Ccom P/L v Jiejing P/L

[1994] FCA 40

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JUijGidENT No. .,.ll.l...l.o..l.ll .O1l.ll ...

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IN THE FEDERAL COURT OF AUSTRALIA	. ,
OUEENSLAND DISTRICT REGISTRY

GENERAL DMSION	No. G124 of 1991	I
BETWEEN:

CCOM PTY. LTD. and

RONALD HOWARD THOMAS

AND:  JIErmG PTY. LTD.

First Resuondent
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AND: - PARAVET INSTRUMENTS PTY. LTD. !.

Second Resuondent

AND:  ALLAN GARNHAM

Third Resuondent

AND: - JEFFREY JOHN YATES

Fourth Resuondent

B:  ERIC RUSSELL CHAPPELL

Fifth Resoondent

JUDGE MAKING ORDER:	Cooper J.
WHEREMADE.	Brisbane
DATE OF ORDER:	10 February, 1994

consequential relief to be taxed if not agreed

~ ~ F E B 1994

MINUTES OF ORDER EoERAL COURT OF

AUSlFUUA

THE COURT ORDERS:-

1.                   The applicants and the third respondent pay the costs of the first, second, fourth and fifth respondents of and incidental to the applicants' claim against them to be taxed if not agreed.

2.                    The applicants and the third respondent pay the costs of the first, second, fourth, and fifth respondents of and incidental to the cross-claim for the revocation of Australian Petty Patent number 616154 and other

The fifth respondcnt pay thc costs of thc nppllcants and the third respondent of and incidental to the fifth respondents cross claim for infringement of copyright.

The second, fourth, and fifth respondents pay the costs of the applicants and third respondents of and incidental to the cross-claim by the second, fourth and i3th respondents for infringement of copyright thrown away by the abandonment by the second, fourth, and fifth respondents of the said cross-claim.

THE COURT FURTHER ORDERS :-

UPON the applicants, by their Counsel, undertaking to prosecute their appeal to the Full Court, from the orders of the Court pronounced on 24 December 1993, with all reasonable dispatch, that orders numbered 2 and 3 of the orders pronounced on 24 December, 1993 be stayed pending the hearing and determination of the applicants' appeal to the Full Court.

Note: Settlement and entry of orders is dealt with m Order 36 of the Federal Court

Rules.

IN THE FEDERAL COURT OF AUSTRALIA
OUEENSLAND DISTRICT REGISTRY

GENERAL DMSION	No. G124 of 1991
BETWEEN:

CCOM PTY. LTD. and

RONALD HOWARD THOMAS

Au~licants

AND:  JIEJING PTY. LTD.

First Resuondent

AND:  PARAVET INSTRUMENTS PTY. LTD.

Second Respondent

Third Resuondent

AND:  JEFFREY JOHN YATES

1

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Fourth Resuondent

AND:  ERIC RUSSELL CHAPPELL

Fifth Respondent

CORAM:  Cooper J.

PLACE:	Brisbane
DATE:	10 February, 1994

REASONS FOR JUDGMENT

On 24 December, 1994 I gave judgment in the proceedings on the
applicants' claim against the first, second, fourth and £&h respondents for alleged
infringement by them of Australian Petty Patent No. 616154, the cross-claim by those

respondents for revocation of the petty patent, and, the fifth respondent's cross-claim for alleged infringement of copyright. The parties have been unable to agree what

orders for costs ought to be made in consequence of the outcome of the proceedings.

Consequently both sides have made submissions on the orders each seeks on costs.

The discretion vested in the court to award costs is unfettered and is not

qualified by the provisions of the Federal Court of Australia Act 1976 or the Federal Court Rules. The discretion must be exercised judicially. There are, however, some general guiding principles:

1.                   Ordinarily costs follow the event and the successful litigant receives its

costs in the absence of special circumstances justifying some other order.

Where a litigant has succeeded only upon portion of its claim the

circumstances may make it reasonable that it bear the expense of litigating that portion on which it has failed. However, a lltigant ought

not be deprived of its costs on an issue on which it has failed unless it has caused a significant increase in the length and cost of the

its costs. proceedings. In that case the litigant may be deprived of all or part of

A successful party who has failed on certain issues may not only be

deprived of the costs of those issues, but may be ordered as well to pay

the other party's costs of those issues.

The general principles applicable in this court are discussed in
Cumminvs v. Lewis (1993) 41 FCR 559 at 602-603; Huphes v Western Australian

Cricket Association (Inc.) [l9861 ATPR 43, 134 at 48, 136. The English practice is set out in Re Elfin data Ltd. [No. 21 [l9921 1 WLR 1207 at 1214, 1217.

In the instant case, the ks t , second, fourth, and 6fth respondents have

succeeded in their defence of the applicants' 'claim and on their cross-claim for revocation. It is true that they failed on certain of the pleaded grounds for revocation. However, in my view, it cannot be said that the grounds were raised or persisted in unreasonably, or that they signilicantly added to the length or the cost of

the trial. Those grounds required a consideration of the documentation containing the alleged prior art and involved very limited cross-examination of any witness; principally, the time taken by them was limited to submissions on the construction of

documents.

The substantial issue litigated in terms of the t ~ m e and cost of the trial

was the issue of infringement. The factual matters raised on that issue necessarily

were relevant to, and impacted upon, the determination of the issues of novelty and	false suggestion. It is not correct to say that there was a clear division of the matters
relevant to each issue and that the infringement issue was a discrete issue capable of being dealt with in isolation from the issues of novelty and false suggestion. To
attempt to make fine distinctions as to each issue in this case is unreasonable, and in my view is not conducive to doing justice between the parties. Sirmlarly, the allocation of broad percentages as a matter of impression of the totality of the claim and cross-claims as a measure to award costs on an in globo basis is also inappropriate.
The applicants have not persuaded me that there exist any circumstances which would justify denylng to the first, second, fourth, and £Zth respondents the benefit of any order for costs of their successful defence of the infringement claim and their success on their cross-claim. Similarly, the applicants
and the third respondent ought not to be denied the benefit of an order for costs of their successful defence of the fifth respondent's cross-clalm. The cross-claim which was initiated by the second, fourth, and fifth respondents for infringement of copyright in the 'Fast Work Program" and the "Word Help Program" was abandoned.
Accordingly, in accordance with the proper exercise of discretion they must pay the
costs of the cross-respondents to that claim thrown away by the abandonment.
The first, second, fourth, and fifth respondents have also sought costs against the third respondent m relation to the applicants' claim for infringement of the petty patent and the cross-claim for revocation. The third respondent was not an
applicant on the record in relation to the principal application. He was a cross- respondent to the jirst, second, fourth, and fifth respondents' cross-claim for
revocation. He was a director and shareholder in the first-named applicant, and the joint holder of the patent-in-suit with the second-named applicant.
It is clear on the material that the third respondent provided substantial funds to advance the litigation by the applicants, that he gave direchons as to the
conduct of the litigation, and that he stood to gain hancially in the successful
prosecution of the litigation and defence of the cross-claim. On 18 May, 1992 he was
a party to the making of an offer to the first, second, fourth, and fifth respondents to settle the proceedings on a basis which would have seen him profit personally. The third respondent filed a notice of appearance to the cross-claim. He defended the cross-claim by delivery of a defence, and appeared on the trial of the action but did not formally lead evidence, cross-examine, or make submissions. He gave evidence on behalf of the applicants on the claim for infringement of the petty patent, and was
present and assisted the applicants to present their case for a substantial part of the
trial. There is evidence that the first-named applicant has a paid up capital of $2.00 and has not filed an annual return for two years. Although the sum of $20,000.00 was provided by way of security for costs by bank guarantee, that was organised by the
third respondent. There is no evidence as to the worth of the second-named applicant.
It is submitted by Counsel for the fist, second, fourth and fifth respondents that I should Infer that the first-named applicant is a company of no substance and that the third respondent has chosen to stand behind the company and
submitted, he has done while substantially funding the litigation, actually playing a the second-named applicant to avoid being exposed to an order for costs. This, it is
part in the conduct of the litigation, and on the evidence, having a real interest in the
outcome of the litigation in mamtamhg the validity of the patent-in-suit and obtaining damages and injunctive relief against the first, second, fourth, and fifth respondents for the alleged infringement of the petty patent. In those circumstances it was
submitted that the necessary conditions to support the making of a costs order against the third respondent, although not a party on the record on the applicants' claim for m g e m e n t of the petty patent, have been made out against the third respondent,
(see:  Knivht v. F.P. Special Assets Limited (1992) 174 CLR 178 at 192-193, 202).

Counsel on behalf of the third respondent submitted that the third

respondent had done no more than any ordinary duector and shareholder would do to enable a company in which he or she was interested to bring and prosecute an action. In doing so it was submitted that the third respondent did not expose himself to an order for costs.

In my opinion, the third respondent went beyond facilitating litigation by

the first-named applicant. He had an interest, and participated, in the applicants' claim, and defended the cross-claim. He specifically had a significant role in the decisions made and direction taken in the conduct of the applicants' claim and the

defence of the cross-claim for revocation. As a practical matter both were

inextricably bound up m p r e s e ~ n g the petty patent and obtaining relief for

infringement. In alI the circumstances, I am satisfied that it is justifiable that he be

made jointly and severally liable with the first and second-named applicants for the

costs of the application and cross-cla~m for revocation.

The applicants also seek an order staying part of the judgment of the court pronounced on 24 December, 1993 pending appeal of that judgment to a Full Court. In my view that stay ought to be granted.

THE COURT ORDERS-

1.                   The applicants and the third respondent pay the costs of the first,

second, fourth and fifth respondents of and incidental to the applicants'
claim against them to be taxed if not agreed.

The applicants and the third respondent pay the costs of the first,

second, fourth, and fifth respondents of and incidental to the cross-claim for the revocation of Australian Petty Patent number 616154 and other

consequential relief to be taxed if not agreed

The fifth respondent pay the costs of the applicants and the third

respondent of and incidental to the iifth respondents cross claim for
hfrhgernent of copyright.

The second, fourth, and fifth respondents pay the costs of the applicants

and thlrd respondents of and incidental to the cross-claim by the

thrown away by the abandonment by the second, fourth, and fifth second, fourth and iifth respondents for infringement of copyright

respondents of the said cross-claim.

THE COURT FURTHER ORDERS :-

WON the applicants, by their Counsel, undertalung to prosecute their
appeal to the Full Court, from the orders of the Court pronounced on 24 December
1993, with all reasonable dispatch, that orders numbered 2 and 3 of the orders

pronounced on 24 December, 1993 be stayed pending the heanng and determination

of the applicants' appeal to the Full Court.

I certify that this and the preceding seven (7) pages are a true copy of the reasons for judgment herein of his Honour Mr. Justice Cooper.

Date:  14 February, 1994

&id0 Y / C I ~ A A

Associate

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!	Counsel for the Applicants:	P.W. Hackett
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Solicitors for the Applicants:	Paul Pattison, Solicitor
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Counsel for the Respondents:	Mrs. D. Mullins
S !	Solicitors for the Respondents:	Bennett & Phllp
Date of Hearing:	10 February, 1994
Place of Hearing:	Brisbane
Date of Judgment:	10 February, 1994