Sydney Discus World Aquariums Pty Ltd v Botany Way Scapes Pty Ltd
[2021] FCCA 1188
•26 May 2021
FEDERAL CIRCUIT COURT OF AUSTRALIA
Sydney Discus World Aquariums Pty Ltd v Botany Way Scapes Pty Ltd [2021] FCCA 1188
File number(s): SYG 944 of 2020 Judgment of: JUDGE BAIRD Date of judgment: 26 May 2021 Catchwords: INTELLECTUAL PROPERTY - COSTS – Notice of discontinuance filed by applicant– application for costs pursuant to rule 13.02 of the Federal Circuit Court Rules – respondents seek costs on indemnity basis or alternatively on a party/party basis, or per the Rules –respondents claim proceeding brought for a non-bona fide purpose – no non-bona fide purpose found – personal liability of company secretary sought – no personal liability – costs awarded on a party/party basis – costs be fixed in a lump sum – application allowed. Legislation: Competition and Consumer Act2010 (Cth), Sch 2 ‑ Australian Consumer Law ss 18, 29
Federal Circuit Court of Australia Act 1999 (Cth) ss 45, 79
Federal Circuit Court Rules 2001 (Cth) rules 1.05, 13.02
Federal Court Rules 2011 (Cth) rules 25.01 – 25.06, 25.10‑25.12, 25.14, 40.02
Trade Marks Act 1995 (Cth) ss 42, 59, 62A, 88, 129,
Cases cited: A2B Australia Ltd v OZ Power Group Pty Ltd [2020] FCCA 2623
Knight v FP Special Assets Ltd (1992) 174 CLR 178; [1992] HCA 28
Oshlack v Richmond River Council (1998) 193 CLR 72; [1998] HCA 11
Washington v Qantas Airways Limited (2014) 107 IPR 144; [2014] FCCA 1413
Number of paragraphs: 60 Date of last submission/s: 26 May 2021 Date of hearing: 26 May 2021 Place: Sydney Counsel for the Respondents: Mr G Tsang Solicitor for the Respondents: Scott Legal ORDERS
SYG 944 of 2020 BETWEEN: SYDNEY DISCUS WORLD AQUARIUMS PTY LTD
Applicant
AND: BOTANY WAY SCAPES PTY LTD
First Respondent
SAM HARLEN
Second Respondent
ORDER MADE BY:
JUDGE BAIRD
DATE OF ORDER:
26 MAY 2021
ORDERS
THE COURT:
1.NOTES:
(a)on 11 February 2021, the applicant filed a notice of discontinuance and served it on the respondents on 12 February 2021;
(b)on 5 March 2021, the respondents filed an application in a case pursuant to r 13.02(1) of the Federal Circuit Court Rules 2001 (Cth), seeking costs;
(c)the application was made within the time required by r 13.02(2),
AND THE COURT IS SATISFIED the applicant has been served with the application, the affidavit evidence in support, and the respondent’s outline of submissions, and that it has been made aware of the date, time and place of this hearing.
2.ORDERS the applicant pay the respondents:
(a)the respondents’ costs of the proceeding for the period up to and including 12 February 2021, fixed in the amount of $42,571.77 (excluding GST); and
(b)the respondents’ costs of the application (including the hearing on 26 May 2021) in accordance with items 3, 12, and 13, and 14 of Schedule 1, Part 1 of the Rules, fixed in the amount of $5,633.50,
being a total amount payable of $48,205.27.
REASONS FOR JUDGMENT
(ex tempore, revised from transcript)
By application in a case filed 5 March 2021, the respondents, Botany Way Scapes Pty Ltd and Mr Samuel Perry Harlen, relevantly seek orders that the applicant, Sydney Discus World Aquariums Pty Ltd, and Ms Supun Gunasena, the company secretary of the applicant, pay the respondents their costs of the proceeding, fixed in alternative amounts, being on the basis of indemnity costs from the first commencement of the proceeding in a total of $66,945.87, or alternatively party/party costs, or alternatively pursuant to the Schedule 1 events based scale under the Federal Circuit Court Rules 2001 (Cth), noting that the Schedule 1 events based scale is calculated at $19,517.4. Each alternative sought is inclusive of GST.
The respondents further seek that the liability of the applicant and Ms Gunasena to pay the respondents their costs is joint and several, and separately, they seek the costs of this application. In support of the application, the respondents have relied on four affidavits – the affidavit of Mr Harlen, made 12 May 2020 and accompanying exhibits, and three affidavits of the principal solicitor, Ms Leanne Janine Scott, the first affidavit made 22 January 2021 and accompanying exhibit (Scott # 1), her second affidavit made 5 March 2021 and accompanying exhibit (Scott # 2), and her most recent affidavit, sworn 25 May 2021 (Scott #3). In Scott #3 Ms Scott gives evidence of the steps taken to bring this application, and the supporting material, including the submissions, to the attention of the applicant and Ms Gunasena.
This application arises in circumstances where the applicant, by a notice of discontinuance dated 11 February 2021 and lodged on that day, discontinued what is described as the Amended Application – General Federal Law.
Rule 13.02(1) of the Rules provides that if a party discontinues an application or part of an application, another party in the proceeding may apply for costs, within the time specified in rule 13.02(2). The present application was filed 21 days after the service on the respondents of the notice of discontinuance on 12 February 2021, and accordingly, was made within the 28 days provided in rule 13.02(2).
First, I am satisfied on the evidence of Ms Scott in Scott #3, that, by email (which email address is notified in the originating application and succeeding Court documents filed in the proceeding as the applicant’s email address), and by mobile telephone number (specified in the notice of intention to withdraw as lawyer dated 22 December 2020, attached to the notice of withdrawal as lawyer dated 22 January 2021, filed by the then solicitors on the record for the applicant in the period 13 July 2020 up until the notice of withdrawal) that the applicant and Ms Gunasena have been given notice of both the application for costs, the basis on which this application is made, and, in addition, the respondents’ counsel’s written submissions. I am also satisfied from that same material, in Scott #3 that the applicant was given proper notice, and has been made aware of today’s hearing.
Mr Tsang of counsel who appeared on behalf of the respondents at today's hearing has provided a very helpful outline of written submissions (which was served on the applicant), and has also provided assistance in taking me through the material before the Court including inter-party correspondence, explanation of Court dates, and in particular the costs that both are sought and are specified in the various invoices, copies of which are attached to Ms Scott's affidavit evidence.
Mr Tsang identifies the issues raised by the application and propounded by the respondents as follows:
(a)whether the respondents should be awarded costs;
(b)if so in what amount;
(c)whether it is appropriate that the applicant's company secretary, Ms Gunasena, be made jointly and severally liable for any costs awarded; and
(d)whether to award the costs of the application.
Background
This proceeding was commenced on 20 April 2020 by the applicant as a self‑represented corporation. The proceeding involved, at that stage, an urgent application for restraining orders for alleged infringement of Australian registered Trade Mark number 1984644 for the word “TWINSTAR”. The originating application sought urgent interlocutory injunctive relief, damages, seizure of allegedly infringing goods, and costs on an indemnity basis. It was accompanied by the first affidavit of Ms Gunasena. It was not readily apparent, or comprehendible, what was the basis for the urgent relief sought.
The respondents were given notice of the originating application. It is apparent from the above timing, and the First Court Date, that this occurred in the earlier part of the present COVID-19 pandemic, and at a time when, both Victoria and New South Wales were in versions of lockdown.
The proceeding was first before me on 13 May 2020. Mr Tsang appeared for the respondents, instructed remotely. On that date I made orders, including granting leave for Ms Gunasena to appear for the applicant company for that day only, relevantly as follows:
…
3.ORDERS that the Applicant file and serve on the Respondents, by no later than 29 May 2020, an address for service confirming an Australian lawyer has been retained to carry on the proceeding on behalf of the Applicant.
4.ORDERS that if an address for service appointing an Australian lawyer as the legal representative retained to carry on the proceeding on behalf of the Applicant is not filed and served by 29 May 2020, the proceedings BE STAYED until further order of the Court.
5.ORDERS that until further order, the Respondents keep accounts and full records of all importing, promotion, sales, and other commercial dealings in products bearing the Twinstar trade mark.
6.NOTES that the above order is made by consent, and without any hearing or determination of the proceeding, and for the purposes of preserving the parties’ position on an interim basis.
7.ORDERS that the Applicant file and serve any further affidavit evidence on which it intends to rely in support of its interlocutory application by 4 June 2020, or if it does not intend to press that application, to advise in writing the Respondents, and the Chambers of Judge Baird, that they will not press the application.
I stood over the proceeding to 10 June 2020. I reserved costs, and granted liberty to apply on three days’ notice after 29 May 2020.
When the matter was next before the Court (on 10 June 2020) the proceeding was conducted by telephone with Ms Gunasena appearing with leave of the Court for the applicant, and Mr Tsang of counsel instructed by Ms Scott, both by telephone, for the respondents. I made orders as follows:
1.NOTES that the applicant corporation remains in contravention of Rule 9.04 of the Federal Circuit Court Rules 2001 (Cth) requiring proceedings to be commenced and carried on by a lawyer unless leave of the Court is obtained.
2.NOTES further that the Applicant corporation has failed to comply with Order 3 of the Court’s Order made on 13 May 2020, and is accordingly in default within the meaning of Rules 13.03A(1)(a), (b), and (d).
3.Upon the Court’s consideration of Ms Gunasena’s application that the Applicant corporation be self-represented, NOTES the Court is not satisfied that it is appropriate for the Applicant to be self-represented, given the issues in the proceeding, and in the circumstances GRANTS leave to Ms Gunasena to appear for the Applicant for today only.
4.EXTENDS the time by which the Applicant is to file and serve on the Respondents an address for service confirming that an Australian lawyer has been retained to carry on the proceeding on behalf of the Applicant to 15 July 2020.
5.NOTES in support of the Applicant’s application for interlocutory relief set out in the Originating Application dated 17 April 2020 that the Applicant relies on the affidavit of Ms Supun Gunasena sworn 17 April 2020, and the further affidavit of Ms Supun Gunasena written 25 May 2020, and stated to be affirmed 3 June 2020 (but not sworn/affirmed), UPON considering those affidavits, and Ms Gunasena’s submissions to the Court, that the Court is not satisfied that the Applicant has shown any urgency for the relief sought nor that the balance of convenience favours the grant of such relief.
6.DISMISSES the Applicant’s claims for interlocutory relief set out in paragraphs 1, 2, and 3 of the Application dated 17 April 2020.
7.STAYS the balance of the Applicant’s Application, pending further order of the Court.
8.ORDERS by 22 July 2020, the Respondents file and serve on the Applicant any cross-claim for rectification of the Register of Trade Marks by cancelling or removing the subject trade mark, and any alternative orders to those sought in the Application, noting that additional cross-respondents may be joined.
9.LISTS any cross-claim duly filed and served for case management on 19 August 2020 at 9:30am.
10.ORDERS that the Applicant pay the Respondent’s costs of today on a party-party basis, as agreed or failing agreement to be determined by the Court on application by the Respondents.
I accepted that Mr Tsang’s submissions which I noted in paragraph [5] of the above orders. Accordingly, I consider that the order for costs in [10] of the above orders is a party/party costs order for the respondents’ costs up to and including that date as relates to the originating application and costs of defending it.
On about 11 June 2020, the applicant wrote to Chambers indicating it would not press the claim and sought to discontinue. It did not, however, discontinue the proceeding. The evidence shows that in the period from 23 June 2020 up to on about 30 January 2021, both the applicant and respondents made various offers relating to resolving the proceeding but also including, on the case of the applicant, that it transfer or cancel registration of the Trade Mark
The respondents, similarly, required that the applicant cancel the Trade Mark registration and pay the respondents a sum. As I have said above, on 13 July 2020, the applicant filed a notice of appointment of lawyer and Ms Rebecca Dunn, of Gilbert and Tobin, notified the Court she was instructed. Other dates to note of relevance in the proceeding are that on 21 July 2020 the respondents filed a response and cross-claim in which they relied by way of defence that pursuant to s 88(1) of the Trade Marks Act 1995 (Cth) (TM Act) the Register of Trade Marks be rectified by cancelling the Trade Mark, that the orders requiring the respondents’ keeping of accounts be vacated, and seeking a declaration that the applicant had made unjustified threats, damages pursuant to s 129(2) of the TM Act for the making of unjustified threats within the meaning of s 129 of the TM Act, additional damages pursuant to s 129(2)(a) of the TM Act, costs on an indemnity basis, and other or further orders.
The cross-claim included with the response provided further grounds for cancellation of the Trade Mark pursuant to s 88(2)(a) of the TM Act including under s 58 of the TM Act – the applicant was not the owner; s 59 of the TM Act – the applicant is not intending to use the Trade Mark; s 60 of the TM Act – likely to deceive or cause confusion; s 62A of the TM Act; s 42(b) of the TM Act – contrary to law, and in particular, conduct in contravention of ss 18, 29(1)(g) and/or 29(1)(h) of Schedule 2 to the Competition and Consumer Act2010 (Cth), the Australian Consumer Law, and passing off. In addition, the cross-claim sought rectification pursuant to section 88(2)(c) of the TM Act, and, relief from unjustified threats under s 129 of the TM Act.
On 19 August 2020, I made orders, inter alia, that the proceeding continue by way of points of claim, defence, cross-claim, and replies, and that the respondents’ “response and cross-claim” filed 21 July 2020, stand as the respondents’ points of cross-claim and relief in the proceeding.
On 19 August 2020, I also made declarations pursuant to s 45 of the Federal Circuit Court of Australia Act 1999 (Cth) (FCCA Act) that it is appropriate, in the interests of administration of justice to allow an order for particular disclosure, and I ordered that the applicant give particular disclosure of categories of documents, in short, concerning the negotiation, preparation and/or making of a document entitled “Letter of Authorisation Exclusive Distributor” dated 12 December 2016, which was a document relied upon by the applicant in support of its entitlement to obtain registration of the Trade Mark.
The applicant filed an amended originating application dated 11 September 2020, and a points of claim of the same date and filed the same day. Thereafter, the respondents filed a points of defence dated 2 October 2020.
Further to the assistance provided by legal representatives on 25 September 2020, the applicant filed a notice of discontinuance with respect of the third respondent. I note no costs were thereafter sought in relation to the third respondent’s participation in the proceeding. Further work ensued, and by orders made by consent on 7 October 2020, I ordered the matter be referred to mediation before a Registrar of the Court, such mediation to occur as soon as practicable and preferably, by 13 November 2020. Mediation duly occurred on 19 November 2020, and was adjourned to conference calls with the parties’ lawyers on 24 and 26 November 2020. The matter did not settle, and the mediation was terminated.
On 27 November 2020, the matter was next before the Court. I made further orders for discovery, including verified discovery by the applicant, and procedural and other draft timetabling orders, including, if practitioners were not able to reach agreement, proposed orders for security, discovery and evidence. I stood the matter over to 3 March 2021 for further case management. Further to the orders made on 27 November 2020, I then made orders in Chambers on 22 December 2020, which allowed for the parties to file and serve proposed orders in relation to security for costs, affidavit evidence and for evidence on the proceeding, and for the exchange of categories of any proposed orders for further discovery. I stood the matter over for case management on a date to be advised after certain steps had been taken.
As I have said above, on 22 January 2021, the applicant’s legal representatives filed a notice of withdrawal as solicitor, and on 11 February 2021, the applicant filed its notice of discontinuance.
Principles and relevant legislative provisions
The relevant principles in relation to costs are well established. Under s 79(3) of the FCCA Act, except as provided by the Rules or any other act, costs are at the discretion of the Court or the judge. The discretion is broad, but is to be exercised judicially and in the context of the relevant Court Rules (see Oshlack v Richmond River Council (1998) 193 CLR 72 at 65; [1998] HCA 11). I have referred to Rules 13.02(1) and (2) of the Rules above. Rule 13 otherwise leaves unfettered the power of the Court to order costs in a proceeding that has been discontinued.
I note the general rule is that costs follow the event, and so a successful party will generally, but not invariably, attain an order for costs in their favour. Costs may be awarded in accordance with the Schedule under the Rules, on a party/party basis, or an indemnity basis, the latter including when offers compromise are made. Pursuant to rule 21.02 of the Rules, in making an order for costs in a proceeding, the Court may set the amount of the costs or the method of calculation or refer the costs for taxation under Part 40 of the Federal Court Rules 2011 (Cth) (FCA Rules).
Pursuant to rule 1.05(2) of the Rules, if in a particular case the Rules are insufficient or inappropriate, this Court may apply, relevantly, the FCA Rules in whole or in part and modify or dispense with them as necessary. Without limiting sub-rule 2, rule 1.05(3)(b) of the Rules then provides, relevantly, that certain rules of the FCA Rules (rules 25.01-25.06, 25.10 ‑ 25.12 and 25.14) apply to this proceeding as an optional means for quantifying costs entitlements in certain circumstances where an offer of compromise is made.
Pursuant to rule 40.02 of the FCA Rules, a party entitled to costs may apply to the Court for an order that costs …
(a)awarded in their favour be paid other than as between party and party; or
(b)be awarded in lump sum, instead of, or in addition to, any taxed costs; or
(c)be determined otherwise than by taxation.
The fundamental purpose of a costs order is to compensate a successful party rather than punish an unsuccessful party. The Federal Court’s Costs Practice Note GPN‑COSTS restates that principle and states that the Court will consider, however, the appropriateness of the making of a special costs order in circumstances which may warrant it, including where parties raise unmeritorious arguments before the Court or otherwise conduct themselves inappropriately in the litigation.
This Court’s ability to order costs under the Federal Court scale is well known and accepted. Whether it is reasonable in the circumstances to do so, however, is a matter to be resolved having regard to the principles I have adverted to above, and the individual circumstances including achieving a just outcome given the facts and law and issue in the proceeding. The matter is not to be resolved with some formulaic approach (see generally Washington v Qantas Airways Limited (2014) 107 IPR 144; [2014] FCCA 1413).
Consideration
I am persuaded by Mr Tsang’s submissions, and by the circumstances that I have referred to above that it is appropriate in this proceeding to order costs. I am not persuaded, however, that the offers that were exchanged by the parties, or more relevantly, the offers made by the respondents satisfy the principles for an offer of compromise. The offers of compromise, it cannot be said, are such that the circumstances in which the respondents find themselves today are equal to or better than the offer that was made. In the circumstances, I do not consider it necessary to say more on that matter.
Should costs be fixed/in a lump sum
Turning to the question as to whether costs should be fixed/in a lump sum, I adapt and incorporate certain paragraphs that I set out in the judgment of A2B Australia Ltd v OZ Power Group Pty Ltd [2020] FCCA 2623 at [21] – [27]:
21.GPN‑COSTS states at item 4.1 that the Federal Court’s preference, wherever it is practicable and appropriate to do so, is for the making of a lump sum costs order. Where a party seeks a lump sum costs order, item 4.10 of GPN‑COSTS provides, inter alia, the costs applicant should file an affidavit in support of the lump sum claim – the costs summary – which must be clear, concise and direct, the intention of the procedure being “to streamline and expedite the determination or resolution of the quantum of costs question”. The costs applicant is not required to exhibit the source material verifying the amounts claimed, but must make it available at any costs hearing.
22.The purpose of the lump sum costs rule has been described as to avoid the expense, delay and aggravation involved in protracted litigation arising out of taxation: see LFDB v SM (No 2) [2017] FCAFC 207 at [14].
23.The Federal Court has oft stated that the exercise of fixing a lump sum is “one of estimation or assessment and not of arithmetic calculation or precision”, the approach must be “logical, fair and reasonable”, however the rule contemplates the “application of a much broader brush than that applied on taxation”: see e.g. Seven Network Limited v News Limited [2007] FCA 2059, Sackville J at [25]; Nine Films and Television Pty Ltd v Ninox Television Ltd [2006] FCA 1046, Tamberlin J at [8]; Ginos Engineers Pty Ltd v Autodesk Australia Pty Ltd [2008] FCA 1051; (2008) 249 ALR 371, per Finn J at [22] – [24] (in relation to this Court); and more recently, Geneva Laboratories Limited v Prestige Premium Deals Pty Ltd (No 5) [2017] FCA 63, at [86]; and Hislop v Paltar Petroleum (No 4) [2017] FCA 1632 at [7].
24.In Paciocco v Australia and New Zealand Banking Group (No 2) [2017] FCAFC 146; (2017) 253 FCR 403, the Full Court explained at [17]‑[20]:
[17]The Costs Practice Note provides for the Court to make use of sophisticated costs orders and procedures, and to take such steps as it considers necessary to ensure that it has the requisite level of detail to make a costs determination that is fair, logical and reasonable and to avoid orders that lead to potentially expensive and lengthy taxation hearings: Costs Practice Note at [3.3].
[18]We emphasise that in making a lump sum award of costs, the Court in undertaking the task of assessing costs is not precluded from undertaking a close inquiry of costs relating to a particular issue or category of costs, should the Court consider it appropriate to do so: see e.g. Hudson v Sigalla (No 2) at [30]. The Court is able to adopt their own procedures in inquiring into costs, is able to be flexible in how it conducts that inquiry, including by the obtaining of suitable assistance whether by referee’s report or other reporting, and is able to acquire the level of detail needed to make a determination that is fair, logical and reasonable.
[19]Whilst the Costs Practice Note now suggests that most cases should have a lump sum costs order approach applied unless there is some characteristic that would make it unsuitable, a lump sum costs order is not mandated in all instances. In all cases it is a matter for the Court to exercise the discretion given to the Court by the Federal Court Act and the Rules as appropriate: see Sigalla at [18]-[19].
[20]There is no particular characteristic that a case must possess for it to be suitable for the making of a lump sum costs order. Particular circumstances that may make a lump sum order especially appropriate include where in a large and complex commercial matter it would save the time, trouble, expense and aggravation of a taxation; where a taxation would require the parties to consume additional time and incur additional expenditure prolonging already protracted litigation; and generally to avoid an ongoing, counter-productive dispute as to costs, in the interests of achieving finality.
25.The power is available “whenever the circumstances warrant their exercise”: see Sony Entertainment (Australia) Limited v Smith [2005] FCA 228; (2005) 215 ALR 788 at 812 (Jacobson J).
26.A lump sum order avoids the time and expense to both parties of a contested taxation. Self‑evidently, it avoids the expense of preparation of a detailed bill of costs, and also, their review.
27.In Seafolly Pty Ltd v Maddern (No 6) [2015] FCA 1369, Tracey J considered authorities applying a discount in awarding a lump sum costs order (which revealed discounts ranging from 15% to 60% on actual costs). At [35], observing that in the end the methodology adopted by other cases is of assistance, but cannot be determinative, his Honour stated that the Court is required to have regard to the exigencies of the particular case and to apply the principles (that I have referred to above) with a view to reaching a logical, fair and reasonable figure. His Honour observed at [38] that:
The authorities establish that a discount should be applied to actual costs incurred by the party seeking a gross sum order. The discount is intended to take account, not only of the inevitable reduction in the amount awarded as a result of a taxation on a party/party basis, but also to recognise that no such taxation has occurred and that any estimate of their outcome is just that and that a further allowance may be necessary in order to ensure fairness to the party against whom the order is made. Both underestimation and overestimation are, to the extent possible, to be avoided.
I am persuaded that a lump sum order avoids time and expense to parties of a contested taxation, or even, in my view, of an uncontested taxation. Self-evidently, it avoids the expense of preparation of a detailed bill of costs and also its review. I am persuaded that in the present case it is appropriate to order costs be fixed in a lump sum. I adopt the respondents’ summary of principles set out in Mr Tsang’s submissions:
[11].It has been observed on previous occasions that, where the Court determines that the power to order costs is engaged, and that it should exercise its discretion to do so, the almost invariable practice of this Court is to fix costs: Abdi v Equitable Financial Solutions Pty Ltd [2020] FCCA 2521 at [56] (Kelly J); citing Alrjoob v Minister for Home Affairs [2018] FCA 1144 at [20] (Collier J); in turn citing Fair Work Ombudsman v Priority Matters Pty Ltd (No 3) [2016] FCCA 2744 at [63] (Street J). This is because, as Street J observed in Priority Matters at [63]:
One of the duties the Court has under s. 14 of the Federal Circuit Court of Australia Act 1999 is to bring the controversies between the parties to a complete and final determination.
[12].In fixing a lump sum for costs, the Court is to approach the task as one of estimation and assessment and not of arithmetic calculation or precision. The approach is more ‘broad brush’ than that to be taken upon taxation. However the approach must be logical, fair and reasonable: see Abdi at [57] and authorities cited therein.
Indemnity basis
Turning now to the question of costs on an indemnity basis. In the first place, the respondents sought an order for costs on an indemnity basis for costs incurred up to and including the date of filing the notice of discontinuance. The amount sought was $66,945.87 including GST.
Mr Tsang made strong submissions that the proceeding was not brought for a bona fide purpose and set out some matters of chronology. It is first sufficient for me to note that I do not accept that the proceeding was commenced for a non-bona fide purpose.
I note that the application for the Trade Mark was filed on 23 January 2019, and acceptance of the Trade Mark was obtained on 15 February 2019 and advertised on 24 June 2019. Registration was advertised on 2 September 2019 and registration was entered on the Register on that day. The Trade Mark is thus registered with effect from 23 January 2019. Notwithstanding that the Trade Mark was registered, and entered on the Register as registered on 2 September 2019, no steps were taken of the kind submitted by the respondents as constituting a non‑bona fide purpose in the period up to the present dispute commenced.
There is, however, in the proceeding, or was in the proceeding, a very live issue about whether the Trade Mark was validly registered or is liable to cancellation or removal. As the application has been discontinued, and as I have the assurance of Mr Tsang that the cross‑claim likewise will be discontinued, it is not the time or place to explore those grounds further.
The second basis on which indemnity costs were sought was on the basis that the applicant imprudently refused previous offers of settlement. I have dealt with that matter above, and I do not propose to say anything further on that matter. As to the third matter, I am not persuaded it is relevant to this question of costs.
The respondents have also alleged that their cross-claim is defensive. Whilst the cross-claim has a large element of defensiveness, and I am satisfied that it is in substance a defensive claim, I do not consider that for that reason alone costs ought to be payable on an indemnity basis.
There is, however, the matter raised by the respondents that the applicant has consistently demonstrated an unwillingness to comply with the Court's orders specifically by not retaining an Australian lawyer, contrary to orders I have already referred to above. And, secondly, by an application made, it appears informally, by Ms Gunasena to seek to have the Court's order set aside, and I refer to a letter from Ms Gunasena for the applicant dated 28 May 2020. That submission has some basis.
Further, the Court, as I have said above, has made a costs order on 10 June 2020, and there appears to be no indication that the applicant intended to comply with that order, and certainly by its notice of discontinuance appears to have considered that it did not need to.
Lastly, the respondents have submitted that the applicant unnecessarily prolonged the course of the proceeding, since at least 10 June 2020, by articulating a desire to unilaterally withdraw from the proceeding, but did not do so at least until the respondents had incurred costs for a security for costs application. Whilst I have some sympathy for the respondents' position as identified above, the respondents were at all times represented by competent legal advisers and have taken a course of proactively making certain steps, including the filing of a cross-claim and undertaking considerable work associated with that cross-claim, including obtaining the services of a translator, and for security for costs application which ultimately was not pressed.
In these circumstances, I am not persuaded that, at least for the full period of the respondents' participation in the proceeding, the respondents should have their costs on an indemnity basis.
Ms Gunasena’s personal liability
Turning now to the question of the participation of Ms Gunasena’s personal liability I have already referred to s 79(3) of the Act. In Knight v FP Special Assets Ltd (1992) HCA 28; [1992] 174 CLR 178, Mason CJ and Deane J (with whom Gaudron J agreed) held that the Court’s discretionary power to make orders against non-parties extended to a category of case consisting of circumstances where:
…the party to the litigation is an insolvent person or man of straw, where the non-party has played an active part in the conduct of the litigation and where the non-party, or some person on whose behalf he or she is acting or by whom he or she has been appointed, has an interest in the subject of the litigation. Where the circumstances of a case fall within that category, an order for costs should be made against the non-party if the interests of justice require that it be made.
In support of the respondents’ submissions that the applicant is a “man of straw”, the respondents point to the share capital of the applicant being $100, that it has no registered interest in real property in Australia, and that it has refused to provide details of unencumbered assets and copies of financial statements when requested to do so, and under the order for discovery. Whilst that is true, I am not in a position to infer from those matters that the company is insolvent or a man of straw.
As to the respondents' reliance on evidence suggesting that the applicant is not the entity that operates the business known as “Sydney Discus World Aquariums Pty Ltd”, I note that the applicant is the registered owner of the Trade Mark on the records of IP Australia, and accordingly is an appropriate entity to have commenced the proceeding.
The respondents make submissions that Ms Gunasena has at all material times played an active part in the conduct of litigation, appearing on behalf of the applicant, engaging directly in communications with the Court's registry, to the Court (my Chambers), and to the respondents. They submit she was the person to give evidence on behalf of the applicant, and it appears, is the company secretary, and acting on behalf of or at the direction of the applicant's sole director, her husband, who is also the owner of all the listed shares.
However, I consider each of these matters consistent with a corporate party acting through individuals who are either employed by or manage the company. I am not persuaded that Ms Gunasena, whilst playing an active part in the conduct of litigation by representing or seeking to represent the company in directions and applications when the company did not have a qualified lawyer, has acted in such a manner as to make her personally jointly, and severally liable for the costs of the proceeding. It follows that the conduct of Ms Gunasena is not such as to make her personally jointly, and severally liable for the respondents’ costs.
Costs of the proceeding
This leaves the costs of the proceeding. I am persuaded that it is appropriate in the circumstances to order costs on the party/party basis, and not the Schedule 1 events based scale under the Rules. Whilst the parties should not assume that intellectual property claims always, and necessarily, when commenced and pursued in this Court should be subject to costs orders on the basis of party/party or Federal Court Scale, it is apparent from the above description of the proceeding that this proceeding has involved considerable complexity including by reason of the applicant’s behaviour, and it is appropriate that the costs orders I make reflect that.
In the circumstances, I accept the respondents’ submission that the Schedule 1 events based scale costs prescribed by the Rules for proceedings in this Court is not apt for this matter. The work involved in this case to date, and in the circumstances I have described above, cannot, in my opinion, be valued fairly by reference to the events which the Schedule 1 events based scale prescribes, or by reference to the values which the Rules place on those events.
As I have said, the respondents have already expended significant time and expense in relation to the proceeding, and I accept that the respondents should be spared the additional expense and involvement in the conduct of a formal taxation. I further accept the submission that the avoidance of the expense of taxation benefits the applicant as well as the respondents. A lump sum costs order provides finality to the litigation which is a benefit to both parties.
In these circumstances as I have foreshadowed above, I consider it is logical, fair and reasonable and in both parties' interests to make a lump sum costs order.
Amount and reasonableness of the respondents’ costs
I have had the benefit of the summary of the respondents’ total costs for the period from 4 May 2020 to the service of the notice of discontinuance on 12 February 2021, I note that the total of costs incurred is $39,072.55 (including GST) for professional fees, and the sum of $19,181.25 (including GST) for counsel fees and separately, the sum of $2,180.83 (including GST) for other disbursements.
I should say at this point that the respondents’ lawyers comprise two firms, but each firm is a sole practitioner, or substantially, a sole practitioner: the one firm, Scott Legal, having commercial litigation experience, and the other firm, Omond and Co, being principally a trade mark law specialist. So too I have been assisted by counsel, and I consider, in the circumstances of this case, that counsel was necessary, and properly, briefed.
I note that Ms Scott is a solicitor with more than 11 years’ experience, and has conducted commercial litigation in a range of jurisdictions including in the Federal Court of Australia and the Federal Circuit Court of Australia including in trade mark cases. She deposes to an appropriate range of recoverable costs on a party/party basis in the amount of 65% of actual costs, and 100% of disbursements, including counsel fees. In the particular circumstances of this case, I accept that submission.
Ms Scott’s invoices and amounts of legal costs and disbursements, however, include GST. There is, however, and contrary to as required by the Practice Note GPN‑COSTS, no GST disclosure in any of Ms Scott’s evidence. In the circumstances, I am not aware whether or not the respondents are entitled to claim an input tax credit or not. I therefore, consider it is appropriate that any GST component of the costs and disbursements claimed is excluded.
I am conscious of the previous costs order on 10 June 2020. I am satisfied that in this particular case, the cross claim is substantially defensive, and as I have said, I consider the legal costs are not excessive in the circumstances.
I will award costs be paid by the applicant in a lump sum, comprising party/party costs of 65% of actual professional fees, up to and including 12 February 2021. I will award 100% of the amount of disbursements for the whole period but excluding GST. In respect of both professional fees and disbursements, I exclude GST because there was no cost GST disclosure in Ms Scott’s evidence, and contrary to that, required by item 6.7 and 6.8 of GPN‑COSTS.
In the particular circumstances of this case, and with the benefit of a summary of the invoices included with Ms Scott’s evidence, and identification of relevant principles, with the assistance of counsel, the calculations I make are set out below:
Table 1 – Costs (all excluding GST)
Period Prof fees LS+O 100% 65% of prof fees Counsel 100% Other 100% Up to 10.6.20 $11,942.00 $7,762.30 $4,437.50 $820.19 11.6.20 ‑ 12.2.21 $23,578.50 $15,326.03 $13,000.00 $1,225.75 Totals $35,520.50 $23,088.33 $17,437.50 $2,045.94
Whilst I have in other cases thereafter reduced the amount so reached by a percentage, for the benefit of a lump sum costs order, in the present circumstances, and given the applicant’s non‑participation, I do not consider it appropriate to further reduce the totals. Accordingly, the calculations will be professional fees in the amount of $23,088.33, counsel fees in the amount of $17,437.50, and other disbursements in the amount of $2,045.94, bringing a total amount of $42,571.77.
In relation to the present application, I consider that it is appropriate to order costs of this application on the Schedule 1 events based scale under the Rules. Given that the matter has lasted the whole of today I will order the amount, of items 3, 13, 14, and the advocacy loading in item 12, being a total of $5,633.50. I consider it would be duplicating the matter to add counsel’s fees as a disbursement over and above the advocacy loading. As these amounts are event based scale, there is no relevant GST component.
I will make orders accordingly.
I certify that the preceding sixty (60) numbered paragraphs are a true copy of the Reasons for Judgment of Judge Baird. Associate: P. Nixon
Dated: 7 June 2021
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