Background
Allied Pinnacle and G R Mailman & Associates disputed their commercial lease following Allied’s vacation of the premises. The core disagreement centered on whether Allied’s “make good” obligations required removal of a 2015 fit-out and exterior repainting. Allied rejected GR Mailman’s $1 million settlement demand and made a counter-offer of $162,500; both were refused. A preliminary injunction was granted in September 2025 restraining GR Mailman from calling a $213,000 bank guarantee pending final determination.
Allied commenced proceedings seeking declarations that it was not required to remove the fit-out. GR Mailman cross-claimed for damages for outstanding redecoration works and removal costs. The substantive issues were resolved across three prior judgments, with a referee appointed to quantify damages on disputed matters including the cost and duration of outstanding works and lost rent.
This fourth judgment addresses the final issue: whether costs should follow the event or be otherwise ordered, and dissolution of the interim injunction.
The Court’s Holding
Justice Muston dissolved the preliminary injunction as the proceedings had reached their natural end with final determination, and ordered no costs. The court found that neither party achieved clear success warranting a full costs order: Allied succeeded on the first construction issue (fit-out removal not required) but failed on the second (exterior painting was required), failed on defenses of unconscionability and breach of an implied good faith term, and lost the damages cross-claim. GR Mailman succeeded on the cross-claim and its rent/outgoings component but faced contested referrals and mixed outcomes at each procedural stage.
Applying the principle in Calvo v Ellimark Pty Ltd (No 2), the court held that the issues were not easily severable and that every issue had been hotly contested with both parties enjoying success and failure throughout. The mixed substantive outcome—where almost every issue was litigated and neither party won decisively—justified a departure from the usual rule that costs follow the event.
Key Takeaways
- Dissolution of the preliminary injunction reflects the natural end of proceedings and removes a contingent enforcement issue.
- A nominally successful defendant (GR Mailman) does not automatically recover full costs when the plaintiff (Allied) succeeded on significant discrete issues, particularly where issues are not easily severable.
- Courts will award no costs where both parties achieved mixed results across multiple hotly-contested issues, even in a complex commercial dispute with a clear monetary winner.
- The escalation from settlement negotiations to litigation, where multiple offers were rejected by both parties, does not itself justify a departure from the no-costs outcome when substantive results are genuinely mixed.
Why It Matters
This decision clarifies that in complex commercial disputes involving multiple contractual interpretation and damages questions, the nominal winner in monetary terms may not recover its legal costs. The court’s emphasis on the pattern of mixed success/failure at each procedural stage—referrals, adoption of reports, construction questions—illustrates that Australian courts will scrutinize the proportionality of issues to costs incurred and the genuineness of each party’s contestation.
For commercial parties negotiating leases and dispute resolution, the decision reinforces that rejected settlement offers do not guarantee a favorable costs outcome if litigation proceeds and the party seeking to enforce an agreement only partially succeeds on the merits. The ruling also confirms that preliminary injunctions dissolve naturally upon final determination without requiring active discharge orders, though explicit discharge may be appropriate for clarity.