FEDERAL COURT OF AUSTRALIA

Integrated Hospitality Services Pty Ltd v Zeneldin [2011] FCA 720

THE COURT ORDERS BY CONSENT THAT:

1.    As and from 15 June 2011, the Respondent, whether by himself, his servants or agents or otherwise howsoever be restrained from –

1.1    applying or using the name “Pearl Kitchen Café Bar Functions” in connection with food services;

1.2    applying or using any names or phrases which are substantially identical or deceptively or confusingly similar to the Applicants’ names, including but not limited to “Pearl”, “Pearl Restaurant and Bar”, “Pearl Restaurant”, “Restaurant Pearl”, “Pearl Café”, “Pearl Events” and “Pearl Catering” as well as “Pearl Kitchen” in connection with food services.

2.     Excluding the neon sign at the front of the premises located at 3 Station Pier, Port Melbourne, by 15 June 2011 the Respondent deliver up on oath to the Applicants or their nominated agent or for destruction of all business, advertising, promotional and other material, used or intended to be used by or capable of being used by the Respondent whether by himself, his servants or agents or otherwise howsoever, in any manner in breach of paragraph 1 above which is now or hereafter in the possession, power, custody or control of the Respondent or his servants or agents.

AND THE COURT FURTHER ORDERS THAT:

3.    By 22 June 2011, the Respondent pay the Applicants’ costs fixed in the sum of $15,000.00.

4.    The Application is struck out subject to a right to reinstatement on 1 August 2011 in the event of the Respondent’s non-compliance with paragraph 2 and 3 above.

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

1    The applicants, Integrated Hospitality Services Pty Ltd and Pearl Catering (Vic) Pty Ltd, commenced proceedings on 1 June 2011. They alleged that the respondent acted in breach of ss 18, 29, and 34 of the Australian Consumer Law, as set out in Schedule 2 to the Competition and Consumer Act 2010 (Cth), and committed the tort of passing off.

2    In their application, the applicants sought interlocutory relief restraining the respondent from using the names “Pearl Kitchen Café Bar Functions” and any other names substantially identical or deceptively similar to names used by the applicants in relation to its restaurant and bar business. The names “Pearl”, “Pearl Restaurant and Bar”, “Pearl Restaurant”, and “Restaurant Pearl” have been used in connection with the restaurant and bar business owned by the applicants, and their predecessors, since 2000.

3    The applicants and the respondent have now reached an agreement, including for final orders. These orders address the fundamental dispute between the parties, and I congratulate them for arriving at a sensible agreement. No doubt, there is a strong commerciality in the result that has been arrived at by the parties.

4    The outstanding matter for determination by the Court is the question of costs.

5    Following the commencement of proceedings by the applicants, the respondent made an offer in writing which addressed the substance of the claim. The respondent agreed to refrain from further using the description “Pearl” in connection with its restaurant business. There were some fairly minor differences between the terms of that offer and the terms of the final orders agreed to by the parties. Perhaps most significantly, in the offer, a period of eight weeks was to be allowed for the use of the name, signs, business cards, advertising, and menus to cease. In the agreed orders, that period is considerably shorter.

6    There was, in all likelihood, no reason why the accord which has been reached in Court today could not have been reached by constructive discussions immediately following the delivery of the open offer by the respondent. The offer made by the respondent was rejected, and no counter-offer was made by the applicants. The parties then locked themselves into an unfortunate position of non-communication. It follows that neither party should bear the costs of the other following the making of the open offer by the respondent. The applicants and the respondents should each bear their own costs from Monday, 6 June 2011.

7    The period prior to the issue of proceedings stands in a different category. The application to the Court was, from the point of view of the applicants, necessary in order to protect their legal rights. Those rights, for whatever reason, be they commercial, legal or otherwise, have ultimately been accepted by the respondent. In those circumstances, it seems proper that the respondent bears the costs of the applicants prior to, and for the issue of, the proceedings.

8    There is little disagreement about the amount of the costs to be payable by the respondent. Mr Samargis, who appeared as counsel for the applicants said that the solicitors for the applicants spent a total of 25 hours in the preparation of the case. He explained the work which he devoted to the case. He spent a half day conferring with his instructing solicitor, and another half day conferring with his clients. He spent a day drawing the pleadings, and two affidavits which have been filed in the Court, and one further day preparing the case and written submissions.

9    The times submitted by Mr Samargis in relation to the applicants’ preparation of the case appear reasonable. Mr Fitzpatrick, who appeared as counsel for the respondent, did not contest that proposition. In a case such as the present, a fair market rate as between party and party for counsel, is in the region of $4,000 a day. For solicitors, the rate is about $440 per hour. As a consequence, the total fees at those rates amount to approximately $22,000. It seems reasonable to adjust that total to take into account the difference between solicitor/client and party/party costs, by about a third, or to round it off, $7,000. The result is $15,000, the amount which, quite independently, the respondent proffered by way of open offer.

10    In the circumstances, $15,000 is a reasonable amount for costs payable by the respondent to the applicants. Thus, the order of the Court will be that the respondent pay the applicants the sum of $15,000, by way of costs.

Associate:

Dated:    24 June 2011