FEDERAL COURT OF AUSTRALIA

Halal Certification Authority Pty Limited v Quality Kebabs Wholesalers Pty Limited (No 3) [2014] FCA 1055

THE COURT ORDERS THAT:

1.    The applicant’s application for indemnity costs be dismissed.

2.    The applicant pay the costs of the first and second respondents of that application as taxed or agreed.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

1    There remains the question of costs. On 13 June 2014 in proceedings NSD 2107 of 2013 I ordered Quality Kebabs and Mr Kose to pay the applicant’s costs as taxed or agreed. The applicant now applies to vary that order on the basis of a Calderbank offer contained in a letter dated 29 April 2014.

2    Having recited in detail the merits of the applicant’s case against Quality Kebabs and Mr Kose the letter went on to say:

‘For the above reasons, the Applicant rejects your offer of 24 April and makes the following counter-offer.

1.    The Respondent’s to pay the Applicant the sum of $65,000 within seven days.

2.    The Respondents publish at the their [sic] cost a notification in prominent Arabic, Turkish and Islamic newspapers of the Applicant’s choosing, stating in part that the Respondents:

2.1    Have used the Applicant’s trademark without permission, and

2.2    Have not now, nor at any time been certified by the Applicant as a halal service provider, and

2.3    Have ceased use of the Applicant’s trademark, and

2.4    A copy of the Applicant’s trademark be reproduced in the notice.

3.    Proceedings dismissed.

The sum in 1. above represents the Applicant’s costs of $30,000, allowing for the cost of the mediation held last Thursday 24 April and some preparation for the hearing next Thursday, and damages of $35,000.

The above offer is made pursuant to the principles of Calderbank v Calderbank [1975] 3 All ER 333 and this letter may be relied upon by the Applicant on a question of costs should your client do no better at the hearing than the settlement offer contained herein.

The above offer is open for acceptance by your client until 12:00pm on Wednesday 30 April 2014, after which time it is withdrawn.’

3    The offer was, therefore, for $65,000 including $30,000 for costs. It was open for one day until 12 pm on 30 April 2014. The trial commenced on the next day 1 May 2014. The proceedings had been on foot against Quality Kebabs since 10 October 2013. This means that the applicant waited 200 days until 29 April 2014, just two days before the trial, to make its offer which it then left open for one day.

4    By that time both parties had incurred expense. Further, the applicant recovered only nominal damages. It is true that I awarded additional damages, in the sum of $91,005.00, but this was not the result of any argument of substance developed before me. Further, the letter of offer made no mention of any such claim. It is true that the pleading claimed exemplary damages but I do not think this was what was being suggested in the letter of offer. It was not reasonable to put on such an offer so late in the piece or to insist upon such a short time frame for its acceptance. Quality Kebabs and Mr Kose would have been in the midst of their preparation for the trial and it was an unreasonable imposition upon them to expect them to deal with such an offer at that time and in that timeframe on pain of indemnity costs. I do not disregard the strength of the applicant’s case in reaching that conclusion. However, much of that strength emerged only after Mr Kose’s disastrous outing in the witness box. As at the date of the offer this cannot have been as clear as it became afterwards.

5    In those circumstances, I do not think it was unreasonable for Quality Kebabs and Mr Kose to have rejected the offer; cf. Black v Lipovac (1998) 217 ALR 386 at 431-2, [213]-[218] (FC).

6    The respondents sought an order reducing the costs to which the applicant was otherwise entitled pursuant to FCR 40.08 which provides:

‘40.08 Reduction in costs otherwise payable

A party other than in a proceeding under the Admiralty Act 1988 may apply to the Court for an order that any costs and disbursements payable to another party in the proceeding be reduced by an amount to be specified by the Court if:

(a)    the applicant has claimed a money sum or damages and has been awarded a sum of less than $100 000; or

(b)    the proceeding (including a cross-claim) could more suitably have been brought in another court or tribunal.’

7    The basis for the application was that the applicant had received only $91,015.00. I decline to make this order because:

(a)    this was an intellectual property case;

(b)    it involved a novel issue about additional damages; and

(c)    the case took a single day and I am far from satisfied that costs were wasted by the action being commenced in this Court.

8    The costs order will, therefore, remain as it is. Mr Kose and Quality Kebabs sought the costs of meeting the application for indemnity costs and I can think of no principled basis for rejecting that submission.

9    The orders of the Court will be:

1.    The applicant’s application for indemnity costs be dismissed.

2.    The applicant pay the costs of the first and second respondents of that application as taxed or agreed.

Associate:

Dated:    1 October 2014