REASONS FOR JUDGMENT
1 Pursuant to leave previously given by the court, on 24 January 2007 the applicant filed a Fourth Further Amended Statement of Claim in this proceeding. The applicant thereby identified the literary works upon which it sues as including the source code for each of the HTML and PDF files for Material Safety Data Sheets ("MSDS") rendered by its "Infosafe" system. That source code was particularised in a confidential annexure to the pleading, Annexure A. The applicant alleged that the respondents had copied the works, and made copies of them available for profit to the public and to their customers. The particular MSDS which were alleged to have been copied were the subject of a second confidential annexure to the pleading, Annexure B. The structure of the pleading, therefore, was that the works in suit were contained in Annexure A, and the allegedly infringing reproductions were contained in Annexure B.
2 On 16 March 2007 the respondents filed a Further Amended Defence, responding to the Fourth Further Amended Statement of Claim.
3 On 11 October 2007, the applicant filed a draft of each of a Fifth Further Amended Application and a Fifth Further Amended Statement of Claim. On 11 December 2007, counsel for the applicant moved for leave to amend the then existing Application and Statement of Claim as proposed in those documents. On the same day, I granted that leave, subject to certain presently immaterial conditions.
4 The applicant accepts that, since it sought an indulgence, it should pay the respondents' costs thrown away by reason of its most recent round of amendments (the Fifth Further Amended Application and the Fifth Further Amended Statement of Claim). However, the respondents make the following contentions with respect to the question of costs:
that the costs to which they are entitled should go beyond the costs associated with responding to the Fifth Further Amended Statement of Claim as such, and should include all their costs incurred in the course of preparing their Defence in the proceeding by reference to the Fourth Further Amended Statement of Claim;
that the costs should be taxed and paid on an indemnity basis; and
that the costs should be paid forthwith.
Each of these contentions is resisted by the applicant.
5 The respondents' contentions are substantially based upon the view which they take about the Fourth Further Amended Statement of Claim. I shall attempt to summarise that view, as it appears to me from the affidavits upon which the respondents rely, and from their written and oral submissions. In the period following the service of the Fourth Further Amended Statement of Claim in January 2007, the respondents undertook the task of attempting to match the works in suit in Annexure A with the allegedly infringing reproductions in Annexure B. That was a considerable undertaking. In the course of doing so, the respondents say, and for present purposes I accept, that they encountered a number of apparent anomalies, incongruities, mismatches and the like. This led to correspondence between the parties, and to interlocutory proceedings in the court. These issues have now, it seems, been resolved, and there is no suggestion they arise in connection with the Fifth Further Amended Statement of Claim. The respondents say that the applicant failed to apply itself conscientiously to the particularisation of its allegations in the Fourth Further Amended Statement of Claim, the result of which was the necessity, on the respondents' part, to incur considerable costs trying to make sense of the particulars that had been provided in Annexure A and Annexure B. By filing a Fifth Further Amended Statement of Claim, the applicant has demonstrated what could, and should, have been done in January 2007. According to the respondents, the period since then has involved the expenditure of resources upon attempting to come to grips with a form of particularisation which the applicant subsequently abandoned.
6 The applicant answered the respondents' contentions by relying upon limitations, imposed by the respondents, upon the use to which it was able to put certain material discovered by the respondents. The particulars in Annexure B to the Fourth Further Amended Statement of Claim were, it seems, substantially derived from electronic documents discovered by the respondents. The applicant then identified those documents as containing the allegedly infringing reproductions of the works in suit. However, the respondents had given their discovery, relevantly, subject to confidentiality undertakings extracted from the applicant. Those undertakings permitted the documents to be inspected by the applicant's solicitor, and by experts engaged by the applicant, but not by members of the applicant's staff as such. This meant that the experts, and the applicant's solicitor, had to work together to identify the reproductions which corresponded with the works in suit the subject of Annexure A. According to the applicant, if the respondents encountered any difficulty lining up the works in suit in Annexure A with the alleged reproductions in Annexure B, it was because no member of the applicant's own staff, having a complete working knowledge of the subject matter concerned, was permitted, by reason of the confidentiality undertakings, to view the material discovered by the respondents.
7 Counsel for the applicant drew my attention to correspondence sent by the applicant's solicitor to the respondents' solicitors, in the second half of 2006 and in January 2007, requesting that his client's staff should be permitted to view the material that had been discovered, free of the confidentiality undertakings. In a letter sent to the respondents' solicitors on 4 January 2007, the applicant's solicitor indicated that it was for the purpose of preparing a Statement of Claim that he desired to show the confidential material to his client's staff. The respondents did not agree to the applicant's staff having access to part of the confidential material until 25 January 2007, by which time the Fourth Further Amended Statement of Claim had been filed (on 24 January 2007). It was not until 11 July 2007 that the respondents gave up their claim of confidentiality in relation to the remainder of the material with respect to which such a claim had been made. According to the applicant's case before me, the applicant's staff were then able to review all of the material discovered by the respondents which would constitute, or provide evidence of, the works which the applicant claimed involved infringements of copyright. This led to the preparation of the new form of Annexure A to what became the Fifth Further Amended Statement of Claim.
8 The respondents resisted the suggestion that the applicant had been unable properly to particularise its allegations of infringement, and its identification of the works in suit, while the relevant discovered documents remained confidential. It was implicit in counsel's submission made on behalf of the respondents that the applicant's solicitor, and its experts, should have been able to identify, from the discovered electronic documents, which material corresponded with which works upon which the applicant chose to sue.
9 In his affidavit sworn on 10 December 2007, the applicant's solicitor explained something of the process involved in his preparation of the particulars to the Fourth Further Amended Statement of Claim in the following terms:
Because of the confidentiality claim in order to identify and index the MSDS which the Respondents had copied and which could be identified in 210, 211 and the first bit stream dump my secretary and I were forced to extract those files which clearly were not the Applicant's files (for example where the word Infosafe was contained in a document as an emergency number); and to make a list of Infosafe numbers of the files retained so that comparative ACOHS files could be identified. Generic programs were written by Mr Moody which enabled the identified copied files to be examined by me and my secretary and ACOHS numbers extracted where the files were HTML; but the PDF files were examined individually by me and my secretary and the ACOHS numbers extracted therefrom.
The solicitor was not cross-examined on this evidence, and it was not submitted that it was otherwise inherently incredible. In the circumstances, I accept what the solicitor says, and I accept that he and the limited class of persons who were able to assist him did what they could to identify the allegedly infringing reproductions, and to relate them to the corresponding works in which the applicant claims copyright.
10 I am not persuaded that the applicant took a less than conscientious approach to the preparation of the Fourth Further Amended Statement of Claim. In the course of the interlocutory period since the filing of that pleading, the respondents have encountered issues and difficulties, including a number with respect to which, it seems to me, the applicant has recognised the legitimacy of the respondents' complaints. I am, however, not presently concerned with these relatively minor questions which might always arise in the conduct of factually complex litigation, particularly where technical issues are involved. Rather, I am concerned with the question whether the general approach of the applicant in the preparation of the Fourth Further Amended Statement of Claim was unnecessary and wasteful, and should have been seen to be so by the applicant. I am not prepared to reach that conclusion. At the broad level with which I am here concerned, I accept the applicant's proposition that the approach which it took to the Fourth Further Amended Statement of Claim was largely the result of its inability to have its own technical staff peruse the confidential material upon which it relied.
11 Two things follow from the conclusion which I have just expressed. First, I am not persuaded that the respondents should, by reason only of the matters canvassed above, get all their costs incurred in the preparation of their defence to the allegations in the Fourth Further Amended Statement of Claim since 24 January 2007. I desire, however, to make it clear that this ruling does not exclude the respondents from submitting, at an appropriate stage, that any part of the costs which they incurred during that period should be recovered from the applicant on some more limited basis, eg some particular default on the part of the applicant which caused the respondents to incur costs which would not otherwise have arisen.
12 Secondly, my conclusion necessarily involves the proposition that it was not unreasonable or imprudent for the applicant to have set out its allegations, and particulars, as it did in the Fourth Further Amended Statement of Claim, or subsequently to have replaced that with a Fifth Further Amended Statement of Claim. In the circumstances, I should not order that the respondents have its costs of the amendments taxed on an indemnity basis: see Hamod v New South Wales (2002) 188 ALR 659, 665.
13 Turning to the respondents' application that the costs thrown away as a result of the filing of the Fifth Further Amended Application and the Fifth Further Amended Statement of Claim be paid forthwith, they relied upon the observation of Branson J in Life Airbag Company of Australia Pty Ltd v Life Airbag Company (New Zealand) Limited [1998] FCA 545 that -
... the demands of justice may well require a departure from the ordinary rule that costs are to be paid after the completion of proceedings, 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 the handling of the proceeding with competence and diligence.
In the circumstances of the findings which I have made above in these reasons, I could not find that the applicant has conducted this litigation without competence or diligence. Life Airbag itself was a case in which the Statement of Claim had been once amended, and three times withdrawn, under the shadow of strike-out applications. Counsel for the applicants in that matter conceded that the first four Statements of Claim "were unsatisfactory and required to be redrawn". The present case does not have these features. It is a considerable distance from Life Airbag. Although the Fifth Further Amended Statement of Claim departs in important respects from the format of the Fourth Further Amended Statement of Claim, those departures were not the result of any less than conscientious (or competent) endeavours on the part of those representing the applicant.
14 Over the protracted course of the interlocutory stages of the present proceeding, orders for costs, one way or the other, have been made on a number of occasions. It appears that in no instance has an order that such costs be paid forthwith been made. At the end of the day, it is likely that both the applicant and the respondents will bring forward their bills for the interlocutory costs to which they have become entitled. Particularly in circumstances such as these, the advantages of following the normal procedure, whereby all interlocutory costs are taxed at the same time at the conclusion of the proceeding, are obvious. I am not persuaded by the respondents that the filing of the Fifth Further Amended Application and the Fifth Further Amended Statement of Claim is an appropriate occasion to depart from the normal procedure.
15 For the above reasons, I propose to order that the applicant pay the respondents' costs occasioned by the filing of the Fifth Further Amended Application and the Fifth Further Amended Statement of Claim, including the costs of the hearing and determination of the applicant's application to amend as such. At the hearing of that application, there was some suggestion by the solicitor for the cross-respondents that her clients might find it necessary to amend their pleadings as a result of the leave to amend granted to the applicant. The issue of costs of the cross-respondents was not adverted to, but, to cover the situation, I shall reserve their costs occasioned by the amendment.
I certify that the preceding fifteen (15) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Jessup.
[2]
Counsel for the Applicant: Mr McGowan SC & Mr Dalton
[3]
Counsel for the Respondent: Mr Garratt QC & Mr Wallis