Maggbury Pty Ltd v Hafele Australia Pty Ltd

[2001] QSC 5

SUPREME COURT OF QUEENSLAND

CITATION:

Maggbury Pty Ltd & Anor v. Hafele Australia Pty Ltd & Anor [2001] QSC 005

PARTIES:

MAGGBURY PTY LTD
ACN 011 007 793
(first plaintiff)
and
GISMA PTY LTD
ACN 072 964 311
(second plaintiff)
v
HAFELE AUSTRALIA PTY LTD
ACN 006 021 432
(first defendant)
and
HAFELE GMBH & CO
(second defendant)

FILE NO:

8775 of 1998

DIVISION:

Trial Division

DELIVERED ON:

17 January 2001

DELIVERED AT:

Brisbane

HEARING DATE:

14 November 2000

JUDGE:

Helman J

CATCHWORDS:

PROCEDURE – SUPREME COURT PROCEDURE – QUEENSLAND – application to have an order against the plaintiffs for security for costs discharged

PROCEDURE – SUPREME COURT PROCEDURE – QUEENSLAND – application that an order that the second defendant be adjudged in contempt of Court be dismissed

Uniform Civil Procedure Rules 1999

Little v Lewis [1987] VR 798
Maggbury P/L  & Anor v Hafele Australia P/L  & Anor [2000] QCA 172
Maggbury P/L & Anor v Hafele Australia P/L & Anor [2000] QCA 397

Maggbury P/L  & Anor v Hafele Australia P/L  & Anor [2000] QSC 220

Plating Co v Farquharson (1881) 17 Ch D 49

COUNSEL:

Dr S J Lee for the plaintiffs
Mr G McGowan for the defendants

SOLICITORS:

O’Shea Corser & Wadley for the plaintiffs
Shand Taylor Lawyers for the defendants

1. HELMAN J:  There are two applications before me.  The first was filed on 23 October 2000 on behalf of the second defendant.  In it an order was sought that the plaintiffs’ application filed in July 1999 seeking an order that the second defendant be ‘adjudged in contempt of Court’ be dismissed, or, in the alternative, that there be judgment for the second defendant in the plaintiffs’ application, and for other, consequential relief.  The second application was filed on 13 November 2000 on behalf of the plaintiffs who seek an order that an order that the plaintiffs give security for the second defendant’s costs of and incidental to the application filed in July 1999 be discharged, an order that a stay of proceedings which applies to the plaintiffs’ application be lifted, and for other, consequential orders. 

1. On 31 August 2000 White J. ordered that the plaintiffs provide security for the second defendant’s costs of and incidental to the contempt application in the sum of $48,000 in a form satisfactory to the Registrar of the court within twenty-one days, and that in default the contempt proceedings be stayed.  No such security has been given, and, as an affidavit sworn by Mr Richard Jefferis and filed by leave at the hearing of the applications shows, there is at present no prospect of its being given.  (Mr Jefferis is a solicitor employed by the plaintiffs’ solicitors.)  The failure of the plaintiffs to give the security is one circumstance relied on by the second defendant in bringing its application.  The other is that the plaintiffs, in their application as it is at present drawn, do not seek the imposition of a penalty on the second defendant.  The first circumstance can be relied on by the second defendant because r. 674 of the Uniform Civil Procedure Rules 1999, so far as it is relevant, provides that if the court orders the plaintiff to give security for costs and if security is not given under the order, the court may, on the defendant’s application, dismiss all or part of the proceeding. The second circumstance can be relied on because courts discourage proceedings for contempt in which only an apology and costs are sought: Halsbury’s Laws of Australia, vol. 5, para. 105-70, p. 188,099.  Such proceedings are a mere waste of the time of the court:  Plating Co. v. Farquharson (1881) 17 Ch. D. 49, at p. 56 per Cotton L.J. In the same case James L.J. said he should be inclined to make the party moving pay costs, adding that he thought such proceedings are ‘a contempt of Court in themselves, because they tend to waste the public time’ (p.57).

1. I should now explain briefly the history of the proceedings that have given rise to the applications.

1. The principal proceeding concerns the rights of the inventor of certain domestic folding ironing boards. The first plaintiff assigned its rights as inventor to the second plaintiff. The second defendant is a limited partnership registered under the German commercial code. It has one ordinary partner, a limited liability company, and a number of limited partners who are natural persons. The first defendant is an Australian company controlled by the second defendant. For about two years beginning in 1995 there were discussions between representatives of the first plaintiff and the defendants about the ironing boards with a view to their commercial exploitation. The discussions came to nothing. In the course of the discussions an agreement, recorded as a ‘Deed of Confidentiality’ dated 25 July 1995, was entered into between the first plaintiff as inventor and the first defendant. Another agreement, recorded in a ‘Deed of Confidentiality’ dated 13 November 1995, was entered into between the first plaintiff and the second defendant. The plaintiffs alleged breaches of the agreements. There was a trial, and judgment was delivered on 22 January 1999. The first plaintiff recovered $25,000 as damages for breaches of contract from the defendants, and an injunction was granted restraining the defendants from manufacturing or distributing ironing boards specified in the order. The defendants appealed to the Court of Appeal, and on 12 May 2000 the appeal was allowed: [2000] Q.C.A. 172. The judgment of the trial judge was set aside and replaced by an award of $5,000 equitable damages only. An application for special leave to appeal to the High Court dated 8 June 2000 was lodged by the plaintiffs and it will be heard at some time this year, it seems in March: Mr Jefferis has been told that it is likely to be allocated a hearing ‘between February and April 2001’. The plaintiffs seek inter alia the setting aside of the decision of the Court of Appeal and the restoration of the trial judge’s orders. 

1. On 29 July 1999 - and so before the dissolution of the injunction - the plaintiffs filed their application alleging that the second defendant was guilty of contempt of court in breaching the injunction. The application has been amended since, most recently on 23 March 2000. In their application one order the plaintiffs sought was an order that the second defendant make disclosure on oath in respect of the matters in question on the application. On 18 August 1999 that part of the application seeking the order for disclosure was heard, and determined in favour of the plaintiffs. There was no appeal, and on 6 January 2000 a further order was made requiring the partners in the second defendant to deliver or produce for the inspection of the plaintiffs documents, the subject of a claim to privilege against self-incrimination, in a list of documents made in compliance with the order of 18 August 1999. There was an appeal to the Court of Appeal against the order of 6 January 2000, and that order was set aside: [2000] Q.C.A. 397. Muir J., with whose reasons McPherson and Thomas JJ.A. agreed, explained that disclosure, if any, should have been made by the second defendant, but that it was unable to claim privilege, and that, in any event, the privilege had been lost; so it was not appropriate to make an order which would have the practical effect of restoring the privilege, even if it were possible to do so: para. 41. The appeal was then unsuccessful except for the setting aside of the order of 6 January 2000.

1. It is convenient to deal first with the plaintiffs’ application, which was made in reliance on rr. 668 and 675 of the Uniform Civil Procedure Rules and on the inherent jurisdiction of the Court.

1. Rule 668(1) of the Uniform Civil Procedure Rules provides, so far as it is relevant, that if facts arise after an order is made entitling the person against whom the order is made to be relieved from it the court may set aside or vary the order. Rule 675 provides that the court may set aside or vary an order made under Part 1 of Chapter 17 ‘in special circumstances’. White J.’s. order was not made under that part, but rather in the inherent jurisdiction of the court to control its process: [2000] Q.S.C. 220, para 12. The plaintiffs nevertheless sought to rely on those rules - and an inherent power in the court - in making their application. Two special and changed circumstances justified the conclusion that their application should succeed, it was argued. The first was their now wishing to amend the application filed on 29 July 1999 further to seek an order that the second defendant ‘pay a fine and/or penalty’; that appears from exhibit RMJ1 to Mr Jefferis’s affidavit to which I have referred. The second was the decision of the Court of Appeal of 3 October 2000, in particular on the question of the claim of privilege by the second defendant. The difficulty with that argument is however that neither constitutes a special circumstance: a proposed amendment to the plaintiffs’ application after it has been on foot for well over a year hardly qualifies as a special circumstance, nor does the decision of the Court of Appeal which did no more than reject a contention concerning the privilege against self-incrimination advanced by the second defendant. Nothing relied on by the plaintiffs could remotely be regarded as a fact arising after White J. made her order, and there is no other principle which in my view would assist the plaintiffs.

1. It follows from what I have said that the order that the plaintiffs give security for costs and the stay of the plaintiffs’ application filed on 29 July 1999 must remain undisturbed. The plaintiffs’ application filed on 13 November 2000 will accordingly be dismissed. The plaintiffs cannot then proceed to amend the former application, which remains one in which no penalty is sought against the second defendant. The second defendant may, then, invoke the jurisdiction under r. 674, and may also rely on the practice of courts in discouraging proceedings for contempt where no penalty is sought. On the latter point it is noteworthy that in appeal [2000] Q.C.A. 397 Muir J. considered it appropriate to make these observations concerning the plaintiffs’ application:

The unusual nature of the respondents’ contempt proceedings

[34]Another unusual feature of this case is the relief sought in the contempt application.  It seeks that the named appellants “be adjudged in contempt of court”.  An injunction against a corporation may be enforced by seizure of the defaulting company’s property or by fine.  In the case of an individual a contempt is punishable by imprisonment or fine or both.  It is noted in Halsbury that –

“The court does not encourage motions to commit where committal is not really sought, and all that is asked for is an apology and the payment of costs.  In such cases the party moving ought not be allowed his costs and the motion may be refused with costs.” [24 Halsbury’s Laws of England, 4th ed. reprint, para.1110]

[35]In In re New Gold Coast Exploration Company [[1901] 1 Ch. 860], Cozens-Hardy J expressed strong disapproval of the bringing of applications for committal for contempt where it was not intended to pursue such an order. He quoted with approval the following passage from the judgment of James LJ in Plating Co v Farquharson [(1881) 17 Ch. D. 49, 56] –

“I certainly in such cases would not only not give the party moving his costs, but I should be inclined to make him pay costs.  I think these motions are a contempt of Court in themselves, because they tend to waste the public time.” [at 861]

[36]The above observations of James LJ remain valid.  The Uniform Civil Procedure Rules and their predecessors make provision for contempt proceedings in order to provide for the enforcement of the process and orders of the Court and the punishment of acts which impede the due administration of justice [cf. Australasian Meat Industry Employees’ Union v. Mudginberri Station Pty Ltd (1986) 161 C.L.R. 98 at 107]. In the case of civil proceedings, the main purpose of the sanctions provided by the Rules in the event of a failure to comply with court orders is coercive rather than punitive. [Mudginberri at 107]

[37]Applications, such as the one under consideration, serve neither of these objectives.  In my view, resort to contempt proceedings by litigants for the purposes of forensic manoeuvring should be discouraged.

[38]The foregoing considerations were not within the appellants’ grounds of appeal and, although raised in the course of argument, were not the subject of considered submissions.  I thought it desirable, however, to express these views, lest it be thought that failure to question the course being pursued by the respondents lent it tacit support.

It would follow that, as things stand at present, there is merit in the second defendant’s application, which should succeed unless some further consideration calls for its refusal or a deferment of final consideration of it.

1. There are three possible considerations which could be relevant to withholding the order sought by the second defendant.  The first is the undoubted public interest in ensuring that a party does not act in defiance of an order of the court.  That is clearly relevant, but it is also clear from the statements from Plating Co v. Farquharson to which I have referred that that consideration in a case of this kind is overridden by the undesirability of encouraging proceedings for contempt in which no penalty is sought.  That obstacle could be overcome if the stay were to be lifted, which could occur only if the plaintiffs’ fortunes were to improve, and that it appears could happen only if they were to succeed before the High Court. Even then of course the plaintiffs may still be unable to give the security, but it seems to me that there is some possibility that they could in that event.

1. Possible success before the High Court is then the second consideration, which would strengthen the plaintiffs’ case in another way if the injunction granted by the trial judge were to be reinstated.  At present the plaintiffs seek to pursue contempt proceedings in relation to an injunction which has been held to have been wrongly granted in the first place.  Such an order must of course be complied with while it is in force, and a committal for contempt of it will not be set aside:  see e.g. Little v. Lewis [1987] V.R. 798. But in this case no finding of contempt has been made, and the fate of the injunction may properly be regarded as another reason why the public interest in pursuing the allegations of contempt is not as great as it would be if the injunction had survived the appeal.

1. The possible effect of success before the High Court leads me to conclude that I should accede to a request made on behalf of the plaintiffs that the second defendant’s application should be adjourned until after the determination of the proceedings in the High Court.  

1. I should mention that there was a further fact relied on on behalf of the plaintiffs revealed for the first time to the second defendant at the hearing before me, that the solicitors for the plaintiffs had written to the Crown solicitor concerning this matter and had received a letter in reply dated 8 November 2000:

Dear Mr Dierke

Maggbury Pty Ltd & Anor v Hafele Australia Pty Ltd & Or

I refer to your letter dated 6 November 2000.  Thank you for providing me with the application and supporting material.

Your submission, including the material that you have most recently provided to me, is being considered and a decision made by the Attorney-General as soon as possible as to whether he will seek to become involved in the matter.  However, it is unlikely that this decision will be made before the application on 14 November 2000.

I do not consider it appropriate that the Attorney-General seek an adjournment of the application in the absence of a decision as to his involvement in it.  It is a matter for your client whether it proposes to seek an adjournment of the application until a decision has been made by the Attorney-General.

It is obvious from the letter that the Attorney-General was aware of the second defendant’s application and did not wish to intervene in it and had yet to make a decision as to whether there was any reason for his intervention.  In those circumstances it appears to me the plaintiffs’ communication and the non- committal response can have no bearing on the outcome of this application. 

1. I shall invite further submissions on costs.