Federal Court of Australia

FCA US LLC v Mahindra Automotive Australia Pty Ltd [2021] FCA 1091

ORDERS

THE COURT ORDERS THAT:

1.    The applicants’ interlocutory application dated 10 June 2021 (interlocutory application) be dismissed.

2.    There be no order as to costs of the proceedings or with respect to the interlocutory application.

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

REASONS FOR JUDGMENT

HALLEY J:

Introduction

1    By an interlocutory application dated 10 June 2021, the applicants (FCA US LLC and FCA Australia Pty Ltd) seek leave, to the extent necessary, to discontinue these proceedings and orders that the respondents (Mahindra Automotive Australia Pty Ltd and Mahindra & Mahindra Limited) pay the applicants’ costs of the proceeding in a lump sum in the amount of $884,000 (excluding GST) pursuant to r 40.02(b) of the Federal Court Rules 2011 (Cth) (FCR).

2    The proceedings were commenced on 26 April 2021 and were principally concerned with the potential importation and sale by the respondents in Australia of a motor vehicle known as the Thar.

3    After the exchange of a series of draft undertakings, the respondents ultimately gave an undertaking to the Court on 20 May 2021 by which the respondents undertook:

(1)    not to import, market or sell in Australia the current model of the Thar vehicle the subject of these proceedings; and

(2)    provide at least 90 days’ written notice to the applicants prior to the earlier of:

(a)    lodging an application for homologation with the Department of Infrastructure, Transport and Regional Development and Communications; or

(b)    launching, marketing or advertising for sale in Australia any future model or variant of the current Thar vehicle.

4    The applicants contend that the respondents, by ultimately providing an undertaking to the Court in those terms, have in substance surrendered or capitulated and therefore should pay the applicants’ costs.

5    The applicants relied on affidavits of Ms Siabon Seet, the solicitor with carriage of the proceedings for the applicants; Ralph Smith, the assistant general counsel of the first applicant; and three affidavits of Ms Suzanne Ward, an expert costs lawyer and academic. The applicants also relied on a bundle of evidence that was prepared in relation to the substantive relief sought in the originating application. This bundle was tendered in relation to this interlocutory application not to prove the truth of the content of that evidence, but rather to demonstrate the level of work product produced. The bundle included affidavits and associated annexures and exhibits of: Mr Thomas Noble, the Director of Marketing and Communications for the second applicant; Mr Jeffrey Ellsworth, the senior manager of Global Jeep Product Marketing for the first applicant; Ms Seet; other senior managers employed by the applicants; and two expert witnesses, including a patent attorney and a marketing academic.

6    The respondents contend that the provision of the undertaking did not constitute an effective surrender or capitulation and that there should be no order as to costs. In the alternative, the respondents contend that by reason of the unreasonable conduct of the applicants in bringing the proceedings, the Court should order that the applicants pay the respondents’ costs of the proceeding on a lump sum basis in the amount of $86,146.06 (excluding GST) in accordance with rr 26.12(7) and 40.02(b) of the FCR.

7    The respondents relied on an affidavit of Ms Jane Owen, the solicitor with carriage of the proceedings for the respondents, and three affidavits of Mr Michael Dudman, an expert costs lawyer. The respondents also relied on two further affidavits of Ms Owen that were filed in relation to the substantive relief sought by the applicants in the originating application.

8    Having regard to all the circumstances, I am not satisfied that the provision of the undertaking by the respondents to the Court constituted an effective surrender or capitulation, nor am I satisfied that the conduct of either the applicants or the respondents was sufficiently unreasonable to justify the making of a costs order against either of them.

Background

9    By letter dated 8 April 2021, the applicants first raised their concerns with the respondents about a proposed launch of the Thar vehicle in Australia (Letter of Demand). The applicants alleged in the Letter of Demand that the respondents contravened ss 18 and 29 of the Australian Consumer Law in Sch 2 to the Competition and Consumer Act 2010 (Cth) (ACL) by engaging in conduct that was likely to mislead or deceive and by making false and misleading representations. The applicants also alleged in the Letter of Demand that the respondents engaged in passing off and design infringement. The applicants sought, without prejudice to their other rights, that the respondents provide written interim undertakings by no later than 5.00 pm on 15 April 2021. This included an undertaking that the respondents would provide the original design documents for the Thar vehicle intended for sale in Australia, any records summarising the planned production and export of the Thar vehicle to Australia and any summaries of the intended launch, marketing and promotion of the Thar vehicle in Australia.

10    By letter dated 15 April 2021, the respondents denied that they had committed any contraventions of the ACL or engaged in passing off or design infringement and declined to provide the interim undertakings sought by the applicants (15 April Letter).

11    By a second letter dated 15 April 2021, the respondents’ solicitors wrote to the applicants’ solicitors on a without prejudice basis (Without Prejudice Letter), advising, inter alia, that:

We have instructions from our client to inform you that Mahindra does not have any immediate plans to commence importation and sale of the Thar branded vehicle in Australia. As and when it is in a position to commence its activity, Mahindra will advise FCA in advance of the launch.

12    The applicants did not respond to either the 15 April Letter or the Without Prejudice Letter.

13    On 26 April 2021 the applicants approached the Court seeking urgent interlocutory relief, noting in their written submissions regarding their application for short service that:

[I]t is apparent from Mahindra’s recent conduct in Australia that it is taking steps to commence selling the Thar in Australia, and that such sale may be imminent … Mahindra has … advised that [it] will “vigorously defend” proceedings commenced by FCA. It has also declined to advise FCA of the date Mahindra intends to start selling the Thar in Australia.

14    In their originating application, the applicants sought declarations that the respondents had:

(a)    engaged in misleading and deceptive conduct in contravention of s 18 of the ACL;

(b)    made false or misleading representations in contravention of ss 29(1)(a), 29(1)(g) and 29(1)(h) of the ACL;

(c)    committed the tort of passing off; and

(d)    infringed each of the Jeep Australian registered designs.

(together the Declarations)

15    The applicants sought the following injunctive relief against the respondents:

(a)    an order pursuant to s 232 of the ACL, restraining the respondents by themselves, their servants, agents and associates or otherwise from importing, supplying, selling, offering to sell, marketing, advertising or promoting, or threatening to import, supply, sell, offer to sell, market, advertise or promote, any vehicles with the Jeep design, the Jeep grill, the design of Jeep Wrangler vehicles or a combination of features that were substantially similar to the Jeep design, the Jeep grill or the design of Jeep Wrangler vehicles without the consent or approval of the applicants;

(b)    an order pursuant to s 232 of the ACL, restraining the respondents by themselves, their servants, agents and associates or otherwise from making or causing to be made, or threatening to make or cause to be made each of the following representations without the consent or approval of the applicants:

(i)    that the Thar is a Jeep Wrangler;

(ii)    that the Thar is affiliated or associated with the Jeep Wrangler vehicles;

(iii)    that the Thar is part of or associated with the Jeep branded range of SUVs;

(iv)    that the Thar has been manufactured, marketed and promoted with the licence, sponsorship or approval of the source of Jeep branded vehicles;

(v)    that Mahindra is still affiliated or otherwise associated with the source of Jeep branded vehicles or the Jeep brand;

(vi)    that the Thar is licensed, sponsored or approved by the source of Jeep branded vehicles;

(vii)    that Mahindra is licensed by or associated with the source of Jeep branded vehicles;

(viii)    that Mahindra is still licensed to manufacture vehicles using the Jeep Design;

(ix)    that the Thar is an authorised derivative or descendant of Jeep branded vehicles;

(x)    that Mahindra’s own design lineage includes the Willys Jeep vehicle;

(xi)    that Mahindra’s own design lineage includes the CJ-3A vehicle;

(xii)    that Mahindra’s own design lineage includes the CJ vehicles;

(xiii)    that the Thar is authorised by the source of the Willys Jeep vehicle or its present successor, as a derivative or descendant of the Willys Jeep vehicle;

(xiv)    that the Thar is authorised by the source of the CJ-3A vehicle, or its present successor, as a derivative or descendant of the CJ-3A vehicle;

(xv)    that the Thar is authorised by the source of the CJ vehicles, or its present successor, as a derivative or descendant of the CJ vehicles; and

(xvi)    any representation that is substantially identical to, or to substantially the same effect as, any one or more of the representations alleged above; and

(together the Representations)

(c)    an order pursuant to s 75(1)(a) of the Designs Act 2003 (Cth) (Designs Act) restraining the respondents by themselves, their servants, agents and associates or otherwise from doing or threatening to do any of the following things:

(i)    making or offering to make;

(ii)    importing into Australia for sale;

(iii)    selling or offering for sale; and/or

(iv)    keeping for the purposes of doing any of the things in (i) to (iii) referred to above,

the Thar or any other vehicle embodying a design that is substantially similar in overall impression to the Jeep Australian registered designs.

(together the Injunctions)

16    The applicants sought the following relief in their originating application in addition to the Declarations and the Injunctions:

(a)    an order that the respondents deliver up to the applicants’ solicitors for destruction all marketing and promotional material in their possession, power or control containing any of the Representations or any representation substantially identical to, or to the same effect as any of the Representations;

(b)    an order that the respondents publish a corrective notice in a form approved by the Court;

(c)    damages pursuant to s 236 of the ACL;

(d)    compensation pursuant to s 237 of the ACL;

(e)    damages or, at the option of the applicants, an account of profits pursuant to s 75(1) of the Designs Act;

(f)    damages pursuant to s 75(3) of the Designs Act; and

(g)    costs.

(Final Orders)

17    In an interlocutory application dated 25 April 2021, the applicants also sought interlocutory injunctions in the same form as the Injunctions above (Interlocutory Injunctions Application).

18    On 26 April 2021, the respondents’ solicitors were served with copies of the applicants’ originating application, the statement of claim, the Interlocutory Injunctions Application and supporting affidavits.

19    By letter dated 29 April 2021, the respondents’ solicitors wrote to the applicants’ solicitors (29 April Letter), enclosing the Without Prejudice Letter on an “open” basis and stating, inter alia:

3.    We stated in paragraph 5 of our 15 April Letter that Mahindra has no immediate plans to commence importation and sale of the Thar branded vehicle in Australia.

4.    We are further instructed that the model of the Thar vehicle the subject of the proceedings … will never be sold in Australia and hence the question of launching the said model in Australia does not arise.

…

13.     In any event, we are instructed that Mahindra is prepared to provide your clients with an undertaking (without any admissions as to liability) that the current model of the Thar will not be imported to Australia and to provide them 28 days’ prior written notice of the launch of any future model of the Thar branded vehicle in Australia (and provide details of the vehicle which will be exported/imported and sold).

14.    This notice period should give your clients ample time to reagitate their interlocutory application if that becomes necessary, by reference to any model of the Thar to be launched in Australia in the above circumstances.

…

17.    The actions of Mahindra prior to the issue of the proceedings, the absence of any actual threat to import and sell the Thar and the further assurances provided by Mahindra in this letter are a complete answer to the claims made by FCA in the proceedings. For example, in terms of the injunctive relief sought in the Originating Application:

a.     there is no conduct or threat of conduct to be restrained in the manner sought in paragraphs 5 and 7 of the Originating Application;

b.     there is no marketing, advertising, promoting [of] the Thar in Australia by which the [Representations] can be said to arise.

20    By letter dated 6 May 2021 the applicants’ solicitors wrote to the respondents’ solicitors attaching a form of undertaking to the Court that the applicants sought from the respondents (6 May Undertaking) in the following terms:

1    The Respondents by themselves, their servants, agents and associates or otherwise will not import, market or sell any vehicle in Australia with the exterior design of the model of the Thar vehicle that is current as at the date of this undertaking and that is depicted in Annexure A hereto.

2     The Respondents will provide at least 90 days’ written notice to the Applicants prior to the earlier of:

(a)     steps taken toward the commencement of homologation of; or

(b)    steps taken toward any renewed activity and/or plans to launch,

any future model of the Thar vehicle or a vehicle based on the Thar vehicle in Australia, such notice to include details of the exterior design of the vehicle intended to be imported, marketed and sold in Australia.

3     Until the expiration of the notice period contemplated in paragraph 2 above, the Respondents by themselves, their servants, agents and associates or otherwise:

(a)     will not market, conduct market research, seek consumer expressions of interest, seek or permit registration in respect of, or publicise any Thar vehicle in Australia; and

(b)     will not oppose, seek removal or cancellation of, object to the use of, file any judicial or administrative action, or otherwise challenge in any way the validity, subsistence or ownership of any intellectual property rights of the Applicants in Australia relating to the Jeep Wrangler vehicle.

21    The applicants’ solicitors sought a response from the respondents’ solicitors by 3.00 pm on Friday, 7 May 2021. Other than the notice period of 90 days and the matters included in paragraph 3, the 6 May Undertaking was substantially in the form of the undertaking offered by the respondents in the 29 April Letter.

22    By letter dated 7 May 2021, the respondents’ solicitors provided a revised form of the proposed undertaking to be provided to the Court (7 May Undertaking) in these terms:

1    The Respondents by themselves, their servants, agents and associates or otherwise will not import, market or sell in Australia the model of the Thar vehicle that was launched in India on 2 October 2020 and that is depicted in Annexure A hereto.

2    The Respondents will provide at least 45 days’ written notice to the Applicants prior to the earlier of:

(a)     the commencement of homologation of; or

(b)     the launch of,

any future model of the Thar vehicle in Australia, such notice to include details of the appearance of the vehicle intended to be imported, marketed and sold in Australia.

23    The 7 May Undertaking was substantially in the same form as the 6 May Undertaking, except that the notice period was reduced to 45 days (bearing in mind the original notice period proffered in the 29 April Letter was 28 days). The 7 May Undertaking also did not extend to the matters sought in paragraph 3 of the 6 May Undertaking.

24    Counsel for the applicants addressed the 7 May Undertaking at a case management hearing on 11 May 2021 and indicated that there were apprehensions regarding the reduced 45 day notice period and the deletion of paragraph 3.

25    On 13 May 2021, the respondents’ solicitors provided the applicants’ solicitors with a further revised version of the proposed undertaking (13 May Undertaking). It was in these terms:

1    The Respondents by themselves, their servants, agents and associates or otherwise will not import, market or sell in Australia the model of the Thar vehicle that was launched in India on 2 October 2020 and that is depicted in Annexure A hereto.

2    The Respondents will provide at least 90 days’ written notice to the Applicants prior to the earlier of:

(a)    the lodging of an application for homologation on the Road Vehicle Certification System website of the Department of Infrastructure, Transport and Regional Development and Communications (https://rvsc.infrastructure.gov.au/); or

(b)     the launch of,

any future model of the Thar vehicle in Australia, such notice to include details of the appearance of the vehicle intended to be imported, marketed and sold in Australia.

26    The 13 May Undertaking was in substantially the same terms as the 11 May Undertaking except that the notice period was increased to 90 days and a more precise definition was provided for the date of the commencement of homologation.

27    On 17 May 2021, the respondents’ solicitors provided the applicants’ solicitors with a further amended proposed undertaking (17 May Undertaking) which was relevantly in these terms:

1    The Respondents by themselves, their servants, agents and associates or otherwise will not import, market or sell in Australia the model of the Thar vehicle that was launched in India on 2 October 2020 and that is depicted in Annexure A hereto (Current Thar Vehicle).

2    The Respondents will provide at least 90 days’ written notice to the Applicants prior to the earlier of:

(a)     the lodging of an application for homologation on the Road Vehicle Certification System website of the Department of Infrastructure, Transport and Regional Development and Communications (https://rvsc.infrastructure.gov.au/ ); or

  (b)     the launch, marketing or advertising for sale in Australia,

of any:

  (c)     future model of the Current Thar Vehicle; or

(d)     variant of the Current Thar Vehicle (eg a variant from two door to four door),

such notice to include details of the appearance of the vehicle intended to be imported, marketed and sold in Australia.

28    The only material change between the 17 May Undertaking and the 13 May Undertaking was the inclusion of a notification period with respect to not only the “future model” of the current Thar vehicle but also any “variant” of the current model of the Thar vehicle.

29    By email dated 19 May 2021 to the respondents’ solicitors, the applicants’ solicitors confirmed that the applicants were prepared to accept the 17 May Undertaking, subject to the issue of costs being determined by the Court and obtaining leave to discontinue the proceedings.

30    At the case management hearing on 20 May 2021, the respondents proffered the 17 May Undertaking to the Court.

Legal principles

31    The Court has an unfettered discretion to order costs pursuant to s 43 of the Federal Court of Australia Act 1976 (Cth) and no rule or principle should be applied mechanically in the determination of where costs should lie in any particular case: Howards Storage World Pty Ltd v Haviv Holdings Pty Ltd (2010) 182 FCR 84; [2010] FCAFC 5 at [17] (Gray J with whom Lindgren J agreed).

32    In the usual course, the Court will not make an order for costs in circumstances where there has been no hearing on the merits: Re The Minister for Immigration and Ethnic Affairs of the Commonwealth of Australia; ex parte Lai Qin [1997] HCA 6; (1997) 186 CLR 622 at 624-625 (McHugh J). However, there are exceptions to this general principle.

33    First, the Court may make an order for costs in favour of a party notwithstanding that there has been no hearing on the merits in circumstances where one party has had a substantial victory and the other a substantial loss, or there has been a marked difference in the reasonableness of the actions taken by the parties: Edwards Madigan Torzillo Briggs Pty Ltd v Gloria Stack [2003] NSWCA 302 at [5] (Davies AJA with whom Mason P and Meagher JA agreed).

34    As Heerey J explained in Oxford Funding Pty Ltd v Oxford Asia Pacific Investments Pty Ltd (No 2) [2006] FCA 1542 at [5]:

While any question of costs always remains a matter of discretion, the approach in the cases is usually that the Court will not try a hypothetical action to decide which party would have won. Rather, the Court will assess the conduct of the parties including, in appropriate cases, the conduct prior to the commencement of proceedings, to see whether that conduct was “reasonable”. This rather suggests that an order will only be made where the party seeking costs has acted reasonably and the other party has not. Where both parties have acted reasonably, or unreasonably, the costs should lie where they fall. “Unreasonableness” in this context could include rejecting a reasonable offer or invitation to engage in discussions which hold out reasonable prospects of a compromise.

35    Second, where the Court is satisfied that one party has effectively surrendered or capitulated it may also make a costs order in favour of the other party notwithstanding that there has been no determination of the merits of the proceedings. The following principles emerge from the authorities with respect to surrender or capitulation:

(a)    either an applicant or respondent might be found to have effectively surrendered or capitulated;

(b)    it is necessary to have regard to the conduct of the parties not to determine whether a party has acted in a manner that can objectively be characterised as unreasonable, but rather to determine whether by their respective conduct one party has, in substance, capitulated or surrendered to the other party: see generally Chapman v Luminis Pty Ltd [2003] FCAFC 162 (Chapman) at [5]-[8] (Beaumont, Sundberg and Hely JJ); Zhao v Suzhou Haishun Investment Management Co Ltd [2020] VSCA 34 at [19]-[20] (Tate, McLeish and Hargrave JJA); cf Diamond Ace Super Fund Pty Ltd v Rodapa Development Pty Ltd [2020] FCA 1582 (Diamond Ace) at [65]-[68] (Griffiths J);

(c)    it is necessary to distinguish between cases in which a party seeking to discontinue proceedings can be said to have effectively surrendered or capitulated and cases in which a supervening event renders the proceedings futile or moot: Diamond Ace at [59] (Griffiths J) citing Travaglini v Raccuia [2012] FCA 620 at [13] (McKerracher J); and Chapman at [7], citing ONE.TEL Ltd v Deputy Commissioner of Taxation (2000) 101 FCR 548; [2000] FCA 270 (ONE.TEL) at [6] (Burchett J);

(d)    an assessment of the degree to which the outcome achieves the relief sought is a threshold issue of significant weight in determining whether a party has effectively surrendered or capitulated. A party does not have to achieve complete success in order to establish that the other party effectively surrendered or capitulated. It is enough to demonstrate that the outcome secured sufficiently achieves the party’s purpose in bringing the proceedings: Diamond Ace at [67]; Balanggarra Aboriginal Corporation v State of Western Australia [2018] FCA 1538 (Balanggarra) at [50] (Barker J); Stephens v Sena, in the matter of Vtara Solar Pty Ltd [2020] FCA 1179 at [30] (Stewart J);

(e)    generally it is not the function of the Court to make a prediction as to the outcome of a hypothetical case in assessing the degree of success or failure achieved by a party in proceedings in which there has been no determination of the merits: Elevate Brandpartners Ltd v Hammond (No 4) [2020] FCA 421 (Elevate Brandpartners (No 4)) at [20] (Stewart J); Clark v ING Life Limited [2007] FCA 1960 at [16] (Rares J); Rickus v Motor Trades Association of Australia Superannuation Fund Pty Limited (2010) 265 ALR 112; [2010] FCAFC 16 at [118]-[119] (Jacobson, Siopis and Foster JJ); Mineralogy Pty Ltd v National Native Title Tribunal [1998] FCA 1700 at 6 (Lee, Tamberlin and R D Nicholson JJ); and

(f)    in some cases it is relevant to have regard to the likelihood of success, but only insofar as it is possible to identify a likely “clear winner”: ONE.TEL at [7]; and Balanggarra at [71]-[73].

Consideration

Applicants’ submissions

36    The applicants submit that prior to the provision of the 17 May Undertaking to the Court, the respondents had litigated the matter unnecessarily for “some time” and then acted so as to effectively surrender or capitulate to the applicants’ requests.

37    The applicants contend that the commencement of the proceedings was reasonable, from a costs perspective, given the respondents’ refusal to provide any of the undertakings sought in the Letter of Demand and refusal to provide any information about the respondents’ plans with regard to the Thar vehicle in Australia. The applicants contend that the respondents’ representation that they did “not have any immediate plans to commence importation and sale of the Thar branded vehicle in Australia” in the Without Prejudice Letter was plainly insufficient to alleviate their concerns because of the “careful use” of the word “immediate” and because it was advanced in a without prejudice communication, meaning that the applicants could not rely on it as proof of the respondents’ position.

38    The applicants submit that for “some time” after the commencement of the proceedings, the respondents continued to refuse to provide an “adequate undertaking” and actively opposed the provision of information to the applicants about their intentions regarding the Thar vehicle, including seeking to set aside a notice to produce directed at obtaining that information. The applicants note that the respondents subsequently claimed that they never intended to market the current Thar model in Australia and advised the applicants that, in any event, the Thar vehicle had not passed homologation and was therefore not able to be sold in Australia.

39    The applicants contend that the 17 May Undertaking provides them with the same protection as a permanent injunction not to import, market or sell in Australia the Thar vehicle the subject of these proceedings and requires the respondents to give notice if the respondents elect to market a future model or variant, which “avoids any temptation, and removes any ability, to seek to circumvent that protection”.

Respondents’ submissions

40    The respondents submit that the provision of the 17 May Undertaking to the Court did not constitute an effective surrender or capitulation on their part. They contend that the relevant issue therefore is the respective reasonableness of the applicants’ conduct in bringing the proceedings and the respondents’ conduct in defending the proceedings.

41    The respondents submit that the conduct of the applicants in both the lead up to the commencement of proceedings and of the proceedings generally was unreasonable. The respondents point to the following conduct of the applicants:

(a)    not raising their concerns with the respondents until the Letter of Demand was sent, despite having been aware since August 2020 of an alleged plan to launch the Thar vehicle in Australia;

(b)    failing to respond to the Without Prejudice Letter or otherwise engage in any further correspondence with the respondents prior to seeking urgent interlocutory relief from the Court 11 days after the service of the Letter of Demand;

(c)    proceeding with seeking urgent interlocutory relief from the Court notwithstanding their knowledge that the specific marketing conduct of that complained of in the Letter of Demand had been removed by the respondents from their website and social media pages on 15 and 16 April 2021; and

(d)    stating to the Court that the basis for their short service application was that it was apparent from the respondents’ recent conduct in Australia that they were taking steps to commence selling the Thar vehicle in Australia and that such sale may be imminent, notwithstanding the content of the Without Prejudice Letter indicating that the respondents had no “present intention” to launch the Thar vehicle in Australia.

42    The respondents submit that their conduct, both prior to and during the proceedings, was “entirely reasonable” on the basis that:

(a)    the respondents had provided a detailed response to the Letter of Demand and the Without Prejudice Letter removed any urgency and should have been a precursor for further discussions between the parties;

(b)    three days after being served with the proceedings, the respondents openly communicated in the 29 April Letter their lack of intention to launch the Thar vehicle in Australia in the immediate future and proactively engaged in the negotiation of an undertaking to the Court to that effect; and

(c)    in the three weeks following the 29 April Letter, the respondents continued to proffer forms of an undertaking in an attempt to resolve the matter. This included the provision of the 7 May Undertaking and the 13 May Undertaking (neither of which was responded to by the applicants) and then the 17 May Undertaking, which was ultimately accepted by the applicants on 19 May 2021 and provided to the Court on 20 May 2021.

Surrender or capitulation

43    I turn first to consider the question of surrender or capitulation.

44    I do not accept that the provision of the 17 May Undertaking to the Court can appropriately be characterised as an effective surrender or capitulation by the respondents.

45    First, the substantive relief sought in the proceedings, as outlined above, extended well beyond the Injunctions. The provision of the 17 May Undertaking did not render the pursuit of the Declarations and the Final Orders in the originating application futile. The 17 May Undertaking only addressed potential future conduct by the respondents; it did not make any admission or acknowledgement with respect to the impugned conduct of the respondents prior to the commencement of the proceedings for which the applicants sought the Declarations and the Final Orders.

46    Any surrender or capitulation finding with respect to the entitlement of the applicants to the Declarations and the Final Orders would require an inappropriate inquiry into the merits of those cases and a prediction as to the hypothetical resolution of those matters. Given the extent of the specific allegations made in the Letter of Demand and pleaded in the statement of claim, this was not a case in which the other relief sought was merely incidental to the injunctive relief sought by the applicants: see Elevate Brandpartners (No 4) at [21]; Nowra Radiology Pty Ltd v Macintosh (No 2) [2020] FCA 1743 at [49]-[50] (Stewart J).

47    Second, the 17 May Undertaking was expressed in much narrower and more confined terms than the expansive and broadly delineated Injunctions and the extent of the relief initially requested by the applicants in paragraph 3 of the 6 May Undertaking. While it is not necessary for an applicant seeking costs to demonstrate complete success, the position in this case is materially different to the authorities establishing that principle: Diamond Ace at [67]; and Balanggarra at [50].

48    Third, the terms of the 17 May Undertaking reflected a negotiated resolution of the specific wording of the undertaking and involved a degree of compromise by both the applicants and the respondents, particularly with respect to the negotiation of the length of the notice period for the commencement of homologation to be included in the undertaking.

49    Fourth, other than with respect to the negotiation of the length of the homologation notice period, there were no material changes to the form of the undertaking proffered in the 29 April Letter to the applicants and the 17 May Undertaking. None of the amendments to the specific wording of the proposed undertaking in that period could reasonably be construed as constituting a substantive capitulation or surrender by the respondents.

Reasonableness

50    Having found that the respondents did not effectively capitulate or surrender by proffering the 17 May Undertaking to the Court, I next address the reasonableness of the respective conduct of both parties.

51    Particularly with the benefit of hindsight, there is some force in the complaints that the applicants and respondents each seek to advance about the other party’s conduct. As is often the position with significant commercial disputes, the pursuit of an aggressive legal strategy can often obfuscate the real issues in dispute and lead to misapprehensions and misunderstandings as to the position of one’s opponent. It is often very difficult to determine where particular fault or responsibility might lie for such misapprehensions and misunderstandings.

52    The applicants maintain, or at least imply by their submissions, that the commencement of the proceedings in which they sought the Declarations, Injunctions and Final Orders was necessary in order to secure the provision of the 17 May Undertaking to the Court. The respondents contend, or at least imply by their submissions, that had the applicants engaged in substantive commercial discussions in response to the Without Prejudice Letter, the applicants’ concerns could have been satisfactorily resolved without the commencement of proceedings. Both the Letter of Demand and the 15 April Letter advanced the respective positions of the parties in unequivocal and uncompromising terms. From a costs perspective, it is regrettable that the applicants did not respond to the Without Prejudice Letter prior to the commencement of proceedings. It is equally regrettable that the respondents included in the Without Prejudice Letter the no “present intention” qualification, which leaves open the possibility that at some future indeterminate, but potentially imminent, time this position may change.

53    Further, following the commencement of proceedings the respondents meaningfully engaged in the provision of various iterations of an undertaking to address the applicants’ concerns. The respondents demonstrated a willingness to compromise, in particular by extending the notice period to be provided to the applicants with respect to any future launch of other models of the Thar vehicle in Australia. The respondents also agreed to accept amendments to the undertaking to satisfy particular concerns of the applicants and at the same time make revisions to reflect more accurately the process by which any new models of the Thar vehicle would be introduced in Australia.

54    I do not accept that in all the circumstances it is possible or appropriate to characterise the conduct of either the applicants or the respondents as sufficiently unreasonable, in contrast to the conduct of the other, to justify an order that they pay the costs of the other parties.

Quantum

55    Given my findings above, the question of whether it is appropriate to make awards of costs on a lump sum basis in the amounts respectively sought by the applicants or the respondents does not arise.

Disposition

56    For the reasons outlined above there will be no order as to costs in these proceedings. Nor will there be any order as to costs with respect to the interlocutory application dated 10 June 2021, as neither party obtained the relief they sought.

Associate:    

Dated:    10 September 2021