Bitech Engineering v Garth Living Pty Ltd (No 2) - [2009] FCA 1460

FEDERAL COURT OF AUSTRALIA
Bitech Engineering v Garth Living Pty Ltd (No 2) [2009] FCA 1460
COSTS – whether the circumstances of the cases justified any issues-based costs orders – in one case, one issues-based costs order made – whether any of the respondent parties entitled to indemnity costs – indemnity costs refused
Corporations Act 2001 (Cth), s 500(2)
Patents Act 1990 (Cth), s 19
Bitech Engineering v Garth Living Pty Ltd [2009] FCA 1393 related
Bitech Engineering v Flameglow Pty Ltd [2008] FCA 1583 related
Colgate-Palmolive Company v Cussons Pty Ltd (1993) 46 FCR 225 followed
Fyna Foods Australia Pty Ltd v Cobannah Holdings Pty Ltd [2004] FCA 1212 applied
PAC Mining Pty Ltd v Esco Corporation (No 2) [2009] FCAFC 52 applied
Re Wilcox; Ex parte Venture Industries Pty Ltd (No 2) (1996) 72 FCR 151 followed
University of Western Australia v Gray (No 21) (2008) 249 ALR 360 applied
Vasram v AMP Life Ltd [2002] FCA 1286 applied
BITECH ENGINEERING v GARTH LIVING PTY LTD (ACN 111 145 432) and COHEN NOMINEES PTY LIMITED (ACN 008 526 994); GARTH LIVING PTY LTD (ACN 111 145 432) v BITECH ENGINEERING
NSD 1681 of 2006
BITECH ENGINEERING v BUNNINGS GROUP LIMITED (ACN 008 672 179)
NSD 43 of 2007
BITECH ENGINEERING v FLAMEGLOW PTY LTD (ACN 117 672 518); FLAMEGLOW PTY LTD (ACN 117 672 518) v BITECH ENGINEERING
NSD 105 of 2007
BITECH ENGINEERING v HOTPOINT (AUST) PTY LTD (ACN 082 599 086); HOTPOINT (AUST) PTY LTD (ACN 082 599 086) v BITECH ENGINEERING
NSD 2056 of 2007
FOSTER J
9 DECEMBER 2009
SYDNEY

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY

GENERAL DIVISION

NSD 1681 of 2006

BETWEEN:
BITECH ENGINEERING
Applicant/Cross-Respondent

AND:
GARTH LIVING PTY LTD (ACN 111 145 432)
First Respondent/Cross-Claimant

COHEN NOMINEES PTY LIMITED (ACN 008 526 994)
Second Respondent

JUDGE:

FOSTER J

DATE OF ORDER:

9 DECEMBER 2009

WHERE MADE:

SYDNEY

THE COURT ORDERS THAT:
1.On the question of costs, the respondents have leave to read and to rely upon the affidavit of Dean Anthony Jones sworn on 30 November 2009 and filed herein.
2.The applicant pay the respondents’ costs of and incidental to the Application other than those costs expended by the first respondent (Garth Living) in relation to the allegation made by the applicant that the first respondent imported, sold or distributed in Australia the BH model heaters and the MS-5 model heater as described in Bitech Engineering v Garth Living Pty Ltd [2009] FCA 1393 and the allegation that the first respondent was involved in a common design with others to import, sell and distribute those model heaters in Australia (these allegations being together referred to as the sale allegations).
3.Garth Living pay the applicant’s costs of and incidental to proving the sale allegations.
4.Garth Living pay the applicant’s costs of and incidental to the Cross-Claim filed by Garth Living on 23 November 2006.
5.Subject to any agreement in relation to costs that may be…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2009] FCA 1460
Decision Date: 9 DECEMBER 2009

CaseChat Overview and Summary

Bitech Engineering v Garth Living Pty Ltd (No 2) involved multiple parties with complex disputes relating to patent infringement and the validity of a patent. The proceedings included claims and cross-claims between Bitech Engineering, Garth Living Pty Ltd, Cohen Nominees Pty Limited, Flameglow Pty Limited, Bunnings Group Limited, and Hotpoint (Aust) Pty Ltd. The central issue was whether Bitech should bear the costs of the proceedings initiated by it and, if so, under what conditions. Additionally, there were claims for indemnity costs and certificates of patent validity.

The legal issues before the court included the reasonableness of Bitech's actions in rejecting settlement proposals, the entitlement to indemnity costs for the respondents, and the appropriate apportionment of costs between the parties. The court had to determine whether Bitech's conduct warranted the respondents being awarded their costs on an indemnity basis and whether Bitech was entitled to certificates of patent validity for certain claims.

In its reasoning, the court found that Bitech should pay the costs of the proceedings brought by it, subject to certain exceptions. The court held that Bitech acted unreasonably in rejecting settlement proposals by some respondents, justifying an indemnity costs order against Bitech. However, Bitech was not required to pay certain costs related to specific allegations. The court also determined that Bitech was entitled to certificates of patent validity for the unchallenged claims. The court detailed specific costs orders for each party, including the payment of costs on an indemnity basis, the reimbursement of certain costs, and the issuance of certificates of patent validity.

Orders

Orders of the court

1. On the question of costs, the respondents have leave to read and to rely upon the affidavit of Dean Anthony Jones sworn on 30 November 2009 and filed herein.

2. The applicant pay the respondents’ costs of and incidental to the Application other than those costs expended by the first respondent (Garth Living) in relation to the allegation made by the applicant that the first respondent imported, sold or distributed in Australia the BH model heaters and the MS-5 model heater as described in Bitech Engineering v Garth Living Pty Ltd [2009] FCA 1393 and the allegation that the first respondent was involved in a common design with others to import, sell and distribute those model heaters in Australia (these allegations being together referred to as the sale allegations).

3. Garth Living pay the applicant’s costs of and incidental to proving the sale allegations.

4. Garth Living pay the applicant’s costs of and incidental to the Cross-Claim filed by Garth Living on 23 November 2006.

5. Subject to any agreement in relation to costs that may be reached between the applicant and Garth Living, within 14 days after the service on the solicitors for the applicant of a Certificate of Taxation in respect of Garth Living’s costs ordered to be paid by the applicant under par 2 above, there be paid out of the trust account of DLA Phillips Fox to Garth Living or as it shall direct the amount set out in the said Certificate less the total amount taxed or agreed pursuant to pars 3 and 4 above up to the amount of $150,000.00 on account of Garth Living’s costs being the sum presently held by DLA Phillips Fox as security for Garth Living’s costs of this proceeding.

6. Subject to any agreement in relation to costs that may be reached between the applicant and the second respondent (Cohen), within 14 days after the service on the solicitors for the applicant of a Certificate of Taxation in respect of Cohen’s costs ordered to be paid by the applicant under par 2 above, there be paid out of the trust account of DLA Phillips Fox to Cohen or as it shall direct the amount set out in the said Certificate up to the amount of $150,000.00 on account of Cohen’s costs being the sum presently held by DLA Phillips Fox as security for Cohen’s costs of this proceeding.

THE COURT CERTIFIES THAT:

7. Pursuant to s 19 of the Patents Act 1990 (Cth), the validity of Claims 1, 8, 12, 14 and 20 made in Australian Patent No 621713 was questioned unsuccessfully in this proceeding.

Note:

1. On the question of costs, the respondent have leave to read and to rely upon the affidavit of Dean Anthony Jones sworn on 30 November 2009 and filed herein.

2. The applicant pay the respondent’s costs of and incidental to this proceeding.

3. Subject to any agreement in relation to costs that may be reached between the applicant and the respondent, within 14 days after the service on the solicitors for the applicant of a Certificate of Taxation in respect of the respondent’s costs ordered to be paid by the applicant under par 2 above there be paid out of the trust account of DLA Phillips Fox to the respondent or as it shall direct the amount quantified in the said Certificate up to the amount of $160,000.00 on account of the respondent’s costs being the sum presently held by DLA Phillips Fox as security for the respondent’s costs of this proceeding.

Note:

1. On the question of costs, the respondent have leave to read and to rely upon the affidavit of Rutland Cheung sworn on 27 November 2009 and filed herein.

2. The applicant pay the respondent’s costs of and incidental to the Application.

3. The respondent pay the applicant’s costs of and incidental to the Cross-Claim filed on 23 April 2008.

THE COURT CERTIFIES THAT:

4. Pursuant to s 19 of the Patents Act 1990 (Cth), the validity of Claims 1, 8, 12, 14 and 20 made in Australian Patent No 621713 was questioned unsuccessfully in this proceeding.

Note:

Background

Background to the litigation

Full text does not contain this section.

Evidence

Evidence Before The Court

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Decision

Reasons for decision

FOSTER J

On 26 November 2009, I delivered Reasons for Judgment in these matters (Bitech Engineering v Garth Living Pty Ltd [2009] FCA 1393) (the principal judgment). On that day, I reserved all questions of costs for determination on the papers. I directed that the parties file Written Submissions on the question of costs. All parties have now filed Written Submissions. In the proceeding between it and Flameglow Pty Limited (Flameglow), the applicant (Bitech) seeks to tender on the question of costs certain correspondence passing between its lawyers (DLA Phillips Fox) and the lawyers for Flameglow. That correspondence is to be found at pp 18–33 of Bitech’s Written Submissions on Costs dated 3 December 2009. That correspondence will become Exhibit A in the costs applications. Flameglow tenders on the question of costs in the proceeding against it a letter from its solicitors (Donaldson Walsh) to DLA Phillips Fox dated 23 May 2008. That letter will become Exhibit 1 in the costs applications. In proceeding NSD 1681 of 2006, in which Garth Living Pty Ltd (Garth Living) and Cohen Nominees Pty Limited (Cohen) are the respondents, those respondents seek to read on the question of costs the affidavit of Dean Anthony Jones sworn on 30 November 2009. That affidavit is taken as read. In proceeding NSD 43 of 2007, in which Bunnings Group Limited (Bunnings) is the sole respondent, Bunnings seeks to read on the question of costs the affidavit of Dean Anthony Jones sworn on 30 November 2009. That affidavit is also taken as read. In proceeding NSD 2056 of 2007, in which Hotpoint (Aust) Pty Ltd (Hotpoint) is the sole respondent, Hotpoint seeks to read on the question of costs the affidavit of Rutland Cheung sworn on 27 November 2009. That affidavit is taken as read. Subject to two qualifications, Bitech accepts that it should pay the other parties’ costs of the proceedings brought by it. The two qualifications concern the particular circumstances of Garth Living and Flameglow. Bitech seeks the costs of the Cross-Claims brought by Garth Living, Flameglow and Hotpoint against it. The respondents contend that they should be awarded a substantial portion of their costs of defending Bitech’s claims against them on an indemnity basis. These applications are founded upon the contention that Bitech acted unreasonably in rejecting settlement proposals made by each of the respondents. I propose to address the question of costs of each proceeding separately in order to do justice to the individual circumstances of the parties in each proceeding. Bitech also claims to be entitled to Certificates of Validity in respect of the Patent. I think that it is entitled to such certificates. In those proceedings where the validity of the Patent was challenged, I propose to issue certificates substantially in the form claimed. PROCEEDING NSD 1681 OF 2006 The respondents in this proceeding are Garth Living and Cohen. Garth Living cross-claimed against Bitech for revocation of the Patent. Cohen declined to cross-claim.

Ratio Decidendi

Legal Principle Established

Established by: FOSTER J

Full text does not contain this section.

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION	NSD 1681 of 2006

JUDGE:	FOSTER J
DATE OF ORDER:	9 DECEMBER 2009
WHERE MADE:	SYDNEY