Active Skin Pty Ltd v Yey Pty Ltd

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FEDERAL CIRCUIT COURT OF AUSTRALIA

Active Skin Pty Ltd v Yey Pty Ltd [2021] FCCA 329

File number(s): SYG 1636 of 2019
Judgment of: JUDGE BAIRD
Date of judgment: 24 February 2021
Catchwords: PRACTICE AND PROCEDURE – security for costs – where applicant accepts obligation to give security - quantum of security – relevant principles - whether court must order costs be referred to taxation under Federal Court Rules 2011 – whether security must be ordered at Schedule 1 scale – security ordered other than at Schedule 1 scale
Legislation:

Federal Circuit Court of Australia Act 1999 (Cth), s 80

Federal Circuit Court Rules 2001 (Cth), Part 21, rr 21.01, 21.02, 21.09, 21.10, Schedule 1

Federal Court of Australia Act 1976 (Cth), s 56

Federal Court Rules 2011 (Cth), Part 40

Trade Marks Act 1995 (Cth), ss 42(b), 56, 60
Cases cited:

A2B Australia Limited & Anor v OZ Power Group Pty Ltd & Anor [2020] FCCA 2623

Bauer Consumer Media Ltd v Evergreen Television Pty Ltd [2019] FCAFC 71; (2019) 142 IPR 1; (2019) 367 ALR 393

Chris and Dora Di Lorenzo Partnership v Denversian Pty Ltd [2020] FCCA 1718

Flujo Holdings Pty Ltd v Merisant Company & Ors [2019] FCA 594

Food Channel Network Pty Ltd v Television Food Network GP [2010] FCAFC 58; (2010) 185 FCR 9; (2010) 86 IPR 437

Gill v Karan Grewal Pty Ltd [2020] FCCA 1202

Henley Arch v Del Monaco (No 2) [2020] FCCA 1911
Number of paragraphs: 51
Date of last submission/s: 7 September 2020
Date of hearing: On the papers  
Place: Sydney
Counsel for the Applicant: S Crysanthou SC and M Hazan
Solicitor for the Applicant: Peter Whitehead, Hazan Hollander
Counsel for the Respondent: A Fox and A Spies
Solicitor for the Respondent: Cameron Lang, Actuate IP

ORDERS

SYG 1636 of 2019
BETWEEN:

ACTIVE SKIN PTY LTD (ACN 121 217 892)
Applicant

AND:

YEY PTY LTD (ACN 088 605 181)
Respondent

ORDER MADE BY:

JUDGE BAIRD

DATE OF ORDER:

24 FEBRUARY 2021

THE COURT:

1.ORDERS pursuant to section 80 of the Federal Circuit Court of Australia Act 1999, that the applicant give security for the respondent’s costs of and incidental to the proceeding for the period 10 June 2020 to the conclusion of the proceeding in the amount of $45,000.

2.ORDERS that the security to be given by the applicant pursuant to Order 1 be by payment into Court within 14 days of the date of these Orders.

3.ORDERS that this proceeding be stayed pursuant to section 80(5) of the Federal Circuit Court of Australia Act 1999 in the event that the security for costs pursuant to Order 1 is not provided by the applicant in the manner or within the time period specified in Order 2.

4.ORDERS the Respondent’s costs be its costs in the cause. 

REASONS FOR JUDGMENT

JUDGE BAIRD

BACKGROUND

  1. On 11 June 2019 a delegate of the Registrar of Trade Marks refused to register two trade mark applications filed by Active Skin

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Details
Case
[2021] FCCA 329
Decision Date

CaseChat Overview and Summary

Active Skin Pty Ltd sought to determine the quantum of security for costs that it was required to provide to Yey Pty Ltd. The application was heard by Baird J.

The central legal issue before the court was whether the quantum of security for costs could be calculated by reference to the Federal Court Rules (FCRules) when the court had not yet made an overarching order referring costs to taxation under those rules. Active Skin argued that without such an order, the security should be calculated according to the Rules, as that was the extent of costs Yey would be entitled to if successful. Yey, conversely, quantified the security based on the FCRules.

Baird J considered the relevant provisions of the Federal Circuit and Family Court of Australia Act 2021 (Cth) (FCC Act) and the Rules. Section 80 of the FCC Act and Rule 21.01 of the Rules empower the court to order an applicant to give security for costs in an amount and manner the court directs. Rule 21.02(2) outlines various ways the court can make an order for costs, including setting the amount, the method of calculation, or referring costs for taxation. Rule 21.10 states that, unless the court orders otherwise, a party entitled to costs is entitled to costs in accordance with Parts 1 and 2 of Schedule 1 and proper disbursements. The court noted that Active Skin did not explain why it would not be entitled to seek costs in accordance with the FCRules should it succeed.

The court found that the quantum of security was to be determined by reference to the FCRules, as Yey had quantified its anticipated recoverable costs on that basis. The court ordered Active Skin to provide security for Yey's costs in the sum of $65,000.

Orders

Orders of the court

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Background

Background to the litigation

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Evidence

Evidence Before The Court

Both parties seek their costs of the application for security. EVIDENCE AS TO QUANTUM OF SECURITY Yey relies on the affidavit of Cameron Lang, employed solicitor, affirmed 14 August 2020. As set out in annexed correspondence from his firm, Mr Lang provides a calculation of anticipated recoverable costs by reference to the costs rules applicable in the Federal Court of Australia (that is, under the FCRules), on a party-party basis, for a 3 day final hearing, estimating a 70% recovery of solicitors’ fees, and 100% recovery of counsel fees, and no other disbursements, giving a total of $65,000. Mr Lang attests to that estimation being conservative. Mr Lang also deposes to an Australian Securities and Investments Commission current and historic company search extract of Active Skin, and certain Google maps’ search results. As Active Skin has agreed to give security (whilst debating the terms of the order, and thus quantum) it is unnecessary to refer to those searches and results further. Active Skin relies on an affidavit of Peter Whitehead, its instructing solicitor, affirmed 24 August 2020. Mr Whitehead sets out a significant number of proceedings in which he has been involved where his firm has been the solicitor on the record in the Federal Court. Mr Whitehead states that that “if [Yey] succeeds in the proceeding, and [Active Skin] is ordered to pay [Yey’s] costs, the costs payable will be determined in accordance with Part 21 and schedule 1 of the [Rules], unless the Court orders otherwise”. He refers to, and provides his calculations based on Schedule 1, giving a total of $22,322.50. I observe that although referring to the events based scale in Schedule 1, Mr Whitehead omits certain events such as judgment taking, the interim application, and disbursements. THE PARTIES’ SUBMISSIONSActive Skin’s submissions Active Skin’s counsel submit the “only issue for determination is whether the quantum of security to be provided by Active Skin can be calculated by reference to the [FCRules] if the Court does not first make an order to the effect that costs in the proceeding be referred to taxation under the FCR, not the [Rules]”. Active Skin says Yey “quantifies security under the [FCRules] for $65,000, while also opposing costs orders being referred for taxation under the FCR”. Active Skin says that before requiring it to provide security now in an amount determined under the FCRules, the Court must make an order in the nature of the overarching taxation order (see [14] above). If the Court does not make such order at this time, the quantum of security must be determined by reference to the Rules, “as that is the extent of costs to which Yey would be entitled”. Active Skin says its position is consistent with the Rules, and specifically Rule 21.10. It argues that to order a party to provide security in an amount determined under the FCRules, when the opposing party is not entitled to costs under those rules, would be contrary to Rule 21.10. Active Skin does not explain why it would not be entitled to seek costs in accordance with the FCRules should it succeed in the proceeding.Yey’s submissions

Decision

Reasons for decision

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Ratio Decidendi

Legal Principle Established

Yey brings its application pursuant to s.80 of the FCCA Act, and rule 21.01 of the Rules, and I apprehend from the inter partes correspondence, also pursuant to s.1335 of the Corporations Act 2001 (Cth). In this case nothing turns upon small differences in the approach to security for costs in each of those provisions. Section 80(2) of the FCCA Act provides that the Court may order an applicant in a proceeding in the Court to give security for the payment of costs that may be awarded against the applicant. The security shall be such amount, and given at such time and in such manner and form, as the Court directs: s.80(3). The Court may reduce or increase the amount of security ordered to be given and may vary the time at which, or manner or form in which, the security is to be given: s.80(4). If security is not given in accordance with that ordered, the Court may dismiss or stay the proceeding: s.80(5). Rule 21.01 reflects the terms of s.80 of the FCCA Act. Section 80 is in substantially similar terms to s.56 of the Federal Court of Australia Act 1976 (Cth) (FCA Act). Rule 21.01, on which Yey relies, is contained in Part 21, Division 21.1 of the Rules. Rule 21.10, on which Active Skin relies, is contained in Part 21, Division 21.3 of the Rules. To place these rules in context, the relevant provisions of the Rules contained in Part 21, Divisions 21.1, 21.2, and 21.3 (relevantly 21.09, and 21.10) are:Part 21—CostsDivision 21.1—Security for costs21.01Security for costs(1)On application by a respondent, the Court may order the applicant to give the security that the Court considers appropriate for the respondent’s costs of the proceeding.(2)For this rule:respondent includes an applicant if a cross‑claim is made or the response to the application seeks orders in relation to matters not covered by the applicant.…Division 21.2—Orders for costs21.02 Order for costs(1)An application for an order for costs may be made:(a) at any stage in a proceeding; or(b) within 28 days after a final decree or order is made; or(c) within any further time allowed by the Court.(2)In making an order for costs in a proceeding, the Court may:(a) set the amount of the costs; or(b) set the method by which the costs are to be calculated; or(c) refer the costs for taxation under Part 40 of the Federal Court Rules or under Chapter 19 of the Family Law Rules; or(d) set a time for payment of the costs, which may be before the proceeding is concluded.21.03 Determination of maximum costs(1)The Court may specify the maximum costs that may be recovered on a party and party basis:(a) by order at the first court date; and(b) of its own motion or on the application of a party. …Division 21.3—Costs and disbursements21.09 Application(1)This Subdivision applies to costs payable, or to be taxed, under an Act, these Rules or an order of the Court, in a proceeding.(2)Subject to paragraphs 21.02(2)(c) and 21.11(2)(a), Chapter 19 of the Family Law Rules does not apply to a family law or child support proceeding in the Court.(3)Unless otherwise provided, these Rules do not regulate the fees to be charged by lawyers as between lawyer and client in relation to proceedings in the Court.Note: For any dispute between a lawyer and a client about the fees charged by the lawyer, see the State or Territory legislation governing the legal profession in the State or Territory where the lawyer practises.21.10 Costs and disbursementsUnless the Court otherwise orders, a party entitled to costs in a proceeding (other than a proceeding to which the Bankruptcy Act applies) is entitled to:(a)costs in accordance with Parts 1 and 2 of Schedule 1; and(b)disbursements properly incurred.Note:For costs in a proceeding to which the Bankruptcy Act 1966 applies, see Part 13 of the Federal Circuit Court (Bankruptcy) Rules 2016.