PKT Technologies Pty Ltd (formerly known as Fairlight.Au Pty Ltd) v Peter Vogel Instruments Pty Ltd

1. The applicant/first cross-respondent pay to the first respondent/cross-claimant the amount of $148,328 in interest awarded pursuant to s 51A of the Federal Court of Australia of Act 1976 (Cth).
2. Each party pay its or his own costs of this proceeding (excluding the costs of the appeal from the orders of Edmonds J made on 17 December 2015). Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

NICHOLAS J: 1 The background to this proceeding set out in my reasons for judgment published on 23 October 2018 (PKT Technologies Pty Ltd (formerly known as Fairlight.Au Pty Ltd) v Peter Vogel Instruments Pty Ltd [2018] FCA 1587). 2 There are two issues that remain to be determined. The first concerns the question of the parties' claims for pre-judgment interest pursuant to s 51A of the Federal Court of Australia of Act 1976 (Cth) ("the Act"). The second concerns the costs of the proceeding generally excluding the costs of the appeal from the judgment of Edmonds J. 3 The matter of interest can be dealt with briefly. The applicant ("PKT") accepts that the first respondent ("PVI") is entitled to interest at the prescribed rates from 1 June 2012 to 23 October 2018. PKT calculates such interest to be $153,261. Leaving aside some minor rounding differences, I agree with this calculation. 4 As to PKT's entitlement to interest on the amount that I held that was it entitled to by way of an account of profits, PKT calculates such interest to be $4,933.50. Again, subject to some minor rounding issues, I agree with that calculation. 5 In the circumstances, I think the most sensible course is for me to set off the amounts of $153,261 and $4,933 and make an order requiring PKT to pay to PVI $148,328 in respect of interest which I award pursuant to s 51A of the Act. 6 That brings me to the matter of costs. 7 The relevant principles are not in dispute. They were summarised succinctly by the Full Court in EMI Songs Australia Pty Limited v Larrikin Music Publishing Pty Ltd [2011] FCAFC 92 as follows at [9]: Costs are in the discretion of the Court (Federal Court of Australia Act 1976 (Cth) s 43). 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. The furtherance of the goal of compensation means that, in general, a successful party will obtain an order for costs in its favour (Oshlack v Richmond River Council (1998) 193 CLR 72; [1998] HCA 11 at [65]-[68]). 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 as well to pay the other party's costs of them…" (Hughes v Western Australian Cricket Association (Inc) (1986) ATPR 40-748 at 48,136). If apportionment of costs is appropriate, the object is not mathematical precision (Dodds Family Investments Pty Ltd (formerly Solar Tint Pty Ltd) v Lane Industries Pty Ltd (1993) 26 IPR 261 at 272) but a result that best reflects the interests of justice in the overall circumstances of the case. 8 PKT submitted that because PVI was not legally represented in the proceeding (including at the hearing before Edmonds J and the remittal hearing before myself) PVI is not entitled to any costs. As to its costs, PKT submitted that there should be an order for costs in these terms: PVI is to pay PKT's costs of and incidental to the proceedings, to the extent those costs relate to PVI's misuse of PKT's trademark, including the costs of and incidental to the remittal hearing, but excluding the costs of the appeal from Edmonds J's orders of 17 December 2015, on a party / party basis as agreed or taxed. 9 As to PKT's claim to costs, I do not think it would be practical or just to make a costs order in the form PKT seeks. In particular, the trade mark issues and the contractual issues that had to be determined in this proceeding were inextricably intertwined. That is not to say that PKT may not be entitled to some costs in respect of its trade mark case, only that there may be more appropriate ways of making an allowance for those costs. I say that in circumstances where both PKT and PVI have enjoyed some success. 10 In that respect I am mindful that although PKT obtained only a modest monetary award in respect of its trade mark claim, it did obtain injunctive relief (in the form granted by the Full Court) following the appeal against the judgment of Edmonds J. But I am also mindful that although a considerable amount of time was devoted to the quantum of the monetary relief sought by PKT, the amount ultimately awarded to it was a small fraction of what it sought. 11 The second cross-respondent ("KFT"), which is a related company that controls PKT, submitted that it should be awarded its costs on the basis that PVI did not obtain any relief against it and should never have been joined. The submission made on behalf of KFT did not indicate what its actual costs were or, in particular, whether any additional costs were incurred that would not otherwise be recoverable by PKT in the event that it is held entitled to its costs. KFT was not separately represented at any stage of the proceeding. Further, my impression based upon my reading of Edmond J's judgment and those parts of the transcript that were before me at the remittal hearing, is that KFT's involvement in the proceeding was minor. 12 PVI submitted that it should be awarded indemnity costs for which both PKT and KFT should be made jointly and severally liable. I will return to the position of KFT shortly but will first deal with PVI's claim for indemnity costs. I propose to deal with this submission on the assumption that PVI will have incurred some professional costs and expenses which it would be entitled to recover even though it was not legally represented. 13 An affidavit made by Mr Vogel in support of PVI's application for costs attaches copies of two Calderbank offers made by PVI to PKT, the first on 12 November 2012, and the second on 16 April 2013. The first offered: 1. Fairlight.au to pay Peter Vogel Instruments $300,000.00 2. Mutual release and discontinue all proceedings 3. Peter Vogel Instruments' rights under clause 19 abandoned 4. Fairlight.au released of any obligation to complete software or supply hardware 5. Fairlight.au grants Peter Vogel Instruments licence to use the Fairlight name and logo on a further eighty CMI-30As. 6. This offer remains open until 5pm 30th November 2012. 14 The second offer made on 16 April 2013 was essentially the same as the first except that it also sought payment of an additional amount calculated at the rate of $1,000 per day from 17 April 2013 to the date of payment. 15 In circumstances where PVI has obtained judgment for $383,956 (excluding interest) PVI's first offer was eminently reasonable. Nevertheless, given the complexity of the contractual issues in the case, I am not satisfied that PKT acted unreasonably in not accepting either the first or second offers: see Anchorage Capital Partners Pty Limited v ACPA Pty Ltd (No 2) [2018] FCAFC 112 at [5]-[7]. On that basis I do not think this is an appropriate case in which to make an order for indemnity costs even if I was satisfied that PVI had incurred costs and expenses that would be recoverable if a costs order was made in the usual form. 16 In his supporting affidavit and written submissions filed on behalf of PVI, Mr Vogel asserted that PVI had incurred costs in the amount of $94,924.91 (excluding the costs of the appeal) and that there should be a lump sum award in respect of those costs. Mr Vogel's supporting affidavit does not contain any particulars of those costs. 17 It may well be that PVI has incurred some professional costs and expenses which it may be entitled to recover in the event that an award of costs was made in its favour: see Cachia v Hanes (1994) 179 CLR 403 at 409, Von Reisner v Commonwealth (No 2) (2009) 262 ALR 430 at [23]-[24]. However, given that PVI was not represented in this proceeding by either counsel or solicitors, I am not satisfied that these would be as substantial as Mr Vogel asserted. 18 Both parties enjoyed a measure of success at the trial before Edmonds J when regard is had to the orders made by the Full Court. In particular, PKT obtained the injunctive relief it sought, while PVI established that PKT had repudiated the contract and infringed PVI's copyright. At the hearing before me, both parties established an entitlement to monetary relief but only for a small portion of the amount that each of them claimed. However, the amount awarded to PKT was only a small fraction of what was awarded to PVI. 19 In all the circumstances, it seems to me that the interests of justice will be best served in this case by ordering that there be no order as to the costs of the proceeding (excluding the costs of the appeal from the orders of Edmonds J made on 17 December 2015). 20 There is one further matter I should mention. 21 In his written submissions, Mr Vogel contended that orders should be made declaring that PKT and KFT are jointly and severally liable for that portion of the damages I awarded to PVI for infringement of its copyright. There are a number of reasons why it is not open to me to make this order. 22 First, the declaration granted by the Full Court in relation to copyright infringement was that PKT had, by the sale of two copies of the Dream II program to third parties after April 2002, infringed PVI's copyright. The Full Court did not find that KFT infringed PKT's copyright nor is it apparent that any such finding was sought by PVI. Secondly, what was remitted to me under the orders made by the Full Court was (relevantly) the assessment of any damages to be awarded to PVI for PKT's copyright infringement. 23 It was therefore not open to PVI to re-litigate the copyright case against KFT at the remittal hearing. At no stage until Mr Vogel's written submissions were filed in relation to questions of interest and costs did he ever suggest that he was seeking orders from me against KFT in respect of copyright infringement. It is much too late for PKT to seek such orders now. 24 There will be orders accordingly. I certify that the preceding twenty-four (24) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Nicholas.