Davidson v McCann Worldgroup Pty Ltd & Ors (No.2) [2009] FMCA 1189 (13 November 2009)

Last Updated: 2 December 2009

FEDERAL MAGISTRATES COURT OF AUSTRALIA

DAVIDSON v McCANN WORLDGROUP PTY LTD & ORS (No.2)

[2009] FMCA 1189

HUMAN RIGHTS – PRACTICE AND PROCEDURE – Costs in relation to interlocutory applications – whether Federal Magistrates Court Rules scale applicable – whether costs to be paid forthwith.

Federal Magistrates Act 1999 (Cth), s.79 Federal Court Rules, O.11, r.16, O.62, r.3 Federal Magistrates Court Rules, rr.1.05, 13.10, 16.05, 21.15

Airservices Australia v Jeppesen Sanderson Inc [2006] FCA 906 Centrestage Management Pty Ltd v Riedle & Ors (No.2) [2007] FMCA 1260 Davidson v McCann Worldgroup Pty Limited & Ors [2009] FMCA 957 Flew v Mirvac Parking Pty Ltd [2006] FMCA 1818 McKellar v Container Terminal Management Services Ltd [1999] FCA 1639 Rafferty and Others v Time 2000 West Pty Ltd (ACN 127 893 270) and Others (No 3) (2009) 257 ALR 503; [2009] FCA 727 Wylie v McCann Worldgroup Pty Limited & Ors [2009] FMCA 959 Yates Property Corporation Pty Ltd v Boland and Others (No 2) (1997) 147 ALR 685; [1997] FCA 760

Applicant:

JENNIFER DAVIDSON

First Respondent:

McCANN WORLDGROUP PTY LIMITED (ACN 000 154 889)

Second Respondent:

PAUL BROWN

Third Respondent:

BAKER AND MCKENZIE (ABN 32 266 778 912)

File Number:

SYG 71 of 2009

Judgment of:

Barnes FM

Hearing date:

13 November 2009

Delivered at:

Sydney

Delivered on:

13 November 2009

REPRESENTATION

Counsel for the Applicant:

Mr J Darams

Solicitors for the Applicant:

Harmers Workplace Lawyers

Counsel for the First Respondent:

Mr P Newall

Counsel for the Second and Third Respondents:

Mr J Fernon SC

Solicitors for the Respondents:

Baker and McKenzie

ORDERS

(1) The applicant, having discontinued the proceeding in relation to the third respondent, Baker and McKenzie, pay the costs of Baker and McKenzie as agreed and in the absence of agreement taxed in accordance with the Federal Court Rules, such costs to be paid within 28 days of the order or agreement being made save and except for the costs of Baker and McKenzie in relation to the application in a case filed on 26 March 2009 which are to be paid by the applicant forthwith in the sum of $6,900 in accordance with the Federal Magistrates Court Rules.
(2) The applicant pay the costs of the first respondent in relation to the application in a case filed on 26 March 2009 fixed in the sum of $6,900 in accordance with the Federal Magistrates Court Rules.
(3) The applicant pay the costs of the second respondent in relation to the application in a case filed on 26 March 2009 fixed in the sum of $6,900 in accordance with the Federal Magistrates Court Rules.

FEDERAL MAGISTRATES COURT OF AUSTRALIA AT SYDNEY

SYG 71 of 2009

JENNIFER DAVIDSON

Applicant

And

McCANN WORLDGROUP PTY LIMITED (ACN 000 154 889)

First Respondent

PAUL BROWN

Second Respondent

BAKER AND McKENZIE (ABN 32 266 778 912)

Third Respondent

REASONS FOR JUDGMENT

(Revised from transcript)

1. Before me are costs applications by the first, second and third respondents in each of the matters of Davidson v McCann Worldgroup Pty Limited & Ors, SYG71/2009 and Wylie v McCann Worldgroup Pty Limited & Ors, SYG70/2009. The respondents each seek costs in relation to the applications in a case filed in each of these matters on 26 March 2009 in relation to the points of claim filed by each of the applicants, which were dealt with in my judgments in Wylie v McCann Worldgroup Pty Limited & Ors [2009] FMCA 959 and Davidson v McCann Worldgroup Pty Limited & Ors [2009] FMCA 957.
2. It is not in dispute that the court has power under s.79 of the Federal Magistrates Act 1999 (Cth) to award costs in proceedings before the court and that the award of costs is in the discretion of the court, except as provided by the rules of court or other legislation (see s.79(3)). The discretion must be exercised judicially (see Yates Property Corporation Pty Ltd v Boland and Others (No 2) (1997) 147 ALR 685; [1997] FCA 760 and Flew v Mirvac Parking Pty Ltd [2006] FMCA 1818). It is also not in dispute that the general rule is that the unsuccessful party should pay the successful party’s (or parties’) costs on a party/party basis.
3. The first respondent’s application in a case in relation to Ms Davidson sought orders that certain parts of the points of claim be dismissed as against it pursuant to r.13.10 of the Federal Magistrates Court Rules or struck out pursuant to O.11 r.16 of the Federal Court Rules in relation to the relief claimed and further, and in the alternative, that the applicant’s claims for relief in both her application and the points of claim be permanently stayed or dismissed pursuant to r.13.10.
4. The second and third respondents sought that certain parts of the points of claim be dismissed as against them pursuant to r.13.10 of the Federal Magistrates Court Rules or struck out pursuant to O.11 r.16 of the Federal Court Rules in relation to the relief claimed. Further, and in the alternative, an order was sought that the applicant’s claims for relief in both her application and the points of claim as against the second and third respondents be permanently stayed or dismissed pursuant to r.13.10. Each respondent sought costs.
5. In Davidson v McCann, while I did not accept the submissions for the respondents that r.13.10 could be used to dismiss points of claim as distinct from claims for relief in an application (see [14] – [30] and cf O.11 r.16 of the Federal Court Rules), for the most part the concerns raised by each of the respondents in relation to the specific points of claim in issue were substantiated in the sense that, as counsel for the second and third respondents put it, the points of claim were “not right to go” and needed to be “dealt with” by orders of the court.
6. There were a number of ways in which the deficiencies could have been addressed. In the particular circumstances of this case, having regard to the fact that this was the first occasion on which the points of claim had been subject to judicial scrutiny and the fact that the applicant had sought the opportunity to replead some of the points of claim in question, I was of the view that it was in the interests of the administration of justice to order that certain parts of the points of claim be struck out but, in effect, to give the applicant leave generally to file and serve amended points of claim to address the issues raised by the respondents. Insofar as summary dismissal was sought based on the deficiencies in the points of claim I was not satisfied that such an order should be made.
7. The applicant has now taken the opportunity to file amended points of claim. It was foreshadowed in the hearing today that the respondents are of the view that there needs to be further amendment to the points of claim which are said not to be in proper form. An opportunity will be given for that to occur. The applicant sought and was granted leave to make an oral application to discontinue the proceedings in relation to the third respondent.
8. While in their applications in a case the respondents sought in the alternative that the proceedings against them be dismissed or permanently stayed, I am not persuaded that in essence the applications were summary dismissal applications or that, having regard to the manner in which the applications were brought and the written and oral submissions of counsel for each respondent as well as the judgment, the applicant had such a measure of success that it is appropriate that there be no order as to costs, notwithstanding the view I took as to the availability of r.13.10 in relation to defective pleadings and the fact that I did not permanently stay or dismiss the proceedings.
9. The respondents were successful in substance in that, as indicated, they established that there were defects in the points of claim that needed to be addressed. I note that the applicant, while given the opportunity to replead, has now discontinued the proceedings in relation to the third respondent. The interlocutory proceedings brought by the respondents were in substance applications to strike out parts of the pleadings, but the parties recognised that in some circumstances the consequence of striking out pleadings or parts of pleadings may lead to the whole of the proceedings being struck out, stayed or dismissed. I note the general principle that the fact that a party has succeeded on only one ground is not reason of itself to deprive it of its costs. While that principle may be applied more readily at the conclusion of a matter, by analogy, it is also relevant in this instance having regard to what, in substance, was the result of the interlocutory applications. On balance I am satisfied that this is a case in which it is appropriate that the applicant should meet the costs of each of the respondents in relation to the applications in a case.
10. Counsel for the first respondent submitted that the costs should be determined in accordance with Schedule 1 of the Federal Magistrates Court Rules. I agree and I am satisfied that it is appropriate to apply Schedule 1 in relation to the costs of each of the respondents in proceedings of this nature (see Centrestage Management Pty Ltd v Riedle & Ors (No.2) [2007] FMCA 1260 at [17]). Having regard to the complexity of the particular issue that was before the court in this case, and that it was within the range of matters appropriate for this court, the scale set out in the rules of the court should apply.
11. The other issue is whether or not the costs of the interlocutory applications should be payable forthwith. The proceedings in relation to the third respondent have concluded and such costs should be payable forthwith. However the proceedings have not concluded in relation to the first and second respondents. The Federal Magistrates Court Rules do not make specific provision in this respect, but the general rule, consistent with the provisions of O.62 r.3(3) of the Federal Court Rules (and see r.1.05 of the Federal Magistrates Court Rules), is that the costs of interlocutory proceedings should not, unless the court otherwise orders, be paid until the principal proceedings are concluded. The Federal Court Rules refer to a party having an entitlement to have a bill of costs taxed. Taxation is not relevant where costs are ordered in a fixed sum under the Federal Magistrates Court Rules, but it is not in dispute that the same general principle is applicable. The issue is whether or not that general principle should be applied in the particular circumstances of this case.
12. In relation to the first and second respondents, I am not persuaded by the submissions (in particular for the first respondent) that this is a case in which the general rule should be displaced so that the costs of the interlocutory proceedings should be payable at this time.
13. I have had regard to the fact that use of the scale in Schedule 1 would facilitate such an approach were I minded to adopt it, but also to all of the circumstances of the case and the authorities cited. In Airservices Australia v Jeppesen Sanderson Inc [2006] FCA 906 Graham J referred to the general principal in O.62 r.3 but went onto state at [31] (by reference to the remarks of Weinberg J in McKellar v Container Terminal Management Services Ltd [1999] FCA 1639 at [41]) that “[i]n lengthy and complex cases where substantial costs have been thrown away as a result of ill-considered pleadings being drawn, the power to order that costs thrown away be paid forthwith should be used less sparingly than it has in the past, on the basis that “[s]uch costs should be capable of being recovered without the innocent party having to wait, possibly years, for that to occur”.
14. However it is notable that in Airservices Australia Graham J had regard to the lengthy history of the proceedings. The applicant in that case had filed a number of statements of claim, additional directions hearings had taken place which should not have been necessary, interlocutory steps had been taken and applications had been bought unnecessarily given the changes in the pleadings that had occurred. In contrast, in this case this is the first time the points of claim have been the subject of judicial scrutiny. Similarly, the circumstances in McKellar are not on all fours with the circumstances in this case.
15. I am not persuaded that the delay in this case is of the order and magnitude of the kind to warrant payment of the costs forthwith or that this is a case in which it is clear that the respondents will have to wait such a considerable time to recover their costs that it is appropriate to order that the costs of the interlocutory applications be paid now. I understand that it is foreshadowed that there may be further applications in relation to the pleadings, although that awaits the filing of the further amended points of claim, but having regard to the fact that the proceedings in which the applications in the case were brought were commenced this year and the nature of the proceedings, I am not persuaded that there will necessarily be such a substantial delay as to warrant an order that the costs of the first and second respondents be paid forthwith.
16. In Rafferty and Others v Time 2000 West Pty Ltd (ACN 127 893 270) and Others (No 3) (2009) 257 ALR 503; [2009] FCA 727 an application for an order to pay costs of an interlocutory application forthwith was refused. Relevantly, Besanko J set out the advantages of the general rule embodied in O.62 r.3(3) (at [20]). The general principles referred to are relevant in this case. I am not persuaded that there can be said to be such an element of unreasonableness in the conduct of the unsuccessful party at this stage of the proceedings or that it is likely that there will be such a delay between the interlocutory proceeding and the conclusion of the principal proceeding that the costs should be payable forthwith.
17. Counsel for the first respondent has calculated, and I accept his calculations, the amount sought under Stage 1A of Schedule 1, together with the hearing fees (allowing for an advocacy loading). On this basis the first respondent seeks costs in the sum of $6,900.
18. Under r.21.15 of the Federal Magistrates Court Rules “[t]he Court or a Registrar may certify that it was reasonable to employ an advocate, or more than 1 advocate, to appear for a party in a proceeding”. I do so certify in relation to each of the respondents. Hence, the daily hearing fee is to include an advocacy loading in accordance with Part I of Schedule 1. I propose to make the costs order sought by the first respondent.
19. Before I make orders in relation to the second and third respondents I want to give the parties the opportunity to make submissions in relation to the order that I have already made in relation to the third respondent and whether that creates a difficulty.

RECORDED : NOT TRANSCRIBED

20. In relation to the second respondent, it should similarly be ordered that the applicant pay the costs of the second respondent in relation to the application in a case filed on 26 March 2009 fixed in the sum of $6,900 in accordance with the Federal Magistrates Court Rules.
21. In relation to Baker and McKenzie, with the consent of the parties the costs order that I made earlier in the hearing today should be varied pursuant to r.16.05(1). I consider that it is in the interests of justice to do so. The order that I made was an order generally for the applicant to pay the costs of Baker and McKenzie as agreed and in the absence of agreement taxed in accordance with the Federal Court Rules. That order should be varied by the addition of the words “save and except for the costs of Baker and McKenzie in relation to the application in a case filed on 26 March 2009 which are to be paid by the applicant forthwith in the sum of $6,900 in accordance with the Federal Magistrates Court Rules”.

I certify that the preceding twenty-one (21) paragraphs are a true copy of the reasons for judgment of Barnes FM

Associate:

Date: 30 November 2009