FEDERAL COURT OF AUSTRALIA Pacific Gaming Pty Limited v Aristocrat Leisure Industries Pty Limited [2002] FCAFC 113 PACIFIC GAMING PTY LIMITED V ARISTOCRAT LEISURE INDUSTRIES PTY LIMITED N 1204 OF 2000 SACKVILLE, FINN & KENNY JJ SYDNEY 15 MAY 2002 IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY N1204 OF 2000 BETWEEN: PACIFIC GAMING PTY LIMITED APPELLANT AND: ARISTOCRAT LEISURE INDUSTRIES PTY LIMITED RESPONDENT JUDGES: SACKVILLE, FINN & KENNY JJ DATE OF ORDER: 15 MAY 2002 WHERE MADE: SYDNEY THE COURT ORDERS THAT: 1. The cross-appeal be dismissed. 2. No order be made as to the costs of the appeal or cross-appeal. 3. Leave be granted to the appellant to appeal against the order made by the primary Judge on 2 February 2001 ("the costs order"). 4. The costs order be set aside and in lieu thereof the appellant be ordered to pay seventy-five per cent of the respondent's costs of the proceedings. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY N1204 OF 2000 BETWEEN: PACIFIC GAMING PTY LIMITED APPELLANT AND: ARISTOCRAT LEISURE INDUSTRIES PTY LIMITED RESPONDENT JUDGES: SACKVILLE, FINN & KENNY JJ DATE: 15 MAY 2002 PLACE: SYDNEY REASONS FOR JUDGMENT 1 On 26 November 2001, the Full Court, as presently constituted, delivered judgment in an appeal brought by leave from a judgment by a Judge of this Court. The appeal was allowed in part, but the balance of the appeal was dismissed: Pacific Gaming Pty Ltd v Aristocrat Leisure Industries Pty Ltd [2002] AIPC 91-759, [2001] FCA 1636. The orders provided for the parties to file and serve any written submissions as to the costs of the appeal and the costs orders made by the primary Judge within fourteen days. 2 Neither party filed written submissions in accordance with the direction. Instead the appellant applied by motion to recall and vacate the order dismissing the balance of the appeal. On 11 April 2002, the motion was dismissed with costs: Pacific Gaming Pty Ltd v Aristocrat Leisure Industries Pty Ltd [2002] FCA 421. The Court ordered that in the absence of any written submissions relating to the costs of the appeal being filed within fourteen days from the date of the orders, there be no order as to the costs of the appeal. 3 Written submissions have now been filed. The appellant submits that there should be no order as to costs in respect of the appeal and cross-appeal. It points out that each side enjoyed some success on the appeal and that the cross-appeal was not pursued. The appellant also submits that an order should be made formally dismissing the cross-appeal. The respondent does not dispute that the orders proposed by the appellant are appropriate. Accordingly, these orders should be made. 4 The remaining question concerns the costs of the proceedings at first instance. The primary Judge, in a separate judgment, ordered the appellant to pay 85 per cent of the respondent's costs: Aristocrat Leisure Industries v Pacific Gaming Pty Ltd [2001] FCA 34. The reduction of fifteen per cent in the quantum of costs ordered was attributable to the last-minute abandonment by the respondent of its claim to copyright in one of the five sets of written specifications for computer games that had been identified in its pleaded case. 5 The appellant concedes that the leave pursuant to which the appeal was brought did not include leave to appeal against the costs orders made by the primary Judge. It points out, however, that the notice of appeal sought an order that the respondent pay the costs at first instance. To the extent necessary, the appellant seeks leave to appeal in respect of the costs order. 6 The appellant says that the costs order made by the primary Judge should be set aside and, in lieu thereof, the Court should order the appellant to pay 50 per cent of the respondent's costs at first instance. It argues that the issue of whether each of the appellant's computer programs infringed the respondent's copyright in each of the corresponding written specifications (on which the appellant succeeded on the appeal) was separate from the issue of whether each of the appellant's written specifications infringed the respondent's copyright in the corresponding specifications (on which the appellant failed on the appeal). The appellant contends that evidence was adduced at the trial which went solely to the question of whether the computer programs infringed and that a reduction in the proportion of costs recoverable by the respondent to fifty per cent would appropriately reflect the significance of that question at trial. 7 The respondent disputes that leave should be granted at this stage in relation to the costs order. It says, however, that if leave is granted the costs order made by the primary Judge should not be disturbed. The respondent argues that the principal issue at trial was whether the appellant had infringed copyright in the respondent's written specifications. On this issue the respondent had succeeded in relation to the appellant's written specifications. The practical effect was that the appellant could not sell games based on the infringing specifications because of the licensing requirements of the Liquor Administration Board. Moreover, so it is said, there was little evidence directed specifically to the computer program question; indeed that had been a "minor subsidiary issue". There was therefore no merit in reducing the proportion of the respondent's costs payable by the appellant by a further thirty per cent. The various issues were closely intertwined and it was not feasible or appropriate to separate the costs attributable to the particular issue on which the respondent ultimately failed. 8 It is not easy for this Court to determine the proportion of the costs at trial attributable to the question of whether the appellant's computer games, as distinct from their written specifications, infringed the respondent's copyright. Our impression, however, is that the issue was treated as a subsidiary one and that it took up relatively little time. Indeed, the issue was not given detailed treatment on the appeal until the Court directed the parties to file additional written submissions. In this connection we note that the respondent adduced no evidence on the computer program issue at trial, other than through a relatively brief cross-examination of two expert witnesses whose evidence addressed a number of issues. 9 On balance we think justice would be done if the proportion of the respondent's costs that the appellant should be ordered to pay were reduced to seventy-five per cent. Since the failure to seek leave to appeal in respect of the costs order appears to have been an oversight and the respondent does not suggest that it has been prejudiced by the delay, we think it appropriate to grant the appellant leave to appeal against that order. 10 The orders of the Court are as follows: 1. Cross-appeal dismissed. 2. No order as to the costs of the appeal or cross-appeal. 3. Grant leave to the appellant to appeal against the order made by the primary Judge on 2 February 2001 ("the costs order"). 4. Set aside the costs order and in lieu thereof order the appellant to pay seventy-five per cent of the respondent's costs of the proceedings. I certify that the preceding ten (10) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justices SACKVILLE, FINN & KENNY. Associate: Dated: 15 May 2002 Counsel for the Appellant: Mr J M Ireland QC with Mr R J Webb Solicitor for the Appellant: McCabe Terrill Counsel for the Respondent: Mr A Franklin with Mr R Cobden Solicitor for the Respondent: Clayton Utz Date of final submissions on costs: 26 April 2002 Date of Judgment: 15 May 2002