FEDERAL COURT OF AUSTRALIA Vuly Property Pty Ltd v Yang (No 2) [2017] FCA 592 File number(s): QUD 845 of 2016 Judge(s): GREENWOOD J Date of judgment: 17 May 2017 Date of publication of reasons: 26 May 2017 Catchwords: PRACTICE AND PROCEDURE – consideration of an application for dismissal of the proceeding – consideration of the question of costs Legislation: Federal Court of Australia Act 1976 (Cth), ss 37N, 37P Date of hearing: 17 May 2017 Date of last submissions: 17 May 2017 Registry: Queensland Division: General Division National Practice Area: Intellectual Property Sub-area: Patents and Associated Statutes Category: Catchwords Number of paragraphs: 12 Counsel for the Applicant: Mr N Ferrett Solicitor for the Applicant: Artifex Advisors Solicitor for the Respondent: Mr K Philp, Bennett Philp Lawyers ORDERS QUD 845 of 2016 BETWEEN: VULY PROPERTY PTY LTD (ACN 160 793 608) Applicant AND: WEI YANG Respondent JUDGE: GREENWOOD J DATE OF ORDER: 17 MAY 2017 THE COURT ORDERS THAT: 1. The proceeding is dismissed. 2. The applicant pay the respondent's costs of the proceeding up to and including 27 January 2017 on a party and party basis to be agreed or taxed. 3. The applicant pay the respondent's costs of the proceeding on and from 28 January 2017 on an indemnity basis. 4. Pursuant to s 23 and s 37P of the Federal Court of Australia Act 1976 (Cth), rule 1.32 and rule 1.36 of the Federal Court Rules 2011, the settled reasons for judgment in support of the orders made on 17 May 2017 are published from Chambers. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011. EX TEMPORE REASONS FOR JUDGMENT GREENWOOD J: 1 This is an application made by the respondent for an order pursuant to s 37P of the Federal Court of Australia Act 1976 (Cth) (the "Act") that the whole of the proceeding be dismissed. The second limb to the application is an application for an order that the applicant, Vuly Property Pty Ltd ("Vuly"), pay the respondent's costs of and incidental to this application and the proceeding on an indemnity basis. 2 As things transpired, the applicant in these proceedings in the original jurisdiction has filed a notice of discontinuance of the proceedings, or at least an instrument by which the applicant seeks the leave of the Court, consistent with the Federal Court Rules 2011 (Cth), to discontinue the proceedings. There is thus no contest about the proceedings being brought to an end either by reason of dismissal pursuant to the statutory powers contained in s 37P or as a function of the Court granting leave to discontinue. 3 Questions have arisen on the footing that the respondent seeks a dismissal of the proceeding largely, I perceive, on the ground that it is said that the interests of justice are best served by making an order for dismissal rather than granting leave to discontinue, although it is said that there is some forensic advantage in an order for dismissal. It seems to me perfectly plain that an order for dismissal of the proceedings does not amount to a res judicata on the cause of action or an issue estoppel on any issue in the proceeding. 4 Nevertheless, it seems to me that the instrument by which leave to discontinue is sought was filed very late in the day and came, really, on the heels of the immediacy of the application this morning, and thus I do propose to dismiss the applicant's proceeding pursuant to the provisions contained in s 37P of the Act. The question that then arises is one of costs. The respondent urges the Court to make an order that their costs be paid on an indemnity basis, and there are largely three reasons for that. 5 One is a failure on the part of the applicant to comply with orders made on 22 November 2016. Another is some laxity on the part of Vuly in the course of correspondence when the matter was in the hands of the former lawyers, and that correspondence, I infer, is said to suggest that Vuly was not being responsive to the initiatives of the respondent. Another is that the applicant has failed to comply with the further order of 28 March 2017 which required it to provide security of costs by way of a bank guarantee, or alternative mechanisms for that purpose, within one month. 6 Vuly contends that this is not an appropriate case for an order for indemnity costs because although, regrettably, there has been a failure to comply with orders, the quality of the conduct, upon analysis, probably is not such that one could say that an order out of the ordinary, for indemnity costs, ought to be made. It should be remembered, of course, that an order for costs made by any court, especially a superior court, is designed to be compensatory, not punitive, and thus the question is a restitutionary one of putting a party partly in restitution for the expenses they have incurred in being compelled to answer or defend claims of another party. 7 In this particular case an order was made on 22 November 2016 in the course of a case management hearing that the applicant file and serve evidence by 27 January 2017. No evidence was put on on that date and then, in the context of the security of costs application, no affidavit was filed by the principal of Vuly explaining circumstances directly relevant to the security of costs questions or, as might have occurred, some explanation in relation to the failure to comply with the earlier order in relation to questions of evidence in the principal proceeding. 8 It seems to me that Vuly, in the large part, has abandoned the proceeding. It chose not to file any affidavits by its principal. It chose not to put on any evidence by the due date of 27 January 2017 and it chose not to put on any explanation for the failure to comply with that order. Now, late in the day, in the face of the application made today for dismissal, Vuly has elected to discontinue or seek to discontinue the proceeding. 9 The overarching purpose of civil practice and procedure in this Court at least, and now modelled in many superior courts throughout the States, is one of the facilitation of the resolution of disputes according to law as quickly and inexpensively and efficiently as possible, and by force of s 37N of the Act, the parties to civil proceedings must conduct the proceedings in a way which is consistent with the overarching purpose. 10 There can be no doubt that Vuly has failed to conduct the proceeding in a way which is consistent with the overarching purpose. Had it intended to do so, it would have no doubt filed and served its evidence on or before 27 January 2017 or it would have proffered an explanation for the failure to do so or take that step. It seems to me that Vuly's conduct goes beyond simply not complying with orders but is consistent with Vuly not taking any real affirmative steps to progress the proceeding. 11 It seems to me that the exercise of the discretion under the Act, which is broad in relation to costs, ought to be exercised on the basis that the respondent be compensated for the costs it has incurred in the conduct of these proceedings at a level that is above the normal party/party costs but only for a part of the proceedings. It seems to me that an order which does justice in all the circumstances is that the respondent have its costs of the proceeding on the normal basis up to and including 27 January 2017 and thereafter it ought to have its costs on an indemnity basis from that point on, largely on the footing, it seems to me, that Vuly essentially has abandoned the proceeding. 12 However, of course, it should be noted that a large part of the steps beyond 27 January 2017 relate to the security of costs questions and the agitation about those questions and those matters have already been the subject of an order for costs on the usual basis, and thus the real force of any order by way of indemnity costs is simply to compensate the respondent for the difference between the indemnity costs and party/party costs in the period from 27 January 2017. I so order. I certify that the preceding twelve (12) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Greenwood. Associate: Dated: 26 May 2017