FEDERAL COURT OF AUSTRALIA

Nokia Corporation v Cellular Line Australia Pty Ltd (No 2) [2006] FCA 980

Costs– whether costs should follow the event – apportionment of costs among respondents

Nokia Corporation v Cellular Line Australia Pty Ltd [2006] FCA 726 referred to

Gladstone Park Shopping Centre Pty Ltd v Ross Wills (1984) 6 FCR 496 referred to

Oshlack v Richmond River Council (1998) 193 CLR 72 referred to

Calderbank v Calderbank [1975] 3 All ER 333 referred to

NOKIA CORPORATION v CELLULAR LINE AUSTRALIA PTY LTD (ACN 093 296 694), ABBAS ZEITOUN, TUNCAY AKYILDIZ AND ERIC SOO WOONG KIM

VID 1484 OF 2005

KENNY J

11 AUGUST 2006

MELBOURNE

THE COURT ORDERS THAT:

1.                  Subject to 2 below, the respondents pay the applicant’s costs of the motion, notice of which was filed on 24 February 2006.

2.                  The costs of the applicant be apportioned between the respondents as follows:

(a) 60 per cent be paid by the first and second respondents;

(b) 20 per cent be paid by the third respondent; and

(c) 20 per cent be paid by the fourth respondent (less 20 per cent of costs referable to the applicant’s costs of preparing evidence of sales of counterfeit products after 24 February 2006).

Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

REASONS FOR JUDGMENT

Introduction

1                     On 14 June 2006, I delivered reasons for judgment and ordered that there be summary judgment for the applicant against the respondents: Nokia Corporation v Cellular Line Australia Pty Ltd [2006] FCA 726 (“Nokia”). I assume familiarity with those reasons. At [61] I noted that:

“At the hearing, I suggested to the parties that they might turn their minds to whether or not costs should be equally proportioned between the respondents. It seemed to me that the third and fourth respondents had not seriously contested the summary judgment motion; and that this should be reflected in any costs order. I also noted, and counsel for Nokia agreed, that the third and fourth respondents were alleged to have engaged in a lower volume of infringing conduct than the first and second respondents. I proposed to hear the parties on the matter of costs after delivering these reasons.”

I ordered that the parties file written submissions on costs. The disposition of costs now falls for determination.

submissions

2                     The applicant submitted, first, that costs should follow the event. Citing Gladstone Park Shopping Centre Pty Ltd v Ross Wills (1984) 6 FCR 496, the applicant claimed that there were no special circumstances that warranted departing from the general rule.

3                     With respect to apportionment, the applicant relied on an affidavit sworn by Luke Andrew Merrick on 23 June 2006. Mr Merrick states that he maintained three separate files in relation to this proceeding. One file related to the first and second respondents and the other files related to the third and fourth respondents respectively. Mr Merrick said that he had reviewed the time recording and disbursement records maintained in respect of each of these files and that, based on this review, he estimated that the applicant’s costs are properly attributable as follows: (1) 60% in respect of the first and second respondents; (2) 20% in respect of the third respondent; and (3) 20% in respect of the fourth respondent.

4                     The applicant also submitted that, as the Court has found that the second respondent is the guiding mind of the first respondent, any order for costs made against those parties should bind them jointly and severally.

5                     The third respondent filed submissions largely repeating the submissions he made at the summary judgment hearing. The third respondent expressed regret for having sold any counterfeit products and explained that such products were a very small part of his business. He wrote that some of these sales may have been a result of an oversight on the part of his staff which included some of his children. He also said that he had been distracted by difficult personal circumstances at the time of the sales. He said that he has been having serious financial difficulties. The third respondent wrote that he would refrain from selling any Nokia branded goods in the future.

6                     The fourth respondent noted that in his Defence filed on 24 February 2006 and in his evidence at the hearing he admitted selling counterfeit Nokia branded products. He argued that, in light of this, Nokia did not have to produce any evidence against him to secure summary judgment. The fourth respondent claimed that he stopped selling Nokia branded products before this proceeding began and that, while he accepted that Nokia had a right to sue him, the case could have settled before it came to court. He said that, in light of these factors, he should not have to pay costs. He also argued that any costs awarded against him should reflect his role in the proceeding. He submitted that, as his conduct was unrelated to that of the other respondents, he should not have to pay any costs relating to preparation or hearing in respect of the other respondents.

7                     The first and second respondents did not file any submissions as to costs.

consideration

8                     A successful litigant is ordinarily entitled to an award of costs: see, e.g., Oshlack v Richmond River Council (1998) 193 CLR 72 at 97 per McHugh J (dissenting in result) and 120-1 per Kirby J. In this case, I have ordered summary judgment against the respondents. Thus, absent special circumstances, the respondents should pay the applicant’s costs.

9                     Whilst I am aware of the third respondent’s position, he has not advanced any justification, which, as a matter of law, would permit a departure from the general rule as to costs.

10                  As noted already, the fourth respondent argued that there should be no costs ordered against him because he admitted selling counterfeit products and because the case against him could have settled. I am also not satisfied, however, that there are sufficient grounds for departing from the general rule with respect to the fourth respondent. It is clear from the evidence that the applicant sought to place the fourth respondent on notice that proceedings might be filed. It may well be that, after further negotiations, settlement could have been reached between the applicant and the fourth respondent. The fourth respondent has not, however, alleged and shown that the applicant rejected an offer of compromise. Thus, the principles of Calderbank v Calderbank [1975] 3 All ER 333 do not apply. While the fourth respondent’s admissions, which were made after the institution of the proceedings, may be relevant as to what costs should be ordered against him (see [15] below) these admissions are not sufficient to avoid a costs order altogether.

11                  The first and second respondents have not contended that costs should not be awarded against them according to the ordinary rule. I see no reason why they too should not pay costs. The remaining issue, therefore, is apportionment.

12                  The second respondent is a manager of the first respondent. In Nokia at [56], I found that no other person plays an active role in the first respondent’s business. I accept the applicant’s submission that, in these circumstances, any costs order against these respondents should bind them jointly and severally.

13                  Aside from the close link between the first and second respondents, there are no other links between the respondents. The businesses of the third and fourth respondents are totally independent. Therefore, I find that costs should be apportioned amongst the respondents upon the basis the applicant has proposed.

14                  As a starting point, I accept the evidence of Mr Merrick concerning the proportion of the costs attributable to each respondent. These figures were based on his review of the applicant’s files. Mr Merrick’s estimates are also commensurate with my sense of the scale of the case against each of the respondents. Therefore, I find it appropriate to order that the first and second respondents should bear 60% of the costs of the proceeding. Similarly, I would order that the third respondent pay 20% of the costs of the proceeding.

15                  Subject to the following qualification, I would also order that the fourth respondent pay 20% of the costs of the proceeding. As already noted, by his Defence, the fourth respondent admitted he had sold counterfeit products. The fourth respondent should not bear the applicant’s costs of adducing evidence of a matter that was known by the applicant to be admitted. Accordingly, the fourth respondent should not bear the applicant’s costs of preparing evidence of sales of counterfeit products after 24 February 2006. Such costs should be deducted from the total costs of the proceeding before the fourth respondent’s 20% share is calculated.

16                  Finally, I note that the third respondent appears to be a person of very limited means, who, on account of language difficulties, found it difficult to understand the warnings given him before these proceedings commenced. The third respondent, like the fourth respondent, gave admirably frank testimony concerning his sales and stated that he would not infringe the applicant’s trade marks in the future. The applicant should properly bear these matters in mind in determining how these proceedings are to be concluded.

Associate:

Dated: 11 August 2006