Nokia Corporation v Cellular Line Australia Pty Ltd

REASONS FOR JUDGMENT 1 This judgment concerns the costs payable by the third respondent to the applicant in these proceedings. 2 In Nokia Corporation v Cellular Line Australia Pty Ltd [2006] FCA 726, delivered on 14 June 2006, the Court held that the first and second respondents had infringed the applicant's trademarks and, as they had failed to establish any arguable defence, the applicant was entitled to summary judgment against them. Further, the third and fourth respondents admitted, in essence, that they had infringed the applicant's trademarks. The Court made orders accordingly. 3 In Nokia Corporation v Cellular Line Australia Pty Ltd (No 2) [2006] FCA 980, delivered on 11 August 2006, the Court ordered that 60% of the applicant's costs be paid by the first and second respondents, 20% be paid by the third respondent, and 20% be paid by the fourth respondent (less 20% of costs referable to the applicant's costs of preparing evidence of sales of counterfeit products after 24 February 2006). 4 At a directions hearing on 15 December 2006, the Court gave the applicant leave to discontinue against the first respondent, on the basis that the applicant's costs be taxed and paid forthwith. Further, the Court ordered, by consent, that the proceeding be discontinued as against the fourth respondent, and that the fourth respondent pay the applicant costs and damages in the amount of $25,000 forthwith. The proceeding remains alive with respect to the second and third respondents. 5 At the 15 December 2006 directions hearing, the applicant agreed that the proceedings should be discontinued against the third respondent, subject to the resolution of the question of costs. I stated that, in the circumstances, my preferred course was to fix these costs, a course to which the applicant and the third respondent acceded. 6 The third respondent is apparently a person of limited means and education. He has family responsibilities. At the 15 December 2006 directions hearing, he claimed to have suffered some misfortune. Whilst noting these matters, he did not make any specific submissions on costs. The applicant, on that occasion, relied on an affidavit sworn by its solicitor on 23 June 2006 and on oral submissions. Further, on 18 December 2006, with leave, the applicant provided the Court with a short statement of its costs. In this statement, the applicant submitted that the amount of $8,250 was an appropriate quantification of its costs in relation to the third respondent. This figure represented 50% of the applicant's out-of-pocket expenses. 7 By early in 2007, the third respondent had made no written submission in response. My chambers wrote to him on 28 February 2007 informing him that he had an opportunity to make further submissions on the question of costs but, if he did not do so, judgment would be delivered today. 8 Yesterday, my associate telephoned the third respondent, who stated he had received the letter of 28 February 2007 and would attend Court today. The third respondent appeared today and, with the assistance of an interpreter, drew attention to the following matters. First, he is presently in receipt of Centrelink payments. Secondly, his business is not doing well, and he is about to close his shop. He reiterated that he had family responsibilities and that he had already incurred costs in other litigation. 9 The third respondent submitted, in effect, that I should discount the figure of $8,250 proposed by the applicant by a further 50% and that I should make provision for the payment of that sum by way of instalments. The applicant's legal representative indicated in Court that the applicant would be prepared to negotiate some accommodation with respect to the payment of costs by the third respondent. I shall reserve liberty to apply within a month of today in the event that these negotiations prove unsuccessful. 10 Where the Court orders costs to be paid, O 62 r 4(2)(c) of the Federal Court Rules enables the Court to specify a gross sum instead of taxed costs: see also s 43 of the Federal Court of Australia Act 1976 (Cth). I consider it appropriate to fix costs because of the patent undesirability of continuing the litigation between the applicant and the third respondent. The Court may make an order fixing costs, even though earlier costs orders in the proceeding contemplated taxation in the ordinary way: see Beach Petroleum NL v Johnson (No 2) (1995) 57 FCR 119 at 120 per von Doussa J ('Beach Petroleum'). 11 Naturally enough, the Court's discretion to fix costs must be exercised judicially and by reference to principle. In setting a gross fee, the Court must be "confident that the approach taken to estimate costs is logical, fair and reasonable": see Beach Petroleum at 123. As Von Doussa J said in Beach Petroleum at 123: "On the one hand the Court must be astute to prevent prejudice to the respondents by overestimating the costs, and on the other hand must be astute not to cause an injustice to the successful party by an arbitrary 'fail safe' discount on the costs estimates submitted to the Court…" His Honour held, at 124, that the starting point for fixing costs must be the charges rendered by the applicant's solicitors, although in a complex bill there are likely to be items taxed off and there may well be occasions in which a judge will make a discount. For example, in Canvas Graphics Pty Ltd v Kodak (Australasia) Pty Ltd [1998] FCA 23, O'Loughlin J held that the sum of costs fixed should be proportionate to the nature, including the complexity, of the case; and, that in a case involving a relatively simple cause of action, it was necessary to keep a firm control on costs, which should not be permitted "to explode". 12 I have no doubt that the applicant sought to have regard to matters of this kind when it put forward the figure of $8,250. It should also be borne in mind that the financial inability of an unsuccessful party to meet costs is generally not a sufficient reason to deprive a successful part of a costs award: see Selliah v Minister for Immigration and Multicultural and Indigenous Affairs [1998] FCA 469 and MZXEF v Minister for Immigration and Multicultural Affairs [2006] FCA 709. 13 It follows then that the matters to which the third respondent has referred today are not a sufficient reason to deprive the applicant of a costs award estimated on a logical, fair and reasonable basis. For the reasons I am about to state, however, I would nonetheless discount the figure given by the applicant a little. It must be borne in mind that, as between the applicant and the third respondent, the case was very straightforward. The third respondent essentially admitted his infringing conduct, which was very limited in point of time, value and quantity. The third respondent has, moreover, been substantially compliant with the Court's processes. Costs should be tightly controlled in litigation such as this. Further, as the applicant noted, whilst there is a need to allocate costs amongst the various respondents, the allocation is not without difficulty. Some items in the applicant's estimate may have been taxed off. In all the circumstances, I would fix the applicant's costs in relation to the third respondent at $6,000. 14 The orders I would make, therefore, are: