Costs
16 In relation to costs, the first issue that arises is whether the applicants should bear some of their own costs.
17 The ordinary rule is that costs follow the event and that a successful litigant receives its costs in the absence of special or exceptional circumstances justifying some other order. In this proceeding, the applicants made claims on a number of grounds. They succeeded on one important basis against all five respondents, namely, authorisation of infringement of copyright. They also succeeded in relation to the direct infringement of copyright by Stephen Cooper by making copies of the sound recordings on the hard drive of his computer. Some time was spent on a number of other issues on which the applicants did not succeed, including the direct infringement of copyright by communicating the sound recordings or making them available to the public and the claims in relation to the Trade Practices Act 1974 (Cth). It is true that the applicants' claims were, to some extent, related and based on a common substratum of fact. However, in the circumstances, I consider that an allowance should be made for the failure of the applicants on these other issues and, in my assessment, the applicants should only recover eighty per cent of their costs to make due allowance for their lack of success on other issues.
18 The second issue that arises is whether there should be any apportionment of costs among the respondents and, if so, the amount that should be paid by each of the respondents.
19 In my view, Stephen Cooper was the principal respondent in the proceeding. He did not call any evidence and put the applicants to proof of matters which the other parties did not dispute, in particular, subsistence and ownership of copyright in the applicants' sound recordings. In addition, it was the website of Stephen Cooper which was at the heart of the litigation. Stephen Cooper played the principal role in the infringing conduct and the establishment of the website. In my view, there should be an apportionment of costs liability as between the respondents. It would be unfair to require an employee such as Chris Takoushis to be liable for the whole of the costs. Likewise with respect to Com-Cen and Bal. I consider, having regard to the way in which the case was conducted, the issues raised and the relevant importance of the roles played by the parties, that the appropriate apportionment of liability is seventy per cent to be paid by Stephen Cooper, twenty per cent to be paid by the second to fourth respondents and ten per cent to be paid by Chris Takoushis. As indicated, Chris Takoushis was an employee of the Com-Cen and Liam Bal was the controlling mind of E-Talk and Com-Cen on the findings that have been made.
20 The third matter that arises concerns a claim by Stephen Cooper that he should recover costs or at least should not have to pay any costs because an offer of settlement was made before the proceedings commenced.
21 This offer of settlement is contained in a letter dated 27 October 2004 from Stephen Cooper's solicitors, Barwick Stevens Lawyers. The letter was given by Ms Stevens to Mr Williams, the applicants' solicitor, on the morning of 27 October 2004. This was the third day of the hearing. All the lengthy preparation for the trial had been completed by then. The letter stated that the offer would remain open until 2.15 pm that afternoon, a period of only a couple of hours. The offer of settlement was that the first respondent would pay a total of $5,000 to the applicants and would undertake to refrain from operating a website using the domain name in issue. The parties would each bear their own costs. The payment of $5,000 was to be in full satisfaction of all claims and the settlement and its terms were to remain confidential save as to costs.
22 In my view, this letter could not be said to be an offer that could justify the applicants being deprived of their costs. The amount offered is minimal. By the third day of the hearing, the costs incurred by the parties were very substantial and the offer that each party pay its own costs was unrealistic. There was no admission of liability by the respondents. The undertaking was between the parties. The offer to refrain from operating the website with a particular domain name was totally inadequate and unduly limited. The time span for the offer was unreasonable. Accordingly, I do not consider that this letter in any way assists the case of Cooper in relation to costs.
23 The fourth matter that arises is the question of whether costs should be awarded at this point in time or should be deferred pending the outcome of the proceedings. It was suggested by Mr Morris QC, on behalf of Stephen Cooper, that any damages that might be recovered after a final hearing as to damages may be insignificant and disproportionate to the quantum of damages asserted by the applicants. It was said that the offer of settlement may therefore prove to be relevant at a later stage of the proceedings and that it is not appropriate to determine the question of costs at this stage.
24 I do not agree with this submission because the applicants have already succeeded on a major part of the case and have obtained injunctive and declaratory relief. Even if the amount of damages recovered at the end of the proceedings is less than the $5,000 offered in the letter of 27 October 2004, this does not alter the fact that the applicants have succeeded in relation to injunctive and declaratory relief and should be awarded their costs to date. The proceedings have dealt with liability and relief by way of declarations and injunctions. The remainder of the proceedings will deal with other aspects of relief including damages, compensation and loss of profits. The proceedings to this stage are discrete from further issues as to remedies and it is appropriate that costs should be awarded in respect of the proceedings to this point. Moreover, I am of the view that the applicants should have leave to tax and recover their costs forthwith without awaiting the determination of the proceedings.
25 The fifth matter that arises concerns draft order 27 of the Short Minutes of Order. The applicants seek an order that Stephen Cooper pay the applicants' costs on and from 21 October 2004 and associated with proof of subsistence and ownership of copyright in the sound recordings on an indemnity basis. This order is sought on the basis that Stephen Cooper has unreasonably and without any justification put the applicants to proof of the subsistence and ownership of copyright whereas the other respondents did not adopt such a course. The order excludes costs that are of an unreasonable amount or were unreasonably incurred by the applicants. The significance of the date, 21 October 2004, is as follows. The proceedings were commenced ex parte on 17 October 2003, at which time the applicants adduced evidence, in a form appropriate in an interlocutory hearing, in relation to the subsistence and ownership of sound recordings including those that were later the subject of specific proof in the proceedings. On 30 April 2004, Stephen Cooper disputed the subsistence and ownership of copyright in the sound recordings. Stephen Cooper did not seek any discovery from the applicants in relation to these matters. In July and August 2004, detailed evidence was sworn on behalf of the applicants as to the subsistence and ownership of copyright and, after objection by Stephen Cooper, was admitted into evidence. On 21 October 2004, Stephen Cooper filed an opening statement in which he said that he did not dispute the evidence adduced by the applicants that they control over 85% of commercially released sound recordings in Australia. Notwithstanding this concession, Cooper continued to dispute the subsistence and ownership of copyright in the sound recordings dealt with in the evidence. Shortly before the commencement of the hearing, Cooper served an extensive list of objections including objections to the affidavits filed by the applicants dealing with the subsistence and ownership of copyright. By written submissions filed on 11 February 2005, during oral address on the final day of the hearing, Stephen Cooper conceded that he could not dispute the applicants' claims as to the subsistence and ownership of copyright in respect of the recordings the subject of specific proof.
26 In my opinion, there are sufficient grounds in this case, having regard to the above circumstances, to justify an exceptional order for indemnity costs as against Stephen Cooper after 21 October 2004, because there was no real basis for him to put the subsistence and ownership of copyright in issue. Therefore, I propose to make an order that he should pay the costs of the applicants incurred after 21 October 2004 on an indemnity basis in relation to subsistence and ownership of copyright.
27 The final matter that arises concerns the costs of recovery of additional emails by the applicants. The emails in question were identified in the screenshot exhibited to the affidavit of Chris Takoushis sworn on 5 December 2003, however, they were not produced by the respondents. Some interlocutory skirmishing took place in December 2004 and January 2005 in relation to these emails, which the applicants alleged ought to have been discovered by the second to fourth respondents. The second to fourth respondents contend that the costs incurred by the applicants in recovering these emails were unnecessary because nothing had been recovered which was of any use to the applicants or which had not already been produced by the second to fourth respondents. Therefore, the second to fourth respondents submit that the applicants should pay their own costs of these interlocutory applications. I am not persuaded that these interlocutory applications were unnecessary or unreasonable in the circumstances and, in my view, attempts by the applicants to locate the emails were properly instituted. In the course of the proceedings, copies of the emails were produced and received into evidence as a result of the applicants' investigations. These emails assisted (see reasons for judgment at [122]) towards the finding that there had been authorisation of infringement of copyright by Chris Takoushis. The emails that were recovered by the applicants as a result of their investigations totalled 78. Accordingly, I consider that the applicants should have the costs of these interlocutory proceedings in December 2004 and January 2005 and other costs incurred in relation to the recovery of any deleted emails that were not produced on discovery.
28 I note that, during the course of the proceedings, I made orders as to the payment of costs in relation to particular applications and, having heard and resolved the first part of these proceedings concerning liability and injunctive and declaratory relief, I do not propose to vary those previous orders.
I certify that the preceding twenty-eight (28) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Tamberlin.