NASAA Certified Organic Pty Ltd v Ayhan

REASONS FOR JUDGMENT 1 This decision concerns an application for leave to discontinue the proceedings and for costs. The application, which is of a relatively unusual kind, is made in the alternative. 2 The applicant commenced the proceedings on 6 June 2014. There is an issue about the correctness of that date to which I will return shortly. 3 The originating application indicated that the applicant sought a declaration that the respondents had engaged in misleading or deceptive conduct in contravention of s 18 of the Australian Consumer Law contained in Schedule 2 to the Competition and Consumer Act 2010 (Cth). The misleading and deceptive conduct was said to comprise the respondents' claim that the products of their vineyard had been certified as organically grown in accordance with a process administered by the applicant. It seems to be common ground that the respondents' vineyard is not so certified. The business of the respondents had had that certification before it was acquired by them, but the certification had been cancelled and the respondents had no entitlement to use it. 4 In addition to seeking a declaration that the respondents had engaged in misleading or deceptive conduct, the applicant also sought injunctions under s 232 of the Australian Consumer Law. These were restraining injunctions and mandatory injunctions, as well as an order requiring the respondents to publish a public notice acknowledging that they were not entitled to claim the organic certification about which the applicant complained. 5 By correspondence dated 14 May 2014, the applicant's solicitors (Fox Tucker) sought from the respondents written undertakings that they would cease making the claims for organic status, that they would destroy physical copies and delete electronic copies of the document indicating the claimed certified organic status, and that they would return to the applicant any remaining copies of the cancelled certificate in respect of the business prior to its purchase by the respondents. Fox Tucker sought those written undertakings to be provided by 21 May 2014, warning the respondents that, in the event that the undertakings were not provided, proceedings would be commenced. 6 The respondents did not provide the undertakings by 21 May. Before the expiry of that period, the first respondent, Mr Zeno Ayhan, did telephone Mr DeRuvo, the partner at Fox Tucker with principal responsibility for the matter. Mr DeRuvo advised him, appropriately, to obtain legal advice with respect to the applicant's demand but there was no communication with the applicant's solicitors before the expiry of the deadline of 21 May. 7 On and after 23 May, Fox Tucker commenced the preparation of legal proceedings to be filed in this Court. On 28 May, Mr Messenger, a legal practitioner, informed Mr DeRuvo that he had been instructed in relation to the matter and there were subsequent attempts by each of them, unsuccessfully as it turns out, to contact one another. Ultimately, they did speak on 5 June 2014. 8 The precise content of their discussion that day has not been disclosed to the Court, apart from the fact that Mr Messenger requested that Mr DeRuvo provide him with a copy of the letter of 14 May 2014 to the respondents. It is not clear whether Mr Messenger indicated to Mr DeRuvo that the respondents would be providing the requested undertakings. It seems likely that the Court has not been provided with all the evidence on that topic. I say that because the "Date Received" stamp on correspondence indicates that Fox Tucker did receive, on 5 June 2014, signed undertakings from each of the respondents in the terms requested by the applicant on 14 May 2014. There is a question as to whether the proceedings were commenced before Fox Tucker's receipt of the signed undertakings. 9 Mr McCabe, the solicitor with the day-to-day conduct of the matter within the firm of Fox Tucker, has given evidence. I accept his evidence as being honest. Mr McCabe said that he gave instructions to Fox Tucker's Rounds Clerk on 5 June 2014 for the proceedings to be filed in the Court. His evidence in that respect is confirmed by the Administration Instruction Form completed in accordance with the usual practice within the office of Fox Tucker. The same form indicates that the task was completed on 5 June 2014. There is also evidence that the cheque in payment of the filing fee was drawn on 5 June 2014. 10 Nevertheless, the Court's records, and in particular the filing stamp, indicate that the proceedings were filed on 6 June 2014. There seem to be two possible explanations for these circumstances. One, that the proceedings were filed in the ordinary way on 5 June 2014 during the hours in which the Registry was open, but not processed by the Registry until 6 June 2014, with the consequence that the proceedings bear the date 6 June 2014. The second is that the proceedings were lodged at the Court on 5 June 2014 at a time when the Registry had closed for the day and, hence, the actual filing of the documents, in accordance with Rule 2.25 of the Federal Court Rules 2011 (Cth), occurred on 6 June 2014. 11 Rule 2.25 provides: (1) A document is filed if: (a) it is lodged with the Court in accordance with rule 2.21(1); and (b) either: (i) for a document in an existing proceeding -- it is accepted in the proper Registry by being stamped as 'filed'; or (ii) in any other case -- it is accepted in a Registry by being stamped as 'filed'. … As can be seen, a document is regarded as filed in the Court only if it has been accepted in a Registry by being stamped as "filed". 12 It is not necessary, in my view, to make a final determination of when the documents were presented at the Registry, although I think it probable that it occurred after the expiry of the Registry opening hours on 5 June 2014. I say that because it would not be consistent with Registry practice for documents received during the Registry's opening hours to be stamped as filed on a subsequent day. 13 The more critical question is whether the receipt of the signed undertakings had come to the notice of those within Fox Tucker prior to the instruction being given to the administrative staff to attend to the filing of the documents in this Court. Again, the evidence on that topic is not complete. I accept, however, Mr McCabe's evidence that he was not aware of the receipt of the signed undertakings at the time he gave the filing instruction to the Fox Tucker Rounds Clerk. It is possible that the signed undertakings were physically in the Fox Tucker office but had not come to the attention of any solicitor at all or, alternatively, that a solicitor working on the matter was not aware of the content or the significance of the documents. 14 Although the position is not entirely clear, I accept for present purposes that the documents were filed at a time when the relevant solicitors in Fox Tucker were unaware of the signed undertakings having been received. I have addressed this question because the Court's attitude to the applicant's present application may have been different if, as at one time appeared be the case, the applicant had issued proceedings despite its receipt of the respondents' undertakings. 15 The originating application indicated, that in addition to injunctions, the applicant sought other forms of relief, including damages. 16 However, the applicant is not presently seeking any further relief in relation to the proceeding, but it has left open the possibility that it may. It is satisfied that the respondents have carried out the steps required by their undertakings, although it is apparent that there was an exchange of correspondence before the applicant reached that stage of satisfaction on 28 July 2014. 17 The applicant seeks orders in the alternative. The first is an order that it have leave to file a notice of discontinuance, but on the condition that the respondents are jointly liable to pay its costs of the proceedings. Such an order is inappropriate, as was acknowledged by counsel for the applicant. That is because the applicant does not require leave to discontinue the proceedings, as the pleadings have not yet closed (Rule 26.12 of the Federal Court Rules). 18 Rule 26.12 provides: (1) A party claiming relief may discontinue a proceeding in whole or in part by filing a notice of discontinuance, in accordance with Form 48. (2) The party may file the notice of discontinuance: (a) without the leave of the Court or the other party's consent: (i) at any time before the return date fixed in the originating application; or (ii) if the proceeding is continuing on pleadings -- at any time before the pleadings have closed; or (b) with the opposing party's consent -- before judgment has been entered in the proceeding; or (c) with the leave of the Court -- at any time. … (7) Unless the terms of a consent or an order of the Court provide otherwise, a party who files a notice of discontinuance under subrule (2) is liable to pay the costs of each other party to the proceeding in relation to the claim, or part of the claim, that is discontinued. 19 If the applicant chooses to file a notice of discontinuance, it will be open to it to seek an order that the usual liability for costs for which r 26.12(7) provides should not apply in this case. However, until it files a notice of discontinuance, the discretion for which r 26.12(7) provides is not enlivened. Accordingly, I decline to make an order in the terms of the first alternative proposed by the applicant. 20 By its second alternative, the applicant seeks an order that the respondents pay the costs of the application for interlocutory injunctive relief. I should explain that the originating application filed on 6 June 2014 included a claim for interlocutory relief in the form of the restraining orders sought in the substantive proceedings. The applicant has never pursued that application. No doubt that was because of its receipt of the respondents' signed undertakings. 21 The applicant submits that the respondents' conduct in providing the written undertakings and their confirmation that the steps required by those undertakings have been carried out is implicitly an admission of its entitlement to the relief it claimed. That circumstance has rendered it unnecessary for the applicant to pursue the claim for interlocutory relief but, in the circumstances, the applicant contends that it is appropriate that the respondents pay the costs it incurred in progressing the proceedings to the present point. 22 Counsel referred to authority indicating that it is within the Court's discretion to make an order for costs at this stage in relation to an application of this kind. It is sufficient to refer to the judgment of Barrett J in Fiduciary Ltd v Morningstar Research Pty Ltd [2002] NSWSC 432, and to the judgment of Hill J in Australian Securities Commission v Aust-Home Investments Ltd (1993) 116 ALR 523. I accept that the Court has the discretion to which the applicant refers. The question is whether or not that discretion should be exercised in favour of the applicant. 23 There is an unsatisfactory feature of the present application. The applicant has not informed the Court clearly of its intentions with respect to any further pursuit of the proceedings. Counsel has said only that the applicant may seek a transfer of the proceedings to the Federal Circuit Court, but then apparently only for the purpose of discontinuing the proceedings. That means that there is uncertainty as to where the present claim for costs sits in relation to the proceedings as a whole. There is also a sense in which the applicant appears to be bargaining with the Court, that is, by indicating that it will discontinue the proceedings only when it knows the Court's attitude to its claim for costs. 24 Courts generally attempt to avoid creating circumstances in which there may be two or more taxations of costs in the one proceeding. It is the same principle which underlies the general reluctance of Courts to order that the costs of interlocutory proceedings be payable immediately. 25 These are principles of general approach which do not preclude the possibility that an order may be appropriate in a given case. However, the two factors which I have mentioned militate against the making of an order presently. 26 There is also the circumstance that the applicant seeks the costs of the order of $35,000 for an interlocutory application which, although contained in the originating application, has never been pursued. It is apparent that some of the costs which the applicant claims must necessarily be costs which are unrelated to its foreshadowed application for an interlocutory injunction. There have been a number of attendances in the Court, but none of them relating discretely to the interlocutory application. In fact, on the first attendance, the applicant was asked expressly whether it was pursuing the application for an interlocutory injunction and asked to give advance notice if that was its intention. The applicant gave no such advance notice. The intertwining of the costs of the foreshadowed interlocutory injunction with the underlying substantive application underlines the undesirability of the Court creating a circumstance in which separate costs orders will, or may, create later difficulties in a taxation of costs. 27 There may well be a reasonable basis on which to order the respondents to pay some of the applicant's costs, bearing in mind in particular that the applicant did not act on the demand contained in its letter of 14 May 2014 until at least 5 June 2014, thereby giving the respondents plenty of time in which to address their position and to confirm to the applicant the action they would take. However, I express no concluded view about this. For the reasons I have mentioned, I am not satisfied that it is appropriate today to make a discrete order in respect of the application for interlocutory relief contained in the originating application. 28 The applicant should inform the Court of its intentions with respect to the proceedings generally. The Court should know whether the applicant will pursue the proceedings further, and whether application for transfer to the Federal Circuit Court will be made. 29 The orders of the Court are: 1. The oral application of the applicant for the costs of the interlocutory application contained in the originating application filed on 6 June 2014 is refused. 2. The applicant is to pay the respondents' costs, if any, in relation to the attendances in relation to that oral application, including the attendances in Court on 5 and 25 August 2014. 3. I adjourn these proceedings for mention only to 12 noon on Friday, 19 September 2014 on the understanding that the applicant will, by no later than close of business on Tuesday, 16 September 2014, have indicated to the respondents and to the Court the procedural directions, if any, it will ask the Court to make at that time. 4. I grant liberty to the parties to apply. I certify that the preceding twenty-nine (29) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice White.