Taxiprop Pty Ltd v Neutron Holdings Inc

1. The applicant/cross-respondent pay 90% of the respondents/cross-claimants' costs of the proceeding up to 18 December 2020.
2. The costs referred to in Order 1 be awarded in a lump sum pursuant to r 40.02(b) of the Federal Court Rules 2011 (Cth).
3. Within 14 days, the parties file any agreed proposed minute of orders fixing a lump sum in relation to the respondents/cross-claimants' costs.
4. In the absence of any agreement: (a) within 28 days, the respondents/cross-claimants file and serve an affidavit constituting a Costs Summary in accordance with paragraphs 4.10 to 4.12 of the court's Costs Practice Note (GPN-COSTS); (b) within a further 14 days, the applicant/cross-respondent file and serve any Costs Response in accordance with paragraphs 4.13 to 4.14 of the Costs Practice Note (GPN-COSTS); and (c) in the absence of any agreement having been reached within a further 14 days, the matter of an appropriate lump sum figure for the respondents/cross-claimants' costs be referred to a Registrar for determination. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

O'CALLAGHAN J: 1 These reasons deal with the question of costs following the orders made in Taxiprop Pty Ltd v Neutron Holdings Inc [2020] FCA 1565; 156 IPR 1 and Taxiprop Pty Ltd v Neutron Holdings Inc (No 2) [2020] FCA 1822. 2 The parties differ about the appropriate form of costs orders, and agree that I should determine the matter on the papers. 3 These reasons assume familiarity with my earlier reasons, and I adopt the same abbreviations there used. 4 Neutron seeks the following orders: (1) The applicant/cross-respondent (Taxiprop) pay the respondents/cross-claimants' (Neutron's) costs of the proceeding up to 18 December 2020. (2) The costs referred to in Order 1 be awarded in a lump sum pursuant to r 40.02(b) of the Federal Court Rules 2011 (Cth). (3) The quantification of the costs awarded under Order 1, and the making of further orders and directions in connection therewith, be referred to a Registrar of the court for determination. 5 Taxiprop, on the other hand, submits that the costs of the claim and cross-claims should be dealt with separately, and, among other orders, seeks the following: (1) The applicant (Taxiprop) pay 75% of the respondents' (Neutron's) costs of the claim. (2) The cross-claimants (Neutron) pay 75% of the cross-respondent's (Taxiprop's) costs of the cross-claims. 6 The court's discretionary power to award costs under s 43 of the Federal Court of Australia Act 1976 (Cth) is broad and unfettered. It is to be exercised judicially, and in accordance with well-established principles. Those principles were not in dispute. 7 Ordinarily, the discretion will be exercised so that costs are awarded to the successful party, but other factors may have a significant claim. Where there are competing considerations, the disposition of the issue "will reflect a broad evaluative judgment of what justice requires". Gray v Richards (No 2) [2014] HCA 47; 89 ALJR 113 at 114 [2] (French CJ, Hayne, Bell, Gageler and Keane JJ). 8 The relevant principles were further summarised by the Full Court (Emmett, Jagot and Nicholas JJ) in EMI Songs Australia Pty Ltd v Larrikin Music Publishing Pty Ltd [2011] FCAFC 92 at [9]: 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. 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. If apportionment of costs is appropriate, the object is not mathematical precision but a result that best reflects the interests of justice in the overall circumstances of the case. (Citations and internal quotations omitted.) 9 And as Nicholas J recently said in Hood v Bush Pharmacy Pty Ltd (No 2) [2021] FCA 138 at [10]: Section 43(3)(c) of the [Federal Court of Australia Act 1976 (Cth)] makes clear that the Court may, in its discretion, order the parties to bear costs in specified proportions. Orders in that form are often made with a view to avoiding an overly complicated taxation of costs which may give rise to further costs that may be unnecessary or disproportionate to the amount in issue in the proceeding. As the Full Court made clear in EMI, the object of such an order is not to apportion costs with mathematical precision but to arrive at an outcome that best reflects the interests of justice. In determining what proportion of one party's costs another party should bear, it will usually be necessary for the Court to make a broad assessment of the time and effort spent by the parties litigating different issues. 10 Neutron submits that "[o]n any practical, commercial view, [it] … succeeded in the present litigation", because it defended an attempt by Taxiprop to enjoin it from continuing to operate its Lime electric bicycle and scooter business. 11 Neutron says that "[t]he most that Taxiprop achieved in this litigation was a declaration, granted 'reluctantly' by the Court, that Neutron infringed [Taxiprop's] LIME trade mark while it was registered in respect of 'transport services' up to 1 December 2020". 12 Neutron submits that this reluctantly granted declaration amounted to nothing in commercial terms. That is because, on 25 January 2021, not long after the court's second judgment of 18 December 2020, Taxiprop accepted Neutron's offer (under r 25.01 of the Federal Court Rules 2011 (Cth)) to compromise its damages claim for $1,000, and to have its remaining claims relating to issues of quantum dismissed with no order as to costs. 13 Neutron thus says that it is "the victor of the proceeding as a whole up to the Court's second judgment on 18 December 2020". 14 Taxiprop submits that the claim and cross-claims should be considered separate events for the purposes of assigning liability for costs. 15 In respect of the cross-claims, Taxiprop says that it has successfully retained the Taxiprop mark for taxi services, which are its primary business. As a matter of principle and fairness, Taxiprop says that "it follows that [it] should have a portion of the costs of the cross-claims. If the proceedings had not been commenced or fought, Taxiprop faced the prospect of losing its trade mark registration altogether and Neutron would not have had to limit its trade mark application for LIME in respect of various goods and services that conflict with taxi services". Taxiprop accepts that it failed to retain its LIME mark for services other than taxi services. It says that Neutron should thus pay 75% of its costs of the cross-claims. 16 In arriving at that figure, Taxiprop also relies on the fact that, in relation to the first cross-claim, Neutron abandoned the non-use application in respect of taxi services for the period 21 August 2015 to 21 August 2018 (the first non-use application), but only after receiving Taxiprop's written closing submissions at trial. It points out that "[h]ad Neutron obtained leave to discontinue the first non-use claim in respect of taxi services and amend its pleadings to withdraw the allegation that there had not been any authorised good faith use of the Taxiprop mark in respect of taxi services, it ordinarily would have been ordered to pay Taxiprop's costs thrown away by reason of such a discontinuance and amendment. It follows that Taxiprop should ordinarily be awarded its costs of opposing the first non-use application in respect of taxi services, in circumstances where that claim was abandoned". 17 As to the claim, Taxiprop submits: Of course, the respondents have also enjoyed success in the proceedings by defending the claim for injunctive relief in respect of their micro-mobility business. While Taxiprop partially succeeded on its claim by obtaining a declaration of infringement against the respondents for their conduct up to 1 December 2020, Taxiprop does not contend that costs should follow the event of that success, but instead should be reflected by a reduction in the respondents' costs [of 25%] in respect of liability on the originating application. 18 Taxiprop's submissions on costs are, with respect, overly ambitious and paint an unrealistic picture of the practical, legal and commercial effect of the outcome of the proceeding as a whole. Taxiprop's mark was pared back to taxi services only; it failed to establish its claims for misleading or deceptive conduct and passing off; it failed to establish a discretionary basis under s 101 of the Trade Marks Act 1995 (Cth) to retain its registration for any services other than taxi services; and it failed to establish infringement under s 120(2), because its contention that Neutron's services and goods are of the same description as, or closely related to, taxi services was rejected. And it obtained a declaration (but no injunction) of trade mark infringement pursuant to s 120(1), the rights in respect of which, in the events that occurred, it agreed to compromise for $1,000. 19 In my view, it is appropriate to make a single order dealing with the claim and the cross-claims, principally because of the degree of overlap between them. 20 In my view, this is also an appropriate case to make a lump sum costs order. See the Costs Practice Note (GPN-COSTS) issued by the court on 25 October 2016 at [3.3], [4.1]. As the Full Court said in Paciocco v Australia and New Zealand Banking Group Ltd (No 2) (2017) 253 FCR 403 at 407 [20] (Allsop CJ, Besanko and Middleton JJ): Particular circumstances that may make a lump sum order especially appropriate include where in a large and complex commercial matter it would save the time, trouble, expense and aggravation of a taxation; where a taxation would require the parties to consume additional time and incur additional expenditure prolonging already protracted litigation; and generally to avoid an ongoing, counter-productive dispute as to costs, in the interests of achieving finality. 21 As Neutron points out, Taxiprop relied on its evidence in respect of the first non-use period not only to defend the abandoned first non-use application, but also to support aspects of its primary claim (among other things). It is precisely to avoid what I suspect would, given the overlap of issues, be an aggravating and expensive taxation of Taxiprop's costs thrown away by reason of the abandonment, and the separate costs arising out of its success in maintaining the mark for taxi services, that I favour making a lump sum order in Neutron's favour, but reduced to recognise those costs. 22 Taxiprop's best points are that: (i) it should have its costs thrown away by virtue of Neutron's abandonment in closing of its first non-use application, about which much ink was spilt (see Taxiprop Pty Ltd v Neutron Holdings Inc [2020] FCA 1565; 156 IPR 1 at 9 [43]-[44]), and (ii) it kept the mark for taxi services in the face of Neutron's case that it should lose the mark altogether. In all the circumstances, recognising the force of those two points, and acknowledging that there is no mathematical precision involved, I think that the fairest order to be made is that the applicant/cross-respondent (Taxiprop) pay 90% of the respondents/cross-claimants' (Neutron's) costs of the proceeding up to 18 December 2020. 23 I will also order that those costs be awarded in a lump sum pursuant to r 40.02(b) of the Federal Court Rules 2011 (Cth), and that, in the absence of agreement, the quantification of those costs be referred to a Registrar for determination. I certify that the preceding twenty-three (23) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice O'Callaghan.