Background
Norwest Childcare Investment Pty Ltd, as purchaser, sued after seeking to rescind a contract to buy property at Norwest. It initially sought declarations concerning the rescission and a charge over the property for repayment of its deposit, as well as a judicial sale. Southern Way International Co Pty Ltd and Supreme Furniture Pty Ltd, the fifth and sixth defendants, had lodged caveats over the property and were joined because their asserted interests could have been affected by a judicial sale.
After the proceedings began, the registered proprietor contracted to sell the property to a third party, administrators were appointed, and the sale completed with all proceeds paid to registered mortgagees. When the plaintiff eventually filed its statement of claim, it no longer sought a charge or judicial sale, leaving claims concerning the rescission, repayment of the deposit, and a money judgment against another defendant. It therefore sought leave to discontinue against the caveat holders without an additional costs order.
The Court’s Holding
Williams J granted leave to discontinue against the fifth and sixth defendants with no order as to costs, except for the costs already awarded to them on 17 April 2026 in relation to their successful informal application to set aside notices to produce.
Although UCPR r 42.19(2) ordinarily requires a discontinuing plaintiff to pay a defendant’s costs, the rule is a default position rather than a presumption. The plaintiff established a sound reason to depart from it: supervening events removed any equity in the property available to support the claimed charge and made the judicial-sale claim untenable. Once those claims were withdrawn, the caveat holders were no longer necessary parties.
The Court found that the plaintiff had properly joined the fifth and sixth defendants initially and had not caused them material unrecovered costs. Its earlier unreasonable notices to produce were addressed by the existing 17 April costs order; the alleged delay in filing the statement of claim was not shown to have caused the caveat holders costs.
Key Takeaways
- A discontinuing plaintiff may avoid the usual costs consequence where supervening events genuinely remove the basis for continuing against particular defendants.
- The r 42.19(2) costs position is a default rule; the plaintiff bears the onus of showing a sound positive ground for a different order.
- Existing costs orders remain enforceable where a discontinuance is otherwise permitted without a further costs order.
Why It Matters
The decision illustrates that a change in the practical availability of property, including a completed sale whose proceeds are exhausted by secured creditors, can justify removing caveat holders from litigation without imposing fresh costs on the plaintiff. The question is fact-specific: the Court focused on whether the parties were reasonably joined, why they ceased to be necessary, and whether their costs had already been addressed.