Louis Vuitton Malletier SA v Toea Pty Ltd (ACN 010 120 966) (No 2)

[2006] FCA 1823

FEDERAL COURT OF AUSTRALIA

Louis Vuitton Malletier SA v Toea Pty Ltd (ACN 010 120 966) (No 2)
 [2006] FCA 1823

LOUIS VUITTON MALLETIER SA v TOEA PTY LTD (ACN 010 120 966) AND JOHN MICHAEL ROSENLUND

VID 587 OF 2005

DOWSETT J
29 NOVEMBER 2006
BRISBANE

IN THE FEDERAL COURT OF AUSTRALIA
QUEENSLAND DISTRICT REGISTRY	VID 587 OF 2005

BETWEEN:

LOUIS VUITTON MALLETIER SA
Applicant

AND:

TOEA PTY LTD (ACN 010 120 966)
First Respondent

JOHN MICHAEL ROSENLUND
Second Respondent

JUDGE:	DOWSETT J
DATE:	29 NOVEMBER 2006
PLACE:	BRISBANE

REASONS FOR JUDGMENT

1. I have previously given my reasons for dismissing this application.  As I understand it, the applicant does not dispute that the respondents are entitled to their costs of the proceedings.  However there is a dispute as to whether they should be taxed on a “party and party” basis or on an “indemnity” basis.  The respondents submit that, for three reasons, costs should be taxed on an indemnity basis.  Firstly they submit the matter should be categorized as a test case.  Secondly, it is said that the applicant’s action was commenced and continued in circumstances where the applicant, if properly advised, should have known that it had no chance of success.  Thirdly, it is submitted that the applicant unreasonably rejected an offer of settlement.

2. As to the question of this being a test case, it may well be that from the applicant’s point of view, it was.  However, in submissions, the point really became an assertion that the applicant was motivated by an improper purpose, or at least, an ulterior motive in bringing these proceedings.  Whilst it may be that the applicant had mixed motives, some connected with the particular operation conducted by the respondents, and some relating to other people trading in the market place in their goods, I do not believe that there was anything improper about the proceedings.  I am satisfied that the applicant brought them for the primary purpose of seeking to restrain the sale of goods in breach of its trademarks.  That seems to me to be the only thing that matters.  As to the question of its being otherwise a test case, that may or may not be so, but I cannot see that in the present circumstances, it has any relevance to the exercise of the discretion as to costs. 

3. As to the suggestion that it was brought in circumstances in which the applicant ought to have known that it would be unsuccessful, I partially accept that submission.  The applicant sought to establish a test for involvement by a secondary party in the tort of another, which was, in my view, inconsistent with the decision in The “Koursk” [1924] P 140 as adopted by the High Court in Thomson v Australian Capital Television Proprietary Limited (1996) 186 CLR 574. To my mind, those two cases clearly state the law for Australia. I see no basis for concluding that those cases would not apply for present purposes to alleged infringements of the Trademarks Act 1995 (Cth), at least in the absence of a decision by the High Court to overrule them.

4. However, accepting that as the relevant test, the question is whether or not the applicant’s case, on its facts, could ever have satisfied it.  It is, I think, fair to say that the case was always quite weak.  However I cannot say that it was hopeless.  The applicant relied upon an inference being drawn from the fact that on numerous occasions, and at a small number of stalls, counterfeit products had been seen or purchased.  However the market had in excess of 400 stalls and, as I have said in the primary reasons, it seems to me that they expected far too much of the respondents in seeking to compel them to ensure that there were no counterfeit sales anywhere in the market.  The chances of the relevant inferences being drawn from the demonstrated facts were quite small, but I am not satisfied that the case was completely without prospects of success.  

5. It may be that the applicant ought to have reconsidered its position following its receipt of Mr Rosenlund’s affidavit.  He, by that affidavit, made it clear that he did not accept that either he or the first respondent had been involved in any breach by stallholders of the applicant’s trademarks.  The applicant was entitled to cross-examine him on those assertions, but a strict legal entitlement to do so does not mean that it should not be penalised in costs for persevering in a case in which it was clear that it could not succeed.  Once the applicant received Mr Rosenlund’s affidavit, its prospects were substantially reduced.  Nonetheless I would not exercise my discretion to order costs on an indemnity basis purely upon that basis.

6. As to the third ground, the respondents made an offer to settle the matter on the basis that the application be dismissed and the parties pay their own costs.  This offer was made by letter dated 20 September 2005.  The offer expired on 4 October 2005.  It was not accepted.  To my mind, the letter offered a reasonable basis for settlement.  I do not accept the criticism made of it that it did not constitute an attempt to settle.  However I also do not accept that the applicant’s conduct in not accepting the offer on or before 4 October 2005 can be categorised as unreasonable for reasons to which I have already referred, namely that the case was not entirely without merits.  This leads me to the conclusion that it was reasonable for the applicant to wait until the respondents’ material was available, in order to determine whether or not they should accept that offer.  By that time, the offer had expired.  In those circumstances, I am unable to conclude that the applicant’s conduct, in refusing the offer as at 4 October, was unreasonable.  Had the offer been open remained open or been renewed after the receipt of the material, the position may have been otherwise. 

7. I order that the applicant pay the respondents’ costs of the proceedings to be taxed on a party and party basis.

8. The applicant applies for the costs of today on the rather adventurous basis that some weeks ago, they offered to pay the respondents costs on a party and party basis.  It would be unreasonable to say that the respondents were unreasonable in prosecuting their claim today, in light of the leeway which I have allowed to the applicant.  In the circumstances, the order as to costs will include the costs of today.

I certify that the preceding eight (8) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Dowsett.

Associate:

Dated:        22 December 2006

Counsel for the Applicant:	Ms E Strong SC
Solicitor for the Applicant:	Corrs Chambers Westgarth
Counsel for the Respondent:	Mr M Rivette
Solicitor for the Respondent:	McLaughlins Solicitors
Date of Hearing:	29 November 2006
Date of Judgment:	29 November 2006