45 Degrees North v The Promotions Factory (Costs)
[2004] FMCA 49
•5 February 2004
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| 45 DEGREES NORTH v THE PROMOTIONS FACTORY (COSTS) | [2004] FMCA 49 |
| PRACTICE AND PROCEDURE – TRADE PRACTICES – COSTS – Applicant’s offer of compromise – judgment for applicant not less favourable than offer – whether applicant should recover costs – whether applicant succeeded on grounds not argued – scale of costs. |
Trade Practices Act 1976 (Cth), ss.45B, 65C(1), 65C(8), 82
Goods Act 1958 (Vic), s.19
Federal Court Rules 2001, O 23
Federal Magistrates Court Rules 2001, r1.05(3)(b)
Trade Practices Commission v Australia Meat Holdings Pty Ltd (No 2) (1988) 10 ATPR 40,893
Archard v Ellerker (1888) 10 ALT 196
| Applicant: | 45 DEGREES NORTH PTY LTD |
| Respondent: | THE PROMOTIONS FACTORY (AUST) PTY LTD |
| File No: | MZ 947 of 2001 |
| Delivered on: | 5 February 2004 |
| Delivered at: | Melbourne |
| Hearing date: | 29 January 2004 |
| Judgment of: | Phipps FM |
REPRESENTATION
| Counsel for the Applicant: | Mr R Millar |
| Solicitors for the Applicant: | Kilger Partners |
| Counsel for the Respondent: | Mr Ravech |
| Solicitors for the Respondent: | Fetter Gdanski |
ORDERS
That the respondent pay the applicant the sum of $6900.00 as interest on the judgment sum of $35,606.45 ordered on 28 August 2003.
That the respondent pay the applicant's costs:
(a)up to and including 31 May 2002 to be taxed on a party and party basis at 80% of the Federal Court scale:
(b)after 31 May 2002 to be taxed on an indemnity basis.
That taxation of costs be in accordance with O 62 of the Federal Court Rules.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT MELBOURNE |
MZ 947 of 2001
| 45 DEGREES NORTH PTY LTD |
Applicant
And
| THE PROMOTIONS FACTORY (AUST) PTY LTD |
Respondent
REASONS FOR JUDGMENT
This judgment deals with the question of costs. On 28 August 2003
I delivered judgment for the applicant against the respondent for $35,606.45 and reserved liberty to apply in respect of interest and costs, 45 Degrees North v The Promotions Factory [2003] FMCA 365. I have determined that interest should be allowed in the amount of $6900.00.
Subsequent to determining the question of interest I was informed of an offer of compromise made by the applicant on 31 May 2002. That offer was as follows:
Pursuant to order 23 of the Federal Court Rules the applicant makes the following offer of compromise without prejudice. The terms of the offer are as follows:
(a)the proceeding be dismissed;
(b)the respondent pay to the applicant the sum of TWENTY FIVE THOUSAND DOLLARS ($25,000) exclusive of costs, such payment to be made within 7 days of acceptance of this offer;
(c)each party bear its own cost of the proceeding:
this offer will remain open for a period of fourteen (14) days after the date of this offer.
Order 23 of the Federal Court Rules (except rules 14 and 15) applies in general federal law proceedings in the Federal Magistrates Court (Federal Magistrates Court Rules 2001, r1.05(3)(b) and part 2 of schedule 3).
Order 23 of the Federal Court Rules provides:
If:
(a) an offer is made by an applicant and not accepted by the respondent; and
(b) the applicant obtains judgment on the claim to which the offer relates not less favourable than the terms of the offer;
then, unless the Court otherwise orders, the applicant is entitled to an order against the respondent for costs incurred in respect of the claim:
(c) up to and including the day the offer was made — taxed on a party and party basis; and
(d) after that day — taxed on an indemnity basis.
Mr Millar, who appeared for the applicant, submitted that it has obtained judgment on the claim not less favourable than the terms of its offer of compromise. He submitted that it should obtain an order for its costs up to and including 31 May 2002 on a party and party basis and after that on an indemnity basis and that there are no grounds for ordering otherwise.
Mr Ravech, who appeared for the respondent, submitted that there should be no order for costs because the applicant succeeded on grounds which were not the basis upon which the applicant put its case. He referred to Trade Practices Commission v Australia Meat Holdings Pty Ltd (No 2) (1988) 10 ATPR 40,893, and Archard v Ellerker (1888) 10 ALT 196.
The applicant succeeded on two grounds, under s.65C and s.82 of the Trade Practices Act 1976 (Cth) and breach of an implied term under s.19 of the Goods Act 1958 (Vic).
Mr Ravech argued that the case as pleaded by the applicant and argued at the trial specifically relied upon the deeming provision in s.65C(8) of the Trade Practices Act as the "gateway" to damages under s.82. In reply, he submitted that the respondent pleaded and argued that damages under s.65C(8) could only be claimed by a "consumer", the applicant was not a "consumer" within the meaning of s.45B, and that the applicant was not entitled to damages under s.65C(8) since the damage it claimed was economic loss and could not be claimed under that subsection.
The finding I made in paragraph 58 of the judgment was that the applicant did not need to rely upon s.65C(8). It claimed damages under s.82 and the evidence established a causal link between the applicant's damages and the breach by the respondent of s.65C(1) without any need to rely on s.65C(8). Mr Ravech submitted that the case the applicant put forward under the Trade Practices Act relied upon s.65C(8). Subsection 65C(8) is irrelevant to the finding I made and so, Mr Ravech argued, the applicant succeeded on a case it had not put forward. If the respondent had been aware of the alternative case, and so had the opportunity to consider it, it may have settled the case or conducted the case differently.
It is correct that in final submissions counsel concentrated their arguments upon s.65C(8). But the case which the respondent was required to meet was that set out in the amended statement of claim, paragraph 8 of which states:
By reason of the aforesaid the Applicant has suffered loss and damage pursuant to Section 65C(8) of the Act and claims damages for loss and damage under Section 82 of the Act.
The paragraph says that the applicant has suffered loss and damage pursuant to s.65C(8), and then goes on to claim damages for loss and damage under s.82. Paragraph 3 of the statement of claim describes the supply of the plastic inflatable bananas, alleges that they are goods to which a prescribed consumer safety standard applied, alleges that they failed to comply with the standard and gives particulars of that allegation. Paragraph 4 alleges that by reason of the matters referred to in paragraph 3, the respondent engaged in conduct in contravention of s.65C(1). I consider that these paragraphs gave sufficient notice of a claim relying upon s.65C(1) and s.82 alone. Even if final addresses did not refer to this claim independently of s.65C(8), all costs by that stage had been incurred. Even if the respondent at that point thought that the only claim it was facing was one which necessarily relied upon s.65C(8) there can be no cost consequences. The claim which succeeded was sufficiently spelt out in the amended statement of claim.
The second basis on which the applicant succeeded was an implied term under s.19 of the Goods Act 1958 (Vic). In paragraph 72 of my judgment I said this:
The implied term was not pleaded expressly in terms of section 19(1) of the Goods Act. But it was pleaded in terms of a requirement to comply with the relevant applicable Standard. That is a sufficient indication of the nature of the particular claim being made by the Applicant.
Similar considerations apply. While the Goods Act may not have been referred to in final addresses, I have already decided that sufficient notice was given of the claim to allow the finding to be made.
The applicant made a claim in negligence. No finding was made on the claim. Mr Ravech submitted that the failure of the applicant on this claim was an additional reason to be taken into account in exercising a discretion as to costs. This argument is easily disposed of. The claim in negligence relied upon the same evidence as the other claims. There was no additional time or expense as a result of this claim. It has no effect on costs.
It follows that there is no reason for ordering otherwise than in accordance with O 23 of the Federal Court Rules save for the basis on which costs are to be taxed.
Mr Millar submitted that insofar as the scale was applicable it should be the Federal Court scale. He submitted that in real terms costs have effectively been reduced by the manner in which the hearing had been conducted, taking only one day. Mr Ravech submitted that there should be a reduction in costs. The first basis for this submission was as an alternative to this submission that there should be no costs. On the same basis, that is that the applicant succeeded on points not made, if there were to be costs they should be reduced costs. I do not accept this argument for the same reason that I have not accepted it for the purpose of the submission that there be no order as to costs. Finally, Mr Ravech submitted that in any event, as a matter of discretion, costs should be on a scale less than the Federal Court scale.
Order 23 of the Federal Court Rules naturally assumes that costs will be taxed on the Federal Court scale. A different basis for the assessment of costs is contained in schedule 1 of the Federal Magistrates Court Rules 2001. These are event based costs and not suitable for use in taxation.
I have discretion to determine the basis on which costs are to be assessed. For costs after the date of the making of the offer I consider that an order that they be taxed without any reference to any scale is appropriate. They are indemnity costs not necessarily assessable in accordance with any particular Court scale or schedule. I do not think it appropriate that I should fetter the discretion of the Registrar carrying out the taxation of indemnity costs.
As to party and party costs I consider I should take into account the amount of the claim and the amount of the judgment and the fact that Federal Magistrates Court procedures are less complicated than those of the Federal Court. I consider that an appropriate exercise of discretion is too allow party and party costs at 80% of the Federal Court scale.
I certify that the preceding nineteen (19) paragraphs are a true copy of the reasons for judgment of Phipps FM
Associate:
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