Kilthistle No.6 Pty Ltd (Receiver and Manager Appointed) v Austwide Homes Pty Ltd
[1997] FCA 1383
•10 DECEMBER 1997
FEDERAL COURT OF AUSTRALIA
PRACTICE & PROCEDURE - whether mediation should be ordered where a party does not consent - whether mediation would be expeditious or effective.
Federal Court of Australia Act 1976, s 53A(1), s 53A(1A)
Federal Court Rules, O 72 r 8, O 72 r 7(1)(a), O 72 r 2(2), O 10 r 1(2)(h)
KILTHISTLE NO.6 PTY LIMITED (RECEIVER AND MANAGER APPOINTED) and AMMRAD PTY LIMITED T/AS LLOYDS TRANSPORTABLE HOMES and BETTER LOOK HOMES PTY LIMITED v AUSTWIDE HOMES PTY LIMITED and CARINDALE HOMES PTY LIMITED and MICHAEL STANLEY NEASON and JOHN AUSTIN FLEMING and PHILLIP MALCOLM ANDREA and BRADLEY JOHN WILSON and STEPHEN JAMES FILEWOOD and KERRY DAVID PASCOE and JAMES DAVID PASCOE and DIANNE MARGARET PASCOE and AUSTRALIAN SECURITIES COMMISSION and AV WEHL INDUSTRIES LIMITED and ACI AUSTRALIA LIMITED
NG 9 of 1996
LEHANE J
10 DECEMBER 1997
SYDNEY
| IN THE FEDERAL COURT OF AUSTRALIA | |
| NEW SOUTH WALES DISTRICT REGISTRY | NG 9 of 1996 |
BETWEEN: | KILTHISTLE NO.6 PTY LIMITED AMMRAD PTY LIMITED T/AS LLOYDS TRANSPORTABLE HOMES BETTER LOOK HOMES PTY LIMITED | |
AND: | AUSTWIDE HOMES PTY LIMITED CARINDALE HOMES PTY LIMITED MICHAEL STANLEY NEASON JOHN AUSTIN FLEMING PHILLIP MALCOLM ANDREA BRADLEY JOHN WILSON STEPHEN JAMES FILEWOOD KERRY DAVID PASCOE JAMES DAVID PASCOE DIANNE MARGARET PASCOE AUSTRALIAN SECURITIES COMMISSION AV WEHL INDUSTRIES LIMITED ACI AUSTRALIA LIMITED | |
JUDGE: | LEHANE J | |
DATE OF ORDER: | 10 DECEMBER 1997 | |
WHERE MADE: | SYDNEY | |
THE COURT ORDERS THAT:
The motion of the fourth respondent is stood over to the first day set down for the trial of the proceedings, with liberty to any party to apply in respect of the motion on five days’ notice.
| IN THE FEDERAL COURT OF AUSTRALIA | |
| NEW SOUTH WALES DISTRICT REGISTRY | NG 9 of 1996 |
BETWEEN: | KILTHISTLE NO.6 PTY LIMITED AMMRAD PTY LIMITED T/AS LLOYDS TRANSPORTABLE HOMES BETTER LOOK HOMES PTY LIMITED |
AND: | AUSTWIDE HOMES PTY LIMITED CARINDALE HOMES PTY LIMITED MICHAEL STANLEY NEASON JOHN AUSTIN FLEMING PHILLIP MALCOLM ANDREA BRADLEY JOHN WILSON STEPHEN JAMES FILEWOOD KERRY DAVID PASCOE JAMES DAVID PASCOE DIANNE MARGARET PASCOE AUSTRALIAN SECURITIES COMMISSION AV WEHL INDUSTRIES LIMITED ACI AUSTRALIA LIMITED |
JUDGE: | LEHANE J |
DATE: | 10 DECEMBER 1997 |
PLACE: | SYDNEY |
REASONS FOR JUDGMENT
The motion
The fourth respondent moves, in accordance with notice of motion filed on 19 November 1997, for the following orders:
An order pursuant to section 53A(1) of the Federal Court of Australia Act (1976) that the proceedings in the Court be referred to a mediator.
That the proceedings stand adjourned until the mediator reports back to the Court or until further order.
That the Registrar nominate a person as the mediator and give the parties notice in accordance with Order 72 rule 6.
That the mediation be conducted on or before 31 January 1998 or such other time as the parties agree.
The motion is supported by all respondents other than the seventh, who did not appear and was not represented on the hearing of the motion, and the eleventh, twelfth and thirteenth, none of which is taking an active part in the proceeding. The applicants vigorously oppose the motion.
Legislation and Rules
The first two subsections of s 53A of the Federal Court of Australia Act 1976 (the Federal Court Act) now provide:
53A (1) Subject to the Rules of Court, the Court may by order refer the proceedings in the Court, or any part of them or any matter arising out of them, to a mediator or an arbitrator for mediation or arbitration, as the case may be, in accordance with the Rules of Court.
(1A) Referrals under subsection (1) to a mediator may be made with or without the consent of the parties to the proceedings. ...
The Federal Court Rules were recently amended, with effect from 26 September 1997, so as (among other things) to be consistent with the power conferred by s 53A(1A) to refer proceedings to a mediator even if the parties do not consent. Particularly, O 72 r 8 has been amended by omitting subrr (2) and (3): under those subrules a party might at any time have terminated a mediation, with the result that the proceedings were “adjourned back to the Court or a Judge”. The Rules contemplate (O 72 r 7(1)(a)) that the Court may give directions as to the conduct of a “mediation conference”; and nothing in O 72 “affects an order or direction under Order 10, rule 1” (O 72 r 2(2)), so that the Rules preserve, where proceedings are referred to a mediator, the power of the Court to make orders and directions for their conduct. In the context of the present motion, it is apposite to refer to O 10 r 1(2)(h) which empowers the Court to:
order that the parties attend before a Registrar for a conference with a view to satisfying the Registrar that all reasonable steps to achieve a negotiated outcome of the proceedings have been taken, or otherwise clarifying the real issues in dispute so that appropriate directions may be made for the disposition of the matter, or otherwise to shorten the time taken in preparation for and at the trial
Submissions and discussion
Ordinarily, of course, mediation is a consensual procedure. There can be little doubt that it is most likely to achieve results if all parties are willing participants. The power of the Supreme Court of New South Wales to refer proceedings to a mediator arises only, as the power of this Court formerly arose only, where the parties to the proceeding agree (Supreme Court Act 1970 (NSW) s 110K). On the other hand, compulsory referral to mediation is not unknown: it arises (to adopt an example to which counsel referred me) under the Farm Debt Mediation Act 1994 (NSW): in general terms, that Act prohibits “enforcement action” in respect of a debt owing under a “farm mortgage” unless mediation, following the procedure for which that Act provides, is first attempted. Clearly, the amendment of the Federal Court Act to empower the Court to refer a proceeding to mediation, even if not all parties agree, and the consequential amendment of the rules reflect a view that mediation may be productive even if a party is initially a reluctant participant. The amendment also reflects a policy in favour of the negotiated settlement of disputes, where that is possible, or at least the refinement or narrowing of the issues in dispute.
This proceeding concerns a number of designs of transportable homes. In broad terms, the applicants claim that copyright subsists in certain drawings and specifications; that the applicants are variously the owners or licensees of the copyright; that the first and second respondents have each infringed certain of the copyrights; and that other respondents have authorised, directed and procured the infringements. There are allegations of flagrancy. Claims are made also based on s 52 of the Trade Practices Act 1974. The defences vary somewhat between groups of respondents, but in each case subsistence and ownership of copyright are at least in issue and the other elements of the causes of action relied on are denied. In the case of certain of the respondents there are defences of innocent infringement. It is evident that the case is by no means a straightforward one: for example, certain of the drawings in which copyright is said to subsist are alleged to have been created during a period beginning in about 1963 and ending in about 1980. The parties read evidence on the motion as to the likely length of a trial and its likely cost. It appears to be common ground that the trial will require at least several weeks (the estimates vary from approximately three weeks to approximately five); there is evidence also as to the costs likely to be incurred and, again as a general proposition, it may be accepted that they will be substantial. The respondents appearing in support of the motion contend that the likely cost will be substantially out of proportion to any damages which the applicant is likely to recover; that proposition, however, is strongly disputed by the applicants.
The applicants submit on a number of grounds that the motion should not succeed. They submit that this is not an appropriate case for mediation: damages are not the central issue; the applicants’ main concern is to establish both their copyright claims and the alleged infringements on the part of the respondents, and to obtain injunctive relief accordingly. Given that all elements of their copyright claims are in issue, the applicants submit that there is no reasonable basis to expect any progress to be made in the course of a mediation. They say also that, if mediation might at some time be appropriate, now is not the appropriate time: they refer to correspondence (which is in evidence) concerning a number of outstanding issues on discovery; there are also some outstanding issues concerning particulars. They suggest (on the basis of evidence of their solicitor) that substantial preparation will be needed for a mediation, and substantial costs incurred, which would be better devoted to preparing the case for trial. Their solicitor gave evidence as well of the absence, to date, of any open offers of settlement, and on that basis also it was suggested that mediation was unlikely to be productive. Additionally, the applicants made a number of submissions about the powers of the Court under the Federal Court Act and the Rules. They contend that the Court either cannot, or would not, make an order requiring an unwilling party to pay the fees of a nominated private mediator; they submit that the Court does not have power to order payment of the costs of the mediation (Federal Court Act s 43) because a mediation is not a proceeding before the Court. They point also to what is said to be the impossibility, or at least difficulty, of making orders which would effectively force an unwilling party to participate in a mediation “in a meaningful way”.
The respondents, on the other hand, contend that the Court has adequate power under O 10
rr 1 and 2 and O 72 to make effective directions for the conduct of a mediation and that the powers of the Court to make orders in relation to costs in the proceeding include power to order the payment of the costs of a Court ordered mediation: this, they say, is an exercise of judicial power in the conduct of the proceedings themselves. They contend that the applicants’ submissions about the futility of a mediation, given the attitude of the applicants, overlooks the “dynamics” which may arise during a mediation and the range of possible outcomes: even if an overall settlement is unlikely, mediation may achieve a narrowing of the issues or, at least, a more realistic understanding by each party of the positions of the others. The applicants’ position ignores, it is said, the fact that parties in mediation often move from previously entrenched positions. Mediation, the respondents submit, should be ordered because of the prospect it offers that a long and expensive trial may be avoided or at least substantially shortened.
I see no reason to doubt the power of the Court to make orders for the conduct of a mediation, including orders requiring attendance and the taking of appropriate steps: I can see no greater difficulty about orders of that kind than about orders and directions under O 10 r 1(2)(h). There may be a question about orders for the payment of the costs of a mediation (I see no need to come to a conclusion on that now) and, in the absence of consent to a referral to a private mediator, I think it highly unlikely that any mediation would be ordered other than one conducted by a registrar or officer of the Court. In a case where a party to proceeding - particularly a party whose concurrence ultimately will be needed if any real progress is to be made - is adamantly opposed to mediation on the basis of a considered view, as to which it leads evidence, that it will be both costly and futile, the Court is likely, I think, to be slow to order a referral to a mediator. The number and nature of the issues in this case, the number of the parties, the course of the proceedings to date, the interlocutory matters remaining in dispute and the evidence of the applicants as to their attitude and its basis and as to their principal object in bringing these proceedings combine to convince me that mediation, at this stage, is unlikely to be either expeditious or effective. I accept that considerable preparation would be required for a mediation; I think that, in the present state of the proceedings, resources would be better devoted to resolving outstanding interlocutory issues.
Conclusion
Accordingly, I do not think it is appropriate, at present, to make the orders sought. On the other hand, I do not think it is appropriate simply to dismiss the motion. It is by no means clear that this is necessarily a case which can reasonably be resolved only by a lengthy and expensive trial of all matters presently in issue between the parties. It may be that resolution of the outstanding interlocutory matters may result in some change of circumstances or attitudes, and what seems to me now not a suitable case for compulsory referral to mediation may later be seen in a different light. I propose, therefore, simply to order that the motion of the fourth respondent be stood over to the first day set down for the trial of the proceedings, with liberty to any party to apply in respect of the motion on five days’ notice.
| I certify that this and the preceding six (6) pages are a true copy of the Reasons for Judgment herein of the Honourable Justice Lehane |
Associate:
Dated:
| Counsel for the Applicants: | Mr A J L Bannon SC and Mr R Cobden |
| Solicitor for the Applicants: | Gilbert & Tobin |
| Counsel for the First and Third Respondents: | Ms J R Baird |
| Solicitor for the First and Third Respondents: | Farrell Lusher |
| Solicitor for the Second, Eighth, Ninth and Tenth Respondents: | Banki Palombi Haddock Fiora |
| Counsel for Fourth Respondent: | Mr R E Montgomery |
| Solicitor for Fourth Respondent: | Commins Hendriks |
| Date of Hearing: | 28 November 1997 |
| Date of Judgment: | 10 December 1997 |
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