Naroth v Innovative Hair Loss Solutions Pty Ltd (No. 5)
[2013] FCCA 313
•17 May 2013
FEDERAL CIRCUIT COURT OF AUSTRALIA
| NAROTH v INNOVATIVE HAIR LOSS SOLUTIONS PTY LTD & ORS (No. 5) | [2013] FCCA 313 |
| Catchwords: PRACTICE AND PROCEDURE – Costs – apportionment of costs – certifying for counsel. |
| Legislation: Federal Circuit Court Rules 2001 (Cth) r.21.15 Federal Magistrates Court Rules2001 (Cth) |
| Cases cited: Naroth v Innovative Hair Loss Solutions Pty Ltd (No.3) [2013] FMCA 209 |
| Applicant: | NANDITA RAGINI NAROTH |
| First Respondent: | INNOVATIVE HAIR LOSS SOLUTIONS PTY LTD |
| Second Respondent: | DEREK BEST |
| Third Respondent: | DEBRA BEST |
| Fourth Respondent: | ALEXENDRA MCCLUNIE |
BY ORGINAL ACTION
| Applicant by cross claim: | INNOVATIVE HAIR LOSS SOLUTIONS PTY LTD |
| First Respondents by cross claim: | SUSHANTH NAROTH AND NANDITA RAGINI NAROTH TRADING AS S& R NAROTH |
| Second Respondent by cross claim: | NANDITA RAGINI NAROTH |
IN ACTION BY CROSS CLAIM
| File Number: | PEG 119 of 2010 |
| Judgment of: | Judge Lucev |
| Hearing date: | 17 May 2013 |
| Date of Last Submission: | 17 May 2013 |
| Delivered at: | Perth |
| Delivered on: | 17 May 2013 |
REPRESENTATION
| Counsel for the Applicant: | Mr D. Garnsworthy |
| Counsel for the Respondent: | Mr G. R. Dean |
| Solicitors for the Respondent: | Metaxas & Hager |
ORDERS
The applicant pay the respondents’ costs in the sum of $62 340.60 by 7 June 2013.
Certifies for counsel for the purposes of the advocacy loading under rule 21.15 of the Federal Circuit Court Rules 2001 (Cth).
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT PERTH |
PEG 119 of 2010
| NANDITA RAGINI NAROTH |
Applicant
And
| INNOVATIVE HAIR LOSS SOLUTIONS PTY LTD |
First Respondent
| DEREK BEST |
Second Respondent
| DEBRA BEST |
Third Respondent
| ALEXENDRA MCCLUNIE |
Fourth Respondent
BY ORGINAL ACTION
| INNOVATIVE HAIR LOSS SOLUTIONS PTY LTD |
Applicant by Cross Claim
| SUSHANTH NAROTH AND NANDITA RAGINI NAROTH TRADING AS S& R NAROTH |
First respondents by Cross Claim
| NANDITA RAGINI NAROTH |
Second Respondent by cross claim:
IN ACTION BY CROSS CLAIM
REASONS FOR JUDGMENT
(Ex tempore reasons edited from the transcript)
By the application before the Court today, the respondent seeks costs in these proceedings, pursuant to the Court’s judgment in Naroth v Innovative Hair Loss Solutions Pty Ltd &Ors (No. 3) [2013] FMCA 209. The Court made orders for the applicants and the respondents to file and serve written submissions and costs schedules and, in one way or another, those orders have been complied with, with both parties filing submissions on costs and, in the case of the respondents, some submissions in reply.
The applicants have subsequently, in their submissions in reply, revised the amount claimed with respect to costs, as a consequence of the applicant quite properly pointing out in her submissions that the costs had not been calculated according to the relevant amounts in the schedules, as they applied at the time of each event, bearing in mind the litigation commenced in July 2010 and there was a trial which extended over 11 separate days between February and September of 2011.
The respondents have revised their schedule, but as the Court has pointed out, it would appear that further revisions to that schedule may be necessary, at least in respect of the stage 5 amount and perhaps in respect of the amounts claimed, there being at least two applicable schedules on the submissions which have been put by Mr Garnsworthy. The applicant does not dispute that the respondents are entitled to costs but, given that the applicant was partially successful in relation to her claim, suggests a figure of 80 per cent of the relevant costs, as appropriate.
Both parties agree that sch.1 to the then Federal Magistrates Court Rules2001 (Cth) apply and, as the Court has indicated, the applicant says, quite correctly, that it is the schedule applicable from time to time during the course of the events in this litigation. The principal area of dispute is whether or not, and if so to what extent, the costs ought to be apportioned, having regard to a number of issues. One being the degree of success in respect to the litigation. Another being the question of the effect of the withdrawal and substitution of a counterclaim partway through the proceedings, either in terms of, in the respondents’ case, its effect upon the proceedings and in the applicant’s case, its effect in terms of preparation for the proceedings.
There is also the issue of whether the Court ought to take account of a rejected without prejudice, save as to costs, offer made before the commencement of the proceedings. In that regard, the Court notes and has specifically drawn to its attention, again quite correctly, that that offer was made on the Friday prior to a Monday trial and that is obviously, if that offer is to be a consideration in the exercise of the Court’s discretion as to the apportionment of costs to lateness of making, a factor to be taken into account on the authorities.
With respect to the respondent seeking costs, it seeks 100 per cent of the schedule rate under the events based schedule in this Court’s costs schedule, as it then was, for stage 1 with respect to initiating the counterclaim; with respect to stage 4, mediation; with respect to stage 5 which is preparation for final hearing which, as the Court has pointed out, will have to be calculated on the basis of a 2 day lump sum plus 9 additional days; and stage 6, which is the final hearing costs of 11 days and the attendance to take judgment, with there being an issue also about a question of whether or not it is appropriate for the Court to certify for counsel pursuant to the rules.
With respect to the question of preparation on the counterclaim, it seems to the Court that, at least in part, the answer to that question is contained in the costs schedule itself, which simply allocates one amount for preparation of an initiating application or counterclaim. So whatever preparation, be it large or small, is actually taken into account at the stage 1. Therefore, it is simply a question as to the Court’s discretion with respect to the stage at which the counterclaim was amended during the trial, as to whether that inputs into the proportionate amount.
As the Court observed at the time, and as the respondent has submitted in the Court correctly today, ultimately, the events during trial did not make any significant difference in terms of the course and conduct of the trial at the time at which the counterclaim was varied, withdrawn and amended. Clearly, the stage 4 costs for a mediation are as set and there is no dispute about that. The stage 5 costs will need to be amended for a lump sum of two days plus nine days.
The question becomes to what extent the Court ought to take account of, or whether it ought to take account of, the without prejudice offer with respect to costs. The Court notes, as it did in the course of the applicant’s argument, that had the applicant accepted the offer then made, which was $17,000 in the form of final settlement, firstly the applicant would have been significantly better off in terms than the result which has now been achieved, notwithstanding the applicant’s success in relation to at least part of the claim; and secondly the respondent would have saved at least some costs of the hearing which eventually lasted for 11 days and not the four days originally listed. In those circumstances, the Court does consider it appropriate to weigh in the balance the fact that the applicant refused what, in retrospect, appears to have been a reasonable settlement offer given the outcome of the proceedings, and the offer is, in the Court’s view, a necessary consideration in the exercise of the Court’s discretion as to costs, and in this case as to the apportionment of the costs.
With respect to the certificate for counsel, as the Court indicated in the course of the argument, notwithstanding the position of the respondents’ solicitors and the appropriateness of their continuing to act at all, let alone their acting as counsel, this was, in the Court’s view, a case in which it was appropriate for counsel to be engaged. In saying that, the Court takes into account the nature and length of the pleadings with the initiating application, the manner and conduct of the interlocutory proceedings, from which it became apparent, at an early stage, that these were going to be long, contentious and difficult matters in the course of the hearing and the length of the hearing itself, even the initial four days, and as it transpired, the 11 day hearing, were such that the engagement of counsel by the respondent was, in the Court’s view, entirely warranted.
It is fair to observe that the length and complexity of the matter, both in its initial stages and the pleadings and, ultimately, at hearing was, to a significant degree, a consequence of the manner in which the litigation was conducted by the applicant. That is not to criticise the applicant, who appeared as a self-represented litigant, but merely to say, as a matter of fact, that that is the way in which the litigation was conducted. So, in those circumstances the Court takes the view that it is reasonable for the respondent to have engaged counsel and to have to pay an advocacy loading and the Court proposes to certify for that purpose, pursuant to r.21.15 of the Federal Circuit Rules 2001 (Cth).
Having regard to the factors which the Court has outlined it ought to take into consideration and having regard to the respective positions put by the parties, which essentially are, on the respondents’ case that it ought to receive 100 per cent of the scheduled costs and in the applicant’s case, that that sum ought to be 80 per cent, the Court taking into account the matters which it has indicated are relevant and weighing all those matters in the balance, is of the view that the appropriate apportionment is 90 per cent of the respondents’ costs that ought to be paid by the applicant to the respondents in respect of stages one, four, five and six of sch.1 to the Federal Magistrates Court Rules 2001 (Cth), as they then were, as applicable at the relevant dates of each event, in the sum of $62 340.60 inclusive of disbursements of $9166.60. The Court takes the view that the incurring of those disbursements was both necessary and that they are reasonable in the circumstances.
The Court would propose to certify for counsel for the purposes of the advocacy loading of 50 per cent for stage six, as it has already indicated and in the ordinary course of events, the Court would propose that costs and disbursements be paid by 7 June 2013.
I certify that the preceding thirteen (13) paragraphs are a true copy of the reasons for judgment of Judge Lucev.
Date: 27 May 2013
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