Vivid Entertainment LLC and Ors v Digital Sinema Aust Pty Ltd and Ors (No.2)
[2007] FMCA 688
•18 May 2007
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| VIVID ENTERTAINMENT LLC & ORS v DIGITAL SINEMA AUSTRALIA PTY LTD & ORS (No.2) | [2007] FMCA 688 |
| COPYRIGHT – PRACTICE AND PROCEDURE – COSTS – Assessment of costs of summary judgment application – departure from Federal Magistrates Court scale – consideration of factors warranting departure from the scale – conduct of the respondents – costs fixed in a specific amount. |
| Federal Magistrates Court Rules 2001 (Cth) |
| SBO Pictures Inc & Ors v KAOS Shop Pty Ltd & Ors [2006] FMCA 82 Vivid Entertainment LLC & Ors v Digital Sinema Australia Pty Ltd & Ors [2007] FMCA 157 |
| First Applicant: | VIVID ENTERTAINMENT LLC |
| Second Applicant: | VIVID VIDEO INC |
| Third Applicant: | SBO PICTURES INC Trading as WICKED PICTURES |
| Fourth Applicant: | WORLD WIDE RED LIGHT DISTRICT INC |
| Fifth Applicant: | ZERO TOLERANCE ENTERTAINMENT INC |
| Sixth Applicant | CONWEST RESOURCES IN Trading as FALCON STUDIOS |
| Seventh Applicant: | CHANDLER TOLUCA LAKE STUDIOS INC Trading as COLOSSAL ENTERTAINMENT |
| Eighth Applicant: | IO GROUP INC Trading as TITAN MEDIA |
| Ninth Applicant (A): | MITCHELL SPINELLI Trading ACID RAIN PRODUCTIONS |
| Ninth Applicant (B): | PW PRODUCTIONS INC Trading as ACID RAIN PRODUCTIONS |
| Tenth Applicant: | CALVISTA AUSTRALIA PTY LTD |
| Eleventh Applicant: | GALLERY TITLES PTY LTD |
| Twelfth Applicant: | GREENWICH TECHNOLOGIES PTY LIMITED |
| Thirteenth Applicant: | BAD MONKEY INC Trading as MANUEL FERRARA |
| First Respondent: | DIGITAL SINEMA AUSTRALIA PTY LTD |
| Second Respondent: | DIGITAL SINEMA PTY LTD |
| Third Respondent: | JIM KARAKIKES |
| File Number: | SYG1341 of 2006 |
| Judgment of: | Driver FM |
| Hearing date: | 14 February 2007 |
| Date of Last Submission: | 8 May 2007 |
| Delivered at: | Sydney |
| Delivered on: | 18 May 2007 |
REPRESENTATION
| Counsel for the Applicants: | Mr R Cobden SC Mr J Hennessy |
| Solicitors for the Applicants: | Gilbert + Tobin |
| Solicitors for the Respondents: | Mr T Tzovaras Tzovaras Legal |
INTERLOCUTORY ORDERS
The Court certifies, pursuant to rule 21.15 of the Federal Magistrates Court Rules 2001 (Cth) that it was reasonable for the applicants to employ counsel to appear and advise and prepare submissions on the summary judgment application in this matter.
For the purposes of order 10 made on 19 March 2007 and pursuant to rule 21.02(2)(a) of the Federal Magistrates Court Rules 2001 (Cth), costs of the summary judgment application are fixed in the sum of $22,534.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT SYDNEY |
SYG1341 of 2006
| VIVID ENTERTAINMENT LLC |
First Applicant
VIVID VIDEO INC
Second Applicant
SBO PICTURES INC
Trading as WICKED PICTURES
Third Applicant
WORLD WIDE RED LIGHT DISTRICT INC
Fourth Applicant
ZERO TOLERANCE ENTERTAINMENT INC
Fifth Applicant
CONWEST RESOURCES INC
Trading as FALCON STUDIOS
Sixth Applicant
CHANDLER TOLUCA LAKE SUTIOS INC
Trading as COLOSSAL ENTERTAINMENT
Seventh Applicant
IO GROUP INC
Trading as TITAN MEDIA
Eighth Applicant
MITCHELL SPINELLI
Trading as ACID RAIN PRODUCTIONS
Ninth Applicant (A)
PW PRODUCTIONS INC
Trading as ACID RAIN PRODUCTIONS
Ninth Applicant (B)
CALVISTA AUSTRALIA PTY LTD
Tenth Applicant
GALLERY TITLES PTY LTD
Eleventh Applicant
GREENWICH TECHNOLOGIES PTY LIMITED
Twelfth Applicant
BAD MONKEY INC
Trading as MANUEL FERRARA
Thirteenth Applicant
And
| DIGITAL SINEMA AUSTRALIA PTY LTD |
First Respondent
| DIGITAL SINEMA PTY LTD |
Second Respondent
JIM KARAKIKES
Third Respondent
REASONS FOR JUDGMENT
This is an application for costs in a fixed amount of an application for summary judgment. On 19 March 2007 I gave judgment substantially in favour of the applicants on the summary judgment application[1]. Order 10 made by me in that judgment was that the first and second respondents shall pay the applicants’ costs of the summary judgment application. I said that I would hear the parties as to the quantum of costs that should be awarded and, at the time of judgment, I invited written submissions as to quantum.
[1] Vivid Entertainment LLC & Ors v Digital Sinema Australia Pty Ltd & Ors [2007] FMCA 157
The applicants seek the sum of $27,040.80 being 60 per cent of their solicitor and own client costs of $45,068. The affidavit of Christopher Edmund Duvall Williams made and filed on 2 April 2007 provides evidence of how those costs were incurred. I received that evidence. The parties agreed that an oral hearing was not required and Mr Williams’ evidence is uncontested. Among other things, Mr Williams deposes that in other comparable proceedings[2] the Court awarded 80 per cent of estimated taxed costs of $64,250 on the basis of solicitor and own client costs of $99,596.22. The opinion of Mr Williams that a similar discount of 40 per cent as an assumed taxation reduction should be applied in this case is an opinion. The capacity of Mr Williams, as a solicitor, to give that opinion evidence is debatable. I treat that aspect of his affidavit as a submission.
[2] SBO Pictures Inc & Ors v KAOS Shop Pty Ltd & Ors [2006] FMCA 82
The respondents filed submissions as to quantum of costs on 27 April 2007. Essentially, the respondents submit that:
a)the Court should apply its scale of costs in schedule 1 to the Federal Magistrates Court Rules 2001 (Cth) (“the Federal Magistrates Court Rules”), which provides for costs of an interim or summary hearing as a discrete event of $1,250[3] plus a daily hearing fee of $2,250[4];
b)there are no recoverable disbursements relating to the summary judgment application; and
c)the applicants should receive for preparation the same amount as is prescribed by the Rules for preparation for a one day hearing[5].
[3] The submissions refer to an amount of $1,135 but it appears the solicitor for the respondents was referring to an outdated copy of the Court rules.
[4] The submissions specify an amount of $1,027.50 but that calculation appears to be based upon an outdated copy of the Court rules and a misinterpretation of the applicable loading for counsel.
[5] The amount referred to in the submissions is $1,365 but the amount specified in the Rules for preparation for a hearing of one day is $2,250.
The respondents submit that the applicants should receive $3,527.50. If those submissions were to be adopted by reference to the Rules as they currently apply, the amount would be $5,750.
The applicants filed submissions in reply on 8 May 2007. They submit that scale costs under the Rules would inadequately compensate the applicants for their costs because of the complexity of the matter, which flowed substantially, if not completely, from the approach of the respondents to put the applicants to strict proof on all issues, and the relative novelty of the summary judgment application.
There is force in those submissions. In order to succeed on the summary judgment application the applicants had to satisfy me that only one conclusion in the principal proceeding could be said to be reasonable[6]. I referred in my summary judgment to the approach taken by the respondents to the litigation. The respondents were unprepared for a trial of the matter without reasonable excuse and chose to put in issue both the subsistence of copyright in the allegedly infringed films and the ownership of that copyright. It was necessary for the applicants on the summary judgment application to review all of the evidence on all issues in dispute that they had been required to introduce. Further, the summary judgment application was made when the applicants’ case had closed, at an advanced stage of the trial, which necessarily increased the costs incurred in that application.
[6] Vivid Entertainment LLC & Ors v Digital Sinema Australia Pty Ltd & Ors [2007] FMCA 157 at [30]
The respondents assert that the costs sought by the applicants are “grossly excessive” but the evidence of Mr Williams as to how the costs were incurred is uncontested. It can be fairly assumed that the solicitor and own client costs of the applicants could be significantly reduced on a taxation. However, there is no procedure for the taxation of costs awarded under the Federal Magistrates Court scale. Neither is a taxation of costs relevant where the Court fixes costs in a specified amount pursuant to rule 21.02(2)(a). It is open to me to apply the Federal Court scale and to refer the costs for taxation under rule 21.02(2)(c) but neither party appears to favour that approach. It would put the parties to additional expense and prolong the resolution of the dispute as to the quantum of costs. I have decided that I should fix the costs in a specific amount pursuant to rule 21.02(2)(a).
The outcome under the Federal Magistrates Court scale for stage 2 of a proceeding would, in the circumstances of this matter, be manifestly inadequate. The summary judgment application was rendered complex and expensive principally because of the approach of the respondents to the litigation. The respondents should bear a substantial amount of the costs that the applicants have incurred. The applicants concede that the bill of costs they rely upon could be reduced by 40 per cent on a notional taxation. I agree. Indeed, it is distinctly possible, on my perusal of the bill, that it could be reduced on a taxation by as much as 50 per cent. I am, however, satisfied that not less than 50 per cent of the costs incurred by the applicants on the summary judgment application have been reasonably and properly incurred when assessed on a party and party basis. I am also satisfied that the applicant should receive a certificate for counsel’s fees pursuant to rule 21.15. I shall therefore fix costs and disbursements in the sum of $22,534, being 50 per cent of the solicitor and own client costs and disbursements incurred.
I certify that the preceding eight (8) paragraphs are a true copy of the reasons for judgment of Driver FM
Associate:
Date: 18 May 2007
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