Axis Aviation Pty Ltd v Avtex Air Services Pty Ltd

[1995] FCA 1166

IN THE FEDERAL COURT OF AUSTRALIA  )
  )
NEW SOUTH WALES DISTRICT REGISTRY  )     No NG3090 of 1995
  )
GENERAL DIVISION                  )

BETWEEN:AXIS AVIATION PTY LIMITED

Applicant

AND:AVTEX AIR SERVICES PTY LIMITED

First Respondent

INTERNATIONAL PILOT TRAINING COURSE PTY LIMITED

Second Respondent

DIETER SIEWERT

Third Respondent

PAUL LANGE

Fourth Respondent

CORAM:    HILL J
PLACE:    SYDNEY
DATED:    16 AUGUST 1995

REASONS FOR JUDGMENT

Axis Aviation Pty Ltd moves the Court for an order pursuant to O62 r11 of the Federal Court Rules that the Court review a decision of the Registrar made pursuant to O62 r46 of the Rules pursuant to which a certificate of taxation was ultimately issued in the sum of $91,808.64.  Alternatively, there is sought an order pursuant to O35 r7(3) of the Federal Court Rules (colloquially referred to as the "slip rule") that an order made by me on 12 May 1992 be corrected so as to limit the liability of Axis for the costs of the applicants in these proceedings to the costs of the first day of hearing and so as to exclude liability for any costs incurred before or after that day.

Alternatively, if the motion be unsuccessful on the first two grounds, Axis asks the Court to set aside the certificate of taxation and extend the time in which Axis might then object to the estimate notified to it by the Registrar pursuant to O62 r46(3)(b) of the Federal Court Rules and notified on 4 August 1994.

I am also asked to direct the Registrar in respect of that taxation to limit the taxation so far as it concerns Axis so that Axis would be liable only for the costs actually incurred by the applicants in respect of issues directly affecting Axis.

There is also before me to day matter number NG 3090 of 1995 concerning the setting aside of a notice under the Corporations Law.  That matter ultimately depends upon the effect of my costs order.  However, it is unnecessary for me to enter into a hearing of that matter because it seems to me more appropriate that the questions and issues between the parties be dealt with on the motion to which I have already referred.

The background to the problem is to be found in an order made by me on 12 May 1992 in the following terms:

"The first, second, fifth, sixth and seventh respondents pay the applicants' costs of these proceedings, except as dealt with in previous orders as to costs but, in that the sixth respondent's liability for the applicants' costs be limited to the costs of one day of hearing."

Counsel for Axis submits that on the face of it this order is clear and carries one meaning only, that is to say that his client is liable only for the costs of one day of hearing but not for any costs that may have been incurred by the applicants up to and including the commencing of the hearing.

The applicants in the original proceedings submit that the order is clear also but that it has the opposite meaning.  The order was arrived at following two part days of argument as to the form of the orders which should be made.  After there had been a hearing on liability which culminated in my judgment of 4 May 1992, there was in evidence before me submissions in the form of draft orders that had been prepared for counsel for the applicants prior to 12 May 1992 and the transcript of the argument that took place on 13 March 1992.

A starting point, however, for construing the order and for ascertaining what was intended by it is to be found in the judgment itself of 4 May 1992 where (at 31-32) I discussed the case then pleaded for the applicants.  I commented that in commercial terms the most significant part of the case was a claim for an order restraining Avtex Air Services Pty Ltd granting rights to use the system in the Sydney area that is discussed in the judgment.

Although the direct claims for relief against Axis were concerned with matters of copyright, a subsequent claim of damages under s52 [of TPA??] was introduced at the last moment but added no new substantive question. What was at issue was the right of the Bartsch interests, if I may call them that, to grant licences of an aviation training system that had been developed and which system included notes, software, slides and other matters. Axis was a licensee of that system. The grant of an injunction against the Bartsch interests would have had the consequence that Axis would not have been entitled to exercise the rights which it wished to exercise.

Indeed, this was recognised at some stage by counsel for Axis who agreed that if an injunction were granted Axis would effectively be bound by that injunction, whether or not an injunction was directly granted against it.  Axis' attitude was ultimately noted on the transcript.

Axis filed a joint defence with the other respondents.  It put at issue all of the matters which the Bartsch interests also put in issue in the proceedings.  It was, as it happens, also jointly represented, at least until the second day of the trial.  On the second or perhaps third day of the trial the argument seems to have proceeded as if it was the second.  Counsel representing Axis gave to the Court an undertaking not to use copyright in certain material, namely videos and as far as thereafter appeared Axis did not participate further in the litigation.

It was against this background that the question of costs came to be considered.  The draft orders prepared by counsel for the applicants sought orders that Axis be, along with other respondents, obliged to pay the applicants' costs.  When the matter was initially argued on 11 May (year) it is clear from the transcript that I did not accept that it was proper that an order be made in the form that the applicants had requested for the simply reason that on the second day the undertaking had been given.

I indicated (at 855 of the transcript) that the giving of that undertaking should be a cut off.  I said:

"Before that time, of course, up to the hearing obviously it [meaning Axis] should have to pay costs to the other side."

Mr Ireland, appearing for Axis among other parties, sought to persuade me that there should be no order as to the costs of Axis.  He referred to the possibility of there being one order whereby Axis might pay some of the applicants' costs and an order whereby the applicants might pay some of the costs of Axis.  he submitted that it would be simpler that there be one order for costs and that be that there be, so far as Axis is concerned, no order.

Later in the transcript on the same day (at 861) there is a further passage reflecting the debate with counsel appearing for the applicants in which it is again made clear that at that stage at least, my reaction was that Axis should pay the costs up to and including the first day of hearing.  Argument resumed on the second day when there was some considerable discussion about numerous matters in the course of which counsel for Avtex mentioned that counsel for Axis was seeking to confine Axis' costs to one day and there was discussion about whether more than one day should be encompassed by the order, having regard to issues that remained live thereafter as to copyright of the video.  Ultimately the order of costs was made in the form I have indicated, that is to say that the words:

"... but that the sixth respondent's liability for the applicants' costs be limited to the costs of one day of hearing"

be added to the draft as initially prepared.

In hindsight it is obvious that the order does have an element of ambiguity in it.  Had it been intended that the only costs to be borne by the sixth respondent be the costs of one day of hearing, then it would clearly have been more appropriate to have dealt with the costs payable by the sixth respondent as a separate order.  On the other hand, had it been intended that the costs of the sixth respondent include the costs up to the first day of hearing as well as the costs of that first day, then it would undoubtedly have been more appropriate for the order to have said that.

However, although I accept that there is an element of ambiguity, it is my view that the proper meaning of the order is that submitted for by the applicants, namely that all of the respondents would pay the applicants' costs up to and including the date of hearing; that the first, second, fifth, sixth and seventh respondents would pay the applicants' costs as incurred thereafter; and in respect of the sixth respondent that its additional liability be limited to the costs of one day.  The sixth respondent would not be responsible for the costs of the remaining nine or so days in which the proceedings continued.

This actually is the basis upon which I understand the Registrar proceeded in making an estimate of costs.  The case is certainly not a case for the application of the slip rule.  The order, even if ambiguous, reflected what was intended and I would accordingly not grant any order in respect to slip rule.

That leaves two further matters which I will deal with in reverse order.  It has been submitted that the Registrar in carrying out the taxation estimate under the rules proceeded on the basis that Axis is responsible for all of the costs of the applicants prior to the date of hearing including the costs of preparing the case in respect of matters not directly relevant to the claim for relief against Axis.  It is said that in so doing the Registrar erred and for that reason her decision was in error.

With respect, that is not so.  Where costs are ordered in a case such as the present, to be paid by a number of parties, the effect of the order is that the whole of the costs of the applicants be borne jointly by the parties responsible to pay those costs.  It is not the case that the taxing officer is required to a portion in respect of each party ordered to pay costs; those costs relating only to issues directly concerning that party.

Finally, counsel for Axis seeks orders in effect permitting Axis to now challenge the estimate that has been made by the Registrar.

Under O62 r46(3)(c), a person ordered to pay costs has fourteen days after notification by the Registrar of an estimate to object to it.  That did not happen in the present case for two reasons.  The first was that Axis believed, having regard to the interpretation which they have to the order, that their liability was only in respect of one day's costs and that there would have to be some further apportionment of costs so that only the costs of that one day were estimated.

Second, a letter was sent by the solicitors from Axis to the solicitors for the applicants concerning the matter.  The fact that this letter was sent was not in dispute.  Unfortunately it seems that the letter was never received.  The fact is also not in dispute.  Whether steps should have been taken by Axis to ensure that there was a reply to the letter is a question which no doubt hangs in the air, but the end result is, so Axis claims, that it has been deprived of its ability to object to the estimate.

Counsel for the applicants submit that I should not grant an extension of time unless evidence was before me which satisfies me that there were matters to which objection could properly be taken in the bill of costs which would change the ultimate outcome.  If such evidence were needed I would have been inclined to have adjourned the present case to permit Axis to file a draft notice of objection so that I could be so satisfied.

I do not think that it is necessary that I reach the stage of satisfaction which counsel for the applicants suggest that I should.  It seems to me sufficient that I find, as I do, that in circumstances not of its own making, Axis has been put in the situation where the period of fourteen days elapsed and it lost its right to object.  If indeed it does have a go at objection, then that is a matter that can be determined by the Registrar in due course on a taxation.

I am satisfied that power exists generally to set aside the Registrar's certificate.  See O35 r7(2), and to extend the time in which a notice of objection could be served O3 r3 Federal Court Rules.  In these circumstances I would make the following orders:

1. I would extend by fourteen days from the date hereof the time to service notice of objection to the estimate of Registrar Sexton pursuant to O62 r46(3)(c) of the Federal Court Rules.

1. Upon the filing of a notice of objection within the said period of fourteen days and the giving of security as required by the rules, I would order that there be set aside the order for payment of the sum of $91,808.64 and the certificate of taxation issued by the Registrar upon which that order for payment is based.

1. The next order would be that Axis Aviation Pty Ltd pay the costs of the motion.  Otherwise I would dismiss the motion.

I certify that this and the
preceding ten (10) pages
are a true copy of the Reasons
for Judgment herein of his Honour
Justice Hill.

Associate:

Date:  20 December 1995

Counsel and Solicitors      JE Armfield instructed by

for Applicant:              Molally Mylott

Counsel and Solicitors      TM Jucovic QC with E Strasser

for Respondent:             instructed by Schweizer & Co

Date of Hearing:            16 August 1995

Date Judgment Delivered:         16 August 1995