Re Tekmat Investments Pty Limited v Judith Ann Ward; Jane Watson-Brown; Christine Andison; Ivan Chertok; Michele Ann Morgan and Edith Clement [1988] FCA 279 (5 August 1988)

FEDERAL COURT OF AUSTRALIA

Re: TEKMAT INVESTMENTS PTY LIMITED
And: JUDITH ANN WARD; JANE WATSON-BROWN; CHRISTINE ANDISON; IVAN CHERTOK;
MICHELE ANN MORGAN and EDITH CLEMENT
No. ACT G88 of 1987
Costs

COURT

IN THE FEDERAL COURT OF AUSTRALIA
AUSTRALIAN CAPITAL TERRITORY DISTRICT REGISTRY
GENERAL DIVISION
Gallop(1), Davies(1) and Pincus(1) JJ.

CATCHWORDS

Costs - application under s.11A of the City Area Leases Ordinance 1936 (A.C.T.) - appeal against order that the successful applicant pay the costs of unsuccessful objectors construction of s.11A(7) - width of discretion - appeal dismissed

Re Axiom Pty Ltd 66 ACTR 1

Donald Campbell and Co. Ltd v. Pollak (1927) AC 732

Ritter v. Godfrey (1920) 2 KB 47

Cretazzo v. Lombardi (1975) 33 SASR 4

Knight v. Clifton (1971) Ch. 700

Gray v. Lord Ashburton (1917) AC 26

F.A.I. General Insurance Co. Ltd v. Southern Cross Exploration N.L. [1988] HCA 13; (1988) 77 ALR 411

City Area Leases Ordinance 1936, s.11A

HEARING

CANBERRA
5:8:1988

Counsel for the Appellant: Mr T. Higgins QC and Mr Arthur

Solicitors for the Appellant: Mallesons Stephen Jacques

Counsel for the Respondent: Mr B. Hull

Solicitors for the Respondent: Allen R. Nelson & Co.

ORDER

The appeal be dismissed with costs.

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

DECISION

This is an appeal from an order of a single judge of the Supreme Court of the Australian Capital Territory that a successful applicant in proceedings before him pay the taxed costs of certain of his opponents in that litigation. The Court has already dismissed the appeal; the reasons for that dismissal follow.

2. The application was brought under the City Area Leases Ordinance 1936 (A.C.T.). The applicant (now appellant) sought an order from the Court under s.11A of the Ordinance.

3. Under that Ordinance, the Minister is empowered (s.5) to grant leases of land in the name of the Commonwealth and under s.8:

"A lease granted for business purposes or for business
and residential purposes may specify the particular
class or classes of business for which the land
included in the lease may be used."

4. The Supreme Court is given power under s.9A to direct a lessee or sub-lessee not to use land or permit it to be used for an unauthorised purpose, which is defined in s.9 as being "a purpose for which the use of the land is not authorised by or under the lease of the land". Under s.11A(1), the Court is empowered to "vary any provision, covenant or condition of a lease in relation to the purpose for which the land subject to the lease may be used". It has been held in a number of cases, including the subject litigation, that in an application under s.11A the Court may give consideration to town planning matters Re Axiom Pty Ltd 66 ACTR 1 at pp 10 et seq. Under s.11A(6), any person who, within a certain time, files and serves notice of his intention to oppose the application is entitled to do so with the leave of the Court. Obviously, the fact that town planning considerations, and therefore questions of the interests of the community as a whole, arise is relevant in considering the jurisdiction to award costs.

5. The respondents in the present appeal are persons who obtained leave to oppose but who did so unsuccessfully. They were nevertheless, as has been mentioned, awarded their costs. That was done under s.11A(7):

"The applicant for variation shall pay his own costs
and, if the Court so orders, the full costs of any
other person appearing in pursuance of this section."

6. The core of the argument advanced on behalf of the appellant was that the objectors' costs should have been dealt with under what might be described as the normal rules. Counsel contended that, there being no indication in s.11A(7) that the discretion as to the objector's costs should be governed by any principles other than those settled and acted upon by Courts for many years, costs should follow the event - at least to the extent that the winner should not have to pay the losers' costs.

7. The history of the litigation was that the appellant sought, pursuant to s.11A, to have the purposes of a clause of a lease varied to permit the construction of a commercial building; the lease provided at the outset for use for residential purposes only. A number of notices of intention to oppose were filed in the Court and all but one of the people who had filed notices of intention to oppose under s.11A(6) were granted leave to do so Re Axiom Pty Ltd (above). The learned primary judge had to consider issues which included whether the residential amenity of nearby premises would be adversely affected, generation of traffic and parking demands by the development, and whether having regard to development close by, refusal of the variation would impede the reasonable user of the land. His Honour's reasons for allowing the variation sought concluded:

"Accordingly, I am satisfied on the balance, but just on
balance, that it is proper to permit the variation
sought in this case."

8. The leading case as to costs following the event is the decision of the House of Lords in Donald Campbell and Co. Ltd v. Pollak (1927) AC 732. That concerned the construction of O.65 r.1 of the Rules of the Supreme Court (U.K.), which left the costs to the discretion of the Court, in a non-jury action. Viscount Cave L.C. quoted at p 809 from Ritter v. Godfrey (1920) 2 KB 47, in which it was said by Lord Sterndale M.R. that:

"... there is such a settled practice of the Courts that
in the absence of special circumstances a successful
litigant should receive his costs, that it is necessary
to show some ground for exercising a discretion by
refusing an order which would give them to him."

9. The Lord Chancellor said that the true view was substantially that thus expressed, but that he would express it in somewhat different language:

"A successful defendant in a non-jury case has no doubt,
in the absence of special circumstances, a reasonable
expectation of obtaining an order for the payment of
his costs by the plaintiff; but he has no right to
costs unless and until the Court awards them to him,
and the Court has and absolute an unfettered discretion
to award or not to award them." (p 811)

10. The Lord Chancellor's was the leading judgment in that Viscount Dunedin and Lord Phillimore agreed with it. Lord Atkinson, on the other hand, accepted Lord Sterndale's statement from Ritter v. Godfrey (p 814). Despite the way the rule was put by the Lord Chancellor, courts have tended to require the party asking for a relaxation of the ordinary practice to point to some particular reason justifying that course see, e.g. Cretazzo v. Lombardi (1975) 33 SASR 4 at pp 12, 16.

11. General discretions given by statute or rule to award costs are ordinarily construed as was that in Donald Campbell v. Pollak. As a corollary, ordinarily an unsuccessful party does not obtain his costs against the successful party; Sachs L.J. said in Knight v. Clifton (1971) Ch 700 at p 716:

"It is inevitable if from time to time there must arise
instances in which the justice of the case demands that
a successful defendant should pay the costs, by which I
refer to the full costs, of the proceedings, despite
his success. Obviously, this will only rarely happen,
but it would be a defect in our system if in those rare
cases the Courts could not do what was just."

12. The argument for the appellant here could be expressed, adapting the language of Sachs L.J., by saying that it was contended that this was not one of those rare cases in which justice demanded that the successful party should pay the full costs of the proceedings. It would seem clear enough that the contention should be accepted, if one starts from the premise on which it is based, namely that the learned primary judge was exercising a general discretion to award costs to be construed in accordance with the rules laid down in authorities such as those mentioned above.

13. However, not every distinct power to award costs must be presumed to be subject to those rules. In Gray v. Lord Ashburton (1917) AC 26, the noble respondent had claimed a sum from a tenant for dilapidations and, being awarded only about a tenth of his claim, was ordered to pay the tenant's costs. The award of costs was made under the Agricultural Holdings Act 1908 (U.K.), which gave an arbitrator a general discretion to award costs and provided that he should take into account inter alia "the reasonableness or unreasonableness of the claim of either party, either in respect of amount or otherwise". The award of costs was challenged in the County Court where the tenant won, then in the Divisional Court where he won again, then in the Court of Appeal which held in favour of Lord Ashburton "in substance upon the ground that the arbitrator was bound as regards costs by the same principles and rules as were applicable to a learned judge of the High Court", as Earl Loreburn put it when the case got to the House of Lords see the report at p 30. There, the arbitrator's award was restored.

14. The case differed from the present in that, although there is, here, a special provision governing costs, it is not applied to an extracurial tribunal, but to a Court. Nevertheless, it seems to us of assistance in measuring the strength of the general rule. Earl Loreburn deprecated:

"... placing a gloss upon the quite simple language of
an Act of Parliament by reference to other Acts which
contain different language. There is the Arbitration
Act, there is the Judicature Act, there is the
Workmen's Compensation Act, to which reference has been
made, each of which speaks about costs in its own
language and makes its own rules. There are also rules
to be observed by learned judges which speak for
themselves. But this Act also speaks for itself and it
governs this case."

15. The House rejected the view taken in the Court of Appeal and declined to apply the principles worked out in relation to ordinary litigation under the Judicature Act and Rules of Court. Although the learned primary judge in the case before us did not refer to Gray v. Lord Ashburton, that decision, prima facie, gives support to the particular approach which he took. It also supports his Honour's approach in a more general sense, as exemplifying the tendency to hold that broadly expressed statutory discretions are not "readily to be limited by judicial fiat" (F.A.I. General Insurance Co. Ltd v. Southern Cross Exploration N.L. [1988] HCA 13; (1988) 77 ALR 411 at 417 (High Court)).

16. Section 11A(7) plainly does not import one aspect of the ordinary rule, namely that the successful claimant is entitled to his costs, and the question is whether it is intended that the reciprocal aspect of the rule be applied. It appears that the better course is to approach the sub-section without any predilection to hold that this separate grant of power to award costs, in respect of a special jurisdiction, is to be implicitly subject to the costs rules worked out by the courts in relation to ordinary litigation governed by the Rules of Court. Reading sub-s.(7) as a whole, the impression is created that a costs regime is intended different from that ordinarily applicable in cases in the Supreme Court.

17. Mr Higgins QC, senior counsel for the appellant, also made a narrower attack upon the reasons of the primary judge, complaining that if his Honour were upheld then objectors would be encouraged unreasonably to oppose applications, because they would feel assured of obtaining their costs as long as some plausible argument on which to base the opposition could be found. It is true that some expressions used by the primary judge might encourage that thought:

"It seems to me that, in general, where local residents,
reasonably and properly, advance with some degree of
success arguments against an application for variation
they ought not to be deprived of their costs or at
least of a substantial part of them unless the
arguments they advanced have already been the subject
of authoritative decision or decisions applicable in
all the circumstances to the circumstances of the
objectors."

18. However, when formally stating his conclusions, his Honour stated the matter differently:

"Where an objector makes out a substantial, even though
in the event unsuccessful, case against an application
for variation the Court is not bound to follow the
ordinary rule as to costs but may in the proper
exercise of its discretion order that the costs of the
objector or part of them should be paid by the
applicant. An objector is unlikely to have an order
for costs made in his favour if he merely advances
arguments which have been dealt with by the Court
before or if he fails to adduce any sufficient evidence
which goes at least some distance towards proving, even
if in the event inadequately, a ground or the grounds
upon which he seeks to rely."

19. As between the two formulations, we would prefer the latter, which appears to be that which his Honour, in the end, applied. We would not accept that there is any general rule that a reasonable objector advancing arguments with some degree of success ought to receive costs. On the view we take, the statute gives the Court a wide discretion as to costs. The circumstances in which that discretion falls to be exercised may vary widely, and in many cases it may seem proper to refuse even a reasonable objector any costs, or to make only a partial order for costs in favour of such an objector.

20. The appellant also contended, in the alternative, that the learned primary judge erred in the exercise of his discretion. Nothing was put forward to necessitate discussion of that aspect. The essential point of the appeal is the assertion that the learned primary judge misconstrued the statutory discretion to award costs, in acting on the view that he was not bound to follow the rule applicable in ordinary litigation that an unsuccessful party may rarely obtain an order for costs against the successful party. We are of the opinion that his Honour was, as he intimated, not so bound.

21. It should be added that the order made was not that originally proposed. The primary judge initially accepted the submission for the applicant, the present appellant, and refused the objectors any costs. He changed his mind before the order was perfected, but it was not argued that his having done so was in itself a legal error.

22. The appeal is, as we have already ordered, dismissed with costs.