondent. The undertaking given by the Defendant was to not dispose of or further encumber her interest in the land. The use of the word “encumber” is significant. The expression “to encumber” connotes a reference to placing a burden in the nature of a debt against the land. In context, to further reduce the equity in the properties by increasing the loan amount against those properties is capable of constituting conduct that further encumbers those properties. There is no need for a further mortgage.
  1. As to the Respondent’s conduct he is alleged to have aided and abetted the Defendant’s breach of the undertaking. The particulars of that allegation are that the Respondent, together with the Defendant, signed the requisite application to the bank and obtained the funds, which were paid by the bank into the joint bank account of the Defendant and the Respondent. These allegations, if proven at a trial, would constitute positive conduct sufficient to support an allegation the Respondent aided and abetted the Defendant’s breach of the undertaking.
  1. This is particularly so having regard to the nature of the application signed by the Defendant and the Respondent. That application was for a “home loan advance” for specified purposes, namely superannuation contributions. It was not merely for a line of credit which may or may not be drawn in the future. The funds advanced in accordance with that application were paid into a bank account held jointly by the Defendant and the Respondent.
  1. Whilst it is not alleged the Respondent executed the further documentation referred to in the letter of approval, his initial action was sufficient to found an allegation of aiding and abetting that breach by the Defendant. Proof of further documentation, and issues as to knowledge would depend on the evidence led at trial.
  1. The allegations made against the Defendant and the Respondent were sufficient to justify the bringing of an application for contempt, and the further prosecution of it.
  1. The Defendant and the Respondent contend leave ought to be refused as the contempt application was brought and prosecuted for collateral purposes. They rely upon the contents of the First Plaintiff’s most recent affidavit which seeks to explain the decision not to proceed. That decision is said to have been a commercial decision having regard to an apparent lack of resources available to meet any order for compensation which may be made against the Defendant or the Respondent.
  1. The Defendant and the Respondent contend it is significant that despite Rule 900(3) giving a party a right to apply for compensation as one of the means of enforcing an undertaking, the contempt application made no such claim. However, such a submission fails to have regard to an essential purpose of any application for contempt. That is, to enforce a previous court order or an undertaking given to the Court. An aspect of that application is the likelihood a person, faced with being dealt with for contempt, will purge their contempt and comply with the court order or undertaking.
  1. A practical consequence of such compliance would be that party taking steps to place the other parties back into the position they would have been had there not been a breach of the undertaking. That is, in effect, obtaining recompense or compensation. It is a legitimate purpose of any contempt proceeding.
  1. The Defendant and the Respondent also relied on general discretionary factors as justifying a refusal to grant leave. Those general discretionary factors included there was no temporal obstacle to prosecution of the application by the Plaintiffs, such as the unavailability of a witness and the lateness of the indication of a lack of desire to prosecute that application. The reasons proffered by the Plaintiffs for discontinuing the proceedings were illogical, and demonstrate the application ought never to have been commenced in the first place.
  1. Whilst it is correct the Plaintiffs do not rely upon the unavailability of witnesses, and the indication they did not intend to proceed with the application was given late, those facts must be viewed in the context of the circumstances faced by the Plaintiffs. Those circumstances include matters contained in without prejudice correspondence sent by the Respondent’s solicitors to the Plaintiffs’ solicitors on 20 December 2013.
  1. That letter was tendered into evidence without objection.[10]  It contained an offer to settle the contempt proceedings.  Significantly, it also contained the following assertion:

“There is no offer by our client to pay your clients any sum of money in order to dispose of all claims which your client makes or have or might possibly have against [the Respondent and others].  He is without funds to do so, having already met substantial legal costs in the conduct of the contempt proceedings and having to face further substantial costs of taking the matter to trial.”

  1. The assertion the Respondent was without funds is a significant fact particularly having regard to the material previously available which indicated the Respondent held substantial assets. Whilst it had always been the case the Defendant, as a bankrupt, would never have been in a position to meet any costs order made in favour of the Plaintiffs, an assertion some two months before the commencement of a seven day trial that the Respondent also was without funds was a significant factor for the consideration of the Plaintiffs.
  1. That it was a significant factor is clear from the contents of the First Plaintiff’s most recent affidavit. The First Plaintiff also sets out details of searches undertaken by his solicitors in February this year as to the asset position of the Respondent. Those searches confirm the accuracy of the assertion contained in the letter from the solicitors for the Respondent dated 20 December 2013 to the effect that the Respondent was without funds.
  1. Whilst the First Plaintiff does not specifically refer in his affidavit to the assertion by the Respondent of no assets, that is hardly surprising having regard to the fact it was contained within a without prejudice letter, which only became admissible upon its tender at trial. The reference to that letter being “without prejudice save as to costs” did not allow that letter to be referred to for the purposes of the present aspect of this proceeding, namely, whether it was reasonable for the Plaintiffs to seek leave to discontinue or withdraw the application.
  1. In any event, it is apparent from the First Plaintiff’s most recent affidavit that it was, objectively, a relevant factor in the ultimate decision of the Plaintiffs to seek leave to discontinue or withdraw the application for contempt. The First Plaintiff gives as his reasons for instructing his solicitors to apply on behalf of the Plaintiffs for leave to discontinue the application the following:

“8.1The Defendant’s repeated failure to fulfil her obligations to Mrs Hunt and I and to the court;

8.2An apparent lack of resources available to meet any order for compensation which might be made against the Defendant and/or the Respondent;

8.3I am now reluctantly resigned to the prospect that whatever further remedies might be obtained against the Defendant and whatever remedies or orders which might be made against the Respondent, the Defendant and the Respondent will not actually do anything in the way of compliance and are likely to take advantage of the Bankruptcy Laws as the Defendant has already once done;

8.4As against that prospect, there is the certainty of the substantial costs of running the application to a seven (7) day hearing; and

8.5Consequently, I have reluctantly concluded that further pursuit of the application represents an uncommercial exercise.”

  1. Whilst the reference to an apparent lack of resources is to an ability to meet any order for compensation, there is subsequently a reference to non-compliance to “whatever remedies or orders which might be made against the Respondent” in the context of a specific reference to the prospect of substantial costs being incurred in running the application to a seven day hearing.
  1. In circumstances where the Plaintiffs are the beneficiaries of court orders in their favour which have not been met, and will not it appears be met in the future, a determination that it is uncommercial to further pursue these proceedings in what would be a seven day trial where there is no prospect a costs order in the Plaintiffs’ favour would be met by either the Defendant or the Respondent is reasonable.
  1. It was reasonable for the Plaintiffs to conclude an appropriate course to take was to seek leave to discontinue or withdraw the contempt application.
  1. The circumstances of the present case are distinguishable from those considered in Re Mempoll Pty Ltd.[11]  There the application to discontinue arose after the application had proceeded to a contested hearing, and an application for an adjournment to remedy evidentiary defects had been refused by the Court.

Should any leave be conditional?

  1. The Plaintiffs had reasonable grounds to commence the application for contempt. Further, the Plaintiffs have acted reasonably in seeking leave to discontinue or withdraw that application. Having regard to both those conclusions, and the nature and purpose of the application, I am satisfied, in the exercise of my discretion, it is appropriate to grant the Plaintiffs leave, provided it can be given on conditions which will ensure there is no injustice to the Defendant and the Respondent in the future.
  1. In considering what are appropriate conditions to the grant of any such leave, the observations of McPherson J in Re Sailport Pty Ltd are apposite.  Those observations accept an appropriate balance, in a circumstance such as this, is the imposition of a condition on the grant of leave that the Plaintiffs not be permitted to commence any further proceedings for contempt based on the same or similar allegations, without the leave of the Court.
  1. Whilst the Defendant and the Respondent contend any condition should provide for an absolute prohibition on any such proceedings, I am satisfied, in the exercise of my discretion, it would not be appropriate to impose an absolute prohibition. The reasonableness of the bringing of the application for contempt initially, and of the decision to seek leave to discontinue or withdraw that application, favours retention of an ability to commence further proceedings in the future, subject to the leave of the Court. That requirement ensures the Defendant and the Respondent will have an opportunity to be heard in respect of whether the commencement of any such proceeding constitutes an abuse of process.
  1. I am also satisfied, having regard to all of the circumstances of the case, that it is appropriate, in the exercise of my discretion, to extend the condition of any grant of leave to include not only contempt proceedings but the institution of any other court proceedings based on the allegations the subject of the contempt application. There is force in the submission made on behalf of the Respondent that any complaint to the Legal Services Commissioner may result in the Respondent being required to give a version which the Plaintiffs could then seek to use when instituting proceedings other than contempt proceedings in the future. That risk is met by the imposition of a condition that the commencement of any future court proceedings first require the leave of the Court. Such a condition would ensure the Defendant and the Respondent are able to be heard as to whether to commence further proceedings would constitute an abuse of process.

Costs

  1. Leave to discontinue or withdraw a claim will generally result in the party granted that leave being ordered to pay the costs of the other party. However, an order for costs in favour of that other party will not be made if there are legitimate grounds for the Court, in the exercise of its discretion, to order otherwise.
  1. That is clear from the terms of Rules 307 and 685 UCPR.  Rule 307 provides:

“1.A party who discontinues or withdraws is liable to pay –

  1. the costs of the party to whom the discontinuance or withdrawal relates up to the discontinuance or withdrawal; and
  2. the costs of another party or parties caused by the discontinuance or withdrawal.
  1. If a party discontinues or withdraws with the court’s leave, the court may make the order for costs it considers appropriate.”
  1. Rule 685 provides:

“1.If, for any reason, it becomes unnecessary to continue a proceeding other than for deciding who is to pay the costs of the proceeding, any party to the proceeding may apply to the court for an order for costs.

2.The court may make the order for what the court considers just”

  1. Relevant factors in the exercise of that discretion include the circumstances of the grant of leave, the conduct of the parties and the fact the Defendant and the Respondent were required to defend proceedings the Plaintiffs have chosen not to pursue to finality. A further relevant factor is that the question of costs is being determined in circumstances where there has been no determination of the application for contempt on its merits.
  1. The applicable principles in the exercise of a court’s power to order costs in such circumstances were considered by McHugh J in Re Minister for Immigration and Ethnic Affairs of the Commonwealth of Australia; ex parte Lae Qin:[12]

“Ordinarily, the power is exercised after a hearing on the merits and as a general rule the successful party is entitled to his or her costs.  Success in the action or on particular issues is the fact that usually controls the exercise of the discretion.  A successful party is prima facie entitled to a costs order.  When there has been no hearing on the merits, however, a court is necessarily deprived of the factor that usually determines whether or how it will make a costs order.

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 costs 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 a litigation.  Thus, for example, in R v Gold Coast City Council; Ex parte Raysun Pty Ltd, the Full Court of the Supreme Court of Queensland gave a prosecutor seeking mandamus the costs of the proceedings up to the date when the Respondent Council notified the prosecutor that it would give the prosecutor the relief that it sought.  The Full Court said that the prosecutor had reasonable ground for complaint in respect of the attitude taken by the Respondent in failing to consider the application by the prosecutor for approval of road and drainage plans.

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 taxed 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 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.”

  1. The relevant considerations in the exercise of the discretion to determine costs, in circumstances where a party has discontinued, have also been recently considered in Ibrahim v Peri Australia Pty Ltd:[13]

“Although …the principles that are to be derived …, in circumstances where a court is requested to make a costs order, when proceedings have not been heard to termination include the following: …whether a party acted reasonably in commencing the proceedings; whether a party had been successful in obtaining interlocutory relief; whether the party sued had acted reasonably; whether the responding party had acted reasonably in defending the proceedings; whether the proceedings terminated after interlocutory relief had been granted; and further, whether the primary judge was satisfied that the party seeking to terminate the proceedings prior to a full hearing had almost a certain chance of success.”

  1. I am satisfied the Plaintiffs acted reasonably in commencing the proceedings. I am also satisfied the Plaintiffs have acted reasonably in seeking the Court’s leave to discontinue or withdraw those proceedings. Those considerations satisfy me it is appropriate, in the exercise of my discretion, to decline the Defendant and the Respondent the benefit of an order for costs in their favour. It would not be just, particularly having regard to the public interest in pursuing contempt proceedings, for the Defendant and the Respondent to receive the benefit of an order for costs in their favour.
  1. However, the fact the Plaintiffs have not proceeded with the application to its finalisation also satisfies me, in the exercise of my discretion, that it would be not be just to give the Plaintiffs the benefit of a costs order in their favour against the Defendant and the Respondent. They have not obtained any orders for relief.
  1. In the circumstances, the appropriate order is one requiring the Plaintiffs, and the Defendant and the Respondent, to bear their own costs of the proceedings. That outcome is achieved by making no order as to costs. A similar order is appropriate in respect of any costs previously reserved.

Orders

  1. Leave is granted to the Plaintiffs to discontinue the application for contempt, conditioned on the Plaintiffs not bringing any further application for contempt, or any other court proceedings, based on the same or similar allegations the subject of the contempt application, without the leave of the Court;
  1. There be no order as to costs.

Footnotes

[1] See Covell Matthews and Partners v French Bulls Ltd [1977] 1 WLR 876, applied in Fuller v Toms [2010] QCA 283 at [25] per Fraser JA.

[2] Uniform Civil Procedure Rule 1999 (Qld) r 310(1).

[3] Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589 at 597; Mango Boulevarde Pty Ltd v Spencer [2010] QCA 207 at [90] per Fraser JA.

[4] See the observations of Smart J in Blake v Norris (1990) 20 NSWLR 300 at 306, adopted by Holmes JA in R v Deemal (2010) 2 Qd R 70 at [19].

[5] [1992] 2 Qd R 395 at 396-397.

[6] [2008] QSC 160.

[7] [2006] QSC 167.

[8] [2010] QCA 283 at [25] per Fraser JA.

[9] (1977) 1 WLR 876 at 879.

[10] Exhibit 1.

[11] [2013] NSWSC 301.

[12] (1997) 186 CLR 622 at 624-625.

[13] [2013] NSWCA 328 at [17].

Close

Editorial Notes

  • Published Case Name:

    Kennedy and Anor v Griffiths and Anor

  • Shortened Case Name:

    Kennedy v Griffiths

  • MNC:

    [2014] QSC 43

  • Court:

    QSC

  • Judge(s):

    Boddice J

  • Date:

    17 Mar 2014

Litigation History

No Litigation History

Appeal Status

No Status