Federal Court of Australia Southern Cross Mining Services Pty Ltd v Mickala Mining Maintenance Pty Ltd (No 2) [2020] FCA 1159 File number(s): QUD 470 of 2019 Judgment of: GREENWOOD J Date of judgment: 11 August 2020 Catchwords: INTELLECTUAL PROPERTY – consideration of the disposition of the costs arising out of the determination of an interlocutory application for leave to amend a statement of cross-claim Division: General Division Registry: Queensland National Practice Area: Intellectual Property Sub-area: Patents and associated Statutes Number of paragraphs: 12 Date of last submission/s: 3 August 2020 Date of hearing: On the papers Counsel for the Applicant: Mr D Logan QC Solicitor for the Applicant: Redchip Lawyers Counsel for the Respondents: Mr E Heerey QC with Mr B McEniery Solicitor for the Respondents: Thomson Geer Lawyers ORDERS QUD 470 of 2019 BETWEEN: SOUTHERN CROSS MINING SERVICES PTY LTD (ACN 107 646 917) Applicant AND: MICKALA MINING MAINTENANCE PTY LTD (ACN 128 020 342) First Respondent DAMIEN PAUL ENGLEBRECHT Second Respondent order made by: GREENWOOD J DATE OF ORDER: 11 AUGUST 2020 THE COURT ORDERS THAT: 1. The costs incurred by Southern Cross Mining Services Pty Ltd of and incidental to the interlocutory application by Mickala Mining Maintenance Pty Ltd ("Mickala") for leave to amend its statement of cross-claim be paid by Mickala and the second respondent, Damien Paul Englebrecht. 2. 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, these orders and the reasons for judgment in support of these orders are made and published from Chambers. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011. REASONS FOR JUDGMENT GREENWOOD J: 1 These proceedings are concerned with the disposition of the costs of and incidental to an application by Mickala Mining Maintenance Pty Ltd ("Mickala") for leave to amend its statement of cross-claim in support of its notice of cross-claim in the principal proceeding. In that application, Mickala was unsuccessful in obtaining the leave it sought on the contested matters. Leave was granted in respect of some matters which were not in contest ultimately in the application. 2 These reasons ought to be read together with the reasons for judgment in Southern Cross Mining Services Pty Ltd v Mickala Mining Maintenance Pty Ltd [2020] FCA 1064. I do not propose to repeat in these reasons contextual matters relating to the structure of the principal proceedings, as those matters are comprehensively addressed in the primary judgment. However, the following matters at [2] to [5] of the primary judgment ought to be noted: 2 In the principal proceeding, the applicant, Southern Cross Mining Pty Ltd ("Southern Cross"), seeks relief in respect of contended infringements of Australian Innovation Patent No. 20130095 (the "095 Patent") of which it is the patentee, against Mickala and Mr Damien Englebrecht. Mr Englebrecht is said by Southern Cross in its statement of claim to be Mickala's sole shareholder, sole director, secretary and guiding mind. 3 As to both respondents, Southern Cross seeks a declaration that the respondents have infringed each of the five claims defining the invention the subject of the 095 Patent. I will return to those claims shortly. 4 Southern Cross also seeks a permanent injunction restraining the respondents from infringing each of the claims by engaging certain acts without its consent or licence; damages pursuant to s 122(1) of the Patents Act 1990 (Cth) (the "Act"); an inquiry as to the loss and damage it claims to have suffered by reason of the infringing conduct together with an order that the respondents pay the amount found due upon such an inquiry; additional damages pursuant to s 122(1A) of the Act; in the alternative to the claims under s 122(1) and (1A), the taking of an account; and other relief. 5 The 095 Patent is a patent for an invention the title of which is "Lighting Tower". It is uncontroversial that the 095 Patent was applied for on 30 January 2013; claims an earliest priority date of 30 January 2013; was granted to the cross-respondent on 21 February 2013; was certified on 28 March 2014; and has an expiry date of 30 January 2021. 3 The respondents to the principal proceeding, Mickala and Mr Damien Englebrecht, have put on a defence to the applicant's statement of claim in which they deny infringement. In addition, Mickala has filed a notice of cross-claim by which it seeks an order for revocation of the 095 Patent in reliance on s 138(3)(b) of the Patents Act 1990 (Cth) (the "Act"). The elements of the cross-claim are described in the primary judgment. 4 The applicant in the principal proceeding, Southern Cross Mining Services Pty Ltd ("Southern Cross"), was the successful party on the interlocutory application. It is entitled to an order for the payment of its costs incurred of and incidental to the interlocutory application. Two questions arise for present purposes. The first is whether Southern Cross ought to have its costs against simply Mickala as the cross-claimant and the party seeking leave to amend its statement of cross-claim, or whether it should have its costs against Mickala and Mr Englebrecht. The second question is whether it should be given liberty to enforce an order for costs now rather than in the light of the ultimate resolution of the proceedings overall. 5 In the statement of claim by Southern Cross, it pleads this at para 3: 3. The Second Respondent [Mr Englebrecht] is, and was at all times material to this proceeding: (a) the sole director, and secretary, of [Mickala]; (b) the sole shareholder of [Mickala]; (c) involved in the day-to-day management of the business of [Mickala]; (d) in effective control of the conduct and business of [Mickala]; and (e) the guiding mind of [Mickala]. 6 By the defence filed on 15 October 2019, the respondents deny para 3 of the statement of claim of Southern Cross. In the submissions on the question of costs in these proceedings, Mickala accepts that Mr Englebrecht is Mickala's sole director and shareholder. It accepts that "he has thereby played an active part in the conduct of the litigation by virtue of his control of the company" and it accepts that "he has a real interest in the litigation, both as Mickala's sole director and shareholder and because the Applicant's action [the claims of Southern Cross] against him falls away if Mickala's cross-claim succeeds". However, Mickala contends that these factors alone are not matters that warrant a costs order in respect of the interlocutory application being made against him. 7 It is true that Mr Englebrecht is not a cross-claimant and he is not therefore a party to the relief claimed by way of cross-claim against the cross-respondent, which is Southern Cross. However, it is artificial to regard Mr Englebrecht as a true "third party" against whom a costs order is sought, in circumstances where at least at the level of the concessions, there is a close relationship between Mickala and Mr Englebrecht. However, the position is a little closer even than that. By the defence of the respondents jointly, the respondents deny para 6 of the statement of claim of Southern Cross. By para 6 of the statement of claim, Southern Cross says that the 095 Patent is, and was at all times material to this proceeding, subsisting and of full force and effect. By para 29 of the statement of claim, Southern Cross asserts that (a) the 095 Patent was held by it; (b) that it is a valid and subsisting patent; (c) that Mickala did not hold any licence or authority to exploit in Australia the invention the subject of the 095 Patent; (d) that Southern Cross sold and hired in Australia an LED lighting tower product manufactured in accordance with the 095 Patent; (e) that Mickala offered and sold, or offered and hired, LED lighting tower products in competition with Southern Cross; and (f) that the Mickala products infringed the claims of the 095 Patent. The respondents jointly deny para 29(a)-(d) and (f), and they do so on the footing that the 095 Patent is not and has never been valid for the reasons pleaded at para 6 which engages a denial of para 6 of the Southern Cross statement of claim: para 29(a)(ii) of the defence of the respondents to the principal proceeding. 8 By para 30 of the statement of claim, Southern Cross pleads that having regard to the relevant paragraphs of its pleading, the respondents have done, and will continue to do (unless restrained), the infringing acts pleaded in the statement of claim and do so in flagrant disregard of the rights in relation to the 095 Patent; knowing or having reason to know of the 095 Patent; knowing that Mickala had no authority or licence to exploit the invention; and having no reasonable basis for believing that Mickala's conduct did not constitute infringement of the 095 Patent. By para 31, Southern Cross pleads that by reason of particular matters pleaded in the statement of claim, the conduct of Mickala has been, and will be, such as to attract the operation of s 122(1A) of the Act. 9 In answer to the claims made in paras 30 and 31, both respondents deny those matters having regard to the matters pleaded by them at para 29 of the defence. That paragraph again engages the notion that the 095 Patent is not, and has never been, valid for the reasons they plead. 10 It can be seen therefore that there is an important degree of correspondence between the claim made by Mickala and the defence by both defendants to the claims of Southern Cross having regard to the merits of those aspects of the cross-claim. 11 I am satisfied that it is appropriate to order that the costs of Southern Cross of and incidental to Mickala's interlocutory application for leave to amend its statement of cross-claim be paid by Mickala and Mr Englebrecht. 12 I am not satisfied that leave ought to be given to enforce the costs order now. I certify that the preceding twelve (12) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Greenwood. Associate: Dated: 11 August 2020