FEDERAL COURT OF AUSTRALIA

Francis v Allen & Unwin (No 2) [2015] FCA 229

THE COURT ORDERS THAT:

1.    The applicant pay the respondents’ costs up to and including 27 October 2014.

2.    Thereafter there be no order as to costs.

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

REASONS FOR JUDGMENT

1    In this proceeding the applicant, Janette Francis, alleged that the publisher and the authors of a book had infringed her copyright and moral rights in a photograph published in the book. Ms Francis claimed that the photograph was of herself, aged about 27, which she had taken in a photo booth and for which she had posed. In short, it was her artistic work.

2    The book was entitled “Brothers in Arms: The inside story of two bikie gangs”. The photograph was described in the book as a photograph of another woman, Leanne Walters. Ms Walters was one of seven people who were killed in September 1984 in a shootout between two rival motorcycle gangs that was the subject of the book. She was 15 at the time. Her parents and step-mother were also named as respondents, although their alleged involvement in any infringement remains obscure. On 18 September 2014 I ordered that Sandra Harvey, one of the authors of the book and the then third respondent, be removed as a party as there was evidence that she was dead at the time the proceeding was commenced. Pamela Walters, the fourth respondent and Leanne Walters’ mother, was also said to have died. She remains a party, however, because Ms Francis objected to her removal without sufficient evidence that she was dead. Absent a death certificate, death or funeral notice or an obituary or, indeed, anything more than the bare assertion, I declined to make a similar order in her case.

3    On 18 July 2014, the respondents applied for summary judgment. I dismissed that application on 22 September 2014 (Francis v Allen & Unwin [2014] FCA 1027) and arranged for Ms Francis to receive legal assistance but Ms Francis sacked the lawyer who had agreed to act for her. I also made orders for the parties to file their evidence for the trial of the action. After the respondents filed their evidence, Ms Francis applied for leave to discontinue the proceeding. Leave was granted, but there is a dispute about costs. The respondents seek an order that Ms Francis pay their costs. Ms Francis submits that such an order should not be made.

The background to the present application

4    The originating application was filed on 1 April 2014. It was accompanied by a statement of claim. A joint defence was filed by Allen & Unwin, Lindsay Simpson and Rex and Lorraine Walters. An earlier attempt by Ms Francis to sue Allen & Unwin in the South Australian Supreme Court was summarily dismissed.

5    The substantive issue on the question of liability in the present proceeding was whether the photograph in question was a photograph of Ms Francis as she alleged or a photograph of Mr Walters’ daughter, as the respondents maintained.

6    Before the pleadings closed, the respondents filed an interlocutory application seeking to have this proceeding summarily dismissed also. The basis of that application was that there were no reasonable prospects of success because, as the respondents put it in their submissions:

The allegation that the Photograph depicts [Ms Francis] is fanciful, implausible and improbable and contrary to all available material. The likelihood of [Ms Francis] proving the contention on the balance of probabilities at trial is non-existent. In the absence of the allegation, [Ms Francis’s] pleaded case falls away.

7    I held otherwise, dismissing the interlocutory application. In short, I did so because on the material tendered by both parties, I was not persuaded that Ms Francis’s allegation was fanciful or implausible, even if it might have been improbable. The mere fact that an allegation might be improbable is a manifestly insufficient basis for summary dismissal. After referring to the evidence upon which Ms Francis relied I said (at [22]):

Against that, all the respondents offer is hearsay and innuendo. While hearsay evidence is admissible on an interlocutory application (Evidence Act 1995 (Cth), s 75), it is generally entitled to less weight than direct evidence. It was open to the respondents to proffer sworn evidence from Mr Walters but they elected, without explanation, not to do so. I do not doubt for present purposes that Mr Walters honestly believes that the photograph is a photograph of his daughter but the statement attributed to Mr Walters is a bare assertion. Without more, it is insufficient to persuade me that it renders Ms Francis’s case fanciful, frivolous or vexatious. The fact that he instructed lawyers to bring this application may speak to the genuineness of his belief but no more than that. That the authors of the book expressed gratitude for Mr Walters’ (scil.) assistance tells us nothing about the subject matter of the photograph. The source of the photograph is not said to be Mr Walters. That Mr Walters attended the launch of the book and kept a copy of it sheds no further light on the matter.

8    After this judgment was published, I made orders to progress the matter to trial. Ms Francis was required to serve her affidavits by 24 November 2014 and the respondents by 8 December 2014 (which I later extended to 10 December 2014). Amongst the evidence filed by the respondents was an affidavit from Mr Walters.

9    In that affidavit Mr Walters identified his daughter as the person in the photograph at the centre of the proceeding, although he said he did not know who took it, nor how the publishers or authors of the book came to have a copy of it. Most importantly, however, annexed to the affidavit were several other photographs taken from a photograph album Mr Walters said he found in his daughter’s belongings. Amongst the photographs reproduced from the album, which he said was inscribed with his daughter’s name and nickname, were two photographs each depicting the same two young women, one of whom is identical to the photograph in dispute in the proceeding. Both appear to have been taken in a photo booth. Mr Walters identified that young woman as his daughter, Leanne. The annexures included other images. One was of the unidentified young woman who appeared with the woman Mr Walters identified as his daughter. That photograph seems to have been taken on the same occasion as the other two but was cut from a wider photograph so as to remove the second subject (the missing image). When that photograph is compared with the photograph in dispute and the two photographs showing the two women together, the overwhelming inference is that the disputed photograph published in the book depicts the missing image. Indeed, it appears to be a copy of the other half of the photograph taken from the album.

10    Lorraine Walters, Mr Walters’ wife, also filed an affidavit in which she identified the person in the disputed photograph as Leanne. She said that she had known Leanne since 1975 and had met her numerous times between then and her death in 1984.

11    Those affidavits were filed and served on 10 December 2014.

12    The next day the matter came before the Court for directions. The first matter on the agenda was whether Ms Francis intended to file any additional evidence. When I asked Ms Francis whether she intended to do so, she said she did not, adding:

Can I just say something? I received an affidavit, I think it was filed on 10 December, and in that affidavit there is an annexure RJW6. Based on that particular annexure, I seek – I would like you to grant leave for a discontinuance of the proceedings.

13    Ms Francis’s application for leave to discontinue came out of the blue. When the question of costs was raised, she submitted that she should not have to pay the respondents’ costs. She submitted:

Well, the fact that the defendant had the photographs in their possession and didn’t put them forward during mediation is a concern. I think that had the photographs been tendered earlier, there would have been no contest. I would have withdrawn had I seen those photographs at any stage. I wouldn't have taken the case on had I seen those photographs.

14    At the invitation of the respondents, I then made a self-executing order in the following terms:

Unless the respondents notify the Court within 7 days that they wish to recover their costs, and provide any affidavit and submissions in support of such application, there will be no order as to costs.

15    On 17 December 2014 the respondents gave notice that they did wish to recover their costs. Their submissions were accompanied by an affidavit from their solicitor, Peter Banki. On 7 January 2015 Ms Francis filed an affidavit of her own, which is a mixture of evidence and submissions.

16    Rule 26.12 of the Federal Court Rules 2011 (Cth) relevantly states:

(1)    A party claiming relief may discontinue a proceeding in whole or in part by filing a notice of discontinuance, in accordance with Form 48.

(2)    The party may file the notice of discontinuance:

(a)    without the leave of the Court or the other party’s consent:

(i)    at any time before the return date fixed in the originating application; or

(ii)    if the proceeding is continuing on pleadings—at any time before the pleadings have closed; or

(b)    with the opposing party’s consent—before judgment has been entered in the proceeding; or

(c)    with the leave of the Court—at any time.

…

(7)    Unless the terms of a consent or an order of the Court provide otherwise, a party who files a notice of discontinuance under subrule (2) is liable to pay the costs of each other party to the proceeding in relation to the claim, or part of the claim, that is discontinued.

17    Despite the terms of r 26.12(7), however, the respondents submitted that where a notice of discontinuance is filed with the leave of the Court, costs are, in effect, entirely at large; the rules do not impose liability on the discontinuing party for the costs of the other party or parties. The inference is that discontinuance by leave is in a special category.

18    The respondents advanced this submission despite the terms of the rule, relying on Inground Constructions Pty Limited v Federal Commissioner of Taxation (1994) 27 ATR 513; (1994) 94 ATC ¶4046 and Wotton v Queensland (2009) 109 ALD 534; [2009] FCA 758. Both these cases, however, were decided under rules of court which have since been repealed.

19    Under those rules – the Federal Court Rules 1979 (Cth) (“former rules”) - the discontinuing party was liable to pay the costs of all other parties in circumstances where the notice of discontinuance was filed without the leave of the Court or the consent of the parties unless the terms of any consent provided otherwise (O 22 r 3). The former rules, however, made no provision for costs where a party discontinued a proceeding with the leave of the Court. In such a case, the authorities indicate, the Court had an “unfettered” discretion to award costs. Rares J discussed the differences between the language in the former and the current rules in Armstrong v Australian Community Pharmacy Authority [2012] FCA 577 at [9].

20    Under the current rule, however, an applicant who files a notice of discontinuance with the leave of the Court is prima facie liable to pay the costs of all other parties. Only where the Court provides otherwise or those parties consent, will he or she be excused. The onus is therefore upon the applicant to show why the usual order should not be made. In Lo v Australian Community Pharmacy Authority [2013] FCA 639 at [60] I said of the current rule:

This rule, which in substance is the same as r 42.19 of the Uniform Civil Procedure Rules 2005 (NSW), establishes a default or prima facie position (Armstrong v Australian Community Pharmacy Authority [2012] FCA 577 per Rares J at [9]). It does not create a presumption that costs will be awarded against the discontinuing party, but it puts an onus on it to make an application to the Court where, absent an agreement to the contrary, it does not propose to pay the costs of the other parties (Foukkare v Angreb Pty Ltd [2006] NSWCA 335 at [65]). And the Court will require “some sound positive ground or good reason for departing from the ordinary course”: Australiawide Airlines Ltd v Aspirion Pty Ltd [2006] NSWCA 365 at [54], Bitannia Pty Ltd v Parkline Constructions Pty Ltd [2009] NSWCA 32 at [54].

What costs order should be made?

21    In her affidavit Ms Francis reiterated what she said in Court. She also sought to explain why she had embarked upon the litigation. She said (without alteration):

I have memory of having a photograph in a photobooth snapped in 1984, and all of that set of photographs were subsequently stolen. Theft is a crime. Only 1 photograph was returned to me and that was again stolen from me some time later. In that twice stolen photograph I was smoothing my lipstick with my lips, which is what it looks like the subject of the photograph in the book is doing. I was tilting my head and looking to the side in the photograph in the photobooth, which is what it looks like the subject in the photograph is doing. In the stolen photographs I was wearing a yellow colour very short sleeve T-shirt, which is what the subject in the book looks like they are wearing. In the stolen photographs I was wearing 3 sets of earrings and 2 necklaces, which is what the subject in the photograph in the book is wearing. In the stolen photographs I had a bandaid on a pimple on my neck, which is what it looks like the subject in the photograph in the book had. I not only believe the photograph book looks like me I believe it is me. I had good reason to embark on and continue with the case.

22    Having regard to what Ms Francis said at the time she applied for leave to discontinue the proceeding, the penultimate sentence of this paragraph cannot be true. She must mean that she believed the photograph was a photograph of herself.

23    The rest of the affidavit extracted various parts of the latest edition of the book. It also took issue with aspects of Mr Walters’ evidence (for no apparently relevant purpose), criticised the conduct of various police officers, and canvassed a number of other matters of no apparent relevance to the present application.

24    Annexed to the affidavit were various photographs said to be of Ms Francis taken between 1980 and 1985, and in 2010.

25    Generally speaking, where there has been no hearing on the merits, the Court is “deprived of the factor that usually determines whether or how it will make a costs order”: Re Minister for Immigration and Ethnic Affairs; Ex parte Lai Qin (1997) 186 CLR 622 at 624 (McHugh J).

26    Here, however, it is abundantly clear from what Ms Francis told the Court on 11 December 2014 that the reason she applied for leave to discontinue the proceeding was that she accepted it was probable, if not inevitable, that she would fail. In effect, she surrendered. In circumstances such as these, “where the discontinuance can be said to be an acknowledgment by an applicant of likely defeat”, even under the former rules, a costs order would ordinarily be made in favour of the respondent: O’Neill v Mann [2000] FCA 1680 at [13].

27    The respondents advanced several arguments as to why Ms Francis should be ordered to pay their costs, based on the false premise that there was no default position. Shortly put, they contended that Ms Francis did not act reasonably in bringing and conducting the proceedings and that the Court can be almost certain that the respondents would have been successful. I accept the latter contention based on the evidence in Mr Walters’ affidavit but I have some difficulties with the first contention.

28    In support of the first contention, the respondents submitted that the applicant filed four affidavits, none of which contained any evidence of ownership of the copyright in the photograph the subject of the proceeding. That is true. Ms Francis should have filed evidence to support the allegation in the pleading that she took the photograph. But it was not in dispute at the time of the interlocutory application, at least, that if Ms Francis was the person in the photograph, then she was entitled to succeed. Assuming that by the time of trial the respondents’ position was different, I would have allowed her to give oral evidence to supplement her affidavit, particularly as she was a litigant in person.

29    Next the respondents submitted that Ms Francis’s first affidavit contained scandalous and irrelevant material and that the statement of claim also contained scandalous material. That is true, too, but overall I am not persuaded that Ms Francis’s conduct of the proceeding was unreasonable.

30    The respondents also submitted that Ms Francis has operated various websites attacking their credit in which wild, offensive and scandalous allegations are made about several of the respondents. This submission is supported by evidence annexed to Mr Banki’s affidavit and is not rebutted. I am unable to see the relationship between the operation of the websites and the respondents’ claim to recover its costs in the proceeding.

31    Finally, the respondents asserted that Ms Francis chose not to be represented by a lawyer. I cannot conclude that her conduct in this respect was unreasonable. Indeed, it is impossible for me to make anything of it in the absence of evidence as to why she did so.

32    The thrust of Ms Francis’s evidence was that the proceeding was not brought without reasonable cause. I decided as much when I dismissed the respondents’ application for summary judgment. Despite the scandalous material in the affidavits and the pleading, I am not persuaded that Ms Francis was unreasonable in the way she conducted the proceeding.

33    The most powerful argument in favour of the respondents’ application is that, once Ms Francis saw the evidence she was up against at trial, she effectively conceded that she could not win.

34    On the other hand, Ms Francis contended that:

    the respondents did not behave as if they were interested in reducing court costs;

    the respondents refused to discuss the matter of the photograph before litigation;

    Mr Walters should have produced the photographs annexed to his affidavit at the time of the mediation on 27 June 2014 or at the time the defence was filed, some four months later.

35    There is some force in these contentions. In particular, there is no apparent reason why the other photographs were not made available to Ms Francis at the time the defence was filed, if not earlier. The evidence from Mr Banki was that the photographs exhibited to Mr Walters’ affidavit were obtained when Mr Banki visited Mr Walters at his home on 23 October 2014 and that he took the photographs and the photograph album back to his office and made pdf images of them. This was four days before the defence was filed. The inference to be drawn from Mr Walters’ evidence is that, although he may not have realised it, he had been in possession of the photographs for years. They could have been the subject of evidence in the application for summary judgment had he turned his mind to the possibility at the time.

36    The powers conferred by the Rules must be exercised in the way that best promotes their overarching purpose, which is to facilitate the just resolution of disputes according to law and as quickly, inexpensively and efficiently as possible: Federal Court of Australia Act 1976 (Cth) (“FCA Act”), s 37M. The parties have an obligation to conduct proceedings (including negotiations for settlement of the dispute to which the proceedings relate) in ways that are consistent with the overarching purpose: FCA Act, s 37N(1). In exercising the discretion to award costs, the Court is required to take into account any failure to comply with the duty imposed by s 37N(1).

37    I have some sympathy for the respondents’ position. On the other hand, I accept that Ms Francis honestly believed that the photograph in the book was the photograph she took of herself. Ms Francis sought leave to discontinue the proceeding very soon after Mr Walters’ affidavit was served on her, when she realised her mistake. I have no reason to doubt that, had the material in the affidavit been given to her earlier, she would not have pressed on.

38    In the light of all these matters, I have concluded that the respondents should recover some, but not all of their costs. Mr Walters and Mr Banki both put on evidence that on 23 October 2014 Mr Walters discovered the album containing the photographs that led Ms Francis to discontinue the proceeding. As I noted above, the respondents filed and presumably served their defence four days later without drawing Ms Francis’s attention to the album or the photographs in question. I am minded to accept Ms Francis’s submission that the respondents should have produced the material at the time the defence was filed. Given the obligations of the parties and their solicitors under s 37N of the FCA Act, I see no good reason why they did not do so. I will therefore depart from the ordinary rule to the extent that the respondents did not adequately facilitate the quick, inexpensive and efficient resolution of the dispute by failing to serve this evidence around the time they filed their defence. Ms Francis should pay the respondents’ costs up until 27 October 2014 (when the defence was filed) (excluding the costs of the interlocutory application) but thereafter each party should pay its, his or her own costs.

Associate:

Dated:    16 March 2015