FEDERAL COURT OF AUSTRALIA

Domino’s Pizza Enterprises Limited v Precision Tracking Pty Ltd (No 5) [2018] FCA 48

ORDERS

THE COURT ORDERS THAT:

1.    The first to fourth respondents pay the costs of the other parties thrown away by reason of the adjournment of the trial on 28 November 2017.

2.    Those costs be assessed on a party and party basis.

3.    The applications brought by Domino’s and by Navman in respect of their costs of the adjournment of the trial be otherwise dismissed.

4.    There be no order as to the costs of these interlocutory applications.

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

REASONS FOR JUDGMENT

ROBERTSON J:

Introduction

1    These reasons concern costs applications made by the applicant/first cross-respondent to the first cross claim (Domino’s) and by the second cross-respondent to the first cross claim/cross-claimant of the second cross claim (Navman) against the first to fourth respondents (the Precision parties) arising out of the adjournment of the trial on 28 November 2017.

2    The proceedings are complex, both substantively and procedurally, and the contests have been vigorous.

3    The relevant background can be found in earlier interlocutory judgments: Domino's Pizza Enterprises Ltd v Precision Tracking Pty Ltd [2016] FCA 853; Domino's Pizza Enterprises Ltd v Precision Tracking Pty Ltd (No 2) [2017] FCA 211; Domino's Pizza Enterprises Ltd v Precision Tracking Pty Ltd [2017] FCA 1063; Domino's Pizza Enterprises Ltd v Precision Tracking Pty Ltd (No 4) [2017] FCA 1264.

4    I also set out the relevant parts of the discovery orders I made on 21 November 2017:

1.    Subject to order 2, the Court declares that documents in paragraph 1, being subparagraphs 1c. and 1d.; paragraph 2, being subparagraph 2d., paragraph 4, being subparagraphs 4c. and 4d.; and paragraph 5 of the letter from DibbsBarker to Corrs dated 13 December 2016 (the 13 December 2016 letter) are subject to Precision Tracking’s standard discovery obligations and that Precision Tracking has been and is obliged to conduct a reasonable search for documents answering those descriptions.

2.    The paragraphs in the 13 December 2016 letter are amended as follows:

a.    the word “All” first occurring is deleted from paragraph 1;

b.    in subparagraph 1c., delete and substitute: “The GPS tracking system or systems provided by Precision Tracking to Park & Fly Pty Ltd or any element of it or them;”

c.    in paragraph 2, delete “Any document” first occurring and substitute “Documents”;

d.    in paragraph 2, delete “recording or”;

e.    in paragraph 4 delete “Any document” and substitute “Documents”;

f.    also in paragraph 4, delete “or encompassing”;

g.    also in paragraph 4, delete c. and d. and substitute “the systems referred to in subparagraphs 1c. and 1d.;

h.    in paragraph 5, delete “any GPS tracking system comparable to the Precision Delivery System” and substitute “the systems referred to in subparagraphs 1c. and 1d.;

i.    delete paragraph 6.

3.    The Court orders that those documents, to the extent they have not already been the subject of a reasonable search, are to be the subject of such search by Precision Tracking and, if found, are to be produced to Domino’s and Navman as soon as practicable, and by no later than 5.00pm on 1 December 2017.

Production pursuant to those orders began to be given by Precision to be given on 27 November 2017, on the evening of the first day the trial.

5    On 28 November 2017 the substantive hearing, set down for three weeks, was adjourned on day 2 in circumstances where Senior Counsel for the Precision parties then accepted: that they had not met its discovery obligation to Navman (see the 21 November 2017 orders) and acknowledged that the standard discovery obligation to Domino’s would have involved the disclosure of the Navman material to Domino’s in the usual course; that there was sufficient substance in the consequent allegations sought to be raised by way of defence to the first cross-claim and in relation to the amendment to Domino’s statement of claim and the companion amendments to be made by Navman; that if the discovery had been given to Navman as it should have been then Domino’s would have got that material then, but Domino’s were aware from the notebooks which had been earlier discovered of approaches to third parties pursuing business opportunities and investors and Domino’s knew that Precision had made some presentation to NRMA in November; and that some re-timetabling was necessary or appropriate in consequence of the amendment or amendments. The Precision parties’ position at that time was that the evidence could continue in relation to the patent claim. At that time, I rejected submissions on behalf of the Precision parties that the trial could continue in relation to the patent claim as I took the view that there was no sufficiently clean or clear division as to the various issues between the witnesses to be called. I then reserved costs.

6    On 7 December 2017 I heard the parties and was told that the total quantum of the costs thrown away as sought was in total some $650,000, including GST. I made the following orders:

THE COURT ORDERS THAT:

1.    The date for compliance with order 2 of the orders dated 1 December 2017 be extended so that the Respondents file and serve any evidence in respect of Domino’s and Navman’s application for their costs thrown away by reason of the adjournment of the trial by 5pm on 16 January 2018.

2.    The date for compliance with order 3 of the orders dated 1 December 2017 be extended so that Domino’s and Navman file and serve any evidence in reply by 5pm on 24 January 2018.

3.    The evidence referred to in orders 1 and 2 above and the hearing of the application for no more than 3 hours on 5 February 2018 be limited to determining Domino’s and Navman’s entitlement to costs thrown away by reason of the adjournment on 28 November 2017.

4.    The written submissions of each party be filed and served by 29 January 2018.

5.    The matter be listed for final hearing from 22 October 2018 through to 2 November 2018 and 3 December 2018 through to 14 December 2018.

I made these orders in circumstances where, in light of the quantum of costs sought, the Precision parties wished to have the opportunity to obtain advice from lawyers not thus far involved in the case.

Evidence

7    There is an affidavit dated 16 January 2018 sworn by Ms Odette Gourley the solicitor for the Precision parties. The Precision parties oppose the application by Domino’s and Navman for an order for the payment of their costs thrown away by reason of the adjournment of the trial. Ms Gourley’s evidence is directed largely to the adequacy of discovery given by the Precision parties in 2016 and 2017.

8    There is an affidavit affirmed 24 January 2018 by Mr Liam Prescott, solicitor for Domino’s, in answer to Ms Gourley’s affidavit.

9    There is also an affidavit in answer to Ms Gourley dated 29 January 2018 sworn by Ms Melissa McGrath, a solicitor acting for Navman.

10    I was taken to parts of two volumes of material which accompanied the affidavit of Ms Gourley and which were referred to in the written and oral submissions.

Issues

11    There seem to me to be four issues. (Order 3 made on 7 December 2017 was directed to exclude from the present hearing the quantification of the lump sum amount, if it was an appropriate case for costs to be assessed on a lump sum basis.)

12    First is the question whether Domino’s and Navman should have their costs thrown away by reason of the adjournment of the trial. It is important, in my view, that the present question is not one which arises after the determination of substantive proceedings, but is, as I have said, in respect of costs thrown away by reason of the adjournment of the final hearing.

13    Second is the question whether those costs should be paid by the Precision parties on an indemnity basis, as sought by Domino’s and Navman.

14    Third is the question whether those costs should be payable forthwith.

15    Fourth is the question whether there should be a lump sum costs order, in an amount set by a Registrar at a later date once evidence has been filed in accordance with the timetable proposed by Domino’s and Navman.

Submissions

16    Domino’s submits that it should have an order for its costs thrown away, on an indemnity basis, by reason of the vacation on 28 November 2017 of the trial of the case; and that the costs order should be for a lump sum, payable forthwith. The submission notes that, although the lump sum costs procedure is not intended to apply generally to interlocutory orders unless otherwise ordered, referring to footnote 13 of the Court’s Costs Practice Note, the procedure should be applied in this case as the proceeding is a complex, ongoing case and it is in the interests of the parties and the Court that interlocutory costs be dealt with as efficiently as possible.

17    Navman seeks an order for its costs thrown away by reason of the adjournment, to be paid forthwith and on an indemnity basis. It adopts the summary of the principles in Domino’s submissions. It also submits that a lump sum costs order would be appropriate in this case.

18    The Precision parties, in their outline of submissions dated 29 January 2018, submit that the costs of the adjournment should either be reserved until trial or should be ordered to abide the result of Domino’s new claim/defence in light of: (a) the fact that Precision discovered material putting Domino’s on notice as to its now amended case in April 2017 and August 2017; (b) the reason for the discovery of further material by Precision; (c) the reason for the adjournment; and (d) the potential for duplication in assessing costs thrown away at this time.

19    The Precision parties submit that the more appropriate order might be that Domino’s and Navman pay the Precision parties’ costs thrown away by the adjournment. However, the Precision parties are content for the issue of costs of the adjournment to be deferred until after the determination of the case on the merits. A further reason to reserve the costs, the Precision parties submit, is that Domino’s and Navman had indicated in correspondence they were seeking costs not properly limited to costs thrown away by reason of the adjournment in that the costs claimed seemed to include all costs incurred in preparation for the hearing, whether wasted or not, and future costs following the adjournment. The extent of any duplication could not be reliably estimated until after the final hearing. Only then could the extent of any alleged duplication of work be properly tested by reference to actual work done. Assertions now about duplication of work were unable to be readily tested.

Consideration

20    As is well-known, s 43 of the Federal Court of Australia Act 1976 (Cth) confers a wide discretion on the Court to award costs, that discretion being required to be exercised judicially.

21    In my opinion, Domino’s and Navman should have their costs thrown away by the adjournment of the trial. The circumstances I have set out at [5] above show this to be so. To paraphrase Ipp J in Clifton Sands Pty Ltd v Australian Safety Products Pty Ltd (unreported, Supreme Court of Western Australia, Ipp J, 8 May 1997, at page 7), on the facts that were then available an adjournment was inevitable and to be attributed to the conduct of the Precision parties. The immediate cause of the adjournment was the inadequate discovery given by Precision. The matters deposed to by Ms Gourley do not, in my opinion, affect that conclusion. Those matters have greater relevance to the basis on which those costs should be assessed, whether on the usual basis or on the indemnity basis. It is not appropriate to postpone the determination of that question as contended for by the Precision parties.

22    I should say however that, in my view, the fact of the trial going over to October 2018 should not lie at the Precision parties’ door since those dates were set to accommodate the availability of counsel and the Precision parties’ counsel were available some months earlier.

23    Next, in relation to indemnity costs, I apply the principles in Re Wilcox: Ex parte Venture Industries Pty Ltd (No 2) (1996) 72 FCR 151 at 156–7:

In order to exercise the discretion judicially the following principles have been accepted by the Court as applicable:

(a)    the Court ought not to depart from the rule that costs be ordered on a party and party basis unless the circumstances of the case warrant the Court in departing from the usual course;

(b)    the circumstances which may warrant departure from the usual course arise as and when the justice of the case so requires or where there may be some special or unusual feature in the case to justify the court in departing from the usual course;

(c)    whilst the circumstances in cases in which indemnity costs have been ordered offer a guide, the question must always be whether the particular facts and circumstances of the case in question warrant the making of an order for costs other than on a party and party basis.

24    I am not persuaded that Domino’s and Navman’s costs should be other than on a party and party basis and I reject the submission that the indemnity basis is appropriate. I am not persuaded that the conduct of either the Precision parties or their lawyers, or any other circumstance, provides a foundation for an indemnity costs order.

25    I accept there was a deficiency in the discovery but not a “relevant delinquency” (see Oshlack v Richmond River Council [1998] HCA 11; 193 CLR 72 and 89) so as to found the exercise of the discretion to order that the costs thrown away be on the indemnity basis. I take into account that the scope of Precision’s discovery obligations was the subject of specific correspondence in late 2016 and in 2017 but also that the issue was not brought to a head by Navman until late October 2017.

26    Because of issues of overlap or potential overlap, I would not make an order that the costs be payable forthwith. It would be necessary to make such an order because the ordinary rule is that “the party in whose favour the order is made must not tax those costs until the proceeding in which the order is made is finished”: Federal Court Rules 2011 (Cth) r 40.13. The relevant principles have been explained recently by Perram J in Federal Treasury Enterprise (FKP) Sojuzplodoimport v Spirits International BV (No 5) [2018] FCA 19 at [7]-[9], as follows:

[7] The principles guiding the exercise of the discretion involved are well established. First, at a high level of generality, Rule 40.13 confers a discretion which ‘should be exercised in favour of a party who establishes that the demands of justice require that there be a departure from what appears to be the general practice…’ (Thunderdome Racetiming and Scoring Pty Ltd v Dorian Industries Pty Ltd [1992] FCA 291; (1992) 36 FCR 297 at 312).

[8] Secondly, in the exercise of the discretion, the Court should bear in mind the twin policy considerations underpinning Rule 40.13. These are that the Court should avoid exposing the parties to the perils of multiple taxation proceedings (Vasyli v AOL International Pty Ltd [1996] FCA 804) and should keep in mind that subsequent events in the litigation may generate costs orders going in the opposite direction and in respect of which set-offs may ultimately be available (Bailey v Beagle Management Pty Ltd [2001] FCA 60; (2001) 105 FCR 136 at 145 [37]). A corollary of that latter consideration — particularly relevant to this case — is that prior costs orders may be available to set off the interlocutory costs order sought to be taxed. On the other hand, where no credit risks attend the parties to the litigation, this set-off consideration may be somewhat less significant (Courtney v Medtel Pty Ltd (No 3) [2004] FCA 347 at [24]).

[9] Thirdly, a range of factors may justify departure from the ordinary rule: where the final determination of the proceedings is far away: Allstate Life Insurance Co v Australia and New Zealand Banking Group Ltd (No 13) [1995] FCA 1459 at [5] (‘It would be wrong if the successful parties do not enjoy the fruits of their order for costs for such a long time.’); where a party has been required to incur significant costs over and above those which it would have incurred had the opposing party acted in handling the proceeding with competence and diligence (Life Airbag Co of Australia Pty Ltd v Life Airbag Co (New Zealand) Ltd [1998] FCA 545 (Life Airbag)); where, following a successful amendment application, a case is essentially a new proceeding (McKellar v Container Terminal Management Services Ltd [1999] FCA 1639 at [19] and [40]); where a discrete issue has been resolved (Australian Flight Test Services v Minister for Industry, Science and Technology [1996] FCA 1425 at [7]); or where there is some reason to think that interlocutory disputation is having the effect of draining the ability of one side to conduct the litigation (Clipsal at [12]).

27    Although additional costs have been incurred by Domino’s and by Navman, I give more weight to the undesirability of multiple taxation proceedings and to the set-off consideration referred to in Federal Treasury Enterprise. Earlier costs orders have been made in favour of the Precision parties, as well as in favour of Domino’s and Navman.

28    As to whether costs should be ordered payable as a lump sum, I am not now in a position to calculate an appropriate sum or sums. Neither is a Registrar. I take into account that the costs thrown away have an interlocutory character. This consideration militates against making a lump sum costs order for the reason that, as the draft short minutes proposed by Domino’s and Navman suggest, reaching the position where a lump sum costs order could be made would involve further considerable attention by the parties. In my opinion that attention should be directed to the substantive issues in the proceedings and the preparation for the adjourned trial.

29    In addition, for reasons of issues of overlap or potential overlap in the assessment of costs thrown away with costs yet to be incurred, I do not think it is appropriate to make a lump sum costs order. In so saying, I do not rule out whether a lump sum costs order would be appropriate on the determination of the substantive proceedings.

30    Reference was made in the course of submissions on each side to the fact of litigation funding of the Precision parties. I have not considered that to be of importance in reaching my conclusions.

31    Since each side, the Precision parties on the one side and Domino’s and Navman on the other, has had a degree of success, I make no order as to the costs of these interlocutory applications.

Associate:

Dated:    5 February 2018

SCHEDULE OF PARTIES