*. (LIMITED DISTRIBUTION) JUDGMENT No. 264 yao IN THE FEDERAL COURT OF AUSTRALIA) ) ) ) ) VICTORIA DISTRICT REGISTRY No. VG 131 of 1988 GENERAL DIVISION BETWEEN: EPIFLOR EPIPANEL PTY LTD Applicant and ABEL LEMON & CO PTY LTD Respondent MINUTES OF ORDER COURT: Woodward J DATE: 14 July 1988 PLACE: Melbourne THE COURT ORDERS THAT: 1. The applicant pay the respondent's costs. 2. The order be stayed for three months. NOTE: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. IN THE FEDERAL COURT OF AUSTRALIA) ) ) No. VG 131 of 1988 ) ) VICTORIA DISTRICT REGISTRY GENERAL DIVISION BETWEEN: EPIFLOR EPIPANEL PTY LTD Applicant and ABEL LEMON & CO PTY LTD Respondent COURT: Woodward J DATE: 14 July 1988 PLACE: Melbourne EXTEMPORE REASONS FOR JUDGMENT In this matter I have a considerable degree of sympathy for the applicant. It seems that it has, for several years, been supplied by the respondent with vinyl chips, which are an essential ingredient in a floor-laying process which 1s an important part of the applicant's business. At some stage over the last two years, in the course of a re-organization of the respondent company and other related corporations, a decision was taken that the respondent and its related companies would cease to supply these vinyl chips on a normal sale and purchase basis to the people that they had previously been dealing with. They would instead dispose of them only as part of the total floor-laying process which they were marketing, and which he they were prepared to license the applicant, and other prople in the same position as the applicant, to perform for them. After this decision was reached, it seems that supplies of the chips continued to be available on the previous basis for some time; but eventually the applicant was informed that the vinyl chips would no longer be supplied by the respondent, and that the only way it could obtain them from a related company was to seek and obtain appointment as a licensed applicator of the respondent's floor-laying system. The applicant began these legal proceedings soon after it became apparent that it was not going to be able to get supplies from the respondent; they have continued over a period of just over three months. The preparation of the case has been very expeditious on both sides, which will fortunately have had the effect of keeping costs to a reasonable level. However, as the case was due for hearing, the applicant has appreciated, no doubt on sound legal advice, that its prospects of success were either slight or non-existent and it has consented to the application being struck out. This I did yesterday, reserving the question of costs. The applicant has argued that it ought not to be required to pay the respondent's costs, not by reason of anything to do with the litigation itself, but by reason of the fact that the applicant was unaware of any potential source of supply which could replace the respondent's supplies, whereas the respondent was itself obtaining its supplies from a particular English source and did not make clear to the applicant the availability of supplies from that source until a few days ago. It seems that there was a reference to the English source as being a possible supplier, in an affidavit which was sworn on behalf of the respondent on 20 June. But the full availability of that source was not made clear until affidavits were sworn on 11 July. It seems to me that, 1n order to avoid the normal result that costs follow the event, and the withdrawal of an application requires the payment of the respondent's costs, the applicant would have to show either (a) that there was something in the respondent's conduct of the action which had led the applicant to believe that it had a good cause of action, when that was not the case, or (b) that there was something in the behaviour of the respondent before the action was commenced with was so unconscionable, or otherwise improper, that it ought to be deprived of its costs, although it was successful in the litigation. In this case I think the worst that could possibly be said of the respondent (and I should say that I have not called on the respondent to reply) is that it acted ina hard-headed business fashion when 1t changed its method of operation, offered only its revised service to the applicant as a licensee, and did not volunteer the fact that the licensee could obtain supplies from another overseas source 1f it wished to do so. In the exercise of my discretion, I am unable to see that the conduct involved, even regarded in its worst possible light, was such that the respondent should be deprived of its costs. Accordingly I must dismiss the application that no order for costs be made. It ais ordered that the applicant pay the respondent's costs; but I shall, in all the circumstances, stay the order for three months. I certify that this and the three (3) preceding pages are a true and accurate copy of the Reasons for Judgment herein of The Hon Mr Justice Woodward Dated: 19 July 1988 Counsel for the Applicant: Mr J. Kennon Solicitors for the Applicants: McIntyre & Carter Counsel for the Respondents: Mr C. Scerr1 Solicitors for the Respondents: Mallesons Stephen Jaques Date of hearing: 14 July 1988