Anakin Pty Ltd v Chatswood BBQ King Pty Ltd

[2008] FCA 1517

FEDERAL COURT OF AUSTRALIA

Anakin Pty Ltd v Chatswood BBQ King Pty Ltd [2008] FCA 1517

ANAKIN PTY LTD, GOLD KINGS (AUSTRALIA) PTY LTD AND MEMPOLL PTY LTD v CHATSWOOD BBQ KING PTY LTD; CHATSWOOD BBQ KING PTY LTD v ANAKIN PTY LTD, GOLD KINGS (AUSTRALIA) PTY LTD AND MEMPOLL PTY LTD

NSD 2357 OF 2006

BRANSON J
10 OCTOBER 2008
SYDNEY

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	NSD 2357 OF 2006

BETWEEN:

AND:

ANAKIN PTY LTD (ABN 42 087 980 130)
First Applicant

GOLD KINGS (AUSTRALIA) PTY LTD (ABN 74 099 226 356)
Second Applicant

MEMPOLL PTY LTD (ACN 053 895 631)
Third Applicant

CHATSWOOD BBQ KING PTY LTD (ABN 95 108 472 573)
Respondent

BETWEEN:

AND:

CHATSWOOD BBQ KING PTY LTD (ABN 95 108 472 573)
Cross-Claimant

ANAKIN PTY LTD (ABN 42 087 980 130)
First Cross-Respondent

GOLD KINGS (AUSTRALIA) PTY LTD (ABN 74 099 226 356)
Second Cross-Respondent

MEMPOLL PTY LTD (ACN 053 895 631)
Third Cross-Respondent

JUDGE:

BRANSON J

DATE OF ORDER:

10 OCTOBER 2008

WHERE MADE:

SYDNEY

THE COURT ORDERS THAT:

1.The respondent, within 21 days of the date of these orders, change its name and change the name of its restaurant at 377 Victoria Road, Chatswood in the State of New South Wales in each case to a name that does not include, or is not, “Chatswood BBQ King”.

2.The respondent, its servants and agents be restrained, with effect from 21 days after the date of these orders, from using the phrase “Chatswood BBQ King” as the name of, or otherwise in connection with, any restaurant operated by it.

3.The respondent, its servants and agents be restrained, with effect from 21 days after the date of these orders, from:

(a)using the phrase “BBQ King” or “BBQ Kings” in connection with any business carried on by the respondent without clearly distinguishing such business from the restaurant business presently carried on by the second applicant in Goulburn Street, Sydney under the name “BBQ King” (“the BBQ King business”);

(b)using any name calculated to lead persons to believe that any business of the respondent is identical to or connected with the BBQ King business; and

(c)representing or holding out any business of the respondent as being identical to or connected with the BBQ King business.

4.        The respondent, within 21 days of the date of these orders:

(a)remove and destroy all signage that identifies its restaurant at 377 Victoria Road, Chatswood in the State of New South Wales as “Chatswood BBQ King”; and

(b)deliver up to the applicants’ solicitors all items including, but not limited to, menus, uniforms, stationery and other promotional materials, on which the phrases “Chatswood BBQ King” or “BBQ King” appear.

5.The respondent pay the second applicant damages in the sum of $20,000 plus the sum of $1,000 in lieu of interest thereon.

6.The Register of Trade Marks maintained under the Trade Marks Act 1995 (Cth) be rectified pursuant to s 88 of the Trade Marks Act 1995 (Cth) by cancelling the registration of registered trade mark No 1027525 for the fancy word mark “BBQ King”.

7.The amended cross-claim be otherwise dismissed.

8.Order 62 rule 36A(1) of the Federal Court Rules not apply to this proceeding.

9.Order 11 of the Orders made on 8 July 2008 be varied by deleting the words “up to and including 26 June 2008 with costs of the motion thereafter being reserved”.

10.Subject to order 9 hereof, and any other costs order previously made in this proceeding, the respondent pay 40% of the applicants’ costs of the proceeding to be taxed if not agreed.

11.All costs orders in favour of the respondent may be offset against the damages and interest to be paid by the respondent and costs orders in favour of the applicant.

AND THE COURT NOTES the undertaking of the applicants given by their counsel that, within 14 days from the date of the above orders, they will cause the agreement dated 1 January 1992 for the sale of the Bar BQ King Restaurant by Bar-B-Q King Restaurant Pty Ltd to the third applicant exhibited to the affidavit sworn by Mr Arthur Yip on 9 July 2008 to be transmitted to the Chief Commissioner of State Revenue together with a complete copy of the reasons for judgment of Branson J in this matter dated 30 September 2008.

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 2357 OF 2006

BETWEEN:

AND:

ANAKIN PTY LTD (ABN 42 087 980 130)
First Applicant

GOLD KINGS (AUSTRALIA) PTY LTD (ABN 74 099 226 356)
Second Applicant

MEMPOLL PTY LTD (ACN 053 895 631)
Third Applicant

CHATSWOOD BBQ KING PTY LTD (ABN 95 108 472 573)
Respondent

BETWEEN:

AND:

CHATSWOOD BBQ KING PTY LTD (ABN 95 108 472 573)
Cross-Claimant

ANAKIN PTY LTD (ABN 42 087 980 130)
First Cross-Respondent

GOLD KINGS (AUSTRALIA) PTY LTD (ABN 74 099 226 356)
Second Cross-Respondent

MEMPOLL PTY LTD (ACN 053 895 631)
Third Cross-Respondent

JUDGE:

BRANSON J

DATE:

10 OCTOBER 2008

PLACE:

SYDNEY

REASONS FOR JUDGMENT

INTRODUCTION

1. On 30 September 2008 I published reasons for judgment in this matter and made the following orders:

   1.The proceeding be stood over to a date to be fixed for the purpose of the making of orders giving effect to these reasons, including orders as to costs.

   2.The parties provide to the Associate to Justice Branson, by 3 October 2008, an agreed minute of the orders to be made (including the orders to be made as to costs) and if agreement has not by then been reached, the minutes of orders for which they will respectively contend and brief outlines of submissions in support of the orders.

2. On the same day I varied the reference to “3 October 2008” in order 2 above to “12:00 noon on 8 October 2008”.

3. The parties did not reach agreement as to the orders to be made by 12:00 noon on 8 October 2008.  Nor have they subsequently advised the Court that they have reached agreement.

4. I have today made the following orders:

   1.The respondent, within 21 days of the date of these orders, change its name and change the name of its restaurant at 377 Victoria Road, Chatswood in the State of New South Wales in each case to a name that does not include, or is not, “Chatswood BBQ King”.

   2.The respondent, its servants and agents be restrained, with effect from 21 days after the date of these orders, from using the phrase “Chatswood BBQ King” as the name of, or otherwise in connection with, any restaurant operated by it.

   3.The respondent, its servants and agents be restrained, with effect from 21 days after the date of these orders, from:

   (a)using the phrase “BBQ King” or “BBQ Kings” in connection with any business carried on by the respondent without clearly distinguishing such business from the restaurant business presently carried on by the second applicant in Goulburn Street, Sydney under the name “BBQ King” (“the BBQ King business”);

   (b)using any name calculated to lead persons to believe that any business of the respondent is identical to or connected with the BBQ King business; and

   (c)representing or holding out any business of the respondent as being identical to or connected with the BBQ King business.

   4.        The respondent, within 21 days of the date of these orders:

   (a)remove and destroy all signage that identifies its restaurant at 377 Victoria Road, Chatswood in the State of New South Wales as “Chatswood BBQ King”; and

   (b)deliver up to the applicants’ solicitors all items including, but not limited to, menus, uniforms, stationery and other promotional materials, on which the phrases “Chatswood BBQ King” or “BBQ King” appear.

   5.The respondent pay the second applicant damages in the sum of $20,000 plus the sum of $1,000 in lieu of interest thereon.

   6.The Register of Trade Marks maintained under the Trade Marks Act 1995 (Cth) be rectified pursuant to s 88 of the Trade Marks Act 1995 (Cth) by cancelling the registration of registered trade mark No 1027525 for the fancy word mark “BBQ King”.

   7.The amended cross-claim be otherwise dismissed.

   8.Order 62 rule 36A(1) of the Federal Court Rules not apply to this proceeding.

   9.Order 11 of the Orders made on 8 July 2008 be varied by deleting the words “up to and including 26 June 2008 with costs of the motion thereafter being reserved”.

   10Subject to order 9 hereof, and any other costs order previously made in this proceeding, the respondent pay 40% of the applicants’ costs of the proceeding to be taxed if not agreed.

   11.All costs orders in favour of the respondent may be offset against the damages and interest to be paid by the respondent and costs orders in favour of the applicant.

   AND THE COURT NOTES the undertaking of the applicants given by their counsel  that, within 14 days from the date of the above orders, they will cause the agreement dated 1 January 1992 for the sale of the Bar BQ King Restaurant by Bar-B-Q King Restaurant Pty Ltd to the third applicant exhibited to the affidavit sworn by Mr Arthur Yip on 9 July 2008 to be transmitted to the Chief Commissioner of State Revenue together with a complete copy of the reasons for judgment of Branson J in this matter dated 30 September 2008.

5. These are my reasons for making the above orders as to costs.

6. I have declined to accede to the applicants’ request that the parties be given the opportunity to make oral submissions on the question of costs.  In my judgment the parties have had an adequate opportunity to consider, and make written submissions concerning, the issue of costs, including the relevance to that issue of all offers of compromise made during the course of this proceeding.  The relatively detailed written submissions received by me on the question of costs provide support for this judgment.  Having regard to the regrettably large amount of court time that this matter has already occupied, I do not consider that the limited additional assistance that a hearing on the issue of costs would provide the court warrants the additional costs that would necessarily be incurred by the parties.

7. I reject the respondent’s submission that O 62 r 36A of the Federal Court Rules should apply to this case.  That order relevantly provides as follows:

   (1)Where a party is awarded judgment for less than $100,000 on a claim (not including a cross claim) for a money sum or damages any costs ordered to be paid, including disbursements, will be reduced by one third of the amount otherwise allowable under this Order unless the Court or a Judge otherwise orders.

   (2)If the Court or a Judge is of the opinion that a proceeding (including a cross claim for a money sum or damages) brought in this Court could more suitably have been brought in another court or in a tribunal and so declares, then any costs to be paid, including disbursements, will be reduced by one third of the amount otherwise allowable under this Order.

   ….

8. The present proceeding was not simply a claim for a money sum.  As my earlier reasons for judgment and the orders made today make plain, it involved many additional issues.  On the assumption that it is necessary to do so, I have considered it appropriate to order that O 62 r 36A(1) not apply.  Having regard to the nature, number and relative complexity of the issues raised, I have not been persuaded that it would be appropriate to declare that the proceeding could more suitably have been brought in another court: O 62 r 36A(2).

9. Both the applicants and the respondent submitted that they were entitled to have their costs, or a large part of them, paid by the other on an indemnity basis.  They placed reliance on essentially the same informal offers of settlement.  It is therefore necessary to give consideration to those offers.

10. This proceeding was instituted on 1 December 2006 following the sending of one letter of demand by Anakin Pty Ltd alleging trade mark infringement to which the respondent did not reply.  The applicants were Anakin Pty Ltd (“Anakin”) and Gold Kings (Australia) Pty Ltd (“Gold Kings”) (together “the original applicants”).  By a letter dated 22 January 2007 the respondent offered to settle the matter on the following basis:

    (a)the matter be dismissed with no order as to costs; and

    (b)the respondent amend its name by removing the “King” from its mark and from its business name and incorporation name.

11. Australian Business Lawyers, the solicitors for the applicants, responded to the letter of 22 January 2007 by a letter dated 5 February 2007.  The letter purported to be written on behalf of Anakin only but, as this proceeding had already been instituted in the name of the original applicants, I regard that as a slip.  By that letter the original applicants rejected the respondent’s above offer.  Having regard to the first term of the respondent’s offer I do not conclude that they acted unreasonably in doing so.  As my reasons for judgment published on 30 September 2008 reveal, I am persuaded that the respondent chose the name of its restaurant with the intent of benefiting from the reputation of the BBQ King restaurant.  By doing so, and then failing to respond to Anakin’s letter of demand, it provoked the institution of legal proceedings against it.  I place little weight in this regard on the fact that Anakin has not established an entitlement to relief.  Gold Kings, a related company, has done so.

12. The letter of 5 February 2007 offered to discontinue the proceeding on the conditions that:

    1.the respondent “permanently and for all time” amend its name and marks by removing the word “King” and all similar words or images from:

    (a)its marks;

    (b)its names;

    (c)its business name;

    (d)its corporate name;

    (e)its premises; and

    (f)any goods associated with it or the goods of persons associated with it.

    2.the respondent publish prominent advertisements, to the satisfaction of “our client”, in either the Sydney Morning Herald or the Daily Telegraph, as nominated by “our client”, stating that the respondent had no connection or business affiliation with “our client”;

    3.the respondent pay “our client’s” legal fees in the matter; and

    4.the respondent, and the respondent’s directors, execute a deed of settlement recording the above conditions.

    The offer was expressed to be open until the close of business the next day.  The letter noted that “our client’s legal fees to date are approximately $15,000.00 and continue to rise”.  Having regard in particular to conditions 2 and 3 of the offer, the time allowed for its acceptance was plainly unreasonable.  The respondent could not reasonably be expected to assume obligations the precise extent of which it did not know.

13. In a letter dated 7 February 2007 the solicitors for the respondent stated:

    2.We note that our client is agreeable in principle to your client’s offer dated 5 February 2007 subject to a number of reservations including reservations as to the advertisement referred to at numbered paragraph 2 of your settlement proposal, your client’s legal fees referred to at numbered paragraph 3 of your settlement proposal and the terms of Deed of Settlement referred to at numbered paragraph 4 of your settlement proposal.

    3.We note that you will provide a schedule of your clients’ legal fees and a copy of the proposed advertisement for our client’s consideration.

    4.Subject to our client’s review of the schedule of your clients’ legal fees and proposed advertisement, we understand that a proposed deed of settlement will be forwarded to our office.

    5.We respectfully emphasise that any settlement agreement is subject to contract.

    6.We look forward to the early receipt of the schedule of your clients’ legal fees and proposed advertisement. (emphasis in original)

14. It is apparent that solicitors for the respondent also wrote to the applicants’ solicitors on 13 February 2007 but neither party has placed reliance on that letter.

15. On 22 February 2007 the applicants’ solicitors wrote to the respondent’s solicitors in the following terms:

    Our client withdraws all previous offers.

    We attach a Deed of Settlement (Deed).  Our client offers to settle the above matter on the terms of the attached Deed.  This offer is open until the close of business on Wednesday, 28 February 2007.  Our client reserves its right to withdraw the offer at any time without notice.

    We also attach a Schedule of Costs for your client’s information.  Our client instructs us that it is only willing to settle on the terms of the Deed on the condition that the parties swiftly reach agreement and execute the Deed.  If our client continues to incur legal fees, in a lengthy negotiation over the terms of the Deed or if further appearances in Court are required, then the offer will be withdrawn and the Settlement Sum contained in the Deed will need to be increased.

    We await your response. (emphases in original)

16. The deed of settlement sent with the letter of 22 February 2007 was drawn between the original applicants, three individuals described as directors of the respondent, and the respondent.  As well as providing for the respondent to refrain from conduct characterised as infringing the Trade Mark, the deed provided for:

    (a)the payment to the original applicants of either $50,000 or $20,000 depending on the speed of the payment;

    (b)the publication in the Sydney Morning Herald and the Sing Tao Daily of a public notice which not only disassociated the Chatswood BBQ King restaurant from the BBQ King Restaurant  in Goulburn Street but also stated that the “directors, shareholders and operators of the restaurant business formerly trading as the Chatswood BBQ King sincerely apologised to the owners and operators of the BBQ King restaurant and BBQ King Express take away stores for any confusion caused to their customers or potential customers” and “sincerely hope that their actions have not caused any damage to the excellent reputation of BBQ King”;

    (c)the display of the above public notice prominently at the respondent’s restaurant;

    (d)the giving by each of the persons described as directors of the respondent of undertaking and representations that he or she would not, amongst other things, “take any step intended, or likely to cause, detriment or loss to” the business of Anakin or Gold King; and

    (e)the assumption by the three persons described as directors of the respondent of joint and several liability with the respondent for the legal costs of the original applicants on a full indemnity basis including any legal costs incurred by them as a result of non-performance of the deed.

17. I observe that this deed sought to achieve appreciably more from the applicants’ point of view than mere settlement of this proceeding.  Moreover, the claim for damages well exceeded that which I have found that they, or any of them, had suffered at that time.

18. By a letter dated 2 March 2007 the respondent’s solicitors advised the applicants’ solicitors that the deed was not acceptable.  The letter offered to resolve the matter on the terms outlined in the letter of 22 January 2007 plus an advertisement (without apology) making clear that the respondent had no connection or association with the original applicants.  No offer to pay any amount by way of legal costs was made.  This offer was expressed to be open for acceptance, in writing, on or before 10:00 am on 9 March 2007.  It was not accepted.

19. The respondent is not open to be criticised, in my view, for not accepting the offer made by the original applicants by the letter dated 5 February 2007 ahead of it lapsing or being withdrawn.  In addition to the matters identified above, I am not satisfied that the respondent received details of the original applicants’ legal fees or the proposed advertisement before the offer either lapsed on 7 February 2007 or was withdrawn on 22 February 2007.  As indicated above, it was reasonable for the respondent to require this information before it accepted the offer.  Nor do I consider that the respondent is to be criticised for declining to accept the offer contained in the letter of 22 February 2007.  The proposed deed of settlement called for the assumption by the respondent, and persons not parties to the proceeding, of obligations of uncertain extent.  It also called for persons not parties to the proceeding to, in effect, indemnify the original applicants in respect of obligations, including significant financial obligations, to be assumed by the respondent.  It further sought the publication of a notice in terms that went beyond what was necessary to remedy the harm caused to the applicants, or any of them, by reason of the respondent’s conduct.

1. On the other hand, for the reasons given above, I do not criticise the original applicants for not accepting the respondent’s settlement offer of 2 March 2007 as it did not provide for the payment of any of the original applicants’ legal costs.

2. Nonetheless, the parties are open to criticism for failing to resolve their differences in or about early 2007.  Disinterested assessment of the correspondence between their respective solicitors suggests that a reasonable compromise was well within their reach at this time.  It is a matter of serious regret that in the circumstances the parties, with the assistance of their respective legal representatives, were not able to resolve their disputes well before this matter came to trial.

3. I conclude that no party has established an entitlement to be paid its costs, or any part of them, on an indemnity basis.

4. The applicants submitted that if the Court were not minded to make an order in its favour for indemnity costs, the respondent should be ordered to pay 80% of its costs.  It argued that the Court found substantially in the applicants’ favour.

5. The respondent, on the other hand, submitted that as Anakin failed on every ground of its application and the respondent obtained an order for rectification of the Register, Anakin should be ordered to pay the respondent’s costs including its costs of the cross-claim.  I do not consider it appropriate to consider the separate position of the individual applicants in this way.  Subject to the late joinder of Mempoll Pty Ltd (“Mempoll”), they ran a single case using the same legal team.  Nonetheless, I do consider it appropriate to take into account generally that the applicants did not establish any entitlements to relief on behalf of Anakin.

6. On 8 July 2008, prior to Mempoll being joined as a party, I made orders which included the following costs orders:

   10.      The Applicants pay the Respondent’s costs thrown away by virtue of:

   (a)       the amendments to the Application and Statement of Claim;
              (b)       the adjournment on 9 March 2008;

   such costs to be taxed and paid on a party party basis.

   11.The Applicants pay the Respondent’s costs of and incidental to the Notice of Motion filed on 19 June 2008 up to and including 26 June 2008 with costs of the motion thereafter being reserved.

7. No reason has been shown for disturbing the above orders – except, in my view, to remove the limitations on order 11.  Nothing occurred after 26 June 2008 which suggested that it would not be appropriate for the respondents to have all of their costs of and incidental to the notice of motion filed on 19 June 2008.  These costs should, I consider, include the cost of the additional day of hearing necessitated by the re-opening of the applicants’ case.  Had the applicants paid greater attention before the commencement of the hearing to the issues of ownership of the Trade Mark and ownership of the BBQ King restaurant business this additional hearing day would not have been required.

8. On a realistic assessment of the outcome of this proceeding, the applicants have had a greater measure of success than the respondent – notwithstanding that the respondent has obtained an order by its cross-claim for the cancellation of the Trade Mark. 

9. The issue on which the applicants’ defence of the cross-claim failed was that of the ownership of the Trade Mark.  The relationship between the applicants, and their respective involvement with the BBQ King restaurant and the goodwill associated with it, were also of importance on the applicants’ claims.  In the circumstances I do not consider it appropriate to make separate orders with respect to the costs of the applicants’ claims and the costs of the respondent’s cross-claim.  The total costs of the proceeding, except to the extent that I have already dealt with them, should be considered together. 

10. In my view, having regard to the matters identified above, and without prejudice to other costs orders made in the proceeding, it is appropriate to order that the respondent pay 40% of the applicants’ costs of the proceeding.  As, subject to other orders, the respondent will also be obliged to bear its own legal costs, this seems to me to result in an appropriate costs outcome in all of the circumstances.  It will be ordered that the costs orders in favour of the respondent may be offset against the damages and interests to be paid by it and the costs orders in favour of the applicants.

I certify that the preceding twenty-nine (29) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Branson.

Associate:

Dated:        10 October 2008

Counsel for the First and Second Applicants and First and Second Cross-Respondents:	Ms J Baird with Ms M Daniels
Solicitor for the First and Second Applicants and First and Second Cross-Respondents:	Australian Business Lawyers
Counsel for the Respondent and Cross-Claimant:	Ms S T Chrysanthou
Counsel for the Respondent and Cross-Claimant on the Notice of Motion heard 18 June 2008:	Mr A Leopold SC with Ms S T Chrysanthou
Solicitor for the Respondent and Cross-Claimant:	Rutland’s Law Firm

Date of Hearing:	17-19 March, 18 June, 8 and 23 July and 30 September 2008
Date of Judgment:	10 October 2008