Koala Wine Estates Pty Ltd v Frada Nominees Pty Ltd & Anor Frada Nominees Pty Ltd & Anor v Koala Wine Estates Pty Ltd [1998] FCA 330

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY NG 958 of 1996

BETWEEN: KOALA WINE ESTATES PTY LTD

Applicant

AND: FRADA NOMINEES PTY LTD

AND: FIRST Respondent

between: GIOVANNI FRADA

and: SECOND RESPONDENT

FRADA NOMINEES PTY LTD and

GIOVANNI FRADA

CROSS CLAIMANTS

KOALA WINE ESTATES PTY LIMITED

CROSS RESPONDENT

JUDGES: SACKVILLE J

DATE: 6 APRIL 1998

PLACE: SYDNEY

THE COURT ORDERS THAT: 1. The hearing set down for 6-9 April 1998 be adjourned. 2. The proceedings be stood over to 7 May 1998 at 9.30 am for directions. 3. The respondents pay the applicant's costs thrown away by the adjournment of the proceedings, on an indemnity basis. 4. The applicant be entitled to have its bill of costs taxed forthwith, notwithstanding that the principal proceedings have not been concluded. 5. The respondents pay the applicant's costs, in accordance with paragraph 3, forthwith upon completion of the taxation referred to in paragraph 4, notwithstanding that the proceedings have not concluded.

Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY NG 958 of 1996

BETWEEN: KOALA WINE ESTATES PTY LTD

Applicant

AND: FRADA NOMINEES PTY LTD

AND: FIRST Respondent

between: GIOVANNI FRADA

and: SECOND RESPONDENT

FRADA NOMINEES PTY LTD and

GIOVANNI FRADA

CROSS CLAIMANTS

KOALA WINE ESTATES PTY LIMITED

CROSS RESPONDENT

JUDGES: SACKVILLE J

DATE: 6 APRIL 1998

PLACE: SYDNEY

REASONS FOR JUDGMENT At the commencement of the hearing in this matter, the second respondent ("Mr Frada") applied for an adjournment of the proceedings. Mr Frada stated that the respondents were not legally represented and wished to have an adjournment of the proceedings in order to obtain legal representation. Before considering the adjournment application, I should say something briefly about the proceedings themselves. The applicant ("Koala Wine") is the registered proprietor of Australian Registered No 96549, for the shape and configuration, pattern and ornamentation of a bottle in the shape of a Koala bear. Koala Wine seeks relief against the first respondent ("Frada Nominees") and Mr Frada on the basis of what is alleged to be the sale by the respondents of tawny port in bottles which infringe Koala Wine's design. Koala Wine seeks injunctive relief, an account of profits or damages and consequential orders. The respondents have filed a cross-claim. In that cross-claim they seek an order for rectification of the Register by expungement of Koala Wine's registered design. The parties were notified that the matter had been listed for hearing on 6 April 1998 by a letter from the Registry of the Federal Court dated 24 December 1997. At an earlier directions hearing, held on 21 November 1997, I indicated that the question of whether there should be a separate hearing on liability would be addressed at the next scheduled directions hearing, on 13 February 1998. At the directions hearing on 13 February 1998, an order was made that issues of liability be determined separately from and prior to issues of quantum. By consent, the matter was also referred to a mediator, to be selected jointly by the parties. In the absence of an agreement within fourteen days, my Associate was to be notified, so that the matter could be referred to a Court selected mediator. Other orders were made to ensure that the proceedings were ready for a hearing on the appointed day, namely, 6 April 1998. As far as the Court was concerned there the matter rested. At the hearing of the present adjournment application, Mr Frada indicated that he wished to put certain factual matters to the Court. I explained to Mr Frada that, if he wished to rely upon factual matters, he would have to give evidence about them. I also explained, of course, that he would be liable to cross-examination by Ms Goddard, who appeared for Koala Wines. In the event, Mr Frada gave evidence in support of the adjournment application. Ms Goddard called evidence from Ms Allsop, her instructing solicitor in the proceedings. Ms Goddard also tendered certain correspondence between the Sydney agents for the respondent's Adelaide solicitors. It emerges clearly enough from Mr Frada's evidence that he was aware in December 1997 that his Adelaide solicitors required payment of certain fees in advance, if they were to appear on his behalf at the hearing. I find, on the basis of his evidence, that Mr Frada was aware at all times between mid-December 1997 and today that, if he did not pay the amounts requested, the solicitors would not be likely to appear on his behalf. Although it appears that Koala Wine was anxious for a mediation to take place, and although agreement was reached on the identity of a mediator pursuant to the orders made on 13 February 1998, the respondents did not agree to participate in any mediation. On 19 March 1998, Koala Wine's solicitors wrote to Solomon Garland Partners ("SGP"), the Sydney agents for the respondent's Adelaide solicitors, noting that the respondents had not consented to attend an initial mediation conference. The letter expressed concern as to the respondents' continued delays in the matter, and noted that the respondents had consented to the matter being referred to mediation at the directions hearing held on 13 February 1998. The letter requested confirmation that the respondents would attend a mediation conference. On 23 March 1998, Koala Wine's solicitors again wrote to SGP enclosing, by way of service, objections to affidavits. The letter noted that the respondents' objections to affidavits were due on that date, namely 23 March 1998. The letter also noted that no response had been received in relation to the question of mediation raised in the letter of 19 March 1998. The letter further advised that if no response was forthcoming the matter would be relisted. A further letter raising the question of mediation was sent on 26 March 1998. Ms Allsop had a conversation on 30 March 1998 with my Associate, raising the possibility of the matter being relisted for the purposes of further orders being made with respect to a mediation. In the event, that course was not pursued. At about this time, negotiations took place between Koala Wine's solicitors and the Adelaide solicitors for the respondents, Mellor Olson. Except for one telephone conversation between Ms Allsop and Mr Mellor, the negotiations took place through correspondence. In the course of that correspondence, Koala Wine's solicitors expressed concern about the absence of action on the part of the respondents to ensure that the matter was ready for hearing. On 1 April 1998, Koala Wine's solicitors forwarded Koala Wine's submissions on infringement, pursuant to orders that had previously been made by me. The letter requested information as to when the respondents' submissions on validity would be received, since these also were due in accordance to the orders that had been made. According to Ms Allsop's evidence, no replies were received from Mellor Olson to the inquiries concerning the readiness of the matter for hearing. It is clear from Mr Frada's evidence that he hoped that the matter could be resolved by negotiation. To that end, he had instructed his solicitors to engage in negotiations with Koala Wine's solicitors, notwithstanding that the respondents had not participated in the mediation. However, it appears that on Friday 3 April 1998, Mr Mellor informed Mr Frada that his firm was not willing to act for him any longer. Mr Maxwell of SGP informed my Associate at approximately 4.50 pm on 3 April 1998 that Mr Frada would be representing himself (and presumably Frada Nominees) at the hearing. During the weekend preceding the hearing, further negotiations took place between Mr Frada, representing himself and Frada Nominees, and Koala Wine, through its solicitors. Those negotiations were unsuccessful. Ms Goddard on behalf of Koala Wine has submitted that the adjournment application should not be granted. She points out, with considerable force, that Mr Frada at all times was well aware that, if he did not meet the requirements imposed by his solicitors for the payment of fees, neither he nor Frada Nominees would be represented at the hearing. She correctly submits that Mr Frada engaged in negotiations, knowing full well that, if they failed, he did not have any arrangements in place for legal representation at the hearing. I leave to one side the question of whether SGP or Mellor Olson ought to have informed the Court as to the position earlier than late on the last working day before the hearing. If there were prejudice occasioned to Koala Wine that could not be met by an order for costs, I would not be prepared to grant the adjournment application. However, Ms Goddard very fairly conceded that there was no special urgency about the hearing. Accordingly, if Koala Wine received the benefit of a costs order, particularly one for indemnity costs, she was not able to suggest that Koala Wine would experience any irremediable prejudice, although of course it would suffer considerable inconvenience by reason of any adjournment. I should say that to adjourn these proceedings at such a late stage causes very considerable inconvenience to the Court. The case has been set down, on the basis of estimates provided by each side, for four hearing days. It is likely to prove difficult, if not impossible, to utilise the days set aside for other cases. Having regard to Mr Frada's knowledge of the position, there is a strong case, even in the absence of irremediable prejudice to Koala Wine, for requiring the case to proceed. Somewhat reluctantly, however, I have concluded that the appropriate course is to permit the adjournment, since to force the respondents on without legal representation might result in injustice, albeit an injustice almost entirely self-inflicted. In my view, however, any adjournment should be granted only on the basis that the respondents be ordered to pay Koala Wine's costs thrown away on an indemnity basis. The respondents, as between themselves and Koala Wine, must bear full responsibility for the adjournment. Koala Wine should not be out of pocket by reason of the adjournment. The powers of the Court in relation to a costs order include those specified in Federal Court Rules ("FCR"), O 62 r 3. FCR, O 62 r3 provides, insofar as relevant, as follows: "(2) Where the Court makes an order in any proceeding for the payment of costs the Court may require that the costs be paid forthwith notwithstanding that the proceeding is not concluded. (3) An order for costs of an interlocutory proceeding shall not, unless the Court otherwise orders, entitle a party to have a bill of costs taxed until the principal proceeding in which the interlocutory order was made is concluded or further order." I think, in the circumstances of the present case, an order should be made entitling Koala Wine to have its order for indemnity costs taxed forthwith. The proceedings have been adjourned without any fault on the part of Koala Wine. It would be unfair if Koala Wine, having prepared for the hearing in a timely fashion, were to be deprived of its costs (being costs to which it is entitled in any event) for a period of time notwithstanding that it cannot be held responsible for any portion of that delay. Moreover, for much the same reason, I think that the Court should make an order that the costs be paid forthwith, following their taxation, notwithstanding that the proceeding has not yet concluded. In the course of hearing the adjournment application, I expressed the view that I should hear from the respondents' solicitors. I expressed that view because, on the evidence before me, there may be a case that the respondents' solicitors, or their Sydney agents, should be ordered to pay the indemnity costs to Koala Wine. At this stage, of course, I am making no judgment about whether any such order should be made or, indeed, whether there has been any default on the part of the solicitors. I shall provide an opportunity for them to be heard on the question before proceeding any further. I certify that this and the preceding five (5) pages are a true copy of the Reasons for Judgment herein of the Honourable Justice Sackville