FEDERAL COURT OF AUSTRALIA

Playcorp Group of Companies Pty Ltd v Peter Bodum A/S (No. 2)

[2010] FCA 455

THE COURT ORDERS THAT:

Save as noted in the orders made in this proceeding on 14 May 2009, the respondents/cross-claimants (Bodum) pay the applicants’/cross-respondents’ (Playcorp) costs of the claim and cross-claim (other than the costs of the designs infringement aspect of the cross-claim, the costs associated with the preparation of the evidence of Ms Sarah Huang and the costs of and in connection with the application for costs) assessed on a party and party basis.

Note:    Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
The text of entered orders can be located using Federal Law Search on the Court’s website.

REASONS FOR JUDGMENT

INTRODUCTION

1                                             On 2 February 2010 reasons for judgment were published in this proceeding and in the related proceeding NSD472 of 2008.  Orders were pronounced on 14 April 2010. The question of costs fell for my determination upon the making of those Orders.  On 13 May 2010 I pronounced costs orders.  The following are the reasons for those costs orders.

GROSS SUM ASSESSMENT

2                                             In relation to the outstanding issues of costs, the parties have agreed that Playcorp should have its costs paid by Bodum on a party and party basis although a discount was sought by Bodum.  However, the parties disagreed as to the appropriate means for the assessment of Playcorp’s costs.  Playcorp sought a direction enabling its costs to be assessed on a gross sum basis under O 62 r 4(2)(c) of the Federal Court Rules (1979).  Bodum on the other hand submitted that Playcorp’s costs be assessed by taxation under O 62 r 8. 

3                                             At the outset, I should indicate that O 62 r 4(2)(c) is expressed in general terms and is not limited to only complex and protracted litigation. Even in very simple cases a gross sum assessment may be appropriate: see Ginos Engineers Pty Ltd v AutoDesk Australia Pty Ltd (2008) 249 ALR 371 per Finn J at [22]. 

4                                             The purpose of the sub rule is to avoid the expense, delay and aggravation involved in protracted litigation arising from the taxation process: see Beach Petroleum NL & Claremont Petroleum NL v Johnson (No  2) (1995) 57 FCR 119 at p 120 per von Doussa J, applying Leary v Leary [1987] 1 All ER 261; Australasian Performing Rights Association v Marlin [1999] FCA 1006 at [3]; Black & Decker Inc v GMCA Pty Ltd (No 4) [2008] FCA 1737 at [3] and Seven Network Limited v News Limited [2007] FCA 2059 at [3] and [25].

5                                             In applying the sub rule, the Court applies a much broader brush than would be used on a taxation of costs pursuant to O 62 r 8.  Nevertheless, the Court must ensure that the approach taken to the estimate of costs is logical, fair and reasonable: see Beach Petroleum NL v Johnson (No 2) (1995) 57 FCR 199 at 120, 123 and 124 per von Doussa J, and Seven Network Limited at [25].

6                                             Further, the Court should now be mindful in interpreting and applying the Rules of the Court to best promote the ‘overarching purpose’ of the civil practice and procedure provisions, which is to facilitate the just resolution of disputes according to law and as quickly, inexpensively and efficiently as possible: see s 37M of the Federal Court of Australia Act 1976 (‘the Federal Court Act’).

7                                             However, it is important to also appreciate that proceeding under O 62 r 4(2)(c) involves the application of the basic principles applicable to a taxation of costs.  At the very least, the provisions of O 62 and Sch 2 provide assistance in fixing an appropriate gross sum: see Charlick Trading Pty Ltd v Australian National Railways Commission [2001] FCA 629 at [10] per Mansfield J and Seven Network Limited at [25] and [27] per Sackville J.

8                                             Therefore in a contested taxation process in fixing an appropriate gross sum, considerable judicial time may be involved, including the receiving and assessing of expert evidence.  Each case must be considered having regard to the particular circumstances arising and the nature of the dispute.  This would explain the fact that there have been a number of Federal Court cases where gross sum assessments have been made, where the range of costs ordered has been very wide: see Seven Network Limited at [33].

9                                             In support of its submissions that there should be an assessment on a gross sum basis, Playcorp relied upon a report prepared by Ms Elizabeth Harris.  Ms Harris is a highly skilled and well qualified cost consultant.  Ms Harris explained the work involved in a traditional taxation of costs in this particular matter and identified the labour intensive nature of the exercise. 

10                                          Ms Harris gave an indication of the costs likely to be incurred by Playcorp should the matter proceed to a traditional taxation process.  Ms Harris also stated that the assessment of the costs on a gross sum basis would be likely to be faster than a traditional taxation process. 

11                                          Playcorp desired to adopt a process for the assessment of its costs which would result in the fastest and least costly means for the cost dispute to be determined.  Playcorp was concerned about the potential for a traditional taxation of costs to become a long, drawn out and costly affair.  Playcorp was concerned that Bodum’s conduct demonstrated a propensity to adopt a ‘no stone left unturned’ approach to litigation.  It was said by Playcorp that it is hard to imagine Bodum resigning itself to the payment of the Registrar’s estimate of Playcorp’s costs. 

12                                          Playcorp submitted that a gross sum assessment was appropriate for the following reasons:-

(a)               On the basis of Ms Harris’ estimates, it was clear that considerable expense would be saved by adopting a gross sum assessment, rather than a traditional taxation;

(b)               Ms Harris’ view was that this proceeding was suitable for gross sum assessment, given its complexity and the level of costs actually incurred;

(c)               Even if the Court took the view that the proceeding was not a complex one, that did not preclude a gross sum assessment;

(d)               It was plain that the material to be prepared and filed on behalf of Playcorp must enable a logical, fair and reasonable assessment of costs and would be open to scrutiny by Bodum; and

(e)               No prejudice would be suffered by Bodum as consequence of a gross sum assessment of an amount for costs.

13                                          Bodum relied upon evidence from Ms Valarie Higinbothoam to respond to Ms Harris’ report.  Ms Higinbothoam has also had extensive experience as a cost consultant.

14                                          In Ms Higinbothoam’s opinion:

(a)               The process involved in the traditional taxation approach which is set out in Ms Harris’ report was extreme;

(b)               The likely costs of Playcorp preparing its bill of costs would be between $40,000 and $55,000 with minimal additional costs for solicitor review;

(c)               It was more likely than not that the question of costs in these proceedings would be finalised following the initial estimate of the Registrar; and

(d)       In the present case, where the order of 14 May 2009 required certain costs to be extracted from the costs able to be claimed by Playcorp, the taxation process was a more appropriate method of fairly calculating those costs.

15                                          I have considered the expert views of each of the cost consultants.  However, it is ultimately a matter for the Court to determine whether it is appropriate to make an order pursuant to O 62 r 4(2)(c). 

16                                          I hold the view that an order for a gross sum assessment should not be made by the Court in this proceeding.  At one level there may be time and expense saved by adopting a gross sum assessment rather than a traditional taxation process.  However, this may depend upon the approach taken to the task.  After all, even with a gross sum assessment material must be lodged and filed with the Court to enable a logical, fair and reasonable assessment of the costs, which will be open here to scrutiny by Bodum.  I have already explained above the need to adhere to the basic principles of taxation.

17                                          Whilst I agree that as a matter of principle any proceeding may be amenable to a gross sum assessment, this is not a proceeding which is unduly complex or the level of costs unduly high on the estimate already undertaken by Ms Harris.  Nor is this proceeding a simple proceeding of the type referred to above in paragraph 3.

18                                          Whilst I have accepted gross sum orders are not limited to the very large cases, they are particularly suited to very simple cases, or to complex litigation where the costs of assessing a taxing bill and the delay and inconvenience involved would necessarily be considerable.  In my view, the taxation issues that arise in this particular litigation can be properly and expediently dealt with by a traditional taxation process. 

19                                          I accept that a gross sum assessment order may be appropriate where it will avoid a counter productive dispute about costs, but, I am far from satisfied that this will occur in this case.  Assuming that Bodum prior to instituting the proceedings left ‘no stone unturned’ in its approach, I do not conclude that further unnecessary conflict between the parties upon a taxation will necessarily occur. 

20                                          I do not proceed on the basis the parties will approach the taxation in the way feared by Playcorp. 

21                                          In fact, I should assume that the parties will (now that they are before the Court) conduct the taxation consistent with the ‘overarching purpose’ of the Rules of Court referred to in paragraph 6 above: see s 37N of the Federal Court Act.

22                                          There could be consequences if the taxation was not conducted in that fashion, which would include the opportunity to re-visit the appropriateness of granting the application under O 62 r 4(2)(c) and ordering costs of and concerning the taxation process itself: see eg Ualesi (t/as Australian Empire Imports) v Expeditors International Pty Ltd [2006] FCA 26; Australasian Performing Rights Association [1999] FCA 1006 and s 37N of the Federal Court Act.  As far as costs are concerned, this could involve ordering any costs to be paid on a solicitor and own client basis.

23                                          Therefore, I have come to the conclusion that I do not consider that the traditional taxation process in this proceeding will be protracted and expensive. I say this even keeping in mind the estimates made by Ms Harris.  However, I do not share her pessimism as to the future conduct of Bodum, nor do I share Playcorp’s fear of a protracted taxation process.

24                                          It has also not been suggested that Playcorp would be unable to participate properly in the traditional taxation process for any financial reason.  Nor has it been suggested that Bodum may not be in a position to meet a liability of any final taxed cost order made.  These would be relevant considerations in exercising the discretion in considering an application under O 62 r 4(2)(c), particularly where the liability for costs is estimated to be large and the taxation process particularly complex and expensive: see eg Harrison v Schipp (2002) 54 NSWLR 738.

25                                          The mere fact that no prejudice will be suffered by Bodum as a consequence of a gross sum assessment amount does not seem to me to override the considerations that I have mentioned. 

DISCOUNT OF COSTS RECOVERABLE

26                                          The next matter in contention was that Bodum submitted that it should be ordered to pay only 50% of Playcorp’s costs incurred in this proceeding taxed on a party and party basis. 

27                                          Bodum sought the reduction in recoverable costs on the grounds that:

(a)               Playcorp’s claim that Bodum enjoyed no relevant reputation in the features of the Chambord Coffee Plunger and Assam Teapot failed; and

(b)               Playcorp’s claim that look-alike coffee plungers and teapots on the market diluted Bodum’s reputation in the Bodum Chambord Coffee Plunger and Assam Teapot failed.

28                                          I do not consider these claims of Playcorp can be disassociated with the main contest between the parties that was ultimately won by Playcorp. 

29                                          As part of the contest Bodum claimed, amongst other matters, to have a reputation in Australia in the naked features of the two products in question, divorced from the branding, get-up and packaging of its products.  In this claim, Bodum failed: see eg Playcorp Group of Companies Pty Ltd v Peter Bodum A/S [2010] FCA 23 at [82].

30                                          Further, the presence of look-alike products in the market was a relevant matter concerning Bodum’s reputation and whether it existed in the features alone of its products, or in the products, brand and get-up as a whole.  In the final determination relevance was placed upon the predominant branding of the Bodum products, with the Bodum trademark and other distinctive indicia, and the awareness of consumers that look-alike products are and had been for many years, in the market.  Indeed, Bodum had been aware of these look-alikes by encouraging consumers to look for ‘the original’.  These were all matters associated with the main contest which Bodum lost.

31                                          I see no basis for reducing the costs otherwise recoverable by Playcorp for all of its party and party costs. 

32                                          In addition, I should mention that no foundation has been laid to support the submission that the appropriate reduction in the recoverable costs be 50%.  I would not be able to make an estimate of the proportion of time and costs devoted to the issues in which Bodum seeks a discount.  In any event, as I have said, I do not consider that the ‘issues’ referred to by Bodum can be readily isolated from the other parts of the proceeding in which Playcorp was successful.

EVIDENCE OF MS SARAH HUANG

33                                          There was potential evidence from Ms Sarah Huang which was to be relied upon by Playcorp but was not led at trial.  The evidence went to a submission of Playcorp on the dilution of Bodum’s reputation.  Playcorp accepted that it was not entitled to its costs associated with the preparation of Ms Huang evidence. 

34                                          Bodum claimed that it had to prepare evidence in reply to Ms Huang’s affidavits and prepare for cross-examination which was ‘complex and expensive’.  Bodum has not provided any material to support this claim, and in the context in which this litigation has been contested, I am not persuaded that Ms Huang’s evidence would have had the importance or special category contended for by Bodum.  It is appropriate that Playcorp does not obtain the costs associated with the preparation of this evidence.  However, it is not appropriate to make any order that Playcorp should pay any of Bodum’s costs associated with Ms Huang’s evidence.  I am not satisfied Bodum spent anything other than minimal time in preparing to meet the proposed evidence of Ms Huang that Bodum did not otherwise need to do to prepare its case.

CONCLUSION

35                                          As to the application for costs itself, each party has had some success, and in my view should bear their own costs.

Associate:

Dated:         18 May 2010