FEDERAL COURT OF AUSTRALIA

Food Channel Network Pty Ltd v Television Food Network, G.P [2009] FCA 1446

PRACTICE AND PROCEDURE – application for an extension of time in which to file an application for leave to appeal indemnity costs order – whether there is a satisfactory explanation for the delay – whether there are sufficient prospects of success if leave were granted – whether there are ‘special reasons’ to justify the extension of time

PRACTICE AND PROCEDURE – indemnity costs order as a result of a Court ordered mediation being abandoned – whether the Court has the power to order one party pay the costs of the other party in these circumstances

Federal Court of Australia Act 1976 (Cth), s 24(1A)

Federal Court Rules, O 52 r 10, O 52 r 10(2A), O 52 r 15(2)

Freedom of Information Act 1982 (Cth) 

Sharman License Holdings Ltd v Universal Music Australia Pty Ltd [2005] FCA 802

Food Channel Network Pty Ltd v Television Food Network G.P [2009] FCA 1445

SZJFC v Minister for Immigration and Citizenship [2009] FCA 1322

Jackamarra v Krakouer (1998) 195 CLR 516

House v The King (1936) 55 CLR 499

Colgate-Palmolive Company v Cussons Pty Limited (1993) 46 FCR 225

Ruddock v Vadarlis (No 2) (2001) 115 FCR 229

Rosniak v Government Insurance Office (1997) 41 NSWLR 608

Wu v Avin Operations Pty Ltd (No 2) [2006] FCA 792 

FOOD CHANNEL NETWORK PTY LTD ACN 079 015 339 v TELEVISION FOOD NETWORK, G.P

QUD 132 of 2009 

REEVES J

4 december 2009

BRISBANE

THE COURT ORDERS THAT:

1.                  The applicant be granted an extension of time to 5 June 2009 in which to file its application for leave to appeal the interlocutory judgment delivered 5 February 2008.

2.                  The applicant be granted leave to appeal the interlocutory judgment delivered on 5 February 2008.

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

Introduction

1                     On 5 June 2009, Food Channel Network Pty Ltd (“Channel”) filed an application under O 52 r 15(2) of the Federal Court Rules seeking leave to file and serve a notice of appeal out of time against an order made on 5 February 2008.  On that date, the primary judge ordered that Channel pay Television Network G.P’s (“Television”) costs thrown away, on an indemnity basis, as a result of a Court ordered mediation being abandoned.

application misconceived

2                     It is convenient to begin by observing that Channel’s application under O 52 r 15(2) is misconceived.  This is so because the indemnity costs order made by the primary judge was an interlocutory order.  It follows that Channel had no right of appeal against that order and instead it had to seek leave to appeal it:  see s 24(1A) of the Federal Court of Australia Act 1976 (Cth).  Channel should, therefore, have filed an application under O 52 r 10 for leave to appeal the order and, at the same time, sought an extension of time under O 52 r 10(2A) in which to file that application.

3                     Nonetheless, I do not consider this is fatal to Channel’s application because, in practical terms, there is little difference in the conditions Channel would have to meet under either rule:  see Sharman License Holdings Ltd v Universal Music Australia Pty Ltd [2005] FCA 802 (“Sharman License Holdings”) at [20], per Lindgren J.  I will therefore proceed to treat Channel’s application filed on 5 June 2009, as an application for leave to appeal under O 52 r 10 combined with an application for an extension of time in which to file that application.

relevant principles

4                     As I have alluded to above, in Sharman License Holdings, Lindgren J set out a summary of the conditions that must be satisfied by an applicant in an application under O 52 r 10:  see at [20].  They are as follows:

·                    there must be a satisfactory explanation for the delay;

·                    the applicant must show it has sufficient prospects of success, which, in turn, requires it to show the interlocutory judgment is attended with sufficient doubt to warrant its being reconsidered by the appellate court and that substantial injustice would result, if leave were to be refused; and

·                    the applicant must show “special reasons” for the extension of time.

5                     As to the second condition (above), I explained in Food Channel Network Pty Ltd v Television Food Network G.P [2009] FCA 1445, that the sufficiency of the doubt about the interlocutory judgment and the extent of the potential injustice involved, must be balanced against each other and not considered in isolation:  see at [14].  For similar reasons, I consider that the explanation for the delay and the requirement to show special reasons should also be included in the same balancing process.  In other words, if Channel’s case is strong on its merits and if it can show substantial injustice will flow if leave is not granted, I consider I should be less demanding in relation to its explanation for delay and the special reasons it is required to show.  In this respect, I note, and respectfully agree with, what appears to be a similar approach, outlined by Rares J in SZJFC v Minister for Immigration and Citizenship [2009] FCA 1322 at [20] – [21].

FACTUAL BACKGROUND

6                     Before turning to consider whether Channel has met these conditions, it is appropriate to set out some of the factual background to illuminate the circumstances in which the indemnity costs order was made.

7                     The substantive proceedings before the primary judge involved an appeal by Television against a decision of a delegate of the Registrar of Trade Marks in favour of Channel. The delegate found that Television had not substantiated its grounds of opposition in respect of the Trade Mark and ordered that the Trade Mark proceed to registration under the Trade Marks Act 1955 (Cth).

8                     Mr Lawrence, the sole director of Channel, was given leave to appear for Channel at various case management directions hearings conducted throughout 2007. However, the primary judge had made it clear to Mr Lawrence that this leave would not extend to him appearing for Channel at any pre-trial mediation, or at the trial of the proceedings, and he would need to retain legal assistance for those purposes.

9                     On 30 November 2007, the primary judge ordered the parties “to attend, participate in and act reasonably and genuinely in a mediation to be conducted at a time and place to be agreed between the parties”. The primary judge also ordered that “the mediation [was] to be conducted by a Registrar of the Court or such other mediator as agreed between the parties” and it was to occur by 4.00 pm on 13 February 2008.

10                  On 7 December 2007, a Registrar of the Court sent a letter to the parties confirming the direction of the primary judge that they attend a mediation conference, stating it was to be conducted “pursuant to Order 72 of the Federal Court Rules”, and giving notice that the mediation conference had been listed at 9.30 am on 22 January 2007 (sic 2008).  Channel alleges that it did not receive this letter, claiming it was sent to the wrong address. Apparently it was later returned to the Court unclaimed.

11                  On 22 January 2008, the same Registrar sent a further letter to the parties.  This letter did not refer to O 72 of the Federal Court Rules, nor the mediation conference that was supposed to have occurred at 9.30 am on the date of this letter. Instead, it noted that the “mediation is to be conducted by a Registrar of the Court or such other mediator as agreed between the parties”.  The letter went on to state:  “It has been assumed, in the absence of advice to the contrary, that the parties require the mediation to be undertaken by a Registrar.  To that end, a mediation conference has been listed for 10.00 am on 4 February 2007 (sic 2008)”.

12                  Channel claims to have received this letter on 24 January 2008.  On 25 January 2008, Channel claims that it briefed a firm of solicitors to appear for it at the mediation conference.

13                  On 30 January 2008, the solicitors Channel had briefed advised Mr Lawrence that they could not be ready to attend the mediation conference on 4 February 2008.  They suggested that he contact the Registrar and ask him to adjourn the mediation conference to a later date, but before 13 February 2008, when the primary judge had ordered it should be concluded.

14                  Accordingly, on 31 January 2008, Mr Lawrence sent a letter by email to the Registrar (with a copy to the solicitors for Television) in which he stated that:  “The date proposed does not give us sufficient time to prepare for the mediation. The 12^th February 2008 is a date that is workable for the mediation for myself and our representative.  This date will give us time to be sufficiently prepared for the hearing”.

15                  There followed an exchange of letters and emails on 31 January 2008 between the Registrar and Mr Lawrence (copied to the solicitors for Television), the outcome of which was that the Registrar was not available to hold the mediation conference on 12 February 2008 (or on any other date around that period) and the matter should therefore proceed to mediation on 4 February 2008.

16                  Despite this, on 1 February 2008, the Registrar sent an email to the parties confirming his oral advice of earlier that day that:

·                    the mediation conference set for 4 February 2008 had been vacated;

·                    the matter had been listed for a directions hearing before the primary judge on 5 February 2008.

17                  On 5 February 2008, the primary judge heard from counsel for Television and Channel and proceeded to make the orders referred to above.  It should be noted that the primary judge was not informed of the detailed history set out above, because it appears neither of the parties was fully aware of it at the time.

18                  The hearing of the substantive proceedings proceeded before the primary judge on 17, 18 and 19 March 2008.

19                  The primary judge reserved her decision and delivered it on 27 March 2009.

20                  Channel has since sought leave under s 195 of the Trade Marks Act 1955 (Cth) to appeal that decision.  That application was made in a separate set of proceedings, No QUD 103/2009. It is unknown why this matter, ie QUD 132/2009, has been pursued in separate proceedings.  I propose to deliver my decision on that application at the same time as I deliver this decision.

The submissions made to and the reasons of the primary judge

21                  At the directions hearing before the primary judge on 5 February 2008, Mr Bennett appeared for Television and Mr Bickford appeared for Channel.

22                  Mr Bennett told her Honour that Television had incurred considerable expense in briefing Senior Counsel to attend the mediation conference on 4 February 2008.  He asserted that the mediation conference was abandoned because Mr Lawrence had not instructed his solicitors until the last minute and they were therefore not able to be ready to proceed on that day.  He therefore sought an order for indemnity costs against Channel based upon, what he described as, its misconduct.

23                  Mr Bickford confirmed that Mr Lawrence had recently retained his firm to act for Channel.  He told her Honour that when his firm was briefed, he had informed Mr Lawrence that he would not be able to prepare in time to attend a mediation conference on 4 February 2008.  He asserted that Mr Lawrence could have attended the mediation on behalf of Channel.  However, he said the Registrar had taken the view that, if Channel was unrepresented at the mediation, it should not proceed.  Mr Bickford queried whether Television was justified in briefing Senior Counsel for the mediation and submitted that, in any event, the usual situation was that each party bore its own costs of a mediation conference.

24                  Having heard these submissions, the primary judge proceeded to give the following ex tempore reasons and then made the orders sought by Mr Bennett:

… Frankly, from what I have heard this morning I am in complete agreement with Mr Bennett.  I had made it very clear to Mr Lawrence of the importance of having representation.  The fact that he has taken those urgings which I sort of made to him and those orders which I indeed made to  him to heart somewhat late in the piece is hardly the problem of the applicants.  I had given him leave to appear, [for] the purpose of the directions previously [and] it was [made] very clear to him he needed representation including at the mediation.  I also made it very clear from my last orders on 30 November that the parties were directed to attend a mediation in good faith and to participate reasonably.  The fact that Mr Lawrence have left it so late to advise that they really weren’t ready for a mediation again is not the problem of the applicants.

If the applicants have sought to engage senior counsel ordinarily I would be somewhat persuaded that, questionable whether senior counsel is necessary but I have heard what Mr Bennett has said in this case.  It is not uncommon to have senior counsel in a mediation.  I am prepared to make the order sought by Mr Bennet (sic) in those circumstances.

matters central to consideration of channel’s application

25                  Bearing in mind the comments I have made above (at [5]) about the importance of the strength of the merits and the extent of the injustice involved, I will proceed to consider those matters first.  Before doing so, I set out below three observations that I consider are central to my consideration of Channel’s application.

26                  First, a court should be careful to avoid converting a leave application of this kind into a preliminary hearing of the appeal.  I should therefore avoid making any detailed analysis of the issues raised, or expressing any concluded views on them.  I consider my assessment of the issues should be more akin to the “rough and ready” approach suggested by Brennan CJ and McHugh J in Jackamarra v Krakouer (1998) 195 CLR 516 at [9].

27                  Secondly, the indemnity costs order made by the primary judge was a discretionary order and it follows that, in order for Channel to succeed on any appeal against such an order, it must show that the primary judge acted upon some wrong principle in making the order:  see House v The King (1936) 55 CLR 499 at 505.

28                  Thirdly, an indemnity costs order involves a departure from the usual position that costs are awarded on a party/party basis.  It follows that there must be some special or unusual features to justify such an order being made:  Colgate-Palmolive Company v Cussons Pty Limited (1993) 46 FCR 225 at 232 – 233 per Sheppard J and Ruddock v Vadarlis (No 2) (2001) 115 FCR 229 at 234 per Black CJ and French J.  Furthermore, where an indemnity costs order is sought on the basis of the misconduct of a party, the Court will require some evidence of that misconduct before making the order:  see Rosniak v Government Insurance Office (1997) 41 NSWLR 608 at 616 per Mason P (with whom Meagher and Clarke JJA agreed) and Wu v Avin Operations Pty Ltd (No 2) [2006] FCA 792 at [41] – [42] per Kenny J.

channel’s contentions

29                  Channel relied upon a number of matters, the more significant of which are set out below, to claim that there are serious doubts about the primary judge’s decision and that it will occasion substantial injustice if leave to appeal it is not granted.

·                    The mediation conference on 4 February 2008 was fixed by the Registrar of the Court without any consultation with it.  This was inconsistent with the terms of the order of the primary judge that the mediation was to be conducted at a time and place and by a mediator, to be agreed between the parties.

·                    It did not receive notice of the mediation conference on 4 February 2008 until it received the letter of 22 January 2008 on 24 January 2008, some eleven days before it was due to be held.

·                    As soon as it was notified of the mediation conference, it retained solicitors to act for it.  There was no evidence Channel had breached any orders of the Court or committed any misconduct.

·                    The mediation conference on 4 February 2008 was abandoned essentially because the Registrar was not available on another date and he formed the view it should not proceed if Channel’s legal advisers could not be present.  However, there was still time between 1 February 2008, when the mediation conference was abandoned, and 13 February 2008, the cut-off date, for the mediation to proceed.

30                  As to the requisite “special reasons”, Channel relied upon the very unusual circumstances set out above and claimed that it would cause it substantial injustice if it were forced to pay an indemnity costs order made in those circumstances.

channel’s explanation for its delay

31                  Under O 52 r 10, Channel was required to lodge its application for leave to appeal the interlocutory indemnity costs order within seven days of that order being made.  That means it was about fifteen months out of time when it lodged its application on 5 June 2009.

32                  Its explanation for its failure to lodge the application for leave to appeal in time was that it did not become aware of the surrounding the fixing and abandonment of the mediation conference set down for 4 February 2008, until its solicitors received a response to its request under the Freedom of Information Act 1982 (Cth) for all of the documents relating to that issue.  It claims it received those documents on 12 May 2008 and by that time it was already about three months out of time to seek leave to appeal.

CONSIDERATION

33                  The first thing to observe is that while the indemnity costs order was an interlocutory order, since it related to a discrete aspect of the proceedings, it effectively operates as a final order, at least in relation to that discrete aspect.  This goes to the question whether substantial injustice will be caused by the order if Channel is not granted leave to appeal it.

34                  On the strength of the merits of Channel’s challenge to the indemnity costs order, without making a detailed analysis of the issues (or reaching any concluded view on them), taking into account the following matters, I consider there is sufficient doubt about the primary judge’s decision to warrant the order being reconsidered by a Full Court:

·                    Channel has given a plausible explanation for its failure to lodge its application within time;

·                    the circumstances in which the mediation conference of 4 February 2008 was set down and then abandoned are quite unusual and, at least prima facie, that appears to have occurred without any prior consultation with Channel;

·                    Channel does not appear to have breached any order of the Court.  Further, the only evidence it committed any relevant misconduct took the form of statements from the bar table the reliability of which is doubtful because neither party appears to have been fully aware of all the surrounding circumstances.

35                  There is a further aspect of this matter, not specifically raised by counsel for either party, but one that I think involves a more fundamental question about this costs order.  That is whether the Court has power to order, and if it does, whether it is consistent with public policy, for a court to order that one party to proceedings pay the costs of another party, in relation to a consensual mediation (albeit one ordered by the Court) conducted as an adjunct to those proceedings.

conclusion

36                  For these reasons, I order that:

·                    Channel be granted an extension of time to 5 June 2009 in which to file its application for leave to appeal the interlocutory judgment delivered 5 February 2008.

·                    Channel be granted leave to appeal the interlocutory judgment delivered on 5 February 2008.

Associate:

Dated:         4 December 2009