FEDERAL COURT OF AUSTRALIA Fieldturf Inc v Balsam Pacific Pty Ltd (No. 2) [2004] FCA 622 COSTS – action concluded – security for costs pending taxation – principles to be applied Imperial Bank of China, India and Japan v Bank of Hindustan, China and Japan [1866] 1 L.R. Ch. App 437 applied The Dominion Brewery Limited v Foster (1897) 77 LT 507 applied FIELDTURF INC vBALSAM PACIFIC PTY LIMITED, DARREN JAMES GIRARD, A.J. & E.A. BERRY PTY LTD, ALAN JOHN BERRY and FATHER ROBERT WOOD as President of the Association of Canonical Administrators for St Monica's College V 905 of 2002 FINKELSTEIN J 18 MAY 2004 MELBOURNE IN THE FEDERAL COURT OF AUSTRALIA VICTORIA DISTRICT REGISTRY V 905 of 2002 BETWEEN: FIELDTURF INC Applicant AND: BALSAM PACIFIC PTY LIMITED, DARREN JAMES GIRARD, A.J. & E.A. BERRY PTY LTD, ALAN JOHN BERRY and FATHER ROBERT WOOD as President of the Association of Canonical Administrators for St Monica's College Respondents JUDGE: FINKELSTEIN J DATE OF ORDER: 18 MAY 2004 WHERE MADE: MELBOURNE THE COURT ORDERS THAT by 4.00pm on 15 June 2004 the applicant shall pay into Court the amount of $100,000 to the credit of this action or shall provide a bank guarantee for that amount drawn on an Australian trading bank, and in a form acceptable to the Registrar, to answer the third and fourth respondents' costs of this action. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. IN THE FEDERAL COURT OF AUSTRALIA VICTORIA DISTRICT REGISTRY V 905 of 2002 BETWEEN: FIELDTURF INC Applicant AND: BALSAM PACIFIC PTY LIMITED, DARREN JAMES GIRARD, A.J. & E.A. BERRY PTY LTD, ALAN JOHN BERRY and FATHER ROBERT WOOD as President of the Association of Canonical Administrators for St Monica's College Respondents JUDGE: FINKELSTEIN J DATE: 18 MAY 2004 PLACE: MELBOURNE RULING 1 This action has settled. Consent orders giving effect to the settlement have been made. The effect of the orders is (1) that the applicant gives up its claim for patent infringement and (2) that the patent upon which it based its claim is to be revoked. There was also an order that the applicant pay the third and fourth respondents' taxed costs. These costs have yet to be taxed. There is an itemised bill which only takes matters up to 31 March 2004. A further bill is being prepared. Then there will be a taxation. In the meantime the third and fourth respondents seek an order that the applicant provide security for their costs. The applicant does not object to providing security, even at this late stage. The only issue in dispute is the quantum. 2 The principle I will apply is that security should be fixed having regard to the probable costs which the third and fourth respondents have been put to, so far as those costs can be ascertained. I take this principle from cases such as Imperial Bank of China, India and Japan v Bank of Hindustan, China and Japan [1866] 1 L.R. Ch. App 437, 438 and The Dominion Brewery Limited v Foster (1897) 77 LT 507, 508. 3 The bill of costs to 31 March 2004 claims $87,729.70 for party/party costs. The third and fourth respondents' solicitor, Mr Skeels, estimates that his clients' total legal costs for the proceeding "will well exceed $140,000 calculated on a party/party basis." He gives some breakdown of the additional costs, but not in any detail. 4 The applicant asked a cost consultant to look at these estimates. The cost consultant examined the bill of costs and said that some of the claimed fees are excessive, and that others need further clarification before he can advise whether they are allowable. Unfortunately the cost consultant did not provide an opinion as to what he believes the fair and reasonable costs (calculated on a party/party basis) incurred by the third and fourth respondents are likely to be. On the other hand, the cost consultant considered Mr Skeels' statement that his clients' costs will "well exceed $140,000" and suggests that the party/party costs will therefore be somewhere between $75,000 to $90,000. The cost consultant then commented that if these respondents' costs are in the order of $150,000 "… then one could expect to recover party-party costs … of somewhere in the vicinity of 50% to 60% of that amount ...". The difficulty with this suggestion, however, is that it overlooks the fact that Mr Skeels estimated the costs of $140,000 on a party/party basis and not on a solicitor/client basis, as assumed by the consultant. 5 It is rather difficult to fix an amount for security given the state of the evidence. All in all, I am of opinion that security in the sum of $100,000 is appropriate. It is unlikely that the respondents' party/party costs will be less than this amount. It is possible, perhaps more possible than not, that the costs will be more, but how much more I cannot say and am not prepared to guess. 6 The third and fourth respondents also seek certification of the rate of fees for counsel. They do so because the usual rate allowed by the taxing registrar is less than the rate charged by their counsel and they say, that in the circumstances of this case, the actual rate charged should be allowed. 7 The main ground upon which the third and fourth respondents seek certification is that they were required to brief a senior barrister experienced in patent litigation in order to comply with the very tight timetable I had imposed to get the case ready for trial. They also say that the difficulty of the issues in the case justified them briefing experienced and specialised counsel. 8 I do not have a view one way or the other as regards whether these points justify the order which the third and fourth respondents seek. I do, however, have a firm view that I should not deal with the application. It is for the taxing registrar to decide the appropriate sum to be allowed for counsel. He is far better placed than I to form a judgment about the appropriateness of allowing a higher rate for counsel in this case. I do not know whether the taxing registrar will pay regard to the matters raised by the third and fourth respondents. Perhaps he will. Perhaps he may be persuaded by these submissions. But it is to the taxing registrar that these submissions should be directed. I certify that the preceding eight (8) numbered paragraphs are a true copy of the Ruling herein of the Honourable Justice Finkelstein. Associate: Dated: 18 May 2004 Counsel for the Applicant: B Caine SC Dr L Duncan Solicitor for the Applicant: Griffith Hack Counsel for the Third and Fourth Respondents: G C McGowan Solicitor for the Third and Fourth Respondents: McNab McNab & Starke Date of filing of evidence and submissions: 21 April 2004 Date of Ruling: 18 May 2004