Bitech Engineering v Flameglow Pty Ltd (In Liquidation) [2010] FCA 1079 (30 September 2010)

Last Updated: 6 October 2010

FEDERAL COURT OF AUSTRALIA

Bitech Engineering v Flameglow Pty Ltd (In Liquidation) [2010] FCA 1079

Citation:		Bitech Engineering v Flameglow Pty Ltd (In Liquidation) [2010] FCA 1079
Parties:		BITECH ENGINEERING v FLAMEGLOW PTY LTD (IN LIQUIDATION) (ACN 117 672 518); FLAMEGLOW PTY LTD (IN LIQUIDATION) (ACN 117 672 518) v BITECH ENGINEERING
File number:		NSD 105 of 2007
Judge:		FOSTER J
Date of judgment:		30 September 2010
Catchwords:		CORPORATIONS – application for leave to proceed against the respondent pursuant to s 500 of the Corporations Act 2001 (Cth) – application granted for limited purposes PRACTICE AND PROCEDURE – whether the liquidator of the respondent should be compelled to provide sales and financial information relating to sales made by a related corporation of products in circumstances found to be an infringement of the applicant’s patent – order made
Legislation:		Corporations Act 2001 (Cth), s 500
Cases cited:		Bitech Engineering v Garth Living Pty Ltd [2010] FCAFC 75 related Bitech Engineering v Garth Living Pty Ltd [2009] FCA 1393; (2009) 84 IPR 78 related
Date of hearing:	30 September 2010
Place:	Sydney
Division:	GENERAL DIVISION
Category:	Catchwords
Number of paragraphs:	12
Counsel for the Applicant:	Mr PA Maddigan
Solicitor for the Applicant:	DLA Phillips Fox
Counsel for the Respondent:	The Respondent did not appear

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION	NSD 105 of 2007

BETWEEN:	BITECH ENGINEERING Applicant/Cross-Respondent
AND:	FLAMEGLOW PTY LTD (IN LIQUIDATION) (ACN 117 672 518) Respondent/Cross-Claimant

JUDGE:	FOSTER J
DATE OF ORDER:	30 SEPTEMBER 2010
WHERE MADE:	SYDNEY

THE COURT ORDERS THAT:

1. Pursuant to s 500 of the Corporations Act 2001 (Cth), the applicant have leave to proceed against the respondent for the purpose of seeking the orders set out in paragraphs 2 to 7 of the applicant’s Notice of Motion filed on 12 August 2010.
2. The respondent file and serve by 21 October 2010, an affidavit providing full details of:

(a) All instances of the hire, sale, supply or other disposal by or on behalf of the respondent of any of:

(i) The heaters known at the trial before Foster J as the FG100, FG150, FG150-2 and FG400 heaters; and

(ii) Any other heater incorporating an apparatus within the scope of Claim 1 of Australian patent number 621713;

(the heaters)

(b) To the extent that it is able, all instances of the hire, sale, supply or other disposal by or on behalf of Ogilvie Distributors Pty Limited of any of the heaters;

(c) Revenue received by or on behalf of the respondent in respect of each instance of hire, sale, supply or other disposal of the heaters;

(d) To the extent that it is able, revenue received by or on behalf of Ogilvie Distributors Pty Limited in respect of each instance of hire, sale, supply or other disposal of the heaters;

(e) Costs incurred by or on behalf of the respondent in respect of each instance of hire, sale, supply or other disposal of the heaters;

(f) To the extent that it is able, costs incurred by or on behalf of Ogilvie Distributors Pty Limited in respect of each instance of hire, sale, supply or other disposal of the heaters;

(g) Such overheads as the respondent would contend should be taken into account in the calculation of profits derived by the respondent, should the applicant elect for an account of profits; and

(h) To the extent that it is able, such overheads as Ogilvie Distributors Pty Limited would contend should be taken into account in the calculation of profits derived by Ogilvie Distributors Pty Limited, should the applicant elect for an account of profits;

And annexing or exhibiting copies of documents in the possession, custody, or power of the respondent recording or evidencing the above matters.

3. The costs of the applicant’s Notice of Motion filed on 12 August 2010 be reserved.
4. The proceeding be listed for directions before Foster J at 9.30 am on 29 October 2010.
5. By no later than 6 October 2010, the applicant notify the liquidator of the respondent in writing of the above orders.
   

Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
The text of entered orders can be located using Federal Law Search on the Court’s website.

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION	NSD 105 of 2007

BETWEEN:	BITECH ENGINEERING Applicant/Cross-Respondent
AND:	FLAMEGLOW PTY LTD (IN LIQUIDATION) (ACN 117 672 518) Respondent/Cross-Claimant

JUDGE:	FOSTER J
DATE:	30 SEPTEMBER 2010
PLACE:	SYDNEY

REASONS FOR JUDGMENT

1. The applicant is a company incorporated in the Republic of Ireland. It is the patentee of Australian Patent No 621713 for an invention described in the patent as “Apparatus for simulating flames” (the Patent). The essential object of the invention is to achieve a realistic simulation of flames emanating from a simulated combusting log or coal fire. The Patent has application in electric and gas fired domestic room heaters.
2. In late 2006, the applicant became aware that certain models of electric flame heaters were being sold by various retailers and suppliers which the applicant believed infringed the Patent. In addition to the present proceeding, the applicant instituted four other proceedings against the suppliers and retailers of the allegedly infringing electric flame heaters.
3. I heard this proceeding and three of the other four proceedings together and delivered judgment in those proceedings on 26 November 2009 (Bitech Engineering v Garth Living Pty Ltd [2009] FCA 1393; (2009) 84 IPR 78). The applicant was unsuccessful before me as far as its claims for infringement of the Patent were concerned. However, on appeal, the Full Court concluded that the Patent had been infringed and upheld the appeal (Bitech Engineering v Garth Living Pty Ltd [2010] FCAFC 75). As yet, there has been no special leave application to the High Court. The matters were remitted to me by the Full Court for the purpose of dealing with the applicant’s claims for damages or, in the alternative, an account of profits.
4. Three of the other four matters are being case managed by me in order to ready them for hearing. The fourth of those matters is to be discontinued.
5. The applicant seeks leave to proceed against the respondent pursuant to s 500 of the Corporations Act 2001 (Cth) for the limited purpose of seeking orders in the terms of paragraphs 2 to 7 of its Notice of Motion filed on 12 August 2010. At this stage, I am prepared to grant leave for that limited purpose, although whether any further leave will be granted in the future and the terms of any such leave will require consideration down the track and in light of all relevant circumstances.
6. The applicant also seeks leave to rely upon paragraph 4 of the affidavit of Donald Ogilvie affirmed on 15 December 2009. Mr Ogilvie was, as at that date, a director and shareholder of the respondent. Paragraph 4 of that affidavit is in the following terms:

Sales of heaters that are the subject of these proceeds [sic] [Flame Effect Heaters] by Flameglow and a related company were approximately $1,190,000 in the season to July 2007. Based on sales of Flameglow prior to cessation of trading, I estimate that sales of flame effect heaters by Flameglow would have been approximately $1,500,000 in the season to July 2008, and two million to July 2009.

7. That affidavit was sworn in support of the respondent’s claim for damages for unjustified threats made by the applicant. The landscape has changed somewhat since that affidavit was sworn and the cross-claim for damages for unjustified threats has now been dismissed in light of the Full Court’s decision (Bitech Engineering v Garth Living Pty Ltd [2010] FCAFC 75) to which I have referred at above.
8. Order 2 sought by the applicant in its Notice of Motion is a conventional form of order designed to provide information to the applicant in order, amongst other things, to enable the applicant to decide whether to press its claim for damages or whether to elect to claim an account of profits. Insofar as the order applies to the respondent itself, I am prepared to make the order as sought. In addition to seeking Order 2 against the respondent in respect of the respondent’s own activities, the applicant seeks an order against the respondent requiring it to address the activities of a related corporation (Ogilvie Distributors Pty Limited (Ogilvie Distributors)).
9. I have some reservations about making an order against the respondent requiring it, in absolute terms, to provide information of a financial kind in respect of an entirely different entity which, although apparently related to the respondent, does not appear to be in liquidation and is certainly not under the control of the liquidator of the respondent.
10. An officer within the office of the liquidator of the respondent, Andre Janis Strazdins, swore an affidavit on 28 September 2010 in which he deposed to the following facts and matters:

(a) The liquidator is unable to comply with an order in terms of Order 2 sought in the Notice of Motion without having custody and control of the books and records of the respondent;

(b) The liquidator has requested Mr Ogilvie to provide those books and records;

(c) Insofar as those books and records are in electronic form, they have been provided by Mr Ogilvie;

(d) Insofar as they are in paper form, they are in storage. Mr Ogilvie is content to provide access to the storage facility for the purpose of allowing the liquidator to inspect and extract such documents as he might require in order to comply with an order in the terms of Order 2 sought in the Notice of Motion; and

(e) Based upon the information already in the possession of the liquidator, the related company to which Mr Ogilvie referred in paragraph 4 of his affidavit affirmed on 15 December 2009 is Ogilvie Distributors.

11. When the matter was called on before me this morning, there was no appearance either by or on behalf of the liquidator of the respondent. However, I am satisfied that the liquidator was aware of today’s listing and that he was also aware of the purpose of that listing. The solicitors for the applicant made clear to the liquidator that the applicant would press today for the orders sought in the applicant’s Notice of Motion. I have therefore dealt with the matter in the absence of the liquidator.
12. There is enough material before me to justify ordering the liquidator to file an affidavit in the terms of that required by paragraph 2 of the Notice of Motion in respect of the respondent itself and also, to the extent that he is able, in the respect of Ogilvie Distributors. I wish to make clear that I am not ordering the liquidator in absolute terms to file the necessary affidavit in respect of Ogilvie Distributors. Rather, I will require him to do so only to the extent that he is able given that he is not the liquidator of that company nor does he have control over the affairs of that company. Accordingly, I make the following orders:

(1) I order that, pursuant to s 500 of the Corporations Act 2001 (Cth), the applicant have leave to proceed against the respondent for the purpose of seeking the orders set out in paragraphs 2 to 7 of the applicant’s Notice of Motion filed on 12 August 2010;

(2) I order the respondent to file and serve by 21 October 2010, an affidavit providing full details of:

(a) All instances of the hire, sale, supply or other disposal by or on behalf of the respondent of any of:

(i) The heaters known at the trial before Foster J as the FG100, FG150, FG150-2 and FG400 heaters; and

(ii) Any other heater incorporating an apparatus within the scope of Claim 1 of Australian patent number 621713;

(the heaters)

(b) To the extent that it is able, all instances of the hire, sale, supply or other disposal by or on behalf of Ogilvie Distributors Pty Limited of any of the heaters;

(c) Revenue received by or on behalf of the respondent in respect of each instance of hire, sale, supply or other disposal of the heaters;

(d) To the extent that it is able, revenue received by or on behalf of Ogilvie Distributors Pty Limited in respect of each instance of hire, sale, supply or other disposal of the heaters;

(e) Costs incurred by or on behalf of the respondent in respect of each instance of hire, sale, supply or other disposal of the heaters;

(f) To the extent that it is able, costs incurred by or on behalf of Ogilvie Distributors Pty Limited in respect of each instance of hire, sale, supply or other disposal of the heaters;

(g) Such overheads as the respondent would contend should be taken into account in the calculation of profits derived by the respondent, should the applicant elect for an account of profits; and

(h) To the extent that it is able, such overheads as Ogilvie Distributors Pty Limited would contend should be taken into account in the calculation of profits derived by Ogilvie Distributors Pty Limited, should the applicant elect for an account of profits;

And annexing or exhibiting copies of documents in the possession, custody, or power of the respondent recording or evidencing any of the above matters.

(3) I reserve the costs of the applicant’s Notice of Motion filed on 12 August 2010.

(4) I fix the proceeding for directions before me at 9.30 am on 29 October 2010.

(5) I order the applicant to notify the liquidator of the respondent in writing of the orders which I have just made by no later than 6 October 2010.

I certify that the preceding twelve (12) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Foster.

Associate:

Dated: 5 October 2010