Lian Fa International Dining Business Corporation v Mu (No 2)

This proceeding arose from a commercial dispute connected with the Sharetea brand. Lian Fa International Dining Business Corporation operated a bubble tea business and franchised rights to others, including Sharetea Australia Pty Ltd, to operate similar businesses. The judgment records that Lian Fa claimed extensive international use and promotion of the word Sharetea in connection with tea houses, bubble teas and other beverages. Mr Teng Mu was the sole director of Sharetea Australia.

In the main case, Lian Fa alleged trade mark infringement, misleading or deceptive conduct, false or misleading representations and unlawful use of confidential information. Those are substantial claims for any business because they can affect branding, customer trust, expansion plans, damages exposure and the ability to keep trading under a disputed name. But this particular judgment was not the final fight about who was right on those issues. It was about whether the respondents should be allowed to adjourn a trial that had already been delayed several times.

That distinction matters. Businesses often focus on the underlying legal rights, such as who owns the brand or whether conduct was misleading. This case shows that before a court even reaches those questions, procedural problems can create major cost and timing consequences. A dispute can become commercially painful long before the final merits are decided.

The procedural history was central to the result. Lian Fa commenced the proceeding in 2021. At the end of that year it sought injunctive relief to restrain the respondents from infringing its trade marks, but that application was rejected. The judgment notes that part of the reason for that rejection was that the matter was then expected to be heard in June 2022. That expectation did not eventuate.

The case then moved through a series of adjournments. It was first listed in December 2021 for hearing in June 2022. In May 2022, the respondents sought an adjournment because of a change in representation, and the matter was relisted by consent for October 2022. In July 2022, the applicant sought to vacate those dates because the hearing estimate had doubled after the pleadings expanded. That was also by consent, and the matter was then listed for March 2023. In October 2022, those dates were vacated again by consent because the applicant had retained new solicitors and new counsel.

By August 2023, the court listed the matter for final hearing between 3 and 27 June 2024, with closing submissions in July 2024. At that stage the court had greater confidence the matter would proceed because the respondents had filed their evidence, defence, cross-claim and reply. But in May 2024 the respondents sought an indefinite adjournment on the basis of absence of solicitor representation for the June 2024 hearing. The court refused that application, although it effectively gave the respondents more time by vacating the first two weeks and pushing the start date to 17 June 2024.

The judge explained that the May 2024 refusal was based on the matter having reached an advanced state of readiness. All evidence had been filed, and the remaining work was said to be mainly counsel work, including submissions, a joint expert report, a statement of agreed facts and a list of objections. The court was not satisfied that Mr Mu had shown he could not secure representation before the hearing. Even so, the court gave him five and a half weeks to do so.

The immediate legal issue was whether the Federal Court should vacate the fixed trial dates and adjourn the hearing again. The court approached that as a discretionary case management decision. The reasons refer to established principles that a party to civil litigation does not have an absolute right to an adjournment simply because it lacks legal representation or is not ready. A court must balance that against the other party's right to a reasonably prompt resolution and the public interest in a fair and efficient civil justice system.

The judge also emphasised that vacating a fixed trial date is a serious step. Parties, witnesses, lawyers and the court itself make commitments on the assumption that the hearing will proceed. Trial dates also create pressure for realistic preparation and possible settlement. So the question was not just whether the respondents preferred more time. It was whether, in all the circumstances, pressing on would produce a fair and workable trial.

The court also considered the overarching purpose in section 37M(1) of the Federal Court Act 1976 (Cth), namely the just resolution of disputes according to law as quickly, inexpensively and efficiently as possible. That meant the judge had to weigh fairness to the parties against the broader need for efficient case management and the impact on other litigants whose matters could have used those hearing dates.

The respondents said there were four main reasons the trial should be adjourned. First, they said the proceeding was a significant piece of commercial litigation. Secondly, although they had now secured legal representation, they said the matter could not be made ready in time and their solicitors were concerned about their professional obligations if forced to proceed unprepared. The judgment specifically refers to obligations to act in the client's best interests, deliver competent, prompt and diligent legal services, and avoid compromise to integrity.

Thirdly, the respondents said the matter was not sufficiently ready because the applicant had served additional reply evidence after the earlier adjournment hearing. Fourthly, they accepted that if an adjournment were granted they should pay an amount the court considered appropriate for costs thrown away.

The most important practical development was the loss of one of the respondents' senior counsel. Their solicitors had been working on the assumption that Mr Hutley SC would appear for the first week and Mr Fox SC for the next two weeks. On 4 June 2024, Mr Hutley SC informed them he could no longer act. That left Mr Fox SC with less than a week to prepare for a substantial trial involving four lay witnesses and, on his estimate, more than a hundred conversations relevant to cross-examination.

The court was not impressed by every part of the respondents' conduct. It noted that Mr Mu had not done all that was within his ability to progress the matter with due dispatch. It also noted questions about the explanation for the loss of earlier representation, including a fee dispute and non-payment issues. The judge referred to evidence that Mr Mu had advanced more than $160,000 after the relevant time, but had not paid the amount said to be owing. Even so, the judge did not find that he had engineered the termination of the earlier retainer in order to force an adjournment.

Raper J granted the adjournment application, but the reasons make clear that this was not a comfortable decision. The judge said the application was allowed with serious misgivings. The court accepted many of the applicant's criticisms about the inadequacy of the respondents' explanations and the lack of promptness in securing representation and counsel. The judge was also concerned that the respondents had not followed the court's request to provide more precise evidence about counsel availability from a wider pool.

Even so, the decisive issue was practical fairness. The court accepted that after the loss of Mr Hutley SC, the remaining senior counsel did not have enough time to prepare properly. The judge considered whether the matter could simply be delayed by a week, but accepted that this would still not solve the problem. Mr Fox SC was only available until 1 July 2024, and the court did not consider it procedurally fair for the respondents' witnesses to give evidence without the benefit of counsel for the remainder of the hearing.

The court also looked at the practical state of readiness. The respondents had not filed submissions, objections or a statement of agreed facts, had not conferred about outstanding translation disputes, and had not acted with dispatch to ensure the joint expert report was before the court. The judge accepted that these failures should not prejudice the applicant, but also concluded that the court itself would not be assisted by forcing the matter to proceed in that condition. In the judge's view, the hearing was unlikely to finish in the allotted time anyway and further disruption was likely.

So the court vacated the hearing listed from 17 June to 4 July 2024 and the closing submissions listed for 24 and 25 July 2024. It gave the applicant leave to seek dates convenient to it not before 1 September 2024 for a two-week hearing. Without prejudice to that right, the matter was also listed for hearing from 17 to 28 February 2025, with closing submissions from 7 to 9 April 2025.

The most commercially important part of the judgment may be the costs orders. Although the respondents obtained the adjournment, the court made them bear the financial consequences of the disruption. They were ordered to pay the applicant's legal costs of the May 2024 adjournment application and the June 2024 adjournment application, as agreed or assessed. They also had to pay the applicant's return flight costs to and from Sydney, ground transport, accommodation in Sydney within the limits set by the orders, interpreter cancellation costs, and any other costs thrown away by reason of the adjournment.

On top of that, the court ordered the respondents to provide security of $300,000 for certain further costs by paying that amount into their solicitors' trust account within 14 days. That is a strong reminder that an adjournment can come with immediate funding pressure. A party may succeed in showing that a hearing cannot fairly proceed, but still be required to put up substantial money because its own conduct contributed to the problem.

The judge's reasoning on fairness is important. The court accepted that the applicant would suffer real prejudice from delay, including alleged continued infringement, concern about recovering damages given the respondents' known asset pool, wasted witness travel arrangements, interpreter arrangements and the fact that the applicant had already provided security of $550,000 into court. The court also recognised the applicant's extensive preparation over the previous six months. But fairness did not run only one way. The judge concluded that the court and the applicant would not ultimately be assisted by forcing the respondents to trial without adequate preparation and representation.

That balance is the practical lesson. Courts do not reward delay, but they also do not insist on a hearing that is likely to be inefficient, unfair and incomplete. When a party's lack of readiness makes an adjournment unavoidable, the court may protect fairness by granting the adjournment while protecting the other side through strong costs orders.

If you run a franchise, distribution network or branded retail business, this case is a reminder that disputes about brand use are rarely narrow. They can involve trade mark rights, consumer law allegations, confidential information and cross-claims at the same time. That means the commercial groundwork matters. Businesses should know who owns the brand, what rights are licensed or franchised, what happens on termination, and who can use operational know-how, recipes, systems, marketing materials and customer-facing branding.

The case also shows that litigation readiness is not just a legal issue. It is a management issue. Once proceedings are on foot, businesses need clear internal decision-makers, stable legal representation, realistic budgets, witness planning, document control and contingency planning if a lawyer or counsel becomes unavailable. Waiting until the last few weeks before trial to solve representation or preparation problems can be disastrous.

For business owners, the strongest practical lesson is about cost risk. The respondents persuaded the court that the hearing should not go ahead, but they still faced immediate and significant financial consequences. That can affect cash flow, settlement leverage and the ability to continue defending the case. In other words, poor litigation management can become a business funding problem very quickly.

This judgment does not tell you who ultimately won the Sharetea dispute. Its value is in showing how a court deals with repeated delay, what kinds of fairness concerns can still justify an adjournment, and how sharply the court may respond on costs when one side's lack of readiness has wasted a trial listing.