Federal Court of Australia

Ames Australasia Pty Ltd v AgBoss Australia Pty Ltd (No 2) [2021] FCA 1044

ORDERS

THE COURT ORDERS THAT:

1.    Subject to order 2, the parties’ costs of and incidental to the interlocutory application filed 7 July 2021 be costs in the cross claim.

2.    The respondent pay the applicant’s costs thrown away by reason of the filing of the amended notice of cross claim and further amended statement of cross claim, which costs shall include the applicant’s costs fairly and reasonably incurred in relation to the respondent’s proposed further amended statements of cross claim provided by the respondent to the applicant on 17 February 2021, 2 July 2021, and 14 July 2021.

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

REASONS FOR JUDGMENT

WHEELAHAN J:

Introduction

1    This judgment deals with the question of costs arising from the respondent and cross claimant’s successful interlocutory application for leave to file and serve an amended notice of cross claim and further amended statement of cross claim: Ames Australasia Pty Ltd v AgBoss Australia Pty Ltd [2021] FCA 902. Leave was granted to the respondent over the active opposition of the applicant and cross respondent.

Background

2    The relevant history is as follows. The respondent furnished the applicant with a draft of its proposed further amended statement of cross claim in February 2021. Subsequently, the parties exchanged correspondence in relation to the proposed pleading, which led to the respondent furnishing the applicant with further drafts. Three different versions of the proposed further amended statement of cross claim were provided by the respondent to the applicant. Unable to agree on the matter, the respondent filed its interlocutory application on 7 July 2021. I heard that application on 27 July 2021, and delivered my decision on 4 August 2021.

3    Upon publishing my reasons in respect of the application, I ordered that in the event that the parties were unable to agree on costs, the parties should make short written submissions and the question of costs would be determined on the papers. The parties were unable to agree, and I received and considered their written submissions.

4    On the question of costs, the applicant submitted that the respondent should pay the applicant’s costs thrown away by reason of the filing of the amended documents, including the costs of dealing with the three versions that were the subject of the parties’ correspondence, and that otherwise the costs of the application should be “costs in the cause”. The applicant submitted that each proposed version contained matters and claims not ultimately pursued in the application, but which the applicant at the time had to consider. The respondent consented to an order that it pay the applicant’s costs thrown away by reason of filing the amended documents, but this consent did not appear to extend to the applicant’s consideration of the earlier drafts.

5    The applicant further submitted that the usual principle that costs follow the event does not apply in applications for amendment. Rather, it was submitted that the party seeking the amendment is typically required to pay the costs of the application. The applicant referred to authorities in which a party seeking and obtaining leave to amend a pleading was held to be liable to pay the costs of the application, even in circumstances where the application was resisted unsuccessfully. Those authorities refer to a general approach that, unless the opposing party acted unreasonably in resisting the application, the party seeking an amendment will be liable for the costs of the application. Of these authorities, I draw attention to Media Ocean Limited v Optus Mobile Pty Limited (No 6) [2009] FCA 1319 (Jagot J), which identifies the foundation of the general principle advanced by the applicant as being that “[A]n applicant seeking leave to amend has an independent obligation to satisfy the Court that leave should be granted, irrespective of the position that the respondent takes. That is, even if the respondent does not oppose an application for leave to amend, such leave will not automatically be granted”: at [34]. Those observations are supported by r 16.51 of the Federal Court Rules 2011 (Cth), which permits a party to amend a pleading once before the close of pleadings, and permits further amendments by consent, also before the close of pleadings. However, where leave to amend a pleading is required, and where leave is consented to or not opposed, it may not be necessary to hear an application in open court, and leave may be given in Chambers: Federal Court of Australia Act 1976 (Cth), s 17(2), Federal Court Rules, r 1.36, r 39.11. The court in those circumstances still exercises judicial power, including consideration of whether any orders sought for leave to amend a pleading should be made: see Porter v Australian Broadcasting Corporation [2021] FCA 863 at [76] (Jagot J). But the procedure of seeking orders to be made in Chambers will likely save the parties unnecessary costs.

6    For its part, the respondent submitted that the applicant’s opposition to its application was unjustified and unreasonable, characterised by its unduly aggressive correspondence and misconceived grounds for opposing the application. On this basis, it sought an order that the applicant pay the respondent’s costs of and incidental to the application.

Consideration

7    The question of costs is a paradigm instance of a discretionary decision, as reflected in the text of s 43(2) and (3) of the Federal Court of Australia Act. The authorities cited by both parties can be no more than guidance as to how the court’s discretion might be exercised in particular cases.

8    There was some merit in the submissions advanced by the respondent that the applicant should pay the costs of the application. I will address first the respondent’s criticism of the correspondence sent by the applicant’s solicitors. It was an unfortunate feature of this interlocutory application that the solicitors for both parties furnished to the court as annexures to affidavits an abundance of correspondence passing between them over the course of a seven month period. An affidavit of the applicant’s solicitor dated 23 July 2021 even contained a detailed analysis of the course of that correspondence, including in a table. The annexure of all this correspondence was unnecessary, and as I stated to counsel at the hearing, was a most unattractive way to advance the parties’ respective cases on an application to amend a pleading. Further, I formed the view that the content and tone of some of the correspondence sent by the applicant’s solicitors was needlessly truculent. It appeared that vigorous debate through unduly lengthy correspondence of this type was some sort of proxy for the litigation itself. The writing of letters between solicitors in litigation should be a medium of information exchange, and not a forum for the expression of indignation, or for extensive argument. However, I do not propose to disallow the applicant’s costs of the correspondence to which I have referred on the ground of its tone. The real questions are whether I allow the applicant’s costs of the application at all, and if so, whether the costs in preparing correspondence were fairly and reasonably incurred by the applicant in the conduct of the litigation for the purposes of r 40.01 of the Federal Court Rules. This latter issue will usually be a question for a Registrar upon a taxation of costs as between party and party should that eventuate: see the Dictionary definition of “Costs as between party and party” in the Federal Court Rules.

9    As to the fact that the applicant was unsuccessful upon this application, in my written judgment at [19] and [20] I stated that some submissions advanced by the applicant were undeveloped and misplaced. Accordingly, I accept the respondent’s submission to the extent that, as I held, submissions advanced on behalf of the applicant were rejected on these bases. However, although the submissions advanced on behalf of the applicant were misplaced, I am not persuaded to find that they were advanced unreasonably, which in this case would be tantamount to finding that they lacked bona fides.

10    In my judgment, the preferable orders are those, in substance, advanced on behalf of the applicant, being that the costs of the interlocutory application be costs in the cross claim, and that otherwise the respondent pay the applicant’s costs thrown away by reason of the amendments, including the party and party costs incurred by the applicant in considering the various versions of the further amended statement of cross claim to which I referred at [2] above. For the avoidance of doubt, it will be a matter for a Registrar upon taxation to consider whether the costs of the applicant in that regard were fairly and reasonably incurred having regard to the content and length of some of the solicitors’ correspondence sent on behalf of the applicant.

Associate:

Dated:    30 August 2021