FEDERAL COURT OF AUSTRALIA

Dr Martens Australia Pty Ltd v Figgins Holdings Pty Ltd (No 2) [2000] FCA 602

COSTS – party and party basis – four related proceedings heard together – respondents’ relied on evidence common to all proceedings – substantial savings in court time – applicants successful in only one proceeding – costs follow event for unsuccessful respondents - proportion of costs to be paid by unsuccessful respondents in respect of costs incurred by applicants for all proceedings.

COSTS – party and party basis – four related proceedings heard together – applicants successful in only one proceeding – applicants sought reductions in costs payable to respondents in proceedings where applicants unsuccessful – reductions sought based on conduct prior to and during hearing – only reduction allowed based on costs thrown away by reason of late amendment of defences.

COSTS – indemnity basis – action against several respondents – one respondent found not to be involved in conduct which formed the basis of the action – respondent not called for cross‑examination – proceeding not discontinued against him – indemnity costs awarded after closing of case against other respondents.

COSTS – indemnity basis – Calderbank letter – offer not exclusive of money claim and party and party costs – consent injunctions proposed by applicants and respondents as part of terms of offer – injunctions sufficiently different to make rejection of the offer by applicants not imprudent – offer not suitable for consideration as a Calderbank offer.

Trade Practices Act 1974 (Cth): s 52

Federal Court of Australia Act 1976 (Cth):  s 43(2)

Federal Court Rules:  O 23, O 62 rr12, 19 and 31

Calderbank v Calderbank [1976] Fam 93 cited

Colgate‑Palmolive Company v Cussons Pty Ltd (1993) 46 FCR 225 distinguished

John S Hayes & Associates Pty Ltd v Kimberly‑Clark Australia Pty Ltd (1994) 52 FCR 201 cited

Flemington Properties Pty Ltd v Raine & Horne Commercial Pty Ltd (unreported, Lehane J, 11 February 1998) cited

Donnelly v Edelsten (1994) 121 ALR 333 cited

Smallacombe v Lockyer Investment Co Pty Ltd (1993) 42 FCR 97 applied

Yorke v Lucas (1985) 158 CLR 661 considered

Hughes v Western Australian Cricket Association (Inc) (1986) ATPR 40‑748 cited

Cummings v Lewis (1993) 41 FCR 559 cited

Ritter v Godfrey [1920] 2 KB 47 cited

Dodds Family Investments Pty Ltd v Lane Industries Pty Ltd (1993) 26 IPR 261 considered

DR MARTENS AUSTRALIA PTY LTD & ORS v FIGGINS HOLDINGS PTY LTD & ORS

VG 958 of 1995

DR MARTENS AUSTRALIA PTY LTD & ORS v BATA SHOE COMPANY OF AUSTRALIA PTY LTD & ORS

VG 959 of 1995

DR MARTENS AUSTRALIA PTY LTD & ORS v RIVERS (AUSTRALIA) PTY LTD & ORS

VG 960 of 1995

DR MARTENS AUSTRALIA PTY LTD & ORS v WINDSOR SMITH PTY LTD & ORS

VG 962 of 1995

GOLDBERG J

10 MAY 2000

MELBOURNE

REASONS FOR JUDGMENT

INTRODUCTION

1                     On 16 April 1999 I published my reasons for judgment in these matters in which I concluded that:

·                    the applicants had failed to make out any of their causes of action against Figgins Holdings Pty Ltd, Bata Shoe Company of Australia Pty Ltd, Rivers (Australia) Pty Ltd and their respective directors;

·                    the applicants had succeeded in some of their claims against Windsor Smith Pty Ltd, Chicago Boot Company Pty Ltd, Ad. Mance Australia Pty Ltd and Mr Craig Mance;

·                    the applicants had failed to make out any of their causes of action against Mr Brett Mance, Ms Leanne Mance and Ms Diane Mance.

On 21 April 1999 I ordered that the applications in the proceedings against Bata Shoe Company of Australia Pty Ltd and its directors, Figgins Holdings Pty Ltd and its directors and Rivers (Australia) Pty Ltd and its directors be dismissed and gave directions to enable the parties to make submissions on costs.  On 7 May 1999 I made declaratory, injunctive and other orders against Windsor Smith Pty Ltd, Chicago Boot Company Pty Ltd, Ad. Mance Pty Ltd and Mr Craig Mance and also heard submissions on the costs of the four proceedings. 

BACKGROUND

2                     The applicants commenced four separate proceedings against four different groups of respondents:

·                    Windsor Smith Pty Ltd (“Windsor Smith”), two of its associated companies and its directors;

·                    Rivers (Australia) Pty Ltd (“Rivers”) and its directors;

·                    Bata Shoe Company of Australia (“Bata”) and its directors; and

·                    Figgins Holdings Pty Ltd (”Figgins”) and its directors and another company (against whom the proceeding settled) and its directors. 

The applicants alleged that each of Windsor Smith, Bata, Rivers and Figgins, by manufacturing and selling certain items of footwear, had contravened s 52 of the Trade Practices Act 1974 (Cth) (“the Act”) and had passed off their footwear as and for footwear of, or associated with, the applicants.  Trade mark infringement was also alleged against Windsor Smith and Bata.  Each respondent company had manufactured a different item of footwear but the common issue in each of the four proceedings was the history and development of a particular style or look of footwear called the Z welt footwear, the reputation and goodwill which had been developed in relation to the Z welt footwear and the entitlement of various applicants to the intellectual property in it.

3                     The four proceedings were heard together so that evidence of the applicants was not duplicated and the respondents in each proceeding in a number of respects relied on the evidence of the respondents in the other proceedings.  The result was that a substantial body of evidence led by the applicants was only led once although it was subject to cross‑examination by each set of respondents.  There were costs consequences in two respects.  First there was a saving of time and costs for the applicants who only had to lead their evidence once with a consequent saving of time and expense not only with evidence‑in‑chief but also in relation to cross‑examination as, substantially, cross‑examination was not duplicated.  Secondly, each group of respondents effectively had to participate in the whole of the trial which meant that they were present whilst other respondents were conducting their cases with a consequent increase in expense.  Overall there was a substantial saving of Court time.

COSTS ORDERS SOUGHT

4                     Various submissions as to costs have been made which are variations on the usual order that costs on a party/party basis follow the event.  I refer to the respondents in each proceeding collectively by reference to the name of the principal corporate respondent.

5                     Bata submitted that three of its directors, Messrs Beckwith, Thring and Kelly, the second, third and fifth respondents, should be paid their costs on an indemnity basis as there was no evidence that any of them were knowingly concerned in or a party to any of the acts or conduct alleged by the applicants and the allegations against them should never have been made.

6                     Figgins submitted that the respondents against whom the proceeding went to trial, namely Figgins and four directors Messrs Corn, Figgins, Venner and Robertson, should be paid their costs from 1 July 1997 on an indemnity basis because of a “Calderbank” letter written by Figgins’ solicitors to the applicants’ solicitors written without prejudice save as to costs on 1 July 1997. 

7                     Windsor Smith submitted that in a number of respects it should not have to pay all the costs of the applicants incurred in relation to the proceeding against it and in particular should not have to pay the applicants’ costs of the whole of the trial as that would result in it paying the applicants’ costs of the trial in those proceedings in which the applicants were unsuccessful and did not obtain an order for their costs but rather had to pay the respondents’ costs.

8                     The applicants submitted that the successful respondents should not be allowed all their costs as their conduct in a number of respects unnecessarily prolonged the hearing in relation to a number of discrete issues.  The applicants submitted that overall the successful respondents should not be allowed 74% of their costs and that the successful respondents should pay 74% of the applicants’ costs on a party/party basis save for one discrete issue in respect of which Bata should pay the applicants’ costs on an indemnity basis.  They submitted in the alternative that the successful respondents should not be allowed their costs in respect of particular issues or matters.

FIGGINS’ APPLICATION FOR INDEMNITY COSTS

9                     On 6 June 1997 Figgins’ solicitors wrote a letter to the applicants’ solicitors which was marked “Without prejudice save as to the question of costs”.  In the letter the following offer by Figgins was proposed:

·                    Payment of $5,000 on execution of terms of settlement (although they contended that their client had made a loss from the sale of the shoe in question);

·                    Each party bear their own costs including reserved costs and waive any entitlement to recover costs under previous costs orders;

·                    Within sixty days of acceptance of the offer withdrawal of any remaining stocks of the “ah! SOUL” Butt Head Black Leather shoe from the market;

·                    Consent to injunctions restraining the relevant respondents from, generally, selling or advertising footwear under or by reference to the trade marks “docs”, “Docs” or “Dr Martens” or any trade marks substantially identical with or deceptively similar to those trade marks and from representing that any of their footwear was associated with or had the approval of the applicants.

The letter stated that if the applicants failed to obtain a judgment more favourable than the terms of the offer, Figgins would seek an order for costs on a solicitor and own client basis or alternatively on a party and party basis from the date of the offer.  That offer was rejected and on 1 July 1997 Figgins’ solicitors wrote a further letter “Without prejudice save as to the question of costs” in which the following offer was made:

·                    Payment of $40,000 inclusive of damages and costs;

·                    Waiver of the entitlement to earlier costs orders in their favour;

·                    No press release relating to the settlement if achieved;

·                    A form of acknowledgment and undertakings was propounded which acknowledged the second applicant’s R Griggs & Co Ltd’s ownership in Australia of the proprietary rights and goodwill in the distinctive features of the Z welt footwear.  The relevant respondents undertook not to manufacture, advertise or sell any footwear having each of the distinctive features relied upon by the applicants or manufacture or sell any footwear under or by reference to specified trade marks or represent that they or any of Figgins’ footwear had the sponsorship or approval of the applicants;

·                    A form of consent order to injunctions generally in these terms was also propounded.

The letter stated that if the applicants did no better at trial than the terms of the offer, Figgins would rely upon the letter on the question of costs.  Figgins relies upon this letter as a Calderbank letter as that term is now understood:  Calderbank v Calderbank [1976] Fam 93 at 106.

10                  On 8 July 1997 the applicants’ solicitors wrote a letter to Figgins’ solicitors in which:

·                    Figgins’ letter was rejected;

·                    A form of press release was proposed;

·                    The applicants said they were prepared to accept $90,000 inclusive of all claims and costs;

·                    A form of acknowledgment, undertakings and consent orders was propounded in a form different from the form proposed by Figgins.

11                  On 14 July 1997 Figgins’ solicitors wrote to the applicants’ solicitors informing them that the applicants’ proposal was unacceptable. 

12                  Figgins submitted that in the light of these circumstances an order for indemnity costs should be made in its favour in the following terms:

“The Applicants pay the respondents’ costs incurred after 1 July 1997 on the basis that such costs are to include all costs except insofar as they are of an unreasonable amount or were unreasonably incurred so that, subject to such exceptions, the Respondents will be completely indemnified by the Applicants for their costs.”

13                  Figgins submitted that although the relevant Federal Court Rules provided for the recovery of costs on a party and party basis:  O 62 rr12, 19 and 31, the Court has routinely departed from this usual or ordinary basis where the justice of the particular case required it or some special or unusual feature arose:  Re Wilcox; Ex parte Venture Industries Pty Ltd (1997) 72 FCR 151 at 158 per Cooper and Merkel JJ. 

14                  Figgins relied upon the principles or guidelines distilled out of the authorities by Sheppard J in Colgate‑Palmolive Company v Cussons Pty Ltd (1993) 46 FCR 225 at 232‑234.  His Honour observed that the settled practice of the Court was to order the payment of costs on a party and party basis and that the Court ought not usually make an order on some other basis unless the circumstances of the case warranted the Court departing from the usual course.  Relevantly for present purposes his Honour included “an imprudent refusal of an offer to compromise” in some of the circumstances which have been thought to warrant the exercise of the discretion.

15                  There is no rigid demarcation between the circumstances in which the usual order as to party and party costs is made and the circumstances in which it is appropriate to award indemnity costs.  As was pointed out by Hill J in John S Hayes & Associates Pty Ltd v Kimberly‑Clark Australia Pty Ltd (1994) 52 FCR 201 at 203:

“… care must be taken not to circumscribe the discretion by reference to closed categories.  It is not a necessary condition of the power to award costs that a collateral purpose be shown.  The categories warranting the exercise of the discretion are not closed:  Colgate‑Palmolive at 233; Tetijo Holdings Pty Ltd v Keeprite Australia Pty Ltd (unreported, Federal Court, 3 May 1991) per French J at p 8; Ragata Developments Pty Ltd v Westpac Banking Corporation (unreported, Federal Court, 5 March 1993) per Davies J at p 6.  In each case it will be necessary to look at the particular facts and circumstances to see whether an exercise of discretion to order costs on an indemnity basis is warranted.”

16                  It does not automatically follow that the making of an offer of compromise or settlement, whether by way of a Calderbank letter of offer or otherwise, and its non‑acceptance followed by a result less favourable to the offeree than that contained in the offer, will lead to an order for the payment of costs on an indemnity basis:  John S Hayes & Associates Pty Ltd v Kimberly‑Clark Australia Pty Ltd (supra) at 205‑206; MGICA (1992) Pty Ltd v Kenny & Good Pty Ltd (No 2) (1996) 70 FCR 236 at 240.  As Lehane J observed in Flemington Properties Pty Ltd v Raine & Horne Commercial Pty Ltd (unreported, 11 February 1998, at 2‑3):

“Underlying that line of authority [concerning the effect to be given to Calderbank offers] is, undoubtedly, a policy of the law in favour of the sensible compromise of disputes.  That policy is promoted if a party who rejects a realistic offer of compromise risks an order for indemnity costs if it refuses the offer and ultimately obtains a result no better than that which it would have got by accepting the offer.

Its promotion, however, does not in my view require that an applicant who receives any offer and rejects it be at risk of an order for payment of indemnity costs should the applicant ultimately fail to obtain any relief because it fails to make good the cause of action on which it relies.  There is, after all, a policy also against deterring parties from pursuing claims to which they reasonably believe themselves entitled.  A case – particularly a complex commercial case – in which there is room for substantial argument, and opposing views, about issues going to liability is by no means uncommon.  Nor is it uncommon in such a case that an applicant, if it makes good the elements of its cause of action going to liability, will be entitled to substantial damages.  The Calderbank policy by no means necessarily requires, in such a case, that the applicant, if ultimately unsuccessful, be required to pay indemnity costs because it rejected an offer of a small fraction of the amount of which it claims.  It may be – perhaps is likely to be – otherwise where the offer is a commercially realistic one made upon a sensible and informed assessment of the prospects and risks of the litigation on each side.”

17                  Thus, whenever a Calderbank offer is made, and is enlivened by a result more favourable to the offeror and less favourable to the offeree, it is necessary to look at all the surrounding circumstances and not simply the fact that an offer was made and rejected and the offeree has achieved a less favourable result than the offer.  It is necessary to look at the genuineness of the offer, whether it was realistic, the point of time at which it was made and that whether, in all the circumstances, it was such a reasonable offer as required the offeree to give careful consideration to it.  If, in all the circumstances, it was unreasonable for the offeree to reject the offer and not accept it then there are strong grounds for the Court ordering indemnity costs on the basis that the offeror has made a fair and reasonable attempt to resolve the proceeding and has given the offeree the opportunity at a relevant point of time in the proceeding to consider the reasonableness of the offer.  The Full Court (Neaves, Ryan and Lee JJ) underscored this approach in Donnelly v Edelsten (1994) 121 ALR 333 where it said at 345:

“The foundation for the order is the need for the costs order to do equity where a party who has succeeded in the proceeding has made a reasonable attempt to terminate the proceeding by an offer of compromise shown to have been a fair offer in all the circumstances and to have provided appropriate opportunity for the offeree to consider and deal with the offer.”

18                  Figgins submitted that its second offer of compromise made on 1 July 1997 was genuine, realistic and fair and made at a time when the applicants had ample opportunity to assess the relevant strengths and weaknesses of each party’s case and to deal with the offer.  Figgins submitted that the rejection of the second offer was unreasonable and that it would be inequitable for Figgins to suffer the costs burden which will follow if its costs are taxed on a party and party basis.

19                  The applicants submitted that Figgins’ application for costs to be paid on an indemnity basis should be refused for the following reasons:

·                    The considerations relevant to Calderbank offers are not apt where the applicants’ claims do not involve a monetary sum as the sole relief claimed in the proceeding;

·                    The procedure set out in the Federal Court Rules as to offers of compromise was not followed;

·                    The offer made was inclusive of costs which precluded the offer being considered in the exercise of discretion as to costs;

·                    The terms of the offer were uncertain because there was no basis upon which the applicants could calculate the component that related to costs, the component that related to damages and the methodology of the calculation of any profits made by Figgins by reason of the sale of the entire range of footwear the subject of the offer of compromise;

·                    The money sum offered was inadequate given the number of pairs of footwear sold by Figgins which was sought to be made the subject of the offer of compromise.

20                  I do not accept the submission that the considerations relevant to Calderbank offers are not apt in circumstances where the claims do not involve a monetary sum as the sole relief.  The principle identified in Calderbank v Calderbank (supra) is not so limited and none of the subsequent cases which have considered the principle have sought so to limit it.  It is always a question of fact whether a Calderbank offer is constructed in such a way as to constitute a reasonable basis for compromising or settling a proceeding.  If it is in a form which is apt to make a sensible and reasonable offer which covers the relief and orders sought by the applicant whether by way of offer of money, undertakings as to conduct or consent to forms of proposed orders, there is no reason why the applicant should not be required to give it proper consideration for the purpose of the application of the Calderbank principle.

21                  It is true that the procedure set out in O 23 relating to offers of compromise was not followed but I do not consider that to be of any relevance having regard to the nature of the offer made by Figgins and its suitability for consideration as a Calderbank offer. 

22                  However the suitability of an offer for consideration as a Calderbank offer depends upon whether it is appropriate to make an offer inclusive of all money claims and costs.  In Smallacombe v Lockyer Investment Co Pty Ltd (1993) 42 FCR 97 at 102, Spender J refused to have regard to an offer inclusive of claim and costs for the purpose of considering whether the Calderbank principle should apply.  His Honour said at 101‑102:

“However, I am satisfied that I should not have regard to the making of an offer which is, in effect, an all‑up offer.  The letter of 21 May 1991 is not a Calderbank letter nor is it a letter of the kind considered in Messiter v Hutchinson, nor is it in any way analogous to a ‘payment in’.

            It requires an applicant to assess two components:  the likely value of the claim and the likely party and party costs to date as they would tax.  It is not analogous to the offer considered in any of the cases, and Mr Doyle, counsel for the respondent, has been unable to cite a case where an all‑up offer of settlement of claim, that is, one including costs, has been considered.

            To give effect to such an offer would tend against lean litigation.  Not all firms conduct litigation so that the costs recoverable on taxation in similar litigation is the same or of the same order.  To accept the all‑up offer as a relevant consideration on costs would, over time, reward the firm whose costs were ‘padded’ although still recoverable on a party and party basis, and disadvantage those firms who conducted litigation with tight efficiency.”

Spender J (at 102) was:

“firmly of the view that an ‘open’ offer ought to be an offer to settle the claim and that an ‘all‑up’ offer of ‘claim plus costs’ ought not to be a relevant consideration on the question of costs and does not fall to be considered in the same way as a Calderbank letter”.

His Honour took the view that such an offer would not promote the finality of the litigation but rather would fragment it.  As was pointed out by Spender J the difficulty with such an offer is that it does not compartmentalise that part of the offer directed to the recovery of an amount claimed by the applicant.

23                  The view expressed by Spender J was followed by Moore J in Hanave Pty Ltd v LFOT Pty Limited (unreported, 11 November 1998).  His Honour observed that Spender J’s reasons were compelling and he could see no reason to depart from Spender J’s approach.  I am inclined to the same view.

24                  If the purpose of a Calderbank letter is to offer to bring litigation to an end it should be couched in such terms as enable the offeree to make a carefully considered comparison between the offer made and the ultimate relief it is seeking in all its aspects.  An offer inclusive of costs confuses this issue as it puts the offeree in a position of not being able to determine the appropriate amount to attribute to the money sum it is seeking.  Although an estimate can be made of what the offeree’s taxed party and party costs might be at the time of the offer, the offeree is not being offered the opportunity to have those costs assessed by taxation in default of agreement, in addition to being made an offer to settle its claim.  As a matter of principle, if a party is to be put at risk of losing its costs, even if ultimately successful, by not accepting an offer made to settle or compromise the proceeding at a point of time prior to trial, that risk should only be imposed if the party is given the opportunity, at the time of the offer, to obtain its taxed costs to date in addition to the offer made, knowing that it has been able to make a careful comparative assessment of the value of the offer as against the ultimate relief sought to be obtained.

25                  Even if I had determined that an offer inclusive of claim and costs was appropriate to consider by reference to the Calderbank principle, I would not have reached the conclusion that it was imprudent or unreasonable for the applicants to reject the Figgins offer having regard to the issues which arose as to the terms of the consent orders proposed by Figgins and the amount of money it offered.

26                  In the course of submissions, comparisons were made between the offer made by Figgins on 1 July 1997 and the counter‑offer made by the applicants on 8 July 1997.  Not only was there a difference between the money payments proposed, $40,000 as against $90,000, there was also a difference in the form of injunctive relief proposed.  Figgins was prepared to consent to injunctions, in general terms, restraining it from manufacturing, selling or advertising:

“any footwear having a majority or all of the distinctive features listed at Annexure A hereto and illustrated at Annexure B hereto so as to pass off or enable to be passed off any footwear of the First Respondent as and for footwear of any or all of the Applicants”.

The applicants propounded a form of order restraining Figgins from manufacturing, selling or advertising:

“any footwear having some or all of the distinctive features listed at Annexure A hereto and illustrated at Annexure B hereto so as to be substantially identical with or deceptively similar to Dr Martens Footwear”.

The relevant orders sought in the further amended application which had been amended on 21 November 1997 sought an order that Figgins be restrained from:

“from manufacturing, … advertising … offering for sale … footwear which has the same or substantially the same get up as the Z Welt Footwear defined in the Third Amended Statement of Claim …”

Figgins submitted that the form of injunction to which it was prepared to consent was essentially the same as in the application.  The applicants submitted that the form of injunction proposed by Figgins was more limited as it only essentially restrained passing off where the footwear had a majority of the distinctive features which was more limited than the injunction which they had sought in the amended application and in their proposed form of consent orders.

27                  It is not necessary for me to decide whether one form of order is more appropriate than the other or whether the relief sought in the amended application was appropriate.  I am not determining whether the applicants should be ordered to pay Figgins’ costs on an indemnity basis by way of punishment but rather, whether Figgins made such a reasonable attempt to resolve the proceeding that it is just in all the circumstances that it should be awarded its costs on an indemnity basis.  Although the difference between the wording proposed by the applicants and Figgins was small it was sufficiently different to result in the applicants not being prepared to accept Figgins’ form of order.  The difference was significant because it opened up an area which had the potential for further disputes.  Although the applicants’ form of proposed order was not apt for an injunction based upon passing off or a contravention of s 52 considerations, it being based upon terminology more relevant to trade mark infringement, it is not for me to determine whether the applicants were unreasonable in propounding the form of order they did.  The issue is whether it was imprudent for the applicants to refuse Figgins’ offer of consent injunctions.  It was important for the applicants to obtain certainty as to what was covered by the injunctions and the consent orders offered did not give them that certainty.  Taken in conjunction with the other matters that had arisen in relation to the offer I do not consider that it was imprudent for Figgins to reject the offer made insofar as it related to the terms of the injunctions sought.

28                  Figgins submitted that the monetary component of the proposed settlement was significant as the main thrust of the applicants’ case was for relief in the nature of declaratory and injunctive relief.  In this respect Figgins pointed to the press release which the applicants proposed.  I do not consider that I should disregard the significance of the relief sought by way of damages or, at the applicants’ option, an account of profits.  There was some issue as to the quantity of alleged infringing footwear at the time the Figgins offer was made but it is not necessary to resolve that issue as the relevant question is whether the applicants’ rejection of the offer was imprudent or unreasonable.  There was the potential for a significant claim for damages or an account of profits if the applicants succeeded and on 1 July 1997, because of the costs which the applicants had incurred to that date, the offer made no allowance for any amount for damages or profits if the offer was applied first in payment of the applicants’ costs.  To the extent to which Figgins made an allowance for a component of damages or profits in the offer, it reduced the contribution towards Figgins’ costs to something substantially less than half its costs.

29                  Having regard to the fact that the offer of $40,000 was an all‑in offer inclusive of claim and costs I do not consider it was imprudent, from a money point of view, to reject that offer having regard to the fact that, according to the applicants on 8 July 1997, their costs at that time were well in excess of $90,000.  It is not to the point that they were prepared to accept $90,000 which contained no component of damages but only components of costs.  The point is rather whether the rejection of the $40,000 was unreasonable and imprudent.  In my view it was not.

30                  Figgins submitted that its 1 July 1997 offer was commercially realistic as it gave the applicants the commercial protection that they wanted, that it was made in a timely manner and that they were able to assess the relevant strengths and weaknesses of each side’s case.  The offer may have been commercially realistic but, for the reasons to which I have referred, it was not imprudent or unreasonable for the applicants to reject the offer.

31                  In an early submission Figgins submitted that the proceeding was at best speculative and in the nature of a test case but that submission did not appear to be pressed.  I do not regard it as an appropriate characterisation of the case to say that it was speculative or a test case.  There were specific allegations raised against the Figgins respondents and there were serious issues of fact and legal principle to be resolved as is demonstrated by my earlier Reasons for Judgment. 

32                  In conclusion, for the reasons to which I have referred I do not consider it appropriate in determining whether an order for indemnity costs should be made, to take into account a Calderbank offer which makes an all‑in offer inclusive of money claims and costs.  Even if I am wrong in this respect I take into account the quantum offered and the fact that, on the applicants’ calculations, the offer had no component for damages or an account of profits.  I also take into account the concerns the applicants had as to the form of injunctive relief which they were seeking and which was being consented to, which was unacceptable to the applicants.  I do not consider that in all the circumstances it was imprudent and unreasonable for the applicants to reject the Figgins’ offer on 1 July 1997.  The applicants should pay Figgins’ costs on a party and party basis.

BATA DIRECTORS’ APPLICATION FOR INDEMNITY COSTS

33                  Messrs Beckwith, Thring and Kelly, the second, third and fifth respondents, seek an order that they be paid their costs on an indemnity basis on the ground that there was no evidence that any of them were knowingly concerned in or a party to any of the acts or conduct alleged by the applicants.  In pars 194 and 195 of my Reasons for Judgment I found that there was no evidence that any of these directors were knowingly concerned in, or a party to, the decision to manufacture the J.J. Lester Danny boot and that they had no knowledge of the circumstances which led to the manufacture of that boot.  Each of them swore an affidavit in September 1997 in which they said that they had no involvement in any matters relating to the design, manufacture or sale of the Danny boot.  Messrs Beckwith and Thring said that they had no recollection of any Board discussions in relation to the manufacture or sale of the footwear until a letter of demand was received by Bata in or about late 1995.  Mr Kelly said that he was only appointed a director of Bata on 1 December 1994, approximately five months after the Danny boot was manufactured and commenced to be sold.  Mr Kelly was not required to attend for cross‑examination but Mr Beckwith and Mr Thring were cross‑examined.

34                  In its initial discovery Bata did not disclose any Board minutes relevant to the issues in the proceeding prior to a letter of demand being sent.  After the trial commenced Bata belatedly discovered an internal memorandum dated 8 February 1994 from Mr Weston to Mr Grant.  I extracted part of this memorandum in par 197 of my earlier Reasons for Judgment.  It referred to a meeting with Mr Bacchi, a Bata product development officer from Italy.  The result of his visit was that Bata would produce Dr Martens type styles and in particular would produce “a product line of Dr Marten type branded J.J. Lester with yellow stitches ready for 1^st May production”.  No satisfactory explanation was given for the failure of Bata to discover this memorandum until well into the trial on 5 November 1997.  Its relevance to the directors is that there had been a Board meeting on 3 February 1994 at which Messrs Weston, Grant, Beckwith and Thring were present, the minutes of which disclosed that:

“Mr Grant reported that Mr Bacchi – product development officer from Italy was currently visiting the company developing the school shoes range with fashion content for local production.  He added that Mr Bacchi would also assist with development of the Industrial leather range.”

This minute was not discovered until well into the trial on 25 November 1997.

35                  In cross‑examination Mr Beckwith said the minute was not a verbatim record of what was said at the meeting and that the practice was for the minutes to give a brief summary which was considerably shorter than the full content of what was said at the meeting.  Mr Thring was asked in cross‑examination whether he had any recollection of Mr Grant’s report and he said that he had no recollection.  It was put to him that there was a report about Bata moving into the product line J.J. Lester which would be copies of Dr Martens shoes and he said that he had no recollection of any discussions about those matters.  Mr Beckwith was asked for his recollection of what Mr Grant told the Board about what Mr Bacchi was doing in Melbourne and he said he had no independent recollection from the minute of what Mr Bacchi was doing or what the Board was told.

36                  The three Bata directors submitted that there was never any possibility of success against them and that the case maintained against them fell within the categories of circumstances identified in the authorities which warranted their costs being paid on an indemnity basis:  Colgate‑Palmolive Company v Cussons Pty Ltd (supra) at 233‑234.  In Fountain Selected Meats (Sales) Pty Ltd v International Produce Merchants Pty Ltd (1988) 81 ALR 397 Woodward J ordered an unsuccessful applicant to pay the costs of an individual respondent on an indemnity basis where the proceeding was commenced under s 75B of the Act when there was no possibility of success.  In Grundy v Lewis (unreported, 2 June 1998) Cooper J held (at 22) that the failure to act in a timely way to discontinue a proceeding against respondents against whom there was no case was a special feature which justified the making of an order for costs on other than a party/party basis.

37                  The Bata directors submitted not only was there no basis upon which to join them as respondents, but also that there was no purpose in doing so unless the joinder was for an ulterior purpose as there was no suggestion that Bata would not be able to meet any order for the payment of damages.

38                  The applicants submitted that as directors of Bata, the three Bata directors could have potential liability for any contravening conduct committed by Bata and that it was an appropriate practice to include the individual directors as respondents.  However, the fact that a person is a director of a company is, of itself, not a sufficient basis for joining individual directors in a proceeding on the basis of liability pursuant to s 75B of the Act.  There must be some relevant involvement of the directors in the conduct complained of and knowledge of the relevant circumstances:  Yorke v Lucas (1985) 158 CLR 661.

39                  The applicants submitted that Bata was a foreign owned company with Australian resident directors and that because of the parent company’s worldwide activities the applicants were entitled to have a belief that the directors of the Australian Bata company would have been aware of Bata’s activities through Mr Weston who was a Singapore chairman.  The applicants submitted that there was no evidence which warranted the conclusion that the proceeding was brought against the Bata directors for the purposes of applying commercial leverage.  It was said that there was no evidence put forward which specifically exonerated the Bata directors but I do not consider that to be a relevant consideration.  If an applicant joins directors of a company on the basis of accessorial liability under s 75B of the Act it runs the risk of paying the directors their costs on an indemnity basis if it turns out that there was no basis for such joinder. 

40                  The evidence did not implicate any of the three directors in the conduct alleged against Bata.  But that fact of itself is no reason for the directors to be awarded their costs on an indemnity basis.  Something more is required.

41                  Bata relied on three categories identified by Sheppard J in Colgate‑Palmolive Company v Cussons Pty Limited (supra) in respect of which indemnity costs might be ordered.  These categories were:

·                    The making of allegations that ought never to have been made.  It was said that there was no evidence which implicated the three directors.

·                    The maintenance of a proceeding in wilful disregard of known facts or clearly established law.  It was said that the affidavits sworn by the three directors were not subjected to serious challenge and that no attempt was made to comply with the requirements of the settled law as set out in Yorke v Lucas (supra). 

·                    The commencement or continuation of proceedings for some ulterior purpose.  It was said that the only inference which could be drawn from a number of matters including Mr Beckwith’s long‑standing position as solicitor for Bata, Mr Thring’s age (78 at the date of the trial), Mr Kelly’s recent appointment, the contents of their affidavits, their cross‑examination, the admission in final addresses that there was no case against them and other matters to which reference was made, was that the proceeding was maintained and prosecuted for the ulterior purpose of seeking to exert commercial leverage on the Board of Bata and its solicitors to compel Bata to settle the proceeding.

These categories have not been made out in relation to Messrs Beckwith and Thring.  (I will consider Mr Kelly’s position separately.)  I am particularly influenced in reaching this conclusion by the existence of the Board minute of 3 February 1994, the internal memorandum of 8 February 1994 and the inability of Messrs Beckwith and Thring in cross‑examination to recollect what was said or discussed at the Board meeting.

42                  The nature of the allegations made against Bata were such that I am not satisfied that it was unreasonable at the outset to commence the proceeding against the directors of Bata who were directors at the relevant time of the decision to manufacture and the manufacture of the Danny boot.  The date of manufacture was said in the defences to be June 1994.  Notwithstanding the principles relating to liability under s 75B of the Act found in Yorke v Lucas (supra), I do not consider that it was unreasonable to take the view that there was a case to be made out for involvement of the directors in the decision to manufacture and sell a product which had the potential to raise issues of copying, passing off and misleading and deceptive conduct.

43                  This is not to say that in every case it is reasonable to institute proceedings based on accessorial liability under s 75B of the Act simply because a person is a director of a company alleged to have contravened s 75B of the Act.  Proceedings should not be issued on a speculative basis that, because a person is a director, something may come up whether in the course of interlocutory processes such as discovery, or in the course of trial, which will establish liability in accordance with the requirements in Yorke v Lucas (supra).  Each case must be considered carefully by reference to the nature of the issues involved.  However once a proceeding is under way, an applicant and its advisers must be astute to ensure that as matters progress, it does not become unreasonable to continue the proceeding against a particular respondent having regard to the available information.

44                  Although Messrs Beckwith and Thring in their affidavits denied any involvement in the conduct complained of, the applicants were entitled to test that evidence in cross‑examination.  The belated discovery of the minute of the Board meeting on 3 February 1994 and the internal memorandum dated 8 February 1994 justified the continuation of that process.  If those documents had been discovered earlier, as they should have been, it would not have been unreasonable to have continued the proceeding against the directors in office in February 1994 until at least after cross‑examination.  The fact that the documents were only discovered after the trial commenced supports the view that, with hindsight, it was not unreasonable to have continued the proceeding against Messrs Beckwith and Thring.

45                  Although the applicants did not make any final submissions in relation to Messrs Beckwith and Thring that situation must be understood in the light of the circumstances to which I have referred, namely that a complete understanding of their evidence only emerged after the cross‑examination particularly in relation to the belatedly discovered documents.  The Board minute does not enable me to form any conclusion as to what was discussed on 3 February 1994.  But it does not follow that the allegations against Messrs Beckwith and Thring ought never to have been made or that the proceeding was continued in wilful disregard of known facts or established law.  The fact that no final submissions were made in relation to Messrs Beckwith and Thring does not automatically mean that an indemnity costs order should be made.  That will depend upon a consideration of the conduct of the parties prior to the final submissions:  Huntsman Chemical Company Australia Ltd v International Pools Australia Ltd (1995) 36 NSWLR 242 at 245‑250; Grundy v Lewis (supra) at 21.

46                  I am not satisfied that the proceeding against any of the Bata directors was commenced or continued for an ulterior purpose.  I am not prepared to draw that inference from the matters relied upon by the Bata directors.  I do not consider that the matters relied upon taken individually or cumulatively warrant that inference.  For example, the applicants were entitled to test the evidence in the affidavits and there was nothing in the nature or subject‑matter of the cross‑examination which warrants the inference.  The fact that no final submissions were made in relation to the Bata directors must be looked at in the light of what had occurred, particularly the cross‑examination in relation to the Board minute of 3 February 1994 and the internal memorandum dated 8 February 1994.

47                  I consider Mr Kelly to be in a different position.  He was not required for cross‑examination.  In his defence he said he had been a director of Bata since 1 December 1994, that in June 1994 Bata manufactured 3,037 pairs of J.J. Lester boots and that since that date it had not manufactured any further pairs of similar boots and that it had no intention of doing so.  Although the amended statement of claim relied upon a purchase of a pair of “Danny” boots from Vienna Shoes on 22 August 1995, Mr Kelly’s (and the other Bata respondents’) defence said that Bata had supplied twelve pairs to Vienna Shoes on 14 July 1994 and none since that date.  The applicants were entitled to test these matters with Mr Kelly but having decided not to require him for cross‑examination, it was unreasonable thereafter to maintain the proceeding against him.  In the absence of cross‑examination it was not appropriate to seek to make any case against Mr Kelly under s 75B of the Act having regard to his uncontested denial that he had any personal knowledge of the circumstances relating to the design, manufacture and sale of the Danny boot.

48                  Consistently with the principles set out in the authorities referred to in par 37 above I consider that the applicants should pay Mr Kelly’s costs on an indemnity basis from the closing of its case against the respondents.

APPLICANTS’ APPLICATION THAT THE SUCCESSFUL RESPONDENTS SHOULD NOT

BE AWARDED ALL THEIR COSTS

49                  The particular matters in respect of which the applicants submitted that the successful respondents should not be awarded their costs can be summarised as follows:

·                    On 24 September 1997 the applicants served extensive notices to admit in relation to a number of matters including incorporation, appointment as directors, ownership of trade marks, the origin of the distinctive features constituting the trade dress or get‑up of the applicants’ Z welt footwear, the distinctiveness of that trade dress and get‑up and the fact that the respondents’ footwear had the same get‑up as the Z welt footwear.  The respondents replied with Notices disputing almost all of these facts.

·                    In substantial respects the respondents adopted the evidence of each other, so that if one respondent was disallowed its costs in relation to an issue on which it led evidence which was the subject of cross‑examination, the other respondents should not be awarded their costs in respect of the time taken to deal with that evidence and cross‑examination.

·                    The respondents unreasonably pursued, and put in issue, a number of matters which wasted costs and court time.  Such matters included:

-                      The issue whether the combination of features comprising the distinctive features relied on by the applicants was relevantly distinctive of the Z welt footwear or, as contended by the respondents, were common or generic features found in the footwear trade in Australia or as a fashion style.  The applicants said that they never disputed that the individual distinctive features had existed in footwear prior to their incorporation into the Z welt footwear yet the respondents contended that the distinctive features taken in isolation were not distinctive of the Z welt footwear.

-                      The issue whether the respondents’ footwear incorporated features which were different from the Z welt footwear.  The applicants contended that some of these differences were only revealed by a minute examination of the footwear which would not be detected by consumers.

-                      The distinctiveness of the distinctive features in combination.

-                      The respondents’ denial that they had copied the trade dress features of the Z welt footwear.

-                      The evidence of a number of witnesses called by Bata and Rivers as to their opinion whether there was any likelihood of mistake or confusion between the Z welt footwear and the respondents’ footwear.  The applicants contended that this was inappropriate survey evidence not carried out in accordance with Practice Note No 11 of the Federal Court.

-                      The existence of look‑alike footwear in the market place at relevant times and their relevance to the distinctiveness of the trade dress of the Z welt footwear.

·                    The late amendments to the defences raising the issue of the existence of look‑alike footwear in the market place.

·                    Reserved costs of directions hearings particularly where issues were raised as to whether the applicants’ case relied on the distinctive features separately or in combination.

·                    The respondents failed to make proper and adequate discovery and, in particular, should not be allowed their costs of responding to notices to produce by the applicants served in the course of the hearing.

·                    The respondents did not variously admit the incorporation of the applicants, their standing to bring the various claims, the proprietorship of various trade marks and the position of individual respondents as directors of corporate respondents.

·                    The respondents did not admit that since at least the late 1960s there had been substantial advertising and sales of substantial quantities of Z welt footwear in Australia.

50                  The applicants submitted that the respondents, by the conduct of their defences, sought to delay the ultimate trial of the proceedings and to prolong it by deliberate confusion of the issues.  It was said that had the respondents confined the issues to matters which could reasonably have been in dispute they would have:

·                    acknowledged the significant reputation of the applicants in the trade dress of the Z welt footwear, albeit in association with the Dr Martens trade marks and branding;

·                    admitted they had copied the trade dress but claimed that because of the branding on their footwear the Act was not contravened nor had they passed off their footwear as the respondents’ footwear.

The applicants contended that in such circumstances the evidence would have been much more limited than in fact occurred.  The applicants said that the trial lasted thirty‑two days of which twenty‑four days was taken up in evidence and that the total time taken in evidence was approximately ninety‑three hours.  The applicants contended that a substantial amount of this time could have been avoided if the trial had been confined to what they say were the real issues in dispute.  In short they contended that the time taken up by evidence would have been reduced to approximately twenty‑one hours or 23% of the actual time taken in evidence and that the amount of time taken in submissions or various other applications (nine days) would have been halved.  The applicants contended that the overall trial time would have been reduced from thirty‑two days to eight and a half days or 26% of the actual time taken.  The applicants said that the costs of pleadings, discovery and preparation for trial could also have been commensurately reduced had the respondents confined the issues in dispute to those which were properly relevant to the proceedings of the nature pleaded by the applicants and the state of knowledge of each of the respondents as to copying and their significant participation in the Australian footwear industry.

51                  It was for these reasons that the applicants submitted that 74% of the respondents’ costs of the whole proceedings should not be allowed and that the respondents should pay 74% of the applicants’ costs of the whole of the proceedings.  In the alternative, the applicants submitted that the costs which related to each of the specific issues of which they made complaint should not be allowed in favour of the respondents and that the respondents should pay the applicants’ costs relating to those issues.

Relevant principles

52                  The power to award costs is very wide and is in “the discretion of the Court or Judge”:  s 43(2) Federal Court of Australia Act 1976 (Cth).  As a general rule, the successful party in a proceeding should be awarded all its costs of the proceeding including reserved costs on a party and party basis.  But there are circumstances in which it will be appropriate to depart from that general rule.  In particular, in an appropriate case costs may not be awarded where a successful party has failed in respect of distinct issues.  There are also circumstances in which it has been held to be appropriate to award costs in favour of a successful party on a more generous indemnity or solicitor and client basis.

53                  A useful starting point can be found in the observations of Toohey J in Hughes v Western Australian Cricket Association (Inc) (1986) ATPR 40‑748 at 48,136:

“The discretion [in respect of costs] must of course be exercised judicially.  There are decisions, both of Australian and English courts, that throw light on the way in which the discretion is to be exercised.  I shall not refer to those decisions in any detail; I shall simply set out in a summary way what I understand to be their effect.

1.        Ordinarily, costs follow the event and a successful litigant receives his costs in the absence of special circumstances justifying some other order.  Ritter v. Godfrey (1920) 2 K.B. 47.

2.    Where a litigant has succeeded only upon a portion of his claim, the circumstances may make it reasonable that he bear the expense of litigating that portion upon which he has failed.  Forster v. Farquhar (1893) 1 Q.B. 564.

3.    A successful party who has failed on certain issues may not only be deprived of the costs of those issues but may be ordered as well to pay the other party’s costs of them.  In this sense, ‘issue’ does not mean a precise issue in the technical pleading sense but any disputed question of fact or of law.  Cretazzo v. Lombardi (1975) 13 S.A.S.R. 4 at p.12.

There is no difficulty in stating the principles; their application to the facts of a particular case is not always easy.  Also it is necessary to keep in mind the caveat by Jacobs J. in Cretazzo v. Lombardi at p.16.  His Honour sounded what he described as ‘a note of cautious disapproval’ of applications to apportion costs according to the success or failure of one party or the other on the various issues of fact or law which arise in the course of a trial.  His Honour commented:

‘But trials occur daily in which the party, who in the end is wholly or substantially successful, nevertheless fails along the way on particular issues of fact or law.  The ultimate ends of justice may not be served if a party is dissuaded by the risk of costs from canvassing all issues, however doubtful, which might be material to the decision of the case.  There are, of course, many factors affecting the exercise of the discretion as to costs in each case, including in particular, the severability of the issues, and no two cases are alike.  I wish merely to lend no encouragement to any suggestion that a party against whom the judgment goes ought nevertheless to anticipate a favourable exercise of the judicial discretion as to costs in respect of issues upon which he may have succeeded, based merely on his success in those particular issues.”

These observations were approved by Cooper J (with whom Sheppard and Neaves JJ agreed) in Cummings v Lewis (1993) 41 FCR 559 at 602‑603.  His Honour continued at 603:

“It is within the discretion of a trial judge to award only a proportion of a successful party’s costs if the conduct of that party in the trial was such as to unreasonably prolong the proceedings (Latoudis v Casey (supra) at 544, 565; Re Elgindata Ltd (No 2) [1992] 1 WLR 1207 at 1214, 1217; [1993] 1 All ER 232 at 237, 240).

            Wilcox J was of the view that to persist in a denial that the statements as found were made was unreasonable and was conduct which unreasonably prolonged the proceedings.  It is no answer to say that a party is entitled to test the evidence to show that nothing was said which might amount to the representations as pleaded.  A party always has that right in litigation.  However, the question which is relevant to the issue as to costs is whether or not the exercise of that right, or the manner in which it was exercised, was reasonable in all the circumstances; and, whether the exercise of the right had the effect of unreasonably prolonging the proceedings.  It was this issue which Wilcox J found against the respondents and upon which he based his decision.”

The applicants relied upon the approach taken in patent cases where, on occasions, parties have been denied a proportion of their costs because, although successful in the ultimate analysis, they failed in respect of certain separate and discrete issues:  Patent Gesellschaft AG v Saudi Livestock Transport and Trading Company (1996) 33 IPR 461; Innovative Agricultural Products Pty Ltd v Crawshaw (No 2) [1996] AIPC 91‑281.  The respondents correctly pointed out that those cases were different from the present proceedings in that the respondents had filed cross‑claims seeking to revoke the patent in suit on numerous grounds, most of which either failed or were not pursued.  In such a case it is relatively easy to identify separate and discrete issues to which court time was devoted.  Nevertheless, the applicants relied upon the patent cases as expounding principles of general application. 

54                  Bata submitted that in applying the principles applicable to the exercise of the discretion to award a successful party only a proportion of its costs it was important to recognise that there was a distinction between applicants and respondents.  They referred to the observation of Lord Sterndale MR in Ritter v Godfrey [1920] 2 KB 47 at 53:

‘The principle as to the exercise of discretion is the same in the case of plaintiffs and defendants, but it is clear that consideration sufficient to justify a refusal of costs to a plaintiff are not necessarily sufficient in the case of a defendant, for the former initiates the litigation while the latter is brought into it against his will.”

The observations referred to above in Hughes v Western Australia Cricket Association (Inc) (supra) and Cummings v Lewis (supra) show that in appropriate circumstances a successful defendant might be disentitled to an order for costs in respect of discrete and separate issues.  Nevertheless, a court should be reluctant to embrace the proposition that, as a general rule, it is appropriate to undertake an enquiry as to who was successful in relation to particular issues in a case to determine whether there should be an apportionment of costs against a successful party.  A court should not be too ready to disallow costs simply because a party has failed upon an issue, unless it be quite a separate and distinct issue from the issues in respect of which it succeeded or unless there be some element of unreasonableness or inappropriate conduct in relation to that issue:  cf Verna Trading Pty Ltd v New India Assurance Pty Ltd [1991] 1 VR 129 at 152‑154. 

55                  Bata submitted that it was appropriate in considering the Court’s exercise of discretion as to costs to consider the commercial outcome of the proceedings.  Bata said that the case involved the commercial issue whether the applicants could succeed in effectively excluding forever competitors from the manufacture or sale of footwear products similar to their own yellow stitched products.  This proposition is a distortion and over‑simplification of the issues which were before the Court.  In any event, I do not consider that it is a correct approach to analyse a case, for the purposes of considering the appropriate orders as to costs, to look at the commercial issues which might lie behind the proceedings.  The correct approach is rather, as the applicants submitted, whether they had a relevant enforceable right which had been contravened.  The fact that these proceedings were part of an international series of proceedings directed against persons whom the applicants considered were infringing or otherwise contravening their rights is not to the point.  The only matter which might intrude into such an issue is whether it might be said the proceeding had been brought for an ulterior purpose unrelated to the relief which the applicants were seeking to achieve or was otherwise an abuse of process.  It was not suggested that was the position in these proceedings. 

Notices to admit

56                  Although the applicants submitted that there were numerous matters in the notices to admit that should have been admitted, it is not easy to isolate out particular matters which, if admitted in the terms of the notices to admit, would have saved significant time and expense in the trial. 

57                  Although the notices to admit sought detailed admissions in relation to matters which formed the substance of the applicants’ case against each group of respondents, the applicants had filed a substantial amount of their evidence‑in‑chief by the time the notices to admit were served in September 1997.  Accordingly a significant number of matters raised in the notices to admit had already been established in the plaintiff’s primary evidence.  In most respects the notices simply restated the allegations in the statement of claim in the same terms.  For example in the notice to admit addressed to Figgins, with one exception, all the paragraphs of the notice repeat substantially word for word, the allegations in the amended statement of claim.  Many of those paragraphs make multiple allegations of fact and are not easily susceptible of an admission or a straight‑forward answer.  Paragraph 20 of the Figgins notice (as do pars 23 and 21 of the notices in the Bata and Rivers proceedings respectively) demonstrates the point clearly; it is identical (without appended particulars) to par 16 of the amended statement of claim.  Paragraph 16 of the amended statement of claim (as did pars 17 and 16 of the statement of claim against Bata and Rivers respectively) alleged:

“Continuously since at least the late 1960’s the Footwear (including the Z Welt Footwear) has been advertised, promoted, marketed, offered for sale and sold in very substantial quantities in Australia under or by reference to one or more of the following scheduled marks:

‘Dr Martens’, ‘DOC’s’, ‘Doc Martens’, ‘Docs’ and the Dr Martens Logo.”

Paragraph 20 of the notice to admit was in identical terms.  However the quantities of footwear sold on an annual basis since the late 1960s varied substantially as did the nature and extent of the advertising, promotional and marketing activities undertaken in relation to the Z welt footwear.

58                  I do not consider that it was either reasonable or appropriate to require the respondents, under the pain of an order for costs pursuant to O 18 r2 of the Federal Court Rules, to respond to a notice which substantially reproduced the allegations in the amended statement of claim in a rolled‑up way and in a form which required the respondents to make admissions as to matters which were not clearly separated from other matters.  Further, in a number of respects it was not possible to sever components of matters, the subject of the notices to admit, without having any consequential effect on other paragraphs in the notices to admit. 

59                  For all these reasons, I do not consider that any of the respondents should be ordered to pay the costs of the applicants incurred in proving any of the facts disputed by them in response to the service of the notices to admit.  A number of the matters had already been the subject of evidence and other matters were not clearly defined for the purpose of proof.  I also do not consider that any of the respondents should be deprived of any costs incurred in responding to the notices to admit.  For the purposes of O 18 r2(4) of the Federal Court Rules I order that that none of the respondents should pay any of the costs incurred by the applicants in proving any facts set out in the notices to admit which were disputed by the respondents and which were proved by the applicants.

Adoption by a respondent of other respondents’ evidence

60                  For the reasons which appear hereafter I am not disallowing any respondent its, his or her costs in relation to any particular issue.  It is not therefore necessary to consider this issue.

Were issues or matters unreasonably put in issue or pursued by the respondents?

61                  The applicants submitted that it was always their case that the trade dress or get‑up of the Z welt footwear comprised the combination of the distinctive features and not a single feature of that combination.  The applicants said that they did not dispute that the distinctive features had individually existed in footwear prior to their incorporation into the Z welt footwear.  The manner in which the applicants relied upon the distinctive features said to reside in the Z welt footwear was the subject of correspondence between the parties and discussion at directions hearings prior to the commencement of the hearing.  For example, at a directions hearing on 11 June 1997 counsel for the applicants made it clear that the allegations in the statement of claim which pleaded the distinctive features were to be read cumulatively and not disjunctively, save that the welt stitch thread was pleaded as alternatively yellow or yellow/orange in colour and that the thick laces were pleaded as alternatively yellow and black, brown and yellow or black in colour.  I am satisfied that by the directions hearing on 11 June 1997  at the latest it was clear that the applicants’ case was that the trade dress or get‑up comprised the combination of the distinctive features rather than individual distinctive features.  The Bata respondents emphasised the point by reciting in their defences that they noted:

“as was confirmed by Counsel for the Applicants before the Honourable Justice Goldberg on 11 June 1997 that the allegations in sub‑paragraph 16.1 to 16.7 inclusive are to be read cumulatively save that the allegation pleaded in paragraph 16.6.1 is an alternative to the allegation pleaded in paragraph 16.6.2 and the allegations pleaded in paragraphs 16.7.1, 16.7.2 and 16.7.3 are pleaded in the alternative …”

The applicants contended that throughout the trial the respondents continued to maintain the proposition that the applicants did not have distinctiveness in the individual features which comprised the distinctive features and the get‑up of the Z welt footwear and that a considerable amount of time was taken up leading evidence and cross‑examining on this issue which was not disputed by the applicants.  In particular Bata called two witnesses, Mr Nutt and Ms Swann, who gave extensive evidence that each of the distinctive features had been commonly used in footwear over a long period.  Evidence along similar lines was led by Windsor Smith from Mr Armstrong and Mr Parkinson.  None of these witnesses said that the combination of the distinctive features constituting the trade dress of the Z welt footwear had previously been used by any manufacturer of footwear.

62                  The applicants submitted that a substantial amount of time was taken up by evidence from the respondents identifying what were said to be differences in construction, look or get‑up of the respondents’ footwear compared with the Z welt footwear.  Some time was also taken in drawing a distinction between a welt and a rand on footwear when, from the visual point of view it may be said that there is no substantial difference. 

63                  The applicants contended that approximately 12% of the transcript is taken up with issues relating to the particular distinctive features taken alone rather than in combination.  However, one must be careful when considering particular aspects of examination or cross‑examination of witnesses on aspects of trade dress in isolation.  For example, part of the transcript references upon which the applicants rely relate to the range of Dr Martens boots which were available in different colours and different styles.  Such issues were an appropriate subject of cross‑examination having regard to the manner in which the applicants advanced their claims and the reputation and goodwill said to reside in the Dr Martens name and its footwear, in particular its lace up boots.

64                  Although it is true that I found that the Z welt footwear had acquired a substantial reputation and identification by reference to its trade dress and get‑up comprising the distinctive features (par 141), it does not follow that the respondents should be penalised in costs for investigating that issue.  It was a key issue in the four proceedings but it is not appropriate to separate it out as an issue which should give rise to a special or unusual order as to costs.  I do not consider that it was irrelevant or inappropriate for the respondents to investigate and test the evidence in relation to the distinctiveness of each of the distinctive features, albeit relied upon in combination, or the reputation in each of those distinctive features upon which the applicants relied.  The applicants relied upon that reputation over a substantial period of time and the degree and extent of that reputation differed at different times during that period. 

65                  Further, the issue of the distinctive features was complicated by the fact that the evidence showed that at different times and different places the applicants had relied on combinations of the distinctive features different from the combination asserted in the four proceedings.  I refer, by way of example, to the Canadian proceedings, the application to the United Kingdom Patent Office and to some of the consent judgments obtained in other jurisdictions.  There was also the issue whether all Dr Martens footwear produced by Accent Footwear Limited incorporated the distinctive features.  Mr Shelton had said so in his affidavit but cross‑examination disclosed that this was not correct.  The applicants may not have disputed that each of the distinctive features relied upon existed in footwear prior to their incorporation into the Z welt footwear but their initial position was that all Z welt footwear had incorporated each of the distinctive features.  The respondents were entitled to test and investigate this proposition.  The proposition which the applicants criticised, namely that the distinctive features, taken in isolation, were not distinctive of the Z welt footwear overlapped into the area whether each of those distinctive features was to be found in all Z welt footwear.

66                  From time to time I formed the view that perhaps an excess of evidence had been led by some of the respondents, such as Bata, in relation to particular individual distinctive features and that cross‑examination on such issues was unnecessary and arguably irrelevant to any issue in the proceedings.  But I have not formed the view that the leading of such evidence, or the undertaking of such cross‑examination, was unreasonable, irresponsible or inappropriate to such an extent that there should be a variation of the usual order as to costs in respect of such evidence or cross‑examination.  The prominence and key nature of the allegation that the reputation of, and goodwill in, the Z welt footwear resided in the combination of the distinctive features conceals the fact that there were overlapping issues in relation to the distinctive features – the combinations relied upon at other times and in other places and whether each of them was always used in Z welt footwear.  For example, the reputation of the Z welt footwear by reference to the distinctive features raised for consideration the extent to which consumers might respond to seeing any of the distinctive features in footwear.  In any event, the evidence of the experts was of some assistance in understanding a number of the issues raised relating to the manufacture of footwear and the relationship between construction and non‑construction features of footwear.  I refer, by way of example, to the difference between a welt and a rand.

67                  It is not to the point that the respondents set out to copy or reproduce the trade dress or get‑up of the Z welt footwear on this issue of costs.  The point was rather whether the applicants had established sufficient reputation and goodwill in that trade dress and get‑up constituted by the distinctive features taken in combination. 

68                  I do not consider, having regard to an overall view of the various issues raised in the proceedings and their overlapping and inter‑relationship, that the time taken in considering individual distinctive features should not be allowed to the successful respondents in their costs.  An examination of a combination of distinctive features inevitably involves a consideration, to some extent, of these features individually.

Denial of copying

69                  The applicants submitted that a substantial amount of time and costs was incurred in establishing that the respondents had copied the Z welt footwear in designing and manufacturing their respective footwear.  The applicants said that the respondents in their defences denied that they had copied the distinctive features of the Z welt footwear and that this denial had been maintained in the notices of dispute served in response to the notices to admit.  So to state the issue is an over‑simplification of what in fact occurred.  In the various amended statements of claim the applicants had alleged that the Z welt footwear had the distinctive features relied upon, that the respondents had manufactured, distributed and sold footwear having specified features and that such footwear had the same get‑up as the Z welt footwear and was substantially identical with or similar to the Z welt footwear.  Such allegations do not precisely correspond to an allegation of copying but rather require an admission that the footwear possesses particular features.  In my earlier Reasons for Judgment I found that:

·                    Bata set out to copy the style and a number of the features of the 1460Z boot albeit under and by reference to the J.J. Lester name (par 211);

·                    Figgins set out to copy the 1461Z shoe albeit under and by reference to the ah! SOUL name (par 246);

·                    Rivers set out to copy the distinctive features of the 1461Z shoe albeit under and by reference to the Rivers’ name and logo (par 269).

I also made findings that although the respondents’ footwear respectively possessed a number of the distinctive features, there were differences from the Z welt footwear which I identified.  I was satisfied in relation to the respondents’ footwear that overall, without considering brandings, markings or price, the impression conveyed by the trade dress get‑up of the footwear was one of similarity to the trade dress and get‑up of 1461Z shoe and the 1460Z boot. 

70                  It is not an accurate understanding of the evidence to say, as the applicants submitted, that with the exception of Figgins each of the respondents maintained their denial of copying until their directors and employees were called to give evidence and were cross‑examined.  It was clear from Mr Jeffrey Figgins’ affidavit as to how the ah! SOUL shoe came to be re‑socked and Mr Figgins did not, in his affidavit, deny copying.

71                  So far as Bata was concerned Mr Grant in his affidavit gave direct evidence that the manufacture of the J.J. Lester Danny boot came about as a result of a recommendation of Mr Weston that Bata move into the particular fashion style of footwear.  Although the internal memorandum dated 8 February 1994 was only belatedly discovered, Bata’s position had not been completely concealed.

72                  So far as Rivers is concerned, in the course of opening the Rivers’ case counsel referred to the evidence of Mr Peter Abbott, Rivers’ Marketing Manager, who resolved in or about March 1992 to produce for Rivers a shoe which embodied the principal features which characterised the Dr Martens look or style but to do so by producing a shoe that was recognisable as a Rivers shoe.

73                  Although there were varying degrees of candidness amongst the respondents, I do not consider that they ought to be penalised on the issue of costs on the basis that the manner in which they approached the issue of copying, or the similarity between the Z welt footwear and their respective products, was irresponsible, unreasonable or a waste of the Court’s time, as maintained by the applicants.

“Survey evidence” led by Bata and Rivers

74                  In each of the Bata and Rivers proceedings a number of witnesses were called who expressed an opinion that they would not have thought that particular Bata or Rivers footwear was Dr Martens footwear or would not have mistaken it for Dr Martens footwear.  The procedure for carrying out the survey laid down by Practice Note No 11 was not followed.  The applicants submitted that the evidence led from these witnesses was flawed because of the manner in which the evidence had been procured and the fact that the opinions expressed were opinions expressed as at 1997 and not at the relevant time that the Bata and Rivers footwear came into the market. 

75                  This evidence was of little assistance for the reasons I set out in pars 207 and 261 of my earlier Reasons for Judgment.  Although there is some substance in the applicants’ complaints about this evidence, it was marginally relevant to the issues before the Court and was not so separate or discrete that it should be the subject of a variation of the usual order as to costs.  Although it turned out that this evidence was of little assistance in the determination of the ultimate issues I had made a ruling as to its admissibility.  This evidence was not directed to such a discrete issue as to result in me concluding that Bata and Rivers should be deprived of their costs in relation to that evidence.

Lookalike footwear

76                  The applicants submitted that the respondents, albeit belatedly, raised the issue that there existed in the market at relevant times lookalike footwear which diminished the reputation of the Z welt footwear.  It is true that there were a number of products alleged by the respondents which were not supported by any evidence whether in examination‑in‑chief or by cross‑examination.  Nevertheless, I made significant findings in relation to the existence of lookalike footwear in the market at relevant times (pars 101‑128) and I can see no reason why the respondents should be deprived of any of their costs in relation to the issue of lookalike footwear which forms a significant part of my Reasons for Judgment.  The applicants said that the significance of the lookalike issue was that the respondents had contended that by reason of the lookalike footwear the Z welt reputation had been diminished.  On that issue the respondents did not succeed but the existence of lookalikes in the market place at particular times was relevant to my ultimate findings.  Those findings included the finding that potential purchasers were aware of the existence of both genuine Dr Martens products and lookalikes or imitations and were able to distinguish between the two classes by reference to branding, labelling and pricing.  In such circumstances costs should follow the event in relation to that issue.

Late amendments to the defences raising the issue of the existence of lookalike footwear

in the market place

77                  Each of the respondents during the trial sought and obtained leave to amend their defences to raise the issue of lookalikes or imitation products in the market place.  The time taken to deal with the issue of granting leave to amend the defences in the course of the trial was relatively small and I do not consider that any allowance should be made against the respondents in respect of the hearing time taken to obtain appropriate leave to amend the defences.  However, no reason was advanced as to why the amendments could not have been made at an earlier point of time and in all of the circumstances I consider that the respondents should bear their own costs of those amendments and should pay the applicants’ costs thrown away by reason of the amendments but that is not to include any of the hearing time during the trial.

Reserved costs of direction hearings

78                  There were numerous directions hearings held in each of the four proceedings presided over from time to time by different judges.  The applicants submitted that the substantial issue flowing through the directions hearings was the respondents’ continuing claim that they were unable to ascertain the case put against them by the applicants.  One of the issues raised at one of the directions hearings was whether the applicants’ case was based upon the individual distinctive features or the distinctive features taken in combination.  However, various other matters were also raised in a number of the directions hearings such as the delivery of lists of documents.  On other occasions notices of motion and applications were simply adjourned without any substantive issues being raised in relation to the nature of the applicants’ claims.  I do not discern in any of the matters raised at any of the directions hearings such a discrete issue or such conduct of any of the respondents as would warrant an order different from an order that the respondents’ costs include the costs at those directions hearings.

Inadequate discovery

79                  The applicants submitted that each of the respondents failed to make proper and adequate discovery of all important documents concerning the design process in relation to their footwear and any instructions given concerning the design and manufacture of their footwear.  The applicants contended that the respondent should not be entitled to any costs in respect of their responses to the applicants’ various notices to produce and that the respondents should pay the applicants’ costs of and incidental to those notices and any Court time taken in relation to issues relating to the notices.

80                  The notices to produce did not simply require the production of documents concerning the design process and instructions given concerning the design and manufacture of the respondents’ footwear.  In numerous respects they require the production of items and documents referred to in affidavits and exhibits to affidavits filed by the respondents. 

81                  Although there were some instances where proper discovery was not made initially and belated discovery was given, I do not consider that any of the respondents should be deprived of their costs of responding to the notices to produce nor should they be required to pay the applicants’ costs of and incidental to the preparation of the notices to produce.

Failure to admit incorporation, registration of trade marks and standing

82                  In the notices to admit served on each respondent, admissions were sought as to incorporation, the standing of the relevant applicants to bring the proceedings including the applicants’ licensing arrangements, the fact that individual respondents relevantly were directors of the corporate respondents and proprietorship of trade marks.  With some minor exceptions none of these matters were admitted and the applicants were compelled to prove these matters by relevant documentation.  The applicant submitted that it was irresponsible, unreasonable and a substantial waste of the Court’s time for the applicants to be put to their proof in respect of these matters. 

83                  The issue of the standing of the applicants, and the relevant chain of entitlement in relation to reputation and goodwill, was a controversial issue and it was not a matter within the respondents’ knowledge.  In my view, it was appropriate for the applicants to be put to their proof on the issue of standing, especially having regard to the nature of the documentation which existed and the issue which arose as to which company in the Griggs group of companies owned the rights to the trade dress and get‑up of the Z welt footwear at the time of the institution of the four proceedings.  There should be no variation of the usual order as to costs in respect of these matters.

Failure to admit substantial sales

84                  A significant aspect of the applicants’ case as pleaded was that since at least the late 1960s the Z welt footwear had been advertised, marketed and sold in substantial quantities in Australia.  This matter was put in issue by the respondents and not admitted in response to the notices to admit.  The applicants submitted that as a result substantial evidence was required to be led to prove the sales made, the advertising materials adopted and the marketing undertaken.  It was said that this task was pointless when upon any view the quantity of pairs sold exceeded one million.  It was also said that the pointlessness of the task was highlighted by the finding that the respondents set out to copy the trade dress of the Z welt footwear to meet the demand generated by its popularity.  The applicants submitted it was irresponsible, unreasonable and a waste of Court time for the applicants to be put to strict proof of these matters.

85                  I do not accept these submissions.  It is an over‑simplification of the issue to assert that the respondents should have admitted the allegations in par 16 of the amended statement of claim against Figgins (par 59 above and found in pars of the Bata and Rivers statement of claim) either in their defences or in response to the notices to admit which reproduced par 16.  The nature and extent of the applicants’ advertising, promotion and marketing activities varied in degree, content and style between the late 1960s and mid‑1995.  In the 1970s it would not have been correct to say that the Z welt footwear was advertised, promoted, marketed and sold in substantial quantities in Australia:  see pars 33‑36 of the earlier Reasons for Judgment.  It was only in 1988 that import restrictions on the importation of footwear manufactured in the United Kingdom were lifted and sales of Z welt footwear increased significantly.  I also found:

“During the 1970s and up to the late 1980s little television, radio or print media advertising promoting Dr Martens footwear was carried out but the sales of the Z welt footwear increased over this period.”

There were also over the years changes in the emphasis of the brand given prominence in relation to the Dr Martens footwear:  par 38 of the earlier Reasons for Judgment.

86                  It was not unreasonable for the respondents to put the applicants to their proof of the nature and quantity of Z welt footwear sold over the extensive period claimed by the applicants and to their proof as to the nature of the advertising, promotional and marketing activities undertaken.  There should be no variation of the usual order as to costs in respect of these matters.

Conclusion

87                  Save for the applicants’ costs thrown away by the amendments to the defences to which I have referred, the respondents’ should have their costs of the proceedings including reserved costs.

THE COSTS ORDER AGAINST WINDSOR SMITH

Windsor Smith submitted that:

·                    If the applicants do not have to pay part of the other respondents’ costs relating to part of the evidence called by those respondents, Windsor Smith should not have to pay the applicants’ costs of that part of the trial.

·                    The costs order against Windsor Smith should reflect an adjustment to avoid Windsor Smith paying those costs of the applicants which were incurred in the other three proceedings in relation to matters which are separate and distinct from the matters concerning Windsor Smith.  It was said that the applicants incurred costs which did not relate to the Windsor Smith proceeding and that Windsor Smith did not adopt all the evidence‑in‑chief of the other respondents.  There was cross‑examination by the applicants of witnesses of the other respondents on subject‑matter unrelated to the case made against Windsor Smith.

·                    It should not have to pay the applicants’ costs of the whole of the trial as such an order would mean that Windsor Smith would be paying the applicants’ costs of the trial in those proceedings in which the applicants were unsuccessful and did not get their costs of those proceedings but rather had to pay the respondents’ costs of those proceedings.

·                    The applicants should not receive any costs in respect of the claims in the Windsor Smith proceeding in which they failed, namely the claim for trade mark infringement against Chicago Boot Company Pty Ltd and the claims against a number of the Windsor Smith directors.

·                    Windsor Smith should not be required to pay the applicants’ pre‑trial costs in respect of the proceedings against the other respondents.  To the extent to which the applicants relied on pre‑trial work in relation to each proceeding, such as discovery, Windsor Smith should only be ordered to pay 25% of the applicants’ costs of any such combined pre‑trial steps.  

88                  The applicants accepted the following propositions:

·                    Windsor Smith should not be required to bear those trial costs of the applicants which relate to matters which are separate and distinct from matters in the proceeding concerning Windsor Smith;

·                    If the Court ordered any of the other respondents to pay any of the applicants’ costs, Windsor Smith should not be responsible for any of those costs;

·                    Windsor Smith should not be ordered to pay the applicants’ costs of the whole of the trial but the applicants are entitled to all of their costs which are related to proving their case against Windsor Smith, irrespective of whether that evidence or those attendances were also used in the proceedings against the other respondents;

·                    The applicants should not be awarded costs in respect of claims relating to matters in which they were unsuccessful, that is, the costs of their claim for trade mark infringement and the costs of their claims against the third, fifth and sixth respondents;

·                    None of the pre‑trial costs incurred in respect of the proceedings against the other respondents, such as issuing fees, should be paid by Windsor Smith.

89                  The applicants opposed the submission that Windsor Smith should only pay a proportion of the applicants’ costs of the combined pre‑trial steps and the trial hearing.  They submitted that they were put to their proof on all aspects of their case by Windsor Smith and that they should get their costs of proving their case against Windsor Smith.

90                  Each of the respondents adopted various parts of the evidence filed by other respondents and it was agreed between all the parties that any cross‑examination and re‑examination would be regarded as cross‑examination and re‑examination in each proceeding.  It followed, said the applicants, that the only parts of the trial time which would be excluded from the costs order against Windsor Smith would be the time taken in relation to:

·                    Witnesses upon whose evidence Windsor Smith did not rely;

·                    Amendments to pleadings concerning other respondents;

·                    Proportional aspects of opening and closing submissions as far as they related exclusively to other respondents;

·                    Notices to produce documents addressed to other respondents.

91                  I agree that Windsor Smith should not have to pay any of the applicants’ costs relating to matters and issues which were separate and distinct from matters and issues in the Windsor Smith proceeding and were unrelated to them but rather related to claims of the applicants in which they were unsuccessful.  The costs incurred by the applicants in relation to matters and issues raised in each of the four proceedings are more difficult to resolve.

92                  It was a sensible approach for the respondents in the four proceedings to adopt parts of the evidence given by other respondents to save any duplication of evidence and to save or reduce the costs incurred in resisting the applicants’ claims and preparing their own cases.  It was also sensible for the four proceedings to be heard together as there was an obvious saving of time in relation to the leading of the applicants’ evidence‑in‑chief, cross‑examination of the applicants’ witnesses and the opportunity to rely upon the evidence given by other respondents.  This procedure, however, leads to a tension between two propositions.  First, a successful applicant should be entitled to its costs incurred in establishing its claim against an unsuccessful respondent.  Secondly, if costs are incurred in relation to issues common to a number of proceedings heard together they should be shared across those proceedings.

93                  It is in the interests of parties before the Court and, in the interests of the administration of justice, that any steps taken to save or reduce the incurring of costs and to promote the efficient disposition of proceedings before the Court should be encouraged.  Thus, it is desirable where there are proceedings with common issues, that the proceedings be heard at the same time, or in such a manner as to avoid the duplication of evidence, cross‑examination, submissions and hearing time. 

94                  Respondents to proceedings with common issues should be encouraged, if it is feasible, to have the proceedings heard in such a manner as to avoid the duplication of costs and time to which I have referred.  However, such encouragement should ensure that unsuccessful respondents are not unfairly burdened with costs not relevant to the proceeding against those respondents.  Further, respondents should be encouraged to have proceedings with common issues heard at the same time so as to obtain an overall saving of costs.

95                  If it be accepted that it is appropriate to have multiple proceedings heard together, where there are common issues of fact and law involved, for the purpose of reducing costs and having an efficient and economical use of court resources, it is also appropriate to consider whether in such circumstances there should be variations to the usual order as to costs.  In particular it is appropriate to give consideration to the apportionment of the costs of an applicant incurred in relation to issues and matters common to those proceedings between those proceedings where the applicant is successful and those proceedings where the applicant is unsuccessful.

96                  In the four proceedings, it was necessary for the applicants to prepare the case they did and to lead the evidence they did, so far as concerned the history, development, reputation, goodwill and sales of Z welt footwear against each group of respondents.  To that extent the whole of those costs were incurred in relation to each proceeding against each group of respondents.  Nevertheless, the fact that the applicants have failed in three of the proceedings is relevant to a consideration of the appropriate order to be made as to costs where the proceedings were heard together and costs were incurred in relation to matters and issues common to those proceedings.

97                  Although the discretion committed to the Court in relation to costs is unfettered it must be exercised judicially.  Further, as was pointed out by Toohey J in Hughes v Western Australian Cricket Association (Inc) (supra) a successful litigant should receive its costs “in the absence of special circumstances justifying some other order” (at 48,136).  In Dodds Family Investments Pty Ltd v Lane Industries Pty Ltd (1993) 26 IPR 261, the Full Court (Gummow, French and Hill JJ) said at 272:

“Generally speaking, and notwithstanding the considerations referred to by Toohey J and the other authorities mentioned above [Cretazzo v Lombardi (1975) 13 SASR 4 at 12; Trade Practices Commission v Nicholas Enterprises Pty Ltd (No 3) (1979) 42 FLR 213], the demands of the community for greater economy and efficiency in the conduct of litigation may properly be reflected in a qualification of the presumption that a successful party is entitled to all its costs.”

That observation was made in a context where the trial judge had ordered each side to bear their own costs where the applicants had failed to establish a case of passing off but had made good their case for expungement of a word mark and the respondents had failed to establish infringement of the word mark or a device mark.  Nevertheless, I consider their Honours’ observation as being relevant to the issues presently before me. 

98                  The difficulty which I have to confront is that if I am to make an allowance in favour of Windsor Smith and against the applicants in respect of the costs they incurred in relation to matters and issues which are common to each of the four proceedings, I cannot make an allowance based on denying the applicants any costs in relation to specific matters or issues.  The only way this matter can be accommodated is by allowing the applicants a proportion of the costs so incurred.  In such circumstances any proportion inevitably would be, to some extent, an arbitrary determination.  For example, it would be inappropriate to allow the applicants only 25% of these costs on the basis that there were four proceedings and the costs should be apportioned equally across the four proceedings.  In such circumstances such an apportionment would be an inadequate recognition of the costs incurred in establishing the applicants’ case against the Windsor Smith respondents. 

99                  But to allow the applicants 100% of these costs is to fail to recognise two consequences of having multiple proceedings heard together.  First it is a failure to recognise and allow for the economies and savings obtained and the efficiency resulting from having four substantial proceedings heard at the same time and treating evidence in one proceeding as evidence led in the other proceedings.  Secondly it is a failure to recognise that the unsuccessful respondents have been obliged to participate in a hearing which, by its nature, will involve those respondents in incurring extra costs in relation to hearing time.  Although an order can be fashioned to have such respondents only pay costs incurred directly in relation to their proceeding, albeit partly incurred also in relation to the other proceedings, there will inevitably be areas where the respondents’ costs will be increased.  I refer for example to the situation where another respondent raises objections to admissibility or where each set of respondents addresses particular issues.

100               In such circumstances, where a respondent participates in a hearing of multiple proceedings at the same time, it is not unreasonable for an unsuccessful respondent to expect that it will obtain a savings in costs where it is unsuccessful and it is ordered to pay the successful applicant’s costs.  The price to be paid for having multiple proceedings heard at the same time is for all parties to acknowledge that certain costs consequences may follow.  The applicant achieves a saving in relation to the presentation of its cases against the respondents at the expense of all respondents having to be present throughout the whole hearing.  The respondents have to be present throughout the whole hearing but it is not unreasonable for them to expect an allowance in respect of any costs ordered against them, if they are unsuccessful, in relation to costs incurred by the applicant in presenting a case against all respondents.

101               Such an allowance to the unsuccessful respondents in respect of the costs of the applicants which they are ordered to pay ought to reflect the nature of the proceedings, their complexity, their length, the number of separate groups of respondents involved, the range of issues raised and the extent of the unsuccessful respondents’ participation in the hearing relative to the participation of the successful respondents.

102               Although a mathematical apportionment is, in the circumstances of this case, arbitrary to some extent, I consider that in the unusual circumstances which exist in relation to these four proceedings it is an appropriate manner in which to resolve the issue.  A mathematical apportionment is, in my view, an appropriate way to effect a resolution of the tension between the two competing issues to which I have referred, namely the entitlement of the applicants to their costs of successfully prosecuting their case against Windsor Smith and, on the other hand, the desirability and consequences of having four proceedings heard together with a consequent saving of costs and court time.  As the Full Court observed in Dodds Family Investments Pty Ltd v Lane Industries Pty Ltd (supra) at 272:

“Where there is a mixed outcome in proceedings, the question of apportionment is very much a matter of discretion for the trial judge.  Mathematical precision is illusory and the exercise of the discretion will often depend upon matters of impression and evaluation.”

103               With these observations in mind and recognising that I must exercise the discretion as to costs committed to me judicially, I consider that there should be a variation of what would otherwise be the usual order as to costs in the proceeding against Windsor Smith.  Having regard to the principles and circumstances to which I have referred I consider that Windsor Smith (the first, second, fourth and seventh respondents) should pay 75% of the costs incurred by the applicants in relation to those matters and issues which the applicants were obliged to lead and present against all respondents in the four proceedings and is otherwise obliged to pay to the applicants all their costs which were incurred in relation to matters and issues specifically relating to Windsor Smith.  This apportionment takes into account the matters to which I have referred to in par 101 above. 

104               The applicants should pay the costs of the third, fifth and sixth respondents in relation to the application against them and should pay the first, second and seventh respondents their costs of the claim against them for infringement of Australian registered trade mark number 641055.

Associate:

Dated:              10 May 2000