SNF (Australia) Pty Ltd v Ciba Specialty Chemicals Water Treatments Ltd

1. The first respondent's application to vary the costs order made on 20 June 2016 be dismissed.
2. Each party pay its own costs of the first respondent's application to vary the said costs order. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

THE COURT: 1 On 20 June 2016, consequential upon our reasons for judgment published on the same day (SNF (Australia) Pty Ltd v Ciba Specialty Chemicals Water Treatments Ltd [2016] FCAFC 88), we made the following orders in this matter: 1. The application for leave to appeal be dismissed. 2. The applicant pay the respondent's costs as agreed or taxed. 3. Any party seeking a different costs order is to notify the other parties and the Court of the order it seeks within seven (7) days in which event further direction will be made in consultation with the parties. 2 Ciba now seeks an order that SNF pay its costs on an indemnity basis. Ciba contends that our reasons for judgment, in which we rejected all of SNF's arguments, together with the unprecedented nature of SNF's application, justify the making of an order for indemnity costs. 3 Ciba described the unprecedented nature of SNF's application as "a second trial and a second subsequent appeal … in regard to innovation patents which expired in January 2012", the second trial being brought by SNF "long after special leave to appeal was refused" and the second appeal being brought after SNF's claims in the second trial had been "comprehensively dismissed by the primary judge". 4 We accept this description. 5 Ciba contends that SNF's application was not only "wholly unsuccessful" but was characterised by the presence of some features often said to justify the making of an indemnity costs order. Specifically, SNF attempted "yet again" to "formulate a new case, not foreshadowed" before the hearing of the application and notwithstanding that it had sought also, and wrongly, to reformulate its case in closing submissions before the primary judge. 6 We accept this contention. 7 Ciba also contends, in a submission we understand to be fundamental to its application for indemnity costs, that, had SNF been properly advised, it would have known that its application for leave to appeal had no prospect of success. As Ciba put it, this conduct, taken with the other factors referred to above, places the case in that special or unusual category in which Ciba should be compensated for its costs on an indemnity basis. 8 It is this characterisation of the circumstances which we are not persuaded to accept. 9 It is true, as Ciba's submissions reiterate, that we rejected every argument SNF put. We accept, moreover, that our rejection of SNF's arguments was emphatic, leading us to the conclusion that the decision of the primary judge was not attended by any doubt, let alone doubt sufficient to warrant the grant of leave (at [113]). It is equally true that, in many respects, we concluded that SNF's arguments were misconceived, being the result of the "beguiling effects of hindsight" and a "manifestation of the desire to recast and then re-do the case it ran before Kenny J, but this time with the benefit of not only knowing the outcome of that decision, but also of another five years' worth of hard thinking about where the case went wrong for SNF"; and this desire on SNF's part, we noted, was understandable, but satisfaction of it would be unjust (also at [60]). Equally accurate is Ciba's contention that we considered that SNF was attempting to put arguments in oral submissions that the primary judge had erred on bases not raised at any earlier time. 10 Given this, just as we understood why hindsight might exercise such an attractive force on SNF, we understand why Ciba would feel it appropriate to claim that justice requires that its costs be paid on an indemnity basis. We are not satisfied, however, that such an order would be just in all the circumstances. 11 The fact that we firmly rejected all of SNF's arguments does not mean that, properly advised, SNF should have recognised that they were hopeless and doomed to fail. We had the benefit of Ciba's comprehensive written and oral submissions in reaching the conclusions we did. That we were persuaded of the correctness, in effect, of each and every submission Ciba made does not mean that SNF was doomed to fail, or was involved in running a case that, on any reasonable view, should not have been run at all. In particular, the fact that we found the documents not to be discoverable in any event does not mean that SNF pursued the appeal in deliberate disregard of known facts. SNF had a view of the facts which, if correct, would have meant the documents were arguably discoverable. We rejected SNF's view of the facts. But we did so with the benefit of the detailed written and oral submissions which Ciba provided. This does not mean that SNF's contentions lacked any rational foundation, or that, in running the case that it did, SNF unreasonably prolonged the hearing of the application for leave. 12 Similarly, our characterisation of SNF's case as an exercise resulting from the effects of hindsight was made in the light of the hearing as a whole; it does not mean that in bringing and prosecuting the case SNF's lawyers were acting unreasonably in not reaching the same conclusion and advising SNF accordingly. 13 Finally, we accept that the leave application was very lengthy, taking three days to hear. However, while we also accept that SNF made arguments in oral submissions that had not been notified to Ciba, we do not consider that those arguments extended the length or scope of the hearing; and Ciba was able to deal with the new arguments effectively in its oral submissions in response. While a hearing of three days might seem extraordinary for an application for leave about the discoverability of seven documents, we do not think that SNF engaged in unreasonable conduct, or in conduct that was unreasonably disproportionate to the alleged importance of the discovery of those documents to it. It is always possible to hope a matter might be heard more efficiently, but nothing that occurred during the hearing suggests to us anything inappropriate on the part of SNF. 14 In these circumstances, we are unable to accept that the case is one in which Ciba should be compensated for its costs on an indemnity basis. Ciba will be adequately compensated by the usual order for costs, as we made on 20 June 2016. 15 In all of the circumstances, we consider that each party should pay its own costs of Ciba's application for indemnity costs. I certify that the preceding fifteen (15) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justices Jessup, Jagot and Nicholas.