Capital Webworks Pty Ltd v Adultshop.Com Limited
[2001] FCA 621
•29 MAY 2001
FEDERAL COURT OF AUSTRALIA
Capital Webworks Pty Ltd v Adultshop.Com Limited [2001] FCA 621
COSTS – interlocutory injunction – first application dismissed – second application not pursued – lapse of time between two applications – effect of lapse on status quo – whether respondents should be awarded costs on second application – whether necessary for court to infer second application without merit – whether necessary for court to characterise actions of applicant as unreasonable – whether costs should be payable forthwith
Warne v Genex Corporation Pty Ltd & Ors (Heerey J, 4 July 1996, unreported) cited
Re The Minister for Immigration & Ethnic Affairs; Ex parte Lai Qin (1997) 186 CLR 622 cited
Mitanis v Pioneer Concrete (Vic) Pty Ltd (1998) ATPR 41-623 cited
Stack v Brisbane City Council (1996) 71 FCR 523 citedcf Narellan Pools Pools Pty Ltd v Compass Ceramic Composite Pty Ltd (Lehane J, 2 April 1996, unreported) applied
Elliott v Seymour (Foster J, 18 March 1994, unreported) cited
CAPITAL WEBWORKS PTY LTD v ADULTSHOP.COM LIMITED, MALCOLM DAY and MELBOURNE INFORMATION TECHNOLOGIES AUSTRALIA PTY LTD
W 49 of 2000RD NICHOLSON J
29 MAY 2001
PERTH
IN THE FEDERAL COURT OF AUSTRALIA
WESTERN AUSTRALIA DISTRICT REGISTRY
W 49 of 2000
BETWEEN:
CAPITAL WEBWORKS PTY LTD
APPLICANTAND:
ADULTSHOP.COM LIMITED
FIRST RESPONDENTMALCOLM DAY
SECOND RESPONDENTMELBOURNE INFORMATION TECHNOLOGIES AUSTRALIA PTY LTD
THIRD RESPONDENTJUDGE:
RD NICHOLSON J
DATE OF ORDER:
29 MAY 2001
WHERE MADE:
PERTH
THE COURT ORDERS THAT:
1.The applicant’s motion for an interlocutory injunction filed on 6 July 2000 be dismissed.
2.The applicant pay the respondents’ costs on the motion.
Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
IN THE FEDERAL COURT OF AUSTRALIA
WESTERN AUSTRALIA DISTRICT REGISTRY
W 49 of 2000
BETWEEN:
CAPITAL WEBWORKS PTY LTD
APPLICANTAND:
ADULTSHOP.COM LIMITED
FIRST RESPONDENTMALCOLM DAY
SECOND RESPONDENTMELBOURNE INFORMATION TECHNOLOGIES AUSTRALIA PTY LTD
THIRD RESPONDENT
JUDGE:
RD NICHOLSON J
DATE:
29 MAY 2001
PLACE:
PERTH
REASONS FOR JUDGMENT
The respondents seek costs on an application for interlocutory injunctive relief made on behalf of the applicant. The issue arises in the following circumstances.
On 29 March 2000 the applicant was removed from the relevant register as the party licensed to use the domain name “adultshop.com.au”. It thereupon issued proceedings in respect of that act on 5 April 2000. On the same day it applied unsuccessfully for injunctive relief against what were then only the first and second respondents.
On 6 July 2000 the applicant filed a motion seeking interlocutory injunctions against the first and second respondents. On 13 July 2000 the third respondent was joined to the action.
On 23 August 2000 the applicant was ordered to provide security for costs and the application for an interlocutory injunction was stayed pending the provision of security.
No security having been provided the Court listed the matter for directions on 3 April 2001. On that date the applicant was directed to provide the security by 10 April 2001 and it did so on that date.
At a directions hearing on 12 April 2001 the applicant was unable to indicate whether it intended to proceed with the application for interlocutory relief. At a directions hearing on 3 May 2001 the applicant stated it was not proceeding with the motion for an interlocutory injunction so that the motion should be formally dismissed. Previously, on 26 April 2001 the applicant’s solicitors had advised the respondents that the applicant proposed to withdraw its application for injunctive relief on the basis that the costs of the same be costs in the cause.
Relevant rules
Order 62 r 3(1) of the Federal Court Rules (“FCR”) provides to the Court a general discretion as to costs “at any stage of the proceeding or after the conclusion of the proceeding”. Furthermore, the Court has a discretion to require that the costs be paid “forthwith notwithstanding that the proceeding is not concluded”: FCR O 62 r 3(2). In the case of an interlocutory proceeding an order for costs shall not “unless the court otherwise orders, entitle a party to have a bill of costs taxed until the principal proceeding in which the interlocutory order was made is concluded or further ordered”: FCR O 62 r 3(3).
Whether costs should be in favour of respondents
For the first and second respondents it is said that as a consequence of the applicant electing not to proceed, the issues raised by the motion have not been determined. Consequently, this is not a matter in which the Court is able to conclude that the outcome of the application was “finally balanced”. It is said the only reasonable inference to draw from the applicant’s decision not to proceed is that the application was without merit. In this respect reliance is placed on Warne v Genex Corporation Pty Ltd & Ors (Heerey J, 4 July 1996, unreported) where an application for injunctive relief considered by his Honour to be without merit resulted in an order for payment of costs forthwith.
For the third respondent, reliance is placed on Re The Minister for Immigration & Ethnic Affairs; Ex parte Lai Qin (1997) 186 CLR 622 at 624 – 5 where it was said by McHugh J sitting as a single judge that “in an appropriate case, a court will make an order for costs even where there has been no hearing on the merits and the moving party no longer wishes to proceed with the action”. Additionally, he said “that in some cases, however, the court may be able to conclude that one of the parties has acted so unreasonably that the other party should obtain the costs of the action”.
It is submitted that here the applicant acted unreasonably in substantial delay in waiting over three months to bring the second injunction application and taking no action to prosecute it for over seven months, its position only being clarified as a result of the Court’s intervention.
Furthermore, it is submitted the application for an interlocutory injunction was almost certain to fail as the applicant had not provided any evidence as to the extent of financial hardship which would flow to it if it were not granted and its delay in filing the motion meant that the first respondent had been using the domain name for its business for over three months, so that restoration of the status quo was virtually impossible.
For the applicant it is submitted that it is not contended by the respondents that the period of delay caused any prejudice to their position. Furthermore, it is said the Court cannot infer that the application was without merit and bound to fail because it cannot be assumed the applicant would not have filed further affidavits in support of its application. The factor of delay may have made a successful application unlikely but it is said that the provision of security negates any suggestion of lack of good faith implicit in the respondents’ submissions directed to that fact. It is submitted for the applicant that the usual practice should be followed of ordering costs in the cause. As the matter involves alleged interference with property rights the issues will not finally be resolved until trial. It is submitted it would be incongruous if costs were awarded differently on a successful interlocutory injunction application to those which might ultimately be appropriate on the determination of the main issue. Finally, it is submitted that no party to an interlocutory application should be in a worse position by conceding the application.
In my opinion it is not necessary to seek to characterise the circumstances relied on for the respondents and to conclude whether they involve the applicant having acted unreasonably or in some other way embarked on actions which come into a particular category. Having regard to all the circumstances it is sufficient that I consider that on balance they should activate the discretion of the Court to order that the applicant pay the costs of the respondents in respect of the interlocutory injunction not pursued. That conclusion may also be reached without relying on an inference that the application may have been without merit.
Whether costs should be paid forthwith
It has already been seen that the submissions for the first and second respondents support the payment of the costs forthwith.
For the third respondent, it submits that as the applicant has brought no claim for permanent injunctive relief against it, it is appropriate to order that costs be paid forthwith: Mitanis v Pioneer Concrete (Vic) Pty Ltd (1998) ATPR 41-623 at 40,831. However, in its submissions the applicant states that the prayer for relief in the statement of claim will be amended to seek an order compelling the third respondent to restore the applicant’s domain name.
Additionally, for the third respondent it is submitted that the evident policy in FCR O 62 r 3 is to discourage the making of interlocutory applications. However, costs are ordered to be paid forthwith where the application is considered by the Court to have been unnecessary: Stack v Brisbane City Council (1996) 71 FCR 523 at 534. Additionally, it is said that the costs having been incurred there is no reason why the third respondent should await the outcome of the action and that the Court should exercise its discretion to require the costs to be paid forthwith.
For the applicant reliance is placed on the general rule that costs are not to be paid until the principal proceeding is concluded: cf Narellan Pools Pools Pty Ltd v Compass Ceramic Composite Pty Ltd (Lehane J, 2 April 1996, unreported). It is submitted that the Court’s discretion to “otherwise order” requires something establishing that the demands of justice require departure from the general practice. The relevant evidence needs to be more than a “mere interlocutory skirmish”: Elliott v Seymour (Foster J, 18 March 1994, unreported).
While I consider that there are circumstances favouring the award of costs to the respondents at this stage of the proceeding, I am not satisfied that there is sufficient grounds to otherwise order that those costs should be paid forthwith. It is a relevant consideration that security for costs has been provided so that it can be anticipated the applicant will pursue the remedies on which it relies to a prompt conclusion without delay.
Conclusion
For these reasons the applicant’s motion for an interlocutory injunction filed on 6 July 2000 should be dismissed and an order should be made that the applicant pay the respondents’ costs of the motion.
I certify that the preceding nineteen (19) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice
RD Nicholson .Associate:
Dated: 29 May 2001
Counsel for the Applicant: Mr P O'Neal Solicitor for the Applicant: Tottle Christensen Counsel for the First and Second Respondents: Mr MH Zilko Solicitor for the First and Second Respondents: Fearis Salter Power Shervington Counsel for the Third Respondent: Mr C G Colvin Solicitor for the Third Respondent: Arthur Robinson & Hedderwicks Date of Hearing: 3 May 2001 Date of Judgment: 29 May 2001
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