FEDERAL COURT OF AUSTRALIA

Chiropedic Bedding Pty Ltd v Radburg Pty Ltd [2009] FCA 1512

Designs Act 1906 (Cth) s 30

CHIROPEDIC  BEDDING  PTY LTD (ACN 052 960 808) v RADBURG PTY LTD  (ACN 006 020 702)

VID 288 of 2007

JESSUP J

5 NOVEMBER 2009

MELBOURNE

THE COURT ORDERS THAT:

1.         Subject to previous costs orders made in this proceeding –

a.         the cross-claimant pay the cross-respondent’s costs, including reserved costs, of the Cross-claim;

b.         in relation to the Claim –

i.          the respondent pay 70% of the applicant’s costs, including reserved costs;

ii.          the applicant pay 30% of the respondent’s costs, including reserved costs;

c.         Each party be entitled to set off its obligation to pay costs to the other party against its entitlement to receive its own costs from that other party.

2.         The motion of which the applicant gave notice on 30 October 2009 be dismissed with costs.

3.         Save as aforesaid, the parties’ costs of today be their costs in the cause.

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

Part a

1                     The ruling I am about to give relates to the costs of this proceeding at first instance, in which I delivered judgment on 14 October 2009 dismissing the respondent’s Cross-claim on validity and upholding the applicant’s claims of infringement in relation to two of the 51 articles which had been the subject of that claim under s 30 of the Designs Act 1906 (Cth).  In relation to those two articles, I ordered that an account be taken of the profits derived by the respondent from the sale of them.  That account has not yet been taken. 

2                     The first submission with which I need to deal this morning relates to the respondent’s suggestion that I should make no order of costs at this stage because it may be that the applicant is entitled to a relatively small sum of money once the accounting has proceeded.  I am not disposed to accept that submission.  I have been informed by counsel that, at least relevantly to the present question, there was no offer of compromise made.  I think I should proceed to deal with the costs of the applicant’s claims for infringement without regard to the sum of money to which it might ultimately become entitled with respect to those articles on which it succeeded. 

3                     That leaves the disposition of the applicant’s claim for costs with respect both to the Cross-claim and to the Application.  Taking first the Cross-claim, the applicant was completely successful in that regard and nothing has been put to me this morning on behalf of the respondent which would persuade me to do other than follow the normal course of ordering that costs follow the event. 

4                     As to the Application, the situation is complicated by the circumstance that the applicant alleged in effect 51 separate infringements pursuant to section 30 of the Act.  This is not a case in which a single episode of conduct on behalf of the respondent is alleged to have manifested itself in the breach of different legal rules.  Rather, the applicant has in effect made 51 separate claims of infringement.  On the other hand, as commonsense would dictate, a very large amount of the infringement side of the case was occupied with the parties’ treatment of general principles and of questions of bed design which had application across all of the beds in respect of which the applicant sued.  Indeed, the task which I confronted of discriminating between the beds which did, and the beds which did not, infringe the applicant’s design was very substantially informed by the general submissions which the parties made. 

5                     The kind of exercise in which I am engaged is neither a scientific nor a mathematical one and a fairly robust approach is, I consider, called for.  Very broadly speaking, I am disposed to think that about two-thirds of the infringement side of the case was taken up with what I have described as general questions rather than with particular questions dealing with individual articles claimed to be infringing.  I consider that the applicant is entitled to two-thirds of its costs, at least in relation to its infringement case, and to a small extra component which would reflect its limited success as to the individual beds.  Correspondingly, I am disposed to think that the respondent is entitled to so much of the component of the remaining third which represents the 49 beds on which it succeeded. 

6                     Taking a broad and robust approach to these things, I think that a just result would be that the costs be divided 70/30, as it were.  Subject to any more convenient proposal acceptable to both parties, I shall order the respondent to pay 70 per cent of the applicant’s costs, and the applicant to pay 30 per cent of the respondent’s costs. 

Part B

7                     The Notice of Motion filed on behalf of the applicant is that the confidentiality order in paragraph 4 of the orders made on 29 June 2007 in this proceeding be lifted to the extent necessary to enable the applicant’s lawyers to advise the applicant concerning any appeal or cross-appeal in relation to the assessment of profits.  I have been informed by counsel for the applicant that there ought to be a conjunctive preposition after the expression “cross-appeal” such as would permit the lifting of the confidentiality order, as it is called, to the extent necessary to enable the applicant’s lawyers to advise the applicant in relation to the assessment of profits. 

8                     The order referred to is as follows:

(4)        The respondent permit an appropriately qualified and independent accountant nominated by the applicant to sufficiently inspect the respondent’s books of account on a confidential basis to enable such account to report to the lawyers acting for the applicant concerning the election between damages and an account of profits.

Pursuant to that order, I have been told − and it was apparent from the way the trial of this proceeding was conducted − the applicant’s accountant, Mr Miano, was given access to the respondent’s books of account.  The parties today have addressed me on the assumption, which I take to be a reasonable one, that Mr Miano remains in possession of that material.  However, he has it on a confidential basis, which has the practical effect that he can confer with the applicant’s legal representatives for the purpose of conducting the proceeding, but he cannot disclose to any of the officers or staff of the applicant itself what the respondent’s books of account show. 

9                     Now that I have ordered that the respondent account for the profits which it has made in relation to two of the beds which were the subject of the proceeding, the applicant says that Mr Miano should be entitled to share his knowledge and understanding of the respondent’s books of account with the officers and staff of the applicant itself for the purpose of the taking of the account.  The other purpose referred to in the Notice of Motion (that is to say, to enable the applicant’s legal advisers to advise the applicant concerning any appeal or cross-appeal) has become moot as I have been informed by the parties that neither proposes to appeal from the judgment which I gave on 14 October. 

10                  The purpose for which Finkelstein J made his order on 29 June 2007 has now been spent.  The applicant, no doubt relying upon the advice of Mr Miano, opted for an account of profits rather than for damages.  In the trial of the proceeding, the parties, to an extent, laid out their cases by which they would seek to quantify the applicant’s entitlement to share in the respondent’s profits to the extent that there was any such entitlement, but, in the way that I have disposed of the applicant’s case, the actual quantification remains to be done.  

11                  The applicant puts to me this morning that it would be practical and just to permit its officers and staff to have access to these books.  The respondent resists the access sought, contending that its books of account are its own confidential material and that it would be sufficient for Mr Miano, upon having perused them and analysed them, to report to the legal representatives of the applicant his estimate of the profits made by the respondent with respect to the two infringing beds. 

12                  I am first of the view that a simple lifting of the confidentiality obligation imposed upon Mr Miano by Finkelstein J’s order would be a clumsy and inappropriate response to the need for an understanding of the respondent’s books upon which the applicant relies.  That order was made for a purpose which has now been achieved.  It was an interlocutory order and, save for the conduct of the accounts which remains to be done, I take the view the judgment which I gave on 14 October was a final one.  It may be convenient for Mr Miano to retain the material which he has in confidence for the purpose of advising the applicant on the conduct of the accounts, but the respondent resists that, and I think I am obliged to respect the respondent’s position and to recognise the limited basis upon which that material was made available to Mr Miano. 

13                  That leaves alive the substance of the applicant’s point that it will, in the course of preparing for and carrying out the accounting, need to have access to so much of the respondent’s books of account as will bear upon the question that needs to be determined by the Registrar.  I am not prepared to assume that all of the material of which Mr Miano is apparently possessed will necessarily be relevant to that exercise, although it seems clear that much of it will be.  However, I do not think that the applicant’s proposal is yet sufficiently defined to permit me to make an order which would address it in a way which does justice as between the parties. 

14                  The respondent itself has not yet given its account and, when that is done, the applicant will have a proper starting point from which to require the respondent to produce those of its books of account and other financial records as appear to be necessary.  The extent of the obligation which might then be imposed upon the respondent, the range of persons on behalf of the applicant who might properly be given access, and the confidentiality regime which should accompany that access, are all matters which lie in the future and are, in my view, proper to be determined in the discretion of the Registrar who is obliged to take the account.  I will indicate now, for the avoidance of any misunderstanding, that the Registrar ought not to feel constrained one way or the other by Finkelstein J’s order.  The questions to which I have just referred ought to be entirely within his or her discretion and ought to be resolved by reference to the circumstances existing when they come to be answered. 

15                  For those reasons, I propose to dismiss the applicant’s Notice of Motion.

Associate:

Dated:         5 November 2009