iNova Pharmaceuticals (Australia) Pty Ltd v Letos Group Pty Ltd (No 5)
[2024] FedCFamC2G 1445
•18 December 2024
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 2)
iNova Pharmaceuticals (Australia) Pty Ltd v Letos Group Pty Ltd (No 5) [2024] FedCFamC2G 1445
File number(s): SYG 3343 of 2019 Judgment of: JUDGE MANOUSARIDIS Date of judgment: 18 December 2024 Catchwords: INTELLECTUAL PROPERTY - Practice and procedure – application to vary two of the orders (Orders) for costs made on 29 November 2024 on the ground that the applicants were denied procedural fairness – whether the orders for costs were interlocutory – whether the applicants were denied procedural fairness – order for costs are interlocutory – applicants denied procedural fairness – Orders set aside and directions made for the filing of evidence in relation to the quantification of costs. Legislation: Federal Circuit and Family Court of Australia Act 2021 (Cth) s 190
Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth) r 17.05(2)(c), (g)
Cases cited: Australian Securities and Investments Commission v Marco (No 15) [2024] FCA 347
Caratti v Commissioner of the Australian Federal Police [2021] FCA 1067
iNova Pharmaceuticals (Australia) Pty Ltd v Letos Group Pty Ltd (No 4) [2024] FedCFamC2G 1307
Division: General Number of paragraphs: 17 Date of hearing: 18 December 2024 Place: Sydney Counsel for the Applicants: Mr M Williams Solicitor for the Applicants: Gilbert + Tobin Solicitor for the First Interested Person: GWH & Associates Counsel for the Fourth Interested Person: Mr D H Southwood Solicitor for the Fourth Interested Person: Auyeung Hencent & Day Lawyers
Table of Corrections 20 December 2024 In order 2 of the judgment, the reference to “qualification” has been corrected to show “quantification”. ORDERS
SYG 3343 of 2019 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)
BETWEEN: INOVA PHARMACEUTICALS (AUSTRALIA) PTY LTD
First Applicant
INOVA PHARMACEUTICALS (SINGAPORE) PTE LTD
Second Applicant
AND: GWH & ASSOCIATES
First Interested Person
MARTIN KACHUN TSE
Fourth Interested Person and other Interested Persons and Respondents named in the Schedule
ORDER MADE BY:
JUDGE MANOUSARIDIS
DATE OF ORDER:
18 DECEMBER 2024
THE COURT ORDERS THAT:
1.Pursuant to r 17.05(2)(c) of the Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth):
(a)order 2 of the orders made on 29 November 2024 (Orders) be varied by deleting “such costs to be set in the amount of $3000”, and deleting the comma after the words “disclosure orders”; and
(b)order 6 of the Orders is set aside.
2.By 24 January 2025, the applicants file and serve evidence on which they intend to rely in support of the
qualificationquantification of the costs referred to in order 2 of the Orders.3.The matter be listed for a directions hearing at 9.30 am on 13 February 2025.
4.The costs of the application that resulted in the making of orders 1 and 2 are reserved.
5.The parties have liberty to apply on such notice as the circumstances warrant.
THE COURT NOTES THAT:
A.These Orders have been amended pursuant to r 17.05(2)(g) of the Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth).
Note: The form of the order is subject to the entry in the Court’s records.
Note: The Court may vary or set aside a judgment or order to remedy minor typographical or grammatical errors (r 17.05(2)(g) Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 17.05 Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth).
EX TEMPORE REASONS FOR JUDGMENT
(Revised from transcript)INTRODUCTION
On 29 November 2024 I pronounced orders in relation to a number of applications for costs made by the applicants (iNova) and, principally, by two other persons, Mr Tse, and GWH & Associates (GWH). I ordered, among other things, that Mr Tse and GWH pay iNova’s costs of including Mr Tse and GWH as respondents to the application iNova made on 8 December 2023 for freezing and ancillary disclosure orders, that iNova’s costs be fixed in the amount of $3,000, and that iNova, Mr Tse, and GWH each pay its or his own costs.
I pronounced these orders on the basis of reasons for judgment I published immediately after I pronounced those orders (earlier reasons).[1] The orders to which I have referred were based on findings contained in paragraphs 75 and 76 of the earlier reasons.
[1] iNova Pharmaceuticals (Australia) Pty Ltd v Letos Group Pty Ltd (No 4) [2024] FedCFamC2G 1307
BACKGROUND
At 11.19 am on 11 December 2024, the lawyer for iNova, Ms Cottier, sent an email to GWH and Mr Tse’s lawyers. The email was as follows:
We refer to the judgment and orders in the above matter dated 29 November 2024.
Order 2 made on 29 November 2024 provides that the quantum of costs for which Mr Tse and GWH & Associates are liable for is $3,000.
However, the parties did not have the opportunity to be heard on the quantum of costs that should be awarded. It is clear from T12.4 to T13.9 of the transcript of the hearing on 20 November 2024 that our clients intended to file evidence and submissions in relation to that issue.
Accordingly, our clients intend to seek to relist the matter, on the basis of r 17.05 of the Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth), or the Court’s inherent power to reopen where the parties have not had the opportunity to be heard.
Please let us know, by no later than 12pm on Friday, 13 December 2024, whether you consent to the below email being sent to the Court.
Dear Associate
We refer to the judgment and orders in the above matter dated 29 November 2024.
Order 2 made on 29 November 2024 provides that Martin Tse and GWH & Associates pay the applicants’ costs of including Mr Martin Tse and GWH as respondents to the application the applicants made on 8 December 2023 for freezing and ancillary disclosures orders, such costs to be set in the amount of $3,000.
At the hearing on 20 November 2024, the following discussion took place between his Honour and the Applicants’ counsel (at T12.4-9 and T13.1-9):
HIS HONOUR: Sorry. Before you get to that. So the end result - if you're successful on all of this, the - what - and I know you've got the orders, but the end result is that there's an order that all the relevant responders to your cost application pay cost, but that's to be apportioned in some sort of way by a registrar.
MR McMENIMAN: Yes…
…
HIS HONOUR: And would it be contemplated that – there will be obviously an affidavit setting out the actual cost, I suppose?
MR McMENIMAN: The actual cost - - -
HIS HONOUR: Some short submissions about how it should be allocated a portion, is that the idea?
MR McMENIMAN: Yes, yes.
Based on that discussion the Applicants had understood that the issue of quantum and apportionment of costs would be dealt with separately, particularly as they had yet to be given the opportunity to be heard on that issue.
The costs attributable to Mr Tse and GWH significantly exceed $3000. iNova respectfully requests the opportunity to put that evidence before his Honour (as to quantum and apportionment as discussed during the hearing as set out above), in a form that his Honour considers appropriate.
In this regard, we note that the Court may have the power to do so under r 17.05 of the Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth) (based on the costs order being interlocutory). Alternatively, as identified by Feutrill J in Australian Securities and Investments Commission v Marco (No 15) [2024] FCA 347 at [218], the Federal Court of Australia, being a Court of limited jurisdiction like this Court, there is an exception to the general principle that the Court does not have an inherent power to re-open perfected final orders “except in cases of fraud or a failure to be heard”.
We therefore respectfully request whether his Honour would be prepared to re-open so that the Applicants can file an affidavit and short written submissions (if the latter would assist the court) on quantum and apportionment, and Mr Tse and GWH be given an opportunity to reply, so that the quantum of the costs order against them can be reconsidered and determined either on the papers or after a short hearing.
Please let us know if we can be of any assistance to the Court.
[This email is sent with the consent of Mr Tse’s legal representatives and GWH & Associates, who are each copied on this email.]
At 5.41 pm on 11 December 2024, Mr Li of AHD Lawyers sent an email to Ms Cottier responding to the email that Ms Cottier had sent earlier that day. That email is as follows:
This email is being sent as a joint correspondence on behalf of Mr Tse and GWH (copied) (jointly referred to as the Respondents).
The Respondents do not consent to the proposed email and oppose any application to re-open the orders. We set out, in brief, the reasons for that position.
First, counsel for Mr Tse recalls that, shortly before or after the exchange you refer to in your email, his Honour indicated that he did not intend to refer the matter to a Registrar and that he intended to deal with all issues between the parties, necessarily including both liability and quantum. We do not have the benefit of a transcript and cannot be more precise. If counsel’s recollection is correct, your clients cannot complain to have been unaware of his Honour’s proposed course.
Relatedly, the parties were at liberty to make any application for costs they saw fit. There is no reason why your clients could not have put on evidence of their costs and submissions in support of a proposed apportionment between the parties. Indeed, that was the approach taken by the Respondent’s [sic].
Second, it is apparent that his Honour considered and determined the amount of costs that ought to be paid by the Respondents. At [76] of his Honour’s reasons he said:
“It also follows that iNova is entitled to the costs it incurred that are specifically attributable to iNova having sought freezing and disclosure orders against Mr Tse and GWH. That should exclude the costs iNova would in any event have incurred had Mr Tse and GWH disclosed to iNova immediately after 16 November 2023 that they had ceased acting for Ms Liang. As I have already found, it is likely that, had such disclosure been made, iNova would have applied for a freezing order and, perhaps, ancillary disclosure orders against Ms Liang, Mr Leon Wang, and Ms Fan; and iNova would in any event have had to prepare and produce substantially the same evidence in support of such application as iNova prepared and adduced on the application it made on 8 December 2023. In these circumstances, it is reasonable to infer that the costs iNova incurred that would be specifically referrable to including Mr Tse and GWH with Ms Liang and as respondents to the application for freezing and ancillary disclosure orders would be relatively modest, and ought not to be more than $3,000.”
The effect of his Honour’s reasoning is that he found your clients would have incurred substantially the same costs even if Mr Tse / GWH had notified your clients that they ceased to act for Ms Liang immediately after 16 November 2023. In the face of that reasoning, any evidence as to the costs purportedly attributable to our client is irrelevant.
Third, any application to re-open (assuming one can be made, which is doubtful) is inconsistent with the parties’ obligation to promote the overarching purpose: Federal Circuit and Family Court of Australia Act 2021 (Cth) s 68(1). The parties have already expended significant time and money on this issue, as well occupying the Court’s valuable time. Indeed, your clients filed three sets of lengthy submissions, any one of which could have dealt with the issues your clients now seek to reagitate. The proposal for further evidence, further submissions and, potentially, a further hearing, merely aggravates the situation.
Fourth, it is doubtful the orders can be re-opened. The orders are not interlocutory. They finally dispose of the parties’ rights in respect of the cost issues raised before his Honour. Rule 17.05 does not apply. The principle in Australian Securities and Investments Commission v Marco (No 15) [2024] FCA 347 at [218] also does not apply, as there was no fraud and no failure to be heard.
We request that this email be sent to the Court should you send your foreshadowed correspondence.
At 1.10 pm on 17 December 2024 Ms Smith, a lawyer employed by the lawyers for iNova, sent to my Associate an email in terms of the draft email Ms Cottier, in her email of 11 December 2024, foreshadowed would be sent to my Associate. When I became aware of Ms Smith’s email I listed the matter for a directions hearing, initially at 9.30 am on 18 December 2024, and then at 10.15 am on that day. Mr Williams appeared for iNova, Mr Wang appeared for GWH, and Mr Southwood appeared for Mr Tse.
HEARING
At that hearing I heard what in effect was an application pursuant to r 17.05 of the Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth) (GFLRules) to vary or set aside the orders to which I have referred. To be clear, they are, first, the order that iNova’s costs be set in the amount of $3,000, and, second, that iNova, GWH, and Mr Tse pay their own costs in relation to the applications for costs that were the subject of the earlier reasons (Orders).
As should be apparent from the email Ms Cottier sent to GWH and Mr Tse’s lawyer on 11 December 2024, the principal ground on which the application to vary or set aside the Orders is made is my failure to accord iNova procedural fairness. In particular, Mr Williams submitted that in the earlier reasons I proceeded on two assumptions in relation to which I did not invite any submissions, those assumptions being that the costs iNova incurred that are referable to Mr Tse and GWH are relatively modest, and that $3,000 would be fair compensation for those costs. Mr Williams submitted the Court has power to vary the Orders. Mr Williams relied on Australian Securities and Investments Commission v Marco (No 15) [2024] FCA 347, at [218].
GWH, through Mr Wang, and Mr Tse, through Mr Southwood, opposed my setting aside the Orders. Mr Wang submitted that I do not have power to set aside the Orders; and that the issue of the quantum of costs should have been dealt with by an affidavit in any event. Mr Wang further submitted that I had made clear findings in the earlier reasons which validate the Orders.
Mr Southwood submitted that the overarching purpose demanded that I put an end to the further incurring of costs in this proceeding by not giving effect to the application that is now being made by iNova; that to the extent the Court does have power to vary the Orders, it appears that iNova are seeking to vary a finding of fact I had made, and that was not a path that was open to the Court; and there was no procedural unfairness because, Mr Southwood submitted, the exchanges at the hearing between me and counsel for iNova indicated that I had left it open for me to proceed in the manner I did.
DETERMINATION
I then turn to determine the issues that arise on the parties’ submissions. The first is the question of power. After I was notified of the application iNova wished to make, I undertook my own research, and I came across the judgment of Colvin J in Caratti v Commissioner of the Australian Federal Police [2021] FCA 1067. At paragraph 9 of his Honour’s reasons for judgment, his Honour said:
It has been suggested in qualified terms that a costs order that forms part of the orders by which a proceeding is finally determined is a final order and may be the subject of an appeal without leave.
After referring to two authorities, his Honour continued:
However, in the recent decision in ALDI Foods Pty Limited as General Partner of ALDI Stores (A Limited Partnership) v Transport Workers’ Union of Australia [2020] FCAFC 231, it was said (without determining the point) that the ‘prevailing view has been that a costs order, even when made as part of the final disposition of a proceeding, is interlocutory in nature’: at [69].
Based on the judgment of Colvin J in Caratti, I am satisfied that the orders iNova seeks to be set aside are interlocutory orders. That means that iNova’s application engages the power in r 17.05(2)(c) of the GFL Rules, which provides:
The Court or a Registrar may vary or set aside a judgment or order after it has been entered if ... (c) it is interlocutory.
I therefore have power to set aside the Orders. What is the principle that should guide the exercise of that power?
The beginning and end of it is the interests of justice. It is true that in administering justice it is necessary to have regard to the overarching purpose of civil practice and procedure stated in s 190 of the Federal Circuit and Family Court of Australia Act 2021 (Cth), and this includes the purpose that the resolution of disputes between parties be dealt with by the application of proportionate resources, having regard to the issues in dispute. An important aspect of the administration of justice, however, is the unstinting obligation of a court to afford parties procedural fairness. Where it is shown that procedural fairness has not been accorded to a party, that is a very strong factor in favour of the Court undoing the harm, to the extent that the Court can, that may have accrued from denying the party procedural fairness.
Turning then to the circumstance of this case, the question is whether there has been a denial of procedural fairness. It is true that I did not, at the hearing, commit myself to any particular course of action about the quantification of iNova’s costs; but it is also true that I did not raise and explore with the parties, and in particular with iNova, the matters which found their way in paragraphs 75 and 76 of the earlier reasons, and in particular my assumption that the costs that are purely attributable to iNova having applied for freezing and ancillary disclosure orders against Mr Tse and GWH would be limited or modest. That may well prove to be the case, but the point is I did not invite the parties to make submissions about that question. It is also the case that I did not invite the parties to make submissions about who should pay the costs of the costs applications themselves, although my failing to do so was due to my already having found that the costs iNova incurred are likely to have been modest, and in any event, not more than $3,000.
It may also be true that my acceding to what iNova seek may result in a disproportionate application of resources. The difficulty with making any assessment of that submission, which was advanced by GWH and Mr Tse, is that I do not have the material by reference to which that submission can be assessed, which is part of the reason for which iNova applied for an order that I vary the orders I made on 29 November 2024.
For these reasons, I am satisfied that it would be in the interests of the administration of justice for me to set aside the Orders, and to give iNova the opportunity to put on material about the costs they say they want to be given an opportunity to put on.
There is one matter I ought to have addressed earlier; and that is the submission about attacking or seeking to challenge findings of fact in the earlier reasons. I do not understand that iNova are seeking to challenge any findings of fact other than the assumptions to which I have referred; but I am not aware of any principle which would prevent iNova from doing so. If an order which I am about to set aside is premised on a finding of fact, I do not see any legal reason why that finding cannot be impugned. That, however, is not an invitation for evidence to be filed to challenge any findings of fact I made in the earlier reasons. The parties, subject to any application for leave to reopen, will be bound by the evidence they adduced at the hearing, and by the manner in which they conducted their respective cases on their applications for costs.
I certify that the preceding seventeen (17) numbered paragraphs are a true copy of the Reasons for Judgment of Judge Manousaridis. Associate:
Dated: 23 December 2024
SCHEDULE OF PARTIES
SYG 3343 of 2019 Interested Persons
Fifth Interested Person:
LEON WANG
Sixth Interested Person:
DPJ PARTNER PTY LTD (ACN 609 453 849) T/AS ENDEAVOUR REALTY SYDNEY
Seventh Interested Person:
JINGHUA FAN T/AS ICY FAN CONVEYANCING
Eighth Interested Person:
JIANHUA KUAI
Respondents
Fourth Respondent:
LETOS GROUP PTY LTD ACN 623 106 561
Fifth Respondent:
LIYAN LIANG
Sixth Respondent:
C&J AUS GROUP PTY LTD ACN 617 599 961
Seventh Respondent:
TAIYI CHANG
Eleventh Respondent:
JUN WEI PTY LTD ACN 616 977 096
Twelfth Respondent:
NINGNING WEI
Thirteenth Respondent:
LI BIN
Fourteenth Respondent:
FY HEALTH PTY LTD ACN 629 197 315
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