FEDERAL COURT OF AUSTRALIA

Moroccanoil Israel Ltd v Aldi Foods Pty Ltd (No 2) [2017] FCA 1393

ORDERS

THE COURT ORDERS THAT:

1.    The respondents pay 35% of the applicant’s costs in NSD 613 of 2015.

2.    There be no variation in the order for costs made in NSD 1297 of 2015.

3.    Costs of both proceedings be awarded on the ordinary basis.

4.    Pursuant to r 40.02(b) of the Federal Court Rules 2011 (Cth), the costs of the two proceedings be paid in a lump sum.

5.    If the parties cannot agree within 14 days of these orders on the amount of the lump sum, the matter be referred to a Registrar of the Court to fix the amount.

THE COURT DIRECTS THAT:

1.    Pursuant to r 1.37, the Registrar:

(a)    determine the amount of the sums in such a manner as he or she sees fit, including, if considered appropriate, on the papers; and

(b)    within 28 days of the making of the determination, make orders for the payment of the amounts so determined.

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

REASONS FOR JUDGMENT

1    Moroccanoil Israel Limited (MIL) brought an action against the respondents (Aldi), alleging that they had infringed its registered trade marks (against which Aldi filed a cross-claim), committed the tort of passing off, and contravened several sections of the Australian Consumer Law (NSD 613 of 2015) (the infringement and consumer action). The trade mark infringement case failed and Aldi had a measure of success in its cross-claim. The passing off case and the statutory cause of action based on the same facts also failed. But MIL succeeded in establishing that Aldi had contravened the ACL in other respects. This proceeding was heard together with an appeal from a decision of a delegate of the Registrar of Trade Marks to reject an application by MIL to register the word mark moroccanoil (NSD 1297 of 2015) (the appeal). MIL prevailed in the appeal and I ordered the respondent in that proceeding, Aldi Foods Pty Limited, to pay its costs. See Moroccanoil Israel Ltd v Aldi Foods Pty Ltd [2017] FCA 823 (the substantive judgment).

2    On 31 August 2017 I made orders for declaratory and injunctive relief in the infringement and consumer action. I also invited the parties to file submissions on costs. This judgment is concerned with that question. It should be read with the reasons in the substantive judgment. Shorthand terms used in this judgment reflect those used in the substantive judgment.

3    Each of the parties has sought orders that costs be paid in a lump sum and as a percentage of its overall costs.

4    MIL asks for orders to the following effect:

1.    that Aldi pay 60% of its costs to date in the infringement and consumer action;

2.    that costs (in both proceedings) be awarded in a lump sum instead of any taxed costs; and

3.    that the amount of costs be determined by a registrar of the Court.

5    Aldi consented to the proposals for lump-sum costs orders and for the determination of the amount to be referred to a registrar. But it vigorously opposed the proposal that it pay 60% of MIL’s costs. Aldi submitted, instead, that MIL should pay 70% of its costs and that after a certain point in time costs in both proceedings should be awarded on an indemnity basis.

6    Both parties filed submissions. MIL also filed an affidavit affirmed by one of its lawyers, Marlia Saunders, attaching correspondence upon which it relied. No evidence was filed by Aldi. Attached to its submissions, however, was a table purporting to set out the number and percentage of paragraphs in written submissions, the time taken at trial (including in oral argument), and the number and proportion of witnesses by cause of action. Aldi also annexed two notices of offer of compromise under r 25.01 of the Federal Court Rules 2011 (Cth) (FCR or the Rules).

7    As the application for a lump-sum costs order is not contentious and as the Court has expressed a preference for costs to be awarded in this manner (see the Costs Practice Note, GPN-COSTS at [4.1]), I propose to accede to the application. I also propose to refer the determination of the amount to a registrar. I consider this the most efficient way to proceed. The remaining questions, however, are not without difficulty. For the reasons that follow, I have concluded that Aldi should pay 35% of MIL’s costs in the infringement and consumer action and that the order for costs in the appeal should not be disturbed.

The substantive proceeding

8    In the trade mark infringement suit, MIL alleged that Aldi’s use of the sign “Moroccan Argan Oil” on a range of hair care products and appliances was substantially identical with, or deceptively similar to, its two registered trade marks which incorporated the name moroccanoil accompanied by the letter “M”. Despite Aldi’s argument to the contrary, I found that Aldi had used the sign “Moroccan Argan Oil” as a trade mark, but I was not persuaded that the sign, as used, was deceptively similar to either of MIL’s marks. I ordered that Aldi’s cross-claim for rectification of the Register be allowed in part, directing the removal of one of MIL’s marks in relation to all of the goods in respect of which Aldi had alleged the trade mark had not been used, and the removal of the other mark in relation to some of the goods in respect of which it was registered but had not been used. In other words, MIL’s action was a complete failure and Aldi’s cross-claim was a partial success.

9    Three cases were brought under the ACL.

10    The first ACL claim was based on the branding and get-up of Aldi’s Moroccan Argan Oil range of products. MIL alleged, in effect, that the brand name and get-up falsely represented that the products in the range were, or were related to, MIL’s products and were being sold and promoted by Aldi on behalf of MIL and/or its licensees, or that in respect of these products Aldi’s business was affiliated or conducted with MIL’s licence, sponsorship or approval. The passing off case was based on the same allegations. I was not satisfied that any of the pleaded representations was made.

11    The second ACL claim turned on the use of the word “naturals” on and in relation to products in the range. That claim was partially successful. I found that this representation was misleading with respect to four products (the Aldi Oil Treatment (Versions 1 and 2), Shampoo, and Dry Shampoo) since the ordinary or reasonable consumer would take the reference to “naturals” to signify that the products contain substantially natural ingredients when — water apart — they do not. The same allegation, made in relation to four other products in the range, however, was not made out.

12    The third ACL claim was based on the alleged performance benefits of the hair care products and appliances. That claim was wholly successful. I found that Aldi represented that the argan oil used to manufacture those goods would make a material contribution to the alleged benefits although the amounts of argan oil were so small as to be incapable of doing so. Accordingly, I determined that the representations were misleading or deceptive.

General principles

13    The award of costs is discretionary. The Court’s power, conferred by s 43 of the Federal Court of Australia Act 1976 (Cth) (FCA Act), contains no express fetters. Any power of this kind, however, must be exercised judicially and in the way that best promotes the overarching purpose of the civil procedure provisions, namely to facilitate the just resolution of disputes according to law and as quickly, inexpensively, and efficiently as possible: see s 37M.

14    If the Court reserves the question of costs, costs follow the event, unless the Court makes a subsequent order: FCR r 40.03. That reflects the ordinary rule or usual order that the unsuccessful party should pay the costs of the successful party. As McHugh J put it in Oshlack v Richmond River Council (1998) 193 CLR 72 at [66], the outcome of the litigation is “[b]y far the most important factor which courts have viewed as guiding the exercise of the costs discretion”.

15    The difficulty in the present case is that, while MIL succeeded in obtaining some relief, its application for relief under the Trade Marks Act 1995 (Cth) was wholly unsuccessful and it had only mixed success in the ACL proceedings. On the other hand, it successfully fought off one arm of Aldi’s cross-claim — the cancellation of its trade marks based on the notion that they should never have been registered in the first place — and enjoyed partial success in resisting the other — the removal of both trade marks from the register for non-use in relation to certain goods.

16    It is well established that a court may reasonably depart from the usual order where, for example, the successful party “unnecessarily protracts the proceeding” or “obtains relief which the unsuccessful party had already offered in settlement of the dispute”: see Oshlack at [69].

17    Further, as MIL’s submissions recognise, where a litigant prevails in relation to only part of its claim, “the circumstances may make it reasonable” that it bear the costs of that part which failed: Hughes v Western Australian Cricket Association Inc (1986) ATPR ¶40-748 at 48-136. In Cretazzo v Lombardi (1975) 13 SASR 4 at 12 Bray CJ (with whom Jacobs J agreed) said that a successful party who fails on some issues “may well not only be deprived of his own costs of those issues, but ordered in addition to pay his opponent’s costs of them”. “Issues”, the Chief Justice explained, did not refer to “a precise issue in the technical pleading sense, but [to] any disputed questions of fact or … law”. These and other authorities were discussed at some length in Hockey v Fairfax Media (No 2) [2015] FCA 750 at [84]–[91] (White J).

18    In Hockey White J also referred to a number of authorities in this Court and elsewhere in which considerations of fairness and justice have driven judges to conclude that each party should pay the other’s costs to the extent of the other’s success in the action: see, for example, Thiess v TCN Channel Nine Pty Ltd (No 5) [1994] 1 Qd R 156 at 209; Bowen Investments Pty Ltd v Tabcorp Holdings Ltd (No 2) [2008] FCAFC 107 at [3]–[5] (Finkelstein and Gordon JJ). In the latter case at [5] their Honours said:

Costs are in the court’s discretion. Fairness should dictate how that discretion is to be exercised. So, if an issue by issue approach will produce a result that is fairer than the traditional rule, it should be applied. It is not suggested that such an approach requires a precise arithmetical apportionment of the costs as between the winner and loser of discrete issues. No doubt the assessment will often be rough and ready. But it will have the virtues of both fairness and reasonableness, which are often lacking in the application of the traditional rule.

19    The Court may make an order that costs be paid in a specified or lump sum: see FCA Act, s 43(3)(d) and FCR r 40.02(b). The purpose of such an order is “to avoid the expense, delay and aggravation involved in protracted litigation arising out of taxation”: Beach Petroleum NL v Johnson (No 2) (1995) 57 FCR 119 at 120. Section 35A(1) of the FCA Act provides that, subject to subs (2), a number of powers of the Court may, if the Court or a judge so directs, be exercised by a registrar. One of those powers is the power to make an order as to costs: s 35A(1)(f). Another is a power of the Court prescribed by the Rules: s 35A(1)(h). Rule 3.01(1) prescribes, for the purposes of s 35A(l)(h), the relevant powers of the Court. They include a power of the Court under a provision of the Rules mentioned in column 2 of an item in Schedule 2 to the Rules. Item 221 of Schedule 2 is the power under r 40.02 to make an order about the amount of costs. In other words, a registrar of the Court has the delegated power to fix costs in a lump sum in accordance with r 40.02(b).

The positions of the parties

20    MIL submitted that an award of 60% of its costs to date is an “appropriate” reflection of its success in the proceeding and takes into account matters in respect of which, it maintains, it should not have been put to proof.

21    MIL sought to justify its position in the following way.

22    First, MIL contended that, although the infringement claim was dismissed, it proved that Aldi used “Moroccan Argan Oil” as a trade mark across its entire range of products. It claimed that this was “the principal evidentiary issue in the infringement case” and was supported by both lay and expert evidence. Further, it pointed out that, despite Aldi’s argument to the contrary, Aldi’s hair brushes and appliances in the “Moroccan Argan Oil” range were found to be goods of the same description as the goods in respect of which the two MIL trade marks were registered. Evidence was led on this issue and cross-examination of MIL’s witnesses took about two hours.

23    Secondly, MIL submitted that, although it was entirely unsuccessful in the first ACL claim, much of the evidence relevant to these claims overlapped with claims in respect of which it was successful. Moreover, it claimed that it was unnecessarily put to proof about certain issues upon which it was ultimately successful. It contended that those issues included its reputation in the get-up of its products and “deliberate copying” by Aldi of MIL’s Oil Treatment. Once again, it also pointed to the dispute as to whether Aldi had used “Moroccan Argan Oil” as a trade mark, as to which it called expert evidence, and upon which it prevailed.

24    Thirdly, MIL submitted that, although it only proved the second ACL claim in relation to four out of eight hair care products, it was “substantially successful” and the evidence was “substantially the same” in relation to all the products the subject of the claim. I gather that the basis for the argument that it was “substantially successful” is that Aldi lost what MIL described as its principal argument: that it was not misleading to use the word “naturals” to refer to products in which there was “some amount, no matter how small” of a natural ingredient.

25    Fourthly, MIL noted that it was wholly successful in respect of the third ACL claim.

26    Aldi, on the other hand, considered itself the overall victor. It submitted that it should recover the lion’s share of the costs in what it described as “the Main Proceeding” (the infringement and consumer action). It argued that MIL’s “modest measure of success” ought to sound in a percentage discount of 30%. The basis for this submission was as follows.

27    First, each of the first ACL, the passing off, and trade mark infringement claims was in itself a “significant piece of litigation”.

28    Secondly, most of the evidence and most of the submissions were taken up by those three causes of action.

29    Thirdly, MIL overstated findings made in its favour and, in any event, MIL’s approach of evaluating costs on an issue by issue basis is not supported by the authorities.

30    Fourthly, MIL’s approach to the first ACL case required Aldi to defend, and the Court to adjudicate upon, a very complicated factual matrix.

31    Aldi supported this submission with the following table:

32    To complicate matters further, Aldi applied for indemnity costs. The application was based on offers of compromise made in both proceedings. The primary reason for the application advanced in written submissions was that the application was made under r 25.14(1), the effect of which is to give rise to a presumption in favour of indemnity costs in the circumstances described in the rule. Rule 25.14(1) reads:

If an offer is made by a respondent and not accepted by an applicant, and the applicant obtains a judgment that is less favourable than the terms of the offer:

(a)    the applicant is not entitled to any costs after 11.00 am on the second business day after the offer was served; and

(b)    the respondent is entitled to an order that the applicant pay the respondent's costs after that time on an indemnity basis.

33    The offers were served on 2 March 2016, some three months before the hearing began. Acceptance of an offer in one proceeding was dependent on acceptance of the offer made in the other proceeding. In its submissions MIL referred to them as “conjoined offers”. According to Aldi, the effect of the offers was that:

(1)    Aldi would agree to an injunction not to infringe either of MIL’s registered trade marks;

(2)    Aldi would agree to an injunction not to offer for sale or sell any of its products the subject of the infringement and consumer action;

(3)    MIL would agree that by re-badging its products as “Argan Oil of Morocco”, Aldi would not contravene either of the two proposed injunctions;

(4)    Aldi would discontinue as a party in the appeal, “thereby permitting that proceeding to be continued by MIL unopposed”;

(5)    the infringement and consumer action (including Aldi’s cross-claim) would be dismissed; and

(6)    each party would bear its own costs in each proceeding to the date of the offer.

34    Aldi submitted that, if MIL had accepted the offers of compromise, MIL would have achieved the principal purpose of “the three centrepiece claims” (the first ACL claim, the passing off claim, and the trade mark infringement claim), namely, for Aldi’s conduct to cease and for Aldi to be enjoined. No mention was made of MIL’s claim for monetary compensation. Moreover, Aldi argued, MIL would also have avoided incurring further costs in the appeal, as that proceeding would have continued unopposed. Instead, MIL pressed on with all its claims in both proceedings. The result, Aldi submitted, was not better than what MIL would have achieved had it accepted Aldi’s two offers. Consequently Aldi contended that, in accordance with the terms of r 25.14, MIL should pay its costs on an indemnity basis as and from 4 March 2016. Regardless, Aldi submitted, MIL should pay its costs from that date.

35    The original submissions were made in writing, in accordance with my order that the question of costs be determined on the papers. The written submissions were supplemented by oral argument after I contemplated deferring the determination until after the question of monetary relief had been dealt with. After the oral argument took an unexpected course, I permitted further brief written submissions.

How should the question be resolved?

36    In my opinion, neither MIL’s proposal nor Aldi’s is appropriate.

37    I turn first to MIL’s argument that Aldi should pay 60% of its total costs.

38    As Aldi put it, this proceeding was “first and foremost, about MIL’s attempt to restrain the use by Aldi of product labelling and get-up on the basis of alleged similarities with MIL’s moroccanoil range of products”. The history of the dispute between the parties revealed in pre-trial correspondence and the development of the pleadings suggests that the second and third ACL claims were afterthoughts. Neither appeared in the first iteration of the pleadings. The second ACL claim was added some three months after the originating application was filed, the third, nearly a year later. MIL’s predominant concerns were with the trade mark infringement claim and the related ACL/passing off claim, both of which were dismissed, with defending Aldi’s cross-claim to keep its own marks on the register, and with getting its word mark registered.

39    Nevertheless, the second and third ACL claims were not insubstantial. As MIL submitted, Aldi’s overview of the case failed to take into account the complexity of the evidence relied upon in relation to the matters upon which MIL succeeded. That included evidence from three industrial chemists, two called by MIL, one by Aldi. MIL is right, too, to point out that, although Aldi did have some success in its non-use claim, MIL did not contest a number of matters.

40    On the other hand, I do not accept that Aldi had no right to put MIL to proof about its reputation in Australia. While it is true that Aldi’s own marketing manager conceded that the MIL Oil Treatment was the market leader in oil treatment products, she made no such concession about the other MIL products. Indeed, no such suggestion was put to her. Moreover, I do not consider Aldi was unreasonable to put MIL to proof on the extent of its reputation, even in the Oil Treatment.

41    Nor do I accept that the principal issue in the trade mark infringement action was the question of whether “Moroccan Argan Oil” was used as a trade mark. It was one of two principal issues. The other issue — whether the Aldi sign was deceptively similar to MIL’s registered marks — was at least of equal importance. Aldi’s argument that “Moroccan Argan Oil” was not a brand name but a description of the products was reasonably arguable and it was supported by expert evidence.

42    Even so, I am not persuaded by Aldi’s argument that MIL should pay 70% of its total costs.

43    First, MIL was the applicant. While it did not win the whole of the infringement and consumer action, it did have some success.

44    Secondly, the proposition that each of the first ACL, the passing off, and the trade mark infringement claim was a significant piece of litigation cannot be accepted. The first ACL claim was identical to the passing off claim. MIL described it as “cognate with the first ACL claim”. No more evidence was led on this question than on the first ACL claim. The only reason the passing off claim was pleaded was that, had it been successful, MIL might have been able to recover additional damages. None of the evidence or the argument, whether oral or in writing, however, was concerned with the assessment of damages, let alone additional damages. At the request of the parties, an order had been made deferring that question until after liability had been determined. Such submissions as there were on the passing off claim were brief.

45    Thirdly, Aldi’s analysis is beguiling. There is no neat or necessary correlation between the number of words (or paragraphs) used in submissions and the costs incurred in developing them. Aldi’s calculations based on the extent of the written submissions, number of witnesses, and hearing days fail to take into account either the different complexities of the various causes of action or the fact that several witnesses gave evidence relevant to more than one claim (including claims MIL both won and lost).

46    I now turn to consider Aldi’s offers of settlement.

47    In oral argument Aldi frankly conceded that the power to award indemnity costs under the Rules was not enlivened. Nevertheless, it urged the Court to consider the offers in the exercise of its discretion. Shortly put, Aldi’s point was that it was unreasonable for MIL to reject the offers because, for all practical purposes, they gave MIL “a win on [its] centrepiece claims” by requiring Aldi to stop selling and distributing the allegedly “infringing products” and left MIL to continue the opposition appeal unopposed. The unstated assumption behind the offers was that MIL had no real interest in, and nothing to gain from, pursuing the second and third ACL cases.

48    I do not doubt that an offer of compromise may be relevant to the exercise of the Court’s discretion where the conditions under the Rules are not made out: see, for example, DSE (Holdings) Pty Limited v InterTAN Inc [2004] FCA 1251 at [11] (Allsop J); Grbavac v Hart [1997] 1 VR 154 at 155 (Winneke P) and at 165 (Hayne JA); Ruaro v Ferrari [2008] FCA 307 (Emmett J). Indeed, MIL reminded me of a judgment of my own in which I had made such an observation: Specsavers Pty Ltd v The Optical Superstore Pty Ltd (No 4) [2012] FCA 652 at [36]. The appeal from this case was dismissed and this observation was not criticised: Specsavers Pty Ltd v The Optical Superstore Pty Ltd (2012) 208 FCR 78.

49    It is true that, had MIL accepted Aldi’s offers it would have avoided the costs of a trial and its principal concerns about Aldi’s behaviour would have been addressed. Be that as it may, I am not disposed to award costs on an indemnity basis from 4 March 2016. Nor am I disposed to award costs to Aldi thereafter on the ordinary party and party basis, as Aldi submitted in the alternative.

50    First, in Les Laboratoires Servier v Apotex Pty Ltd (2016) 247 FCR 61 at [327] the Full Court noted that the primary judge was uncertain as to whether offers of compromise were more or less favourable to Apotex than the result in the case. In those circumstances, the Court held that the offers “could not reasonably be taken into account in Apotex’s favour as a discretionary matter under s 43”.

51    Here, it appears to be common ground that the overall result MIL achieved was not less favourable than the conjoined offers. Certainly, I am not satisfied that it was.

52    Secondly, Aldi’s offer was an all or nothing one; the offer made in one proceeding could not be accepted unless the offer in the other was also accepted. Registration of the word mark, moroccanoil, the subject of the appeal, was doubtless a matter of importance to MIL. True it is, the offers envisaged that Aldi would not contest the appeal. That said, the offer made on the appeal did not include Aldi’s consent to an order allowing the appeal and setting aside the decision of the delegate.

53    What is more, Aldi’s characterisation of the effect of its offers did not tell the full story. The precise terms of the offer in the appeal were these:

1    Consent orders

(a)    Aldi will consent to orders being made by the Court in the following terms:

(i)    That Aldi is forthwith removed as a party to the proceedings pursuant to rule 9.08 of the Federal Court Rules 2011 (Cth).

(ii)    That each party shall bear its own costs associated with the proceedings up to and including when Aldi is removed as a party to the proceedings.

2    Other terms

(a)    This offer is made 'without admissions' by Aldi as to the validity of the trade mark the subject of Trade Mark Application No. 1463962. Aldi expressly reserves its right to challenge the validity of the trade mark in the event that Trade Mark Application No. 1463962 proceeds to registration and Aldi is subsequently sued for infringement of any such trade mark.

(b)    This offer of compromise is only capable of acceptance together with acceptance of the terms of the Notice of Offer to Compromise in Proceedings NSD613 of 2015 which has been served at the same time as this offer.

(c)    This offer of compromise is open to be accepted for 14 days after service of this offer of compromise.

This offer is inclusive of costs.

(Emphasis added.)

54    In other words, Aldi left open the prospect of future litigation over the word mark.

55    In the appeal MIL was not only successful; it also obtained an order for costs, both of the appeal and of the proceeding before the delegate. Yet Aldi’s offer made no provision for the payment of any of MIL’s costs. Putting aside the costs of the proceeding before the delegate, by the time the offer was made MIL would have incurred costs on the appeal. There is no evidence of the amount of those costs but at a minimum they would have included filing fees, counsel’s advice, and costs associated with retaining Professor Zuckermann, a distinguished linguist and lexicographer. Professor Zuckermann’s affidavit was affirmed on 1 April 2016 (after the date of the offers) but he was retained in October 2015 and formally instructed on 20 November 2015. Having regard to the work product, it is reasonable to assume that work began well before the offers were made and that his fees would have been significant.

56    Thirdly, the offer in the infringement and consumer action failed to address either the second ACL claim (in which MIL was substantially successful) or the third (in which it was totally successful). The new packaging Aldi proposed in its offer included the representations I found to be misleading or deceptive. The orders I made restrained Aldi from exhibiting, offering for sale, selling, supplying, advertising, and/or promoting eight of the 12 products the subject of the proceedings in conjunction with the representations I found to be false and/or misleading, whether in packaging, on labelling, or otherwise. Moreover, at the time the offers were made, MIL would have incurred some costs in connection with those claims. Aldi did not offer to compromise those claims in any way, whether by withdrawing its products from sale, offering to pay compensation or damages or covering MIL’s costs or a proportion of them. The unstated assumption (that MIL had no real interest in pursuing those claims) appears to have been based on an inference derived from the history and background of the litigation. MIL’s decision not to accept Aldi’s offers suggests that the assumption was unfounded.

57    Fourthly, three months out from the hearing, MIL would undoubtedly have incurred substantial costs in prosecuting the trade mark infringement and first ACL/passing off claim. Yet, Aldi did not offer to pay those costs or to compromise them.

58    Having regard to all these matters, I am not satisfied that it was unreasonable or, for that matter, imprudent of MIL not to accept Aldi’s offers.

59    It follows that all costs should be awarded on the ordinary basis. But who should pay them and in what proportions and by what measure, given the mixed success?

60    A percentage costs order based on the overall costs incurred is attractively simple. Aldi’s approach, however, is overly simplistic. MIL’s is largely opaque. MIL argued that “a large majority” of the costs of the first ACL and passing off claim was spent on MIL establishing reputation, which was also relevant to the s 41 cross-claim, and that minimal costs were spent on the trade mark infringement claim “because the trade marks had to be considered in respect of the s 41 case”. But no evidence was adduced to support the argument.

61    In the absence of any evidence of the amounts spent by the parties on the prosecution of the unsuccessful claims, a percentage costs order based on the overall costs of the two proceedings might not be fair. On one view, the fairest way to determine costs is by reference to the success of the parties on the various causes of action. It is arguable that the circumstances of the present case make it reasonable that each party pay the costs of the other party on the causes of action in which it was unsuccessful — in other words, that MIL should pay Aldi’s costs on the trade mark infringement claim but that Aldi should pay MIL’s costs on the cross-claim (in addition to the costs of the appeal), perhaps with a modest discount to reflect Aldi’s partial success on the part of the cross-claim seeking removal of the MIL marks for non-use.

62    But neither party contended for this outcome. Moreover, it is likely to add to the parties’ costs. If there is another course that achieves a similar result without incurring additional costs it is to be preferred. In Thiess the Court of Appeal decided against an order that each party pay the costs of the other to the extent of the latter’s success in the action and instead awarded the defendant one third of its costs on the basis that it had successfully defended two thirds of the claims brought against it. At 209 the Court remarked:

Approximate though this may be, it seems to us to be preferable to the alternative of apportioning costs according to the success of either party in relation to particular issues, which would produce a process of taxation that seems to be almost universally deplored.

63    While the parties here have opted to avoid taxation, the task of determining what costs are attributable to a particular cause of action is no easy matter. Considerations of economy and efficiency tell against the course I contemplated.

64    Consequently, I accept Aldi’s submission that the Court should not “delve into the details on an ‘issue by issue’ approach”. As Aldi submitted, such an approach “tends to distract from the principal task of determining entitlement to costs based on the end result of the litigation”. In Les Laboratoires at [301], the Full Court acknowledged the breadth of the Court’s discretion, noted the remarks of Toohey J in Hughes, but at the same time found at [306] that the primary judge erred by awarding costs on the basis of success as to issues rather than starting from the position that the successful party was entitled to its costs.

65    Ultimately, I have decided that, as MIL was partially successful in the infringement and consumer action and obtained relief against Aldi, it should recover costs in that proceeding as well as the appeal, but that the costs of the former should be substantially reduced in recognition of the extent to which it failed. Taking all relevant matters into account, I conclude that, in addition to the costs of the appeal, Aldi should pay 35% of MIL’s costs of the infringement and consumer action. Such an award gives due weight to the primacy in the litigation of the infringement and first ACL/passing off cases but recognises MIL’s success in the other two ACL cases. It also recognises that a good deal of the costs incurred by MIL in successfully fending off the s 41 arm of Aldi’s cross-claim will be picked up by the costs order in the appeal. In other words, I expect that the costs associated with the retainer of Professor Zuckerman and in responding to the evidence of Ms Butler, Aldi’s lexicographer, would be recovered in the costs of the appeal. Since the reputation of the registered marks was relevant to the issues under s 41(5) and (6) of the Trade Marks Act, I also expect that MIL’s concerns about the costs associated with proving that matter would be largely, if not entirely, alleviated by that costs order.

66    Aldi proposed that I make orders for the filing and service of evidence to be placed before the Registrar. I decline to do so. The manner in which the matter proceeds from now on should be left to the Registrar. In the meantime, I urge the parties to try to resolve their dispute, with or without the Registrar’s assistance.

67    There will be orders accordingly.

Associate:

Dated:    29 November 2017