Fallshaw Holdings P/L v Flexello Ltd

[1992] FCA 600

NOT SUITABLE FOR DISTRIBUTION

IN THE FEDERAL COURT OF AUSTRALIA	)
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NEW SOUTH WALES DISTRICT REGISTRY )	NG 7 of 1992

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GENERAL DIVISION 1

BETWEEN:  FALLSHAW HOLDINGS PTY LIMITED

Applicant

3D (FORMERLY FLEXELLO

CORAM: Burchett J.	/Y aFr' . .
PLACE: Sydney DATE : 19 August 1992

EX TEMPORE REASONS FOR JUDGMENT

BURCHETT J.:

In this matter an undertaking as to damages, in the usual form, was given upon an application for an interlocutory injunction pending the determination of a proceeding or further order. It should be noted that the language of the interlocutory order was as I have stated it, that is, "pending the determination of the proceedings or further order." The injunction was one restraining activities said to be in breach of patent rights. Apparently because the applicant in those proceedings was a foreign company, the interlocutory orders also included an order that within 14 days the applicant

provide, by way of bank guarantee, in favour of the	respondent, security for the applicants' undertaking as to
damages, and for the costs of the proceeding, in the sum of !

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$150,000 assuming a three day hearing in 1991.	I
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A bank guarantee was given. There had been a grant of liberty to the respondent to the proceeding to apply to the	I I
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court in relation to the question of security, but it is not
suggested any such application was made, the bank guarantee	1 :
apparently being regarded as sufficiently complying with the

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requirements of the order. The guarantee was from Barclays Bank Australia Limited. It was in the sum required by the terms of the order, but it was expressed as being valid for a period of one year from 20 August 1991; and there was then

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.	'provision for it to be extended.	I - ,
The hearing of the principal proceeding did take place during the year 1991. It was in fact a four days hearing, but
nothing turns on that.	As a result of that hearing, the	I ,
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application in support of which the interlocutory relief had	i I :
been obtained was successful, on the findings of the primary
judge, and a permanent injunction was granted. The matter was
then the subject of an appeal which is due to come on for	.

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hearing shortly. What I am asked to do is to make an order	l
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that the respondent to the appeal, the original applicant,	f I
continue to maintain the security pending the determination of	j -
the appeal.
The application is resisted, and four arguments have been presented in support of that resistance. Attention is firstly	l'
directed to the terms of Order 52 rule 20; but it does not seem to me that that rule has much to do with the issue in the present application, since it is directed to the provision of security for costs of an appeal, while the present matter is, at any rate primarily, concerned with the support of the undertaking as to damages and the costs of the original hearing.
Then it is said that, in the proceedings at first instance, the appellant admitted infringement of the patent, so that the issue really arose upon its cross-claim for revocation of the patent. On that basis, it was said that the true attacker was the appellant and the respondent to the appeal was the defender. Reliance was placed on the decisions in Amalaamated Minina Services Ptv Ltd v Warman International Ltd (1988) 88 ALR 63 and MaatSchaDDii Voor Fondsenbezit v Shell TranSDort and Tradina ComDanv [l9231 2 KB 166. But I do not think that this really answers the problem, because it was the respondent to the appeal who came to the court seeking the
be established in the court, and gave in order to obtain that relief of an interlocutory injunction, before its rights could	relief the undertaking as to damages, being required by the
order of the court to support the undertaking by security. It is rather late in the day, it seems to me, for the respondent to attempt to reverse that situation.
The next argument was that a relevant factor in the exercise of the court's discretion is the prospects of the success of the proceeding. I readily accept that that is so. In the present case, some evidence has been provided by affidavit that the proceeding has prospects of success, that is, the appeal has prospects of success, and nothing was put in argument or otherwise to suggest that the appeal is other than bona fide, or that in fact it lacks any prospect of success. Furthermore, once again, the matter cannot be considered as a fresh application. It slmply is not that; it arises out of an application, and out of the form of relief granted, including a protection actually offered to the other party as a condition of the obtaining of that relief.
Finally, it was put that the present applicant is unable to demonstrate that the respondent's financial position is such as to make it probable it would be unable to satisfy any judgment or order against it. I think the last comment I made is also applicable to this argument. Furthermore, it is demonstrable that the situation of a foreign company at least raises serious problems of enforcement in the event of
basis that the interlocutory relief in question was granted	dispute. In my opinion, I should deal with this matter on the
pending the determination of the proceedings, and that that word, "determination", should, in the context, reflect upon the construction of the order in respect of the provision of security. It was security in relation to an undertaking as to the damages which the court might think flowed from an order
in the terms I have mentioned. I think the undertaking as to damages cannot be said to have vanished, at least as regards the period prior to the hearing at first instance, upon the making of the first instance decision. If that were so, parties protected by such an undertaking would be accepting even more of a lottery than litigation is usually thought to

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be. It seems to me that the undertaking as to damages can be relied upon in the event that the appellant succeeds in the appeal, and I think it follows that the security was intended

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1. to cover the situation until the ultimate determination of the right to relief. If that not be so, and assuming the matter was left entirely undecided, I think it would still be proper to grant the continuation of the security for that further period in order to make the original order for security properly effective. For these reasons, I am prepared to make an order as sought in the application.

I make an order in terms of paragraph 1 of the notice of
motion. I reserve liberty to apply on three days notice and I
order that the costs of this motion be the appellant's costs

in the appeal.

I certify that this and the preceding four (4) pages are a true copy of the Reasons for Judgment herein of his Honour Mr Justice Burchett.

Associate : )-=--L	-E-._~ ..[-c-
Date: 19 August 1992