Federal Court of Australia

Hugo Boss AG v Hardge (No 2) [2025] FCA 184

ORDERS

THE COURT ORDERS THAT:

1.    Paragraph 7 of the orders made on 19 November 2024 as to costs is varied to provide that the applicant’s costs be assessed on a lump sum basis.

2.    The assessment of costs is referred to a Judicial Registrar for determination, on a date to be listed.

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

REASONS FOR JUDGMENT

NESKOVCIN J

INTRODUCTION

1    On 19 November 2024, judgment in default was entered against the respondent for injunctions to restrain the respondent from infringing certain trademarks belonging to the applicant, damages or an account of profits and delivery up of goods and advertising materials that bear the respondent’s infringing marks: Hugo Boss AG v Hardge [2024] FCA 1325. An order was also made that the respondent pay the applicant's costs of and incidental to this proceeding, to be taxed.

2    After the orders were entered, the applicant sought an order that its costs be assessed on a lump sum basis. For the reasons that follow, I will make an order that the applicant’s costs be assessed on a lump sum basis.

BACKGROUND

3    The applicant commenced this proceeding by originating application filed on 7 May 2024 and a supporting statement of claim. The applicant alleged that the respondent had infringed certain trademarks and contravened s 20 of the Trade Marks Act 1995 (Cth) and ss 18, 29(g) and (h) of the Australian Consumer Law, being Sch 2 of the Competition and Consumer Act 2010 (Cth). In its originating application, the applicant sought injunctions, declarations and damages. In relation to costs, the applicant merely sought an order for “costs”.

4    Attempts to serve the originating documents on the respondent on three separate occasions were unsuccessful. The applicant sought, and orders were made, for substituted service on the respondent under r 10.24 of the of the Federal Court Rules 2011 (Cth).

5    The respondent did not file an appearance. The applicant applied for default judgment pursuant to r 5.23(2) of the Rules and the matter was set down for hearing on 15 October 2024. The respondent did not appear at the hearing.

6    On 19 November 2024, judgment in default was entered against the respondent: Hugo Boss AG v Hardge. An order was also made that “the respondent pay the applicant’s costs of and incidental to this proceeding, to be taxed” (costs order).

7    On 2 December 2024, by email to Chambers, the applicant requested a variation to the costs order, to provide that its costs be assessed on a lump sum basis. The applicant requested that the costs order be varied on the basis that it had sought an order for lump sum costs in its written submissions that were filed prior to and after the default judgment hearing.

8    The applicant’s written submissions filed after the default judgment hearing stated:

If the Court makes the default judgment orders, the Applicant submits it would be appropriate to refer the question of costs (to be calculated on a lump sum basis) and the assessment of damages or an account of profits (at the election of the Applicant) to a Registrar. As mentioned at the hearing, the Applicant respectfully requests it be given a reasonable period (of approximately six weeks) to try to locate the Respondent before it takes the next steps in the proceeding.

9    In response to the applicant’s request for a variation of the costs order, I directed the applicant to file written submission addressing:

(1)    the basis on which the Court might vary the costs order, including by reference to the Rules; and

(2)    the grounds on which the Court should exercise its discretion to make a lump sum costs order.

10    On 24 December 2024, the applicant provided written submissions seeking a lump sum costs order under r 40.02(b) of the Rules and raised the following matters in support of such an order:

(a)    the limited and relatively simple nature of the proceeding to date;

(b)    the location of the respondent is currently unknown;

(c)    a lengthy taxation process would impose a disproportionate burden on the applicant; and

(d)    a lump sum costs order would be consistent with the Court’s general desire to make the assessment of costs as inexpensive and efficient as possible.

applicable PRINCIPLES

11    Section 43 of the Federal Court of Australia Act 1976 (Cth) gives the Court or a Judge jurisdiction to award costs in all proceedings before the Court. The Court has a wide discretion to award costs. The power conferred by s 43 of the Act is a broad and ample power which is not to be read down otherwise than by judicial principle conformable with its amplitude: DSE (Holdings) Pty Limited v InterTAN Inc (2004) 51 ACSR 555; [2004] FCA 1251 at [14] (Allsop J, as his Honour then was).

12    The default position in relation to the quantification of costs payable as a result of an order of the Court is, in the absence of agreement, taxation: Masters v Lombe (liquidator), in the matter of Babcock & Brown Limited (in liq) (Lump Sum Costs) [2024] FCA 1336 at [23]-[24] (Cheeseman J).

13    The Court’s power to award costs on a lump sum basis arises by reason of s 43(3)(d) of the Act and r 40.02 of the Rules. Section 43(3)(d) of the Act provides that, without limiting the discretion of the Court in relation to costs, the Court may “award a party costs in a specified sum”. Rule 40.02 provides that a party “who is entitled to costs” may apply to the Court for an order that costs “be awarded in a lump sum, instead of, or in addition to, any taxed costs”.

14    It is accepted that, in some circumstances, the Court has the power to make a lump sum costs order notwithstanding that an earlier costs order has been made which envisaged taxation in the ordinary way. A lump sum costs order may be made as a supplemental order in aid of and as an alternative mode of enforcing a costs order made earlier in a proceeding: Beach Petroleum NL v Johnson (No 2) (1995) 57 FCR 119 at 120; [1995] FCA 350 (von Doussa J), Hudson v Sigalla [2016] FCA 1204 at [57]-[58] (Katzmann J); Fewin Pty Ltd v Burke (No 3) [2017] FCA 693 at [56] (Markovic J). A lump sum costs order cannot be made to vary or modify an earlier costs order if the original power of the Court is spent: Australian Securities and Investments Commission v Cassimatis (Costs) [2023] FCA 613 at [27] (SC Derrington J).

15    The making of a lump sum costs order remains at the discretion of the Court. The discretion is not confined and may be exercised whenever the circumstances warrant it. In relation to the exercise of the Court’s discretion to make a lump sum costs order, the Full Court in Paciocco v Australia and New Zealand Banking Group Ltd (No 2) (2017) 253 FCR 403; [2017] FCAFC 146 at [20] (Allsop CJ, Besanko and Middleton JJ) stated that:

…particular circumstances that may make a lump sum order especially appropriate include where in a large and complex commercial matter it would save the time, trouble, expense and aggravation of a taxation; where a taxation would require the parties to consume additional time and incur additional expenditure prolonging already protracted litigation; and generally to avoid an ongoing, counterproductive dispute as to costs, in the interests of achieving finality.

CONSIDERATION

16    I am satisfied that it is appropriate to make an order that the applicant’s costs be assessed on a lump sum basis.

17    First, the mode of assessment of the applicant’s costs has not been determined on its merits. The question whether the Court should exercise its discretion to make a lump sum costs order was not addressed in oral submissions at the hearing for default judgment. It is therefore open in this case to vary the costs order to provide for the mode of costs assessment and to order that the applicant’s costs be assessed on a lump sum basis: Cassimatis at [27] (SC Derrington J).

18    Secondly, assessment of the applicant’s costs on a lump sum basis will avoid the expense and burden of a taxation of the applicant’s costs in circumstances where the respondent cannot be located by the applicant and there is uncertainty regarding the recoverability of costs.

19    Thirdly, a lump sum costs order will bring the proceeding to finality in a manner that the applicant considers to be the most efficient and expedient course that is open to it.

conclusion

20    For the reasons outlined above, I would vary the costs order and make an order that the applicant’s costs be assessed on a lump sum basis. The matter will be referred to a Judicial Registrar for the assessment of costs.

Associate:

Dated:    13 March 2025