Waikato Rugby Union Incorporated v Wellfit Limited HC Auckland CIV 2004-404-4678

[2005] NZHC 1234

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV 2004-404-4678

BETWEEN

WAIKATO RUGBY UNION

INCORPORATED

Plaintiff

AND

WELLFIT LIMITED

Defendant

Hearing:         On the Papers

Appearances: LF Muldowney for Plaintiff

AG Stuart for Defendant Judgment:     8 March 2005

JUDGMENT OF COOPER J ON COSTS

This judgment was delivered by Justice Cooper on 8 March 2005 at 10.00 a.m., pursuant to

r 540(4) of the High Court Rules

Registrar/Deputy Registrar Date:

Solicitors:
Tompkins Wake, PO Box 258, Hamilton

Webster Malcolm & Kilpatrick, PO Box 22, Warkworth

WAIKATO RUGBY UNION INCORPORATED V WELLFIT LIMITED HC AK CIV 2004-404-4678 [8 March 2005]

[1]    The plaintiff commenced a proceeding in which it sought an injunction restraining the defendant from manufacturing, marketing or selling a garment described as the “Wellfit 2004 jersey” and/or the “altered Wellfit 2004 jersey”, together with an enquiry as to damages or, at the plaintiff’s election, an account of profits in respect of sale of those garments. Contemporaneously, the plaintiff sought interim  relief  but  after  successive  appearances   in   the  Duty  Judge’s  List   on   9 September 2004, 7 October, 14 October, 28 October 2004, 9 December 2004, during which period settlement negotiations were said to be on-going, the parties filed a joint memorandum.

[2]    Their memorandum advised that the matter had not been settled, and time- tabling orders were made in accordance with the memorandum when the matter came before me on 15 December 2004. The memorandum also recorded that the plaintiff had elected not to pursue its application for interim injunction, intending to proceed instead only on the substantive proceeding. Further, counsel for the parties advised that each would seek costs against the other in respect of the interim injunction application. I directed that submissions on costs in respect of the interim injunction application should be filed and served by 20 January 2005. I have now received and considered memoranda from counsel for the plaintiff and the defendant accordingly.

[3]    The subject matter of the dispute between the parties is a jersey which was manufactured and sold by the defendant. The jersey was coloured red, yellow and black, and was in appearance similar to the jersey which has been worn by the plaintiff’s team for many decades. Further, the defendant’s jersey had the word “Waikato” prominently displayed in black lettering on the front. Inside the back collar was a label in two main parts. On its left there was the defendant’s identifying mark “W-Star” under which the defendant was identified by words describing it as the exclusive clothing sponsor to New Zealand Cricket. On the right of the label was a Silver Fern under which were the words New Zealand Cricket and “Official Licensed Product”. This interesting juxtaposition of our winter and summer games apparently occurred at the behest not of their governing bodies, but by a decision of, or inadvertence by, the defendant. In an affidavit sworn on 31 August 2004, Mr Melsop, who is the plaintiff’s marketing manager, deposed that officials spoken to at

NZ Cricket were unaware that its label and name were being used on the defendant’s merchandise.

[4]    The plaintiff has itself developed a range of sportswear in sports’ garments reflecting its red, yellow and black colours. It is the registered proprietor of NZ registered trademark No. 252842 in Class 25: Clothing and headgear which is in the following terms:

The mark comprises the colours red, yellow and black in adjoining bands of equal width, in a repeating pattern.

[5]    The defendant had no licence or authority from the plaintiff to manufacture, market or sell the Wellfit 2004 jersey. The plaintiff requested the defendant to cease doing so, alleging that its actions constituted an infringement of the plaintiff’s registered trademark, passing off of the defendant’s goods as the plaintiff’s goods or as an authentic and official licensed product of the plaintiff, and breach of ss 9 and 13(e) of the Fair Trading Act 1986.

[6]    Because the plaintiff ultimately elected not to proceed with his application for interim relief there has been no occasion for the Court to formally decide whether the proceeding raised a serious question to be tried, and whether the overall justice of the case would have required the grant of interim relief. I think it suffices for present purposes however, if I express my view on the basis of the affidavits that were filed, that there was justification for the bringing of the claim.

[7]    Following the commencement of the proceeding the defendant withdrew its garments from the market and removed the reference to New Zealand Cricket and the words, “Official Licensed Product” from the neck label. Mr Muldowney, in his submissions of 19 January 2005 on the question of costs, states that that alteration met one of the plaintiff’s significant concerns, because the garment no longer had a statement on it implying that it had been officially licensed. It was that alteration  that, combined with the period over which the proceeding had been adjourned for settlement discussions (during which time the concluding round, semi-finals and finals of the 2004 NPC competition had been completed), had resulted in a decision by the plaintiff not to press its application for interim relief, but to focus on the

substantive hearing, given that the garment is now back on the market in its altered form.

[8]    For the defendant, however, Mr Stuart has relied on delays by the plaintiff in taking action. He has referred to evidence that the defendant had been selling garments in the Waikato colours since the early 1990s (without complaint from the plaintiff), delays in raising any objection to the sale of the jerseys, tardiness in following up on a letter by the plaintiff’s patent attorneys in which complaint was first made about the defendant’s actions, and action taken by the defendant  as soon as the plaintiff’s concerns about the labelling were clarified. He submitted that, the plaintiff having essentially abandoned its application for interim injunction, it should pay the defendant’s costs.

[9]    I am not persuaded by Mr Stuart’s arguments that it would be appropriate to order the plaintiff to pay the defendant’s costs. In my view, the plaintiff had proper grounds for complaint against the defendant in respect of the jersey as it was initially labelled. The defendant tacitly at least acknowledged that was the case by the action that it took to alter the labelling.

[10]   Under r 46(1) of the High Court Rules, all matters relating to the costs of and incidental to a proceeding or a step in a proceeding are at the discretion of the Court. Rules 47 to 48G apply subject to r 46(1). There is in my view nothing in r 47 (which sets out the principles applying to the determination of costs) that prevents the Court from awarding costs to a plaintiff in circumstances such as this. I consider that the claim for interim relief was justifiably commenced, and accept that it was not proceeded with partly because of actions subsequently taken by the defendant, which achieved part of what the plaintiff had sought, and in part for the other pragmatic reasons to which Mr Muldowney referred. In my view, it is appropriate in these circumstances that the plaintiff achieve an award of costs in its favour.

[11]   Counsel were generally agreed that the matter should be dealt with on the basis that it falls within Category 2 Band B. On that basis, Mr  Muldowney calculated an entitlement to $6,090. However, that sum included an amount claimed in respect of the commencement of the proceeding, referring to the notice of

proceeding and the statement of claim. Mr Stuart submits in his second memorandum of 28 January 2005 that it would be inappropriate to award costs in respect of those matters because the substantive claim is still extant and yet to be determined. The costs that I am required to fix at this point are only those  concerning the application for interim relief.

[12]   On the other hand, restricting the plaintiff to 0.6 of a day (the result of classification in Band B) for preparing and filing an interlocutory application would not, in my view, result in a sufficient award.

[13]   Mr Stuart suggested that, if I came to the view that costs should be payable to the plaintiff then an appropriate allowance to make in respect of preparing and filing the interlocutory application would be two days. I consider that that would be an appropriate allowance.

[14]   Making that alteration to the number of days on which Mr Muldowney’s calculation had been made gives an amended total of 3.2. Applying the Category 2 daily recovery rate, the result is that the plaintiff is entitled to costs in the sum of

$4,640.

[15]   It will, I hope, be obvious that nothing I have said in this judgment should be regarded as determinative of any issue which arises for decision in the outstanding substantive proceeding between the parties.