Hells Angels Motorcycle Corporation (Australia) Pty Limited v Redbubble Limited

1. The application for security for costs filed by Redbubble Limited on 11 September 2017 is dismissed.
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.

GREENWOOD J: 1 On 11 September 2017, the respondent in the principal proceeding "Redbubble" filed an application for an order for further security for costs. Redbubble sought to have the application heard and determined last Friday, 15 September 2017. 2 The principal proceeding was set down for trial for five days commencing 25 September 2017, on 18 May 2017. 3 Last Friday was the date nominated for the pre-trial case management hearing convened to address issues that might usefully be addressed in preparation for the trial. The application for security for costs was listed for mention last Friday. 4 The application for further security for costs filed so close to the commencement of the trial raises the threshold question of whether the interests of justice are served by entertaining the application at all and whether bringing the application so late in the day is consistent with the obligation of the respondent to act in a way consistent with the overarching purpose of the Civil Practice and Procedure provisions designed to aid the resolution of disputes as quickly, inexpensively and efficiently as possible as contemplated by ss 37M and 37N of the Federal Court of Australia Act 1976 (Cth). 5 The application is supported by an affidavit of Miriam Anne Stiel sworn 11 September 2017. Ms Stiel is a partner of the firm Allens Linklaters ("Allens"), the solicitors for Redbubble. At the pre-trial case management hearing, the Court raised with counsel for Redbubble the question of whether bringing such an application was consistent with the overarching purpose and the interests of justice having regard to the preparation which has been undertaken to bring the matter to trial, to date. Counsel for Redbubble said that submissions would be put on in support of the application identifying contentions seeking to address the question raised by the Court. Those submissions were emailed to Chambers at about 4.15pm yesterday. 6 I have considered those submissions. 7 The brief history of the matter is that an application for security for the costs, to a particular point in time that might have been awarded in the proceeding against the applicant "HAMC" was made last year and on 16 May 2016, an order for security in an amount of $50,000 was made. An order was also made granting liberty to Redbubble to make an application for further security in relation to the trial of the action as the Court may determine appropriate, if at all, having regard to the factors identified in the reasons for judgment given on 16 May 2016 in Hells Angeles Motorcycle Corporation (Australia) Pty Ltd v Redbubble Ltd [2016] FCA 530. Security was provided by the applicant. Thereafter, the action was not progressed in any material way which resulted in an enquiry by the Court on 17 January 2017 about the state of the matter. The applicant then from 27 January 2017 commenced taking further steps to prosecute the proceeding. 8 The applicant then made an application for summary judgment in relation to various aspects of the causes of action in the principal proceeding. It is not necessary to recite the nature of the causes of action litigated in the principal proceeding. The parties are well familiar with them. In the result, the Court took the view that matters would be best served by not entertaining an application for summary judgment on 29 and 30 May 2017 but rather taking steps to bring the matter to trial. Accordingly, the dates of 29 and 30 May 2017 were vacated for the reasons set out in Hells Angeles Motorcycle Corporation (Australia) Pty Ltd v Redbubble Ltd [2017] FCA 464 ("the 2017 judgment"). In those reasons, the Court noted Redbubble's observations that testing and examining the Redbubble method of business operation so as to answer aspects of contended copyright infringement and authorisation of infringement would involve Redbubble putting on a substantial body of evidence. That evidence would go to what was described as "a substantial controversy between the parties which would require findings of fact to be made in order to determine the question of whether the conduct and operation of the Redbubble website engages infringing conduct in the manner contended for by the applicant": [17]. The Court also noted that there would be not insignificant forensic questions alive in relation to the evolution of the title to the relevant works: [23]. 9 On 18 May 2017, the Court set the matter down for hearing on 25 September 2017 for five days and a range of directions orders were made to facilitate preparation of the matter for trial on those days. The orders dealt with questions in relation to pleadings, evidence and trial preparation. 10 Redbubble says that the applicant filed its evidence in chief and between 28 July 2017 and 2 August 2017 Redbubble filed and served its substantial evidence in answer. Redbubble says that this material was not available to the Court when addressing the first security for costs application. Redbubble says that on 23 August 2017, HAMC served an affidavit from Mr Bolam and said that it would be relying on an affidavit of Ms O'Neill. 11 On 29 August 2017, Allens wrote to the solicitors for HAMC and requested that HAMC provide further security in an amount of $215,000 for preparation and conduct of a five day trial, by 19 September 2017. That demand for security became a matter of controversy. 12 In the submissions, Redbubble says at para 2(g), and thus concedes that it was clear at the case management hearing on 28 February 2017 that a further application for security for costs and the provision of security for a trial was inevitable. Moreover, it must have been obvious to Allens from the very nature of the proceedings and, in any event, by reason of the issues in controversy reflected in the reasons for judgment in the 2017 judgment, that substantial preparation would be required especially in relation to a suit based on foreign works in order to prepare the matter for trial. Then, on 18 May 2017, extensive orders were made for steps to be undertaken to prepare the matter for trial. 13 Although Redbubble's lawyers were aware from 28 February 2017 that a further application for security for a trial was inevitable, no application was filed until 11 September 2017, that is, 195 days later. Redbubble's lawyers knew the scope of the controversy in substance on 5 May 2017, yet no application was made until 11 September 2017, 129 days later. Redbubble's lawyers were aware on 18 May 2017 of the preparation which would be engaged in preparing the matter for trial yet no application was made until 11 September 2017, 116 days later. None of this is consistent with the statutory obligation cast upon Redbubble to conduct the proceeding, including contemplated applications for security, in a way consistent with the overarching purpose recited in s 37M(1). So much is obvious. 14 The application for security has, I suspect, probably been made in order to enable Redbubble's solicitors to be able to say that an application for security for costs for the trial of a proceeding was brought but refused by the Court. 15 To be clear, the Court is not refusing an application for security for costs. The Court is refusing to entertain an application made at three seconds to midnight when the application ought to have been made promptly. 16 Tactically and strategically, such an application, made so late in the day, might well have the effect of distracting the applicant from the intensive, immediate pre-trial preparation but I am sure that that is not the underlying purpose of the application made, as it is, at the last moment. The application seeks security in an amount of $150,000 and seeks an order that the security be provided within seven days and in the event that security is not provided, the application be stayed. Such orders, sought on the cusp of the trial, are entirely inappropriate. The applicant ought not to be burdened with them. Nor ought the applicant be required to respond to the application. 17 The application will not be entertained by the Court. It is to be dismissed pursuant to s 37P and s 23 of the Federal Court of Australia Act 1976 (Cth). I certify that the preceding seventeen (17) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Greenwood.