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[2021] FCA 185
Federal Court of Australia
2021-03-05
Stewart J
Original judgment source is linked above.
Federal Court of Australia, Costs Practice Note (GPN-COSTS), 25 October 2016
Division: General Division
Registry: New South Wales
National Practice Area: Intellectual Property
Sub-area Trade Marks
Date of hearing: Determined on the papers
Counsel for the Applicants/Cross-Respondent: S J Goddard and E E Whitby
Solicitor for the Applicants/Cross-Respondent: Griffith Hack Lawyers
Counsel for the Respondents/Cross-Claimant: A R Lang and J E McKenzie
Solicitor for the Respondents/Cross-Claimant: MinterEllison
Counsel for the Appellant: S J Goddard and E E Whitby
Solicitor for the Appellant: Griffith Hack Lawyers
Counsel for the Respondent: A R Lang and J E McKenzie
Solicitor for the Respondent: MinterEllison
BETWEEN: ALLERGAN AUSTRALIA PTY LTD (ACN 000 612 831)
AND: SELF CARE IP HOLDINGS PTY LTD (ACN 134 308 151) First Respondent
SELF CARE CORPORATION PTY LTD (ACN 132 213 113) Second Respondent SONIA AMOROSO Third Respondent
AND BETWEEN: SELF CARE IP HOLDINGS PTY LTD (ACN 134 308 151) (and another named in the Schedule) First Cross-Claimant
AND: ALLERGAN INC (and another named in the Schedule) First Cross-Respondent
order made by: STEWART J DATE OF ORDER: 5 March 2021
AND: SELF CARE IP HOLDINGS PTY LTD (ACN 134 308 151) Respondent
order made by: STEWART J DATE OF ORDER: 5 March 2021
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
Introduction 1 This judgment concerns the costs of the proceedings which, aside from costs dealt with here, I have previously determined. As there is no need for present purposes to distinguish between the various applicants or the various respondents, I shall refer to them simply as Allergan (the applicants) and Self Care (the respondents). 2 On 22 October 2020, I published reasons for judgment in these two proceedings: Allergan Australia Pty Ltd v Self Care IP Holdings Pty Ltd [2020] FCA 1530 (the first judgment). The cases are: (1) NSD15/2017 (the main proceeding) in which Allergan advanced cases against Self Care for trademark infringement, misrepresentations contrary to the Competition and Consumer Act 2010 (Cth) Sch 2 (Australian Consumer Law) (ACL), passing-off and infringements of the Therapeutic Goods Act 1989 (Cth), and in which Self Care by cross-claim sought removal of certain trademarks from the register, or for the scope of their registration to be reduced; and (2) NSD1802/2017 (the appeal proceeding) in which Allergan appealed against the decision of a delegate of the Registrar of Trade Marks to allow Self Care's trade mark application in respect of FREEZEFRAME PROTOX to proceed to registration. 3 In respect of the main proceeding, I made orders that the parties prepare consent or competing orders, in accordance with my reasons and findings, to dispose of the proceeding. In the appeal proceeding I made orders dismissing the appeal and, by order 2, ordering Allergan to pay Self Care's costs. I will return to that cost order because there is a dispute between the parties as to whether I can revisit it. 4 I subsequently made orders by consent as follows: (1) Staying the costs order in the appeal proceeding "until orders as to costs in each [proceeding] are agreed or determined by the Court in accordance with the orders made today in [the main] proceeding". (2) Declaring that a particular representation made by Self Care is a contravention of the ACL, allowing the cross-claim to a limited extent, setting a timetable for evidence and submissions on costs, and otherwise dismissing the claim and cross-claim. 5 A high-level summary of the outcomes in the main proceeding and the appeal proceeding is as follows: (1) Self Care was substantially successful in defending the claims against it in the main proceeding, losing only in relation to one statement out of 36 (see the first judgment at [111]-[116] for schedules of the impugned statements), and winning outright in relation to the trademark infringement under the Therapeutic Goods Act and passing-off claims; (2) Self Care was partially successful on its cross-claim, succeeding on one element of it and failing on the other; and (3) Self Care was wholly successful in the appeal proceeding. 6 In my assessment, with knowledge of the evidence, the hearing and the submissions, it is fair to say that Self Care was 90% successful in the proceedings taken together. I reach that assessment by allocating 5% to Self Care's lack of success in part of the cross-claim and 5% to its lack of success in relation to one of the many impugned statements.
The evidence 7 The parties rely on a staggering volume of evidence to support their submissions on costs. 8 Self Care relies on the following affidavits and exhibits: (1) the affidavit of John Ian Fairbairn, its solicitor, dated 22 December 2020 (16 pages), exhibit JIF-28 (175 pages) and confidential exhibit JIF-29 (388 pages); and (2) the affidavit of John Ian Fairbairn dated 15 February 2021 (12 pages) and Exhibit JIF-30 (15 pages). 9 Allergan relies on the following affidavits and exhibits: (1) the affidavit of Kellie Anne Louise Stonier, its solicitor, dated 29 January 2021 (29 pages) and annexure KAS-147 (159 pages); and (2) the affidavit of Kellie Anne Louise Stonier dated 24 February 2021 (4 pages). 10 The parties also each filed two sets of written submissions which were subject to page limits imposed by me. The page limits were flouted - more so by one side than the other - by the age-old, transparent and, frankly, tedious, stratagem of reducing the font size, line-spacing and margin widths from those which are conventionally used and which enable a document to be easily read. To add to the burden, Allergan referred to 21 authorities, sometimes inexplicitly citing numerous authorities in support of a single long-established and uncontentious proposition. 11 The approach to costs which is reflected in the parties' evidence and submissions - in particular Allergan's - is to be deprecated. It is contrary to established principle which requires that costs be dealt with as inexpensively and efficiently as possible. 12 The parties were agreed that I should decide the costs questions on the papers.
Applicable principles on costs 13 The relevant principles are well-known and are not in dispute. Under s 43 of the Federal Court of Australia Act 1976 (Cth), costs are in the discretion of the court. The discretion is broad but is to be exercised judicially. The fundamental purpose of the discretion is to compensate the successful party, not to punish the unsuccessful party. 14 In general, a successful party will obtain an order for costs in its favour. However, a successful party who has failed on certain issues may not only be deprived of the costs of those issues but may be ordered to pay the other party's costs of them. If the apportionment of costs is appropriate, the object is not mathematical precision but a result that best reflects the interests of justice in the overall circumstances of the case. See EMI Songs Australia Pty Ltd v Larrikin Music Publishing Pty Ltd [2011] FCAFC 92 at [9]. 15 However, the mere fact that a court does not accept all of a successful party's arguments does not make it appropriate to deal with costs on an issue by issue basis: Victoria v Sportsbet Pty Ltd (No 2) [2012] FCAFC 174 at [8]. A court will be reluctant to adopt an approach of apportioning costs between different issues depending on success or failure on those issues where it is likely to be difficult, if not impossible, to allocate items of costs between the different issues. See Marmax Investments Pty Ltd v RPR Maintenance Pty Ltd (No 2) [2015] FCAFC 155 at [16], citing Cretazzo v Lombardi (1975) 13 SASR 4 at 16; Chevron Australia Holdings Pty Ltd v Cmr of Taxation (No 5) [2015] FCA 1310 at [15]. 16 The court's preference, wherever practicable and appropriate, is to make a lump sum costs order so as to finalise costs and avoid potentially expensive and lengthy taxation hearings: Costs Practice Note (GPN-COSTS) at [3.3]; Paciocco v Australia and New Zealand Banking Group Ltd (No 2) [2017] FCAFC 146; 253 FCR 403 at [16]. The guiding principle is to reduce delay and cost when quantifying costs: GPN-COSTS at [3.1]; Paciocco at [16]. 17 A well-established circumstance justifying an award of indemnity costs is an imprudent refusal of an offer to compromise: Anchorage Capital Partners Pty Ltd v ACPA Pty Ltd (No. 2) [2018] FCAFC 112 at [6] per Nicholas, Yates and Beach JJ. Whether rejection of an offer was "unreasonable" may include consideration of: (a) the stage of the proceeding at which the offer was received; (b) the time allowed to the offeree to consider the offer; (c) the extent of the compromise offered; (d) the offeree's prospects of success, assessed as at the date of the offer; (e) the clarity with which the terms of the offer were expressed; and (f) whether the offer foreshadowed an application for an indemnity costs order in the event of the offeree rejecting it: Anchorage at [7]. 18 An unsuccessful party is not liable to pay indemnity costs merely because it received an offer to settle on terms more favourable than it achieved at trial and rejected that offer; there is no presumption that success in the proceeding for the offeror necessarily renders the offeree's rejection unreasonable: CGU Insurance Ltd v Corrections Court of Australia Superannuation Ltd [2008] FCAFC 173 at [75] per Moore, Finn and Jessop JJ.
The different orders sought by the parties 19 Self Care seeks orders as follows: (1) that Allergan pay its costs of both proceedings taken together on a party/party basis up to 11 December 2017 (alternatively 28 March 2018); (2) that Allergan pay its costs of both proceedings taken together on an indemnity basis from 12 December 2017 (alternatively 28 March 2018); (3) that the costs are paid on a lump sum basis; (4) that the costs be paid in the amount of $2,207,381.89 (alternatively an unspecified lesser amount if the indemnity costs are from 28 March 2018); and (5) that order 2 made in the appeal proceeding on 22 October 2020 be set aside. 20 The reason why indemnity costs are sought from 11 December 2017 is that that is the date of a first offer that was made in accordance with the principles in Calderbank v Calderbank [1975] 3 WLR 586. The alternative date of 28 March 2018 is because that is the date of a second offer that was made by Self Care to settle the proceedings. I will shortly return to the offers. 21 Allergan contends for an order in the main proceeding that it pay 60% of Self Care's costs on the ordinary basis as agreed by the parties within 60 days, or otherwise to be determined on a lump sum basis by a Registrar of the Court. It submits that it is premature to quantify the costs on a lump sum basis at this stage. It also says that the costs order in the appeal proceeding is final and cannot be revisited. 22 Allergan contends that it should be ordered pay only 60% of Self Care's party/party costs in the main proceeding, or a 40% reduction in the costs it would otherwise have to pay, based on a consideration of: (1) what it says are costs thrown away as a result of Self Care having given undertakings during the course of the proceeding not to make certain statements that Allergan had complained of which resulted in unnecessary expert and lay evidence; (2) its success in relation to one of the remaining statements that it complained of; and (3) its success on part of the cross-claim.
Relevant history 23 Allergan commenced the proceeding in January 2017. At that stage, its claim related only to the FREEZEFRAME PROTOX mark and included claims of trademark infringement, misleading and deceptive conduct (including that Self Care had made certain affiliation and efficacy representations) and passing-off. 24 In May 2017, the parties engaged in mediation which, needless to say, was unsuccessful. 25 In July 2017, Allergan filed an amended statement of claim, expanding the claim to include references to the Therapeutic Goods Act and new claims relating to the Inhibox, Night (tub and tube) and Boost products. 26 In September 2017, the delegate of the Registrar of Trade Marks made the decision in respect of the FREEZEFRAME PROTOX mark which became the subject of the appeal proceeding when it was commenced by Allergan in October 2017. 27 In December 2017, Self Care filed a cross-claim seeking removal of the BOTOX mark from class 3. 28 On 11 December 2017, Self Care made its first Calderbank offer to settle both proceedings. The offer included the dismissal of both proceedings on the following bases: (1) Self Care would cease offering for sale and selling FREEZEFRAME PROTOX branded products. (2) Self Care would withdraw its application for the FREEZEFRAME PROTOX trade mark (thereby bringing the appeal proceeding to an end). (3) Self Care would make changes to the claims that it made in respect of its Night product so as to no longer claim that it was clinically "proven" to visually match injections, but rather to claim that it was clinically "shown" to do so, and to no longer claim that the product brought the skin's structure back to baby's skin in less than three months, but rather to say that the skin's structural appearance can look as firm as a baby's skin in less than three months. (4) Allergan would pay 80% of Self Care's costs of both proceedings on a party/party basis. 29 On 18 March 2018, Self Care made its second Calderbank offer to settle both proceedings. The offer was stated to remain open until 9 April 2018. It included the dismissal of both proceedings on the following bases: (1) Self Care would cease offering for sale and selling PROTOX, FREEZEFRAME PROTOX or PROTOX FREEZEFRAME branded products, and would destroy all stock of products, packaging and promotional materials which bore the FREEZEFRAME PROTOX mark. (2) Self Care would cease from referring to "Botox" or "Botox®", as opposed to "botox", on the product packaging and information booklets for its various products. (3) Self Care would cease advertising the Protox product, including with reference to various statements complained of in relation to that product in the amended statement of claim. (4) Self Care would cease from making various statements in relation to the Night product, including the statement in respect of which Allergan was ultimately successful and almost all the rest of the statements that it subsequently unilaterally undertook not to make (as dealt with further below). (5) Allergan would pay 80% of Self Care's costs of the main proceeding on a party/party basis. (6) Self Care would withdraw its application for the FREEZEFRAME PROTOX trade mark and the appeal proceeding would be dismissed with no order as to costs. 30 On 29 March 2018, which is to say before the offer expired, Allergan's solicitors requested Self Care's solicitors to provide an estimate of 80% of Self Care's costs. No response was received to that request. 31 In April and July 2018, Self Care served evidence by way of affidavit in the proceedings. 32 In August 2018, Allergan further expanded its claims in a further amended statement of claim. 33 In February 2019, Self Care gave undertakings to the Court not to make a substantial number of statements about its various products. Self Care explained that the proceedings had been broadened over time to deal with a number of aspects of its packaging and advertising that were no longer commercially relevant to it, and that the Court should not have to consider such matters given the time that that would occupy at trial and the ongoing costs that would be involved in defending each of the claims. Self Care also explained that it had made the commercial decision to remove FREEZEFRAME PROTOX from its suite of products. Self Care did not, by giving the undertakings, accept any liability in respect of, or pre-existing legal obligation not to make, the statements that it undertook not to make. 34 On 7 March 2019, Self Care served a notice to admit requiring Allergan to admit that there is a reasonable basis to claim that the various FREEZEFRAME products are effective to reduce the appearance of wrinkles and effective to reduce the appearance of wrinkles to the extent identified in the various studies. Thereafter, Allergan served a notice disputing the matters in the notice to admit. 35 In May 2019, Allergan served a second further amended statement of claim which continued to plead a number of statements that were the subject of the undertakings, introduced new claims that Self Care "threatened" to make certain statements by reason of the undertakings, and removed claims in relation to a number of the efficacy representations in respect of FREEZEFRAME branded products. 36 The trial of the proceedings was in June 2019.
Revisiting the costs order in the appeal proceeding 37 It seems to me that before the parties' contesting contentions can be dealt with any further it is necessary to deal with a foundational question, which is whether the costs order that I made in the appeal proceeding can or should be revisited. The circumstances in which I made that order include the following: (1) I had received no submissions from the parties on the costs of the appeal proceeding, whether in writing or orally. (2) After having considered the parties' competing contentions in the appeal proceeding and reasoning why each of the appeal grounds should fail (at [340]-[412] of the first judgment), I concluded as follows (at [413]): For the above reasons, Allergan Inc's appeal against the decision of the delegate of the Registrar of Trade Marks falls to be dismissed with costs. (3) The conclusion on costs was simply on the basis that the costs should follow the result, although that was not explained in the reasons for judgment. (4) The parties had not had the opportunity to make any submissions on the costs in the appeal proceeding, or to raise any relevant factual matters such as offers to settle. (5) I was ignorant of the offers to settle on which Self Care now relies in relation to the costs of both proceedings, the parties having correctly kept these from me pending my decision on the merits of their respective cases. 38 Aside from its statutory power, as expressed in r 39.05(h) of the Federal Court Rules 2011 (Cth), the Court has at best very limited power as part of its powers as are incidental and necessary to the exercise of its expressly conveyed jurisdiction, to vary or set aside orders already entered. The High Court held in DJL v The Central Authority [2000] HCA 17; 201 CLR 226 at [45] per Gleeson CJ, Gaudron, McHugh, Gummow and Hayne JJ that the Family Court of Australia has no power to re-open final orders after their entry. Black CJ in Pantzer v Wenkart [2007] FCAFC 27 at [5] held that it is hard to see how, in the face of that authority, there can be any foundation for the contention that the Full Court of the Federal Court has power to re-open final orders duly entered. See also Owston Nominees No 2 Pty Limited v Branir Pty Ltd [2003] FCA 629; 129 FCR 558 at [27] per Allsop J; SZCZF v Minister for Immigration and Citizenship [2009] FCA 208; 107 ALD 138 at [9] per Flick J; Hancock Prospecting Pty Ltd v Rinehart (No 3) [2021] FCAFC 23 at [7] per Allsop CJ, Besanko and O'Callaghan JJ. 39 In the present case it is sufficient to rely on r 39.05(h) of the Rules, which is commonly referred to as the "slip rule" and is a reflection of the common law principles which determine when orders can be varied or set aside. The basis for varying or setting aside a judgment or order after it has been entered in reliance on the slip rule is if "there is an error arising in a judgment or order from an accidental slip or omission". Paragraph (e) of the rule also allows a judgment or order to be varied or set aside "if it does not reflect the intention of the Court". 40 In Construction, Forestry, Mining and Energy Union v Mammoet Australia Pty Ltd (No 2) [2012] FCA 1404, Gilmour J set aside a costs order previously made and entered in reliance on r 39.05(e) on the basis that there was a failure in the reflection of the intention of the Court in the relevant order by reason of an accidental slip or omission. The failure was expressed (at [10]) "as a failure by the parties to positively make submissions on the question of costs, or perhaps more fairly to them, a failure on the part of the Court to raise the question with the parties before making the order". The present is just such a case. 41 In Tropicana Ltd v Australasia Corporate Services Pty Ltd [2011] FCA 684 at [16], Gordon J explained that the slip rule permits the correction of an error where it is either a unilateral or mutual error or inadvertence by the parties' representatives, "or an error of the Court". It was explained that the purpose of the rule is to avoid injustice. 42 See also Notaras v Barcelona Pty Ltd (No 2) [2019] FCA 617 at [34]-[36] per Robertson J with regard to the availability of the slip rule to award costs on an indemnity basis where costs had previously been ordered on a party/party basis because of the oversight of the relevant party's legal representatives in failing earlier to ask for costs on an indemnity basis. 43 In my view, not only does the slip rule have possible application in the present case, but it should be applied with the result that the costs order in the appeal proceeding should be vacated and the question of costs revisited. There are several reasons for this including that I did not hear the parties on costs; that was through my inadvertence or error, I was not aware of facts which are relevant to the consideration of costs because the parties had not yet had the opportunity to adduce evidence of them, and justice demands that the costs question be revisited. Moreover, that the costs order was open for reconsideration appears implicit in the orders made by consent referred to in [4(1)] above. 44 For those reasons, I will set aside order 2 made by me in the appeal proceeding on 22 October 2020. That clears the way for the costs of the two proceedings to be dealt with together. The two proceedings were heard together with evidence in one being evidence in the other. It would be most difficult and inefficient to try to separate out different items of work, and hence costs, between the two proceedings. It is therefore most convenient and cost-effective to deal with the costs of the cases together.
Allergan's case on costs 45 The first problem with what Allergan contends for is the conclusion that I have reached that the costs of the two proceedings should be dealt with together. I can nevertheless consider Allergan's contentions and apply them to the case as a whole to the extent that they find favour. 46 Allergan submits that there should be a reduction in the party/party costs "on account of the late giving of undertakings and accordingly wasted lay and expert evidence costs". It further submits that many of the efficacy representations complained of included comparisons of a temporal nature with Allergan's products and other unsupported claims as to the percentage reduction in wrinkles over specified time periods. It submits that in light of the finding that the statement "delivers the results of a Botox injection in 4 weeks" was misleading, had the efficacy representations that were the subject of the undertakings been maintained, they would likely have also been found to be misleading or deceptive. 47 The problem with the submission that the undertakings were "late" and accordingly resulted in wasted lay and expert evidence costs is that the undertakings were given without admission of any liability. That leads to the problem with the submission with regard to the likelihood that the statements that Self Care undertook not to make would have been found to be misleading or deceptive. I understand that to be in support of the notion that there was evidence directed to the question whether those statements were contrary to the ACL which, once the undertakings were given, was no longer needed. 48 It is quite inappropriate, and contrary to all considerations of convenience and efficiency, for the Court to have to speculate now, in the context of a costs decision, on what the outcome at trial might have been if the undertakings had not been given. See Hammond v Quayeyeware Pty Ltd, in the matter of Quayeyeware Pty Ltd [2019] FCA 2207; 141 ACSR 434 at [6]-[7] and the cases there cited for analogous circumstances. I am not now required to embark upon some sort of mini-trial on the question of whether the statements that are the subject of the undertakings were contrary to the ACL. The very purpose of the undertakings was to avoid the need for a trial on that question. 49 In respect of the parties' mixed success on the cross-claim, Allergan submits that the parties should bear their own costs on the cross-claim which represents a 5% reduction in Self Care's party/party costs entitlement. As already indicated, I accept that estimate as reflecting a fair reduction on account of Allergan's partial success on the cross-claim.
Self Care's case on costs 50 Self Care submits that its first offer, of 11 December 2017, was an offer of a genuine compromise and that the terms of the offer were more favourable than the outcome achieved by Allergan at trial. It says that Allergan's failure to accept the offer was unreasonable. 51 Self Care's first offer made only a minor concession with regard to the efficacy statements about the Night product - being the changes from "proven" to "shown" and the "skin's structure" to the "skin's structural appearance". Those changes can hardly be characterised as making any ground-breaking concession. Moreover, acceptance of the offer would not have resulted in Self Care not maintaining its use of the statement which was ultimately found to be misleading. The offer also did not address statements that were ultimately removed from contention as a consequence of the undertakings subsequently given by Self Care. 52 In those circumstances, I do not consider that Allergan's refusal of the offer was imprudent or unreasonable. 53 Self Care submits that the terms of its second offer were also more favourable than the outcome achieved by the applicants at trial for much the same reasons as in respect of the first offer. The second offer did however go significantly further in respect of the statements that it took out of contention. Self Care points out that by the stage of the second offer the proceedings had been on foot for some 14 months, and submits that there is no sensible basis on which Allergan could assert that it was not familiar with the scope of the dispute or unable to properly consider its prospects of success or the commercial sense of the offer. 54 Allergan submits that it was not unreasonable or imprudent of it to refuse the offer. That is on the bases that: Self Care's evidence had not been filed; the offer not to use a capital "B" and instead use a lowercase "b" was not significant which was ultimately confirmed in the first judgment (at [236]); the offer to cease making certain statements was made as a confidential settlement unlike the public nature of the undertakings that were ultimately given; the offer was silent as to the Inhibox, Boost and Eraser products; and, the offer to accept 80% of its costs did not represent a serious compromise and was not quantified even when quantification was sought. 55 In my view it is difficult to conclude that Allergan would have been in a better position had it accepted the second offer than the position that it was ultimately in following the trial. That is because of the role played by the undertakings given by Self Care. I accept that those undertakings were given without admission as a consequence of which they cannot be treated as a victory at trial for Allergan, but neither can they be treated as if they had formed part of the second offer or as a victory for Self Care. The undertakings nevertheless play an important role in an assessment of whether in reality the judgment that was obtained by Allergan was less favourable than the terms of the offer. The offer did not include withdrawal of the statements that were later the subject of the undertakings, so the position under the offer and the position in the judgment are not directly comparable. To the extent that Allergan's respective positions after the notional acceptance of the offer and after judgment are to be compared, it is better off after the judgment than it would have been after acceptance of the offer because of the undertakings made by Self Care in the interim. 56 In these circumstances, it cannot be concluded that Allergan was unreasonable or imprudent in rejecting the offer. 57 In my view, it follows that neither basis for Self Care seeking indemnity costs succeeds. 58 Self Care submits that in the alternative to reliance on the offers to settle, it is entitled to its costs on an indemnity basis in so far as such costs were incurred in relation to proving the matters subject to the notice to admit facts served by it on 7 March 2019. It will be recalled that the notice to admit facts related broadly to two propositions: that Self Care's various products were effective to reduce the appearance of wrinkles and that its various products were effective to reduce the appearance of wrinkles to the extent identified in the various studies. Those facts were disputed by way a formal notice by Allergan. 59 Ultimately, save in respect of the one misleading statement on which it succeeded, Allergan failed to discharge the onus to prove that Self Care did not have reasonable grounds for making the efficacy representations: first judgment at [577]. Self Care submits that the result of Allergan disputing the facts which it was asked to admit was that they had to be proved, which involved significant costs. 60 Allergan submits that the admissions that were sought from it were not matters pleaded against Self Care and were accordingly not issues in dispute properly the subject of a notice to admit. Allergan draws attention to the statement in the first judgment (at [490]) that "Allergan does not assert that Self Care's products are not effective to reduce the appearance of wrinkles". Allergan also points out that the notice to admit was served after lay and expert evidence was filed with the result that even if the facts should have been admitted at that stage there would have been little cost saving. 61 It seems to me that although it was not pertinently in dispute that Self Care's products were effective in reducing the appearance of wrinkles - the principal dispute in that respect being whether they were effective in the same way or by the same mechanism as Botox is effective, the studies that form the subject of the notice to admit were disputed by Allergan. That is reflected in the primary judgment (at [541]-[576]) where I identified and dealt with the arguments advanced by Allergan against a conclusion that the studies relied on by Self Care amounted to "reasonable grounds" for the efficacy representations. Those arguments focused on why the studies could not be relied on. Thus, Allergan specifically challenged that element of the notice to admit that Self Care had sought to remove from contention, namely that the various products were effective to reduce the appearance of wrinkles to the extent identified in the various studies. 62 In the result, there is a significant degree to which what was sought to be removed from contention by the notice to admit and which was disputed by Allergan was relevant to the proceeding and required time and expense to prove. It is more difficult to quantify the extent of time and expense that would have been saved had the notice to admit not been disputed. That is particularly so given that the notice to admit post-dated service of evidence and expert reports. Mr Fairbairn says the following in that regard in his first affidavit (at [56]): I estimate Self Care's costs in proving [the facts that are the subject of the notice to admit] to be at least $142,000 (being $79,595.51 in professional fees and $62,257.50 in disbursements) (Notice Costs). This figure comprises all expert fees following 21 March 2019, as well as all Counsel and MinterEllison fees after 21 March 2019 that related to expert evidence (including all fees associated with the expert conferral process, conferences with the expert Mr Richard Williams and those costs incurred on day 5 and half of a 6 of the hearing). 63 For reasons that I will come to, I prefer not to deal with the costs at this stage in dollar amounts. Rather, I propose to make an assessment as to the proportion of its costs that Self Care is entitled to leaving the quantification of that to be dealt with in due course. In my assessment the costs relating to proof of the studies and hence "reasonable grounds" following the notice to admit amount to about 5% of the costs overall. That is confirmed by taking the figure of $142,000 deposed to by Mr Fairbairn as a proportion of Self Care's total costs in the proceeding, also deposed to by him (at [41(a)] of his first affidavit), as $2,365,674.95. That amounts to 6%. 64 Rule 22.03 of the Rules provides that if a party serves a notice of dispute, as Allergan did, and the truth of any fact disputed in the notice is proved, the party that served the notice of dispute must pay the costs of proving the truth of the fact. Those costs are ordinarily party/party costs. However, as submitted by Self Care, a failure to answer a notice to admit facts is a matter relevant to the determination of costs, including costs on an indemnity basis in an appropriate case: Polygram Records Inc v Raben Footwear Pty Ltd [1996] AIPC 91-284; 140 ALR 617. 65 In that case the party that disputed the relevant facts chose not to lead any evidence in support of that dispute, but rather only to cross-examine the other party's expert. Foster J (at 619) characterised the question that had to be decided as being whether that approach of only cross-examining the expert, and not calling any evidence countervailing her evidence, should be stigmatised as simply a tactical device which was necessarily engaged in at the risk of an award of costs on an indemnity basis if it failed. Ultimately, his Honour concluded that it was a tactical device and on that basis ordered the costs of proof on an indemnity basis. 66 The circumstances of the present case are quite different. Allergan relied on the expert evidence of Dr Haley. Ultimately, for the most part I found Dr Haley's criticisms of the various reports unpersuasive. That is, however, not a proper ground for ordering costs on an indemnity basis. There is nothing to suggest that Allergan's approach on these questions was other than genuine, albeit ultimately unsuccessful. 67 As will be seen, Self Care will in any event be awarded the bulk of the costs of the proceeding. The costs of proving the facts that were the subject of the notice to admit are included in those costs. As there is no basis to order those costs on an indemnity basis, no further or separate treatment of those costs is required.
Conclusion on liability for costs 68 It will be recalled that in my assessment Self Care was 90% successful in the proceeding. As a starting point, it should therefore be entitled to 90% of its party/party costs. I have concluded that it is not entitled to any indemnity costs as a result of either of its offers to settle or its notice to admit. I have also concluded that none of the reductions that Allergan contends for should be applied save for 5% in respect of its partial success in its claim in the main proceeding, which is already accounted for in the 10% I have credited to it reflected in the figure of 90% I have arrived at. 69 Mr Fairbairn stated in his first affidavit (at [38]) that in his calculations he did not specifically reduce Self Care's costs in respect of the matters on which it was unsuccessful because he considered that the same evidence was in any event required in respect of matters on which Self Care was successful. That may be justified on what he was seeking to calculate. However, in my view in coming to an overall award on costs justice is best served by giving some credit, on a rough and ready assessment, to the losing party in respect of those issues on which it was successful. That will best reflect the interests of justice in the overall circumstances of the case. 70 In the result, in my assessment and in the exercise of the Court's discretion on costs I will award Self Care 90% of its party/party costs. Those costs include the costs of determining the question of costs to date.
Quantification of costs 71 I am satisfied that Self Care should have its costs on a lump sum basis. To approach the costs on that basis will result in savings and efficiency. However, I do not propose to do the quantification of those costs myself. The reason is that that is not a straightforward exercise, in particular given that Self Care has presented its costs on an indemnity basis, at least following its first offer. 72 A more efficient way of quantifying the costs, even on a lump sum basis, is to refer that to a Registrar of the Court. A Registrar is better placed to undertake that exercise, and is far more familiar than I am with the questions that arise in relation to the quantification of costs. However, I will first allow the parties 28 days to seek to agree on the quantification of the costs. I certify that the preceding seventy-two (72) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Stewart.
Associate: Dated: 5 March 2021 SCHEDULE OF PARTIES NSD 15 of 2017 Cross-Claimants Second Cross-Claimant: SELF CARE CORPORATION PTY LTD (ACN 132 213 113) Cross-Respondents Second Cross-Respondent ALLERGAN AUSTRALIA PTY LTD (ACN 000 612 831)
Allergan Australia Pty Ltd
Self Care IP Holdings Pty Ltd