Federal Court of Australia Swancom Pty Ltd v The Jazz Corner Hotel Pty Ltd (No 4) [2024] FCA 1006 File number(s): VID 330 of 2019 Judgment of: O'BRYAN J Date of judgment: 3 September 2024 Catchwords: COSTS – application for review of a decision of a Registrar of the Court as to the quantum of costs payable pursuant to a lump sum award – requirement for a de novo hearing on the question of quantum – whether the question of quantum should be referred to an experienced costs lawyer for inquiry and report – relevant considerations Legislation: Federal Court of Australia Act 1976 (Cth) ss 35A(5) and 37M Federal Court Rules 2011 (Cth) s 28.67 Cases cited: Bechara v Bates (2021) 286 FCR 166 Harris v Caladine (1991) 172 CLR 84 Super Pty Limited (formerly known as Leda Constructions Pty Limited) v SJP Formwork (Aust) Pty Limited (1992) 29 NSWLR 549 Swancom Pty Ltd v The Jazz Corner Hotel Pty Ltd (No 3) [2021] FCA 729 Swancom Pty Ltd v The Jazz Corner Hotel Pty Ltd [2022] FCAFC 157 Division: General Division Registry: Victoria National Practice Area: Intellectual Property Sub-area: Trade Marks Number of paragraphs: 22 Date of last submission/s: 29 August 2024 Date of hearing: Determined on the papers Solicitor for the Applicant: K&L Gates Solicitor for the Respondents: Brand Partners Commercial Lawyers ORDERS VID 330 of 2019 BETWEEN: SWANCOM PTY LTD ACN 071 212 194 Applicant AND: THE JAZZ CORNER HOTEL PTY LTD ACN 615 168 968 First Respondent BIRD'S BASEMENT PTY LTD ACN 607 922 609 Second Respondent SAINT THOMAS PTY LTD ACN 612 480 109 (and another named in the Schedule) Third Respondent AND BETWEEN: THE JAZZ CORNER HOTEL PTY LTD ACN 615 168 968 Cross-Claimant AND: SWANCOM PTY LTD ACN 071 212 194 Cross-Respondent order made by: O'BRYAN J DATE OF ORDER: 3 SEPTEMBER 2024 THE COURT NOTES THAT: A. On 9 April 2021, the Court made final orders in this proceeding with reasons published in Swancom Pty Ltd v The Jazz Corner Hotel Pty Ltd (No 2) [2021] FCA 328. B. On 30 June 2021, the Court made orders concerning the costs of the proceeding (being orders 3, 4, 5 and 6, which are referred to herein as the Costs Orders), and made orders directing that any question concerning the quantum of the costs be determined by a Registrar of the Court, with reasons published in Swancom Pty Ltd v The Jazz Corner Hotel Pty Ltd (No 3) [2021] FCA 729. C. The Costs Orders were stayed pending the final determination of appeals. D. Pursuant to the Costs Orders, on 19 July 2024 Registrar Segal made orders to the effect that: (a) the respondents' costs of the application payable by the applicant pursuant to order 3 of the Costs Orders be fixed in the sum of $278,600; and (b) the applicant's costs of the cross-claim payable by the first respondent pursuant to order 4 of the Costs Orders be fixed in the sum of $223,300 (the Costs Assessment Orders), and published reasons for making those orders (the Costs Assessment Reasons). E. By interlocutory application filed on 8 August 2024, the respondents have applied for review of the Costs Assessment Orders pursuant to s 35A(5) of the Federal Court of Australia Act 1976 (Cth) (the FCA Act). F. Taking account of the overarching purpose of the civil practice and procedure provisions as set out in s 37M of the FCA Act, the following orders are made for the purposes of conducting the review of the Costs Assessment Orders pursuant to s 35A(5) of the FCA Act. THE COURT ORDERS THAT: 1. Pursuant to ss 37P and 54A of the FCA Act and Div 28.6 of the Federal Court Rules 2011 (Cth) (the Rules), the question of the quantum of costs to be paid by the parties pursuant to the Costs Orders (Referred Question) be referred to a person appointed in accordance with order 2 for inquiry and report as a referee (the Referee). 2. The Referee will be an experienced costs lawyer: (a) agreed between the parties within 28 days of the date of these orders; or (b) failing agreement of the parties within 28 days, nominated by a Registrar of the Court. 3. The parties are to inform the Court promptly whether they have agreed a Referee pursuant to order 2. 4. In the conduct of the reference: (a) the parties are to provide the Referee with copies of: (i) these orders; (ii) the decisions of the Court in Swancom Pty Ltd v The Jazz Corner Hotel Pty Ltd (No 2) [2021] FCA 328 and Swancom Pty Ltd v The Jazz Corner Hotel Pty Ltd (No 3) [2021] FCA 729; (iii) the Costs Orders; (iv) the Costs Summaries, Costs Responses and any evidence and submissions filed by the parties before Registrar Segal; (v) the Costs Assessment Orders and the Costs Assessment Reasons; and (b) the parties are not to provide any other evidence to the Referee. 5. Subject to order 4, the Referee is to conduct the reference in such manner as he or she thinks fit to enable a just, efficient, timely and cost-effective resolution of the reference including, to the extent the Referee considers it necessary or appropriate, the Referee may direct the parties to provide submissions on any issue in dispute. 6. The Referee and the parties have liberty to apply to the Court for further directions in respect of any matter in relation to the reference. 7. The Referee is to give to the Court a written report in accordance with r 28.66 of the Rules, and a copy to each of the parties, by 15 November 2024, or such later date as the Court orders. 8. Any application by a party for orders pursuant to r 28.67 of the Rules shall be made within 14 days of receipt of the Referee's report by that party. 9. Without affecting the powers of the Court as to costs, and subject to further order, the applicant on the one hand and the respondents on the other hand are each to be liable for 50% of the fees payable to the Referee up to the date of provision of the Referee's report to the Court, including any disbursements incurred by the Referee. 10. The parties have liberty to make a joint application to the Court within 21 days of the date of these orders, supported by a joint submission and any necessary affidavit, seeking orders to: (a) set aside orders 1 to 9 above; and (b) have the review of the Costs Assessment pursuant to s 35A(5) of the FCA Act conducted on a different basis. 11. The proceeding be listed for further case management on a date to be fixed. 12. Costs be reserved. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011. REASONS FOR JUDGMENT O'BRYAN J: 1 This proceeding has been hard fought, with disagreement on most issues. Consistently with the approach to this litigation throughout, the parties do not agree with the lump sum costs determination made by a Registrar of the Court and seek a review of that determination by the Court, and the parties do not agree on the Court's proposed approach to the conduct of that review. 2 In the proceeding, the applicant (Swancom) alleged infringement of its registered trade marks by the respondents (which I will refer to collectively as the Jazz Corner Hotel parties), and the Jazz Corner Hotel parties cross-claimed seeking the cancellation of Swancom's registered trade marks in class 41. Each of the claim for infringement and the cross-claim for cancellation was dismissed, although on the cross-claim orders were made amending the services specified in respect of two of Swancom's marks. 3 On 30 June 2021, the Court made orders concerning the costs of the proceeding (the Costs Orders), with reasons published in Swancom Pty Ltd v The Jazz Corner Hotel Pty Ltd (No 3) [2021] FCA 729. The Costs Orders were relevantly as follows: 3. The applicant pay the respondents' costs of the application. 4. The first respondent pay the applicant's costs of the cross-claim. ... 6. The costs referred to in Orders 3 and 4 be awarded in lump sums pursuant to r 40.02(b) of the Federal Court Rules 2011 (Cth). 4 The Court also made an order directing that any question concerning the quantum of the lump sum costs be determined by a Registrar of the Court. 5 The order requiring that costs be awarded in a lump sum, and the order requiring that the quantum of the lump sum be determined by a Registrar of the Court, were intended to simplify and make more efficient the assessment of costs consistently with the overarching purpose in s 37M of the Federal Court of Australia Act 1976 (Cth) (the FCA Act). Unfortunately, by reason of the parties' continued disagreement, that intention will not be fulfilled. 6 The Costs Orders were stayed pending the final determination of appeals. On 13 September 2022, the Full Court dismissed each of the appeal brought by Swancom and the appeal brought by the Jazz Corner Hotel parties: Swancom Pty Ltd v The Jazz Corner Hotel Pty Ltd [2022] FCAFC 157; 168 IPR 42. At the time of judgment, the Full Court made standard orders for the payment of costs in each appeal, with the costs to be assessed in the absence of agreement. Subsequently, on 26 October 2022, the orders were amended to provide that the costs were to be awarded in a lump sum and that any question concerning the quantum of the lump sum costs was to be determined by a Registrar (thereby aligning the costs orders on appeal with the costs orders at trial). 7 On 19 July 2024, Registrar Segal made orders in respect of the costs of the trial to the effect that: (a) the respondents' costs of the application payable by the applicant pursuant to order 3 of the Costs Orders be fixed in the sum of $278,600; and (b) the applicant's costs of the cross-claim payable by the first respondent pursuant to order 4 of the Costs Orders be fixed in the sum of $223,300, (the Costs Assessment Orders) and published reasons for making those orders (the Costs Assessment Reasons). 8 I note for completeness that, at the same time, Registrar Segal also made an assessment of the costs of the appeals. However, no application for review of that assessment has been made. 9 By interlocutory application filed on 8 August 2024, the respondents have applied for review of the Costs Assessment Orders pursuant to s 35A(5) of the FCA Act. The application is supported by an affidavit of Havva Nur Celik, a solicitor representing the Jazz Corner Hotel parties, sworn 8 August 2024. 10 Section 35A(5) provides as follows: A party to proceedings in which a Registrar has exercised any of the powers of the Court under subsection (1) may, within the time prescribed by the Rules of Court, or within any further time allowed in accordance with the Rules of Court, apply to the Court to review that exercise of power. 11 The review that is required to be conducted by the Court is not an appeal, where the issues are confined by grounds of appeal, but a de novo hearing: Harris v Caladine (1991) 172 CLR 84 at 94–95 (Mason CJ and Deane J), 123, 126 (Dawson J), 150–151 (Gaudron J) and 164 (McHugh J). As the Full Court explained in Bechara v Bates (2021) 286 FCR 166 (Bechara v Bates) at [17]: The nature of a review under … s 35A(6) of the Federal Court Act of an order made by a registrar (often but not always in the context of the review of the making of a sequestration order in bankruptcy) has been the subject of a significant number of decisions of this Court. All are consistent. To underpin the validity of the delegation of judicial power of the Commonwealth to a non-judicial court officer there must be a rehearing de novo before a judge of the Court … . The review does not hinge, or focus, upon error in the decision of the registrar. It is a hearing de novo, in which the matter is considered afresh on the evidence and on the law at the time of the review, that is at the time of the hearing de novo … 12 The parties proposed timetabling orders which contemplated the review being listed for hearing with an estimate of one day. Recognising the requirement for the Court to conduct a de novo hearing, I gave consideration to whether the question of the quantum of costs to be paid by the parties pursuant to the Costs Orders should be referred to an experienced costs lawyer for inquiry and report as a referee. Draft orders effecting a referral were then provided to the parties, and the parties were invited by the Court to file a short submission with respect to the proposed referral. 13 The Jazz Corner Hotel parties did not oppose the referral and requested one minor revision to the orders which I consider to be appropriate. 14 Swancom opposed the referral on the basis that it would result in additional, unnecessary costs and would not be consistent with the overarching purpose of the civil practice and procedure provisions as set out in s 37M of the FCA Act. Swancom submitted that it believes that the issue in dispute between the parties with respect to costs involves a discrete point of legal principle that is properly dealt with by a judge of the Court, rather than a referee, and the point does not concern matters that require extensive work by (or the experience of) a cost consultant, as assumed by the draft orders proposed by the Court. Swancom submitted that the referral will not achieve the aims of s 37M of the Act and will result in additional, unnecessary costs because: (a) the parties have already incurred substantial costs to date in the lump-sum cost assessment before the Registrar and will incur substantial further costs if required to conduct a further assessment before the referee; (b) the determination of the referee under the referral will not be binding or finally determinative, given the need for the parties to make a further application under r 28.67 of the Federal Court Rules 2011 (Cth) if they wish the Court to adopt the findings of the referee's report or make a decision based on the report; and (c) the referral is unlikely to resolve the principal issue in dispute between the parties as outlined above, given it is an issue of principle of a kind that would ordinarily be regarded as apt for resolution by a judge of the Court, rather than a referee. 15 Swancom submitted that there is no utility in the parties incurring the substantial further costs of the referral as the parties are already in a position to address the question of whether the assessment made by the Registrar was appropriate. Swancom also submitted that it was under the impression that the issue of costs had already been resolved and, as a result, has already paid the net amount payable under the Costs Assessment Orders to the Jazz Corner Hotel parties on 23 July 2024. 16 The difficulty with Swancom's submission is that it fails to recognise that the review is not an appeal, in which the issues to be determined are defined by grounds of appeal, but a de novo hearing. As matters presently stand, the parties have not sought to limit the issues to be determined on the review, and have not proposed any procedures or timetabling orders that would result in the issues being limited. Swancom's submissions contained no proposals in that regard. 17 As stated in the Court's Referee and Assessor Practice Note: … judicial resources are finite and are to be marshalled with discrimination in the public interest. These considerations transcend the specific interests of the parties and involve the administration of justice generally. The Court's resources must be deployed in such a way as to facilitate the efficient disposition of all of the Court's workload. Complex cases, and cases involving the determination of a large number of individual claims, require the parties and those who advise them to consider carefully how the dispute can be resolved efficiently and with a proportionate demand on the Court's time. Additionally, parties need to be aware that: "[t]he proposition that all litigants are entitled to have a judge … decide all issues of fact and law that arise in any litigation, is unsustainable": Super Pty Limited (formerly known as Leda Constructions Pty Limited) v SJP Formwork (Aust) Pty Limited (1992) 29 NSWLR 549 at 558 per Gleeson CJ. 18 In a busy court, it is unrealistic for the parties to expect that judges will set aside a one day hearing to assess, on a de novo basis, the quantum of lump sum costs to be paid between the parties. The assessment of reasonable costs incurred in a proceeding can be readily undertaken by a Registrar of this Court or an experienced costs lawyer. Unfortunately, the parties are not content to abide by the decision of the Registrar in this case and seek a review of that decision. That is, of course, their legal right. But it does not mean that the parties have an entitlement to have all issues of fact and law that arise on the review determined by a judge of this Court. The assessment of reasonable costs involves many factual issues that can be appropriately and efficiently undertaken by an experienced costs lawyer as referee, saving the Court time to undertake other work. After the referee has conducted an inquiry and produced a report, a party may, on application, ask the Court to adopt, vary or reject the report, in whole or in part. Any issues in dispute between the parties at that time will be the subject of judicial determination, but typically on a far narrower basis. 19 It can be accepted that referring the assessment of costs to an experienced costs lawyer will subject the parties to further expense. In the first instance, each of the parties will be required to bear that expense on an equal footing. However, on the final determination of the review, the Court has power to award costs in respect of the review. Depending upon the outcome of the review, the Court has power to require one party or the other to pay the whole of the costs of the referee. The Court will not hesitate to make such an order if it considers that the position adopted by one of the parties, including by making the application for review, was unreasonable, or otherwise to do justice in the proceeding. 20 As noted above, Swancom submitted that it has already paid the net amount payable under the Costs Assessment Orders to the Jazz Corner Hotel parties. There is no legal difficulty associated with that decision. As explained by the Full Court in Bechara v Bates at [3], the orders made by Registrar Segal take effect as an exercise of judicial power by the Court. The effect of the orders is not deferred until the review has been undertaken by the Court, and the orders are not provisional. The orders of Registrar Segal may be altered by the Court on the review, which may result in an additional amount becoming payable by Swancom or an amount becoming payable by the Jazz Corner Hotel parties. If Swancom has any concerns about the ability of the Jazz Corner Hotel parties repaying any amount that has been paid to them under Registrar Segal's orders, Swancom can seek interim relief in that regard. 21 For the foregoing reasons, I do not accept Swancom's submission urging the Court not to make a referral of the question of the quantum of costs to be paid by the parties pursuant to the Costs Orders to an experienced costs lawyer. I consider that such an order should be made consistently with the overarching objective of civil practice and procedure as stated in s 37M of the FCA Act. 22 However, I propose to give the parties a short period of time in which to confer about the possibility of narrowing the issues to be determined by the Court on the review. Given that the review is a de novo hearing, any such narrowing would need to be achieved by the parties reaching agreement on relevant factual matters and, in an appropriate manner, confining the hearing to clearly defined issues. If the parties are able to reach agreement on such matters, they will have liberty to apply to the Court to set aside the orders governing the referral. The Court will determine whether to set aside the orders based on the extent of the agreement the parties have reached about the underlying dispute and the nature and scope of the disputed facts and issues. I will therefore include an order giving the parties liberty to make a joint application to the Court within 21 days, supported by a joint submission and any necessary affidavit, seeking orders to set aside the referral and have the review of the Costs Assessment Orders pursuant to s 35A(5) of the FCA Act conducted on a different basis. I certify that the preceding twenty-two (22) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice O'Bryan. Associate: Dated: 3 September 2024 SCHEDULE OF PARTIES VID 330 of 2019 Respondents Fourth Respondent: ALBERT DADON