Campomar Sociedad, Limitada & Anor v Nike International

[1999] HCATrans 148

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
  Sydney  No S41 of 1999

B e t w e e n -

CAMPOMAR SOCIEDAD, LIMITADA

First Appellant

NIKE COSMETICS SA

Second Appellant

and

NIKE INTERNATIONAL LTD

First Respondent

NIKE AUSTRALIA PTY LTD

Second Respondent

Office of the Registry
  Sydney  No S42 of 1999

B e t w e e n -

CAMPOMAR SOCIEDAD, LIMITADA

Appellant

and

NIKE INTERNATIONAL LTD

First Respondent

NIKE AUSTRALIA PTY LTD

Second Respondent

Application for security for costs

GUMMOW J

(In Chambers)

TRANSCRIPT OF PROCEEDINGS

AT SYDNEY ON THURSDAY, 10 JUNE 1999, AT 9.48 AM

Copyright in the High Court of Australia

MR J.V. NICHOLAS:   May it please the Court, I appear for the respondents to the appeal and the applicant on the motion for security for costs.  (instructed by Sprusons:Solicitors)

MR D.K. CATTERNS, QC:  May it please the Court, I appear for the appellants who are the respondents on the summons.  (instructed by Mallesons Stephen Jaques)

HIS HONOUR:   Yes.  Let me just finds the summons first.  There is a summons in each matter, is there not, or is there only one - - -?

MR NICHOLAS:   Yes, your Honour, there is a summons in each matter, both filed on 3 June.  I am sorry, your Honour, there is one summons filed in S41 of 1999, which was filed on 3 June.

HIS HONOUR:   Yes, I have that.

MR NICHOLAS:   And amongst the orders sought, which is not controversial between us - - -

HIS HONOUR:   But there is not a summons in the other one?

MR NICHOLAS:   No, your Honour.

HIS HONOUR:   But there is an application that - it is order 1.  Order 1 sought in the summons is for consolidation.

MR NICHOLAS:   Yes, your Honour, or, alternatively, that they be heard together.  My learned friend and I were agreed that the second of those orders ought to be made subject to any different view your Honour had, that is, that the appeals be heard together.

HIS HONOUR:   Yes.  Why were there two appeals?

MR NICHOLAS:   Your Honour, there were two proceedings in the court below at first instance and that carried through into the appeal.  Both proceedings were heard together before Justice Sheppard.

HIS HONOUR:   Why were there two?

MR NICHOLAS:   There were two, your Honour, because after the first set of proceedings were commenced in relation to passing off and one particular trademark, after that time, there was another trademark which was registered and it was necessary to bring further proceedings.

HIS HONOUR:   Yes, I follow, thank you.

MR NICHOLAS:   Your Honour, I can hand up to your Honour some short minutes of order which - - -

HIS HONOUR:   Very well.

MR NICHOLAS:   As to the matter we have just touched on, deal in order 1 with the hearing of the appeal.  Order 2, your Honour, which is contentious, reflects what, in recent practice, has been the order usually made in this Court when security is ordered under - - -

HIS HONOUR:   Yes.  It does not deal with the form of security, of course.

MR NICHOLAS:   No, it does not, your Honour.  The recent cases I have in mind seem consistently to leave the question of form to the registrar for his determination.

HIS HONOUR:   Well, the parties could agree, I suppose.

MR NICHOLAS:   Yes, your Honour.

HIS HONOUR:   Just going back to order 1 for the moment.  How voluminous were the appeal books in the Full Federal Court?

MR NICHOLAS:   They ran into approximately four volumes, from recollection, your Honour.

HIS HONOUR:   How many pages, roughly?  Your solicitors may know.

MR NICHOLAS:   Approximately 2,000, your Honour.

HIS HONOUR:   Would there be any utility in having some special order that those appeal books could be used again here with a supplementary appeal book to deal with the peculiar matters necessary to get it here, as it were?

MR NICHOLAS:   I think that would be a great utility, your Honour, in terms of saving some costs.

HIS HONOUR:   Would that be convenient to the solicitors, and save some costs?

MR CATTERNS:   Yes, it would be.  Thank you, your Honour.

HIS HONOUR:   Just sit down for a minute, Mr Nicholas.  There is notice of contention, is there?

MR NICHOLAS:   Yes, your Honour, there is.

HIS HONOUR:   Is there a cross-appeal?  Just a notice of contention?

MR NICHOLAS:   Just a notice of contention.

HIS HONOUR:   Well, I will make order 1 in the short minutes Mr Nicholas handed up, and order 1 is:

1.  Appeal No S41 of 1999 and appeal No S42 of 1999 be heard together.

And I will make a second order, that:

2.  The parties be at liberty to include as sufficient for the record in this Court the appeal books filed in the appeals to the Full Federal Court with an additional volume including an index to that volume, the judgment and orders of the Full Federal Court, the orders granting special leave, the notices of appeal and of contention and such other materials as the parties agree or the Registrar requires.

MR CATTERNS:   May it please the Court.

MR NICHOLAS:   May it please the Court.

HIS HONOUR:   Now, that brings us to security for costs.

MR NICHOLAS:   Yes, your Honour.  There is an affidavit sworn by Kate Johnston on 2 June 1999 upon which the applicant for security relies.  That was filed in S41 of 1999.

HIS HONOUR:   Yes, I have Ms Johnston's affidavit.

MR NICHOLAS:   Mr Catterns' clients yesterday filed an affidavit of Neil Robert Murray, sworn 9 June 1999.

HIS HONOUR:   Yes, that is right.  Yes, I have that.

MR NICHOLAS:   Your Honour, we seek to reply to that affidavit with an affidavit of Mr Kortian, sworn 10 June 1999.

HIS HONOUR:   Any opposition to that?

MR CATTERNS:   No, your Honour.

HIS HONOUR:   The affidavit of Mr Kortian, sworn 10 June 1999, may be filed in Court.  I will just read it to myself.  Any objection to the - - -

MR CATTERNS:   No, there is not, your Honour.

HIS HONOUR:   Now, the material from Spain on your side, Mr Nicholas, seemed to indicate that the Spanish system required reciprocity, is that not so?  In other words, it seemed to require that the Spanish judgment, mutatis mutandis, would be registered here.

MR NICHOLAS:   Yes, your Honour, that seems to be common between the two.

HIS HONOUR:   I may be wrong but I do not think Spain is a schedule country under the Foreign Judgments Act 1991.

MR NICHOLAS:   It is not, your Honour.  So, it would be a common law method of enforcement, if it was enforceable here at all.

HIS HONOUR:   Yes.

MR NICHOLAS:   I think that is made clear by the letter from Baker & McKenzie which indicates that over there it is of the same nature, I gather, that is to say, they are basically proceedings in the Supreme Court in Spain on the judgment and it is not a simple process of - - -

HIS HONOUR:   It does not look like a simple registration system.

MR NICHOLAS:   - - - registration.  Indeed, the letter that we received overnight indicates that the simple registration process can take anywhere between six months and a year, assuming there are no procedural issues that arise that can stretch it out beyond that.  Then there is an issue as to enforcement which leads to a conclusion that one could be talking of anything between one and two years before any sum could be recovered in Spain at all.  That is paragraph (b) on page 2 of that letter, your Honour.  Your Honour, it is a short point.  It is common ground that the ‑ ‑ ‑

HIS HONOUR:   Well, I wanted to ask you, before you went on further.  An order was made in the Federal Court, was it?

MR NICHOLAS:   Yes, your Honour, for security and it was complied with.  Those moneys have - - -

HIS HONOUR:   Was that made by consent or with resistance?

MR NICHOLAS:   I think it was made by consent, your Honour, from recollection.  Those moneys have since been released and satisfied the order for costs that was made in that court.  But it is common ground, your Honour, that there are no assets of these foreign litigants in this jurisdiction which is a matter, we say, that counts heavily in our favour.  As your Honour has already seen, enforcement of this judgment in Spain is by no means a simple process and it is certainly a time-consuming process, and it is one that would seem to involve of itself some considerable expense.  The estimates involved on that topic range up to a sum of $US6,000 to enforce this judgment in Spain.

Your Honour, the principles are well and truly familiar to your Honour but can I hand up to your Honour a decision of Justice McHugh which your Honour may be familiar with?

HIS HONOUR:   Which was that?  Ramset?

MR NICHOLAS:   Chellaram 65 ALJR 642 which is a decision that was referred to in the correspondence between the parties.

HIS HONOUR:   That had insolvency in it, did it not?

MR NICHOLAS:   It did, your Honour, as an additional factor.  But at 643, column 1, beginning at paragraph B, his Honour refers to the fact that "we are dealing with exercise of discretion".  At about line C:

A circumstance which may have very great weight when only two or three circumstances have to be weighed may be of minor significance when many circumstances have to be weighed.  However, for over 200 years, the fact that a party, bringing proceedings, is resident out of the jurisdiction and has no assets within the jurisdiction has been seen as a circumstance of great weight in determining whether an order for security for costs should be made. 

Your Honour, here, we cannot say that, on the evidence, insolvency is established.  On the other hand, the evidence from the appellants certainly does not establish that they are solvent.  There is some evidence of turnover of a sum of $17 million per annum or something of that nature.

HIS HONOUR:   This is quite a large Spanish business, is it not?

MR NICHOLAS:   Yes, your Honour, but - - -

HIS HONOUR:   I would not find, on an interlocutory application, that they might be insolvent.

MR NICHOLAS:   No, your Honour, certainly.  In other words, that issue seems to be completely neutral, your Honour.

HIS HONOUR:   Yes.  The real point is that there is no assets here and that enforcement has difficulties both as to time and to cost.

MR NICHOLAS:   Yes, your Honour.  Your Honour, there is no suggestion, of course, that an order would stultify this appeal in some way, which is a consideration that is often prayed in aid.

HIS HONOUR:   No.  That was a factor in Ramset, in a way.

MR NICHOLAS:   Yes.

HIS HONOUR:   What was the figure in the Federal Court?  It was $25,000, was it not?

MR NICHOLAS:   $25,000, your Honour.  The appeal here seems to be an appeal on all issues, judging by the notice of appeal that has been filed.  There has been no narrowing in the scope of issues that are to be the subject of this appeal, given - compared to what was raised in the Federal Court.

MR CATTERNS:   I think it has to be, your Honour, we lose unless we win on all issues, in effect.

HIS HONOUR:   Yes.

MR NICHOLAS:   That is all I wanted to say on that application.

HIS HONOUR:   Yes, all right.  Yes, Mr Catterns.

MR CATTERNS:   Just briefly, if I may your Honour, may it please the Court.  Your Honour, our friend's application is based merely on the fact that the appellants are foreign corporations.  There is no suggestion that they cannot pay and our evidence is, so far as it goes, that they can.  They are substantial corporations with, I think, $15 million or $17 million turnover.

HIS HONOUR:   Yes.

MR CATTERNS:   Have paid $25,000.

HIS HONOUR:   Yes.  I just hope there might be another outbreak of consensus here.

MR CATTERNS:   It is a point that should not trouble your Honour for too long, I fully accept.  Your Honour, more importantly, we would submit that one ought not to, what, with globalisation and so on - if your Honour would forgive the jargon - assume that a foreign corporation will not pay, not every corporation or every foreign corporation refuses to pay its debts.  We have so far paid $25,000.

HIS HONOUR:   No, but they would be perfectly entitled to say, "There's no registration system providing an automatic connection between us and Spain.  We're perfectly prepared to pay in accordance with Spanish law and procedures."  They perfectly entitled to say that.

MR CATTERNS:   And, your Honour, I cannot challenge what my friend has said about the - - -

HIS HONOUR:   Yes, what do you say about that?

MR CATTERNS:   I cannot challenge that, your Honour.

HIS HONOUR:   Yes.  But, I mean, it does have factors of difficulty in delay involved.

MR CATTERNS:   That is so, your Honour.

HIS HONOUR:   As would be the position here if a Spanish judgment was sought here and we did not have a registration system and there would have to be an action at common law on it, I suppose.

MR CATTERNS:   Your Honour, I cannot disagree with that, with respect.  That would lead to a fall-back position, perhaps, of securing Mr Nicholas' $US6,000 which is, say, $A10,000.  Your Honour, I accept that the public interest cases that your Honour is well familiar with do not apply in the sense that we are not being shut out.  Indeed, we proclaim that we can pay the money, rather than the opposite.  But we submit that the public interest may still be relevant though perhaps to a lesser extent because, having got through the special leave hurdle, at least, it is a credible appeal in an important - - -

HIS HONOUR:   Yes, it raises important issues.

MR CATTERNS:   In important issues, yes, your Honour.

HIS HONOUR:   That is conceded, I think.

MR CATTERNS:   Your Honour, finally, may I just refer your Honour to her Honour Justice Gaudron's decision in Dillon v Baltic Shipping 65 ALJR 647 - we had it here if your Honour wanted to look at it - just to remind your Honour that in that case, as with his Honour Justice McHugh - there is an issue in that case, your Honour, about securing the likely verdict which, of course, her Honour held could not be done. But, your Honour, just at the bottom of the left-hand column on the last page when her Honour turns to the question of the security for the costs, her Honour referred also, as it was insolvency in the case before Justice McHugh, things had gone into difficulty in what had been the Soviet Union by then and so there was uncertainty there too.

HIS HONOUR:   Yes.  Yes, I have come across the Baltic Shipping Company myself.

MR CATTERNS:   Yes, your Honour.  So, although it was not exactly insolvency, it was the same difficulties.  Whereas here the difficulties are, as it were, certain and quantifiable.  So, just if I may return to my earlier submission, the mere fact of foreignness, we submit, in a case such as this, given the facts that I have drawn attention to, ought itself not to enliven the discretion.  Alternatively, if your Honour were minded to order security, it ought to be for the lesser sum of about $10,000 rather than the $25,000, so as to secure the overseas enforcement.  May it please the Court.

HIS HONOUR:   Yes, thank you.

MR NICHOLAS:   Your Honour, $10,000, we would submit, would not really overcome the difficulties we are speaking of.  They would secure the costs of enforcement but security and recoverability in Spain does not seem to be ultimately an issue other than the time and the expense involved in engaging that process.  So, we would submit it is an appropriate case where security for the costs of the appeal ought to be put up and it is not a case that justifies departing from what is the usual practice. 

HIS HONOUR:   Yes, thank you.

This is an application for security for costs under Order 70 rule 7 of the Rules of Court.  The order sought is in the following terms:

Within 28 days of the date of this order, the appellants provide security for the respondents' costs of the appeals in No S41 of 1999 and No S42 of 1999 in the sum of $25,000 in a form acceptable to the Registrar.

The application is supported by the affidavit of Ms Kate Johnston of 2 June 1999.  In addition, on each side, there are materials dealing with the position under Spanish law that would obtain if enforcement was sought in Spain of a costs order made here.  Those matters are dealt with in the affidavits of Mr Murray, sworn 9 June, and of Mr Kortian, sworn 10 June.

Three matters appear to me to be of particular importance in exercising the discretion that is involved.  The first is that the making of an order for provision of security would not have the effect of stultifying the appeals.  The appellants are substantial corporations carrying on business in Spain and elsewhere in the world.  Secondly, the appellants, however, have no assets in Australia out of which a costs order could be required.  Thirdly, the evidence to which I have referred indicates that the enforcement procedures in Spain, in particular given the lack of a reciprocal registration system with this country, under the Australian Foreign Judgments Act 1991 (Cth), would be time consuming and could involve significant expense.

The second of the factors I have mentioned was mentioned by McHugh J in P S Chellaram & Co v China Ocean Shipping Co (1991) 65 ALJR 642 at 643. His Honour observed that:

for over 200 years, the fact that a party, bringing proceedings, is resident out of the jurisdiction and has no assets within the jurisdiction has been seen as a circumstance of great weight in determining whether an order for security for costs should be made.

That is so here, and there are also the additional factors which I mentioned.

The position has been established that an order for security should be made.  It then becomes necessary to determine the quantum.  The Court has been informed that a security order was made in the Full Court of the Federal Court in the sum of $25,000 and that, in due course, that money was paid out.  It was suggested that a suitable sum here would be limited to the equivalent of $US6,000 which is said to be the approximate cost of enforcement proceedings in Spain.  However, it is not merely the cost of the enforcement proceedings but the delay that, on the evidence, would be involved in utilising those procedures that is to be taken into account.

In all the circumstances, I think I should make the order in the form proposed in the short minutes and, accordingly, I will add as order 3:

Within 28 days of the date of this order, the appellants provide security for the respondents' costs of the appeals in No S41 of 1999 and No S42 of 1999 in the sum of $25,000 in a form acceptable to the Registrar.

What should I do about costs?  Make it costs of the appeals?

MR NICHOLAS:   I would ask for the costs of the application, your Honour, which is an order that Justice McHugh made in similar circumstances.

MR CATTERNS:   I think there are cases that go both ways on that, your Honour.

HIS HONOUR:   They do.

MR CATTERNS:   I would submit that the order should be costs in the appeal.

HIS HONOUR:   Yes.  I think that is right.  Order 4:

Costs of this application be costs of the appeal.

I make those four orders in each of matters No S41 and S42 of 1999.

MR NICHOLAS:   May it please the Court.

MR CATTERNS:   May it please the Court.

HIS HONOUR:   Is there anything else, gentlemen?

MR NICHOLAS:   No, your Honour. 

AT 10.15 AM THE MATTER WAS CONCLUDED