Magic Menu Systems Pty Ltd v AFA Facilitation Pty Ltd

[1996] FCA 450

FEDERAL COURT OF AUSTRALIA       )No. QG 125 of 1995

QUEENSLAND DISTRICT REGISTRY   )

GENERAL DIVISION  )

BETWEEN:    MAGIC MENU SYSTEMS PTY LTD
  (ACN 050 409 704)

First Cross-claimant

AND:             MMS FRANCHISING PTY LTD
  (ACN 062 393 864)

Second Cross-claimant

AND:             A.F.A. FACILITATION PTY LTD

First Cross-respondent

AND:             WALTER CORNEILLE CLEMENT MARIE JANUS

Second Cross-respondent

AND:             KOBBLE CREEK PTY LTD
  (ACN 062 208 093)

Third Cross-respondent

AND:             GRAHAM BOYD SIMON and ANNE MARIE SIMON

Fourth Cross-respondent

MINUTES OF ORDERS

JUDGE MAKING ORDER:  Drummond J
DATE OF ORDER:  10 May 1996
WHERE MADE:  Brisbane

THE COURT ORDERS THAT:

1. As between the cross-claimants and the first and second cross-respondents, the costs of and incidental to the determination of the separate issues be reserved to the judge who deals with the cross-claim for damages against those cross-respondents.

1. There be liberty to all parties to apply with respect to these costs, should the cross-claimants not promptly pursue their claim for damages against the first and second cross-respondents.

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

FEDERAL COURT OF AUSTRALIA        )  No. QG 125 of 1995
QUEENSLAND DISTRICT REGISTRY    )
GENERAL DIVISION  )

BETWEEN:    MAGIC MENU SYSTEMS PTY LTD
  (ACN 050 409 704)

First Cross-claimant

AND:             MMS FRANCHISING PTY LTD
  (ACN 062 393 864)

Second Cross-claimant

AND:             A.F.A. FACILITATION PTY LTD

First Cross-respondent

AND:             WALTER CORNEILLE CLEMENT MARIE JANUS

Second Cross-respondent

AND:             KOBBLE CREEK PTY LTD
  (ACN 062 208 093)

Third Cross-respondent

AND:             GRAHAM BOYD SIMON and ANNE MARIE SIMON

Fourth Cross-respondent

Coram:           Drummond J
Date:              10 May 1996
Place:              Brisbane

REASONS FOR JUDGMENT

On 8 May 1996, I published reasons for making findings on certain issues ordered to be determined separately.  What was dealt with was the cross-claimants’ claim for,

among other things, an injunction against the first and second cross-respondents on the ground of their unlawful maintenance of certain proceedings brought against the cross-claimants by others.  The cross-claimants failed to obtain an injunction on the limited ground that they had failed to show a sufficient risk of future injury to warrant injunctive relief. However, they succeeded in obtaining findings in their favour on all other elements of the cause of action.

The first and second cross-respondents today submit that the ordinary rule, as it was described, that costs follow the event should apply and that the first and second cross-respondents should have their costs of the hearing of the separate issues.  In support of that submission, counsel referred me to a letter already in evidence from the solicitors for the first and second cross-respondents to the solicitors for the cross-claimants dated 12 April 1996, a letter written shortly before the hearing of the separate issues started, in which the solicitors for those cross-respondents said:

Furthermore, the material upon which you rely fails completely and utterly to establish special damage of a kind to complete the tort or torts which you allege.

That was, of course, an accurate foreshadowing of what happened at the hearing.  That statement was made in the context of an invitation by the solicitors for the first and second cross-respondents to the cross-claimants to discontinue their proceedings.  However, it was merely part of a general demurrer, if I can so put it, to the cross-claimants’ claim against the first and second cross-respondents because, as is apparent from the letter, not only was the point taken that there was insufficient proof of actual damage to complete
the cause of action, but the points were also taken that the cross-claimants were unable, on the evidence on which they relied at the hearing, to establish any of the other elements of the cause of action also.  The letter failed to predict accurately the outcome of the litigation in all those other respects.

Although the cross-claimants failed on their claim for injunctive relief against the first and second cross-respondents, their damages claim remains on foot.  There is no reason, so far as I can see, to doubt that that damages claim, as distinct from the claim for injunctive relief, was brought bona fide against the first and second cross-respondents, and there is no reason to doubt that the cross-claimants will pursue that claim for damages, as they are perfectly entitled to do.

The cross-claimants have been successful in the proceedings to date in obtaining determinations, binding on the first and second cross-respondents that all the elements of their causes of action in maintenance and champerty against those cross-respondents have been established save only for the requirement that there must be proof of actual damage before the cross-claimants can recover an award of damages from the first and second cross-respondents.

If the cross-claim proceeds on the claim for damages against those cross-respondents, the cross-claimants will be entitled to rely on the success they have achieved to date in making out their entitlement to those damages.  If they pursue the claim for damages and succeed in recovering an award from the first and second cross-respondents it would, in my opinion, be wrong to order that they should pay the whole or even a large part of the  costs of the proceedings in which I refused them injunctive relief.  Much of the hearing before me was taken up with issues other than that of actual damage, on which other issues the cross-claimants succeeded and which success settles those issues in respect of the damages claim that is still on foot. It seems to me inappropriate to order that the first and second cross-respondents have anything like full recovery of the costs of the hearing of the separate issues.

In my opinion, the judge who deals with the damages claim, if that claim is pursued, will be better placed than I to make a just order with respect to the costs of the proceedings involving the determination of the separate issues, which included the claim for injunctive relief.

I will therefore reserve all questions of costs as between the cross-claimants and the first and second cross-respondents of and incidental to the determination of the separate issues to the judge who deals with the cross-claim for damages against those cross-respondents.  There will be liberty to all parties to apply with respect to these costs should the cross-claimants not promptly pursue their claim for damages against the first and second cross-respondents.

I will indicate that I regard my order reserving the costs of and incidental to the hearing of the separate questions as involving the costs of today’s hearing also.

I certify that this and the preceding three pages

are a true copy of the reasons for judgment

herein of the Honourable Justice Drummond.

Associate:

Date:              10 May 1996