Lift Shop Pty Ltd v Next Level Elevators Pty Ltd
[2024] FedCFamC2G 1300
•29 November 2024
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 2)
Lift Shop Pty Ltd v Next Level Elevators Pty Ltd [2024] FedCFamC2G 1300
File number(s): SYG 2118 of 2023 Judgment of: JUDGE BINGHAM Date of judgment: 29 November 2024 Catchwords: CONSUMER LAW – COSTS – dismissal of Application in a Proceeding seeking orders for forensic imaging and access – Respondents seek party-party costs up to 12 June 2024 and costs on an indemnity basis thereafter – costs awarded according to scale Legislation: Federal Circuit and Family Court of Australia Act 2021 (Cth) ss 190(2) and 214(3)
Federal Circuit and Family Court of Australia (Division 2) (General Federal Rules) 2021 (Cth) rr 1.04, 22.02, 22.04 and 22.09
Cases cited: Australian and International Pilots Association v Qantas Airways (No 3) [2007] FCA 879
FSJ18 v Minister for Immigration, Citizenship and Multicultural Affairs [2024] FCA 433
Re Minister for Immigration and Ethnic Affairs; Ex parte Lai Qin (1997) 186 CLR 622
Division: Division 2 General Federal Law Number of paragraphs: 34 Date of last submissions: 15 October 2024 Date of hearing: On the Papers Place: Melbourne Solicitor for the Applicant: Gilbert + Tobin Counsel for the Respondents: Mr Cordiner KC Solicitor for the Respondents: Allens ORDERS
SYG 2118 of 2023 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)
BETWEEN: LIFT SHOP PTY LTD (ACN 109 724 647)
Applicant
AND: NEXT LEVEL ELEVATORS PTY LTD (ACN 161 047 016)
First Respondent
MADELINE KATERS
Second Respondent
ORDER MADE BY:
JUDGE BINGHAM
DATE OF ORDER:
29 NOVEMBER 2024
THE COURT ORDERS THAT:
1.The Applicant pay the Respondents’ costs of the Application in a Proceeding filed 7 June 2024 in accordance with Schedule 2 of the Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth) as agreed, where costs cannot be agreed the cost will be taxed.
Note: The form of the order is subject to the entry in the Court’s records.
Note: The Court may vary or set aside a judgment or order 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 BINGHAM:
The Respondents seek costs with respect to an Application in a Proceeding filed on 7 June 2024 by the Applicant (June 2024 Application) seeking forensic imaging and forensic access orders. The June 2024 Application was initially listed for hearing before me in person at the Sydney Registry on 2 August 2024. On 2 August 2024 the June 2024 Application was adjourned to a date to be fixed for the purpose of making directions. Costs were reserved on this occasion. The June 2024 Application was listed before me on 26 September 2024 for case management.
At the case management hearing the Applicant sought to have the June 2024 Application adjourned again. I informed the Applicant that the June 2024 Application could either be set down for hearing or dismissed. The Applicant elected with the consent of the Respondents to have the June 2024 Application dismissed and I made orders giving effect to the dismissal. At the request of the Respondents orders were also made for submissions as to costs in relation to the June 2024 Application and for those costs to be determined on the papers. These are the Reasons for Judgment in relation to the Respondents’ application for costs.
BACKGROUND
The substantive proceedings were issued on 22 December 2023 under Schedule 2 of the Competition and Consumer Act 2010 (Cth). It is alleged that the Respondents breached an undertaking and engaged in misleading or deceptive conduct and/or tortious deceit which caused loss and damage to the Applicant. The Applicant seeks declarations, permanent injunctions, delivery up of confidential information, damages, an account of profits, interest and costs. The Respondents oppose the making of declarations and granting the relief being sought by the Applicant.
The June 2024 Application sought “forensic imaging and access orders” pursuant to rule 14.01 of the Federal Court Rules 2011 (Cth). The Respondents opposed the scope of the orders sought.
Orders were made on 13 June 2024 listing the June 2024 Application for interlocutory hearing and requiring the filing of materials. At the request of the parties Orders amending the timetabling for filing were made on 28 June 2024 and 18 July 2024.
On 1 August 2024 at 8:49pm my Chambers received a Minute of Proposed Consent Orders from the parties (Minute). I was not minded to make orders in Chambers in the form proposed by the parties. The Minute was unsatisfactory in that a declaration as required by rule 14.02 of the Federal Circuit and Family Court of Australia (Division 2) (General Federal Rules) 2021 (Cth) (GFL Rules) and s 176(2) of the Federal Circuit and Family Court of Australia Act 2021 (Cth) (FCFCOA Act) had not been made and related to a timeline for dealing with “proposed categories of discovery”, and simply adjourned the June 2024 Application.
At the interlocutory hearing on 2 August 2024 I sought submissions as to why I should make orders as proposed in the Minute. After hearing submissions I made a declaration that it was appropriate in the administration of justice to allow discovery in these proceedings. I made Orders referring the issue of discovery to a Registrar of this Court for a case management hearing, if necessary, on a date to be fixed by the Registrar and that the June 2024 Application be adjourned to a date to be fixed for further directions.
The Court received no correspondence from the parties regarding any outstanding issues of discovery, no request was made for a case management hearing before a registrar to deal with any outstanding issues regarding discovery and no further material was filed by the parties. The June 2024 Application remained extant.
Given the June 2024 Application remained on foot, and the Court’s overarching purpose to facilitate the just resolution of disputes according to law as quickly, inexpensively and efficiently as possible, on 29 August 2024 I listed the June 2024 Application for a case management hearing on 26 September 2024.
On 23 September 2024 the Respondents filed an Application in a Proceeding seeking to amend their Defence, by withdrawing admissions. This was programmed at the case management hearing and listed for an interlocutory hearing on 16 December 2024.
The substantive matter has been before the Court four times since proceedings commenced with Orders made on twelve occasions. The matter has not been referred to mediation and no evidence has been filed other than evidence which relates to interlocutory skirmishes between the parties.
COSTS APPLICATION
The Law
Rule 1.04 of the GFL Rules and s 190(2) of the FCFCOA Act deal with this Court’s overarching purpose. Importantly the GFL Rules and the FCFCOA Act require the facilitation of the just resolution of disputes as quickly, inexpensively and efficiently as possible.[1] Further in giving effect to the overarching purposes the parties must avoid undue delay, expense and technicality.[2] Importantly, the objectives of the FCFCOA Act includes the efficient disposal of the Court’s overall caseload and the disposal of all proceedings in a timely manner.[3]
[1] Federal Circuit and Family Court of Australia (Division 2) (General Federal Rules) 2021 (Cth) (GFL Rules), r 1.04(1) and Federal Circuit and Family Court of Australia Act 2021 (Cth) (FCFCOA Act), s 190(2)(a).
[2] GFL Rules, r 1.04(2) and FCFCOA Act, ss 190(2)(b) and (e).
[3] FCFCOA Act, ss 190(c) and (d).
Rule 22.02 of the GFL Rules relevantly provides:
Order for costs
(1)An application for an order for costs may be made:
(a) at any stage in a proceeding; or
(b) within 28 days after a final decree or order is made; or
(c) within any further time allowed by the Court.
(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; or
(d) set a time for payment of the costs, which may be before the proceeding is concluded.
The GFL Rules further provide at rules 22.04 and 22.09 respectively:
22.04 Costs reserved
If the costs of a motion, application or other proceeding are reserved, the costs reserved follow the event unless the Court otherwise orders.
[…]
22.09 Costs and disbursements
Unless the Court otherwise orders, a party entitled to costs in a general federal law proceeding (other than a proceeding to which the Bankruptcy Act 1966 applies) is entitled to:
(a) costs in accordance with Schedule 2; and
(b) disbursements properly incurred.
[…]
Costs orders operate to compensate a successful party, rather than punish an unsuccessful party where costs follow the event. An award of costs requires consideration of whether the party that is successful be permitted to recover so much of its costs as are reasonably incurred. The just resolution of disputes does not necessarily require that a successful party recover all of its costs and disbursements. It is within the discretion of the Court to determine the assessment of costs in the circumstances of the matter having regard to the objectives and overarching purpose of the Court.
The test as to whether indemnity costs should be awarded is whether the justice of the case might so require or whether there exists some special or unusual feature of the case to justice for the Court in departing from the ordinary practice: Australian and International Pilots Association v Qantas Airways (No 3) [2007] FCA 879. I am of the view that this is not the type of case where an award of indemnity costs is appropriate.
Schedule 2 of Part 1 of the GFL Rules provides for costs for general federal law proceedings other than migration proceedings. It is this scale of costs that will apply to any cost award that I might make with respect to the application before me.
The Respondents’ case
The Respondents relied upon written submissions filed 3 October 2024 and reply submissions filed 15 October 2024. The Respondents seek an award of costs on a party and party basis or alternatively on an indemnity basis because the June 2024 Application:
(a)Resulted in both parties incurring significant and unnecessary costs.
(b)Wasted the Court’s time.
(c)Was futile.
(d)Was unnecessary.
(e)Constituted the Applicant acting unreasonably; and
(f)The Applicant’s “eleventh hour decision” not to pursue the June 2024 Application supports the premise that the application should not have been brought in the first place.
The Respondents submitted that they undertook their own “pragmatic” imaging process once it was determined, on 27 May 2024, that that there could be information on devices that was relevant to the proceedings and the Applicant was well aware that the imaging had taken place and that this process had been undertaken for, among other reasons, to avoid the need for a foreshadowed application for forensic imaging by the Applicant.
On 12 June 2024, five days after the June 2024 Application was made, the Respondents’ Solicitors emailed the Applicant’s Solicitors proposing that the parties should proceed with a process of and timetable for discovery and that having regard to comments on Judge Baird at a case management hearing on 7 May 2024 it was appropriate for a process of discovery to occur before the parties put on their evidence.
The Respondents submitted at the hearing on 2 August 2024 and at the case management hearing on 26 September 2024 that the June 2024 Application was premature and that the appropriate course to be taken by the parties was to engage in discovery.
In response to submissions made by the Applicant with respect to this costs application, the Respondents assert that they:
(a)Did not, on 13 October 2023, represent to the Applicant that “no relevant documents” existed but rather stated that the Respondents’ solicitors had not at that stage identified any relevant documents in the possession of the Respondents which evidenced the conduct complained of; and
(b)Any new forensic imaging application made by the Applicant after discovery would not be the same as the June 2024 Application as the parameters of such application would be narrowed by the discovery process.
The Applicant’s case
The Applicant relied upon written submissions filed 10 October 2024. The Applicant contended that costs should be in the cause or alternatively reserved.
The Applicant referred to s 214(3) of the FCFCOA Act and the authority that the Court should exercise its discretion judicially not arbitrarily or capriciously: FSJ18 v Minister for Immigration, Citizenship and Multicultural Affairs [2024] FCA 433 at [30]. The Applicant also pointed to Re Minister for Immigration and Ethnic Affairs; Ex parte Lai Qin (1997) 186 CLR 622 at 624-5 for the principle that where the Court has not determined an application, it does not embark on a mini-trial of the issues and it would only make an adverse costs order if one of the parties acted unreasonably.
The Applicant submitted that:
(a)The June 2024 Application was not heard or determined by this Court; rather, the Applicant agreed to dismissal the of the Application, proposed by the Court, knowing it could re-lodge the same application later. Unreasonableness is therefore absent.
(b)The Respondents knew that the June 2024 Application was predicated on the Respondents’ assertions that they had no relevant documents. Pursuing discovery in the situation would have had no utility. This Court held the same view, being reluctant to make any discovery order without a declaration as to its necessity. The Respondents implicitly accepted this by agreeing to forensic imaging orders and undertook their own imaging in the face of the June 2024 Application.
(c)Once the Respondents changed their position on the existence of documents, in late July 2024, the Applicant acted reasonably in agreeing to pursue discovery. That decision was made to avoid unnecessary costs, once circumstances had changed. It is wrong for the Respondents to seek to punish the Applicant for this.
(d)Fourth, a costs order is premature. The Applicant has been permitted to file an identical application to its June 2024 Application, subject to how the discovery dispute has been determined. An adverse cost order now would need to be re-opened if this occurs. I do not accept this submission any new application for forensic examination will be as a matter of logic narrowed by the discovery process.
DETERMINATION
Should costs be awarded?
At the case management hearing on 26 September 2024 the proposal, by consent, with respect to the June 2024 Application was that it be adjourned again to an uncertain date in the future. Such a proposal was contrary to the Court’s overarching purpose, this application had been extant since June, affidavits and submissions had been filed by both parties, there had been undue delay and expense to both parties involved, the dispute required just resolution in these circumstances. I advised the parties that I was unwilling to adjourn the June 2024 Application and the matter could either be set down for hearing or dismissed.
It was the Applicant’s application, and it elected to have it dismissed with the consent of the Respondents rather than have it set down for hearing. The Applicant described this as them “agreeing” to the dismissal, which in its submission could not be considered unreasonable conduct. I reject this submission. I agree with the submission of the Respondents that the Applicant should never have bought this application or withdrawn it in circumstances where the:
(a)The Respondents were prepared to consent to forensic imaging orders for the preservation of evidence;
(b)The Respondents undertook a forensic imaging process;
(c)The Respondents provided a short draft minute of orders on 12 June 2024 regarding discovery being the next appropriate step; and
(d)The Applicant agreed on 31 July 2024 that discovery was in fact the appropriate next step two days prior to the listed date for hearing of the June 2024 Application in circumstances where both parties had filed affidavit material and submissions.
The conduct of the Applicant has caused the Respondents to incur unnecessary costs in defending the June 2024 Application and has wasted Court time. In these circumstances an award of costs to compensate the Respondents is appropriate.
I wish to make the following observation regarding the conduct of the proceeding before me: discovery is not as of right in this Court. The Court has an expectation that the parties and their legal practitioners will genuinely engage in an informal process prior to troubling the Court with applications. The parties to this proceeding and their legal advisers should keep this in the forefront of their mind.
I reject the argument made by the Applicant that the same forensic imaging application may be filed after discovery is complete. It begs belief that where the parties have genuinely engaged in informal and formal discovery that the same or identical application as the June 2024 Application could or would be filed. As a matter of logic the scope of any application would be narrowed by discovery and a new supporting affidavit and submissions would have to be filed.
As already stated, this is not a matter where indemnity costs are appropriate. I will order costs on scale in accordance with Schedule 2. Those costs will be limited to the costs of preparation and filing of affidavits and submissions in accordance with the Orders of Judge Baird made on 13 June 2024 and the appearance on 2 August 2024.
The parties had to prepare and file material for the Interlocutory Hearing listed on 2 August 2024 pursuant to Orders. Senior Counsel and Counsel were briefed and appeared at the Interlocutory Hearing. The provision of the consent orders was very late (8:49pm) the night before the Interlocutory Hearing and not in a satisfactory form necessitated the matter being called on in any event on 2 August 2024.
I will not make an order for costs with respect to the appearance on 26 September 2024 as the Respondents’ filed their own application in a proceeding which was also listed on 26 September together with the June 2024 Application for the purposes of case management and an appearance was required in any event.
Orders will be made accordingly.
I certify that the preceding thirty-four (34) numbered paragraphs are a true copy of the Reasons for Judgment of Judge Bingham. Associate:
Dated: 29 November 2024
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