FEDERAL COURT OF AUSTRALIA
Firstmac Limited v Zip Co Limited (No 2) [2023] FCA 1074
File number: NSD 1004 of 2019 Judgment of: MARKOVIC J Date of judgment: 13 September 2023 Catchwords: COSTS – application for indemnity costs – principles in respect of Calderbank offers – where applicant did not accept offers by respondents to settle proceedings – whether offers were commensurate with a possible outcome in the proceeding Legislation: Federal Court of Australia Act 1976 (Cth) s 43
Trade Marks Act 1995 (Cth) s 122
Federal Court Rules 2011 (Cth) r 25.01 and r 25.14
Cases cited: Anchorage Capital Partners Pty Limited v ACPA Pty Limited (No 2) [2018] FCAFC 112
Calderbank v Calderbank [1975] 3 All ER 333
Energy Beverages LLC v Cantarella Bros Pty Ltd (No 2) [2022] FCA 394
Firstmac Limited v Zip Co Limited [2023] FCA 540
Merial Inc v Intervet International BV (No 4) (2017) 124 IPR 1; [2017] FCA 223Division: General Division Registry: New South Wales National Practice Area: Intellectual Property Sub-area: Trade Marks Number of paragraphs: 52 Date of hearing: 4 August 2023 Counsel for the Applicant/Cross-Respondent: Mr H Bevan SC and Dr WA Rothnie Solicitor for the Applicant/Cross-Respondent: Spruson & Ferguson Lawyers Counsel for the Respondents/Cross-Claimants: Mr L Merrick Solicitor for the Respondents/Cross-Claimants: King & Wood Mallesons ORDERS
NSD 1004 of 2019 BETWEEN: FIRSTMAC LIMITED
Applicant
AND: ZIP CO LIMITED
First Respondent
ZIPMONEY PAYMENTS PTY LTD
Second Respondent
AND BETWEEN: ZIP CO LIMITED
First Cross-Claimant
ZIPMONEY PAYMENTS PTY LTD
Second Cross-Claimant
AND: FIRSTMAC LIMITED
Cross-Respondent
ORDER MADE BY:
MARKOVIC J
DATE OF ORDER:
13 SEPTEMBER 2023
THE COURT ORDERS THAT:
1.Paragraphs 1 to 3 of the interlocutory application titled “Costs Application” filed by the respondents/cross-claimants on 27 June 2023 (Costs Application) be dismissed.
2.The respondents’/cross-claimants’ costs are to be paid by the applicant/cross-respondent as between party and party.
3.The costs that are the subject of Order 4 of the Orders made on 6 June 2023 and Order 2 above are to be assessed as a lump sum.
4.Within 28 days the respondents/cross-claimants are to file and serve an affidavit constituting a costs summary in accordance with paragraphs 4.10 to 4.12 of the Costs Practice Note (GPN-COSTS).
5.Within a further 28 days, the applicant/cross-respondent is to file and serve any costs response in accordance with paragraphs 4.13 to 4.14 of the Costs Practice Note (GPN-COSTS).
6.In the absence of agreement having been reached within a further 14 days, the matter of an appropriate lump sum figure for the respondents’/cross-claimants’ costs be referred to a Registrar for determination.
7.The respondents/cross-claimants are to pay the applicant’s/cross-respondent’s costs of paragraphs 1 to 3 of the Costs Application.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
REASONS FOR JUDGMENT
MARKOVIC J:
On 29 May 2023 I delivered judgment in this proceeding: see Firstmac Limited v Zip Co Limited [2023] FCA 540 (Firstmac (No 1)). At the time, among other things an…
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- Case
- [2023] FCA 1074
- Decision Date
CaseChat Overview and Summary
The court held that Firstmac's rejections of the offers to settle were not unreasonable. The First Calderbank Offer was made too early in the proceedings, before sufficient evidence was available for Firstmac to assess its chances of success. The Second Calderbank Offer was also made at a time when Firstmac had not had the opportunity to challenge the particulars in the Zip Companies' defence, and given the admissions made by the Zip Companies, it was reasonable for Firstmac to reject the offer. Consequently, the court found that the Zip Companies had not established that it was unreasonable for Firstmac to reject the offers, and therefore, the Zip Companies were not entitled to indemnity costs.
In conclusion, the court dismissed the Zip Companies' application for indemnity costs, ordered that the Zip Companies pay Firstmac's costs of the application, and directed that the Zip Companies' costs of the proceeding be assessed as a lump sum. The court also provided a timeline for the filing of costs summaries and any responses, and outlined the procedure for determining an appropriate lump sum figure if the parties could not agree. The orders reflect the court's determination that the Zip Companies had not demonstrated an entitlement to indemnity costs.
Orders
Orders of the court
1. Paragraphs 1 to 3 of the interlocutory application titled “Costs Application” filed by the respondents/cross-claimants on 27 June 2023 (Costs Application) be dismissed.
2. The respondents’/cross-claimants’ costs are to be paid by the applicant/cross-respondent as between party and party.
3. The costs that are the subject of Order 4 of the Orders made on 6 June 2023 and Order 2 above are to be assessed as a lump sum.
4. Within 28 days the respondents/cross-claimants are to file and serve an affidavit constituting a costs summary in accordance with paragraphs 4.10 to 4.12 of the Costs Practice Note (GPN-COSTS).
5. Within a further 28 days, the applicant/cross-respondent is to file and serve any costs response in accordance with paragraphs 4.13 to 4.14 of the Costs Practice Note (GPN-COSTS).
6. In the absence of agreement having been reached within a further 14 days, the matter of an appropriate lump sum figure for the respondents’/cross-claimants’ costs be referred to a Registrar for determination.
7. The respondents/cross-claimants are to pay the applicant’s/cross-respondent’s costs of paragraphs 1 to 3 of the Costs Application.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
Background
Background to the litigation
Full text does not contain this section.
Evidence
Evidence Before The Court
Full text does not contain this section.
Decision
Reasons for decision
Ratio Decidendi
Legal Principle Established
The trial commenced on 8 March 2022.CONSIDERATION I address each of the Zip Companies’ offers in turn.2019 Offer of Compromise The Zip Companies submitted that it was unreasonable for Firstmac not to accept the 2019 Offer of Compromise because:(1)at the time the 2019 Offer of Compromise was made Firstmac was well placed to assess its position in the case. The Zip Companies had filed their defence to the amended statement of claim and their cross-claim. The defence set out particulars in support of the Zip Companies’ defences under s 122 of the Trade Marks Act 1995 (Cth), the claim of honest concurrent use and the basis upon which the Zip Companies contended that they had legitimate and substantial common law rights in the trade mark ZIP. Insofar as the particulars to the defence are concerned, the Zip Companies contend that they were uncontroversial, were ultimately unchallenged and accurately foreshadowed the factual findings that would lead to the outcome in this case; (2)the 2019 Offer of Compromise was very favourable to Firstmac and constituted a significant compromise. Had Firstmac accepted it, it would be in a much better financial position as it would not have incurred further costs or the Zip Companies’ costs and would have received a payment of $150,000. In addition Firstmac would have retained the registered trade mark in dispute; and (3)as at the date of the 2019 Offer of Compromise Firstmac’s prospects were poor. Firstmac was apprised of the nature and extent of the Zip Companies’ common law rights and Firstmac had elected to sue on a trade mark that was vulnerable to removal for non-use. It was not in dispute that the terms of the 2019 Offer of Compromise were more favourable to Firstmac than the outcome of the proceeding. The question for resolution is whether it was unreasonable for Firstmac not to accept the 2019 Offer of Compromise, given its timing. That assessment is to be made at the time i.e. in October 2019. For the following reasons it was not unreasonable for Firstmac not to accept the 2019 Offer of Compromise at the time. First and notably, the 2019 Offer of Compromise was made only four months after commencement of the proceeding and only two weeks after the Zip Companies had filed their defence. At the time the 2019 Offer of Compromise was made and during its currency no evidence had been filed by either party. That is the 2019 Offer of Compromise was made at a time when Firstmac did not have sufficient information to assess its prospects of success having regard to the defence. Secondly, the Zip Companies had admitted use of the Respondents’ Marks and certain domain names, that the name and trade mark ZIP was substantially identical to the Applicant’s Mark and that the Respondents’ Services were those in respect of which the Applicant’s Mark was registered but disputed substantial identity and deceptive similarity for the Stylised Zip Marks or ZIP Formative Marks and domain names. In these circumstances it was reasonable for Firstmac to reject the 2019 Offer of Compromise and press its claim for infringement particularly given the Zip Companies’ admissions and the fact that part of the assessment of the similarity of marks involves matters of impression upon which minds may differ.