Greyhound Pioneer Australia Ltd v Pioneer Motor Service Pty Ltd

[1998] FCA 224

IN THE FEDERAL COURT OF AUSTRALIA
QUEENSLAND DISTRICT REGISTRY	QG 51  of   1997

BETWEEN:	GREYHOUND PIONEER AUSTRALIA LTD (ACN 008 685 229) Applicant
AND:	PIONEER MOTOR SERVICE PTY LTD (ACN 002 858 451) Respondent
JUDGE(S):		SPENDER J
DATE OF ORDER:		13 MARCH 1998
WHERE MADE:		BRISBANE

THE COURT ORDERS THAT:

The respondent pay the applicant the costs of and incidental to its amended application, to be taxed if not agreed, except that in respect of the costs reserved by Drummond J on 30 May 1997, there be no order as to costs.

Note:Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA
QUEENSLAND DISTRICT REGISTRY	QG 51 of 1997

BETWEEN:	GREYHOUND PIONEER AUSTRALIA LTD (ACN 008 685 229) Applicant
AND:	PIONEER MOTOR SERVICE PTY LTD (ACN 002 858 451) Respondent

JUDGE(S):	SPENDER J
DATE:	13 MARCH 1998
PLACE:	BRISBANE

REASONS FOR JUDGMENT

This is the remaining matter of costs in relation to proceedings between Greyhound Pioneer Australia Ltd (‘Greyhound Pioneer’) and Pioneer Motor Service Pty Ltd (‘Pioneer Motor Service’).

After a contested hearing, on 16 October 1997 I ordered that Pioneer Motor Service on the route between Brisbane and Sydney be restrained, inter alia, from using the word “Pioneer” as part of its trading name or style. The applicant therefore succeeded in obtaining injunctive relief against the respondent. Other claims by the applicant, including claims for damages or an enquiry as to damages for passing-off or, alternatively, damages pursuant to s 82 of the Trade Practices Act 1974 for breaches of s 52 of that Act, were not pressed at the final hearing of the proceedings.

On 30 May 1997, Drummond J declined to grant an application for interlocutory injunctive relief.  His Honour expressed the view then that the applicant had a strong arguable case that Pioneer Motor Service was passing-off its business as that of Greyhound Pioneer, but in assessing the balance of convenience and having regard to the circumstance that a trial was able to take place relatively shortly after the application for interlocutory relief and on an undertaking by Pioneer Motor Service to segregate in its records the information dealing with the financial effect of the Brisbane to Sydney run from the time of the interlocutory application until the conclusion of the trial, his Honour declined to grant any interlocutory relief.  Drummond J noted that Greyhound Pioneer had been aware of Pioneer’s activities by late 1996, yet did not move against Pioneer until early May.

Written submissions as to the costs of the interlocutory proceedings and the trial have been made by the parties.

On the question of costs the applicant submits that having obtained injunctive relief at the final hearing, the usual rule that costs follow the event should entitle it to its costs.

In Gladstone Park Shopping Centre Pty Ltd v Ross Wills (1984) 6 FCR 496, per Davies J at 505 and at 507 per Beaumont J (with whom Northrop J at 504 agreed), the Full Court of the Federal Court has made it plain that in litigation in the Federal Court the usual rule is that costs follow the event. In two later Full Court cases, namely, Queensland Wire Industries Pty Ltd v Broken Hill Co Pty Ltd (1987) 17 FCR 211 at 222 and in Cummings v Lewis (1993) 113 ALR 285 at 327 per Cooper J, (with whom Sheppard and Neaves JJ at 294 agreed on this aspect of the matter), the adoption of the ordinary rule by Toohey J in Hughes v Western Australian Cricket Association (Inc) (1986) ATPR ¶40-748 at 48,136 was approved.

The observations by Cooper J in Cummings v Lewis referred to above are as follows:

“The nature of the discretion vested in a trial judge as to the award of costs and the principles which guide the exercise of the discretion are set out by Toohey J in Hughes v Western Australian Cricket Assn (Inc) at 48,136:

Section 43(2) of the Federal Court of Australia Act 1976 vests the award of costs ‘in the discretion of the Court or Judge’. The Federal Court Rules do not purport to qualify that discretion. The only rule to which reference is necessary is O 62, r 15 whereby, when costs are reserved, those costs follow the event ‘unless the Court or a Judge otherwise orders’.
The discretion must of course be exercised judicially.  There are decisions, both of Australian and English courts, that throw light on the way in which the discretion is to be exercised.  I shall not refer to those decisions in any detail; I shall simply set out in a summary way what I understand to be their effect.

1.  Ordinarily, costs follow the event and a successful litigant receives his costs in the absence of special circumstances justifying some other order: Ritter v Godfrey [1920] 2 KB 47.

2.    Where a litigant has succeeded only upon a portion of his claim, the circumstances may make it reasonable that he bear the expense of litigating that portion upon which he has failed: Forster v Farquhar [1893] 1 QB 564.

3.    A successful party who has failed on certain issues may not only be deprived of the costs of those issues but may be ordered as well to pay the other party’s costs of them.  In this sense, ‘issue’ does not mean a precise issue in the technical pleading sense but any disputed question of fact or of law: Cretazzo v Lombardi (1975) 13 SASR 4 at 12.”

So far as the costs of the interlocutory application are concerned, Drummond J had reserved those costs.  Order 16 r 15 of the Federal Court Rules provides:

“Where the costs of a motion, application or other proceeding are reserved by the Court or a Judge, the costs so reserved shall follow the event unless the Court or a Judge otherwise orders.”

Pioneer submitted that it should not be responsible for the costs of the interlocutory proceedings, because the application for an interlocutory injunction was dismissed and in that sense the respondent was successful in those proceedings.

It further submitted that the applicant should pay its own costs of the final hearing.  It says:

“The amended application by the applicant included an enquiry as to damages which matter it did not pursue nor did it advise the respondent that it was not going to pursue it.  Consequently, it is submitted, costs were wasted in relation to this aspect of preparation by the respondent.”

Pioneer pointed out that (as noted by Toohey J in his observations in Hughes v Western Australian Cricket Assn Inc referred to above) a successful party who has failed on certain issues may not only be deprived of the costs of those issues but may be ordered as well to pay the other party’s costs of them: Cretazzo v Lombardi (1975) 13 SASR 4 at 12.

Pioneer relies on some observations by Einfeld J in Re Sanchez; Ex parte Smits (1994) 49 FCR 326 and in Marks v GIO (1996) 137 ALR 579 at 581-3 to the effect that there is a disconformity in the notion of a successful party usually having its costs, and the terms of s 43 of the Federal Court of Australia Act 1976. Section 43(1) confers jurisdiction on the court to award costs in the ordinary case and s 43(2) provides:

“Except as provided by any other Act, the award of costs is in the discretion of the Court or judge.”

The view of Einfeld J expressed in those cases is, in my respectful view, in conflict with the approach  confirmed by the Full Court of the Federal Court in the cases earlier referred to.  It is this latter approach which I follow.

As Cooper J noted in Cummings v Lewis (supra) at 327:

“It is within the discretion of a trial judge to award only a proportion of a successful party’s costs if the conduct of that party in the trial was such as to unreasonably prolong the proceedings: Latoudis v Casey (1990) 170 CLR 534 at 544, 565; 97 ALR 45; Re Elgindata Ltd (No 2) [1992] 1 WLR 1207 at 1214, 1217.”

Pioneer further submits that a change in the pleadings reduced the scope of the injunction sought.  The initial claim for injunctive relief was directed to all of the activities of the respondent.  An amended application was filed on 30 March, the day of the hearing of the interlocutory application, and what the applicant there sought by way of injunctive relief was confined to conduct on the Sydney to Brisbane route.

A departure from the usual rule that a successful litigant receives his costs where the litigant has been only partially successful, should not be a matter of course.  As Toohey J noted in Hughes v Western Australian Cricket Association Inc (supra):

“Where a litigant has succeeded only upon a portion of his claim, the circumstances may make it reasonable that he bear the expense of litigating that portion upon which he has failed.”

However, in my opinion, the fact of only partial success is not a sufficient basis for such a departure from the ordinary rule.  A disposition to make fragmented costs orders where a party has failed on a part of its claim, is to be avoided.  Some reason other than the mere lack of success on a portion of the claim has to be shown to justify a successful party bearing the expense of litigating the unsuccessful portion or, indeed, being ordered to pay the costs of the other party in respect of that portion of the claim.

In Australian Conservation Foundation v Forestry Commission (1988) 81 ALR 166, the applicants wholly failed, but a successful respondent had raised and failed in respect of some issues. Burchett J at 169 indicated that the objections raised by the respondent which failed added the last half day to the time of the hearing. His Honour then said:

“It does not necessarily follow that the costs orders otherwise appropriate should be affected.  A party against whom an unsustainable claim is prosecuted is not to be forced, at his peril in respect of costs, to abandon every defence he is not sure of maintaining, and oppose to his adversary only the barrier of one hopeful argument: he is entitled to raise his earthworks at every reasonable point along the path of assault.  At the same time, if he multiplies issues unreasonably, he may suffer in costs.  Ultimately, the question is one of discretion and judgment.”

Burchett J had earlier echoed the warning of Jacobs J where he said:

“The discretion conferred by this section has more than once been described as ‘unfettered’.  It is nevertheless a judicial discretion, to be exercised in a principled way: see Hughes v Western Australian Cricket Association Inc (1986) ATPR 48-134 at 48,136-7. In that judgment, Toohey J cited the warning of Jacobs J in Cretazzo v Lombardi (1975) 13 SASR 4 at 16 against the too ready assumption that a party who has substantially failed may nevertheless recoup something in respect of costs by virtue of his success on a particular issue.”

In my respectful opinion, similar considerations apply to a successful applicant who nonetheless has failed on some issues.  As Heerey J noted in Henderson v Amadio Pty Ltd (unreported, 22 March 1996):

“To extend Burchett J’s military metaphor, the plaintiff is not to be regarded as culpable because he attacked at points of the defendant’s fortifications other than the place where success came.  He is not to be forced, at his peril in respect of costs, to abandon every flank attack.”

The circumstances of the present case are not so much a case of parts of the applicant’s claim being unsuccessful, but that some of the relief originally sought was abandoned along the way.  I am not persuaded that that conduct by the applicant is either sufficiently discrete for the purpose of costs characterisation, or the costs of Pioneer in respect of the abandoned claims, even if it were possible to segregate them from its other costs, likely to be so large as to make it reasonable to depart from the ordinary rule.

Insofar as the costs of the interlocutory application, which costs were reserved, the effect of O 62 r 15  is that, in the absence of an order by the court, the respondent would be obliged to pay the costs of the interlocutory application as well as the costs of the principal proceedings.

I had occasion to consider that rule in O’Keeffe Nominees v B P Australia (1995) 55 FCR 591 particularly at 598 and 599. I there referred to Woods v Walsh (1989) 22 FCR 204 and to the observations of Lee J at 206-207:

“Although the words ‘follow the event’ may mean ‘according to who wins’, (see Davies v Eli Lilly & Co [1987] 1 WLR 1136; [1987] 3 All ER 94, per Donaldson MR (at 1143; 99), per Lloyd LJ (at 1144; 100-101), per Balcombe LJ (at 1146; 102) unless an order is made in respect of costs there would be no event in respect of which the provisions of r 15 could operate. If no order for the payment of costs is made on disposal of the cause or matter, or an order is made that no costs be paid, no foundation for the taxation of the reserved costs would be provided by r 15. The effect of the rule, therefore, is to make reserved costs of interlocutory proceedings costs in the cause of the successful party in the principal proceedings unless some other order is made in respect of them.”

Notwithstanding the reservation of costs by Drummond J, I do not think that this is a case where those costs should follow the costs order I make in respect of the principal proceedings.  I do so on the basis of the matters referred to by his Honour in declining to grant interlocutory relief, and the further circumstance that the original claim of Greyhound Pioneer for interlocutory relief was directed to the whole of Pioneer’s activities, the amended application restricting the claim for interlocutory relief to conduct on the Sydney to Brisbane route was filed only on the day of hearing of the interlocutory relief; that amended application did not so limit the claim for final relief, and the final relief as granted was so limited.  In my opinion, there ought to be no order as to costs of the interlocutory proceedings.

For the above reasons, the order that I make is as follows:

The respondent pay the applicant the costs of and incidental to its amended application, to be taxed if not agreed, except that in respect of the costs reserved by Drummond J on 30 May 1997, there be no order as to costs.

I certify that this and the preceding six (6) pages are a true copy of the Reasons for Judgment herein of the Honourable Justice Spender

Associate:

Dated:            13 March 1998

Solicitor for the Applicant:	Corrs Chambers Westgarth
Solicitor for the Respondent:	Humphreys & Cornish
Written submissions on costs received	31 October 1997
Date of Judgment:	13 March 1998