Australian Competition & Consumer Commission v Oceana Commercial Pty Ltd [2004] FCA 58 | Case summary

THE COURT ORDERS THAT: 1. The applicant pay the third, eleventh and twelfth respondents' costs, taxed on a party and party basis, including any reserved costs. 2. The applicant pay the fourth respondent's costs taxed on a party and party basis, including any reserved costs, save for appearances where a watching brief was involved. 3. The applicant pay any legal costs incurred by the ninth respondent. 4. The applicant pay the tenth respondent's costs, taxed on a party and party basis, including any reserved costs. 5. The applicant pay the thirteenth respondent's costs taxed on a party and party basis, including reserved costs up to 9 April 2003 but thereafter on an indemnity basis, which is to say that the applicant pay all of the thirteenth respondent's costs save those which are of an unreasonable amount or were unreasonably incurred. 6. The applicant pay 60 per cent of the first, second, fifth and sixth respondents' costs. THE COURT DIRECTS THAT : 7. The applicant is to remove any reference to these proceedings having involved two-tier marketing from its web-site. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

REASONS FOR JUDGMENT 1 I have made orders for costs in favour of the respondents who had no orders made against them. The thirteenth respondent additionally seeks indemnity costs. The applicant seeks its costs against the first, second, fifth and sixth respondents. The fifth and sixth respondents seek the larger portion of their costs against the applicant. 2 I shall deal first with the thirteenth respondent's claim for indemnity costs against the applicant. I am of course sympathetic to regulatory or prosecuting authorities bringing proceedings in good faith and would be reluctant to hold them liable for indemnity costs save where there is cogent evidence that they should not have maintained a proceeding against a particular respondent. In these proceedings, the Commission may, at least initially, have reasonably inferred from the fact that Mr Johanson was a panel solicitor that he was involved to a larger extent than has turned out to be the case. There was however a point in the litigation where it could be said that his linkage to the NAPC scheme, as a whole, which was the substantial case brought against him, was obviously deficient. I refer, of course, to the findings made on the conspiracy ruling on 9 April 2003. It was fairly obvious at that point that the case had substantial gaps in it if it was to be shown that he had knowledge of the elements of the scheme. The marketing fee case was, I consider, doomed to failure. 3 I will therefore order that the applicant pay the thirteenth respondent's costs taxed on a party and party basis up to 9 April 2003 but thereafter on an indemnity basis, which is to say that the applicant pay all of the 13th respondent's costs save those which are of an unreasonable amount or were unreasonably incurred. 4 In relation to the costs of the first, second, fifth and sixth respondents, in very short summary, the applicant has succeeded on one issue. It failed on the substantial aspects of the case, namely the NAPC scheme, as a contravention of s 52 of the Trade Practices Act 1974 (Cth). It failed to make out a case of misrepresentation of market value and other misrepresentations including non-disclosures. It would perhaps be understating the position to say that the applicant has not had a significant success. The question then is what effect did those unsuccessful areas have on the length of the trial and the costs therefore incurred. I think it was substantial. This is so particularly with respect to the NAPC scheme which formed the substantial focus of the case. 5 I have already observed that, in my view, it substantially lengthened the trial and made it more complex. It also had the effect, I consider, of bringing in a larger number of respondents. There were always problems in the prospects of success of a case at a legal level and not just an evidentiary level. I would have thought that the prospects of success would have been described as quite uncertain if not improbable. The applicant, I consider, must have determined to run what was effectively a test case and, in doing so, determined to join a large number of respondents to it. 6 The evidence of the many purchasers who were called, was not, in my view, very helpful. They confirmed only a few aspects of the seminar script. Their evidence did not substantially coincide with the misrepresentations alleged. They did not establish the scheme which had been pleaded. 7 The evidence as to market value had obvious problems and I have discussed this during submissions on costs. The reality is that it resulted in very lengthy cross-examinations which, as I have said, were necessary because of the nature of the evidence and the opinion put forward. 8 The cases against many of the respondents were not substantiated and they appear to depend upon a broader view being taken of their knowledge and participation which the ACCC could not establish. The Gleesons' evidence did not go very far towards the ultimate finding that there was no reasonable basis for the representation as to a capital growth rate. I do, however, accept the Commission's submission that some days in evidence were necessary to establish the documents which proved that the fifth and sixth respondents acted in concert with each other and for their companies. 9 My view is that about 80 per cent of the time taken during the trial, was unnecessary for one reason or another. The applicant would be entitled to an order for only 20 per cent of its costs taking into account what I have said about what the respondent should be compensated for. My order will be that the applicant pay 60 per cent of the first, second, fifth and sixth respondents' costs. The seventh and eighth respondents have not appeared to seek costs and I am not aware, in any event, that they have incurred any legal costs, so I shall not make orders in that regard. 10 Senior counsel for the sixth respondent has also raised the question about a misstatement which has for some years now appeared in a publication in the applicant's web-site which refers to two-tier marketing. Indeed, I have made observations about the nature of the case conducted by the ACCC which has never, at any point, involved two-tier marketing. I am reluctant to make directions against the applicant, but it has been asked on two occasions to explain why it has not removed what is such an obvious misstatement. Instructions were to be sought but they have not. I do not propose to allow it any further time, and create further costs and delay in this matter. I consider that it is part of the Court's inherent jurisdiction to prevent misstatements of proceedings, particularly where those misstatements involve imputations of dishonesty against respondents which have not been established. I will direct the applicant to remove from its web-site any references to these proceedings having involved two-tier marketing. I certify that the preceding ten (10) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Kiefel.

Australian Competition & Consumer Commission v Oceana Commercial Pty Ltd

At a glance

Court

Decision date

Before

Source

Judgment (27 paragraphs)

Parties

Legislation Cited (1)