Reddy v Hughes

[1996] FCA 960

CATCHWORDS

COSTS - recovery of costs - all matters other than costs issue settled by parties - not appropriate to seek to determine merits - factors relevant to order for costs

Trade Practices Act 1974 (Cth) s82

Fair Trading Act 1987 (NSW) s68

Australian Securities Commission v Aust-Home Investments Limited & Ors (1993) 44 FCR 194

HELEN REDDY v
ANTON HUGHES & ORS
No. NG 37 of 1994

CORAM:    BRANSON J
PLACE:    SYDNEY
DATE:     8 NOVEMBER 1996   

IN THE FEDERAL COURT OF AUSTRALIA )   
NEW SOUTH WALES DISTRICT REGISTRY )    No. NG 37 of 1994
GENERAL DIVISION                 )

IN THE MATTER OF       HELEN REDDY  
  Applicant

ANTON HUGHES
  First Respondent

HOGHTON HUGHES
  Second Respondent

GOLDEN EDITIONS PTY LIMITED
  Third Respondent

CORAM:    BRANSON J
PLACE:    SYDNEY
DATE:     8 NOVEMBER 1996

REASONS FOR DECISION

By an amended application dated 29 April 1994 the applicant claimed the following relief:

"1.An Order that the Respondents and each of them be permanently restrained from the manufacture or distribution of video tapes of the Concert performed by the Applicant on 25 April 1975 in the form of the articles an example of which is Exhibit '1' to the Affidavit of the Applicant sworn on 10 June 1993 in these proceedings.

1. Damages against the Third Respondent pursuant to s.82 of the Trade Practices Act 1974.

1. Damages against the First and Second Respondents pursuant to s.68 of the Fair Trading Act 1987 (NSW).

1. Damages for passing off.

1. Alternatively, an account of profits earned by the Respondents in consequence of the sale and/or distribution of the said video tapes.

1. Costs."

The respondents filed a defence to the amended statement of claim filed on behalf of the applicant.

Shortly after the matter was called on for hearing on 23 October 1996 counsel for the parties were able to advise the Court that the matter had settled with respect to all issues other than costs.  The settlement involved the respondents, by their counsel, without any admissions, giving an undertaking to the Court which substantially reflected the terms of the first order sought by the amended application.  It further involved the respondents, by their counsel, undertaking to request their distributors to return to them any of the video tapes, the subject of these proceedings, which they might have in stock, within 14 days of 23 October 1996.  Such undertakings were given to the Court by the respondents by their counsel.  These two undertakings having been given, counsel for the applicant called no evidence and sought no relief against the respondents other than in respect of an order for costs.

Counsel for the respondents opposed the applicant's application for her costs of the proceedings and made application on behalf of her clients that they be awarded their costs of the proceedings.

In Australian Securities Commission v Aust-Home Investments Limited & Ors (1993) 44 FCR 194, Hill J at 201 distilled the following propositions from previous authorities:

"(1)Where neither party desires to proceed with litigation the Court should be ready to facilitate the conclusion of the proceedings by making a cost order ...

(2)It will rarely, if ever, be appropriate, where there has been no trial on the merits, for a Court determining how the costs of the proceeding should be borne to endeavour to determine for itself the case on the merits or, as it might be put, to determine the outcome of a hypothetical trial ...

(3)In determining the question of costs it would be appropriate, however, for the Court to determine whether the applicant acted reasonably in commencing the proceedings and whether the respondent acted reasonably in defending them ...

(4)In a particular case it might be appropriate for the Court in its discretion to consider the conduct of a respondent prior to the commencement of the proceedings where such conduct may have precipitated  the litigation ...

(5) [not here relevant]"

In considering the reasonableness, or otherwise, of the respective conduct of the applicant and the respondents in commencing and defending the proceedings, it is necessary to give consideration to the initial application in this matter, and to compare it with the amended application. The initial application, which was filed on 24 January 1994, was an application pursuant to ss36, 37 and 38 of the Copyright Act 1968 (Cth) ("the Copyright Act"). The amended application makes no explicit reference to the Copyright Act. The relief sought by it is set out above. It appears to place reliance principally upon the Trade Practices Act 1974 (Cth), the Fair Trading Act 1987 (NSW) and the common law cause of action of "passing off".

In the circumstances, I am not able to be satisfied that the applicant acted reasonably in commencing the proceeding by her application filed on 24 January 1994.  I deal subsequently with the issue of the amended application filed on 29 April 1994. 

This is not a case, in my view, in which the respondents ought to be penalised in costs for its conduct prior to the commencement of the litigation.  It is true that they passed on to the applicant's solicitors copies of correspondence from the party whom they assert licensed them to produce and distribute the video in question which was somewhat inflammatory in its tone.  However, by a facsimile transmission of 4 June 1993 (i.e. well before these proceedings commenced) they advised the applicant's solicitors as follows:

"Frankly, if there is any problem, we would be quite prepared to remove the video from sale, as per your request.  This has been one of the poorest sellers in our catalogue!" [underlining on original]

It is unclear whether the applicant's solicitors responded to the above transmission four days later or just over a year later.  The response bears the date 8 June 1994 but its contents suggest that no legal proceedings had been instituted as at the time that it was drawn.  It seems likely that its true date was 8 June 1993.  It makes no mention of the passage in the facsimile transmission of 4 June 1993 set out above.  It foreshadows the prompt institution of legal proceedings.
Counsel for the applicant placed weight on the differences between an injunction or an undertaking given to a court, on the one hand, and a mere agreement to undertake a course of action on the other.  There are, of course, differences.  However, in my view, it will rarely be appropriate for a party to institute legal proceedings for an injunction in the face of agreement by the opposing party to cease voluntarily the conduct of which complaint is made.  Nothing was put to me to support any suggestion that the applicant had grounds to doubt that the respondents would act in accordance with any agreement that they might make.  The sticking point may well have been the issue of whether there was "any problem".  No attempt, however, appears to have been made by the parties to clarify this issue between 4 June 1993 and the issue of proceedings on 24 January 1994.

On 29 April 1994 the applicant filed an amended application.  Its terms are referred to above.  I am not prepared to conclude that the filing of the amended application was unreasonable.  This finding, however, is not intended to detract from what I have said above concerning the facsimile transmission of 4 June 1993.

By letter dated 11 July 1994, the solicitors for the respondents, after advising the solicitors for the applicant of the basis upon which their clients were prepared to defend their proceedings, advised as follows:

"... we are instructed that very few copies of the Video have been sold.  In the circumstances, our client does not wish to be involved in expensive legal proceedings in relation to a product which is of little value to it.  Our client is willing to withdraw the Video from sale, without admissions, provided your client discontinues these proceedings."

Again it does not appear that the solicitors for the applicant made any positive endeavours to explore the possibility of settlement apparently thrown up by the above offer.

The applicant tendered, on the argument as to costs, a copy of an offer of compromise dated 14 October 1996 served on the respondents pursuant to O 23 of the Federal Court Rules. In addition to an order, in effect, restraining the respondents from offering for sale the video the subject of these proceedings, such offer, if accepted by the respondents, would have required them to pay to the applicant $7,500 plus the applicant's costs of the proceedings.  In view of the basis upon which the proceedings settled, and also the lateness of the service of the offer of compromise, I do not consider that proof of the service of this offer advances the applicant's case as to costs.

I take into account, however, that the respondents did not, at any time before this matter came on for hearing, either informally or in reliance of the Federal Court Rules, offer to the applicant the undertakings given by them in settlement of this matter.   Having regard to all of the circumstances of the case, I consider that justice will be done by the applicant's amended application being dismissed with no order as to the costs.

I certify that this and the preceding six (6) pages are a true copy of the reasons for judgment of the Honourable Justice Branson.

Associate:

Date:

Counsel for the applicant:           Mr N. Confos

Solicitors for the applicant:             Steven Naris & Co.

Counsel for the respondents:         Ms S. Goddard

Solicitors for the respondents:      Banki Palombi
  Haddock & Fiora

Hearing date:  23 October 1996