Australian Competition and Consumer Commission v Geowash Pty Ltd

COLVIN J: 1 Geowash, Ms Ali and Mr Cameron have been found to have breached the Australian Consumer Law (ACL) and the Competition and Consumer Act 2010 (Cth) in their dealings with franchisees. Geowash and Ms Ali have also been found to have contravened the ACL by making representations to prospective franchisees by means of the Geowash website. The detailed findings as to the contravening conduct are set out in my reasons in Australian Competition and Consumer Commission v Geowash Pty Ltd (Subject to a Deed of Company Arrangement) (No 3) [2019] FCA 72 (Liability Judgment). 2 On 24 January 2020, after considering further argument as to the appropriate relief, I made final orders (Final Orders) to give effect to my reasons in the Liability Judgment: Australian Competition and Consumer Commission v Geowash Pty Ltd (Subject to a Deed of Company Arrangement) (No 4) [2020] FCA 23. Included within the Final Orders was an order that the parties file and serve a joint minute of proposed orders as to costs or separate outlines of submissions as to the cost orders that should be made, together with any affidavit. By consent of the parties that period was extended until 28 February 2020. The Final Orders also provided for the question of costs to be determined on the papers, unless otherwise ordered. 3 It appears that the parties could not reach agreement as to the form of orders. On 28 February 2020 submissions were filed by the Australian Competition and Consumer Commission (ACCC). Geowash is in liquidation and was not expected to file submissions. 4 Ms Ali and Mr Cameron have not filed any submissions. In response to an inquiry from the Court as to whether there was any reason why the Court should not proceed to determine the appropriate cost orders, the following email was received from their solicitor: We advise that the matter is under appeal and stay application has been made in relation [to] the orders made by his Honour, including as to costs. The appeal was commenced on 21 February 2020 and a stay application [was] foreshadowed to the [ACCC] on 24 February 2020. The interlocutory application for a stay was formally made with a supporting affidavit on 13 March 2020. The interlocutory application is attached and has not yet been determined by the Court. 5 The interlocutory application (attached to the email) seeks a stay of the Final Orders with retrospective effect from 21 February 2020 and for orders as to the conduct of the appeal so that any hearing may take place in Sydney. 6 Having regard to the terms of the email, I caused inquiries to made of the parties as to their respective positions as to whether an order should be made deferring the determination of cost orders until the outcome of the application for a stay. 7 For Ms Ali and Mr Cameron the submission made is that the Court should not make any further order until the application for a stay can be determined. It was submitted that if the Court proceeded to make cost orders it would 'have the effect of needlessly complicating the application for the stay …, as the likely result to preserve the status quo would be that a separate application would have to be made for a stay of any fresh orders made'. There was no indication of any steps that had been taken to secure a listing of the stay application which in any event had been made well after compliance with the extended date for making submissions as to the appropriate cost orders. Further, it can hardly be said to complicate the stay application if it was required to be expanded to include a stay of the operation of any cost orders that may be made. Finally, the question of costs is not a matter requiring extended consideration. The Court is not contemplating the making of any order fixing the quantum of costs, simply orders as to who should pay the costs and the manner of their assessment. 8 For the ACCC, it was submitted that there was no reason to delay the determination of cost orders. It was submitted that the determination of the orders would not prejudice the stay application. 9 I am not satisfied that there should be further delay in the determination of appropriate cost orders. No compelling reason has been raised as to why the form of orders should not be decided at this point. As there is an appeal on foot, the making of orders now would enable any complaint about the cost orders to be raised in the context of the appeal. They could be included in any stay order that may be made pending an appeal if that was thought appropriate. There is nothing contended for Ms Ali and Mr Cameron as to why the determination of appropriate cost orders in this matter is particularly complex. The determination of the quantum of costs of a successful party should not be delayed: Paciocco v Australia and New Zealand Banking Group Limited (No 2) [2017] FCAFC 146; (2017) 253 FCR 403 at [16] (Allsop CJ, Besanko and Middleton JJ). For those reasons, I proceed to consider the appropriate orders. 10 The award of costs is discretionary: s 43 of the Federal Court of Australia Act 1976 (Cth). The discretion to award costs is unconfined, but must be exercised judicially, that is according to relevant considerations and taking account of the contextual features and facts of the litigation: Kazar (Liquidator) v Kargarian; In the matter of Frontier Architects Pty Ltd (in liq) [2011] FCAFC 136; (2011) 197 FCR 113 at [4]. Settled principle guides the exercise of the discretion: Oshlack v Richmond River Council [1998] HCA 11; (1998) 193 CLR 72 at [38]. Generally, the discretion is exercised in favour of the successful party: Foots v Southern Cross Mine Management Pty Ltd [2007] HCA 56; (2007) 234 CLR 52 at [25]. This may be expressed in the following terms as stated in IFTC Broking Services Limited v Commissioner of Taxation [2010] FCAFC 22 at [8]: ... the compensatory principle informs the usual approach to costs (costs follow the event), an approach which generally is not displaced other than in special circumstances, with such circumstances to be assessed in the context of the particular case. 11 The ACCC has been successful in the proceedings. There is no suggestion that there are particular reasons why costs should not follow the event. 12 The Court's preference wherever it is practicable to do so is to facilitate the making of lump sum cost orders. 'Particular circumstances that may make a lump sum order especially appropriate include where in a large and complex commercial matter it would save the time, trouble, expense and aggravation of a taxation; where a taxation would require the parties to consume additional time and incur additional expenditure prolonging already protracted litigation; and generally to avoid an ongoing, counter-productive dispute as to costs, in the interests of achieving finality': Paciocco at [20]. Those considerations apply in this case. 13 The first respondent, being a company in liquidation, did not actively participate in the proceedings. 14 In the circumstances, I am satisfied, subject only to the matters addressed below, that it is appropriate for an order to be made that the costs of the proceedings should be paid by the second and third respondents and that those costs should be assessed on a lump sum basis. 15 The ACCC accepts that there should be qualifications to those orders to reflect the following matters: (1) It should bear its own costs of the affidavit of Mr Jarvis affirmed 8 April 2019 stating the reasons for the ACCC failing to comply with certain orders of the Court; and (2) It should bear its own costs of its unsuccessful interlocutory application dated 24 April 2019 to amend the relief sought on its substantive application. 16 In addition, in the Liability Judgment, I declined to accept the evidence of Mr Cromwell. I found that it was in a form that was neither direct evidence nor was it expert evidence. It was evidence that was of no assistance to the determination of the issues before the Court and the order for costs in favour of the ACCC should exclude the costs of conferring with Mr Cromwell concerning his testimony, in preparing his affidavit evidence and the time spent in giving his oral evidence. I have considered whether there ought to be any order in favour of the second and third respondents as to those costs. The matters addressed in response to the affidavit evidence of Mr Cromwell were required to be addressed by Ms Ali and Mr Cameron in any event having regard to the nature of their defence because there were issues as to what amounts they had received from Geowash, the nature of those receipts and the circumstances in which they were paid. They were matters in issue because of the way the ACCC put its case and the reliance placed by the ACCC upon the analysis of Ms Yan. In those circumstances, I make no order in favour of Ms Ali and Mr Cameron as to costs which might be said to have been incurred by responding to the evidence of Mr Cameron. 17 For those reasons I will make cost orders in the terms sought by the ACCC, varied in the way I have indicated to deal with the evidence of Mr Cromwell. I certify that the preceding seventeen (17) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Colvin.