EMI Songs Australia Pty Limited v Larrikin Music Publishing Pty Ltd

REASONS FOR JUDGMENT 1 These reasons for judgment relate to the costs of the first respondent's cross-appeal against the orders of the primary judge in proceeding No. NSD 145 of 2008. In that proceeding, the primary judge found against the first respondent in respect of the Qantas advertisements and otherwise dismissed the proceeding. 2 The circumstances underlying the bringing of the cross-appeal, and its resolution, are set out in EMI Songs Australia Pty Ltd v Larrikin Music Publishing Pty Ltd (2011) 191 FCR 444; [2011] FCAFC 47 (the principal judgment). Terms defined in the principal judgment have the same meaning in these reasons. The principal judgment discloses that the Full Court dismissed the appeal by the EMI parties and ordered the EMI parties to pay Larrikin's costs of the appeal. The Full Court allowed Larrikin's cross-appeal in part and invited the parties to make submissions on the costs of the cross-appeal. 3 Larrikin's cross-appeal involved two primary issues, two consequential issues and two subsidiary issues. The first of the primary issues was whether the primary judge erred in holding that the Qantas advertisements did not reproduce a substantial part of Kookaburra. The Full Court resolved that issue against Larrikin. The second primary issue was whether the primary judge erred in dealing with, or alternatively in dismissing, Larrikin's claims about the EMI parties authorising infringements of Larrikin's copyright in Kookaburra. The Full Court rejected Larrikin's argument that the primary judge was not seized of the issue of authorisation. It also rejected Larrikin's argument that there was no dispute about the authorisation issue. However, the Full Court accepted Larrikin's argument that the primary judge erred in resolving the authorisation issue (whether that error be characterised as an error of principle or as the giving of inadequate reasons), with the consequence that the order dismissing the proceeding was set aside and the issue of authorisation remitted for determination by the primary judge. 4 The two consequential issues related to Larrikin's entitlement to damages and an account of profits, and to injunctive relief. The Full Court's orders also provided for these issues, which depended on the resolution of the authorisation issue, to be dealt with by the primary judge. 5 Finally, Larrikin's two subsidiary claims on the cross-appeal - that the primary judge should not have reserved the question of costs and should have ordered further discovery - were dismissed by the Full Court. 6 Although the EMI parties and Larrikin identified the same principles as relevant to the award of costs, their submissions as to the appropriate order were in conflict. 7 Larrikin submitted that the appropriate order was that the EMI parties pay 50% of Larrikin's costs of the cross-appeal. According to Larrikin, its success on the issue of authorisation meant that highly material aspects of its original claim were remitted to the primary judge for further consideration and resolution. Larrikin submitted that it should have its costs of that issue. Larrikin also said that it was inappropriate to differentiate between the arguments on which it succeeded and those on which it failed for the purposes of awarding costs. The award to Larrikin of 50% of its costs was said to recognise both its success on the authorisation issue and its failure on the issue of the Qantas advertisements, which Larrikin described as a "short point". 8 The EMI parties submitted that Larrikin should be ordered to pay 75% of the EMI parties' costs of the cross-appeal. According to the EMI parties, this award would appropriately reflect the relative successes and failures of the parties on the cross-appeal. The EMI parties noted that Larrikin failed in its challenge to the primary judge's conclusions on the Qantas advertisements, which the EMI parties described as a "major part of the cross-appeal". In respect of the authorisation issue, the EMI parties said that Larrikin had enjoyed only "mixed success". Insofar as Larrikin succeeded on the question of authorisation, the EMI parties said that the problem had arisen "at least in part" due to the way in which Larrikin had dealt with the issue before the primary judge. 9 The submissions of the EMI parties do not reflect the applicable principles, which may be summarised as follows. Costs are in the discretion of the Court (Federal Court of Australia Act 1976 (Cth) s 43). The discretion is broad but is to be exercised judicially. The fundamental purpose of the discretion is to compensate the successful party, not to punish the unsuccessful party. The furtherance of the goal of compensation means that, in general, a successful party will obtain an order for costs in its favour (Oshlack v Richmond River Council (1998) 193 CLR 72; [1998] HCA 11 at [65]-[68]). However, "a successful party who has failed on certain issues may not only be deprived of the costs of those issues but may be ordered as well to pay the other party's costs of them…" (Hughes v Western Australian Cricket Association (Inc) (1986) ATPR 40-748 at 48,136). If apportionment of costs is appropriate, the object is not mathematical precision (Dodds Family Investments Pty Ltd (formerly Solar Tint Pty Ltd) v Lane Industries Pty Ltd (1993) 26 IPR 261 at 272) but a result that best reflects the interests of justice in the overall circumstances of the case. 10 The submissions for the EMI parties give insufficient weight to the fact that Larrikin succeeded in its challenge to the decision of the primary judge in respect of the issue of authorisation, with the consequence that the order of the primary judge dismissing the proceeding was set aside. Larrikin did not enjoy only "mixed success" on the authorisation issue. While not all of the ways in which Larrikin put its case on authorisation were accepted, Larrikin succeeded on that issue and the EMI parties failed, as reflected in the order allowing the cross-appeal in part. The issue, moreover, was an important part of the cross-appeal. Its resolution in Larrikin's favour enabled the consequential issues (relating to damages and an account of profits as well as injunctive relief) to be determined by the primary judge, as Larrikin sought. In addition, the EMI parties placed too much weight on the issue of the Qantas advertisements. The arguments on the Qantas advertisements raised nothing new as a matter of principle. They involved, as Larrikin put it, a "short point" in the cross-appeal because all relevant issues of principle had already been raised as part of the appeal proper. Finally, although Larrikin failed on the issues of costs and discovery, these issues were truly subsidiary. 11 Once these facts are recognised, it should be apparent that the result for which the EMI parties contended - that Larrikin should pay 75% of the EMI parties' costs of the cross-appeal - is untenable. Instead, there should be a costs order in favour of Larrikin on the cross-appeal. As Larrikin appreciated, the discount of its costs by 50% is appropriate having regard to the issues on which the parties succeeded and failed and their relative importance to the cross-appeal as a whole. The 50% discount gives substantial effect to the fundamental principle of costs orders - that is, compensating the successful party - without descending to separate costs orders on an issue-by-issue basis (an approach which, as Larrikin said, does not commend itself in this case). 12 For these reasons, the EMI parties should pay 50% of Larrikin's costs of the cross-appeal. I certify that the preceding twelve (12) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justices Emmett, Jagot and Nicholas.