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[2010] FCA 544
procedural. The respondent’s application for summary judgment was dismissed; the security-for-costs application was not finally determined, with the Court reserving the form and timing of any security orders...
Tianjian admitted continuing to use Noble's trade marks after the licence was terminated, but argued that the Trade Marks Act excused those uses because the marks had been applied to the boats with Noble's consent before termination. To win summary judgment, Tianjian needed to establish that the particular boats it promoted after termination had in fact received the marks before that date. The evidence did not establish this, and the key fact was not clearly pleaded. The Court therefore dismissed the summary judgment application. Noble admitted it could not meet a costs order, so the Court's reasons proposed security payments in stages, with details still to be settled after hearing the parties.
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3 cited instruments linked from this judgment.
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Noble Engineering Pty Limited held two registered trade marks associated with boat hull designs. The judgment describes the marks as using the words “Noble Supervee Hull Design” and “Noble Supervee”, with one mark also including a stylised image ([4]). In 2008, Noble agreed to grant an exclusive licence to Noble No 2 Pty Ltd. Noble No 2 then licensed Tianjian Noble Boats International Pty Ltd to use and exploit the marks ([5]).
A dispute arose about payment of the licence fee. Noble terminated the exclusive licence, effective 12 August 2009 ([6]). Tianjian nevertheless continued using the marks on boats it offered for sale and in promotional material, including its website, brochures, magazine articles, and displays at the Sydney and Brisbane International Boat Shows ([7]). Noble commenced Fast Track proceedings in December 2009, claiming those uses infringed its marks ([8]).
Tianjian admitted the uses alleged by Noble, but pleaded a defence under s 123(1) of the Trade Marks Act 1995 (Cth) ([9], [12]). In the terms reproduced in the reasons, s 123(1) provides that a person does not infringe in specified circumstances if a registered mark has been applied to, or in relation to, goods by or with the registered owner's consent. The judgment also notes that s 9 defines “applied to” and “applied in relation to” ([10]). Reeves J referred to Transport Tyre Sales Pty Ltd v Montana Tyres Rims and Tubes Pty Ltd for the proposition that s 123 can extend to promotional material relating to goods ([11]).
Tianjian applied for summary judgment under s 31A(2) of the Federal Court of Australia Act 1976 (Cth). Its case depended on the contention that, although it continued to use the marks after termination, those marks had been applied to the relevant boats before 12 August 2009. If established, Tianjian said, s 123(1) excused the uses.
Tianjian relied principally on an affidavit from its general manager and secretary, Mr Lee. He said Tianjian had decided to rebrand its products around June or July 2009, arranged for replacement stickers, and instructed the shipyard to remove the old stickers and apply new ones ([15]). He also said the marks were not applied to any of Tianjian’s products from July 2009 onwards ([15]). For a magazine article, he said stickers had been applied to products between January and June or July 2009, and that after a meeting the marks were no longer applied to the products ([16]).
The judgment also addresses a security-for-costs application. Noble admitted that it was impecunious and unable to meet an adverse costs order. It argued that an order for the amount sought would stifle its proceeding, and that its financial condition had been caused by Tianjian’s conduct ([31]). The reasons record an estimate of Tianjian’s costs of $74,438.50, which Noble did not dispute ([30]).
The first important point was the burden of proof on the summary judgment application. Tianjian, as the party seeking judgment, bore the onus ([13]). Reeves J framed the task as showing that, because of the s 123 defence, Noble had “no reasonable prospects” of successfully prosecuting its claim ([14]). It was not enough for Tianjian to identify a possible defence. It had to establish the factual foundation necessary for that defence to succeed.
The central factual question was whether the boats Tianjian displayed and promoted after 12 August 2009 had the marks applied to them before that date ([21]). Reeves J treated this as pivotal because, if Tianjian proved the fact, the s 123 defence would succeed and no other issue was in dispute; if it did not, the infringement claim could not be summarily disposed of on that basis ([21]).
The affidavit evidence did not resolve that question. Mr Lee said that the marks were not applied to products after July 2009, but Reeves J observed that this was not evidence that marks had been applied to the particular boats before that date ([22]). Mr Lee also said that stickers had been removed and replaced with new marks in July. The judge considered that evidence difficult to reconcile with an assumption that the relevant boats still bore the old marks ([23]).
It was possible that some boats bearing the marks were already in transit or in Australia, but neither Mr Lee nor anyone else gave evidence establishing that possibility as a fact ([24]). The relevant information was exclusively within Tianjian’s possession. Reeves J declined to draw an inference in Tianjian’s favour, especially because Tianjian bore the onus on the application ([24]). This was not a finding that such boats did not exist. It was a finding that the evidence did not establish their existence for the purpose of summary judgment.
The pleading point did not fill the gap. Tianjian argued that Noble had not filed a Reply denying the defence ([17]). But the pivotal fact was not clearly alleged in paragraph 5 of the Fast Track Response ([25]). In addition, where the defence was pleaded generally, O 11 r 14 of the Federal Court Rules implied a joinder of issue. Reeves J concluded that Noble did not need to file a Reply merely to contest the general defence ([26]). The absence of a Reply therefore did not amount to proof of the factual proposition Tianjian needed.
Reeves J acknowledged that s 31A established a lower standard than the summary dismissal approach associated with General Steel Industries Inc v Commissioner for Railways (N.S.W.) ([18]). But the judge also accepted that the Court should proceed cautiously to avoid unjustly shutting a party out of litigating a fairly arguable issue ([19]). The judgment’s reasoning is therefore fact-sensitive: a lower threshold did not relieve Tianjian of proving the fact on which its defence depended.
The reasons describe the pre-s 31A position by reference to General Steel. They state that s 31A, particularly subs (3), sets a lower standard for summary judgment applications than the standard associated with the High Court’s decision in that case ([18]). Reeves J cites a series of Federal Court decisions in support of that understanding, including Duncan, Lawrenson, Jewiss, Boston Commercial, Genovese, Jefferson Ford and Vranic ([18]).
The judgment does not set out a new general test for all summary judgment applications. Instead, it applies s 31A(2) to the particular application and states that Tianjian had to show Noble had no reasonable prospects because of the pleaded defence ([14]). The Court also adopts the approach that a real factual issue requiring resolution for the defence to succeed prevents the Court from concluding that the claim has no reasonable prospects ([14]).
The judgment’s treatment of the lower threshold is qualified by the need for caution. Reeves J agreed with prior Federal Court observations that a litigant should not be unjustly deprived of a hearing on an issue that is fairly arguable ([19]). The Court also agreed that s 31A concerns substance rather than form, such as pleading points ([20]). In this case, the failure was substantive: the evidence did not establish the pivotal fact. The Court did not dismiss the application merely because of a technical pleading defect.
On the trade mark issue, the judgment records the operation of s 123(1) and refers to the Full Court’s decision in Transport Tyre Sales. That decision was cited for the proposition that the statutory defence may extend beyond goods bearing the mark to promotional material relating to those goods ([11]). The present case did not finally determine the merits of Tianjian’s defence. It decided only that the factual precondition relied on had not been established sufficiently to dispose of Noble’s proceeding summarily.
For security for costs, the reasons describe a balancing approach within the circumstances before the Court. Noble’s admitted impecuniosity supported security, but the Court also considered the risk of stifling the proceeding ([31], [35]). Its proposed solution was staged security, reflecting the fact that most of Tianjian’s estimate related to trial costs ([36]). The judgment does not state a general formula for security in other cases.
At [13], Reeves J states: “Tianjian bears the onus in this summary judgment application.” In plain English, Tianjian had to prove the basis for obtaining judgment without a trial. Noble did not have to disprove an unsubstantiated possibility.
At [14], the reasons explain that Tianjian had to establish that, because of its defence, Noble had “no reasonable prospects” of pursuing the proceeding. The Court connects that requirement to the need to resolve any real factual issue that matters to the defence. A defence that might succeed after factual findings is not necessarily a basis for summary judgment.
At [19], Reeves J says the Court should proceed cautiously so Noble is not “unjustly shut out from litigating an issue that is fairly arguable”. This does not cancel the statutory summary judgment power. It explains how the Court approached the power where an arguable factual question remained.
At [21], the judge identifies the “pivotal fact”: whether the boats promoted after 12 August 2009 had the marks applied before that date. This pinpoints why evidence that marks were not applied after July was insufficient. That evidence did not, by itself, identify which boats bore the marks or when the marks on those boats had been applied.
At [24], the judge observes that a possibility of marked boats being in transit or in Australia was not supported by evidence. The Court did not infer that fact in Tianjian’s favour because the information was within Tianjian’s possession and Tianjian carried the onus. The passage illustrates how the burden of proof affected the treatment of an evidentiary gap.
At [27], Reeves J concludes that the defence and pivotal fact involved disputed factual issues that had to be resolved before the defence could succeed. The practical meaning is that the dispute could not be finally determined through this summary judgment application.
The reasoning is most directly relevant where a party seeks summary judgment based on a statutory defence that depends on a specific factual precondition, and the evidence does not establish that precondition. Here, the precondition was that the marks had been applied to the boats before the licence termination date. The case may be useful where a respondent admits conduct but argues that the conduct is excused by a defence, and the decisive issue is when, how, or to which goods a relevant act occurred.
The case also matters where the moving party has better access to evidence about the key fact. Tianjian was the party with information about its supply chain, boats, and rebranding process. The Court did not draw an inference in its favour where it had not provided evidence directly addressing whether relevant marked boats remained in transit or in Australia ([24]). The judgment does not establish that an evidentiary gap will always count against the party with better access, but it demonstrates the significance of that circumstance when that party also bears the onus.
A second recurring pattern is reliance on the opposing party’s pleadings, or lack of a Reply, as a substitute for evidence. Reeves J distinguished the pleaded general defence from the unpleaded pivotal fact. Because the relevant factual proposition was not clearly alleged, Noble’s failure to reply did not establish it ([25]-[26]).
The reasoning also has relevance where an application risks ending a claim before a factual dispute is tried. The Court accepted that s 31A lowered the threshold, yet emphasised caution where an issue remained fairly arguable ([18]-[20]). The case does not mean that every factual disagreement prevents summary judgment. The relevant disagreement must matter to the outcome of the defence, as the identified pivotal fact did here.
The judgment text provided contains no decisions subsequent to 31 May 2010 and therefore does not show how later courts treated Noble Engineering. It would not be possible, on this source alone, to identify later applications, distinctions, approvals, or criticism of the decision.
Within its own reasons, Reeves J relied on a number of prior authorities. Jefferson Ford and Windsor were cited on the moving party’s onus ([13]). Boston Commercial, Fortron Automotive Treatments, Commonwealth Bank and Jefferson Ford were cited for the proposition that a real factual issue requiring resolution for a defence to succeed prevents a finding that the claim has no reasonable prospects ([14]). Several authorities were cited regarding the lower statutory threshold under s 31A ([18]), and others were cited for caution against unjustly shutting out a fairly arguable issue ([19]).
For research purposes, the judgment’s own stated precedential contribution should be kept distinct from those earlier authorities. Its application turns on the particular evidence and pleading before Reeves J. The reasons do not establish what later courts did with the decision, and no claim about its subsequent treatment can be grounded in the judgment supplied.
The decision left the underlying infringement claim unresolved. It did not decide whether Tianjian’s post-termination uses ultimately infringed the marks, or whether Tianjian could establish its s 123(1) defence at trial. The reasons held only that the evidence on the summary judgment application did not establish the pivotal factual premise.
The judgment does not determine whether any boats bearing Noble’s marks were in transit or in Australia after 12 August 2009. Reeves J expressly treated that as possible but unsupported by evidence ([24]). Nor does the decision determine the full application of s 9’s definitions to the particular boats and promotional material. The relevant statutory text and Transport Tyre Sales were discussed, but the factual defence could not be resolved at this stage.
The security-for-costs issue was also not fully finalised in the text provided. The reasons propose $15,000 as first-stage security, a further $9,000 before trial, and a third stage immediately before trial ([36]). Reeves J stated that the parties would be heard about the form of security, the dates for provision, and consequential orders ([37]). The formal order reproduced in the judgment expressly dismisses the summary judgment application. Accordingly, the source does not disclose the eventual form or precise timetable for security.
Finally, Reeves J did not determine whether Tianjian caused Noble’s impecuniosity. Because the dispute involved several parties and related entities, the Court considered it could not decide responsibility or extent on the material before it and proceeded on Noble’s first ground of opposition ([33]-[34]). That issue remained outside the determination described in the reasons.
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Solicitor for the Respondent: HWL Ebsworth Lawyers
BETWEEN: NOBLE ENGINEERING PTY LIMITED ACN 010 768 742
AND: TIANJIAN NOBLE BOATS INTERNATIONAL PTY LTD ACN 133 581 487
BETWEEN: NOBLE ENGINEERING PTY LIMITED ACN 010 768 742
AND: TIANJIAN NOBLE BOATS INTERNATIONAL PTY LTD ACN 133 581 487
introduction 1 This is an application for summary judgment by Tianjian Noble Boats International Pty Ltd, the respondent in these proceedings, against Noble Engineering Pty Limited, the applicant. 2 Tianjian has made its application under s 31A(2) of the Federal Court of Australia Act 1976 (Cth). That section allows the Court to give summary judgment for Tianjian if it is satisfied that Noble has "no reasonable prospects" of successfully prosecuting the proceeding. 3 Most of the facts surrounding this dispute are admitted on the pleadings - Noble's Fast Track Statement and Tianjian's Fast Track Response. What follows is a brief summary of those facts.
factual background 4 Noble holds two registered trade marks which relate to the design of boat hulls. The trade marks use the words "Noble Supervee Hull Design" and "Noble Supervee" and one of them includes a stylised image. 5 In 2008, Noble agreed to grant an exclusive licence to a company called Noble No 2 Pty Ltd, which in turn, granted a licence to Tianjian, to use and exploit Noble's trade marks. 6 After a dispute arose about the payment of the licence fee under this agreement, Noble terminated the exclusive licence effective from 12 August 2009. 7 Subsequent to 12 August 2009, Tianjian continued to use the trade marks on boats it offered for sale and in related promotional materials on its website; in brochures; in magazine articles; and in displays at the Sydney and Brisbane International Boat Shows.
Tianjian RAISES A defence under section 123(1) of the Trade Marks Act 8 Noble issued these proceedings, as Fast Track proceedings, in December 2009, claiming that these uses infringed its trade marks. 9 In its Fast Track Response, Tianjian admitted it made all the alleged uses of Noble's trade marks, but it claimed, by way of defence, that it was entitled to do so under s 123(1) of the Trade Marks Act 1995 (Cth). That section provides that:
In spite of section 120, a person who uses a registered trade mark in relation to goods that are similar to goods in respect of which the trade mark is registered does not infringe the trade mark if the trade mark has been applied to, or in relation to, the goods by, or with the consent of, the registered owner of the trade mark.
10 Section 9 of the Trade Marks Act is also relevant to this defence. It defines the expressions "applied to" and "applied in relation to" that are used in s 123(1). 11 In Transport Tyre Sales Pty Ltd v Montana Tyres Rims and Tubes Pty Ltd (1999) 93 FCR 421; [1999] FCA 329, the Full Court held, among other things, that s 123 of the Trade Marks Act not only applies to goods to which a trade mark had been applied with consent of the registered owner, but it also applies to the use of that trade mark in promotional material in relation to those goods: see at [94] to [96]. 12 Tianjian purported to raise this defence in paragraph 5 of its Fast Track Response as follows: (a) by virtue of the licence agreement between Noble No 2 and [Noble] dated 9 October 2008, [Noble] granted to Noble No 2 an exclusive right to use and exploit, inter alia, the Trade Marks; (b) by virtue of the agreement between Noble No 2 and [Tianjian], [Tianjian] licenced to [Tianjian], inter alia, the Trade Marks; [NB: the second reference to Tianjian appears to be an erroneous reference to Noble No 2.] (c) Benjamine Noble, as marketing director for [Tianjian's] business, provided the "NOBLE SUPERVEE HULL DESIGN" logo artwork and authorised and directed the placement of the logo artwork on [Tianjian's] goods and advertising material; (d) Robert Noble, director of [Noble], is Benjamine Noble's father; (e) [Noble] consented to the application of the Trade Marks to and in relation to the respondents' goods between October 2008 and 12 August 2009; (f) [Tianjian] did not become aware that [Noble] was the registered owner of the Trade Marks until 1 September 2009; (g) at all material times, the Trade Marks were applied to and in relation to the [Tianjian's] goods with the consent of [Noble] and therefore, [Tianjian's] use of the Trade Marks is excused by s 123 of the Trade Marks Act 1995 (Cth) and is not an infringement of s 120 of the Trade Marks Act 1995 (Cth).
the operation of section 31a in this application 13 Tianjian bears the onus in this summary judgment application: see Jefferson Ford Pty Ltd v Ford Motor Company of Australia Ltd (2008) 167 FCR 372; [2008] FCAFC 60 ("Jefferson Ford") at [127] per Gordon J and Windsor v Sydney Medical Service Co-operative Ltd (No 2) [2009] FCA 704 at [38] per Edmonds J. 14 Put in context, that means establishing that, because of this defence, Noble has no reasonable prospects of successfully prosecuting these proceedings. To make good this defence, Tianjian has to establish, as a fact, that all of its uses of Noble's trade marks after 12 August 2009 involved boats to which Noble's trade marks were applied before that date. Put another way, if the pleadings, affidavits and other evidence produced in relation to Tianjian's summary judgment application reveal that there is a real issue of fact that has to be resolved for Tianjian's defence to succeed, it cannot be said that Noble's claim has no reasonable prospects of success: see Boston Commercial Services Pty Ltd v GE Capital Finance Australasia Pty Ltd (2007) 236 ALR 720; [2006] FCA 1352 ("Boston Commercial") at [44] per Rares J, Fortron Automotive Treatments Pty Ltd v Jones (No 2) [2006] FCA 1401 at [20] per French J, Commonwealth Bank of Australia v ACN 000 247 601 Pty Ltd (In liq) (formerly Stanley Thompson Valuers Pty Limited) [2006] FCA 1416 at [32] per Jacobsen J and Jefferson Ford at [130] per Gordon J.
Tianjian's evidence 15 In support of its application, Tianjian relied upon an affidavit of Mr Jason Lee, its General Manager and Secretary. In that affidavit, Mr Lee states, among other things, that Tianjian decided to rebrand all its products in about June or July 2009. As a consequence of that decision, Mr Lee states:
16 Later in his affidavit, Mr Lee gives evidence about a magazine article that was referred to in Noble's Fast Track Statement as follows:
13 (c) The interview, testing and photographs taken by "Trailerboat Fisherman" magazine and included in its November/December 2009 edition took place in or around August 2009. Stickers bearing the Trade Marks had been applied to the products between January 2009 and June or July 2009 in the course of the manufacture of the products at the shipyard in China. After the Meeting, the Trade Marks were no longer applied to the products;
17 Mr Coveney, counsel for Tianjian, submitted that Mr Lee's affidavit provided the evidence necessary to establish the factual basis for Tianjian's defence under s 123(1) of the Trade Marks Act. Further, he submitted that Noble had produced no evidence to contradict this evidence and this provided further support for it. He also submitted the closest Noble came to doing so was in the affidavit of Mr Noble, where he implies it is "possible" that the trade marks were applied to the new shipment of boats made by Tianjian after 12 August 2009. Finally, Mr Coveney pointed to the fact that Noble has not filed a Reply to Tianjian's Fast Track Response, denying the allegations in paragraph 5 thereof.
Tianjian fails to discharge its onus 18 It is clear from its terms, particularly subs (3), that s 31A sets a lower standard for applications of this kind than that set by High Court decisions such as General Steel Industries Inc v Commissioner for Railways (N.S.W.) (1964) 112 CLR 125 at 129 to 130 per Barwick CJ: see Duncan v Lipscombe Child Care Services Inc (2006) 150 IR 471; [2006] FCA 458 at [6] per Heerey J, Lawrenson Light Metal Die Casting Pty Ltd (In Liq) v Cosmick Pty Ltd [2006] FCA 753 at [15] per Heerey J, Jewiss v Deputy Commissioner of Taxation (2006) 65 ATR 222; [2006] FCA 1688 at [26] per Mansfield J, Boston Commercial at [27] per Rares J; Genovese v BGC Construction Pty Ltd [2007] FCA 923 at [4] and [5] per Gilmour J, Jefferson Ford at [124] per Gordon J and Vranic v Secretary, Department of Education, Employment and Workplace Relations [2009] FCA 672 at [21] per Greenwood J. 19 Nonetheless, I respectfully agree with the views expressed by a number of judges of this Court to the effect that I should proceed with caution when dealing with an application of this kind so as to ensure that Noble is not unjustly shut out from litigating an issue that is fairly arguable: see Boston Commercial at [45] to [46] per Rares J; Unit 11 Pty Ltd v Sharpe Partners Pty Ltd (2006) 150 FCR 405 at [64] per Tamberlin J; Granitgard Pty Ltd v Termicide Pest Control Pty Ltd [2008] FCA 55 at [9] per Logan J and Keynes v Rural Directions Pty Ltd (No 2) (2009) 72 ACSR 264; [2009] FCA 567 at [47] per Besanko J. 20 Furthermore, I also respectfully agree with the observations of Rares J in Shumack v Commonwealth of Australia [2009] FCA 775 at [14] that the power expressed in s 31A is concerned with substance and not form, eg pleading points. 21 As I have noted above, there is one pivotal fact raised by Tianjian's defence. It is: whether the boats that Tianjian admits it displayed and promoted for sale after 12 August 2009, bearing Noble's trade marks, had those trade marks applied to them before 12 August 2009. If Tianjian establishes this pivotal fact, it will be entitled to succeed on its defence under s 123(1) of the Trade Marks Act and, because there is no other issue in dispute, it must follow that Noble will have no reasonable prospects of successfully prosecuting its claim in these proceedings. 22 However, there is a number of reasons why I consider Tianjian must fail in this application. To begin with, Mr Lee does not state in his affidavit that the boats Tianjian offered for sale after 12 August 2009 had Noble's trade marks applied to them before that date. All Mr Lee says in paragraph 12 of his affidavit is that none of Noble's trade marks was applied to any boats after July 2009. This is obviously not evidence that any of Noble's trade marks were applied to any boats before that date. 23 While Mr Lee does say in paragraph 13(c) of his affidavit that stickers bearing the Trade Marks were applied to the products between January 2009 and June/July 2009, he also says earlier (at paragraph 10) that, in July 2009, the stickers bearing Noble's trade marks were removed and replaced with stickers bearing new trade marks. If that is so, it is difficult to see how any of the boats produced in China, whether before or after that date, could have borne Noble's trade marks. 24 Of course, I suppose it is possible that there were boats that were already in Tianjian's supply chain in transit to, or in Australia, that bore Noble's trade marks. However, neither Mr Lee nor anyone else, has given any evidence of this fact. Since this is information that is exclusively within Tianjian's possession and it has apparently elected not to address it directly in its evidence-in-chief, I do not consider, in those circumstances, that any inference as to this fact can be drawn in its favour: see Commercial Union Assurance Company of Australia Ltd v Ferrcom Pty Ltd (1991) 22 NSWLR 389 at 418 per Handley JA. Moreover, I do not consider it would be appropriate to draw such an inference in circumstances where I am determining a summary judgment application upon which Tianjian bears the onus. 25 As to paragraph 5 of Tianjian's Fast Track Response, nowhere in that paragraph does Tianjian allege the pivotal fact I have stated above: at [21]. Unless that pivotal fact is clearly alleged by Tianjian in its pleading, I cannot see how its pleadings assists it. Further, if that fact is not pleaded, there was no need for Noble to expressly admit or deny it. 26 While the pivotal fact is not pleaded, the defence under s 123(1) of the Trade Marks Act is pleaded in general terms in paragraph 5. In that event, I do not consider it was necessary for Noble to file a Reply to Tianjian's Fast Track Response if the only purpose was to join issue with Tianjian on that defence because, in such circumstances, O 11 r 14 of the Federal Court Rules implies a joinder on that issue. 27 It necessarily follows from all this, that Tianjian's defence under s 123(1) of the Trade Marks Act and the pivotal fact involve issues of fact that are in dispute and will have to be resolved before Tianjian's defence could succeed. It could not, therefore, be said that Noble had no reasonable prospects of success in prosecuting its claims.
CONCLUSION 28 For these reasons, Tianjian's application for summary judgment must be dismissed.
security for costs 29 Tianjian has also sought an order for security for costs against Noble. It has variously relied upon s 56 of the Federal Court of Australia Act 1976 (Cth), O 28 r 3 of the Federal Court Rules and s 1335 of the Corporations Act 2001 (Cth) in making that application. 30 Mr Simon Tolhurst, the solicitor acting for Tianjian, has sworn an affidavit in which he has deposed, among other things, to an estimate of Tianjian's costs of pursuing this matter to trial. The total estimated costs are $74,438.50. Noble has not disputed this assessment. 31 In its materials, Noble has admitted that it is impecunious and would not be able to meet an order for costs in Tianjian's favour if it were unsuccessful in these proceedings. However, Noble opposes an order for security for costs on two grounds: 1. because of its impecuniosity, it could not meet an order in the amount sought and that would stifle its proceedings against Tianjian; and 2. its impecuniosity was brought about by the conduct of Tianjian. 32 In the alternative, Noble says that, if security for costs is to be ordered, the most it is able to provide at the present time is $15,000 and any order for security should therefore be limited to this amount. Mr Jones, who appeared for Noble, also submitted that any order should be staged over a period of time leading up to the trial of the proceedings. 33 In support of the latter ground, Mr Noble has filed an affidavit in which he has deposed to the background to the dispute between Noble and Tianjian. It is apparent from Mr Noble's affidavit that these proceedings form a part of a much wider dispute involving not only Tianjian, but also a co-venturer in a boat building business and the receivers that have been appointed to a related company called Noble No 2 Pty Ltd. 34 Given the breadth and complexity of that dispute and the fact it involves a number of other parties, I do not consider I can determine whether or not Tianjian is responsible for Noble's impecuniosity and, if so, to what extent. I will therefore proceed to determine Tianjian's application on the basis of Noble's first ground of opposition. 35 In view of Noble's admitted impecuniosity, I consider Tianjian should be secured for the payment of any costs order it may obtain against Noble, should Noble be unsuccessful in these proceedings. However, so far as possible, I consider that order for security should be implemented in a way that does not stifle Noble's proceedings against Tianjian. In my view, that can best be achieved by ordering that security for costs be provided in a number of stages. 36 The schedule of estimated legal costs prepared by Mr Tolhurst shows that the vast majority of the total estimate of approximately $74,000 is related to the costs of the actual trial, ie approximately $50,000. The balance of approximately $24,000 relates to interlocutory steps and preparation for trial. Since Noble has stated it is able to provide a maximum amount of $15,000 at this time, I consider the staged payments should be as follows:
First stage $15,000 within a short period from this order
Second stage $ 9,000 at a time to be fixed sometime before the trial of these proceedings is due to commence
Third stage At a time to be fixed just prior to the commencement of the trial of these proceedings.
37 I therefore propose to make orders that Noble provide security for Tianjian's costs, in a form to be agreed, in the amounts and in accordance with the stages set out above. I will hear the parties as to the form of the security, the dates upon which it is to be provided and any consequential orders. I certify that the preceding thirty-seven (37) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Reeves.
Noble Engineering Pty Limited
Tianjian Noble Boats International Pty Ltd
(1999) 93 FCR 421
(2008) 167 FCR 372
(2007) 236 ALR 720
(1964) 112 CLR 125
(2006) 150 IR 471
(2006) 150 FCR 405
(1991) 22 NSWLR 389
The respondent’s application for summary judgment was dismissed; the security-for-costs application was not finally determined, with the Court reserving the form and timing of any security orders for further hearing.