FEDERAL COURT OF AUSTRALIA

R & R Industries (Australia) Pty Ltd v Marbletrend Pty Ltd [2010] FCA 1311

THE COURT ORDERS THAT:

1.    The solicitor for the applicant make arrangements to ensure that, should he be unable to do so, a solicitor is available to complete the preparation for and attend and instruct in the trial of the proceeding on behalf of the applicant at a date to be fixed in 2011, and on or before 10 December 2010 file and serve a statement setting out those arrangements.

2.    There be a directions hearing on 11 March 2011.

3.    There be liberty to apply.

4.    The applicant pay the respondent’s costs thrown away by reason of the vacation of the trial date.

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 Federal Law Search on the Court’s website.

REASONS FOR JUDGMENT

introduction

1    On 22 November 2010, pursuant to O 30 r 7 of the Federal Court Rules (Cth), I vacated the trial in the above matter, which was fixed to commence on 29 November 2010 with an estimate of a three day hearing.

2    My reasons for making that order are set out below.

3    The applicant, by an application made orally by counsel on 22 November 2010 and foreshadowed in the letter of the applicant’s solicitor to the Court dated 19 November 2010, sought that the trial date be vacated and refixed in the new year.

4    The letter stated that the applicant’s solicitor had been diagnosed with and treated for cancer a year ago, was advised that he was cancerfree in mid2010 but, following vision problems experienced on 18 October 2010, had undergone further investigations which indicated that his cancer had metastasized. In consequence, the applicant’s solicitor commenced a continuing intensive course of radiation. Although he was initially advised that substantial side effects of the treatment were not usual, on 18 November 2010, while endeavouring to prepare the matter for trial, the solicitor recognised that his condition had deteriorated and prevented him from continuing the preparation.

5    It was not disputed that the applicant’s solicitor was a sole practitioner who had had the carriage of the matter throughout. His letter stated that although he had an employee who would normally be able to assist in the preparation of the material and instruct counsel, the employee was currently unable to do so because her husband was gravely ill.

6    In the circumstances, I treated the application for vacation of that date as being formally made by the letter dated 19 November 2010. Although there was no affidavit in support, the contents of the solicitor’s letter were not disputed.

7    The respondent opposed the application.

The parties’ submissions

8    Before me, the solicitor for the respondent submitted that the respondent should not be penalised by further delay occasioned by the health problems of the applicant’s solicitors.

9    The respondent submitted that if the trial were vacated, the litigation would continue to hang over the respondent’s head. While the respondent denied the applicant’s claims, a trial on liability only had been ordered and the litigation could ultimately be further protracted.

10    The respondent submitted that the matter was longstanding and the applicant had been late in complying with orders on many occasions.

11    The respondent submitted that the applicant’s solicitor had been aware of his health problems from 18 October 2010, but had failed to make appropriate arrangements and should have taken steps immediately when advised that his cancer had metastasized. Further, given the nature of the health problems, there was no firm indication of when the applicant’s solicitor would be able to act. The case was straightforward and other options were available to the applicant, who had retained experienced counsel. The matter should therefore proceed as scheduled.

12    The respondent also submitted that it had diligently prepared for trial and, if an adjournment were granted, the respondent should have its costs thrown away on an indemnity basis.

13    In response, counsel for the applicant relied on the matters set out in the letter of the applicant’s solicitor.

14    Counsel for the applicant submitted that if the trial were to proceed, he would essentially be without an instructor as (in contrast to the respondent) the applicant was not represented by a major law firm. The applicant’s solicitor had had the care and conduct of the matter throughout, and it was not practically feasible to replace him at this stage.

15    In such circumstances, the applicant would be significantly prejudiced in its capacity adequately to present its case.

History of the proceeding

16    The proceeding was commenced on 11 September 2008. The applicant, R & R Industries (Australia) Pty Ltd, by an application dated 11 September 2008, alleged that the respondent, Marbletrend Pty Ltd, had infringed its monopoly in its registered design for a shower base.

17    The statement of claim dated 11 September 2008 alleged that, from June 2005, the respondent had applied, without licence or authority, the applicant’s registered design or obvious or fraudulent imitations thereof to articles (shower bases) in respect of which the registered design was registered.

18    On 30 October 2008, Sundberg J made orders for the conduct of the proceeding, which required pleadings and inspection of discovered documents (in relation to liability only) to be completed by 6 April 2009.

19    Further orders were made on 19 December 2008 and, on 21 January 2009, consent orders vacating Sundberg J’s timetable were made, adjourning the proceeding until further order.

20    An amended statement of claim was filed on 15 December 2008.

21    In May 2009, Sundberg J made orders for a timetable requiring the filing and service of further and better particulars to the applicant’s amended statement of claim by 3 July 2009, any reply and defence to the cross claim by 17 August 2009, and discovery and inspection in relation to liability only, to be completed by 11 September 2009.

22    On 12 June 2009, a further amended statement of claim was filed.

23    A defence and cross claim was filed on 10 July 2009. It alleged that the registered design is wrongly registered, invalid, not new or original, differs only in immaterial details from a design registered before the priority date (31 May 1996) in respect of the same articles, and is an obvious adaptation of such designs. The respondent relied, in that context, on various shower bases and reproductions of shower bases in specified United States and Australian patents.

24    A defence to the cross claim was filed on 23 July 2009. It alleged that the applicant’s registered design differs sufficiently for it to be properly registered, is valid and has been infringed.

25    The parties provided their lists of documents in late 2009.

26    A mediation was ordered by 7 May 2010 by consent. It would appear that the mediation took place.

27    On 7 June 2010, Gordon J set the matter down for trial on 29 November 2010.

28    Gordon J ordered the filing of amended pleadings to be completed by 16 June 2010. Her Honour ordered that, by 16 June 2010, a list of prior art and the respondent’s proposed experts’ reports be filed.

29    Her Honour ordered the applicant to file, by 28 June 2010, its evidence in support of authorisation/ownership, its response to proposed experts, its list of prior art and its questions to be put to the experts.

30    In the course of the proceeding the timetable for, inter alia, directions hearings and the filing and serving of pleadings, submissions and evidence has been extended by consent.

31    According to the Court’s file, proposed consent orders extending certain dates were filed on behalf of the respondent on 22 January 2009, 26 March 2009, 28 May 2009, 25 June 2009, 30 October 2009, 19 February 2010 and 24 September 2010.

32    Proposed consent orders extending certain dates were filed on behalf of the applicant on 19 August 2010 and 26 September 2010.

33    A number of affidavits have been filed on behalf of both parties, including:

(a)    Affidavit of Phillip Royce sworn on July 2010.

(b)    Affidavit of Elaine Royce sworn on July 2010.

(c)    Affidavit of Raymond Bowers sworn 21 July 2010.

(d)    Affidavit of Sarah Matheson sworn 29 July 2010.

(e)    Affidavit of Robert Walton sworn 29 July 2010.

(f)    Affidavit of Phillip Royce sworn 17 September 2010.

(g)    Affidavit of Robert Walton sworn 15 October 2010.

34    The Prior Art bundle has been filed.

35    At the hearing on 22 November 2010, the respondent’s solicitor handed up a chronology which noted that the applicant had been late in filing its evidence in reply, had not filed and served any objections to evidence (due on 8 November 2010) and had not filed and served written submissions (due on 15 November 2010).

discussion

36    O 30 r 7 of the Federal Court Rules provides:

A date for trial fixed by the Court may be vacated only by

order of the Court.

37    The Court has discretion in relation to ordering the vacation of a trial date.

38    While no case of vacation of a trial date due to the illness of an instructing solicitor was identified, in practice, trial dates are not uncommonly vacated due to the illness of counsel, even where the relevant party has other counsel, if the opportunity to present its case adequately would otherwise be jeopardised.

39    In Business in Focus (Aust) Pty Ltd v Begun Property Pty Ltd [2006] FCA 264, Collier J, on an application made several weeks before the date fixed for trial, vacated a trial date due to the applicants’ change of solicitor. The new solicitor deposed to a large volume of material to review.

40    The application was opposed on the basis that the applicants’ case was of limited scope requiring limited steps for preparation, the absence of admissible evidence as to why the applicants could not be ready, the prejudice to the second respondent’s business and reputation as the holder of a restricted financial services advisory licence, the fact that the applicants had taken no steps to prosecute the proceedings for several months and the delay in filing the application to vacate the trial date.

41    Collier J found that, realistically, the applicants’ solicitors would not be in a position to prepare adequately for trial “should the trial proceed in two weeks time” (at [13]). Her Honour noted although the second respondent was anxious to be freed from the distraction of pending litigation, the potential prejudice arising from the vacation of the trial date was “no more than hypothetical at this stage” (at [14]) in contrast to the “present identifiable, serious and bona fide” prejudice likely to be suffered by the applicant should it be obliged to proceed to trial inadequately prepared (at [15]).

42    Collier J referred to Sali v SPC Ltd (1993) ALJR 841 in which Brennan, Deane and McHugh JJ stated (at 843-844) that:

In determining whether to grant an adjournment, the judge of a busy court is entitled to consider the effect of an adjournment on court resources and the competing claims by litigants in other cases awaiting hearing in the court as well as the interests of the parties.

43    Collier J also relied on The State of Queensland v JL Holdings Pty Ltd (1996) 189 CLR 146 (“JL Holdings”), a case subsequently disapproved of by the High Court in Aon Risk Services Australia Ltd v Australian National University (2009) 239 CLR 175 (“Aon Risk Services”) in so far as it suggested that, subject to paying costs, a party was entitled to amend a pleading, although it resulted in the vacation of the trial date.

44    In Aon Risk Services, the vacation of a trial date was occasioned by reason of very substantial and unexplained late amendments. The High Court made clear that there was no automatic right to amend merely because the proposed amendments constituted triable issues and there was no prejudice not compensable by costs.

45    The plurality stated that all matters relevant to the exercise of the power to permit amendment of pleadings should be weighed and “[t]he fact of substantial delay and wasted costs, the concerns of case management, will assume importance on an application for leave to amend” (at 217).

46    The present matter does not concern an application for leave to amend. Rather, it is an application to vacate the trial date due to the serious health problems of the applicant’s instructing solicitor, who is a sole practitioner with only a single employee, who is unavailable to take his place. In Fair Work Ombudsman v Kentwood Industries Pty Ltd [2010] FCA 98, McKerracher J recently considered the adjournment of a trial date. After referring to Aon Risk Services, his Honour continued (at [29]):

Constant adjournments of trials of any nature are highly undesirable. As against that, it is, in my view, (while applying the observations in Aon) even less desirable to proceed to trial in 6 business days given the prejudice which the respondents would inevitably be confronted in the absence of legal representation, illness and lack of witnesses.

47    In this case, while the respondent contended that the solicitor knew of his health problems from after 18 October 2010 and should have circumvented the present problems by making appropriate arrangements, the solicitor stated that he was advised that serious side effects of the treatment were not usual. He became aware that he was unable to carry on with the trial preparation only on 18 November 2010 and immediately thereafter sought that the trial be vacated.

48    The respondent submitted that the applicant had failed to comply with orders on time and had revised its pleadings on various occasions. The proceeding has been on foot for about two years and the applicant first sent a letter of demand in 2005. None the less, the applicant has now complied with the principal orders for preparation for trial, save for furnishing written submissions.

49    In such circumstances, while it is unfortunate that no contingency plan was set in place, the health complications impeding the solicitor from carrying on occurred within a relatively short time, and it cannot be concluded that his previous assumption that he would be fit to prepare and instruct for trial was unreasonable.

50    The respondent contended, correctly, that it had prepared for trial and would suffer continued delay in a proceeding already on foot for two years, by reason of the vacation of the trial. The respondent did not, however, identify any specific or particular prejudice other than the delay, uncertainty and costs thrown away inevitably attending the vacation of a trial date.

51    The costs thrown away can be addressed by an appropriate order. Set against the prejudice to the respondent of vacation of the trial date is the prejudice to the applicant if it is obliged to proceed in circumstances where, in essence, it lacks a solicitor familiar with the matter to complete the preparations for trial and to attend, liaise with clients and instruct counsel.

52    While the case may be, as the respondent submits, relatively straight forward, it relates to a specialist area of registered designs, the trial is fast approaching and, in my view, the retention of experienced counsel would not sufficiently outweigh the significant prejudice to the adequate presentation of the applicant’s case arising from the want of an instructing solicitor. I was not persuaded that it was practically feasible to make alternative arrangements at this stage.

53    In such circumstances, I considered it appropriate to vacate the trial fixed for 29 November 2010, on the basis that a new trial date would be fixed for early May 2010 or any suitable earlier date that becomes available.

54    In order to avert a recurrence of the present difficulties, it appears appropriate to direct that the applicant’s solicitor make arrangements for completing the preparation for trial and for the retention of a suitable solicitor, able to act on behalf of the applicant prior to and at trial should the existing solicitor be unable to do so, and on or before 9 December 2010, file and serve a letter setting out those arrangements.

55    The respondent sought its costs thrown away on an indemnity basis. The principles relevant to an order for indemnity costs are well established: see Colgate-Palmolive Co v Cussons Pty Ltd (1993) 46 FCR 225 (“Colgate-Palmolive”) at 230-234; Ugly Tribe Co. Pty Ltd v Sikola [2001] VSC 189 (“Ugly Tribe”) at [7]-[12]. Those authorities establish that departure from the usual course of awarding costs on a party and party basis requires some special or unusual feature (ColgatePalmolive at 233), and discuss the kinds of circumstances in which courts have departed from the usual rule. While the categories of special circumstances are not closed (Ugly Tribe Co at [8]), recognised examples include knowingly making false or irrelevant allegations of fraud, particular misconduct causing loss of time to the Court and other parties, commencing proceedings for an ulterior motive, contempt of court, commencing proceedings in wilful disregard of known facts or established law and unexplained failure to discover documents which could have shortened or avoided the trial.

56    In my opinion, while the vacation of the trial date is in no way attributable to the conduct of the respondent, which is entitled to its costs thrown away, the present circumstances do not justify an order for indemnity costs.

57    In addition to the order made on 22 November 2010 vacating the trial date, I therefore propose, subject to hearing the submissions of the parties, to order that:

1.    The solicitor for the applicant make arrangements to ensure that, should he be unable to do so, a solicitor is available to complete the preparation for and attend and instruct in the trial of the proceeding on behalf of the applicant at a date to be fixed in 2011, and on or before 10 December 2010 file and serve a statement setting out those arrangements.

2.    There be a directions hearing on 11 March 2011.

3.    There be liberty to apply.

4.    The applicant pay the respondent’s costs thrown away by reason of the vacation of the trial date.

Associate:

Dated:    2 December 2010