FEDERAL COURT OF AUSTRALIA

Aldi Foods Pty Ltd v Moroccanoil Israel Ltd (No 2) [2018] FCAFC 147

ORDERS

THE COURT ORDERS THAT:

1.    The Appellant be granted leave to appeal.

2.    The appeal be allowed.

3.    Orders 1-5 made by the primary judge on 24 July 2017 be set aside.

4.    The Respondent’s appeal from the decision of the Delegate of the Registrar of Trade Marks given on 9 October 2015 be dismissed.

5.    All questions of costs including of the appeal be remitted to the primary judge.

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

ORDERS

THE COURT ORDERS THAT:

1.    The appeal be allowed in part.

2.    Declarations 1, 2 and 3 made by the primary judge on 31 August 2017 be set aside.

3.    Order 2(a) made by the primary judge on 31 August 2017 be set aside.

4.    Orders 1-5 made by the primary judge on 29 November 2017 be set aside.

5.    All questions of the costs including of the appeal be remitted to the primary judge.

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

REASONS FOR JUDGMENT

THE COURT:

1    The Full Court delivered judgment in matters NSD 1654 of 2017 (‘Trade Mark Appeal’) and NSD 1656 of 2017 (‘Main Appeal’) on 22 June 2018: Aldi Foods Pty Ltd v Moroccanoil Israel Ltd [2018] FCAFC 93. The only order made at that time was that the parties bring in short minutes of order giving effect to the Court’s reasons within 7 days. The Court’s conclusions were expressed at [166]-[167] by Perram J:

‘166    The Appellants succeed on the Naturals claims but fail on the Performance Benefits claims. The appeal in NSD 1656 of 2017 should be allowed and the primary judge’s orders in relation to the Naturals claims should be set aside. Both parties have had a measure of success and there should be no order as to the costs of the appeal. The primary judge made separate costs orders but these are affected by her Honour’s acceptance of the Naturals case. Those orders should be set aside and her Honour should redetermine the question of the costs of the trial.

167     In the trade mark appeal, NSD 1654 of 2017, leave to appeal should be granted, the appeal should be allowed with costs and the orders of the primary judge set aside. The application to this Court at first instance should be dismissed with costs.’

2    With these conclusions Allsop CJ and Markovic J agreed (at respectively [1] and [169]). On 22 June 2018, the Full Court ordered the parties to bring in short minutes of order within 7 days. On 29 June 2018 Perram J extended the time for compliance with the Full Court’s order to 6 July 2018. On 6 July 2018, the parties informed the Court that they were unable to reach agreement on the short minutes of order. On 23 July 2018 Perram J made orders by consent for a timetable for brief submissions on the form of the orders resulting in a timetable for submissions ending on 7 August 2018. Both parties have filed submissions in compliance with that timetable with the last submission being received by the Court on 7 August 2018. The Court has concluded that the matter should be dealt with on the papers.

3    It will be seen from the above that the Court did not seek from the parties submissions on costs but rather merely on what the form of the orders should be. The Appellants now seek special costs orders as a result of the outcome of the appeal. The orders they seek are:

    a special costs order for the costs of the appeal in the Trade Mark Appeal proceeding on the basis of a Calderbank offer;

    a special costs order for the costs of the first instance hearing of the Trade Mark Appeal proceeding on the basis of the same Calderbank offer;

    a special costs order for the costs of the Main Appeal on the basis of the same Calderbank offer; and

    a special costs order for the costs of the trial in relation to the Main Appeal on the basis of the same Calderbank offer.

4    As the Respondent correctly submits, neither in their written submissions nor in their oral submissions on appeal did the Appellants foreshadow that there would be any special costs orders sought. In Kable v State of New South Wales (No 2) [2012] NSWCA 361 Basten JA (with whom the other members of the NSW Court of Appeal agreed) said this about a situation such as the present (at [14]):

‘As a general rule, any party which would seek to be heard in opposition to the usual order as to costs should raise the issue with the Court at the hearing of the appeal. If it does not, and seeks to be heard with respect to costs after orders have been made, even if the application is made in a timely fashion, that party should expect to have to explain and justify its failure to take advantage of the opportunity to address on costs at the hearing of the appeal and, if there were reasons for not doing so, why those reasons were not explained to the Court on the hearing of the appeal. ...’

5    The same point has frequently been made by the Full Court, most recently in Thomas v Commissioner of Taxation (No 2) [2017] FCAFC 144 (‘Thomas’). Authorities to the same effect are collected at [5]-[6] in Thomas. The Appellants now submit that they should not now be shut out from seeking a special costs order because:

    costs are in the discretion of the Court and that discretion is not constrained by any failure to raise the issue of a special costs order at the time of the hearing of the appeal; and

    it would have been presumptuous and inappropriate for them to have done so because it was only on the publication of the Full Court’s reasons on 22 June 2018 that it became apparent that there was any basis for the present application. Consequently, so the Appellants submitted, they made their application at the appropriate time and in the appropriate manner.

6    It is unlikely that these submissions are correct. No question of being presumptuous is involved. All that the Appellants had to do was to inform the Court that it should forbear from making any costs orders at the time the appeal and instead receive further submissions. However, in this case, the fact is that no such costs orders have yet been made. Further, the Respondent does not suggest it is prejudiced by the raising of the issue in the current manner although it does object to the Court entertaining it.

7    Despite the procedural irregularity of the Appellants’ position, the Court is persuaded it should entertain the application but, having done so, has formed the view that it should not now proceed to dispose of the issue of costs in the manner foreshadowed at [166]-[167] in the reasons of Perram J. In the absence of an effective Calderbank offer the proposal at those paragraphs should be the result but it is not clear at this stage what impact the Calderbank offer will have on the issue. As will be seen, it is not presently possible to assess the reasonableness of the offer contained in that letter.

8    The special costs orders are all sought on the basis of a Calderbank letter dated 19 April 2016 pre-trial. Part of it involves the offer of a payment by the Appellants to the Respondent of $150,000. The reasonableness of that offer cannot be judged at this stage because the effect of the Full Court’s conclusions is that the primary judge still needs to determine what damages the Respondent is entitled to for the Performance Benefits claims (upon which it succeeded). The Appellants submit that there is ‘no rational basis on which [the Respondent] could be entitled to any substantial amount of damages in respect of those contraventions, which were not based on any infringement of [the Respondent’s] rights’. The Respondent, on the other hand, points to the very large profits made by the Appellants by selling its Moroccan Oil products, submits it was hardly a surprising proposition that the Respondent might have been damaged by the Appellants’ unlawful incursion into the market and submits that it proposes to prove a substantial drop in its sales caused by the infringing conduct.

9    The Full Court does not regard itself as sensibly able to assess either party’s submission. Consequently, it cannot assess the reasonableness of the figure of $150,000 in the Calderbank offer. This makes it impossible for the Court to determine any of the costs matters that the Appellants now seek to ventilate all of which rest on the Calderbank offer. So far as the impact of the Calderbank offer is concerned, this should be addressed by the primary judge at the appropriate time which would appear necessarily to be after her Honour determines the damages to which the Respondent is entitled on the Performance Benefits claims.

10    As to the issue of the costs in this Court, one option might be to make costs orders which were contingent on the outcome the primary judge’s determination of whether the Calderbank offer was effective. If it were then the orders might be as the Appellants suggest but if the offer were held to be ineffective then the orders would be as the Court originally contemplated, set out at [1] above. The difficulty with taking that course is that the hearing before the primary judge may not be resolved in the tidy way this approach assumes. In that circumstance, the appropriate course is to remit the question of the costs of the appeals to the primary judge, to be dealt with after the assessment of the Respondent’s damages and at the same time as her Honour deals with the Calderbank issues. We would not seek to bind her Honour’s determination of the issue save as to note that in the absence of any effective Calderbank offer the Court’s view as presently appraised is that it would make no order as to costs in the Main Appeal and would order the Respondent to pay the Appellant’s costs in the Trade Mark Appeal. We would also not express any view as to whether the offer is expressed to extend to an appeal.

Other orders

11    The primary judge dealt with costs in a separate judgment on 29 November 2017: Moroccanoil Israel Ltd v Aldi Foods Pty Ltd (No 2) [2017] FCA 1393. The orders made were:

‘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.’

12    The Appellants submit that the present dispute was whether order 3 should be set aside. They submit that all of the costs orders should be set aside including order 3. The primary judge’s reasoning on the costs issue proceeded on the assumption that the Respondent had succeeded on the trade mark issue which is no longer the case. We make no comment on what the appropriate costs should now be which will be for the primary judge. However, this Court’s reasoning disrupts the result below and the matter will need to be considered afresh. Orders 1-5 should be set aside.

Orders

13    In NSD 1654 of 2017 the orders are:

1.    The Appellant be granted leave to appeal.

2.    The appeal be allowed.

3.    Orders 1-5 made by the primary judge on 24 July 2017 be set aside.

4.    The Respondent’s appeal from the decision of the Delegate of the Registrar of Trade Marks given on 9 October 2015 be dismissed.

5.    All questions of costs including of the appeal be remitted to the primary judge.

14    In NSD 1656 of 2017 the orders are:

1.    The appeal be allowed in part.

2.    Declarations 1, 2 and 3 made by the primary judge on 31 August 2017 be set aside.

3.    Order 2(a) made by the primary judge on 31 August 2017 be set aside.

4.    Orders 1-5 made by the primary judge on 29 November 2017 be set aside.

5.    All questions of the costs including of the appeal be remitted to the primary judge.

Associate:

Dated:    4 September 2018