Costs
21 Section 43(2) of the Federal Court of Australia Act 1976 (Cth) confers upon the Court a wide discretion in relation to the awarding of costs. The discretion must be exercised judicially: Ruddock v Vadarlis (No 2) (2001) 115 FCR 229 at [9] (Black CJ and French J).
22 The respondents seek an apportionment of costs on the basis that they were successful on a range of issues. Considerations relevant to the exercise of the Court's discretion where an apportionment of costs is sought, include the following:
Ordinarily, costs follow the event and a successful litigant receives its costs in the absence of special circumstances justifying some other order.
Where a litigant has succeeded only upon a portion of its claim, the circumstances may make it reasonable that the litigant bear the expense of litigating that portion upon which the litigant has failed.
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. In this sense, "issue" does not mean a precise issue in the technical pleadings sense but any disputed question of fact or of law.
Care needs to be exercised in relation to an apportionment so that parties are not dissuaded by the risks of costs from canvassing all issues which might be material to the decision in the case.
Whilst the discretion to apportion costs and deny a successful party all of its costs, should usually be exercised where exceptional circumstances exist, the Court should not be reluctant to recognise the existence of exceptional cases. Community demands for greater economy and efficiency in the conduct of litigation are served by encouraging parties to realise that they will not necessarily recover the whole of their costs where they have unsuccessfully raised discreet issues.
Where there is a mixed outcome in proceedings, the question of apportionment ought not be approached in a mathematically precise manner and will often depend upon matters of impression and evaluation.
See Hughes v Western Australian Cricket Association (Inc) (1986) 8 ATPR 40-748 at 48,136 (Toohey J); Dodds Family Investments Pty Ltd (formerly Solar Tint Pty Ltd) v Lane Industries Pty Ltd (1993) 26 IPR 261 at 271-272 (Gummow, French and Hill JJ); Cadbury Schweppes Pty Ltd v Darrell Lea Chocolate Shops Pty Ltd (No 3) [2007] FCAFC 119 at [11] (Black CJ, Emmett and Middleton JJ).
23 The respondents sought an apportionment of costs and contended that REA should not recover as against the Real Estate 1 respondents more than 30 per cent of its costs. The basis upon which the respondents contend for an order in those terms may be summarised as follows:
REA pursued three causes of action against the respondents - misleading and deceptive conduct, passing off and trade mark infringement. The first two causes were pursued together but were separate and distinct from the third. The respondents were entirely successful in resisting the claims of misleading and deceptive conduct and passing off. The individual respondents were entirely successful in resisting the claim of accessorial liability. The only aspect on which REA succeeded was its case of trade mark infringement.
The respondents should not pay REA's costs in relation to the misleading and deceptive conduct and passing off claims. Those causes of action were substantial and occupied most of the hearing including most of the oral and written submissions. By way of illustration, only 10 of 68 paragraphs in the respondents' written submissions addressed trade mark infringement and 27 of 99 paragraphs of REA's written submissions addressed trade mark infringement.
24 The respondents informed the Court that whilst the individual respondents were successful, they do not seek a separate costs order in their favour. Rather, they seek that the Court take into account REA's liability for costs to the individual respondents in accepting the position on apportionment contended for by Real Estate 1.
25 REA contended that the Court should decline to apportion costs in favour of the respondents and sought an order that the "respondents" (by which I assume REA meant the corporate respondents) pay REA's costs of the proceeding on a party/party basis. REA's contentions in support of its position may be summarised as follows:
Any consideration of the appropriate order as to costs must begin with the ultimate result. In this case REA achieved the ultimate result that it sought being the restraint imposed on the use of the impugned brand and domain names.
The pursuit by REA of its claims based on misleading or deceptive conduct and passing off did not involve issues wholly separate and distinct from the trade marks claim and their pursuance did not involve any unreasonable or inappropriate conduct on the part of REA as:
all claims related to the same conduct of the respondents, namely the use of the names "realestate1.com.au" and "realcommercial1.com.au" as brand and domain names;
there was considerable overlap in the evidence adduced in relation to each claim and in particular the evidence of widespread consumer recognition of the name "realestate.com.au";
although the claims were separately addressed in written and oral submissions it cannot be said that a considerable part of the trial was taken up with separate and distinct issues on which REA failed; and
it cannot be said that it was unreasonable or inappropriate for REA to make claims of misleading or deceptive conduct and passing off, in circumstances where REA had established "secondary meaning" in the name "realestate.com.au" and the Court accepted that there was a real danger of confusion on the part of consumers.
Insofar as there were any additional costs incurred in relation to the misleading or deceptive conduct and passing off claims, the Court should take into account additional costs incurred by reason of the respondents' unreasonable failure to make admissions about non-controversial facts.
In contrast to that conduct, REA acted reasonably throughout the proceeding including by seeking to settle the proceeding by making an offer before trial to accept relief in substantially the same terms as has been achieved through the litigation.
26 In my view, the mixed outcome of the proceeding does warrant a discount of the costs that REA may otherwise have been entitled to from Real Estate 1. Whilst, as against Real Estate 1, REA is the successful litigant and has essentially achieved the outcome it sought from the proceeding, there are circumstances that make it reasonable that REA bear the expense of litigating those parts of the litigation upon which it failed.
27 There was nothing unreasonable in REA pursuing its claims for misleading or deceptive conduct and passing off. I accept that all of the claims brought by REA against Real Estate 1 related to what was essentially the same conduct and that there was considerable overlap in the evidence adduced in relation to those claims. Nevertheless, a considerable part of the trial, the affidavit evidence and written submissions was taken up by issues germane to claims on which REA failed and which were of no or little significance to the trade mark case in which REA succeeded.
28 My earlier reasons for judgment at [227] made the observation (by reference to the authorities there referred to) that the threshold for trade mark infringement is lower than that required to establish misleading or deceptive conduct and that the wider inquiry, of the kind that might be undertaken in a passing off case or where misleading or deceptive conduct is alleged, is not appropriate. Those observations not only reflect the law but are also reflective of the way in which the proceeding was, not unexpectedly, conducted.
29 Whilst much of the evidence and the submissions made were relevant to all three claims, the inquiry required to determine the misleading or deceptive conduct and passing off claims was wider. The wider inquiry addressed matters such as the particular internet context in which the impugned names were used by Real Estate 1 and which were said to be misleading or deceptive and the extent and significance of any such deception. Additionally, a large amount of evidence, submissions and court time was taken up by REA's failed attempt to establish that some 12,000 consumers had actually been misled or deceived. Evidence, submissions and court time was also taken up by issues peculiar to REA's failed claim that the individual respondents were accessories.
30 In my view those matters, when combined with the preparedness of the individual respondents to forego an order for costs in their favour, justifies an apportionment of costs and an order that Real Estate 1 pay 70 per cent of REA's costs of the proceeding.
31 As indicated, REA asserted that the respondents acted unreasonably and thereby increased the costs of the proceeding. I have considered that issue including the two affidavits relied upon by REA to support its submission.
32 I accept that this was a case which largely involved uncontroversial facts. It was clearly a case in which a statement of agreed facts was both appropriate and sensible. REA prepared a draft list of agreed facts following an indication from the respondents that much of the factual issues in the case were unlikely to be disputed. Subsequently, the respondents changed their position. I accept that there was a degree of unreasonableness involved. Nevertheless, the work done by REA to prepare the draft list of agreed facts was not wasted. The draft list was converted into a Notice to Admit. A Notice of Dispute filed by the respondents admitted a large number of the facts sought to be agreed but disputed others. Most of the disputed facts related to what has been described as "the disputed statistics" dealing with REA's website traffic statistics, agents' subscriptions and property listing numbers and details of the number of subscribers to REA's email alerts. Other facts were also disputed including facts relevant to Real Estate 1's business. I am satisfied that many of the facts disputed should have been admitted. I accept also that some costs were incurred by REA in proving the disputed facts and in particular the disputed statistics. A solicitor for REA has deposed that the solicitor/client costs associated with proving the truth of the disputed statistics was between $55,000 and $70,000.
33 My assessment of the appropriate percentage of REA's costs which Real Estate 1 should be ordered to pay, takes into account my view that the lion's share of the unnecessary costs actually incurred by REA, by reason of the respondents' failure to reasonably make admissions, should be paid by Real Estate 1.
34 For those reasons, I consider that the appropriate order is that Real Estate 1 pay 70 per cent of REA's costs of the proceeding. I will also make the other orders earlier identified.
I certify that the preceding thirty-four (34) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Bromberg.