Hardingham v RP Data Pty Limited

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FEDERAL COURT OF AUSTRALIA

Hardingham v RP Data Pty Limited [2020] FCA 1062

File number: NSD 114 of 2020
Judge: BURLEY J
Date of judgment: 24 July 2020
Catchwords: PRACTICE AND PROCEDURE –security for costs of appeal – where appellants accept they are impecunious – whether grounds of appeal are reasonably arguable – whether granting security would stultify the appeal – whether granting security would be oppressive – applications dismissed  
Legislation:

Federal Court of Australia Act 1976 (Cth) s 56

Federal Court Rules 2011 (Cth) r 36.09
Cases cited:

All Class Insurance Brokers Pty Ltd (in liquidation) v Chubb Insurance Australia Limited [2020] FCA 840

Bell Wholesale Co Ltd v Gates Export Corporation [1984] FCAFC 29; 2 FCR 1

Chapman v Luminis Pty Ltd [2002] FCA 496

Dye v Commonwealth Securities Limited [2012] FCA 992

Frigger v Kitay [2019] FCA 624

Hardingham v RP Data Pty Limited [2019] FCA 2075

Hardingham v RP Data Pty Limited (No 2) [2019] FCA 2138

Hardingham v RP Data Pty Limited (No 3) [2020] FCA 868

Jackamarra v Krakouer [1988] HCA 27; 195 CLR 516

John Caines Management Pty Ltd v Adrenalin International Powersports Pty Ltd [2004] FCA 747

Pioneer Park Pty Ltd v Australia and New Zealand Banking Group Limited [2007] NSWCA 344

Tran v The Commonwealth [2009] FCA 921
Date of hearing: 8 July 2020
Registry: New South Wales
Division: General Division
National Practice Area: Intellectual Property
Sub-area: Copyright and Industrial Designs
Category: Catchwords
Number of paragraphs: 23
Counsel for the Appellants: Mr R Cobden SC with Mr J Sleight
Solicitor for the Appellants: Neville Hourn + Bourg Legal
Counsel for the First Respondent: Mr M D Martin QC
Solicitor for the First Respondent: Mills Oakley Lawyers
Counsel for the Second Respondent: Mr H P T Bevan
Solicitor for the Second Respondent: Corrs Chambers Westgarth

ORDERS

NSD 114 of 2020
BETWEEN:

JAMES KELLAND HARDINGHAM

First Appellant

REAL ESTATE MARKETING AUSTRALIA PTY LTD

Second Appellant
AND:

RP DATA PTY LIMITED

First Respondent

REALESTATE.COM.AU PTY LTD

Second Respondent

JUDGE:

BURLEY J

DATE OF ORDER:

24 JULY 2020

THE COURT ORDERS THAT:

1.The interlocutory application filed by the first respondent on 3 April 2020 and the interlocutory application filed by the second respondent on 3 April 2020 be dismissed.

2.The respondents pay the appellants’ costs of the interlocutory applications referred to in order 1.

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


REASONS FOR JUDGMENT

BURLEY J:

1.                 BACKGROUND

  1. The first appellant, Mr Hardingham, is a professional photographer and creator of floor plans. He is also the sole director of the second appellant, Real Estate Marketing Australia Pty Ltd (REMA), which is engaged by real estate agents to supply photographs and floor plans for the sale and lease of property. I refer to Mr Hardingham and REMA collectively as the appellants.

  2. These proceedings are an appeal to the Full Court from the reasons and judgment in Hardingham v RP Data Pty…

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Details
Case
[2020] FCA 1062
Decision Date

CaseChat Overview and Summary

In Hardingham v RP Data Pty Limited, the appellants sought to appeal the primary judge’s dismissal of their claim for copyright infringement. The primary judge had made orders for costs, which were stayed pending the outcome of the appeal. RP Data and REA, the respondents, filed interlocutory applications seeking security for their costs of the appeal, in accordance with rule 36.09 of the Federal Court Rules 2011. The appellants opposed the applications, arguing that they were impecunious and that ordering security would be oppressive and would stultify their appeal.

The court was required to decide whether the appellants' grounds of appeal were reasonably arguable, and whether granting security would be oppressive or would stultify the appeal. The court found that the appellants had a sufficiently arguable case on appeal to warrant permitting it to proceed. The court also found that the appellants were impecunious and that there was a real risk that the respondents would not recover their costs of the appeal if the appellants failed. However, the court considered that ordering security would be oppressive and would stultify the appeal. The court noted that the purpose of the discretion to order costs on appeal was protective, to ensure that a respondent was not unreasonably exposed to a risk that if the respondent was successful in defending the claim the respondent would nevertheless be deprived of the benefit of a costs order because of the appellant’s impecuniosity.

The court dismissed the interlocutory applications filed by the respondents, and ordered that the respondents pay the appellants’ costs of the interlocutory applications. The court considered that the appellants had a sufficiently arguable case on appeal, and that ordering security would be oppressive and would stultify the appeal. The court noted that the protective purpose of the discretion to order costs on appeal was engaged in this case, and that it was not appropriate to order security in those circumstances.

Orders

Orders of the court

1. The interlocutory application filed by the first respondent on 3 April 2020 and the interlocutory application filed by the second respondent on 3 April 2020 be dismissed.

2. The respondents pay the appellants’ costs of the interlocutory applications referred to in order 1.

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

Background

Background to the litigation

Full text does not contain this section.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

The primary judge dismissed the appellants’ claim for copyright infringement. His Honour has subsequently made orders as to costs: Hardingham v RP Data Pty Limited (No 2) [2019] FCA 2138 (costs judgment). The primary judge has also stayed the orders made in the costs judgment pending the outcome of the appeal: Hardingham v RP Data Pty Limited(No 3) [2020] FCA 868 (stay judgment). In the stay judgment his Honour found:[6] I accept Mr Hardingham’s evidence that REMA’s business has been significantly disrupted as a consequence of the COVID-19 pandemic. That business involves being retained by real estate agents to take photographs and create floor plans for the sale and lease of property. It might be that REMA’s business has been able to improve since the date of the affidavit of 16 April 2020, but I accept that its business is likely to have been significantly affected.[7] The evidence establishes that the applicants were funded by a litigation funder at trial. Whatever the precise arrangement was, it did not cover the applicants for costs orders made against them. There is no longer any litigation funding and the appeal is being prosecuted on a speculative basis by counsel and their instructing solicitors. … [9] RP Data correctly points out that a trustee in bankruptcy or liquidator might choose to prosecute the appeal. However, that does not alter the fact that the applicants themselves would not be able to prosecute the appeal. ...[12] The applicants submit that they have an arguable appeal. Predictably, RP Data submits that they do not. Having read the submissions of the parties and in particular the grounds of appeal, my view is that the grounds of appeal are at least sufficiently arguable to warrant granting a stay.2. THE SECURITY FOR COSTS APPLICATIONS On 3 April 2020 RP Data and REA each filed an interlocutory application seeking security for their costs of the appeal to the Full Court, pursuant to rule 36.09 of the Federal Court Rules 2011 (Cth). RP Data seeks security of $80,000, and REA seeks security of $40,000. In support of its application RP Data relies upon the affidavit of Dale Francis Cliff, a Partner at Mills Oakley, the solicitors for RP Data. REA relies upon the affidavit of Katherine Louise Hay, a Partner at Corrs Chambers Westgarth, the solicitors for REA. The appellants rely on the affidavit of Mr Hardingham affirmed on 22 May 2020. In summary, Mr Hardingham deposes to his impecuniosity, which is not in dispute. Mr Hardingham further deposes that:[16] I have been told by my clients that it is unlikely they will be engaging the services of [REMA] on the same or similar level [sic] to previous years as a result of the COVID-19 pandemic, as the Government has placed restrictions on the real estate industry and marketing campaigns. As a result, there was an immediate effect on the business of REM, with a significant downturn in business, which is still continuing. I am considering whether or not to liquidate [REMA] as it does not appear to be a viable enterprise as at the date of swearing this affidavit. …[24]A funder was responsible for the legal fees incurred by [REMA] and myself for [the first instance] proceedings, including Mr Cobden SC, Mr Sleight and Neville Hourn + Borg Legal. Indemnity for my own legal fees was the extent of agreement for funding. [25]In respect of the legal fees to be incurred in the appeal proceedings, Neville Hourn + Borg Legal, Mr Richard Cobden SC and Mr James Sleight have agreed to undertake the appeal proceedings on a speculative basis. Neither [REMA] or I have the benefit of any funding for the appeal. [26] If an order for a stay of the costs orders is refused, [REMA] has no assets or means of raising funds to carry out those orders, [REMA] would be insolvent and I would have no alternative but to place [REMA] in liquidation. Further, if such a cost order was enforced against myself, I would have no alternative but to apply for bankruptcy. If an order for a stay is refused, it would have the effect of preventing [REMA] and I from prosecuting these proceedings as neither it nor I would be able to carry out the costs orders.

Ratio Decidendi

Legal Principle Established

Furthermore, the purpose of the discretion to order costs on appeal is protective, to ensure that a respondent is not unreasonably exposed to a risk that if the respondent is successful in defending the claim the respondent will nevertheless be deprived of the benefit of a costs order because of the appellant’s impecuniosity. Whilst courts are reluctant to order that an impecunious applicant, being a natural person, provide security where the effect would be to stifle that person’s access to the courts, where such a person has already obtained access to a court and has received a decision dismissing the claim, the position is different. That is because at the appellant level, there has already been a determination adverse to the person against whom security for costs is sought: see Tran v The Commonwealth [2009] FCA 921 at [3] – [6]; Frigger v Kitay [2019] FCA 624 at [35] and the authorities cited there. 4. CONSIDERATION There is no dispute that the impecuniosity of REMA and Mr Hardingham is such that there is a real risk that in the event that they fail in their appeal the respondents will not recover their costs of the appeal. Nevertheless, I do not consider that in the circumstances of this case it is appropriate to order that the appellants give security for the respondents’ costs. First, in my view the appellants have a sufficiently arguable case on appeal to warrant permitting it to proceed. It is not possible or appropriate in a security for costs application to reach any firm view as to the prospects of success on appeal, beyond a general consideration of the reasons for the decision of the primary judge and the formation of a general overview: Chapman v Luminis Pty Ltd [2002] FCA 496 at [17]; see also, by analogy Jackamarra v Krakouer [1988] HCA 27; 195 CLR 516 at [9]. The appellants’ case before the primary judge, as summarised in the primary judgment at [24], was that REMA had licenced its photographs and floor plans to agencies for the purpose of those works being used for the marketing of the properties depicted in discharge of each agency’s retainer to sell market the property for sale or lease on behalf of the owner. The licence included an implied term that the agencies were able to grant a sub-licence for marketing the properties for sale or lease, but that implied licence did not extend to the use of the photographs and floor plans after the sale or lease of the property had been completed. The primary judge rejected that argument. He made a number of relevant factual findings, and then concluded:[78] The objective circumstances in relation to the twenty transactions the subject of the separate question, each of which occurred after 9 April 2014, are such that:(1) it is to be inferred from the conduct of the applicants and the agencies, including their course of dealings;(2) alternatively, it should be implied into the agreements between the applicants and the agencies, in order to give business efficacy to those agreements,that the applicants agreed that the agencies were authorised, by way of licence from the applicants, to upload the photographs and floor plans to the realestate.com.au platform and grant to REA a licence in the form required by REA and contained in REA’s usual terms and conditions.