Bryer Merchandisers Pty Ltd v Nike Australia Pty Ltd

REASONS FOR JUDGMENT 1 This is an application by the respondent seeking to have paid forthwith costs to which it is entitled under five interlocutory orders. They are: (1) the order made on 28 February 2001 striking out the amended statement of claim, (2) the order made on 27 April 2001 in respect of the further directions hearing and an abandoned motion of the applicants for expedition, (3) the order made on 18 November 2002 setting aside a notice to produce served by the applicants, (4) the order made on 16 May 2003 giving leave to amend the second further amended statement of claim, and (5) the consent order made on 5 September 2003 substituting for the leave given on 16 May 2003 an amendment in the form of a revised statement of claim. Such orders, when made in relation to inter partes interlocutory hearings, are referred to in England as 'costs in any event' orders because, whatever the result in the principal proceeding, the party in whose favour the relevant order is made will get those costs. 2 The award of costs is in the discretion of the Court, but the Federal Court Rules also make provision for the costs of proceedings in the Court. Order 62, rule 3 provides: '(1) The Court may in any proceeding exercise its powers and discretions as to costs at any stage of the proceedings or after the conclusion of the proceeding. (2) Where the Court makes an order in any proceeding for the payment of costs the Court may require that the costs be paid forthwith notwithstanding that the proceeding is not concluded. (3) An order for costs of an interlocutory proceeding shall not, unless the Court otherwise orders, entitle a party to have a bill of costs taxed until the principal proceeding in which the interlocutory order was made is concluded or further order.' In Bailey v Beagle Management Pty Ltd (2001) 105 FCR 136 a Full Court said (at 145) of this rule: 'The policy behind O 62, r 3 is that, in the ordinary course of litigation, costs awarded in interlocutory proceedings need not be paid until the conclusion of the proceeding when set-offs can be made in the light of the ultimate orders for costs.' 3 The operation of O 62 r 3(2) has been discussed in a number of cases, the names of which have been conveniently collected by Kenny J in Eunson v Beaulieu United Ltd (2002) 190 ALR 110 at 114-116. More recently, in Australian Agricultural Co Ltd v AMP Life Ltd [2003] FCA 1134 Sackville J noted, with evident approval, the view that one of the factors which has caused courts to depart from a normal rule such as that stated in O 62 r 3(2) was the self-contained nature of the interlocutory proceeding in which the costs order was made. In one of the cases referred to by Kenny J the judge purported to identify in past decisions 'principles' which govern the exercise of the discretion under O 62 r 3. I think that such a description rather overstates the general significance of statements in the cases about specific factors and circumstances. In my view, the demands of justice provide the only guiding principle for a departure from the general rule. Each case must be considered by reference to its own particular facts. 4 Two submissions of the applicants may, therefore, be rejected at the threshold. First, it was contended that the prefatory clause in r 3(2) stipulated a time limitation on the making of an order of the kind sought in the present application. Such a strained and unnatural construction would impose an extremely inconvenient and unlikely fetter on the discretion of the Court. The word 'where', as opposed to 'when', is hardly apt to describe a time for doing something. Secondly, it was submitted that, in order to warrant a departure from the general rule, the respondent had to demonstrate (1) sufficiently delinquent conduct on the part of the applicants and (2) sufficiently serious consequences to the respondent. This submission rests on a confection of the specific discussion about such factors in the context of particular cases. Such statements have no general application to every case in which a departure from the general rule is sought. 5 There is no point in canvassing once more the reasons for the first four orders that are the subject of the present application. Although this proceeding was commenced on 2 December 1999, it has not yet been fixed for trial. It now seems likely that it will be fixed for hearing at the end of the year. Counsel for the respondent relied on what he says are the substantially different causes of action in the revised statement of claim, the earlier pursuit by the applicants of ill-considered and abandoned claims, and the duration of the litigation. The respondent also adduced evidence of the applicants' profitability (although impecuniosity was ultimately not an issue) and of the quantum of its own costs. 6 Counsel for the applicants (who only came into the matter after the order made on 16 May 2003) wasted no time defending the pleading efforts of their predecessors. They pointed out, correctly, that the revised statement of claim represented on its face an arguable case. Certainly no evidence suggested otherwise. So far as causes of action were concerned, the revised statement of claim abandoned the negligence claims, added a claim alleging the making of and giving effect to an exclusionary provision in contravention of s 45(2)(a)(i) and s 45(2)(b)(i) of the Trade Practices Act 1974 ('the Act') and refined existing claims based upon breach of contract and ss 46, 48 and 51AC of the Act. Counsel submitted that, moreover, the new exclusionary provision allegation involved no more than a different legal characterisation of facts which had previously been pleaded. 7 Further, counsel for the applicants submitted that, overall, the substance of the applicants' cases has not changed since the proceeding was commenced. That may be so, but the subject orders result from the way in which those cases were pleaded and conducted prior to the filing of the revised statement of claim. The position changed after their retainer, but the reality is that the conduct of this case falls into two distinct periods. 8 The pleading battles are now over. They represent a discrete aspect of the proceeding. Whilst counsel for the applicants may be reluctant to acknowledge that situation, they submitted that the present application, nonetheless, is too late and that it would be unfair to require the payment now of costs ordered long ago. A difficulty with this argument is that, for its part, the respondent could not reasonably have anticipated when those orders were made that this proceeding would drag on so long. It is not to the point in those circumstances that, not so long after the first order was made, the provisions of O 62 r 3(2) were drawn to the attention of the respondent's solicitors in correspondence from the applicants' solicitors. Having regard to the prolongation of the proceeding and the discrete nature of the subject matter of the relevant interlocutory hearings, in my view, justice demands in the circumstances of this case a departure from the normal rule in respect of the first four orders. 9 The fifth order stands in a different position. Counsel for the applicants submit that the revised statement of claim will assist the further conduct of the proceeding. I accept that submission. During the negotiations that led up to the making of the consent order on 5 September 2003, the respondent was at pains to make clear its intention to pursue the immediate payment under r 3(2) of its costs of any amendment. However, I think that, in the light of the likely schedule for the further conduct of the proceeding, payment of those costs may presently abide the conclusion of the principal proceeding. 10 Some judges have commented on the undesirability of having taxation issues dealt with seriatim. I think that the real mischief at which r 3(3) is directed is a plethora or endless succession of taxations. I see no inconvenience, having regard to the history of the proceeding, to the taxation at this stage of the costs payable under the subject interlocutory orders and of the present motion. I will, therefore, make such an order. The order for payment forthwith will be confined to the first four orders and to the present motion, upon which the respondent has largely succeeded and will be awarded its costs. I certify that the preceding ten (10) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Whitlam.