FEDERAL COURT OF AUSTRALIA

Yperion Technology SAS v Luminex Pty Ltd [2013] FCAFC 38

THE COURT ORDERS THAT:

1.    The costs of the application for leave to appeal, of the appeal and of the application for a stay of proceedings made before Emmett J be costs in the cause.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

1    The appellant commenced proceedings in Paris to recover monies owing for goods sold to the first respondent. The appellant also commenced proceedings against the respondents in Australia for infringement of trademark, breach of copyright, misleading and deceptive conduct and breach of agreement. These claims arose from an allegation that the respondents sold counterfeit smart cards used to operate the laser hair removal machines supplied by the appellant to the first respondent.

2    In cl 24.2 of the distribution agreement made between the appellant and the first respondent the parties agreed “to submit to the Commercial Court of Paris, all disputes arising out of or in connection with the validity, interpretation or performance of this agreement and its exhibits.”

3    The primary judge ordered a stay of the Australian proceedings in reliance on this clause.

4    Following the hearing of an application for leave to appeal from those orders the parties settled the matter save as to costs. The Court made orders by consent as follows:

In this order:

Australian Proceedings means proceedings NSD2352 of 2011 in the Federal Court of Australia.

French Proceedings means the pending proceedings in the Tribunal de Commerce de Paris (the Commercial Court of Paris or the Business Court of Paris) between the Applicant, the First and Sixth Respondents and Karpati Licencing Pty Limited filed on or around 20 September 2011.

UPON the undertaking to the Respondents and the Court, of the Applicant by its counsel to:

(a)    discontinue or dismiss forthwith the French Proceedings;

(b)    not bring any claims presently made in the French Proceedings (“French Claims”) in any court, otherwise than as part of the Australian Proceedings; and

(c)    treat the costs of the French Proceedings as abiding the outcome of costs in the Australian Proceedings (whether by order, settlement or otherwise), and if there is any dispute as to their quantum that they be assessed in accordance with Australian principles of costs assessment / taxation;

AND UPON the undertaking to the Applicant and the Court, of the Respondents by their counsel that they will:

(a)    consent to the French Claims, and the claims currently made in the Australian Proceedings, being brought as part of the Australian Proceedings;

(b)    not seek to invoke clause 24.2 of the Exclusive Distribution Agreement dated 8 July 2003 between the Applicant and the First Respondent in answer to or as a barrier to the French Claims, or the claims currently made in the Australian Proceedings, being brought as part of the Australian Proceedings; and

(c)    treat the costs of the French Proceedings as abiding the outcome of costs in the Australian Proceedings (whether by order, settlement or otherwise), and if there is any dispute as to their quantum that they be assessed in accordance with Australian principles of costs assessment / taxation;

THE COURT, BY CONSENT, ORDERS AS FOLLOWS:

1.    Leave to appeal be granted.

2.    The appeal be allowed.

3.    Orders 1 and 2 of the orders of Emmett J made on 22 May 2012 be set aside.

4.    If no consent order as to costs is filed in the meantime, within 7 days of the date of this order, the Applicant file any written submissions in chief as to the costs before Emmett J, and the costs of the application for leave to appeal and the appeal (collectively, “Costs”).

5.    Within 14 days of the date of this order, the Respondents file any written submissions in answer as to Costs.

6.    Within 21 days of the date of this order, the Applicant file any written submission in reply as to Costs.

5    In accordance with those orders on 20 February 2013 the appellant filed a written submission on the question of costs. On 27 February 2013 the respondents filed a written submission in response, and on 1 March 2013 the appellant filed a written submission in reply.

The Parties’ submissions

6    The appellant contended that the respondents should pay its costs of the application before the primary judge and before the Full Court.

7    The respondents contended that each side bear their own costs of the application to the primary judge and the appellant should pay 50 per cent of the respondents’ costs of the appeal to the Full Court. Alternatively, the respondent contended that each side should bear their own costs of the application before the primary judge and before the Full Court. The respondents contended that where there has been no determination on the merits and both parties have acted reasonably, the starting point is that there be no order as to costs. Then, the respondents contended that there were two considerations which militated in favour of the appellant paying 50 per cent of the respondents’ costs of the appeal.

8    First, the respondents contended that the outcome reflected an advantageous result to them. They achieved a position that they would only be sued in one jurisdiction. This result had not been offered to them by the appellant before. Second, in the course of argument before the Full Court, the appellant, following some observations from the Court, submitted that the appellant may have wrongly conceded before the primary judge, and the primary judge wrongly found, that there was no evidence that the Court in Paris would not deal with the causes of action dependent on Australian law. If this submission would have been determinative of the application, then the respondents had wasted effort in addressing complex conflict of laws questions raised in the submissions of the appellant. Had the appellant properly identified the central issues in the application, the costs of addressing these complex issues would not have been incurred.

9    In reply, the appellant contended that it was bound by the exclusive jurisdiction clause to bring the contract claims in France, and further, that the respondents had not sought to have the French proceedings heard in Australia prior to the settlement of this application. In relation to the Australian proceedings the appellant completely succeeded. The appellant argued that the respondents effectively conceded the application and, in that circumstance, it was appropriate to order costs in favour of the appellant: One.Tel Ltd v Deputy Commissioner of Taxation (2000) 101 FCR 548. The appellant then submitted that unless the application was determined on the merits it was speculative as to whether some part of the argument was wasted.

Consideration

10    There are two factors which guide the determination of the issue of costs in the circumstances of this appeal.

11    The first factor is that the Court has not determined the merits of the appeal but has acceded to consent orders proposed by the parties. In the absence of a determination on the merits the Court should not ordinarily make an order for costs by reference to a prediction of what the likely outcome of the appeal would have been had the matter been resolved on the merits. There may be some cases in which the outcome is so obvious that it would not be wrong in principle to make an order for costs by reference to the likely outcome of the appeal after a determination on the merits. However, that is not the case in this appeal.

12    The second factor is that this appeal concerned an interlocutory, not a final, order. There is more force in the argument that each side should bear their own costs where a matter is resolved by final orders. Where there is no such finality it may be appropriate to reflect in the order for costs on the interlocutory matter the result ultimately to be achieved on a final hearing by making an order for costs in the cause. Then the party which achieves success in the final outcome obtains its costs for the interlocutory application which, by its nature, was part of the process of achieving success at the final determination of the case.

13    In the end, justice is served in the circumstances of this appeal if the parties’ costs of the application to the primary judge and to the Full Court are costs in the cause.

Associate:

Dated:    5 April 2013