FEDERAL COURT OF AUSTRALIA

Hunter Pacific International Pty Ltd v Martec Pty Ltd (No 2) [2016] FCA 1041

ORDERS

THE COURT NOTES:

In the following declaration and orders, Razor Ceiling Fan means the ceiling fan product known as the Razor ceiling fan (model numbers MRF134B and MRF134W) as depicted in the images in Annexure A to the originating application dated 26 February 2015 (reproduced in Annexure A to these orders).

THE COURT DECLARES THAT:

1.    By importing into, offering for sale and selling, keeping for the purpose of offering for sale and selling and/or otherwise disposing of in Australia the Razor Ceiling Fan, the Respondent has infringed Australian registered design no. 340171.

THE COURT ORDERS THAT:

2.    The Respondent be restrained, whether by itself, its servants or agents or otherwise, from importing into, offering for sale and selling, keeping for the purpose of offering for sale and selling and otherwise disposing of in Australia the Razor Ceiling Fan or any other ceiling fan which includes a ceiling fan hub the design of which is identical, or substantially similar in overall impression, to Australian registered design no. 340171, for as long as Australian registered design no. 340171 remains registered on the Register of Designs.

3.    Within 28 days, the Respondent at its election deliver up to the Applicant or as it directs, or destroy with verification on oath or by affirmation, all stocks of ceiling fan hubs of the Razor Ceiling Fan in its possession, power, custody or control.

4.    There be an inquiry to determine the Applicant’s entitlement to, and the quantum of, any pecuniary relief against the Respondent.

5.    The Respondent pay the Applicant’s costs of the proceeding to date (excluding costs the subject of orders previously made in the proceedings).

6.    Without prejudice to any application by the Applicant for the Respondent to pay security for its costs in any appeal proceeding, the Respondent has leave to appeal from the declaration and orders referred to in orders 1-5 above.

7.    The parties have liberty to apply on two days’ notice.

8.    Orders 3 and 4 be stayed until the later of:

(a)    14 days from the date these orders are made; or

(b)    if any appeal to the Full Court is filed during that 14 day period until the determination of those appeal proceedings.

9.    The application for an order staying the injunction referred to in order 2 above and the costs order referred to in order 5 above be dismissed.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

(Revised from Transcript)

NICHOLAS J:

1    Today I made orders in favour of the applicant based upon my finding that the respondent infringed the applicant’s registered design (Hunter Pacific International Pty Ltd v Martec Pty Ltd [2016] FCA 796). I made a declaration, an order for delivery up and an order for an inquiry to determine the applicant’s entitlement to any pecuniary relief. I also granted an injunction restraining the respondent from further infringing the registered design. The respondent was ordered to pay the applicant’s costs of the proceeding to date.

2    The respondent wishes to appeal each of my orders and I have granted it leave to appeal. The question that must now be decided is whether any of the orders made by me should be stayed. The respondent seeks a stay of all the orders made by me in favour of the applicant. For its part, the applicant does not oppose the making of an order staying the order for delivery up or the order relating to the assessment of pecuniary relief. The real question is whether the injunction and the costs order should be stayed pending the determination of the respondent’s appeal.

3    The evidence before me consists of affidavits made today by the respondent’s solicitor, Ms O’Connell, and the applicant’s solicitor, Ms Gouley. Ms O’Connell’s affidavit includes an exhibit which identifies the approximate number of Razor ceiling fans in the respondent’s possession (approximately 693 fans) and an additional number that it is expecting to receive that are being shipped to it from overseas (approximately 180 fans). I gather that these additional fans are due to arrive in the near future. In all, the applicant will soon be in possession of about 873 Razor fans.

4    Ms O’Connell’s affidavit is relied upon by the respondent to establish that the respondent will suffer hardship if the injunction and the costs order are not stayed until the determination of the appeal. Before saying a little more about that, I should note that the respondent has offered to undertake that it will keep full and proper accounts of all further sales of Razor ceiling fans and that it will not acquire any further stock of such fans until the determination of the appeal.

5    The evidence does not say very much about the respondent’s business or its financial circumstances except that, according to instructions given by Mr Care, the respondent’s Managing Director, to Ms O’Connell:

Martec is a trading entity, and will continue to trade, and there is therefore no reason to doubt that Martec has the ability to meet an award of damages and costs both now and following the determination of, an appeal.

6    That evidence was received in the absence of any objection by the applicant. Significantly, Ms O’Connell’s affidavit does not indicate how many Razor fans the respondent has already sold nor does it provide any other evidence from which one might infer that the respondent has the financial capacity to pay the applicant’s costs not to mention any pecuniary award in favour of the applicant.

7    In Powerflex Services Pty Ltd v Data Access Corp (1996) 67 FCR 65 the Full Court held that an applicant for a stay need not show special circumstances in order to obtain a stay. In so holding the Full Court followed the New South Wales Court of Appeal’s decision in Alexander v Cambridge Credit Corporation Ltd (1985) 2 NSWLR 685 which had previously been followed by Heerey J in Henderson v Amadio Pty Ltd (No 3) (1996) 65 FCR 66. These authorities establish that the Court has a broad and unfettered discretion that may be exercised in favour of an applicant seeking a stay pending the determination of an appeal if the applicant establishes a case for exercising the discretion in his or her favour. Ultimately, however, it is for the applicant seeking the stay to satisfy the Court that the circumstances warrant the making of such an order.

8    The evidence relied upon by the respondent in support of the proposition that it will suffer a significant burden or hardship in the event that the injunction is not stayed is scant. Ms O’Connell’s affidavit, referring again to instructions received from Mr Care, suggests that the respondent’s relationship with retailers and other customers will be disrupted by any cessation in the supply of Razor ceiling fans by the respondent. It also suggests that if the injunction is not stayed, then the respondent will be prevented from honouring its warranty commitments in relation to any Razor ceiling fans supplied to date. In submissions it was explained that this is because, in the absence of a stay, the respondent will not be able to supply replacement fans to customers as and when required.

9    The respondent’s evidence does not indicate how many Razor fans it has supplied to date, how many orders it currently holds for such fans or what proportion of the respondent’s revenue is attributable to sales of Razor ceiling fans. Nor does the evidence provide any indication of the extent to which the respondent has previously been required to replace Razor ceiling fans that it has supplied pursuant to its warranty commitments.

10    It is necessary to weigh up any hardship to the respondent against any hardship to the applicant that might be occasioned by granting a stay. The applicant has statutory rights with a limited life, and it has now established after a trial that its rights have been infringed by the respondent apparently over a period of several years. Contrary to the respondent’s submission, the fact that the applicant never sought an interlocutory injunction is not a factor to which I would attach any weight in this case, though I recognise, of course, that the respondent has been selling Razor ceiling fans for some considerable time. But matters have now changed given that there has been a trial at which the applicant prevailed.

11    In the circumstances, I am not persuaded that the interests of justice favour the grant of a stay of the injunction. That brings me to the question of the costs order.

12    I am also not persuaded that it would be appropriate to make an order staying the costs order. I have already drawn attention to the scant evidence concerning the respondent’s financial circumstances. I do not think the applicant should be prevented from taking steps to enforce the costs order at least up until the point at which a certificate of taxation issues. At that point it will be open to the respondent to make a further application for a stay of the enforcement of the costs order in the event that the appeal has not already been determined, and I refuse the application for a stay of the costs order on that understanding. Further, in the event that the appeal is successful, it would be open to the Court to make a costs order in favour of the respondent to compensate it for any costs that may be thrown away in the event it is found that the respondent has been put to the expense of a taxation pursuant to a costs order that is set aside.

13    Orders accordingly.

Associate:    

Dated:    26 August 2016