Ahmad Tea Limited v Ashrafinia
[2024] FedCFamC2G 388
•12 March 2024
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 2)
Ahmad Tea Limited v Ashrafinia [2024] FedCFamC2G 388
File number(s): SYG 958 of 2021 Judgment of: JUDGE CAMERON Date of judgment: 12 March 2024 Catchwords: PRACTICE AND PROCEDURE – Costs – Respondents’ application for costs following discontinuance – Relevant considerations. Legislation: Australian Consumer Law
Federal Circuit and Family Court of Australia (Division 2) (General Federal Law Rules) 2021 (Cth), rr 13.02, 22.02
Federal Court Rules 2011 (Cth), r 26.12
Cases cited: Agha Juice Sydney Road Pty Ltd v Musawi [2023] FedCFamC2G 270 Division: Division 2 General Federal Law Number of paragraphs: 22 Date of hearing: 12 March 2024 Place: Sydney Counsel for the Applicants: Mr L. James Solicitor for the Applicants: One Group Legal Counsel for the Respondents: Mr H. Pararajasingham Solicitor for the Respondents: Longton Legal ORDERS
SYG 958 of 2021 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)
BETWEEN: AHMAD TEA LIMITED
First Applicant
HECHAM GROUP PTY LTD TRADING AS HECHAM COFFEE AND NUTS ROASTER
Second Applicant
AND: AZADEH ASHRAFINIA
First Respondent
PARVANEH PTY LTD
Second Respondent
ORDER MADE BY:
JUDGE CAMERON
DATE OF ORDER:
12 MARCH 2024
THE COURT ORDERS THAT:
1.The respondents’ application for costs be dismissed.
2.The respondents pay the applicants’ costs of and incidental to the application in a proceeding filed 30 November 2023 as agreed or assessed.
3.Any application for assessment of costs be filed and served no later than 12 April 2024.
Note: The form of the order is subject to the entry in the Court’s records.
Note: The Court may vary or set aside a judgment or order to remedy minor typographical or grammatical errors (r 17.05(2)(g) Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 17.05 Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth).
REASONS FOR JUDGMENT
JUDGE CAMERON
INTRODUCTION
Ahmad Tea Limited and Hecham Group Pty Ltd trading as Hecham Coffee & Nuts Roaster, (Applicants) were, respectively, the global producer and the Australian distributor of tea blends promoted under the name “Ahmad Tea” (Ahmad Tea). The applicants commenced this proceeding alleging, inter alia, that the first respondent, Ms Ashrafinia, had made various misleading and deceptive representations in contravention of the Australian Consumer Law in connection with her sale of Ahmad Tea on her own website and had infringed the applicants’ copyright in tea-related photographs by reproducing them on her website.
The originating application sought relief including declarations of contravention, restraint of the first respondent, damages, interests and costs. An amended statement of claim filed on 2 February 2023 introduced Parvaneh Pty Ltd to the proceeding. On 2 November 2023, the applicants filed a notice of discontinuance. On 30 November 2023, the respondents filed an application in a proceeding seeking orders that the applicants pay their costs of the proceeding on an indemnity basis, pursuant to rr.13.02 and 22.02 of the Federal Circuit and Family Court of Australia (Division 2) (General Federal Law Rules) 2021 (Cth) (Rules). These reasons concern that application for costs.
PROCEDURAL HISTORY
The applicants commenced this proceeding on 31 May 2021 and on 31 August 2021 Judge Baird made orders referring this matter to mediation. The mediation was conducted by Registrar Cho on 9 November 2021. At a directions hearing on 6 May 2022, the applicants foreshadowed their intention to discontinue the proceeding. The applicants indicated that this was because, following mediation, Ms Ashrafinia had changed the photographs and text displayed on her website such that some of the applicant’s desired outcomes of the proceeding had been achieved.
Directions hearing on 6 May 2022
On 6 May 2022, the Court granted Ms Ashrafinia leave to file an application for costs upon discontinuance of the proceeding but no notice of discontinuance was filed and so the matter was listed for further directions on 8 July 2022.
Directions hearing on 8 July 2022
At a directions hearing on 8 July 2022, the applicants indicated that they no longer intended to discontinue the proceeding on the basis that new infringing conduct had occurred. The applicants sought and were granted leave to file by 5 August 2022 an application in a proceeding seeking leave to file an amended application and statement of claim. The application in a proceeding was not filed in time and the matter was listed for further directions on 2 September 2022.
Directions hearing on 2 September 2022
On 1 September 2022, the applicants lodged an application in a proceeding concerning a further proposed amended application. At the directions hearing on 2 September 2022, the matter was adjourned to 21 October 2022 so the parties could reach agreement on the proposed amendments of the statement of claim.
Orders of 9 December 2022
On 9 December 2022 the Court relevantly made the following orders by consent:
1.Leave be granted for the applicants to file and serve their amended statement of claim by 16 December 2022.
2.The first applicant pay the costs of the respondent thrown away by reason of the amendment as agreed or as assessed.
3.The respondent file and serve any defence to the amended statement of claim and file and serve any cross-claim by 1 February 2023.
…
The respondents did not file a crossclaim.
Amended Pleadings
On 2 February 2023, the applicants filed their amended statement of claim joining the second respondent, Parvaneh Pty Ltd. The amended statement of claim alleged the respondents had made the following representations:
(a)an “association representation”, by way of offering for sale and in fact selling the tea through the website, displaying images of packages of the tea on the website and using words and phrases such as “our range, “our teas”, “our expertly crafted blends” and “our tea masters” on the website; and
(b)a “website representation” by reason of the actions mentioned above, and that in doing so Ms Ashrafinia had represented that the website enjoyed the sponsorship of, affiliation with or endorsement by either of the applicants.
On 28 July 2023, the respondents filed their defence to the amended statement of claim.
Application for security for costs
At a directions hearing on 10 August 2023, the Court made timetabling orders providing for the respondents to file an application for security for costs and for the filing of both parties’ evidence. On 31 August 2023, the respondents filed an application for security for costs seeking security in the sum of $179,900. It was listed before Registrar O’Connor on 3 November 2023.
Discontinuance
On 2 November 2023, the applicants filed a notice of discontinuance.
LEGISLATION
Rule 13.02 of the Rules relevantly provides:
Costs
(1)If a party discontinues an application, or part of an application, another party to the proceeding may apply for costs.
(2)Unless the Court or a Registrar directs otherwise, an application for costs must be made within 28 days after service on the party of the notice of discontinuance.
(3)If an order for costs is made against a party and the party brings against the party to whom the costs are payable a further proceeding on the same or substantially the same matter, the Court may stay the further proceeding until the costs are paid.
Rule 22.02 of the Rules relevantly provides:
Order for costs
(1)An application for an order for costs may be made:
(a) at any stage in a proceeding; or
(b) within 28 days after a final decree or order is made; or
(c) within any further time allowed by the Court.
(2)In making an order for costs in a proceeding, the Court may:
(a) set the amount of the costs; or
(b) set the method by which the costs are to be calculated; or
(c) refer the costs for taxation under Part 40 of the Federal Court Rules; or
(d) set a time for payment of the costs, which may be before the proceeding is concluded.
CONSIDERATION
The parties filed outlines of written submissions and addressed the Court. A number of affidavits were filed and documents introduced into evidence.
It is necessary at this point to observe that the Rules of this Court do not include an analogue of r.26.12(7) of the Federal Court Rules 2011 (Cth), which provides:
Unless the terms of a consent or an order of the Court provide otherwise, a party who files a notice of discontinuance under subrule (2) is liable to pay the costs of each other party to the proceeding in relation to the claim, or part of the claim, that is discontinued.
That being so, the position in this Court is governed by considerations identified in the cases. Judge Manousaridis discussed the relevant authorities in Agha Juice Sydney Road Pty Ltd v Musawi [2023] FedCFamC2G 270. At [16], his Honour distilled the principles to be derived from the authorities when considering an application for costs in circumstances where the Court has not determined the merits of a case. His Honour said:
(a) The Court should not try a hypothetical action between the parties.
(b)In some cases, however, the Court may be able to conclude that one of the parties acted so unreasonably that the other party should obtain the costs of the action.
(c)In other cases the Court may feel confident that, although both parties have acted reasonably, one party was almost certain to have succeeded if the matter had been fully tried.
(d)Where the proceeding has been terminated in a way that leads to one side being clearly successful, there is then a basis on which the Court can exercise its discretion in favour of the successful party.
In this case, there has been no determination on the merits of the proceeding. The arguments today have traversed the cases and its history in some detail. I am willing to accept that the parties’ positions were not static and that the expressions of the applicant’s claims and the respondent’s defence to those claims evolved over time, as is often the case.
The respondent’s position is that the applicants acted unreasonably by tantalising her from time to time with intimations of discontinuance which did not come to fruition. It was contended that this suggested a lack of commitment to the litigation and, in essence, a pointless prolongation of it until it was ultimately put to rest by the notice of discontinuance filed on 2 November 2023. However, the summary of the proceedings in this Court set out earlier in these reasons and the evidence to which I have been taken satisfy me that the proceeding was a serious one and that the applicants remained concerned about the respondents’ conduct until matters which had originally been denied by the respondents were admitted in the defence to the amended statement of claim which they filed on 28 July 2023.
The evidence indicates that following those admissions, the applicants offered:
(a)on 20 September 2023, a discontinuance and payment to the respondents of $30,000 for their costs; and
(b)on 2 November 2023, to dismiss the proceeding and pay the respondents’ costs as agreed or assessed from 28 July 2023.
I am not persuaded that the earlier suggestions of discontinuance were manifestations of a lack of commitment to the proceeding, that the proceeding was unreasonably prolonged by the applicants or that unfulfilled intimations of discontinuance should sound in an order for costs.
I make no comment on the reasonableness of the offers which followed the defence to the amended statement of claim, other than to observe that the respondents’ quantification of their costs as at November 2023 appeared to contain costs of material size which would not be allowable on a party and party-based assessment or taxation. I also note that the discontinuance of the proceeding occurred just as the security for costs application was to be heard but I place no significance on that beyond an inference that the applicant was looking to settle the proceeding on a basis that was not disadvantageous to the respondents and did not want to spend any further money on this litigation.
I am not persuaded that the applicants’ conduct was unreasonable or justifies an order that they pay the respondents’ costs.
Costs might also be ordered because one party has clearly been successful in the proceeding or would have been if the matter had run to a hearing. I can see no basis for finding that the respondents would have been successful in the proceeding. Indeed, the chronology of events, rehearsed by the parties today rather suggests the reverse.
CONCLUSION
The respondents have not demonstrated an entitlement to costs and the application for costs will be dismissed.
I certify that the preceding twenty-two (22) numbered paragraphs are a true copy of the Reasons for Judgment of Judge Cameron. Associate:
Dated: 30 April 2024
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