A few handy reminders for business owners from a recent Australian Federal Court decision on costs.

Trade Mark Protection is Crucial: Ensure your trade marks are robustly maintained and defended. In this case, Mercato Centrale had one of Caporaso’s trade marks cancelled. This ultimately led to the dismissal of Caporaso’s infringement claim regarding that mark.

Strategic Litigation Involves Counter-Claims: If facing a claim, consider offensive, cross-claims as part of your response. Mercato Centrale’s cross-claim was a key factor. They sought cancellation of Caporaso’s trademark which led to success in defending against the infringement action.

Abandoning part of your case: Pursuing part of your case for too long when they are unlikely to succeed can be risky. If you abandon them late in the trial, for example after significant evidence has been adduced (eg, after cross-examination of a key witness), it can be considered “wasteful of costs.” This may lead to a higher proportion of costs being awarded against you. Caporaso abandoned claims under the Australian Consumer Law (ACL). It also abandoned claims of passing off and against the second respondent personally. This contributed to it paying higher costs.

Scope of Evidence: Be mindful of the resources expended on issues where you might not succeed. Some of Mercato Centrale’s failed arguments consumed a significant portion of evidence. This was a key consideration when costs were awarded.

Costs Generally “Follow the Event,” but Discretion Applies: The general rule is that the losing party pays the winning party’s costs. However, courts have a wide discretion to apportion costs. This means that even if you “win” the overall case, you may not recover all of your costs. This is particularly true if you were unsuccessful on “discrete issues.” It is also relevant if your conduct led to wasted costs.

Justification for Legal Expenses: The necessity of certain legal expenses, such as briefing multiple Senior Counsel, will be reviewed during the cost assessment process (“taxation of costs”). Ensure your legal strategy is proportionate and necessary to avoid unnecessary expenses that may not be recoverable.

Separate Consideration for Different Parties: Costs for different parties, even if they are on the same side, might be considered and awarded separately, especially if one party was not involved in all aspects of the litigation (e.g., appeals or cross-claims).

Factors Influencing Cost Apportionment: Courts may apportion costs based on issues such as:

• the degree of success on “discrete disputed issues”;

• unmeritorious objections or issues;

• whether issues are “clearly dominant or separable” and involve different factual inquiries; and

• the extent of abandoned claims and associated wasted costs

Read the case at: Caporaso Pty Ltd v Mercato Centrale Australia Pty Ltd (No 3) FCA 624