Cadbury Schweppes Pty Ltd v Darrell Lea Chocolate Shops Pty Ltd (No 3) [2007] FCAFC 119 (28 August 2007)

Cadbury Schweppes Pty Ltd v Darrell Lea Chocolate Shops Pty Ltd (No 3) [2007] FCAFC 119

COSTS – costs of appeal where successful party abandoned a number of grounds of appeal prior to the hearing – where successful party was unsuccessful on substantive issues of appeal – where circumstances justify apportionment of costs between the parties according to their success or failure on separate issues

COSTS – costs of the motion on notice seeking variation of orders – where motion was unsuccessful – no circumstance existed to justify departure from the ordinary principle that costs follow the event

Federal Court of Australia Act 1976 (Cth), s 43

Dodds Family Investments Pty Ltd (formerly Solar Tint Pty Ltd) v Lane Industries Pty Ltd (1993) 26 IPR 261 cited

CADBURY SCHWEPPES PTY LTD (ACN 004 551 473) v DARRELL LEA CHOCOLATE SHOPS PTY LTD (ACN 000 498 386)
VID 774 OF 2006

BLACK CJ, EMMETT & MIDDLETON JJ
28 AUGUST 2007
MELBOURNE

IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY	VID 774 OF 2006

ON APPEAL FROM A SINGLE JUDGE OF THE FEDERAL COURT OF AUSTRALIA

BETWEEN:	CADBURY SCHWEPPES PTY LTD (ACN 004 551 473) Appellant
AND:	DARRELL LEA CHOCOLATE SHOPS PTY LTD (ACN 000 498 386) Respondent

JUDGES:	BLACK CJ, EMMETT & MIDDLETON JJ
DATE OF ORDER:	28 AUGUST 2007
WHERE MADE:	MELBOURNE

Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY	VID 774 OF 2006

ON APPEAL FROM A SINGLE JUDGE OF THE FEDERAL COURT OF AUSTRALIA

BETWEEN:	CADBURY SCHWEPPES PTY LTD (ACN 004 551 473) Appellant
AND:	DARRELL LEA CHOCOLATE SHOPS PTY LTD (ACN 000 498 386) Respondent

JUDGES:	BLACK CJ, EMMETT & MIDDLETON JJ
DATE:	28 AUGUST 2007
PLACE:	MELBOURNE

1 Cadbury brought a proceeding in the Court in which it claimed that the use by Darrell Lea of a shade of purple in connection with its chocolate confectionary business may cause consumers to conclude, mistakenly, that Darrell Lea products are Cadbury products or that there is some connection between the respective chocolate confectionary businesses of Darrell Lea and Cadbury. A judge of the Court made orders that Cadbury’s proceeding be dismissed with costs: see Cadbury Schweppes Pty Ltd v Darrell Lea Chocolate Shops Pty Ltd (No 4) [2006] FCA 446. On 21 May 2007, the Full Court upheld an appeal from those orders and set them aside on the ground that certain expert evidence that Cadbury sought to lead had been wrongly excluded: see Cadbury Schweppes Pty Ltd v Darrell Lea Chocolate Shops Pty Ltd [2007] FCAFC 70. The Full Court ordered that the matter be remitted to the primary judge for further hearing.

2 By notice of motion dated 5 June 2007, Cadbury moved the Court for an order that the order made on 21 May 2007, remitting the matter to the trial judge for further hearing, be varied to provide that the matter be remitted to the trial judge for a new trial. The Full Court declined to make the order sought: see Cadbury Schweppes Pty Ltd v Darrell Lea Chocolate Shops Pty Ltd (No 2) [2007] FCAFC 102.

3 Orders were made that the parties to the appeal file written submissions as to the costs of the appeal and the costs of Cadbury’s motion on notice dated 5 June 2007.

4 It was submitted by Cadbury that it had succeeded in the appeal and that it was therefore entitled to its costs. Darrell Lea submitted that the costs of the appeal should be reserved for the consideration of the trial judge. In the alternative, it contended that if the Full Court were to determine this issue, then there should be no order as to the costs of the appeal. It said further that if there were an order for costs, it should be that Cadbury pay Darrell Lea’s costs thrown away by reason of the late abandonment of certain appeal grounds, and Darrell Lea’s costs of the appeal grounds where Cadbury was unsuccessful. Darrell Lea accepted that it should pay Cadbury’s costs in relation to the expert evidence grounds of appeal but it also contended that there should be no order permitting the taxation of costs (and requiring payment) until the conclusion of the trial.

5 In support of its submissions Darrell Lea sought to tender an affidavit of Anthony Brooke Watson sworn 5 June 2007 deposing to the abandonment of certain grounds of appeal, to amendments to Cadbury’s notice of appeal, and to certain costs incurred in the preparation of the appeal.

6 The primary position of Cadbury was that it objected to the tender of the affidavit of Mr Watson. However, an affidavit of Natalie Jean Hickey of 10 July 2007 was filed and served on behalf of Cadbury in response to the affidavit of Mr Watson. There was some disagreement between the parties as to the costs incurred as detailed by Mr Watson.

7 As we have come to the view that it is not appropriate that we determine what costs may have been thrown away by reason of amendments made to the notice of appeal, or the costs associated with the abandonment or loss of certain grounds of the appeal, we place no reliance on the affidavit material sought to be tendered by either party.

8 Without recourse to the evidence sought to be relied upon, it is apparent that the following relevant events occurred prior to and at the hearing. On or about 3 January 2007, Cadbury sought the leave of the Court to amend its notice of appeal dated 14 July 2006. The amended notice of appeal, dated 3 January 2007, was provided to the Court. The Full Court was informed that Darrell Lea had confirmed that it had no objection to Cadbury relying on the amended notice of appeal and that Cadbury had agreed to pay Darrell Lea’s costs thrown away by reason of the amendments made. The Court granted leave to Cadbury to amend the notice of appeal. At the hearing of the appeal, some grounds of the amended notice of appeal were abandoned by Cadbury, namely, grounds 3, 4, 5, 6, 8, 13, 14, 17 and 18. Grounds 1, 2, 7, 9, 10, 11 and 12, which raised challenges to substantive findings of the trial judge, were pressed only formally at the hearing of the appeal and were rejected by the Court. Grounds 19 to 25 relating to the order for indemnity costs were pressed and Cadbury was ultimately successful in setting aside all the costs orders made by the judge. The remaining grounds 15 and 16 related to the disputed evidence issue.

9 The principal question considered by the Full Court was whether the trial judge erred in refusing to admit the expert opinion evidence that Cadbury sought to adduce and, on this principal question, Cadbury was successful. Nevertheless, putting aside the issue of the costs thrown away by virtue of the amendment to the notice of appeal (as to which the parties have already reached agreement) and the issue of the indemnity costs, the fact is that Cadbury abandoned some grounds and was unsuccessful on others.

10 It is not doubted that a wide discretion is conferred on the Court to make costs orders under s 43 of the Federal Court of Australia Act 1976 (Cth) (‘the Act’). Darrell Lea contended that we should effectively treat the Full Court decision as interlocutory and reserve the costs for the trial judge to determine at the further hearing of the trial. We do not accept that the characterisation of the Full Court’s decision as interlocutory is correct. Undoubtedly, in the overall result of the proceedings, the rights of the parties in litigation have not been finally determined, in that a further hearing before the trial judge has been ordered and a number of different outcomes are possible following that further hearing. However, in relation to the appeal itself, the Court was asked to determine a question as to the inadmissibility of evidence, which was contested and which the Full Court found in favour of Cadbury. Therefore, we do not think that it is appropriate to reserve costs of the matter for the determination of the trial judge as the Full Court has made a decision which determined the issue before it.

11 The usual practice is that costs follow the event and that the Court will order the recovery of costs by the successful party on a party-party basis but success or failure on separate issues may lead the court to engage in a process of apportionment: see Dodds Family Investments Pty Ltd (formerly Solar Tint Pty Ltd) v Lane Industries Pty Ltd (1993) 26 IPR 261. Accepting that Cadbury has succeeded in its appeal, even though it did not obtain a new trial and that the ordinary course would be that the costs follow the event, we consider that there is a good reason why there should be an apportionment of the costs in the present case. Putting aside the agreement between the parties about the costs thrown away by the amendment to the notice of appeal (which agreement we assume would be maintained and these orders will not affect), further grounds were abandoned prior to the hearing of the matter before the Court. In relation to the challenges to the substantive findings (which were not pressed other than in a formal way) Darrell Lea was successful in any event. Treating the amended notice of appeal as the starting point for the purposes of our inquiry, there was a significant narrowing of the appeal prior to the hearing, and Cadbury failed in their challenge to the substantive issues. It is appropriate that, where one party, although successful overall, raised and pursued unsuccessful grounds or abandoned grounds that the other party was expected to meet in preparation of and in the course of the hearing, and as a consequence costs have been thrown away or incurred, such costs should be paid by the successful party.

12 Whilst it is true that the abandoned grounds and the substantive issues did not occupy much hearing time, those issues were raised as questions of substance and needed to be dealt with by Darrell Lea. Darrell Lea obviously needed to prepare in anticipation of the arguments being presented to the Court. On this basis, it is appropriate that there be an apportionment between the grounds abandoned or lost and those that were won by Cadbury.

13 It is sometimes preferable in these circumstances to avoid leaving the quantification and fixing of costs to taxation. An allocation of costs in the case of a mixed result can rarely be achieved with mathematical precision and such is not necessary: Dodds 26 IPR at 272 per Gummow, French and Hill JJ. We do not have all the appropriate material to estimate the amount of costs or time spent on the preparation and consideration of each relevant ground of appeal, and so cannot make any percentage apportionment of the costs. Therefore, we must leave the quantification and fixing of costs to taxation in default of agreement between the relevant parties.

15 In relation to the costs of the motion on notice dated 5 June 2007 Cadbury submitted that the costs should be costs in the appeal. It was said that Cadbury did not seek to reopen the appeal or have the Full Court consider its reasons for judgment and it brought the matter before the Court to resolve a controversy about the form of the Full Court’s orders. It was said that the controversy as to the form of the Full Court’s orders arose because, in its reasons for judgment, the Full Court referred to a new trial under s 28(1)(f) of the Act.

16 Darrell Lea submitted that the appropriate order is that Cadbury pay to Darrell Lea the costs of and incidental to Cadbury’s motion dated 5 June 2007. It was argued that Cadbury was unsuccessful in its motion and there was no reason to depart from the ordinary principle that the costs follow the event.

17 As we have already indicated, on 21 May 2007, the Full Court ordered that the matter be remitted to the trial judge for further hearing. The order of the Court was clear that the matter be remitted to the trial judge for further hearing of the proceeding and not a trial ab initio. As was said in the Full Court’s judgment at [114]:

18 There was no doubt that the Full Court had the power to order a further hearing. The actual order of the Full Court was clear that there was to be a further hearing as opposed to a new trial. The amplification of the reasons of 21 May 2007 was made in response to Cadbury’s position in support of its motion of 5 June 2007. However, there was no controversy as to the form or content of the Court’s orders. If Cadbury seeks to appeal it may do so in the appropriate way. We see no basis for departing from the ordinary principle that the successful party is entitled to its costs. In those circumstances we will order that Cadbury pay to Darrell Lea its costs of the motion on notice dated 5 June 2007.

19 As for the timing of the taxation of the costs, it is desirable to avoid multiple taxations, so it is appropriate to order that neither party be entitled to have a bill of costs taxed until the principal proceeding is concluded or further order of the trial judge. This is not because we treat the appeal as an "interlocutory application", but as an aspect of the exercise of the Court’s discretion as to the ordering of costs and to avoid unnecessary taxations.

I certify that the preceding nineteen (19) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Chief Justice Black, and Justices Emmett and Middleton.

Counsel for the Appellant:	N Hutley SC with M Wyles and S Rebikoff

Solicitor for the Appellant:	Mallesons Stephen Jaques

Counsel for the Respondent:	C Golvan SC

Solicitor for the Respondent:	Middletons

Date of Hearing:	26, 27, 28 February, 26 June 2007

Date of Judgment:	28 August 2007

Federal Court of Australia - Full Court Decisions

Cadbury Schweppes Pty Ltd v Darrell Lea Chocolate Shops Pty Ltd (No 3) [2007] FCAFC 119 (28 August 2007)