FEDERAL COURT OF AUSTRALIA

Crocker v Toys ‘R’ Us (Australia) Pty Ltd [2016] FCA 1103

ORDERS

THE COURT ORDERS THAT:

The application for extension of time and leave to appeal filed on 18 August 2016 be dismissed.

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

REASONS FOR JUDGMENT

COLLIER J:

1    This is an application for an extension of time and leave to appeal filed on 18 August 2016 from a decision of a Judge of this Court in Crocker v Toys ‘R’ Us (Australia) Pty Ltd (No 2) [2015] FCA 727 dated 11 June 2015.

Background

2    Some history to this application can be seen in the decision of the primary Judge in a related judgment, Crocker v Toys ‘R’ Us (Australia) Pty Ltd [2015] FCA 588 which was also delivered on 11 June 2015. Relevantly, it appears from that judgment that:

    Ms Crocker claimed to have designed a device used to secure children’s car seats, prams, high chairs, swings and strollers. She had a registered business “Securap Child Accessories” in Queensland in 1991. She claimed to hold copyright in relation to the instructions for the use and marketing packaging in which the product was offered for sale. Finally Ms Crocker claimed that the respondents had variously infringed her registered trade mark, infringed her common law trade mark and infringed her copyright, by, inter alia, reverse engineering her invention.

    In December 2010 Ms Crocker applied to the Registrar of Trade Marks for registration of a trade mark in respect of her product. The application was accepted by the Registrar of Trade Marks in December 2010. Opposition proceedings in question were commenced by Infa-Secure Pty Ltd under Pt V of the Trade Marks Act 1995 (Cth) on 21 June 2011.

    On 8 November 2012, the Delegate of the Registrar upheld Infa-Secure Pty Ltd’s opposition to Ms Crocker’s application and refused to register her trade mark.

    On 1 December 2014 Ms Crocker filed an originating application commencing proceedings against Infa-Secure Pty Ltd and the three respondents to this application.

    On 30 December 2014, Ms Crocker discontinued the proceeding against Infa-Secure Pty Ltd.

3    On 25 May 2015 Ms Crocker filed an application in the Federal Court in QUD 647/2014seeking the following relief:

I am seeking leave of the court to address the following matter as a matter of urgency.

I received this email from Chrysiliou Lawyers today as dated asking that I pay a sum of $40,942.22 being a bill of costs prepared allegedly for the discontinuance against Infa Secure Pty Ltd.

I remind the court that this company was never served any document and discontinuance was filed prior to any attempt to serve any Infa Secure Pty Ltd company.

I do not know if this is the right company of Infa Secure Pty Ltd that I intended to serve but could not locate as they are unable to be identified on the opposition notice to IP Australia and finally.

This bill does not give me any information regarding what the costs are for and to whom I owe this money when the Infa Secure Pty Ltd opposing me in the Federal Court of Australia is not the company I intended serving as the opponent to my trademark application to IP Australia.

Would the court, at its own discretion, please make orders in relation to this bill urgently and determine if this company has any lawful right to seek monies from me in relation to this proceeding or if they are in fact the wrong company seeking monies from me under fraudulent pretences to be the right company.

4    The primary judgment the subject of this application is short, and I now set it out in full:

1.    Ms Crocker filed this application on 25 May 2015 and requested that it be dealt with as a matter of urgency. Because of that request, at the first mention date of the application, it was set down for hearing today. It is not clear from Ms Crocker’s application exactly what order it is that she seeks. When I asked her what it was, she could not tell me, nor could she nominate which of the Court’s Rules she was relying upon. However, Mr Ferrett for Infa Secure Pty Ltd (Infa Secure) (the former first respondent in this proceeding) told me that he had assumed it must be an application for an order to set aside the usual effect of r 26.12(7) of the Federal Court Rules 2011 (Cth) (the Rules). That rule provides that:

Unless the terms of a consent or an order of the Court provide otherwise, a party who files a notice of discontinuance under subrule (2) is liable to pay the costs of each other party to the proceeding in relation to the claim, or part of the claim, that is discontinued.

2.    That rule applies in this case because approximately one month after commencing this proceeding on 1 December 2014, Ms Crocker filed a notice of discontinuance against Infa Secure. That notice was filed on 30 December 2014.

3.    Fortunately, during the luncheon adjournment, Ms Crocker was able to obtain some legal advice and she has now put forward the bases upon which she seeks to have the usual operation of r 26.12(7) set aside. Her main contention was that she discontinued against Infa Secure before the proceedings were served on it. She also pointed to the Court’s discretion in relation to costs under s 43 of the Federal Court of Australia Act 1976 (Cth) and submitted that the costs that had been claimed by Infa Secure (approximately $40,000) was excessive. For these reasons, she submitted Infa Secure should not be entitled to any order for costs.

4.    Mr Ferrett submitted that Ms Crocker had not put forward any basis upon which the ordinary operation of r 26.12(7) should be set aside. He submitted that the question of service was otiose because Infa Secure’s lawyers filed a notice of acting on 19 December 2014, 11 days before the proceeding was discontinued against it. It also submitted that the quantum of any costs order is a matter that will fall to be determined on the assessment of costs under that order.

5.    Whether or not this proceeding was served on Infa Secure is, I agree, now rendered otiose because it appears from the Court file that Infa Secure’s lawyers did, indeed, file a notice of acting on 19 December 2014. If Infa Secure incurred costs as an incident of this proceeding before, and after, that date, and up to the discontinuance on 30 December 2014, it should be entitled to recover those costs against Ms Crocker.

6.    I do not consider Ms Crocker has put forward any basis to set aside the usual operation of r 26.12(7). As to whether the costs claimed by Infa Secure are excessive, I agree that is a matter that will fall to be determined by the Registrar in the assessment of those costs. It does not provide a basis for setting aside the usual operation of r 26.12(7) of the Rules.

7.    For these reasons, Ms Crocker’s application filed 25 May 2015 is dismissed.

5    On 22 July 2016 a sequestration order was made against the estate of Ms Crocker in proceeding QUD 345/2016. It was common ground at the hearing before me that the sequestration order related to the unpaid costs found by his Honour in the primary judgment to be payable by Ms Crocker to Infa-Secure Pty Ltd, and subsequently assessed. The sequestration order remains in place.

6    On 27 July 2016 Ms Crocker filed an application for review of that sequestration order. On 12 August 2016 Logan J stayed the proceedings under the sequestration order of 22 July 2016 pending hearing and determination of Ms Crocker’s application for review.

Application before this Court

7    Ms Crocker is a litigant in person. The grounds of the application before the Court are as follows:

1.    I was unable to appeal the judgment last year and in the prescribed time due to illness as known to the Court for which I am now medicated. I was further dealing with a family trauma that the Registrar is aware of and I am unwilling to publish. My illness was a breakdown due to the stress of the situation coupled with severe depression and anxiety. I further commenced menopause which left me suffering considerable symptoms. Both conditions are already known to the Court and are on the record in QUD 647/2014 and QUD 9/2015.

2.    The judgement is void due to there being NO first former respondent of this name as their name had changed and they are now under external administration following a favourable judgment of the Federal Court to another company and owing considerable money to another company that sued them for similar reasons.

3.    The former first respondent was incorrectly named by me due to their failure to change their name on their stationary [sic], correspondence to Federal Ministers, in correspondence to me and their ASIC records.

4.    While the judgement exists, it will be exploited as it is presently being by a company that has absolutely no association with the former first correct respondent and is a new company that simply took up the name of the former first respondent (correct company).

5.    I believe I was tricked into or deliberately confused into naming the former first respondent Infa Secure Pty Ltd by acts of trickery and inconsistent correspondence to ensure I did not name the correct company that was already engaged in litigation commenced by another party against them. This will be evidenced in the affidavit attached.

8    Ms Crocker has also filed an affidavit in support of her application. This affidavit sets out evidence upon which Ms Crocker relies, as well as her proposed draft grounds of appeal which are as follows:

1.    There is no former first respondent of this name.

2.    The correct former first respondent is now under external administration and unable to be joined to the proceeding. I possess considerable evidence to prove that the applicant is not the former first named respondent and neither did the applicant obtain the good will of the alleged predecessor being the correct former first respondent as outlined in my affidavit.

3.    The Ex Tempore Judgment of His Honour, Justice Reeves, is now being exploited by the applicant to QUD 345/2016 who is nothing more than a company who took up the name of the former company and have falsely declared that they are a successor of the former company. This company is seeking a costs order of me and a subsequent bankruptcy despite not being the company with whom I have any history.

9    The proposed orders sought by Ms Crocker are:

1.    The judgment to be dismissed.

2.    This application to bankrupt me in QUD 345/2016 for seeking the costs related to the Ex Tempore order to be dismissed.

3.    An order for costs.

10    In her affidavit, Ms Crocker deposes, materially:

    She named the wrong company as the first respondent in earlier proceedings. She had done so because the correspondence in her possession identified “Infa Secure Pty Ltd”.

    Ms Crocker had always known the company to be “Infa Products Pty Ltd ACN 092 222 994” as the correct respondent, but knew also that it had changed its name between Infa Products Pty Ltd and Infa-Secure Pty Ltd several times.

    “Infa-Secure Pty Ltd ACN 092 222 992” now named Infa Products Pty Ltd is currently under external administration having been successfully sued in the Federal Court of Australia for similar reasons by another company. Ms Crocker is the second victim of the family conducting these companies, which exercises phoenix activity to defeat inventors such as herself.

    Correspondence included in the affidavit demonstrates that Infa-Secure Pty Ltd has changed names several times.

    Infa-Secure Pty Ltd has only existed since February 2011, and therefore is not the company with which she has a history, and which manufactured, imported and sold the infringing product for more than 10 years.

    The incorrect naming of the company is no error on her part but that of utter confusion created by the Horsfall family which controls the Infa companies, and the Infa entities and their lawyers.

    Her affidavit filed with her originating application in QUD 647/2014 sets out precise and clear information, and it is not possible that the respondent to that application believed it was the company she was referring to.

11    The respondents, and Infa-Secure Pty Ltd, are represented by solicitors and Counsel. An affidavit in support of the respondents sworn by Mr Reynier van der Westhuizen was filed on 2 September 2016. Mr van der Westhuizen deposed that he was the solicitor acting for the first and third respondents and Infa-Secure Pty Ltd in this proceeding, and that the application for extension of time and leave was opposed by those parties.

Submissions of the parties

12    I have set out in some detail Ms Crocker’s claims relevant to the current application. In her written submissions Ms Crocker alleges, in summary:

    she has had numerous medical conditions and stress which have impeded her attention to and conduct of this litigation;

    the lawyers with whom she has been dealing are incompetent;

    the respondents are represented by the lawyers for Infa-Secure Pty Ltd ACN 149 173 660;

    she knew that the Infa entity she served was the wrong party, but could not explain it due to her health and stress;

    the conduct of her case was being sabotaged;

    she was sent to jail for communicating subject matter and defending herself against retailers who were abusing her;

    she was deliberately exploited by the lawyers for the respondents;

    Infa-Secure Pty Ltd ACN 149 173 550 has committed substantial fraud against IP Australia, the Federal Court and the retailers. It has moved property from one company to another over the past decade. The respondents claimed they knew Ms Crocker was the inventor of the relevant product but thought she had abandoned it;

    although she has filed many documents with the Court in respect of Court proceedings she has been assisted by QPILCH;

    Chrysiliou Lawyers did not exist for much of the time she was engaged in the proceedings;

    the application for review of her bankruptcy will be heard by Logan J on 10 November 2016.

13    In summary, the respondent opposes Ms Crocker’s application for extension of time and leave to appeal against the primary judgment on the basis that:

    Ms Crocker is currently an undischarged bankrupt, which means that this application is incompetent;

    the costs order against which Ms Crocker wishes to appeal was made in favour of Infa-Secure Pty Ltd, a respondent against which Ms Crocker discontinued proceedings. Ms Crocker has not named Infa-Secure Pty Ltd as a respondent to the application currently before the Court, and has refused to serve them in respect of it;

    there is insufficient evidence explaining the delay in the filing of this application;

    despite claims of illness, the evidence before the Court demonstrates that Ms Crocker has pursued her rights;

    the proposed appeal is bound to fail because the grounds of appeal are not expressed with clarity.

Consideration

Threshold question

14    An important threshold point in this application is that while all proceedings under Ms Crocker’s sequestration order of 22 July 2016 have been stayed, this does not mean that Ms Crocker is no longer a bankrupt under the Bankruptcy Act 1966 (Cth). Section 37 of that Act provides:

(1)    Subject to subsection (2), the Court may rescind, vary or discharge an order made by it under this Act or may suspend the operation of such an order.

(2)    The Court does not have power to rescind or discharge, or to suspend the operation of:

(a)    a sequestration order; or

(b)    an order for the administration of the estate of a deceased person under Part XI.

15    As Beach J observed in Endresz v Australian Securities and Investments Commission [2014] FCA 1139:

8.    It is apparent from the provisions and operation of the Bankruptcy Act 1966 (Cth) (the Act) that it is inapposite to talk of a stay of a sequestration order as such. When a sequestration order is made, it takes immediate and automatic effect by force of the Act. There is an immediate vesting of property in the trustee in bankruptcy. Moreover, after-acquired property of the bankrupt vests as soon as it is acquired. See, generally, Nand v Fuji Xerox Australia Pty Ltd [2014] FCA 757 at [3] per Yates J. It is conceptually incoherent to contemplate a judicial stay order as being available to countermand automatic legislative operation where no question of invalidity is involved.

9.    In concept, one can only consider whether there should be a stay of any proceedings or action under a sequestration order, rather than a stay of the order itself. So much is made plain by the language of s 52(3) of the Act which uses the language of “stay all proceedings under a sequestration order”. I interpolate at this point that s 52(3) also has a time limit of 21 days. Nevertheless, in the Court’s appellate jurisdiction under r 36.08, such a time bar does not limit the Court’s power thereunder. A separate source of jurisdiction can be invoked, rather than that applicable under s 52(3).

10.    Further, reference should also be made to s 37(2)(a) of the Act, which provides that the Court does not have power to suspend the operation of a sequestration order.

11.    In summary, the Court only has power to stay proceedings or action under the sequestration order …

(Emphasis added.)

16    I also note the observation of the Full Court in De Robillard v Carver (2007) 159 FCR 38 that:

Subject to the outcome of the appeal the appellant became bankrupt upon the making of the sequestration order by the primary judge (see definition of ‘bankruptcy’ in s 5 of the Bankruptcy Act, s 43(2) of the Bankruptcy Act and Cavanagh v Bank of New Zealand (1990) 22 FCR 124 at 128). Neither the filing of an appeal, nor a stay upon proceedings in relation to the sequestration order changed that circumstance.

(emphasis added.)

17    In the circumstances it is clear that only Ms Crocker’s trustee in bankruptcy has power to litigate this matter, and that the application is incompetent: s 58 Bankruptcy Act 1966 (Cth).

Relevant principles

18    However even were this not the case I consider that it would be appropriate to dismiss the application currently before the Court. I take this view for the following reasons.

19    In determining whether to grant an extension of time for leave to appeal, as explained in Hunter Valley Developments Pty Ltd v Cohen (1984) 3 FCR 344 at 348-349 key questions for consideration by the Court are:

    whether the applicant has provided a satisfactory explanation for the delay in seeking leave to appeal;

    whether the respondent would experience prejudice were an extension of time granted; and

    whether the proposed grounds of appeal have merit.

20    A comparison may be drawn with principles relevant to applications for leave to appeal an interlocutory decision, explained in Decor Corporation Pty Ltd v Dart Industries Inc (1991) 33 FCR 397 at 398-399 as:

    whether in all the circumstances, the decision is attended with sufficient doubt to warrant its being reconsidered by the Full Court; and

    whether substantial injustice would result if leave were refused, supposing the decision to be wrong.

21    Clearly in both types of application the merits of the substantive application constitute a crucial consideration for the Court in deciding whether the Court should exercise its discretion in the applicant’s favour.

22    Turning to the application for extension of time, I do not consider that Ms Crocker’s explanation for her late filing of the application for leave is satisfactory. In essence, Ms Crocker attributes the lateness to the condition of her health, and stress she has experienced. While health conditions can, in appropriate cases, be the cause of a litigant failing to comply with a statutory deadline, as the respondents have correctly pointed out Ms Crocker has continued to pursue her claimed rights since the delivery of the primary judgment. So, for example, Mr van der Westhuizen gives evidence that:

    between 11 June 2015 and 15 May 2016 in QUD 647/2014 Ms Crocker has filed an amended statement of claim of 24 pages (on 29 April 2016), several affidavits (including one affidavit of 81 pages) and several interlocutory applications.

    in the proceeding QUD 647/2014 until it was stayed, Ms Crocker appeared at every hearing or directions date, relevantly on 30 July 2015, 13 August 2015, 13 November 2015, 4 March 2016, 5 May 2016 and 19 May 2016.

    Ms Crocker has been very active in QUD 9/2015, filing submissions, affidavits, two interlocutory applications, a defence and an amended defence between 11 June 2015 and 12 May 2016. Ms Crocker also appeared at every hearing or directions date in this proceeding, relevantly on 13 August 2015, 21 August 2015, 13 November 2015, 4 February 2016, 25 February 2016, 4 March 2016, 14 April 2016, 5 May 2016 and 19 May 2016.

    Ms Crocker commenced action in proceeding QUD 865/2015 by filing an originating application and affidavit on 18 September 2015.

    In proceeding QUD 345/2016 between 11 June 2015 and 5 August 2016 Ms Crocker has filed numerous affidavits, an interim application, several sets of submissions, a notice of opposition, an application for review and an interlocutory application.

    Ms Crocker has appeared at every hearing and directions date in QUD 345/2016, relevantly on 6 July 2016, 22 July 2016 and 12 August 2016.

    Since 11 June 2015 Ms Crocker has addressed in excess of 500 emails to his firm, many of substantial length.

23    No reason has been put to me why I should not accept Mr van der Westhuizen’s evidence. Certainly it is not disputed by Ms Crocker – rather she explains her activity as being conducted late at night, with support from QPILCH lawyers.

24    In my view however the vigour with which Ms Crocker has pursued her claims in multiple legal proceedings in this Court during the past 15 months counters her claim of health problems impeding her ability to file an application for leave in the prescribed time.

25    Second, I am satisfied that the respondents to these proceedings would be prejudiced should the Court extend time to Ms Crocker to file an application for extension of time. So far as I can identify, the named respondents to this application have no interest in it, and have appeared only on sufferance because they have been named as respondents. The proper respondent, it appears, should be Infa-Secure Pty Ltd which was successful in obtaining its costs in the primary judgment. If the Court did grant an extension of time, the respondents, who have no interest in this application and because of the lateness of the application for leave currently need take no further part in it, would be required to defend the application, even if that defence took the form of an application of competency or to have it struck out.

26    However it is very clear that Infa-Secure Pty Ltd – which in my view should be named as a proper respondent in these proceedings – would be seriously prejudiced by an extension of time. This is because the sequestration order by which Ms Crocker became bankrupt was based on her costs debt to Infa-Secure Pty Ltd the subject of the primary judgment in this case.

27    Third, I am satisfied that the draft grounds of appeal have no merit. The primary judgment concerned an application by Ms Crocker for the Court to make an order negating the effects of r 26.12(7) of the Federal Court Rules 2011 (Cth). As the transcript of the proceedings of 11 June 2015 before his Honour demonstrates, Ms Crocker argued in summary that costs should not be awarded against her because:

    she discontinued against Infa-Secure Pty Ltd before the proceedings were served on it; and

    the costs that had been claimed by Infa-Secure Pty Ltd (approximately $40,000) was excessive.

28    His Honour dealt with both grounds and noted that the lawyers for Infa-Secure Pty Ltd filed a notice of acting on 19 December 2014, which was clearly prior to Ms Crocker discontinuing the proceedings filed against Infa-Secure Pty Ltd. His Honour concluded that if Infa-Secure incurred costs between that date and the date of discontinuance it should be entitled to recover those costs against Ms Crocker in accordance with r 26.12(7). His Honour further noted that Ms Crocker had not put forward any basis to set aside the usual operation of r 26.12(7), and that if the costs were excessive that issue could be dealt with in assessment.

29    Ms Crocker has submitted strongly that she made an error in naming Infa-Secure Pty Ltd as a respondent in the primary proceedings. Clearly however his Honour considered that Ms Crocker had discontinued the proceedings against Infa-Secure Pty Ltd for tactical reasons, and not because she “discovered” that the company was the “wrong” respondent. I note in particular the comment of his Honour at p 21 ll 17-18 of the transcript of 11 June 2015.

30    The primary Judge has a broad discretion conferred by s 43 of the Federal Court of Australia Act 1976 (Cth) to consider an appropriate costs order in this case, and clearly was also guided by the terms of r 26.12(7). I am unable to identify any error in the exercise of his Honour’s discretion as set out in the reasons for judgment. Indeed, I note in the grounds of her application that Ms Crocker states:

There is nothing wrong with the Ex Tempore Order legally and his Honour made no error in making the order. The problem is that the Order is now being exploited by party who has no legal right or grounds to be seeking the costs order as a party who is now using the name of the party awarded the judgment.

31    The fact remains that Ms Crocker commenced proceedings against Infa-Secure Pty Ltd, and subsequently discontinued them. Costs were incurred by Infa-Secure Pty Ltd during that time. Ms Crocker’s allegation of improper “exploitation” of that order by other parties simply makes no sense.

Conclusion

32    I am satisfied that the application for extension of time and leave to appeal before the Court is incompetent. In any event, the application for extension of time should be dismissed because of the absence of satisfactory explanation for lateness in filing, the prejudice to the respondents and Infa-Secure Pty Ltd should the Court be minded to grant the extension, and the lack of merit in the proposed grounds of appeal.

33    At the hearing I raised with both parties the question of costs. Counsel for the respondents submitted that it was unlikely his clients could recover costs from Ms Crocker. The respondents sought no order as to costs in the circumstances.

Associate:

Dated:    9 September 2016