Cadbury's purple packaging complaint put on hold

In Cadbury Schweppes Pty Ltd v Darrell Lea Chocolate Shops Pty Ltd, the Federal Court of Australia has upheld Cadbury Schweppes Pty Ltd's application to discontinue proceedings against Darrell Lea Chocolate Shops Pty Ltd in relation to its use of the colour purple. The court rejected Darrell Lea's form of order and directed Cadbury to pay costs taxed in the ordinary way as between party and party.

Cadbury had brought the proceedings against Darrell Lea on February 4 2003. It claimed that it had acquired a reputation and goodwill in a colour identified as 'Cadbury purple', which it had used in the packaging, promotion, sale and distribution throughout Australia of chocolate and other confectionery products. It alleged that Darrell Lea had engaged in misleading or deceptive conduct by using a shade of purple approximating to 'Cadbury purple' for, among other things, the packaging of some of its chocolate bars.

Cadbury sought leave to discontinue the proceedings when it became clear that it would not have its case ready by the trial date.

A form of order disposing of the proceedings was proposed by each party. The provisions of the competing forms of order designed to preserve for each party the benefit of discovery, third-party production of documents and other interlocutory work in the event that Cadbury should institute fresh proceedings invoking the same causes of action were largely uncontroversial. The real controversy between the parties centred on whether (i) the court should order Cadbury to pay Darrell Lea's costs as between solicitor and client (or, as is sometimes said, on an indemnity basis), or (ii) the costs should be taxed in the ordinary way as between party and party.

Darrell Lea argued that a solicitor-client order should be made because of Cadbury's repeated, and at times flagrant, non-compliance with procedural or interlocutory directions (which were outlined in the earlier judgment) and which in some respects were unexplained. Secondly, Darrell Lea submitted that the court should make a solicitor-client order because of the effect that the issue of numerous subpoenas had had on its franchisees and distributors.

It also based its claim on an estimation of the likely difference between party-party costs and solicitor-client costs. Darrell Lea had incurred approximately A$300,000 in legal costs and disbursements in the proceedings to date. It argued that if its costs were ordered to be paid on a party-party basis, then it would only recover about A$180,000 of these costs.

The judge decided "on a fairly fine balance" not to order that the costs be taxed as between solicitor and client. He came to that view primarily because of the contemplation that fresh proceedings would be issued by Cadbury and the benefit would be taken in those fresh proceedings of much of the substantial work that had already been carried out in the proceedings at issue.

The judge felt that if those fresh proceeding do commence there will probably be a real issue as to how the benefit of work undertaken on each side in the present proceedings should be reflected on the taxation of costs in the new proceedings. That issue would, he considered, be unduly complicated if he were to order that the costs to date be taxed as between solicitor and client. In the circumstances, the judge could not come to a conclusion about the propriety of Cadbury's institution and maintenance of the present proceedings except for the procedural or interlocutory derelictions submitted by Darrell Lea. Those derelictions alone, he considered, should not attract a punitive order for costs to be taxed on the higher scale. Nor did he consider persuasive in this regard the difference between the two types of costs.

Julian Gyngell, Solicitor, Wahroonga