On 16 June 2017, in Psyfari Pty Ltd v Rathcown Pty Ltd [2017] NSWSC 776, Parker J gave some helpful guidance as to the appropriate order for costs in proceedings which are discontinued or compromised before the Court has determined the questions raised in them – in a case which it was unnecessary to proceed to final hearing because of the actions of a third party.
His honour held at [19]-[20]:
“Generally speaking, where proceedings are discontinued or compromised before the Court has determined the substantive questions raised in them, the Court will not embark on a trial of the proceedings simply to determine the incidents of costs. Rather, in those circumstances, the Court’s general practice is to leave the costs to lie where they fall.
This is not an invariable practice. In some cases the Court may be persuaded that the outcome represents a capitulation by one side so that the other side has in substance succeeded in the proceedings even though there was no contest. In other situations, the Court may consider that the conduct of one party was unreasonable, so that it should bear the costs: Re Minister for Immigration; Ex parte Lai Qin (1997) 186 CLR 622 at 624.”
Parker J found that in the case before him, there was no reason to depart from the usual approach ie costs should lie where they fell, holding at [28] that:
“this is a clear instance of proceedings becoming unnecessary because of the actions of a third party. The defendant’s position in correspondence was that the agreement had been terminated, but also that even if it was still on foot the Babylon festival was not sufficiently similar to the Psyfari festival for it to be a breach of the agreement. Counsel for the plaintiff did not suggest that these defences were hopeless, or that the defendant had otherwise conducted itself unreasonably.”