Federal Court of Australia

Ragopika Pty Ltd v Padmasingh Isaac trading as Aachi Spices and Foods (No 2) [2023] FCA 764

ORDERS

THE COURT ORDERS THAT:

1.    The costs order made by the Delegate be set aside and instead there be an order that the respondent pay the appellant’s costs of the proceedings before the Delegate to be taxed if not agreed.

2.    The respondent pay the appellant’s costs of the appeal to be taxed if not agreed.

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

REASONS FOR JUDGMENT

KENNETT J

1    On 18 May 2023 I handed down my judgment in this proceeding: [2023] FCA 487. I set aside the decision of a delegate of the Registrar of Trade Marks, ordered that the respondent’s grounds of opposition to registration of the appellant’s trade mark “AACHI INDIAN CUISINE” be dismissed and ordered that the appellant’s trade mark be registered. These reasons will use the same abbreviations as my reasons for judgment.

2    My orders on 18 May 2023 included a conditional order that Aachi pay Ragopika’s costs and made provision for either party to file written submissions seeking a different costs order. Ragopika filed submissions seeking an order that Aachi pay part of its costs on an indemnity basis. Aachi filed submissions resisting that proposition. The parties were content for the issue to be dealt with on the papers.

3    Ragopika relies on three communications in the alternative to each other. It does not submit that any of these constitutes an offer of compromise under Part 25 of the Federal Court Rules 2011 (Cth). It relies on principles concerning what are commonly referred to as Calderbank letters, arising from Calderbank v Calderbank (1975) Fam 93 (Calderbank).

4    The three communications are as follows.

(a)    On 17 September 2018, in the course of an exchange of emails with Aachi’s solicitor, the then solicitor for Ragopika conveyed an offer that his client would change the name of its restaurant to “Aachiee Indian Restaurant”, and would cease to use the disputed AIC mark and withdraw its trade mark application (the first offer). The email was headed “on a without prejudice basis”. Aachi’s solicitor responded on 19 September 2018, rejecting the proposal and saying that if a “reasonable name” was not selected by 26 September 2018 proceedings would be commenced.

(b)    Ragopika’s then solicitor sent a further email on 1 October 2018, this time headed “without prejudice save as to costs”. He referred to the earlier email and to a telephone conversation. He said that his client proposed to use the name “Myachie” (the second offer). Aachi’s solicitor replied on 9 October 2018, saying that his client was not willing to accept this proposal.

(c)    On 9 March 2023 Ragopika’s current solicitor sent a more formal letter to Aachi’s solicitor. It was headed “without prejudice save as to costs” and set out an offer to settle the proceeding in rather more detail than the earlier emails. In short, the proposal was that Aachi withdraw its opposition and the parties enter into a binding arrangement including a promise by Ragopika to use the AIC mark only on restaurants and fast food outlets in Western Australia, with each party to bear its own costs of the proceeding and the proceeding before the delegate (the third offer). The offer was to expire on 23 March 2023. The letter was headed “without prejudice save as to costs”. It also included:

(i)    reference to the parties’ written submissions and a (very brief) explanation of why Ragopika expected to succeed in the proceeding; and

(ii)    an express statement that, if not accepted, the offer would be relied upon under the principles in Calderbank.

5    Aachi submits that none of these communications constitutes a Calderbank offer. It refers to a number of Australian authorities discussing what should be included in a letter purporting to make such an offer. It is convenient to refer to Koonara Management Pty Ltd v Rockliff (No 3) [2020] FCA 523 at [35], where the following statement of Beazley JA in Elite Protective Personnel Pty Ltd & Anor v Salmon [2007] NSWCA 322 (at [97]) was endorsed:

A Calderbank letter is the appellation given to a letter which conforms to the structure of that deployed in Calderbank v Calderbank, namely one which is marked “without prejudice”, makes an offer of settlement, and warns that the letter will be relied upon on the question of costs if and when that issue arises. “Calderbank offers” are well recognised means of making offers of settlement in circumstances where the party making the offer ultimately seeks a costs advantage if the offer is not accepted.

(Citations omitted.)

6    I doubt, with respect, whether there can be said to be any rigid requirements for a letter to perform this function. The award of costs (including indemnity costs) is ultimately in the discretion of the Court. Departure from the normal rule that costs on a party-party basis follow the event requires justification. If the asserted justification is that a party rejected an offer of settlement that would, if accepted, have left it in a better position than it finds itself in following judgment, the Court will necessarily need to consider the nature of that offer, the clarity with which it was made and whether it was unreasonable to reject it. These issues do not necessarily raise binary questions that can be answered by reference to whether or not the correspondence putting the offer contained particular forms of words.

7    Ragopika’s first and second offers were made at an early stage of the proceedings before the delegate. The application was not advertised as being accepted for possible registration until the following July, and Aachi’s grounds of opposition were not settled until nearly a year after the offers were made. The evidence considered by the delegate was not filed until the first half of 2020. Any assessment of the parties’ prospects at that stage was necessarily tentative. Further, neither of the offers was put in detailed terms; neither called for a response by a particular date; and the first offer made no reference at all to costs. They were essentially exploratory. It was not unreasonable for Aachi to reject these offers.

8    Ragopika’s third offer had most if not all of the elements usually said to be important in a Calderbank letter. It set out in fairly brief but intelligible terms the resolution that was proposed; it contained an express expiry date; and it included an express warning that the offer would be relied on pursuant to Calderbank principles if Ragopika succeeded in the litigation (which, by this stage, was listed for trial in this Court around four weeks later). The letter did not spend undue effort in trying to convince Aachi’s solicitors of the strength of Ragopika’s case. However, it directed their attention to the parties’ submissions and reminded them of the important point (for the purposes of ss 42(b) and 60 of the Act) that Aachi had never operated restaurants in Australia.

9    With the benefit of hindsight it is easy to say that Aachi should have accepted this offer. However, viewed from the perspective of the parties in the weeks leading up to the trial, Aachi’s refusal is not unreasonable: that is, it does not show a level of intransigence or blindness to what was about to happen that would justify the imposition of indemnity costs.

10    At the time of the third offer, Aachi had the benefit of a decision in its favour by the delegate. Although that decision was based only on s 60 of the Act, and the Court ultimately came to a different view, the decision was not obviously wrong. Aachi was also relying on several other grounds that had not been the subject of a decision. The prospects of at least one of these grounds (s 62A) were likely to depend in part on the evidence of Mr Pillai and how he performed in cross-examination. Beyond making a point that was obvious to all parties from the beginning, the letter containing the third offer did not point to any particular feature of the case that should have made Aachi’s solicitors realise their client’s position was particularly weak.

11    For these reasons, costs will not be ordered to be paid on an indemnity basis.

12    Aachi’s submissions on costs also assert that Ragopika was not legally represented before the delegate, and that it is therefore entitled only to recover its disbursements in respect of that proceeding. It does appear that at least some of the documents filed by Ragopika in the proceeding before the delegate were filed by the company itself and not by lawyers acting on its behalf. However, the written submissions that Ragopika made to the delegate were not part of the material before the Court; and it is apparent from the evidence submitted on the costs application that Ragopika had legal representation at least at an earlier stage, in September and early October of 2018. The level of involvement of legal representatives, in any event, goes to the amount that Ragopika is entitled to recover by way of costs rather than its entitlement in principle to recover them. It is properly addressed as part of a costs assessment, or (preferably) by agreement between the parties.

13    I will therefore make an order in the same terms as the costs order that I made, conditionally, on the last occasion.

Associate:

Dated:    7 July 2023