Paul Mitchell Systems (Australia) P/L v Paul Mitchell Systems Pte Ltd

[1993] FCA 910

910   1 9 3

JUDGMENT No. ........ ........ .. ........ ...

IN THE FEDERAL COURT OF AUSTRALIA	)
WESTERN AUSTRALIA DISTRICT REGISTRY	)
GENERAL DIVISION	) NO WAG 123 of 1991

PAUL MITCHELL SYSTEMS

(AUSTRALIA) PTY LTD

Applicant

- and -

PAUL MITCHELL SYSTEMS PTE

13 D E C 1993 LTD

First Respondent

AUSTRALIA

PRINCIPAL

REQIGTRY	WALTER LAU LOKE LIM also
known as LAU LOKE LIM and
LOW LOKE LIM

Second Respondent

AND BETWEEN:  PAUL MITCHELL SYSTEMS PTE
LTD

Cross-Claimant

- and -

PAUL MITCHELL SYSTEMS

(AUSTRALIA) PTY LTD

Cross-Respondent

Coram:	Olney J
Place :	Melbourne (Heard in Perth)
Date:	9 December 1993.

before all other questions arising in these 1993 were ordered to be decided separately and

proceedings are answered as follows:
Question 1: Did the distribution agreement made
between the applicant and the first respondent in or
about November 1989 contaln a term to the effect of
that pleaded in paragraph 8 of the re-amended
statement of claim:
No
Question 2: Was there a collateral agreement made
between the applicant and the first respondent as
pleaded in paragraph 8 of the re-amended statement
of clam?
NO
Question 3: Did the distribution agreement made
between the applicant and the first respondent
contain any terms to the effect of those pleaded in
paragraph 10, 15, 16 and 17 of the amended defence
of the respondents dated 23 October 1992. If so,
which terms did it contain?

Yes.  The distribution agreement contained:

MINUTE OF ORDER

THE COURT ORDERS THAT:

1.    The orders pronounced herein on 29 October 1993 be vacated.

2.    The separate questions which by order made on 3 May

(a)	a partly express and partly implied term
as pleaded in paragraph 10 of the amended defence;
(b)	an implied term as pleaded in paragraph 17.1 of the amended defence.

Question 4: Was the distribution agreement made between PMSA and PMS varied in June 1990 as pleaded in paragraph 10A of the re-amended statement of claim?

NO
Question 5: Were representations made as pleaded
in paragraph 7 and/or 9 of the re-amended statement
of claim?
NO

3.    The application be dismissed.

4.   The cross-respondent take all necessary steps to transfer the name Paul Mitchell Systems (Australia) Pty Ltd to a company nominated by the cross- claimant.

5.

(a)	Save as provided in paragraph (b) hereof, the respondents' costs of the proceedings (including reserved costs) be taxed and an amount equal to 97%% thereof be pald by the applicant.
(b)	The respondents pay the applicant's costs of the notices of motion for change of venue heard on 25 May 1992 and 12 July 1993.

NOTE:	Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
IN THE FEDERAL COURT OF AUSTRALIA	)
WESTERN AUSTRALIA DISTRICT REGISTRY	)
GENERAL DIVISION	)  NO WAG 123 of 1991

PAUL MITCHELL SYSTEMS

(AUSTRALIA) PTY LTD

Applicant

- and -

PAUL MITCHELL SYSTEMS PTE

LTD

First Respondent

WALTER LAU LOKE LIM also
known as LAU LOKE LIM and

LOW LOKE LIM

Second Respondent

AND BETWEEN:  PAUL MITCHELL SYSTEMS PTE
LTD

Cross-Claimant

- and -

PAUL MITCHELL SYSTEMS

(AUSTRALIA) PTY LTD

Cross-Respondent

Coram:	Olney J
Place :	Melbourne
Date:	9 December 1993  SUPPLEMENTARY REASONS

On 29 October 1993 I published a minute of an order answering the separate questions which were ordered to be tried separately and before all other questions arising in these proceedings. At the same time I published my reasons for decision.

The matter had been heard in Perth, but the decision was given in Melbourne. On 29 October 1993 the first and second respondents were represented by a solicltor but the applicant was not represented. It was not my expectation that either party would be represented and no submissions were made on behalf of the respondents in the absence of the applicant's representative.

At the conclusion of my reasons for decision I said:

The decision of the Court supports entrrely the case put by the respondents and in the ordinary course costs should follow the event. Although the parties have not had the opportunity to be heard on the questlon of costs, the result 1s so clear cut that it is obvious that there are no crrcumstances w h ~ c h would lustrfy any departure from the normal rule.

Accordingly, there will be an order that the applicant pays the respondents' costs of and rncrdental to the trral of the separate

questions.

The mlnute published on 29 October 1993 contained an order that the respondents' costs of and incidental to the trial of the separate questions be paid by the applicant.

Later in the day on 29 October 1993, that is after the reasons

and minute of order had been published, my Associate was

contacted by the applicant's solicitors who advised that they sought the opportunity to make submissions on the question of costs. In the circumstances, I directed that no order be sealed until further direction, and further that the applicant should have the opportunity within 7 days to make written submissions and that the respondents have the opportunity to reply in writing within a similar period thereafter.

I have since received the following written submissions:

1.	Applicant's submissions concerning appropriate orders following reasons for judgment dated 5 November 1993.
2.	Letter dated 18 November 1993 from applicant's solicitors.
3.	Respondents' submissions concerning final order and costs dated 22 November 1993.
4.	Applicant's further submissions concerning final orders dated 26 November 1993.
5.	Letter dated 30 November 1993 from respondents' solicitors.

The issues raised in the parties' submissions go beyond merely

the question of the costs of the trial of the separate questions. They include the question of the making of final

orders in respect of both the claim and cross-claim, the costs of the proceedings generally and also the question of the date from which the orders so made should become effective.

COSTS OF THE SEPARATE OUESTIONS

My initial approach to the question of costs in relation to the trial of the separate questions is that set out above. The matter which I dealt with was the subject of a specific order of limited scope. The applicant failed in its case and the respondents were entirely successful. It was, in my view, conceivable that other issues remained to be litigated otherwise there would have been little purpose in the order for separate questions raising only particular questions rather than the general question of liability.

I am however now lnformed that the common understanding of the

parties was that if the separate questions were answered in the respondents' favour then there should be an order dismissing the applicant's claim and an order in terms of "paragraph 1 of the first respondent's amended cross-claim".

(The reference to paragraph 1 of the amended cross-claim is clearly included to refer to paragraph 1 of the prayer for relief contained in that pleading).

orders in these terms and in the circumstances it seems to be Both parties in their submissions consent to the making of both appropriate and within my power that I should so order.
This being the case, there is no necessity to consider the
question of the costs of the trial of the separate questions
as a distinct issue but rather any costs order should relate
to the whole proceedings.

FINAL ORDERS

In view of the consensus of the parties the order of the Court will first recite the answers to the separate questions as set out in the mlnute published on 29 October 1993, to which will be added an order that the applicant's claim be dismissed.

Paragraph 1 of the prayer for relief in the first respondent's amended cross-claim filed on 23 October 1992 is in these

terms :

"An order requiring the First Res~ondent (emphasis added) to take all necessary steps to transfer the name Paul Mitchell Systems (Australia) Pty Ltd to a company nominated by the cross-claimant".

The reference to "First Respondent" is obviously an error, and in the context of the pleading filed on 23 October 1992, the pleader's intention was obviously to refer to the cross- respondent. In an earlier version of the cross-claim, three

cross-respondents were named and the cross-respondent was

identified as the first cross-respondent. Since 23 October

1992 there has been only one cross-respondent and it is appropriate that the order in response to paragraph 1 of the cross-claim to which the parties have consented refer to the relevant party as the cross respondent. There will be an order accordingly.

THE COSTS OF THE PROCEEDINGS

In the ordinary course of events there would be orders that the applicant pays the respondents' costs of the application and the cross-claimant's costs of the cross-claim. Such an order would normally involve the applicant paying all reserved costs.

For the applicant it is said that the last minute decision of the respondents not to press certain matters pleaded in their defence (being matters referred toin the order for the trial of separate questions) justifies the Court both denying the respondents their costs in relation to those issues and orderlng the respondents to pay the applicant's costs thereof on an indemnity basis. Further, the applicant seeks to have the costs of two unsuccessful applications for change of venue made by the respondents, in respect of which costs were reserved.

As to the last matter, the respondents are prepared to concede	that the costs of the two applications be awarded to the
applicant and on the basis of that concession I will so order.
The applicant has made extensive submissions as to why there should be a costs order in its favour in relation to the issues not pressed by the respondents. I agree that to the extent that the respondents have put the applicant to unnecessary costs in pleading an issue that is abandoned
before trial the costs thrown away should be awarded to the applicant. The respondents would have it that no costs were thrown away by reason of them not pursuing the issues that were not pressed.
Whilst it is always open to a party to defend a claim on a variety of grounds, there are occasions when a party which succeeds on one or some grounds but fails on another or others is subjected to a costs penalty. The present case is somewhat analogous. Each case will depend upon its own circumstances.
That some unnecessary costs were incurred by the applicant by reason of the respondents pleading issues which were not pursued at trlal can hardly be denied. The question for resolution is whether such costs are sufficiently significant to justify an order being made in relation to them and if so, what form of order.
After considering the material advanced on behalf of the applicant it is my view that more than a merely nominal amount is involved and that therefore I am of the view that some
order should be made to compensate the applicant. There is absolutely no reasonable basis upon which to order that any costs awarded to the applicant be taxed on an indemnity basis. I agree with the respondents' solicitors in characterising the claim for indemnity as being extravagant. I do not propose to canvass the arguments raised in relation to the various issues raised by the parties. They are set out in detail in the submissions. My view is that it would be an extremely complex matter to identify the costs specifically referrable to the abandoned issues and that it would not be sensible to make an order which would inevitably give rise to a lengthy and costly taxation of costs. Instead, I propose to order that the costs which would otherwise be recoverable by the respondents should be discounted to compensate the applicant for the costs thrown away.
I have had the advantage of hearing evidence in the matter over a period of several days and have a falr understanding of the case as pleaded. I have also been able to peruse the documents filed by the parties over the course of the two years since the application was originally filed. In addition, I have had the advantage of considering the written submissions made by the parties. I am of the view that the matters not pressed by the respondents were to a large extent connected with a related issue which was pressed and on which
the respondents succeeded and that therefore the discount in favour of the applicant should only be small. Doing the best
I can, but with a degree of confidence that what I propose is
a fair and reasonable result for both parties, I propose to order that the respondents recover from the applicants 97%% of their taxed costs of the whole proceedings.
THE EFFECTIVE DATE OF THE JUDGMENT
The applicant is concerned that the time for lodging notice of appeal against my decision may have commenced to run from 29 October 1993 and that therefore an extension of time will be required if an appeal is to be instituted.
The effect of the direction I gave on 29 October 1993 that the order pronounced earlier that day be not sealed was to vacate the order. Questions relating to the form of the order and to costs have since remained reserved. In order to put the matter beyond question, I propose to include an appropriate order in the order to be made following the publication of these reasons.

I certify that this and the preceding 8 pages are a true copy of the Reasons for Judgment of the Honourable Mr Justice Olney

I

Associate:

Dated: 3 F Y 3 3

Mr D. Solomon (instructed by Solomon Brothers) appeared for the applicant.

Mr H. Sperling QC with Mr J. Nicholas (instructed by Parker & Parker as agents for Allen Allen & Hemsley) appeared for the

respondents.