FEDERAL COURT OF AUSTRALIA

N.V. Sumatra Tobacco Trading Company v British American Tobacco Australia Services Limited (No 2) [2012] FCA 219

THE COURT ORDERS THAT:

The respondent be awarded its costs of and incidental to the proceeding, to be taxed if not otherwise agreed.

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

REASONS FOR JUDGMENT

1    In NV Sumatra Tobacco Trading Company v British American Tobacco Australia Services Ltd [2011] FCA 1228 I dismissed an application for leave to appeal from a decision of Greenwood J, in which his Honour had, in the original jurisdiction of the Court, dismissed an appeal from a decision of a delegate of the Registrar of Trade Marks under s 56 of the Trade Marks Act 1995 (Cth). After delivering judgment I invited the parties to make submissions as to costs. The parties have done so in writing, with a view to a decision as to costs being made by me on the papers.

2    As I noted in my earlier judgment, the respondent in the proceedings before me was the respondent in the substantive proceedings before Greenwood J. It was successful in both cases.

3    In respect of costs payable, the respondent submits (in summary) that the usual rule is that costs follow the event, and that this rule should apply in this case.

4    The applicant however submits that it should pay only 85% of the respondent’s costs of and incidental to the application for leave to appeal as agreed or taxed, because:

    The respondent’s submissions before me in the interlocutory proceedings in relation to substantial injustice related only to the respondent’s unpaid costs of the trial at first instance.

    This was a separate and distinct proposition for which there was no precedent, and which the respondent properly abandoned at the hearing. However this concession ought to have been made at the outset.

    Lengthy affidavit material was filed by the respondent in support of its arguments in relation to the issue of substantial injustice.

    The applicant should not be required to pay the costs of the respondent incurred in respect of this issue.

5    The respondent submits however that it never abandoned the issue of substantial injustice arising in circumstances where the applicant was permitted to appeal the decision below without the issue of the costs at first instance being addressed. The respondent submits that affidavit material was filed in respect of this point.

Consideration

6    The key question is whether the respondent’s case in relation to substantial injustice was abandoned at the hearing before me.

7    In my view the applicant in its submissions appears to be confusing two separate issues raised at trial in relation to principles of substantial injustice.

8    The applicant clearly submitted that substantial injustice would result to it in accordance with the principles explained in Décor Corporation Pty Ltd v Dart Industries Inc (1991) 33 FCR 397 at 398-399 should leave to appeal be refused, supposing his Honour’s decision was wrong. The primary submission by the applicant at the hearing was that substantial injustice would result because – in summary – refusal of leave would result in the extinguishment of the applicant’s registered trademark (TS 12 October 2011 p 22 ll 38-47, p 23 ll 1-11).

9    However while the respondent conceded the merit of the applicant’s arguments in respect of the potential substantial injustice the applicant would suffer should his Honour have been wrong (TS 12 October 2011 p 39 l 35), the respondent nonetheless submitted that the applicant’s position was balanced by the potential substantial injustice the respondent would suffer if leave to appeal were granted, in particular by reference to:

    the fact that the applicant was a foreign corporation;

    the applicant had already been unsuccessful twice in respect of the relevant trademarks; and

    the respondent had been put to great expense which it was unlikely to be able to recover.

10    Accordingly, the respondent submitted that the potential injustice to the respondent should leave to appeal be granted was a discretionary factor the Court could take into account in deciding whether or not to grant leave (in particular, TS 12 October 2011 p 39 ll 35-47, p 40 ll 1-2, 30-33, 41-47, p 41 ll 1-3).

11    The respondent filed affidavits sworn by Ms Chrystal Dare and Mr Roland Matters in support of this proposition. Ms Chrystal Dare was a lawyer instructed by the respondent in these proceedings. Her affidavit of sworn 10 October 2011 goes, in summary, to the costs incurred by the respondent, and research she caused undertaken which indicated that the applicant had no assets in Australia to which the respondent could have recourse in respect of costs should the respondent be successful in the proceedings. Mr Roland Matters was a legal costs consultant retained by the solicitors for the respondent, who deposed in his affidavit sworn 10 October 2011 (inter alia) as to his expert opinion in respect of the proportion of actual costs recovered by successful litigants.

12    It is clear that the respondent never abandoned its case that the Court could take into consideration the potential injustice the respondent would suffer in respect of costs should leave to appeal be granted. In my judgment refusing leave to appeal I did not advert to this issue, because it was clearly unnecessary for me to do so.

13    While costs always remains a matter of discretion, the usual practice is that costs follow the event, and a successful litigant receives costs in the absence of special circumstances justifying some other order: ACCC v Australian Safeway Stores Pty Ltd (No 2) [2003] FCAFC 163 at [6]. The applicant accepts this practice, although in this case the applicant contends that circumstances warrant a departure from that approach. I am not persuaded by the submissions advanced by the applicant that there should be a departure from this rule, or that any discount in respect of costs incurred by the respondent is warranted.

14    The appropriate order is that the respondent should be awarded its costs of and incidental to the proceeding, to be taxed if not otherwise agreed.

Associate:

Dated:    13 March 2012