C.M.E Blasting & Mining Equipment Ltd v Rock Tool Refurbishment Solutions Pty Ltd

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FEDERAL COURT OF AUSTRALIA

C.M.E. Blasting & Mining Equipment Ltd v Rock Tool Refurbishment Solutions Pty Ltd [2021] FCA 160

File number: SAD 43 of 2020
Judgment of: BESANKO J
Date of judgment: 2 March 2021
Date of publication of reasons: 3 March 2021
Catchwords: PRACTICE & PROCEDURE — application for security for costs under s 56 of the Federal Court of Australia Act 1976 (Cth) and r 19.01 of the Federal Court Rules 2011 (Cth) — where applicant in proceeding a corporation in Ontario, Canada — where assets in the jurisdiction, but considerable uncertainty about respondents’ ability to recover costs from those assets — where there is no reciprocal enforcement of judgments legislation between Australia and Ontario, Canada — where there is no evidence about applicant’s assets in Ontario, Canada — appropriate for the quantum of security to be fixed by reference to costs incurred or likely to be incurred in the proceeding — security ordered
Legislation:

Federal Court of Australia Act 1976 (Cth) s 56

Federal Court Rules 2011 (Cth) r 19.01

Cases cited:

Augusta Ventures Limited v Mt Arthur Coal Pty Limited [2020] FCAFC 194; (2021) 384 ALR 340

Austin, Nicols & Co Inc v Lodestar Anstalt [2009] FCA 1228

Dead End Survival, LLC v Marhasin [2019] ONSC 3569

Dense Medium Separation Powders Pty Ltd v Gondwana Chemicals Pty Ltd [2011] NSWCA 84

Farmitalia Carlo Erba SrL v Delta West Pty Ltd (1994) 28 IPR 336

Maxim’s Caterers Ltd v Magnona Pty Ltd(No 1) [2010] FCA 450

Division: General Division
Registry: South Australia
National Practice Area: Intellectual Property
Sub-area: Patents and associated Statutes
Number of paragraphs: 52
Date of hearing: 16 December 2020
Counsel for the Applicant: Mr B Gardiner
Solicitor for the Applicant: Piper Alderman
Counsel for the Respondents: Mr A Fox
Solicitor for the Respondents: DLA Piper Australia

ORDERS

SAD 43 of 2020
BETWEEN:

C.M.E. BLASTING & MINING EQUIPMENT LTD

Applicant
AND:

ROCK TOOL REFURBISHMENT SOLUTIONS PTY LTD (ACN 634 752 953)

First Respondent

BRADLEY BEURS

Second Respondent
AND BETWEEN:

ROCK TOOL REFURBISHMENT SOLUTIONS PTY LTD

Cross-Claimant
AND:

C.M.E. BLASTING & MINING EQUIPMENT LTD

Cross-Respondent

ORDER MADE BY:

BESANKO J

DATE OF ORDER:

2 MARCH 2021

THE COURT ORDERS THAT:

1.Within 21 days, the Applicant ensure that there is in the Piper Alderman trust account funds in the amount of US$220,000, such funds not to be released from the Piper Alderman trust account except:

(a)in satisfaction of an order for costs in favour of the First and Second Respondents, made upon conclusion of the proceeding;

(b)upon conclusion of the proceeding with judgment (including any costs orders) and after satisfaction of any costs orders in favour of the First and Second Respondents; or

(c)with prior written consent of the parties or upon further order of the Court.

2.Within 28 days, the Applicant provide to the First and Second Respondents’ legal representatives evidence of the payment in compliance with order 1.

3.In the event that orders 1 and 2 are not complied with, the proceedings…

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Details
Case
[2021] FCA 160
Decision Date

CaseChat Overview and Summary

The case of C.M.E Blasting & Mining Equipment Ltd v Rock Tool Refurbishment Solutions Pty Ltd involved a dispute between an applicant, a corporation based in Ontario, Canada, and the respondents, which included Rock Tool Refurbishment Solutions Pty Ltd. The primary issue before the Federal Court was the application for security for costs under section 56 of the Federal Court of Australia Act 1976 (Cth) and rule 19.01 of the Federal Court Rules 2011 (Cth). The applicant had assets in Australia, but there was considerable uncertainty about whether these assets could be used to satisfy a potential order for costs against the applicant. Additionally, there was no reciprocal enforcement of judgments legislation between Australia and Ontario, Canada, complicating the enforcement of any judgment. The court had to determine whether an order for security for costs was appropriate and, if so, what the appropriate quantum of that security should be.

The legal issues before the court were multifaceted. Firstly, it had to ascertain the assets available in Australia that could be used to satisfy a potential order for costs. Secondly, if an order for security for costs was appropriate, the court needed to determine the appropriate amount of that security. This involved assessing the likely quantum of costs incurred and to be incurred in the proceeding, and considering whether the security should be fixed by reference to the costs of enforcing a costs order in Ontario, Canada. The court also had to consider the evidence provided by both parties, which included affidavits from experienced legal professionals.

In its reasoning, the court acknowledged that while the applicant had assets in Australia, there was significant uncertainty about their availability to satisfy a costs order. The court noted the absence of reciprocal enforcement of judgments legislation between Australia and Ontario, Canada, which further complicated the enforcement issue. Given these circumstances, the court deemed it appropriate to fix the quantum of security by reference to the costs incurred or likely to be incurred in the proceeding. The court ordered that within 21 days, the applicant must ensure that US$220,000 was held in a trust account and provided evidence of this to the respondents' legal representatives within 28 days. If these orders were not complied with, the proceedings would be stayed pending further order of the court. Additionally, the respondents were granted liberty to apply for further security if the proceeding continued past the completion of evidence. The costs of the interlocutory application were reserved.

The final orders of the court mandated that the applicant must deposit US$220,000 in a trust account within 21 days and provide evidence of this deposit to the respondents' legal representatives within 28 days. Failure to comply with these orders would result in the stay of the proceedings pending further order of the court. The respondents were also granted the liberty to apply for further security if the proceeding continued beyond the completion of evidence. The costs of the interlocutory application were reserved for later determination.

Orders

Orders of the court

1. Within 21 days, the Applicant ensure that there is in the Piper Alderman trust account funds in the amount of US$220,000, such funds not to be released from the Piper Alderman trust account except:

(a) in satisfaction of an order for costs in favour of the First and Second Respondents, made upon conclusion of the proceeding;

(b) upon conclusion of the proceeding with judgment (including any costs orders) and after satisfaction of any costs orders in favour of the First and Second Respondents; or

(c) with prior written consent of the parties or upon further order of the Court.

2. Within 28 days, the Applicant provide to the First and Second Respondents’ legal representatives evidence of the payment in compliance with order 1.

3. In the event that orders 1 and 2 are not complied with, the proceedings are stayed pending further order of the Court.

4. In the event that the proceeding continues past the completion of evidence, the First and Second Respondents have liberty to apply for further security for costs.

5. The costs of the Interlocutory application dated 30 October 2020 be reserved.

Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

Background

Background to the litigation

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Evidence

Evidence Before The Court

The key issues which arise on this application are as follows:(1)What assets does the applicant have in Australia which might be available to satisfy an order for costs in favour of the respondents?(2)If an order for security for costs is appropriate, what is the appropriate amount of that security? This issue divides into two issues. They are as follows:(a)What is the appropriate amount for security having regard to the evidence before the Court as to the likely quantum of the costs incurred and to be incurred, to the point where the evidence has been prepared and is complete?(b)Is it appropriate to fix the quantum of security by reference to the costs of enforcing a costs order of this Court in Ontario, Canada and, if so, what is the appropriate amount?The Evidence Each party relies on a number of affidavits. The respondents are represented by DLA Piper. Ms Robynne Lyndsay Sanders is a solicitor and partner of DLA Piper. She has the care and conduct of the proceeding on behalf of the respondents. The proceeding involves the claim by the applicant and a cross-claim made by the first respondent and first cross-claimant. Ms Sanders has affirmed three affidavits in this proceeding. She has over 20 years of experience in litigation and she has been involved predominantly in patent litigation. She states that she has conducted over 30 patent infringement cases over her career. She has had to provide her clients with estimates as to the associated costs of litigation. She has been involved in over 15 cases where costs were recovered following the conclusion of proceedings, including over five cases in which costs were taxed. She has sought security for costs on behalf of her clients in eight cases. Ms Sanders deposes, and I accept, that she has a detailed knowledge of the usual steps required to be completed in patent litigation, the time required to complete those steps and the approximate costs of completing those steps. The respondents also rely on an affidavit affirmed by Mr Alan Macek. Mr Macek is a solicitor and barrister in Toronto, Canada. He was called to the Ontario Bar in 2006 and is a partner of DLA Piper Canada. That firm is part of the DLA Piper global group of firms which includes DLA Piper Australia. Mr Macek’s practice is focused on intellectual property litigation and patent prosecution. He deposes to the fact that he has been involved in cases in the Federal Court, Federal Court of Appeal, Court of Queen’s Bench of Alberta and the Ontario Supreme Court. He deposes to the fact that most of his litigation work involves cross-border litigation. Mr Macek is the Chair of the Canadian Bar Association Patents Committee and a fellow of the Intellectual Property Institute of Canada and its Information, Communication and Technology Committee. He is also a registered patent agent and a registered trade mark agent. Mr Macek states that on a number of occasions he and the Canadian litigation group at DLA Piper have been involved in cross-border litigation where the impact of foreign judgments in Canada was in issue. He and the group in which he works has been involved in numerous proceedings before the Ontario Supreme Court and the Federal Court involving both applications and actions with interlocutory motions and appeals.

Decision

Reasons for decision

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Ratio Decidendi

Legal Principle Established

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