FEDERAL COURT OF AUSTRALIA

 

Young v Wyllie (No 2) [2010] FCA 616


Citation:

Young v Wyllie (No 2) [2010] FCA 616



Parties:

GARY YOUNG v GREGORY WYLLIE, VIDEO SPORTS PTY LTD, EX DVD PTY LTD [Previously Ezy DVD Pty Ltd] (in liquidation) ACN 094 555 674, JIM ZAVOS, PITSTOP BOOKSHOP PTY LTD, BARBARA ELIZABETH LYSTER, ATLANTIC VIDEO, CHAOS ENTERTAINMENT PTY LTD, ROBERT APPEL, STOMP PTY LTD, ANDREW JORGENSEN, SANITY MUSIC STORES PTY LTD, (NO THIRTEENTH RESPONDENT NAMED), GREG MILNE and DARREN ROBINSON TRADING AS MOVIE SEARCH DOT COM



File number:

ACD 41 of 2008



Judges:

MOORE J



Date of judgment:

17 June 2010



Catchwords:

COSTS - consideration of appropriate costs order where unsuccessful application for summary judgment – factors relevant to Court's discretion – whether costs should be awarded on an indemnity basis – whether costs to be payable forthwith – consideration of costs capping



Legislation:

Federal Court Rules Orders 62 and 62A



Cases cited:

Airservices Australia v Jeppesen Sanderson Inc [2006] FCA 906

All Services Australia Pty Ltd v Telstra Corporation Ltd (2000) 171 ALR 330

Colgate-Palmolive Company v Cussons Pty Limited (1993) 46 FCR 225

Corcoran v Virgin Blue Airlines Pty Ltd [2008] FCA 864

Dibb v Avco Financial Services Ltd [2000] FCA 1785

Gersten v Minister for Immigration and Multicultural Affairs [2001] FCA 260

Hughes v Western Australian Cricket Association (Inc) (1986) ATPR 40-748

Life Airbag Company of Australia Pty Ltd v Life Airbag Company (New Zealand) Ltd [1998] FCA 545

McKellar v Container Management Services Limited [1999] FCA 1639

Rafferty v Time 2000 West Pty Ltd (ACN 127 893 270) (No 3) (2009) 257 ALR 503

Re Wilcox; Ex parte Venture Industries Pty Ltd (1996) 141 ALR 727

Ritter v Godfrey [1920] 2 KB 47

Woodlands v Permanent Trustee Company Limited (1995) 58 FCR 139

 

 

Date of hearing:

17 June 2010

 

 

Date of last submissions:

20 April 2010

 

 

Place:

Sydney

 

 

Division:

GENERAL DIVISION

 

 

Category:

Catchwords

 

 

Number of paragraphs:

35

 

 

Counsel for the Applicant:

The applicant appeared in person

 

 

Counsel for the First and Second Respondents:

C Champion

 

 

Solicitor for the First and Second Respondents:

Hazan Hollander Solicitors

 

 

Counsel for the Fifth and Sixth Respondents:

The fifth and sixth respondents appeared by telephone

 

 

Solicitor for the Fifth and Sixth Respondents:

Conal O'Toole

 

 

Counsel for the Seventh Respondent:

J McDonald

 

 

Solicitor for the Seventh Respondent:

Harris Freidman Hyde Page

 

 

Counsel for the Eighth and Ninth Respondents

The ninth respondent appeared by telephone

 

 

Counsel for the Tenth, Eleventh, Twelfth and Fourteenth Respondents:

S Gorry

 

 

Solicitor for the Tenth, Eleventh, Twelfth and Fourteenth Respondents:

Henry Davis York






IN THE FEDERAL COURT OF AUSTRALIA

 

NEW SOUTH WALES DISTRICT REGISTRY

 

GENERAL DIVISION

ACD 41 of 2008

 

BETWEEN:

GARY YOUNG

Applicant

 

AND:

GREGORY WYLLIE

First Respondent

 

VIDEO SPORTS PTY LTD

Second Respondent

 

EX DVD PTY LTD [Previously Ezy DVD Pty Ltd] (In Liquidation) ACN 094 555 674

Third Respondent

 

JIM ZAVOS

Fourth Respondent

 

PITSTOP BOOKSHOP PTY LTD

Fifth Respondent

 

BARBARA ELIZABETH LYSTER

Sixth Respondent

 

ATLANTIC VIDEO

Seventh Respondent

 

CHAOS ENTERTAINMENT PTY LTD

Eighth Respondent

 

ROBERT APPEL

Ninth Respondent

 

STOMP PTY LTD

Tenth Respondent

 

ANDREW JORGENSEN

Eleventh Respondent

 

SANITY MUSIC STORES PTY LTD

Twelfth Respondent

 

(NO THIRTEENTH RESPONDENT NAMED)

Thirteenth Respondent

 

 

GREG MILNE

Fourteenth Respondent

 

DARREN ROBINSON TRADING AS MOVIE SEARCH DOT COM

Fifteenth Respondent

 

 

JUDGE:

MOORE J

DATE OF ORDER:

17 JUNE 2010

WHERE MADE:

SYDNEY

 

THE COURT ORDERS THAT:

 

1.                  The applicant's notice of motion of 26 August 2009 for summary judgment be dismissed.

2.                  The applicant to pay the respondents' costs (other than the third, fourth and fifteenth respondents) of the notice of motion on a party and party basis.

3.                  Subject to further order, the costs to be taxed and payable 7 days after the application for leave to appeal is determined or otherwise resolved.






Note:Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
The text of entered orders can be located using Federal Law Search on the Court’s website.







IN THE FEDERAL COURT OF AUSTRALIA

 

NEW SOUTH WALES DISTRICT REGISTRY

 

GENERAL DIVISION

ACD 41 of 2008

 

BETWEEN:

GARY YOUNG

Applicant

 

AND:

GREGORY WYLLIE

First Respondent

 

VIDEO SPORTS PTY LTD

Second Respondent

 

EX DVD PTY LTD [Previously Ezy DVD Pty Ltd] (In Liquidation) ACN 094 555 674

Third Respondent

 

JIM ZAVOS

Fourth Respondent

 

PITSTOP BOOKSHOP PTY LTD

Fifth Respondent

 

BARBARA ELIZABETH LYSTER

Sixth Respondent

 

ATLANTIC VIDEO

Seventh Respondent

 

CHAOS ENTERTAINMENT PTY LTD

Eighth Respondent

 

ROBERT APPEL

Ninth Respondent

 

STOMP PTY LTD

Tenth Respondent

 

ANDREW JORGENSEN

Eleventh Respondent

 

SANITY MUSIC STORES PTY LTD

Twelfth Respondent

 

(NO THIRTEENTH RESPONDENT NAMED)

Thirteenth Respondent

 

GREG MILNE

Fourteenth Respondent

 

DARREN ROBINSON TRADING AS MOVIE SEARCH DOT COM

Fifteenth Respondent

 

 

JUDGE:

MOORE J

DATE:

17 JUNE 2010

PLACE:

SYDNEY


REASONS FOR JUDGMENT

1                     This judgment deals with the issue of costs of an interlocutory application for summary judgment by the applicant following the decision in Young v Wyllie [2010] FCA 283 (30 March 2010).  In that decision I concluded the applicant had failed to establish any basis for the granting of summary judgment against any respondent under s 31A of the Federal Court of Australia Act 1976 (Cth) (Federal Court Act).  The parties were invited to file written submissions on the question of costs.  These reasons should be read in conjunction with the earlier reasons.

The applicant's submissions

2                     The applicant is a self represented litigant without legal qualifications.  He appears committed to the view that his case is a strong one and also that it raises issues of general and public importance.  The applicant submits that his argument is not frivolous and an interim costs order would be contrary to the public policy of Australia and "destroy ordinary Australians faith in their ability to petition their government for redress of "wrongs"" in such circumstances where the issues to be considered are too important for costs to be allowed at all.  The applicant also suggests that:

… there is no glaring reason why an interim costs judgement should be granted to Respondents at this stage.  In fact to do so will distract the focus of the case and bring unfair [burdens] on all litigants, and in particularly Applicant who is pressing a legitimate claim of legal "..first impression.."  among other claims, which he has a right to do and in fact has a right to seek leave to appeal to further that claim in which he has legitimate belief.  There is also the effect of "chilling" of Applicant and other litigants who may want to bring an action of "first impression" to determine their rights in this court.


3                     The costs incurred by the respondents have, according to the applicant, been caused by delaying tactics of the first and second respondent when they knew that what they were doing was "in fact unlawful and illegal".  He submits that he has "won substantial victories in this matter" and in the circumstances it would be "improper" for costs to be awarded "halfway through this litigation".  He refers in his submission to the "US/Australia Free Trade Agreement" (AUSFTA) and "The International [Covenant] on Civil and Political Rights" (ICCPR) and the impact these have on his rights.

4                     Other issues raised by the applicant in his submissions include an email from the Department of Foreign Affairs and Trade said to support his claim, "numerous motions" and the ICCPR.

The respondents' submissions

5                     The first and second respondents seek an order that the applicant pay their costs on an indemnity basis.  They submit that these costs should be paid forthwith under O 62 r 3(2) of the Federal Court Rules.  Indemnity costs, it is submitted, are justified in the circumstances of this case because the action has been commenced or continued by the applicant where, if properly advised, he should have known that he had no chance of success.  It should therefore be presumed that the action was commenced or continued for an ulterior motive or due to a disregard for the known facts or the established law: Fountain Selected Meats (Sales) Pty Ltd v International Produce Merchants Pty Ltd (1988) 81 ALR 397.  The first and second respondents submit that the indemnity costs should be awarded because "it was unreasonable for the party against whom the order is made to have subjected the innocent party to the expenditure of costs": see Hamod v New South Wales (2002) 188 ALR 659.

6                     The first and second respondents submit that the applicant, in filing his application for summary judgment, was asking the court to accept his version of events and his interpretation of the law before the first and second respondents had the opportunity to present their case and test the evidence of the applicant by cross-examination. 

7                     The first and second respondents submit that the applicant has been warned of the risks attached to continuing with the proceedings and pursuing the application for summary judgment without legal representation.  They submit that the applicant has refused to seek legal advice while not indicating that this was due to impecuniosity.  The first and second respondents contend that the applicant's pursuit of summary judgment, despite warnings by the Court, was "unreasonable and made in wilful disregard of known facts" and the application was "unmeritorious", "high-handed", "hopeless" and "unnecessary" because the defence and affidavit evidence of the first and second respondents point to the "existence of numerous factual and legal issue[s] that call for the matter to proceed to trial".   The findings in the judgment of 30 March 2010 are that the applicant's claim in relation to s 103 of the Copyright Act 1968 (Cth) is "untenable".  The first and second respondents submit that because of the element of unreasonableness in the applicant's conduct the power provided by O 62 r 3 should be exercised.  They furnish evidence that the costs incurred in respect of the proceedings to date are $161,566.37 and approximately $93,349.33 has been incurred in dealing with the s 31A application.  These costs have been imposed unnecessarily and represent a considerable financial burden for the first and second respondents.  The first respondent in his affidavit filed on 20 April 2010 said that he owes an outstanding balance of $41,633.98 to his solicitors and barrister who have continued "to work despite their fees remaining unpaid".  Details of the fees incurred in defending these proceedings were attached to the affidavit.  The first and second respondents seek a stay of proceedings until there is payment in full of indemnity costs.

8                     There were no submissions on costs filed by the third and fourth respondents.  As noted in the judgment of 30 March 2010 at [50] these proceedings were stayed against the third respondent pursuant to s 471B of the Corporations Act 2001 (Cth).  The fifteenth respondent filed a defence to the applicant's amended statement of claim on 12 June 2009, however, he has not filed a notice of appearance and has not filed a submission on costs.

9                     The fifth and sixth respondents filed a submission on costs on 14 April 2010.  These were said to be supplementary to submissions on costs made during the hearing of the application for summary judgment on 12 February 2010.  The fifth and sixth respondents contend at [6] of their submissions that the applicant has failed "utterly to identify any loss or damage suffered".  They claim that their costs should be taxed and paid forthwith by the applicant because the application for summary judgment "was hopelessly misconceived".  No express reference was made to indemnity costs.

10                  The seventh respondent agreed with the submissions of the first and second respondents that orders for indemnity costs to be taxed and payable forthwith are warranted in the circumstances of these proceedings, where the applicant has failed to establish any basis for summary judgment.  The seventh respondent submits that the demands of justice in this case require that there should be a departure from the general practice of not ordering costs until the principal proceedings are concluded.  Considerable costs have been incurred because the applicant has not acted with competence and diligence.  Despite only a small number of videos being sold by the seventh respondent, the seventh respondent has been involved in litigation for almost eighteen months and the matter has still not been set down for final hearing, in part because many of the documents filed by the applicant were "long and rambling" and the documents in support of the application could be described as "haphazard and shambolic".

11                  The eighth and ninth respondents submit that the applicant failed to make out a case against them for liability under s 103 of the Copyright Act or ss 52 and 53(g) of the Trade Practices Act 1974 (Cth).  They submit that the applicant is aware that the eighth and ninth respondents do not purchase, offer for sale or sell products through the Chaos website and this is supported by the affidavits of the tenth and eleventh respondents.  They argue the applicant has continued to pursue his claims despite being warned of the risks involved and despite being advised to seek legal advice.  The eighth and ninth respondents contend that the applicant's case is "frivolous and fundamentally flawed" and as a result of defending the applicant's allegations they have been forced to incur substantial legal costs.  The submission notes that the legal advisors of the eighth and ninth respondents have been dismissed because of the prolonged nature of the proceedings and the unsustainable costs incurred.  They seek indemnity costs and costs taxed and payable forthwith.

12                  The tenth, eleventh, twelfth and fourteenth respondents submit that "it was clear from the commencement of the proceedings that the (a)pplicant did not have any maintainable cause of action against" them and they maintain that the applicant failed to demonstrate infringement of s 103 of the Copyright Act or ss 52 and 53 of the Trade Practices Act and has not provided evidence of any conspiracy or other fraudulent activity on the part of the respondents.  These respondents submit that they have been forced to incur costs in defending proceedings in which the applicant had no real prospect of success.  They seek an order for indemnity costs or alternatively that the applicant should pay the respondents' costs on a party/party basis and these should be taxed and payable forthwith.

Payment of costs forthwith – the principles

13                  The general principle is that costs are resolved when the rights of the parties are finally determined and the proceedings are concluded.  O 62 r 3 of the Federal Court Rules concerns the time when costs are to be dealt with by the Court.  It provides as follows:

(1)    The Court may in any proceeding exercise its powers and discretions as to costs at any stage of the proceeding or after the conclusion of the proceeding.

(2)    Where the Court makes an order in any proceeding for the payment of costs the Court may require that the costs be paid forthwith notwithstanding that the proceeding is not concluded.

(3)    An order for costs of an interlocutory proceeding shall not, unless the Court otherwise orders, entitle a party to have a bill of cost taxed until the principal proceeding in which the interlocutory order was made is concluded or further order. (Emphasis added)

The Court has a power to order costs at any stage and can require those costs to be paid "forthwith", after determination of an interlocutory issue.  Usually an order for costs of an interlocutory proceeding is not made until the principal proceeding is finalised, as provided by r 3(3) so that multiple taxations can be avoided, the funds of an opposing party are not exhausted at an early stage and to avoid a situation where the successful party would be prevented from setting off the judgment against an earlier order to pay costs. 

14                  The nature of the power to order that costs be paid forthwith was recently considered by Besanko J in Rafferty v Time 2000 West Pty Ltd (ACN 127 893 270) (No 3)  (2009) 257 ALR 503.  His Honour ordered the respondents to pay the applicant's costs of a notice of motion but refused to order that the costs be paid forthwith.  As to the applicable principles, his Honour said:

20        The general rule, which is embodied in O 62 r 3(3), is that the costs of an interlocutory proceeding are not to be taxed until the principal proceeding is concluded or until further order. The general rule serves a number of purposes. First, it avoids multiple taxations in a proceeding. Secondly, it avoids the apparent unfairness which may arise where, at an early stage of a proceeding, a party who is ultimately successful is required to pay costs to a party who is ultimately unsuccessful. Finally, it prevents interlocutory proceedings being used as a weapon to exhaust the financial resources of one of the parties.

21            At the same time, the court may order that costs be paid forthwith, and the cases suggest that that power may be exercised in circumstances in which there is an element of unreasonableness in the conduct of the unsuccessful party, and it is likely that there will be a long delay between the interlocutory proceeding and the conclusion of the principal proceeding. One example of the former which has been discussed in the cases is where an unsuccessful party makes multiple attempts to plead its case. It seems to me that another consideration which may be relevant to the question of whether an order should be made that the costs of an interlocutory proceeding be paid forthwith is the nature of the interlocutory proceeding and the likely quantum of the costs involved. It seems to me that if the interlocutory proceeding is a substantial one and the costs payable are substantial then that may be a matter which, together with other matters, may lead to an order being made that the costs of the interlocutory proceeding be paid forthwith.

 

22            Each party referred me to a number of cases which discuss the relevant principles. The respondents emphasised statements to the effect that the court’s power to order that the costs of an interlocutory proceeding be paid forthwith is exercised only in very special circumstances (Vasyli v AOL International Pty Ltd (unreported, Lehane J, 2 September 1996)). The applicants referred to statements in the authorities to the effect that the power to order that the costs of an interlocutory proceeding be paid forthwith should be used less sparingly than it has in the past: (Airservices Australia v Jeppesen Sanderson Inc [2006] FCA 906 at [31] per Graham J).

23            In addition to the authorities which I have mentioned, I refer to Spotwire Pty Ltd v Visa International Service Association (No 2) [2004] FCA 571 at [103]-[109] per Bennett J; IO Group Inc v Prestige Club Australasia Pty Ltd [2008] FCA 1147 at [20]-[25] per Flick J; McKellar v Container Terminal Management Services Ltd [1999] FCA 1639 at [13]-[20], [24], [41] per Weinberg J; Australian Securities and Investments Commission v Mining Projects Group Ltd (No 3) [2008] FCA 952 at [24] per Gordon J; and Jianshe Southern Pty Ltd v Cooktown Pty Ltd (No 2) [2007] FCA 903 at [35].

15                  Three comparatively recent examples of where parties have been ordered to pay costs forthwith are as follows.

16                  In Life Airbag Company of Australia Pty Ltd v Life Airbag Company (New Zealand) Ltd [1998] FCA 545 Branson J concluded at page 12 that costs should be paid forthwith "where a party has been required to incur significant costs over and above those which it would have incurred had the opposing party acted in the handling of the proceeding with competence and diligence."  In Life Airbag the applicants filed five different versions of a statement of claim within nine months and the respondents incurred the costs of instructing counsel to attend at Court on strike out applications.  These costs were viewed by her Honour as "costs in reality thrown away and in respect of which, in my view, the demands of justice may require a departure from the general practice envisaged by O 62 r 3."  Justice Branson also, in ordering costs to be paid forthwith, thought that the issues were complex and that a hearing date could not realistically be expected for many months in the future.  There was, in that case, suggestion by the applicants that such a departure from the ordinary rule may well stifle the proceedings, however, her Honour stated at page 13:

I conclude that in the circumstances of this case, the interests of justice require that there be a departure from the ordinary rule that an order for costs of interlocutory proceedings does not entitle a party to have a bill of costs taxed, and the costs paid, until the principal proceeding is concluded.  In so concluding I do not overlook the suggestion put forward on behalf of the applicants that such a departure from the ordinary rule may have the effect of stifling the proceedings.  I am not satisfied that it would necessarily have such an effect.  However, even if I were, my conclusion would not alter.  (Emphasis added)

17                  Justice Weinberg in McKellar v Container Management Services Limited [1999] FCA 1639 found that almost a year had been wasted in the proceeding, mainly because of serious defects in the applicants' pleading.  The amended statement of claim was found at [9] to be "so plainly defective in both its style and manner of pleading, and so confusing and poorly drafted," that it was struck out in its entirety.  In the further amended application the number of respondents was increased from eleven to thirty-four.  In the further amended statement of claim the applicants entirely abandoned a number of claims and pleaded a significantly different case.  His Honour did not consider that the respondents should have to wait for up to two years before they could recover costs expended in taking time consuming steps to ensure that a pleading, which ought never to have been filed, was struck out.  These were costs which were thrown away.  The cost awarded to the respondents previously, as well as the costs of and incidental to the motions before the Court were ordered to be taxed and paid forthwith.

18                  In Airservices Australia v Jeppesen Sanderson Inc  [2006] FCA 906 Graham J held at [32]:

The making of an order under Order 62 rule 3 is justified where, through no fault of a party, such as the first and second respondents in the present case, there has been substantial delay in the proceedings because an applicant has attempted a number of versions of the Application and the Statement of Claim, additional directions hearings have taken place which should not have been necessary, interlocutory steps have been taken and applications have been brought unnecessarily given the changes to the pleadings that have occurred.

His Honour at [32] referred to the decision in All Services Australia Pty Ltd v Telstra Corporation Ltd (2000) 171 ALR 330.  In that matter Kiefel J at [11] considered an order under O 62 r 3 was justified where "a party in whose favour costs orders have been made to date should not be required to wait until the finalisation of the proceedings to obtain payment of them", particularly where there have been substantial delays in the proceedings, most commonly caused by unsatisfactory attempts to plead a case requiring additional and unnecessary direction hearings.  Graham J in Airservices Australia at [33] held that the circumstances clearly brought the case into the category "where, if costs are to be ordered by reference to the changes that have been proposed or made to the Application and/or pleadings of the applicant, then justice requires" that the applicant who has put the respondents to unnecessary expense should pay such costs as are thrown away and these should be paid forthwith.

Indemnity costs or party and party costs – the principles

19                  Section 43 of the Federal Court Act confers a wide discretion on the Court in relation to costs, although this power should be exercised judicially.  Costs ordinarily follow the event and the successful litigant will receive its costs, unless special circumstances justify some other order: Hughes v Western Australian Cricket Association (Inc) (1986) ATPR 40-748.  As a broad generalisation, this is true of interlocutory contests and final hearings.  As Atkin L J has explained in Ritter v Godfrey [1920] 2 KB 47 at 54 "the discretion of a judge is not an absolute discretion, but must be exercised subject to certain governing principles".

20                  The principles applicable to an order for indemnity costs are well-established.  Justice Sheppard in Colgate-Palmolive Company v Cussons Pty Limited (1993) 46 FCR 225 at 233 said that there should be some "special or unusual feature in the case" to warrant a departure from the ordinary rule that costs be paid on a party and party basis.  At 234 para [5] his Honour stated:

The question must always be whether the particular facts and circumstances of the case in question warrant the making of an order for payment of costs other than on a party and party basis.

Some of the examples included in Sheppard J's reasons include cases where there have been allegations of fraud in instances where these were known to be false, in cases where proceedings were commenced or continued for some ulterior motive or in instances where allegation were made which ought never to have been made.  The Full Court of this Court awarded indemnity costs in Re Wilcox; Ex parte Venture Industries Pty Ltd (1996) 141 ALR 727 because the application with which the proceedings were concerned was held to be an abuse of process and the inordinate delay in making the application, in the circumstances of the case, provided good reason for the award of indemnity costs.  The statement of applicable principles is found at 732 – 33 per Cooper and Merkel JJ, Black CJ agreeing:


(2) In order to exercise the discretion judicially the following principles have been accepted by the Court as applicable:

(a)the Court ought not to depart from the rule that costs be ordered on a party and party basis unless the circumstances of the case warrant the court in departing from the usual course;

(b)the circumstances which may warrant departure from the usual course arise as and when the justice of the case so requires or where there may be some special or unusual feature in the case to justify the Court in departing from the usual course;

(c)whilst the circumstances in cases in which indemnity costs have been ordered offer a guide, the question must always be whether the particular facts and circumstances of the case in question warrant the making of an order for costs other than on a party and party basis.

21                  More recently a Full Court said in Gersten v Minister for Immigration and Multicultural Affairs [2001] FCA 260 at [19]:

If an action is commenced when proper advice would indicate that the proceeding has no prospect of success, a discretion to award indemnity costs is ordinarily enlivened. Similarly, if a party who has no defence to a claim of right, refuses to acknowledge that right and either obstinately, or for an ulterior purpose, obliges the claimant to commence proceedings to enforce that right, that circumstance may attract the exercise of a discretion to award indemnity costs against that party.

Conclusion on costs orders

22                  The applicant filed his application and statement of claim on 6 November 2008 instituting proceedings against nine respondents.  Four months later an amended application and statement of claim was filed on 3 March 2009 which named the first to twelfth respondents and the fourteenth and fifteenth respondents but omitted the thirteenth respondent.  The difference between the original application and amended application was the inclusion of the second respondent and in [10] of the details of claim the phrase "offering for sale".  Relief sought in these applications was:

1    For an Accounting and Damages

2    For Copyright Piracy and Damages.

Six weeks after the filing of the amended application and statement of claim, on 16 April 2009, the applicant filed a further amended application and statement of claim.  The details of the claim are the same as those in the amended statement of claim.  Relief sought in the further amended application was expanded to include:

Suit for Violation of section 52 Trade Practices Act 1976

violation of section 53 Trade Practices Act 1976

violation of section 103 Copyright Act 1968

for an accounting of profits s 115(2) Copyright Act 1968.

23                  Defences to the further amended statement of claim were filed by the respondents between 9 June 2009 and 22 June 2009.  On 23 June 2009 I ordered that mediation be conducted by a Registrar or Deputy Registrar of this Court.  The mediation held on 29 July 2009 was unsuccessful.  On 26 August 2009, before the respondents' affidavits were filed, the applicant filed a notice of motion requesting summary judgment.  At a directions hearing on 13 October 2009 I observed for the benefit of the applicant problems associated with him prosecuting an application under 31A.  Despite observations I have made about the risks inherent in the applicant representing himself, he has insisted on doing so and there is little doubt that his inexperience has led to additional and unnecessary costs, as well as delays.

24                  In the circumstance of this case, it is appropriate to order that the applicant pay the costs of the respondents who have incurred costs (the respondents other than the third, fourth and fifteenth respondents) of the unsuccessful application for summary judgment.  The applicant has failed in obtaining summary judgment.  Costs should follow the event in relation to this application.

25                  I also consider that those respondents should have the benefit of an order under O 62 r 2.  That is, I propose to order that those costs should be payable forthwith.  I acknowledge that this is an unusual order to make.  However, this application for summary judgment, in substance, was misconceived and was pursued by the applicant against a background in which, in the proceedings more generally, the nature of his case has emerged only incrementally with the attendant delays and costs.  I also acknowledge that the burden of making such an order may, for the applicant, be a considerable one.  It is conceivable it may stifle the litigation.  My present view is that, having regard to the discussion in my reasons for judgment of 30 March 2010, the applicant's case has extremely limited prospects of succeeding at a final hearing.  If the costs burden imposed by the order stifles the litigation, then paradoxically that may be a better outcome for the applicant than the matter going to trial.  A full trial with, if appropriate, discovery (an inherently costly process itself) and, at trial, the cross examination of witnesses would be a materially more expensive exercise.  The respondents, if successful, would almost inevitably secure a costs order in their favour.

26                  However, in the circumstances of this case I am not disposed to grant indemnity costs.  While the applicant has attracted justified criticism from the respondents for his conduct of the proceedings, nevertheless his actions have not been so unreasonable as to warrant departure from the usual rule.  There is no sufficiently special or unusual feature evident in the particular facts and circumstances of this case to lead me to order costs other than on a party and party basis.  In addition, the costs the respondents have incurred in resisting the application for summary judgment will have included (probably as a significant element) their costs of marshalling the legal argument and the evidence which will be used at a final hearing (assuming, of course, (i) that the case does not settle or (ii) the applicant does not discontinue the proceedings or (iii) the respondents do not make an application for summary dismissal under s 31A or (iv) they do and it is unsuccessful).

27                  In summary, it is not unreasonable and would impose an injustice on the respondents in the circumstances of this case for their costs not to be met and paid forthwith (subject to a matter referred to in the following paragraph).  I will order that the applicant pay the respondents' costs on a party and party basis for the application for summary judgment to be taxed and payable forthwith.  I will formalise the effect of my reasons of 30 March 2010 by ordering that the applicant's notice of motion for summary judgment be dismissed. 

28                  The applicant has sought leave to appeal against my judgment of 30 March 2010.  The application for leave was premature in the sense that I did not then make orders disposing of the application for summary judgment.  However, I assume this will not be an impediment to the hearing and determination of such an application.  The costs orders I am making will not take effect until that application is determined.  If there is an inordinate delay in the determination of the application for leave to appeal, I can vary the order.

Cost capping

29                  The applicant has requested that the Court consider limiting the "fees and costs" in the proceedings and cites numerous cases from the United Kingdom where the capping of costs has been considered.  Though this issue was raised in submissions in reply by the applicant and no formal application was made, I consider I am able to address this question now.  Under O 62A of the Federal Court Rules, maximum costs may be determined at a directions hearing.  The provisions are as follows:

1          The Court may, by order made at a directions hearing, specify the maximum costs that may be recovered on a party and party basis.

2          A maximum amount specified in an order under rule 1 shall not include an amount that a party is ordered to pay because the party:

(a)          has failed to comply with an order or with any of these Rules; or

(b)          has sought leave to amend its pleadings or particulars; or

(c)          has sought an extension of time for complying with an order or with any of these Rules; or

(d)          has otherwise caused another party to incur costs that were not necessary for the economic and efficient:

(i)        progress of the proceedings to trial; or

(ii)       hearing of the action.

3                     An order under rule 1 may include such directions as the Court considered necessary to effect the economic and efficient:

(i)    progress of the proceedings to trial; or

(ii)   hearing of the action.

4                     If, in the Court's opinion, there are special reasons, and it is in the interests of justice to do so, the Curt may vary the specification of maximum recoverable costs ordered under rule 1.

2

30                  The factors relevant to the exercise of discretion in making an order under O 62A rule 1 were considered by Bennett J in Corcoran v Virgin Blue Airlines Pty Ltd [2008] FCA 864 at [6]. These factors include the following:

·            The timing of the application (Sacks v Permanent Trustee Australia Ltd  (1993) 45 FCR 509 at 511 per Beazley J; Flew v Mirvac Parking Pty Ltd  [2006] FMCA 1818 at [48] per Barnes FM; Minns v State of NSW No. 2) [2002] FMCA 197 at [9] per Raphael FM]);

·            The complexity of the factual or legal issues raised in the proceedings ([Hanisch v Strive Pty Ltd [1997] FCA 303] at 387 per Drummond J; Dibb v Avco Financial Services Limited [2000] FCA 1785 at [15] per Sackville J);

·            The amount of damages that the applicant seeks to recover (Hanisch at 387) and the extent of any other remedies sought (Flex at [48]);

·            Whether the applicant's claims are arguable and not frivolous or vexatious (Flew at [15]);

·            The undesirability of forcing the applicant to abandon the proceedings (Woodlands v Permanent Trustee Company Limited (1995) 58 FCR 139 at 148 per Wilcox J; Flex at [9]); and

·            Whether there is a public interest element to the case (Woodlands at 146; Flew at [23], [47]).

The cases cited by Bennett J indicate that an order capping costs will generally be made in cases where the issues involved are not of any particular complexity and the amounts sought to be recovered are modest. 

31                  As noted earlier, the applicant filed the application and statement of claim in this matter on 6 November 2008.  It was not until 3 May 2010, eighteen months after the initiating documents were filed, that the applicant requested the Court to consider the capping of costs. 

32                  The applicant has based his submission on costs, in part, on his interpretation of the relevance of the AUSFTA and its impact on ss 103 and 86 of the Copyright Act, his personal understanding of the relevance of the ICCPR and the impact of international law, United States law and English law, particularly "cost capping", on Australian legislation.

33                  It is well established that the provisions of an international treaty to which Australia is a party do not form part of Australian law unless those provisions have been legislatively implemented and embodied in Australian law.  Treaties are not self-executing under Australian law.  The US Free Trade Agreement Implementation Act 2004 (Cth) (USFTAIA) received Royal Assent on 16 August 2004.  Schedule 9 of this Act contains the major changes to copyright law as a result of the agreement and includes the extension of the term of protection by 20 years, new rights in relation to performers in sound recordings, a scheme for the limitation of remedies against carriage service providers and broader criminal provisions.  Section 103 of the Copyright Act, on which the applicant relies, was not amended by the USFTAIA.  The most recent amendment to s 103 was made by the Copyright Amendment Act 2006 (Cth) This amendment added subsection (3) as follows:

article includes a reproduction or copy of a work or other subject-matter, being a reproduction or copy in electronic form.

According to the Explanatory Memorandum, the amendment was made to extend the definition to electronic reproduction and electronic copies, to ensure digital files and the downloading of digital files over the internet was protected.  It adds nothing to the applicant's argument about the relevance of this section to the AUSFTA.

34                  There is no doubt that the applicant would prefer not to run the risk of paying the respondents' costs.  However, as Sackville J observed in Dibb v Avco Financial Services Ltd [2000] FCA 1785 at [15] and [16] "a very large proportion of applicants in this Court" would prefer not to run such risks.  However, an important consideration is the injustice to the respondents if they are denied what would be their entitlement to costs.

35                  It would be inappropriate in the circumstances for a cost capping order to be made.

 

I certify that the preceding thirty five (35) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Moore.





Associate:


Dated:         17 June 2010