FEDERAL COURT OF AUSTRALIA

United Broadcasting International Pty Limited v Turkplus Pty Limited (No 2) [2010] FCA 1413

THE COURT ORDERS THAT:

1.    The applicants are to bring in draft orders giving effect to these reasons.

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    By notice of motion filed on 26 November 2010 (the notice of motion) the applicants in the proceeding seek default judgment against the third respondent under O 35A r 3(2). The relief claimed in the notice of motion includes declarations, injunctions and an order for costs quantified as a gross sum payable forthwith.

2    The proceeding relates to claims brought by the applicants for copyright infringement and breaches of fiduciary duty.

general outline of claims

3    The applicants allege (and by his defence the third respondent has admitted) that the second applicant is the owner of the copyright subsisting in Australia in television broadcasts described in an amended statement of claim filed on 15 July 2010 (the statement of claim) as the ATV Avrupa Channel broadcasts (the broadcasts).

4    The applicants allege that the first applicant is the exclusive licensee of the copyright in the broadcasts by reason of a licence agreement that was entered into by the first and second applicants on 22 April 2010.

5    The applicants allege that either the first respondent or, alternatively, the second respondent, has infringed the second applicant’s copyright in the broadcasts by rebroadcasting or communicating them (or a number of television programs included in them) to the public.

6    In each alternative case, the applicants allege that:

(a)    the first and second respondents entered into a common design with each other to do the infringing acts;

(b)    the first and second respondents procured or directed each other to do the infringing acts; or

(c)     the first and second respondents authorised each other to do the infringing acts.

7    The applicants also allege copyright infringement by dealing: see s 103 of the Copyright Act 1968 (Cth) (the Copyright Act). That case was not pursued by the applicants for the purposes of the present motion.

8     The applicants allege that, since 1 September 2009, the third respondent has been a director of the first respondent. This fact is admitted by the third respondent. The applicants allege that the third respondent procured, directed or authorised the first respondent’s infringing acts and thereby infringed the copyright in the broadcasts himself.

9    By their amended defence filed on 23 July 2010, the first and third respondents dispute the existence of the first applicant’s alleged exclusive copyright licence. They advance, instead, a separate and competing exclusive licence of that copyright, arising from an agreement alleged to have been made between the first respondent and the second applicant on or about 4 February 2010. Alternatively they allege that the second applicant is estopped from denying the existence of that agreement. Based on that alleged exclusive licence, the first and third respondents say that there has been no infringement of copyright as alleged by the applicants. For its part, the first respondent has also filed a cross-claim seeking relief based on the alleged existence of its own exclusive licence of the copyright in the broadcasts.

10    The applicants dispute the existence of the exclusive licence claimed by the first and third respondents.

11    In addition they allege that, at relevant times since November 2004 until 30 June 2009, the third respondent held the successive positions of Chief Operating Officer, Chief Executive Officer and Chief Executive Officer of International Operations, of the first applicant. These matters are not disputed by the third respondent. They allege that, arising from those positions, the third respondent owed certain fiduciary duties to the first applicant, which he has breached.

12    The applicants allege the duties to have been:

(a)    a duty to act for and on behalf of the interests of the first applicant and to put those interests ahead of his own or of any third party; and

(b)    a duty to negotiate and secure the renewal of a pre-existing exclusive licence of the copyright in the broadcasts (called the Merkez Licence Agreement) that had been entered into on 15 May 2006 between the first applicant and the second applicant’s predecessor in title to that copyright.

13    The applicants allege that the duties were breached by the third respondent:

(a)    failing to negotiate the renewal of the Merkez Licence Agreement for the first applicant, as he had been instructed to do;

(b)    failing to inform the first applicant that he had failed to renew the Merkez Licence Agreement; and

(c)     seeking to negotiate and secure an exclusive licence agreement with the second applicant in respect of the copyright in the broadcasts for and on behalf of himself or an entity associated with him (namely, the first respondent).

14    The first and third respondents dispute the existence of the alleged fiduciary duties and, in any event, their breach.

The evidence ON THE MOTION

15    The applicants read the following affidavits in support of their motion:

(a)    Affidavit of Anna Ross affirmed 18 October 2010 together with Exhibit AR-1. This affidavit and its exhibit deal with the procedural history of the matter up to 13 October 2010;

(b)    Affidavit of Anna Ross affirmed 23 November 2010 together with Exhibit AR2. This affidavit and its exhibit deal with the procedural history of the matter from 21 October 2010 to 22 November 2010;

(c)     Affidavit of Anna Ross affirmed 10 December 2010 together with Exhibit AR3. This affidavit and its exhibit deal with service of the notice of motion and of Ms Ross’ affidavit of 23 November 2010 and an affidavit of Odette Margaret Gourley affirmed 6 December 2010 on the third respondent;

(d)    Affidavit of Anna Ross affirmed 13 December 2010 together with Exhibit AR4. This affidavit and its exhibit deal with the making of an offer of compromise by the applicants that has been accepted by the first respondent and with correspondence passing between the solicitors for the applicants and the third respondent on 10 December 2010; and

(e)    Affidavit of Odette Margaret Gourley affirmed on 6 December 2010 together with Exhibit OMG-1 and confidential Exhibit OMG-2. This affidavit and its exhibits deal with the question of costs and the calculation of the amount claimed by the applicants as a gross sum that is sought to be awarded against the third respondent.

16    The applicants also tendered various documents including an affidavit of service of May-Ann Michelle Hill sworn on 7 December 2010. This affidavit was prepared by the third respondent’s solicitors in compliance with O 45 r 7(3) following the giving of notice by them to the third respondent under O 45 r 7(2) of their intention to cease to act on his behalf in the proceeding. This affidavit was admitted as exhibit A at the hearing of the motion.

procedural history

17    On 20 May 2010 the applicants approached the Court for an abridgement of time within which to serve an application and supporting affidavits in respect of their claims of copyright infringement, with a view to obtaining interlocutory injunctive relief.

18    The matter came before Nicholas J on 28 May 2010, at which time his Honour made further directions, including for the filing of a statement of claim. His Honour also listed the applicants’ claim for interlocutory relief for hearing.

19    On 10 June 2010 Nicholas J heard the claim for interlocutory relief. On 11 June 2010 his Honour granted interlocutory injunctions against each of the respondents: United Broadcasting International Pty Ltd v Turkplus Pty Ltd (2010) 86 IPR 570; [2010] FCA 594. Those injunctions were stayed pending lodgement of an unconditional bank guarantee in the amount of $300,000.00 to secure the usual undertaking as to damages given to the Court by the applicants. His Honour also ordered that the costs of the interlocutory application, as between the applicant and the first and third respondents, be the applicants’ costs in the cause. The proceeding was then placed in my docket for directions on 16 June 2010.

20    The bank guarantee was lodged as required.

21    It is not necessary to recount the various directions that have been made in the proceeding other than to note that, on 16 June 2010, at the request of the parties, I made directions in relation to the giving of discovery by categories of documents that might be agreed between them. The time for giving discovery on that basis was extended at subsequent directions hearings. No issue arises about the need to grant those extensions.

22    On 22 September 2010 the first and third respondents filed a joint list of documents. The third respondent verified that list on behalf of the first respondent and himself. The applicants’ solicitors reviewed the joint list and, believing it to be inadequate in several respects, engaged in correspondence on that matter with the first and third respondents’ solicitors. It is unnecessary to set out the terms of this correspondence, save to note that the correspondence makes clear that there was agreement between the parties as to the categories of the documents in respect of which discovery was to have been given by the first and third respondents.

23    When the matter came back before me for directions on 18 October 2010 I granted leave to the applicants to file a notice of motion seeking further and better discovery against the first and third respondents. On that day I also made orders providing for the discontinuance of proceedings, by consent and with no order as to costs, between the applicants and the second respondent.

24    As things turned out, the applicants and the first and third respondents were able to resolve their discovery dispute without proceeding to a hearing of the applicants’ motion. As a result, the applicants and the first and third respondents sought, and I made, the following orders by consent on 21 October 2010:

THE COURT ORDERS THAT:

1.    Within 14 days of these orders, each of the First Respondent/Cross-Claimant and the Third Respondent (collectively, the “Respondents”) provide full and proper discovery of all documents in their possession, custody or power that fall within the categories of discovery annexed hereto and marked “A” (“Categories of Discovery”).

2.    Within 21 days of these orders, the Third Respondent, on behalf of himself and the First Respondent, file and serve an affidavit explaining:

(a)    the steps taken by each of the Respondents to identify the documents in their possession, custody or power that fall within the Categories of Discovery; and

(b)    if any documents falling within the Categories of Discovery had previously been in either or both of the Respondents’ possession, custody or power but are no longer in either or both of their possession, custody or control, when it, he or they parted with it and what has become of it.

3.    The Respondents pay the costs of the Applicants’ Notice of Motion filed 18 October 2010.

4.    The hearing listed for 22 October 2010 of the Applicants’ Notice of Motion filed 18 October 2010 be vacated.

5.    The proceedings be listed for directions on 15 November 2010.

25    The categories of documents identified in the annexure to the orders are identical to the categories of documents referred to in the correspondence between the parties, in respect of which discovery should have been given by the first and third respondents. The evidence before me is that orders 1 and 2 made on 21 October 2010 have not been complied with.

26    On 15 November 2010, on the application of the applicants and the first and third respondents, I vacated a case management conference which I had appointed for 22 November 2010 and ordered, instead, that the proceedings be listed for directions on that day.

27    On 19 November 2010 an offer of compromise was served by the applicants on the first respondent. The applicants also gave notice that, if the offer of compromise was accepted, and proceedings were discontinued as between the applicants and the first respondent, the applicants would seek orders at the directions hearing on 22 November 2010 providing for the filing of a notice of motion seeking default judgment against the third respondent.

28    The applicants appeared at the directions hearing on 22 November 2010, but there was no appearance by either the first respondent or the third respondent. In those circumstances, and on the application of the applicants, I made orders for the filing (on or before 26 November 2010) of a notice of motion seeking orders that default judgment be entered against the third respondent, and for the filing of affidavit evidence in respect of that motion by both the applicants and the third respondent. I also granted liberty to apply on one day’s notice. The notice of motion was filed on 26 November 2010. The liberty to apply was not exercised.

29    On 30 November 2010 the third respondent’s solicitors sent a copy of the notice of motion and a copy of Ms Ross’ affidavit of 23 November 2010 by express post to the third respondent at his last known address in Australia as well as by email to an address used by them to communicate with the third respondent: Exhibit A. In a covering letter, the third respondent’s solicitors recorded that:

(a)    they had not received any instructions from the third respondent since 22 September 2010;

(b)    they had sought to contact the third respondent by both telephone and email on a number of occasions to no avail; and

(c)     they were left with no option other than to file a notice of ceasing to act in the event that they did not hear from the third respondent within 7 days. A draft notice of ceasing to act was enclosed with that letter.

30    On 2 December 2010 the applicants and the first respondent executed an offer of compromise (which had been foreshadowed by the communication on 19 November 2010 to which I have referred). By way of summary only of its more relevantly important clauses, the offer of compromise provided that:

(a)    the applicants and the first respondent would pay their own legal costs of the proceedings (application and cross-claim);

(b)    those parties released each other from the claims and cross-claims in the proceedings, save for the applicants’ copyright claims against the first respondent;

(c)     although the applicants did not release the first respondent from their copyright claims against it, they agreed not to proceed with those claims;

(d)    the first respondent acknowledged that the first applicant is the exclusive licensee in Australia and New Zealand of the second applicant’s copyright in the broadcasts for the term of the exclusive licence granted on 22 April 2010;

(e)    the first respondent acknowledged that it is not the exclusive licensee or a licensee in Australia or New Zealand of the second applicant’s copyright in the broadcasts;

(f)    the first respondent undertook that it would not re-broadcast, or authorise, direct or cause any other person to re-broadcast the ATV Channel or any part of the ATV Channel in Australia or New Zealand during the term of the first applicant’s exclusive licence except as authorised by the first applicant;

(g)    the first respondent undertook that during the term of the first applicant’s exclusive licence it would not represent to any person that anyone other than the first applicant is the exclusive licensee in Australia and New Zealand of the second applicant’s copyright in the broadcasts;

(h)    the first respondent would provide written acknowledgement to the first applicant that it agreed to the immediate release of the bank guarantee securing the undertaking as to damages that had been given in respect of the granting of interlocutory relief.

31    On 7 December 2010 the third respondent’s solicitors filed a notice of ceasing to act: O 45 r 7(1). A copy of the notice was served on the applicants’ solicitors shortly after 1.00 pm on that day. However, earlier that morning, the applicants had served a copy of Ms Gourley’s affidavit and Exhibit OMG-1 on them. A copy of confidential Exhibit OMG2 was not served, although the applicants’ solicitors advised that a copy would be served on receipt of confirmation that the third respondent’s solicitors would not disclose the contents of that document to the third respondent.

32    On 8 December 2010 the applicant subsequently sent a copy of Ms Gourley’s affidavit and Exhibit OMG-1 to the third respondent using an email address which had been provided by the third respondent’s solicitors. That email address was the same as that previously used by the third respondent’s solicitors to communicate with the third respondent.

33    On 10 December 2010 the third respondent, by reply, sent an email to the applicants’ solicitors attaching a letter. This letter makes clear that the third respondent:

(a)    had notice of the applicants’ motion for default judgment against him;

(b)    had notice that his solicitors had ceased to act for him; and

(c)     had notice of “the content of your correspondence including attached affidavits”.

34    Apart from other matters, the letter stated:

Unfortunately e-mail sent to the TurkPlus email address is not a reliable communication for me anymore, as your clients have put the company to cease its broadcast operations and the layoff of its all staff resulting unreliable IT services such as emails.

I also have not been in Australia since October and no postal mail has been communicated or forwarded to me from the Australian address you have on record.

It is unfortunate that I have been left without a representation in Australia to defend myself, however I am in search of it despite the current hardship I have been forced into.

I deny the allegations included in the Affidavits attached to your communication and any others that I may not be aware of.

I will contact you as soon as I am able to find proper representation to defend my case against the allegations.

If, contrary to this request, your instructions are to still continue and seek default judgment against me without having any representation, I kindly ask you to bring this letter to the attention of the Court and His Honour, Justice Yates.

35    Apart from the general denial of “the allegations included in the affidavits”, including, curiously, of allegations of which he expressed no present awareness, nothing of substance was stated by the third respondent about his failure to comply with the orders made on 21 October 2010. Moreover no proposal was made by him as to how this default would be rectified. Indeed, the third respondent seems to have arrogated to himself a right to keep the proceeding in abeyance until such time as he is “able to find proper representation to defend my case against the allegations”.

36    The evidence and the Court’s record make clear that the third respondent:

(a)      is not resident in Australia but is resident in either Turkey or the United States of America;

(b)    has not filed a notice providing an address for service in Australia since the filing of his solicitors’ notice of ceasing to act; and

(c)     seeks to be actively involved in the proceeding only in a manner and time of his choosing.

defaults relied on BY THE APPLICANTS

37    Order 35A rule 3(2)(c) provides that, if a respondent is in default, the Court may:

… if the proceeding was commenced by an application supported by a statement of claim or the Court has ordered that the proceeding continue on pleadings - give judgment against the respondent for the relief that:

(i)    the applicant appears entitled to on the statement of claim; and

(ii)    the Court is satisfied it has power to grant; …

38    Order 35A rule 2(2) relevantly provides:

For this Order, a respondent is in default if the respondent has not satisfied the applicant’s claim and:

    … … …

    (c)    the respondent fails to attend a directions hearing; or

    (d)    the respondent fails to comply with an order of the Court in the proceeding; or

    … … …

    (f)    the respondent fails to serve a list of documents or an affidavit or other document or does not produce a document as required by Order 15; or

    … … …

    (h)    the respondent fails to defend the proceeding with due diligence.

39    The applicants contend that the third respondent is in default by:

(a)    failing to give discovery as required by order 1 made on 21 October 2010;

(b)    failing to file and serve the affidavit required by order 2 made on 21 October 2010; and

(c)     failing to attend the directions hearing on 22 November 2010.

40    The applicants also contend that, by reason of these matters, the respondent has failed to defend the proceeding against him with due diligence.

relevant principles

41    Order 35A rule 3(2)(c) dispenses with the requirement for an applicant for default judgment to tender proof of his or her claims when seeking judgment. In a proceeding where the application is supported by a statement of claim it is sufficient that the applicant appears, on the face of the statement of claim itself, to be entitled to the relief that is claimed, provided the Court is satisfied that it has power to grant that relief. This approach has been adopted in a long line of cases, commencing with Arthur v Vaupotic Investments Pty Ltd [2005] FCA 433 at [3]. It is not a matter of controversy.

42    However the cases also recognise two related propositions. First, if the criteria for O 35A r 3(2)(c) are satisfied, the Court has a discretion as to whether or not to grant the relief that is claimed: Hills Industries Ltd v Hualin Pty Ltd (2009) 82 IPR 513; [2009] FCA 1143 at [11]. Secondly, in exercising that discretion it may be appropriate for the Court to require some evidence by way of proof of the primary allegations, and perhaps on other matters. Whether this is necessary will depend on the particular circumstances of the case including, in particular, the nature of the relief that is sought: Universal City Studios LLLP v Hoey t/as DVD Kingdom (2006) 232 ALR 525; [2006] FCA 727 at [10].

43    In the present matter the applicants seek declarations as well as injunctions. Both forms of relief are discretionary. Depending on the circumstances of the case, an exercise of discretion in favour of the granting of relief of that kind may require, but will not necessarily require, the tender of evidence establishing why that relief should be granted, including, for example, the necessity for or utility of that relief, if those matters are not otherwise apparent on the face of the statement of claim. This is particularly so in the case of declaratory relief.

44    As a matter of general principle, a declaration will not be granted unless the court is satisfied both that the declaration sought is appropriate and that is would have sufficient practical utility in resolving the matter that is before the court: Neeta (Epping) Pty Ltd v Phillips (1974) 131 CLR 286. For example, if the subject matter of the dispute has been superseded by events such that the applicant’s present or future legal rights or commercial or personal interests will not be affected by a determination of that matter, then this provides a cogent reason for refusing to grant that form of relief: Gardner v Dairy Industry Authority of New South Wales (1977) 18 ALR 55 at 69; Ashmere Cove Pty Ltd v Beekink (No 2) (2007) 244 ALR 534; [2007] FCA 1421 at [40]. As the decision in Neeta itself recognises (at 307), it is also generally undesirable that a court should grant declaratory relief without consequential relief, unless the parties are agreed on the consequences which flow from the declaration itself.

consideration

45    I am satisfied on the evidence that the third respondent is in default, within the meaning of O 35A r 3(2), in having failed to comply with orders 1 and 2 made on 21 October 2010 and in having failed to attend the directions hearing on 22 November 2010. Whether it can be said that, by reason of those failures alone, the third respondent has also failed to defend the proceeding with due diligence is not a matter that I need to decide.

46    I am satisfied, on the face of the statement of claim, that it is appropriate to grant some of the relief sought by the applicants. In my view the fact that the third respondent has filed a defence is not an impediment to my taking that course. The terms of O 35A r 3(2)(c) are clear that it is to the allegations in the statement of claim to which reference should be made, not any other pleading, for the purpose of satisfying the relevant pre-conditions. In any event, the third respondent’s default, coupled with his apparent attitude to the defence of the proceeding as revealed by those parts of his letter I have quoted, make it sufficiently clear that his defence will only be prosecuted with such expedition as the third respondent himself considers appropriate: see, in that connection, Luna Park Sydney Pty Ltd v Bose [2006] FCA 94 at [19]. This represents an unsatisfactory state of affairs.

47    In respect of the claim of copyright infringement, the applicants seek the following declaration:

... that the Third Respondent has infringed the Second Applicant’s copyright subsisting in the television broadcast of the Turkish Television channel “ATV AVRUPA” (ATV Channel) by:

    (a)    procuring or directing; or

    (b)    authorising,

    the First Respondent to re-broadcast the whole or a substantial part of ATV Channel in Australia or communicate the whole or a substantial part of the ATV Channel to the public in Australia otherwise than by broadcasting it, without the licence of the Second Applicant or the First Applicant when it became the exclusive licensee in Australia of the Second Applicant’s copyright subsisting in the television broadcast of the ATV Channel (Exclusive Licensee).

48    The applicants also seek the following injunction:

… that pursuant to section 115(2) of the Copyright Act 1968 (Cth) the Third Respondent be permanently restrained whether by himself, his servants, agents or otherwise, from infringing the Second Applicant’s copyright subsisting in the television broadcast of the ATV Channel by:

(a)    procuring or directing; or

(b)    authorising,

the First Respondent or any other person to re-broadcast the whole or a substantial part of the ATV Channel in Australia or communicate the whole or a substantial part of the ATV Channel to the public in Australia otherwise than by broadcasting it, without the licence of the First Applicant for so long as it is the Exclusive Licensee and otherwise the Second Applicant.

49    I am of the view that it is appropriate to grant the injunction that is sought. It is relief to which the applicants are entitled on the face of the statement of claim. It is clear that the third respondent continues to dispute the existence of the exclusive licence granted to the first applicant in respect of the second applicant’s copyright in the broadcasts.

50    However, I am not satisfied that it is appropriate to grant the declaration that is sought. First, it will be clear from the terms in which the injunction will be granted that it is predicated on the third respondent’s infringement of the second applicant’s copyright of which the first applicant is the exclusive licensee. Secondly, no party other than the third respondent currently disputes the existence of the exclusive licence granted to the first applicant, or threatens to infringe the second applicant’s copyright. Thirdly, there is no evidence that any other person disputes the second applicant’s ownership of the copyright or the existence of the exclusive licence granted to the first applicant, or threatens to infringe the copyright.

51    In those circumstances there is no utility in granting the declaration as sought in addition to the injunction that will be granted. I therefore refuse to grant the declaration that is sought in that regard.

52    In respect of the claim relating to the breaches of fiduciary duty, the applicants seek the following declarations:

… that the Third Respondent has breached a fiduciary duty owed to the First Applicant when he was Chief Executive Officer of the International Operations of the First Applicant by failing to act for and on behalf of the interests of the First Applicant.

… that the Third Respondent has breached a fiduciary duty owed to the First Applicant by failing to negotiate and secure the renewal of the licence agreement dated 15 May 2006 between the First Applicant and the Second applicant under which the First Applicant was the exclusive licensee of the copyright subsisting in the broadcasts of the ATV Channel in Australia.

53    I am not satisfied that this relief should be granted.

54    The allegations of breach of fiduciary duty appear to have been pleaded in response to the first and third respondents’ allegation that the second applicant had granted an exclusive licence of the copyright in the broadcasts to the first respondent, or that the second applicant should be estopped from denying that it was bound by such a licence. In the event that it would be held that such a licence had been granted or that the second applicant would be estopped from denying that it was bound by such a licence, the applicants plead that, because of the alleged breaches of fiduciary duty, the first respondent should be taken as having received that licence as a constructive trustee for the first applicant. Alternatively the applicants allege that the first applicant has suffered loss or damage as a result of the breaches. The alleged loss or damage has not been particularised. However, the clear suggestion on the face of the statement of claim is that, based on the assumptions underlying that allegation, the first applicant’s loss or damage is represented by the loss to the first applicant of the licence which the first respondent has secured by reason of the pleaded breaches. The pecuniary relief claimed in that regard is equitable compensation or an account of profits.

55    In submissions the applicants made clear that pecuniary relief is no longer claimed. It is obvious why that is so: the successful prosecution of the applicants’ claims of copyright infringement necessarily proceed on the basis that the second applicant has indeed granted an exclusive licence of the copyright in the broadcasts to the first applicant on 22 April 2010 as alleged, and that the first respondent has no relevant licence of that copyright. It can thus be seen that, to that extent, the applicants’ claims with respect to copyright infringement and breaches of fiduciary duty are based, respectively, on contradictory factual premises.

56    The applicants submitted, however, that the claims relating to the breaches of fiduciary duty were of wider import justifying the grant of the declarations that they seek. I am unable to see how that is so, for the following reasons.

57    First, I am unable to see how the second applicant is entitled to the declarations that are sought in light of the fact that the only duties alleged to have been breached are those alleged to have been owed to the first applicant.

58    Secondly, so far as the first applicant is concerned, the granting of the declarations would seem to have no practical utility beyond a mere admonition of the third respondent without any other consequence attaching thereto. No other relief is sought against the third respondent by reason of the alleged breaches.

59    Thirdly, the first declaration that is sought is, in any event, impermissibly general in its terms and, for that reason alone, lacks utility.

60    Fourthly, the second declaration that is sought focuses on a failure to negotiate and secure a renewal of the Merkez Licence Agreement. Those events have long since passed with the granting of the new exclusive licence to the first applicant on 22 April 2010 as alleged. Thus a declaration in relation to that matter could not affect the first applicant’s present or future legal rights or commercial or personal interests, and, for that reason, lacks utility.

61    For these reasons I refuse to grant the declarations that are sought in this regard.

62    As to the question of costs, I am of the view that the applicants are entitled to an order for costs of the proceeding insofar as they relate to the third respondent, including the costs of its present motion.

63    In that connection the applicants sought an order that the costs be quantified as a gross sum in the amount of $121,182.50 and that those costs be payable forthwith. Ms Gourley’s affidavit sets out the basis on which those costs are claimed and quantified. They include the costs of the applicants’ successful claim for interlocutory relief against the first and third respondents and the costs of the present motion.

64    Pursuant to O 62 r 4(2)(c) the Court may order that, instead of taxed costs, costs be awarded as a gross sum. The purpose of the order is to “save the parties the time, trouble, delay, expense and aggravation in having a taxation proceed on a matter”: Keen v Telstra Corp Ltd (No 2) [2006] FCA 930 at [4]; Nine Films & Television Pty Limited v Ninox Television Limited [2006] FCA 1046; Macquarie Bank Ltd v Seagle (2008) 79 IPR 72; [2008] FCA 1417 at [30]. The power is not confined and may be exercised whenever the circumstances warrant its exercise: Su v Australian Fisheries Management Authority (No 3) [2008] FCA 2018 at [1].

65    I am satisfied that this is an appropriate case for the making of such an order. Having considered the matters identified by Ms Gourley in her affidavit, I am satisfied that the sum claimed is reasonable.

66    There is, however, one matter that troubles me. Although the third respondent was served with a copy of Exhibit OMG-1 which sets out the fees and disbursements billed by the applicants’ solicitors, including a schedule of rates charged, the third respondent has not been served with confidential Exhibit OMG-2 which sets out the itemised invoices issued by the applicants’ solicitors. It is this exhibit which contains the detail of the work actually undertaken by the applicants’ solicitors. At the hearing of the motion I made an interim order, on the application of the applicants’ solicitors, that access to confidential Exhibit OMG-2 be limited. The effect of that order, however, would be to allow access to confidential Exhibit OMG-2 to external solicitors or counsel engaged by the third respondent and also to the third respondent personally albeit on a limited basis.

67    I would be prepared, therefore, to make an order that the applicants are entitled to costs for the gross sum that is claimed subject to the proviso that the third respondent has leave within 21 days to file a notice of motion seeking orders to set aside or vary that order.

other matters

68    The applicants and the first respondent seek leave to discontinue the proceeding as between themselves, with no order as to costs, in accordance with a notice of discontinuance they have executed. That leave should be granted.

69    The applicants also seek an order that the bank guarantee lodged by them with the Registrar of the Court be released forthwith. The first respondent has signified its consent to that course. In my view it is appropriate to make that order given that:

(a)    leave will be granted to the applicants and first respondent to discontinue the proceeding as between themselves;

(b)    I propose to make an order for final injunctive relief against the third respondent; and

(c)    at the hearing for interlocutory relief before Nicholas J the only likely loss or damage advanced by the first and third respondents as a result of the making of the interlocutory injunctions against them related to the first respondent, not the third respondent.

disposition

70    The applicants are to bring in draft orders giving effect to these reasons.

Associate:

Dated:    16 December 2010