Australia China Business Bureau Pty Ltd v MCP Australia Pty Ltd

[2003] FCA 1121

FEDERAL COURT OF AUSTRALIA

Australia China Business Bureau Pty Ltd v MCP Australia Pty Ltd
[2003] FCA 1121

PRACTICE AND PROCEDURE – COSTS – whether costs should be apportioned on the basis of how issues were determined – whether the Court should exercise its discretion to apportion costs according to success or failure of one party or the other

Dr Martens Australia Pty Ltd v Figgins Holdings Pty Ltd (No 2) [2000] FCA 602 referred to
Australian Competition & Consumer Commission v IMB Group Pty Ltd [2002] FCA 886 applied
Doric Products Pty Ltd v Lockwood Security Products Pty Ltd (2002) 54 IPR 495 applied
Telstra Corporation Ltd v Royal & Sun Alliance Insurance Australia Ltd [2003] FCA 979 cited
Expectation Pty Ltd v PRD Realty Pty Ltd [2003] FCA 1086 referred to
Gladstone Park Shopping Centre Pty Ltd v Wills (1984) 6 FCR 496 applied
GEC Marconi Systems Pty Ltd v BHP Information Technology Pty Ltd [2003] 201 ALR 55 applied

AUSTRALIA CHINA BUSINESS BUREAU PTY LTD v MCP AUSTRALIA PTY LTD & ORS
N 1228 OF 2001

HELY J
20 OCTOBER 2003
SYDNEY

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	N 1228 OF 2001

BETWEEN:

AUSTRALIA CHINA BUSINESS BUREAU
FIRST APPLICANT

McKECHNIE INVESTMENTS
SECOND APPLICANT

McKECHNIE PLC
THIRD APPLICANT

AND:

MCP AUSTRALIA PTY LTD
FIRST RESPONDENT

WINDOWARE AUSTRALIA PTY LTD
THIRD RESPONDENT

SULLIVANS INTERNATIONAL PTY LTD
FOURTH RESPONDENT

M T SULLIVAN & CO PTY LTD
SIXTH RESPONDENT

MICHAEL SULLIVAN
SEVENTH RESPONDENT

BETWEEN:

SULLIVANS INTERNATIONAL PTY LIMITED

CROSS CLAIMANT

AND:

McKECHNIE INVESTMENTS BV

FIRST CROSS RESPONDENT

McKECHNIE PLC

SECOND CROSS RESPONDENT

JUDGE:

HELY J

DATE OF ORDER:

20 OCTOBER 2003

WHERE MADE:

SYDNEY

THE COURT ORDERS THAT:

1.        ACBB pay the respondents’ costs of the proceedings.

2.        The cross claimants pay the cross respondents’ costs of the cross claim.

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

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	N 1228 OF 2001

BETWEEN:

AUSTRALIA CHINA BUSINESS BUREAU
FIRST APPLICANT

McKECHNIE INVESTMENTS
SECOND APPLICANT

McKECHNIE PLC
THIRD APPLICANT

AND:

MCP AUSTRALIA PTY LTD
FIRST RESPONDENT

WINDOWARE AUSTRALIA PTY LTD
SECOND RESPONDENT

SULLIVANS INTERNATIONAL PTY LTD
THIRD RESPONDENT

M T SULLIVAN & CO PTY LTD
FOURTH RESPONDENT

MICHAEL SULLIVAN
FIFTH RESPONDENT

BETWEEN:

SULLIVANS INTERNATIONAL PTY LIMITED

CROSS CLAIMANT

AND:

McKECHNIE INVESTMENTS BV

FIRST CROSS RESPONDENT

McKECHNIE PLC

SECOND CROSS RESPONDENT

JUDGE:	HELY J
DATE:	20 OCTOBER 2003
PLACE:	SYDNEY

REASONS FOR JUDGMENT

1. Australia China Business Bureau Pty Ltd (‘ACBB’) failed in its claim against the respondents.  Nonetheless ACBB submits that no costs order should be made against it.  In ACBB’s submission the Court should take account of success on the various issues and reflect that in any order for costs: Dr Martens Australia Pty Ltd v Figgins Holdings Pty Ltd (No 2) [2000] FCA 602; Australian Competition & Consumer Commission v IMB Group Pty Ltd [2002] FCA 886. To these references there may be added Doric Products Pty Ltd v Lockwood Security Products Pty Ltd (2002) 54 IPR 495; Telstra Corporation Ltd v Royal & Sun Alliance Insurance Australia Ltd [2003] FCA 979 and Expectation Pty Ltd v PRD Realty Pty Ltd [2003] FCA 1086.

2. This is not a case in which ACBB as applicant was partially successful on discrete issues.  The most that can be said is that ACBB succeeded in establishing some, but not all, of the matters which it had to establish if it was to succeed on the narrowest formulation of its case against MCP.  That formulation of ACBB’s case was introduced by an amendment made after the commencement of the hearing.

3. In those circumstances no sufficient cause has been shown for departing from the ordinary practice that costs follow the event.  ACBB should pay the respondents’ costs of the proceedings.

4. Sullivans failed in its cross claim against McKechnie because the cross claim only arose if ACBB made good its case that MCP was in breach of the exclusive supply agreement alleged in the Further Amended Statement of Claim (‘the FASC’).  ACBB did not make good that case.

5. The cross defendants are entitled to their costs of defending the cross claim, either from ACBB, or from the cross claimant.

6. ACBB is a company with a nominal share capital.  At an earlier stage of these proceedings (on 4 April 2002) I ordered that the applicant provide security for the costs of the first, third, fourth, sixth and seventh respondents in the amount of $120,000.00 (the affidavit of Jennifer Campbell of 10 September 2003 par [2] misstates the terms of the order which was made).  I ordered the provision of security because there were grounds to believe that ACBB might not be in a position to meet the respondents’ costs if it failed in its claim.  If only for that reason, it would not be appropriate to order that the cross respondents’ costs be paid by ACBB, rather than by the unsuccessful cross claimant: Gladstone Park Shopping Centre Pty Ltd v Wills (1984) 6 FCR 496, 506.

7. The appropriate order is that the cross claimant pay the cross respondents’ costs of the cross claim.

8. The next question is whether ACBB should be ordered to reimburse the cross claimant for the costs which it has been ordered to pay to the cross respondents.  In the determination of this question I have derived assistance from the judgment of Finn J in GEC Marconi Systems Pty Ltd v BHP Information Technology Pty Ltd [2003] 201 ALR 55 at [70] – [75].

9. Ultimately I have come to the conclusion that although ACBB’s claim was the catalyst for the institution of the cross claims, ACBB should not be ordered to bear the costs of the cross claim.  I have come to that conclusion for two reasons.  First, ACBB had no involvement in the subject matter of the cross claim.  The cross claim was brought on wholly discrete causes of action on an agreement with which ACBB had no connection or in respect of conduct on the part of the cross respondents in which ACBB was not involved.  Second, the cross claim had as its core factual premise the proposition that at no stage during the due diligence process prior to the agreement for the purchase of the share in MCP was there any disclosure to the cross claimant of a contractual requirement that MCP should purchase products exclusively from ACBB.  That factual premise was dependent on the acceptance of the evidence of Mr Sullivan in preference to that of Mr Adair.  I preferred the evidence of Mr Adair to that of Mr Sullivan in that respect.

10. I make the following orders:

    (a)       ACBB should pay the respondents’ costs of the proceedings;

    (b)the cross claimants should pay the cross respondents’ costs of the cross claim.

I certify that the preceding ten (10) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Hely.

Associate:
Dated:             20 October 2003

Counsel for the Applicant:	Mr J Garnsey QC
Solicitor for the Applicant:	Etheringtons Solicitors
Counsel for the Respondent:	Mr S Finch SC
Solicitor for the Respondent:	Clayton Utz Lawyers
Counsel for Cross Respondents:	Mr P Durack
Solicitor for Cross Respondents:	Allens Arthur Robinson
Date of Hearing:	11 September 2003
Date of Judgment:	20 October 2003