Indoor Holdings Pty Ltd v Bennett (No 2) - [2010] WASC 307

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS

CITATION: INDOOR HOLDINGS PTY LTD -v- BENNETT [No 2] [2010] WASC 307

CORAM: LE MIERE J

HEARD: 18 OCTOBER 2010

DELIVERED : 2 NOVEMBER 2010

FILE NO/S: CIV 1664 of 2006

BETWEEN: INDOOR HOLDINGS PTY LTD
Plaintiff
AND
PETA JANE BENNETT
Defendant

Catchwords:

Costs - Action discontinued - No hearing on the merits - Interlocutory relief - Whether parties acted reasonably in commencing and defending the proceedings - Turns on own facts

Costs - Application for leave to discontinue the action - Costs to follow the event

Costs - Application to dismiss for want of prosecution - Costs to follow the event

Interlocutory relief - Interlocutory injunction - Usual undertaking as to damages - Action discontinued - No determination on the merits - Application for an inquiry as to damages - Turns on own facts

Legislation:

Nil

Result:

No order as to costs of the action
Defendant to pay plaintiff's costs of the plaintiff's application for leave to discontinue
Defendant to pay plaintiff's costs of the defendant's application to dismiss for want of prosecution
Defendant's application for inquiry as to damages dismissed

Category: B

Representation:

Counsel:

Plaintiff: Ms P E Cahill SC
Defendant: Mr T Galic

Solicitors:

Plaintiff: Cooper Legal Pty Ltd
Defendant: Galic & Co

Case(s) referred to in judgment(s):

Air Express Ltd v Ansett Transport Industries (Operations) Pty Ltd [1981] HCA 75; (1981) 146 CLR 249
Australian Securities Commission v Aust‑Home Investments Ltd (1993) 44 FCR 194; (1993) 11 ACSR 136
Bennett v Indoor Holdings Pty Ltd [2006] WASCA 265
Graham v Campbell (1878) 7 Ch D 490
J T Stratford & Son Ltd v Lindley (No 2) (1969) 1 WLR 1547; (1969) 3 All ER 1122
Metropolitan Properties Pty Limited v Caltex Petroleum Pty Limited [1999] WASC 153
Newcomen v Coulson (1878) 7 Ch D 764
One.tel Ltd v Deputy Commissioner of Taxation [2000] FCA 270; (2000) 101 FCR 548
Re Minister for Immigration and Ethnic Affairs; Ex parte Lai Qin [1997] HCA 6; (1997) 186 CLR 622
Ushers Brewery Ltd v P S King & Co (Finance) Ltd (1972) 1 Ch 148

LE MIERE J: The plaintiff carried on business providing services to retail pharmacies under or by reference to the name 'Pharmacy 777'. Ian Charles Hamilton and Donna Lorraine Pearson licensed the defendant to use the name 'Pharmacy 777 Mandurah'. In 2006 the defendant started to operate a pharmacy in Dower Street, Mandurah under the name 'Pharmacy 777 Mandurah Car Park Chemist'. The plaintiff commenced this action to restrain the defendant from using the name 'Pharmacy 777' or any similar name and for damages for loss and damage it claims to have suffered by reason of the defendant's conduct.
On 6 July 2006, upon the plaintiff giving the usual undertaking as to damages, the court made an order for an interlocutory injunction restraining the defendant from using the name 'Pharmacy 777' or any similar name. The defendant's appeal to the…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2010] WASC 307
Decision Date: 2 NOVEMBER 2010

CaseChat Overview and Summary

Indoor Holdings Pty Ltd, a pharmacy business, brought proceedings against Bennett, seeking injunctive relief and damages for the use of the name 'Pharmacy 777 Mandurah'. The case was before the Federal Court of Australia, where the primary issue was whether Bennett was entitled to use the aforementioned name for her pharmacy business. The dispute arose from a claim by Indoor Holdings that Bennett's use of the name infringed on their trademark and business interests. The case involved an interlocutory injunction and an application for costs, given the action was discontinued without a hearing on the merits. The court had to determine whether the parties acted reasonably in initiating and defending the proceedings, and if both parties continued to act reasonably until the litigation became futile.

The central legal issue was the reasonableness of the parties' actions in both commencing and defending the proceedings, especially in light of the action being discontinued before a final determination. The court had to apply the principles established in Re Minister for Immigration and Ethnic Affairs; Ex parte Lai Qin and One.tel Ltd v Deputy Commissioner of Taxation. These principles guide the court in determining whether both parties acted reasonably and whether the litigation was pursued until it became futile. The case hinged on whether the change in circumstances, specifically Bennett entering into a partnership with Mr Hamilton, rendered the continuation of the litigation futile and whether both parties acted reasonably up to that point.

The Federal Court, after considering the arguments, found that both parties acted reasonably in initiating and defending the proceedings. The court noted that Indoor Holdings sought to discontinue the action because Bennett had entered into a partnership with Mr Hamilton, thereby altering the circumstances of the case. The court accepted that Indoor Holdings no longer needed to restrain Bennett from operating the pharmacy under the name 'Pharmacy 777 Mandurah'. The court concluded that the action had become futile and that discontinuing it was reasonable. Therefore, the court dismissed Indoor Holdings' application for an inquiry into damages and ordered the action be discontinued without any costs order.

In accordance with the findings, the court made an order that the action be discontinued with no order as to costs. The court reasoned that both parties had acted reasonably in the litigation, and the action had become futile due to the change in circumstances. The order reflects the court's view that neither party should bear the costs of the discontinued litigation.

Orders

Orders of the court

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Background

Background to the litigation

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Evidence

Evidence Before The Court

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Decision

Reasons for decision

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Ratio Decidendi

Legal Principle Established

McHugh J in Re Minister for Immigration and Ethnic Affairs; Ex parte Lai Qin [1997] HCA 6; (1997) 186 CLR 622, considered the relevant principles for determining costs orders where there has been no hearing on the merits of the case. His Honour stated:The court cannot try a hypothetical action between the parties. To do so would burden the parties with the costs of a litigation action which by settlement or extra-curial action they had avoided. …If it appears that both parties had acted reasonably in commencing and defending the proceedings and the conduct of the parties continued to be reasonable until the litigation was settled or its further prosecution became futile, the proper exercise of the cost discretion will usually mean that the court will make no order as to the cost of the proceedings (624 ‑ 625). In One.tel Ltd v Deputy Commissioner of Taxation [2000] FCA 270; (2000) 101 FCR 548, Burchett J said:In my opinion, it is important to draw a distinction between cases in which one party, after litigating for some time, effectively surrenders to the other, and cases where some supervening event or settlement so removes or modifies the subject of the dispute that, although it could not be said that one side has simply won, no issue remains between the parties except that of costs. In the former type of case, there will commonly be lacking any basis for an exercise of the court's discretion otherwise than by an award of costs to the successful party. It is the latter type of case which more often creates problems, since there may be difficulty in discerning a clear reason why one party, rather than the other, should bear the costs [6]. The plaintiff submits that both parties acted reasonably in commencing and defending the proceedings and the conduct of the parties continued to be reasonable until the further prosecution of the litigation became futile and, on the plaintiff's application, the court ordered that the action be discontinued. The plaintiff says that it sought leave to discontinue the action because in or about June 2009 the defendant commenced trading in partnership with Mr Hamilton at a pharmacy in Mandurah trading as 'Pharmacy 777 Mandurah'. The plaintiff did not, and never had, disputed that Mr Hamilton is licensed to use the business name 'Pharmacy 777 Mandurah' to conduct a pharmacy business within the boundaries of the City of Mandurah. Accordingly, the plaintiff no longer required or desired to restrain the defendant from using the name 'Pharmacy 777 Mandurah'. The plaintiff apprehended that the cost of proving damages incurred in the short period before the interlocutory injunction was obtained could well exceed the likely amount of damages to be awarded. As I have said, on 24 May 2010 I ordered that the action be discontinued. In stating my reasons for making that order I said:The basis on which the plaintiff brought its application that the action be discontinued with no order as to costs was as follows. In broad terms, the plaintiff said that since the action had been commenced the defendant had entered into a partnership with Mr Hamilton to operate the relevant pharmacy. The plaintiff accepted that Mr Hamilton was entitled to operate the pharmacy under the name 'Pharmacy 777', whereas it did not accept that the defendant was entitled to operate the pharmacy under that name in her own right.Accordingly, the plaintiff considered that the circumstances had changed, which made the continuation of the action futile. The plaintiff said that the continuation of the action was futile in that the action sought in effect to prevent the defendant from operating the pharmacy on her own under the name 'Pharmacy 777', whereas the defendant no longer was seeking to do that and had entered into a partnership with Mr Hamilton to operate the pharmacy in partnership with him under the name 'Pharmacy 777'.A plaintiff should not be required to continue with the action if it does not wish to do so. The defendant does not seek to make the plaintiff continue the action against its wishes and indeed, seeks to have the action brought to an end in any event. In my view, given the history of the matter, the appropriate order is that the plaintiff have leave to discontinue and that the action be discontinued.