Lowe v Mack Trucks Australia Pty Limited (No 2)

• Jurisdiction: Australia Federal only
• Judgment Date: 21 May 2008
• Neutral Citation: [2008] FCA 711
• Court: Federal Court

FEDERAL COURT OF AUSTRALIA

Lowe v Mack Trucks Australia Pty Limited (No 2) [2008] FCA 711

COSTS – principles relevant to an award of costs – whether Court should depart from the ordinary rule

Federal Court of Australia Act 1976 (Cth) s 43

Federal Court Rules (Cth) O 62

Ruddock v Vadarlis (No 2) (2001) 115 FCR 229 referred to

Colgate-Palmolive Company v Cussons Pty Limited (1993) 46 FCR 225 referred to

Re Wilcox: Ex parte Venture Industries Pty Ltd (No 2) (1996) 72 FCR 151 followed

Abbott v Random House Australia Pty Ltd [1999] FCA 1540 referred to

Hamod v State of New South Wales (2002) 188 ALR 659 followed

Ugly Tribe Co Pty Ltd v Sikola [2001] VSC 189 approved

Xat Ky v Australvic Property Management Pty Ltd (No 2) [2007] FCA 1785 referred to

Rosniak v Government Insurance Office (1997) 41 NSWLR 608 referred to

Tetijo Holdings Ltd v Keeprite Australia Pty Ltd [1991] FCA 187 referred to

GRAHAM LOWE and ERICA LOWE v MACK TRUCKS AUSTRALIA PTY LIMITED

VID 249 OF 1999

KENNY J

21 MAY 2008

MELBOURNE

IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY	VID 249 OF 1999

BETWEEN: GRAHAM LOWE First Applicant ERICA LOWE Second Applicant

AND: MACK TRUCKS AUSTRALIA PTY LIMITED Respondent

JUDGE:	KENNY J
DATE OF ORDER:	21 MAY 2008
WHERE MADE:	MELBOURNE

THE COURT ORDERS THAT:

1. Save for:

(a) costs thrown away by reason of the abandonment of the two expert witness reports of Dr Arnold McLean filed in September 2004 and in February 2006 respectively; and

(b) the costs incurred by reason of the late discovery of the CD-ROM containing the FORS raw data referred to in [14] of these reasons

the applicants pay the respondent’s costs of and incidental to the proceeding, including reserved costs, on a party and party basis, to be taxed in default of agreement.

2. The applicants pay such of the respondent’s costs as fall within in (a) and (b) in [1] above on an indemnity basis, to be taxed in default of agreement.

3. Upon the expiration of time in which to appeal from my judgment of 4 April 2008 or the determination of any appeal from that judgment (whichever is later), all documents relating to the schematics and/or construction of any vehicle designed and/or manufactured by the respondent which have been provided by the respondent to the applicants in any form whatsoever (whether paper, electronic or otherwise) and any copies of such documents, whether in the possession of the applicants, their legal representatives or witnesses called by them, be returned to the solicitors for the respondent.

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

IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY	VID 249 OF 1999

BETWEEN: GRAHAM LOWE First Applicant ERICA LOWE Second Applicant

AND: MACK TRUCKS AUSTRALIA PTY LIMITED Respondent

JUDGE:	KENNY J
DATE:	21 MAY 2008
PLACE:	MELBOURNE

REASONS FOR JUDGMENT

INTRODUCTION

1 On 4 April 2008, I delivered judgment dismissing the application made by Mr and Mrs Lowe for damages in respect of the loss which they had allegedly suffered as a result of their acquisition of a Mack prime mover. The parties subsequently filed written submissions on costs, the disposition of which now falls for determination.

2 The central issue in this proceeding was whether the Lowes had established that, on account of defects in construction and design, the truck was unfit for the purpose of interstate long-haul transport. If so, they claimed damages for breach of implied contractual conditions as to fitness for purpose and merchantability, relying on s 71 of the Trade Practices Act 1974 (Cth) (“the TPA”): see Lowe v Mack Trucks Australia Pty Ltd [2008] FCA 439 (“Lowe v Mack Trucks”). The Lowes also pursued a claim under s 52 of the TPA, to the effect that two of the respondent’s sales representations were misleading and deceptive, or likely to mislead or deceive. At trial, however, the Lowes failed to make out their case. In Lowe v Mack Trucks at [264], I concluded that the applicants had not shown that, on the balance of probabilities, the truck was not of merchantable quality and was unfit for the purpose of interstate, long-haul goods transport. Nor had they shown that the truck was other than as represented to them by the respondent’s sales representative in March 1998.

PARTIES’ SUBMISSIONS ON COSTS

3 The applicants did not dispute that, in the circumstances just outlined, the respondent was entitled to its costs, taxed on a party and party basis. The respondent argued, however, that, in respect of two matters, it was entitled to an award of costs on a solicitor-client basis. The respondent identified these matters as:

(a) abandonment and replacement of the first two expert reports prepared by Dr Arnold McLean on the fourth day of the trial; and

(b) failure to disclose the critical FORS raw data until the fifth day of the trial.

The respondent submitted that the applicants’ conduct with respect to these matters was sufficiently exceptional to warrant an award of indemnity costs.

4 As to this latter submission, the applicants replied, first, that:

The preference of the evidence of one witness to another, i.e. Morrison to MacLean [sic] is not such an unusual event as to warrant departure from the usual rule. Whilst acknowledging that portions of MacLean’s [sic] reports and evidence were not proceeded with, that merely achieves a truncated outcome which has saved costs. The alternative may have seen more time utilised in dealing with the evidence of MacLean [sic] with the result that the extended evidence of MacLean [sic] would ultimately have been rejected (given the findings made in respect of his evidence). In those circumstances, a solicitor client costs order would not have been warranted. It follows that by reason of the decision taken at trial to save time, a solicitor/client costs order is not warranted.

Further, the applicants “conceded that the FORS data was discoverable”, but said:

The production at a late stage however, meant nothing more than the fact that the examination of that data was undertaken at a point in time which interrupted the trial. Costs would have necessarily been incurred in examining the data and conferring with experts and with counsel, regardless of the time when the data was produced. The trial saw many delays occasioned by the availability of witnesses, the production of documents by both sides, the availability of the Court, and the like. Such delays are to be expected in the course of a lengthy trial and do not warrant a departure from the usual rule as to costs.

CONSIDERATION

5 By virtue of s 43 of the Federal Court of Australia Act 1976 (Cth), the Court may make orders as to costs. The power, which is discretionary, must be exercised judicially: see Ruddock v Vadarlis (No 2) (2001) 115 FCR 229 at 234 per Black CJ and French J. Within this general discretion, it is accepted that costs ordinarily follow the event, with the result that a successful litigant receives costs in the absence of special circumstances justifying some other order: see Ruddock v Vadarlis (No 2) (2001) 115 FCR 229 at 234 per Black CJ and French J.

6 The usual rule is that costs are payable on a party and party basis, unless the circumstances of the case warrant a departure from the normal course: see Colgate-Palmolive Company v Cussons Pty Limited (1993) 46 FCR 225 (“Colgate-Palmolive”) at 233 per Sheppard J and the Federal Court Rules (Cth), O 62. In that case, Sheppard J considered the circumstances in which indemnity costs might be awarded, referring, amongst other things, to “misconduct that causes loss of time to the Court and to other parties” although, as his Honour concluded, “[t]he question must always be whether the particular facts and circumstances of the case in question warrant the making of an order for payment of costs other than on a party and party basis”: see Colgate-Palmolive at 233-234. The Full Court reconsidered the appropriateness of an indemnity costs award in Re Wilcox: Ex parte Venture Industries Pty Ltd (No 2) (1996) 72 FCR 151 (“Re Wilcox”) at 152-153 per Black CJ and 156-158per Cooper and Merkel JJ. In Re Wilcox, at 156-157, Cooper and Merkel JJ reiterated Sheppard J’s approach, saying:

In order to exercise the discretion [regarding costs] judicially the following principles have been accepted by the Court as applicable:

(a) the Court ought not to depart from the rule that costs be ordered on a party and party basis unless the circumstances of the case warrant the Court in departing from the usual course;

(b) the circumstances which may warrant departure from the usual course arise as and when the justice of the case so requires or where there may be some special or unusual feature in the case to justify the court in departing from the usual course;

(c) whilst the circumstances in cases in which indemnity costs have been ordered offer a guide, the question must always be whether the particular facts and circumstances of the case in question warrant the making of an order for costs other than on a party and party basis.

See also Abbott v Random House Australia Pty Ltd [1999] FCA 1540 at [5] per Beaumont, Miles and Drummond JJ, quoting the above passage with approval. Even more recently, the Full Court in Hamod v New South Wales (2002) 188 ALR 659 at 665 (per Gray J, with whom Carr and Goldberg JJ agreed) explained the basal principle for an award of indemnity costs in the following terms:

Indemnity costs are not designed to punish a party for persisting with a case that turns out to fail. They are not awarded as a means of deterring litigants from...