Guttershield v LBI Holdings

Civil Procedure Act 2005 LEGISLATION CITED : Patents Act 1990 (Cth) Service and Execution of Process Act 1992 (Cth) Uniform Civil Procedure Rules

CASES CITED : Guttershield Systems Australia Pty Ltd v LBI Holdings Pty Ltd [2004] NSWSC 941; (2004) 63 IPR 407 Guttershield v LBI Holdings [2009] NSWSC 735

Guttershield Systems Australia Pty Ltd - First Plaintiff/First Cross-Defendant Guttershield Pty Ltd - Second Plaintiff/Second Cross-Defendant PARTIES : LBI Holdings Pty Ltd - First Defendant/First Cross-Claimant Leafbusters Pty Ltd - Second Defendant/Second Cross-Claimant Bruce Wickett - Third Cross-Defendant

COUNSEL : G Grinter - Plaintiffs/Cross-Defendants S Reuben - Defendants/Cross-Claimants

SOLICITORS : John Brent & Co - Plaintiffs/Cross-Defendants Slater & Gordon - Defendants/Cross-Claimants

IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION EQUITY LIST

5724/02 GUTTERSHIELD SYSTEMS AUSTRALIA PTY LIMITED v LBI HOLDINGS PTY LIMITED JUDGMENT 1 CAMPBELL JA: This is an application relating to the costs of some extremely long running litigation. The general nature of the litigation is as I described it in an application earlier this year, Guttershield v LBI Holdings [2009] NSWSC 735: "2 In essence, the issue in the case concerned whether the plaintiffs had a beneficial interest in five particular Australian patents. The plaintiffs in the case are companies associated with a Mr Bruce Wickett, and I will refer to the plaintiffs and Mr Wickett collectively as "The Wickett Interests". The defendants in the case are companies that are associated with a Mr and Mrs Groom, I will refer to them and Mr and Mrs Groom collectively as "The Groom Interests". 3 Both the Wickett Interests and the Groom Interests carried on a business of installing on buildings, devices that would keep leaves out of gutters. The plaintiffs carried on their business in New South Wales, the defendants, in Victoria. They entered into a type of joint venture or cooperation agreement they referred to as the "Alliance", that lasted from 17 March 1999 to 7 July 2002. For the period from the start of the Alliance to 4 September 2000, some companies associated with a Mr De Graaf that carried on business in South Australia were also members of the Alliance. 4 The Alliance operated under the terms of a document that the parties drafted for themselves. One of its terms was: 'All intellectual and real property developed by the Alliance remains the common property of all members of the Alliance.' 5 There were various improvements during the course of the Alliance to the devices used to keep leaves out of gutters. Some of these improvements were ones to which intellectual property rights attached. The patents that were in dispute in the case were ones that were held by the Groom Interests. The Wickett Interests asserted that those patents had been developed in the course of the Alliance and so were required to be shared with the Wickett Interests. 6 One of the patents related to a type of mesh that was referred to as "2G", referring to second generation. After the Alliance had come to an end but before the litigation was heard, the Wickett Interests had started using a type of mesh that they called "3G", that they claimed they had developed, and claimed was different and superior to the 2G mesh. 7 In the litigation, I found that all five of the patents in issue were subject of the obligations concerning the Alliance. … 10 In the judgment that I gave in the principal proceedings, I upheld the entitlement of the plaintiffs to share in the intellectual property that the Grooms had developed during the course of the Alliance. I also said, at [96], [98]-[99]: '96 In my view, it is, however, appropriate that any equitable relief be conditional upon Mr Wickett and his companies undertaking to transfer to such of the Groom companies, or De Graaf companies, as might want them, an appropriate proportionate interest in the intellectual property which he or the Wickett companies hold and to which Clause 3 of the Agreement applies, upon payment to him or the Wickett companies of the appropriate proportion of the cost of development of that intellectual property. It is appropriate to impose this condition on Mr Wickett, even though he was not in his personal capacity a member of the Alliance. Just as LBI holds on constructive trust for the Alliance members intellectual property developed by the Grooms which falls within Clause 3 of the Agreement, so would Mr Wickett hold on constructive trust intellectual property he developed which falls within Clause 3 of the Agreement. That condition should apply in relation to intellectual property developed up to 7 July 2002. … … 98 Mr Grieve QC thirdly submits that equitable relief should be denied because it has no utility. So far as the patents concerning the 2G Mesh are concerned (the 2G Mesh patent itself, and the Formula patent) the factual foundation for that submission is that the Wickett companies are now predominantly marketing a different mesh, which they call 3G. There is a registered design relating to that new mesh, though not a patent. Mr Wickett has been marketing that new mesh since around 20 August 2003. The Wickett companies obtain supplies of that mesh from a New Zealand company. 99 Mr Wickett agreed, in cross-examination, that the proportion of Nylex product which is now sold by him is less than five percent of his total sales. However, he says he would like to have the Nylex product available for sale, but that when his right to continue access to that product is uncertain, because these proceedings are undecided, he has withdrawn the Nylex product from sale until such time as the legal uncertainties are cleared up. Mr Wickett is of the view that the 3G Mesh is a superior product to the 2G Mesh, but wishes to have access to both products so that he can market one as a premium product, and the other as a mid-range product. In these circumstances, I do not accept that granting the plaintiffs equitable relief concerning those two patents would lack utility.' 11 I set out in the reasons for judgment (at [107]) a draft of the form of orders that then seemed to me to be appropriate, but without having received the benefit of submissions from counsel. However, the orders were not made at the time the principal judgment was delivered on 25 October 2004. Rather, the parties were given the opportunity to consider the form of orders and make submissions about the form that they submitted the order should take. 12 A second hearing occurred on 17 December 2004. I gave an ex tempore judgment that, to some extent, clarified the basis upon which the orders had initially been proposed. That judgment included (at [4]-[5]): 'Mr Grinter, for the plaintiff, opposed there being a reference to the Master to determine what patents, registered design or intellectual property were ones developed by the plaintiff and that fall within the expression I have earlier quoted. He submits that the only items of intellectual property developed by the plaintiff which the defendants ought be able to have an interest in are the items which were referred to in evidence at the hearing. He points out, correctly, that there would need to be a hearing to establish what other items of intellectual property were developed by the plaintiff, and that that hearing might involve some extensive evidence. He points out that there has never been a claim by the defendants to intellectual property, design and patents that was developed by the plaintiff. All of that is true. None of it provides a reason for not having a reference to the Master. The basis upon which the reference was proposed in the draft orders contained in my judgment, was that the Equity court would not grant equitable relief to the plaintiff, unless he did equity. In the present context, that means that he cannot enforce the contract by equitable remedy against the defendants, unless he is prepared to offer to perform his side of that same contract. This is a matter which was raised clearly in cross-examination, and in submission, by Mr Grieve of Queens Counsel at the hearing. I have no intention of granting relief on a basis which excuses the plaintiff from doing equity.' It will be seen that the requirement that, "he who seeks equity must do equity" was very much the guiding principle. 13 On 17 December 2004, I made orders that differed in some significant respects from the draft that I had proposed. I shall annex to these reasons, a copy of the orders then made. 14 The purpose of order 2(a) was to require the Wickett Interests to pay one-third of the cost of development of the five patents in question, if they were to obtain a one-third propriety right to them. The purpose of clauses 2(b) and (c) was to require the Wickett Interests to do equity by giving the Groom Interests the opportunity to acquire upon payment of the appropriate proportion of the costs of development, a proportionate interest in any intellectual property that the Wicketts had developed while the Alliance was on foot. The difference between clause 2(b) and clause 2(c) concerned how to ascertain the quantum of the appropriate proportion of the costs of development. While the De Graaf Interests were part the Alliance, the cost of development were to be shared one-third each. After the De Graaf Interests had ceased to be part of the Alliance, the costs were to be shared one half each. 15 The purpose of clause 2(d) was to give the De Graaf Interests the option of having equity done to them by acquiring a proportionate interest in those items of intellectual property that were developed while they were part of the Alliance upon payment of an appropriate proportion of the cost of development. Clause 5 imposed a requirement for the De Graaf Interests to be notified of the orders, so that they would have a practical opportunity of taking advantage of that option.' 2 The costs in issue concern the costs of the principal hearing, the costs of a reference before the Associate Justice and costs of various incidental applications that were not disposed of by specific costs orders. There is also an application that I will need to deal with separately for an interim award of costs. Costs of the Principal Hearing 3 The judgment that followed the principal hearing was given on 25 October 2004: Guttershield Systems Australia Pty Ltd v LBI Holdings Pty Ltd [2004] NSWSC 941; 63 IPR 407 (the "Principal Judgment"). There was a separate hearing of a question of whether trademarks were intellectual property within the relevant clause of the Alliance Agreement. I ordered the costs of that separate hearing be costs in the cause. Thus, the costs of the principal hearing will in effect include the costs of that separate question. 4 The Guttershield interests in substance have succeeded in that the Principal Judgment found that they were entitled to the one-third interest that they had claimed in the five patents. 5 The Groom interests submit that, even so, the appropriate order to make concerning the costs of the principal hearing is an order that each party should bear their own costs. The Defendants' Calderbank Letter of 23 August 2007 6 One of the matters the Groom interests rely upon in support of that contention is an offer of compromise that was made on 23 August 2007 by the Groom interests to the Guttershield interests. That offer was made at a time before the final orders were made in the proceedings. The offer was to settle all disputes on the following basis: "1. Our client will pay your clients $100,000.00 over a period of 24 months in equal monthly instalments; 2. Our respective clients each retain sole ownership of their respective intellectual property; 3. All previous costs orders vacated; 4. Each party to pay their own costs of the proceedings." 7 That offer had a very short time frame, in that it was only open until close of business on 31 August 2007. 8 The Groom interests submit that the offer, if accepted, would have brought an end to the litigation. That submission is correct, but it is a submission that could fairly be made about very many offers that are made in the course of litigation. 9 The form of the offer bears little resemblance to the orders that were ultimately made. It does not deal with what would happen concerning interlocutory relief that was then on foot that had been obtained by the Guttershield interests. 10 It is well-established, concerning a Calderbank offer (which the letter of 23 August 2007 in substance was) that, while it is always a matter for the Court's discretion what costs orders it makes, a useful test of whether a Calderbank offer should trigger any particular consequence so far as costs is concerned is whether it was unreasonable for the person to whom it was addressed not to have accepted it. 11 It is inconceivable that a Court would allow orders to be made in terms of the offer as a means of finally disposing of the proceedings. The terms of the offer do not say whether the proceedings are to be dismissed or not and do not say what is to happen to the interlocutory orders. I do not regard the offer as one that was capable of acceptance in its terms. That in itself is a sufficient reason for not regarding Guttershield's conduct in declining to accept it as unreasonable. Failure to Establish Trust 12 Another basis upon which the Groom interests submit that there should be no order as to costs is that the Guttershield interests are said to have brought the suit upon the basis that there was an oral declaration of trust in respect of the five patents in suit in favour of the Wickett interests, and they failed in establishing any such trust. My reasons for judgment explaining why that claim failed are in the Principal Judgment, at paras [80]-[91]. 13 I have not had put before me for this hearing any reasons for judgment concerning the interlocutory relief that was granted. Certainly the pleadings put the claim on two alternative bases, one being the declaration of trust (that failed) and the other being the construction of the relevant clause of the agreement of the alliance (that succeeded). In my view, the bringing of the head of claim based on a declaration of trust, that was intimately tied up with the running of the claim that ultimately succeeded, is not a reason for making any special order as to costs. Relief Granted was Conditional 14 Another reason that the Groom interests put forward as a reason why each party should bear their own costs is that the relief that I was ultimately prepared to grant was not the relief that the Wickett interests claimed, but was in several respects conditional. As I made clear in the judgment that ultimately settled the form of the orders, the basis for imposition of the conditions was the requirement that he who seeks equity must do equity. I do not regard the fact that relief was given on a fairly usual basis for the granting of equitable relief as a reason for the plaintiffs not being regarded as having in substance succeeded. 15 Another related matter that the defendants point to is that in cross-examination in the case, Mr Wickett said that he did not intend to transfer title to various patents that he himself had acquired or developed into the name of the alliance. I dealt with this in the Principal Judgment at paras [95] and [96], and said that I regarded the reason he gave for not intending to transfer them as an untenable one. I also said, however, that I did not regard his answers in cross-examination as amounting to a final and considered refusal to do equity. The question of whether he would transfer the patents of the Guttershield interests was one that had not been raised between the parties in advance of the cross-examination - at least so far as the material before me shows - and as events have transpired he has accepted the condition upon which the relief was granted. Thus I would not regard his initial response in cross-examination as a reason for altering any costs order that otherwise may be made. 16 The defendants also point to the fact that it was the conditional nature of the relief granted that led to the inquiry before the Associate Justice. They say that, because there was no offer by the plaintiffs at the outset to do equity, they were not entitled, as at the time of commencing the proceedings, to a declaration of entitlement in the terms in which they claimed it in the summons. I would accept that the summons did not in express terms make any offer of willingness or give any indication of willingness to do equity. However, the summons included the usual claim for such further or other relief as the Court thinks fit, and, as mentioned earlier, the imposition of a condition in terms of a fundamental equitable maxim does not in my view take the relief as actually granted significantly outside the scope of that expressly claimed. Some Relief Initially Claimed but Not Ultimately Sought 17 The final matter to which the defendants point concerning the relief that was obtained is that there were some paragraphs of the summons that claimed relief that were ultimately not pressed for. That relief was summarised at para [101] of the Principal Judgment as being "orders aimed at informing the plaintiffs about what use the defendants had made of the five patents, and requiring the defendants to pay an appropriate proportionate share of the profits made by exploitation of the patents". I noted that Mr Grinter accepted that, if the plaintiffs were to become the joint registered holders of the patents, the effect of section 16 of the Patents Act 1990 (Cth) was that the plaintiffs would not be entitled to such orders. 18 It is correct, in those circumstances, that the summons made claims that were ultimately not pressed, and that, if pressed, would have failed. The amount of time taken on those issues was, however, quite small. It is a matter to be taken into account, but of comparatively small weight. Effect of the Outcome of the Reference 19 The matters that were referred to the Associate Justice for inquiry were of three kinds:

1. the development costs of the defendants' five patents;

2. what patents, registered designs or other items of intellectual property were held in the name of the Wickett interests which were developed during the period of the Alliance; and

3. the costs incurred in relation to the development of the intellectual property referred to in 2 above. 20 The Grooms had accepted, before the reference hearing, the estimate given by the Wickett interests of the costs they had incurred in development of certain intellectual property that they conceded had been developed during the period of the Alliance. That left only two issues to be determined on the reference. 21 The result of the reference was that on the two live issues the Associate Justice found that the cost of the development of the five patents was an amount marginally less than $32,000. He also found that there were certain items of intellectual property that were the subject of the undertakings referred to in paragraphs 2(b), 2(c) and 2(d) of the orders, namely: "Gutter grid logo Tubular mesh screen patent Mesh screen patent Bushfile trademark Guttersock trademark Stopper assembly patent Drainsock trademark". 22 Of these the Drainsock trademark was one that had not been volunteered by the Guttershield interests as one that they had developed during the course of the Alliance. It was only in the course of the hearing before the Associate Justice, and through cross-examination of Mr Wickett, that he conceded that intellectual property and the Drainsock trademark should have been accounted for by him. He made no claim for costs in respect of development of the Drainsock trademark, so that removed the need for any enquiry into the quantum of such costs. Effect of the Cross-Claim 23 There was a cross-claim that was litigated at the same time as the summons, as part of the principal proceedings. The result of that litigation was that the Groom interests were able to obtain an undertaking to the Court that the Wickett interests would not reproduce any of the wording contained in a particular advertisement in which the Groom interests had claimed intellectual property. While that was a discrete issue, it was a small one in the overall context of the principal hearing. 24 In all the circumstances, the issues on the cross-claim and the issues on the summons were very closely connected. It would be undesirable to make a separate order concerning the costs of those two processes. Conclusion on Overall Effect of Matters Considered So Far 25 In my view, the overall result of the matters considered so far is that the failure of the Wickett interests to obtain some of the relief that they sought, and the comparatively small measure of success that the defendants obtained, concerning the copyright in the advertisement, and as a result of the condition that was imposed upon the granting of relief is such that there should be a comparatively small moderation of the costs of the principal proceedings. Effect of Guttershield's Failure to Pay 26 Before I complete considering how the costs of the principal proceedings should fall, there is one other matter that requires to be taken into consideration. It relates to the effect of the first of the Guttershield companies named in the proceedings now being in liquidation. The second of the Guttershield companies in the proceedings is still in full corporate existence, although it has changed its name to Guttershield Queensland Pty Limited. It was common ground at today's hearing that the liquidation of the first-named Guttershield company is a voluntary liquidation. It is not submitted that the liquidation is indicative of insolvency. 27 The orders that were made as a result of the principal hearing were complex. I will reproduce them as an annexure to this judgment. It can be seen that the entitlement of the Guttershield companies to obtain any interest in the intellectual property in the five patents was dependent, under clause 2(a), on giving a conditional undertaking to the Court to pay a proportion of the costs of development of those patents. Under clause 3, there was to be an inquiry to determine those costs. Under clause 4, the Guttershield companies were to elect whether they would give an undertaking to pay those costs unconditionally. It is common ground that the undertaking referred to in 2(a) was given on the conditional basis initially, and, after the hearing before the Associate Justice, there was an election to give the undertaking on an unconditional basis. 28 Clause 8 then dealt with the consequences of that undertaking being given on an unconditional basis. Its effect, in broad terms, is that the Groom interests were ordered to carry out all necessary steps to transfer the registration of the intellectual property, on the basis that the cost of the change in registration was borne by the Groom interests, upon payment by the plaintiffs of the costs of development of the five patents. In other words, the Guttershield interests would not obtain the sort of ultimate success constituted by actually being on the register until such time as they had actually paid the money that they have given an undertaking to pay. 29 That time has not yet been reached. The solicitors for the Groom interests wrote to the solicitors for the Guttershield interests on 24 November 2009 enquiring whether the Guttershield interests intended to make the payment. At the time Mr Lewis, solicitor for the Groom interests, put on his affidavit of 7 December 2009 for the purpose of this costs application, there had been no response to that letter. 30 The failure of the Guttershield interests to say that they would actually perform their undertaking was also referred to by Mr Reuben, counsel for the Groom interests, in paragraph 41 of his written submissions. 31 Mr Reuben submits that the plaintiffs must show they are ready, willing and able to comply with their election to pay the development costs in order to obtain the relief that is given by the proceedings. I do not think that is quite right. As order 2(a) was structured, and order 4 and order 8, the Court's order for the Groom interests to transfer had as its price the giving of the undertakings referred to in paragraph 4 unconditionally. That price has been paid. Thus, it seems to me, the plaintiffs in the proceedings have obtained the benefit of an order for the defendants to execute the documents required for the five patents to become registered. The order also contemplates that registration will not take place until the costs of development have actually been paid. It is that final step that has not yet occurred. 32 Exhibit B in today's proceedings is a letter that the solicitor for the Guttershield interests wrote to the solicitor for the Groom interests on 8 December 2009. It refers to a letter that the solicitors for the Guttershield interests wrote to the solicitors for the Groom interests on 2 October 2009. I was informed from the bar table, without objection, that that letter related to some of the mechanics of conveyancing to effect the transfer of the patents. The letter of 8 December 2009 says also, "We asked that the defendants submit to this office within 14 days of the date hereof the appropriate transmission/transfer documents for the transfer of the interests in the Five Patents". The letter of 8 December 2009 put forward proposals, of what seem on their face to be an unexceptional conveyancing nature, for steps yet to be carried out concerning the actual obtaining of registration. It is only at the time of handing over of the transfer documents that the Guttershield interests are required to actually make payment, pursuant to the undertaking that they have given. 33 The letter of 8 December 2009 concludes by saying: "In view of the existing costs orders and the plaintiffs' anticipated costs orders to be made by the Court on 14 December 2009 ... the Plaintiffs will on 14 December 2009 be applying for an order from the Court that the payment of the one-third interest payment be set off against the costs owed by the defendants to the plaintiffs." 34 Mr Reuben points to that paragraph as an indication of a lack of preparedness on the part of the Guttershield interests to actually make the payment that they have undertaken to make. I do not agree. In my view what the paragraph does is to foreshadow the making of an application to the Court. That application has not actually been made yet, and whether any order is made will depend upon the further course of today's proceedings. If the order is not made - or indeed if the application is not made - then the undertaking that the Guttershield interests had given will remain as an undertaking to the Court, enforceable in accordance with its terms, by the usual sanctions for breach of an undertaking. 35 In all these circumstances, I do not regard the failure of the Guttershield interests to have performed their undertaking at this stage as indicative of them not having, in substance, succeeded in the litigation. Conclusion on Costs of Principal Proceedings 36 I had earlier referred to the small measure of success that the defendants had. In my view the appropriate way of taking account of that small measure of success is by some moderation of the order for costs in the plaintiffs' favour. The measure of success was quite small in the overall order of things. In my view the appropriate order to make in the principal proceedings is that the defendants pay 95 percent of the costs of the plaintiff. Costs of the Reference 37 There is a separate question about whether a separate order should be made concerning the costs of the reference to the Associate Justice. If no order were made, then, because the reference to the Associate Justice was an interlocutory step in carrying through the orders in the proceedings, the costs of the reference to the Associate Justice would follow the costs of the principal proceedings. 38 I have already referred to the issues that there were before the Associate Justice. The Guttershield Calderbank Letters 39 Guttershield claims the benefit of two separate offers of compromise that it made concerning the hearing before the Associate Justice. One of those offers was made on 20 December 2006. It was to agree that the costs of development of the five patents were $45,000. The Groom interests had claimed that the costs of developing their intellectual property were in excess of $93,000. As I have said, the costs were ultimately determined to be just short of $32,000. 40 It had been on 17 December 2004 that I had actually made the orders that finalised the hearing before me, including making the order for reference to the Associate Justice. The reference itself proved quite protracted, with hearings in September and November of 2007, and February of 2008, and judgment on the reference ultimately being given on 23 July 2008. Thus this particular offer was made during the stage of preparation for the hearing of the reference. 41 The offer that was made upon 20 December 2006 stated that it was open for 42 days. The Legal Almanac for 2006 shows that the legal vacation that year started on 18 December 2006 and the first day of the new term was 29 January 2007. Thus nearly all of the 42 days ran during the legal vacation. Given the stage in the proceedings at which the offer was made, and the fact that nearly all of the time that the offer was open was during the legal vacation, I do not regard it as unreasonable in the circumstances for the Grooms not to have accepted it. It does not generate any order for indemnity costs. 42 On 26 October 2007 Guttershield made another Calderbank offer again offering to agree that the costs of development of the five patents were $45,000. This time the offer was not subject to any time limit. Further, the issues were well advanced by them. The offer, however, was not to resolve all the issues that then remained outstanding in the reference. It would have resolved what ultimately proved to be the principal issue, but not all issues. Indeed, in its terms the offer contemplated that if it was accepted the remaining issues could be disposed of within a day. 43 In my view, an offer of this type is not one that should in the circumstances generate any indemnity costs order. It was through cross-examination at the hearing that entitlement to some of the measure of success that the Groom interests obtained arose. In all these circumstances, in my view the costs of the reference should be dealt with in the same manner as the costs of the principal hearing. Reserved Costs of Interlocutory Applications 44 Another issue relates to various interlocutory applications, concerning which costs were reserved. Under Uniform Civil Procedure Rule 42.7 reserved costs and any other incidental costs not specifically disposed of follow the same course as the costs of the principal proceedings, unless the Court otherwise orders. There are several applications made to me today for the Court to otherwise order. Abridgment of Time For Service 45 One of them relates to the application for abridgement of time for service. There was Court application on 29 November 2002 for abridgement of time for service of the summons. The time for service was abridged to 4 December 2002, which is five days later. The summons was made returnable on 18 December 2002. Thus, the order allowed 14 days after service before the first return date. The proceedings were ones that were to be served in Victoria. Under section 17 of the Service and Execution of Process Act 1992 (Cth), 21 days is needed for service, unless the Court otherwise orders. Likewise, the Supreme Court Rules, in rule 7.5 and rule 5.3 (and it was the Supreme Court Rules that applied in 2002) suggest that 21 days was needed, unless there was a contrary order. 46 It is not clear to me whether service was actually effected under the Service and Execution of Process Act, or in accordance with the Supreme Court Rules, but the answer is the same as to the time that needed to lapse between service and the return date, unless the Court otherwise ordered. It cannot be said, in my view, that no application needed to be made for abridgement of time for service, and thus that no order for costs was appropriate concerning it. In my view, the costs of the abridgement for time for service should follow the costs of the principal proceedings. Costs of Interlocutory Injunction Hearing 47 There is also an invitation for the Court to make a separate order concerning the reserved costs of the interlocutory injunction hearing. The plaintiffs made an application for interlocutory injunctions to Young CJ in Eq (as his Honour then was) on 18 December 2002. The interlocutory injunctions were granted. Mr Reuben's submissions say that the application was made for interlocutory relief "on the basis that there had been an oral declaration of trust in relation to the five patents in suit". However, they also say that, "the Court, favouring the balance of convenience, granted the interlocutory injunctions for the purposes of interim preservation of rights attaching to property that might fall within clause 3 of the Alliance Agreement". 48 As mentioned earlier, I have not had placed before me for the purpose of today's application any reasons for judgment that might have been delivered on the application for interlocutory injunction. As I note the application was made on what would have been the last day of term, it may well be that there were no reasons, or that they were very brief. However, accepting in full what was said in Mr Reuben's submission concerning the basis on which the application was made and granted, it does seem that both of the bases of claim upon which the Guttershield interests ultimately put their case - namely trust and clause 3 of the Alliance Agreement - were in play at the time of the application for the interlocutory injunction hearing. In these circumstances, I see no reason why the costs of the interlocutory injunction hearing should not follow the same course as the costs of the principal proceedings. Application Resolved by Orders of 31 October 2003 49 On 31 October 2003 orders were made on an application by the Grooms to join Mr Wickett as a cross-defendant, and various other interlocutory matters. That application was resolved by consent. The orders actually made on 31 October 2003 related not only to the joinder of Mr Wickett as a cross-defendant, but also to other more routine interlocutory matters, like the time for filing of further evidence, and the noting of some undertakings. In the circumstances, I do not see any reason for the costs of that particular application to be treated any differently to the costs of the principal proceedings. Application Heard 27 August 2004 Re Subpoena 50 Another interlocutory application is one that was made on 27 August 2004. It was an application that was made by the Groom interests to set aside part of a subpoena that the Guttershield interests had served on Mr Morcom. He is a patent attorney who had acted for the Groom interests concerning obtaining of various items of intellectual property, including the five patents that were in dispute in the present proceedings. The Registrar on 1 April 2004 had declined to set the subpoena aside. 51 An application for review of that decision came before me on 27 August 2004. On that occasion the only matter in issue was the scope of paragraph 5 of the subpoena in question. That paragraph was one which was clearly, in my view, far too wide. 52 Not all issues of the notice of motion that had come before the Registrar were heard by me on 27 August. I stood the balance of the notice of motion over to the trial. At the trial, nothing more was heard of it. In my view, the substantial justice of the case would be met by ordering the Guttershield interests to pay the costs of the hearing before me of 27 August 2004. Interim Award of Costs 53 The final matter that calls for determination today is an application that is made by the Guttershield interests for an interim award of costs. The circumstances that give rise to the application for an interim order for costs is that the court time that has been occupied by this case so far exceeds 12 days. The plaintiffs estimate that their costs are in excess of $150,000. They list disbursements alone that are in excess of $78,000. Many of those disbursements relate to counsel's fees. The particular order for interim costs that they seek is that the defendants pay the sum of $50,000 to the plaintiffs forthwith. 54 The application is based on section 98 of the Civil Procedure Act 2005. Section 98 provides, so far as is relevant "(1) Subject to rules of court and to this or any other Act: (a) costs are in the discretion of the court, and (b) the court has full power to determine by whom, to whom and to what extent costs are to be paid, and (c) the court may order that costs are to be awarded on the ordinary basis or on an indemnity basis. … (4) In particular, at any time before costs are referred for assessment, the court may make an order to the effect that the party to whom costs are to be paid is to be entitled to: (a) costs up to, or from, a specified stage of the proceedings, or (b) a specified proportion of the assessed costs, or (c) a specified gross sum instead of assessed costs, or (d) such proportion of the assessed costs as does not exceed a specified amount." 55 Mr Reuben submits that the Court is not given power by section 98 to make an order for interim payment of costs. 56 I observe that while section 98(4) refers to certain specific types of orders for costs that the Court has power to make, an order for payment on account of costs is not specifically referred to. I also observe that when the Court was given power to make orders for interim payment of damages, by sections 81 to 84 of the Civil Procedure Act, specific power was conferred upon it to do so. 57 I propose to proceed on the basis of assuming, without deciding, that the Court has power to make an interim order for payment of costs. 58 On that basis, in my view the circumstances of the present case do not call for the making of any such order. The proceedings have been on foot since 2002. No special reason is put forward for making what is, even assuming that there is power to make it, an unusual order, beyond the fact that costs have been mounting up. I decline to make the order for interim payment of costs. Orders 59 In the result, the specific orders that are called for, and that I make, are:

(1) The plaintiffs pay the costs of the defendants of the hearing before me of 27 August 2004.

(2) Subject to specific orders concerning costs made today or previously made, the defendants pay 95 percent of the costs of the plaintiff of the proceedings, including reserved costs and the costs of the reference to the Associate Justice. * * * * * * * *

[discussion with counsel] 60 HIS HONOUR: Neither counsel sees a reason why the costs of today's hearing should not follow the same course as other costs of the proceedings. Thus, there is no occasion to make any separate order concerning the costs of today. ********** Annexure

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