FEDERAL COURT OF AUSTRALIA

Anema E Core Pty Ltd v Aromas Pty Ltd [1999] FCA 215

ANEMA E CORE PTY LTD V AROMAS PTY LTD

QG 203 OF 1996

SPENDER J

12 MARCH 1999

BRISBANE

THE COURT ORDERS:

1.                  Notwithstanding the provisions of O 62 r 36A, the first and second respondent pay one-half of the costs of the applicants of and incidental to the action to be taxed;

2.                  The applicants pay the costs of the second respondent on the cross-claim, to be taxed;

3                    As between the applicants and the third to sixth respondents there be no order as to costs.

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

REASONS FOR JUDGMENT ON COSTS

1                     I gave judgment in these proceedings on 22 January 1999: Anema E Core Pty Ltd & Ors v Aromas Pty Ltd & Ors [1999] FCA 30.  While the applicants succeeded in establishing a contravention of s 52 of the Trade Practices Act 1974, in respect of which I gave judgment for $82,800.00, they failed in other respects.  In particular, the applicants were not successful in obtaining orders pursuant to s 87 of the Trade Practices Act in the nature of rescission, and they failed to establish that the four natural respondents were knowingly concerned in the contravention of the Trade Practices Act that was established or in the independent claims of fraud against them.  The second respondent succeeded on its cross claim as to its entitlement to determine the franchise agreement.

2                     Because of the outcome in those proceedings, on 22 January 1999 I expressed the tentative view that an appropriate order might be, rather than have costs orders between various and different parties which would require some measure of offsetting, that there be no order as to costs.  I invited the parties to make written submissions on the question of costs and these are the orders of the court in respect of costs in the light of those submissions.

3                     I should for completeness say that objection was taken on behalf of the respondents to the applicants’ submissions in reply on costs.  I have heeded those objections and have considered the question of costs on the basis of the principal submissions by the various parties fortified by my own view as to the way the issues were contested and with the result of those contests.

4                     The applicants’ submission is that they should have “their costs of and incidental to the action to be taxed subject to the provisions of Order 62 Rule 36A (i e reduced by one-third), that the Second Respondent have its costs of the cross-claim and that there be no costs in relation to the dismissal of the Application against the Third to Sixth Respondents”.  Concerning those last respondents, it was submitted that there would be no separate  and identifiable costs of any significance occasioned to them as a result of their being respondents in the proceedings.  They had been represented by the same solicitors and counsel as the corporate respondents throughout the action and were necessary witnesses in relation to the claims made by the applicants.

5                     The respondents submit, in line with my foreshadowed tentative view, there should be no order as to costs.  Such an order, it is submitted on behalf of the respondents, would be fair, practical and is a genuine reflection of the degree of success achieved by the applicants and the respondents.  I acknowledge the force of the respondents’ submission that such an order would avoid the likelihood of two contested taxations, would overcome the false appearance that only one respondent was successful, and then only on a contractual point in a trial mainly devoted to other matters, and would avoid a complicated situation involving costs of various issues being ordered to different parties which would create taxation problems.  While I am sensitive to these considerations, as my tentative expression of an appropriate costs order would indicate, on reflection, I have reached the conclusion that such an order would not properly indicate the success that the applicants achieved.  I refer to the applicants collectively because, in my opinion, there really is only one set of costs, there being as a practical matter no separate and identifiable costs of the natural applicants.

6                     There is no dispute as to the principles that apply in the exercise by the court of its discretion under s 43(2) of the Federal Court of Australia Act 1976 (Cth) to award costs: see Hughes v Western Australian Cricket Association (Inc) [1986] ATPR ¶40-748; Cummings v Lewis (1993) 113 ALR 285; Henderson v Amadio (unreported judgment of Heerey J of 22 March 1996 on costs of those proceedings); Australian Conservation Foundation v Forestry Commission (1988) 81 ALR 166 at 169; ACCC v Nationwide News Pty Ltd [1996] ATPR ¶41-519; and Leisure Industries Pty Ltd v D F McCloy (No 2) Pty Ltd (1991) 28 FCR 172.  I have on other occasions expressed my respectful agreement with the observations of Jacobs J in Cretazzo v Lombardi (1975) 13 SASR 4 at 16, where his Honour said:

“The ultimate ends of justice may not be served if a party is dissuaded by the risk of costs from canvassing all issues, however doubtful, which might be material to the decision of the case.  There are, of course, many factors affecting the exercise of the discretion as to costs in each case, including in particular, the severability of the issues, and no two cases are alike.  I wish merely to lend no encouragement to any suggestion that a party against whom the judgment goes ought nevertheless to anticipate a favourable exercise of the judicial discretion as to costs in respect of issues upon which he may have succeeded, based merely on his success in those particular issues.”

7                     Some of the applicants’ failures would in a practical sense be reflected in any reduction pursuant to the operation of O 62 r 36A.  The failure in respect of the trading losses, for instance, was a consequence of my findings as to the causation aspect, holding that the effect on the franchised business of the roadworks, the competition from the Coffee Club, and the difficulties caused by the retention of Jo Jensen as Manager, were not to be attributed to any conduct on the part of the respondents in contravention of the Trade Practices Act.  The failure against the natural respondents arose because of the lack of proof that they were knowingly concerned in the contravention by the corporate respondents of s 52 of the Trade Practices Act.

8                     However, to make costs orders as the applicants submit I should make, does not fairly reflect the failures by the applicants, including particularly the failure of the fraud allegations and the failure to obtain relief akin to rescission.  An order that the applicants have two-thirds of their costs would be too generous to the applicants.

9                     In all the circumstances I think that the following orders are appropriate:

3.                  Notwithstanding the provisions of O 62 r 36A, the first and second respondent pay one-half of the costs of the applicants’ of and incidental to the action, to be taxed;

4.                  The applicants pay the costs of the second respondent on the cross-claim, to be taxed;

5.                  As between the applicants and the third to sixth respondents there be no order as to costs.

Associate:

Dated:              12 March 1999