Blow Bar Co Pty Limited v McGann (No 2)

[2018] FCA 459

FEDERAL COURT OF AUSTRALIA

Blow Bar Co Pty Limited v McGann (No 2) [2018] FCA 459

File number:

NSD 1896 of 2017

Judge:

ROBERTSON J

Date of judgment:

6 April 2018

Catchwords:

COSTS – successful application by respondents to strike out certain paragraphs of the statement of claim – whether costs should be ordered on an indemnity basis

Cases cited:

Blow Bar Co Pty Limited v McGann [2018] FCA 293

Gaffney v RSM Bird Cameron Partners (a Firm) (No 2) [2013] FCA 945

Date of hearing:

Determined on the papers

Date of last submissions:

4 April 2018

Registry:

New South Wales

Division:

General Division

National Practice Area:

Intellectual Property

Sub-area:

Copyright and Industrial Designs

Category:

Catchwords

Number of paragraphs:

13

Counsel for the Applicants:

Mr R Notley

Solicitor for the Applicants:

David Hand Solicitor

Counsel for the Respondents:

Ms R White

Solicitor for the Respondents:

K&L Gates

ORDERS

NSD 1896 of 2017

BETWEEN:

BLOW BAR CO PTY LIMITED

First Applicant

LEIGH DOLE PTY LIMITED AS TRUSTEE FOR THE DOLE FAMILY TRUST

Second Applicant

AND:

TIMOTHY MCGANN

First Respondent

TIMOTHY MCGANN AS TRUSTEE FOR THE MCGANN FAMILY TRUST

Second Respondent

TNCD PTY LIMITED

Third Respondent

JUDGE:	ROBERTSON J
DATE OF ORDER:	6 APRIL 2018

THE COURT ORDERS THAT:

1.The applicants pay the respondents’ costs of and incidental to the interlocutory application as amended and filed on 14 February 2018, excluding costs in relation to that part of the interlocutory application which concerned security for costs, on the ordinary basis. Those costs include 80% of the respondents’ costs of the case management hearing on 7 February 2018 and 80% of the respondents’ costs of the case management hearing on 14 February 2018.

2.The costs of the first case management hearing on 6 December 2017 are reserved.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

ROBERTSON J:

1. These reasons deal with costs. They should be read with the interlocutory decision in Blow Bar Co Pty Limited v McGann [2018] FCA 293 (Blow Bar) which concerned the striking out of certain paragraphs of the applicants’ statement of claim for failure to state the material facts, with leave to replead.

2. The successful respondents submitted that the applicants should pay their costs on an indemnity basis, including 80% of the respondents’ costs of the case management hearing on 7 February 2018 and 80% of the respondents’ costs of the case management hearing on 14 February 2018.

3. The applicants submitted that the appropriate orders with respect to the costs of the strikeout application were either that the costs be the respondents’ costs in the cause or that the applicants pay the respondents’ costs of the strikeout application on the ordinary basis.

4. The tentative view I expressed in Blow Bar, at [57], was that costs should follow the event and that the respondents should have their costs of and incidental to their amended interlocutory application, excluding costs in relation to that part of the application which concerned security for costs.

5. In support of their application for costs on an indemnity basis, the respondents submitted that the Court should treat them as having been overwhelmingly successful in their application and the fact that their application included certain paragraphs which were not struck out did not increase the parties’ costs.

6. The respondents referred to Gaffney v RSM Bird Cameron Partners (a Firm) (No 2) [2013] FCA 945 at [10] for the principle that to warrant a departure from the ordinary rule that costs be paid on a party and party basis, there should be some special or unusual feature in the case.

7. The special and unusual features were submitted to be: no steps were taken by the applicants to resolve the proceedings prior to filing the originating process on or about 26 October 2017; the applicants were first put on notice of the deficiencies in their statement of claim on 4 December 2017; protracted correspondence relating to the deficiencies in the statement of claim followed; and in oral and written submissions, counsel for the applicants provided additional material facts to supplement those pleaded in the statement of claim. The respondents submitted that at least by 6 March 2018 the applicants had formed the view that further material facts were necessary for the respondents to understand the claims against them.

8. The applicants submitted that the correspondence between the legal representatives of the parties from 4 December 2017 did not constitute the respondents clearly putting to the applicants that the basis of the strikeout application was a failure to plead material facts and that it was unreasonable for the applicants to put the respondents to the expenditure of the costs of the strikeout application. Rather, the applicants submitted, the respondents put to the applicants that insufficient particulars had been provided or that certain claims were bound to fail.

9. The applicants also submitted that any orders made by the Court with respect to the costs of the strikeout application should make it clear that those orders excluded costs in relation to that part of the application which concerned security for costs.

10. Although the applicants’ submissions purported to take issue with some of the conclusions at [60]-[62] of the judgment in Blow Bar, it was the costs referred to at [57] of that judgment in respect of which I indicated I would hear the parties. I accept however that the orders made on 16 March 2018 could have been clearer and I have taken into account the applicants’ submissions dated 4 April 2018 at [11].

11. In my opinion, the particular facts and circumstances of this case do not warrant the making of an order for payment of costs other than on a party and party basis.

12. In forming this view, I have taken into account not only that the respondents did not have complete success on the strikeout application but also that the basis on which the Court disposed of the interlocutory application was related to but not the same as the basis put by the respondents to the applicants in the course of the correspondence to which I have referred. It was in the course of the hearing on 7 March 2018 that I made clear to the parties that I would proceed by reference to r 16.02(1)(d) of the Federal Court Rules 2011 (Cth), that is, whether the statement of claim stated the material facts on which the applicants relied that were necessary to give the respondents fair notice of the case to be made against them at trial, but not the evidence by which the material facts were to be proved. As I said at [18] of the judgment in Blow Bar, I proceeded in this way although the correspondence between the solicitors referred to whether or not further and better particulars should be given.

13. The orders I make, consistently with my conclusions at [58]-[62] of the judgment in Blow Bar, are that the applicants pay the respondents’ costs of and incidental to the interlocutory application as amended and filed on 14 February 2018, excluding costs in relation to that part of the interlocutory application which concerned security for costs, on the ordinary basis. Those costs include 80% of the respondents’ costs of the case management hearing on 7 February 2018 and 80% of the respondents’ costs of the case management hearing on 14 February 2018.

I certify that the preceding thirteen (13) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Robertson.

Associate:        

Dated:        6 April 2018