Barrett Property Group Ltd v Metricon Homes Pty Ltd (No 2)

• Jurisdiction: Australia Federal only
• Court: Federal Court (Australia)
• Judgment Date: 23 November 2007
• Neutral Citation: [2007] FCA 1823
• Date: 23 November 2007

FEDERAL COURT OF AUSTRALIA

Barrett Property Group Ltd v Metricon Homes Pty Ltd (No 2)

[2007] FCA 1823

COSTS – indemnity costs – misconduct of respondents – undue prolongation of defence.

COSTS – time for taxation of costs – departure from general rule in Federal Court Rules Order 62 r 3(3) – time for payment of costs – O 62 r 3(2) – costs to be paid forthwith.

ORDERS – stay of orders for taxation and payment of costs pending disposition of application for leave to appeal and any appeal.

Copyright Act 1968 (Cth)

Trade Practices Act 1974 (Cth)

Access For All Alliance (Hervey Bay) Inc v Hervey Bay City Council [2007] FCA 974 applied

Allstate Life Insurance Co v ANZ Banking Group Ltd [1995] FCA 660 referred to

Barrett v Metricon [2007] FCA 1509 referred to

Cirillo v Consolidated Press Property Ltd (No 2) [2007] FCA 179 cited

Colgate-Palmolive Company v Cussons Pty Limited (1993) 46 FCR 225 applied
Compagnie Industrielle de Precontrainte et D’Equipment des Constructions SA v First Melbourne Securities Pty Ltd [1999] FCA 660 discussed
Courtney v Medtel Pty Limited (No 3) [2004] FCA 347 referred to

Dias Aluminium Products Pty Ltd v Ullrich Aluminium Pty Ltd (No 2) [2005] FCA 1400 referred to

Ian Duncan v Secretary, Department of Family and Community Services [2007] FCA 507 referred to

Dunstan v Orr [2007] FCA 873 referred to

Hamod v New South Wales (2002) 188 ALR 659 cited

Hurst and Devlin v Education Queensland (No 2) [2005] FCA 793 cited

Jianshe Southern Pty Ltd v Turnbull Cooktown Pty Ltd (No 2) [2007] FCA 903 referred to

John S Hayes & Associates Pty Limited v Kimberley-Clarke Australia Pty Limited (1994) 52 FCR 210 referred to

Life Airbag Co of Australia Pty Ltd v Life Airbag Co (New Zealand) Ltd [1998] FCA 545 referred to

McKellar v Container Terminal Management Services Ltd [1999] FCA 1639 referred to

Pacific Publications Pty Ltd v Next Publishing Pty Ltd [2005] FCA 971 applied
Readymix Holdings International Pte Ltd v Wieland Process Equipment Pty Ltd [2006] FCA 1297 referred to
Re Wilcox; ex parte Ventura Industries Pty Ltd (No 2) (1996) 72 FCR 152 applied

Trumpet Software Pty Ltd v OzEmail Pty Ltd [1996] FCA 560 discussed
United Insurance Advisers Pty Ltd v United Insurance Advisers (National) Pty Ltd [2006] FCA 440 cited

Universal Music Australia Pty Ltd v Cooper [2005] FCA 1878 discussed

Anthony Vasyli v AOL International Pty Limited [1996] FCA 804 referred to

Walker v Citygroup Global Markets Pty Ltd [2005] FCA 1866 referred to

Yap v Granich & Associates [2001] FCA 1735 cited

BARRETT PROPERTY GROUP PTY LTD (ACN 088 015 267) AND SRS PROPERTY GROUP PTY LTD v METRICON HOMES PTY LTD (ACN 005 108 752), ROSS PALAZZESI AND ADRIAN POPPLE

VID 833 OF 2005

GILMOUR J

23 NOVEMBER 2007

PERTH (HEARD BY VIDEO-LINK TO MELBOURNE)

IN THE FEDERAL COURT OF AUSTRALIA
WESTERN AUSTRALIA DISTRICT REGISTRY	VID 833 OF 2005

BETWEEN:	BARRETT PROPERTY GROUP PTY LTD (ACN 088 015 267) First Applicant SRS PROPERTY GROUP PTY LTD Second Applicant
AND:	METRICON HOMES PTY LTD (ACN 005 108 752) First Respondent ROSS PALAZZESI Second Respondent ADRIAN POPPLE Third Respondent
JUDGE:	GILMOUR J
DATE OF ORDER:	23 November 2007
WHERE MADE:	PERTH (HEARD BY VIDEO-LINK TO MELBOURNE)

THE COURT ORDERS THAT:

1. The respondents pay the applicants’ costs to be taxed and paid forthwith.

2. Such costs, in respect of 50% of trial preparation from 10 April 2006 and the trial, be taxed on an indemnity basis.

3. The respondents pay the costs on the motion for special costs orders to be taxed and paid forthwith.

4. The operation of Orders 1 and 3 above be stayed pending the disposition of the respondents’ application for leave to appeal and any appeal.

5. The parties have liberty to apply in respect to these orders.

Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA
WESTERN AUSTRALIA DISTRICT REGISTRY	VID 833 OF 2005

BETWEEN:	BARRETT PROPERTY GROUP PTY LTD (ACN 088 015 267) First Applicant SRS PROPERTY GROUP PTY LTD Second Applicant
AND:	METRICON HOMES PTY LTD (ACN 005 108 752) First Respondent ROSS PALAZZESI Second Respondent ADRIAN POPPLE Third Respondent

JUDGE:	GILMOUR J
DATE:	23 November 2007
PLACE:	PERTH (HEARD BY VIDEO-LINK TO MELBOURNE)

REASONS FOR JUDGMENT

1 Barrett Property Group Ltd and SRS Property Holdings Pty Ltd are the successful applicants in proceedings brought against Metricon Homes Pty Ltd, Ross Palazzesi and Adrian Popple under the Copyright Act 1968 (Cth). On 24 October 2007, by consent, a declaration of infringement of copyright by Metricon as well as declarations that Palazzesi and Popple authorised such infringement were made. Those orders were made following my judgment in the matter which was delivered on 28 September 2007: Barrett Property Group Pty Ltd v Metricon Homes Pty Ltd [2007] FCA 1509. The question of costs which was held over for further argument is now before the Court for resolution.

2 The applicants seek an order that costs be taxed and paid forthwith, and that in respect of half of the costs of preparation and trial, these be taxed on an indemnity basis. The respondents oppose the application but say that if indemnity costs are to be paid then this should be in respect of only 4/13ths of the costs. The trial took thirteen days.

INDEMNITY COSTS

3 An award of costs is in the discretion of the Court or Judge except as provided by any other Act: Federal Court of Australia Act s 43(2). The discretion must be exercised judicially. In the normal course, costs are ordered to be paid on a party and party basis: Colgate-Palmolive Company v Cussons Pty Limited (1993) 46 FCR 225 at 232; Re Wilcox; Ex parte Ventura Industries Pty Ltd (No 2) (1996) 72 FCR 152 at 158 per Cooper and Merkel JJ. A costs order is not intended to punish the unsuccessful party but rather to compensate the successful party: Hurst and Devlin v Education Queensland (No 2) [2005] FCA 793 at [5]. This is so even where the ordinary practice is departed from. The aim is not to punish or deter future litigants but simply to compensate a party fully for costs which normal party-party costs could not be expected to do, where it was unreasonable for that party to be subjected to any expenditure of costs, such as where a hopeless proceeding is brought: Cirillo v Consolidated Press Property Ltd (No 2) [2007] FCA 179 at [4]-[5]. Any departure from this general rule requires a special reason: Access For All Alliance (Hervey Bay) Inc v Hervey Bay City Council [2007] FCA 974 at [10]; Pacific Publications Pty Ltd v Next Publishing Pty Ltd [2005] FCA 971 at [5]. The categories in respect of which departure from the usual rule are contained are not closed: John S Hayes & Associates Pty Limited v Kimberley-Clarke Australia Pty Limited (1994) 52 FCR 203; Jianshe Southern Pty Ltd v Turnbull Cooktown Pty Ltd (No 2) [2007] FCA 903 at [32].

4 In Colgate-Palmolive, (at p 233)Sheppard J identified various categories which might give rise to an award of indemnity costs. These include:

· the making of allegations of fraud knowing them to be false, and the making of irrelevant allegations of fraud;

· evidence of particular misconduct that causes loss of time to the Court and to other parties;

· the commencement or continuation of proceedings for an ulterior motive;

· wilful disregard of known facts or clearly established law;

· the making of allegations which ought never to have been made or the undue prolongation of a case by groundless contentions; and

· an imprudent refusal of an offer to compromise.

5 Whatever the case, the Court should not make such an order for costs unless there is some clear basis or “some special or unusual feature in the case”: Pacific Publications at [5].

6 Here the applicants point to what they describe as particular misconduct on the part of the respondents, as well as the undue prolongation of the defence in the proceeding. Whilst discrete matters, they are, in a significant way, overlapping questions.

7 These complaints concern the conduct of the respondents both in preparation for and at trial, going to the issue of the derivation of the accused plans and houses and whether or not these had been copied from the Copyright Works.

8 Prior to the trial the respondents put on very detailed, and obviously considered, affidavits from Mr Palazzesi, one of its directors, Mr Bujega, one of its designers, Mr Popple, its product development manager and Mr Biasin, its then design sales manager. In combination, these affidavits contain approximately 1000 pages including many exhibits. These individually and in combination were tendered to establish a design evolution of the accused plans and homes which was independent of the Copyright Works. The cross-examination of these witnesses by senior counsel for the applicants took in excess of three days. Initially there was a lengthy opening including a significant part of it concerning the question of derivation and copying. There was also a view of the homes, the subject of the Copyright Works as well as the accused homes. This took an entire day.

9 I rejected the defence of independent derivation and found that the ‘alfresco quadrant’ in each of the accused homes had been copied from the applicants’ ‘Seattle 31’ project home design, in order to produce the alfresco quadrant in Metricon’s Prada 35 project home design and that the other accused homes had in turn been designed by direct reference to the Prada 35 as well as the ‘Memphis 33’ another project home designed by the applicants. [230], [243]-[244]

10 The...