Zoo Sport (Europe) Ltd v Zoo International Pte Ltd

1. The proceedings be dismissed.
2. Orders 1 to 3 of the Orders made on 27 July 2018 be set aside.
3. The parties are to file and serve any further submissions and any affidavit material concerning costs and orders for payment of the amount paid into Court by the applicants by 4pm on 8 October 2019.
4. The question of costs and how the money paid into Court by the applicants is to be dealt with will be determined on the papers. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

RANGIAH J: 1 The principal proceedings concern a dispute about the ownership and use of certain trademarks. The applicants seek declarations, injunctions, damages and other relief against the respondents. 2 The application presently before the Court is brought by the respondents for dismissal of the proceedings for want of prosecution. 3 The applicant companies are registered in the United Kingdom. Mr David Peyton is a director of those companies. 4 The proceedings were commenced by originating application and statement of claim filed on 3 July 2018. On 27 July 2018, I ordered, upon the applicants' application, that the respondents be restrained from, inter alia, using the disputed trademarks until trial or further order. The interlocutory injunctions were made on the basis of undertakings being given by Mr Peyton, including to pay $50,000 into Court as security for his undertaking as to damages by 31 August 2018. That amount has been paid into Court. 5 On 6 March 2019, I made orders by consent, providing, inter alia, that by 29 March 2019, the applicants provide security for the respondents' costs by payment of $100,000 into Court. I also ordered that the proceedings be stayed, pending payment of that amount into Court. The applicants have not complied with the order for security for costs. Accordingly, the proceedings remain stayed. 6 On 15 July 2019, the lawyers acting for the applicants filed a notice of ceasing to act. On 24 July 2019, I conducted a case management hearing, at which the applicants were represented by Mr Peyton, who appeared by telephone from the United Kingdom. I ordered, inter alia, that any application for dismissal for want of prosecution be filed and served by 26 August 2019. I ordered that the applicants file and serve a notice of address for service. I also ordered that any application for dismissal for want of prosecution be heard on 1 October 2019. 7 The respondents duly filed an application for dismissal for want of prosecution. Although the applicants failed to file a notice of service, I had also ordered that in the absence of a notice of address for service being filed, that the respondents could affect service on the applicants to the email address supplied by Mr Peyton. I am satisfied that the respondents' application has been served at the email address provided by Mr Peyton. 8 There has been no appearance on behalf of the applicants at the hearing today. Neither have the applicants complied with orders made on 24 July 2019 for the filing and service of any affidavits or written submissions. Accordingly, the application for dismissal for want of prosecution is uncontested. 9 Rule 5.22 of the Federal Court Rules 2011 (Cth) (the Rules) provides that a party is in default if, relevantly, the party fails to comply with an order of the Court. The applicants have failed to comply with orders of the Court, including orders for the payment into Court for security for costs and provision of an address for service. In the past, the applicants have also failed to comply with other orders of the Court, including for filing of requests for particulars and a reply and orders requiring mediation to take place. I am satisfied that the applicants are in default. Rule 5.23(1) of the Rules provides that if an applicant is in default, a respondent may, inter alia, apply for an order that the proceeding be dismissed. 10 In Lenijamar v AGC Advances (1990) 27 FCR 388, Wilcox and Gummow JJ noted that there are two situations that are obvious candidates for the exercise of power to dismiss a proceeding where a party is in default. The first is where the history of non-compliance by an applicant is such as to indicate an inability or unwillingness to cooperate with the Court and the other parties in having the matter ready for trial within an acceptable period. The second is where the non-compliance is continuing and occasioning unnecessary delay, expense or other prejudice to the respondent. 11 In Microbio Resources Inc v Betatene Ltd, (unreported, Black CJ, Sheppard and Einfeld JJ, 8 October 1993), the Full Court held at 9 that: The court is careful to see that orders for security of costs do not work injustice to parties against whom such orders are made, but if those parties do not comply with the orders and give no evidence or explanation as to why they have not complied with them, they cannot be heard to complain of injustice if after a considerable length of time, and extensions of time, the ultimate sanction of dismissal is implied. It is incumbent upon parties in such circumstances to provide evidence of their position. 12 In Idoport Proprietary Limited v National Australia Bank Limited [2002] NSWSC 18 at [24], Einstein J referred to five factors flowing from Microbio Resources relevant to the exercise of the discretion as to whether to dismiss a proceeding where there has been a failure to comply with an order for security for costs. Those factors are: (1) the period that has elapsed since security was ordered; (2) the fact that the plaintiff has been on notice of the application for dismissal; (3) the seeming inability of the plaintiff to further fund the main proceedings; (4) prejudice to the defendants; and (5) the position of the court. 13 The order for security of costs has not been complied with, despite over six months elapsing since the order was made. The applicants have been on notice of the respondents' intention to bring this application since 20 August 2019. Despite that, they have failed to file any affidavits or submissions or appear at the hearing today. The failure of the applicants to instruct other lawyers to resist the application suggests that there is little prospect of security for costs being provided in the future, and that there is little prospect of the proceeding being prosecuted with diligence. The applicants, being corporations, are not competent to appear for themselves in these proceedings, pursuant to r 4.01(2) of the Rules. 14 There is no evidence before the Court indicating the applicants' ability to meet the order for security for costs. The applicants have not demonstrated any intention to advance the proceedings with appropriate speed, even if they were able to provide the security for costs. That is demonstrated by the number of breaches of orders in the proceedings to date, including their failure to provide an address for service. 15 The continuation of this litigation without expedition will cause prejudice to the respondents in the form of ongoing disruption and legal expense. That is particularly so, given the continuing operation of the interlocutory injunction granted on 27 July 2018, which prejudices the respondents' ability to trade using the disputed trademarks. 16 In these circumstances, I am satisfied that the defaults of the applicants demonstrate an inability or unwillingness to cooperate with the Court and the other parties in having the matter ready to proceed to trial within an acceptable period. Further, it would be oppressive to the respondents for the litigation to proceed in circumstances where the applicants have failed to provide the security for costs that they consented to. 17 I am satisfied that it is appropriate to dismiss the proceeding. I certify that the preceding seventeen (17) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Rangiah.