Australia New Zealand Migration Publications Pty Ltd v Business & Property Sales Pty Ltd
[2011] FMCA 466
•19 May 2011
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| AUSTRALIA NEW ZEALAND MIGRATION PUBLICATIONS PTY LTD & ANOR v BUSINESS & PROPERTY SALES PTY LTD & ORS | [2011] FMCA 466 |
| PRACTICE & PROCEDURE – Costs – quantification of costs – departure from Federal Magistrates Court scale – consideration of factors warranting departure from the scale – conduct of the respondents. PRACTICE & PROCEDURE – Costs – departure from default position under order 62 – consideration of factors warranting costs order to be payable forthwith. |
| Federal Court Rules (Cth), Order 62 Rule 3 Supreme Court Rules1970 (NSW), Part 52A, r.9 |
| Allstate Life Insurance Co v Australia and New Zealand Banking Group Ltd and Ors (17 August 1995 unreported); BC9501951 Vivid Entertainment LLC v Digital Sinema Australia Pty Ltd (No.2) [2007] FMCA 688 |
| First Applicant: | AUSTRALIA NEW ZEALAND MIGRATION PUBLICATIONS PTY LTD |
| Second Applicant: | CHASE MANHATTAN BUSINESS BROKERS PTY LTD |
| First Respondent: | BUSINESS & PROPERTY SALES PTY LTD |
| Second Respondent: | PNP PUBLICATIONS PTY LTD |
| Third Respondent: | NALA ANNE PERKINS |
| Fourth Respondent: | GLOBAL BUSINESS BROKERS PTY LTD |
| File Number: | BRG 628 of 2010 |
| Judgment of: | Burnett FM |
| Hearing date: | 19 May 2011 |
| Date of Last Submission: | 19 May 2011 |
| Delivered at: | Brisbane |
| Delivered on: | 19 May 2011 |
REPRESENTATION
| Counsel for the First Applicant: | Mr C. Johnstone |
| Solicitors for the First Applicant: | Bennett & Philp |
| Counsel for the Second Applicant: | Mr C. Johnstone |
| Solicitors for the Second Applicant: | Bennett & Philp |
| Counsel for the First Respondent: | Mr J. Cremin |
| Solicitors for the First Respondent: | Davellin Lawyers |
| Counsel for the Second Respondent: | Mr J. Cremin |
| Solicitors for the Second Respondent: | Davellin Lawyers |
| Counsel for the Third Respondent: | Mr J. Cremin |
| Solicitors for the Third Respondent: | Davellin Lawyers |
| Counsel for the Fourth Respondent: | Mr J. Cremin |
| Solicitors for the Fourth Respondent: | Davellin Lawyers |
ORDERS
That Order 6 of Orders made 27 October 2010 be amended to read the words “party/party” in lieu of the word “standard”.
That Order 4 of Orders made 29 March 2011 be amended to read the word “taxed” in lieu of the word “assessed” and that the words “or as otherwise determined by the Court” be deleted.
That the costs of each Order for costs as amended of 27 October 2010 and 29 March 2011 be subject to short form assessment by Hardwells Costs Assessors and subject to any application made by either party the assessment by Hardwells is to be paid within 28 days of delivery of the notice of the assessment.
That the matter be listed for hearing on 14 July 2011 commencing at 10.00am.
That the costs of the application be reserved.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT BRISBANE |
BRG 628 of 2010
| AUSTRALIA NEW ZEALAND MIGRATION PUBLICATIONS PTY LTD |
First Applicant
And
| CHASE MANHATTAN BUSINESS BROKERS PTY LTD |
Second Applicant
And
| BUSINESS & PROPERTY SALES PTY LTD |
First Respondent
And
| PNP PUBLICATIONS PTY LTD |
Second Respondent
And
| NALA ANNE PERKINS |
Third Respondent
And
| GLOBAL BUSINESS BROKERS PTY LTD |
Fourth Respondent
REASONS FOR JUDGMENT
(Ex Tempore)
This matter comes back before me today on the matter of costs. Difficulties have arisen for two reasons. First, because of the manner in which the two relevant costs orders were expressed, a matter for which I accept responsibility, and secondly, because of the inability of the parties to engage in meaningful dialogue in relation to the matter of costs, a matter which I think ought to have been capable of being undertaken, notwithstanding the expression of the costs orders. In part, that inability on the part of parties to engage in meaningful dialogue is perhaps reflected in the unevenness of representation of the parties in the case before me. The applicant appears with instructing solicitors and counsel who are experts in the particular field the subject of dispute between these parties. Unfortunately, the respondent is not so represented and the obvious disparity between the parties’ legal representation occasions significant difficulty.
Dealing first with the matter of the orders. The order made on
27 October relevantly expressed the issues of costs in these terms:
“The respondents pay the costs of the applicants of and incidental to the application including reserved costs to be assessed on a standard basis.”
The order made on 29 March was expressed in these terms:
“The respondents pay the costs of the first and second applicants of and incidental to the application to be assessed or otherwise determined by the court.”
The applicant’s counsel has correctly noted that when speaking of costs the term “assessed” is not in accordance with the requirements of the Rules. The Rules speak in terms of costs being “taxed”, and although not a matter of great moment, it is appropriate that the order be adjusted to reflect the meaning provided for in the Rules. Accordingly, I will make orders varying those two orders to delete the word “assessed” where it appears and insert in its place the word “taxed”.
In the order of 22 October, I also ordered that the costs be assessed on a standard basis. Again, while the term “standard basis” is well understood by practitioners in Queensland as it picks up the expression used in the Uniform Civil Procedure Rules1999 (Qld) (UCPR), it is not the term which is to be found in the Federal Court Rules (Cth) or the Federal Magistrates Court Rules 2001 (Cth), which refer to costs, understood as costs on a standard basis, as being “party party costs”, to use the parlance which was the subject of revision when the UCPR were introduced in Queensland in 1996. It is appropriate that the orders reflect the language of the Rules which apply in this court and accordingly, in the order of 27 October 2010, the word “standard” will be deleted and the words “party party” will be substituted. That order will then be perfectly plain to all parties, not that I think it ought reasonably have been the basis for any dispute prior to today.
So far as the order of 29 March is concerned, the only issue that arose there concerned the use of the word “assessed” which I have earlier addressed. I note in the respondent’s submissions that the respondent has taken the view that that order omitted the words “per scale” as having been omitted. That is not the case. The order as it would now read is that the costs are to be taxed or otherwise determined by the court, meaning that if the parties do not tax the costs, they can come back to the court for assessment by the court or by a machinery process put in place by the court. That is, in fact, the essence of the application today. The parties cannot agree on the matter of costs.
As I had earlier indicated, I wished to avoid the parties becoming embroiled in a difficult, lengthy and expensive costs assessment process. It was with that in mind that the order was made directing that the matter might come back for determination before the court. It certainly is not the case that the order was ever intended that scale costs would be the default position and I make that matter known expressly now. It is not to say, of course, that the scale costs may not be apposite but for reasons which have become apparent from more recent affidavit material, it would seem that in this instance, scale costs would not be apposite.
Moving then to the application itself. The applicant essentially seeks to have put in place either a fixed costs order based upon material placed before the court or alternatively some process put in place such that costs can be resolved. Briefly, the relevant facts so far as both costs orders are these. The application having been commenced was subject to the provision of interlocutory orders. In due course, pleadings were delivered and exchanged. Difficulties arose with the pleadings delivered by the respondent that led to an application, initially for the pleading to be struck out. That application was successful and orders were made. The subsequent pleading also proved to be infected by pleading difficulties and further orders were sought and subsequently made.
Following each of those applications, a costs order was made and it is only in respect of the quantification of costs that any difficulty arises.
I make those observations particularly because the respondent’s outline of argument raises not only the matter I noted before about whether or not costs were to be assessed on the scale but also raises a number of arguments in expectation that there had been an order for indemnity costs or that such an application was being prosecuted today by the applicant. It is not the case that there has even been an indemnity costs order made in either of these two applications or which is subject to either of these orders, nor is it the case that the applicant prosecutes a claim for me to vary the orders that were made and asks for indemnity costs orders. The issue, as I have earlier stated, is rather one that relates to quantification of those costs, the subject of the two orders which I have earlier mentioned.
Before proceeding to address the manner in which I consider the matter of costs ought to be concluded between the parties, I will make some observations about the costs in the application generally. An affidavit has been prepared by Kenneth Philp who was the solicitor with the carriage of the action on behalf of the applicants. He is an experienced solicitor of about 30 years experience with considerable experience in commercial litigation in both this court and the Federal Court, particularly in the field of intellectual property. He has sworn in some detail in his affidavit to the extent of costs that he believes have been incurred in the context of prosecuting the applicant’s applications resulting in the costs orders of 27 October and 29 March.
In broad terms, he has estimated those costs at about $46,000.
In coming to that figure, he has not only sought to eliminate from his assessment any allowance for costs that relate to other aspects of the litigation but also sought to discount what are his solicitor client costs or indemnity costs to have a figure reflect the party party costs of the two applications. After that exercise, he estimates the party party costs in respect of both applications at between $32,500 and $36,000.
That is to be contrasted against costs, including disbursements, on an assessed basis based upon the court scale at approximately $15,000.
In broad terms, what the applicant seeks is that it has its costs on an assessed basis rather than on a scale basis, principally because the scale in these circumstances would be manifestly inadequate. The matter of the manifest inadequacy of scale costs has been addressed by previous courts, see, for instance, Vivid Entertainment LLC v Digital Sinema Australia Pty Ltd (No.2),[1] Ginos Engineers Pty Ltd v Autodesk Australia Pty Ltd[2] and Dunstan v Human Rights and Equal Opportunity Commission (No.3).[3] It is ultimately a matter of judgment but clearly, the most significant issue to be considered in assessing whether or not those costs might more appropriately be awarded on a scale or on a taxed basis would be reflected in the complexity of the application which is prosecuted.
[1] [2007] FMCA 688
[2] (2008) 249 ALR 371; [2008] FCA 1051
[3] [2006] FCA 916
This is a complex application. It is made all the more complicated, with respect to the respondents, by the manner in which they have conducted the proceeding. A review of the affidavits which were filed early in the application in support of their pleading evidence that matter. They are lengthy and, one might infer prolix by reference to the exhibits attached to the affidavit. In the ordinary course a reasonable practitioner would be required to review that material. Furthermore, when one then examines the nature of the issues alive in the application to strike out the pleading itself, one can see that the application was not only highly technical in the nature but it also dealt with highly technical issues in respect of the manner in which the response and the proposed cross claim are pleaded.
These are not simple cases. These are complex cases and it is, in my view, quite appropriate for a party responding to what is in essence a complex cause of action pleaded under the Trade Practices Act1974 (Cth) in respect of intellectual property rights to expect and receive a proper pleading which addresses the matters raised and addresses them in a manner which is sensible and capable of ready comprehension. The first pleading did not do that, the second pleading had deficiencies which I sought to gently address, notwithstanding that that may not have been taken in the spirit in which the observations were made. Notwithstanding those matters, the fact remains it is a complex action. There is a significant amount of material and it is not, in my view, a case which is appropriate for assessment by reference to scale costs. As I indicated to counsel in the course of debate, scale costs were introduced at a time when the court’s business did not include actions of this kind.
It is appropriate, having regard to actions of this kind, that costs of a kind that are appropriate to reflect the complexity of the action and the effort involved by those who represent those in these proceedings, are capable of reasonable recovery. It is not, as is contended by the respondents, to punish the respondent by way of costs orders.
The principal is merely to ensure that the innocent party enjoys reasonable compensation for the costs that are incurred in prosecuting the action.
It can be seen from Mr Philp’s affidavit that the costs of this proceeding to date to his client are something approaching $80,000. His client is a commercial client and, one anticipates, is acting in an economically rational manner. His client believes the money is well spent although, understandably, his client may not wish to necessarily incur those costs. His client, I assume, makes a value judgment as to its relative worth. It follows that, in my view, the costs ought to be assessed and not be subject to the scale assessment.
The next matter to be addressed, then, concerns the issue of whether or not the costs are payable forthwith. My costs order did not address that matter and, of course, that would have left in place the default position provided for under order 62, which is that costs in interlocutory applications are not subject to assessment until the conclusion of the proceeding. The applicants seek an express order that the costs be subject to immediate assessment. The principles governing the court’s exercise of discretion in relation to that matter are well expressed in the decisions of Orrcon Operations Pty Ltd v Capital Steel & Pipe Pty Ltd(No 2),[4] and Life Airbag Company of Australia Proprietary Limited & Life Airbag Company (New Zealand) Ltd.[5]
[4] [2008] FCA 24
[5] [1998] FCA 545
Dealing first with the observations in Life Airbag (supra) and, in particular, Branson J’s remarks commencing at [10] where her Honour observed:
“Order 62 rule 3 does not give any indication of the matters to which the court is to have regard in determining whether to order that certain costs be paid forthwith, notwithstanding that the proceeding is not concluded.”
From that point Olney J in Thunderdome Racetiming and Scoring Pty Ltd & Dorian Industries Pty Ltd[6] at [312] expressed the view that:
“The discretion should be exercised in favour of a party who establishes that the demands of justice require that there be a departure from what appears to be the general practice envisaged by the rule. Mainly, that an order for costs of an interlocutory proceeding shall not entitle a party to have a bill of costs taxed until the principle proceeding in which the interlocutory order was made is concluded.”
[6] (1992) 36 FCR 297
In Allstate Life Insurance Co v Australia and New Zealand Banking Group Ltd and Ors[7] Lindgren, Lockhart and Tamberlin JJ expressed the view that the provision of the Federal Court rules allowing orders that costs be paid forthwith is possibly under utilised. Their Honours indicated that, where the final determination of a proceeding was far away, it might be appropriate for use to be made of order 62, rule 3.
In Allstate (supra) the court, in considering the costs of an interlocutory appeal said:
“The litigation is complex. It is unlikely that final judgment will be given until late 1996, or even later. The successful parties to the appeals before this court will therefore, in the ordinary course of events, not recover their costs for a long time. It would be wrong if the successful parties do not enjoy the fruits of their order for costs for such a long time. The parties are entitled to the benefit of the order for costs to which this court has made in appeals from interlocutory orders should not be deprived of that benefit until the case has been finally disposed of.”
[7] (17 August 1995 unreported); BC9501951
The statement of claim in this matter suggests that the litigation will be complex. Certainly, the matter to date has proceeded slowly; a hearing date cannot, realistically, be expected for many months. I therefore take into account, in the exercise of my discretion, the fact that unless an order is made pursuant to order 62, rule 3, the respondents will not receive the benefit of the orders for costs made in their favour for a considerable time.
His Honour then proceeded to consider a number of other cases, including the observations of Kiefel J then of the Federal Court in Harris v Cigna Insurance Australia Limited,[8] and Lehane J in Vasyli v AOL International Proprietary Limited,[9] each of which authorities endorse the principle expressed by Branson J. In terms of the issues that ought be considered in exercising the discretion, the observations of Besanko J in Orrcon Operations Pty Ltd (supra) are, in my view, of assistance. There, his Honour made reference at paragraph [20] to Fiduciary Limited v Morning Star Research Pty Ltd[10] and continued:
“In that case, Barrett J identified three categories of case in which the court might order that costs be paid forthwith under part 52A, rule 9, of the Supreme Court Rules 1970 (NSW) namely:
(a)where the decision on the application determines a separately identifiable matter or the completion of a discrete aspect;
(b)where there has been unreasonable conduct on the part of the unsuccessful party; or
(c)where there is likely to be considerable lapse of time between the application and the final determination of the proceeding.
Those three matters were in large in the context of the present application.
[8] (1995) ATPR 41-445; BC9501545
[9] [1996] FCA 804
[10] (2002) 55 NSWLR 1
Dealing firstly with the first point identified by Barrett J: whether or not the application determines a separately identifiable matter. The costs orders relate to applications in respect of the pleadings. One assumes the pleadings are now closed. To that end, it can be seen that they relate to what can plainly be seen as a discrete and compartmentalised part of the proceeding. It seems, in my view, on that basis, that this is an appropriate case on that ground alone.
Secondly, where there has been unreasonable conduct on the part of the unsuccessful party. This is a case which, I am afraid, does reflect some unreasonableness on the part of the respondents. The unreasonableness is not in the sense of what could be described as vexatiousness but, perhaps, rather a lack of focus. That is best illustrated by the respondent’s outline of argument which was filed on 16 May. To take a number of matters by way of observation, paragraph [2]. Although I’m prepared to accept paragraph [2], subparagraphs A to K, could be taken as grounds addressing the reasonableness of their approach to matters, the fact remains that in the context of this application the matter of costs having been determined, what paragraph [2], in fact, seeks to do is to
re-argue the very issues that were resolved in the earlier applications.The unreasonableness associated with those is that it has put the applicants to the added trouble and burden of having to consider those matters and address them and, to that end, demonstrates unreasonableness. Further, there is to be found in the body of the submissions, within paragraph [2], an argument that the respondent should have the benefit of their costs on those issues which should be set off against the costs claimed by the applicants. Again, the matter has already been resolved. To re-agitate the matter, in the context of my earlier judgment, is simply unreasonable.
If the respondents are unhappy with my earlier orders, they have remedies available to them before the Full Court. But to put the applicants to the trouble and burden of having to respond to these matters in this context, in my view, again demonstrates unreasonableness or, at least, a misconception or misapprehension by the respondents of the matter which is being agitated in the application. A matter which I think ought to have been plain to them from the outset.
Likewise, in paragraph [4] there is an attack on the basis of the conduct of the parties. These are matters which are not relevant in the context of the current application and demonstrate, respectfully, an inability on the part of the respondents to focus upon the real issues that need to be agitated. This is not the time or place and, again, puts the applicants to unnecessary burden in having to review and consider those matters.
I have earlier addressed the matter which can be seen in paragraph
[6] – 8(e) concerning indemnity costs. Again, a point which illustrates the respondents’ failure to focus on the real issues alive in the application before me today.
Then, there is the matter of procedural fairness which is addressed in paragraph 8(g)(I) and which again, in this context, does not appear to be relevant, although I note there is a further submission in relation to procedural fairness at the conclusion of the outline which is noted but not accepted in this instance. Those factors, in my view, illustrate unreasonable conduct on the part of the unsuccessful party. They are reflective of matters that were raised in the earlier applications which were the subject of the orders and it follows, again, on that basis it would seem that the usual order ought be departed from.
Finally, there is the question of the lapse of time. The application is one that will not be concluded before the end of this year, assuming it progresses smoothly. So it follows that it is unlikely that the applicants would succeed quickly in obtaining a judgment one way or another, but one which ultimately permits them to prosecute their costs orders on this application for these interlocutory costs orders. So it follows too that there is, in my view, sufficient in the lapse of time to justify departure from the usual order.
That leads me then to the final issue of assessment. I earlier made observations this is a contest conducted in a forum which affords both parties equal liberty to representation, such that the manner of representation is a matter for parties. However, the court does always have an overriding obligation to ensure that there is a fair contest, even if the respective representation does not necessarily permit that. This is a case where I feel it is appropriate that I intervene to enable the respondents, for their own benefit, to be satisfied that what is contended for by the applicants is fair and reasonable. It can, in my view, be ultimately the subject of an appropriate application for indemnity costs if, indeed, the applicants’ costs prove to be unreasonable. However, I do want to avoid the need for a full form assessment.
What I propose to do is to direct that the applicant arrange for an independent costs assessor to undertake a short form assessment of costs, I will reserve the question of costs on that assessment until after the short form assessment comes back.
I will direct the costs of each order for costs as amended. I will direct that the costs orders as amended of 27 October 2010 and 29 March 2011 be subject to short form assessment to be assessed by Hartwell’s costs assessors who are now agreed by the parties as an appropriate legal costs assessor. Subject to any application made by either party, the assessment by Hartwell’s is to be paid within 28 days of delivery of the notice of assessment.
I will otherwise adjourn the application. I will reserve the costs of today because I expect that there will be an argument about these costs once we get the answer to the short form assessment. I am going to give you 14 July as a date for a hearing on these other applications that I can see are going to arise in consequence.
I certify that the preceding thirty-three (33) paragraphs are a true copy of the reasons for judgment of Burnett FM
Date: 13 July 2011
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