Australian Competition and Consumer Commission v Valve Corporation (No 8) [2016] FCA 1584

FEDERAL COURT OF AUSTRALIA

Australian Competition and Consumer Commission v Valve Corporation (No 8) [2016] FCA 1584 File number: NSD 886 of 2014

Judge: EDELMAN J

Date of judgment: 23 December 2016

Catchwords: PRACTICE AND PROCEDURE – costs – costs of unsuccessful interlocutory application – costs of liability hearing – costs of penalty hearing

Cases cited: Australian Competition and Consumer Commission v Valve Corporation (No 6) [2016] FCA 1348

Date of hearing: 23 December 2016

Registry: New South Wales

Division: General Division

National Practice Area: Commercial and Corporations

Sub-area: Regulator and Consumer Protection

Category: Catchwords

Number of paragraphs: 10

Counsel for the Applicant: Ms NL Sharp

Solicitor for the Applicant: Thomson Geer

Counsel for the Respondent: Mr ADB Fox

Solicitor for the Respondent: PricewaterhouseCoopers

ORDERS NSD 886 of 2014

BETWEEN: AUSTRALIAN COMPETITION AND CONSUMER COMMISSION Applicant

AND: VALVE CORPORATION Respondent

JUDGE: EDELMAN J DATE OF ORDER: 23 DECEMBER 2016

THE COURT ORDERS THAT:

1. Save in respect of the costs orders made on 17 December 2014, 16 July 2015 and 19 February 2016, the respondent pay 75% of the applicant's costs of and incidental to the hearing on liability (including reserved costs) to be taxed if not agreed. 2. The respondent pay the applicant's costs of and incidental to the hearing on relief (including reserved costs) to be taxed if not agreed. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

EDELMAN J: 1 At the delivery of my reasons for decision this afternoon three issues arose concerning costs. The parties provided short written submissions very shortly before the hearing, supplemented by brief oral submissions. They consented to the delivery of reasons for decision from chambers. 2 The first two costs issues concerned the costs of the liability hearing and the penalty hearing. Valve submitted that the ACCC should only be entitled to 75% of its costs of each. The ACCC seeks all of its costs of each hearing. 3 As to the liability hearing, at the time I delivered reasons for decision I indicated a provisional view that Valve should pay 75% of the costs of the ACCC. This was not a view that was reached by an attempt to discern which issues Valve had succeeded upon and which the ACCC had succeeded upon although, as an overall assessment, the ACCC succeeded on most issues. 4 When costs are considered, success is generally measured by reference to outcome. My provisional view was informed by the fact that the ACCC was not wholly successful in the outcome of its application. Indeed, in relation to a substantial part of the outcome of the liability proceeding the ACCC was unsuccessful. As Valve submitted, almost 40% of my reasons for decision concerning liability were devoted to nine alleged misrepresentations made by Valve. A considerable amount of the trial was devoted to that liability that the ACCC sought to establish. The ACCC was unsuccessful in relation to one of the refund policy representations and unsuccessful in relation to all of the alleged representations made to individual complainants. That lack of success would have had a substantial effect on orders that were made at the penalty hearing. 5 Finally, although I had some concerns about some aspects of Valve's approach to discovery during the period leading up to the liability hearing, my overall conclusion was, and remains, that the appropriate order is that Valve pay 75% of the ACCC's costs of the liability hearing, to be taxed if not agreed. 6 The second costs issue that arose at the delivery of my reasons for decision was the costs of the penalty hearing. Valve submitted that the ACCC did not obtain all of the relief it sought and that Valve had experienced a measure of success at the penalty hearing. I accept that to be the case but I remain of the same preliminary view, expressed in reasons for decision concerning penalty, that Valve should pay all of the ACCC's costs of the penalty hearing. In short, Valve was unsuccessful at the penalty hearing on almost all matters of substance which occupied any real time at the hearing. It is also relevant that the penalty hearing and the orders were necessary due to Valve's contraventions. Valve also conducted the penalty hearing by a scorched earth approach, leaving almost no stone unturned. For instance, Valve produced 72 pages of submissions and annexures, including 234 paragraphs of single spaced submissions in small font. Most of these submissions concerned the appropriate pecuniary penalty. The penalty I imposed was the amount sought by the ACCC and was 12 times greater than the penalty of $250,000 proposed by Valve. Valve should pay all of the ACCC's costs of the penalty hearing. 7 The third costs issue concerned the costs of Valve's application concerning confidentiality orders. That application was filed on 14 October 2016. In its application, Valve sought confidentiality orders in respect of its answers to interrogatories which disclosed Valve's gross revenue and net profit. The application was heard on the papers with reasons delivered at the commencement of the penalty hearing on 15 November 2016: Australian Competition and Consumer Commission v Valve Corporation (No 6) [2016] FCA 1348. At the time I delivered those reasons, I dismissed the application and made orders that Valve pay the ACCC's costs of that application to be taxed if not agreed. Valve did not oppose that order but it had not had the opportunity of reading the reasons for decision at the time the order was made. Valve now seeks an order that the costs order be varied such that Valve pay 50% of the ACCC's costs of that application. I accept that Valve should have the opportunity of making submissions concerning whether this costs order, which was interlocutory, should be varied and I accept that I have power to vary the order. 8 The essence of Valve's submissions was that the application was necessary because of the ACCC's conduct in refusing to provide comfort or assurance to Valve that it would not disclose Valve's confidential information orally during the hearing. Valve submitted that it was not until 3 November 2016, in the ACCC's written submissions, that the ACCC indicated a change in its position in that regard and confirmed that there was "no need for an interim decision as the parties can take care in the manner in which they present their oral addresses to preserve any possible confidentiality". 9 I do not accept Valve's submission that the only reason, or even a substantial reason, why Valve had brought its confidentiality application concerned matters relating to oral addresses. That issue was, at best, peripheral and concerned only whether the Court should rule on the confidentiality application before the penalties hearing. Indeed, after the ACCC had confirmed that any confidential information would be preserved in oral submissions, Valve did not abandon its application. It persisted with it; it simply did not seek a ruling before the oral penalties hearing. 10 Even more fundamentally, Valve's confidentiality application was wholly unsuccessful. Many of the orders it sought were directed to the world at large. Some were apparently directed to the Court itself. Many were misconceived. The period of time over which the orders were sought also involved considerable overkill. And I had serious doubt whether much of the information was (and is) confidential. Further, during the penalty hearing, counsel for the ACCC informed the Court (without demur by counsel for Valve) that Valve did not press the claim for confidentiality over any of the correspondence in the Court Books. Valve never explained why it had sought confidentiality orders, in very wide terms, over communications to and from the ACCC or why it had never indicated to the Court that those claims had been abandoned. Even taking into account the delay by the ACCC in providing confirmation that no allegedly confidential information would be revealed in oral submissions it is appropriate that Valve pay the costs of the ACCC occasioned by that application. No variation of the order is necessary. I certify that the preceding ten (10) numbered paragraph are a true copy of the Reasons for Judgment herein of the Honourable Justice Edelman.