CONSIDERATION
5 In most proceedings where one party fails it will be usual and just to order that party to pay the successful party's costs. Often it will be unexceptionable for the Court to proceed upon the basis that the successful party should have the benefit of an order for costs in that party's favour because the substantive decision of the proceedings warrants that outcome: Probiotec Ltd v University of Melbourne (2008) 244 ALR 96 at 114 [73] per myself; Finn J at [1] and Besanko J at [82] agreed with my reasons.
6 In Probiotec 244 ALR at 107-109 [45]-[52] I reviewed the authorities as to the discretion of the Court to make an order for costs under s 43 of the Federal Court of Australia Act 1976 (Cth). The discretion under s 43(2) of the Act is unconfined and there is no automatic rule that costs always follow the event: see also Foots v Southern Cross Mine Management Pty Ltd (2007) 241 ALR 32 at [26]-[27], [34] per Gleeson CJ, Gummow, Hayne and Crennan JJ. Nor is there an absolute rule that in the absence of disentitling conduct, a successful party is to be compensated by an unsuccessful party under a provision such as s 43: Probiotec 244 ALR at 108 [48]. The general power conferred by a provision like s 43 is not to be narrowly construed, but where there has been some delinquency on the part of an unsuccessful party, the Court also has power to order costs against that party, and sometimes on a greater scale than party/party costs: Probiotec 244 ALR at 108 [48].
7 As I observed in my principal judgment, this matter has the unusual feature that both parties were found to have been dishonest in their dealings with one another. Ultimately, Hoy Mobile succeeded on the substance of its claims in the litigation. This was because it established that it was entitled to resist Allphones' attempt to terminate the franchise agreement, and that Allphones had underpaid commissions and other sums which it ought to have paid Hoy Mobile in accordance with the franchise agreement. Nonetheless, I am satisfied that Hoy Mobile's denial that it had committed a fraud on Allphones because Allphones had condoned that fraud and its assertion that Allphones had elected to affirm the franchise agreement during the period between May 2006 and 28 August 2006 were substantive issues during the course of the proceedings. Hoy Mobile failed on these two issues and must bear responsibility for the costs incurred by its seeking to eschew the consequences of its own fraudulent behaviour.
8 I am not satisfied that the other matters to which Allphones pointed have had the significance in the litigation which would require some departure from the usual outcome that parties who succeed in obtaining relief will often have failed on intermediate issues, even issues of some substance in the litigation, yet be entitled to an order for costs. I think a fair outcome in the context of the way in which this litigation has been conducted should reflect that in seeking unsuccessfully to eschew the consequences of its own fraud, Hoy Mobile occasioned an expansion of the issues and the litigation by seeking to prove that Allphones was, in effect, knowledgeable about what it was doing at various times so as to disentitle Allphones from being able to terminate the franchise agreement.
9 I am of opinion that these matters warrant a proportion of the ordinary order for costs, to which Hoy Mobile would otherwise have been entitled, to be deducted from the amount I should order in its favour. It is impossible to be scientific or precise about the quantification of the amount by which that order for costs ought to be reduced.
10 Allphones argued that I should look at the number of paragraphs devoted to certain issues in my principal judgment, and take them as a guide to the amount of time occupied by those issues. They involved somewhat complex issues of fact and law. And there were overlaps, because some of the material dealing with affirmation also related to the issue of unconscionable conduct on the part of Allphones: Hoy Mobile (No 2) [2008] FCA 108 at [406] and [407]. Indeed, the affirmation argument also raised considerable overlaps with the claims for a store refresh payment by Allphones, Mr Ilivesky's demand on 30 June 2006 for Hoy Mobile to release a phone to Allphones for a retention customer, Allphones' letter of 3 July 2006 placing Hoy Mobile on commission hold and stock hold and its subsequent conduct in lifting those holds: see Hoy Mobile (No 2) [2008] FCA 810 at [222]. There were considerable periods of the hearing which focused on the question of fraud and Allphones' knowledge of it, both from its inception, and at the time of the alleged acts of affirmation which Hoy Mobile failed in substance to persuade me amounted to conduct supporting its claim.
11 Doing the best I can, I am of opinion that it would be fair in all the circumstances to order that Allphones pay 85 per cent of Hoy Mobile's costs of the proceedings, so as to reflect its lack of success on the issues of fraud and affirmation.
I certify that the preceding eleven (11) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Rares.