FEDERAL COURT OF AUSTRALIA Wang v Anying Group Pty Ltd (No 2) [2011] FCA 1413 Citation: Wang v Anying Group Pty Ltd (No 2) [2011] FCA 1413 Parties: HUA WEI WANG, XINYING PTY LTD (ACN 118 548 977) and NEW CENTURY 2001 PTY LTD TRADING AS ANYING SYDNEY COMPANY (ACN 114 661 568) v ANYING GROUP PTY LTD (ACN 126 282 657), YANYAN SUN and YUN CHEN; ANYING GROUP PTY LTD (ACN 126 282 657), YANYAN SUN and YUN CHEN v HUA WEI WANG, XINYING PTY LTD (ACN 118 548 977), NEW CENTURY 2001 PTY LTD TRADING AS ANYING SYDNEY COMPANY (ACN 114 661 568), REGISTRAR OF TRADE MARKS, CHUANG WANG and ANYING INTERNATIONAL FINANCIAL PTY LIMITED (ACN 105 067 990) File number: NSD 768 of 2008 Judge: FOSTER J Date of judgment: 12 December 2011 Catchwords: COSTS – whether costs should be apportioned across particular issues or discounted having regard to the fact that part of the applicants' case failed – whether the appropriate exercise of discretion in respect of costs is to discount the award that otherwise would have been made in favour of the successful parties Legislation: Trade Practices Act 1974 (Cth), ss 52, 53(d), 75B and 80 Australian Consumer Law Cases cited: Wang v Anying Group Pty Ltd [2011] FCA 1196 related Kazar (Liquidator) v Kargarian; In the Matter of Frontier Architects Pty Ltd (In Liq) [2011] FCAFC 136 cited Dates of hearing: Determined on the papers Date of last submissions: 23 November 2011 Place: Sydney Division: GENERAL DIVISION Category: Catchwords Number of paragraphs: 15 Counsel for the Applicants/ First, Second and Third Cross-Respondents: Mr C Harris SC Solicitor for the Applicants/ First, Second and Third Cross-Respondents: Colin Biggers & Paisley Counsel for the First, Second and Third Respondents/ Cross-Claimants: Mr J Garnsey QC, Mr C Moschoudis Solicitor for the First, Second and Third Respondents/Cross-Claimants: Ren Zhou Lawyers Counsel for the Fourth, Fifth and Sixth Cross-Respondents: The Fourth, Fifth and Sixth Cross-Respondents did not appear IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY GENERAL DIVISION NSD 768 of 2008 BETWEEN: HUA WEI WANG First Applicant XINYING PTY LTD (ACN 118 548 977) Second Applicant NEW CENTURY 2001 PTY LTD TRADING AS ANYING SYDNEY COMPANY (ACN 114 661 568) Third Applicant AND: ANYING GROUP PTY LTD (ACN 126 282 657) First Respondent YANYAN SUN Second Respondent YUN CHEN Third Respondent AND BETWEEN: ANYING GROUP PTY LTD (ACN 126 282 657) First Cross-Claimant YANYAN SUN Second Cross-Claimant YUN CHEN Third Cross-Claimant AND: HUA WEI WANG First Cross-Respondent XINYING PTY LTD (ACN 118 548 977) Second Cross-Respondent NEW CENTURY 2001 PTY LTD TRADING AS ANYING SYDNEY COMPANY (ACN 114 661 568) Third Cross-Respondent REGISTRAR OF TRADE MARKS Fourth Cross-Respondent CHUANG WANG Fifth Cross-Respondent ANYING INTERNATIONAL FINANCIAL PTY LIMITED (ACN 105 067 990) Sixth Cross-Respondent JUDGE: FOSTER J DATE OF ORDER: 12 DECEMBER 2011 WHERE MADE: SYDNEY THE COURT ORDERS THAT: The respondents pay 80% of the applicants' taxed costs (including reserved costs) of and incidental to the whole of the proceedings to date including the Cross-Claim. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011. IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY GENERAL DIVISION NSD 768 of 2008 BETWEEN: HUA WEI WANG First Applicant XINYING PTY LTD (ACN 118 548 977) Second Applicant NEW CENTURY 2001 PTY LTD TRADING AS ANYING SYDNEY COMPANY (ACN 114 661 568) Third Applicant AND: ANYING GROUP PTY LTD (ACN 126 282 657) First Respondent YANYAN SUN Second Respondent YUN CHEN Third Respondent AND BETWEEN: ANYING GROUP PTY LTD (ACN 126 282 657) First Cross-Claimant YANYAN SUN Second Cross-Claimant YUN CHEN Third Cross-Claimant AND: HUA WEI WANG First Cross-Respondent XINYING PTY LTD (ACN 118 548 977) Second Cross-Respondent NEW CENTURY 2001 PTY LTD TRADING AS ANYING SYDNEY COMPANY (ACN 114 661 568) Third Cross-Respondent REGISTRAR OF TRADE MARKS Fourth Cross-Respondent CHUANG WANG Fifth Cross-Respondent ANYING INTERNATIONAL FINANCIAL PTY LIMITED (ACN 105 067 990) Sixth Cross-Respondent JUDGE: FOSTER J DATE: 12 DECEMBER 2011 PLACE: SYDNEY REASONS FOR JUDGMENT 1 On 21 October 2011, I published Reasons for Judgment in this matter (Wang v Anying Group Pty Ltd [2011] FCA 1196) (the principal judgment). After receiving Written Submissions from the parties as to the appropriate orders to be made, on 16 November 2011, I made orders giving effect to those Reasons. The orders which I made on that day were in the following terms: THE COURT: 1. By consent, ORDERS that, with effect from 28 June 2010, the applicants' entitlement to pecuniary remedies (if any) and the cross-claimants' entitlement to pecuniary remedies (if any) and the quantum of any such remedies to which any party might be entitled be heard separately from and after all other questions in the proceedings. 2. ORDERS that, pursuant to the provisions of s 88(1)(a) of the Trade Marks Act 1995 (Cth), the Register of Trade Marks kept under s 207 of that Act be rectified by cancelling the registration of Australian Registered Trade Mark No 1100722. 3. DECLARES that: (a) By carrying on business under or by reference to the name "Anying" (the Anying name); and (b) By using in connection with such business the logo and four Chinese characters depicted below: whether alone or in conjunction with the Anying name (the Anying trade mark), the first respondent has: (i) Passed off its business and the foreign currency exchange services provided by it as those of the third applicant; (ii) In trade or commerce, engaged in conduct that is misleading or deceptive or likely to mislead or deceive within the meaning of s 18(1) of the Australian Consumer Law and, until 1 January 2011, within the meaning of s 52 of the Trade Practices Act 1974 (Cth); and (iii) In trade or commerce, in connection with the supply or possible supply of services namely foreign currency exchange services and in connection with the promotion of the supply or use of such services, made false or misleading representations that it had and continues to have the sponsorship or approval of the third applicant or was affiliated with the third applicant and thereby contravened s 29(1)(g) of the Australian Consumer Law and, until 1 January 2011, contravened s 53(d) of the Trade Practices Act 1974 (Cth). 4. DECLARES that the second and third respondents aided, abetted, counselled or procured the contraventions by the first respondent of the Trade Practices Act 1974 (Cth) and the Australian Consumer Law specified in Order 3 above and were knowingly concerned in or party to those contraventions and were thus involved in such contraventions with the consequence that they are both liable for such contraventions by reason of the provisions of s 75B of the Trade Practices Act 1974 (Cth) and ss 2, 18 and 236 of the Australian Consumer Law. 5. ORDERS that the first respondent by itself, its officers, its employees, its servants and its agents and otherwise howsoever, be restrained from carrying on business or trading under or by reference to the Anying name or the Anying trade mark or any name or trade mark substantially the same as the Anying name or the Anying trade mark. 6. ORDERS that the second and third respondents by themselves, their officers, their employees, their servants and their agents and otherwise howsoever, be restrained from carrying on business or trading under or by reference to the Anying name or the Anying trade mark or any name or trade mark substantially the same as the Anying name or the Anying trade mark. 7. ORDERS that the second and third respondents, and each of them, by themselves, their servants, their agents and otherwise howsoever be restrained from: (a) aiding, abetting, counselling or procuring; and (b) being in any way knowingly concerned in or party to another person or entity carrying on business or trading under or by reference to the Anying name or the Anying trade mark or any name or trade mark substantially the same as the Anying name or the Anying trade mark and be further restrained from conspiring with others to cause another person or entity to carry on business or trade in such a manner. 8. DECLARES that, by representing to members of the public that: (a) The business of the third applicant and the business of the first respondent were one and the same; (b) The owner of the foreign currency exchange business conducted by the third applicant was the same person or entity as the owner of the foreign currency exchange business conducted by the first respondent; and (c) There was a business connection between the third applicant and the first respondent (the representations) the first respondent: (a) in trade or commerce, engaged in conduct that is misleading or deceptive or likely to mislead or deceive within the meaning of s 18(1) of the Australian Consumer Law and, until 1 January 2011, within the meaning of s 52 of the Trade Practices Act 1974 (Cth); and (b) in trade or commerce, in connection with the supply or possible supply of services namely foreign currency exchange services and in connection with the promotion of the supply or use of such services, made false or misleading representations that it had and continues to have the sponsorship or approval of the third applicant or was affiliated with the third applicant and thereby contravened s 29(1)(g) of the Australian Consumer Law and, until 1 January 2011, contravened s 53(d) of the Trade Practices Act 1974 (Cth). 9. ORDERS that the first respondent by itself, its officers, its servants, its agents and otherwise howsoever, be restrained from making the representations, or any of them. 10. NOTES that the third applicant has elected to claim an account of profits from the respondents (rather than damages) for passing off and for contraventions of the Trade Practices Act 1974 (Cth) and the Australian Consumer Law. 11. ORDERS that the Application and the Further Amended Cross-Claim Application and Second Further Amended Cross-Claim (both of which were filed on 25 May 2010) (the Cross-Claim) otherwise be dismissed to the intent that, save for the relief granted by Orders 2 to 9 above and the preservation to the third applicant by these orders of its right to pursue the respondents for an account of profits, all other claims for relief stand dismissed. 12. ORDERS that, by no later than 23 November 2011, the parties file and serve any Written Submissions that they may wish to make on the question of costs both of the Application and of the Cross-Claim. 13. ORDERS that thereafter the question of costs be dealt with on the papers. 14. ORDERS that the proceeding be listed for directions at 9.30 am on 30 November 2011 before Foster J for the purpose of making directions in respect of the third applicant's claims for an account of profits. 2 Those orders contemplated that the parties would file and serve Written Submissions on the question of costs and that thereafter that question would be dealt with on the papers. The parties filed Written Submissions in respect of costs, as directed. These Reasons for Judgment determine the costs of the proceedings to date. 3 The most significant issue in the case was the question of whether the first respondent (Anying Auburn) should be permitted to continue trading under and by reference to the Anying name and the Anying trade mark. The declarations and orders which I made on 16 November 2011 have the effect of prohibiting Anying Auburn from continuing to use the Anying name and the Anying trade mark in its business activities. It is, therefore, obvious that the applicants have prevailed on the critical issue in the case. 4 All three of the applicants were represented by the same firm of solicitors and the same Counsel. The first and second applicants anchored their case in the first applicant's trade mark registration in respect of the Anying logo, the Anying name and the four Chinese characters depicted in the registered trade mark. Their case, based on infringement of the registered trade mark, failed because I found that the registered trade mark should be cancelled. The case brought by the third applicant, however, succeeded. The relief which I granted flowed from the success of that case. Given that each of the applicants was represented by the same firm of solicitors and the one Counsel, I see no reason to differentiate between them when considering the question of costs. 5 The hearing of the proceedings occupied six days of Court time. The first four days dealt with all issues other than the copyright issues. The last two days dealt with the copyright issues. The respondents were the parties who raised the copyright issues. They failed to make good the claims which they made based on copyright. 6 In addition, as is apparent from the principal judgment, with the exception of the claim that the registered trade mark be cancelled, all of the other claims raised by the respondents in their Cross-Claim failed. 7 From the above brief conspectus of the issues involved in the proceedings, it is clear that the applicants should have their costs incurred in respect of all of the claims advanced by the respondents in their Cross-Claim with the exception of the respondents' claim for an order cancelling the registered trade mark. Further, although some time was occupied both at the hearing and, no doubt, in preparation for that hearing by the parties in advancing and meeting the trade mark infringement case initiated by the applicants, much of the evidence brought forward by both groups of parties directed to that case would probably have been necessary, in any event, in order for the parties properly to address the case based upon contraventions of the Trade Practices Act 1974 (Cth). 8 The respondents submitted that the Court should approach the question of costs in the present proceedings by treating the principal claims brought by the applicants as entirely separate from the claims advanced by the respondents in their Cross-Claim. In their Written Submission in respect of costs, the respondents submitted that the Court ought to make the following orders: (a) in favour of the Second and Third Applicant against the Cross-Claimants; (b) in favour of the Cross-Claimants against the First Applicant; and (c) The First Applicant pay the costs payable by the Cross-Claimants in favour of the Second and Third Applicants by way of Bullock or Sanderson order (see: Sanderson v Blyth Theatre Co [1903] 2 KB 533 at 538–9 per Romer LJ.); (d) Alternatively, each part [sic] bear their own costs; (e) Further, in the alternative that an apportionment of costs be ordered (see: Kazar (in his capacity as liquidator of Frontier Architechs [sic] Pty Limited (in liquidation)) v Kargarian (No. 2) [2010] FCA 147 [sic] at [8] and on appeal at [2011] FCAFC 136 at [48] & [49]. 9 The respondents submitted that the real cause of the litigation was the first applicant's unlawful registration of the registered trade mark and that the Court should recognise this circumstance in the costs orders which it makes. 10 The Court has a discretion in respect of the award of costs. It has the power to apportion costs. In Kazar (Liquidator) v Kargarian; In the Matter of Frontier Architects Pty Ltd (In Liq) [2011] FCAFC 136 at [43]–[47], I made the following observations: Costs 43 Section 43(2) of the Federal Court Act provides that, in a matter such as the present, the award of costs is in the discretion of the Court or judge. Section 43(3) provides: 43 Costs … (3) Without limiting the discretion of the Court or a Judge in relation to costs, the Court or Judge may do any of the following: (a) make an award of costs at any stage in a proceeding, whether before, during or after any hearing or trial; (b) make different awards of costs in relation to different parts of the proceeding; (c) order the parties to bear costs in specified proportions; (d) award a party costs in a specified sum; (e) award costs in favour of or against a party whether or not the party is successful in the proceeding; (f) order a party's lawyer to bear costs personally; (g) order that costs awarded against a party are to be assessed on an indemnity basis or otherwise. 44 Section 43 confers a broad discretion on the Court to award costs. Costs do not automatically follow the event (Foots v Southern Cross Mine Management Pty Limited (2007) 234 CLR 52 at [26] (p 63) and at [34] (p 65) per Gleeson CJ, Gummow, Hayne and Crennan JJ; Oshlack v Richmond River Council (1998) 193 CLR 72 at [63] (p 95) per McHugh J). This is reinforced by the terms of s 43(3). The amplitude of the Court's discretion to order costs is illustrated, but not constrained, by the specific instances listed in s 43(3). 45 This Court's discretion as to costs must be exercised judicially and with due regard to precedent, established principle and factors directly connected with the litigation (Oshlack at [65] (p 96) per McHugh J). The discretion must not be exercised arbitrarily, capriciously or so as to frustrate the legislative intent (Oshlack at [22] (p 81) per Gaudron and Gummow JJ). As Gaudron and Gummow JJ went on to say in Oshlack at [22] (p 81): … the discretion conferred is … unconfined except insofar as "the subject matter and the scope and purpose" of the legislation may enable an appellate court to pronounce the reasons given by the primary judge to be "definitely extraneous to any objects the legislature could have had in view" (Water Conservation and Irrigation Commission (NSW) v Browning (1947) 74 CLR 492 at 505). (See also the observations of the plurality in Foots v Southern Cross Mine Management Pty Limited at [34] (p 65) where their Honours cited a passage from Daniell's: Practice of the High Court of Chancery (5th ed, 1871) with apparent approval). 46 The successful party should, generally speaking, have the benefit of an order for costs in his or her favour (Foots v Southern Cross Mine Management Pty Limited at [25] (pp 62–63) per Gleeson CJ, Gummow, Hayne and Crennan JJ; Oshlack at [66]–[68] (pp 96–97) per McHugh J). Costs are awarded to indemnify the successful party to some extent against his or her outlays on costs, not by way of punishment of an unsuccessful party (Oshlack at [1] (p 75) per Brennan CJ and at [67] (p 97) per McHugh J). 47 At [134] (pp 120–121) in Oshlack, Kirby J made some general remarks concerning the way in which statutory provisions giving a court a broad discretion in respect of costs (such as s 43 of the Federal Court Act) should be interpreted and applied. The following propositions relevant to the present case may be extracted from his Honour's observations at [134] (pp 120–121): (a) In civil non-jury trials, a successful party, in the absence of special circumstances, has a reasonable expectation of obtaining an order for costs in its favour unless for some reason connected with the case a special and different order is warranted (subpar (2) of [134] (p 120)); (b) Notwithstanding that the statutory prescription gives to the Court a broad discretion, that discretion should be exercised in accordance with established guidelines referable to the considerations of which the Court should generally take account (subpar (3) of [134] (p 121)); and (c) Costs generally follow the event in order to give effect to the notion that orders for costs are intended to provide a partial indemnity for outlays made by the successful party (subpar (4) of [134] (p 121)). These remarks may be compared with the observations of McHugh J in his dissenting judgment in Oshlack at [69]–[70] (pp 97–98). In those paragraphs, his Honour explained that the courts have, for some time, been quite firmly in favour of the proposition that the successful party should have his or her costs paid by the unsuccessful party and that the benefit of that "usual" order for costs would only be denied to the successful party if he or she was guilty of disentitling conduct or if some other exception to the usual order could be invoked. In the passages referred to, it may be that his Honour adopted an overly rigid view in favour of "the usual order for costs" when regard is had to the views of the majority in Oshlack and the plurality in Foots. Nonetheless, an order for costs in favour of the successful party will very often be a sound exercise of the Court's discretion as to costs. 11 I propose to determine the question of costs in the present case by adhering to the approach outlined in the above passages from Kazar. 12 The applicants have succeeded on the most critical question in the case. They have obtained injunctive relief in respect of the Anying name, the Anying logo and the Anying trade mark. The respondents, on the other hand, have only managed to secure relief in respect of one of the many claims made in their Cross-Claim: that is to say, the claim that the registered trade mark be cancelled. The cancellation of the trade mark did not prevent the grant of relief pursuant to ss 52, 53(d), 75B and 80 of the Trade Practices Act 1974 (Cth) and equivalent provisions in the Australian Consumer Law. 13 Whilst it is difficult to attribute a precise proportion of the parties' costs to the litigation of the validity of the trade mark and therefore the capacity of the first and second applicants to sue for infringement of that mark, I think that I am entitled to take a broad view of the matter and to treat the applicants' lack of success on those issues as a reason for discounting the amount of costs which might otherwise have been awarded to them, given their success on the central issue in the case. Doing the best I can and bringing to bear my knowledge of the issues in the case and the time taken in respect of the trade mark issues, I think that a discount of 20% is appropriate. The applicants submitted that a discount of 10% is appropriate. However, I think that a discount of only 10% does not fairly give appropriate weight to the significance of the respondents' win on the trade mark issues. 14 Accordingly, I propose to order that the applicants have 80% of their taxed costs (including reserved costs) of both the proceedings brought by them and of the Cross-Claim and that there be no other orders as to costs. 15 There will be orders accordingly. I certify that the preceding fifteen (15) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Foster. Associate: Dated: 12 December 2011