FEDERAL COURT OF AUSTRALIA

Hanave Pty Ltd v LFOT Pty Ltd [2000] FCA 388

COSTS – construction of ambiguous costs order – surrounding circumstances – respondents succeeded at trial – Full Court upheld applicant’s appeal and made order that respondents pay costs of “hearing below” – respondents subsequently succeeded on cross-claim – part of hearing to which Full Court costs order related was taken up by hearing of cross-claim – cross-respondent was not a party to the appeal – appeal concerned only the application, not the cross-claim – whether Full Court costs order bound respondents in their capacity as cross-claimants

WORDS AND PHRASES – “hearing”

National Companies and Securities Commission v News Corporation Ltd (1984) 156 CLR 296, referred to

Yates Property Corporation Pty Ltd v Boland (1998) 89 FCR 78, applied

Repatriation Commission v Nation (1995) 57 FCR 25, applied

Preston Erection Pty Ltd v Speedy Gantry Hire Pty Ltd [1999] FCA 122, referred to

Marsh v Adamson (1985) 5 FCR 124, applied

Shackley v Australian Croation Club Ltd (1996) 141 ALR 736, applied

HANAVE PTY LTD v LFOT PTY LIMITED (formerly JAGAR PTY LIMITED) (Cross-Claimant), PAUL EWEN MITCHELL TRESIDDER (Cross-Claimant), JOSEPH RAYMOND GLEW (Cross-Claimant), ROBERT BURKE (Cross-Respondent)

NG 721 of 1995

MOORE J

31 MARCH 2000

SYDNEY

THE COURT ORDERS THAT:

1.         Subject to orders 2 and 3 the cross-respondent pay the cross-claimants’ costs of the cross-claim.

2.         LFOT Pty Ltd and Paul Tresidder pay Hanave Pty Ltd half the costs of the preparation of the written submissions filed after 6 May 1999.

3.         Robert Burke pay the cross-claimants half the costs of the preparation of the written submissions filed after 6 May 1999.

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

REASONS FOR JUDGMENT

1                     On 31 August 1998 I gave judgment dismissing an application by Hanave Pty Ltd (“Hanave”) against LFOT Pty Ltd (“LFOT”), Mr Paul Tresidder and Mr Joseph Glew: see [1998] FCA 1051; (1998) ATPR 41-658.  For reasons which I later explained in a costs judgment given on 11 November 1998: see [1998] FCA 1429, I made no orders in relation to a cross-claim by the respondents against Mr Robert Burke.  An appeal against the judgment of 31 August 1998 was successful and on 1 April 1999 a Full Court made orders in favour of Hanave: see [1999] FCA 357; (1999) ATPR 41-687.  The matter was remitted to me to deal with the cross-claim and the assessment of damages.

2                     On 11 November 1999 I gave judgment in which damages were assessed and contribution ordered against Burke as cross-respondent: see [1999] FCA 1568; (1999) 168 ALR 318; (1999) ATPR 41-725.  I did not then deal with the costs of the cross-claim having regard to the terms of one of the orders made by the Full Court in the appeal.  The orders made by the Full Court on 1 April 1999 were:

“(1)     The appeal be allowed.

(2)       The orders made on 31 August 1998 be set aside and in lieu thereof judgment be entered for Hanave Pty Limited against the first respondent, Lfot Pty Limited.

(3)       The matter be remitted to the primary Judge for determination of the issue of the liability of each of the second and third respondents with respect to the contravening conduct of the first respondent, for determination of the cross claim and an assessment of damages on the claim and cross claim.

(4)       Lfot Pty Limited pay Hanave Pty Limited’s costs of this appeal and the hearing below.”

3                     After the Full Court gave judgment on 1 April 1999 an application was made by LFOT to vary the costs order the Full Court had made on 1 April 1999.   That application was dismissed on 7 May 1999: see [1999] FCA 572.

4                     In relation to the question of costs I said the following in my judgment of 11 November 1999:

“[37]  On one view order 4 made by the Full Court deals with the costs of the hearing before me to the point where I gave judgment on 31 August 1998.  Thus, on that view, the only costs in relation to the cross-claim, in which the cross-claimants have substantially succeeded, I need to consider would be the costs of the directions hearing on 6 May 1999 and the preparation of the written submissions.  However the cross-claimants have sought an opportunity to make submissions on costs.  Any such submissions, from any party, should be filed and served within 21 days of today.”

5                     Written submissions were thereafter made by the parties as to what order should be made in relation to costs.  The first submission of Burke was that the only costs order that might be made in favour of the cross-claimants was an order of the type adverted in the passage quoted in paragraph 4 above.  The cross-claimants took issue with this contention. 

6                     The starting point in a consideration of what costs orders should be made in the cross claim is the costs order of the Full Court of 1 April 1999.  It is necessary to ascertain what is meant by the words “hearing below” in that order.  They may be a reference to costs for the trial which would include time taken for the trial of the cross-claim: see, for example, National Companies and Securities Commission v News Corporation Ltd (1984) 156 CLR 296 at 308 or they may be a reference that much of the trial that was given over to determining the application which was the matter determined by the Full Court at least as to liability.

7                     The order, in my opinion, is ambiguous and it is therefore permissible to have regard to surrounding circumstances: see Yates Property Corporation Pty Ltd v Boland (1998) 89 FCR 78 and Repatriation Commission v Nation (1995) 57 FCR 25 at 33-34. 

8                     The application to vary the costs order of the Full Court took the form of a letter to the associate to the presiding judge.  In the result written submissions were made to the Full Court by both Hanave and the respondents.  The respondents’ submissions (including LFOT) dealt with both the costs of the appeal and the costs of the trial.  As to the latter the submission read:

“Costs of the trial

4.         It is submitted that the appropriate order is that the trial judge should, after determining the damages claim and the cross-claim, deal with the question of costs of the initial trial and the hearing in relation to the damages of the cross-claim.  It is submitted that the trial judge is in the best position to make a proper assessment of what proportion of costs of the trial should be borne by each party.”

9                     The response of Hanave to those submissions was:

“Costs of the Trial

3.         Having regard to the outcome of the appeal the Judge below ought to have found that the appellant succeeded in its application.  The ordinary rule as to costs would then apply in the absence of special circumstances.

4.         The respondent has not made any submissions as to any circumstances which existed before the judge below which might amount to special circumstances.

5.         The respondent had an opportunity to make any submissions as to the existence of special circumstances at the hearing of the appeal as costs were an issue.  No such submissions were made.

6.         There is no basis for the Full Court to remit the question of costs of the trial back to the trial Judge.”

10                  It is apparent from their reasons of 7 May 1999 that Wilcox and Kiefel JJ dismissed the application to vary the costs order substantially on the basis that submissions on the question of costs should have been made during the hearing of the appeal.

11                  However their Honours did refer to and adopt what was said by another Full Court in Preston Erection Pty Ltd v Speedy Gantry Hire Pty Ltd [1999] FCA 122.  That Full Court said:

“It was open to the respondent on the hearing of the appeal to advance argument that, in the event of the appeal succeeding, the appellants should not receive all their costs of the trial.  Or the respondent could have requested that, in the event of the appeal succeeding, it be given leave to put further submissions as to costs.  Neither course was adopted.  As we have said, a respondent is at risk of having to meet the appellant’s costs of the appeal and the trial, should the appeal succeed.”

12                  In adopting these observations Wilcox and Kiefel JJ reinforced what might be thought to be suggested by the terms of the order they earlier made.  That is, LFOT was to pay Hanave’s costs of the entire trial (perhaps without treating Hanave’s costs as different to Burke’s costs) and not just that part of it attributable to the determination of the application by Hanave (and not the cross-claim).   It might be inferred that the majority of the Full Court intended, by order 4 made on 1 April 1999, that the costs of Hanave (and indirectly Burke) of the entire hearing before me (to that point) be paid by LFOT.  That would be because they were not minded, notwithstanding subsequent submissions to the contrary made by LFOT, to vary the order so that there might be some later apportioning of those costs after the matter had been remitted.

13                  However Burke was not a party to the appeal.  The appeal was inter partes litigation and was, itself, a proceeding: see Marsh v Adamson (1985) 5 FCR 124 and Shackley v Australian Croation Club Ltd (1996) 141 ALR 736.  The costs order made by the Full Court bound the parties to that proceeding.  It was not an order that bound Burke.  In my opinion, it was not intended to be an order made to the benefit or detriment of the respondents to the appeal, in their capacity as cross-claimants.  That is, the costs order was intended to relate only to the matter with which the Full Court was dealing, namely the application by Hanave.  The order was intended to bind the respondents to the appeal (and in particular LFOT) but only as respondents to the original application of Hanave.

14                  I have concluded I am not constrained by order 4 from making an appropriate costs order in relation to the cross-claim and, to the extent that the hearing before me as trial judge was referrable to the cross-claim, costs of that hearing.  The cross-claim has now been determined and cross-claimants were substantially successful.  They are entitled to their costs. 

15                  Submissions have been made as to the form of the order including apportioning the costs of the hearing.  However in the submissions which led to my costs judgment of 11 November 1998: see [1998] FCA 1429 there was a stark division between counsel as to the amount of time taken up on the cross-claim during the hearing.  Counsel for Hanave (at that time also appearing for Burke) submitted the proceedings against Burke “occupied more than half the hearing time in the case”.  Counsel for LFOT, Glew and Tressider, submitted the cross-claim consumed a total of five hours 22 minutes of 21 days of hearing time.  The difficulty, as I see it, in now endeavouring to identify what portion of the hearing was given over to the cross-claim, is that the parties (in the absence of agreement), in any taxation of costs based on the order of the Full Court, will be entitled to assert their respective views about the time that was taken with the application at the hearing on the one hand and the cross-claim on the other.  They may now adopt different positions to those earlier taken.  It would be undesirable for me to endeavour to apportion time taken with the cross-claim when it is now many months after the hearing and my assessment may be flawed and at odds with any considered view arising in the taxation of costs based on the order of the Full Court.  I cannot vary that order.  Accordingly I simply propose to order that Burke pay the cross-claimants their costs of the cross-claim. 

16                  The only matter I consider I should deal with specifically are the written submissions made after 6 May 1999.   They were directed to the assessment of damages (in the application in which Hanave had been successful) and the cross-claim (in which the cross-claimants had been successful).  Hanave is entitled to its costs of preparing the submissions insofar as the submissions concern damages.  The cross-claimants are entitled to their costs of preparing the submissions insofar as the submissions concerned the cross-claim.  LFOT and Tressider should pay Hanave half the costs of preparing those submissions and Burke pay the cross-claimants half the costs of preparing those submissions. 

17                  I do not propose to make any order in relation to Glew as the costs arising from his involvementin the proceedings are really costs of LFOT.  Nor do I propose to make any order requiring Burke to pay for the preparation of the submissions of LFOT, Glew and Tresidder insofar as they related to damages.

18                  Counsel for Burke asks for that any costs order be stayed.  I have not been asked to stay any other orders I have made and I see no reason to isolate the costs order by ordering that it be stayed. 

Associate:

Dated:              31 March 2000