Irwin v Lee
[2022] FedCFamC2G 3
•20 January 2022
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 2)Irwin v Lee [2022] FedCFamC2G 3
File number(s): MLG 2612 of 2019 Judgment of: JUDGE BAIRD Date of judgment: 20 January 2022 Catchwords: INTELLECTUAL PROPERTY – Costs – where application dismissed by consent – where no hearing on merits - whether costs should be awarded – whether on indemnity costs basis – in a lump sum – according to Federal Court scale – or according to Schedule 1, Part 1 of Federal Circuit Court Rules 2001(Cth) or Schedule 2, Part 1 of Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth) – reasonableness of amount of costs claimed - whether justifying circumstances for indemnity, lump sum costs order – where circumstances did not justify indemnity costs in respect of all costs claimed incurred – exercise of discretion to award costs – costs ordered fixed in a lump sum Legislation: Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth) rr 1.04, 13.02, 22.02, 22.09, Sch 2 Pt 1
Federal Circuit and Family Court of Australia Act 2021 (Cth) s 214
Federal Circuit Court of Australia Act 1999 (Cth) s 79
Federal Circuit Court Rules 2001(Cth) rr 1.03, 13.02, 15.03, 17.05, 21.02, 21.10, Sch 1 Pt 1
Federal Court of Australia Act 1976 (Cth) s 37N
Federal Court Rules 2011 (Cth) Pt 40
Cases cited: FCA US LLC v Mahindra Automotive Australia Pty Ltd [2021] FCA 1091
Hamod v New South Wales (2002) 188 ALR 659; [2002] FCA 424
Hudson v Sigalla (No 2) [2017] FCA 339
JT Stafford & Son Ltd v Lindley (No 2) [1969] 3 All ER 1122
LFDB v SM (No 2) [2017] FCAFC 207 at [14]
Oshlack v Richmond River Council (1998) 193 CLR 72; [1998] HCA 11
Paciocco v Australia and New Zealand Banking Group (No 2) (2017) 253 FCR 403; [2017] FCAFC 146
Rickus v Motor Trades Association of Australia Superannuation Fund Pty Limited (2010) 265 ALR 112; [2010] FCAFC 16
Seafolly Pty Ltd v Maddern (No 6) [2015] FCA 1369
Washington v Qantas Airways Limited (2014) 107 IPR 144; [2014] FCCA 1413
Division: Division 2 General Federal Law Number of paragraphs: 147 Date of last submission/s: 8 April 2020 Date of hearing: Determined on the papers Place: Sydney Solicitor for the Applicant: Mr J Irwin Counsel for the Respondents: Mr H T Bevan Solicitor for the Respondents: Simpsons Solicitors
Table of Corrections 3 February 2022 The heading Federal Court Costs Scale has been moved from before paragraph 82, to before paragraph 84 ORDERS
MLG 2612 of 2019 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)
BETWEEN: INGRID TAMARA IRWIN
Applicant
AND: BRI LEE
First Respondent
ALLEN & UNWIN PTY LTD
Second Respondent
JANE PALFREYMAN
Third Respondent
ORDER MADE BY:
JUDGE BAIRD
DATE OF ORDER:
20 JANUARY 2022
THE COURT ORDERS THAT:
1.Paragraphs 4 and 5 of the Orders of the Court made 2 December 2019 are set aside.
2.The applicant pay the first, second and third respondents’ costs of the proceeding, fixed as a lump sum pursuant to r 22.02(2) of the Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth), in the total amount of $85,000.
3.The amount ordered in paragraph 2 is payable within 90 days.
4.Orders, pursuant to ss 230(1)(a), 231(1)(a), and 232 of the Federal Circuit and Family Court of Australia Act 2021 (Cth), paragraph 12 of the orders of the Court made 4 September 2019, and entered on 10 September 2019, continue permanently.
THE COURT NOTES THAT:
A.These Orders have been amended pursuant to rule 17.05(2)(h) of the Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth).
Note: The form of the order is subject to the entry in the Court’s records.
Note: This copy of the Court’s Reasons for judgment may be subject to review to remedy minor typographical or grammatical errors (r 17.05(2)(g) Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 17.05 Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth).
REASONS FOR JUDGMENT
Judge Baird
Introduction
This is my determination of costs following the dismissal of the proceeding by consent consequent upon the applicant’s application for leave to discontinue the proceeding within 14 days of the date fixed for final hearing on liability. The respondents seek their costs on the bases of indemnity, Federal Court scale, and fixed in a lump sum amount of $150,000, whilst the applicant submits that the parties should bear their own costs, or failing that, that she pay the respondents’ costs in accordance with this Court’s events based costs schedule.
This proceeding was commenced in the Federal Circuit Court of Australia (as this Court was then named) on 12 August 2019, and was docketed to me in the Court’s National Intellectual Property List with a first Court date of 4 September 2019. The Applicant, Ms Ingrid Tamara Irwin, sought relief for alleged infringement of her copyright in the literary work entitled “You Be Good Girl” by the book Eggshell Skull authored by Ms Bri Lee, and published by Allen & Unwin Pty Ltd. Each of the literary works are works of non-fiction, and each is based on their author’s experiences.
The Applicant named four respondents to the proceeding: the first respondent Ms Lee, the second respondent Allen & Unwin Pty Ltd, the third respondent Ms Jane Palfreyman, and the fourth respondent Melbourne University Press Pty Ltd. The Applicant represented herself until 24 October 2019, when her husband, a solicitor, became her legal representative. The first to third respondents (Respondents) have at all times been jointly represented by the same solicitor and legal firm, and by counsel. Shortly after the first Court date, the Applicant and fourth respondent reached a resolution, and on 23 September 2019 the Applicant discontinued the proceeding against the fourth respondent.
On 27 November 2019, by email to Chambers, copied to the Respondents’ solicitors, and enclosing draft notice of discontinuance, the Applicant sought to discontinue this proceeding. Chambers informed the Applicant that she required leave, as orders earlier made by me had stated that the upcoming hearing on 9 and 10 December 2019 was a ‘final hearing’, and discontinuance was sought within 14 days of that hearing. Chambers indicated that absent hearing to the contrary from the Respondents, the Court proposed to grant that leave.
On 28 November 2019, the Respondents informed Chambers they opposed the application. Whilst they stated that the proceeding should be dismissed, the Respondents informed the Court that there may be matters the Court should note, and that they wished to apply for costs and be heard on costs. They otherwise sought to maintain the final hearing dates. Chambers then drew the parties’ attention to the objects set out in r 1.03 of the Federal Circuit Court Rules 2001 (Cth) (2001 Rules) (now restated as the ‘overarching purpose’ in r 1.04 of the Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth) (GFL Rules)), and to respondents’ entitlement upon discontinuance to apply for costs pursuant to r 13.02 of the 2001 Rules (restated in r 13.02 of the GFL Rules). Chambers invited agreement, or failing agreement, requested the parties provide competing short minutes, and a short note from each party.
There was no agreement. The Respondents in their note to Chambers said, inter alia, that the present may be that rare case where the Court should refuse leave, because of the impact of the Applicant’s allegations on them, in particular on the first respondent. On 2 December 2019, the parties, by their legal representatives, appeared before me (the Applicant’s solicitor by telephone from Victoria, and the Respondents by their counsel before me in Sydney) for the Court to hear the parties on the application for leave to discontinue and the Respondents’ opposition.
In the course of that Court appearance, by consent, the Court ordered the Applicant’s solicitor’s email to Chambers dated 27 November 2019 stand as her application for leave to discontinue, dispensed with the requirement to file an application in a case, dismissed the originating application as amended on 17 September 2019 (Amended Application), ordered that “the Applicant pay the Respondents’ costs, as agreed or taxed”, directed that the Respondents take no steps with respect to taxation of those costs pending the determination of any application with respect to costs or further order, and made directions for notification of any costs applications, quantum, filing and service of affidavits in relation to costs, and listed the proceeding for hearing on costs on 10 March 2020. The Court noted the assurance given by the Applicant’s solicitor to the Court that “the Applicant remains adamant that she will not bring the matter again”.
On 5 March 2020, by consent, I made directions for the filing and service of outlines of submissions in relation to costs, and, pursuant to rule 15.03 of the 2001 Rules, directed that the question of costs be determined on the papers.
Regrettably, this judgment has been delayed well beyond any indicative time that may have been assumed by the parties. As the issue is to be determined on the papers, the credit of any witness is not in issue. The passage of time has enabled me to consider the submissions of the parties, and the affidavits and other documents on which they rely, and the Court documents and Court events in the proceeding without the distraction of the moment and the initial disruptions of the Covid-19 pandemic. This time has also allowed me to consider in context, and with the benefit of some distance, the passionate convictions on occasions expressed by both the parties and their legal representatives in their material.
Overview of parties’ competing positions on costs
The Respondents
As I have indicated above, the Respondents apply for their costs:
(a)on an indemnity basis “because of the particular circumstances of this case and the manner in which it was conducted render it unreasonable for the applicant to have subjected the respondents to the expenditure of costs”;
(b)assessed on the Federal Court scale;
(c)in a lump sum fixed at $150,000.
In support of their application, the Respondents rely on two affidavits of their solicitor Mr Adam Simpson affirmed respectively on 18 November 2019 (Simpson #1), and 5 February 2020 (Simpson #2); certain paragraphs of the affidavit of Ms Palfreyman affirmed 2 October 2019, and bundles of correspondence they emailed to the Court (my Chambers) on 23 October 2019, and 2 December 2019. In addition, after the provision of submissions, in rebuttal the Respondents seek leave to rely on two emails.
The total amount of costs claimed incurred by the Respondents is $195,016.20 (ex GST). As I have said, the Respondents seek costs fixed in the amount of $150,000, reflecting what their solicitor says is “an effective discount of approximately 23% to the actual costs they have incurred in connection with this dispute”.
The Applicant
The Applicant submits that the Respondents’ application should be refused. The circumstances do not warrant indemnity costs or the Federal Court scale, the Applicant exercised her rights to seek relief from this Court in its intellectual property jurisdiction intended to permit individuals of limited financial means to have access to the Court at a lesser scale of costs and in a quicker time than the Federal Court had previously provided.
She submits the Court should order that each party bear their own costs, or failing that, any costs should be calculated according to the Court’s events-based scale of costs set out in Schedule 1 - Costs, Part 1 of the 2001 Rules (from 1 September 2020, now see Schedule 2, Part 1 of the GFL Rules, which is substantially the same updated as to amounts, and which excises costs and events relevant only to disputes in the family law jurisdiction of this Court). I will refer to the Court’s event‑based scale of costs generally as the Costs Schedule, without distinguishing between that under the 2001 Rules or the GFL Rules.
The Applicant relies on the affidavit of her solicitor Mr Jonathan Irwin sworn 24 February 2020 in response to Simpson #2, and on psychological reports and medical reports attached to submissions, dated variously 12 March 2020 (re ECG, blood tests), 5 March 2020 (blood pressure), 15 February 2017 (psychiatric report, Dr L A Walton), and 16 November 2017 (psychiatric report, Dr D Shan), these last two apparently obtained in the context of a personal injuries claim brought by the Applicant in relation to her historical sexual abuse. In addition, on 6 April 2020 the Applicant filed an expert report by Mr M Lake, psychologist, dated 18 April 2016, addressed to the Victorian Victims of Crime Assistance Tribunal.
Overview chronology, and procedural history of the proceeding
As I have indicated at [2] above, the proceeding principally concerned allegations of breach of copyright in a literary work. At least initially, the Applicant also alleged copying from 4 related works originating from the Applicant.
It suffices to provide a brief overview of the parties’ respective claims in the proceeding. I use the term ‘claims’ in this context to refer to the facts, matters and claims set out in the Court documents in the proceeding. I have not, and do not purport to, conduct any trial, or make any finding on the truth, accuracy or completeness of any of the facts, matters and claims asserted. As I stated to the parties at the various case management hearings in the proceeding, copyright subject matter, and thus copyright infringement, is not concerned with the truth, accuracy, or completeness of the content of the works in suit. I here observe that it has not been necessary, or appropriate, for the purposes of case management of the proceeding, or for these reasons to read the respective literary works, and I have not done so.
The lives of the Applicant and first respondent (as I have ascertained from the Court documents) have certain similarities - biographical facts and experiences - of which they have each written in their respective literary works. In general terms, from the Court documents it appears these similarities as disclosed in their respective literary works include they were each sexually assaulted as a child by another minor known to them, that they were law graduates / lawyers, that as adults they each sought to bring their perpetrator to account under the law, and engaged with the Australian legal system in so doing and perceived inadequacies in the legal system.
The Applicant authored a manuscript based on certain events in her life – the literary work I refer to in [2] above. She started writing it in early 2017, and on 8 August 2017, on the recommendation of a friend and journalist, sent the manuscript to Melbourne University Press, formerly the fourth respondent in the proceeding. During August 2017, she also sent the manuscript to 2 other Australian publishers. On 1 September 2017, the Applicant sent a part of her manuscript to Allen & Unwin, the second respondent, together with a book synopsis and book cover design (totalling 61 pages). None of the publishers accepted the Applicant’s literary work for publication. In March 2019, the Applicant self‑published her work under a pseudonym and with a different title.
Earlier, in mid-2016, Ms Palfreyman, the third respondent and employee of the second respondent, received a book proposal from the first respondent’s literary agent. In August 2016, the first and second respondents entered a book deal for Eggshell Skull. On 31 August 2017, the first respondent submitted a draft manuscript of Eggshell Skull to Allen & Unwin. That draft was substantially complete, but did not comprise the full manuscript. On 1 September 2017, the first respondent posted on Instagram that she had just submitted her manuscript to the second respondent. The first respondent sent the final two chapters of her manuscript to Allen & Unwin in December 2017. Eggshell Skull was published on 23 May 2018.
The Applicant claims instances of copying of expressions, phrases, analogies and interpretations of her experience in Eggshell Skull. She says that these give rise to inferences of copyright infringement of her literary work. The Applicant alleges that both the second respondent and the fourth respondent were both sources of copying by the first respondent.
In her originating application (and in her Amended Application) the Applicant says that a preliminary inspection in July 2018 by Ms Johnson, barrister, on her behalf, of certain documents at the Respondents’ solicitors offices “failed to establish independent creation … in any more than 11 instances out of approximately 250 alleged infringements”. The Applicant claimed that scant drafts of the manuscript were produced at the inspection, and notes the Respondents’ explanation that the computer program used by the first respondent to write her manuscript had problems which caused her to be unable to retrieve drafts predating August 2017, save for two chapters created in 2016. It appears that at some later time during the course of the proceeding, however, some additional drafts were able to be produced.
The Applicant also draws attention to apparent contradictions between public accounts given by the first respondent and in correspondence with the Applicant by the third respondent in 2018 as to their communications and engagement in the course of the first respondent writing her manuscript.
In the Amended Application, in sum, the Applicant claims (at [35]) that “the infringements included the cover theme, cover colour, the driver for the protagonist seeking justice, the wisdom from an older male relative, the traits, thoughts, observations and reactions of the protagonist, the specialised legal insight, the plot, the background and context around the plot, the unique analogies and words used to express our experience” and that “together, the infringements form a substantial part of the [Applicant’s work].”
The Respondents in their respective Concise Statements in Response (each of which is in substantially the same terms) deny infringement, say that the first respondent is the sole author of Eggshell Skull, and that the first respondent never read, received, or had access to or knowledge of, any part of the works identified by the Applicant at any time prior to Eggshell Skull’s publication. They say that:
to the extent that any similarities exist between the [parties’ respective literary works or any of the other materials identified by the Applicant], those similarities are the result of the use of common English words and phrase (sic); descriptions of similar facts, experiences or events; or coincidence; and do not give rise to any inference of copying …; and could not, individually or in aggregate, amount to the reproduction of a substantial part of any of the [Applicant’s excerpt, literary work or other materials] in Eggshell Skull.
Court Appearances
In total there have been four Court appearances in this proceeding: the first Court date on 4 September 2019, and three subsequent case management hearings, which were also concerned with foreshadowed interlocutory applications, on 24 October 2019, 18 November 2019, and the last on 2 December 2019 (referred to above at [6] – [7]).
The First Court Date – 4 September 2019
On 4 September 2019, at the Court in Sydney the Applicant appeared in person before me, having travelled from Victoria. The Respondents appeared by counsel, instructed by their solicitors, both based in Sydney. This first return date of the originating application, was also the return date of the Applicant’s application for interlocutory relief made in the originating application, and in an application in a case filed 30 August 2019. The hearing took approximately 3 hours. My review of the transcript reveals that I emphasised that the proceeding was concerned with copyright infringement; it is not a trial of the first respondent’s life, it is about two competing literary works.
At the conclusion of the hearing, I listed the proceeding for final hearing on particular separate questions – in substance, being the case on liability, and for summary dismissal pursuant to rule 17.05 of the 2001 Rules. I made extensive case management orders and directions including for the Amended Application to incorporate certain identified relief, the preparation of short form chronologies, the provision of a word copy of the Applicant’s copyright infringement chart (exhibit ITI‑F to the Applicant’s first affidavit, filed with the origination application), exchange of requests for discovery, the filing of concise responses, and affidavits directed to issues of liability.
I dismissed the application for interlocutory relief set out in the originating application, dismissed the Applicant’s application in a case filed 30 August 2019 (which sought, amongst other matters, interlocutory injunctions in relation to a subsequent book by the first respondent), ordered that thenceforth no application in a case or subpoenas be filed without leave of the Court, and made certain non‑publication and suppression orders sought by the Respondents. I listed the proceeding for further case management on 24 October 2019.
The Court’s order for final hearing provided:
LISTS the proceeding for final hearing on 9 and 10 December 2019 at 10:15am at the Court in Sydney to hear and determine:
(a)the following separate questions:
(i)whether the first respondent copied any, and if so which, of the Applicant’s works entitled “You Be Good Girl” (being the document at Exhibit ITI-A), Exhibit ITI-C, Exhibit ITI-D, annexure ITI-8, annexure ITI-11, and annexure ITI‑12 to the first Irwin affidavit (Works); and
(ii)whether Eggshell Skull is a reproduction of the whole or a substantial part of any of those Works;
(b)whether the application should be dismissed pursuant to r.17.05 of the Federal Circuit Court Rules 2001 (Cth).
On my review of the transcript I note that at this first case management hearing I informed the Applicant that the costs may end up being significant, and said:
“whilst this jurisdiction does have a scale of costs, it is also open to parties – applicant or respondent – depending on how they run their case and … to be subject to costs on other scales, or, as [the Applicant has already indicated], indemnity”.
Later in that first case management hearing, counsel for the Respondents raised the issue of the scale of costs and said:
“I’m not making application now, but I do expressly state that the question of the at which (sic) court scale will apply is likely to become an issue, and indeed it may well be that, having regard to the material and the way the trial has run, that my client will – might well make an application in due course for the Federal Court scale to apply either in full or with such reduction as your Honour considers appropriate in the exercise of the discretion. I just wish to make that perfectly plain at the outset”.
The transcript records that the Court, and counsel referred to Part 21 of the 2001 Rules, and r 21.02(b) and (c) in particular (now restated in r 22.02(b) and (c), GFL Rules.
Second case management hearing - 24 October 2019
On 24 October 2019 (October hearing), the second case management hearing, issues before the Court (or raised before hearing) included disputes regarding discovery, confidentiality claimed by the Respondents in certain exhibits referred to in their evidence, the form of proposed confidentiality undertakings, the Applicant’s foreshadowed request to have an independent IT expert analyse certain Respondents’ documents, and the Respondents’ concerns to remove from the Court file a particular affidavit from a third party filed on behalf of the Applicant (Affidavit).
Mr Irwin, solicitor, appeared by video‑link, recently instructed on behalf of the Applicant, and the Respondents appeared as before. During the course of the Court appearance, I noted the confidentiality undertaking given by Mr Irwin to the Court and to the first respondent regarding the Respondents’ claimed confidential exhibits, comprising the first respondent’s drafts. Whilst the provision of the undertaking resolved certain confidentiality disputes between the parties, under the terms of the undertaking, Mr Irwin was precluded from disclosure of those documents to the Applicant without the Court’s authorisation or the Respondents’ prior consent.
Inter alia, I made orders for limited discovery (noting the Applicant had made informal discovery of documents sought), directed the parties to identify which affidavits, or parts of affidavits they intended to rely on at the hearing of the separate questions (noting that the Respondents informed the Court they relied on the 3 short affidavits they had filed), and made other pre‑trial directions by reference to my template directions (including notification of witnesses required for cross-examination, lists of objections, provision of Court books, opening submissions and a provisional timetable for hearing). I made orders limiting access to the Affidavit.
In relation to the Applicant seeking a forensic IT expert access to inspect and analyse an electronic form of the Respondents’ confidential exhibits, I made directions that any application be made by way of application in a case to be returnable at the next case management hearing, to be supported by affidavits including of the proposed expert, and if application was made, that outlines of submissions be provided.
I listed the matter for further case management on 18 November 2019, noting that issues to be discussed on that occasion included the nature and scope of cross‑examination, and further discovery.
Third case management hearing - 18 November 2019
On 18 November 2019 (November hearing), appearances were as before. The issues before the Court included those identified above, procedural issues for final hearing such as witnesses appearances by video‑link, and additional issues raised by the Applicant’s application in a case sought to be filed on 4 November 2019, and restated in her proposed short minutes of order provided thereafter. In support, the Applicant filed and served her affidavit affirmed 4 November 2019. The Applicant provided a draft further amended originating application, and supporting timelines and tables of possible access, and individuals sought to be joined or subpoenaed. The Respondents relied on Simpson #1 made that morning. Both parties relied on short outlines of submissions. I heard from the parties.
The Applicant sought certain further discovery, the access, inspection and analysis by the forensic IT expert foreshadowed at the October hearing, and provision to the Court of an expert report by her, leave to join 6 additional parties (individuals), and to further amend the Amended Application in two respects. She sought revocation of the Court’s suppression order, and that the Court rule at this hearing on admissibility of the Affidavit (which the Applicant proposed to rely on at the final hearing). In addition, the Applicant sought to vacate the December 2019 hearing dates, and to obtain a new trial for 4 days in 2020. Alternatively to joinder, the Applicant sought leave to file and issue subpoenas.
The forensic IT expert’s proposed report to the Court was described in the Applicant’s proposed short minutes to be in relation to a “plagiarism software check …, [and] the authenticity of the emails, attachments and accompanying metadata of the Respondents’ documents [then identified]”. The new matters sought to be included in the proposed further Amended Application were said to be regarding the identification of further links to direct access by the Respondents to the Applicant’s work, and regarding “the falsity of the events relied on as truth underpinning the first respondent’s memoir, … proving the existing cause of action … [of] copying”.
During the case management hearing I reiterated what I had said at the first case management hearing in September 2019 that the question for me at the December hearing was the comparison of the final work - the creative work that finds its expression in the published work Eggshell Skull, and not a question of factual accuracy or historical accuracy of the first respondent’s life story. I observed that there was nothing in the confidentiality undertaking that prevented the Applicant, or her advisers (including the proposed forensic IT expert) from comparing the published work Eggshell Skull against the Applicant’s manuscript provided to Melbourne University Press, and against the Applicant’s part/extract provided to Allen & Unwin. No particular matters or specific document in respect of which Mr Irwin required a release from confidentiality in order to obtain instructions was identified. I ruled against further discovery, and against release from the confidentiality undertaking.
I ruled that none of the individuals sought to be joined is likely to be capable of giving evidence of any real probative value in the proceeding, and it would be a waste of the Court’s time and a waste of both parties’ resources to allow those persons to be joined. I refused leave to the Applicant to join further parties, to file and serve the proposed further amended originating application, and to issue the subpoenas. I was not persuaded that the matters the subject of the suppression order would be relevant to the copyright infringement questions of access or qualitative substantial reproduction. I informed the parties that if pressed I would rule on the issues of suppression, and admissibility of the Affidavit at the December hearing.
I extended time for compliance by the parties with certain of the pre-trial directions. I noted that the Applicant’s proposed application in a case dated 4 November 2019 is not allowed, the Court having heard the parties and ruled that if it were allowed the Court would dismiss it. I reserved the costs of the day and on the proposed application in a case. The hearing dates remained on foot.
2 December 2019 hearing
On 27 November 2019, the Applicant, by email sought to discontinue the proceeding against the Respondents (see above, [4]-[5]). On 2 December 2019, the parties appeared before me and I made the orders I have described above, at [6] – [7].
EVIDENCE ON THE ISSUE OF COSTS
The Respondents
Mr Simpson is the Respondents’ solicitor on the record. He is an experienced intellectual property practitioner, with over 20 years’ experience in Australia, and before that in the United Kingdom.
Simpson #1 was made on 18 November 2019 in answer on the application in a case, and other matters relating to the November hearing. Mr Simpson first refers to the pre‑litigation inspection by Ms Johnson in July 2018. Mr Simpson then understood Ms Johnson to act for the Applicant (see above at [22]). He says that by reason of material subsequently put forward by the Applicant his understanding may be incorrect, and Ms Johnson may not have been so engaged. Mr Simpson annexes correspondence to show what documents were made available at that inspection (see further below at [119] – [120]).
Mr Simpson addresses the Applicant’s foreshadowed intention to join named individuals in the proceeding, argues they should not be joined, and evidences his firm’s inquiries of the Respondents and the named individuals in that regard.
Mr Simpson then recounts that the Applicant posted a video on her personal Facebook page in July 2019 in which he says the Applicant made statements broadly reflecting her claims subsequently made in the proceeding, refers to third party comments on Facebook following that post and on social media of which the first respondent then became aware of, and expresses the prejudice and distress caused to the first respondent. To the best of his knowledge the Facebook page is no longer publicly available. Mr Simpson attests that the Respondents are concerned that the proceeding be heard and determined as soon as possible, his concern about the legal costs, and opposes anything that would delay the hearing.
Simpson #2 is made in support of the lump-sum costs order sought by the Respondents. It is intended to operate as a costs summary compliant where applicable with the Federal Court Costs Practice Note GPN‑COSTS. Mr Simpson makes the appropriate attestations. He attests that the costs summary has been prepared with the assistance of a costs’ expert.
Mr Simpson attests the Respondents’ incurred legal costs and disbursements as at 2 December 2019 amounting to $183,501.20 (excluding GST), and that further legal costs incurred since then (to 5 February 2020) amount to “at least” $11,515.00 (excluding GST), being a total of $195,016.20.
He states that professional fees amount to $146,301.50, and identifies 5 lawyers who have performed work in the matter, primarily himself (115 hours) and one lawyer/associate (184 hours). The other 3 lawyers have in total performed 15 hours of work. Mr Simpson attests that the Respondents have incurred disbursements of $48,714.70, comprising Counsel’s fees of $44,583.32, and Court transcript, travel and courier disbursements of $4,131.38.
Whilst not stated, simple addition shows each of the above amounts is excluding GST. Mr Simpson attests that the hourly rates of the solicitors are at or below the amount allowable for attendances under the Federal Court’s Rules, and counsel’s hourly rate is within the range contemplated by that Court’s relevant National Guide.
Mr Simpson says that the Respondents’ “total costs relate to the following categories of work”, describes 10 categories of work, and in respect of each category provides an estimated percentage of the “total amount claimed”. It is not clear whether these categories and estimates encompass counsel’s fees or not. I have assumed that Mr Simpson intends a distinction between costs and disbursements, and that the categories and estimates thus relate to the solicitors’ professional fees.
In summary (except as are quoted), the 10 categories and percentage estimates (noting the total of the estimated percentages is 101%) are:
(a)pre‑litigation correspondence – 8%;
(b)“consideration, advice and correspondence in relation to claims against the Applicant arising from her allegations of copying, including reaching agreement with the Applicant in relation to reservation of rights for the purposes of the efficient conduct of this proceeding” – 4%;
(c)initial consideration of claim and preparation for and attendance at first case management hearing [4 September 2019]– 16%;
(d)preparation of concise responses – 5%;
(e)preparation of affidavit evidence – 12%;
(f)further consideration of claim and further documents file, advice, preparation for and attendance at second case management hearing [24 October 2019]– 10%;
(g)discovery – 5%;
(h)interlocutory disputes, correspondence, and additional case management hearings “arising from Applicant’s applications in a case” – 31%;
(i)preparation for trial – 4%;
(j)“recovery of legal costs (including correspondence with Applicant and preparation of present application)” – 6%.
Mr Simpson then sets out reasons why he says the Respondents are justified in seeking an indemnity costs order, and, separately, why they are justified in seeking application of the Federal Court scale. Based on his experience he estimates an award of indemnity costs would be approximately $165,000, and taxation or assessment on the Federal Court scale would be an award of $140,000.
In sum he says indemnity costs are justified because there were no reasonable prospects, pre‑litigation inspection was permitted in good faith, unfounded allegations were made, there was aggressive and persistent pursuit of irrelevant issues, and the conduct of the proceeding was unsatisfactory and increased costs, see further Respondents’ submissions set out below.
In support of application of the Federal Court scale, in Mr Simpson’s opinion, the proceeding has been of a “non-routine and complex nature” because of the seriousness of the allegations, the nature of the remedies, the length of the works in suit, the number of parties, the nature of the allegations of access, the need for confidentiality to protect sensitive information, and the interplay with legal issues arising from criminal conduct, the number and duration of case management hearings, and the number and nature of interlocutory orders sought.
Ms Palfreyman gives evidence of receiving correspondence from the Applicant in June 2018, and her written response at that time as publisher of Eggshell Skull. Ms Palfreyman seeks to clarify that response, stating that whilst she had then written that prior to publication of Eggshell Skull [she] had been “in constant contact with [the first respondent], discussing her progress on the manuscript chapter by chapter”, she “did not mean to suggest that I had been actively reviewing and providing feedback on [the first respondent’s] manuscript prior to receiving her draft on 31 August 2017”.
Ms Palfreyman recounts some conversations she attests she had with Ms Johnson at the pre‑litigation inspection. That evidence is hearsay. The material on the Court file reveals it is disputed. I accord it no weight.
The Respondents also relied on two bundles of documents, the first prepared for the second case management hearing in October 2019, and the second bundle prepared for the 2 December 2019 hearing. I have considered those bundles.
The first bundle comprises inter partes correspondence between the Applicant herself, and the Respondents’ solicitors in the period 2 October 2019 to 22 October 2019, on the issues of confidentiality, irrelevance of the Affidavit and that it be withdrawn, and discovery. Much of the content comprises discovery tables. There is a significant amount of duplication, arising from email chains, and the like.
The second bundle comprises partes (solicitor to solicitor) correspondence following the November hearing. There is post hearing further agitation on the issue of subpoenas, some agitation of Mr Irwin’s concerns about perceived inconsistencies in confidential documents, his request for an explanation, and that the Applicant’s IT expert test the documents, the Respondents’ extensive objections to evidence (principally irrelevance, opinion and speculation), and inter partes and Chambers correspondence relating to discontinuance. This correspondence includes from the Respondents’ solicitors (crossing with the Court’s correspondence to the parties) evidencing their strong desire to continue to final hearing, further evidenced in their later correspondence pressing for submissions for the final hearing, and the Applicant’s response. This bundle does not show either party in a positive light.
In addition, after submissions were filed, the Respondents sought leave to rebut the Applicant’s submissions as to the nature of counsel’s advice to rely on two emails annexed to the Applicant’s affidavit affirmed 16 October 2019. The Applicant’s submissions make general assertions about obtaining counsel’s advice to the effect that the quantum of similarities identified alone gave rise to suspicion and was evidence of substantial copying rather than mere coincidence, and appear to locate that advice prior to commencement of the proceeding. In his affidavit in answer on costs, however, Mr Irwin refers to his client obtaining counsel’s advice in a different context: responding to Simpson #2’s claim that indemnity costs are appropriate because of the Applicant’s conduct during the proceeding.
The two emails are from a barrister (not Ms Johnson) to the Applicant in late 2018, before the proceeding was commenced. There is no indication whether or not they comprise the complete universe of attempts to obtain advice, whether or not advice was obtained by the Applicant in relation to the subject matter of the proceeding, nor whether they are the basis for the reference in the Applicant’s submissions to counsel’s advice. Further, it is apparent from my consideration that the emails are communicated in a different context and in a different time period to the counsel advice referred to by Mr Irwin in his affidavit.
In these circumstances, I consider that the probative weight of the emails (if any, which I doubt) is substantially outweighed by the danger that the evidence might be misleading or confusing or result cause or result in undue waste of time. I refuse leave.
The Applicant
Mr Irwin is the Applicant’s solicitor on the record. Mr Irwin’s affidavit is made in response to Simpson #2, and in support of the Applicant’s position on costs, see above at [13]-[14]. His affidavit is made based on his own knowledge of the matter, and principally on instructions provided by the Applicant.
Mr Irwin does not dispute the categories of work carried out as deposed, but does dispute the amount claimed, reliance on the Federal Court Scale and thus the calculations of amounts. He says the Respondents’ reliance on that Scale increases the costs to the Applicant, operates beyond the intention of parliament in expanding the jurisdiction of the Court. The Applicant brought her matter in this Court, and the correct scale to be applied is the Costs Schedule. He observes the Applicant is not in a position to dispute Counsel’s fees or other disbursements stated in Simpson #2.
In responding to Mr Simpson’s justification for indemnity costs, Mr Irwin explains that a considerable amount of draft material was finally made available, but only pursuant to confidentiality undertaking, making it impossible for the Applicant to herself to peruse and instruct. The materials produced appeared to be different in content and nature from that reported earlier by Ms Johnson. As to the matters the Applicant sought to pursue as to historical truth, they were not accurately deposed to and properly contextualised. They were relevant to the extent that the first respondent appears to have written a book about life experiences that had in fact not happened as described (and so I apprehend from the matters ventilated in the Court documents, and at Court appearances, the Applicant believed this refuted that similarities between the subject works were mere co-incidence).
As to the Applicant’s conduct in the proceeding, she had obtained advice from 2 barristers experienced in copyright law that the matter was not hopeless, in their view the material in affidavits was relevant, and ought not to be objectionable, and it was reasonable to seek to join parties who had every opportunity to pass on materials to enable access.
Mr Irwin also seeks to refute Mr Simpson’s justification for Federal Court Scale costs. He attests to the Applicant’s circumstances, and submits that the order sought by the Respondents would be punitive to an extent that far outweighs the concept of paying compensation to the Respondents.
I have referred above to the medical reports. I have considered them. It is not necessary to set out the reports or conclusions. Whilst some reports precede the chronology of the dispute and the proceeding, they substantiate Mr Irwin’s explanation in his affidavit and in his submissions of the Applicant’s circumstances, and explain some of what I observed of the Applicant in the proceeding, as revealed by my review of the transcript.
PRINCIPLES AND RELEVANT LEGISLATIVE PROVISIONS
The relevant principles relating to costs are well established, and are not disputed. Pursuant to s 214(2) and (3) of the Federal Circuit and Family Court of Australia Act 2021 (Cth) (2021 Act), in force since 1 September 2021 (formerly set out in s 79 of the Federal Circuit Court of Australia Act 1999 (Cth)), the Court has a broad discretion to order costs. Section 214(2) and (3) provide:
(2)The Federal Circuit and Family Court of Australia (Division 2) or a Judge has jurisdiction to award costs in all proceedings before the Court (including proceedings dismissed for want of jurisdiction) other than proceedings in respect of which any other Act provides that costs must not be awarded.
(3)Except as provided by the Rules of Court or any other Act, the award of costs is in the discretion of the Federal Circuit and Family Court of Australia (Division 2) or Judge.
Although the discretion afforded to the Court is broad, it must be exercised judicially and in the context of the relevant Court rules: see Oshlack v Richmond River Council (1998) 193 CLR 72; [1998] HCA 11, at [65]. That discretion includes, but is not limited to, the discretion to order indemnity costs, and that parties bear their own costs.
Costs Rules in this Court
Part 22 of the GFL Rules governs costs in general federal law proceedings in this Court, including in the exercise of the Court’s intellectual property jurisdiction. Part 22 relevantly restates Part 21 of the 2001 Rules. It suffices to refer to the GFL Rules.
Unless the Court otherwise orders, a party entitled to costs in a general federal law proceeding is entitled to costs in accordance with Schedule 2; and disbursements properly incurred: r 22.09 GFL Rules.
The default position in this Court is that costs, when ordered, are assessed as provided by Schedule 2 GFL Rules (formerly, Part 1, Schedule 1, 2001 Rules).
Schedule 2, GFL Rules is a Court event-based schedule. It is in substantially the same terms as the former costs schedule, Part 1, Schedule 1 to the 2001 Rules (referred to in r 21.10, 2001 Rules), which was similarly event‑based. In each case, events are identified by item number and description, and corresponding amounts specified per event. As I have said above at [14], for convenience I refer to these schedules generally as the Costs Schedule. I set out relevant extracts from the Costs Schedule later in these reason.
An application for an order for costs may be made (a) at any stage in a proceeding; (b) within 28 days after a final order is made; or (c) within any further time allowed by the Court: r 22.02(1), GFL Rules.
Pursuant to r 22.02(2), in making an order for costs in a proceeding, the Court may:
(a)set the amount of the costs; or
(b)set the method by which the costs are to be calculated; or
(c)refer the costs for taxation under Part 40 of the Federal Court Rules 2011 (Cth) (FC Rules); or
(d)set a time for payment of the costs.
Costs when ending a proceeding early
Part 13 of the GFL Rules - which provides for ending a proceeding early - is also relevant. Rule 13.02(1) of the GFL Rules provides that if a party discontinues an application or part of an application, another party in the proceeding may apply for costs.
Notification of application for costs suffices
In the present case, no application in a case for costs (refer r 22.02(1), and r 13.02(2), GFL Rules) was made by the Respondents at any time during the interlocutory steps and case management hearings in the proceeding, or after I made final orders on 2 December 2019. As I have noted above at [32], however, at the first case management hearing the Respondents’ counsel raised the possibility of a later – post trial - application for costs at the Federal Court Scale. In their Concise Statements in Response dated 2 October 2019 the Respondents each said “The Applicant should pay the [respective] Respondent’s costs of the proceeding at a scale to be determined”.
In the course of the hearing on 2 December 2019, and by the Court’s orders on that date, I made it clear that notification to Chambers and inter partes of any application for costs sufficed. Consistently with the Court’s overarching purpose I consider that by the orders I then made the Court dispensed with the requirement that on or after 2 December 2019 the Respondents file an application in a case seeking costs, and I so find.
Federal Court Costs Scale
If costs are referred for taxation under Part 40 FC Rules, without further specificity, they are costs as between party and party. As defined in the Dictionary, Schedule 1 to the FC Rules these are only the costs that have been fairly and reasonably incurred by the party in the conduct of the proceeding. For convenience I refer to this costs regime as the Federal Court Scale.
The purpose of a costs order
The fundamental purpose of a costs order is to compensate a successful party rather than punish an unsuccessful party. The Federal Court’s Costs Practice Note (GPN‑COSTS) restates that principle, and states that the Court will consider, however, the appropriateness of the making of a special costs order in circumstances which may warrant it, including where parties raise unmeritorious arguments before the Court or otherwise conduct themselves inappropriately in the litigation.
This Court’s ability to order costs under the Federal Court Scale in lieu of the Costs Schedule is well known and accepted. Whether it is reasonable in the circumstances to do so, however, is a matter to be resolved having regard to the principles underlying costs orders generally, and the individual circumstances of a given case, including achieving a just outcome given the facts and law at issue in the proceeding. The matter is not to be resolved with some formulaic approach: see generally, Washington v Qantas Airways Limited (2014) 107 IPR 144; [2014] FCCA 1413.
Indemnity costs
As defined in the Dictionary to the FC Rules, costs on an indemnity basis means costs as a complete indemnity against the costs incurred by the party in the proceeding, provided that they do not include any amount shown by the party liable to pay them, to have been incurred unreasonably by the party incurring them. Costs on an indemnity basis are to be distinguished from costs as between party and party.
Costs should not be ordered on an indemnity basis unless there is some special or unusual feature of the case that justifies departure from the ordinary practice. Davies J in the Federal Court explained the principle in TSG Franchise Management Pty Ltd v Cigarette & Gift Warehouse (Franchising) Pty Ltd (No. 3) [2016] FCA 828 at [7], referring to Hamod v New South Wales (2002) 188 ALR 659; [2002] FCA 424, at 665 (per Gray J, Carr and Goldberg JJ agreeing):
[7]Indemnity costs are not designed to punish a party for persisting with a case that turns out to fail. They are not awarded as a means of deterring litigants from putting forward arguments that might be attended by uncertainty. Rather, they serve the purpose of compensating a party fully for costs incurred, as a normal costs order could not be expected to do, when the Court takes the view that it was unreasonable for the party against whom the order is made to have subjected the innocent party to the expenditure of costs.
[8]The cases illustrate the appropriateness of awarding costs on an indemnity basis where there has been particular misconduct that caused a loss of time to the Court and to other parties, where proceedings were commenced or continued in wilful disregard of known facts or clearly established law, where allegations were made which ought never to have been made, or where the proceeding was unduly prolonged by groundless contentions …
Lump sum costs order
GPN‑COSTS states at item 4.1 that the Federal Court’s preference, wherever it is practicable and appropriate to do so, is for the making of a lump sum costs order. Item 4.10 of GPN‑COSTS provides, inter alia, the costs applicant should file an affidavit in support of the lump sum claim – the costs summary – which must be clear, concise and direct, the intention of the procedure being “to streamline and expedite the determination or resolution of the quantum of costs question”.
The purpose of the lump sum costs rule has been described as to avoid the expense, delay and aggravation involved in protracted litigation arising out of taxation: see LFDB v SM (No 2) [2017] FCAFC 207 at [14]. In Paciocco v Australia and New Zealand Banking Group (No 2) (2017) 253 FCR 403; [2017] FCAFC 146, the Full Court said at [18]‑[20]:
[18]We emphasise that in making a lump sum award of costs, the Court in undertaking the task of assessing costs is not precluded from undertaking a close inquiry of costs relating to a particular issue or category of costs, should the Court consider it appropriate to do so: see e.g. Hudson v Sigalla (No 2) at [30] (‘Sigalla’). The Court is able to adopt its own procedures in inquiring into costs, is able to be flexible in how it conducts that inquiry, including by the obtaining of suitable assistance whether by referee’s report or other reporting, and is able to acquire the level of detail needed to make a determination that is fair, logical and reasonable.
[19]… a lump sum costs order is not mandated in all instances. In all cases it is a matter for the Court to exercise the discretion given to the Court by the Federal Court Act and the Rules as appropriate: see Sigalla at [18]-[19].
[20]There is no particular characteristic that a case must possess for it to be suitable for the making of a lump sum costs order. Particular circumstances that may make a lump sum order especially appropriate include where in a large and complex commercial matter it would save the time, trouble, expense and aggravation of a taxation; where a taxation would require the parties to consume additional time and incur additional expenditure prolonging already protracted litigation; and generally to avoid an ongoing, counter-productive dispute as to costs, in the interests of achieving finality.
The exercise of fixing a lump sum is “one of estimation or assessment and not of arithmetic calculation or precision”, the approach must be “logical, fair and reasonable”, however the rule contemplates the “application of a much broader brush than that applied on taxation”, and the power is available “whenever the circumstances warrant its exercise”. see e.g., authorities I summarised in Henley Arch Pty Ltd v Del Monaco (No. 2) [2020] FCCA 1911 at [19].
Self-evidently, a fixed sum order avoids the time and expense to both parties of a contested taxation (noting that assessment in accordance with the Costs Schedule is unlikely to be complex). As Katzmann J said in Hudson v Sigalla (No 2) [2017] FCA 339, at [55]‑[56], however, there is a need for claims made for fees charged by lawyers to disclose “discretion and conservative moderation”, having regard to the obligation imposed by s 37N of the Federal Court of Australia Act 1976 (Cth) (FC Act), and in this Court, the overarching purpose in r 1.04 of the GFL Rules.
In Seafolly Pty Ltd v Maddern (No 6) [2015] FCA 1369, Tracey J considered authorities applying a discount in awarding a lump sum costs order (which revealed discounts ranging from 15% to 60% on actual costs). At [35], observing that in the end the methodology adopted by other cases is of assistance, but cannot be determinative, his Honour stated that the Court is required to have regard to the exigencies of the particular case and to apply the principles (I have referred to above) with a view to reaching a logical, fair and reasonable figure. His Honour observed at [38] that:
The authorities establish that a discount should be applied to actual costs incurred by the party seeking a gross sum order. The discount is intended to take account, not only of the inevitable reduction in the amount awarded as a result of a taxation on a party/party basis, but also to recognise that no such taxation has occurred and that any estimate of its outcome is just that and that a further allowance may be necessary in order to ensure fairness to the party against whom the order is made. Both underestimation and overestimation are, to the extent possible, to be avoided.
Costs where no hearing on the merits
In appropriate cases, the Court may make an order for costs in circumstances where there has been no hearing on the merits of a matter, due to the moving party no longer wishing to proceed with the application. Rule 13.02 GFL Rules expressly provides that in this Court a party may apply for costs in the case of discontinuance.
Generally it is not the function of the Court to conduct a hypothetical trial, or make a prediction as to the outcome of a hypothetical case in assessing the degree of success or failure achieved by a party in proceedings in which there has been no determination of the merits: see e.g., JT Stafford & Son Ltd v Lindley (No 2) [1969] 3 All ER 1122 at p1124; Rickus v Motor Trades Association of Australia Superannuation Fund Pty Limited (2010) 265 ALR 112; [2010] FCAFC 16 at [118]-[119]; FCA US LLC v Mahindra Automotive Australia Pty Ltd [2021] FCA 1091, at [35(e)]. As the above summary of principles relevant to indemnity costs shows, however, the reasonableness of the parties’ behaviour may be a factor taken into account by the Court in the exercise of its discretion to award costs.
THE PARTIES’ SUBMISSIONS
The Respondents
The Respondents submit (as did Mr Simpson in his affidavits) that the application ought not to have been brought because, they say:
(a)in 2018, before the proceeding was commenced, they made good faith efforts to demonstrate to the Applicant that the first respondent independently created Eggshell Skull;
(b)there was no evidence of access to or copying by the first respondent of the Applicant’s work or any of the other materials. The case on access was “speculative at best, involving fancy layered with conspiracy”, and by the time they went on affidavit in early October 2019, and verified discovery on 4 November 2019, the case was, “on any properly objective view, hopeless”; and
(c)a review of the Applicant’s chart of alleged similarities shows that the majority of the similarities appear reasonably attributable to common English language, as well as similarities in the underlying stories and facts.
The Respondents argue that if the Applicant had “focussed on the two real issues in dispute and the matter had proceeded swiftly towards trial on the separate questions without more, the position with respect to costs might perhaps be different”. They say this is not what happened, but that instead she made unfounded allegations against the Respondents “amounting to fraud, perjury, and document forgery”, and “aggressively and persistently pursued issues irrelevant to the real issues in dispute, namely the factual truth of Eggshell Skull, and the first respondent’s experience of sexual abuse”, which consumed their time and resources. They characterise seeking, obtaining, filing and serving the Affidavit as “the most egregious and hurtful instance” of the Applicant’s conduct.
The Respondents submit that the Applicant’s conduct of the litigation was unsatisfactory, she filed “voluminous and prolix affidavits that were objectionable”, made interlocutory applications which were speculative and hopeless, and did not cooperate in narrowing the issues in dispute and repeatedly sending correspondence to Chambers in respect of issues that had been dealt with by the Court.
The Respondents submit that the combination of the above warrants the award of indemnity costs. They assure the Court “this is not to punish the Applicant but to compensate the respondents fully because it was unreasonable for the applicant to have subjected the respondents to the expenditure of costs”.
The Applicant
The Applicant submits (as did Mr Irwin in his affidavit) that:
(a)she exercised her rights to seek relief in this Court, intended to permit individuals with limited financial means have access to Courts at a lesser scale of costs and in a quicker time than previously the case in the Federal Court. Any assessment of costs should be at the Costs Schedule amounts because the matter was initiated in this Court;
(b)she identified a great many similarities and inclusions in Eggshell Skull that gave rise to the belief that her work had been provided to the first respondent and copied in Eggshell Skull. She devoted considerable time and energy to demonstrating how the first respondent could have gained access to her work;
(c)the Respondents exercised their rights to defend the matter. That they say there is no case to answer does not mean the case is doomed to fail;
(d)the Respondents acknowledged that there were considerable similarities between the Applicant’s and the first respondent’s work, but their position remained these were due to coincidences and general use of language;
(e)at the time when the Applicant was able to obtain counsel advice, she was advised that the quantum of similarities alone gave rise to suspicion, and was evidence of substantial copyright rather than mere coincidence;
(f)the materials provided by the Applicant were provided not to cause the Respondents to incur costs through having their representatives read over them but to demonstrate the extent to which the Applicant believed her work was replicated and used;
(g)the sum of $150,000 sought by the Respondents is exorbitant, punitive, and serves as a serious deterrent to litigants who have a reasonable cause of action but limited or no funds;
(h)ultimately, following directions hearings and a deterioration in the Applicant’s health, she gave instructions to discontinue; the application as amended was dismissed, and the Court noted the Applicant’s assurance she would not bring the matter again (see above at [7]).
The Applicant submits indemnity costs are not appropriate in the circumstances; ultimately it is for a Court to hear argument and analyse documents and materials to determine the prospects of success. This is not a case where the application was brought ‘high handed’, with ‘no chance of success’, nor was it ‘hopeless’, or brought and prosecuted ‘not for the bona fide purpose of protecting and enforcing a legal right, but to achieve an ulterior or extraneous purpose’. Contrary to the Respondents’ submission, there were no “allegations of fraud made knowing them to be false, and the making of irrelevant allegations”.
The Applicant held a genuine belief based on her provision of her manuscript to publishers, the chronology at [19] - [20], and her observations that the second book – Eggshell Skull was “richly laced with inter alia, ideas, concepts, imagery and language that was included in the Applicant’s manuscript”. She submits the level and degree of copying was substantial, and clear enough to give rise to more than reasonable suspicion. There was a prima facie case to answer.
The Applicant acknowledges that her case on access as articulated at the first case management hearing was difficult to prove but [was] certainly more than speculative. It was not a matter of fancily layered conspiracy. To seek a higher level of costs because an applicant put together a more complex application is not a reason to punish her from a costs perspective.
Further, the Respondents did not make every effort to provide materials to prove independent copying, viz., the 2018 inspection, and exhibits were claimed confidential, and only provided in October/November 2019 under confidentiality.
The Applicant’s solicitor submits her circumstances are relevant. In sum:
(a)whilst for a time a solicitor, she has surrendered her practicing certificate, and as at April 2020 had not worked for at least 12 months. She has no income, no assets and no means;
(b)she suffers severe PTSD as a result of being sexually abused when a child. Her attempts to have the perpetrator prosecuted have further traumatised her, and the proceeding has further exacerbated her trauma;
(c)she has recently been diagnosed with severe hypertension, and with left ventricular hypertrophy, and her mental health is fragile. In support, see the medical reports.
The Applicant accepts that the Court has ultimate discretion on costs. She submits that she sought relief in the appropriate jurisdiction, the parties ought to bear their own costs, however if the Court makes an order for costs against her this Court’s scale is the appropriate scale.
COSTS SCHEDULE AND AMOUNTS
As I have said, the Costs Schedule is a Court events-based scale. Events are identified by item number and description.
By reference to the table in Schedule 1, Part 1 of the 2001 Rules, (being that in force at the time the costs were incurred, and the application for costs was made, and the amounts there specified) items in the Costs Schedule possibly relevant to this proceeding - including for final hearing - are as follows:
Table 1
Item Description Amount for a general federal law proceeding (including GST) 2
Initiating or opposing an application which includes interim orders (other than procedural orders) up to the completion of the first court date
Both:
(a) $3,744; and
(b) The daily hearing fee mentioned in item 13 that applies to the hearing
3
Interim or summary hearing – as a discrete event
Note: this stage applies to an interim application or a summary proceeding of a type not otherwise addressed in this fee structure. It does not include the item 1 or 2 component.
Both:
(a) $1,867; and
(b) The daily hearing fee mentioned in item 13 that applies to the hearing
6
Preparation for final hearing – one day matter
$6,728
7
Preparation for final hearing – 2 day matter
$10,111
9
Final hearing costs for attendance of solicitor at hearing to take judgment and explain orders
Both:
(a) $305; and
(b) The daily hearing fee mentioned in item 13 that applies to the hearing
12
Advocacy loading
50% of the daily hearing fee mentioned in item 13 that applies to the hearing
13
Daily hearing fee
Either:
(a) For a short mention - $305; or
(b) For a half day hearing - $1,120; or
(c) For a full day hearing - $2,241
14
Disbursements – Court fees and other fees and payments to the extent that they have been reasonably incurred
The amount of the fees and payments
Costs in the proceeding according to Costs Schedule
Applying the above items to the Court events in this proceeding, the amount of costs if allowed assessed at the Costs Schedule, giving the Respondents the benefit of some preparation for final hearing, and attendance on judgment, and full disbursements (but excluding GST) would be as follows:
Table 2
Item Court event in the proceeding Amount applicable 2
First Court date – 4 September 2019 hearing (half day):
$3,744 + $1,120 = $4,864
3
Second Court date – 24 October 2019 hearing (half day):
$1,867 + $1,120 = $2,987
3
Third Court date – 18 November 2019 hearing (half day):
$1,867 + $1,120 = $2,987
3
Fourth Court date – 2 December 2019 hearing (half day):
$1,867 + $1,120 = $2,987
6
Preparation for final hearing – allow 1 day
$6,728
9
Final hearing costs for attendance of solicitor at hearing to take judgment and explain orders
(delivery of judgment, short mention)
$305 + $305 = $610
Sub-total of above items $21,163 14
Disbursements – Court fees and other fees and payments to the extent that they have been reasonably incurred
$48,714.70 (note, excluding GST)
Comprising Counsel fees, Court transcript, travel and courier costs)
Grand total of above (all items): $69,877.70 CONSIDERATION
It will be apparent from the following that I do not accept either party’s submission in its entirety. Taking into account the principles I have referred to above, and having had regard to, and considered, the chronology and procedural history of the proceeding, the Court appearances and subject matters, the parties’ evidence on costs, and their submissions, for the following reasons I have concluded that the Applicant should pay the Respondents’ costs, but not entirely as sought by the Respondents, nor at the Costs Schedule. In the exercise of my discretion I decline to award costs entirely on an indemnity costs bases, according to the Federal Court Scale, or at the Costs Schedule.
First, I consider that it is not appropriate in the circumstances of this case that there be no order as to costs. The proceeding was not discontinued at a preliminary or early stage. It was only after 3 extensive case management hearings, active case management on the part of the Court, and the filing of the parties’ evidence, and discovery, that the Applicant sought to discontinue her application. It follows that I reject the Applicant’s submission that each party bear their own costs.
Secondly, given the above recitation of the dispute, the procedural history, and the Court appearances, I consider that the Costs Schedule amount of $69,877.70 (see Table 2 above) does not compensate the Respondents for the costs properly and reasonably incurred by them in the proceeding. I am mindful that the Applicant brought her proceeding in this Court, and that an order applying the Costs Schedule is the default order in the Court, however, noting the observations I summarise at [86], the Applicant was on notice from the first Court date that the Respondents may later seek costs at the Federal Court Scale (see above at [32]), and was further put on notice by the Concise Responses: see above at [82].
Lump sum order
Thirdly, the parties have spent considerable time and expense in the proceeding. It is apparent from the material before me that the parties’ (by which term I include solicitors) interactions became increasingly and mutually fractious and argumentative. A lump sum order provides finality to the litigation, and will minimise further expense, delay, and aggravation, which I consider is a benefit to all parties. In these circumstances, I consider that it is logical, fair and reasonable and in all parties’ interests to make a lump sum order. I will so order.
Proceeding in this Court was appropriate and in good faith
Fourthly, I do not accept that the proceeding should never have been brought or continued.
I accept that the Applicant brought the proceeding in good faith, and based on her belief genuinely held that similarities in ideas, concepts, imagery, certain expressions and biography showed that her work had been copied. I accept that the Applicant brought the proceeding in this Court as an appropriate forum for an individual rights holder to seek relief in respect of copyright.
Mention has been made of the alleged similarities, and the parties’ differing explanations for them. I do not consider it unreasonable for both parties to wish to ventilate their cases and to have the Court determine the issue of copyright infringement.
Whilst the individual parties have filed affidavits, and the first respondent has stated on oath that she independently created her manuscript, the matter has concluded without going to hearing, and it follows, without any deponent’s evidence being tested. I do not consider it is appropriate to conduct a hypothetical trial in these circumstances. I do not propose to do so under the guise of a costs order. Nor is it appropriate to express any views on the Applicant’s chart of similarities. I decline the parties’ urging that I do so.
Pre‑litigation attempts do not justify special costs order
Fifthly, I do not accept that it follows from the Respondents’ offer and participation in a pre‑litigation inspection that the proceeding should not have been brought. Among other concerns, the Applicant was not able to see and consider the documents.
The inspection as evidenced by the Respondents in their costs material was circumscribed. The documents made available were claimed strictly confidential, available only to Ms Johnson, and only on the single occasion of her attendance at the Respondents’ solicitors’ office. Ms Johnson was permitted to note and disclose only the titles of the documents, whether listed similarities appeared in the documents, and if so at what date. She viewed the documents only at the inspection, and only for the purpose of providing a conclusion of her opinion of plagiarism.
The documents made available for inspection comprised several documents – the description of the documents differs as between Mr Simpson, Ms Palfreyman and, in the correspondence in evidence before me. I accept that this difference may be simply a matter of difference in nomenclature, and not substance, however any confusion engendered thereafter is unfortunate.
The Respondents claim that because of this pre‑litigation inspection the Applicant’s claim should not have been brought, and it follows they should have their costs including of all pre‑litigation disputes (I assume this is the relevance of including reference in Simpson #1 to the Applicant’s Facebook post). I do not accept this submission. Whilst I accept the inspection was well intentioned on the part of all participants, the terms on which it was conducted cannot be said to be reasonable or sufficient so as to render the Applicant exposed to costs by her future action in bringing and maintaining the proceeding.
No indemnity costs order
Sixthly, I do not accept that the present is an appropriate case in which to order indemnity costs.
I accept that both authors have experienced hurt and distress, including in the fact and conduct of the proceeding. I accept the parties’ respective solicitor’s evidence in this regard. An award of indemnity costs in favour of the Respondents, however, is not the appropriate response. I do not consider that such an award is reasonable, or fair.
Whilst the Respondents disavow any punitive element in their application for indemnity costs, statements in their evidence on costs and in submissions disclose a real, deep and continuing antagonism, and suggest a continuing desire to have the Applicant pay for the stated hurt and distress caused in the proceeding. The documents and instances asserted to be the making of unfounded allegations by the Applicant “amounting to fraud, including allegations of perjury and document forgery”, objectively considered, do not bear the weight of that characterisation. It does not follow from the obtaining of the Affidavit, and the Applicant’s obdurate persistence that it was relevant, that indemnity costs should be ordered for the entirety of the Respondents costs.
An award of indemnity costs in this proceeding would be punitive. I do not accept that that is the proper role of an award of costs in the individual circumstances of this proceeding, and of each of the parties. I do not so exercise my discretion.
Non-routine and complex proceeding
Seventhly, it is to overstate the matter to describe the proceeding as of a non‑routine and complex nature, so as to attract the Federal Court Scale in order to compensate the Respondents for all their costs. The matters claimed in Simpson #2 as supporting that description, if intended to encompass the whole of the proceeding, are exaggerated.
Viewed objectively, the Respondents’ justification for application of the Federal Court Scale is principally concerned with matters relating to, or ventilated at the November hearing. From my review of the November hearing, in the context of the Court documents and overall case management of the proceeding, I am persuaded that the November hearing was complex and not routine, and that the Respondents costs for that event should not be limited to the Costs Schedule item, as the event-based item and amount would not reasonably compensate the Respondents for the November hearing.
Turning to the remaining matters the Respondents rely on as justifying their application for costs at the Federal Court Scale, none of the allegations of copyright infringement, the length of the copyright works in suit, the number of parties, or the number of case management hearings (including the November hearing) is out of the ordinary. The Respondents confuse the Applicant’s assertions with an objective assessment as to the nature of the remedies sought and the means of possible access included several possibilities.
The final hearing was set down at the first case management hearing, and scheduled in approximately 4 months thereafter. This is a reasonably short period.
It was clear from the first case management hearing that the question of copyright infringement was concerned with the reproduction right in copyright in a literary work by another literary work, and claimed access in a limited period, both of which reproduction and access were clearly denied.
It is apparent from the above review of Court appearances that the Court engaged in active and detailed case management of the proceeding at each appearance, and provided guidance on the Court’s requirements for the efficient and cost effective conduct of the proceeding. Whilst the hearings took time – each ran for approximately 2 and a half to 3 hours - and a number of issues was dealt with at these appearances which issues were not necessarily simple or mundane, I do not consider that the proceeding as a whole gave rise to complex legal or factual issues.
That said, however, matters raised by the Applicant at the November hearing were repetitive of earlier hearings, unreasonable, and groundless. My rulings and orders make that clear.
Leaving aside affidavits directed to service or costs, and from the foreshadowed forensic IT expert, the Applicant filed 4 affidavits in her name (including on interlocutory and case management matters), and affidavits from 2 other people. That the Applicant’s affidavits comprised a mix of submission, opinion, and matters of fact should have been readily apparent to the Respondents’ legal representatives and treated accordingly. Leaving aside Mr Simpson’s 2 affidavits, the Respondents filed affidavits from 3 people. Each was short.
Both parties contributed to costs being incurred
Eighthly, I consider that both the Applicant and the Respondents – that is, both parties - contributed to the costs incurred in the conduct of the proceeding. Inter alia, this is evident in the correspondence placed before me, and in the Court appearances. Both parties perceived slights, and expressed distrust and suspicion, whether or not present or intended. This led to further expense, delay and aggravation.
Further, matters of confidentiality and discovery vigorously exercised the parties and each contributed to their own costs. It suffices to non-exhaustively note the following.
The Applicant was entitled to relevant discovery to test access. The existence of drafts of a published literary work and the contents of a draft at various times may be relevant in some chronologies of access in some proceeding. The breadth of discovery sought by the Applicant, and her subsequent persistence in further discovery, however, tested the bounds of reasonableness, and unnecessarily increased costs.
The Respondents’ insistence that draft manuscripts be kept confidential, and initially thus from the Applicant – which position the Respondents’ revived after the October hearing, the Respondents’ initial inability to disclose some drafts claimed written before 31 August 2017 because of problems with the third party program used in writing the manuscript, and the apparently differing accounts or imprecise descriptions of pre‑September 2017 communications between the first respondent and the third respondent, whilst each may be explicable and not intending to engender distrust, each contributed to continuing issues in the proceeding, and increased their costs.
Applicant’s persistence
Ninthly, I do not consider that the Applicant’s beliefs and conduct at the first and second case management hearings, whilst misguided, should sound against her in the costs amounts sought. I consider that the Costs Schedule amounts appropriate. However, the Applicant persisted with these beliefs and sought to re-agitate matters notwithstanding the Court had impressed upon her at the first and second case management hearings that they were not relevant and could not be maintained.
Returning to matters to which I have referred above, I accept the Respondents’ submission that the Applicant’s conduct in relation to the subject matters of the 4 November 2019 application in a case and the 18 November 2019 case management hearing, justifies a costs order other than according to the Court Schedule for that hearing and application. So too, I consider that the Respondents are entitled to costs for the 2 December hearing, and thereafter, but not in the amounts sought.
Amounts sought
Finally, I am satisfied that the engagement of Counsel was appropriate and the amounts of the disbursements reasonable, and will be ordered, subject to an overall discount for a lump sum order.
In the individual circumstances of this proceeding, that the Applicant was a single individual, and having regard to the number and complexity of the Court appearances, in the exercise of my discretion I am not persuaded that the total costs incurred and sought by the Respondents show that discretion and conservative moderation to which Katzmann J referred in Sigalla.
It is apparent from the categories of work deposed to by Mr Simpson, and his estimate of an indemnity costs order, that the total amount comprises all costs incurred in relation to the Respondents’ interactions with the Applicant, not limited to the proceeding and the defences stated in the Concise Responses.
Quantum of costs
Costs Schedule, Federal Court Scale and Indemnity costs each applied in part
For the foregoing reasons, in the particular circumstances I consider that a fair and reasonable broadbrush approach is to award costs payable by the Applicant in a lump sum, comprising a mix of Costs Schedule, Federal Court Scale, and indemnity costs, calculated by reference to the Respondents’ categories of work as deposed to by Mr Simpson (but excluding certain categories), and then to apply a lump sum reduction. I calculate the amount as follows:
Table 3 – costs ordered
Respondents’ category of work claimed Amount and Rate (a)
Pre-litigation work
No amount
(b)
Re claims against Applicant
No amount
(c)
Up to and including first Court date
Costs Schedule, item 2, $4,864
(d) –(e)
Preparation of concise responses, and affidavits
No amount
(f)
Further consideration of claim and further documents, up to and including second Court date – 24 October 2019:
Costs Schedule, item 3, $2,987
(g)
Discovery
No amount
(h)
Interlocutory disputes, correspondence, and additional case management hearings (Third Court date – 18 November 2019, and Fourth Court date – 2 December 2019):
allow $30,000
(h)
Fourth Court date – 2 December 2019 hearing (half day):
Costs Schedule, item 3, $2,987
(i)
Preparation for final hearing
Costs schedule, item 6, $6,728
(j)
Recovery of legal costs and costs application
Allow $4,000
Sub-total of above items $51,566 Disbursements –Counsel fees, Court transcript, travel and courier costs – claim $48,714.70
Allow in full - $48,714.70
Preliminary amount calculated: $100,280.70
Having regard to the finality of a lump sum order, I round down the preliminary amount to $100,000 and apply a lump sum discount of 15% to that amount. I will allow time to pay.
CONCLUSION
The amount I will order the Applicant to pay the Respondents by way of costs is the total fixed amount of $85,000. Given the delay in delivering these reasons, and the current circumstances of the Covid-19 pandemic I will allow a period of 90 days for the Applicant to pay this amount. I will so order.
Another matter
The suppression order made 4 September 2019 will be made permanent.
I certify that the preceding one hundred and forty-seven (147) numbered paragraphs are a true copy of the Reasons for Judgment of Judge Baird. Associate:
Dated: 20 January 2022
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