FEDERAL COURT OF AUSTRALIA

Orion Pet Products Pty Ltd v Royal Society for the Prevention of Cruelty to Animals (Vic) Inc (No 2) [2002] FCA 967

COSTS – complex litigation – multiple parties and multiple causes of action – proceedings brought by first and second applicants against first and second respondents – cross-claim brought by first and second cross-claimants against first, second and third cross-respondents – second applicant succeeded against first respondent on claim for defamation but not against second respondent – second applicant failed on all other claims – first applicant failed on all claims – second cross-claimant succeeded on cross-claim against all cross-respondents – liability admitted – quantum only issue to be determined – whether “global” approach to question of costs should be adopted.

Federal Court of Australia Act 1976 (Cth) s 43

Orion Pet Products Pty Ltd v Royal Society for the Prevention of Cruelty to Animals (Vic) Inc [2002] FCA 860 referred to

Cretazzo v Lombardi (1975) 13 SASR 4 at 16 referred to

Morosi v Mirror Newspapers Ltd [1977] 2 NSWLR 749 at 809 referred to

Ritz Hotel Ltd v Charles of the Ritz Ltd [1989] AIPC 90-567 at 38,940 referred to

Hughes v Western Australian Cricket Association (Inc) (1986) ATPR 40-748 at 48,134 referred to

Inn Leisure Industries Pty Ltd v D.F. McCloy Pty Ltd (1991) 21 FCR 172 referred to

Cummings v Lewis (1993) 41 FCR 559 referred

Byrnes v Jakona Pty Ltd [2002] FCA 121 referred to

Dodds Family Investments Pty Ltd v Lane Industries Pty Ltd (1993) 26 IPR 261 at 272 referred to

ORION PET PRODUCTS PTY LTD (ACN 010 638 721) and INNOTEK AUSTRALIA PTY LTD (ACN 010 408 983) v ROYAL SOCIETY FOR THE PREVENTION OF CRUELTY TO ANIMALS (VICTORIA) INC and HUGH WIRTH

Q1 of 2000

WEINBERG J

9 AUGUST 2002

MELBOURNE (VIA VIDEO LINK TO BRISBANE)

THE COURT ORDERS THAT:

1.         The applicants be released forthwith from any requirement that they provide security for costs in this proceeding.

2.         The Royal Society for the Prevention of Cruelty to Animals (Victoria) Inc pay to Innotek Australia Pty Ltd fifty per cent (50%) of its costs of and incidental to this proceeding, such costs to be taxed in default of agreement.

3.         There be no order as to the costs of the cross-claim.

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

REASONS FOR JUDGMENT

1                     On 5 July 2002 I delivered judgment in this matter:  Orion Pet Products Pty Ltd v Royal Society for the Prevention of Cruelty to Animals (Vic) Inc [2002] FCA 860.  I held that the first applicant, Orion Pet Products Pty Ltd (“Orion”), failed completely in its claims.  The second applicant, Innotek Australia Pty Ltd (“Innotek”), succeeded in respect of its claim for defamation against the first respondent, the Royal Society for the Prevention of Cruelty to Animals (Victoria) Inc (“the RSPCA”), but not against the second respondent, Dr Hugh Wirth.  It also failed in its claim under s 52 of the Trade Practices Act 1974 (Cth) (“the Act”), and in its claims for the torts of injurious falsehood, and negligence against both the RSPCA and Dr Wirth.  With regard to the cross-claim brought by the RSPCA and Dr Wirth against the cross-respondents, Innotek, Anthony John Holliday, and Mary Colleen Holliday, the RSPCA failed, but Dr Wirth succeeded. 

2                     I ordered that, in the primary proceeding, there should be judgment for the second applicant against the first respondent in the sum of $100,000.  That included a lump sum of $15,000 in lieu of interest.  I also ordered that, in relation to the cross-claim, there be judgment for the second cross-claimant against the first, second and third cross-respondents in the sum of $30,000.  That included a lump sum of $5,000 in lieu of interest.  I directed that the parties file and serve written submissions regarding the question of costs.

3                     In their submissions, the applicants contended that, having regard to the complexity of the findings made in relation to the primary claim, costs should be awarded on a “global” basis.  By that they meant that the Court should have regard to principles of substantial justice, reflecting the reality of the aims of the parties and the extent to which they had been achieved, rather than attempting to isolate costs in respect of separate claims and issues.  They submitted that it would be just in all the circumstances if the RSPCA were to pay Innotek eighty per cent of its costs.  They also submitted that there should be no order as to costs in relation to either the claim made by Orion in the primary proceeding, or the cross-claim made against the cross-respondents. 

4                     The applicants submitted that State Courts had adopted, or recognised, just such a “global” approach to the question of costs in instances of sufficient complexity.  They referred to Cretazzo v Lombardi (1975) 13 SASR 4; Morosi v Mirror Newspapers Ltd [1977] 2 NSWLR 749; and Ritz Hotel Ltd v Charles of the Ritz Ltd [1989] AIPC 90-567 at 38,940.  They noted that in Cretazzo,Jacobs J at 16, strongly deprecated the practice of awarding costs with respect to specific issues rather than the overall outcome of the litigation.  They submitted that this Court too has recognised that there may be cases where costs should be awarded on a “global” basis: Hughes v Western Australian Cricket Association (Inc) (1986) ATPR 40-748 at 48,134; Inn Leisure Industries Pty Ltd v D.F. McCloy Pty Ltd (1991) 21 FCR 172; Cummings v Lewis (1993) 41 FCR 559 and Byrnes v Jakona Pty Ltd [2002] FCA 121. 

5                     By contrast, the respondents submitted that where a litigant has succeeded upon only a portion of his claim, the circumstances may make it reasonable that he bear the expense of litigating that portion upon which he has failed.  Indeed, a successful party who has failed on certain issues may not only be deprived of the costs of those issues but may be ordered as well to pay the other party’s costs of those issues: Hughes (supra).

6                     The respondents submitted that the applicants had relied at trial on four distinct causes of action.  The first applicant had failed completely in all of its claims.  The second applicant had succeeded, but only in relation to one of those causes of action, its claim in defamation, and then against only one of the respondents, the RSPCA.  The claim for defamation had succeeded only in relation to the contents of the Herald Sun article of 1 August 2000.  The respondents noted that it was not until 31 August 2001, shortly before the commencement of the trial, that the cause of action in defamation had been pleaded.  That was after the parties had filed and served all of the affidavits upon which they sought to rely. 

7                     The respondents submitted that, given that a substantial part of the evidence led at the trial related to issues upon which the applicants had ultimately failed, and given also that to the extent that Innotek had recovered damages the quantum had been far below that originally claimed, the respondents should be regarded as having been largely successful in the proceeding.  They submitted that Innotek should be entitled only to those costs incurred with respect to the defamatory imputations which the Court determined had been conveyed by the Herald Sun article, and even then, only from the date when the claim for defamation was first pleaded, and not earlier. 

8                     The respondents submitted that in order to reflect such an outcome the Court should order that the RSPCA pay ten per cent of Innotek’s costs, but only those costs incurred after 31 August 2001.  They submitted that the Court should otherwise order that the applicants pay the RSPCA’s costs of the primary proceeding, as well as all of Dr Wirth’s costs.  They further submitted that Innotek and the other cross-respondents should pay the cross-claimants’ costs of the cross-claim.  

9                     Finally, the respondents referred to O 62 r 15 of the Federal Court Rules which provides that where the costs of a motion, application or other proceeding are reserved by the Court, the costs so reserved shall follow the event unless otherwise ordered.  Costs were reserved in this proceeding on 12 September 2000 and 1 March 2001.  As regards the costs reserved on 1 March 2001 the respondents accepted that those costs should follow the event.  The costs reserved on 12 September 2000 related to Innotek’s application for an interlocutory injunction restraining the respondents from publishing matters critical of the use of electronic dog collars.  This was at a time when the only cause of action which Innotek had pleaded related to a radio broadcast in October 1999.  That cause of action was brought pursuant to s 52 of the Act.  Ultimately, Innotek failed in respect of that claim.  Accordingly, it was submitted that Innotek should pay the costs of that interlocutory application. 

CONCLUSION

10                  The jurisdiction of this Court to award costs arises from s 43 of the Federal Court of Australia Act 1976 (Cth).  The discretion with which the Court is vested under that section must of course be exercised judicially. 

11                  In my opinion, it is appropriate in a case of this nature, where each party has enjoyed a measure of success on the numerous issues agitated before the Court, to approach the question of costs with a view to doing substantial justice between the parties.  It would be open to the Court to award costs separately in respect of each issue determined in the trial, and in relation to each party considered individually.  However, that would create a degree of artificiality, and would impose an extraordinarily difficult task upon any registrar faced with the need to tax costs, in default of agreement.  Moreover, this is an area where “mathematical precision is illusory”, and the exercise of the discretion often depends “upon matters of impression and evaluation”: Dodds Family Investments Pty Ltd v Lane Industries Pty Ltd (1993) 26 IPR 261 at 272. 

12                  Any attempt to “dissect” the costs as between the issues determined in this proceeding would be complicated by the fact that both the applicants/cross-respondents, and the respondents/cross-claimants, were each jointly represented by solicitors and counsel.  It is unclear to me whether Dr Wirth personally incurred any significant costs in defending the claims brought against him, as distinct from the costs incurred by the RSPCA in defending the claims brought against it.  Certainly, there was little, if any, additional evidence called which related specifically to his situation.  I note that after judgment was delivered in this matter, an affidavit was filed with the Court, on behalf of Innotek, exhibiting a newspaper article in which Dr Wirth was reported as having made statements which suggested that the legal costs incurred by the respondents were likely to have been met by the RSPCA’s insurer. 

13                  There is another reason for adopting the “global” approach to costs in the present case.  That is that virtually all of the evidence led was relevant to each cause of action.  In other words, the evidence led in support of the claim for defamation was largely the same as that led in support of the claim for injurious falsehood, and the claim made under s 52 of the Act.  There would have been little saving in time had the applicants confined their case to one of defamation.  Insofar as the applicants failed to establish that a number of the statements made by or on behalf of the RSPCA were actionable, evidence concerning the truth, or otherwise, of those statement would still have been admissible, as relevant to a number of the issues raised in this proceeding. 

14                  It is true that Orion was entirely unsuccessful in its claims against the respondents.  It is also true that Innotek succeeded only in relation to the claim for defamation arising out of the publication of the Herald Sun article, a claim which was added at a very late stage in the proceeding.  Nonetheless, the trial was conducted largely upon the basis that the central issue in dispute was the truth, or otherwise, of the claims made in that article, namely the claims that the applicants’ electronic dog collars inflicted 3,000 volt shocks, caused burns to dogs’ necks, and led to their deaths.  In relation to each of these claims, Innotek succeeded in establishing that what had been said in the article was defamatory.  The RSPCA failed to justify the statements made in that article, and must therefore bear a significant portion of the costs associated with resolving these factual issues. 

15                  In my opinion, Innotek is entitled to an order that it receive fifty per cent of its costs of and incidental to this proceeding.  Those costs must be paid by the RSPCA, and not by Dr Wirth who was wholly successful in defending each of the claims brought against him.  I consider that the costs reserved on 12 September 2000 and 1 March 2001 should simply follow the event.  I do not think it appropriate that a separate order for costs be made in favour of Dr Wirth in relation to the primary proceeding.  There is nothing on the material before me to suggest that he personally incurred any costs additional to those incurred by the RSPCA, and if he did, they were at best marginal. 

16                  Ordinarily it would be appropriate to order that the cross-respondents pay the costs of the cross-claim.  However, the matter is complicated by the fact that the RSPCA was unsuccessful in recovering any damages on that cross-claim.  It would be a diabolical task to attempt to calculate what adjustment, if any, should be made to those costs having regard to the outcome in this proceeding.  In my opinion, substantial justice between the parties is best done if I make no separate order regarding the costs of the cross-claim, but take those costs into account when arriving at the percentage of costs which I award to Innotek on the primary claim.  I have done so, and in arriving at the figure of fifty per cent, I have reduced the amount that I would otherwise have ordered.  I should add that, in any event, I consider that the costs of the cross-claim were miniscule by comparison with the costs incurred in relation to the primary proceeding.

17                  I appreciate that fixing a global figure of fifty per cent, in favour of Innotek, may be regarded as a somewhat unrefined method of dealing with the question of costs.  This approach does not meet all of the permutations arising in this case if the matter is looked at in terms of the issues separately raised, and the parties who have enjoyed various measures of success.  However, the “global” approach seems to me to be the only practicable solution to what is otherwise an intractable difficulty.

18                  When judgment was delivered on 5 July 2002, I directed that written submissions be filed regarding the issue of releasing the applicants’ security for costs.  Given that they have recovered an award of $100,000, and even allowing for the award of $30,000 on the cross-claim, the respondents effectively hold security for $70,000 represented by the Court’s judgment.  There is no basis for any continuing security.  I propose to order that the security be released.

Associate:

Dated:              9 August 2002