FEDERAL COURT OF AUSTRALIA

Aristocrat Technologies Australia Pty Limited (ACN 001 660 715) v Global Gaming Supplies Pty Ltd (ACN 008 548 589) (No 2) [2010] FCA 277

THE COURT ORDERS THAT:

1.         The first, second, third, fifth and sixth respondents be jointly and severally liable to pay the applicants 50% of their costs of the proceedings incurred on and from 22 June 2007.

2.         There be no orders as to costs of the proceeding described as the Global proceeding.

3.         The applicants pay the fourth respondent’s costs of the proceedings in so far as any such costs are separate from or additional to the costs incurred by the sixth respondent.

Note:Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
The text of entered orders can be located using Federal Law Search on the Court’s website.

REASONS FOR JUDGMENT

1                          I gave judgment in this matter and made orders for damages on 15 December 2009.  At that time I indicated I would hear the parties on costs. 

2                          It is well accepted that section 43(2) of the Federal Court of Australia Act 1976 (Cth) confers an unfettered discretion on the Court in the exercise of the power to order costs but the discretion must be exercised judicially. 

3                          It is also well accepted that the usual costs order is that the successful party will have its costs on a party-and-party basis but success or failure on separate issues may lead the Court to engage in a process of apportionment, see Cadbury Schweppes Pty Ltd v Darrell Lea Chocolate Shops Pty Ltd (No 3) [2007] FCAFC 119 at [11].

4                          Here it seems to me that it is appropriate to make such an apportionment, the only real question being what allocation ought to be made.  The difficulty which arises is that, as Crennan J observed in Dias Aluminium Products v Ullrich Aluminium Pty Ltd (No 2) (2006) 225 ALR 569 at [7], an allocation of costs in a case of mixed results can never be done with mathematical precision. 

5                          Mr Williams, who appeared for the Aristocrat companies on the present hearing, accepted that some apportionment was appropriate.  He submitted that the Aristrocrat companies ought to receive 80 per cent of their costs.  Counsel for the Global respondents and the Tonita respondents took slightly different approaches.

6                          Counsel for the Global respondents, Mr Ogborne, sought an order that the Aristrocrat companies pay 20 per cent of his clients’ costs whereas Mr Green for the Tonita respondents submitted that I ought to order Mr Allam to pay 20 per cent of the costs from the date of consolidation of the proceedings on 22 June 2007. 

7                          Mr Ogborne pointed to the Aristrocrat companies’ failure on a number of important issues in order to support his argument.  In particular, he pointed to the data matching exercise, the conversion claim and the relatively small amount of ordinary damages awarded compared to the amount claimed by the Aristrocrat companies. 

8                          Mr Green submitted that Tonita ought to have its costs of the proceedings because no orders were made against that company.  So far as costs against Mr Allam were concerned, Mr Green emphasised the way in which the case had been run, the undistilled “snowstorm” of paper and the claim by the Aristrocrat companies to every possible alternative open to them.  Mr Green also pointed to the late withdrawal of the claim of copyright infringement in the EPROM labels. 

9                          A further issue which arises is whether any costs order made against the respondents ought to be limited to the period from consolidation of the proceedings. 

10                        I accept Mr Ogborne’s submission that the data matching exercise was an enormous one and that a huge amount of time and painstaking effort was put into meeting that part of the Aristrocrat companies’ case.  So much is obvious from the scope of the Aristrocrat companies’ evidence on this issue and from Mr Andrews’ response in exhibits GGS1, GGS2 and GGS4. 

11                        It is true that the Aristrocrat companies failed to prove their case by reference to the computer-generated data.  A small amount of the data was supported by the evidence of Ms Oldfield but there is no escape from the proposition that the data matching exercise should result in a fairly substantial reduction in the quantum of costs which would otherwise have been awarded to the Aristrocrat companies. 

12                        The other issues to which Mr Ogborne referred, whilst of some importance in the case, are of less significance in the allocation exercise.  So, too, is the issue of copyright in the EPROM labels but some reduction must be made for all these matters. 

13                        It would be wrong in my opinion to try to allocate costs by measuring the amount of paper generated or the portion of damages recovered.  That would be to seek to achieve mathematical precision.  The correct approach is one which endeavours to compensate the successful party (though, of course, not to give it a full indemnity) for having to come to Court to vindicate its claim.  That is why, in my opinion, in the ordinary case, an applicant’s failure on some issues will not deprive it of the benefit of a full costs order. 

14                        But even in a case such as the present it is not appropriate to reduce the costs order to one which fails to take account of the fact that the Aristrocrat companies have had a measure of success.  They had to come to Court to vindicate their rights.  They brought a larger case than the case on which they succeeded but the respondents resisted liability vigorously.  They were unsuccessful in that defence and damages as well as additional damages of $450,000 were ordered under section 115(4) of the Copyright Act 1968 (Cth). 

15                        The purpose of the costs order is not to punish the unsuccessful respondents but the fact that they were ultimately found liable at the end of a long trial is a matter to be weighed in the balance in allocating costs in a matter such as this.  I accept Mr Green’s submission that a party who seeks to run every issue in a case that could be conducted more economically takes the risk that it will have to bear the wasted costs but the same applies to an unsuccessful respondent.

16                        This was a case of “trench warfare.”  No compromise was made or given by either party.  I am satisfied that on a good many issues it was open to the respondents to have made concessions which would have shortened the length of the trial. 

17                        In my view costs ought only to be ordered from the date of consolidation.  This is because it is clear to me from what I said in paragraph 32 of my judgment on 15 June 2007, see Aristocrat Technologies Australia Pty Limited v Global Gaming Supplies Pty Limited [2007] FCA 943, that the Global proceeding was overtaken by the consolidated proceeding and the Aristrocrat companies failed on the Play King transaction (that is, the 32 shipments referred to in that paragraph of my earlier judgment).

18                        Doing the best I can, in my opinion, the appropriate allocation of costs from that date is that the first, second, third, fifth and sixth respondents should be ordered to pay 50 per cent of the cost of the proceedings.  In coming to that view I have taken into account, of course, the matters to which I have referred.  I have also taken into account the fact that it was open to the respondents to have admitted liability and to have fought the case purely upon the question of quantum.  That was a course which they chose to reject and instead vigorously defended the proceedings.  In those circumstances, I think that the exercise of my discretion in the allocation process has to be informed by the way in which the proceedings were defended.

19                        Of course, the Aristrocrat companies have borne the risk which they undertook of trying to run a larger case than was otherwise justified.  The exercise is not an easy one but it seems to me that the 50 per cent figure is a fair one in all the circumstances. 

20                        The Aristrocrat companies should be ordered to pay Tonita’s costs of the proceedings but the order should be limited to any additional or separate costs incurred by Tonita.  This is because Tonita and Mr Allam had a common interest in the proceedings.  To award Tonita its full costs may, in the absence of a clear statement to the contrary, effectively deprive the Aristrocrat companies of the benefit of the costs order against Mr Allam. 

21                        Finally, Mr Williams sought to argue that I should make additional orders to the damages orders that I made on 15 December 2009.  In particular, he sought declaratory and injunctive relief although I was not provided with the precise terms of the orders that he sought. 

22                        The short answer to Mr Williams’ submission is that it is too late to raise that contention.  Although the Aristrocrat companies maintained a claim for declaratory and injunctive relief the only mention of it at the end of the case was at paragraph 183 of the Aristrocrat companies’ closing written submissions.  That paragraph stated that the draft orders would be submitted prior to closing oral addresses but that was not done.  In any event, the award of additional damages ought to be a sufficient disincentive to the respondents and the transactions at issue were of some antiquity. 

23                        For these reasons the orders I will make are as follows:

1.         I order that the first, second, third, fifth and sixth respondents be jointly and severally liable to pay the applicants 50 per cent of their costs of the proceeding incurred on and from 22 June 2007.

2.         There are to be no orders as to costs of the proceeding described as the Global proceeding.

3.         The applicants are to pay the fourth respondent’s costs of the proceeding in so far as any such costs are separate from or additional to the costs incurred by the 6th respondent.

Associate:

Dated:         24 March 2010