Federal Court of Australia

Derrimut Health & Fitness Pty Ltd v Revival 24:7 Gym Pty Ltd (No 2) [2020] FCA 1581

ORDERS

THE COURT ORDERS THAT:

1.    Pursuant to r 39.05(e), the Court’s declarations and orders of 22 October 2020 are set aside and substituted with the following.

2.    The Applicants have leave pursuant to r 8.21(1)(g) to amend the Originating Application in the form set out at exhibit NMH-15 to the 20 December 2020 affidavit of Nicholas Mark Holt.

3.    Pursuant to s 232 of schedule 2 of the Competition and Consumer Act 2010 (Cth), the Respondent be required to remove all images of the five photographs, copies of which are set out at exhibits NMH-1, NMH-2, NMH-3, NMH-4 and NMH-5 to the 15 November 2019 affidavit of Nicholas Mark Holt (Photographs), from its marketing of any goods or services marketed by the Respondent.

4.    Pursuant to s 232 of schedule 2 of the Competition and Consumer Act 2010 (Cth), the Respondent be restrained from using the Photographs in its marketing of any goods or services marketed by the Respondent.

5.    Pursuant to s 115(2) of the Copyright Act 1968 (Cth), the Respondent be required to remove the Photographs from its marketing of any goods or services marketed by the Respondent.

6.    Pursuant to s 115(2) of the Copyright Act 1968 (Cth), the Respondent be restrained from using the Photographs in its marketing of any goods or services marketed by the Respondent.

7.    Pursuant to s 126(1)(a) of the Trade Marks Act 1995 (Cth), the Respondent be required to remove the Second Applicant’s registered trademark number 1298338 (Trademark) from its marketing of any goods or services marketed by the Respondent.

8.    Pursuant to s 126(1)(a) of the Trade Marks Act 1995 (Cth), the Respondent be restrained from using the Trademark in its marketing of any goods or services marketed by the Respondent.

9.    Pursuant to s 23 of the Federal Court of Australia Act 1976 (Cth), the Respondent be restrained from using the Photographs and the Trademark in its marketing of any goods or services marketed by the Respondent.

10.    The Respondent pay the Applicants’ costs of the proceeding, assessed on a lump-sum party and party basis, in the amount of $46,786.39

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

REASONS FOR JUDGMENT

ANDERSON J:

Background

1    The first applicant (Derrimut) is the owner of a gym, retail store and café business. It has gyms at 13 sites across Victoria and South Australia. As part of its online marketing, Derrimut has published five photographs of its facilities which are exhibits “NJS-6” to “NJS-10” of the affidavit of Nikolaos John Solomos dated 7 November 2019 (Photographs). Derrimut owns the copyright in the Photographs.

2    The second applicant (UPS) is the owner of a registered trademark (No 1298338), which relates to UPS and its branded goods (Trademark). UPS is a well-established and reputable brand within the fitness supplement market.

3    The respondent (Revival) was to commence business as a gym and fitness supplements supplier. From a date unknown, Revival published the Photographs on its website as part of its marketing and promotional activities. The Trademark is depicted within the Photographs.

4    Derrimut has not authorised Revival to publish or use the Photographs. UPS has not authorised Revival to use the Trademark. Derrimut and UPS wish to prevent Revival from using the Photographs and the Trademark.

5    On 22 November 2019, I granted the applicants’ interlocutory application for injunctions:

(1)    compelling Revival to remove the Photographs from its website (hhtps://www.revival247.com.au/) by 4.00 pm on 25 November 2019; and

(2)    prohibiting Revival from displaying, reproducing, publishing or otherwise using the Photographs,

until after the conclusion of the trial of this proceeding or until further order: Derrimut Health & Fitness Pty Ltd v Revival 24:7 Gym Pty Ltd [2019] FCA 1988 (2019 Reasons).

6    Subsequent to the orders of 22 November 2019, Revival has removed and is no longer using the Photographs.

7    On 22 October 2020, the Interlocutory Application dated 20 December 2019 filed by Derrimut and UPS came on for hearing before me. Mr Luxton of counsel appeared on behalf of Derrimut and UPS. There was no appearance on behalf of Revival.

8    On 5 October 2020, the solicitors acting for Derrimut and UPS received an email from a Mr Ronaldo Yousef. Exhibit “AWTS-3” to the affidavit of Mr Andrew Stops sworn 12 October 2020 is an “ASIC Current Organisation Extract” of Revival, which records that Mr Ronaldo Yousef is one of Revival’s directors. In Mr Yousef’s 5 October 2020 email, he advised that, as a consequence of the effects of the COVID-19 pandemic, Revival has been forced to permanently close. The email further advised that Revival did not have the financial ability to engage lawyers to act on its behalf in this proceeding.

9    As a consequence, the matter proceeded before me undefended.

10    At the conclusion of the hearing on 22 October 2020, I entered judgment in default against Revival. On 30 October 2020, I made the Orders which accompany these reasons. These are my reasons for doing so.

JUDGMENT IN DEFAULT

11    By their Interlocutory Application dated 20 December 2019, Derrimut and UPS variously seek:

(1)    leave to amend the Originating Application pursuant to r 8.21(1)(g);

(2)    judgment in default against Revival pursuant to r 5.23(2)(d) or 5.23(2)(c), as set out in the (proposed) Amended Originating Application;

(3)    alternatively, self-executing orders against Revival pursuant to r 5.21(d), as set out in the (proposed) Amended Originating Application, if the Respondent fails to comply with r 11.02, r 11.06, r 11.07 and r 11.08 by a date to be determined by the Court; and

(4)    costs (on a lump-sum, indemnity basis).

12    The Interlocutory Application is supported by:

(1)    the affidavit of Mr Nicholas Mark Holt dated 20 December 2019 (Third Holt affidavit);

(2)    the affidavit of Mr Andrew William Tilley Stops dated 12 March 2020 (First Stops affidavit);

(3)    the affidavit of Mr Andrew William Tilley Stops dated 12 October 2020 (Second Stops affidavit);

(4)    five affidavits of service, being:

(a)    the affidavit of service of Mr Daniel Wilson dated 29 November 2019;

(b)    the affidavit of service of Mr Kyle Knight dated 29 November 2019;

(c)    the first affidavit of service of Mr Mark Stephens dated 29 November 2019;

(d)    the second affidavit of service Mr Mark Stephens dated 29 November 2019;

(e)    the affidavit of service of Ms Ashleigh Kent dated 31 January 2020.

13    Derrimut and UPS also rely upon the affidavits filed in support of the Originating Application, being:

(1)    the affidavit of Mr Nikolaos John Solomos dated 7 November 2019 (Solomos affidavit);

(2)    the affidavit of Mr Nicholas Mark Holt dated 15 November 2019 (First Holt affidavit);

(3)    the affidavit of Mr Nicholas Mark Holt dated 21 November 2019 (Second Holt affidavit).

Applicants’ evidence

14    The applicants’ affidavits, relevantly, disclose the following evidence.

15    Derrimut is the owner of the businesses trading as Derrimut 24:7 Gym, Protein 24:7 and Derrimut Café. It conducts business as a 24 hour-a-day, seven day-a-week gym, retail store and café. It is the owner of 13 gyms across Victoria and South Australia. As a result, it has a well-established and reputable brand, with substantial goodwill within the market of fitness products and services.

16    Derrimut has published numerous photographs of its gyms, retail store and café for online marketing purposes.

17    The authors of the Photographs were Mr Trent Lockwood (Lockwood) and Mr Mark John (John). Lockwood and John are, and at all material times were, “qualified person(s)” for the purposes of s 32 of the Copyright Act 1968 (Cth). Lockwood and John have assigned ownership of the copyright in the Photographs, in writing, to Derrimut.

18    Derrimut has not alienated, licensed, assigned, novated, disposed of, or in any manner transferred, its ownership of the copyright in the photographs to any other party (including Revival).

19    UPS is the owner of the business trading as UPS. It conducts business as a supplier of various fitness supplements. It is the owner of the Trademark (the Trademark is exhibit “NJS-3” to the Solomos affidavit). As a result, UPS is a well-established and reputable brand, with goodwill within the fitness supplement market.

20    UPS has licensed Derrimut to use and reproduce the Trademark. Pursuant to that licence, the Trademark appears within one of the Photographs (which is shown at exhibit “NJS-9” to the Solomos affidavit).

21    Revival’s online marketing (at exhibit “NJS-5” of the Solomos affidavit) discloses it has engaged in trade or commerce and commenced in about November 2019. It operates a 24 hour-a-day, seven day-a-week gym and fitness supplements supplier with “state of the art” facilities.

22    From a date presently unknown, Revival (without authority) published the Photographs on its own website, https://www.revival247.com.au/.

23    On 18 October 2019, solicitors acting for Derrimut and UPS sent a letter of demand to Revival. By that letter, Derrimut and UPS required Revival to remove all of the Photographs from its online marketing. Revival did not comply with that demand.

24    On 8 November 2019, Derrimut and UPS filed the Originating Application in this proceeding.

25    On 22 November 2019, I granted Derrimut and UPS’s application for an interlocutory injunction: 2019 Reasons.

26    On 22 November 2019, the solicitors acting for Derrimut and UPS emailed to Revival the Court’s orders made 22 November 2019.

27    On 25 November 2019, Revival was personally served with the Court’s orders made 22 November 2019.

28    On 25 November 2019, the Photographs were removed from Revival’s website.

29    On 4 December 2019, Derrimut and UPS’s solicitors emailed a letter to Revival:

(a)    reminding Revival of its obligations pursuant to the Federal Court Rules 2011 (Cth) (Rules) to file and serve a notice of address for service;

(b)    notifying Revival that it was in default of these obligations; and

(c)    notifying Revival that, if it did not remedy the defaults by 6 December 2019, then Derrimut and UPS would seek default judgement, alternatively self-executing orders.

30    Revival did not remedy the above defaults by 20 December 2019, upon which the applicants filed the present application.

31    On 28 January 2020, the present application and two supporting affidavits were served on Revival by posting the documents to Revival’s address.

32    On 12 March 2020, Derrimut and UPS filed the First Stops affidavit. On the same day, solicitors acting for Derrimut and UPS sent the First Stops affidavit to Revival.

33    On 8 September 2020, solicitors acting for Derrimut and UPS sent an email to the Court requesting that this proceeding be relisted. The Respondent was copied in to that email.

34    On 5 October 2020, solicitors acting for Derrimut and UPS received an email in reply from Mr Ronaldo Yousef (which I have referred to above). By that email, Mr Yousef indicated (amongst other things) that Revival had closed its business, and has not engaged lawyers in respect of the present proceeding.

35    The solicitors acting for Derrimut and UPS have received no further communications from Revival.

36    Notwithstanding Mr Yousef’s email advising that Revival’s business had closed, Revival remains registered as a company.

37    Revival remains in default of its obligation to file and serve a notice of address for service. It has not taken any formal steps in this proceeding.

Application to amend Originating Application

38    Derrimut and UPS seek to amend the Originating Application in the terms as set out in the “[Proposed] Amended Originating Application” at exhibit “NMH-15” to the Third Holt affidavit.

Principles

39    The Court’s power to grant an application to amend an Originating Application under r 8.21(1) is discretionary. The power is to be exercised in furtherance of the objectives in s 37M of the Federal Court of Australia Act 1976 (Cth) (Act): Tamaya Resources Ltd (in liq) v Deloitte Touche Tohmatsu (a Firm) [2016] FCAFC 2; 332 ALR 199 (Tamaya), [122] (Gilmour, Perram and Beach JJ).

40    Section 37M(1) provides that the overarching purpose of the civil practice and procedure provisions is to facilitate the just resolution of disputes according to law and as quickly, inexpensively and efficiently as possible. Section 37M(2), without limiting the generality of subsection (1), provides, relevantly, that the overarching purpose includes, as objectives, the efficient use of the judicial and administrative resources of the Court, the efficient disposal of the Court’s overall caseload, and the disposal of proceedings in a timely manner. Sections 37M(3) and (4) relevantly provide that the Rules must be interpreted and applied, and any power conferred by them must be exercised, in the way that best promotes the overarching purpose: Tamaya, [123].

The proposed amendments

41    Paragraph 3 of the Originating Application seeks a prohibitive injunction, pursuant to s 232 of the Australian Consumer Law (ACL), prohibiting Revival from using any materials, photographs, designs, trademarks, logos or copyright which are owned by Derrimut and/or UPS. The proposed amendments seek analogous prohibitive injunctions relating to the other causes of action alleged.

42    In particular, proposed paragraph 5A seeks to include a prohibitive injunction, pursuant to s 115(2) of the Copyright Act 1968 (Cth), to the effect that Revival be prevented from using Derrimut’s copyright in any part of Revival’s marketing, operations and/or processes. This proposed relief arises out of the cause of the action in paragraph 4 of the Originating Application.

43    Proposed paragraph 7A seeks to include a prohibitive injunction, pursuant to s 126(1)(a) of the Trade Marks Act 1995 (Cth), to the effect that Revival be prevented from further infringing UPS’s trade mark in any part of Revival’s marketing, operations and/or processes. This proposed relief arises out of the cause of action in paragraph 6 of the Originating Application.

44    Proposed paragraph 7B seeks to include a prohibitive injunction pursuant to s 23 of the Act, to the effect that Revival be prevented from using Derrimut’s photographs and UPS’s Trademark so as to mislead and deceive persons into believing that there is a connection between (a) Derrimut and UPS and (b) Revival.

Consideration

45    I have considered the proposed amended originating application, and I am satisfied that:

(1)    the proposed amendments arise “out of the same facts or substantially the same facts as those already pleaded to support an existing claim for relief”: r 8.21(1)(g)(i) of the Rules;

(2)    the proposed amendments are necessary to facilitate the just and effective resolution of the dispute;

(3)    the proposed amendments are necessary to ensure that any relief obtained by Derrimut and UPS, under the causes of action, will have ongoing utility beyond the initial removal of the Photographs. Absent the amendments, it would appear that Revival could, for example, notionally comply with the claimed relief by removing the images (thereby complying with the mandatory injunctions), but then restore the photographs (without contravening the relief sought in the Originating Application that is currently on foot).

46    I will grant leave, pursuant to r 8.21(1)(g) of the Rules, to amend the Originating Application in the form set out at exhibit “NMH-15” to the Third Holt affidavit. I am satisfied that the amendments sought by Derrimut and UPS are necessary to facilitate the just and efficient resolution of the dispute. The amendments sought are, in my view, necessary to ensure that any relief obtained by Derrimut and UPS, under the causes of action, will have a utility beyond the initial removal of the Photographs. For these reasons, I will grant leave to amend the Originating Application as proposed by Derrimut and UPS.

Default Judgment

47    Derrimut and UPS seek judgment in default, or alternatively, certain self-executing orders.

Relevant principles

48    Rule 5.23(2) includes:

If a respondent is in default, an applicant may apply to the Court for:

…

(c)     if the proceeding was started by an originating application supported by a statement of claim or an alternative accompanying document referred to in rule 8.05, or if the Court has ordered that the proceeding continue on pleadings – an order giving judgment against the respondent for the relief claimed in the statement of claim or alternative accompanying document to which the Court is satisfied that the applicant is entitled; or

(d)     an order giving judgment against the respondent for damages to be assessed, or any other order; or

(e)     an order mentioned in paragraph (b), (c) or (d) to take effect if the respondent does not take a step ordered by the Court in the proceeding in the time specified in the order.

49    A party is “in default” if the party fails to:

(a)    do an act required to be done, or to do an act in the time required, by the Rules: Rules, r 5.22(a);

(b)    attend a hearing in the proceeding: Rules, r 5.22(c); or

(c)    prosecute or defend the proceeding with due diligence: Rules, r 5.22(d).

50    Rule 5.21(d) of the Rules provides that “[a] party may apply to the Court for an order that, unless another party does an act or thing within a certain time[,] the party have judgment against the other party”.

51    The above Rules are to be applied so as to promote the overarching purpose identified in s 37M(1) of the Act: Tamaya, [122]-[123].

52    Further to s 37M(2), the overarching purpose relevantly includes the following objectives:

(a)    the just determination of all proceedings before the Court;

(b)    the efficient use of the judicial and administrative resources available for the purposes of the Court;

(c)    the efficient disposal of the Court’s overall caseload;

(d)    the disposal of all proceedings in a timely manner; and

(e)    the resolution of disputes at a cost that is proportionate to the importance and complexity of the matters in dispute.

See AON Risk Services Australia Ltd v Australian National University [2009] HCA 27; 239 CLR 175 at [23] and [30] (per French CJ).

53    Factors relevant to the making of orders in default include direct and indirect prejudice to the opposing party, the impact of the delay on the proceeding, the reasons for the delay, good faith or lack of good faith, and the effect of putting off a trial both on other litigants and on the Court’s ability to manage cases efficiently: Black & Decker (Australasia) Pty Ltd v GMCA Pty Ltd [2007] FCA 1623, [5].

54    In Chamberlain Group, Inc v Giant Alarm System Co, Ltd (No 2) [2019] FCA 1606 (Chamberlain), Yates J stated at [13] and [14]:

The power to give judgment against a defaulting party is undoubtedly discretionary. The discretion must be exercised cautiously. Where the defaulting party is a respondent to a pleaded claim, the giving of judgment for final relief on the application will deliver complete success to the applicant without investigation of the merits of the pleaded claim: ACOHS Pty Ltd v Ucorp Pty Ltd [2009] FCA 577 at [27]. There is no requirement that the act or acts of default be intentional or amount to contumelious conduct. There is no requirement that the act or acts of default result in inordinate or inexcusable delay. That said, such features, if present, will be relevant to the exercise of the Court’s discretion. So too will conduct that persuades the Court that the defaulting party is manifesting an inability or unwillingness to cooperate with the Court and the other party or parties to the proceeding.

Rule 5.23(2)(c) requires the Court to be satisfied that the applicant is entitled to the relief claimed in the statement of claim. This requirement has been interpreted as meaning that the Court must be satisfied that “on the face of the statement of claim” the applicant is entitled to the relief that is claimed. It is not a requirement that the applicant prove its claim by way of evidence. Put another way, the facts alleged in the statement of claim are taken to have been admitted: Australian Competition and Consumer Commission v Dataline.Net.Au Pty Ltd [2007] FCAFC 146; 161 FCR 513 at [42]. If, on inspection of the statement of claim, the Court is satisfied that the applicant would be entitled to the relief sought then this requirement of r 5.23(2)(c) will be met: CNIP Pty Ltd v Chan & Naylor Norwest Pty Ltd (No 2) [2011] FCA 1170 at [18] – [19]; Speedo Holdings B.V. v Evans (No 2) [2011] FCA 1227 at [23]. The Court may permit further evidence to be adduced, but not evidence that would alter the pleaded case: Australian Competition and Consumer Commission v Dataline.Net.Au Pty Ltd [2006] FCA 1427; 236 ALR 665 at [45], [48] – [50]; United Broadcasting International Pty Ltd v Turkplus Pty Ltd (No 2) [2010] FCA 1413 at [42] – [44]; Australian Competition and Consumer Commission v Yellow Page Marketing BV (No 2) [2011] FCA 352; 195 FCR 1 at [62] – [63].

55    Similar statements of principle were set out in Speedo Holdings B.V. v Evans (No 2) [2011] FCA 1227 at [15]-[26] (Flick J).

Consideration

56    I am satisfied that Revival is a party which is in default. Revival:

(1)    failed to file a notice of address for service under rr 5.02, 11.02 and 11.06 of the Rules: see Rules, r 5.22(a);

(2)    failed to attend the hearing on 22 November 2019 and the hearing of this application on 21 October 2020: see Rules, r 5.22(c); and

(3)    failed to defend the proceeding by taking such steps that are required by the Rules to have been taken with due diligence: see Rules, r 5.22(d). In this respect, I have set out above the steps the applicants have taken in an attempt to engage with Revival on the subject of this proceeding. Revival has not participated in the proceeding. Based on the affidavit material filed by the applicants, I am satisfied that Revival “is manifesting an inability or unwillingness to cooperate with the Court and the other party or parties to the proceeding”: Chamberlain, [13].

57    I have reviewed Derrimut’s and UPS’s Originating Application and the affidavit material they have filed. The essential bases of each contravention are, in particular, set out in the Solomos affidavit. Based on the material filed, I am satisfied that, on the face of the Originating Application and affidavit material, the Applicants are entitled to the relief they have claimed: see 2019 Reasons.

58    For the reasons given, I am satisfied that it is appropriate to enter judgment in default against Revival. As a consequence, there is no need to consider the alternative relief sought of a self-executing order.

Costs

59    Derrimut and UPS seek the costs of the proceeding. They seek a lump sum costs order, with the costs awarded on an indemnity basis.

Principles

60    A party who is entitled to costs may apply to the Court for an order that costs:

(1)    be awarded in a lump sum, instead of, or in addition to, any taxed costs: Rules, r 40.02(b);

(2)    awarded in their favour be paid other than as between party and party: Rules, r 40.02(a).

61    Principles applicable to lump sum costs orders were summarised by Middleton J in De Brett Seafood Pty Ltd v Qantas Airways Ltd (No 7) [2015] FCA 979 adopting the earlier statements of Sackville J in Seven Network News Ltd v News Ltd [2007] FCA 2059:

[49]     His Honour stated the principles at [25] as follows:

…

(i)    The purpose of the subrule is to avoid the expense, delay and aggravation involved in protracted litigation arising out of taxation: Beach Petroleum v Johnson (No 2), at 120, per von Doussa J, applying Leary v Leary [1987] 1 All ER 261; Harrison v Schipp (2002) 54 NSWLR 738, at 742 [21] per Giles JA.

(ii)    An order that costs be assessed as a gross sum does not envisage that any process similar to that involved in taxation should take place. On the contrary, the Court applies a much broader brush than would be used on a taxation of costs pursuant to O 62: Beach Petroleum v Johnson (No 2), at 120, 124, per von Doussa J; Harrison v Schipp, at 743 [22], per Giles JA.

(iii)    The Court should be confident that the approach taken to the estimate of costs is logical, fair and reasonable. The Court should be astute to avoid both overestimating the recoverable costs and underestimating the appropriate amount, for example by applying an arbitrary discount to the amounts claimed: Beach Petroleum v Johnson (No 2), at 123, per von Doussa J.

(iv)    Although the power to assess a gross sum for costs involves the exercise of a discretion, it is necessary to bear in mind fundamental principles applicable to an assessment of costs on a party and party basis. These include the principles contained in O 62 r 19 (embodying the ‘necessary or proper’ test) and those stated in Stanley v Phillips (1966) 115 CLR 470, at 478, per Barwick CJ (on a party and party taxation the emphasis is upon obtaining adequate representation to enable justice to be done, not upon the propriety of steps taken to ensure maximum success in the cause): Auspine Ltd v Australian Newsprint Mills Ltd (1999) 93 FCR 1, at 4-5 [12]-[15], per O’Loughlin J; Charlick Trading Pty Ltd v Australian National Railways Commission [2001] FCA 629, at [6]-[8], per Mansfield J.

(v)    Although the methodology permitted by O 62 r 4(2)(c) initially involves a broader approach than on a normal taxation, the provisions of O 62 and Schedule 2 provide assistance in fixing an appropriate gross sum: Charlick Trading Pty Ltd v ANRC, at [10], per Mansfield J.

[50]     At [26-7] his Honour continued:

[26]     The last point should be developed a little further. FCR, O 62 r 4(2)(c) authorises the Court to order that, instead of taxed costs, the successful party should be entitled to a gross sum costs order. The subrule contains no express direction that the Court is to apply the detailed criteria that are laid down in O 62 and Schedule 2. On the contrary, the subrule apparently leaves the question of quantification at large.

[27]    Rule 4(2)(c) is, however, located within an Order that makes detailed provision for the assessment of party and party costs. It would be extremely odd if the more expeditious procedure contemplated by r 4(2)(c) resulted in either a successful or an unsuccessful party being exposed to an assessment of costs which simply ignores or overrides the basic principles applicable to a taxation of costs. I accept Mr Sheahan’s submission that it would be an error for a Court to use its power under r 4(2)(c) to assess a gross sum clearly higher than that which would be allowed on a taxation of costs.

(Emphasis in original.)

[51]     The principles in Seven Network have been applied in decisions of this Court, including by Barker J in Thompson v Department of Environment and Conservation (No 2) [2011] FCA 970 at [7] and Logan J in Wide Bay Conservation Council Inc v Burnett Water Pty Ltd (No 9) (2011) 194 FCR 250 at [31-4].

[52]    I note that assessments of lump sum orders (or “gross sum” costs as they were termed under the Former Rules) made in other cases are of limited relevance. They may indicate whether the amount determined is within a “usual” or appropriate range, but each case must be decided on its particular facts and circumstances. Particularly complex and lengthy cases such as the present proceeding are, by their nature, not “usual”.

[53]    I also note that it is inevitable, given the broad brush nature of the process, that the level of detail provided by the party claiming lump sum costs will be less than on a taxation. This is particularly the case where, as occurred here, the proceeding is on foot and a party may have been reluctant to disclose potentially privileged or confidential information. What is required is a level of detail sufficient to enable the Court to assess what is fair, logical and reasonable. The Court should be careful to apply its judgment so as to neither over-compensate nor under-compensate the party entitled to its costs.

62    The party seeking a lump sum costs order must satisfy the Court as to the amount of costs incurred and that there is a proper basis for the award of such an amount as a gross sum: Saizeriya Co Ltd v Peregrine Management Group Pty Ltd [2005] FCA 1174, [31]. It will be necessary to examine charges rendered by the relevant party’s solicitors, noting that the sum fixed should be proportionate to the nature and complexity of the case: LFDB v MS SM (No 2) [2018] FCA 2062, [8].

63    The Court’s “Costs Practice Note (GPN-COSTS)” provides at [4.1]-[4.2]:

4.1     The Court's preference, wherever it is practicable and appropriate to do so, is for the making of a lump-sum costs order.

4.2     Utilisation of a lump-sum costs procedure will always be at the discretion of the judge. The parties will be given a fair opportunity to present their views as to the appropriateness of utilising a lump-sum costs procedure.

(Footnotes omitted.)

64    As to indemnity costs, the following statement of Sheppard J (at [24]) in Colgate-Palmolive Company v Cussons Pty Ltd [1993] FCA 801; (1993) 46 FCR 225 is continually cited:

The ordinary rule is that, where the Court orders the costs of one party to litigation to be paid by another party, the order is for payment of those costs on the party and party basis …

In consequence of the settled practice which exists, the Court ought not usually make an order for the payment of costs on some basis other than the party and party basis. The circumstances of the case must be such as to warrant the Court in departing from the usual course. That has been the view of all judges dealing with applications for payment of costs on the indemnity or some other basis whether here or in England …

Notwithstanding the fact that that is so, it is useful to note some of the circumstances which have been thought to warrant the exercise of the discretion. I instance the making of allegations of fraud knowing them to be false and the making of irrelevant allegations of fraud …; evidence of particular misconduct that causes loss of time to the Court and to other parties …; the fact that the proceedings were commenced or continued for some ulterior motive … or in wilful disregard of known facts or clearly established law …; the making of allegations which ought never to have been made or the undue prolongation of a case by groundless contentions …; an imprudent refusal of an offer to compromise … The question must always be whether the particular facts and circumstances of the case in question warrant the making of an order for payment of costs other than on a party and party basis.

It remains to say that the existence of particular facts and circumstances capable of warranting the making of an order for payment of costs, for instance, on the indemnity basis, does not mean that judges are necessarily obliged to exercise their discretion to make such an order. The costs are always in the discretion of the trial judge. Provided that discretion is exercised having regard to the applicable principles and the particular circumstances of the instant case its exercise will not be found to have miscarried unless it appears that the order which has been made involves a manifest error or injustice.

(Citations omitted.)

65    These principles were cited with approval in Dowling v Fairfax Media Publications Pty Ltd (No 2) [2010] FCAFC 28, [42] (Graham J), [140] (Logan and Flick JJ).

66    In Tytane Pty Ltd v Lyons [2017] FCA 1602, Davies J stated at [18]:

The ordinary rule is that the costs of a successful party will be paid by an unsuccessful party on a party-party basis. The Court will not usually make an order for costs on an indemnity basis unless there is some special or unusual feature in the case which justifies a departure from the ordinary practice: Colgate-Palmolive Company v Cussons Pty Ltd [1993] FCA 801 at [16], [20]–[24]. In Hamod v New South Wales [2002] FCAFC 97 at [20], Gray J (with whom the other members of the Court agreed) said:

Indemnity costs are not designed to punish a party for persisting with a case that turns out to fail. They are not awarded as a means of deterring litigants from putting forward arguments that might be attended by uncertainty. Rather, they serve the purpose of compensating a party fully for costs incurred, as a normal costs order could not be expected to do, when the Court takes the view that it was unreasonable for the party against whom the order is made to have subjected the innocent party to the expenditure of costs.

67    In Macushla Pty Ltd (Trading as Sunnytop Bakery Ciabatta Della Nonna) v El Souki [2019] FCA 643, Snaden J stated at [18]:

The Court’s power to award indemnity costs is not in dispute: Federal Court of Australia Act 1976 (Cth), s 43. The bases upon which it might typically do so are notorious and also not credibly in doubt: see, eg, Colgate-Palmolive Company and Another v Cussons Pty Limited (1993) 46 FCR 225, at 232-234 (Sheppard J), referred to with approval in Dowling v Fairfax Media Publications Pty Ltd (No 2) [2010] FCAFC 28, [42] (Graham J), [140] (Logan and Flick JJ) and Tytane Pty Ltd v Lyons [2017] FCA 1602, [18] (Davies J).

Consideration

68    I am satisfied in the circumstances of this case that it is appropriate to make a lump sum costs order. Such an order will avoid further expense, delay and better serve the efficient administration of justice.

69    I am not, however, satisfied that the lump sum costs should be awarded on an indemnity basis. The conduct of Revival does not warrant an indemnity costs order. That is so, in my opinion, because, after service of the interlocutory orders made by me on 22 November 2019, Revival removed, on 25 November 2019, the infringing Photographs from its website.

70    The email from Mr Ronaldo Youself dated 5 October 2020 states that the business closed in March 2020 due to the COVID-19 restrictions and has not re-opened. Mr Yousef advises that Revival has not engaged lawyers because it does not have the financial capacity to pay for lawyers to act on its behalf in the proceeding.

71    In these circumstances, Revival’s conduct, after removing the infringing Photographs from its website on 25 November 2019, cannot properly be characterised as having contumelious disregard of Derrimut and UPS’s rights. I also do not accept that Revival has, by its conduct alone, unnecessarily prolonged this proceeding. That was in large part due to the impact of the COVID-19 restrictions on the ability of the Court to accommodate the listing of this application. For these reasons, Derrimut and UPS will be entitled to their costs on a party-party basis.

72    At the hearing of this application on 22 October 2020, the applicants tendered, and I marked as Exhibit A-1, an email from a costs lawyer, Ms Naomi Murray, dated 21 October 2020. That email stated, among other things, that, if a party-party costs order were to be made, the professional costs claimed by the applicants would be reduced by $2,792.46. Ms Murray did not apply any reductions to disbursements (such as court fees and counsel fees). Applying those reductions, the total costs figure on a party-party basis is $46,786.39.

73    I have reviewed the First Stops affidavit, which exhibits a Costs Summary by Ms Murray, and Exhibit A-1 (being correspondence from Ms Murray which applies a reduction to the costs claimed by the applicants). I am satisfied that a sum of $46,786.39 is proportionate to the nature of this case, which has:

(1)    involved two applications to this Court, one of which proceeded on an urgent basis;

(2)    entailed four causes of action, namely copyright infringement, trademark infringement, misleading and deceptive conduct, and passing off;

(3)    required the preparation of several affidavits; and

(4)    required a number of steps to be taken in order to attempt to properly engage with the respondent in relation to this proceeding.

74    There will be an order that the respondent pay the applicants’ costs of the proceeding, assessed on a lump-sum party and party basis, in the amount of $46,786.39.

Associate:

Dated:    30 October 2020