Venezuela Pty Ltd v Bright
[2017] WADC 79 (S)
•16 JUNE 2017
VENEZUELA PTY LTD -v- BRIGHT [2017] WADC 79 (S)
| DISTRICT COURT OF WESTERN AUSTRALIA | Citation No: | [2017] WADC 79 (S) | |
| Case No: | CIV:528/2013 | 8-11 DECEMBER 2015, 22-23 & 25 FEBRUARY 2016, 16 JUNE 2017 & ON THE PAPERS | |
| Coram: | SWEENEY DCJ | 16/06/17 | |
| PERTH | 11/08/17 | ||
| 17 | Judgment Part: | 1 of 1 | |
| Result: | Indemnity costs refused Special costs order made | ||
| PDF Version |
| Parties: | VENEZUELA PTY LTD IAN DOUGLAS BRIGHT |
Catchwords: | Costs Calderbank offers Indemnity costs Whether limits on costs should be removed |
Legislation: | Legal Profession Act 2008 (WA) s 280(2) |
Case References: | Bailey v Naimol Pty Ltd [1994] FCA 1401; (1994) 125 ALR 228 Cape Lambert Resources Ltd v MCC Australia Sanjin Mining Pty Ltd [2013] WASCA 66 (S) Cox v Crooks (No 2)[2000] TASSC 34 Eckersley v Graeme Peter Eckersley as Executor of the estate of the late Gloria Dawn Eckersley (dec) [2016] WASC 154 (S) Electricity Generation and Retail Corporation t/as Synergy v Woodside Energy Ltd [2014] WASC 469 (S) Ford Motor Co of Australia Ltd v Lo Presti [2009] WASCA 115; (2009) 41 WAR 1 Hazeldene’s Chicken Farm Pty Ltd v Victorian WorkCover Authority (No 2) [2005] VSCA 298; (2005) 13 VR 435 Heartlink Ltd v Jones as Liquidator of HL Diagnostics Pty Ltd (in liq) [2007] WASC 254 (S) O'Rourke v P & B Corporation Pty Ltd [2008] WASC 36 (S) Venezuela Pty Ltd v Bright [2017] WADC 79 Warren v Lawton [No 3] [2106] WASC 285 (S) |
JURISDICTION : DISTRICT COURT OF WESTERN AUSTRALIA
- IN CIVIL
DECISION : 11 AUGUST 2017 FILE NO/S : CIV 528 of 2013 BETWEEN : VENEZUELA PTY LTD
- Plaintiff
AND
IAN DOUGLAS BRIGHT
Defendant
Catchwords:
Costs - Calderbank offers - Indemnity costs - Whether limits on costs should be removed
Legislation:
Legal Profession Act 2008 (WA) s 280(2)
Result:
Indemnity costs refused
Special costs order made
Representation:
Counsel:
Plaintiff : Mr P McGowan
Defendant : Mr R J Price
Solicitors:
Plaintiff : GV Lawyers
Defendant : Tottle Partners
Case(s) referred to in judgment(s):
Bailey v Naimol Pty Ltd [1994] FCA 1401; (1994) 125 ALR 228
Cape Lambert Resources Ltd v MCC Australia Sanjin Mining Pty Ltd [2013] WASCA 66 (S)
Cox v Crooks (No 2)[2000] TASSC 34
Eckersley v Graeme Peter Eckersley as Executor of the estate of the late Gloria Dawn Eckersley (dec) [2016] WASC 154 (S)
Electricity Generation and Retail Corporation t/as Synergy v Woodside Energy Ltd [2014] WASC 469 (S)
Ford Motor Co of Australia Ltd v Lo Presti [2009] WASCA 115; (2009) 41 WAR 1
Hazeldene’s Chicken Farm Pty Ltd v Victorian WorkCover Authority (No 2) [2005] VSCA 298; (2005) 13 VR 435
Heartlink Ltd v Jones as Liquidator of HL Diagnostics Pty Ltd (in liq) [2007] WASC 254 (S)
O'Rourke v P & B Corporation Pty Ltd [2008] WASC 36 (S)
Venezuela Pty Ltd v Bright [2017] WADC 79
Warren v Lawton [No 3] [2106] WASC 285 (S)
1 SWEENEY DCJ: On 16 June 2017 I delivered my reasons for dismissing the plaintiff's claim for damages for breach of copyright in certain building plans for a residence: Venezuela Pty Ltd v Bright [2017] WADC 79. These reasons deal with the remaining issue of costs.
2 The plaintiff was wholly unsuccessful in its case. Not only did I find that there was no breach of copyright, I also found that, had the plaintiff's case succeeded on liability, I would only have awarded the nominal sum of $1,000 by way of damages, rather than a figure informed by the lost profits on the potential building contract that it sought. Secondly, I found that I would not have awarded additional damages for any flagrant breach of copyright on the facts of this case.
3 According to the usual rules the successful party, in this case the defendant, is entitled to his costs of the action on a party-party basis. He seeks, however, an award of indemnity costs on the basis that, at three different stages in the proceedings, he made a Calderbank offer to settle the matter, which offers were unreasonably rejected.
4 He therefore seeks an order that, from the point of the first offer, or alternatively the second offer, or alternatively the third offer, his costs be paid on an indemnity basis. Failing that, he seeks special costs orders allowing taxation of costs without regard to certain limits set down by the applicable costs scales.
5 Both parties were content to file written submissions on this matter and for me to determine the matter on those submissions rather than take up further time in court with legal argument, which is consistent with the sentiments expressed by Martin CJ in O'Rourke v P & B Corporation Pty Ltd [2008] WASC 36 (S) [5] - [6].
General principles as to indemnity costs
6 The general principles governing an award of indemnity costs were set out in the judgment of Buss JA in Ford Motor Co of Australia Ltd v Lo Presti [2009] WASCA 115; (2009) 41 WAR 1 [16] – [32]. A Calderbank offer will not justify an award of indemnity costs unless its rejection was unreasonable. The party who made the offer bears the onus of satisfying the court that it should make an award of indemnity costs in his favour. There is no presumption of an entitlement to an award of indemnity costs in this situation, and the unreasonableness of the rejection of the offer is not determined by any presumption. Rather, it depends on the circumstances of the particular case.
7 Although it is neither possible nor desirable to provide an exhaustive list of all of the circumstances to be taken into account in deciding whether that rejection was unreasonable, ordinarily regard should be had to at least the following:
(a) the stage of the proceeding at which the offer was received;
(b) the time allowed to the offeree to consider the offer;
(c) the extent of the compromise offered;
(d) the offeree's prospects of success, assessed as at the date of the offer and without the benefit of hindsight;
(e) the clarity with which the terms of the offer were expressed; and
(f) whether the offer foreshadowed an application for indemnity costs in the event of its rejection.
8 The court may also take into account the extent to which the party making the offer identified any weaknesses or flaws in the offeree's case. There is no rule however that the offer must identify such weaknesses, and the failure to do so may be considered against the extent to which such weaknesses have already been exposed: Warren v Lawton [No 3] [2106] WASC 285 (S), citing Hazeldene’s Chicken Farm Pty Ltd v Victorian WorkCover Authority (No 2) [2005] VSCA 298; (2005) 13 VR 435 [26] - [27].
9 The mere fact that the offeree is ultimately worse off than he would have been had he accepted the offer does not mean that its rejection was unreasonable. Because the assessment of the unreasonableness of the rejection of the offer is to be made without the benefit of hindsight, it would be contrary to that approach to determine the judgment sum ultimately awarded as a yardstick to measure reasonableness or unreasonableness of the rejection of the offer.
10 There is some authority to the effect that an offer expressed to be inclusive of costs should not ground an order for indemnity costs because it does not place the offeree in a position to assess the two components of the likely value of the claim and the likely party and party costs to date if taxed: see, for example, Cox v Crooks (No 2)[2000] TASSC 34 [21] - [25].
11 Finally, the awarding of indemnity costs is exceptional, generally being awarded in circumstances in which the conduct of the party against whom the order is sought is of a kind that calls for a form of admonition: O'Rourke v P & B Corporation [7].
Chronology of the offers and their content
12 The writ in this action was issued on 19 February 2013. On the same day the plaintiff filed its statement of claim. On 15 April 2013 it was met with a request for further and better particulars, which it provided by 29 April 2013. It amended its statement of claim on 21 May 2013.
13 The first offer was made by way of letter dated 10 July 2013. The alleged infringement of copyright was denied, but the defendant offered to pay the plaintiff the sum of $15,000, inclusive of costs, and GST if any, within seven days of the parties executing a deed of settlement and on the basis that, upon payment, the parties would file a minute of consent orders dismissing the proceedings with no orders as to costs and with all existing cost orders vacated.
14 The defendant's solicitors asserted in the letter that the plaintiff had 'little or no prospect of succeeding in its claim for loss of profits on a contract which never existed', and pointed out that the final building contract had not been signed. They further asserted that the plaintiff would never have given the defendant consent to use its plans, and therefore any claim for damages based on a 'licence fee' approach also had little or no prospect of success. They complained that the plaintiff had failed to particularise the basis on which it would be seeking additional damages based on a flagrant infringement of copyright.
15 The plaintiff was given 14 days to accept the offer, and the letter informed the plaintiff that, in the event that the defendant secured a result at trial better than the offer, the defendant would make application for indemnity costs.
16 The offer was rejected.
17 On 11 September 2013 the plaintiff further amended its statement of claim and also provided particulars of objective similarity between the two sets of plans. It provided discovery on 28 March 2014 and the defendant provided discovery on 7 May 2014. On 21 May 2014 a subpoena issued to Ross Griffin (the builder engaged by the defendant after he parted ways with the plaintiff), to produce certain documents. In August 2014 the defendant provided further discovery and it is apparent that Ross Griffin responded to the subpoena prior to 5 September 2014.
18 The second offer was made by letter of 5 September 2014 from the defendant's solicitors to the plaintiff's solicitors offering, upon similar terms to those contained in the first offer, to settle the matter on the basis of the defendant paying the sum of $20,000 inclusive of costs. The offer was open for acceptance for 14 days and again the plaintiff was informed that, upon the defendant securing a better result at trial than the offer, he would make an application for indemnity costs.
19 The second letter set out in brief detail the defendant's position that he had consulted Ross Griffin on 1 November 2009, gave instructions to Mr Druce who then prepared numerous freehand sketches for the rough outline of the home, and paid Ross Griffin a total of $58,631 for the preparation of plans, indicative of Mr Druce taking time to design the plans independently. The letter asserted that the plaintiff's case had little or no prospect of success, pointing out that even if the plaintiff was able to obtain expert evidence to the effect that the Ross Griffin plans substantially reproduced the plaintiff's plans, the plaintiff would still have to prove that the defendant authorised any infringement of copyright. That offer was rejected.
20 On 20 February 2015 the defendant served his expert witness report from Mr Hofman. On 23 February 2015 the plaintiff served the first of its expert witness reports prepared by Mr Dickie. On 24 March 2015 the plaintiff provided further discovery and then on 28 April 2015 it provided a further expert report from Mr Dickie and an expert report from Mr Robinson.
21 The third and final offer was made by letter dated 27 August 2015 from the defendant's solicitors, this time offering on similar terms to the previous offers the amount of $40,000 inclusive of costs, with the offer open for 28 days, and again informing the plaintiff that the defendant would rely upon the letter to seek indemnity costs.
22 The third letter summarised the expert opinion of Mr Hofman in favour of the defence. The letter also claimed that the plaintiff's claim for damages, particularised as a 'loss of profits over the life of the building contract', was 'flawed for a number of reasons'. The reasons asserted however, it is fair to say, did not hone in on the argument advanced at trial which centred on the fact that the defendant was never willing to build with the plaintiff in any event. The letter did remind the plaintiff that the defendant had paid it a sum of $25,000 already for the preparation of plans. Finally, the letter simply asserted that 'the case does not call for any additional damages under statute'.
The issues for the plaintiff at trial
23 In broad terms, in order to succeed at trial, the plaintiff had to establish liability on the part of the defendant and also make out its claim for damages.
24 As to its case on liability, the plaintiff was armed with two witnesses, its principal Mr Craig Sheiles, and its designer, Mr Michael Rule. Although I made some comments about the reliability of a few aspects of their evidence in the judgment, both were essentially honest and credible witnesses. It was reasonable for the plaintiff to assume that they would be. The case did not predominantly turn upon their credibility, however.
25 By the time expert reports had been exchanged, the plaintiff was armed with two expert witnesses who had expressed confident opinions that the Ross Griffin design did amount to a substantial reproduction of the plaintiff's design and could not have been produced other than by way of copying. The two designs were similar in many respects.
26 As to the plaintiff's case that the defendant must have authorised Mr Rod Druce of Ross Griffin to substantially reproduce the plaintiff's design, its case was based on the drawing of an inference to that effect.
27 Findings on liability turned to a considerable extent upon the credibility of the defendant and Mr Druce. Those findings went against the plaintiff at trial but, without the benefit of hindsight, it was not unreasonable for the plaintiff to consider that it had at least an arguable case on liability, particularly given the opinions expressed by its expert witnesses. The defendant does not seek to persuade the court otherwise.
28 As to damages, damages pursuant to the Copyright Act 1968 are at large, but the plaintiff still had to prove that it had actually suffered damage as a result of any infringement of copyright. I have considered its original statement of claim and the subsequent amendments, and its outline of submissions in the lead up to trial and then its final closing submissions.
29 This was never a case asserting breach of contract, and the lump sum building contract was never signed. It was never part of the plaintiff's pleaded case that the defendant was in some way contractually bound to have his house built by the plaintiff.
30 Rather, the plaintiff's case in its submissions and as put in cross-examination during the trial was that the defendant had been willing to build with the plaintiff, and intending to build with the plaintiff, right up until and including his signing of a Preparation of Plans Agreement on 13 August 2009 and that, shortly thereafter, he rather inexplicably, and in a fit of pique, parted ways with the plaintiff and decided to engage a second builder and authorised that builder to copy the plaintiff’s plans, by direct copying or by giving Mr Druce such detailed instructions as to ensure the plaintiff’s design was substantially reproduced.
31 Although the plaintiff tackled the plausibility of the defendant's stated reasons for parting ways with the plaintiff, it did not plead or advance a case to the effect that the defendant had in a premeditated or fraudulent way engaged the plaintiff to design a house for him, intending and always knowing that he was going to instruct a second builder to infringe the copyright in those plans, hence depriving the plaintiff of the opportunity to build the house. Nor by the time discovery had been provided, and as the evidence was led, was there scope for asserting that the defendant had engaged Ross Griffin prior to parting ways with the plaintiff.
32 The plaintiff's case was that the assessment of damages in its favour should be informed by the expected profit it lost on the anticipated building of the house, being somewhere in the area of $365,000 - $400,000, although damages remained at large. Loss of profits was pitched as a good starting point for assessing damages.
33 There is legal authority in the field of breach of copyright supporting an assessment of damages at large informed by lost profits, albeit not equating to lost profits as such. At trial the plaintiff's legal advisers placed particular reliance on a decision of Bailey v Naimol Pty Ltd [1994] FCA 1401; (1994) 125 ALR 228 in support of its claim for damages to be informed by an expected loss of profits.
34 It was wholly unsuccessful in that argument at trial. I found Bailey v Naimol to be entirely distinguishable. I found that, even had it been successful in proving an infringement of copyright, it had not established any actual loss as a result. I found that the plaintiff lost the client for reasons quite unconnected to any issue of infringement of copyright. Those findings were made largely based upon my positive view of the defendant's credibility and his evidence as to why he parted ways with the plaintiff.
35 I do consider the plaintiff's case for damages at large was always weak.
36 That is not to say it was utterly doomed. I infer that the plaintiff had been advised by its legal advisers that its claim for damages in line with its lost profits was reasonably arguable. Competent and experienced counsel made submissions in support of its claim at trial. Much depended upon the factual findings underpinning the assessment of damages.
37 Importantly, the plaintiff also pursued a claim for additional damages pursuant to s 115(4) of the Act. It claimed such damages on the basis of the alleged flagrancy of the breach and was essentially planning to rely on what might emerge in the evidence during the trial in support of such a claim. Obviously its case for such damages was going to turn upon decisions I made about the credibility of the defendant and Mr Druce. Those decisions went against the plaintiff.
38 I also found that I would not in any event have been prepared to award additional damages. Again I infer that the plaintiff had been advised by its legal advisers that its claim for additional damages was reasonably arguable.
Was it unreasonable for the plaintiff to reject the offers?
39 The first offer of 10 July 2013 was made very early in the proceedings, prior to either party giving discovery. Although the defendant's solicitors pointed out certain difficulties the plaintiff would face in proof, at that stage it appears that the plaintiff was not even in a position to know when the defendant had engaged Ross Griffin, whether after he had parted ways with the plaintiff or during his involvement with it. The expert witnesses had not prepared their reports and the plaintiff was given only two weeks to consider the offer.
40 The offer was also a very modest figure compared to what was being claimed and was inclusive of costs, with no suggested breakdown of the figure into the offer and the likely costs incurred to date, although the offer was unambiguous in the sense that it left no figure to be calculated, and the $15,000 was simply a flat figure to end the matter entirely.
41 By 10 July 2013, the defendant's own legal fees had already passed the figure of $15,000, even after certain discounts on those fees. Assuming, as seems reasonable, that the plaintiff's lawyers had incurred fees in the same sort of area, the offer was in reality a way for the plaintiff to cover its legal expenses and walk away. That is no criticism of the defendant whatsoever, but it was not an offer that was likely to be attractive.
42 I am not prepared to make an award of indemnity costs based on this offer. However unfortunate it is with hindsight that the plaintiff did not accept this early offer, I do not consider it acted unreasonably in rejecting such a low offer so early in the piece.
43 The second offer of 5 September 2014 was still very modest compared to the plaintiff's claim. A year on, it was only $5,000 more than the first offer and, in the interim, the plaintiff had further amended its statement of claim, provided particulars of objective similarity, provided discovery and presumably spent time considering the defendant's discovered documents and the documents produced by Ross Griffin in response to a subpoena. Given the likely time spent on those items and the likely increase in legal fees incurred, and the fact that the offer was expressed to be inclusive of costs and GST if any, with no breakdown of the components for damages versus costs, the offer in substance as to damages was probably less than the first offer. By the time of this offer, the defendant's own legal fees had just topped $50,000.
44 While the second letter set out something of the defendant's position in relation to his dealings with Ross Griffin suggestive, if those assertions were credible, that Mr Druce had arrived at his design independently, they were mere assertions and it was not unreasonable for the plaintiff to consider that it had reasonable prospects of proving its case on liability. Counsel at trial for the plaintiff certainly attacked the credibility of both the defendant and Mr Druce, and I infer that this stance was consistent with the intended approach of those advising the plaintiff in this case at the time of the second offer. I am not prepared to make an award of indemnity costs based on the second offer. Although I consider the plaintiff's case on damages at large was always weak, I have already inferred that the plaintiff was being advised otherwise. I do not consider the plaintiff acted unreasonably in rejecting the offer.
45 I turn now to the third offer of 27 August 2015. The trial commenced on 8 December 2015, so the offer was made relatively close to trial, but this time with 28 days to consider the offer. The offer had increased to $40,000, double the previous offer, but still only about 10% of what the plaintiff was seeking in its primary claim for damages informed by loss of profits, leaving aside interest and its claim for additional damages.
46 The offer was again expressed to be inclusive of costs. It did not attempt to break down the anticipated costs from the offer in so far as it related to damages, although there was no ambiguity about the offer. The plaintiff's costs could be expected to have substantially increased since the second offer, given that by this stage it had retained two expert witnesses and obtained three reports, and is likely also to have retained its counsel of choice for the trial (if not before) and provided materials to him and perhaps conferred with him. By the end of August 2015, the defendant's own legal fees were $120,000. Assuming that the plaintiff's costs were also mounting, in reality the offer equated to a contribution towards the costs incurred to date, or nothing as to costs and an offer towards settlement of the damages claim that bore no relation to the plaintiff's claim for damages based on a loss of profits.
47 By this stage the expert report from the defence had been disclosed. The third letter summarised the expert opinion of Mr Hofman in favour of the defence. The plaintiff's counsel at trial took a fairly scathing view of this report, however, and I infer that those advising the plaintiff are likely to have considered the reports of its own experts to be more likely to find favour with the court. That proved wrong in the end result, but at that stage they had two experts largely agreeing with each other, and Mr Dickie in particular was very confident in his opinion.
48 In addition, the defence also contained an assertion that the defendant had an implied licence to use the plaintiff's plans. That assertion was disavowed shortly prior to trial, and I made specific findings about that pleading and did not find that it reflected adversely upon the defendant's credibility, but the plaintiff had at least grounds for hoping that it would establish the infringement. As mentioned earlier, the defendant does not seek to argue that the plaintiff had no reasonable basis for thinking it might succeed on liability and hones in on the hurdles in the plaintiff's way in relation to damages.
49 But a reasonable basis for considering that it could succeed on proving liability also informs whether or not the plaintiff had a reasonable basis for its claim for additional damages. The plaintiff might well have thought that, had the court formed a very poor view of the defendant's credibility and found that he blatantly instructed Mr Druce to copy the plaintiff's design from the outset, it stood a reasonable prospect of being awarded some form of additional damages. Clearly those advising the plaintiff considered there were reasonable prospects of it being awarded additional damages, given that they were pleaded, and that claim was maintained at trial. That view was not unreasonable, pre-trial and prior to hearing any evidence, notwithstanding that the court formed a different view post-trial.
50 The letter containing the offer did warn the plaintiff that its claim for damages, particularised as a 'loss of profits over the life of the building contract', was 'flawed for a number of reasons', but did not really show the defendant's hand in terms of setting out a detailed set of facts which would persuade the reader that the plaintiff could not prove any loss. It did refer to the fact that the defendant had paid the plaintiff a sum of $25,000 already for the preparation of plans.
51 The reasons asserted however, it is fair to say, did not hone in on the argument advanced at trial which centred on the fact that the defendant was never willing to build with the plaintiff in any event and the reasons for that unwillingness. Finally, the letter simply asserted that 'the case does not call for any additional damages under statute'.
52 Although this third offer comes closest to establishing a case for indemnity costs, given the hurdles in the plaintiff's way and the extent to which the letter drew attention to those, I am still not persuaded that I should award indemnity costs against the plaintiff. Although I consider its claim for damages at large was always weak, there were legal authorities that could at least form the basis for an argument for damages at large, and there was some potential for additional damages had I formed a very negative view of the defendant's credibility and taken a different view as to the appropriateness in any event of awarding additional damages against him. I infer that those advising the plaintiff held the view that it had a reasonable case and it was not unreasonable for the plaintiff to consider on that basis that it had prospects of success.
53 This is not a case in which there was any improper purpose in pursuing the litigation. Nor was there any impropriety in the conduct of the litigation itself. Although I was critical of the manner in which the plaintiff's expert witnesses, particularly Mr Dickie, were briefed, I infer that to have been the result of not thinking the matter through, rather than any improper motive. This is not a case in which some sort of admonition is warranted.
54 The granting of indemnity costs is exceptional in nature. In all of the circumstances I am not persuaded that indemnity costs should be awarded.
The costs orders being sought
55 In the alternative to an award of indemnity costs, the defendant seeks the usual order that the costs of the action be taxed if not agreed, including the costs of the application for costs. The plaintiff submits that is the appropriate order to be made. The defendant also seeks an additional allowance for counsel's trial preparation equivalent to 10 hours ($3,850) on account of preparation prior to the resumption of the part heard trial. That order is unopposed. The defendant also seeks an order that the defendant's costs of the transcript, and the costs of the instructing solicitor at trial be allowed on the taxation. That order is unopposed. I make orders in those terms.
56 The defendant also seeks an order that the costs of this application including the preparation of the minute of proposed orders, affidavit in support and written submissions be taxed as falling within item 20(h) (attending on reserved judgment) of the applicable costs scale. The plaintiff does not specifically address that order, but I consider that it does fall within the item and I make that order.
57 Finally, the defendant seeks a special costs order to the effect that his costs be taxed without regard to the upper limits imposed by the relevant costs scales under item 17 (preparation of case) and item 20(a) (fee on brief). That order is opposed.
General principles in relation to a special costs order
58 Section 280(2) of the Legal Profession Act (WA) provides:
… if a court or judicial officer is of the opinion that the amount of costs allowable in respect of a matter under a costs determination is inadequate because of the unusual difficulty, complexity or importance of the matter, the court or officer may do all or any of the following -
(a) order the payment of costs above those fixed by the determination;
(b) fix higher limits of costs than those fixed in the determination;
(c) remove limits on costs fixed in the determination;
(d) make any order or give any direction for the purposes of enabling costs above those in the determination to be ordered or assessed.
59 The reference to 'a matter' is a reference to the whole of the matter subject to a costs determination, rather than the specific aspect or item of the matter for which the limit imposed by the applicable scale is sought to be lifted: Electricity Generation and Retail Corporation t/as Synergy v Woodside Energy Ltd [2014] WASC 469 (S), [5] (Martin CJ).
60 First the court must be satisfied that the amount of costs allowable under the applicable scale would be inadequate. The onus is upon the person seeking the order to prove that. The court should consider potentially applicable items in a costs scale in order to form an opinion that the amount of costs allowable under the costs determination is inadequate: Electricity Generation [12] (Martin CJ). However, this is a matter of impression, rather than science, taking into account that a taxing officer will actually fix the amount of costs to be reasonably allowed: Electricity Generation [4]. It will not ordinarily be necessary for the court to determine what amount should be allowed on taxation, only whether there is a fairly arguable case that a greater amount should be allowed than is allowable under the relevant scale: Electricity Generation [28].
61 Second, if the court is satisfied that the amount of costs allowable would be inadequate, it must then also form the opinion that that is so because of the unusual difficulty, or the complexity or importance of the matter, the word 'unusual' qualifying only the 'difficulty' of the matter: Cape Lambert Resources Ltd v MCC Australia Sanjin Mining Pty Ltd [2013] WASCA 66 (S) [5]. In assessing the importance of the matter the court is assessing whether the work done was appropriate to the significance of the issues between the parties, or to other prospective parties, the public or community generally: Heartlink Ltd v Jones as Liquidator of HL Diagnostics Pty Ltd (in liq) [2007] WASC 254 (S) [18] - [19] (Martin CJ). Again the onus is upon the person seeking the order to establish that. That is a value judgment based on the courts experience of the usual range of cases before the superior courts.
62 If both matters are made out, then the court will decide whether in its discretion to make such an order.
Special costs order
63 The two items on the applicable Legal Practitioners (Supreme Court) (Contentious Business) Determinations for 2012 and 2014 are item 17, which allows a maximum of 120 hours for getting up the case for trial by a senior practitioner and item 20(a) which allows for counsel fees on brief which allows for a fee on brief based on 3.5 days preparation and the first day in court and thereafter a fixed rate per day in court.
64 I am satisfied that both items should be lifted, such that the taxing officer can determine a reasonable sum without those upper limits, and will briefly state my reasons why.
65 The case was not legally so difficult as to lift it above the usual run of cases. Both parties had researched the law and provided detailed submissions, but in the end the parties agreed on the legal principles.
66 The dispute did, however, involve issues of considerable importance to the plaintiff, because it involved the protection of its copyright in its original designs, and it builds about 5 - 10 high-end one-off houses a year. The outcome of this one dispute therefore potentially impacts on decisions the plaintiff might make in the future in other matters. The defendant was placed at risk of paying damages in the ballpark area of $400,000 or more. And while Mr Druce was not a party to the action, his reputation as both salesman and designer within the industry in which he still works was inevitably under fire.
67 Further, the case was factually complex. The devil was absolutely in the detail, and in the finest details in the architectural plans which needed to be painstakingly compared to each other.
68 The defendant had a harder road to travel than the plaintiff in establishing his case. The plaintiff's case was centred on comparing the ultimate results between its design and the Ross Griffin design, with some attention given to an explanation as to why certain differences should not be seen to detract from the ultimate submission of both similarity and actual copying. While some evidence was led about the defendant's dealings with the plaintiff, the plaintiff did not need to delve into every detail in order to present its case.
69 The defendant on the other hand needed to go into considerable detail as to his dealings with the plaintiff in order to highlight his own design requirements, to fully explain the significance of the Mermaid Beach house (a third house which I found informed the designs of both parties, and particularly the Ross Griffin design), to explain the parting of ways with the plaintiff notwithstanding having paid it $25,000 and signed an agreement about a week before, and then to canvas the entire design process with Ross Griffin, from initial sketches to concept drawings to working drawings, drawing by drawing, decision by decision, with corresponding evidence from Ross Griffin's employee Mr Druce. The defendant's case could not have succeeded but by the meticulous dissection of the designs and the entire design process engaged in with both the plaintiff and Ross Griffin, and that was the approach taken at trial.
70 Both parties in this case briefed experienced and competent counsel to appear, and both had an instructing solicitor in court. The trial ran for seven days. There were three experts witnesses involved. There was no time-wasting in the manner in which the trial was conducted by either party. There was no unnecessary evidence, or unnecessary and protracted cross-examination. The defendant's written closing submissions ran to 75 pages, together with a further 41 page schedule responding to the plaintiff's particulars of objective similarity. The judgment runs to 171 pages.
71 The material which has been put before the court on affidavit indicates that counsel rendered accounts for pre-trial preparation of 83 hours, adding up to around $54,000. The accounts are before the court and detail the involvement in the pre-trial preparation engaged in by counsel, including settling the brief to the expert witness and being engaged in various steps of the preparation done by those instructing him. He was clearly not simply presented with a package of materials in the days before trial, but was engaged throughout 2015.
72 I am satisfied that counsel could not have adequately prepared for this trial in 3.5 days, and that the limit imposed by item 20(a) of the scale is quite inadequate to capture the detailed familiarity with the factual material that counsel needed to be personally well across to adequately tackle the plaintiff's case and present the defence. I am satisfied there is a fairly arguable case that a greater amount should be allowed than is allowable under item 20(a).
73 I am satisfied that the reason is because the matter was both important to the parties and to the prospective party Mr Druce, and that it was also complex factually. I am mindful that there are numerous cases involving multiple parties and complex financial arrangements and the like, to which this case does not compare for complexity and for which an adequate and reasonable amount will far exceed the adequate and reasonable amount in this case, but that does not detract from the proposition that this case was factually complex and involved issues of importance.
74 As to item 17, the material before me on affidavit indicates that, excluding work which can be attributed to other items on the scale, the defendant's solicitors have charged for just short of 250 hours, or a bit over double the upper limit of 120 hours. For the same reasons, I am satisfied that the limit should be lifted. The evidence which needed to be gathered and considered and the preparation required to put that evidence into cohesive form, and the preparation of witnesses, would all have been time-consuming because of the nature of the case and the need to be meticulous and very detailed.
75 Again I am satisfied there is a fairly arguable case that a greater amount should be allowed than is allowable under item 17, because the matter was both important to the parties and Mr Druce and complex factually, when compared to the usual run of cases, and I am satisfied I should exercise my discretion in favour of the defendant.
76 I am not minded in this case to replace the upper limits contained within items 17 and 20(a) with an alternative upper limit. The plaintiff has not sought such an order and simply opposes the lifting of the limit. I am mindful of the sorts of comments expressed in cases such as Eckersley v Graeme Peter Eckersley as Executor of the estate of the late Gloria Dawn Eckersley (dec) [2016] WASC 154 (S) (Chaney J) concerning burgeoning and disproportionate legal costs, and the need to ensure the proper administration of the law and access to justice, and the need for proportionality between the costs incurred and the value of the subject matter in dispute and the financial position of each party. This is not a probate case where the value of the estate is diminished by costs. In this case, the plaintiff voluntarily issued proceedings to protect its commercial interests and the defendant is a successful businessman who built a very high-end house. I consider there is no reason in this case not to simply remove the limits and leave the proper limits on reasonable costs to be determined by the taxing officer.
77 Accordingly I make the special costs order sought to the effect that costs be taxed without regard to the limit of hours under the applicable costs scale in relation to both items 17 (preparation of case) and 20(a) (fee on brief).
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