FEDERAL COURT OF AUSTRALIA

James v Nolmont Pty Ltd (subject to a Deed of Company Arrangement) (ACN 010 874 834) (No 2) [2009] FCA 697

JESSE JAMES, WEST COAST CHOPPERS, INC and VANILLA GORILLA LP v NOLMONT PTY LTD (SUBJECT TO A DEED OF COMPANY ARRANGEMENT) (ACN 010 874 834)

VID 1136 of 2004

RYAN J

25 JUNE 2009

MELBOURNE

THE COURT ORDERS THAT:

1.                  The applicants provide further security in the sum of $150,000 in a form acceptable to the Registrar of the Court for the respondent’s costs from and including the second day of the trial until judgment herein.

2.                  The security referred to in paragraph 1 of this Order be provided by 31 July 2009 and in default the application be dismissed.

3.                  The respondent file and serve by 24 July 2009 a list of the passages from each affidavit filed on behalf of the applicants as part of the applicants’ evidence-in-chief including any exhibit to any such affidavit, to the admissibility of which objection is taken by the respondent.

4.                  The list referred to in paragraph 3 above shall contain respect of each passage, a short statement of the grounds on which it is said to be inadmissible.

5.                  The applicants file and serve by 3 August 2009 a response to the lists referred to in paragraphs 3 and 4 of this Order, containing, in respect of each passage identified therein, a short statement of the grounds on which it is claimed to be admissible.

6.                  The applicants by 24 July 2009 collate a collection, and file and serve a list, of documents discovered by the applicants to date which have been claimed to be confidential and which the applicants still maintain should not be disclosed to Austin Watson or Ian Richards on behalf of the respondent.

7.                  The respondent by 24 July 2009 collate a collection, and file and serve a list, of documents discovered by the respondent to date which have been claimed to be confidential and which the respondent still maintains should not be disclosed to Joseph Yanny or Lory Ishii, of Yanny & Smith, the applicants’ American attorneys.

8.                  There be a hearing before Ryan J on 6 August 2009 for consideration of and ruling on;

(a)        the admissibility of the evidence referred to in paragraphs 3 and 4 above;

(b)        whether any and which of the documents identified pursuant to paragraph 6 above as still being subject to a claim of confidentiality should be made available for inspection by Austin Watson or Ian Richards;

(c)        whether any and which of the documents identified pursuant to paragraph 6  above as still being subject to a claim of confidentiality should be made available for inspection by Joseph Yanny or Rory Ishii.

9.                  The costs of all parties of and incidental to motions on notice each dated 17 June 2009 including the costs of the hearing this day be reserved.

10.              The hearing dates for the trial of the application and the cross-claim herein fixed to commence on 20 July 2009 be vacated.

11.              Liberty be reserved to any party to apply on not less than 48 hours notice in writing to the other parties.

Note:      Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
The text of entered orders can be located using eSearch on the Court’s website.

REASONS FOR JUDGMENT

1                     There are before the Court several motions on notice in this matter.  One by Nolmont Pty Ltd, which is the respondent to the application and a cross-claimant (“Nolmont”) seeks an order for the provision by the applicants and cross-respondents of further security for the costs of the action, being the costs of the trial after the first day and subsequent to the trial.  The amount of further security which is sought is in the sum of $192,750. 

2                     There is also a cross-motion by the applicants seeking the provision of security by Nolmont in the sum of $90,000, being in respect of the applicants/cross-respondents’ costs, up to and including the first day of the action.

3                     When I made the order for security in favour of Nolmont on 12 October 2007 (Jesse James v Nolmont Pty Ltd (subject to a Deed of Company Arrangement) (ACN 010 874 834) [2007] FCA 1604), I canvassed the competing considerations which weigh with the Court in the exercise of the discretion to make an order for security for costs, and I there noted that the grant or withholding of an order for security for costs is in the wide discretion of the Court, although the presence of a foreign applicant with no readily accessible assets within the jurisdiction is a potent factor in favour of its exercise;  see P S Chellaram & Company Ltd v China Ocean Shipping Co (1991) 102 ALR 321.

4                     I then dealt with the question which has been agitated again today of the roles or positions occupied in this litigation by the applicants and the respondent.  I said at [3] of those reasons:

‘One of the principal factors said to weigh against affirmative exercise of the discretion in this case is that Nolmont has raised a cross-claim which itself puts in issue the validity of the subject trademark, thus placing Nolmont effectively in the position of an applicant.  I retain the clear impression that in this action the applicants are the real moving parties, or” the aggressors”, as the expression is sometimes used, and that the cross-claim for revocation would not have been raised or pursued if the action had not been instituted or revived in April 2006 by leave to proceed after Nolmont had gone into administration;  cf, Farmitalia Carlo Erba SRL v Delta West Pty Ltd (1994) 28 IPR 336.’

5                     Despite what has happened since October 2007, and the evidence to which I have been taken about events or disputes between Mr Watson, the sole director of Nolmont, and the administrator of the deed of company arrangement applicable to Nolmont, I retain the impression that the applicants are still the moving parties or “the aggressors” in this litigation and I consider that the reasoning which underlay my earlier order still obtains. 

6                     I further consider that, having regard to the fact that the matter is now in the last stages of being readied for trial, a further provision of security should be required to provide a measure of protection to Nolmont, or those standing behind it, against the costs which will be incurred in the second and subsequent days of a trial which has been estimated on both sides to occupy some 15 sitting days.  I still consider, as I indicated in my earlier reasons, that an order for security, even one for “top-up” security of the kind that is now sought, should not provide a complete indemnity for a respondent’s costs presumptively covered by the order;  see again Brundza v Robbie & Company (No 2) (1952) 88 CLR 171, at 175.  In the present case I consider that an appropriate order for security would be one in the sum of $150,000 and I propose to make such an order.  As far as concerns the motion by the applicants for security, as I indicated in the course of argument, I do not regard the matters which have been canvassed today as evidencing such a degree of novelty or fresh developments since this proceeding was instituted, or at least since Nolmont went into administration, as to explain the late application for security or to justify a departure from the principle which I understand militates against security being ordered against a party to litigation who is not the aggressor but is, in substance, involved in it defensively.  Accordingly, I do not propose to make any order for security against Nolmont on the motion of the applicant.

7                     The respondent’s notice of motion also raises a claim for inspection by Mr Watson, who, as I have said, is the sole director of the respondent and Mr Richards, its Chief Financial Officer, of documents which have been discovered but claimed to be confidential and on that basis have been produced for inspection only by the legal representatives of the respondent.  Ms Strong SC, who appears for the applicant, referred to a recent decision of Gordon J, Cadbury Pty Ltd v Amcor Limited (No 2) [2009] FCA 663, in which her Honour indicated that it is frequently necessary to resolve a controversy of this kind about the extent to which documents, particularly those brought into existence over a considerable period of time, and retaining some character of confidentiality which has been assigned by the party producing them, should be produced to the other party or to a lay person in the camp of the other party.

8                     In the light of the discussion into which her Honour entered, I consider that the parties should, as far as possible, resolve that issue for themselves.  However, in case it cannot be so resolved, I propose to institute a mechanism whereby the Court can resolve that issue after hearing submissions and, to the extent necessary, examining itself such of the documents as remain subject to a disputed claim of confidentiality.  Similar considerations apply to the claim made by the applicants for an order permitting it to release documents for which Nolmont has claimed confidentiality to two named American legal practitioners who have been retained for the purposes of this litigation to advise the applicants and their American directors or company officers. 

9                     There is less detail available about documents of that kind for which the respondents have claimed confidentiality, but I think it appropriate to institute a similar mechanism in respect of those documents.  There is, finally, a claim for the provision by Nolmont of further and better particulars of the cross-claim.  That seems to centre on a discrepancy between the pleadings and the affidavit evidence which has been filed on behalf of Nolmont.  It is pleaded in paragraph 30(b) of the further amended defence and cross-claim that:

‘Nolmont has continuously advertised and promoted the West Coast Choppers and East Coast Choppers mark since 1992.’

10                  The affidavit evidence which has been filed on behalf of Nolmont indicates that any advertising or promotion of that kind did not commence until February 1993.  Mr Panna SC, for the respondent, has indicated that Nolmont will be bound by the evidence which it has adduced and will not depart from it.  He, accordingly, contends that there is no need for an amendment to the pleadings or the provision of further and better particulars.  In the light of that concession, I consider that it is presently unnecessary to require the provision of further particulars.  If there be any attempt at trial to depart from what is revealed by the respondent’s evidence, or to seek to introduce evidence suggesting activity of the relevant kind before February 1993, then this question can be further agitated at that time.  For these reasons, I decline to make any order in terms of paragraph 7 or 8 of the applicants’ notice of motion. 

Associate:

Dated:         25 June 2009