FEDERAL COURT OF AUSTRALIA Nine Films & Television Pty Ltd v Ninox Television Limited [2005] FCA 1665 COSTS – application for indemnity costs – exercise of discretion to award costs – whether any special or unusual circumstances warranting the granting of indemnity costs NINE FILMS & TELEVISION PTY LTD (ACN 066 040 024) AND NINE NETWORK AUSTRALIA PTY LTD (ACN 008 685 407) v NINOX TELEVISION LIMITED (FORMERLY KNOWN AS NINOX FILMS LIMITED), TELEVISION NEW ZEALAND LIMITED AND JOHN CHARLES McEWEN NSD 1820 OF 2004 TAMBERLIN J SYDNEY 9 NOVEMBER 2005 IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY NSD 1820 OF 2004 BETWEEN: NINE FILMS & TELEVISION PTY LTD ACN 066 040 024 FIRST APPLICANT/FIRST CROSS-RESPONDENT NINE NETWORK AUSTRALIA PTY LTD ACN 008 685 407 SECOND APPLICANT/SECOND CROSS-RESPONDENT AND: NINOX TELEVISION LIMITED (FORMERLY KNOWN AS NINOX FILMS LIMITED) FIRST RESPONDENT/CROSS CLAIMANT TELEVISION NEW ZEALAND LIMITED SECOND RESPONDENT JOHN CHARLES McEWEN THIRD RESPONDENT JUDGE: TAMBERLIN J DATE OF ORDER: 9 NOVEMBER 2005 WHERE MADE: SYDNEY THE COURT ORDERS THAT: 1. The application for indemnity costs is dismissed. 2. The applicants are to pay the costs of the first and third respondents of the application on a party/party basis. 1. The parties have liberty to apply in relation to any further directions that might be appropriate in this matter 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 NSD 1820 OF 2004 BETWEEN: NINE FILMS & TELEVISION PTY LTD ACN 066 040 024 FIRST APPLICANT/CROSS-RESPONDENT NINE NETWORK AUSTRALIA PTY LTD ACN 008 685 407 SECOND APPLICANT/SECOND CROSS-RESPONDENT AND: NINOX TELEVISION LIMITED (FORMERLY KNOWN AS NINOX FILMS LIMITED) FIRST RESPONDENT/CROSS-CLAIMANT TELEVISION NEW ZEALAND LIMITED SECOND RESPONDENT JOHN CHARLES McEWEN THIRD RESPONDENT JUDGE: TAMBERLIN J DATE: 9 NOVEMBER 2005 PLACE: SYDNEY REASONS FOR JUDGMENT 1 This is an application by the applicants ("Nine") for an order that the costs payable by the first and third respondents ("Ninox") on the application and by the first respondent on the cross-claim be taxed and paid on an indemnity basis. 2 Four grounds are relied on by Nine in seeking indemnity costs. I have considered these grounds and the careful submissions formulated on behalf of Nine, both in writing and orally, together with the written outline of submissions of the first and third respondents on costs. 3 The first matter raised by Nine is that Ninox made grave allegations of copying against Mr David Barbour and Mr Julian Cress, which it is claimed are tantamount to an allegation of theft and fraud, and that these allegations were found to be unsubstantiated. As it turned out, having heard the whole of the evidence, I formed the view that there was not sufficient evidence to the effect that the material had been copied. 4 There was substantial testing of the evidence of Mr Barbour and Mr Cress in relation to these matters. One curious matter adverted to, and relied on heavily, by Ninox, was the evidence of Mr Barbour and Mr Cress that, in formulating the production of The Block, there had been no reference to the Australian version of Dream Home when they were discussing, considering and framing the format of the new program. I did not agree with Ninox's submission that one would draw from this evidence an inference to the effect that there had been copying by Nine. However, I do not think that Ninox's argument was so insubstantial as to have no substance whatsoever. Although I think that it was a weak and difficult inference to draw, and a somewhat remote one, nevertheless, I do not think that it was beyond the pale such that it would indicate that Ninox was not entitled to mount an argument that there had been some copying, especially in view of the fact that Ninox also pointed to, and relied on, some similarities between the programs at a generalised level. 5 The second matter raised by Nine is that the threats were made over a substantial period of time to employees of Nine and Nine's international licensees, culminating in the commencement of legal proceedings in New York. In my view, if one assumes that there is some substance in the case advanced on behalf of the first and third respondents, such that it was a reasonably arguable case, then it cannot be said that this provides any independent ground for granting indemnity costs. In order for indemnity costs to be granted, there needs to be some circumstance which is out of the ordinary. If a party considers that they have a reasonable case and there is some reasonable argument to be made or evidence to be called or tested in relation to that case, then the fact that they make statements over a period asserting those rights is not, in my opinion, in itself a ground on which to award indemnity costs or to support an application for such costs. 6 The third matter raised by Nine is that Ninox's claims were wholly unmeritorious and, on any reasonable view, incapable of succeeding. This was not apparent at the outset of the proceedings. It is said that ample evidence was given as to the provenance of the program, other evidence was adduced as to the absence of copying and the dissimilarities between the programs, but, in my view, and it is to some extent a matter of impression, there was no substantial resemblance between the two programs. The objective different features of the two programs strongly supported the conclusion which I reached, but, again, the mere fact that a party is unsuccessful in persuading me that there was a sufficient degree of similarity between the programs at an appropriate level of detail or a copying of the program does not mean that indemnity costs, as opposed to party/party costs, ought to follow the outcome. 7 The final matter raised by Nine was that Ninox refused several opportunities that Nine gave them to bring the proceedings to a swift end. However, to some extent, this observation as to delay in bringing the matter to Court lies at the feet of each of the parties and, as it turns out, I think this is a neutral consideration. 8 The Calderbank letter, as it is described, was dated 12 January 2005 and, in substance, abandons any claim for damages. Instead, it seeks consent orders which call for admissions and, in effect, a capitulation on the substance of the case. The letter also seeks costs, as well as requiring Ninox to comply with other requirements, such as an undertaking that it would take no further proceedings in Australia in relation to allegations of copyright infringement or any action taken in relation to that matter. A Calderbank letter making a reasonable offer of compromise is a factor that can be taken into account in deciding whether to award costs on an indemnity basis. In my view, the Calderbank letter in this case does not amount to a significant offer of compromise in the circumstances, and it was not unreasonable for the offer to be rejected, because the letter calls for a total concession in relation to the merits and substance of the case in circumstances where there was an argument to be made by Ninox, albeit at a general level and not strongly based in the evidence as it emerged at the trial. 9 In these circumstances, I do not think that this case is outside the ordinary run of cases where there has been a failure to substantiate a case. The degree of similarity and level of generality at which the question of copying might be approached is an issue of a difficult nature and, in this case, I formed the view that there was not sufficient similarity in relation to the specific and important elements of the programs, some of which are intangible in nature. I do not think it can be said that, on a simple viewing of the two programs, it is obvious that the case for Ninox was doomed to failure. 10 Accordingly, I refuse the application for indemnity costs. 11 The applicants are to pay the costs on this application of the first and third respondents on a party/party basis. 12 I reserve liberty to apply in relation to any further directions that might be appropriate in this matter. I certify that the preceding twelve (12) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Tamberlin. Associate: Dated: 18 November 2005 Counsel for the Applicants: D T Kell Solicitor for the Applicants: Gilbert + Tobin Counsel for the Respondents: D Sibtain Solicitor for the Respondents: McCullough Robertson Date of Hearing: 9 November 2005 Date of Judgment: 9 November 2005