Top Plus Pty Ltd v Yi Star Pty Ltd (No 2)
[2023] FedCFamC2G 348
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 2)
Top Plus Pty Ltd v Yi Star Pty Ltd (No 2) [2023] FedCFamC2G 348
File number(s): BRG 1005 of 2019 Judgment of: JUDGE BAIRD Date of judgment: 10 May 2023 Catchwords: PRACTICE AND PROCEDURE – COSTS – discretion as to costs - whether costs under the Federal Court scale are appropriate – whether circumstances justifying and indemnity costs order against all respondents – whether letters constituted Calderbank offers – as against first and third respondents indemnity costs appropriate from date of a second offer – applicants unsuccessful in claims against second and fourth respondents – costs follow event – pre‑judgment interest Legislation: Copyright Act 1968 (Cth) s 115
Federal Circuit and Family Court of Australia Act 2021 (Cth) ss 190, 191, 211, 214
Federal Circuit Court of Australia Act1999 (Cth) s 76
Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth) rr 15.02, 22.02, 22.09, Schedule 2
Federal Court Rules2011 (Cth) r 25.14, Part 40
Cases cited: Calderbank v Calderbank (1975) 3 All ER 333
Henley Arch Pty Ltd v Del Monaco [2019] FCCA 3848
Henley Arch Pty Ltd v Del Monaco (No. 2) [2020] FCCA 1911
Mann Travel Pty Ltd v Skyscanner Ltd [2021] FedCFamC2G 263
Mann Travel Pty Ltd v Skyscanner Ltd (No 2) [2022] FedFamC2G 33
Otter Products v Peter Hayden [2021] FedCFamC2G 13
Top Plus Pty Ltd v Mix Entertainment Pty Ltd [2022] FedCFamC2G 981
Top Plus Pty Ltd v Yi Star Pty Ltd [2023] FedCFamC2G 189
Division: Division 2 General Federal Law Number of paragraphs: 61 Date of last submission/s: 5 May 2023 Date of hearing: Heard on the papers Place: Sydney Counsel for the Applicants: Mr G Tsang Solicitor for the Applicants: Thomson Geer Solicitor for the Respondents: CJM Lawyers ORDERS
BRG 1005 of 2019 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)
BETWEEN: TOP PLUS PTY LTD
First Applicant
UNIVERSAL MUSIC LIMITED
Second Applicant
AND: YI STAR PTY LTD
First Respondent
ZHANG WIEN
Second Respondent
CUI ZHOYI (and another named in the Schedule)
Third Respondent
order made by:
JUDGE BAIRD
DATE OF ORDER:
10 March 2023
THE COURT ORDERS THAT:
1.Pursuant to s 211(3)(d) of the Federal Circuit and Family Court of Australia Act 2021 (Cth), the first and third respondents pay to the first applicant the sum of $24,000 in lieu of pre‑judgment interest.
2.Pursuant to r 22.02 of the Federal Circuit and Family Court of Australia (Division 2) (General Federal Law Rules)2021 (GFL Rules), the first and third respondents pay the applicants’ costs of the proceeding against the first and third respondents:
(a)on a party and party basis up to and including 11am on 6 December 2020; and
(b)thereafter on an indemnity costs basis,
as agreed or in the absence of agreement, taxed in accordance with Part 40 of the Federal Court Rules.
3.Pursuant to r 22.02 of the GFL Rules, the applicants pay the second and fourth respondents’ costs of the proceeding on a party and party basis, as agreed or in the absence of agreement, taxed in accordance with Part 40 of the Federal Court Rules.
4.The application, including the claims against the second and fourth respondents, otherwise be dismissed.
Note: The form of the order is subject to the entry in the Court’s records.
Note: The Court may vary or set aside a judgment or order to remedy minor typographical or grammatical errors (r 17.05(2)(g) Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 17.05 Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth).
REASONS FOR JUDGMENT
JUDGE BAIRD
These reasons deal with the issue of costs and interest following reasons for judgment given by me in Top Plus Pty Ltd v Yi Star Pty Ltd [2023] FedCFamC2G 189, handed down on 23 March 2023 (Reasons).
The applicants were successful in their claims against the first respondent, Yi Star Pty Ltd, and the third respondent, Mr Zhuoyi Cui (respectively), pursuant to s 115 of the Copyright Act 1968 (Cth) for infringement of copyright in certain cinematograph films being karaoke music videos (KMV Films). The applicants were unsuccessful in their claims against the second respondent, Ms Yiwen Zhang, and the fourth respondent, Ms Wenyan Wang. It follows that the proceeding against Ms Zhang and Ms Wang must be dismissed.
Upon delivery of my reasons I made a declaration that Yi Star and Mr Cui had infringed the second applicant - Universal Music Limited’s - copyright in certain KMV Films, granted injunctions restraining further infringement of copyright by them, and made orders for delivery up. Pursuant to s 115(2) of the Copyright Act I awarded compensatory damages in the sum of $113,538.34 payable by Yi Star and Mr Cui jointly and severally to Top Plus Pty Ltd, the first applicant. Pursuant to s 115(4) of the Copyright Act I awarded additional damages in the sum of $60,000 payable by Yi Star and Mr Cui jointly and severally to Top Plus. I stood the proceeding over to a date to be fixed to enable consultation among the parties on the calculation of interest, the making of any other orders, and on the issue of costs.
On 7 April 2023, with the consent of the applicants, the respondents’ solicitor, Mr Wu, by email to my Chambers informed the Court that discussions between the parties regarding an agreed position on the issue of interest and costs were ongoing, and that the parties intended to provide the Court with proposed draft orders by 12 April 2023. No draft orders have been provided.
On 13 April 2023, the applicants’ solicitors, Thomson Geer, informed the Court by email that they were still awaiting a response from Mr Wu regarding the respondents’ position on costs and interest, and in the absence of a response the applicants intended to file written submissions and a short affidavit by 5pm that same day. The applicants then filed and emailed to Chambers, and copied to Mr Wu, written submissions on costs and interest dated 13 April 2023 and an affidavit in support made by the applicants’ solicitor, Mr Anthony James Conaghan, sworn 13 April 2023.
By email from my Chambers sent 21 April 2023 the Court advised the parties that Chambers had: (i) received the applicants’ submissions and affidavit identified above, and (ii) not received any submissions or supporting material from any of the respondents. I informed the parties that if the Court had not received a response from the respondents by 4pm on 28 April 2023, the issues of costs and interest would be dealt with on the papers without an oral hearing, and sought an acknowledgment of receipt from the parties. Pursuant to r 15.02 of the Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth) (GFL Rules), if the parties consent the Court may make a decision on the papers; see also the overarching purpose and the parties obligations to facilitate that purpose provisions in ss 190 and 191of the Federal Circuit and Family Court of Australia Act 2021 (Cth) (FCFCOA Act).
The applicants responded stating that they did not take issue with the course proposed. The respondents did not respond until 5 May 2023. On 5 May 2023, Mr Wu emailed my Chambers and Thomson Geer, acknowledging receipt of Chambers correspondence, apologising for the delay in responding, and advising that further to his move to a different legal firm, the respondents’ legal representation has changed to the firm he has now joined. Mr Wu then stated:
We confirm that the First and Third Respondents consent to the orders in the form proposed by the applicants and, further, that the Second and Fourth Respondents do not wish to be heard on the question of costs.
The applicants’ position on costs and interest
As I have noted, the applicants did not provide any form of order for costs and interest, however they did set out what they seek in their written submissions. I construe Mr Wu’s reference above to the ‘form proposed by the applicants’ to refer to what the applicants seek in their submissions. Whilst the applicants are clear about the amount of interest they seek, and how they calculate it, they have proposed alternative costs orders, and make submissions on those alternatives. The Court is thus tasked with determining the issues of costs and pre-judgment interest in the exercise of its discretion, as I consider it should do so in any event.
As to costs, in their submissions the applicants seek:
(a)an order that Yi Star and Mr Cui pay the applicants’ ‘costs of the whole proceeding on an indemnity basis’;
(b)‘in the alternative, an order for their costs of the proceeding on a party and party basis up to and including the making of various Calderbank offers, and thereafter on an indemnity basis’.
In addition to Thomson Geer’s letter of demand dated 14 January 2019 to the first and third respondents, there are three offers contained in letters annexed to Mr Conaghan’s affidavit. The applicants rely on the earliest offer, with each subsequent offer relied upon in the alternative if the immediately preceding offer is considered by the Court to be insufficient. Each of the three letters is stated to be ‘without prejudice save as to costs’ addressed to Mr Wu and his colleague as the respondents’ solicitors, and dated variously 29 April 2020, 4 December 2020, and 16 April 2021 (collectively, Offers). Each of the Offers state on their face that they are sent electronically to Mr Wu, and in the case of the second and third letter, also to his colleague.
In respect of Ms Zhang and Ms Wang (the second and fourth respondents), the applicants submit that their involvement in the proceeding was ‘relatively minor and not sufficient to make an adverse costs order against the applicants’. Alternatively, to the extent that the Court considers otherwise, the applicants submit that an overall discount of 5% ‘would be more than sufficient to accommodate any costs in relation to those aspects of the case’. Thus, the applicants’ primary submission on costs is that they should recoup all their costs, including those expended on their unsuccessful claims against Ms Zhang and Ms Wang.
As to pre‑judgment interest, the applicants seek the amount of $25,919.40. They calculate this amount by applying a rate of interest of 5.5% per annum to the judgment sum of $113,538.34 (the sum awarded to Top Plus pursuant to s 115(2) of the Copyright Act), and applying that rate for the period commencing on 28 January 2019 (being 2 weeks after the letter of demand) up to the date of judgment on 23 March 2023, a total period of 4 years and 55 days. The applicants submit that the applicable rate of interest for the whole of the period should be the Federal Court scale rate of pre‑judgment interest (RBA cash rate plus 4%) as at 28 January 2019, which scale rate was then 5.5% per annum. Properly, the applicants do not seek pre‑judgment interest on the sum awarded pursuant to s 115(4) of the Copyright Act.
The applicants are silent as to any other orders necessary to conclude the proceeding. I assume this omission is inadvertent, as self‑evidently, the proceeding must be dismissed as against Ms Zhang and Ms Wang.
Pre-judgment interest
It is convenient to deal with the matter of pre-judgment interest first.
The relevant statutory provisions pursuant to which the applicants seek interest are ss 211(2) and (3) of the FCFCOA Act. In their Amended Application the applicants seek interest to judgment pursuant to s 76 of the Federal Circuit Court of Australia Act1999 (Cth), the predecessor and equivalent provision to s 211(2) and (3), FCFCOA Act. I am satisfied that the applicants thereby have made an application for an order for the award of interest under s 211(2) of the FCFCOA Act.
Pursuant to s 211(3) FCFCOA Act, if I am not satisfied that good cause has been shown for not making an order under the section, the Court must either include in the sum for which judgment is given an amount of interest calculated at such rate as the Court thinks fit, or order a lump sum in lieu of such interest without proceeding to calculate interest.
The applicants submit the Court should order pre‑judgment interest on the sum of $113,538.34. The respondents do not make any submissions against an award of pre‑judgment interest. There is no good cause shown why an amount for pre‑judgment interest in respect of the sum of $113,538.34 awarded under s 115(2) of the Copyright Act should not be ordered.
The applicants submit the Court should apply the same approach to determining the amount of pre‑judgment interest that I took in Top Plus Pty Ltd v Mix Entertainment Pty Ltd [2022] FedCFamC2G 981 at [113]-[117], there adapting what I said earlier in Henley Arch Pty Ltd v Del Monaco [2019] FCCA 3848 at [96]-[97]. In each of those two instances, pursuant to s 211(3) FCFCOA Act, I awarded pre‑judgment interest in a lump sum, applying the Federal Court scale rate of interest applicable for some of the relevant period, but not the interest rates as they varied over the whole of the relevant period.
As I have said at [12], in this proceeding the applicants have nominated as the applicable rate of interest the Federal Court scale rate of 5.5% which was the rate applicable at 28 January 2019. For most of the period for which interest is sought in this proceeding, however, the Federal Court scale rate of interest was below 5.5% per annum. Specifically, from 1 July 2019 the rate of interest was 5.25%, from 1 January 2020 it was 4.75%, from 1 July 2020 it was 4.25%, and for the 18 months from 1 January 2021 through to 30 June 2022 it was at 4.10%. For the period 1 July 2022 to 31 December 2022 the rate was 4.85%. Since 1 January 2023 the scale rate has been 7.10%.
Whilst the respondents do not make any submissions on interest, I do not consider that it follows that I should uncritically accept the applicants’ claim in circumstances where for most of the period for which interest is sought the applicable Federal Court scale rate was considerably less than 5.5%. Nonetheless, I consider that there is an interest in finality of litigation, and a benefit to minimising further time and expense by now awarding a lump sum pursuant to s 211(3) of the FCFCOA Act.
In the circumstances, having regard to the variations in interest rates summarised above, and with the aim of achieving a just resolution, according a measure of fairness to the parties, pursuant to s 211(3)(d) of the FCFCOA Act, I award to the first applicant – as the party awarded damages pursuant to s 115(2) of the Copyright Act - the sum of $24,000 in lieu of pre‑judgment interest.
Costs - relevant principles
Pursuant to s 214(2) and (3) of the FCCFOA Act, the Court has a broad discretion to order costs. In sum, the Court’s discretion is broad, but is to be exercised judicially, and in the context of the relevant court rules: see in respect of intellectual property cases in this Court, inter alia, Henley Arch Pty Ltd v Del Monaco (No. 2) [2020] FCCA 1911, at [7]-[11]; Mann Travel Pty Ltd v Skyscanner Ltd [2021] FedCFamC2G 263 at [45]-[47], and Mann Travel Pty Ltd v Skyscanner Ltd (No 2) [2022] FedFamC2G 33 (Mann Travel (No. 2)) at [5]-[11], to which last decision the applicants refer in their submissions.
As I said in Mann Travel (No. 2), the fundamental purpose of a costs order is to compensate a successful party, rather than punish an unsuccessful party. In the absence of good reason to the contrary, a successful litigant should receive their costs. This is reflected in the general rule that costs follow the event.
The default position in this Court is set out in r 22.09 of the GFL Rules: unless the Court otherwise orders, a party entitled to costs in a general federal law proceeding … is entitled to: (a) costs in accordance with Schedule 2; and (b) disbursements properly incurred: see generally, Otter Products v Peter Hayden [2021] FedCFamC2G 13; Mann Travel (No. 2).
Costs may be awarded according to the Court event‑based scale set out in Schedule 2, GFL Rules as provided by r 22.09 (see immediately above), or otherwise, inter alia, on a party and party basis (including under the Federal Court scale), or on an indemnity basis.
Pursuant to r 22.02(2) of the GFL Rules, the Court may set the amount of the costs, or the method of calculation, or refer the costs to taxation. The discretion exercisable by this Court expressly includes applying the taxation provisions in Part 40, Federal Court Rules 2011 (FCRules). This Court’s ability to order costs under the Federal Court scale is well known and accepted. Whether it is reasonable in the circumstances to do so is a matter to be resolved having regard to the principles I summarise here and in the cases to which I refer, and the individual circumstances of the case, including achieving a just outcome given the facts and law at issue in the proceeding.
Where the circumstances of the case warrant, the Court may order indemnity costs. In broad terms, this means costs as a complete indemnity against the costs incurred by the party in the proceeding, provided that they do not include any amount shown by the party liable to pay them to have been incurred unreasonably by the party incurring them. Indemnity costs may be distinguished from costs as between party and party. The Dictionary, schedule 1 to the FCRules (to which this Court may have recourse when the circumstances require), refers to party and party costs as ‘only the costs that have been fairly and reasonably incurred by the party in the conduct of the proceeding’.
An order for indemnity costs requires that there be some special or unusual feature. Indemnity costs are not punitive, but are designed to compensate a party fully for costs incurred, as a normal costs order (that is, a party and party order) could not be expected to do, when the Court takes the view that it was unreasonable for the party against whom the order is made to have subjected the innocent party to the expenditure of costs: see Mann Travel (No. 2) at [8].
A circumstance justifying an award of indemnity costs is an imprudent refusal of an offer of compromise, or where the offer is not formally made in the form of an offer of compromise required by the FCRules, under the principles in Calderbank v Calderbank (1975) 3 All ER 333. A key question is whether the offeree’s refusal of the offer was unreasonable when viewed in light of the circumstances existing at the time the offer was rejected or lapsed, and the measure of success ultimately obtained by the applicants. The assessment of whether an offer was more favourable than the outcome decided by the court is to be based on a broad, evaluative assessment having regard to the substance of the outcome decided, and that which would have been the state of affairs yielded under the offer had it been accepted.
Discussion and Consideration
An ‘otherwise order’ award of costs
I first address whether it is appropriate in my discretion to ‘otherwise order’ costs, rather than order costs according to the event based scale in Schedule 2 of the GFL Rules. It is implicit in the applicants’ submissions that they seek an order for costs otherwise than according to the event based scale.
I consider that the Reasons sufficiently demonstrate that it is reasonable in the circumstances of this proceeding to order that costs be payable other than as specified in Schedule 2. These circumstances include the complexities of facts and legal issues that arose in this proceeding, including the nature of the exclusive licences in copyright in cinematograph films being karaoke music videos, the contractual arrangements the parties relied upon and the construction of terms for which they argued – both for and against exclusivity of copyright, the claims of authorisation, the defences of innocent infringement, and the claims as to damages.
Indemnity costs of the whole proceeding
I do not accept the applicants’ submission that they should be awarded their costs of the whole proceeding on an indemnity basis. It does not follow that because the applicants succeeded against Yi Star and Mr Cui that it was unreasonable for the applicants to be put to the expense of commencing the proceeding, or of proceeding against all four respondents.
No party was exemplary in the evidence they filed, or in the clarity and sufficiency of their respective cases, including at final hearing. Further, much of what the applicants seek to rely on repeats matters taken into account in the sum awarded pursuant to s 115(4) of the Copyright Act, and otherwise does not warrant the characterisation of unreasonableness sufficient to attract indemnity costs of the whole proceeding.
The applicants acknowledge that in each of the notification letters they sent to Yi Star in the period 1 September 2017 up to and following Thomson Geer’s letter of demand dated 14 January 2019 they proposed licence fees on the basis that access to karaoke and the KMV Films was provided in 21 rooms, and not the lesser number of rooms found by the Court (Reasons, [323]). The applicants say that their requirement that Yi Star be licensed for 21 rooms should not weigh against the applicants in the Court’s exercise of its costs discretion, as the respondents could have easily clarified the exact number of karaoke rooms and the operating period by engaging with the applicants.
I am not persuaded by this submission. There is nothing in Mr Conaghan’s affidavit and annexures to show that the applicants invited and would have accepted a licence fee based on a lesser number of rooms. The applicants pressed for a licence fee on the basis of 21 rooms at the final hearing. They did not give any quarter on this number.
The letter of demand and the Offers
The applicants submit that it was unreasonable for Yi Star and Mr Cui to ignore, reject or not accept the letter of demand and the Offers. Implicitly, the applicants accept that none of the correspondence on which they rely is an offer made in accordance with the FCRules (but see below regarding the letter dated 4 December 2020).
Letter of demand
By the letter of demand the applicants required payment of $87,451.24 for outstanding licence fees for 2017‑2018 based on 21 karaoke rooms, and that Yi Star, Mr Cui and Ms Zhang confirm that they would attend a without prejudice meeting with the applicants, and stated that failing which the applicants would consider themselves as having met their obligations under the Civil Dispute Resolution Act 2011, and would institute proceedings. In addition to payment of the amount of $87,451.24, the letter makes clear that more was required from the three named respondents, but it is unclear what the applicants would then have accepted as sufficient to dissuade them from suit. In these circumstances, the letter of demand does not constitute a Calderbank offer. It need not be considered further.
Letter dated 29 April 2020
The letter dated 29 April 2020 (First Offer) was made after the respondents served their defence, but before the applicants had filed any evidence. The First Offer was made in respect of all respondents. It was made shortly after the applicants joined Ms Wang in the proceeding. In the First Offer the applicants drew attention to the liability of directors of a corporate respondent.
The First Offer contained an offer that the respondents pay $165,000, comprising licence fees to the end of 2020, discounted, and rounded to $155,000, together with $10,000 to be paid by way of costs (recoverable costs were then estimated at $15,000). It included an obligation to enter into a licence agreement, and was subject to a deed of settlement. The total was payable in whole within 14 days of the deed of settlement, or in two tranches of $82,500 each. If payment was to be made in tranches, the applicants also required a bank guarantee.
The applicants state that by the First Offer they are foregoing flagrancy damages, and interest.
The First Offer pre‑dates the pleadings relied on at final hearing (see Reasons [31]), the applicants’ evidence read at hearing (See Reasons [40]), and pre‑dates the earliest Notice to Admit Facts (dated 17 June 2020), also relied on at hearing (see Reasons [32], [141]-[142]).
Although the amount of s 115(2) damages awarded was greater than the amount sought in the First Offer ($155,000 as compared with $113,538.34) the total amount of s 115(2) and s 115(4) damages awarded against Yi Star and Mr Cui at final hearing was $173,538.34: see above at [3]. As I have said, the applicants calculated licence fees on the basis of 21 rooms, a greater number than determined in the Reasons.
I am not reasonably satisfied that the applicants in the First Offer gave sufficient and cogent reasons why the respondents should accept the Offer, rather than assertions by reference to other cases. On its face, the First Offer does not sufficiently articulate the applicants’ case they took to hearing, nor does it clearly identify the KMV Films.
In the circumstances, I do not consider that it was unreasonable for the respondents not to accept the First Offer at the time. The non‑acceptance of the First Offer does not suffice to attract indemnity costs.
Letter dated 4 December 2020
The next letter in time relied on as an offer is letter dated 4 December 2020 (Second Offer), which enclosed a copy of the First Offer (29 April 2020 letter). The Second Offer referred to some of the content of the First Offer, and noted the work that had been undertaken, and the evidence served that since the First Offer, including evidence from Hong Kong, which I assume is a reference to the first affidavits made by Mr Duncan Wong and Ms Juno Tong read at hearing. The Second Offer was made after service of the first Notice to Admit Facts (see above).
As noted on its face, the Second Offer was also made after a case management hearing in the proceeding held on 11 November 2020.
The Second Offer on its face comprises an offer to resolve the proceeding for the sum of $120,000, and payment of costs fixed in the amount of $20,000, which the applicants identified as being the party and party costs attributable to unnecessarily incurred costs of evidence of subsistence and ownership following from the respondents disputing the Notice to Admit (that is, including the evidence from Hong Kong). The Second Offer further states that an offer of compromise pursuant to Part 25 of the FCRules in the same terms as the letter is attached. No document is attached. This may be an inadvertent omission.
In the Second Offer the applicants’ state that the offer represents a significant discount on the quantum of damages, a waiver of the right to recover interest, and a waiver of the right to recover additional damages, and a limitation on costs.
The Second Offer then states that if the respondents are agreeable to the quantum of the offer, but are unable to comply with the timetable for payment pursuant to Part 25, the applicants are prepared to consider any proposal as to terms of payment. The Offer concludes by informing the respondents of the consequences under r 25.14(3) of the FCRules of failure to accept the Second Offer, namely that if the applicants obtain a judgment more favourable than the terms offered, they will be entitled to their costs on a party and party basis up to 11:00am on the second business day after service, and on an indemnity basis thereafter.
In the absence of the Part 25 Offer of Compromise referred to in the Second Offer, I cannot be satisfied that it complied with the FCRules. Notwithstanding this, given the content described above, and for the reasons that follow, I am satisfied that the Second Offer was made under Calderbank principles.
At the time of service of the Second Offer, the respondents had the benefit of the pleadings, and at least 3 weeks to consider the applicants’ evidence then filed (see Reasons [40], noting that further evidence was filed subsequently). I consider that the respondents were sufficiently on notice and informed of the applicants’ case and the nature of their evidence to enable them to properly consider and respond to the Second Offer.
I consider that in substance the applicants obtained overall a more favourable result than the offer contained in the Second Offer would have yielded: the applicants obtained a declaration, injunctive relief against Yi Star and Mr Cui, delivery up, and a greater total amount of pecuniary relief, and interest, even leaving aside the matter of costs. In reaching this conclusion, and in the orders I will make, I take into account that the applicants did not succeed against the second and fourth respondents, Ms Zhang and Ms Wang.
Subject to what I next say regarding Ms Zhang and Ms Wang, pursuant to r 22.02(2) GFL Rules I will award the applicants their costs of the proceeding as against Yi Star and Mr Cui, to be paid by those respondents on a party and party basis, up to and including 11:00am 6 December 2020, and thereafter on an indemnity basis, as agreed or in the absence of agreement taxed in accordance with Part 40, of the FCRules.
It follows that, save in relation to Ms Zhang and Ms Wang, I do not need to consider the terms and effect of the subsequent letters relied upon by the applicants as a Calderbank offer, two letters dated 16 April 2021 issued immediately before the final hearing – one addressed to the first and third respondents, and the other addressed to the second and fourth respondents, and both requiring that all respondents agree to the terms offered.
The second and fourth respondents: Ms Zhang and Ms Wang
The applicants were unsuccessful in their claims against Ms Zhang and Ms Wang. The usual order is that costs follow the event.
Whilst the applicants submit that the second and fourth respondent’s involvement in the proceeding was ‘relatively minor’ (see above [11]), this does not have regard to the fact that the applicants brought claims against them that did not succeed.
In the letter dated 16 April 2021 addressed to Ms Zhang and Ms Wang, the applicants assert that the vast majority of the evidence advanced on their behalf would have been necessary to advance even if only the first and third respondents had been sued. The applicants further assert in the letter that the respondents have adduced their evidence in an extremely disorganised manner, failed to meet deadlines and ‘unnecessarily retain[ed] multiple counsel for, comparatively speaking, a small claim’. The applicants assert that even if successful, the net effect would most likely be that each party bear their own costs (after taxation, and after costs claims brought by the applicants). I interpose here to state that I am satisfied that it was appropriate for the respondents, and specifically, the second and fourth respondents, to retain counsel, and given the location of the respondents and their solicitors, to engage Sydney junior counsel for interlocutory applications.
In the letter the applicants then stated that, conversely, the second and fourth respondents (together with the first and third respondents) have compelled the applicants to incur considerable unnecessary costs, including, inter alia, by not admitting Notices to Admit, by convoluted defences and by a long drawn out and tortuous manner of the provision of their evidence.
These assertions may be given short shrift. It is reasonable to infer that the applicants took a deliberate and considered decision to pursue claims against Ms Zhang and Ms Wang and to incur the costs in so doing in the face of the information able to be ascertained from the ASIC records and the evidence of Mr Cui. They pressed their claims at the final hearing. Simply put, the applicants’ claims against the second and fourth respondents did not succeed. I am not persuaded that costs should not follow the event.
Whilst the applicants’ submission that costs could be dealt with by a discount on the applicants’ costs (see [11] above) has some attraction, I do not have sufficient information to form any view whether there is utility in ordering a discount on the costs payable by the first and third respondents, and if so, what that discount should be. I am not prepared to speculate. In the circumstances, in the exercise of my discretion, I conclude that the appropriate order is that the applicants pay the second and fourth respondents’ costs of the proceeding on a party and party basis, as agreed, or if not agreed, taxed in accordance with Part 40, FCRules.
I so order.
I certify that the preceding sixty-one (61) numbered paragraphs are a true copy of the Reasons for Judgment of Judge Baird. Associate:
Dated: 10 May 2023
SCHEDULE OF PARTIES
BRG 1005 of 2019 Respondents
Fourth Respondent:
WENYAN WANG
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