Australian Competition and Consumer Commission v Cement Australia Pty Ltd (No 2)
[2017] FCAFC 168
•26 October 2017
FEDERAL COURT OF AUSTRALIA
Australian Competition and Consumer Commission v Cement Australia Pty Ltd (No 2) [2017] FCAFC 168
Appeal from: Australian Competition and Consumer Commission v Cement Australia Pty Ltd [2016] FCA 453 File number: QUD 408 of 2016 Judges: MIDDLETON, BEACH AND MOSHINSKY JJ Date of judgment: 26 October 2017 Catchwords: COSTS – Court’s discretion as to costs – applicable principles – where appellant succeeded on two grounds of appeal but was unsuccessful on a ground that occupied substantial time on the hearing of the appeal – where appellant accepted that some reduction in the costs that would otherwise be ordered was appropriate Legislation: Federal Court of Australia Act 1976 (Cth), s 43 Cases cited: Firebird Global Master Fund II Ltd v Republic of Nauru (No 2) (2015) 327 ALR 192
Les Laboratoires Servier v Apotex Pty Ltd (2016) 247 FCR 61
Oshlack v Richmond River Council (1998) 193 CLR 72
Queensland North Australia Pty Ltd v Takeovers Panel (No 2) (2015) 236 FCR 370
Ruddock v Vadarlis (No 2) (2001) 115 FCR 229
Date of hearing: Determined on the papers Date of last submissions: 19 October 2017 Registry: Queensland Division: General Division National Practice Area: Commercial and Corporations Sub-area: Regulator and Consumer Protection Category: Catchwords Number of paragraphs: 10 Counsel for the Appellant: Mr M Hodge and Ms C Schneider Solicitor for the Appellant: Australian Government Solicitor Counsel for the Respondents: Mr N Hutley SC with Dr RCA Higgins SC and Mr C Bannan Solicitor for the Respondents: Herbert Smith Freehills ORDERS
QUD 408 of 2016 BETWEEN: AUSTRALIAN COMPETITION AND CONSUMER COMMISSION
Appellant
AND: CEMENT AUSTRALIA PTY LTD (ACN 104 053 474)
First Respondent
CEMENT AUSTRALIA (QUEENSLAND) PTY LTD, FORMERLY QUEENSLAND CEMENT LTD (ACN 009 658 520)
Second Respondent
POZZOLANIC ENTERPRISES PTY LTD (ACN 010 367 898) (and another named in the Schedule)
Third Respondent
JUDGES:
MIDDLETON, BEACH AND MOSHINSKY JJ
DATE OF ORDER:
26 OCTOBER 2017
THE COURT ORDERS THAT:
1.The respondents pay 70 per cent of the appellant’s costs of the appeal and the cross-appeal, to be taxed if not agreed.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
REASONS FOR JUDGMENT
THE COURT:
On 5 October 2017, we published our reasons for judgment on the appeal and made orders to give effect to those reasons. In relation to costs, we ordered that each party file and serve a submission (of no more than three pages) within 14 days, and indicated in our reasons that we proposed to deal with the issue of costs on the papers. The parties have now filed written submissions. These reasons, which should be read together with our 5 October 2017 reasons, deal with the issue of costs. We adopt the abbreviations used in the 5 October 2017 reasons.
The appeal concerned the pecuniary penalties imposed by the primary judge on the respondents. As set out in [10] of our 5 October 2017 reasons, the appeal concerned the following issues:
(a)whether the primary judge erred in law in assessing and imposing a single joint and several penalty on two respondents;
(b)whether the making of and giving effect to the provisions of each of the contravening contracts ought to be separately penalised or treated as a single course of conduct;
(c)whether the primary judge erred in his treatment of issues of market harm and financial benefits; and
(d)whether the penalties imposed by the primary judge were manifestly inadequate as they were not of appropriate deterrent value.
In summary, our conclusions in relation to these issues were as follows:
(a)In relation to the joint and several issue, we upheld the ground of appeal (at [376], [392]).
(b)In relation to the course of conduct issue, we upheld this ground of appeal and dismissed the cross-appeal (at [430], [441]).
(c)In relation to the market harm and financial benefits issue, we dismissed the grounds of appeal (at [479], [496], [565]).
(d)In light of our conclusions in relation to the joint and several issue and the course of conduct issue, the penalties imposed by the primary judge needed to be set aside and the penalty discretion re-exercised. As noted at [566], both parties accepted at the appeal hearing that, if it were necessary for the discretion to be re-exercised, it was appropriate for this task to be carried out by this Court. Accordingly, in section H of the 5 October 2017 reasons, we re-exercised the discretion. The outcome was that we imposed penalties upon the respondents totalling $20.6 million (as summarised in the table at [631]). This was an increase of $3.5 million compared with the penalties imposed by the primary judge, which totalled $17.1 million (see the summary table at [331] of the 5 October 2017 reasons).
The parties’ respective positions on the costs of the appeal are as follows. The ACCC accepts that some reduction in the costs that would otherwise be ordered in its favour (as the successful party) is appropriate given that it was unsuccessful in relation to the market harm and financial benefits issue and this occupied a “not insignificant” proportion of the written and oral submissions on the appeal. The ACCC submits that an appropriate order would be that the respondents pay 80 per cent of the ACCC’s costs of the appeal and the cross-appeal.
The respondents accept that they should pay the ACCC’s costs of the cross-appeal. In relation to the appeal, the respondents submit that a departure from the usual order as to costs is appropriate on the basis that the ACCC lost a severable issue that substantially increased the costs of the appeal. The respondents submit that:
(a)if the Court considers that the ACCC should pay the respondents’ costs on the issue of market harm and financial benefit, then no order as to the costs of the appeal should be made at all (as although an order could be made requiring each party to pay 50 per cent of the other’s costs, the pragmatic approach would be to make no order as to costs); or
(b)if the Court considers that the ACCC should not recover its costs on the issue of market harm and financial benefit, then the respondents should be ordered to pay 50 per cent of the ACCC’s costs.
In our view, for the reasons that follow, there should be an order that the respondents pay 70 per cent of the appellant’s costs of the appeal and the cross-appeal.
Section 43 of the Federal Court of Australia Act 1976 (Cth) provides that the Court has jurisdiction to award costs in all proceedings before it. The Court has an unfettered discretion in how that jurisdiction is exercised, save that it must be exercised judicially: Ruddock v Vadarlis (No 2) (2001) 115 FCR 229 at [9] per Black CJ and French J. The approach usually taken is that costs follow the outcome of an appeal: see Firebird Global Master Fund II Ltd v Republic of Nauru (No 2) (2015) 327 ALR 192 at [6] per French CJ, Kiefel, Nettle and Gordon JJ; see also Les Laboratoires Servier v Apotex Pty Ltd (2016) 247 FCR 61 at [297]-[298], [303] per Bennett, Besanko and Beach JJ; Oshlack v Richmond River Council (1998) 193 CLR 72 at [67] per McHugh J.
In Queensland North Australia Pty Ltd v Takeovers Panel (No 2) (2015) 236 FCR 370, Dowsett, Middleton and Gilmour JJ said, at [11], that the success or failure of the relevant party is the starting point in consideration of the question of costs. It was also stated that the cases contemplate at least three distinct categories of situation in which a successful party might be deprived of costs, or even ordered to pay the costs of the other party. These are: first, where the applicant has been only partially successful in that it has not obtained all of the relief sought; secondly, where a party has succeeded in obtaining the relief sought, but has not succeeded on all bases (factual or legal) upon which it sought such relief; and thirdly, where the successful party’s conduct of the case requires consideration of the award of costs. (See also the analysis found at [18] of that decision.)
In the present case, the starting point is that the ACCC, as the successful party, would ordinarily be entitled to its costs of both the appeal and the cross-appeal. It succeeded in obtaining orders that the appeal be allowed and the cross-appeal dismissed. Further, the outcome of the re-exercise of the discretion was to increase the penalties imposed on the respondents by $3.5 million. However, in the particular circumstances of this case, as the ACCC accepts, it is appropriate that there be a reduction in the costs that would otherwise be ordered, given that the market harm and financial benefit issue (upon which the ACCC was unsuccessful) occupied a significant portion of the written and oral submission on the appeal. The question of the appropriate discount or reduction is not one that can or should be approached with mathematical precision. And the appropriate reduction in a given case may not reflect the percentage of the written and oral submissions attributable to the relevant issue. The market harm and financial benefit issue was a major forensic contest requiring detailed submissions of fact and law both in writing and on the hearing of the appeal. In these circumstances, it is appropriate for there to be (what we consider to be) a substantial reduction in the costs that would otherwise be ordered in favour of the ACCC. We consider an appropriate reduction to be 30 per cent of the costs of the appeal and the cross-appeal.
Accordingly, we will order that the respondents pay 70 per cent of the ACCC’s costs of the appeal and the cross-appeal.
I certify that the preceding ten (10) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justices Middleton, Beach and Moshinsky. Associate:
Dated: 26 October 2017
SCHEDULE OF PARTIES
QUD 408 of 2016 Respondents
Fourth Respondent:
POZZOLANIC INDUSTRIES PTY LTD (ACN 010 608 947)
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