Lian Fa International Dining Business Corporation v Mu

RAPER J: Introduction 1 The following comprises my reasons for judgment delivered ex tempore on 12 June 2024 as revised from the transcript. The orders I made on that date are as set out above. 2 Lian Fa (the applicant) operates a business retailing "bubble teas" and other beverages and also franchises the right to others, including Sharetea Australia (the second respondent), to operate businesses of the like kind, retailing "bubble teas". Lian Fa asserts that it and its other franchise businesses have widely and extensively used and promoted the word "Sharetea" (Sharetea Brand) throughout Taiwan, Singapore, Indonesia, Vietnam, Philippines, Hong Kong, Japan, the United States, and Canada in respect of tea houses, bubble teas and other beverages. Mr Mu (the first respondent) is the sole director of Sharetea Australia. 3 By Lian Fa's further amended originating application, filed on 28 February 2023, it seeks declaratory relief, damages and consequential orders arising from the respondents' alleged trade mark infringement, pursuant to ss 120(1) and (2) of the Trade Marks Act 1995 (Cth), the respondents engaging in misleading and deceptive conduct and making false or misleading representations in contravention of ss 18 and 29(1)(g) and (h) of the Australian Consumer Law being Sch 2 of the Competition and Consumer Act 2010 (Cth) and the respondents using unlawfully Lian Fa's confidential information. 4 By interlocutory application, filed on 7 June 2024, the respondents apply for leave to abort the trial, set down to commence on 17 June 2024 for three weeks. Although the respondents are the applicants in this interlocutory application, they will hereafter be referred to as the respondents. 5 This is the fifth application for an adjournment. 6 The respondents relied upon the following evidence in support of their applications: (a) the affidavit of Teng Mu affirmed on 6 May 2024; (b) the affidavit of Teng Mu affirmed on 12 June 2024; (c) the affidavit of James Lawrence sworn on 6 May 2024; and (d) the affidavit of Justine Munsie sworn on 7 June 2024. 7 The applicant relied upon the affidavit of Joachim Delaney affirmed 11 June 2024 and referred to Ms Delaney's evidence in previous applications in this proceeding. Organising principles 8 As observed by the Full Court in Jarrett v Westpac Banking Corp [1999] FCA 425 at [6], the general applicable considerations taken into account when deciding whether or not to adjourn a hearing include the following: General considerations applying to decisions to adjourn a fixed trial date include the following: First, a party to civil litigation does not have an absolute right to legal representation in the sense that the trial must be adjourned if the party does not have a lawyer. A party is of course entitled to every reasonable opportunity to obtain legal representation but this is subject to other, sometimes competing, considerations such as to the rights of other parties to reasonably prompt disposition of the litigation and the need to maintain public confidence in a fair and efficient system of civil justice. The vacating of a trial date which has been fixed, by consent of the parties, well in advance, is a serious step. Parties and their witnesses, solicitors and counsel and the Court itself make important commitments based on the assumption that the trial date will be honoured. And, as practical experience of litigation shows, the approach of a fixed trial date is a powerful incentive to realistic negotiations and possible settlement, all of which is in the public interest. 9 Accordingly, even where there is an absence of legal representation (which is not the case here), that absence alone may be an insufficient reason to adjourn the hearing of a long-scheduled application or appeal: Timu v Minister for Immigration and Border Protection [2018] FCAFC 161 at [19]. 10 Matters relevant in determining the weight to be given to that absence (or partial absence) of legal representation by reason of inadequate time to prepare, include: the time and the steps taken by the party to obtain legal representation; the explanation for any delay and the utility of any adjournment, including the likelihood of the party obtaining legal representation or being so adequately represented; and, the relevant time period in which that will occur, see BSY16 v Minister for Home Affairs [2019] FCA 140 at [5]; Pallas v Minister for Home Affairs [2019] FCAFC 149 at [43]. 11 As to the latter two matters, it is by reason of these that the Court sought, given the lacunae in the respondents' evidence in support of this application, to understand when they say they will have had adequate time to prepare and, in essence, adequate legal representation. 12 Ultimately, the decision is a discretionary one which must be exercised judicially and will depend on the individual circumstances that are relevant: EPH17 v Minister for Immigration and Border Protection [2019] FCA 824; 166 ALD 47 at [18]-[19]; Jarrett at [78]. The unfortunate procedural history of this matter 13 This matter has a very unfortunate procedural history. Lian Fa commenced these proceedings in 2021. At the end of that year, Lian Fa brought an application to injunct the respondents from infringing its trade marks, which was rejected by the Court, but, significantly, part of the reason for that rejection was because it was then anticipated that the matter would be heard in June 2022: Lian Fa International Dining Business Corporation v Mu [2021] FCA 1527 at [91]. However, since then, the matter has not proceeded with due despatch and has been the subject of four adjournment applications, three of which were by the consent of the parties. 14 The circumstances of those applications may be summarised in the following way. On 17 December 2021, the proceedings were listed for 27 June 2022, with an estimate of five hearing days. The matter was first docketed to me on 2 May 2022, within a short time thereafter, the first application for an adjournment was made on 12 May 2022 by the respondents, which was not opposed, to vacate the hearing by reason of a change in representation. On 23 May 2022, the matter was then relisted, by consent, to be heard between 17 and 21 October 2022. 15 On 6 July 2022, the applicant sought to vacate the October 2022 trial dates on the basis of a revised doubling of the hearing days; necessary because of the expansion of the pleadings in the matter. This was consented to by the respondents. On 22 July 2022, the Court made orders giving the specific dates of 13 to 24 March 2023 for the 10-day hearing. 16 Then, on 19 October 2022, those dates were vacated, again by consent, because the applicant had retained new solicitors and new counsel. At that case management hearing, the Court pointed out to the parties that it had already vacated the hearing dates previously. The parties suggested that it be set down for hearing in August 2023, which the Court indicated would not be possible due to it being during the Full Court hearings period. The Court indicated its reluctance to set the matter down for particular dates until it could be confident that the parties were ready for hearing. 17 On 8 August 2023, the Court made orders listing the matter for final hearing between 3 and 27 June 2024 (with closing submissions on 24-25 July 2024). By this time, the respondents had filed its evidence, its defence, its Third Further Amended Statement of Cross-Claim and Reply to Defence to Third Further Amended Statement of Cross-Claim. The Court had greater confidence that the matter would progress to hearing. 18 Unfortunately, another (fourth) application for adjournment was made, this time by the respondents, on the basis of absence of solicitor representation for the June 2024 hearing. Whilst this application for an indefinite adjournment was refused on 8 May 2024, in effect it was practically, partially granted, as the first two weeks of the hearing were vacated such that the matter was pushed back to commence later to allow Mr Mu five and a half weeks to obtain representation and get ready for the trial. 19 The reason for the refusal of the indefinite adjournment was on the basis that the matter had achieved an advanced state of readiness (all evidence had been filed) and all that was left to prepare primarily involved the work of counsel (and not of solicitors) in the preparation of submissions, the provision of a joint expert report, a Statement of Agreed Facts and a list of objections. Further, Mr Mu had not satisfied the Court that he was, in fact, unable to secure representation before the hearing and had put on no evidence as to whether counsel previously retained were in fact available or not, and had taken limited steps to secure alternative solicitors. As a consequence, the Court was prepared to delay the start of the hearing by two weeks, from 3 June and extend it to 17 June, which would give the respondents five and a half weeks to secure representation. 20 Notably, during the hearing of the adjournment application, the Court sought to understand with some specificity when the Counsel and solicitor representing Mr Mu (for the purpose of the adjournment application) would be available in July 2024 as an attempt to try to see if a middle ground could be achieved, by delaying the start and/or splitting the hearing to best accommodate all parties. The Court indicated availability between 1 and 5 July, such that it could be moved to 24 June to 5 July; and, further availability in the week commencing 22 July 2024.

The current adjournment application 21 Then, on 8 June 2024, 10 days before the trial is set to commence, the respondents filed another application for adjournment. Evidence was filed on behalf of the respondents' new solicitor, Ms Justine Munsie. That evidence indicated the attempts taken to secure counsel and ready the matter for hearing. Ms Munsie indicated that ordinarily it would take eight to 10 weeks to prepare for a hearing, but she gave no indication as to when counsel would in fact be available. Her evidence focused on current inability; not how and when a pool of counsel would be available. 22 As a consequence, the Court wrote to the parties on Monday 10 June 2024, copying counsel (given it is a public holiday and Counsel for the respondents were required to file submissions at 9:00am on Tuesday 11 June 2024), asking that the respondents indicate with some precision, in July, September, October and December 2024, when they have Counsel available (even if not Counsel of choice, but from a wider pool). 23 Rather than act in accordance with what the Court had sought, the respondents provided no further evidence of the canvassing of a wider pool of potential counsel but remained on the course they had already set. 24 Here, the application appears to be brought now, contrary to the previous application, on the basis that the respondents have partial legal representation for the hearing, impaired by the circumstances. It was a submission of Senior Counsel for the respondents today that he and the respondents' solicitors would be available to appear next week, but where there would be inadequate time to prepare. 25 The respondents submit that there are four primary matters which support their application. First, the nature of the proceedings, being a significant piece of commercial litigation; secondly, despite the respondents now securing legal representation, the matter cannot be ready for hearing in time and where the solicitors now retained, express that if the matter presses on, they are concerned they will be unable to comply with their obligations under the Legal Profession Uniform Law Australian Solicitors' Conduct Rules 2015 (NSW); namely, to act in their clients' best interests (r 4.1.1), deliver competent, prompt and diligent legal services (r 4.1.3) and avoid compromise to their integrity (r 4.1.4); thirdly, by reason of the applicant's service of additional reply evidence (after the hearing of the adjournment application), the matter is not sufficiently ready for trial; and fourthly, despite the applicant's late service of new evidence and the provision of supplementary discovery, the respondents agree to pay a sum which the Court considers appropriate to be paid for the costs thrown away.

Why the application is allowed 26 The determination of whether to grant such an application is a discretionary one which requires the balancing the interests of the parties as well as of all the other litigants before the Court, for whom these dates were no longer made available. The determination of case management issues of significant moment, such as this occasion, involves endeavouring to do justice as a whole: Aon Risk Services Australia Ltd v Australian National University [2009] HCA 27; 239 CLR 175 at [30]. 27 The unfortunate procedural history of the matter and the multiple previous adjournments have frustrated the Court's attempts to attend to this matter with due dispatch and efficiency. 28 The Court has a very significant concern that Mr Mu, has not done all that was within his ability to deal with this matter with due dispatch. 29 The applicant identified a number of persuasive reasons, both as articulated by Senior Counsel for the applicant and in the evidence of Ms Delaney, consistent with the organisation principles underpinning the Court's discretion as to why, the adjournment ought not be granted. First, the matter has been set down for over a year. Secondly, there are questions as to the inadequacy of explanation of circumstances leading to the respondents' loss of representation in April 2024. In this respect, it is clear that Mr Mu's former solicitors terminated the retainer on the basis of what they say was a fundamental breach (regarding the non-payment of $300,000 by the end of March 2024). However, the evidence reveals that Mr Mu did advance over $160,000 after this time and appeared to assume that there was no such essential term. Despite the urging of the parties, with different effect, it is my view that the evidence reveals that there was a dispute regarding fees and for unexplained reasons Mr Mu did not pay the amount owing. However, it was his evidence that he misunderstood this to be a term. Regardless, it is my view that the evidence does not establish that Mr Mu orchestrated the termination of the retainer in order to bring about an adjournment. 30 In any event and the third matter which the applicant asks that I take into account, is that the respondents have never suggested loss or absence of representation arises from their financial circumstances, incapacity or otherwise. Fourthly, since the last failed adjournment attempt, the only evidence of Mr Mu making attempts to secure representation, is that he had contact with one law firm, Addisons (and it took effectively two weeks for him to agree terms and provide money on trust). Senior Counsel for the applicant made a number of submissions as to the slowness of and/or inaction to progress the matter by Mr Mu thereafter, including by the provision of instructions to retain Counsel. This included the fact that, despite the Court having asked Senior Counsel for the respondents on 8 May 2024 whether any attempts had been made to retain the previous counsel, no such attempts were made for three and a half weeks. Notably, of course, that the submission was rightly pointed, by Senior Counsel for the applicant to an absence of instructions on Mr Mu's part and says nothing about the due dispatch or otherwise exercised by the solicitors now retained by Mr Mu. 31 However, I do accept that after the last adjournment, ultimately Mr Mu did retain solicitors (albeit not quickly) and also that his solicitors were, until 4 June 2024, operating on the assumption that they would appear with the combined assistance from Mr Hutley SC for the first week of the hearing and Mr Fox SC for the next two weeks. However, Mr Hutley SC then became unable and informed them on 4 June 2024 that he could no longer act. Whilst I accept there might be some criticism of the time it took to obtain counsel and the absence of junior counsel being retained, a critical event leading to the respondents being unable to ready themselves (albeit in a less than ideal way) was the loss of Mr Hutley SC last week. 32 This means that the remaining Senior Counsel, Mr Fox SC, is left in the invidious position of having less than a week to prepare. The Court has contemplated whether the matter could be delayed by a week to afford Mr Fox SC the opportunity to get up to speed and prepare to cross-examine four lay witnesses in relation to what he estimates to be over a hundred conversations, putting aside the other matters which would be required to be the subject of that cross-examination. Whilst Mr Fox SC is very experienced and capable, I accept his submission that he does not consider that is sufficient time for him to prepare and in any event, it is my view that even if there were a delay of a week (which, in the circumstances, I would be minded to grant) the matter would not complete in that period. Mr Fox SC submitted that he was only available until 1 July 2024. 33 Whilst Senior Counsel for the applicant submitted that the matter could proceed thereafter for the remainder of that week without Counsel, I do not consider that would be procedurally fair in the circumstances, particularly where the respondents' witnesses would be giving their evidence, in effect, without the benefit of counsel. In any event, account must be taken of the fact that by reason of the respondents having not taken all the procedural steps required to complete the matter, it must be accepted that this will lead to inefficiencies during the trial. I accept that the consequences of this failure should not befall the applicant. I must, nonetheless, take into account all of the circumstances which includes how practically this matter will proceed, to which I will return. 34 I accept that the applicant will suffer prejudice as a result of a further delay which includes, the continued infringement of its trade mark by the respondents for which there is a concern, given the size of the potential damages (at least $10 million) that it will be unable to recoup them given the respondents' known asset pool. Further, it is not without significance that the applicant had sought to restrain Mr Mu's use of the mark and that application was refused in 2021 by reason of the then hearing being in mid-2022. The applicant also has been the subject of an order that it provide security of $550,000 into Court, to which Ms Delaney refers in her affidavit. If the matter is adjourned until 2025, then the applicant will not have had the benefit of access to those funds for nearly two years. 35 In addition, I accept that the applicant will suffer prejudice regarding the costs thrown away, including, in particular, having made arrangements for its witnesses to travel to Australia, and arranging interpreters. This, of course, does not include the fact that the applicant was entitled to assume that a hearing would be heard when it was listed and had made arrangements to travel to Australia. Ms Delaney has set out extensively the preparations that have been made by her legal team in the last six months and what the delay will cost (though noting it cannot comprise a complete account of the inefficiency that will arise). In that respect, I note, and I accept the submission made by Senior Counsel for the Respondent that Ms Delaney has sought in a comprehensive way to describe the extent of the preparation that her client has had to undertake in good faith in the last six months. This evidence is relevant to the costs thrown away but, of course, it does also bring into stark relief the difficulty on the side of the respondents' solicitors and counsel where they now do not have even have a small fraction of the time to prepare for the hearing. This has to be taken into account. 36 It is my view that the applicant is entitled to its costs for the adjournment as well as its costs thrown away. I am also of the view that it should be entitled to the orders that it seeks in relation to, first, the payment forthwith of the applicant's legal costs of and incidental to the adjournment application filed on 6 May 2024 as agreed or assessed, and also forthwith to pay the applicant's legal costs of and incidental to the adjournment. In addition, I will order that the parties enter the cost arrangements otherwise agreed and for the respondents to provide security for certain of the costs in the sum of $300,000. 37 The Court must, when determining where to draw lines in case management processes, consider the overarching purpose under s 37M(1) of the Federal Court Act 1976 (Cth), do, as expressed by Mortimer J in Agius v State of South Australia (No 4) [2017] FCA 361 at [85], namely to reach a conclusion that is consistent with this overarching objective, while ensuring the active parties have a reasonable opportunity to present their respective cases. 38 I accept the many submissions made by the applicant to which I have referred to above as to the inadequacy of explanation in the past and a certain lack of promptitude by Mr Mu (in instructing Addisons) regarding the securing of Counsel for this hearing. I note the careful submissions made by Senior Counsel for the applicant in this regard, as well as the evidence of Ms Delaney. 39 However, it is the Court's view that ultimately, the stickiness of the respondents' current predicament (regarding lack of Counsel and preparation time) is, in part the result of inaction on Mr Mu's part, but is also in part based on miscommunication regarding the availability of Mr Hutley SC. By reason of this, for the reasons set out above, the other retained Senior Counsel cannot be forced on in the way the Lian Fa proposes. 40 The Court must consider how practically this matter can proceed. Part of that consideration includes, if the matter were to proceed next week, how it will occur, in circumstances where the respondents have failed to undertake any of the necessary preparatory steps to date. They have not filed their submissions, objections, the Statement of Agreed Facts, conferred regarding outstanding translation disputes and acted with dispatch to ensure that the joint expert report is before the Court. Now, whilst, of course, again, this failure should not befall the applicant in the circumstances, it is one where the Court has to be mindful of the fact that it will not be assisted without those steps being undertaken and where the applicant will be at a disadvantage, not knowing (with the benefit of submissions and the other interlocutory steps that have to be taken in advance) what the respondents' case is, particularly with respect to its cross-claim. The Court is concerned also that this would lead to the proceeding not completing in the allotted time in any event and there will be further requests for an adjournment. 41 The difficulty for the Court, in this circumstance is that the applicant and the Court will not ultimately be assisted in this matter if the respondents appear without adequate representation in the time that is currently allocated. It appears inevitable that the matter would not have concluded in the time allotted even if the parties pressed on. 42 Accordingly, with serious misgivings so as to ensure that the matter is actually progresses in a timely and just manner where the Court and the applicant are assisted by the respondents being adequately prepared, the Court is minded to grant the adjournment on the basis of the matter being set down at a time convenient to the applicant. The Court will make the orders that the parties have otherwise proposed, including that the matter be listed for case management next week.

Conclusion 43 By reason of the forgoing, the respondents' application is allowed but where the respondents are required to pay the applicant's costs in the application, costs thrown away and other incidental orders. I certify that the preceding forty-three (43) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Raper.