FEDERAL COURT OF AUSTRALIA

Shahid v Australasian College of Dermatologists (No 2) [2008] FCAFC 98

KIRAN RUBINA SHAHID v AUSTRALASIAN COLLEGE OF DERMATOLOGISTS

WAD 113 OF 2007

BRANSON, STONE AND JESSUP JJ

4 JUNE 2008

MELBOURNE (HEARD IN PERTH)

THE COURT ORDERS THAT:

1.         Order 3 made on 9 May 2008 be varied by substituting the sum of $16,770.80 for the sum of $15,384.92.

2.         The respondent pay the appellant interest pursuant to s 51A of the Federal Court of Australia Act 1976 (Cth) in the amount of $5,913.83.

3.         Order 6 made on 9 May 2008 be set aside.

4.         The respondent pay one half of the appellant’s costs –

            (a)        not including interlocutory costs already ordered to be paid to a particular party,

            (b)        including reserved costs and costs not previously dealt with,

            of the proceeding under appeal.

5.         The costs to which the appellant is entitled not be reduced pursuant to O 62 r 36A of the Federal Court Rules. 

6.         The respondent be entitled to set off, to the extent necessary, its entitlement to interlocutory costs already ordered to be paid to it, if any, first against its obligation to pay the costs of the appellant and secondly against its obligation to pay damages to the appellant. 

Note:    Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

REASONS FOR JUDGMENT

THE COURT

1                          On 9 May 2008, we gave judgment in this appeal, and made orders which provided for the filing and service of memoranda with respect to interest and costs.  Such memoranda have now been received.  Additionally, the solicitor for the appellant has corresponded with the Court with respect to certain corrections which, he contends, should be made to the orders made on 9 May 2008. 

2                          We shall deal with those corrections first.  In his correspondence, the appellant’s solicitor drew our attention to the fact, not readily apparent from the documents upon which his client relied, and not referred to in terms in the submissions made on behalf of the appellant, that the air fares dealt with in par 248 of the reasons of Jessup J published on 9 May 2008 included, as to one half as it happens, the fares of the appellant herself.  Those fares amounted to $1,355.88.  Additionally, item 21 (a courier fee in the sum of $30) included in category (d) in par 234 of the reasons of Jessup J was mistakenly so included, and ought to have been part of category (a), items admitted by the College.  These matters having been raised, the solicitors for the College made no objection to the amounts in question being included in the damages to which the appellant should be entitled.  We shall adjust our award accordingly. 

3                          On our award as so adjusted, the appellant claimed interest, pursuant to s 51A of the Federal Court of Australia Act 1976 (Cth), in the sum of $5,913.83.  The College accepted the appellant’s entitlement to interest in this sum, and we shall make an order accordingly.

4                          On the matter of costs, the parties’ memoranda dealt both with the costs of the proceeding at first instance and with the costs of the appeal.  As to the former, our attention was drawn to the circumstance that the trial Judge (who has since retired from the Court) had dealt with a number of interlocutory applications and hearings in different ways.  On some occasions, his Honour had ordered that costs be paid by a particular party; on other occasions, his Honour had reserved costs; and on yet other occasions his Honour had made no order as to costs.  Quite obviously, the orders which his Honour made as to the costs of a particular interlocutory occasion should stand.  As to the occasions when costs were reserved, nothing put to us on behalf of the College gives us any reason not to allow O 62 r 15 of the Rules of Court to operate according to its terms.  Accordingly, subject to what we say below on the matter of apportionment, the appellant should have her costs of those occasions.  As to the appellant’s costs of those occasions when no relevant order was made by his Honour, since no party suggested that O 62 r 29 had any relevant application to those occasions, we consider that the appropriate course is to treat those costs in the same way as the costs which were reserved. 

5                          We turn, then, to the matter of apportionment to which we have referred.  Although the College did not take issue with the general proposition that costs should follow the event, it pointed out that the originating proceeding which came before the trial Judge involved a great many separate allegations of misleading conduct and the like which were found not to have been made good by his Honour below; and the appellant made no complaint about those findings at the hearing of her appeal.  It was submitted on behalf of the College not only that the appellant’s entitlement to costs should be very substantially qualified, but also that the applicant should pay an appropriate proportion of its own (ie the College’s) costs.

6                          In the Statement of Claim which the appellant took to trial, she grouped her allegations as to non-future representations (ie those which did not rely on s 51A of the Trade Practices Act 1974 (Cth) or the corresponding provision in the Fair Trading Act 1987 (WA)) under five headings:

(a)        The “value of general practice representations”, set out in par 11 of the Statement of Claim (four representations);

(b)        The “value of general practice reinforced representations”, set out in par 14 of the Statement of Claim (two representations);

(c)        The “positive feedback and research representations”, set out in par 18 of the Statement of Claim (three representations);

(d)        The “open, transparent and accountable representations”, set out in par 20 of the Statement of Claim (20 representations);

(e)        The “strong performance and competitive position representations”, set out in par 23 of the Statement of Claim (seven representations).

In relation to all of these representations except two aspects of the “open, transparent and accountable representations”, the appellant failed at trial, and did not pursue the matter on appeal. 

7                          There were 22 “future” representations to which the appellant referred in pars 39, 40 and 41 of her Statement of Claim.  Although many of those representations were relied upon also with respect to the non-future part of the appellant’s case, to the extent that they were said to constitute future matters, the appellant was wholly unsuccessful.  In these respects, the College was obliged to discharge the onus of proof cast upon it by s 51A and, to the extent that the trial Judge held that the representations had been made, it did so.

8                          We are persuaded that it would be unjust to require the College to pay the whole of the appellant’s party/party costs of the proceeding below.  In their memoranda filed recently, the parties have provided us with little practical assistance as to how we might attempt, even very broadly, to apportion the appellant’s costs as between those which substantially related to matters upon which she has ultimately succeeded, and those which substantially related to matters upon which she has ultimately failed.  She succeeded with respect to what might be described as the big questions in the proceeding – whether the College was a trading corporation, whether the relevant activities of the College were done in trade or commerce, and whether the transactions involved in the lodgement of her internal appeals were contractual – but she has failed to make good the bulk of her allegations of unlawful conduct under the Trade Practices Actand the Fair Trading Act, and her contractual claim for lost opportunity. 

9                          Taking account of the extent to which the appellant’s entitlement to costs should be qualified by reason of her limited measure of success, and of the College’s claim that some part of its costs be paid by the appellant, and adopting what must necessarily be a somewhat robust approach to the question, we consider that justice would be done if we were to require the College to pay one-half of what would otherwise be the appellant’s entitlement to her costs of the proceeding at first instance.

10                        We would not apply any apportionment in relation to the appellant’s costs of the appeal.  The appellant was substantially successful at that level, and did not seek to rely upon the many representations with respect to which she had failed below.  In accordance with normal principles, the College should be required to pay the appellant’s costs of the appeal. 

11                        While on the subject of the costs of the appeal, we should refer to a submission on behalf of the appellant that a party to an appeal should, during the hearing of the appeal, alert the court to the prospect that he or she might, depending on the outcome, desire to contend that adherence to the ordinary rule that costs follow the event would be inappropriate in the circumstances.  Reference was made to the following passage in the judgment of the Full Court in Hewlett Packard Pty Ltd v GE Capital Finance Pty Ltd [2003] FCAFC 278 [13]:

We conclude by making the following observation.  Order 62 r 3 of the Federal Court Rules empowers the Court to exercise its powers and discretions as to costs at any time, including after the conclusion of a proceeding.  Nonetheless it is in the public interest, and in the interests of the parties to any appeal, that issues concerning the costs of the appeal should be resolved, where possible, together with the appeal.  (This means additional costs and inconvenience is avoided.)  It is for this reason that, where no party has signalled that the appeal might be attended by special circumstances such as to render inapplicable the ordinary rule that costs follow the event, the practice of the Full Court is to pronounce an order for costs in accordance with the ordinary rule when judgment is delivered.  Should a party take the view in any particular case that, depending on the outcome of the appeal, it might wish to contend that the adoption of this course would be inappropriate, the Court should be alerted to this possibility before the close of the hearing of the appeal.   It may well be that it is inappropriate to deal with the issue until after the substance of the appeal is decided.  There may be a requirement for evidence; without prejudice material may have to be disclosed.  Nevertheless, the Court should be alerted to the existence, or the possibility of the existence, of such an issue.  Parties should expect that, if a Full Court has not been alerted to the possibility that a party may wish to contend that the usual rule as to costs should not apply, it will pronounce an order as to costs in accordance with the ordinary rule when judgment on the appeal is delivered.

With respect, we agree entirely with the observations there set out, but we read them as a reminder of what good practice requires, rather than as a rule which would impinge upon such rights as a party may otherwise have.  It may be said, of course, that the present case is in a somewhat different category from that apparently assumed to be the norm in Hewlett Packard, since, at the time when our final orders were made, we expressly gave each party leave to make a further application with respect to the costs of the appeal.  In the result, the point is probably moot, since we have in any event decided to treat the costs of the appeal as following the event in the normal course. 

12                        For the avoidance of doubt, we shall order that the College be permitted to set off its entitlement to interlocutory costs, if any, against its obligations to make payments to the appellant under the orders we have made and propose to make, first by way of costs and secondly, if necessary, by way of damages.

13                        The next matter with which we are required to deal is that raised by a letter sent by the solicitors for the College to the solicitor for the appellant on 1 November 2005.  The letter was headed “without prejudice save as to costs”, and offered to pay $20,000, inclusive of interest and costs, in settlement of the proceeding.  The offer was open for 14 days.  There is no need for us, on this occasion, to consider whether a letter expressed in this way should be entitled to consideration under the so-called Calderbank principles, since the offer was on any view manifestly inadequate by reference to the judgment ultimately secured by the appellant.  As varied by the orders we propose to make today, our award will entitle the appellant to damages in the sum of $16,770.80 (plus interest and costs).  By our own very approximate calculations, the amount of interest to which the appellant would have been entitled down to the last date upon which the College’s offer was open for acceptance would have been in the order of $2,400.  Added to the award of damages as such, this would have given the appellant a notional entitlement to a sum in excess of $19,100 on 15 November 2005.  It is implausible that one half of the appellant’s party/party costs would by then have amounted to less than $900.  On any view, it lay upon the College to establish that, taking into account the primary award ultimately made, and the interest and costs to which the appellant would notionally have been entitled as at 15 November 2005, the appellant’s total entitlement at that time would have been less than $20,000.  The College made no attempt to do so and, as we have said, it seems inherently implausible.  

14                        Finally, the College seeks to rely upon O 62 r 36A of the Rules of Court.  Sub-rule (1) thereof provides as follows:

Where a party is awarded judgment for less than $100,000 on a claim (not including a cross-claim) for a money sum or damages any costs ordered to be paid, including disbursements, will be reduced by one-third of the amount otherwise allowable under this Order unless the Court or a Judge otherwise orders.

It was submitted on behalf of the appellant that only a claim "seeking exclusively a monetary judgment" ought to fall within the ambit of this rule.  Counsel relied on Collier Constructions Pty Ltd v Foskett (1992) 33 FCR 591.  However, in that case, French J held only that the rule was “triggered by a money judgment”;  that is to say, his Honour made the point that the rule could have no operation unless there was such a judgment.  He said nothing about the situation in which there was such a judgment in combination with other relief, much less about the situation that faces us here, namely, where damages, declarations and injunctions were sought, but where the only final relief awarded to the appellant is by way of a money judgment.  That r 36A does have application in cases of this kind was at least implicit in the reasons of the trial Judge in the case reported on appeal as O’Kelly Holdings Pty Ltd v Dalrymple (1993) 45 FCR 145, 154 and in the refusal of the majority (Sweeney and O’Connor JJ) to interfere with the trial Judge’s discretion in relevant respects (see 45 FCR at 157).  That proposition was affirmatively held  by Moore J in Australasian Performing Right Association Ltd v Pashalidis [2000] FCA 1815, and has been held, or assumed, by single Judges of the court since:  see eg Sony Computer Entertainment Australia Pty Ltd v Stirling [2001] FCA 1852;  Reidy’s Lures Pty Ltd v Basser Millyard Pty Ltd [2003] FCA 1242; Australasian Performing Right Association Limited v Metro On George Pty Limited [2004] FCA 1371; Aristocrat Technologies Australia Pty Ltd v DAP Services (Kempsey) Pty Ltd (in liquidation) [2006] FCA 487; and Tu v Pakway Australia Pty Ltd (2006) 227 ALR 287.  In the circumstances, we propose to proceed on the basis that r 36A does apply here.  We do so because the submission made on behalf of the appellant is directly contradicted by Pashalidis, an authority not referred to by counsel, which has generally set the pattern of subsequent single-Judge decisions on the point.  If a different course is to be taken by a Full Court, we consider that that should occur only after considered argument concerned directly with those authorities.

15                        However, we propose to exercise our discretion to make an order excluding the operation of the rule in the circumstances of the present case.  Although the damages ultimately recovered by the appellant were modest, in order to vindicate her rights in relevant respects she was required to prosecute a case which, as it happens, involved quite difficult, and in some respects previously unresolved, questions of the law.  With the possible exception of Monroe Topple & Assoc Pty Ltd v Institute of Chartered Accountants in Australia (2002) 122 FCR 110, there was no direct precedent for the application of the Trade Practices Act to the circumstances of a body such as the College in its dealings with persons who sought to be admitted to training programs, the successful completion of which were pre-conditions to membership.  On the “trade or commerce” point, two members of the Court as presently constituted saw the matter favourably to the appellant, while the other member saw the matter favourably to the College, as had the trial Judge.  On the “professional activity” point, we have arrived at a conclusion which differs from that of the trial Judge, but it should be recognised that his Honour adopted what was the appropriate course for a single member of the court, namely, to follow a judgment of a single member of the Supreme Court of a State which was on point.  For these and similar reasons, we take the view that the present case is not within the class of cases with which the policy underlying r 36A is implicitly concerned. 

Associate:

Dated:         4 June 2008