FEDERAL COURT OF AUSTRALIA Don Guan Kam Tai Co Ltd v Chun Shing Trading Co Pty Ltd [2009] FCA 225 Federal Court of Australia Act 1976 (Cth) s 56 Federal Court Rules O 28 DONG GUAN KAM TAI CO LTD v CHUN SHING TRADING CO PTY LTD QUD 199 of 2008 BUCHANAN J 11 MARCH 2009 SYDNEY IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY QUD 199 of 2008 BETWEEN: DONG GUAN KAM TAI CO LTD Applicant AND: CHUN SHING TRADING CO PTY LTD Respondent JUDGE: BUCHANAN J DATE OF ORDER: 11 MARCH 2009 WHERE MADE: SYDNEY THE COURT ORDERS THAT: 1. The applicant provide security for the respondent's costs of the suit. 2. The amount of the security for costs to be provided be $60,000 inclusive of GST until further order. 3. The said $60,000 security for costs be provided by the applicant by, at the applicant's election: (a) Bank guarantee in a form acceptable to the Registrar or a Deputy Registrar, such bank guarantee to be deposited in the Registry; or (b) Payment of the said sum into Court; or (c) Deposit of the said sum into an interest bearing deposit or controlled monies account, in the joint names of Heidtman & Co Lawyers and Davellin Lawyers ("the Account"), there to be held until further order. 4. The said security for $60,000 be provided within twenty-one (21) days of the date of these orders. 5. The proceedings be stayed until the said security is provided. 6. All interest earned on the fund in the Account is to accumulate to the Account. 7. All fees, costs, taxes and charges associated with the opening and operating of the Account are to be paid in the first instance from interest earned on the deposited funds and otherwise by the applicant if and when due. 8. Costs of the motion be costs in the cause. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. The text of entered orders can be located using eSearch on the Court's website. IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY QUD 199 of 2008 BETWEEN: DONG GUAN KAM TAI CO LTD Applicant AND: CHUN SHING TRADING CO PTY LTD Respondent JUDGE: BUCHANAN J DATE: 11 MARCH 2009 PLACE: SYDNEY REASONS FOR JUDGMENT BUCHANAN J: 1 These proceedings involve an application filed on 10 July 2008 for an order pursuant to s 88 of the Trade Marks Act 1995 (Cth) seeking rectification of the Register of Trade Marks by cancelling Australian trade mark number 788457 for "Silang" in class 30. The application is now supported by an amended statement of claim filed on 27 August 2008. The amended statement of claim says that the applicant is a company incorporated in the People's Republic of China, and the respondent is an Australian company. It is accepted that the applicant has no assets in Australia. 2 The respondent has brought an application for security for costs. The applicant accepts that in the circumstances it would be appropriate that some order for security for costs be made. The parties are substantially divided on the question of the amount which should be ordered. 3 The respondent read and relied upon affidavits sworn by Daniel Sheen, the former solicitor acting for the respondent, filed on 17 September 2008, and Alan McMurran, a solicitor now acting for the respondent, filed on 6 November 2008. The applicant relied on two affidavits sworn by Chun-Hong David Lin, a solicitor acting for the applicant, filed respectively on 24 November 2008 and 10 March 2009. 4 Necessarily, any estimate of an appropriate amount to provide for security of costs must be approached on a fairly broad basis, drawing such assistance as is available from the evidence provided by the parties. Even though the pleadings have closed the estimate necessarily occurs, at least in a case such as the present, before the hearing and before the respondent's evidence has been prepared, and without having available all the material which will ultimately be necessary to assess what will be reasonable costs in all the circumstances. The approach which the Court takes is to provide a fund from which the costs of the respondent may be drawn if the applicant fails, but without setting out to provide an indemnity for the respondent in relation to such costs. 5 I will refer in a little greater detail to the evidence which was provided of the estimates made by the three solicitors whose affidavits were read in the proceedings, but two broad comparisons will suffice at the moment to indicate the parameters of the debate. Mr Sheen estimated that the hearing would take seven days, and that costs would be incurred of an amount which, if 70 per cent were recovered, would result in a figure of $98,000. Mr Lin made an estimate based upon an assumption that the case would take four days. On his estimate, 70 per cent of the final figure would be $49,000, 50 per cent of that estimated by Mr Sheen for a case which would take a little more than 50 per cent of the time to hear. The other comparison which might be made at the outset is between the figure estimated by Mr McMurran, which was for total costs for a four day trial of $175,200, against the estimate given by Mr Lin of total costs for a four day trial of about $70,000. All these figures were exclusive of GST. 6 Mr Smallbone, who has appeared for the respondent to seek an order for security for costs of $100,000, has urged me not to be too selective about choosing features from the respective affidavits. As I understood his submission, he invited me to conclude that Mr Sheen's estimate of the length of the trial was the more reliable. Proceeding in that way would certainly yield, on Mr Sheen's evidence, a figure approaching $100,000. It is not entirely clear to me how Mr McMurran's evidence is called in aid in the exercise but, for present purposes, that may be put to one side. 7 Some of the individual features which do arise from the three affidavits might be summarised in the following way: Mr Sheen indicated that in his view there would be eight witnesses for the respondent; the case would take seven days to hear and four days to prepare. He estimated total costs at $140,000 plus GST; solicitors' interlocutory costs of $24,000; counsel's interlocutory fees of $30,000; solicitors' main hearing costs of $35,200; and counsel's main hearing costs of $38,500. Although these amounts total $127,000 Mr Sheen estimated a total cost of $140,000 and, at a recovery rate of 70 per cent, a resulting figure of $98,000. As I earlier indicated, this corresponds reasonably closely in an overall sense to Mr Lin's estimates. 8 The respondent's new solicitor, Mr McMurran, estimated that a hearing would require a minimum of three to four days. He did not indicate how many witnesses would be called. He estimated solicitors' interlocutory costs of $10,000 to $15,000, main hearing preparation costs of $35,000 to $45,000; and main hearing attendance costs of $20,000. These were based on partner rates of $5000 per day. The total solicitors' costs were $75,000; he estimated counsel's costs of $100,200, making a total of $175,200 for a four day hearing, compared with Mr Sheen's earlier estimate of $140,000 for a seven day hearing. There was some suggestion that the same counsel would be involved. Mr McMurran's estimates produced the odd result that counsel were estimated by Mr Sheen as likely to charge $68,500 for a seven day hearing and by Mr McMurran to charge $100,200 for a four day hearing. 9 Mr Lin estimated that the hearing would take three to four days and would conclude within that time. He suggested that Mr McMurran's estimates were excessive. Mr Lin offered estimates of reasonable solicitors' costs of about $34,000 and counsel's costs of about $35,000, which he rounded up to a total of $70,000. He accepted a recovery rate of 70 per cent and suggested, therefore, that appropriate security for costs was $49,000 plus GST. 10 I do not think, in the circumstances, that I should proceed upon an assumption that the hearing will take, as Mr Sheen estimated, seven days. I think the better course is to assume for the moment that it will take four days. That seems to me to accord with the evidence of both Mr McMurran and Mr Lin. On the other hand, I think Mr Sheen's approach to the quantification of costs, certainly overall, is a more satisfactory basis upon which to proceed at the moment than Mr McMurran's. 11 It appears to me that the estimates made by Mr Sheen and Mr Lin, once allowance is made for their differing estimates of the length of the hearing, are broadly comparable. There remains the ability to make a further application to the Court under s 56 of the Federal Court of Australia Act 1976 (Cth) and O 28 of the Federal Court Rules in the event that a respectable basis for doing so presents itself in the future. 12 In the circumstances, I propose to proceed upon an estimate that the case will take four days to conclude and that, broadly speaking, the figure resulting from Mr Sheen's calculations should be accommodated to that estimate. The result is that Mr Lin's estimate requires some small adjustment. The final figure makes no pretension at precision beyond the explanation that I have given. In all the circumstances, it appears to me that it would be appropriate at the moment to get security for costs in a sum of the order of $55,000, to which GST will need to be added. An appropriate total figure, inclusive of GST, is $60,000. 13 Otherwise, it appears to be common ground that orders should be made in the form of the draft orders which were handed to the court by Mr Smallbone today. Those orders will be amended so as to include a figure of $60,000 in the orders which, in the draft, are orders 2, 4 and 5. Orders 3 and 9 will be omitted, and the numbering of other orders will be adjusted accordingly. 14 It seems to me that, on the evidence which was relied upon, there was a respectable argument on both sides for the estimates which were relied upon. No party has had complete success in the debate. In my view, the appropriate order is that the costs of the present motion be costs in the cause. I certify that the preceding fourteen (14) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Buchanan. Associate: Dated: 26 March 2009 Counsel for the Applicant: Mr C Jackson Solicitor for the Applicant: Davellin Lawyers Counsel for the Respondent: Mr D A Smallbone Solicitor for the Respondent: Heidtman & Co Date of Hearing: 11 March 2009 Date of Judgment: 11 March 2009