FEDERAL COURT OF AUSTRALIA Lamb v Hog's Breath Company Pty Ltd (No 4) [2007] FCA 1029 PRACTICE AND PROCEDURE – security for costs – natural person applicant outside jurisdiction – security for costs in favour of particular respondent – security already ordered in relation to other respondents – substantial areas of common interest between respondents – amount of security fixed having regard to opportunities to avoid duplication of legal work between respondents JOHN CHARLES LAMB v HOG'S BREATH COMPANY PTY LTD ACN 011 054 970, HOG'S BREATH CAFE (AUSTRALIA) PTY LTD ACN 071 132 655, HB INVESTMENTS PTY LIMITED ACN 060 678 328, HOG'S BREATH CLOTHING CO PTY LTD ACN 060 678 355 AND DONALD RICHARD ALGIE WAD 300 OF 2006 FRENCH J 6 JULY 2007 PERTH IN THE FEDERAL COURT OF AUSTRALIA WESTERN AUSTRALIA DISTRICT REGISTRY WAD 300 OF 2006 BETWEEN: JOHN CHARLES LAMB Applicant AND: HOG'S BREATH COMPANY PTY LTD ACN 011 054 970 First Respondent HOG'S BREATH CAFE (AUSTRALIA) PTY LTD ACN 071 132 655 Second Respondent HB INVESTMENTS PTY LIMITED ACN 060 678 328 Third Respondent HOG'S BREATH CLOTHING CO PTY LTD ACN 060 678 355 Fourth Respondent DONALD RICHARD ALGIE Fifth Respondent JUDGE: FRENCH J DATE OF ORDER: 6 JULY 2007 WHERE MADE: PERTH THE COURT ORDERS THAT: 1. The applicant provide security for the second respondent's costs in the proceeding up to but not including the first day of trial in the amount of $30,000 to be provided by way of payment into Court or bank guarantee in a form acceptable to the Registrar. 2. The applicant is to provide the security on or before 6 August 2007. 3. If the security is not provided by 6 August 2007, the action will thereafter be stayed as against the second respondent. 4. There is liberty to apply for further security in the event of the matter proceeding to trial or in the event of changed circumstances justifying an order. 5. The costs of the motion in relation to the application for security are in the cause Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. IN THE FEDERAL COURT OF AUSTRALIA WESTERN AUSTRALIA DISTRICT REGISTRY WAD 300 OF 2006 BETWEEN: JOHN CHARLES LAMB Applicant AND: HOG'S BREATH COMPANY PTY LTD ACN 011 054 970 First Respondent HOG'S BREATH CAFE (AUSTRALIA) PTY LTD ACN 071 132 655 Second Respondent HB INVESTMENTS PTY LIMITED ACN 060 678 328 Third Respondent HOG'S BREATH CLOTHING CO PTY LTD ACN 060 678 355 Fourth Respondent DONALD RICHARD ALGIE Fifth Respondent JUDGE: FRENCH J DATE: 6 JULY 2007 PLACE: PERTH REASONS FOR JUDGMENT ON SECOND RESPONDENT'S MOTION FOR SECURITY FOR COSTS 1 By a motion filed on 21 June 2007 the second respondent, Hog's Breath Café (Australia) Pty Ltd seeks an order that the applicant provide security for its costs of the proceedings up to and including the first day of trial in the amount of $60,000 or such other amount as the Court deems fit. The first, third, fourth and fifth respondents have common representation. The second respondent is separately represented. 2 On 30 January 2007 I made an order that the applicant provide security for the costs of the first, third, fourth and fifth respondents. 3 No application was made by the second respondent for security for costs at the time that the other respondents made their application. The reason for this appears to emerge from a letter dated 13 November 2006 from the solicitors for the second respondent to the applicant's solicitors. It is apparent from that letter that the second respondent regarded its active involvement in the litigation as a respondent as unnecessary. The second respondent, it was said, had no knowledge of the factual basis of the applicant's claims regarding the origin of the disputed trade marks. If the applicant were successful in obtaining an injunction to restrain the second respondent from using the trade marks, the second respondent would look to the first respondent for indemnification in relation to any loss arising out of those orders. It was said in the letter: We refer to order 6 rule 6 of the Federal Court rules in relation to inconvenient joinder. On the basis that our client will abide by any order the Court makes, we invite you to consider your respective clients' responses in an application to be made by HBCA, pursuant to order 6 rule 6, for an order that the proceedings be stayed against it or alternatively, an order excusing HBCA from participating in the litigation. Notwithstanding that position the second respondent, at the directions hearing on 26 February 2007 foreshadowed an application for security for costs. On that date however the proceedings were stayed on account of the applicant's failure to comply with the order for security in relation to the other respondents which had been made on 30 January 2007. 4 In the event, the security order in relation to the other respondents was not complied with until shortly after 10 April 2007. On that date the applicant filed a substituted statement of claim. At a directions hearing on 11 April 2007 orders were made adjourning the directions hearing to 24 April 2007 to allow programming directions to be considered and discussed by the parties. An extension of time for the filing of the substituted statement of claim was allowed retrospectively. 5 At the directions hearing on 24 April 2007 orders were made including an order that the second respondent file and serve any motion for security for costs by 29 May 2007 in order to enable the parties to confer with respect to the question of security in the meantime. 6 Communications and correspondence ensued. On 29 May 2007 the applicant's solicitors proposed to the second respondent's solicitors that the time for the second respondent to file its motion for security for costs be extended to allow additional time to confer. This was done without reference to the Court. As I noted at the directions hearing on 22 June 2007, it is not for the parties by agreement to set aside the orders of the Court. If an extension of time is desired for compliance with a direction of the Court, then that can be done by application or by the filing of a consent order subject to the approval of the Court. The motion for security was ultimately filed on 21 June 2007. 7 The second respondent's solicitor relies upon the affidavit of Michael Anthony Graham sworn 12 January 2007 setting out an estimate of costs likely to be incurred by the other respondents in the proceedings. The second respondent's solicitor, Mr Hocking, said that he regarded this also as an accurate estimate of the costs likely to be incurred by the second respondent. Since the filing of that affidavit the applicant, as noted, has filed a substantial new statement of claim. In Mr Hocking's opinion the allegations made in the new statement of claim have substantially increased the costs that the second respondent is likely to incur in defending the proceedings. 8 In my opinion the second respondent is entitled to an order for security for costs on the same principles as those underpinning the order for security for costs made in favour of the other respondents. However I am not satisfied that the second respondent is likely to or would be justified in incurring the same level of costs as the other respondents. There is, in my opinion, substantial room for cooperation to ensure that in areas of their common interest work is not duplicated. Absent any detailed justification for making an order for security for costs at the same level as that made in favour of the other respondents, I propose to order that the applicant provide security for the costs of the second respondent up to the first day of trial in half the amount ordered in relation to the other respondents. That is to say the applicant will be required to provide security for the costs of the second respondent in the sum of $30,000. Having regard to the applicant's offer of $20,000 and the second respondent's claim for $60,000, the costs of the motion will be in the cause. I certify that the preceding eight (8) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice French. Associate: Dated: 6 July 2007 Counsel for the Applicant: Mr JD MacLaurin Solicitor for the Applicant: Mallon & Co Lawyers Pty Ltd Counsel for the First, Third, Fourth and Fifth Respondents: Mr A Crowe SC and Mr I Erskine Solicitor for the First, Third, Fourth and Fifth Respondents: Tucker & Cowen Counsel for the Second Respondent: Ms M Sedic Solicitor for the Second Respondent: Lavan Legal Date of Hearing: 22 June 2007 Date of Judgment: 6 July 2007