Matthews, Grant v ACP Publishing Pty Ltd

[1998] FCA 1683

FEDERAL COURT OF AUSTRALIA

Costs – whether partially successful applicant should be awarded costs – whether matter was a test case.

GRANT MATTHEWS V ACP PUBLISHING PTY LIMITED

NG 730 OF 1997

JUDGE:         BEAUMONT J.
PLACE:         SYDNEY
DATE:           15 DECEMBER 1998

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	NG 730 of 1997

BETWEEN:	GRANT MATTHEWS APPLICANT
AND:	ACP PUBLISHING PTY LIMITED RESPONDENT
JUDGE:		BEAUMONT J.
DATE OF ORDER:		15 DECEMBER 1998
WHERE MADE:		SYDNEY

THE COURT ORDERS THAT:

1. The respondent pay the applicant's costs of the question whether the Court had power to award damages in lieu of or in addition to, the grant of any injunction or its equivalent (in the form of an undertaking to the Court);  otherwise make no order for costs.

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

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	NG 730 of 1997

BETWEEN:	GRANT MATTHEWS APPLICANT
AND:	ACP PUBLISHING PTY LIMITED RESPONDENT

JUDGE:	BEAUMONT J.
DATE:	15 DECEMBER 1998
PLACE:	SYDNEY

REASONS FOR JUDGMENT (NO. 2) (ON COSTS)

BEAUMONT J:

In my reasons for judgment dated 10 September 1998 I reserved, at the specific request of counsel for the respondent, the question of costs.  I have now heard full argument on the question. 

As I indicated in the course of argument, I will approach the matter in principle along the lines of the reasoning in Canvas Graphics Pty Limited v Kodak (Australasia) Pty Limited, Beaumont, Lee and Von Doussa JJ, unreported, 30 June 1995;  that is to say, in principle, in an appropriate case, an applicant may be deprived of costs where there is only partial success after an exaggerated claim has been made.  A similar approach is now indicated in a recent decision of the English Court of Appeal in Butcher v Wolfe, 30 October 1998, unreported.

The correspondence between the solicitors for the parties shows, in essence, the following:

1. The respondent was prepared to offer the applicant the sum of $7,000 plus costs together with an undertaking not to reproduce, publish or authorise the reproduction or publication of the photograph without prior written consent but upon the footing that the proceedings be discontinued and that a confidential deed of release be entered into.

1. That the applicant, for his part, would be prepared to settle the damages aspect of the claim in the sum of $50,000 inclusive of costs, but coupled with an undertaking by the respondent along lines similar to that already suggested by the respondent, together with the entry into a confidential deed of release, with the proviso that the applicant was to be at liberty to state, “that the proceedings were settled to the satisfaction of the parties after (the respondent) gave an unspecified undertaking and paid an unspecified sum”.

I accept, as Falconer J observed in Colgate Palmolive Limited v Markwell Finance Limited [1990] RPC 197, that in the analogous area of passing off or other proceedings in vindication of property rights, in particular intellectual property rights including copyrights, “a person whose right has been infringed is entitled to come to court to have his right pronounced upon and vindicated and to an injunction against the infringer…”, and that “as to costs in such a case the general rule has been that the plaintiff is entitled to his costs of obtaining the injunction ... and that, even if damages awarded do not exceed any payment in” (at 200).

In the present case, it appears that, although the parties seem to have reached common ground on the giving and acceptance of a private and confidential undertaking along the lines I have indicated, they were far apart on the amount of damages that the respondent should pay.  For that reason, the settlement package offered on behalf of each of the parties was found to be unacceptable to the other side.  The inevitable result was the litigation which ensued.  In that litigation, after the matter had proceeded some small distance at the final hearing, an undertaking to the Court was proffered on behalf of the respondent.  As I noted in my reasons dated 10 September 1998 (p 2), since that undertaking had an operation similar to an injunction, the applicant did not seriously contend that the Court should refuse to accept it in lieu of the injunction originally sought and I therefore accepted the undertaking as one given to the Court, and not merely as between the parties.

To that extent, the applicant vindicated his proprietary right. It was said in this connection that this process of vindication involved an element of the resolution of a “test case”. As I have indicated to counsel in the course of argument, I do not accept that this litigation had any element of a “test case” as that term is generally understood. It is true that the provision in question, namely s 35(5) of the Copyright Act 1968 (as it then stood), was not of long standing, but the critical language of the provision consists of the words - “that person made known, expressly or by implication, to the author of the work the purpose for which the work was required”. These words are ordinary English words, and there is no reason to regard them as a technical phrase which should require some special interpretation. I so interpreted them without the need for argument on the question. The issue, as I saw it, as my reasons for judgment indicate, is essentially a question of fact, involving the application of those ordinary words. I therefore do not propose to take into account, on the question of costs, the suggested element of a “test case” here.

I turn next to the element of damages.  So  far as the question of the amount of damages to be awarded is concerned, in my opinion, the reasoning in Canvas Graphics and Butcher v Wolfe is squarely in point here.  It emerges from the evidence which I have mentioned, that the applicant was seeking an amount in the order of some seven times that offered by the respondent;  and that the amount awarded to the applicant in my judgment, including pre-trial interest, was something less than a quarter of the amount offered by the respondent.  In those circumstances it was, in my assessment, unreasonable for the applicant to pursue that aspect of the claim in the light of the respondent's generous offer.  However, as I stated in my previous reasons (at pages 10 and following) there was a threshold question to be addressed on the issue of damages;  and that was the existence and nature of the Court's power to award damages, either in lieu of, or in addition to, an injunction or its equivalent (in the form of an undertaking to the Court).  This question is, as my reasons show, a complex one on which there is little authority and upon which I invited the parties to make written submissions at the conclusion of the hearing.  I received helpful submissions from both counsel.  However, in the event, I found that the Court did have the power contended for by the applicant.

Bearing in mind all the foregoing considerations, it appears to me that, in the exercise of my discretion, it is appropriate that there be no order for the costs of the proceedings, save that I order that the respondent pay the applicant's costs of the question whether the Court had power to award damages in lieu of, or in addition to, the grant of any injunction or its equivalent (in the form of an undertaking to the Court).

I certify that this and the preceding three (3) pages are a true copy of the Reasons for Judgment herein of the Honourable Justice Beaumont

Associate:

Dated:             15 December 1998

Counsel for the Applicant:	Mr R Cobden
Solicitor for the Applicant:	Gray and Perkins
Counsel for the Respondent:	D M Yates SC
Solicitor for the Respondent:	Gilbert and Tobin
Date of Hearing:	15 December 1998
Date of Judgment:	15 December 1998