Seafolly Pty Ltd v Madden (No 3)

The matter before the Federal Court of Australia in Seafolly Pty Ltd v Madden (No 3) [2013] FCA 316 involved Seafolly Pty Ltd, a company in the women's swimwear market, and Ms Leah Madden, a competitor. The dispute originated from Ms Madden's public statements suggesting that Seafolly copied and marketed her designs. Seafolly initiated proceedings against Ms Madden for misleading and deceptive conduct, injurious falsehood, and copyright infringement. Ms Madden cross-claimed for defamation and misleading and deceptive conduct based on Seafolly's press releases. The court, in previous proceedings, ruled in favor of Seafolly and ordered Ms Madden to pay costs. However, Ms Madden sought to vary these orders due to a Calderbank offer, which was refused.

In this case, both parties filed interlocutory applications. Seafolly sought a lump sum costs order, while Ms Madden applied for a stay on the enforcement of the costs orders pending the appeal. The court's primary task was to decide whether there was a proper foundation for granting Ms Madden's stay application and whether it was necessary to resolve Seafolly's lump sum costs application. The court considered the principles guiding the exercise of discretion in granting stays, including the balance of convenience and the competing rights of the parties. Ms Madden argued that she had limited assets and would need to sell her home to pay the costs, which would be unfair if her appeal succeeded. Seafolly, on the other hand, argued that Ms Madden had assets she could use to meet her obligations.

The court found that a stay, subject to Ms Madden's undertakings not to dispose of or encumber her property beyond a certain limit, would be fair in the present circumstances. It was not necessary to resolve Seafolly's lump sum costs application at that time. The court ordered that the enforcement of the costs order be stayed until the hearing and determination of the appeal without prejudice to Seafolly's rights to apply for taxation of those costs. The parties' costs of the interlocutory applications were reserved.