Case: Ginos Engineers Pty Ltd v Autodesk Australia Pty Ltd [2007] FMCA 2156
Outcome: affirmed
(xi) On 6 December 2007 his Honour rejected Ginos' application for costs and had "no hesitation": Ginos Engineers Pty Ltd v Autodesk Australia Pty Ltd [2007] FMCA 2156 at [30] ; in acceding to Autodesk Australia's request for costs. In the event he awarded costs in a lump sum in the figure of $22,500. The appeal is against that order. There is no appeal against the Federal Magistrate's order rejecting Ginos' application for costs. 15 I preface my consideration of this matter with the observations that, for present purposes, the award of costs was in his Honour's discretion: FM Act s 79; and that under r 21.02(2)(a) of the FMC Rules an order could be made setting the amount of the costs to be awarded. I would also note, as did the Federal Magistrate, that r 1.03 (insofar as presently relevant) provides: 1.03 Objects (1) The object of these Rules is to assist the just, efficient and economical resolution of proceedings. (2) ... the Rules aim to help the Federal Magistrates Court: &#8226; to operate as informally as possible &#8226; to use streamlined processes &#8226; to encourage the use of appropriate dispute resolution procedures. ... (4) To assist the Court, the parties must: &#8226; avoid undue delay, expense and technicality &#8226; consider options for primary dispute resolution as early as possible. In quoting the above, his Honour highlighted the word "economical" in r 1.03(1). For reasons I give below, I quite understand why he did. 16 Having quoted the above provisions (at [32]-[34]), the Federal Magistrate went on to say (at [35]): Given the objects to the rules and costs r.21.02, I have no hesitation in deciding to award costs here and calculated on a lump sum basis. Importantly, I would note in passing, his Honour had put the parties on notice at the 4 December 2007 hearing that he was predisposed to fix the costs himself and he indicated his reasons for so doing as the following exchange with the appellants' counsel illustrates: HIS HONOUR: Mr Scragg, this matter has come to an end. MR SCRAGG: Yes, I know, your Honour. The simple way is the usual order, that costs be taxed. That's a simple way be agreed or taxed. HIS HONOUR: Mr Scragg, you've addressed me on that and I've also heard from Mr Hennessy about that. Given the way that this matter has progressed since it was commenced, the amount of time that has been spent at every step, I'm not disposed at the moment to make an order that the costs be taxed. Because I can see that it's simply going to result in one or other of the parties or perhaps more accurately both incurring considerable extra expense in sorting out the question of costs. I will return to this matter. 17 The Federal Magistrate then indicated in his reasons that he was assisted in determining the appropriate costs order by the affidavit of Mr Williams whom, he noted, had given similar evidence which was accepted in "other similar intellectual property cases". Mr Williams had been involved in numerous copyright infringement cases in this Court and in the Federal Magistrates Court. It is unnecessary for me to comment on the degree of similarity between the case before his Honour and those to which he referred. The case before him clearly was an appropriate one for a lump sum order irrespective of whether it could be said to be a complex one. The discretion given in r 21.02(2)(a) is not circumscribed. I would emphasise that no ground of appeal challenged directly the decision to make a lump sum order as such although ground 7 (which must fail as I will indicate) might be said to do so obliquely. Mr Williams' evidence was that in his experience costs are assessed for between 50 per cent and 70 per cent of the professional costs and disbursements expended on a matter. He was familiar with the work undertaken on the file and the accounts rendered in respect of this work; he provided an estimate of the costs that in his view were likely to be recoverable by the respondent in an assessment process, having regard to his experience of costs awards made in complex cases in the Federal Magistrates Court; he listed the items of work that had been undertaken; and, in the exhibit to his affidavit, he provided an itemised invoice of professional costs. He concluded that the total professional costs and disbursements that had been incurred or made (whether or not billed) totalled $24,558. He applied a 60 per cent recovery figure to that sum to produce a "taxed amount" of approximately $14,734.80. When account was taken of professional costs incurred after the date of Mr Williams' affidavit the total of professional costs became $45,136.39. A reduction of $380 was made to this figure (it represented work in the New South Wales proceeding) as were other minor reductions so reducing the total to $44,693.64. 18 His Honour went on to indicate that he had "studied the schedules". It is not clear whether this is a reference to the confidential exhibit (cf [44] of the reasons) or, perhaps more probably, to the schedule of costs referred to in r 21.10 of the FMC Rules (which schedule specifies lump sum orders for designated events but from which a federal magistrate could depart: r 21.10). In light of that he indicated he "would feel more comfortable with a reduction of 50% rather than the 60% that Mr Williams mentioned". He reduced the amount (rounded off) to $22,500 and ordered accordingly. 19 It is necessary to set out the grounds of appeal in full. They are: 1. The assessment was based on a rate of solicitor's charges of $632.50 and $687.50 per hour for senior practitioners, $319 per hour for a junior practitioners and $220 and $242 per hour for law clerks; such rates are significantly higher than the Adelaide rate which should have been applied and are unreasonable; 2(a). The assessment made no allowance in favour of the applicant for costs associated with a claim by the respondent that the applicant had sued the wrong party; the claim was not sustained; 2(b). The assessment made no allowance in favour of the applicant for costs awarded for the refusal by the respondent to consent to the production of the exhibit "MJW1" to the affidavit of Mr Williams, a director of the applicant, which refusal it eventually abandoned; 3. The assessment made no allowance in favour of the applicant for steps which duplicated work already done so as to make the further work unnecessary; 4. The assessment included costs incurred by the respondent in relation to another matter; 5. In making the assessment, the learned Judge should have used the scale of fees set out in rule 21 and should not have in the circumstances departed from that scale; 6. That a proper charge for the work in question, if taxed in accordance with the scale or otherwise, would have been approximately $5000 to $8000. 7. Contrary to the view of the Magistrate, it would not have imposed significant additional costs upon the parties to tax the respondent's costs on an item by item basis. 20 I would note immediately that the challenges made to the lump sum costs order in Grounds 1 to 5 relate to the manner in which the assessment was made. Ground 6 simply makes an assertion as to what the award might have been if they had been taxed. Whatever Ground 7's purpose was meant to be, it must fail for reasons I will later give. 21 Having noted the grounds I should emphasise they do not include: (i) an allegation of a denial of procedural fairness in the adjournment given from 4 December to 6 December; (ii) a challenge to Mr Williams' expertise and to the reception of his opinion evidence that was said to be inadmissible; or (iii) an allegation of inadequacy of reasons. Counsel for the appellant sought to raise these on the appeal. I refused to allow it. I should also indicate that at the hearing before the Federal Magistrate, Mr Williams was available for cross-examination. Counsel refrained from availing of this. Nonetheless, he proceeded to contend before his Honour that the invoice annexed to Mr Williams' affidavit disclosed unnecessary services being rendered, excessive charges being made and charges made for matters on which the respondent was unsuccessful. Additionally, he contended before me, surprisingly, that his submissions to the Federal Magistrate by way of criticism of Mr Williams' evidence were evidence before his Honour notwithstanding that no ruling or agreement to that effect was made. While his Honour invited counsel to put on evidence on the issue of costs and in relation to Mr Williams' evidence, again he refrained from so doing.