LUXOTTICA RETAIL AUSTRALIA PTY LTD v GRANT [2009] NSWCA 378 | Case summary

23 November 2009 LUXOTTICA RETAIL AUSTRALIA PTY LTD v GRANT Judgment 1 JUDGMENT of THE COURT delivered by BASTEN JA: The applicant seeks leave to appeal from a judgment of White J in the Equity Division with respect to the costs of proceedings in that Division: Luxottica Retail Australia Pty Ltd v Grant (No 2) [2009] NSWSC 736. 2 The substantive dispute between the parties concerned a number of documents which the first defendant in the proceedings below (and the first respondent on this application) had emailed to her home computer shortly before the termination of her employment with the applicant (the plaintiff in the proceedings below). The documents were said to be both confidential and the subject of copyright vested in the applicant. By the time the matter went to trial, on 23 and 24 February 2009, the only issue in dispute (apart from costs) was the plaintiff's claim under the Copyright Act 1968 (Cth) for damages for infringement of copyright. That issue resulted in a judgment for the applicant against the first defendant in the sum of $10: see Luxottica Retail Australia Pty Ltd v Grant [2009] NSWSC 126 at [53]. 3 The order made by the primary judge on 31 July 2009 was that the plaintiff pay the defendant's costs of the proceedings from and including 18 February 2009 and that there otherwise be no order as to the costs of the proceedings. 4 The reasons given by his Honour for this conclusion appeared in the second judgment at [29]: "However, [the first defendant's solicitors'] offer of 17 February 2009 gave the plaintiff substantially the whole of the relief which it obtained in the proceedings. … On the findings I have made, [the] offer of 17 February 2009 should have been accepted. The principal reason for its non-acceptance was the plaintiff's insistence that it obtain its costs. However, for the reasons I have given, the plaintiff was not entitled to its costs. The rejection of the offer of 17 February 2009 was unreasonable. In those circumstances I consider that all of the defendants are entitled to their costs on the ordinary basis from 17 February 2009." 5 There was no challenge to the reasoning contained in this paragraph: rather, the challenge was to the earlier reason that the plaintiff was not entitled to its costs as at 17 February 2009. That reasoning appeared to refer back to his Honour's statements at [26] in the following terms: "In the absence of settlement offers and having regard to the parties' success on the only substantive issues litigated, and having regard to the fact that orders for the delivery up of documents were made by consent and without admissions at the commencement of the hearing, I think the appropriate costs order would be that there be no order as to costs up to 22 February 2009 and that the plaintiff pay the defendants' costs of the hearing. The reason for such an order would be that the plaintiff obtained orders by consent and without admissions on the first day of the hearing for the delivery up of documents. In the absence of any hearing on its entitlement to those orders, there should be no order as to costs. But the plaintiff substantially failed in respect of the matters that were contested at the hearing; the award of nominal damages for breach of contract not being a substantial success." 6 The applicant contended that his Honour's reference to the absence of any hearing on the entitlement to the consent orders appeared to invoke an earlier statement that the Court "will not usually attempt to determine who would have succeeded had there been no settlement", referring to the judgment of McHugh J in Re Minister for Immigration and Ethnic Affairs; Ex parte Lai Qin [1997] HCA 6; 186 CLR 622 at 624-5: see [2009] NSWSC 736 at [3]. 7 There was no dispute that his Honour stated the correct principle, namely that, while costs are in the discretion of the Court, they should normally follow the event unless it appears that some other order should be made: Civil Procedure Act 2005 (NSW), s 98, and Uniform Civil Procedure Rules 2005 (NSW), r 42.1, referred to by his Honour at [2]. Nor was there any dispute that the principle stated in Lai Qin might appropriately be applied with respect to circumstances which it identified, namely that there will usually be no order as to costs where the parties have acted reasonably in commencing and defending proceedings, until the litigation was settled or its further prosecution rendered futile. In the present case, the applicant contended that this was not a case where the merits had not been litigated but rather was a case where the merits had been determined, in its favour. 8 Counsel for the applicant accepted that the case did not give rise to any issue as to the formulation of principle, but merely a contention that the wrong principle had been applied. However, application of a principle depends upon the circumstances of the particular case and, even if erroneous, is unlikely to give rise to any issue of general importance or necessarily lead to an erroneous decision in a subsequent case. Accordingly, unless for some reason relating to the regularity of the administration of justice, the intervention of this Court appears to be required, leave to appeal in respect of the exercise of a discretion to award costs will be unusual. There may be circumstances in which capitulation by one party, in the face of an adverse decision in related proceedings, may allow for an award of costs on the basis that the merits of the claim have in practical terms been determined and have determined the outcome of the proceedings: see Newcastle Wallsend Coal Co Pty Ltd v Industrial Relations Commission of NSW [2006] NSWCA 129; 153 IR 386 at [38]-[39]; Fordyce v Fordham [2006] NSWCA 274; 67 NSWLR 497 at [70]-[87]; Muhibbah Engineering (M) BHD v Trust Co Ltd [2009] NSWCA 205 at [50]-[55] (Sackville AJA). The applicant argued, in effect, that a similar approach should have been taken in the present case, because the entitlement of the applicant in relation to the documents was established in the substantive hearing. 9 While there may be some merit in that contention, the appropriateness of the order ultimately turned on a finding as to the reasonableness of the applicant's conduct in refusing to accept an offer made on 17 February 2009, which conceded its entitlement in respect of the documents, but involved no offer to pay its costs. If the offer had been accepted at that time, there would indeed have been a settlement without a hearing on the merits, to which the principle in Lai Qin may well have applied. While it is not entirely clear that this was the approach the primary judge adopted, it would have been an available approach and would have resulted in the order made. Accordingly, the applicant has failed to demonstrate any error which would materially have affected the outcome of the costs proceedings. 10 The Court makes the following orders:

LUXOTTICA RETAIL AUSTRALIA PTY LTD v GRANT

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