CATCHWORDS

Practice and procedure - costs - legal practitioners appearing for successful respondent to appeal "pro bono on a contingency fee basis" - whether a consideration relevant to costs order to be made - objection to competency raised by respondent on hearing of appeal rather than by motion for dismissal prior to hearing of appeal - respondent fails on competency issue - whether costs should follow "event" of dismissal of appeal - whether costs order should treat competency issue as "discrete" from merits issues - whether respondent who succeeded on appeal but failed on competency issue should be placed in more favourable position on costs than if he had earlier moved for dismissal of appeal on that ground.

Federal Court Rules, O 52 r 18

Arrowcrest Group Pty Limited v Gill (1993) 46 FCR 90

Transport Commission v Nugent, unreported, Supreme Court of Victoria/Appeal Division, 22 May 1995.

Jamal v Secretary of Department of Health (1988) 14 NSWLR 252 (CA)

MICROSOFT CORPORATION & ANOR v RODNEY DAVID MARKS

No. NG 82 of 1996

CORAM:    BEAUMONT, LINDGREN  AND LEHANE JJ

DATE:     30 AUGUST 1996

PLACE:    SYDNEY

IN THE FEDERAL COURT OF AUSTRALIA)

                                  )

NEW SOUTH WALES DISTRICT REGISTRY)    No. NG 82 of 1996

                                  )

GENERAL DIVISION                  )

                      BETWEEN:   MICROSOFT CORPORATION

                                             First Appellant

                                  MICROSOFT PTY LIMITED

                                            Second Appellant

                          AND:   RODNEY DAVID MARKS

                                                  Respondent

CORAM:    BEAUMONT, LINDGREN  AND LEHANE JJ

DATE:     30 AUGUST 1996

PLACE:    SYDNEY

                      MINUTE OF ORDERS

THE COURT ORDERS THAT:

1.   On the respondent's application, leave be granted for the making of further submissions in relation to the appropriate order for costs on the appeal.

2.   There be no variation in order number 3 made on 14 August 1996.

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

IN THE FEDERAL COURT OF AUSTRALIA)

                                  )

NEW SOUTH WALES DISTRICT REGISTRY)    No. NG 82 of 1996

                                  )

GENERAL DIVISION                  )

                                           BETWEEN:MICROSOFT CORPORATION

                                                          First Appellant

                                                     MICROSOFT PTY LIMITED

                                                          Second Appellant

                                               AND:RODNEY DAVID MARKS

                                                          Respondent

CORAM:    BEAUMONT, LINDGREN AND LEHANE JJ.

DATE:     30 AUGUST 1996

PLACE:    SYDNEY

                REASONS FOR JUDGMENT ON COSTS

BEAUMONT J:

I have read in draft form the reasons for judgment of Lindgren J.  I agree with his Honour.

IN THE FEDERAL COURT OF AUSTRALIA)

                                  )

NEW SOUTH WALES DISTRICT REGISTRY)    No. NG 82 of 1996

                                  )

GENERAL DIVISION                  )

                           BETWEEN:   MICROSOFT CORPORATION

                                             First Appellant

                                      MICROSOFT PTY LIMITED

                                            Second Appellant

                               AND:   RODNEY DAVID MARKS

                                                  Respondent

CORAM:    BEAUMONT, LINDGREN  AND LEHANE JJ

DATE:     30 AUGUST 1996

PLACE:    SYDNEY

                REASONS FOR JUDGMENT ON COSTS

LINDGREN J:  Reasons for Judgment on this appeal were delivered on 14 August 1996.  The Court ordered that the appeal be dismissed, that the costs at first instance abide the decision of the trial Judge, Tamberlin J, and that there be no order as to the costs of the appeal.  The orders have not been entered.

The respondent ("Mr Marks") sought leave to make further submissions designed to persuade the Court to order the appellants ("Microsoft") to pay his costs of the appeal.  The parties have provided written outlines of the submissions on costs which they would make if leave were granted and have elaborated on those submissions orally.  Microsoft did not submit that leave should not be granted and I think that it should.

The reason why, notwithstanding dismissal of the appeal,  Mr Marks did not obtain an order for costs on 14 August 1996 is that he failed on a submission that the appeal was not competent.  In sum, his submission was that the appeal was incompetent because it constituted an appeal against the acquittal of a criminal charge.  The reasons for rejection of the submission appear in the earlier Reasons for Judgment. 

Mr Marks now makes two principal submissions as to why Microsoft should be ordered to pay his costs: first, that there is no reason why costs should not follow the event and that "the event", for this purpose, is the result on the appeal, namely its dismissal; secondly, that the case was undertaken by his counsel "pro bono on a contingency fee basis at the request of this Court".  I will address the latter point first.

Mr Marks read an affidavit of Brendan Leonard King, a partner of the Victorian firm Belleli King & Associates.  Mr King had acted for Mr Marks in the proceeding at first instance before Tamberlin J but had ceased acting for him on or about 18 March 1996 because he was unable to arrange appropriate funding or legal aid.  Mr King's affidavit shows that the List Judge, Sheppard J, caused an inquiry to be made of the New South Wales Bar Association as to whether it could procure someone to appear for Mr Marks on the hearing of Microsoft's appeal; that the Association had contacted Mr B A M Connell of counsel who had appeared for Mr Marks on the trial before Tamberlin J, instructed by Mr King; and that Mr Connell, with Mr D R Sibtain of counsel, agreed to represent Mr Marks, again briefed by Mr King, "pro bono on a contingency fee basis" as mentioned earlier.  I take this to mean, relevantly, that the legal practitioners who represented Mr Marks on the appeal were not to be paid unless Microsoft was ordered to pay Mr Marks' costs.  Mr Marks submits that a favourable view should be taken of the position of legal practitioners who appear in such circumstances for necessitous litigants and that this view should affect the disposition of the issue of costs as between the parties.

I think that the submission should not be accepted.  At the outset, I am quick to commend the New South Wales Bar Association, and in particular, Mr Connell and Mr Sibtain who appeared for Mr Marks on the hearing of the appeal.  They did so on the basis mentioned and have, without remuneration, helped Mr Marks to obtain the result to which we have held he was justly entitled.  Moreover, their representation of Mr Marks has positively assisted the Court in performing its function.  Without adequate legal representation of the kind that both parties had on the hearing of the appeal in this
case, there is the danger that justice will not be properly administered. 

However, it lies in the hands of Government, not of the courts, to address the problem of impecunious litigants.  The present case illustrates but one aspect of the inability of a court to redress the imbalance.  Acceptance of Mr Marks' submission would involve the making of a special costs order favourable to him and unfavourable to Microsoft which would not have been made if Mr Marks had been paying for his legal representation.  It would be wrong that a litigant in the position of Microsoft should have to sustain a forensic disadvantage by reason of a special costs arrangement between the opposing party and the legal practitioners appearing for him.  I could not support such discrimination against the opponents of impecunious litigants.  It is not amiss to notice that once introduced, the discrimination would apply, not only against corporations such as Microsoft, but also against individuals who, perhaps with difficulty and by borrowing, find the resources with which to pay for legal representation.

I turn now to Mr Marks' other submission.  He points to the fact that the case concluded within a day and submits that although he failed on the issue of the competency of the appeal, his overall success signifies that the usual order for costs in favour of a successful party should follow.

Again, I do not think that this submission should be accepted.  Order 52 r 18 of the Federal Court Rules evinces a policy that objections to the competency of an appeal should, generally, be taken by a respondent by way of a motion for dismissal of the appeal on that ground.  Indeed, sub-r 18(3) provides that if a respondent does not so move and the appeal is dismissed as incompetent, the respondent is not, unless the Court otherwise orders, to receive any costs of the appeal and the Court may order the respondent to pay the appellant any costs of the appeal proved useless or unnecessary.  Clearly, the rule treats an objection to competency as a special ground for the dismissal of an appeal which should generally be disposed of as a preliminary matter in order to obviate the risk of an unnecessarily lengthy appellate hearing: see Arrowcrest Group Pty Limited v Gill (1993) 46 FCR 90 at 99.

If Mr Marks had moved for dismissal of the appeal under O 52 r 18 as that rule invited him to do, there can be no doubt that he would have been ordered to pay Microsoft's costs of his motion.  The appeal would then have proceeded "on the merits" and Microsoft would have been ordered to pay Mr Marks' costs of the appeal.  It may be that, in view of the predicted shortness of the hearing of the appeal, the motion for dismissal would have been directed to be heard at the same time as the appeal.  Nonetheless, the same orders for costs on Mr Marks' motion and on the substantive appeal would have been made as if the motion had been heard and decided previously.  Acceptance of Mr Marks' submission would place him in a more favourable position than if he had moved for dismissal of the appeal as incompetent - a position which I do not think he should be permitted to attain.

The issue of the competency of the appeal was an issue clearly raised by Mr Marks in his outline of submissions.  From these circumstances may be distinguished those of Transport Commission v Nugent, unreported, Supreme Court of Victoria/Appeal Division, 22 May 1995, referred to by Mr Marks.  In that case the Court itself raised the issue of competency and the respondent then took up the point and argued incompetency, albeit unsuccessfully.  Nonetheless, the respondent had the benefit of an order that the appellant pay the respondent's costs of the dismissed appeal.  The distinguishing feature of the case is that the Court raised the issue of competency, thereby virtually inviting the parties to present the available arguments for and against it, so that the Court could satisfy itself on the issue, as it was bound to do.

While it is true that neither party raised the possibility that the objection to competency be heard and determined otherwise than as part of the appeal generally, I think it appropriate that the discrete nature of the issue as to competency be recognised.  In my view, the circumstances of the present case fall into an exceptional category of the kind referred to by Mahoney JA in Jamal v Secretary of Department
of Health (1988) 14 NSWLR 252 (CA) at 271, in which the costs of an appeal do not follow the event.

Neither party has submitted that if we should be of the view that Mr Marks should pay Microsoft's costs on the competency issue and that Microsoft should pay Mr Marks' costs otherwise of the appeal, the Court should make orders in those terms rather than in the terms of the third order made on 14 August 1996, namely, that there be no order as to the costs of the appeal (to the intent that the respective parties be left to bear their own costs).

Accordingly, the third order made on 14 August 1996, namely that there be "no order as to the cost of the appeal" should stand. 

IN THE FEDERAL COURT OF AUSTRALIA                               )

NEW SOUTH WALES DISTRICT REGISTRY                              )

GENERAL DIVISION                                                                    )              No. NG082 of 1996

          ON APPEAL FROM A JUDGE OF THE FEDERAL COURT OF AUSTRALIA

                      BETWEEN:          MICROSOFT CORPORATION

                                                                                                                                 First Appellant

                                                            MICROSOFT PTY LIMITED

                                                                                                                            Second Appellant

                      AND:                     RODNEY DAVID MARKS

                                                                                                                                     Respondent

CORAM:     Beaumont, Lindgren and Lehane JJ

PLACE:        Sydney

DATE:          30 August 1996

                                      REASONS FOR JUDGMENT (ON COSTS)

LEHANE J:  I have had the advantage of reading the reasons for judgment of Lindgren J.  I entirely agree with them and with the orders which his Honour proposes.

                                                     I certify that this page is a true copy of the Reasons for Judgment herein of the Honourable Justice Lehane.

                                                     Associate: 

                                                     Dated:  30 August 1996

Heard:                                          26 August 1996

Place:                                            Sydney

Decision:                                       30 August 1996

Appearances:Mr D K Catterns QC and Ms S J Goddard of counsel instructed by Mallesons Stephen Jaques appeared for the appellants.

                                                     Messrs J J J Garnsey QC, B A M Connell and D R Sibtain of counsel instructed by Belleli King and Associates appeared for the respondent.