Secretary, Department of Health and Ageing v Export Corporation (Australia) Pty Ltd ACN 009 441 632 [2010] FCA 389 (27 April 2010)

Last Updated: 6 May 2010

FEDERAL COURT OF AUSTRALIA

Secretary, Department of Health and Ageing v Export Corporation (Australia) Pty Ltd ACN 009 441 632 [2010] FCA 389

Citation:		Secretary, Department of Health and Ageing v Export Corporation Pty Ltd [2010] FCA 389
Parties:		SECRETARY, DEPARTMENT OF HEALTH AND AGEING v EXPORT CORPORATION (AUSTRALIA) PTY LTD
File number:		ACD 38 of 2009
Judge:		STONE J
Date of judgment:		27 April 2010
Legislation:		Federal Court of Australia Act 1976 (Cth) s 43
Cases cited:		Baulderstone Hornibrook Engineering Pty Limited v Gordian Runoff Limited (No.2) [2009] NSWCA 12 Colgate-Palmolive Company v Cussons Pty Limited [1993] FCA 536; (1993) 46 FCR 225 Fountain Selected Meats (Sales) Pty Ltd v International Produce Merchants Pty Ltd [1988] FCA 202; (1988) 81 ALR 397 Secretary, Department of Health and Ageing v Export Corporation (Australia) Pty Ltd [2010] FCA 249 Tetljo Holdings Pty Ltd v Keeprite Australia Pty Ltd (unreported) [1991] FCA 225, 3 May 1991
Date of hearing:	15 March 2010
Place:	Canberra
Division:	GENERAL DIVISION
Category:	No catchwords
Number of paragraphs:	14
Counsel for the Applicant:	L Robberds QC with T Begbie
Solicitor for the Applicant:	Australian Government Solicitor
Counsel for the Respondent:	S Free
Solicitor for the Respondent:	McLachlan Thorpe Partners

IN THE FEDERAL COURT OF AUSTRALIA
AUSTRALIAN CAPITAL TERRITORY DISTRICT REGISTRY
GENERAL DIVISION

BETWEEN:

SECRETARY, DEPARTMENT OF HEALTH AND AGEING Applicant

AND:	EXPORT CORPORATION (AUSTRALIA) PTY LTD ACN 009 441 632 Respondent

JUDGE:	STONE J
DATE OF ORDER:	27 APRIL 2010
WHERE MADE:	SYDNEY (VIA VIDEO LINK TO CANBERRA)

THE COURT ORDERS THAT:

1. Subject to order 2, the respondent pay the applicant’s costs of the notice of motion filed on 11 January 2010 on an indemnity basis up to and including 9 March 2010.
2. The respondent pay on a party/party basis the applicant’s costs incurred in respect of the order sought in the notice of motion filed on 11 January 2010 that the respondent provide particulars of the physiological process in humans relied on in respect of each of the relevant goods.
   

Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
The text of entered orders can be located using Federal Law Search on the Court’s website.

IN THE FEDERAL COURT OF AUSTRALIA
AUSTRALIAN CAPITAL TERRITORY DISTRICT REGISTRY
GENERAL DIVISION

BETWEEN:

SECRETARY, DEPARTMENT OF HEALTH AND AGEING Applicant

AND:	EXPORT CORPORATION (AUSTRALIA) PTY LTD ACN 009 441 632 Respondent

JUDGE:	STONE J
DATE:	27 APRIL 2010
PLACE:	SYDNEY (VIA VIDEO LINK TO CANBERRA)

REASONS FOR JUDGMENT

1. By notice of motion filed on 11 January 2010 the respondent sought orders that the applicant, the Secretary of the Department of Health and Ageing, provide further particulars of the claims made in its statement of claim. The notice of motion was heard on 15 March 2010. At the conclusion of the hearing I gave a short ex tempore judgment and dismissed the notice of motion; [2010] FCA 249. On 31 March 2010 Jagot J dismissed the respondent’s application for leave to appeal from the interlocutory judgment of 15 March 2010.
2. The applicant now seeks the costs of the notice of motion from the respondent. In particular the applicant seeks indemnity costs in respect of that part of the costs that it incurred in respect of aspects of the respondent’s request for particulars that were “abandoned” by the respondent “in its written submissions served on 9 March 2010”.
3. Subject to exceptions not presently relevant, s 43 of the Federal Court of Australia Act 1976 (Cth) gives the Court jurisdiction to award costs in all proceedings before the Court and provides that the award of costs is within the discretion of the Court. Section 43(3)(g) specifies that, in its discretion, the Court may award indemnity costs. It is accepted that the Court’s discretion in relation to indemnity costs is not fettered, nevertheless indemnity costs are only be awarded where there is some special feature justifying a departure from the usual party/party costs. In Fountain Selected Meats (Sales) Pty Ltd v International Produce Merchants Pty Ltd [1988] FCA 202; (1988) 81 ALR 397 at 401, Woodward J commented:

I believe that it is appropriate to consider awarding “solicitor and client” or “indemnity costs”, whenever it appears that an action has been commenced or continued in circumstances where the applicant, properly advised, should have known that he had no chance of success. In such cases the action must be presumed to have been commenced or continued for some ulterior motive, or because of some wilful disregard of the known facts or the clearly established law.

4. Woodward J’s statement of principle was accepted by French J in Tetljo Holdings Pty Ltd v Keeprite Australia Pty Ltd (unreported) [1991] FCA 225, 3 May 1991; see also Colgate-Palmolive Company v Cussons Pty Limited [1993] FCA 536; (1993) 46 FCR 225.
5. In referring to the above authorities I am mindful of, and respectfully agree with, Allsop P’s comment in Baulderstone Hornibrook Engineering Pty Limited v Gordian Runoff Limited (No.2) [2009] NSWCA 12 at [5] where, in the context of an application for indemnity costs, his Honour said:

Three things need be borne in mind in a judgment such as this on costs: the desirability of avoiding unnecessary recitation of cases (abounding as they are in this area); the desirability of not restating, in different terms, approaches to the broad discretion that have been well settled; and the desirability of dealing with the arguments without over-elaboration, if this is possible.

6. The notice of motion described the particulars sought as those “requested in letters dated 20 November 2009 and 16 December 2009 from the Respondent’s solicitors to the Applicant’s solicitors”. In those letters the respondent had asked for particulars going well beyond those it sought at the hearing of the notice of motion. In fact it pressed only one aspect of its initial request which was for “particulars of the physiological process in humans relied on in respect of each of the relevant goods”; see [2010] FCA 249 at [3].
7. The applicant claims that the respondent “abandoned” three of its four requests for particulars and that the first intimation the applicant had of that approach was in the respondent’s submissions served on 9 March 2010. The applicant submits that in abandoning aspects of its initial request, the respondent tacitly conceded that it had already been provided with sufficient particulars to prepare its defence and, moreover, recognised that for this reason it would not succeed in the broader application.
8. In response, the respondent submits that it was clear from the correspondence between the parties that it was satisfied on all aspects of its request except in respect of the one issue it pressed at the hearing of the notice of motion. In support of this position, the respondent referred to the letter of 16 December 2009 to the applicant’s solicitors, in which the respondent’s solicitor sought clarification on one point:

[T]he difficulty we have is that your client expressly leaves open the possibility that there may be other, unspecified matters upon which it would seek to rely as to presentation.
.....
Accordingly, we ask you to confirm that the matters set out in the documents attached to schedule A1 comprise the totality of the facts, matters and circumstances your client relies upon in alleging a representation as to therapeutic use. If not, we invite you to provide us with amended particulars and/or documents which do state exhaustively those matters.

9. In their response of 22 December 2009 the solicitors for the applicant provided that clarification saying:

[W]e confirm for more abundant clarity that the overall presentation which is relied upon is that which is depicted in the photographs. The Applicant does not intend to rely upon other matters, not depicted in the photographs, which could be said to form part of the presentation of the goods.

The respondent submits that this was the confirmation which it had sought and therefore, following this exchange, the applicant should have appreciated that the respondent was satisfied in respect of all issues except those that it eventually pressed.

10. I would give some weight to this submission were it not for the fact that at a directions hearing on 4 March 2009 it was clear that the applicant was under the impression that the respondent was pressing every issue. Mr Begbie who appeared for the applicants addressed the respondent’s wider request for particulars saying:

We have given a schedule of all of the goods and we have identified on that schedule extensive matters which we say are significant to the fact of each of those goods being a therapeutic good. In addition, we have given detailed photographs of each of the goods and said that that is photographic material representing the evidence that we will be relying upon. The primary evidence that we rely on which is the goods themselves and the appearance that they have. The respondent says that we ought go further and, in our schedule, we should now exhaustively identify for them every single feature of each good that we may rely on at trial as being relevant to whether or not they’re a therapeutic good.

11. At that point the respondent had the opportunity to make clear that it was pressing one issue only. It did not do so. In fact, when I expressed concern about the utility of the whole exercise of seeking further particulars and asked if the respondent was wanting to pursue its notice of motion, Mr Warton who appeared as agent for the respondent’s solicitors, said:

I’ll certainly raise your concerns with my principals regarding this issue. I am instructed that they do want to press the matter. They say that the applicant can provide further particulars and, in terms of today, we would be seeking a date for counsel to come and address the court on the reasons why we think these particulars can and ought be provided in this matter.

12. Given that comment it is not surprising that the applicant understood the respondent to be intent on pursuing all the issues raised by the terms of the notice of motion. I assume that Mr Warton, as he said he would, raised the concerns expressed with his principals. Those concerns should have prompted the respondent’s solicitor to clarify the issue and confirm that it would only be pursuing one aspect of its original request. Clearly that did not happen and, in a letter dated 18 February 2010, the solicitor for the applicant again raised the sufficiency of the particulars already provided and unsuccessfully invited the respondent to withdraw its request. The letter states:

The particulars provided on behalf of the Applicant to date give ample information to enable your client to plead to the statement of claim ....

In the same letter the applicant warned the respondent that it would be seeking indemnity costs should it succeed in its opposition to the notice of motion.

13. On this evidence I am satisfied that several months before the hearing of the notice of motion the applicant had given the respondent ample particulars to enable it to understand the case it had to meet and to plead its defence. These particulars included detailed photographs showing packaging and labelling of the products with which this proceeding is concerned. It had confirmed that the Secretary “does not intend to rely on other matters, not depicted in the photographs, which could be said to form part of the presentation of the goods eg advertising on point of sale promotional material”.
14. In the circumstances, the respondent’s election to pursue its notice of motion without clarification that it intended to press only one aspect of its initial request, and in wholly rejecting the applicant’s suggestion that it withdraw its request prior to the hearing, was irresponsible. That narrowing of its request was made clear only when it served its submissions on 9 March 2010. In my opinion its conduct was unreasonable to an extent sufficient to justify the award of indemnity costs to the limited extent sought by the applicant. The orders of the Court will be that the respondent pay the applicant’s costs of the notice of motion on an indemnity basis except in respect of its request for particulars of the physiological process in humans relied on in respect of each of the relevant goods, for which the applicant should have its costs on the usual party/party basis.

I certify that the preceding fourteen (14) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Stone.

Associate:

Dated: 27 April 2010