Federal Court of Australia

Enagic Co., Ltd v Horizons (Asia) Pty Ltd (No 2) [2020] FCA 1240

ORDERS

THE COURT ORDERS THAT:

1.    The interlocutory application filed by the respondent on 29 July 2020 be dismissed.

2.    The respondent pay the appellant’s costs of the interlocutory application filed by the respondent on 29 July 2020.

3.    Paragraphs 7 and 8 of the appellant’s notice to produce dated 8 July 2020 be set aside.

4.    The balance of the appellant’s notice to produce dated 8 July 2020, being paragraphs 1-6 and 9-10 be stood over to 2 September 2020 at 9.30 am before a Registrar of this Court.

5.    Paragraphs 1-4 of the interlocutory application filed by the respondent on 12 August 2020 be otherwise dismissed.

6.    The respondent pay the appellant’s costs of paragraphs 1-4 of the interlocutory application filed by the respondent on 12 August 2020.

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

REASONS FOR JUDGMENT

MARKOVIC J:

1    There are two interlocutory applications before the Court, each brought by the respondent, Horizons (Asia) Pty Ltd (Horizons).

2    In the first application filed on 29 July 2020 Horizons seeks an order “[l]ifting the stay granted to the [a]ppellant for the second tranche of security for [Horizons’] costs made on 16 October 2019” and an order for further security for its costs. In the second application filed on 12 August 2020 Horizons seeks an order setting aside the notice to produce dated 8 July 2020 (Notice to Produce) served on it by the appellant, Enagic Co., Ltd (Enagic).

3    Before proceeding further I note that since February 2020 Horizons has not been legally represented in this proceeding. On each occasion that the matter has been before the Court, Horizons has sought, and been granted, leave to be represented by Ms Lee Ng who describes herself as a senior administrator of Horizons. Enagic has not opposed this course for the purpose of the case management hearings and the hearing of these applications. However, as I have made plain, going forward, it will be necessary for Horizons to make, and have determined, an application supported by relevant evidence to dispense with the requirement imposed by r 4.01(2) of the Federal Court Rules 2011 (Cth) (Rules) that it not proceed other than by a lawyer if, contrary to Ms Ng’s assertion, it does not intend to retain lawyers for the purposes of the proceeding and, in particular, the hearing scheduled to commence on 30 November 2020.

4    I will address each of the applications now before me in turn.

Horizons’ application to discharge the stay

5    On 10 October 2019 an order was made by consent requiring Enagic to pay a second tranche of security for Enagic’s costs in the amount of $100,000 exclusive of GST up to and including trial by payment of that amount into an interest bearing account of this Court (Second Tranche Security Order). On 16 October 2019, on the application of Enagic, an order was made staying the Second Tranche Security Order (Stay Order). It is that latter order that Horizons now seeks to discharge.

Background

6    This proceeding was commenced by the filing of a notice of appeal on 18 December 2018 in which Enagic appeals from the decision of a delegate of the Registrar of Trade Marks (Registrar) made on 27 November 2018 by which the delegate decided that, as each of the grounds of opposition raised by Enagic had not been established, Horizons’ trade mark application no 1798917 for the mark KANGEN (Opposed Mark) may proceed to registration.

7    On 12 February 2019 Horizons lodged a notice of acting – appointment of lawyer with the Court appointing Reynier Van Der Westhuizen of ChrysLegal Pty Ltd to represent it in the proceeding.

8    On 5 March 2019 Horizons filed a notice of acting – change of lawyer appointing Blair Beven of Mills Oakley as its legal representative.

9    On 5 June 2019 orders were made including an order that Horizons file and serve any interlocutory application seeking security for its costs on or before 14 July 2019.

10    On 17 June 2019 Horizons lodged a notice of acting – change of lawyer appointing James Nicholas Lawrence, also of Mills Oakley, to represent it in the proceeding in place of Mr Beven who was described as being “formally of Mills Oakley”.

11    On 2 July 2019 the parties reached an agreement in relation to payment of a first tranche of security by Enagic in the sum of $40,000 up to and including mediation. On that date an order was made by consent requiring Enagic to provide security for Horizons’ costs up to and including mediation within 14 days by way of payment of $40,000 into an interest bearing account of this Court (First Tranche Security Order).

12    On 29 July 2019 Enagic paid $40,000 in accordance with the First Tranche Security Order.

13    A mediation took place in July 2019.

14    Between 26 and 28 August 2019 the parties corresponded about the payment by Enagic of further security for Horizons’ costs, including on a without prejudice basis.

15    On 29 August 2019 orders were made including an order that Horizons file and serve any interlocutory application for additional security for its costs by 6 September 2019 together with any affidavits in support.

16    Between 29 August 2019 and 10 October 2019 the parties corresponded on the question of provision of further security for costs by Enagic, including on a without prejudice basis.

17    On 10 October 2019 the Second Tranche Security Order was made by consent.

18    On 15 October 2019:

(1)    at 9.44 am Ms Ng sent an email to Horizons’ lawyer at the time, Mr Lawrence, which was copied to several people including Khajaque Kortian of Spruson & Ferguson Lawyers Pty Ltd, the solicitors for Enagic, and which attached a letter addressed to the Court. In that letter Ms Ng on behalf of Horizons said, among other things:

We regret to inform the Court that we have received resignation from our legal representative, Mills Oakley, of which resignation was reaffirmed during the course of yesterday, 14.10.2019.

We were made aware of defaults of certain court orders as recently as late yesterday and the actions that had led to such court orders have not been explained to us, to date.

We are presently seeking to appoint another representative to attend Court as soon as possible.

In the circumstance that we do not have an alternative representative instantly available to step in, we are writing to inform the Court of this position as soon as we have come to it.

In this circumstance, we would humbly request to adjourn the interlocutory hearing listed on Wednesday, 16.10.2019, for a reasonable time of not less than three weeks in order to enable a replacement representative be put in place for the Defendant.

(2)    by email sent at 1.28 pm Mr Lawrence, in response to an inquiry from Mr Kortian as to whether Mills Oakley continued to act for Horizons or had taken steps to comply with r 4.05 of the Rules, informed Mr Kortian that a notice of ceasing to act had been filed that morning and they had “no need to comply with Rule 4.05”;

(3)    a notice of ceasing to act was filed in the proceeding by Mr Lawrence; and

(4)    by email sent at 3.17 pm to, among others, the email address service@horizonsasia.com Mr Kortian provided a copy of the orders that Enagic proposed to seek at the case management hearing listed the following day, 16 October 2019, which included a proposed order in the form of the Stay Order.

19    On 16 October 2019 the proceeding was listed for case management hearing. At that time, there was no appearance on behalf of Horizons. The following exchange took place with counsel for Enagic, Ms Whitby, in relation to the Second Tranche Security Order and Enagic’s proposed order for a stay of that order:

HER HONOUR:    … You don’t want to pay security?

MS WHITBY:    We’re not saying that security is off the table, your Honour, but we certainly gave that order – consented to that order in good faith that the matter would be proceeding to hearing in accordance with your Honour’s timetable, and that was a very strict timetable, we would say. It was something that the appellant was prepared to accede to, provided that the respondent would be participating in a meaningful way in the hearing. So, we would ask your Honour to simply stay that order. And given the other orders that are sought by the appellant, in particular the vacation of the hearing date, it might be appropriate that security be ordered in further tranches, rather than a lump sum of $100,000 by 24 October, as currently is ordered by the court.

HER HONOUR:    There’s already some security paid into court - - -

MS WHITBY:    Yes, your Honour.

HER HONOUR:    - - -is there not, Ms Whitby? All right. Well, I’m happy to stay the order until further order. It can be revisited if the respondents appear on the next occasion.

The Stay Order was made at that time.

20    On 23 October 2019 Horizons lodged a notice of acting – change of lawyer appointing Mr Beven, now of Holding Redlich, to represent it in place of Mr Lawrence.

21    On 10 February 2020 Mr Beven filed a notice of ceasing to act in the proceeding.

22    Since 11 February 2020 Horizons has not had legal representation in the proceeding.

23    By email dated 29 April 2020 from “A Watkins A/G Manager (per) Ng Lee, Authorised Officer, Horizons (Asia) Pty Ltd” addressed to my associate and copied to, among others, Mr Kortian, Horizons requested a number of things including that the case management hearing listed on 30 April 2020 be vacated and/or adjourned until further order, the Stay Order be discharged and the proceeding be listed for case management hearing on a date after 18 September 2020. A somewhat detailed letter dated 28 April 2020 addressed to Enagic’s lawyers was attached to that email.

24    On 30 April 2020 when the proceeding was listed for case management hearing there was no appearance on behalf of Horizons. In the course of the case management hearing, the following exchange took place in relation to the Stay Order with Ms Whitby:

MS WHITBY:    Your Honour will recall that there was a case management hearing on 16 October 2019 where Mills Oakley – there was no appearance for the respondent. Mills Oakley had ceased to act. The precise reasons we’re not sure; but Mills Oakley ceased to represent the respondent two days prior to that case management hearing. And, also, at that case management hearing the issue was raised as to deficiency as to the notice to produce.

    And it is stepping a while back in time, now, your Honour, but the same deficiencies that plagued the respondent’s discover list was very similar – there were documents that were simply not responsive to the notice to produce, again, publicly available documents. And, for those reasons, I urged your Honour to order a stay, and your Honour granted that stay on 16 October.

…

HER HONOUR:    It seems the respondent wants the stay listed, but the answer to that must be that it still has no solicitors acting.

MS WHITBY:    Yes. Precisely.

HER HONOUR:    And there’s no evidence before me as to what the costs are that are likely to be incurred from here on in.

MS WHITBY:    Yes. I wholeheartedly adopt your Honour’s summary of what our legal position is, there. And we would further submit that, in the event that the respondent does appoint legal representatives, the appellant would wish to be heard at that time. Further, we may file a notice of motions seeking that the sum of security be reduced. And your Honour has the power to make such an order under section 56 of the Federal Court of Australia Act. And we would respectfully submit that we would be entitled to assess the costs estimate that is put forward by any legal representative at that time. So a stay would certainly be – lifting of the stay would be premature.

…

HER HONOUR:    Yes. All right. Well, I’m not satisfied. I don’t – I’m not satisfied as to why they couldn’t appear today. And, therefore, it is appropriate for me to proceed. I’m also satisfied that the orders sought should be made – it appears from the matter I’ve been taken to that there has been inadequate compliance with the discovery orders and there has certainly been no affidavit explaining the steps undertaken to – and the searches undertaken to comply with the discovery order as ordered by me on 18 March. And I note those orders were by consent. So, for those reasons, I will make the order.

    I also should note, for the purpose of the transcript, that the respondent sought to have the stay on the provision of security listed. But, at this stage, I’m not satisfied there’s any proper basis to do that, and that the respondent also sought an adjournment until September this year without, apparently, there being any steps taken in the proceeding so that it could appoint lawyers seemed to require that period of time because of the current situation caused by the COVID 19 pandemic.

    But there’s no – there was no evidence relied on by the respondent to explain why that period of time was required. Despite the difficult circumstances, I do not think that period of time is required to retain a lawyer. Parties can still communicate with prospective lawyers by telephone or video conference, and the – this respondent has had ample opportunity to retain new lawyers. The chronology prepared by the solicitors for the appellant demonstrates that it has been some time since new solicitors where – since the respondent has been legally represented.

25    As noted at [3] above, putting to one side those occasions on which there was no appearance for Horizons, since 11 February 2020 Horizons has sought and been granted leave to have Ms Ng appear on its behalf at the case management hearings which took place on 16 and 30 July 2020 and at the hearing of the applications the subject of these reasons.

26    Ms Ng says that Horizons has incurred significant legal costs between December 2018 and February 2020 in the proceeding but does not provide any evidence of the costs incurred, the hourly rates charged and the nature or categories of the work undertaken other than to say that since July 2019 the costs incurred have been entirely attributable to Enagic’s discovery application and its amendment of its points of claim, “leading to filing of further evidence” and which will necessitate the filing of an amended defence by Horizons and require it to incur further costs.

27    Ms Ng says that she understands that Horizons wishes to appoint a new lawyer “as soon as it is allowed to do so in the current climate and the evolving impacts and constraints” of the novel coronavirus (COVID-19) pandemic. Ms Ng explains that since Horizons has not had legal representation she has been instructed to step in and conduct the proceeding as best as she can and to find a suitable substitute lawyer as quickly as possible. Ms Ng says that she contacted a number of prospective legal representatives and held discussions in person and by telephone with more than one of them. She understands that the initial requirements of a prospective legal representative include payment of a significant deposit and the provision of a complete set of records relating to the background to the proceeding before IP Australia as well as this proceeding.

28    Ms Ng’s evidence, given as at 6 July 2020, is that since what she describes as the 90 day lockdown started at the end of March 2020 as a result of the COVID-19 pandemic, she first had restricted access and eventually no access to Horizons’ principal place of business and its paper records which are in storage. She understands that some of Horizons’ staff have been stood down until further notice and that those working are at remote locations. As at 6 July 2020 Horizons’ office was “temporarily closed pending resumption and subject to the evolving impacts” of the COVID-19 pandemic. Ms Ng says that Horizons’ plan to restore its business to “normality” has been delayed due to “the very recent threat of a ‘Second Wave’ of the coronavirus which put our neighbouring state (Victoria) and Australia as a whole on high alert”.

Horizons’ submissions

29    Horizons submits that based on Enagic’s own argument there can be no question that the First Tranche Security Order and the Second Tranche Security Order were made with consent; the First Tranche Security Order was for the period up to and including the conclusion of the mediation, which occurred on 30 July 2019; and the Second Tranche Security Order was for the period from 1 August 2019 onward.

30    Horizons also submits that there can be no question that it was legally represented from 1 August 2019 to about 10 February 2020 with a nominal break of less than one week between 16 and 23 October 2019. It says that it would be impractical, if not irresponsible, to suggest that it did not incur costs or that its costs incurred for the period between 1 August 2019 and 10 February 2020 would be anything less than $100,000.

31    Horizons submits that there could be no argument that the lawyers and counsel who represented it and who represent Enagic are of similar calibre and thus have similar costs. It says that Enagic can be guided by the costs it has incurred during the same period to realise that the Second Tranche Security Order and a further order for payment of an additional amount of $50,000 as security for Horizons’ costs is appropriate for the period from “1 August 2019 to 10 October 2020” and the ongoing proceeding. Horizons submits that r 19.01 of the Rules requires advance payment of security for its costs, not payment after those costs have been incurred and paid.

Should the Stay Order be discharged?

32    Horizons now seeks an order discharging the Stay Order and the payment of additional security by Enagic. The effect of acceding to Horizons’ application would be to require Enagic to pay $100,000 as security for Horizons’ costs in accordance with the Second Tranche Security Order. For the reasons that follow I would not accede to Horizons’ application.

33    First, the application for the Stay Order was made at a time when Horizons was not legally represented. Although very shortly after that application and the Stay Order were made Horizons was once again legally represented, no application was made to discharge the Stay Order by Horizons’ newly appointed lawyers. That position continued for the whole of the period during which Horizons continued to be represented by those lawyers, 23 October 2019 to 10 February 2020. Horizons did not provide any explanation for why that was so.

34    Secondly, Horizons seeks to have the Stay Order discharged in circumstances where it is no longer legally represented.

35    The Court’s power to make an order for security for costs is found in s 56 of the Federal Court of Australia Act 1976 (Cth) (FCA Act) which, among other things, permits the Court or a judge to order an applicant in a proceeding in the Court to give security for the payment of costs that may be awarded against him or her. Such an order is made to ensure that a successful respondent has protection for the costs incurred in successfully defending a proceeding brought against it. In circumstances such as these, where the appellant is a foreign corporation, an order for security for costs provides a fund within the jurisdiction which will enable a successful respondent to recover its costs in the event that an order is made, in this case, for Enagic to pay those costs at the conclusion of the proceeding: see Jasmine Solar Pty Ltd v Trina Solar Australia Pty Ltd [2020] FCA 1018 at [96]. It is axiomatic that the costs that are protected by such an order are the respondent’s party/party costs.

36    As Horizons is currently unrepresented it is difficult to see how since 11 February 2020 it could be incurring costs of the type that an order for security for costs seeks to protect. That is, at present Horizons is not incurring costs which might attract the necessary protection given by an order made pursuant to s 56 of the FCA Act and r 19.01 of the Rules (which sets out the requirements for an application for an order for security for costs).

37    Thirdly, while it may be the case, as Horizon submits, that in the period from 23 October 2019 to 10 February 2020 when it was represented it incurred legal costs, Ms Ng asserted in her oral submissions on behalf of Horizons that it did and that those costs were in excess of the amount the subject of the Second Tranche Security Order. However, there is no evidence before me of the legal costs actually incurred, the basis upon which any such legal costs, if incurred, were charged or, at even at a high level, the nature of the work undertaken.

38    The First Tranche Security Order and the Second Tranche Security Order were made by consent such that Horizons never in fact filed an application pursuant to r 19.01 of the Rules and, it follows, did not file any evidence in support of such an application in accordance with the requirements of that rule. While I might infer that Horizons incurred legal costs for the period that it was legally represented, in the absence of any evidence, including, at a minimum, evidence filed in accordance with r 19.01 of the Rules, I am unable to assess the quantum of any such costs and whether, because of the amount so incurred, the Stay Order should be discharged. Indeed, one possible inference to be drawn from the fact that Horizons’ lawyers did not make an application for discharge of the Stay Order between 23 October 2019 and 10 February 2020, a period of some four months, is that any legal costs it had incurred, at least at that stage, were protected by the First Tranche Security Order.

39    Fourthly, Ms Ng’s evidence that Horizons intends to retain legal representation for the purpose of this proceeding but that in order to do so it will be required to pay what Ms Ng describes as a “very sizeable sum of deposit” does not take the matter any further. As I explained to Ms Ng and as is apparent from the matters set out at [35] above, the purpose of an order for security for costs is not to enable a party to pay its lawyers but is to secure a fund to meet a respondent’s costs once quantified in the event that a costs order is made in favour of that respondent. That Horizons may need to pay an amount on account of its legal costs in order to retain lawyers is not relevant to the question of whether there should be a discharge of the Stay Order.

40    Fifthly, there is no basis upon which I would conclude that Enagic should pay an additional sum of security. Putting to one side that Horizons is not presently legally represented and that there is no evidence to suggest that it has or intends in the immediate future to retain lawyers, there is no evidence to support such an application as required by r 19.01 of the Rules.

Horizons’ application to set aside the Notice to Produce

41    By the Notice to Produce Enagic seeks production of documents in the following categories:

1.    Business Sale Agreement: a document recording the terms of the purchase of the Respondent's business from Cheung Hoi Lan Penson by Pyng Lee Shih.

2.    Share Transfer Agreement: a document recording the agreement to transfer the full shareholding of the Respondent from Cheung Hoi Lan Penson to Pyng Lee Shih.

3.    Director Appointment Agreement: a document recording the agreement to appoint Pyng Lee Shih as a director of the Respondent.

4.    Consent to Act as Director: a copy of the Consent to Act as Director of the Respondent signed by Pyng Lee Shih.

5.    Contracts of Employment: a copy of each of the employment agreements recording the terms of Ng Lee’s employment with:

a.    the Respondent;

b.    Pyng Lee Shih; and/or

c.    Cheung Hoi Lan Penson.

6.    Payslips of Ng Lee: in the event that the employment agreements of Ng Lee with the Respondent and/or its officers are verbal, or alternatively, not available to produce, a copy of at least one payslip per year since 2007 issued by the Respondent (or Pyng Lee Shih and/or Cheung Hoi Lan Penson, as appropriate) to Ng Lee.

7.    Photo Identification of Pyng Lee Shih: a copy of a signed photo identification (including passport or driver’s licence) of Pyng Lee Shih.

8.    Photo Identification of Ng Lee: a copy of a signed photo identification (including passport or driver’s licence) of Ng Lee.

9.    Lease Agreement: a copy of the Respondent’s lease agreement/s for its lease of the premises recorded as the registered office and principal place of business of the Respondent, being Unit 1, 2 Hunter Street, Enfield NSW 2136.

10.    Termination of Lease Agreement: a copy of any termination of the Respondent’s lease agreement/s for its lease of the premises recorded as the registered office and principal place of business of the Respondent, being Unit 1, 2 Hunter Street, Enfield NSW 2136.

11.    Domain Name Certificates: a copy of the Certificates of Registration for each of the domain names listed in Annexure NG-15 to the affidavit of Ng Lee affirmed on 26 July 2019.

42    Horizons seeks to have the Notice to Produce set aside on the grounds that the categories sought in it are not relevant to the proceeding and/or they seek the production of documents of a “personal and private nature”. Notwithstanding its application, on 28 July 2020 Horizons produced some documents in answer to the Notice to Produce and, under cover of an unsworn affidavit of Ms Ng dated 12 August 2020, produced additional documents in response to category 11 of the Notice to Produce.

43    Horizons submits that all of the information sought by Enagic in the Notice to Produce has been provided and that any outstanding documents are not relevant to the proceeding. In her affidavit dated 5 August 2020 Ms Ng says, by way of further explanation, that Horizons considers that the majority of the Notice to Produce is not relevant to the proceeding and/or that the documents sought are of a personal and private nature. Notwithstanding this, Horizons produced a list of documents and an accompanying affidavit dated 28 July 2020 in response to the Notice to Produce. Ms Ng explains that, in particular, Horizons objects to producing documents in categories 2, 3, 4, 5(a), 5(b), 6, 7, 8 and 9 because those categories are irrelevant to the proceeding and because the documents sought in them are confidential and private in nature.

44    As to the latter, Ms Ng says that she personally has acted for Horizons but is not a member of Horizons or a party to the proceeding and does not have a financial interest in Horizons. Accordingly, Ms Ng personally objects to the disclosure of personal and private information about her to Enagic and its lawyers.

45    In relation to those documents which have been produced, Ms Ng says that she understands that there can be no challenge as to their authenticity. She explains that some of the documents produced on 28 July 2020 were documents filed with the Australian Securities and Investments Commission (ASIC) which could have been easily obtained by Enagic without recourse to the Notice to Produce. Ms Ng is of the opinion that Enagic’s various notices to produce have been designed for no other purpose than to generate additional proceedings and costs in order to wear down Horizons.

46    Enagic’s position is that the categories sought in the Notice to Produce are relevant to matters in issue in the proceeding and that, with the exception of the documents produced in answer to category 11, the production to date by Horizons is inadequate and incomplete.

Should the Notice to Produce be set aside?

47    The Notice to Produce was issued under r 30.28 of the Rules which permits a party to serve on another party a notice in accordance with Form 61 requiring the party served to produce any document or thing in the party’s control at any trial or hearing in the proceeding.

48    Lack of apparent relevance is a ground for setting aside a notice to produce. In other words, a notice to produce must seek documents that are relevant. The test is “whether the documents are ‘reasonably likely to add, in the end, in some way or other, to the relevant evidence in the case’”: see Seven Network Limited v News Limited (No 11) [2006] FCA 174 at [6]. The onus rests on Enagic to demonstrate the apparent relevance of the categories of documents it seeks in the Notice to Produce. In order to assess whether it has discharged that onus I will consider each of the categories in turn.

49    Before doing so, it is instructive to have regard to the nature of the claim made by Enagic. In particular, Enagic relies on s 58 (applicant not owner of the mark), s 44 (substantially identical or deceptively similar marks), s 60 (mark similar to a mark that has acquired a reputation in Australia), s 62A (application for registration of a mark made in bad faith) and s 42(b) (use of mark contrary to law) of the Trade Marks Act 1995 (Cth) (TM Act) as grounds of opposition to the registration of the Opposed Mark.

50    Putting to one side category 11, which in any event has been satisfied by Horizons’ most recent production (see [42] above), Enagic contends that the categories of documents it seeks in the Notice to Produce are relevant to:

(1)    identifying the true owner of the KANGEN mark;

(2)    identifying the controlling mind of Horizons, including the scope of Ms Ng’s authority and/or the authority of Pyng Lee Shih, Horizons’ sole director, and their respective tenure with Horizons; and

(3)    Ms Ng’s ability to speak to key issues in dispute in the proceeding, namely the adoption of the KANGEN mark and Horizons’ motives in seeking registration of the Opposed Mark.

These matters are most relevant to Enagic’s grounds of opposition under s 58 and s 62A of the TM Act.

Categories 1 and 2

51    Categories 1 and 2 of the Notice to Produce seek any document recording the terms of the purchase of Horizons’ business and any document recording the transfer of the shareholding in Horizons from its former owner, Cheung Hoi Lan Penson, to Pyng Lee Shih. A company search of Horizons shows that on 4 April 2016 Pyng Lee Shih became its sole director, secretary and shareholder and Cheung Hoi Lan Penson retired as its sole director and secretary and ceased being a shareholder. By these categories, Enagic seeks to understand the basis for the sale of the shares and business of Horizons to Pyng Lee Shih and the context in which Horizons made its application for registration of the Opposed Mark on 24 September 2016 and to identify the signature of the current director and secretary, Pyng Lee Shih.

52    I accept that in the circumstances of this case, in particular where it is alleged that the application for registration of the Opposed Mark was made in bad faith, the circumstances in which there was a change in ownership of the shareholding in Horizons and its business are relevant matters to explore and that the documents sought are reasonably likely to add, in some way or other, to the relevant evidence in the case.

53    While Horizons has produced some material in relation to the change in ownership of Horizons, Enagic contends that the production is incomplete. That seems to be the case given that no document which records the terms of the sale of Horizons’ business has been produced, assuming such a document exists. One of the documents which was produced on 28 July 2020 is the minutes of a directors’ meeting held on 4 April 2016 which appears to record the appointment of Pyng Lee Shih as director and secretary and the resignation of Cheung Hoi Lan Penson from those roles as well as the transfer of the single share in Horizons from Cheung Hoi Lan Penson to Pyng Lee Shih. However, the signature of the incoming director, secretary and shareholder, Pyng Lee Shih, the place at which the meeting was held and the addresses of the signatories are redacted. Those redactions were made, I infer, because Horizons asserts that such information is confidential or private in nature.

54    That is not a proper basis for redacting the information. Given that those documents (and others) may respond to these categories of the Notice to Produce, they should be produced without redactions. If there is any issue as to confidentiality of any part of the documents produced, that can be raised with the solicitors for Enagic and the parties can agree on an appropriate regime for confidentiality.

Categories 3 and 4

55    By categories 3 and 4 of the Notice to Produce, Enagic seeks the production of any documents recording the agreement to appoint Pyng Lee Shih as the director of Horizons and a copy of Pyng Lee Shih’s consent to act as director. For the same reasons set out in relation to categories 1 and 2, I accept that those categories of documents are relevant to the issues in the proceeding and that they are reasonably likely to add, in some way or other, to the relevant evidence in the case.

Categories 5 and 6

56    By categories 5 and 6 of the Notice to Produce, Enagic seeks the production of contracts of employment for Ms Ng’s employment with Horizons, its current director and/or its former director or, in the event that there is no written contract of employment, a copy of at least one pay slip per year since 2007 issued by Ms Ng’s relevant employer.

57    Based on the material filed in the proceeding to date, it appears that Horizons will principally rely on Ms Ng’s evidence in defending the appeal. Ms Ng describes herself as an employee of Horizons. She says that since about 2014 she has worked in the role of an administrator and since 2016 her duties have evolved into that of a manager, overseeing Horizons’ Australian operations generally. During this latter period, she has primarily been involved in managing Horizons’ trade mark affairs, product branding, digital marketing and promotion on the internet as well as an occasional trade mark dispute.

58    Enagic wishes to identify when Ms Ng became an employee of Horizons and the length of her employment, having regard to the fact that Horizons intends to rely on her evidence in relation to first use of the KANGEN mark in 2009 and the circumstances in which it applied for registration of the Opposed Mark. Given the issues in the proceeding and the grounds of opposition relied on by Enagic, I am satisfied that documents in these categories are relevant and should be produced.

Categories 7 and 8

59    In categories 7 and 8 of the Notice to Produce, Enagic seeks production of a signed photographic identification of each of Pyng Lee Shih and Ms Ng. Enagic says that it is unclear whether Pyng Lee Shih and Ms Ng are the same person and whether Pyng Lee Shih is the person who has, in fact, been signing off on the company documents and that it seeks to elucidate those matters from the documents produced in answer to these categories.

60    It is difficult to see how these documents are relevant and how they are reasonably likely to add in some way or other to the relevant evidence in the proceeding. How the actual identity of Pyng Lee Shih and Ms Ng is relevant was not clearly explained. Enagic speculates that they are one and the same person but provides no basis for that speculation. If the matter proceeds to hearing and Horizons relies on Ms Ng’s evidence she will need to attend and to make herself available for cross-examination if so required by Enagic. In my view, obtaining photographic identification of Ms Ng in the meantime will not assist the resolution of the issues. Similarly, obtaining photographic identification of Pyng Lee Shih does not seem to me to be of apparent relevance to any of the grounds of opposition relied on by Enagic.

61    Categories 7 and 8 of the Notice to Produce should be set aside.

Categories 9 and 10

62    By categories 9 and 10, Enagic seeks production of any lease agreements for Horizons’ registered office and principal place of business in Enfield, New South Wales (Enfield Premises) and any termination of the lease for the Enfield Premises.

63    In support of these categories Enagic relies on a report prepared by Rumore Associates, private investigators, dated 4 June 2020. Among other things they attended the Enfield Premises and reported as follows:

… As expected, we noted the property to be a two storey, freestanding, commercial building with no evidence to suggest the building provided for residential accommodation.

The building was quite evidently unoccupied and, in that regard, we could readily see through to the ground floor areas via the ground floor windows facing the street and side lane. The ground floor area was largely devoid of any fittings, fixtures or furniture save for what appeared to be remnant displays stands or perhaps office fittings. There was much graffiti all around the building – perhaps further evidence of the building having been vacant for some time.

There was no commercial signage of any description however; a hand-written note attached to the front gate indicated that deliveries could be made at the adjacent property at 177 The Boulevard. The telephone number of 9642 6233 was also indicated.

Subsequent searches have indicated that this telephone number is subscribed to by Charles Abraham, Accountant and as publicly listed at 177 The Boulevard Enfield.

As you are aware, 177 The Boulevarde is listed on the Company’s ASIC extract as the previous Principal Place of Business and Registered Office of the company.

Rumore Associates provided photos of the Enfield Premises.

64    In response, Horizons relies on a letter dated 10 August 2020 from Charles Abraham who is the sole director of Melaka Pty Ltd, the owner of the Enfield Premises. Mr Abraham is also Horizons’ accountant. In his letter Mr Abraham says: the Enfield Premises are not unoccupied; those premises presently have two tenants; it is a commercially designed structure which is zoned residential; since April 2016, unit 1 has been occupied by Horizons and unit 2 is occupied by another tenant; unit 1 is due to expire on 31 December 2020; from March to May 2020, when businesses were affected by COVID-19, Melaka undertook maintenance of the Enfield Premises including painting and minor roof repairs; and during that period a hand-written sign was placed on the security gate of the Enfield Premises directing inquiries to Mr Abraham but no inquiries were received from Rumore Associates.

65    Enagic seeks the documents in categories 9 and 10 because the Enfield Premises are listed on documents lodged with ASIC as Horizons’ principal place of business and, at least based on the report of Rumore Associates, those premises appear not to be in use. Enagic says the documents are relevant to the ground of opposition under s 62A of the TM Act in that they are relevant to the question of whether Horizons was carrying on a business of the nature it describes under the Opposed Mark at the time of its application for that mark.

66    I accept that categories 9 and 10 of the Notice to Produce are relevant for the reasons set out in the preceding paragraph. Relevant to the ground of opposition under s 62A of the TM Act is the question of whether Horizons was or is in fact offering the services for which they seek the registration of the Opposed Mark, being distribution of goods, wholesale, retail sales, marketing and promotion. The question of its occupancy or otherwise of the premises it claims to be its principal place of business goes to that issue. There is, on the evidence before me, clearly a dispute about those issues. However, Horizons’ evidence does not answer the request for the documents to be produced in categories 9 and 10 nor does it establish that the categories are not relevant. To the contrary, it raises additional issues which remain unanswered. In any event, Mr Abraham seems to suggest that there is a lease in place which will expire at the end of this year. If that is so it can, I assume, be readily produced.

Category 11

67    As noted at [46] above, Enagic is satisfied that Horizons has responded to category 11 of the Notice to Produce.

Conclusion on the Notice to Produce

68    Paragraphs 7 and 8 of the Notice to Produce should be set aside. The balance of the Notice to Produce will be stood over to 2 September 2020 at 9.30 am before a Registrar of this Court to allow Horizons time to produce any documents it has in answer to it. Those documents should be produced in unredacted form. If any issues of confidentiality arise in relation to any of those documents that cannot be resolved inter partes, that can be raised with the Registrar and an appropriate access regime can be put in place.

Costs

69    Enagic seeks its costs of Horizons’ application to discharge the Stay Order and its costs of Horizons’ application to set aside the Notice to Produce on an indemnity basis.

70    Section 43 of the FCA Act confers a wide discretion on the Court in awarding costs, which is to be exercised judicially. Section 43(3)(g) permits the Court or a judge to order that costs awarded against a party be assessed on an indemnity basis or otherwise.

71    In Colgate-Palmolive Company v Cussons Pty Limited (1993) 46 FCR 225 at 233-234 Sheppard J said the following about the circumstances in which an order for indemnity costs might be made:

4.    In consequence of the settled practice which exists, the Court ought not usually make an order for the payment of costs on some basis other than the party and party basis. The circumstances of the case must be such as to warrant the Court in departing from the usual course. … Most judges dealing with the problem have resolved the particular case before them by dealing with the circumstances of that case and finding in it the presence or absence of factors which would be capable, if they existed, of warranting a departure from the usual rule. But as French J said (at p 8) in Tetijo, “The categories in which the discretion may be exercised are not closed”. Davies J expressed (at p 6) similar views in Ragata (supra).

5.    Notwithstanding the fact that that is so, it is useful to note some of the circumstances which have been thought to warrant the exercise of the discretion. I instance the making of allegations of fraud knowing them to be false and the making of irrelevant allegations of fraud (both referred to by Woodward J in Fountain and also by Gummow J in Thors v Weekes (1989) 92 ALR 131 at 152; evidence of particular misconduct that causes loss of time to the Court and to other parties (French J in Tetijo); the fact that the proceedings were commenced or continued for some ulterior motive (Davies J in Ragata) or in wilful disregard of known facts or clearly established law (Woodward J in Fountain and French J in J-Corp (supra)); the making of allegations which ought never to have been made or the undue prolongation of a case by groundless contentions (Davies J in Ragata); an imprudent refusal of an offer to compromise (eg Messiter v Hutchinson (1987) 10 NSWLR 525; Maitland Hospital v Fisher (No 2) (1992) 27 NSWLR 721 at 724 (Court of Appeal); Crisp v Keng (unreported, Court of Appeal, NSW, Kirby P, Priestley JA, Cripps JA, No 40744/1992, 27 September 1993) and an award of costs on an indemnity basis against a contemnor (eg Megarry V-C in EMI Records (supra)). Other categories of cases are to be found in the reports. Yet others to arise in the future will have different features about them which may justify an order for costs on the indemnity basis. The question must always be whether the particular facts and circumstances of the case in question warrant the making of an order for payment of costs other than on a party and party basis.

72    I will deal with each of the applications in turn.

73    Horizons has been unsuccessful in its application to discharge the Stay Order. It follows that it should pay Enagic’s costs of that application. However, this is not a case where I would order those costs to be paid on an indemnity basis. Enagic relies on the fact that at the case management hearing on 16 July 2020 Horizons was put on notice by the Court that its lack of legal representation meant that it was not entitled to seek security for costs and that it was inappropriate to have the Stay Order set aside. While such statements may have been made at the case management hearing, given that Horizons is not legally represented and Ms Ng is, at this stage, appearing with leave, that is not a sufficient basis on which to make such an order. Ms Ng is not a lawyer and would not be aware of the potential costs consequences of proceeding with an application of this nature. Further, there is no evidence before me that she was put on notice of Enagic’s intention to seek a costs order on an indemnity basis or that she would have understood that to be the case.

74    Enagic has achieved a significant, if not complete, measure of success in relation to the Notice to Produce or, put another way, Horizons has only achieved limited success in having 2 of the 11 categories set aside. In light of that Enagic should have its costs of the application to set aside the Notice to Produce, particularly given the protracted way in which Horizons has responded to the Notice to Produce. However, in light of Horizons’ limited success I would decline to make an order that those costs be paid on an indemnity basis.

Conclusion

75    I will make orders in accordance with my reasons.

Associate:

Dated:    27 August 2020