Douglas v Racing Victoria Ltd and Anor (No.2)
[2019] FCCA 715
•25 March 2019
FEDERAL CIRCUIT COURT OF AUSTRALIA
| DOUGLAS v RACING VICTORIA LTD & ANOR (No.2) | [2019] FCCA 715 |
| Catchwords: COPYRIGHT – COSTS – Follow the event – whether costs should be awarded on indemnity or other basis – proportionality – whether amount claimed is reasonable – costs to be taxed under Pt.40 of Federal Court Rules. |
| Legislation: Federal Circuit Court Rules 2001 (Cth), rr.21.02, 21.04, 21.10, 21.11 |
| Cases cited: Colgate-Palmolive Co v Cussons Pty Ltd (1993) 46 FCR 225 |
| Applicant: | WILLIAM RODERICK DOUGLAS |
| First Respondent: | RACING VICTORIA LTD |
| Second Respondent: | DESIGN AWARDS PTY LTD |
| File Number: | MLG 913 of 2017 |
| Judgment of: | Judge A Kelly |
| Hearing date: | 10 May 2018 |
| Date of Last Submission: | 7 February 2019 |
| Delivered at: | Melbourne |
| Delivered on: | 25 March 2019 |
REPRESENTATION
| The Applicant: | In person |
| Counsel for the Respondents: | Mr A.M. Bell |
| Solicitors for the Respondents: | Maddocks Lawyers |
ORDERS
The applicant pay the respondents’ costs of the proceeding, including reserved costs, to be taxed in default of agreement.
Pursuant to rules 21.02(2)(c) and 21.10 of the Federal Circuit Court Rules 2001 (Cth), refer the respondents’ costs of the proceeding, including reserved costs, to be taxed under Part 40 of the Federal Court Rules 2011 (Cth).
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT MELBOURNE |
MLG 913 of 2017
| WILLIAM RODERICK DOUGLAS |
Applicant
And
| RACING VICTORIA LTD |
First Respondent
| DESIGN AWARDS PTY LTD |
Second Respondent
REASONS FOR JUDGMENT
On 24 January 2019, reasons for judgment were published respecting the applicant’s claims for breach of copyright, misleading conduct, breach of conduct and other relief: [2019] FCCA 49. By orders made on that date, the application was dismissed. These reasons for judgment, which concern an application for costs, should be read with those reasons.
The respondents seek an order for indemnity costs, alternatively an order for costs on a standard basis.
The quantum claimed by the respondents is $86,028.25 by way of professional fees, $32,493.50 for counsel’s fees and $3,879.19 in relation to other disbursements. The amounts claimed include costs incurred in relation to an application made to re-open an earlier proceeding, the application of which was dismissed on 27 March 2017 with an order that the costs of that proceeding be reserved in this proceeding.
The respondents submit that the claims were hopeless, had no chance of success and that their application for indemnity costs are supported on the basis of an offer of compromise and Calderbank offer.
The respondents correctly submitted that the circumstances in which indemnity costs were ordered are not closed and that relevant considerations include whether a party had persisted in what should have been seen to be a hopeless case, and where it appears that properly advised, the party should have known that he or she had no prospect of success: Colgate-Palmolive Co v Cussons Pty Ltd (1993) 46 FCR 225.
The primary basis on which the application for indemnity costs was made was that the applicant had sworn affidavits that he was the author and owner of copyright in the medals the subject of the proceeding. This was a fact intensive and essential question in proof of the claim for breach of copyright. The evidence was the subject of challenge and was rejected. I do not accept that the applicant should always have known that that claim had no chance of success, irrespective of whether he had or had not been properly advised. The evidence called in relation to the commissioning, design and fabrication of the medals left open the possibility that copyright could have inhered in the applicant. Ultimately it was found not to be so. However, the rejection of that claim occurred in circumstances where the applicant had successfully demonstrated in earlier proceedings that the first respondent had copied earlier medals and had done so by simply providing the original medals to a new supplier and asked that they be copied. The precise sequence of events which led to the preparation of the concept drawings and the manufacture of the dies which were used to produce the medals left open the possibility that the applicant could have held copyright.
A second basis on which indemnity costs were sought was that the claim was statute barred. I found that the applicant’s claims would have been barred in respect of conduct occurring before 4 May 2011: [2019] FCCA 19, [196]. It does not follow that the claims were otherwise hopeless.
A third basis for claiming indemnity costs was that the claim in contract could only sound in damages and that no evidence had been led on this issue. Accepting those propositions to be accurate, it should not be overlooked that the procedural history of the matter was such that the court made directions for the trial to be held on liability only.
A fourth factor which was relied upon was that the respondents had gone to significant lengths to accommodate the applicant’s requests to inspect the medals before the commencement of the proceedings including by seeking to explain their stance that there had been no copyright infringement. This is a factor which I do take into account.
There has been no good reason demonstrated why costs should not follow the event. The question is the basis on which those costs ought be allowed. The Federal Circuit Court Rules 2001 (Cth) confer power when making an order for costs to: set the amount of costs; set the method by which such costs are to be calculated; or to refer the matter for taxation under Pt 40 of the Federal Court Rules 2011 (Cth): r.21.02(2). Reserved costs follow the event: r.21.04.
Unless the court otherwise orders, the costs of this proceeding would in general be determined in accordance with Sched 2 of the rules: r.21.10.
In my opinion it is appropriate to ‘otherwise order’ with the result that the costs of the proceeding should be determined in accordance with the scale of costs set out in Sched 2 to the Federal Court Rules. I consider that this is appropriate for a variety of reasons. First, the applicant by his counsel pursued a claim of fraud was which unfounded: [2019] FCCA 19, [141], [171]-[175]. Secondly, the respondents had gone to the significant lengths referred to in [9] above. Thirdly, the respondents had made a Calderbank offer on 17 April 2018 by which they made a detailed offer amounting in aggregate to $15,000 which offer was rejected. I do not take into account an earlier offer which was made for a minimal sum.
For those reasons, I consider that the respondents are entitled to their costs of the proceeding, the method for the determination of which should be set by reference to Pt 40 of the Federal Court Rules.
I record that the respondents provided an itemised account of their costs and disbursements. I wish to make some observations in relation to that account. First, the applicant was afforded an opportunity to provide submissions on the questions of costs but did not do so. Further, he requested additional time in which to address the question of costs but did not make any submissions in that additional time. Secondly, I record that the proceeding was conducted inside two days. There were only two witnesses. The trial ran into a second day to accommodate counsel in the preparation of their submissions.
I do not address the question whether the itemised account is a reasonable claim for costs and disbursements as between solicitor and client. However, it is an entirely separate question whether the quantum of that account is a reasonable reflex of the costs which would properly be allowable under Sched 2 of the Federal Court Rules. Upon examination of the fees itemised in that account, a live question is whether the sum expended in the defence of the proceeding was proportionate to the matters in issue. That said, I do not ignore that the respondents were required to prepare for a trial on serious allegations. The quantum of those costs should be determined by a taxing officer in default of agreement.
I certify that the preceding fifteen (15) paragraphs are a true copy of the reasons for judgment of Judge A Kelly
Associate:
Date: 25 March 2019
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