New South Wales Supreme Court CITATION : Coffs Ex-Services Memorial & Sporting Club Ltd v Coffs Harbour Catholic Recreation & Sporting Club Ltd [2010] NSWSC 605 HEARING DATE(S) : 31/5/10 JURISDICTION : Equity Division JUDGMENT OF : Lindgren AJ EX TEMPORE JUDGMENT DATE : 2 June 2010 1. The plaintiff pay the defendants costs on: DECISION : (a) the plaintiff's claim for monetary relief; and (b) issues numbered 6 and 7 in exhibit D1. 2. Otherwise there be no order as to costs to the intent that the parties bear their own costs of the proceeding. LEGISLATION CITED : Civil Procedure Act 2005, ss 56, 57 Evidence Act 1995, s 67 Arkin v Tridon Australia Pty Ltd [2003] FCA 1386 Australian Securities Commission v Aust-Home Investments Ltd (1993) 44 FCR 194 CASES CITED : Gribbles Pathology Pty Ltd v Health Insurance Commission (1997) 80 FCR 284 One.Tel Ltd v Deputy Commissioner of Taxation (2000) 171 ALR 227 Re the Minister for Immigration and Ethnic Affairs; Ex parte Lai Qin (1997) 186 CLR 622 Yates Property Corporation Pty Ltd v Boland (2000) 179 ALR 664 PARTIES : Coffs Ex-Services Memorial & Sporting Club Limited (P) Coffs Harbour Catholic Recreation & Sporting Club Limited (D) FILE NUMBER(S) : SC 2009/291872 COUNSEL : R Cobden SC and C Freeman (P) F Gleeson SC and M McCarthy (D) SOLICITORS : Slater & Gordon (P) Eastern Commercial Lawyers (D) IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION LINDGREN AJ Wednesday 2 June 2010 2009/291872 – COFFS EX-SERVICES MEMORIAL & SPORTING CLUB LTD v COFFS HARBOUR CATHOLIC RECREATION & SPORTING CLUB LTD JUDGMENT HIS HONOUR: Introduction 1 This proceeding was fixed for final hearing over four days commencing last Monday, 31 May. The parties are both clubs at Coffs Harbour. The plaintiff is said to be the largest club between Newcastle and Tweed Heads with some 28,000 members. The defendant is said to have some 7,000 members. The proceeding arises out of what has been described as "rebranding" exercises by both clubs in June, July, August 2009, although, in the case of the plaintiff, there was also an earlier rebranding in 2008. 2 The proceeding was settled on Monday and the present reasons relate only to the question of costs. Background 3 The plaintiff's claim is for contravention of sections 52 and 53(c) and (d) of the Trade Practices Act 1974 (Cth) and for passing off, in each case arising out of the defendant's use of the name "Club Coffs". It registered that name as a business name on 24 June 2009. The new name was announced to members of the defendant on 12 July 2009 and it was launched publicly on 29 July 2009. The defendant has also sought to have the name registered as a trademark, but that application is not yet finalised. 4 The plaintiff demanded that the defendant cease to use the name "Club Coffs". The plaintiff alleges that those words had become associated with the plaintiff in the minds of people in Coffs Harbour and environs. The plaintiff has never itself used "Club Coffs" as its name or badge. It relies on the general reputation associated with that name in the minds of the public. However, the plaintiff did use signage on its premises and also various documents in which the word "Coffs" appeared very prominently in a perpendicularly elongated manner and below the word "Coffs" in quite small print "ex-services club". 5 In 2001 the plaintiff merged with the Woolgoolga Bowling Club and in 2008 with the Urunga Golf and Sporting Club. The plaintiff's first attempt at rebranding occurred in 2008 when it adopted "CEX" or "CEX Group". There were some difficulties with a "CEX Club" which need not be elaborated upon, and so in June 2009 a second rebranding occurred in which "C.ex" appeared in a logo with, depending upon the circumstances, the words "Myclub Group" or "Myclub Woolgoolga" or "Myclub Urunga" or "Myclub Coffs" appearing below the "C.ex". A feature of the new brand seems to have been the distinction between the large letter "C" and the less significant ".ex". 6 Apparently the "ex" signified "ex-services" and apparently the "C" may have been thought to indicate "Coffs" or "Club". The difference does not matter at present. 7 The plaintiff made known its adoption of the rebranding within the club on 25 June 2009 and the new brand began to appear in the press in early July 2009. 8 The two clubs engaged in their rebranding exercises quite independently of each other - there is no suggestion that either club intentionally or deliberately sought to trade off the rebranding of the other club. Accordingly, the plaintiff's claim is not one of intentional deception by the defendant. 9 The issue which was destined to assume importance on the hearing was whether the plaintiff could establish the reputation that it alleged it enjoyed in the minds of the relevant section of the public associated with "Club Coffs". It will be recalled that its case was to depend, not upon any formal use of that expression by the plaintiff, but upon repute within the community generally. The nature of the plaintiff's claim in this respect may be gathered from paragraphs 6 and 7 of the statement of claim which were as follows: "6. For many years, and at least at the date of commencement of the defendant's conduct pleaded below, the words 'Coffs', 'Club Coffs' and 'Coffs Club' ('Names'), the Old Logo and since 2 July, 2009, the New Logo (jointly referred to as 'Logos') have come to signify to members of the plaintiff, their families and the public or a substantial section thereof including those in Coffs Harbour and surrounding areas the plaintiff's business, such that persons seeking to acquire goods or services under or by reference to the Names and the Logos or any names or logos similar thereto, expect and intend to acquire the plaintiff's goods and services and not the goods and services of any other person. 7. The plaintiff has, and for many years has had, a substantial and valuable goodwill in the Names and the Logos throughout Coffs Harbour and surrounding areas in relation to its business and its goods and services." The course of the hearing on Monday 31 May 2010 and the undertaking to the Court proffered by the defendant 10 In early to mid February 2010 the defendant added the words "on West High" to the words "Club Coffs" in its use of the latter expression. The defendant's premises are in fact in West High Street, Coffs Harbour. Senior Counsel for the plaintiff acknowledged in submissions that it appeared that the defendant had used the additional words "almost universally and uniformly" (transcript p9). 11 There was an issue to which I will return as to whether the additional words were permanent "disclaiming material". Senior Counsel for the plaintiff stated in the course of his opening that if they were permanent, the plaintiff would have no complaint as to the ongoing use of the name. This resulted in some discussion and the proffering of an undertaking by the defendant to the Court which the plaintiff accepted as satisfactory. The undertaking, accepted by the Court, was as follows: "On a no admissions basis: 1. The defendant undertakes through its counsel to the Court that from fourteen days from today on a permanent basis it will include the words "On West High" on all external signage and advertising of the defendant. 2. For the avoidance of doubt, this undertaking of the defendant does not relate to any internal signage, uniforms, advertising or promotional material of the defendant club and does not include the defendant's domain name." 12 There followed a substantial argument as to costs. At the conclusion of that argument it was agreed that a further order should be made dismissing the proceeding save as to costs. Accordingly, I ordered that the proceeding be dismissed save as to costs which were reserved. The defendant's case for an order for costs 13 The principles that govern the issue of costs where there has been no adjudication on the merits are not in controversy between the parties. There is a line of authority, including the following cases: Australian Securities Commission v Aust-Home Investments Ltd (1993) 44 FCR 194 (Hill J) esp at 201; Re the Minister for Immigration and Ethnic Affairs; Ex parte Lai Qin (1997) 186 CLR 622 (McHugh J); Gribbles Pathology Pty Ltd v Health Insurance Commission (1997) 80 FCR 284 (Finkelstein J); One.Tel Ltd v Deputy Commissioner of Taxation (2000) 171 ALR 227 (Burchett J); Yates Property Corporation Pty Ltd v Boland (2000) 179 ALR 664 (Goldberg J); Arkin v Tridon Australia Pty Ltd [2003] FCA 1386 (Hely J). 14 As Justice Hely said in the case last cited, if both parties acted reasonably in commencing and defending the proceeding, the proper exercise of the discretion will usually result in no order being made as to costs, except in the unusual case where one party was almost certain to have succeeded if the matter had been fully tried. His Honour cited McHugh J in Lai Qin at 624-625. Hely J also acknowledged the distinction between a case where one party, after litigating for some time, effectively surrenders to the other, and cases where some supervening event or settlement so removes or modifies the subject of the dispute that, although it could not be said that one side had simply won, no issue remains between the parties except that of costs. His Honour cited One.Tel at 231-232. 15 The defendant relies on three grounds for seeking an order that the plaintiff pay its costs and I will deal with these in turn. (a) Claims abandoned 16 First, in the course of his oral submissions Senior Counsel for the plaintiff made clear that his client did not press the claim based on a claim made in the pleading that the defendant's new logo was substantially identical or deceptively similar to the plaintiff's logo, both its old logo and its new one. That is to say, one of the bases for the plaintiff's claim was given up. 17 What was given up can also be gauged from exhibit D1, which was a statement of issues for trial which the defendant had prepared and which bears annotated responses on behalf of the plaintiff. In the form in which paragraphs 6 and 7 of that document were prepared by the defendant, they were as follows: "6. Was the plaintiff's new 'C.ex Coffs' logo distinctive of the plaintiff's business with the relevant class of persons as at the date the defendant commenced the conduct? 7. If yes, is the defendant's 'Coffs Club' logo that is displayed at paragraph 13(b) of the statement of claim substantially identical with, or deceptively similar to, or a colourable variation or imitation of, the plaintiff's new 'C.ex Coffs' logo"? Against both of those issues the plaintiff responded in writing "not pressed by the plaintiff". 18 The defendant says that it should have its costs of preparing to meet these issues no longer pressed. Although, as Senior Counsel for the plaintiff suggested, those costs may not be great, the defendant through its counsel indicated that some work had been done, and, indeed, evidence in the form of an affidavit by Edmund Jones had been prepared, in relation to the abandoned issues. The defendant should have its costs on the abandoned issues. 19 Senior Counsel for the plaintiff also said on Monday that the plaintiff no longer sought monetary relief, either damages or an account of profits. Again, it may be that the costs of the defendant in preparing to meet the monetary claims would not be great, but the defendant should have its costs on them. 20 In my view, there should be an order in favour of the defendant that the plaintiff pay the defendant's costs of preparing to defend the two issues mentioned and the claim for monetary relief. (b) Addition of the words "on West High" 21 The second matter on which the defendant relies is that, as noted earlier, in and since February 2010 it has added the words "on West High" to the words "Club Coffs". 22 The plaintiff responds that it did not know until Monday morning, the first day of the hearing, that this change was permanent. In response, the defendant says that the plaintiff could have asked. The plaintiff replies that the defendant could have made a formal offer to the plaintiff akin to the undertaking that it gave to the Court on Monday. The defendant says that the plaintiff should have inferred that the change was a permanent one. 23 Prior to the hearing, the defendant did not proffer an undertaking to the plaintiff - it simply began to add the words "on West High". 24 I approach the matter by asking whether, if the matter had proceeded to a full hearing, the plaintiff would have been denied injunctive relief on the basis of the addition of the words "on West High". I think not. That is to say, I do not think that the Court would have concluded on the basis of nothing more than the fact that the defendant had begun unilaterally to add those words in February 2010 that there was no longer any threat that it would use the bare words "Club Coffs". Accordingly, I do not accept the defendant's argument that it should have its costs against the plaintiff as from February 2010 on the basis of the addition of the words mentioned. (c) The state of the plaintiff's affidavit evidence 25 The third and final ground on which the defendant relies I have found quite difficult. This is that it was unreasonable for the plaintiff to have launched the proceeding because it could not have proved its reputation associated with the words "Club Coffs", that is to say, that in the minds of members of the public in Coffs Harbour and the surrounding region, "Club Coffs" meant the plaintiff. It was argument over this matter that occupied most of the time of the hearing on Monday. 26 I mentioned earlier that in order to prove its reputation allegedly associated with the words "Club Coffs", the plaintiff relied not on any adoption by it of those words, any business name, any trademark, any advertising material, indeed, anything at all emerging from the plaintiff in any formal sense. The plaintiff bore the burden of establishing that the words "Club Coffs" were associated with it. The plaintiff relied on its use of the word "Coffs" as the dominant part of its name in its signage, its position as by far the largest club in the region, and the testimony given by a number of individuals, several of whom were associated in various ways with the plaintiff. That evidence went to, first, the abbreviated forms of reference that those individuals used to refer to the plaintiff; second, the abbreviated forms of reference that they heard others using to refer to the plaintiff; and, third, enquiries made at the plaintiff's premises by various individuals who, so it was said, had seen advertising of events at "Club Coffs" and assumed that this was a reference to the plaintiff. 27 It should be said at the outset that there is a distinction between confusion which may arise in a person's mind from various causes and evidence establishing that the confusion arises because of misleading conduct. The misleading conduct posited in the present case is a representation by the defendant that "Club Coffs" meant the defendant whereas, because of a reputation established over the years, it truly meant the plaintiff. It is the "truly meant the plaintiff" on which the result in the case was to turn. 28 The relevant date at which the plaintiff had to prove that the words pointed to the plaintiff by public repute was agreed to be 29 July 2009, the date when the defendant launched and began to use the name. 29 The plaintiff relied on affidavits of deponents Cox, Engel, Williams, Allan, Hunter, Thomson, Challinor and Wardman. The defendant objected to all of these affidavits, at least in part. Generally speaking, the objection was that the evidence was hearsay, whether first-hand, second-hand or third-hand. The defendant pointed out that only one of the witnesses, the witness Cox, actually said that he used the expression "Club Coffs" without more to refer to the plaintiff. The various witnesses referred to a variety of forms of abbreviation that were in use to refer to the plaintiff, in many, if not all, of which the word "Coffs" occurred. Several of them referred to use of the expression "Coffs Club" either alone or with other words. 30 The witnesses also gave evidence of abbreviated forms of reference that were in use in relation to the defendant. 31 The picture that emerges is far from clear. I do not accept that the fact that the plaintiff had not itself adopted the name "Club Coffs" is fatal to its case. The question is one of the public's understanding. 32 The word "Coffs" in large letters had long since been used by the plaintiff as the prominent part of its name, followed by "ex-services club" in much smaller print. Although the matter was not fully argued, the plaintiff's case is that while the plaintiff had not previously used "Club Coffs", the fact just mentioned, coupled with the plaintiff's size and location and the use by people of the expression "Coffs Club" and other expressions incorporating the word "Coffs" would cause a hearer or reader of "Club Coffs" to associate that name with the plaintiff. While this position may not have prevailed, I am not persuaded that it was unreasonable. 33 In relation to the individuals who attended at the plaintiff's premises, mistakenly believing that the plaintiff had been referred to by advertising of "Club Coffs", apparently not one of those persons who was allegedly deceived was to give evidence. Most of the affidavits to which I was referred were from staff or members of the plaintiff who gave evidence of what they were told by the individuals who attended at the plaintiff's premises. 34 In relation to all of evidence of the latter kind in respect of which the hearsay objection was taken, the defendant emphasised that no notice had been given under section 67 of the Evidence Act 1995. As well the defendant made the point that if the Court had been disposed to admit the evidence over the hearsay objection, the defendant would have asked the Court to refuse to admit the evidence because its probative value was substantially outweighed by the danger that the evidence might be unfairly prejudicial to the defendant. A particular point made on of behalf of the defendant was that without the individuals making the enquiry at the plaintiff's premises having been identified, it was not possible for the defendant to track them down or in any other way to test their evidence. 35 I have spent a good deal of time considering the defendant's submissions on the evidentiary issue, not only in the hearing on Monday but as well since the hearing (although another hearing yesterday occupied virtually the full day). This leads me to say that if I were required to predict what would have happened if the hearing had proceeded to conclusion, I would say that my impression is that the defendant would probably have succeeded on the evidentiary issues. However, I must avoid conducting a hypothetical hearing. In accordance with the authorities, that is not the basis on which the costs issue is to be decided. 36 I am not persuaded that the plaintiff commenced the proceeding unreasonably or that the defendant was almost certain to have succeeded. 37 It is conceivable that if yet further time were to be spent by me carefully analysing the affidavits and resolving as if on a final hearing, all of the hearsay objections, as well as reaching a final view on the effect of the plaintiff's use over many years of "Coffs" as the prominent part of its name and its position as the major club presence in Coffs Harbour, I would have reached the conclusion that the proceeding was not reasonably commenced. That, however, would involve me in spending considerable further time and giving reasons for the hypothetical rulings on the objections and the other matters mentioned, and, depending on the rulings, hypothetically exercising the discretion given by s 135. This is a course that the authorities establish should not be followed. 38 The warnings against conducting a hypothetical hearing are, I note, also consistent with the mandatory provisions found in sections 56 and 57, particularly paragraph (1)(c) of the latter, of the Civil Procedure Act 2005. I appreciate that those provisions are concerned with case management, but the approach that is established by the authorities to which I referred earlier is consistent with the approach to case management found in those provisions. 39 In the result, although I do have some sympathy for the defendant's position, I think the proper order is that, subject to the special order which I mentioned, the parties be left to bear their own costs. Conclusion 40 The orders of the Court are as follows: 1. The plaintiff pay the defendant's costs on: (a) the plaintiff's claim for monetary relief; and (b) issues numbered 6 and 7 in exhibit D1. 2. Otherwise there be no order as to costs to the intent that the parties bear their own costs of the proceeding. ********************** DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.