Washington v Qantas Airways Limited
[2014] FCCA 1413
•4 July 2014
FEDERAL CIRCUIT COURT OF AUSTRALIA
| WASHINGTON v QANTAS AIRWAYS LIMITED | [2014] FCCA 1413 |
| Catchwords: COSTS – Application for costs – matter settled prior to final hearing – application for costs to be pursuant to Federal Court Rules 2011 (Cth) – whether costs according to event based Court scale should be awarded. |
| Legislation: Bankruptcy Act 1966 (Cth) Competition and Consumer Act 2010 (Cth) Evidence Act 1995 (Cth) s.135 Fair Work Act 2009 (Cth) Federal Circuit Court of Australia Act 1999 (Cth) s.3, 79 Federal Circuit Court Rules 2001 (Cth) rr.1.06, 21.02, 21.10, 21.11, Sch.1 Federal Court Rules 2011 (Cth) |
| Washington v Qantas Airways Limited [2013] FCCA 778 Perez & Ors v Fernandez (No.2) [2012] FMCA 183 Vivid Entertainment LLC & Ors v Digital Sinema Australia Pty Ltd & Ors (No. 2) [2007] FMCA 688 SBO Pictures Inc & Ors v Kaos Shop Pty Ltd & Ors [2006] FMCA 82 Meskenas v ACP Publishing Pty Ltd [2006] FMCA 1136 A.P.R.A v Cougars Tavern & Ors [2008] FMCA 369 Top Plus Pty Ltd & Ors v K Square Pty Ltd & Ors (No.4) [2010] FMCA 671 Phonographic Performance & Ors v Adelaide City Entertainment [2005] FMCA 923 Microsoft Corporation v Wordsworth [2007] FMCA 2071 PPCA Ltd v All Girls Entertainment Pty Ltd & Ors [2010] FMCA 593 APRA Ltd v Riceboy Pty Ltd & Anor [2011] FMCA 942 Centrestage Management Pty Ltd v Riedle & Ors (No.2) [2007] FMCA 1260 Facton Ltd & Ors v Ching Lim Sports Cap Pty Ltd & Ors (No.2) [2010] FMCA 735 Burns v Media Options Group Pty & Ors (No.2) [2013] FCCA 2016 Ruddock & Ors v Vadarlis & Others (No.2) [2001] FCA 1865; (2001) 115 FCR 229 Oshlack v Richmond River Council [1998] HCA 11 Noble v Baldwin & Anor (No.2) [2011] FMCA 700 Ladakh Pty Ltd v Quick Fashion Pty Ltd & Anor (No.2) [2011] FMCA 712 Ladakh Pty Ltd v Cao & Anor (No.2) [2010] FMCA 968 Travers v New South Wales [2001] FMCA 18; (2001) 163 FLR 99 Shiels v James [2000] FMCA 2 Wiggins v Department of Defence – Navy (No.3) [2006] FMCA 970 |
| Applicant: | MEGAN ALEXANDER WASHINGTON |
| Respondent: | QANTAS AIRWAYS LIMITED |
| File Number: | SYG 449 of 2013 |
| Judgment of: | Judge Nicholls |
| Hearing date: | 20 February 2014 |
| Date of Last Submission: | 20 February 2014 |
| Delivered at: | Sydney |
| Delivered on: | 4 July 2014 |
REPRESENTATION
| Counsel for the Applicant: | Mr J M Hennessy SC |
| Solicitors for the Applicant: | Gilbert + Tobin |
| Counsel for the Respondent: | Mr N R Murray |
| Solicitors for the Respondent: | Allens |
ORDERS
The respondent pay the applicant’s costs as agreed or assessed pursuant to Part 1 of Schedule 1 to the Federal Circuit Court Rules 2001 (Cth).
The applicant pay the respondent’s costs for the application for costs as agreed or assessed pursuant to Part 1 of Schedule 1 to the Federal Circuit Court Rules 2001 (Cth).
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT SYDNEY |
SYG 449 of 2013
| MEGAN ALEXANDER WASHINGTON |
Applicant
And
| QANTAS AIRWAYS LIMITED |
Respondent
REASONS FOR JUDGMENT
On 7 March 2013 Ms Megan Alexander Washington (“the applicant”) commenced proceedings in this Court pursuant to the Competition and Consumer Act 2010 (Cth) (“the CCA”) and the Copyright Act 1968 (Cth) (“the Copyright Act”) alleging that Qantas Airways Limited (“the respondent”) engaged in misleading or deceptive conduct and made false or misleading representations.
Background
On 21 June 2013, I handed down judgment in relation to the applicant and respondent’s Applications in a Case concerning discovery of documents in the proceedings (see Washington v Qantas Airways Limited [2013] FCCA 778 (Washington (No. 1)). The conduct of the proceedings to that date had been vigorous on both sides and involved a series of Court orders to enable the parties to progress their respective cases.
On 10 September 2013, the respondent accepted the applicant’s offer of compromise (dated 30 August 2013) in relation to the substantive application. The parties agreed that the respondent pay the applicant’s costs in the proceedings (see the terms of the settlement). That agreement was that these costs should be as “agreed or assessed”. It appears agreement as to the amount of costs could not be achieved. This now requires determination by the Court.
The Dispute
The current dispute between the parties is as to the “scale” of costs to be applied. The applicant seeks on order that the respondent pay her costs (and disbursements) as agreed or assessed pursuant to the Federal Court Rules 2011 (Cth) (“the FCA Rules”). In the alternative, the applicant seeks her costs pursuant to the FCA Rules, with a “discount”.
The respondent resists this, and while accepting that it should pay the applicant’s costs, it asserts that costs should be awarded in accordance with the “scale” set out at Schedule 1 to the Federal Circuit Court Rules 2001 (Cth) (“the FCC Rules”), and as applicable to general federal law matters.
The Evidence
The applicant sought leave to read the affidavit of Michael John Williams, solicitor, made on 5 February 2014. The respondent objected to [39] of the affidavit going into evidence. [The remainder was read.]
In that paragraph Mr Williams asserts a number of matters. They are that the substantive proceedings involved a copyright claim and that in his experience the present case was “as complex” as other copyright cases in which he had been involved. Further, that the application raised other legal issues, namely those claims under the CCA, which were not present in the “other” copyright cases.
I understand the applicant to be seeking to rely on this evidence for the purpose of supporting her argument that given the complexity of this matter it was more appropriate to refer to the costs regime under the FCA Rules, rather than the FCC Rules.
The respondent’s objection was based generally on s.135 of the Evidence Act 1995 (Cth) (“the Evidence Act”). In context I understood this to refer to s.135(c) of the (“cause or result in undue waste of time”) or s.135(b) (“be confusing or misleading”) Evidence Act. The respondent’s position was that a comparison of any complexity in this case with the claimed complexity in the large number of other cases referred to by the applicant could not be properly tested. As the respondent described it, this would require “intimate scrutiny” of the entire conduct of the case, including the large volume of correspondence between the parties (through their solicitors). In essence, this would cause an undue waste of time, and in any event be misleading and confusing.
I admitted the paragraph provisionally. On reflection, and having heard the parties’ arguments in full, I would allow the paragraph into evidence. The assessment of the comparative “complexity” of this case and other cases within the jurisdiction was relevant to the question of how, or to what extent, costs should be assessed.
Specifically, in relation to s.135(c) of the Evidence Act, while some time was taken it could not be said in the circumstances of the dispute to be an “undue waste”. While the respondent may see this exercise as an “undue waste” it was the lack of agreement between the parties on the method of assessing costs that enlivened the matter of “complexity”.
On the matter of Mr Williams’ affidavit evidence here, I note that the weight assigned to this evidence was assessed in light of the Court’s consideration of the circumstances and outcomes of the list of cases to which the applicant referred.
The Applicant’s Argument
The applicant sought to emphasise that the substantive proceedings could be characterised as a “copyright case”. This was put for the purpose of submitting the following. There was no argument with the proposition that Schedule 1 of the FCC Rules, referred to as the “scale costs” (the events based costing approach used in the FCC Rules), was generally applied in this Court. Nonetheless, the applicant submitted in “copyright” cases in this Court the “orthodox” approach is to apply the FCA Rules.
In particular, the applicant relied on Perez & Ors v Fernandez (No.2) [2012] FMCA 183 (“Perez” per Judge Driver at [7]:
“There is authority that in copyright proceedings, because of the complexity of those proceedings the Federal Magistrates Court's scale of costs does not provide adequate recompense to a successful party. Counsel for the applicants referred to several decisions by my colleague, Raphael FM. The most recent of those was APRA v Cougars Tavern [2008] FMCA 369. I have also accepted in other proceedings that the fixed event based scale in the Federal Magistrates Court Rules does not provide adequate recompense for long and complex proceedings in circumstances where the scale is specifically designed to deal with a high volume of relatively simple matters which only go for a day or so. I accept the applicants’ submissions that the appropriate order to make is an order requiring costs to be taxed if not agreed by reference to the Federal Court Rules.”
[Footnotes omitted]
The applicant sought to rely on a number of cases to support the proposition that the proceedings involved complexity such as to warrant the application of the FCA Rules.
First, that complexity could be seen from certain aspects of what was a long running controversy between the parties. This “controversy” preceded the date of the filing of the application to the Court (see variously the affidavit of Mr Williams at, for example, [19] – [20]).
Further, that during the six months while the proceedings were on foot “two rounds” each of discovery and subpoenas, a lengthy interlocutory hearing which required judgment to be reserved, and an unsuccessful day of mediation reflected the factual complexity involved, the legal issues arising, and what was said to be the “hard fought nature of the dispute”.
Second, the applicant drew attention to what she said was the complexity of the pleadings in this matter. Here, attention was directed, in particular, to the Points of Claim filed by the applicant in these proceedings, and the respondent’s “defence” filed in response. The argument was that a number of critical and complex issues, both at law and in fact, are apparent and provide the basis for the applicant’s contention.
The background to the circumstances giving rise to the applicant’s substantive application involved the performance of a particular song by the applicant at an event held by the respondent. The issues arising were said to include matters involving the applicant’s reputation, the correct copyright classification for the song and, separately, the use to which the recording of her performance of the song was put by the respondent. Further, there were matters of the exact terms of the agreement between the applicant and the respondent in relation to the performance of the song, whether any breaches of the agreement occurred, and the scope of any authority for the use of the song. Even further, a suite of claims arose as to the nature and character of representations made, and factual disputes as to whether they were made in the first place.
Third, the applicant drew attention to the correspondence between the parties, as referred to in the annexures to Mr Williams’ affidavit, for the purpose of identifying what was said to be the large range of issues and facts that ultimately were reflected in the Points of Claim. The various facts and issues were such that they created a matrix from which was produced such a degree of complexity to support the applicant’s claim now to costs at the Federal Court scale rather than the FCC Rules.
Further, the applicant sought to rely on this view of what the material revealed to draw on analogy with a number of other “copyright” cases which she sought to put before the Court. In these other cases costs, for the greater part, were awarded pursuant to the FCA Rules (for example, see Vivid Entertainment LLC & Ors v Digital Sinema Australia Pty Ltd & Ors (No. 2) [2007] FMCA 688 (“Vivid”), SBO Pictures Inc & Ors v Kaos Shop Pty Ltd & Ors [2006] FMCA 82 and Perez).
In a similar vein, the applicant sought to draw an analogy between the circumstances and the complexity said to be revealed in those cases and submitted that the final hearing of this matter would have involved such matters as the need for expert evidence as to the valuation of the applicant’s “image” for the purposes of assessing damages. She submitted that this was a matter of itself involving similar complexity as found in the other cases.
Further examples were said to include the assessment of relevant facts emerging from divergent accounts of the agreement between the applicant and the respondent. Noting that this included allegations that the terms of the agreement between the parties, in part, arose from oral agreements.
The applicant further submitted that the material revealed that the final hearing would have involved significant focus and argument on the “novel” principle, or question, of “performance insights” in a context where this concept had not been subject of judicial consideration in Australia. Here again the applicant referred to Perez. The argument was that that case involved consideration of “moral rights” which had only been the subject of juridical consideration once in Australia (see Meskenas v ACP Publishing Pty Ltd [2006] FMCA 1136 (“Meskenas”)).
As referred to above, the applicant provided a bundle of cases to the Court (see also the two schedules of cases) to assist the Court in understanding how the applications for costs in matters of this type have been dealt with in this Court. The applicant sought a consistent approach to matters of this type in this Court.
Essentially, the cases can be put into two groups. Sixteen cases where costs were awarded with reference to the FCA Rules and seven cases where costs were awarded with reference to Schedule 1 of the FCC Rules.
As set out above, the applicant agreed with the respondent that, “prima facie”, Schedule 1 of the FCC Rules should “apply”. However, her argument was that that needed to be understood with reference to the way in which copyright cases have been dealt with by the Court. That treatment was described as “particular”. The applicant’s position can best be illustrated as arising from what was said by Judge Driver in Perez at [7] (see above).
In this regard, the Court was taken to A.P.R.A v Cougars Tavern & Ors [2008] FMCA 369 (“Cougars”) as it arises from the extract in Perez, and Vivid Entertainment at [8] per Judge Driver:
“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.”
The applicant emphasised that in such cases as Cougars where no respondent appeared, costs were nonetheless ordered with reference to the FCA Rules (albeit with a 20% discount) (at [30] per Judge Raphael):
“It is appropriate that the respondents should pay the applicant’s costs of these proceedings. I am mindful that the event based scale proposed in Schedule 1 of the Federal Magistrates Court Rules 2001 is not appropriate for this type of action where a considerable amount of work has had to be done in the absence of any response or any evidence from the respondents. I would propose that the applicant’s costs be taxed if not agreed pursuant to the Federal Court Act and Rules. In order to reflect the fact that proceedings in the Federal Magistrates Court should be less expensive than those conducted in the Federal Court I would order that the amount of taxed costs to be paid shall be 80% of those costs payable under the Federal Court scale.”
The applicant also referred, and with emphasis on the “Parliamentary intention” at the formation of this Court, to Top Plus Pty Ltd & Ors v K Square Pty Ltd & Ors (No 4) [2010] FMCA 671 (“Top Plus”) at [30] per Judge Raphael:
“Both parties are in agreement that this is not an appropriate case for an award of costs under the schedule to the Federal Magistrates Court Rules 2001 (the ‘Rules’). It is a case where costs should be assessed in accordance with the Federal Court Rules 1979. This court has a long practice of ensuring that even when a taxation or assessment of this type is undertaken the final award takes into account the intentions of the Parliament on the formation of the court that it be ‘quicker, simpler and cheaper’. Thus the general rule has been that costs under the Federal Court scale be payable at only as to 80%. That is the order that I would make.”
The applicant sought to explain the seven cases where this Court’s scale was applied. Four of those cases (Phonographic Performance & Ors v Adelaide City Entertainment [2005] FMCA 923, Microsoft Corporation v Wordsworth [2007] FMCA 2071, PPCA Ltd v All Girls Entertainment Pty Ltd & Ors [2010] FMCA 593 and APRA Ltd v Riceboy Pty Ltd & Anor [2011] FMCA 942) were said to be “low level copyright enforcement” cases where there was no significant dispute because the respective respondents had not appeared.
As to the remainder, it was explained that in Meskenas the applicant did not seek other than FCC scale costs, in Centrestage Management Pty Ltd v Riedle & Ors (No. 2) [2007] FMCA 1260 (“Centrestage”) a component of costs, albeit under this Court’s scale, was awarded on an indemnity basis, and Facton Ltd & Ors v Ching Lim Sports Cap Pty Ltd & Ors (No. 2) [2010] FMCA 735 (“Facton”) was said to be, with respect, somewhat lacking in reasoning as to why scale costs were applied.
The applicant also argued that to make a costs order in the applicant’s favour with reference to the FCA Rules (in full and not with the discount mentioned above) would result in a “just” outcome.
The matter stressed here was that the applicant was essentially successful in these proceedings. The respondent agreed to the applicant’s offer of compromise, that is to pay the applicant what was described as a “significant sum” in full and final settlement of her claims.
The applicant again stressed on this point what was also said by Judge Driver in Perez at [7] (see above). That is, that it would not be a just outcome for an applicant, who has otherwise been awarded damages, to then be inadequately recompensed by the scale costs. The applicant particularly stressed the evidence of Mr Williams to submit that her actual costs incurred to the date of his affidavit significantly exceed any costs to be awarded under the FCC Rules (see Mr Williams’ affidavit at [33]).
Respondent’s Argument
The respondent’s position, essentially, is that the “fair process” (the “procedural fairness” position) adopted in this Court is that any award of costs is done with reference to the event based scale in Schedule 1 to the FCC Rules.
The respondent characterised the applicant’s position as seeking a “special” costs orders. That is, once the “procedural fairness” position is understood, then the applicant is really seeking to argue that copyright cases in this Court are a “special kind of case” which require the application of the FCA Rules.
The respondent’s position was that when proper regard is had to each of the elements in the applicant’s submissions, they do not successfully argue for a departure, in the circumstances of this case, from the “procedural fairness” position. I will deal with particular aspects of the respondent’s submissions in the consideration below.
Consideration
There appeared to be agreement between the parties that the relevant statutory environment and FCC Rules created a situation that the “procedural fairness” position in relation to costs awards in this Court is with reference to, and application of, the events based scale in Schedule 1 to the FCC Rules. It should be noted that I did not comprehend the respondent’s position to be that the Court did not have discretion in this matter.
The arguments before the Court centred around the question as to whether there were factors present that argued for costs to be awarded with reference to the FCA Rules and not the FCC Rules.
The Court’s Discretion to Award Costs
Notwithstanding the parties’ position before the Court, some attention must first be focussed on the “procedural fairness” position seemingly accepted by both parties. To the extent that the respondent stresses that the fixed events scale represents some primary or even status quo, that submission needs to be understood in light of the nuances of the relevant statutory scheme and the FCC Rules.
The Court’s jurisdiction to award costs flows from s.79(2) of the Federal Circuit Court of Australia Act 1999 (Cth) (“the FCC Act”). Three things must immediately be noted.
First, the exercise of any power flowing from that jurisdiction, by statute, does not apply to family law or child support proceedings, or in matters arising under the Fair Work Act 2009 (Cth) (see s.79(1) of the FCC Act). To the extent that submissions before the Court sought to distinguish the situation in relation to matters under the Bankruptcy Act 1966 (Cth), that distinction arises under the FCC Rules, not the FCC Act (see r.21.10 of the FCC Rules).
Second, as I said in Burns v Media Options Group Pty & Ors (No.2) [2013] FCCA 2016, I do not comprehend that the Court’s discretion in relation to costs is other than unfettered, subject of course to exercising the discretion judicially (Ruddock & Ors v Vadarlis & Others (No 2) [2001] FCA 1865; (2001) 115 FCR 229 at [9] per Black CJ and French J (as he then was) and Oshlack v Richmond River Council [1998] HCA 11 at [66] per McHugh J).
Third, and however, s.79(3) of the FCC Act directs attention to the FCC Rules:
“Except as provided by the Rules of Court or any other Act, the award of costs is in the discretion of the Federal Circuit Court of Australia or Judge.”
The words “…any other Act…” may be put to one side for the purposes of this judgment. The words “[e]xcept as provided by the Rules of Court…” may raise a concern that the discretion given by s.79(2) of the FCC Act is otherwise “fettered” by the FCC Rules in its exercise.
There are, at least two reasons to reject this. First, as Judge Barnes said in Noble v Baldwin & Anor (No.2) [2011] FMCA 700 at [9]:
“The Federal Magistrates Court has an unfettered discretion under s.79 of the Federal Magistrates Act 1999 (Cth) to award costs, provided such discretion is exercised judicially and in the context of the relevant court rules (see Oshlack v Richmond River Council (1998) 193 CLR 72; [1998] HCA 11 at [65] per McHugh J).
Second, the FCC Rules themselves contemplate and provide for the situation that the Court may dispense with compliance (or partial compliance) with the FCC Rules in the interests of justice (r.1.06(1) of the FCC Rules). Further, where the Court makes an order inconsistent with the FCC Rules, the order of the Court prevails (r.1.06(2) of the FCC Rules).
In this light, what emerges is that the Court’s discretion is unfettered, its exercise must be done judicially and in the context of, or having regard to, the relevant FCC Rules.
This directs attention to Part 21 of the FCC Rules. The following parts thereof are relevant to the disposition of the matter before the Court:
1)Rule 21.02(2):
“21.02 Order for costs
…
(2) In making an order for costs in a proceeding, the Court may:
(a) set the amount of the costs; or
(b) set the method by which the costs are to be calculated; or
(c) refer the costs for taxation under Part 40 of the Federal Court Rules or under Chapter 19 of the Family Law Rules; or
(d) set a time for payment of the costs, which may be before the proceeding is concluded.”
2)Division 21.3:
“21.10 Costs and disbursements
Unless the Court otherwise orders, a party entitled to costs in a proceeding (other than a proceeding to which the Bankruptcy Act applies) is entitled to:
(a) costs in accordance with Parts 1 and 2 of Schedule 1; and
(b) disbursements properly incurred.
21.11 Taxation of costs
(2) When taxing a statement of costs, a taxing officer must apply:
(a) for a family law or child support proceeding—the scale of costs set out in Schedule 3 to the Family Law Rules; and
(b) for a general federal law proceeding—the scale of costs set out in Schedule 2 to the Federal Court Rules.
(3) In this rule:
taxing officer means a Registrar.”
Under this scheme any “entitlement” to costs by a party in general federal law proceedings directs attention to Part 1 of Schedule 1 to the FCC Rules. Hence the fixed events scale pressed by the respondent to be applied to the circumstances of this case.
The use of the word “entitled” (as at r.21.10 of the FCC Rules) must of course be understood in context of the application of relevant principles of an award of costs (for example, costs follow the event). In the current case it is not necessary to pursue this further as the respondent has not argued that the applicant should not recover her costs. As stated above, the dispute is over how that recovery should be calculated.
In all, therefore, the exercise of the Court’s discretion here, albeit unfettered, is to be exercised in the context of the FCC Rules. To talk of “prima facie” positions, in my view, seeks to divert attention away from the relationship between the exercise of the Court’s discretion and the Court’s proper regard to the FCC Rules.
The Schedule in the FCC Rules may be a useful guide or even a “starting point” for consideration of the exercise of the Court’s discretion. However, ultimately a caution that must be noted here is that the Court’s discretion must be exercised with reference to the particular circumstances of each case and what may be reasonable as an award of costs in, and arising from, those circumstances.
In all, therefore and bearing in mind the above, the question for the Court now is whether the circumstances reasonably speak for the applicant to be reimbursed, on a party and party basis, for her costs in light of the Schedule to the FCC Rules, the FCA Rules or some variation of either, or both.
Of course, there may be cases where it is reasonable to apply the Schedule to the FCC Rules and its fixed event based costs or the FCA Rules or both (for example in Perez the award of costs with reference to the taxation under the FCA Rules was limited to 80%, see also Cougars at [30]).
The caution here applies equally to the applicant’s argument. That, in effect, accepted that the event based scale at Schedule 1 to the FCC Rules represented some reflection of “ordinary” cases before the Court, but that copyright cases, by their nature and complexity, should be treated differently.
Ultimately, this matter must be resolved with reference to what is reasonable in the circumstances, having regard to a number of relevant principles, including, achieving a just outcome. It should not be resolved with some strict formulaic approach. That is, as the applicant contends, the FCC fixed event scale costs are to be applied, unless it is a copyright case which by definition is more complex than other cases and therefore the FCA Rules should be applied.
To the extent that it may be said that that is implicit in some of the authorities of this Court, to which the applicant referred, then I respectfully do not agree that that is the approach to be taken. In my view, the relevant approach is as generally set out above.
The matter of complexity, therefore, needs to be seen in this light. That is, did this case involve complex factual and legal issues such as to make it reasonable to apply the FCA Rules or some variation, or was the matter one for disposition having regard to the “starting point” in the guide of what may be reasonable as set out in the Schedule to the FCC Rules, or some variation of it.
Complexity
Turning first to the matter of complexity. The applicant’s submission was that a matter was either complex or not. The submissions did not allow for any degree or scale of complexity, but proceeded from the basis of two opposing absolutes.
I do not agree with the applicant’s approach in this regard. In part, the applicant’s submission here was consistent with her proposition that copyright cases are more complex than other general federal law cases in this Court and that, in any event, the circumstances of this case (and shown in the evidence of Mr Williams) either supported that proposition or established a basis, separately, for costs to be awarded with regard to the FCA Rules.
First, it must be noted that there is an immediate difficulty with the concept of “complexity” itself. The term, on its own, lacks precision. Its application in any case, ultimately, relies on subjective appraisal. This lends weight to the view that I have taken that the disposition of this matter should arise out of the reasonable exercise of the Court’s “unfettered” discretion, rather than the application of some predetermined formula. Of course comity of approach is important but ultimately what is fair, and just, must be determined with regard to the individual circumstances of each case.
Second, I agree with the respondent that the notion of complexity of facts and law in any proceedings should not be approached in terms of absolutes. Rather, the question is whether the proceedings as they evolved before the Court contained matters of facts and law that, by their nature, required a certain level of work and attention by legal representatives such that what is required is indemnity at a level higher, or lower, than that contemplated in the Schedule to the FCC Rules.
Third, the respondent’s submissions as to the “non-binary” nature of complexity is supported by a number of the authorities on which the applicant otherwise relied. For example, in Ladakh Pty Ltd v Quick Fashion Pty Ltd & Anor (No.2) [2011] FMCA 712 per Judge Riley, the Court referred to a matter being “somewhat complex” (at [62]).
Further examples are found in such cases as Facton. The Court there spoke of “such complexity” rather than the absolute “complexity” urged by the applicant (see at [31]). In Centrestage, the Court referred to “complexity” (in relation to the majority of issues in that case) that “…was well within the range appropriate for this Court” (at [47]).
What can be said to generally, and relevantly, emerge from the authorities referred to by the applicant is that the notion of “complexity”, and its particular application to each of the different circumstances presented in each case requires the exercise of judgment along a spectrum of assessment informed by the actual legal and factual matter in each case, and how they develop or evolve in the proceedings.
There is clearly a point where in some matters the complexity of all or some of the issues was of such character that the prima facie position or starting point of awarding costs in the scale according to the FCC Rules was not appropriate and regard was had to the available, but different, regime offered by the FCA Rules.
Commencing Proceedings in this Court
Related to the above, before the Court both parties made submissions on the question of the obvious differences between commencing proceedings in this Court instead of the Federal Court and the consequences of that choice in the subsequent disposition of a costs application.
As to the difference, relevantly, I respectfully agree with Judge Burchardt generally on the consequence of having made the election to commence proceedings in this Court (Ladakh Pty Ltd v Cao & Anor (No.2) [2010] FMCA 968 (“Ladakh”) at [4]):
“… This Court is the inferior Federal Court. Like all such Courts, it is cheaper to litigate in than superior courts. It is not, in my view, generally open to applicants to choose this Court and then seek to, as it were, retain superior Court costs scales. If you issue in this Court, prima facie you will recover your costs on the Federal Magistrates Court scale…”
Further, consistent with the view that I have taken above, Judge Burchardt went on to say (Ladakh at [4]):
“…But in this case, the matter was more complex than usual. Issues of proof in particular were far more complex then in the normal run of copyright cases. These were all ultimately matters of impression, but taken overall, I regard the Federal Court Rules as being appropriate to apply; so the Court’s order will be made in those terms.”
I note also the clear rejection of the formulaic approach of simply equating copyright cases as being “complex”. In that case the Court applied the FCA Rules because “the matter was more complex than usual”. This is consistent with the approach that “copyright cases” are to be treated no differently to any other “type” of cases (other than when the FCC Act or the FCC Rules make it so). That is, the awarding of the appropriate and reasonable level of costs should derive from the particular circumstances presented in each case, and not simply from the description of the area of jurisdiction.
Having elected to commence proceedings in this Court, the applicant, with legal representation, would be aware that, consistent with its status as inferior to the Federal Court, this Court operates under the statutory direction “to operate as informally as possible in the exercise of judicial power” and “to use streamlined procedures” (s.3(2)(a) and (b) of the FCC Act).
As Judge Raphael put it in Meskenas (at [5]):
“One of the objects of the Federal Magistrates Court [as this Court was then known] legislation was to provide a forum where disputes of this kind could be decided more ‘cheaply, quickly and simply’.
Similarly, in Top Plus Judge Raphael said (at [7]):
“…One of the objects of the Federal Magistrates Court legislation was to provide a forum where disputes of this kind could be decided more ‘cheaply, quickly and simply’…”
While in both cases this was used to explain a reduction in the award of costs otherwise to be assessed under the FCA Rules, I do not comprehend that it would not equally apply to the disposition of the question in the context created by the applicant’s position as to the application of the FCA Rules over the scale in the FCC Rules.
In exercising her election to commence her application in this Court, in light of the above, the applicant cannot expect now that that election can be ignored simply on the application of the formula she now presses. It is of course entirely a matter for the applicant as to where she chose to agitate her complaint, but the what remains is that if this was a “complex” copyright matter and as such, on her success, deserving of costs at the higher level of the “automatic” application of the FCA Rules, why she elected not to commence it in the Federal Court.
The applicant argued that not to apply the FCA Rules would deter applicants from initiating proceedings in this Court. That may, or may not, be the case. But I do not see this as a relevant consideration in the awarding of costs. The Court cannot be concerned with making decisions that applicants prefer simply to encourage persons to commence proceedings in this Court.
The Court’s Consideration of Costs
The question before the Court now, as variously referred to above, must be resolved, in the exercise of the Court’s discretion, with proper regard to the actual circumstances in this case. That is, the factors in this case, in light of the various principles referred to above, are to be weighed to arrive at a reasonable, and just, outcome as between the parties.
A number of factors need to be addressed in this context. First, the notion that the volume of work done is, or can be of itself, an element establishing complexity of the legal issues involved must be rejected. While it may to some extent be an indication of the factual complexity, it cannot be determinative of that point. In the current case I am not persuaded that the volume of work done (drawing on the evidence in Mr Williams’ affidavit and what is on the Court’s file) was of such extent or character to warrant the application of the FCA Rules.
Second, I do not agree that longevity, or a failure to resolve a dispute at mediation, of itself, reveals complexity. Without specific reference to this case it may simply be the result of the nature of the proceedings or the way parties have chosen to conduct themselves.
In this case, the evidence of the longevity of events before the commencement of the proceedings, said to involve extensive correspondence and pre-trial negotiations, says nothing about the complexity of the issues raised.
Again, some distinction must be drawn between the length of the proceedings, what was said of the dispute by each of the parties and what can be seen of this dispute, and whether these matters can support the proposition that the proceedings included, or involved, complexity.
That distinction must arise between notions of volume of work done and the actual complexity of the legal issues arising. The volume of material in, and the “longevity” of the process of, the case may in some circumstances be an indicator of complexity. However, in the current case, the evidence of Mr Williams and the background derived from Washington (No. 1), in my view reflects the “hard fought” nature of the approach of both parties to the litigation, rather than necessarily the complexity of the legal issues.
In relation to the interlocutory hearing and judgment, the need for a “reserved judgment”, as is apparent on its face, was reflective more of the large volume of items raised by both parties in support of their respective Applications in a Case involving discovery, and resisting the other party’s Application in a Case, rather than complex legal issues.
This may support an argument of some factual complexity but not necessarily of complex legal issues arising at that time (see further below on factual complexity).
Third, the applicant submitted that these proceedings involved primarily a copyright issue. The repeated description by the applicant, and the reliance in her arguments, was that this was a “copyright case”.
Some of the evidence attached to Mr Williams’ affidavit plainly supports the proposition that this matter involved copyright issues. But, it also supports the proposition that, at least, in equal proportion or part, the matter also involved consumer law matters, and an alleged breach, or breaches, of a contractual agreement.
Further, regard must also be had to the respective Applications in a Case made by the parties and their disposition in the Court’s judgment handed down on 16 July 2013 (see also above).
At that time, while plainly the case could be seen to involve consumer, contract and copyright issues, the copyright issue could not be discerned as being dominant, or preeminent, in light of how the “case” had actually unfolded before the Court and at the hearing of the Application in a Case.
Plainly those interlocutory applications were focussed on discovery of documents and the like. However, the context in which the various discovery disputes evolved, and were presented before the Court, did not suggest the preeminent position the applicant’s submissions now try to assign to the “copyright” claim.
As the matter evolved before the Court, as distinct from how it may have contemporaneously (and prior to litigation) have been perceived by the parties and some of those acting for, or representing them, in various capacities (as set out in the material annexed to Mr Williams’ affidavit), the emphasis as to the relevant areas of law was in the order as set out at [1] of the judgment concerning discovery (Washington (No. 1)):
“On 7 March 2013, Megan Alexander Washington (“the applicant”) made an application to this Court pursuant to the Competition and Consumer Act 2010 (Cth) and the Copyright Act 1968 (Cth), alleging that Qantas Airways Limited (“Qantas” and “the respondent”) engaged in misleading or deceptive conduct and made false or misleading representations, in contravention, respectively, of ss.18 and 29 of the Australian Consumer Law (“ACL” – Sch.2 of the Competition and Consumer Act 2010 (Cth)). Further, that the respondent breached the agreement between it and Ms Washington and, in contravention of the Copyright Act 1968 (Cth), engaged in unauthorised use of the recording of Ms Washington’s performance.”
Fourth, and separately, it is clear from the material attached to Mr Williams’ affidavit and by the actual proceedings before the Court, that the respondent vigorously defended the applicant’s attack. The applicant’s conduct in pressing her claims can also be described in this way.
The vigorous (or “robust” as the respondent described it before the Court) conduct on the part of the parties should not be confused with the notion of complexity. I agree with the respondent that such vigour is not an indicator of complexity of the relevant law or facts. As I have referred to elsewhere in this judgment, the assessment of the degree of complexity (and the impression of it – see [72] above) needs to arise from the substance of the actual issues, both factual and legal, in the proceedings.
Some explanation is required here of what is meant by “actual issues”. It is generally the case in exchanges between parties in litigation and prior to the commencement of proceedings, particularly through their representatives, that many matters are canvassed, conveyed in contemplation, implied, asserted and in an appropriate sense, “threatened”. The material attached to Mr Williams’ affidavit provides an example of this.
The relevant approach for the Court, however, is to consider this evidence and the other material filed in the proceedings, and distil from this the arguments in dispute, the matters of substance, both legal and factual, that require proper attention.
It is here that the strength of the respondent’s argument emerges. The applicant relied in her arguments now on the Points of Claim filed in these proceedings to support her argument of complexity. However, when the Points of Claim is viewed in context of the other material in these proceedings and when regard is had to the factual matrix giving rise to the original dispute as expressed in the application, then I agree with the respondent that the complexity contended by the applicant is not borne out.
For the purpose of clarity, as set out above, that factual matrix, or factual circumstances, giving rise to the dispute between the parties, was the performance, recording and distribution of a song by the applicant at a dinner held by the respondent.
As I referred to earlier, before the Court the case certainly emerged as one involving allegations of conduct that was said to be misleading or deceptive and representations that were said to be false and misleading. The terms of the “oral agreement” about the use of the performance of the song were also an issue.
What did not emerge as clearly was what exactly the copyright issue was. Bearing in mind that the material attached to Mr Williams’ affidavit was not before the Court until recently, and certainly not before the Court prior to the settlement of the dispute, it was difficult to see on that basis how it could be said that this case was so prominently, when compared to the other issues and complaints raised in the application, a “copyright” case raising a copyright issue of substance.
I agree with the respondent that there was no dispute between the parties that the respondent was permitted to record the performance of the song. The dispute was about the use to which that recording was put, and whether it exceeded the terms of any agreement between the parties.
In this light, I note the respondent’s submissions concerning s.248G(3) of the Copyright Act. While clearly I have not had the opportunity to hear evidence to the contrary, this appears to distinguish the “copyright issue” from one of complexity in an objective sense, to a difficult one for the applicant to overcome if she were to succeed in this aspect of her claim.
It is clear that this matter did not proceed to a final hearing of the application. The applicant initiated proceedings and sought, in effect, $500,000 from the respondent as damages. After a lengthy course of disputation, including the interlocutory hearing before this Court concerning discovery and an unsuccessful mediation before a Registrar, the substantive matter was settled by the parties.
As stated above, the applicant has argued in these proceeding as to costs that there were three separate causes of action in this matter. She sought to focus attention on the “copyright” cause, and its prominence in her overall substantive application. The applicant also submitted a “novel” question involving infringement of performance copyright arose in this case. As referred to above, to emphasise that this made the case “complex” (and therefore requiring cost with reference to the FCA Rules), the applicant said this particular issue had not been the subject of judicial determination in Australia.
That may well have been the case. But the opportunity to have tested the applicant’s proposition both as to the substance of the “novel” issue, and whether it was a “complex” issue, never arose.
That is, it is important to again note that this matter did not proceed to a final hearing. Nor had any order been made setting the matter down for any such final hearing. The proceedings had not as yet reached that stage. While it proceeded to a series of events before the Registrars of the Court in relation to return of subpoenas and the like in contemplation of a final hearing, after the “formal” mediation had been unsuccessful, no final hearing date had been set.
Even if the Court were now to proceed on the assumption that a final hearing would have involved a “novel” and even “complex” issue of copyright (both in terms of law and fact), the indemnity of a party for costs should be directed to costs actually incurred in the proceedings before the Court, and not those that may have been incurred had circumstances been different.
The evidence before the Court (Mr Williams’ affidavit) does not provide a probative basis to say that the preparation of the applicant’s case in relation to any such “novel” point had commenced in earnest for a hearing let alone had proceeded to any degree. An order setting the matter down for a final hearing may have assisted the applicant as such an indicator, independent of Mr Williams’ affidavit, but as set out above the proceedings had not developed to that stage.
Nor, in these circumstances, can it be said that an undeveloped possibility of a “novel” point, and the mere raising of that point in general terms even in pleadings, elevates the matter to a “complex” case.
Before the Court, the applicant also argued that if the Court were not to award costs with reference to the FCA Rules, then this would act to discourage parties from settling at mediation.
It is of course preferable for a number of reasons for parties to settle disputes at mediation, or even on their own initiative as a result of mediation, as appears to have been the case here. This Court “routinely” makes orders to enable mediation to take place matters such as these proceedings. In this must be noted the valuable role played by the Registrars of the Federal Court.
But this is not a satisfactory reason to award costs at a level other than what is reasonable, and appropriate, having regard to the actual circumstances presented by each case.
Further, I agree with the respondent that such a submission from the applicant assumes an entitlement to costs with reference to the FCA Rules. Plainly no such entitlement exists based simply on being “successful” at mediation or after.
In all, the applicant should receive an order for costs. That is agreed between the parties. However for the reasons set out above, I am not persuaded by the applicant that such an order should be made with reference to the FCA Rules.
The respondent urges that the order for costs should be made with the application of the event based scale set out at Schedule 1 to the FCC Rules.
For reasons set out above in this judgment, I do not hold the view that costs may only be awarded with strict reference to that Schedule. In my view, in the exercise of the Court’s unfettered discretion in the matter of costs this scale may be used as a starting point or guide. The award of the amount of costs or the method of calculation of costs, however, should arise from the circumstances of each case presented, what is reasonable, and what will produce a just outcome for the successful party.
The difficulty in this case, however, is that the applicant did not pursue any such other award of costs. That is, an award of costs based on the scale in Schedule 1 to the FCC Rules, but with variations to take into account any particular aspects that may have warranted variation.
As stated above, and repeated again for clarity, the applicant only pressed the following two “variations” or options, as stated above. The first was for the Court not to apply the scale in the Schedule to the FCC Rules and to vary the costs order from the “prima facie” position to an award of costs with reference to the FCA Rules because of the complexity of the issues in these proceedings.
In the alternative, second, the applicant did accept that in some other “copyright” cases, Judges of this Court, who were persuaded to order costs with reference to the FCA Rules did so with some “discount” in recognition of the inferior status of this Court to the Federal Court, and what this said about the level of complexity in cases before the Federal Court to which its rules are directed.
In the absence of any argument from the applicant, let alone application, that the Court should proceed to apply the fixed scale costs in the FCC Rules with some variation in the applicant’s favour, it is not appropriate for the Court to proceed to do so.
At best, the applicant’s position was that if this Court’s scale was applied she would be inadequately compensated for the costs she incurred in what was a successful prosecution of her case, because her costs (as Mr Williams’ affidavit states at [33]) exceeded the Court’s scale costs to a significant extent.
I understand, at least in part, the applicant’s argument to be that in effect the application of this Court’s scale costs, rather than the FCC Rules, would mean that the applicant as “a successful party” would lose the benefit of her “victory” (see for example Travers v New South Wales [2001] FMCA 18; (2001) 163 FLR 99, Shiels v James [2000] FMCA 2 per Judge Raphael and Wiggins v Department of Defence – Navy (No.3) [2006] FMCA 970 at [35] per McInnis FM (as he then was)).
However, I did not perceive this to be an argument to vary the application of the FCC Rules, if the Court were to find against the applicant in not awarding costs with reference to the FCA Rules. Rather, it was an argument against applying the scale in the FCC Rules. For the reasons already set out above, I do not accept that argument.
Conclusion
In any event, I am not persuaded, in all the circumstances of this case, that the award of costs to the applicant should be other than with reference to the Schedule of the FCC Rules. I will make an order accordingly.
The applicant has not been successful in her application for costs to be awarded in her favour with reference to the FCA Rules. The respondent did not dispute, given the settlement in the applicant’s favour, that she should receive an award of costs. The dispute that necessitated these “costs” proceedings was that the applicant should receive her costs with reference to the FCA Rules. In this she has been unsuccessful. The respondent has been successful. In this light the respondent should receive an award of costs, with reference to the fixed scale costs in Schedule 1 to the FCC Rules for the costs proceeding.
I certify that the preceding one hundred and twenty-five (125) paragraphs are a true copy of the reasons for judgment of Judge Nicholls
Associate:
Date: 4 July 2014
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