FEDERAL COURT OF AUSTRALIA Clipsal Australia Pty Ltd v Clipso Electrical Pty Ltd [2016] FCA 37 File number: NSD 2537 of 2013 Judge: PERRAM J Date of judgment: 4 February 2016 Catchwords: COSTS – application for costs – whether costs orders should be made – whether costs should be awarded as lump sum – whether costs should be made payable forthwith Legislation: Federal Court of Australia Act 1976 (Cth) s 43(3)(d) Federal Court Rules 2011 (Cth) r 40.13 Cases cited: Ariix LLC v Mahilall (No 2) [2014] FCA 494 Beach Petroleum NL v Johnson (1995) 57 FCR 119 Sony Entertainment (Australia) Limited v Smith (2005) ALR 788 Date of hearing: Heard on the papers Date of last submissions: 24 December 2015 Registry: New South Wales Division: General Division National Practice Area: Intellectual Property Sub-area: Patents and associated Statutes Category: Catchwords Number of paragraphs: 14 Counsel for the Applicant: Mr J S Cooke Solicitor for the Applicant: Banki Haddock Fiora Counsel for the Respondent: Mr S Balafoutis and Ms F St John Solicitor for the Respondent: Breene & Breene Solicitors ORDERS NSD 2537 of 2013 BETWEEN: CLIPSAL AUSTRALIA PTY LTD First Applicant SCHNEIDER ELECTRIC (AUSTRALIA) PTY LIMITED Second Applicant AND: CLIPSO ELECTRICAL PTY LTD First Respondent MAZEN ABDULKADER Second Respondent JUDGE: PERRAM J DATE OF ORDER: 4 FEBRUARY 2016 THE COURT ORDERS THAT: 1. The first respondent pay the applicants' costs of and incidental to their claims of infringement of the 133 and 135 patents incurred up until 19 November 2015 on a party-party basis. 2. The respondents pay the applicants' costs thrown away by reason of the amendment on 17 October 2014 of their defence to admit the applicants' reputation alleged in paragraph 6 of the statement of claim filed on 13 December 2013. 3. The costs of the applicants' costs application be costs in the cause. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011. REASONS FOR JUDGMENT PERRAM J: 1 These proceedings were transferred to my docket on 22 October 2015 and are fixed for trial commencing on Monday 16 May 2016. The case involves, or has involved, allegations of the infringement of registered trade marks and innovation patents. There are other allegations as well. 2 The applicants now apply for certain costs orders in advance of the trial. The question is whether the respondents should be ordered to pay the costs thrown away by the applicants in preparing aspects of the case that the respondents have subsequently admitted. In addition, the applicants seek to have those costs assessed by means of lump sum costs orders and to have an order that the lump sums so ordered should be payable forthwith. 3 There are two distinct aspects to the application. The first concerns the costs the applicants say they were put to in being required to prove that they had a reputation in the name CLIPSAL. This was admitted by the respondents on 17 October 2014 having been initially alleged by the applicants in paragraph 6 of their statement of claim filed on 13 December 2013. The second concerns costs said to have been thrown away by the applicants in having to prove that the first respondent had infringed two of their innovation patents. The first respondent admitted that it had infringed the patents on 6 November 2015 and consented to injunctive and declaratory relief that I granted on 19 November 2015. 4 The respondents do not deny that the applicants are entitled to an order that they pay the applicants' costs thrown away by reason of the amendment to their defence which had the effect of admitting for the first time that the applicants had a reputation in the CLIPSAL name. 5 They do deny, however, that the applicants are entitled to a costs order in respect of the patents. They say that the patent allegations were only added to the applicants' case on 8 September 2015 and that the first respondent admitted infringement at the first available opportunity when the respondents filed their defence to the allegation. Further, so they submit, from 14 July 2015 they were conducting inquiries through a patent attorney to determine whether they should make that admission. They submit that they should not be punished for responsibly reducing the ambit of the proceedings. 6 The applicants say that this is only half the picture. They submit that they sought to add the patent infringement case at the directions hearing on 14 July 2015 but that this was not consented to because, as counsel for the respondents explained to the then docket judge, there was going to be a contest about the validity of the patents. In consequence of that posture, the applicants say they were ordered to put on their evidence in relation to the patents by 25 August 2015 and to file an application to amend their originating application and statement of claim to raise the patent claims returnable on 8 September 2015 (Orders 6 and 7 of 14 July 2015). The respondents then consented to the amendments (having in the meantime had the benefit of seeing the applicants' evidence on infringement). It was only on 6 November 2015, when the defence was filed, that the admission was made. So viewed, the applicants had been put to the expense of putting on their whole case on infringement just so the first respondent could then admit it. 7 I do not see that these circumstances require a departure from the ordinary rule that a party should pay the costs thrown away by reason of an amendment. I would accept that the respondents were acting reasonably in seeking advice from a patent attorney on the issue of infringement. However, the fact is that the applicants have wasted money preparing a case that is now no longer relevant because of the respondents' change of heart. 8 Accordingly, the applicants are entitled to both the sets of costs that they seek. 9 Should the Court also determine the amount of those costs itself? It has the power to do so under s 43(3)(d) of the Federal Court of Australia Act 1976 (Cth). The circumstances in which such an order may be made are not closed but include the avoidance of the delay, expense and aggravation arising out of taxation: Beach Petroleum NL v Johnson (1995) 57 FCR 119 at 120 per Von Doussa J. I do not think that that is germane in this case since even if I make the orders sought by the applicants there will still be other costs orders at the conclusion of the trial that will likely require taxation. 10 Such an order may also be appropriate where the proceedings are complex and where it may be more efficient for a trial judge to determine the issue of costs than to condemn the parties to a taxation: Sony Entertainment (Australia) Limited v Smith (2005) ALR 788 at [189]ff per Jacobson J. Another reason to make such an order will arise in those cases where there is a basis to think that the costs of the taxation themselves may turn out to be irrecoverable (Sony at [195]) or where one party has been particularly truculent so that it may be thought just to spare the other from the inconvenience of further engagement over the process of taxation: Ariix LLC v Mahilall (No 2) [2014] FCA 494 at [10] per Rares J. Another circumstance sometimes thought relevant is where a party has failed to appear: Sony at [193]. 11 I do not think that any of these circumstances apply here. The closest would be a suggestion that the respondents had acted unreasonably in not making the admissions earlier. There is substance in that contention but I do not infer from it that I should save the applicants from the process of taxation over these two issues, especially where a taxation may still occur at the end of the trial. In those circumstances, I decline to make lump sum costs orders. 12 The applicants also applied for an order that the costs that I will order should be paid now. Because I have declined to make lump sum costs orders it will be necessary, unless agreement can be reached, for the applicants to seek a taxation of their costs. And, until that occurs, the effect of r 40.13 of the Federal Court Rules 2011 (Cth) is to bar a party with the benefit of a costs order arising from an interlocutory application from applying for a taxation of those costs until the end of the proceedings. Accordingly, the applicants require an order dispensing with the operation of r 40.13 if they are to present their costs for taxation at this early stage. A formal application for such a dispensation was not before me, it being assumed, I think, that the lump sum issue and the time of enforcement issue travelled together. Even so, I would not have granted the applicants leave to proceed to a taxation of the two interlocutory costs orders I will make. The reasons for this are: (a) I do not think it would be desirable to make the parties go through two processes of taxation, which they will do if leave is granted and the trial costs are taxed; (b) there was nothing before me to suggest that the applicants were in particular need of the money or that the behaviour of the respondents might be criticised as being intended to draw out the proceedings to drain the applicants financially; (c) I do not accept that the conduct of the respondents was so unreasonable that the cost of their folly should be immediately visited upon them as a deterrent to such behaviour in the future; and, (d) it may be that the respondents will succeed at trial and obtain costs orders greater than those which the applicants have presently secured. If that occurs then the applicants will have had the use of the respondents' funds at no cost. 13 In those circumstances, I decline to permit the costs to be taxed forthwith or otherwise enforced at this stage. 14 The orders I will make are: 1. The first respondent pay the applicants' costs of and incidental to their claims of infringement of the 133 and 135 patents incurred up until 19 November 2015 on a party-party basis. 2. The respondents pay the applicants' costs thrown away by reason of the amendment on 17 October 2014 of their defence to admit the applicants' reputation alleged in paragraph 6 of the statement of claim filed on 13 December 2013. 3. The costs of the applicants' costs application be costs in the cause. I certify that the preceding fourteen (14) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Perram. Associate: Dated: 4 February 2016