FEDERAL COURT OF AUSTRALIA The South Australian Brewing Company Pty Ltd v Carlton & United Breweries Ltd [2001] FCA 994 Trade Practices Act 1974 (Cth) THE SOUTH AUSTRALIAN BREWING COMPANY PTY LIMITED v CARLTON & UNITED BREWERIES LIMITED S 41 OF 2001 MANSFIELD J ADELAIDE 24 JULY 2001 IN THE FEDERAL COURT OF AUSTRALIA SOUTH AUSTRALIA DISTRICT REGISTRY S 41 OF 2001 BETWEEN: THE SOUTH AUSTRALIAN BREWING COMPANY PTY LIMITED (ACN 007 065 267) AND: APPLICANT CARLTON & UNITED BREWERIES LIMITED (ACN 004 056 106) RESPONDENT AND: CARLTON & UNITED BREWERIES LIMITED AND: (ACN 004 056 106) CROSS CLAIMANT THE SOUTH AUSTRALIAN BREWING COMPANY PTY LIMITED (ACN 007 065 267) CROSS RESPONDENT JUDGE: MANSFIELD J DATE OF ORDER: 24 JULY 2001 WHERE MADE: ADELAIDE The Court notes the undertaking given by the respondent by its counsel that : 1. On or before 4.00 pm on Tuesday, 31 July 2001, it will take all available steps to collect, for the purposes of destruction, from the retailers to whom it has sent promotional material and/or packaged beer featuring the photograph referred to in paragraph 1(b) of the orders made on 13 July 2001 all such promotional material and/or packaged beer. 2. On or before Friday 2 August 2001, it will file and serve an affidavit sworn by an officer with knowledge of and fully detailing the steps taken by the respondent pursuant to paragraph 1 above together with the respondent's estimates of the respective quantities of cartons and associated promotional material which have been retrieved from retailers, which remain with retailers and, in the case of packaged beer, which have been sold by retailers to customers. THE COURT ORDERS THAT : 1. The respondent, Carlton & United Breweries Limited pay to the applicant, The South Australian Brewing Company Pty Limited, 25 per cent of the costs of the application generally incurred subsequent to 15 May 2001. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. IN THE FEDERAL COURT OF AUSTRALIA SOUTH AUSTRALIA DISTRICT REGISTRY S 41 OF 2001 BETWEEN: THE SOUTH AUSTRALIAN BREWING COMPANY PTY LIMITED (ACN 007 065 267) AND: APPLICANT CARLTON & UNITED BREWERIES LIMITED (ACN 004 056 106) RESPONDENT AND: CARLTON & UNITED BREWERIES LIMITED AND: (ACN 004 056 106) CROSS CLAIMANT THE SOUTH AUSTRALIAN BREWING COMPANY PTY LIMITED (ACN 007 065 267) CROSS RESPONDENT JUDGE: MANSFIELD J DATE OF ORDER: 24 JULY 2001 WHERE MADE: ADELAIDE EX TEMPORE REASONS FOR JUDGMENT 1 There are three issues which, on the submissions, remain outstanding. The first whether the Court should make the proposed additional order regarding the retrieval by the respondent of impugned material from retailers. The form of that order as sought is in the following terms : "Direct that in order further to comply with paragraph 1(b) of the Orders made on 13 July 2001 the Respondent : (a) on or before 4.00 pm on Thursday, 26 July 2001 send a letter (by facsimile or courier) in the form of annexure A to the retailers to which it has supplied any promotional material and/or packaged beer featuring the photograph referred to in paragraph 1(b) of those Orders; (b) on or before 4.00 pm on Tuesday, 31 July 2001 take all available steps to collect, for the purposes of destruction, from the retailers referred to in paragraph (a) above all such promotional material and/or packaged beer; and (c) on or before Friday, 2 August 2001 file and serve an affidavit made by an officer with knowledge of and fully detailing the steps taken by the Respondent pursuant to paragraphs 2(a) and 2(b) above." 2 There was a form of letter attached. In general terms, the applicant seeks an order requiring the respondent to send further correspondence to its retailers in the terms it identified and to take steps to implement the recovery of the cartons of packaged beer and the promotional material which I have found contravene s 52 of the Trade Practices Act 1974 (Cth) ("the Act"). It also requires the respondent to file and serve an affidavit by 2 August 2001 describing what has been done in that regard. 3 On 21 July 2001 the respondent in fact wrote to the retailers to whom it had provided those cartons of packaged beer and that promotional material in the following terms : "Dear Retailer I refer to my letter of 13 June 2001 concerning legal proceedings in the Federal Court between CUB and SA Brewing and in particular the 'Win the VB Superbox' competition. On 13 July 2001, the Federal Court ruled that CUB could not use the photograph of club captains Mark Ricciuto and Matthew Primus in club playing apparel and in a 'head to head' pose together with the logos of the Adelaide Football Club Pty Ltd and of the Port Adelaide Football Club Ltd which had been used in the course of the competition. Accordingly, if you have not already sold or returned all of the 30 can cartons of VB displaying the captains' photograph purchased by you, we now ask that you return to us any cartons that you have remaining in stock as soon as possible. We also ask that you return to us, as soon as possible, all promotional material (including posters, price boards, corflutes and mobiles relating to the competition) featuring the captains' photograph. Our representatives will attempt to contact you within the next 3 working days to arrange a time for collection of the stock and promotional material. We will issue a credit note for all stock returned and can arrange for replacement stock of VB in standard packaging to be delivered to you. In the meantime, we maintain our previous requests that you do not sell any of the cartons and do not display any of the promotional material. Thank you for your co-operation." 4 The applicant complains about the terms of that communication in a number of respects. Firstly, it contends that the material in that letter does not notify in detail the nature of the findings of the Court in relation to the Showdown 10 promotion. It complains that the letter does not specify a date by which the remaining unsold cartons and promotional material are to be collected. And it complains that the respondent does not proffer any form of undertaking to the Court to attend to those matters. 5 I have considered the form and content of the respondent's letter dated 21 July 2001. I do not think it is necessary or desirable for the respondent to be directed to send a further letter for the purpose of specifying in more detail the nature of the order of the Court made on 13 July 2001. I am, however, mindful on the material before me that there is a very significant quantity of unsold cartons of that packaged beer, in the form used in the Showdown 10 promotion, and I infer that there is also a substantial volume of promotional material which has not yet been collected. I accept that the respondent is doing all that it considers appropriate to recover that material in a timely fashion. Its letter of 21 July 2001 requests the return of all that material and indicates that : "Our representatives will attempt to contact you within the next three working days to arrange a time for collection of the stock and promotional material." 6 In my view it is appropriate, notwithstanding the efforts of the respondent to date, to put a time limit by which those efforts should be completed. In the absence of any undertaking from the respondent to that general effect, I propose (subject to considering the particular terms of the proposed further order) to make a further direction in part in accordance with the proposed further order sought by the applicant. It will set a definite time by which the recovery processes in relation to the cartons of packaged beer and the promotional material will be recovered. I think it is appropriate first to give the respondent an opportunity to offer an undertaking in those terms. I therefore invite Mrs Crennan QC of counsel for the respondent to indicate whether the respondent will undertake to do those things. An opportunity was provided to seek those instructions. An appropriate undertaking was offered. 7 I note that the respondent by its counsel undertakes that : 1. On or before 4.00 pm on Tuesday, 31 July 2001, it will take all available steps to collect, for the purposes of destruction, from the retailers to whom it has sent promotional material and/or packaged beer featuring the photograph referred to in paragraph 1(b) of the orders made on 13 July 2001 all such promotional material and/or packaged beer. 2. On or before Friday 2 August 2001, it will file and serve an affidavit sworn by an officer with knowledge of and fully detailing the steps taken by the respondent pursuant to paragraph 1 above together with the respondent's estimates of the respective quantities of cartons and associated promotional material which have been retrieved from retailers, which remain with retailers and, in the case of packaged beer, which have been sold by retailers to customers. I will accept that undertaking in lieu of any order in relation to the first of the applicant's submissions today. 8 I have considered the submissions of the parties in relation to corrective advertising. In my judgment it is not appropriate for the respondent to be directed to undertake any corrective advertising in this matter for the following brief reasons. 9 I do not consider that, given the action which has been taken and is being taken by the respondent to recover the packaging and promotional material which relates to the Showdown 10 promotion, there is any real risk of members of the public being misled in the future in relation to the particular conduct which I have found to have infringed s 52 of the Act. The question in my view is essentially whether correctional advertising should be directed to minimise or reduce the loss which the applicant has suffered in the past by reason of the infringing conduct. Having regard to the period of time which has elapsed, and having regard to the contractual rights of the respondent, to which I have referred at some length in my reasons for decision given on 13 July 2001, in my view it will be difficult to order a form of corrective advertising which is fair to the interests of both the applicant and the respondent. I am also mindful of the fact, as I was told at the interlocutory hearing and at the trial, that the applicant has suffered significant loss by reason of the publication of the Showdown 10 promotion, and that it has a right to recover damages for that loss. In my view the publication of corrective advertising at this point may well complicate the process of the assessment of that damage. As I do not think that such advertising is necessary to protect the interests of consumers in the future, I decline to make any order for corrective advertising. 10 The remaining issue relates to the question of costs. In my reasons for decision of 13 July 2001, I expressed the provisional view that there should be no order for costs. As the parties have identified, the applicant has succeeded in resisting the claim for cancellation of its Showdown word mark, and has succeeded in respect of its claims in relation to the Showdown 10 promotion. It failed, apart from preserving its word mark, in respect of the claims concerning the Showdown 7 and 9 promotions. Both parties are agreed that the interlocutory hearings on 10 and 11 April 2001 in relation to the Showdown 9 promotion should be reflected in an order for costs in favour of the respondent, and that the interlocutory hearing on 8 and 12 June 2001 in relation to the Showdown 10 promotion should be reflected in an order for costs in favour of the applicant. 11 It is a question for the Court overall to consider what is an appropriate order in the exercise of its discretion. The applicant seeks 75 per cent of its costs, except for the costs of the first interlocutory hearing on 10 and 11 April 2001. The respondent seeks 50 per cent of its costs, other than the costs of the notice of motion of 6 June 2001 leading to the interlocutory hearing on 8 and 12 June 2001, or alternatively it seeks separate orders for costs of the two interlocutory hearings and an order that the applicant pay it one-third of the costs otherwise of the proceeding. 12 In my view it is appropriate to make one order for costs in this matter rather than to make a series of costs orders to reflect the success of the parties on the respective issues. There will be considerable difficulty on the part of any taxing officer in isolating the issues, so as to effect a fair outcome on costs on taxation on separate issues, particularly because there is significant intersection of the submissions and evidence in relation to the claims concerning the Showdown 7 and 9 promotions and the claim to cancel the registration of the applicant's Showdown word mark. I propose therefore to make one order for costs. 13 In making that order for costs, I have borne in mind the success of each of the respondent and the applicant on the successive notices of motion for interlocutory relief. I have borne in mind the fact that the applicant failed in its principal claim in respect of the Showdown 7 and 9 promotions, but it preserved its word mark in the face of a challenge to that word mark. It succeeded in general terms in its claims in respect of the Showdown 10 promotion. 14 Up until the amendment of the defence on 15 May 2001, by the inclusion of the cross claim for expungement of the Showdown word mark, it seems to me that there is no basis upon which the applicant could resist (if I were minded to make a separate order for costs) the costs of the proceedings to that point being costs in favour of the respondent. Thereafter, as the matter has proceeded, the issues to which I have referred continued in tandem. The applicant succeeded on a significant interlocutory hearing, and in respect of one of its significant claims at the trial. 15 In doing the balancing which it is necessary to do, I should indicate that I have not put into the scales the "size" of the impugned conduct. Counsel for the applicant contended that I should have regard to the extent to which the Showdown 10 promotion was directed to permeating the relevant market, compared to the extent to which the Showdown 7 and 9 promotions were directed to permeating the relevant market. I have not had regard to that consideration, because it seems to me that on the matter of costs I should simply have regard to the extent to which the work involved in relation to the various claims contributed to the work ultimately undertaken in conducting litigation. 16 I have considered the extent to which the hearing occupied time in relation to the various matters. The hearing extended over nine days, of which about three days was taken up with submissions in opening and in closing. I cannot really see a basis upon which I can break up that period other than more or less equally. For the other six days, doing a very rough adjustment of the total of the evidence, it seems to me that about four days of that time was taken up with the Showdown 10 promotion, and clearly about two days of that time was taken up with the case involving the Showdown 7 and 9 promotions. There is inevitably some overlap, in that witnesses did not take all of the time which their evidence occupied purely on one or other of their causes of action. I should also reflect the fact that the time taken on the Showdown 7 and 9 promotions, including the extensive affidavit material, was in part evidence which was directed to and used for the purposes of resisting the respondent's cross claim, and as well as being directed to resisting the applicant's claims in respect of Showdowns 7 and 9. 17 In doing the best I can it seems to me, upon reconsideration of my provisional view, that it would be fair for the applicant to recover some but not very much of its costs of the proceeding subsequent to 15 May 2001. In my judgment, an appropriate order for costs is that the respondent should pay to the applicant 25 per cent of the costs of the application generally incurred subsequent to 15 May 2001. There should be no order for the costs of the application up to that date. I so order. 18 Counsel for the respondent has raised the question as to the scope of operation of par 1(b) of the order made on 13 July 2001. That order is intended to operate only in respect of the particular form of presentation of packaging and promotional material which is illustrated, for example, by the carton which is exhibit A26 at the hearing. I endeavoured in my reasons for decision to indicate that I was confining my decision to the particular facts and circumstances. Nor does my decision seek either to prohibit or to authorise the respondent in other forms of promotion involving any different assemblage of photographs, logos or the like. That is a matter for it; and if its then form of promotion is the subject of proceedings, for the Court as then constituted to determine whether any such form of promotion gives rise to a cause of action by the then applicant. I certify that the preceding eighteen (18) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Mansfield. Associate: Dated: 24 July 2001 Counsel for the Applicant: Mr F M Douglas QC with Mr D Kell Solicitor for the Applicant: Johnson Winter & Slattery as agents for Mallesons Stephen Jaques Counsel for the Respondent: Mrs S Crennan QC with Mr A Ryan Solicitor for the Respondent: Thomson Playford as agents for Corrs Chambers Westgarth Date of Hearing: 24 July 2001 Date of Judgment: 24 July 2001