Hyperbaric Health International Pty Ltd v Healing Chambers of Australia Pty Ltd
[2018] FCA 2082
•19 December 2018
FEDERAL COURT OF AUSTRALIA
Hyperbaric Health International Pty Ltd v Healing Chambers of Australia Pty Ltd [2018] FCA 2082
File number: NSD 1746 of 2015 Judge: NICHOLAS J Date of judgment: 19 December 2018 Date of publication of reasons: 20 December 2018 Date of hearing: 19 December 2018 Registry: New South Wales Division: General Division National Practice Area: Intellectual Property Sub-area: Copyright and Industrial Designs Category: No Catchwords Number of paragraphs: 27 Counsel for the First Applicant/Cross-Respondent: Ms K E Maxwell appeared on her own behalf and on behalf of Dr T J Baret. The first applicant did not appear Counsel for the Second Applicant The second applicant did not appear Counsel for the Respondents/Cross-Claimant: Mr HPT Bevan Solicitor for the Respondents/Cross-Claimant: Adendorffs Solicitors & Conveyancers
ORDERS
NSD 1746 of 2015 BETWEEN: HYPERBARIC HEALTH INTERNATIONAL PTY LTD
(ACN 132 818 715)First Applicant
98TH PERCENTILE PTY LTD (ACN 169 514 390)
Second Applicant
AND: HEALING CHAMBERS OF AUSTRALIA PTY LTD
(ACN 161 399 855)First Respondent
PETER STONE
Second Respondent
AND BETWEEN: HEALING CHAMBERS OF AUSTRALIA PTY LTD
(ACN 161 399 855)Cross-Claimant
AND: HYPERBARIC HEALTH INTERNATIONAL PTY LTD
(ACN 132 818 715)Cross-Respondent
JUDGE:
NICHOLAS J
DATE OF ORDER:
19 DECEMBER 2018
THE COURT ORDERS THAT:
1.All previous costs orders in the proceeding be discharged.
2.The application be dismissed with costs which are fixed in the amount of $100,000.00 payable by the First Applicant to the Respondents.
3.The order for costs made against the First Applicant not be enforced against the First Applicant without the leave of the Court.
4.Pursuant to the undertaking given to the Court given on 22 March 2017 Dr Trevor John Baret and Ms Kylie Eva Maxwell pay to the Respondents the sum of $100,000.00 in respect of the Respondents’ costs of the proceeding (inclusive of GST).
5.The liability of Dr Trevor John Baret and Ms Kylie Eva Maxwell pursuant to Order 4 is joint and several.
6.The Respondents take no steps to enforce the order referred to in Order 4 for a period of 90 days from today.
7.Dr Trevor John Baret and Ms Kylie Eva Maxwell each be restrained, until further order, or until full payment is made to the Respondents of the costs referred to in Order 4, from encumbering, mortgaging, assigning or transferring the property known as 58 Boronia Road, Bullaburra New South Wales (Folio Identifier C/419358) without the leave of the Court.
8.Dr Trevor John Baret and Ms Kylie Eva Maxwell have liberty to apply to the Court on 7 days’ notice to be given to the Court and to the Respondents in relation to order 7.
9.The Respondents are to:
(a)deliver to the Chambers of Justice Nicholas a folder of any affidavit material and written submission on which they intend to rely in respect of any application for leave to proceed to judgment on their Cross-Claim by 8 February 2019; or
(b)file and serve a notice of discontinuance on or before 8 February 2019 in the event that they do not wish to proceed with any such application.
10.There will be no order as to costs of the Cross-Claim in the event that any notice of discontinuance is filed by the Respondents pursuant to subpara 9(b).
11.Copies of these orders are to be served by the Respondents:
(a)on the liquidator of the first applicant, Mr Stephen Wesley Hathaway, of Helm Advisory by emailing electronic copies of such documents to [email protected]; and
(b)on Dr Baret and Ms Maxwell by:
(i)emailing electronic copies of such documents to them at [email protected]; and
(ii)sending them copies of such documents by pre-paid post to 58 Boronia Road, Bullaburra, NSW, 2784.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
REASONS FOR JUDGMENT
NICHOLAS J:
Yesterday I made various orders in this proceeding including orders against Dr Trevor John Baret and Ms Kylie Eva Maxwell in relation to costs. These are my reasons for making those orders.
The proceeding has a long history and has been the subject of at least two unsuccessful attempts by a Registrar of the Court to mediate a settlement. On 21 September 2018, the proceeding was provisionally fixed for hearing commencing on 11 February 2019 with an estimate of three days.
The applicants terminated the retainer of their lawyer on or shortly prior to 3 December 2018. On 6 December 2018, the first applicant entered into a creditors’ voluntary liquidation. The second applicant was apparently de-registered on 7 October 2018.
The liquidator of the first applicant indicated that he neither consented to nor opposed an order that the proceeding brought by the first applicant be dismissed with costs.
I made an order dismissing the application with costs fixed in the amount of $100,000. Correspondence from the liquidator of the first applicant indicates that there is little, if any, prospect of the company satisfying that costs order.
The order dismissing the application was made by me pursuant to r 5.21 of the Federal Court Rules 2011 (Cth) based upon the applicants’ failure to prosecute their application with due diligence and their failure to appear at a case management hearing held on 10 December 2018. It was quite apparent from the events leading up to that hearing that the applicants did not intend to further prosecute their application.
I fixed the respondents’ costs in the amount of $100,000 in light of the affidavit of Mr Michael Adendorff sworn 13 December 2018 in support of an application for a lump sum costs order in the amount of $108,786. Mr Adendorff’s affidavit summarises the costs incurred by the respondents in the proceeding which totalled $145,048. This amount compared favourably with the $280,000 that Ms Maxwell told me the applicants had spent in legal fees.
Having considered Mr Adendorff’s evidence I was satisfied that it was appropriate to assess the respondents’ costs of the application (excluding the costs of their cross-claim) in the amount of $100,000 based on total solicitor and client costs of $145,048.17. In my view, the amount of $100,000 represents a reasonable sum that is equal to, or more likely somewhat less than, the amount that would be recoverable by the respondents on a party/party basis in respect of the applicants’ claim against them.
This brings me to the orders made against Dr Baret and Ms Maxwell.
On 22 March 2017, I made orders disposing of an application for security for costs filed by the respondents in these proceedings. That interlocutory application was dismissed upon certain undertakings being given to the Court by Dr Baret and Ms Maxwell.
Dr Baret and Ms Maxwell undertook to the Court that:
(a)they will be jointly and severally liable, up to the amount of $110,000, for an order by the Court that the Applicants pay the Respondents’ costs in the proceedings with respect to the Applicants’ claims; and
(b)they will not further encumber or further mortgage, assign or transfer the property at 58 Boronia Road, Bullaburra, New South Wales, folio identifier C/419358.
I considered it appropriate that orders be made against Dr Baret and Ms Maxwell enforcing the undertaking previously given by them in relation to security for the respondents’ costs. The orders made by me require Dr Baret and Ms Maxwell to pay the respondents their costs assessed in the amount of $100,000.
Yesterday, Ms Maxwell appeared before me on her own behalf and on behalf of Dr Baret (her partner) and made various submissions.
First, Ms Maxwell submitted that it was appropriate that the proceeding be dismissed on terms that the parties should bear their own costs.
Secondly, Ms Maxwell submitted that she and Dr Baret understood that they would only be liable on the undertaking for costs incurred by the respondents after the date upon which the undertaking was given and that they received legal advice to that effect from the solicitors who were acting for the applicants in March 2017.
Thirdly, Ms Maxwell informed me that she and Dr Baret were experiencing some financial hardship which meant that they would not be able to pay the respondents’ costs until such time as they sold the property at 58 Boronia Road, Bullaburra, New South Wales (“the Bullaburra property”).
Fourthly, Ms Maxwell also raised an issue about the date of Mr Adendorff’s affidavit which the first page shows as 10 March 2017. However, it is clear that this is a typographical error. The attestation clause shows that the affidavit was made on 13 December 2018, which is the day the affidavit was filed.
Ms Maxwell told me that the Bullaburra property is where she and Dr Baret reside. She also told me that it is currently being renovated.
The Bullaburra property is the subject of the second of the undertakings that Dr Baret and Ms Maxwell gave to the Court on 22 March 2017. I will say more about this undertaking shortly.
It would not be appropriate to order that the parties bear their own costs. The applicants brought a legal proceeding against the respondents which the applicants have abandoned. In my view costs should follow the event.
I do not accept that liability under the undertakings of 22 March 2017 was limited to costs incurred by the respondents after that date. The undertaking given was relevantly unqualified and extended to any and all costs that may be awarded to the respondents in respect of the applicants’ claims up to the amount of $110,000.
On the question of hardship, Ms Maxwell indicated that while she and Dr Baret were in the process of renovating the Bullaburra property and preparing it for sale, she did not know when it would be ready for sale or how long it might take to sell. However, that is not a sufficient reason for either deferring determination of the question of costs or for allowing Dr Baret and Ms Maxwell an indefinite time to pay the respondents’ costs. The orders that were made allow Ms Maxwell and Dr Baret 90 days in which to pay.
The only other matter I need to refer to is the injunction that I granted against Dr Baret and Ms Maxwell restraining them, without the leave of the Court, from encumbering, mortgaging, assigning or transferring the Bullaburra property until the respondents are paid their costs.
The undertakings provided by Dr Baret and Ms Maxwell to the Court were intended to provide the respondents with security in respect of their costs. The security provided was something less than a mortgage over the Bullaburra property but something more than a personal guarantee.
There may be an argument that if the application is dismissed and the cross-claim discontinued, the proceeding will become “finalised” within the meaning of the 22 March 2017 undertakings. The better view, in my opinion, is that the proceeding will not be finalised until such time as the costs order has been paid. In any event, and to put the matter beyond argument, I granted the injunction restraining further dealings in the Bullaburra property until such time as the costs have been paid.
I made clear during the course of the hearing that it is open to Ms Maxwell and Dr Baret to apply to the Court for leave to mortgage, encumber, assign or transfer the Bullaburra property which, it may be assumed, would not be opposed in the event that the respondents’ entitlement to their costs remains adequately secured. Of course this is a matter about which Dr Baret and Ms Maxwell would be well advised to seek their own legal advice.
Various other related procedural orders were made which will speak for themselves.
I certify that the preceding twenty-seven (27) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Nicholas . Associate:
Dated: 20 December 2018
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