Case: Colgate-Palmolive Company v Cussons Pty Ltd (1993) 46 FCR 225
Outcome: considered
The respondents made detailed submissions in support of their contention that the applicants should be ordered to pay the costs of the respondents on an indemnity basis. In summary the respondents submitted that assessment of costs on an indemnity basis was warranted in the circumstances of this case because: a. the proceedings were based on serious unfounded assertions of impropriety, lies and deceit against the first and second respondents, including a very serious assertion against the second respondent that he attempted to destroy relevant records. These assertions were maintained by the applicants throughout the proceedings, notwithstanding that there was no evidentiary or factual foundation for them; b. relief was sought against the second respondent as knowingly concerned in the alleged misleading and deceptive conduct when no proper case was pleaded for such relief, and indeed the Court found that that case failed at the threshold; c. the applicants sought to maintain the serious allegations in para 19 of the Further Amended Statement of Claim upon a distorted record produced on the instructions of the second applicant; d. this is a case warranting the making of an order for indemnity costs within the principles articulated in Colgate-Palmolive Company v Cussons Pty Ltd (1993) 46 FCR 225 at 232-234; e. it is a fundamental premise that serious allegations of propriety should not be made in the absence of any evidentiary or factual foundation for them; f. it is not enough that there is some hope to prove such serious allegations out of the mouths of the witnesses for the respondents; g. the only characterisation of the conduct of the applicants is that they chose to deliberately adopt the course of making serious and wanton assertions of impropriety to attack the first and second respondents. 8 The applicants submitted that indemnity costs were not warranted in the circumstances of this case because, in summary: a. in all matters in which a failure to disclose relevant information is alleged under s 52 Trade Practices Act 1974 (Cth) ("the Act ") there will be elements of impropriety and deceit; b. had the Court accepted the second applicant's version of events in relation to the provision of Block Summary data, actionable deception would have been found; c. no allegation of fraud was pleaded against the respondents; d. the purpose of an award of indemnity costs is not to punish an unsuccessful litigant because the case was lost on the basis of adverse findings of credit or fact; e. the applicants did have evidentiary or factual foundations in making the allegations contained in the Further Amended Statement of Claim, namely the packing shed records and the various scenarios. The applicants failed because of factual findings relating to those issues; f. to the extent that the respondents' claim for indemnity costs relies upon a claim that the applicants ought never have made the relevant allegations, this imports a notion of pre-knowledge on the part of the unsuccessful litigant that the allegation advanced by the litigant is not only false but known by him to be false. This was not the case here because the allegations advanced by the applicants were not simply allegations of oral conversations, but were mixed allegations relying upon documents, conduct and oral representations. It could not be said that the allegations pleaded were "groundless" because the ultimate proof of the allegations depended upon a finding by the Court as to the context of certain oral representations alleged; g. accordingly, costs of the action should be awarded to the respondents on a party to party basis. 9 The discretion of the Court to award costs is found in s 43 Federal Court of Australia Act 1976 (Cth) which provides as follows: (1) Subject to subsection (1A), the Court or a Judge has jurisdiction to award costs in all proceedings before the Court (including proceedings dismissed for want of jurisdiction) other than proceedings in respect of which any other Act provides that costs shall not be awarded. ...... (2) Except as provided by any other Act , the award of costs is in the discretion of the Court or Judge. 10 Principles applicable to the award of indemnity costs have been considered on numerous occasions in this Court, including by the Full Court. As observed by the Full Court in De Alwis v Minister for Immigration and Multicultural and Indigenous Affairs [2004] FCAFC 77: [6] The purpose of an order for costs is to indemnify or compensate the person in whose favour it is made, not to punish the person against whom it is made: see Latoudis v Casey [1990] HCA 59 ; (1990) 170 CLR 534 ; Ohn v Waltob (1995) 36 NSWLR 77 at 79 per Gleeson CJ. The usual rule is that costs should be on a party-party basis, but that the Court has a wide and unfettered discretion to award costs on an indemnity basis in appropriate cases in particular circumstances: see Colgate-Palmolive v Cussons (1993) 46 FCR 225 at 231-234. [7] In deciding whether to award indemnity costs each exercise of discretion depends on the particular facts. Indemnity costs can be awarded where it appears that a proceeding is commenced or continued in circumstances where the applicant properly advised should have known there was no chance of success... 11 Circumstances warranting the Court in departing from the usual course of ordering costs on a party to party basis were described by Sheppard J in Colgate-Palmolive at 233 as including: &#8226; making allegations of fraud knowing them to be false; &#8226; making irrelevant allegations of fraud; &#8226; evidence of particular misconduct that causes loss of time to the Court and to other parties; &#8226; the fact that proceedings were commenced or continued for some ulterior motive or in wilful disregard of known facts or clearly established law; &#8226; the making of allegations which ought never to have been made or the undue prolongation of a case by groundless contentions; and &#8226; an imprudent refusal of an offer to compromise.