FEDERAL COURT OF AUSTRALIA

Aristocrat Technologies Australia Pty Ltd v Global Gaming Supplies Pty Ltd (No 2) [2013] FCA 1253

THE COURT ORDERS THAT:

1.    The sixth respondent pay 35% of the costs of the applicants in respect of the proceedings, other than the remittal proceedings.

2.    The applicants pay the sixth respondent’s costs of the remittal proceedings.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT (COSTS)

Introduction

1    The only remaining issue in this proceeding is the costs order to be made in respect of the claim against the sixth respondent (Mr Allam).

2    There is a substantial disparity between the approaches taken by the parties on this question. The Aristocrat Companies submit that Mr Allam should pay 35% of the costs of the proceedings. Mr Allam submits that the Aristocrat Companies should be ordered to pay 95% of his costs, as well as the whole of his costs of the remitter.

3    A subsidiary issue arises in a request made by the Aristocrat Companies that I vary the costs orders made on 30 September 2013 as to the costs payable by them to the fourth respondent, Tonita Enterprises Pty Ltd (Tonita).

The costs order against Mr Allam

4    Both groups of parties to the present dispute accept the principle that, whilst the usual costs order is that a successful party will have its costs on a party-party basis, success or failure on particular issues may lead the Court to a process of apportionment: Cadbury Schweppes Pty Ltd v Darrell Lea Chocolate Shops Pty Ltd (No 3) [2007] FCAFC 119 at [11].

5    What separates the parties’ submissions is who should be treated as the successful party. The Aristocrat Companies submit that they have enjoyed a measure of success against Mr Allam, which should entitle them to a costs order, subject to a reduction by reason of their failure on certain issues. Mr Allam, however, submits that he was substantially successful and only a minor allowance should be made against him.

6    The guiding principle to be applied before any question of apportionment is to be considered, is that the question of costs is to be looked at realistically as to which party has won and which has lost: Knott Investments Pty Ltd v Winnebago Industries, Inc (No 2) [2013] FCAFC 117 at [29] per Allsop CJ.

7    It is true, as counsel for Mr Allam submits, that the elaborate legal construct on which the Aristocrat Companies embarked at the outset bears little resemblance to the orders which ultimately came to be made against Mr Allam.

8    However, what seems to me to be critical is that, by no realistic measure, can Mr Allam be said to have been successful in the copyright case which formed the substantial part of this proceeding.

9    Ultimately, I made only two declarations which were concerned with approximately 50 machines shipped in 11 infringing transactions, as well as the compliance plates referred to in [162], [163] and [167] of the judgment of the Full Court in Allam v Aristocrat Technologies Australia Pty Ltd [2012] FCAFC 34.

10    But what must be borne in mind in the exercise of the discretion to award costs under s 43 of the Federal Court of Australia Act 1976 (Cth) is that the Aristocrat Companies had to come to Court to seek that relief. Moreover, it was relief which was ordered in the face of Mr Allam’s fierce denial of any involvement in the infringing transactions.

11    The starting point therefore is that the Aristocrat Companies should have their costs of, and incidental to, the trial but the level of costs payable must be subject to apportionment to reflect the parties’ success or failure on various issues.

12    In approaching the question of apportionment it is necessary to bear in mind that this cannot be done with mathematical precision: Dias Aluminium Products Pty Ltd v Ulrich Aluminium Pty Ltd (2005) 225 ALR 569 at [7] per Crennan J.

13    It seems to me that a good deal of weight in the apportionment process must be given to the outcome of the factual dispute between the Aristocrat Companies and Mr Allam. The focus of the Aristocrat Companies’ case was upon Mr Allam’s infringing conduct in manufacturing counterfeit components, including fake compliance plates, for second hand Aristocrat gaming machines. I found that Mr Allam’s denials of his conduct were false.

14    The extent of the factual dispute and the substantial body of evidence which underlay it can be seen in the primary judgment at [667] to [676]. My factual findings against Mr Allam are set out in my primary judgment at [710] to [712]. I made further findings adverse to Mr Allam at [724] to [750]. These findings were upheld by the Full Court at [133].

15    Notwithstanding the passage of time that has elapsed since the trial, I have a good recollection of the time that was devoted to addressing, in cross-examination and submissions, the substantial body of evidence which related to this issue. Allowance must be made for other issues on which the Aristocrat Companies were not successful. But the attention that was devoted to unravelling this central aspect of the factual claim against Mr Allam weighs strongly in favour of the Aristocrat Companies in the apportionment process.

16    Ultimately, in my opinion, the submissions put on behalf of Mr Allam are little different from those which I took into account in my reasons for costs orders made on 8 March 2010: see Aristocrat Technologies Australia Pty Ltd v Global Gaming Supplies Pty Ltd (No 2) [2010] FCA 277.

17    There, I considered that Mr Allam should pay 50% of the Aristocrat Companies’ costs. That should be the starting point but allowance must be made for the effect of the judgment of the Full Court. That judgment left the primary infringement intact but reversed the findings of secondary infringement. In addition, I dismissed the trade mark claim when the matter was remitted to me.

18    Doing the best I can in the allocation process, it seems to me that the appropriate allocation of the costs of the proceeding (other than the remitter) is that Mr Allam should be ordered to pay 35% of the costs of the Aristocrat Companies.

19    As to the remitter, very little time was occupied on the question of relief. The substance of the hearing was the issue of trade mark infringement on which Mr Allam was successful. The Aristocrat Companies’ succeeded in obtaining declarations but their measure of success in that aspect of the proceeding is sufficiently reflected in the order that they pay 35% of the costs of the proceeding.

20    Accordingly, I propose to order that the Aristocrat Companies pay Mr Allam’s costs of the remitter.

The costs order against Tonita

21    On 30 September 2013 I ordered the Aristocrat Companies to pay the costs of Tonita.

22    However, the Aristocrat Companies have pointed out that in the orders which I made on 8 March 2010, I provided for their liability to pay Tonita’s costs to be limited to those which were additional to or separate from those incurred by Mr Allam. This was because, to do otherwise may, in the absence of a clear statement to the contrary, effectively deprive the Aristocrat Companies of the benefit of the costs order against Mr Allam.

23    The difficulty which now arises is that the orders I made on 30 September 2013 have now been entered and the Aristocrat Companies have filed a notice of appeal. The grounds of appeal include a challenge to the form of the costs order made against Tonita.

24    It seems to me to follow that I cannot now deal with the issue. However, I should say that when I made the costs orders on 30 September 2013, I overlooked the limitation to which I referred in my earlier costs judgment. The limitation is in my opinion an obvious one and should not occupy the time of a Full Court. The “trench warfare” between the parties should cease and the issue should be able to be resolved between them.

Associate:

Dated: 25 November 2013