Cadbury Schweppes Pty Ltd v Darrell Lea Chocolate Shops Pty Ltd

Federal Court of Australia|2008-07-31|Before: Heerey J

REASONS FOR JUDGMENT 1 The applicant (Cadbury) brought this proceeding against the respondent (Darrell Lea) alleging passing off and also misleading and deceptive conduct in contravention of ss 52 and 53(c) and (d) of the Trade Practices Act 1974 (Cth) by Darrell Lea's use of the colour purple in connection with the marketing of chocolate products. In the course of the trial I rejected evidence tendered by Cadbury from three expert witnesses, Dr Brian Gibbs, Dr Constantino Stavros and Mr Timothy Riches (the Cadbury experts). 2 I gave judgment for Darrell Lea: Cadbury Schweppes Pty Ltd v Darrell Lea Chocolate Shops Pty Ltd (No 4) (2006) 229 ALR 136. The Full Court upheld Cadbury's appeal, holding that I had wrongly excluded the evidence of the Cadbury experts but otherwise rejecting Cadbury's substantive grounds of appeal: Cadbury Schweppes Pty Ltd v Darrell Lea Chocolate Shops Pty Ltd (2007) 159 FCR 397. The orders I made, including costs orders, were set aside and the matter was remitted to me for further hearing so that the evidence of the Cadbury experts could be received. 3 After the further hearing Cadbury's application was again dismissed: Cadbury Schweppes Pty Ltd v Darrell Lea Chocolate Shops Pty Ltd (No 8) (2008) 75 IPR 557. Questions of costs remain to be resolved. The parties have filed written submissions, from which it appears that while there is acceptance that, in general, Darrell Lea should get its costs, some issues remain in dispute.

Should Darrell Lea pay Cadbury's costs of the making of submissions on 10 April 2006? 11 Cadbury submitted that Darrell Lea should receive no costs, and should pay Cadbury's costs, in respect of the making of final submissions on 10 April 2006 at the end of the first trial. Cadbury says that these submissions were wasted because they had to be repeated at the second trial. Had it not been for the wrongful exclusion of the evidence of the Cadbury experts, only one set of final submissions would have been made. 12 In the final submissions at the second trial there was necessarily reference by both sides to the whole body of evidence and argument, but this was really by way of background so as to put the evidence of the Cadbury experts in context. 13 Also, the real contest between the parties had been substantially narrowed by the intervening decision of the Full Court. As already noted, the Full Court had rejected Cadbury's appeal grounds other than those connected with the Cadbury experts and a costs issue. Some of those grounds were abandoned and others "pressed only formally at the hearing of the appeal": Cadbury Schweppes Pty Ltd v Darrell Lea Chocolate Shops Pty Ltd (No 3) [2007] FCAFC 119 at [8]. The Full Court ordered that Cadbury pay Darrell Lea's costs of and associated with grounds 1 to 14 (inclusive), 17 and 18 of the amended notice of appeal. 14 Further, while the first trial had been conducted on the mutual assumption that there was no relevant difference between the passing off and Trade Practices Act claims, the Full Court pointed out that this was not necessarily so and that, in particular, in the Trade Practices claims Cadbury did not have to establish an exclusive reputation in relation to the colour purple: 159 FCR 397 at [96]-[99]. 15 The conclusion is that, broadly speaking, while there was a certain amount of overlapping, the submissions at the first trial were not wasted. The submissions at the second trial understandably concentrated on the evidence of the Cadbury experts. 16 Moreover, virtually all the final submissions by Darrell Lea at the first trial were directed to arguments in effect upheld by the Full Court and, indeed, to a large extent ultimately not challenged by Cadbury (since the evidence of the Cadbury experts had already been excluded, it was not the subject of any discussion in those submissions). It would seem unreasonable to deprive the ultimately successful party of the costs of arguments which have been found to be correct. 17 There should be no special order in relation to the final submissions at the first trial.

Darrell Lea's costs of meeting affidavits late filed by Cadbury 18 This matter is discussed by the Full Court: 159 FCR 397 at [115]-[127]. Because there had been substantial default by Cadbury in complying with consent directions for the filing of affidavits I directed that Cadbury pay, on an indemnity basis, Darrell Lea's costs of preparing to meet such evidence. 19 Their Honours held that because there had been no explanation of the failure to apply for an extension of time to vary the timetable, there was no error of principle in my ordering indemnity costs for Darrell Lea's preparation related to Cadbury affidavits rejected on the grounds of lateness: 159 FCR 397 at [125]-[126]. However, their Honours considered there was an error insofar as that order extended to Darrell Lea's costs in respect of its expert Mr John Hall. His evidence, which was in the same field as that of the Cadbury experts, would have been relied on by Darrell Lea had I not rejected the evidence of the Cadbury experts on grounds unrelated to lateness (although their affidavits were a few days late). 20 At the second trial, Darrell Lea decided not call Mr Hall. Nevertheless, costs in relation to the preparation of his evidence should be allowed to Darrell Lea: Clark, Tait & Co v Federal Commissioner of Taxation (1931) 47 CLR 142 at 146. But, consistently with the Full Court's ruling, those costs should not be on an indemnity basis, as Darrell Lea now concedes. 21 As to the issue of other costs in relation to the late filed evidence, I remain of the view, having once again considered the matter, that Cadbury's conduct as discussed in the Full Court's reasons warrants an order for indemnity costs. 22 The net result that is that there should be the same order for indemnity costs as made at the first trial, except in relation to the evidence of Mr Hall.

Submissions on costs 23 Since Darrell Lea has succeeded on the costs issues, it should get the costs of those submissions.

Orders 24 There will be orders accordingly. I believe I have dealt with all remaining issues. In case that is not so, I shall reserve liberty to apply within seven days. I certify that the preceding twenty-four (24) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Heerey.

Associate: Dated: 31 July 2008 Counsel for the Applicant: M D Wyles and S Rebikoff

Solicitors for the Applicant: Mallesons Stephen Jaques

Trade Practices Act 1974(Cth)

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