FEDERAL COURT OF AUSTRALIA

Cultivaust Pty Ltd v Grain Pool Pty Ltd [2004] FCA 1568

COSTS – party and party costs – indemnity costs – exercise of discretion to award costs – effect of rejecting an offer of compromise on costs orders – whether case had any real prospects of success on certain issues – apportioning costs on an ‘issues’ basis

Plant Variety Rights Act 1987 (Cth)

Plant Breeder’s Rights Act 1994 (Cth)

Trade Practices Act 1974 (Cth)

Federal Court of Australia Act 1976 (Cth) s 43

Grain Marketing Act 1975 (WA)

Limitation Act 1935 (WA) s 47A

Federal Court Rules O 23, O 62 r 31

Calderbank v Calderbank [1975] 3 All ER 333 referred to

Ruddock v Vadarlis (2001) 115 FCR 229 referred to

Colgate-Palmolive Co v Cussons Pty Ltd (1993) 46 FCR 225 referred to

John S Hayes and Associates Pty Ltd v Kimberley-Clarke Australia Pty Ltd (1994) 52 FCR 201 referred to

J-Corp Pty Ltd v Australian Builders Labourers Federated Union of Workers (No 2) (1993) 46 IR 301 referred to

NMFM Property Pty Ltd v Citibank Ltd (2001) 109 FCR 77 referred to

De Alwis v Minister for Immigration & Multicultural & Indigenous Affairs [2004] FCAFC 77 referred to

Perre v Apand Pty Ltd [2004] FCA 881 referred to

Dr Martens Australia Pty Ltd v Figgins Holdings Pty Ltd (No 2) [2000] FCA 602 referred to

Yates Property Corp Pty Ltd v Boland (No 2) (1997) 147 ALR 685 referred to

Oshlack v Richmond River Council (1998) 193 CLR 72 referred to

Melbourne Steamship Co Ltd v Moorehead (1912) 15 CLR 333 referred to

Re Wilcox: Ex parte Venture Industries Pty Ltd (No 2) (1996) 72 FCR 151 applied

Cretazzo v Lombardi (1975) 13 SASR 4 referred to

Australian Conservation Foundation v Forestry Commission (1988) 81 ALR 166

CULTIVAUST PTY LTD & THE STATE OF TASMANIA v GRAIN POOL PTY LTD & THE STATE OF WESTERN AUSTRALIA

SAD 104 of 1999

(Consolidated with No SAD 66 of 2001)

MANSFIELD J

3 DECEMBER 2004

ADELAIDE

THE COURT ORDERS THAT:

1.         Subject to paragraph 2 hereof, the applicants pay to the first respondent costs of the proceedings, including reserved costs on a party and party basis.

2.         The applicants pay to the first respondent costs in respect of the following claims brought by applicants:

(a)                the breach of contract claim as pleaded at paragraphs 24, 25, 26 and 39 – 43, 44(d) and 71(e) of the amended consolidated statement of claim filed pursuant to leave granted on 20 March 2002 (the ACSC); and

(b)               the estoppel claim as pleaded in paragraphs 23, 25, 26, 27, 32A, 32B, 35A, 35B and 71(e) of the ACSC; and

(c)                the unlawful interference claim as pleaded in paragraphs 28 – 29E, 44(e) and 71(e) of the ACSC only insofar as that claim related to dealing with the New South Wales Grains Board;

including reserved costs to the extent that such costs are shown by the first respondent to have been incurred only in respect of those claims, on the basis that such costs are to include all costs so incurred by the first respondent except insofar as they are of an unreasonable amount or were unreasonably incurred so that, subject to such exceptions, and upon the basis so specified, the first respondent will be completely indemnified by the applicants for its costs.

3.         Certificates be granted for one senior counsel and one junior counsel for the first respondent.

4.         The applicants pay to the second respondent costs of the proceedings (including the costs of the proceedings whilst in the High Court of Australia), including any reserved costs on a party and party basis.

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

REASONS FOR JUDGMENT

THE COSTS ISSUES

1                     I gave judgment in this matter on 21 May 2004.  I dismissed the applicants’ claims.  I reserved for further argument the question of costs.  This judgment deals with that question.

2                     The issues as to costs are limited.  It is clear that the applicants accept that their liability for costs should be jointly incurred.  They also accept that they should pay to the first respondent its costs on a party and party basis, save for one issue which they acknowledge should lead to them paying the first respondent its costs on an indemnity basis.  The first respondent seeks costs on an indemnity basis in respect of four other issues.  The second respondent seeks costs against the applicants on a party and party basis, but the applicants dispute that any order for costs should be made in favour of the second respondents.

3                     The applicants’ claims arose from the circumstances in which Franklin barley came to be grown and dealt with in Western Australia from 1992, including from second and subsequent generations of Franklin barley seed.  The first respondent dealt with all Franklin barley grown in Western Australia from 1992 onwards as it occupied the position of the statutory marketing authority for all grains, including barley, in Western Australia.  In the fulfilment of that function, it established grain pools for Franklin barley in the relevant seasons, and so received and then disposed of the Franklin barley so received.  In addition, by permit, it authorised certain maltsters to acquire Franklin barley direct from growers of Franklin barley grown by them in Western Australia.  All the Franklin barley handled by the first respondent, and that dealt with by maltsters under permit from the first respondent, was used either for malting purposes or for animal feed.  The second applicant held plant variety rights (PVR), and then from 10 November 1994 plant breeder’s rights (PBR), in Franklin barley under the Plant Variety Rights Act 1987 (Cth) (the PVR Act) and subsequently the Plant Breeder’s Rights Act 1994 (Cth) (the PBR Act).  The second respondent granted the first respondent an exclusive licence within Australia (excluding Tasmania) authorising it to deal in Franklin barley for their mutual benefit.

4                     The proceeding commenced on 24 December 1999.  Subsequently, an amended statement of claim was filed after extensive consideration in the latter part of 2001.  In the amended statement of claim, the applicants alleged:

(1)        The first respondent infringed the PVR, and then the PBR, in Franklin barley by the conduct alleged (the PBR infringement claim).  They sought damages and/or an account of profits from the first respondent for that unlawful infringement of their rights.  Ultimately, the applicants claimed infringement only of the PBR and they elected to seek damages from the first respondent rather than an account of profits.

(2)               By dealings between the first applicant and the first respondent in 1992 and 1993, there arose a fiduciary relationship between them, and the first respondent’s conduct was in breach of the obligations which that relationship imposed upon the first respondent (the breach of fiduciary duty claim).

(3)               The first respondent and the applicants on or about 5 May 1992 agreed for the first applicant to supply Franklin barley for growing in Western Australia on terms which the first respondent breached by its conduct (the breach of contract claim).

(4)               The first respondent by its conduct in 1992 and 1993 is estopped as against the first applicant from denying that its dealings with the first applicant relating to the supply into Western Australia of Franklin barley after the 1992 growing trials in effect entitled the first applicant to claim a production levy on all Franklin barley handled by the first respondent (the estoppel claim).

(5)               The first respondent in about December 1992 interfered unlawfully in the applicants’ trade in its dealings with the Australian Barley Board and the New South Wales Grains Board with a view to securing from those entities a production levy agreement in relation to the production and handling of Franklin barley by those entities in South Australia, Victoria and New South Wales (the unlawful interference claim).  The alleged illegal conduct involved the first respondent endeavouring to have those two statutory marketing authorities and the first respondent negotiate with the first applicant on common terms to secure a lower production levy, and endeavouring to reach an agreement as to the maximum amount of production levy in contravention of s 45 of the Trade Practices Act 1974 (Cth).  The claim with respect to dealings with the New South Wales Grains Board was not pursued at trial.  The applicants do not oppose an order for the costs on an indemnity basis in favour of the first respondent relating to that issue in so far as it concerns dealings with the New South Wales Grains Board.

5                     One consequence of the claim for infringement of PVR and PBR was the plea that, to the extent that the first respondent acted in accordance with its powers and functions under the Grain Marketing Act 1975 (WA) (the GM Act) as in force from time to time, the provisions of the GM Act which then applied were inconsistent with the PVR Act and the PBR Act, and to that extent were invalid.  In the light of my findings that the PBR were not infringed, it was not necessary to resolve that issue.

6                     The second respondent adopted a limited role in the conduct of the proceedings.  Its involvement arose in the following way.  The applicants initially instituted proceedings only against the first respondent on 24 December 1999.  Independently the applicants instituted proceedings against the second respondent in 2001 in the High Court seeking declarations as to the invalidity of certain provisions of the GM Act.  In a sense, that application was anticipatory of them succeeding in establishing contraventions by the first respondent of their PVR and PBR, and of the first respondent then asserting reliance upon its powers and functions under the GM Act.  That matter was remitted by the High Court to the Federal Court for hearing by order made on 23 April 2001.  In this Court, by order made on 29 June 2001, the two proceedings were consolidated.  At the hearing, the second respondent appeared by counsel.  It made submissions on the constitutional issues, including as to the proper construction of the relevant provisions of the PBR Act (by that time the claim under PVR Act was no longer pursued) so as to demonstrate that there was no inconsistency between the GM Act and the PBR Act.  It did not call evidence or participate in cross-examination of any of the witnesses.  It did not make submissions with respect to the factual findings which the Court might have made, or about any of the causes of action other than that relating to Commonwealth legislation and then only to the limited extent referred to.  The second respondent did not incur any significant additional cost as a consequence of the consolidation of the two proceedings.  However, by reason of the consolidation of the two proceedings, it was required to be involved in the consolidated proceeding to the extent described.

7                     Each of the applicants’ claims failed.  The construction of the relevant provisions of the PBR Act led me to the conclusion that the first respondent’s conduct did not contravene the PBR of the applicants.  Consequently, it was unnecessary to address the contentions that certain provisions of the GM Act were inconsistent with the PBR Act or the PVR Act.

8                     It is in that context that the respondents seek their costs generally in the proceeding on a party and party basis, but as I have noted the first respondent in respect of certain issues seeks costs on an indemnity basis.  Those issues are:

·                    that part of the PBR infringement claim concerning the alleged infringement by the first respondent of the applicant’s PVR rights under the PVR Act;

·                    the breach of contract claim;

·                    the breach of fiduciary duty claim;

·                    the estoppel claim;

·                    the unlawful interference claim, to the extent that it related to dealings with the New South Wales Grains Board. 

The costs of the PBR infringement claim alleging contravention of the PBR Act, and for a declaration that certain provisions of the GM Act are inconsistent with the PBR Act and the PVR Act (an issue which I did not need to resolve) are sought on a party and party basis, as are the costs of the unlawful interference claim to the extent that it related to dealings with the Australian Barley Board.

9                     The thrust of the first respondent’s submissions is that the five issues in respect of which indemnity costs are sought were pursued and maintained unreasonably, and thereby prolonged and unnecessarily complicated the issues in evidence at the trial.

10                  The first respondent also relies upon its communication of 8 March 2002 in which it offered to resolve the proceedings by the dismissal of all claims, with each party to bear its own costs.  The offer was in writing.  It was open only until 26 March 2002.  The hearing commenced on 8 April 2002.  The offer was expressed to have been made under O 23 of the Federal Court Rules, or as a Calderbank letter (Calderbank v Calderbank [1975] 3 All ER 333).

The principles

11                  There is no issue as to the relevant principles to be applied.  Section 43 of the Federal Court of Australia Act 1976 (Cth) continues the power of the Court to award costs.  The discretion to award costs is one which, of course, must be exercised judicially:  Re Wilcox; Ex parte Venture Industries Pty Ltd (No 2) (1996) 72 FCR 151 (Wilcox) at 152 per Black CJ.

12                  There is also consensus as to the proper starting point to the exercise of that discretion.  It is ordinarily the case that costs should follow the event to compensate the successful litigant:  Ruddock v Vardarlis (2001) 115 FCR 229 at 235, [12] per Black CJ and French J.  Generally, further, there will need to be some additional circumstances which warrant departure from ordering costs simply on a party and party basis and for ordering costs on an indemnity basis:  Colgate-Palmolive Co v Cussons Pty Ltd (1993) 46 FCR 225 at 232 – 233 per Sheppard J.  His Honour there enumerated some instances of circumstances where an order for indemnity costs may be warranted.  There is no limited or restricted categorisation of the circumstances in which the justice of the case will warrant an order for indemnity costs.  As Hill J said in John S Hayes and Associates Pty Ltd v Kimberley-Clarke Australia Pty Ltd (1994) 52 FCR 201 (Hayes) at 203:

‘… care must be taken not to circumscribe the discretion by reference to closed categories.  It is not a necessary condition of the power to award costs that a collateral purpose be shown.  The categories warranting the exercise of the discretion are not closed.  In each case it will be necessary to look at the particular facts and circumstances to see whether an exercise of discretion to order costs on an indemnity basis is warranted.’  [References omitted]

13                  Such circumstances may include that the party has persisted in what should, upon a proper consideration, have been seen as a hopeless case:  e.g. J-Corp Pty Ltd v Australian Builders Labourers Federated Union of Workers (No 2) (1993) 46 IR 301 at 303 per French J; NMFM Property Pty Ltd v Citibank Ltd (2001) 109 FCR 77 at 96 per Lindgren J.  To maintain such a claim does not necessarily lead to the presumption that the action was commenced for some ulterior motive.  I do not infer any such motive on the part of the applicants.  Indeed, although it was suggested by the first respondent in written submissions, I do not find that the applicants maintenance of the claim for an account of profits against the first respondent, at least until almost the end of the hearing, or the basis of the formulation of that claim, was for tactical reasons only to put pressure upon the respondents.

14                  I regard the proper starting point to be that expressed by Black CJ in Wilcox at 152 as follows:

‘… it is well established that the starting point for any consideration of an application for indemnity costs is that in the ordinary case costs will follow the event and the Court will order the unsuccessful party to pay the costs of the successful party, on a party and party basis, a basis which will fall short of complete indemnity.  Nevertheless, the court has an absolute and unfettered jurisdiction in awarding costs, although the discretion must be exercised judicially.’

15                  In this matter, the applicants contend that it would only be in the interests of justice to award indemnity costs in respect of the four issues outstanding if the Court were satisfied that the case was a hopeless one, that is one doomed to fail.  They further contend that each of the four claims under consideration was arguable:  cf De Alwis v Minister for Immigration & Multicultural & Indigenous Affairs [2004] FCAFC 77 at [7]; Perre v Apand Pty Ltd [2004] FCA 881 at [26] per Selway J, so that indemnity costs should not be ordered.

16                  The making of an offer of compromise and its rejection does not, without more, justify an order for costs on an indemnity basis; Hayes at 206 per Hill J.  The context of the offer, its timing, and other matters may, however, elevate its significance on the question of costs:  Dr Martens Australia Pty Ltd v Figgins Holdings Pty Ltd (No 2) [2000] FCA 602 at [17] per Goldberg J.  In particular, if the offeree was unreasonable to reject the offer in all the circumstances, including apparent deficiencies in its case, either on matters of law or evidence, the justice of the case may lead to an order for indemnity costs even if the case is assessed as less than hopeless:  Yates Property Corp Pty Ltd v Boland (No 2) (1997) 147 ALR 685 at 693 per Branson J.

17                  In my view, to assess the significance of the offer of compromise in this matter requires a focus upon the understanding of the applicants as to the strengths and weaknesses of their claims shortly before the trial was to commence.  That assessment may move the demarcation point along the costs order line to identify where party and party costs are appropriate and where indemnity costs are appropriate.  It was at that time that the offer of compromise was made.  Its non-acceptance may move the demarcation point somewhat in favour of the first respondent.  The precise point along that line where the justice of the case should lead to an order for indemnity costs is nevertheless still a matter of judicial discretion having regard to all the circumstances.

18                  It is convenient at this point to deal with one contention made by the first respondent concerning the conduct of the second applicant.  It is axiomatic that the reasonableness of the conduct of a litigant, for the purposes of a claim for indemnity costs, must be measured having regard to the nature and role of the particular litigant:  Oshlack v Richmond River Council (1998) 193 CLR 72.  The authority indicating that the Crown must act, and be seen to act, as a model litigant is longstanding:  Melbourne Steamship Co Ltd v Moorehead (1912) 15 CLR 333 at 342 per Griffith CJ.  That principle has been adopted and applied on many occasions.  However, there is nothing in this matter about the conduct of the second applicant which indicates any departure on its part from the standard of conduct applicable to a model litigant.  I do not therefore regard that consideration as one which affects the exercise of the discretion more favourably to the first respondent than would otherwise be the case.  The written submissions of the first respondent did not identify particular conduct of the second applicant which, it contended, involved a departure from the standard of conduct expected of the second applicant.  Their focus was upon the various claims having been pursued at all.  I did not perceive in the course of the hearing or in the pre-trial proceedings any particular conduct on the part of the second applicant which would be categorised as conduct which departed from that expected of the Crown.  It did not conduct the proceedings in a harassing way, or seek to use its power or resources in any unfair way as against the respondents.  It is apparent, notwithstanding that the first respondent is an independent statutory authority, that the resources available to it to conduct the proceedings did not disadvantage its conduct of the proceedings in any way, or in any way of which a model litigant might have taken advantage.

19                  In the light of those general observations, I shall now turn to consider the particular issues which require to be addressed.

consideration

1.  The claim for infringement of the PBR Act

20                  The claim that the first respondent had contravened the applicants’ PVR was maintained throughout the proceedings until the final submissions.  Senior counsel for the applicants in opening indicated that the claim may not have been pursued, but it was not formally abandoned, and the respondents had no reason not to continue to resist it during the course of the evidence.

21                  However, subject to one qualification, I do not think the circumstances are such as to lead to an order for indemnity costs in respect of this claim.  The first reason for that conclusion is that I am not persuaded that the ultimate abandonment of the claim in this instance leads to the view that, from its inception, the applicants were unreasonable in making the claim or in maintaining it.  The legislation is quite complex.  The concepts within it are difficult.  The legislation had not been the subject of any relevant earlier judicial determination.  The determination of the PBR infringement claim itself involved careful consideration of the relevant provisions of the PVR Act, and of the PVR of the applicants.  I do not categorise the PVR part of this claim as being so lacking in prospects of success as to warrant the grant of indemnity costs to the first respondent.

22                  I am also mindful of the desirability of the applicants proving the history of the development of Franklin barley, so as to establish the existence of PVR and then PBR in Franklin barley in any event.  That is, much of the evidence going to the establishment of PVR in Franklin barley would have been adduced to establish the existence of PBR in Franklin barley.  The evidence as to the introduction of Franklin barley into Western Australia would also have been appropriately adduced even if no claim based upon PVR had been made.  I do not think that it would be at all easy to unravel the preparatory work, or the parts of the trial, which went only to resist the claim based upon infringement of PVR in those circumstances.  Indeed, for the reasons I have given, I think that work would be relatively small in the overall picture, although I accept that the first respondent might be able on taxation to demonstrate some such work.

23                  As noted above, the first respondent does not claim that the refusal of the Calderbank offer entitles it to indemnity costs generally against the applicants from a reasonable time after the offer was made.  The Calderbank offer was to settle the matter overall.  It contained no proposal dealing discretely with this claim, or any other of the causes of action pleaded.  It does not therefore directly enter the scales in favour of an indemnity costs order with respect to any particular cause of action.  I have, however, taken it into account in a general way when undertaking the exercise of my discretion whether to award indemnity costs in respect of the several claims for which indemnity costs are sought.

24                  Overall, however, I am not persuaded that the first respondent should recover its costs on an indemnity basis in respect of the PVR part of the PBR infringement claim in the light of the considerations I have addressed above.

2.  The breach of contract claim

25                  The breach of contract claim, in the light of the evidence, was clearly not maintainable.  The applicants’ evidence-in-chief barely raised the prospect of a contract as alleged.  Indeed, the director of the first applicant accepted as much in the course of his evidence.  He had also conveyed to the second applicant on 6 May 1992 that negotiations with the first respondent were not ‘progressing very far’.  The first respondent had, through its general manager, clearly asserted on 5 May 1992, about the time of the alleged contract, that the first respondent did not intend to enter into any contract with the first applicant at about that time.  The two officers of the first respondent whose conversations were alleged in the amended statement of claim to have given rise to the alleged contract were not, on the applicants’ own evidence, those persons with whom the first applicant would have expected to have contact to reach any contract as alleged.

26                  I think the picture presented by the material indicates that the breach of contract claim was never much more than speculative.  There was no significant conflict of oral evidence which required resolution to determine the claim, and no positive documentary evidence which tended to support it.

27                  In the light of those views, I am disposed to order that the applicants pay to the first respondent its costs on an indemnity basis in respect of that claim.  I do not consider that the material available to the applicants prior to the trial, as disclosed by the course of evidence, discloses any significant prospect of the applicants making out the case they had pleaded on that topic.

28                  I do not, however, regard the allegations so made as involving any misconduct on the part of the applicants.  There was a slight chance that the claim may have evolved into something more substantial in the course of the evidence.  Despite the suggestion of some ulterior purpose on their part, in respect of this particular claim no specific ulterior purpose was identified and I do not think one existed.  It was, in my view, a matter of pleading all possible avenues to success even though some of those avenues were (as this claim was) pretty narrow.

29                  I have nevertheless come to the conclusion that it is in the interests of justice that the first respondent should recover its costs of this issue on an indemnity basis.  I am mindful that the task of isolating the legal work attributable to this cause of action from that which is attributable to the claims generally of the applicants will be a difficult one.  Part only, and a relatively small part, of the pleadings related to it.  Part only, and again a relatively small part, of the applicants’ evidence related to it.  The applicants adopted the course of telling the story of the introduction and supply of Franklin barley into Western Australia fully as part of their general case.  That was done both orally and through the extensive volumes of documents introduced chronologically.  I am not critical of that approach.  The applicants should not be obliged to pay indemnity costs for adopting that approach, except where the first respondent can show on taxation that it undertook particular work to address only the claim for breach of contract.  Otherwise the task of the taxing officer will be too difficult, and the taxation of costs will be too complex and expensive.  To avoid so far as possible those consequences, I propose to include in the order as to indemnity costs in respect of the breach of contract claim a limitation restricting the order for indemnity costs to such costs as are clearly shown by the first respondent to have been incurred only in respect of the breach of contract claim.  The taxing officer will then have the task, for example, in respect of this claim of allowing only those costs of drawing, engrossing and settling the defence as it responded to pars 24, 25, 26 and 39 – 43, 44(d) and 71(e) of the amended statement of claim if the first respondent can isolate such costs.  It may not choose to do so, or may be unable to do so.  The filing of the defence was necessary whether or not this claim was made.  It is unlikely that counsel settling the defence identified separately the fees for settling that part of the defence dealing specifically with this claim.  On the other hand there may be separate memoranda of advice about this claim, and records may indicate (for example) that, of the time spent proofing Mr Swan and preparing and engrossing his statement, a certain period of time was spent in addressing only this claim.

3.  The estoppel claim

30                  The estoppel claim was added to the statement of claim on 30 November 2001, at the same time as the breach of contract claim.  It was based in part upon the same communications in early May 1992 as were alleged to support the breach of contract claim.  It extended to other communications or conduct in December 1992, February 1993, April 1993 and September 1993.

31                  In respect of this claim, to the extent that it is based upon communications in May 1992, I have reached the same view as to the appropriate costs order as I have made in respect of the breach of contract claim and for much the same reasons.

32                  In my judgment, similar considerations apply to each of the other allegations made to support the estoppel claim.  The evidence of the applicants did not, in relation to those allegations, arguably reach the level of providing a foundation (if unanswered) upon which a finding of an estoppel would have been made.  I need only mention one particular feature of those allegations.  In late 1992, whilst the first respondent made it clear that it would not enter into a production levy agreement with the first applicant for the supply of Franklin barley into Western Australia without the support of the Western Australian Farmers Federation, it nevertheless got to the point of responding to an overture from the first applicant by providing the first applicant with a draft agreement which included a provision for a form of production levy in an unspecified amount.  At that point, I think the first respondent by its officers had shown a preparedness to contemplate a production or end point levy agreement, but only with industry support.  The first applicant understood that, as it then diverted its focus to securing industry support in early 1993. I do not consider those communications indicate that, at that time, the foundation for the alleged estoppel was in reality any stronger than it had earlier been.

33                  I propose to make an order for indemnity costs in respect of the estoppel claim in comparable terms to that to be made in respect of the breach of contract claim.  The reasons for it being so confined are the same.

4.  The breach of fiduciary duty claim

34                  The alleged fiduciary duty was, in essence, between the first applicant and the first respondent.  It was alleged that the first respondent undertook voluntarily to promote the interests of the first applicant in Western Australia by the growing trials which it sponsored in 1992 and in early 1993, and in subsequent dealings, so as to result in a ‘collaborative undertaking’.  I found no such relationship existed, and that the dealings between the first applicant and the first respondent in relation to the supply of Franklin barley into Western Australia were simply commercial.

35                  I am, however, not persuaded that it is in the interests of justice that an order for indemnity costs should be made in respect of this claim.  The applicants recognised that the foundation for the claim was a little beyond the conventional, based upon the role of the first applicant as authorised agent for the second applicant and the role of the first respondent as the statutory marketing authority for Western Australia.  There was some evidence of the first respondent’s preparedness to explore the introduction of Franklin barley into Western Australia in 1992, particularly by reason of pressure from local maltsters.  The communications between those parties did not, as I found, move beyond the realm of a commercial relationship.  But I am not persuaded that, on the material available to the applicants, their claim was so imprudent, or lacked any real foundation until the context of the relationship between them was fully exposed by the evidence, as to warrant the making of an order for indemnity costs.

36                  In determining whether it is in the interests of justice that an order for indemnity costs should be made on this claim, I have also taken into account that, as the case unfolded, much and probably most of the evidence directed to this claim was also relevant to the claims that the first respondent had infringed the PVR and the PBR which existed in Franklin barley.

37                  I do not consider an order for indemnity costs should be made in respect of this claim.

5.  Other issues

38                  The applicants contend that the first respondent should not be awarded costs in relation to the issues of laches, and the application of s 47A of the Limitation Act 1935 (WA).

39                  I did not need to determine those issues.  I did however reach a firm, albeit obiter, view that s 47A of the Limitation Act did not apply to the present action.

40                  Generally speaking, apportionment of costs on an ‘issues’ basis is a course the Court should be reluctant to adopt:  see e.g. Cretazzo v Lombardi (1975) 13 SASR 4 at 16 per Jacobs J.  The applicants contend that the two issues are separate and distinct, and can be readily isolated for taxation purposes.

41                  I do not consider it appropriate to isolate those issues.  In my view, confronted with the nature of the applicants’ claims, the first respondent was entitled to raise those issues by way of defence:  see Australian Conservation Foundation v Forestry Commission (1988) 81 ALR 166 at 169 per Burchett J.  It has not been shown to have been unreasonable in having done so.  The laches defence was not addressed, as ultimately it was not necessary to do so.  The s 47A defence, whilst determined adversely to the first respondent, is not shown to have been unreasonably raised.  The mere fact that that issue can be isolated does not, in all the circumstances of this matter, lead me to the view that the first applicant should be deprived of its costs of that issue.

6.         Two counsel

42                  The applicants did not contend that it was inappropriate for the Court to indicate that the first respondent should have the costs of the attendance of both senior counsel and junior counsel at the trial:  see O 62 r 31, Federal Court Rules.

7.  The costs of the second respondent

43                  In my judgment, there is no reason why the second respondent should not have its costs of the proceedings.

44                  The second respondent was required to participate in the proceedings as it became a party to them by the consolidation order.  It was successful in resisting the relief claimed against it.  It did not adopt a role in the proceedings which went beyond attending to its proper interests.  It is not suggested its conduct unduly prolonged the course of the hearing.  In my judgment, to the contrary, its conduct was throughout the proceedings appropriately focussed.  Ultimately, as the judgment of 21 May 2004 reveals, its position that the determination of the constitutional questions was unnecessary so no declarations should be made on those questions was vindicated.

45                  In my view, the fact that the constitutional questions were not addressed because, in the light of the findings in the applicants’ claims against the first respondent, it was not necessary to do so should not lead to the second respondent bearing its own costs of its attendance at the hearing to protect its interests.  There was no order made as to the separate trial of issues, so the second applicant could not safely absent itself from the hearing.  It acted reasonably in attending the hearing.

Orders

46                  For those reasons, I consider that the appropriate orders as to costs are:

1.         Subject to paragraph 2 hereof, the applicants pay to the first respondent costs of the proceedings, including reserved costs on a party and party basis.

2.         The applicants pay to the first respondent costs in respect of the following claims brought by applicants:

(a)                   the breach of contract claim as pleaded at paragraphs 24, 25, 26 and 39 – 43, 44(d) and 71(e) of the amended consolidated statement of claim filed pursuant to leave granted on 20 March 2002 (the ACSC); and

(b)                   the estoppel claim as pleaded in paragraphs 23, 25, 26, 27, 32A, 32B, 35A, 35B and 71(e) of the ACSC; and

(c)                   the unlawful interference claim as pleaded in paragraphs 28 – 29E, 44(e) and 71(e) of the ACSC only insofar as that claim related to dealing with the New South Wales Grains Board;

including reserved costs to the extent that such costs are shown by the first respondent to have been incurred only in respect of those claims, on the basis that such costs are to include all costs so incurred by the first respondent except insofar as they are of an unreasonable amount or were unreasonably incurred so that, subject to such exceptions, and upon the basis so specified, the first respondent will be completely indemnified by the applicants for its costs.

3.         Certificates be granted for one senior counsel and one junior counsel for the first respondent.

4.         The applicants pay to the second respondent costs of the proceedings (including the costs of the proceedings whilst in the High Court of Australia), including any reserved costs on a party and party basis.

Associate:

Dated:              30 November 2004