Globaltech Corporation Pty Ltd v Reflex Instruments Asia Pacific Pty Ltd

1. Enforcement of the Registrar's order 2 of 17 March 2023 be stayed until further order.
2. Subject to the outcome of the appeal against Rofe J's orders of 28 October 2022 in Proceeding NSD 1040 of 2019 and the assessment of costs by the Registrar of costs payable to the respondent by the applicant pursuant to those orders, such costs be set-off against any amount payable by the respondent to the applicant pursuant to the Registrar's order 2 of 17 March 2023.
3. Liberty to apply on 7 days' notice.
4. The applicant pay the respondent's costs of the interlocutory application. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

Background 1 Before me is an interlocutory application filed by the respondent in the proceeding ("Reflex") seeking a stay of an order for the payment of costs (order 2) made by a Registrar on 17 March 2023. That order was made after the Registrar assessed costs awarded to the applicant ("Globaltech") pursuant to costs orders made by the trial judge (Jagot J) on 12 July 2022 (order 2) and 26 July 2022 (order 9) in a patent proceeding brought by Globaltech against Reflex. The Registrar fixed the costs payable pursuant to her Honour's orders in the amount of $835,705. The final orders made by the trial judge were the subject of an appeal brought by Reflex. That appeal (Proceeding NSD 618 of 2022) was heard by a Full Court in February of this year with judgment reserved. The orders made by her Honour on 26 July 2022 included an order (order 11) granting Reflex liberty to apply for an order "to set-off its costs". 2 The first of the orders sought by Reflex in the present application is to stay the costs order of 17 March 2023 until the determination of the appeal in Proceeding NSD 618 of 2022 or further order. The second order sought by Reflex is an order that it: is entitled to set off the whole amount of its liability to [Globaltech] under order 9 of the orders dated 26 July 2022 and order 2 of the orders dated 17 March 2023 against Globaltech's liability to Reflex: (a) under orders 14 and 15(d) of the orders dated 28 October 2022 in Federal Court Proceeding NSD 1040 of 2019; and/or (b) any order for a judgment sum made in Federal Court Proceeding NSD 1089 of 2016. 3 The orders referred to in (a) are orders made on 28 October 2022 (orders 14 and 15(d)) by Rofe J as trial judge in a patent infringement proceeding between Australian Mud Company Pty Ltd ("AMC") and Reflex, as applicants, and Globaltech, Globaltech Pty Ltd, Boart Longyear Limited and Boart Longyear Australia Pty Ltd ("BLAPL"), as first to fourth respondents, respectively. Rofe J made an order (order 14) requiring the respondents to pay the applicants' costs of and incidental to the applicants' claim in the proceeding in respect of liability for infringement. BLAPL, the sole cross-claimant, was ordered (order 8) to pay the applicants' costs of the cross-claim seeking revocation of the patent. 4 The proceeding referred to in (b) is a proceeding commenced by Reflex and AMC as applicants against Globaltech and Globaltech Pty Ltd as respondents for patent infringement which was heard by Besanko J (Proceeding NSD 1089 of 2016). On 14 December 2018 his Honour made final orders including an order (order 9) that the respondents pay the applicants' costs of the proceeding to date. Those costs were subsequently assessed and paid. His Honour also ordered (order 8) that there be an enquiry as to damages or profits in respect of the respondents' infringements. An appeal brought against his Honour's orders by Reflex and AMC was dismissed. 5 The enquiry into the applicants' entitlement to pecuniary relief is fixed for hearing before Besanko J in June this year. The evidence indicates that the amount to which the applicants may ultimately be entitled to receive by way of pecuniary award is in the vicinity of $7.0 million (including interest). It also seems likely, at least on the evidence before me, that Globaltech will also be liable for a significant amount in costs incurred by Reflex and AMC of and incidental to the determination of their entitlement to the pecuniary award. Further costs incurred by Reflex and AMC in connection with their claim for pecuniary relief are estimated by their solicitor to already exceed $1.0 million. 6 There is evidence before me indicating that the costs awarded to the applicants in the proceeding heard by Rofe J are in the vicinity of $2.0 million. The assessment of those costs is presently being undertaken by a Registrar. The evidence indicates that the costs in that matter are likely to be assessed and fixed by the Registrar during the course of the next few months. 7 Globaltech and the other respondents in the proceeding heard by Rofe J brought an appeal against her Honour's orders. That appeal is listed for hearing on 22 and 23 May 2023. No order has been made staying the costs orders made by her Honour. 8 There is unchallenged evidence to suggest that, following delivery of judgment by Rofe J, a US based Boart Longyear entity named Veracio Ltd ("Veracio") acquired more than half the issued share capital in Globaltech from Votraint No 1609 Pty Limited ("Votraint"). Votraint and Veracio are wholly owned subsidiaries of Boart Longyear Group Ltd. 9 On 28 March 2023 Reflex and AMC filed an interlocutory application seeking a freezing order against Globaltech and Globaltech Pty Ltd. That application was heard by Besanko J on 5 April 2023 who reserved his decision. It is apparent from correspondence exchanged between the parties in connection with the present application that Globaltech did not adduce any evidence as to its financial circumstances in the application heard by Besanko J. During the course of that hearing there were statements by Senior Counsel for those companies which appear to accept that they are, or at least may be, impecunious. The evidence of those statements has not been addressed or qualified by any evidence called by Globaltech in this proceeding. Globaltech did not call any evidence on the present application as to its financial circumstances or otherwise. 10 I was not a member of the Full Court that heard the appeal from Jagot J and the parties have not addressed me on the merits of Reflex's appeal. That said, it was not suggested by Globaltech that the appeal brought against her Honour's judgment was not commenced in good faith and on reasonable grounds. In the absence of any suggestion to the contrary, I propose to deal with the application for a stay of the costs orders made in this proceeding on that basis.