Allergan Australia Pty Ltd v Self Care IP Holdings Pty Ltd

Federal Court of Australia|2023-06-22|Before: Stewart J

The applicants pay the costs of and incidental to the respondents' application for a stay of the proceedings, from 10 December 2021 up until the stay was consented to by orders on 14 February 2022, including the costs of the case management hearing on 16 December 2021.
The applicants pay the costs of the parties' competing applications in respect of the stay-related costs.
Failing agreement between the parties on the quantification of the costs in orders 1 and 2 within 28 days of these orders, the costs be determined on a lump-sum basis by a Registrar of the Court. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

Introduction 1 There are competing applications before me with regard to costs associated with an application by the respondents for a stay of first instance proceedings pending the outcome of applications for special leave to appeal to the High Court and, if special leave were granted, the appeals. The stay was ultimately ordered by consent, but no order was made in relation to the respondents' costs associated with their application for the stay. The respondents were thereafter granted special leave to appeal and they were successful in their appeals to the High Court: Self Care IP Holdings Pty Ltd v Allergan Australia Pty Ltd [2023] HCA 8. 2 The respondents seek an order that the applicants are liable to them for their costs of and incidental to their request for a stay of the proceedings. The applicants, in contrast, seek an order that the applicants and the respondents bear their own costs of and incidental to the respondents' request for a stay of the proceedings. 3 For the following reasons, I have concluded that the respondents should have their costs of the stay application, including from when they first requested such a stay on 10 December 2021 until orders granting the stay were made by consent on 14 February 2022.

The relevant events 4 There are two principal proceedings. In proceeding NSD15/2017, the applicants (conveniently referred to as Allergan) made claims against the respondents (conveniently referred to as Self Care) of trademark infringement, breach of the Australian Consumer Law (ACL) and passing off. In proceeding NSD1802/2017, Allergan appealed from a decision of a delegate of the Registrar of Trade Marks to allow Self Care's application for registration of a trade mark. There was also a cross-claim in that proceeding for the removal from the register of a mark of Allergan's in a particular class for non-use and for cancellation of a defensive mark in respect of a particular class. 5 On 1 December 2017, Yates J ordered that the two proceedings be heard together and that the quantification of the loss and damage claimed by Allergan be heard and determined separately from and after all questions of liability had been determined. 6 The matters then proceeded to trial on that separated basis. On 22 October 2020, I published reasons for judgment in which I explained why all but one of Allergan's claims (being a particular ACL claim) should be dismissed, Allergan's trademark appeal should be dismissed, Self Care's cross-claim for cancellation of a defensive mark should be dismissed and Self Care's cross-claim for removal of a mark should succeed. See Allergan Australia Pty Ltd v Self Care IP Holdings Pty Ltd [2020] FCA 1530. Agreed orders giving effect to those reasons were made on 7 December 2020. 7 Allergan appealed from those orders to the Full Court. In the meanwhile, the parties sensibly agreed that the relevant orders be stayed pending the appeal. 8 The Full Court substantially upheld Allergan's appeal on 7 September 2021: Allergan Australia Pty Ltd v Self Care IP Holdings Pty Ltd [2021] FCAFC 163; 393 ALR 595. The proceedings were remitted to me for determination of the various damages claims and an account of profits, and to decide a costs question. On 13 October 2021, the Full Court made various declarations with regard to trademark infringement and the ACL claims, and injunctions against Self Care restraining them from using certain phrases or descriptors in relation to their products. Those orders also foreshadowed an application by Self Care, to be filed within seven days, to stay the injunctions. 9 In the meanwhile, on 5 October 2021, Self Care had filed applications for special leave to appeal to the High Court against the orders of the Full Court. 10 On 19 October 2021, Self Care by their new solicitors, Gilbert + Tobin, wrote to Allergan by their solicitors, Griffith Hack, making a proposal with regard to the injunctions being stayed pending the outcome of the special leave applications. Griffith Hack responded, refusing the request for a stay of the injunctions and proposed that the proceedings continue notwithstanding the special leave applications. 11 On 29 November 2021, Griffith Hack requested a case management hearing in order to progress the matters. It was only in response to that, on 10 December 2021, that Gilbert + Tobin proposed that the proceedings should be stayed, arguing that it was premature to fix a timetable to progress the process of determining damages and any account of profits when there was the potential that the Full Court's findings of trademark infringement and breaches of the ACL might be overturned. 12 Allergan pressed for the first instance proceedings to continue into a discovery and quantum phase, and for the determination of the outstanding costs question, notwithstanding the special leave applications and Self Care's articulated position that progress in the first instance proceedings should be held in abeyance pending the outcome of the special leave applications. Allergan required Self Care to file a stay application and at the same time pressed for extensive procedural orders for the further conduct of the proceedings to be made at a case management hearing on 16 December 2021. 13 When no agreement could be reached between the parties, on 17 December 2021 I made orders programming the proposed stay application to be heard in mid-February 2022, that being the first opportunity for a hearing given the impending end of year break. Self Care's application for a stay was filed on 21 December 2021. 14 In January and early February 2022, further correspondence passed between the parties' respective solicitors in which Self Care again proposed the stay by consent. Allergan resisted that, and on 3 February 2022 filed evidence opposing the stay application including contending that no stay should be granted because the prospects of special leave to appeal and then any appeals being successful were "extremely low". 15 Later on 3 February 2022, the High Court notified the parties that the special leave applications had been listed for oral hearing. Following that event, which Allergan characterises as a "turning point", the parties reopened discussion about the possibility of agreement to a stay of the proceedings pending the outcomes in the High Court. Ultimately, on 14 February 2022, two days before the stay application was due to be heard, the parties agreed to the stay of the proceedings and a costs order dealing with Allergan's costs of the stay application in the event that they were successful in the High Court. 16 That left the question of Self Care's costs undecided, particularly in the event that the applications for leave to appeal and the subsequent appeals were successful. That is the question that is presently before me. Neither side contends that that question is foreclosed by the orders made on 14 February 2022.

Consideration 17 In support of their contention that the parties should bear their own costs on the stay application, Allergan submits that the grant of the stay was an indulgence to Self Care and that there is no reason to deviate from the ordinary course that the party obtaining the benefit of an indulgence ought to bear the costs of achieving that indulgence. Allergan refers to MTR Corporation (Sydney) NRT Pty Ltd v Thales Australia Ltd [2020] NSWCA 226 at [19]. Allergan submits that their proposed costs order properly balances that factor with Self Care's ultimate success in the High Court. 18 That characterisation of the stay in the present case as an indulgence is incorrect. MTR Corporation concerned an application to stay substantive orders of a primary judge pending an appeal. In the present case, there was no application to stay the orders of the Full Court pending the outcome of the processes in the High Court. The application that was made, and the order that was ultimately made by consent, was to stay the proceedings pending the outcomes in the High Court. In the meanwhile, the injunctions made by the Full Court remained in place, as did the declarations. All that was sought to be held in abeyance was the process for the quantification of damages and an account of profits, and a costs question, in respect of which there was no urgency whatsoever. Moreover, the parties' and the Court's time and effort in progressing those matters would have been considerable, and, as it turns out, it would all have been wasted given Self Care's success in the High Court. 19 That form of stay is not an indulgence. Indeed, it is in truth merely a case management question that I should have decided at the hearing on 16 December 2022 but which I did not decide then on Allergan's insistence that an interlocutory application for a stay should be filed so that they could respond to it. 20 In my assessment the question of costs before me can be considered in two different ways, both of which reach the same result. 21 By the first approach, one can give consideration to who had success in the stay application. Although the application was settled on the basis that consent orders were made so the occasion to decide the merits of the application did not arise, the settlement gave Self Care what it had sought, namely a stay. In other words, Self Care was substantially successful in the stay application and Allergan in effect capitulated. Ordinarily, Self Care should then get the costs of the application on the basis that the costs follow the event. 22 It makes no difference to that analysis that the circumstance on which Allergan's capitulation turned was that the special leave applications were listed for oral hearing, rather than being dismissed without such a hearing as their evidence had sought to predict. The point is that they put Self Care to the expense of putting on an application with supporting evidence and submissions, and then on the eve of the hearing they capitulated. 23 Nevertheless, it may have been that on Self Care being successful on the stay application, rather than being awarded the costs of the stay application, the appropriate order would have been that the costs follow the fortunes of the proceedings in the High Court. That takes one to the other way of considering the issue. 24 By the second approach, one can have regard to whether it ultimately turned out that the stay was justified with reference to the outcome in the High Court. As already mentioned, it is now known that the stay was well justified and that progressing the proceedings in parallel with the progress of the High Court proceedings would have turned out to be a complete waste of time, effort and costs. On that basis, Self Care should have the costs of the stay application. 25 The truth of the matter is that it never made any sense but to stay, or pause the progress of, the first instance proceedings pending the outcome in the High Court. Allergan's insistence to the contrary, right up to the eve of the hearing of the stay application, was never reasonable or well advised, and can hardly have been said to be an approach consistent with the purpose of proceedings being pursued inexpensively and efficiently. Indeed, to not stay the proceedings would have been inconsistent with the underlying purpose of the order that liability be separated out and determined prior to questions of loss that had been made back in 2017. 26 That notwithstanding, I am not satisfied that Self Care should have a costs order quite in the terms in which they seek it. That is because the order that they seek is for the costs "of and incidental to the respondents' request for a stay", the purpose being to capture the costs from October 2021. However, as mentioned, the only stay that was mooted at that point was a stay of the injunctions which was then not pursued. The stay of the proceedings is a separate and quite different question. Such a stay was not requested until December 2021. The order should reflect that.

Conclusion 27 In the circumstances, there should be orders that: the applicants pay the costs of and incidental to the respondents' application for a stay of the proceedings, from 10 December 2021 up until the stay was consented to by orders on 14 February 2022, including the costs of the case management hearing on 16 December 2021. the applicants pay the costs of the competing applications for stay-related costs, and failing agreement between the parties on the quantification of those costs within 28 days, the costs be determined on a lump-sum basis by a Registrar of the Court. I certify that the preceding twenty-seven (27) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Stewart.

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