Bridge and Marine Engineering Pty Ltd v Taylor
[2004] VSC 534
•21 December 2004
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMERCIAL AND EQUITY DIVISION
INTELLECTUAL PROPERTY LIST
No. 8003 of 2001
| BRIDGE AND MARINE ENGINEERING PTY LTD (ACN 059 317 396) | Plaintiff |
| v | |
| ROBERT TAYLOR and AUSTRACK PROJECT MANAGEMENT PTY LTD (ACN 065 271 114) | Defendants |
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JUDGE: | HARPER J | |
WHERE HELD: | MELBOURNE | |
DATE OF HEARING: | 30 JUNE 2004 | |
DATE OF JUDGMENT: | 21 DECEMBER 2004 | |
CASE MAY BE CITED AS: | BRIDGE AND MARINE ENGINEERING PTY LTD v TAYLOR & ANOR | |
MEDIUM NEUTRAL CITATION: | [2004] VSC 534 | |
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PRACTICE AND PROCEDURE – Claim of ownership of inventions – Alleged breach of contract and misleading and deceptive conduct in applying to register patents - Claim for monies lent, alternatively had and received - Application to dismiss proceeding for want of prosecution – Whether delay inordinate or inexcusable – Prejudice to defendants - Whether an abuse of process – Department of Transport v Chris Smaller (Transport) Ltd [1989] 1 AC 1197, Bishopgate Insurance Australia Ltd v Deloitte Haskins & Sells [1999] 3 VR 863 and Spitfire Nominees Pty Ltd & Anor v Ducco [1998] 1 VR 242 followed - Grovit v Doctor [1997] 1 WLR 640 considered.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr N. Hopkins | Deacons |
| For the Defendants | Mr M. Pearce | McKean & Park |
HIS HONOUR:
Kooragang Island forms part of the Port of Newcastle in New South Wales. A scheme is underway to extend its use for port purposes. Considerable intellectual capital has gone into the design of new infrastructure. The parties to this proceeding each claim ownership of the resultant intellectual property. The plaintiff, Bridge and Marine Engineering Pty Ltd (“BME”), also claims the return of monies allegedly either lent to the defendants or one or other of them, or received by them to the use of the plaintiff.
The Writ (with a statement of claim annexed) was filed as long ago as 17 October 2001. For reasons which shall become apparent later in this judgment, I note at this point that, by paragraph 7 of the pleading, the plaintiff alleges that two patents had been registered. A defence on behalf of the second defendant, Austrack Project Management Pty Ltd (“AustrackPM”), followed on 27 November 2001. In it, the allegations in paragraph 7 of the statement of claim are denied generally, but the defence does not assert that which subsequently became accepted as the fact; that is, that patent applications had been lodged, but not approved.
Although a reply to the defence of the second defendant was filed on 14 January 2002, the pleadings are yet to be finalised. An amended statement of claim was filed on 4 April 2002. Following leave granted by me, a further amended statement of claim was filed on 12 February 2003. A fresh pleading was subsequently put forward by the plaintiff, but in the result leave to file it was not pressed. I now have before me yet another version. The defendants maintain that, if the accompanying application for leave to amend in the form of this version were granted, the sins of its forebears would even then not be expiated: the most recent (and fifth) attempt by the plaintiff to plead its case simply illustrates, the defendants submit, that it has no case.
The defendants also maintain that the proceeding should be dismissed or stayed for want of prosecution, for failure to abide by the orders of the Court and for abuse of process.
The plaintiff is a member of a group of design and construction companies associated with the family of Mr John Denis Thomas. BME is the design company in the group. Mr Thomas is a civil engineer who is employed by BME as an engineering manager, designing what he describes as innovative structures that use unconventional engineering techniques. He claims to be the author of original artistic works comprising four design sketches identified in paragraph 4 of the further amended statement of claim filed 12 February 2003. Each design was, the plaintiff alleges, prepared by Mr Thomas in the course of his employment with BME. The plaintiff is therefore the owner of the copyright in those works.
There is also a patent claim. The plaintiff asserts that Mr Thomas is the inventor of both a “stockyard” and a “storage facility” for various bulk materials. In the statement of claim as presently pleaded, as well as in the currently proposed second further statement of claim, it is said that intellectual property in these inventions belongs to the plaintiff because Mr Thomas “invented the inventions pursuant to his contract of employment with BME.”
In the proposed second further amended statement of claim, each of the inventions is alleged to be the subject of a separate Australian patent application. In the case of the “stockyard”, the Australian patent application number is 200027826 and the corresponding Patent Co-operation Treaty patent number is W00046132. In the case of the “storage facility”, the relevant numbers are 2000027827 and W0004631. The problem, according to the plaintiff, is that AustrackPM - not the plaintiff - is the applicant. The latter has moved to claim that to which it has no entitlement. Consistently with this, “AustrackPM has represented to various parties interested in joining the development of the Newcastle Port Project that it is the owner of BME’s intellectual property.”[1]
[1]Further amended statement of claim, para. 14
In 1995 Mr Thomas was introduced to the first defendant, Mr Robert Taylor. Mr Taylor deposes that he had been interested in the Newcastle Port redevelopment since 1992. To that end, he had “developed a concept for a port facility and [had] been involved in discussions with numerous parties to get a project off the ground.”[2] He says that by the time he and Mr Thomas discussed the latter’s involvement in the project, “a considerable amount of work had already been undertaken in the development of concepts for the port” by another engineer. [3] These materials were shown to Mr Thomas. According to Mr Taylor, Mr Thomas merely developed concepts which were already in existence. Mr Taylor therefore claims that he is the inventor of the concept which is the subject of the patents.[4]
[2]Affidavit of Robert Taylor filed 18 June 2004, paragraph 4.
[3]Ibid, paragraph 5
[4]Ibid, paragraphs 14 and 15
Thus the battle lines are drawn. For his part, Mr Thomas says that the drawings upon which Mr Taylor relies as the basis of the defendants’ claim do not incorporate the key features that subsequently appear in the patent applications.[5] He deposes in his affidavit filed on 23 June this year that he has retained the workbooks in which the development of these key features is recorded. In particular, Mr Thomas identifies two drawings, a set of calculations and a concept sketch all of which he says were created on or before 3 January 1996. He also refers to a concept sketch that he says was made before 8 January 1996.[6] There is therefore a real dispute about who invented what.
[5]Affidavit of John Denis Thomas filed 23 June 2004, paragraph 10(1).
[6]Ibid, paragraph 10(2), exhibits “JDT7” to “JDT11”.
On 12 January 1996 BME and AustrackPM executed a document described as a “Technology Agreement”. In its recitals that agreement acknowledged that each party had separately and jointly developed certain technology. That developed by each was identified in the Schedule, as was the joint technology and that which is the subject of the patent applications. Pursuant to that agreement BME granted to AustrackPM, for the sole purpose of the operation of the port development, a non-exclusive licence in the BME technology and in BME’s part of the joint technology (cl. 9.2). BME alleges that AustrackPM breached the agreement by claiming that it is the owner of the BME technology.
BME alleges a further, or alternative, cause of action. By its representations that it is the owner of the BME intellectual property, and by its patent applications, AustrackPM engaged in misleading and deceptive conduct in contravention of s. 52 of the Trade Practices Act 1974, s.9 of the Fair Trading Act 1999 (Vic) and s.42 of the Fair Trading Act 1987 (NSW). By engaging in that conduct, AustrackPM and Mr Taylor both also acted unconscionably in breach of ss.51AA or 51AC of the Trade Practices Act 1974. An additional claim is brought by BME for breach of copyright in the reproduction by AustrackPM, when applying for Letters Patent, of BME’s original artistic works.
The are other, unrelated, claims. BME by its present pleading seeks recovery of the sum of $192,688.67 paid by it to the firm of solicitors, Corrs Chambers Westgarth, which it alleges was then acting for it. Payment is said to have been made on 1 November 1996 “in respect of a tender deposit in respect of the Newcastle Port Project with Brambles Ltd.”[7] But Brambles subsequently pulled out of the project, and so BME (on a date that does not appear in the further amended statement of claim) sought repayment. Despite the fact (as the plaintiff alleges) that it was the source of the funds in question, and therefore entitled to their refund, the $192,688.67 found its way to the defendants. Based on information received from the solicitors, the plaintiff believes that the deposit came into the defendants’ hands on or about 12 August 1997. They have never paid it over.
[7]Further amended statement of claim, para. 30
As a pleading, all this is straightforward enough. The plaintiff, however, seeks - in the version of the statement of claim upon which it now wishes to rely - to put a new angle on it. It now asserts, by the proposed second further amended statement of claim, that it was not Brambles Ltd but “Ampol” (sic) which required the “tender deposit”; and it did so as a condition of the defendants’ right to tender for an assignment of a lease of premises on Kooragang Island. The amount specified was paid – not by the defendants, but by the plaintiff by way of loan from it to them. When the tender was unsuccessful, the tender sum was repaid to the defendants, who have failed to pass it on to the plaintiff.
There is one remaining cause of action pleaded by the second further amended statement of claim. BME seeks repayment of “a series of loans” made by it to Mr Taylor between December 1995 and February 2001. Twenty-seven individual payments are listed in the schedule to the further amended statement of claim. These total $216,729.86. Under the heading “Description” in the schedule there appears such expressions as “Personal expenses/accounts paid on behalf”; “Personal living expenses”; and “Computer finance payment”.
In addition to the existing allegation of indebtedness, BME seeks in the proposed second further amended statement of claim to expand the plea to include unjust enrichment and monies had and received. In each case in the total amount claimed under these heads is the same as the total of the “loans”, namely $216,729.86.
I will deal first with the application for dismissal for want of prosecution. The defendants submit that there have been three periods of substantial inactivity by the plaintiff. They specify the periods between: (a) 12 April and 26 November 2002; (b) 20 February and 7 August 2003; and (c) 26 November 2003 and 25 May 2004. According to the defendants, 33 months (originally stated to be 43 months) elapsed between the commencement of proceedings and the date of application. In that time there had been 19 months of inactivity (amounting to 58% of the period). Mr Pearce of counsel for the defendants submitted that I should exercise my discretion against the plaintiff, particularly where the proceeding is in a Judge-managed list and where the plaintiff is now seeking to amend the statement of claim for the fifth time. Moreover, this is an instance where the claims are, according to the defendants, an abuse of process. In these circumstances I am entitled, he submitted, to cumulate the delay, the consequential prejudice and the abuse - so that even if none by themselves were sufficient to warrant the dismissal of the proceeding, taken together they certainly are: Grovit v Doctor.[8]
[8][1997] 1 WLR 640 at 646-8.
The history of this proceeding is as follows:
(a)The Writ and Statement of Claim were filed on 17 October 2001. A Notice of Appearance was filed on behalf of AustrackPM on 29 October 2001. Its defence followed on 27 November. A Conditional Notice of Appearance was filed on behalf of Mr Taylor on 30 January 2002. At an initial directions hearing on 20 February 2002 Mr Andrew Brown, the solicitor for the defendants, accepted that Mr Taylor’s appearance was no longer conditional. At that time I also expressed some concerns about what I perceived to be the failure of the statement of claim sufficiently to delineate the various causes of action.
(b)On 4 March 2002 the plaintiff’s then solicitors withdrew on the basis of possible conflict of interest. They were replaced, on 5 March 2002, by Galilee & Associates.
(c)On 8 March 2002 I heard an application for the proceeding to be cross vested to the Supreme Court of New South Wales. I refused that application and gave directions for the filing, by the following 5 April, of an amended statement of claim. That document was filed on 4 April 2002.
(d)On 30 September 2002 Galilee & Associates ceased to act. On 1 November 2002, the return date for a directions hearing, I made a self-executing order after the plaintiff failed to appear. On 26 November 2002 Deacons became the solicitors on the record for BME and a directions hearing took place on 3 December. At that hearing I gave leave for a further amended statement of claim to be filed by 29 January 2003. That time was extended by consent to 12 February 2003; and the date for the next directions hearing was refixed for 20 February. A further amended statement of claim was filed by the due date.
(e)On 20 February 2003 I made, by consent, orders for non-party discovery from Corrs Chambers Westgarth. This was to be provided within 14 days, ie by 6 March. I otherwise adjourned the directions hearing to a date to be fixed. Non-party discovery, which included a 21 page list of documents, was not filed until 2 April 2003: almost a month late, although the affidavit of discovery was sworn in NSW on 1 March. A supplementary affidavit of documents was filed by Corrs Chambers Westgarth on 6 May 2003.
(f)On 15 August 2003, an affidavit sworn by David James Wilson was filed on behalf of BME. Mr Wilson deposed that, pursuant to s.192 of the Patents Act, a copy of the amended statement of claim had been served on the Commissioner for Patents. This resulted in the Deputy Commissioner writing a letter dated 28 February 2003 to the effect that the existing statement of claim incorrectly stated that Letters Patent had been registered. The fact was that the relevant applications were yet to be examined. Accordingly, BME sought to further amend the pleading. Any consequential delay must be attributed at least in part to the failure of the defendants, who through their association with the patent application presumably knew the true position, to plead in the second defendant’s defence that no patents had been granted. Indeed, the delay between 28 February and 15 August is said to have its cause first in the need to investigate further the status of those applications. The second causal factor, it was put by the plaintiff, was the inability of counsel, due to other commitments, to settle a proposed amended pleading. Mr Wilson also deposed to unresolved issues concerning a claim for privilege – made by the defendants - in respect of some of the documents discovered by Corrs Chambers Westgarth and objections – again, made by the defendants - as to relevance.
(g)On 15 August 2003 the directions hearing was adjourned to 8 October 2003 to enable the issues to be discussed between the parties. Mr Brown then, on behalf of the defendants, expressed the sensible view that it would save expense if the statement of claim were amended once rather than on a multiplicity of occasions.
(h)On 8 October 2003 I ordered that the defendants file an affidavit substantiating any claim for privilege in relation to the documents discovered by Corrs Chambers Westgarth. I otherwise adjourned the directions hearing to 20 November 2003. That directions hearing was subsequently adjourned by consent to 26 November 2003, and the time for filing the defendants’ affidavit extended to 25 November 2003. A faxed copy of the affidavit was filed with the Court by the due date and the original was filed the following day.
(i)On 26 November 2003 I granted leave to BME to file, by 12 December 2003, a second further amended statement of claim. I also ordered that defences be filed by 27 January 2004 and any reply by 16 February 2004. Discovery was to take place by 15 April and inspection by 17 May 2004. The directions hearing was adjourned to 25 May 2004.
(j)By the time of the next directions hearing on 25 May 2004, BME had failed to file its second further amended statement of claim. Mr Brown on behalf of the defendants filed an affidavit sworn on 24 May 2004 in which he described his attempts to ascertain what the position was in relation to the pleading and, more particularly, to obtain confirmation that the plaintiff “would not require the filing of defences by my clients”. Apart from receiving confirmation that defences were not required, he deposed that no steps had occurred in the proceeding despite the timetable ordered by me on 26 November 2003. At the directions hearing on 25 May 2004 Mr Hopkins of counsel for the plaintiff sought to file a further version of the second further amended statement of claim. No explanation was proffered then, or has been since, for the failure on 12 December 2003 to file an amended pleading as ordered. Mr Brown indicated his clients wished to make the application for dismissal. I therefore fixed the application for hearing on 30 June 2004.
In Department of Transport v Chris Smaller (Transport) Ltd.[9] Lord Griffiths said:
“The power [to dismiss for want of prosecution] should be exercised only where the court is satisfied either (1) that the default has been intentional and contumelious, eg. disobedience to a peremptory order of the court or conduct amounting to an abuse of the process of the court; or (2) (a) that there has been inordinate and inexcusable delay on the part of the plaintiff or his lawyers, and (b) that such delay will give rise to a substantial risk that it is not possible to have a fair trial of the issues in the action or is such as is likely to cause or to have caused serious prejudice to the defendants, either as between themselves and the plaintiffs, or between each other, or between them and a third party.”[10]
[9][1989] AC 1197 at 1203
[10][1989] 1 AC 1197 at 1203
In the joint judgment of Tadgell and Ormiston JJ in Bishopgate Insurance Australia Ltd v Deloitte Haskins & Sells,[11] (with which Brooking J concurred) their Honours expressed the opinion that in the above passage Lord Griffiths “succinctly repeated” the principles governing applications for dismissal for want of prosecution. The word “repeated” is apt, since the formulation adopted by his Lordship relied heavily on that enunciated by Lord Diplock some eleven years earlier in Birkett v James.[12] As the Court noted in Bishopgate, what was there said did not lay down immutable rules; on the contrary, the relevant principles are capable of adaptation according to the circumstances of the case. They are also subject to the fundamental precept that the discretion to dismiss will only be exercised if the justice of the occasion demands it.[13] Their Honours added that the principles, with their two limbs:
“… are of the most general application and have been applied in jurisdictions with differing rules and practices. No doubt their application will vary according to the nature and cause of delay and the likelihood of prejudice, or the effect of disregard of court orders, in particular jurisdictions but there seems no reason to abandon the stated principles in this jurisdiction, whether or not cases are subject to court management…”.
[11][1999] 3 VR 863 at 873
[12][1978] AC 297 at 318
[13]Shepperdson v Lewis [1966] VR 418 at 419; Masel & Ors v Transport Industries Insurance Co Ltd & Ors [1995] 2 VR 328 at 332; Spitfire Nominees Pty Ltd & Anor v Ducco [1998] 1 VR 242 at 246
The defendants relied on Grovit v Doctor & Ors[14]. This was an appeal brought to the House of Lords from a judgment of the Court of Appeal. That Court had in turn affirmed the order of the trial judge, who had dismissed, for want of prosecution, an action in defamation. One of the issues before their Lordships was whether a proceeding could be so dismissed notwithstanding that the defendants had failed to show actual prejudice or a substantial risk of an unfair trial, but had instead relied on inexcusable and inordinate delay (two years of total inactivity) stigmatised as an abuse of process. Alternatively, their Lordships were invited by counsel for the first plaintiff to consider whether “… it [is] permissible to take elements which might (but are not sufficient on their own to) amount to a ground for striking out for abuse of process, combine them with delay and treat the combination as an additional and hybrid ground for striking out?”[15] In considering these questions, Lord Woolf held that the courts below had been correct to find that the plaintiff’s conduct had amounted to an abuse of process. It was therefore unnecessary to decide whether the “combination” point (or “hybrid situation”, as his Lordship described it) was one upon which a party seeking dismissal could rely. I shall return to that aspect of his Lordship’s speech in a moment. Before doing so, I note that his Lordship said:
“The evidence which was relied upon to establish the abuse of process may be the plaintiff’s inactivity. The same evidence will then no doubt be capable of supporting an application to dismiss for want of prosecution. However, if there is an abuse of process, it is not strictly necessary to establish want of prosecution under either of the limbs identified by Lord Diplock in Birkett v James … In this case once the conclusion was reached that the reason for the delay was one which involved abusing the process of the court in maintaining proceedings when there was no intention of carrying the case to trial the court was entitled to dismiss the proceedings.”[16]
[14][1997] 1 WLR 640
[15]Ibid, at 642
[16]Ibid at 647-8
During the course of his speech, Lord Woolf examined criticisms of the need for defendants to show serious prejudice as a result of delay under the second principle set out above. He noted that this requirement “… prevents the court taking into account the adverse effect which delay can have on the reputation and efficiency of the civil justice system as a whole.”[17] Often defendants are not able to establish serious prejudice and therefore fail in their applications to dismiss for want of prosecution. He also suggested that the definition of prejudice was too restricted, giving little weight to the anxiety caused by litigation, and pointed out that the need for a defendant to demonstrate prejudice by showing that his witnesses’ recollection would be adversely impaired may undermine the defendant’s case if the application is not granted. Ultimately, however, his Lordship felt that that case, in which the defendants were unrepresented, was not an appropriate vehicle for determining whether such a “hybrid situation” should be allowed. In the penultimate paragraph of his speech Lord Woolf said:
“It is possible that in his judgment [in the Court of Appeal] Evans LJ was indicating that in a hybrid situation, an action could be dismissed for want of prosecution albeit that the evidence strictly fell short of what is required under limb (1) and limb (2) [of the principles enunciated by Lord Diplock in Birkett v James and Lord Griffiths in the Chris Smaller (Transport) case] when each is considered separately. I can appreciate the reasons why it could be thought to be appropriate to adopt this approach.”
[17]Ibid at 643
In the end it is all a matter of degree. The defendants sought to persuade me that the delay and the abuse of process were real and relevant, and that each was individually sufficient to warrant dismissal of the proceeding; and, if not individually sufficient, in combination the two certainly were. I turn to an examination of this question.
It is now three years since the writ was issued. No satisfactory statement of claim has yet been served. What is established, as the history of the proceeding as set out above demonstrates, is that there were indeed three periods of inactivity by the plaintiff: some five months, from April to November 2002; six months from late February to mid August 2003; and six months from late November 2003 to May 2004. Some of that delay however was due to the need to obtain non-party discovery from Corrs Chambers Westgarth in relation to the tender deposit; and associated with it were issues of legal professional privilege. This was claimed by the defendants in respect of some of those documents. I do not suggest that in doing so they were other than bona fide; but any consequential delay cannot be put at the feet of the plaintiffs. The delay of the last five and a half months, I regret to say, lies at the feet of the Court.
Mr Hopkins submitted that any delay for which his clients were responsible was neither inordinate or excessive. After some hesitation, I have concluded that he is right. I am particularly influenced by the fact that an important part of the plaintiff’s claim is the allegation that the defendants have nearly $193,000 of its money for which they refuse to account. That money, according to the plaintiff, has been through the hands of its former solicitors, Corrs Chambers Westgarth. The latter have indicated to the plaintiff that the funds in question have subsequently been transferred to the defendants in circumstances about which those solicitors are aware, but about which the plaintiff remains ignorant despite its attempts to obtain relevant discovery. As I have noted, these attempts have also been hampered by the claims for privilege made by the defendants. The result, at least as the plaintiff would put it, is that BME could not properly formulate its case for the return of the “deposit”. Yet the entitlement to that deposit is, it seems to me, a real issue here; and it is one that is directly relevant to the drawing of the statement of claim.
Mr Thomas gave evidence, both by affidavit and under cross examination, of the pressures of work in relation to the plaintiff’s association with a major road-making project - the construction of the Craigieburn by-pass – in which, as with the Port of Newcastle development, he had an important personal involvement on behalf of the plaintiff. I accept his evidence on this issue. I accept that BME was engaged to design, and construct off-site, a fly-over bridge to cross the Metropolitan Ring Road. It is Mr Thomas’ evidence, which again I accept, that as far as he is aware, off-site construction of this kind had never before been successfully attempted in Australia. Construction off-site has, I am prepared to believe, advantages for traffic flow on the road the bridge is designed to span. In a project of such novelty, unexpected problems are inevitable. Mr Thomas gave evidence that it was a large undertaking with onerous deadlines where many other interested parties depended on the performance of him and, through him, the plaintiff. I accept that he worked long hours with 70% to 80% of his work time dedicated to that project. The enterprise also required the investment, by the plaintiff or members of the plaintiff’s group of family companies, of some $500,000 in the development of the intellectual property, the acquisition of specialised plant and equipment, and the training of personnel. BME was therefore unable both properly to fund its involvement in the present litigation and devote the necessary resources of time and effort to it.
This unsatisfactory situation, Mr Thomas would have me believe, is now behind him. On the other hand, what he said on this point must be considered against the background of the concession, made by him during cross examination, that work of the complexity and innovation of the Craigieburn by-pass is standard for him and for the plaintiff; and he actively seeks such retainers. He did add that, because the developmental phase of the Craigieburn by-pass project was complete, the work load would not be as great - and the balance of the work would be more routine - in the next couple of years. This does not answer the concern about the disruption to the progress of this litigation should a new deal, comparable to the by-pass project, come the plaintiff’s way.
The defendants were keen to emphasise this point. It has substance. There is, however, an answer to it. The plaintiff has had its chance. If it wishes to pursue this case, it must now give it whatever priority is required to move it towards trial with the utmost reasonable expedition. Of course the courts cannot ignore the demands of everyday life. It would be unrealistic, and unacceptably arrogant, for courts to require that once litigation is commenced the parties must place it always and necessarily first among their priorities. It is for this reason that, having accepted Mr Thomas’ evidence about the difficulties he faced in managing the Craigieburn by-pass while running (or failing to run) this case, I am not prepared to accede to the defendants’ strike-out application. But the courts must also keep constantly in mind the interests of opposite parties. The defendants have a real and legitimate interest in disposing of this litigation as expeditiously as possible. It seems to me that, having allowed the plaintiff some latitude, the court is now bound to require strict compliance with an appropriate schedule designed to bring the matter to trial at the earliest reasonable opportunity.
I come to this conclusion having regard to the defendants’ submission that no attempt has been made to link the Craigieburn project specifically to the periods of inactivity to which I have referred above. The defendants point, in particular, to the failure both to attend the directions hearing on 1 November 2002 and to file a second further amended statement of claim by 12 December 2003.
There is some substance to these complaints. I note that at the date of the 1 November 2002 directions hearing BME had not in the previous month appointed solicitors to replace Galilee & Associates. This firm had ceased to act on 30 September. It may be that the directions date was overlooked, or that Mr Thomas was simply not aware of it. But if that is the explanation, no evidence of it was given. Worse, no reason for the failure to comply with the order made on 26 November 2003 (granting leave to file a second further amended statement of claim) has been given at all. This is not good enough. It is especially serious because the statement of claim as it presently stands (that is, the version filed 12 February 2003) seeks revocation of the Letters Patent on the basis that the defendants obtained them by fraud, false suggestion or misrepresentation. That claim does not re-appear in the proposed pleading. The defendants complain, perhaps with justification, that if - as the proposed pleading suggests - BME has for some time been aware that there was no basis for these allegations, then even now it has not effected a withdrawal of an unjustified yet serious charge.
This behaviour on the part of the plaintiff gives cause for concern.. In particular, it is no excuse to say that the delay between February and August 2003 in drawing a proposed amended pleading was in part due to counsel attending to other commitments. Nonetheless, the actual periods of delay do not seem to me to be inordinate. This is not a case that would justify the exercise of my discretion to dismiss the proceeding for want of prosecution; indeed, I am of the opinion that an injustice would be occasioned were I to take that step.
The defendants submit that there is a substantial risk that there will not be a fair trial because of the lapse of time between certain of the events in dispute (in particular oral agreements said to be made between Messrs Thomas and Taylor between December 1995 and October 1996) and the date of a likely trial. Moreover, it will be necessary to adduce evidence about the background to this matter. This may involve the exploration, in a trial that will not take place before 2005, of events which occurred as far back as 1992. Of course, the question for me is not whether the parties will have a fair trial after nine to thirteen years; I must consider whether, by reason of any inordinate and inexcusable delay, any time lost will make any difference: Bishopgate Insurance Australia Ltd v Deloitte Haskins & Sells[18] and Spitfire Nominees Pty Ltd & Anor v Ducco.[19]
[18][1999] 3 VR 863 at 875 per Tadgell and Ormiston JJA
[19][1998] 1 VR 242 at 248 per Hedigan AJA
In my opinion, the additional time would not be so prejudicial as to justify dismissing this proceeding. It seems to me that the issues relating to the patents will rely heavily on the construction of the various agreements, and the materials and drawings evidencing the development of the ideas. There is no suggestion that any of the relevant documents have been lost or destroyed. The passage of an additional 18 months or so should not necessarily affect that exercise. The oral agreements will require the evidence of Messrs Thomas and Taylor. There is no suggestion that either will not be available to give evidence or that their memories are significantly more impaired than they would be in any event after the passage of time. The reality is that, even if there had not been these delays, it might still have been necessary for each witness to recall events some seven to 10 years earlier.
When considering whether the relevant delays might be characterised as inordinate or inexcusable, it is open for me to have some regard to any delay by BME in instituting proceedings, although this period would not be counted directly as delay.[20] In this context, Mr Hopkins submitted that BME brought proceedings shortly after Mr Thomas became aware of the attempt by the defendants to apply for Letters Patent. Mr Thomas deposed that he learned about the existence of the patent applications (or, as he wrongly thought, the patents) in early May 2001 when his daughter, Joanne, undertook an internet search.[21] As I have already noted, the Writ was filed on 17 October 2001. Mr Taylor, however, says that the plaintiff knew of the patent applications well before May 2001. He deposes that he wrote a letter dated 2 February 2000 in which he says he recorded discussions during which Mr Thomas confirmed that the defendants would be free to file and obtain patents “for the joint technology and licensed technology”.[22] Mr Thomas disputes receiving that letter. This issue will be a matter for trial. Mr Taylor also points to documents drafted in September 2000 during the course of negotiations with interested third parties that referred to “the three provisional patents”. Mr Thomas said in cross examination that he thought this was a reference to patent search reports obtained by him following searches for three patent applications which he had made.[23] There is also a disagreement about who the legal representatives were acting for when they drew those documents. Again, these will be matters to be determined at trial. For present purposes, it seems to me to be appropriate to proceed on the basis that there was no relevant delay by BME in commencing proceedings.
[20]Spitfire Nominees Pty Ltd v Ducco, ibid, at 243
[21]Affidavit of John Denis Thomas filed 30 June 2004, paragraph 3.
[22]Affidavit of Robert Daniel Taylor filed 18 June 2004, paragraph 28.
[23]T.33-34
Similarly, in respect of the tender deposit, Mr Thomas deposed that he first learned of what he believes to be the true position in or about May 2001. At that time he was “reviewing an old document file” for the purpose of marketing the port project to a Canadian company. While doing so, he came across a fax dated 12 August 1997 from Mr Julian Gregory (a partner of Corrs Chambers Westgarth) to Mr Taylor. That fax refers to “the cheque representing a refund of the tender deposit” and indicates that “there is no reason for you not to bank the funds”.[24] Mr Thomas says he wrote to Mr Gregory on 27 June 2001 about this fax and then spoke to him the next day. During the resultant conversation, the latter said that although he did not recall the exact nature of the refund, he expected it was the same deposit paid by BME on 1 November 1996. Again, proceedings were issued on 17 October 2001.
[24]Exhibit “JDT4” to the affidavit of John Denis Thomas sworn 16 June 2004
The defendants have complained of what they describe as the serious prejudice to their reputations. They have every right to do so. Mr Taylor deposes that the claims made against him personally “inhibit my ability to proceed with the project and make a living”. He does not, however, provide any detail on this point. I also accept, as Mr Hopkins on behalf of BME pointed out, that these complaints have arisen for the first time in anticipation of the application presently before me.
Mr Taylor contends that by this litigation BME claims that he has “in effect stolen the intellectual property” to which BME (he would say wrongly) asserts it has title. This, he contends, has adversely affected his reputation. He speculates that knowledge of the claims “would make any potential joint venture partner nervous about imparting their knowledge on the project”.[25] So much is indeed to be expected. The courts have always been astute to do what can be done, consistently with the proper administration of justice, to protect reputations that deserve to be protected, and to proceed on the basis that all litigants are entitled to a good reputation unless and until the contrary is proved. These ends can best be met if the courts insist that allegations of fraud and mendacity and the like only be made on adequate material, and that when made they be the subject of early adjudication.
[25]Affidavit of Robert Taylor filed 18 June 2004, paragraphs 44 and 45.
I bore these considerations in mind as I prepared these reasons for judgment. They are one particular reason why I regret the delay in their publication. They are also a reason why this litigation must now proceed rapidly to trial, and why no further indulgence can be allowed to the plaintiff, no matter how pressing its other business might be.
Mr Taylor has expressed the belief that BME continues to delay these proceedings to obtain a de facto injunction for “commercial purposes”. If this be true, and if the litigation is otherwise without merit, the plaintiff is guilty of an abuse of process.
The defendants seek to pursue the abuse argument on other bases. They point to the inability of BME to plead a cause of action even after five attempts; the “evident concoction” of the latest pleading of a loan in relation to the tender deposit; the failure by BME to explain how it can maintain its claim in the face of a Deed of Novation and Amendment; and the failure to deal with an acknowledgement in the draft Joint Venture Agreements of the defendants’ right to apply for patents.
I do not agree that the plaintiff’s claims are a concoction. There is no evidence that that is so. Mr Thomas during cross examination said that as a civil design engineer who trades in intellectual property, he has a real concern about issues in this dispute.[26] I accept this evidence. I cannot agree that the plaintiff is “scratching about for a case”. On the contrary, I think there are some serious and very real issues to be determined. It is true that the plaintiff has had several attempts to formulate its cause of action. It seems to me, however, that the core elements of the plaintiff’s complaint have remained the same: there has always been a dispute about the intellectual property; and while the tender deposit may not previously have been pleaded as a loan, the plaintiff has always maintained that these were monies to which it was entitled.
[26]T.53
It also seems to me that a number of the proposed amendments are more in the nature of refinements. The plaintiff’s legal representatives have sought to respond to some of the legitimate criticisms of the earlier pleading, especially in relation to providing proper particulars of the relevant original works and patents. I do not think that the plaintiff should be penalised for so responding. Frequently pleadings will be amended as new information comes to light, and as reflection reveals inadequacies. It is unfortunately rare for pleadings in a case of any complexity to escape the need for amendment; and this is both an indication of the general difficulty of the task, and the need for the courts to be conscious of that difficulty while insisting that, as soon as reasonably possible, the real issues be accurately reflected in claim, defence and reply.
The defendants point to a Deed of Novation and Amendment executed in December 1997. They, together with the plaintiff and Sharvine Pty Ltd, a company associated with Brambles and which had an interest in the port development, were parties to that deed. They say that a release contained in this document is a complete answer to the claim brought by BME. Failure by BME to explain how it can maintain its claim in the face of these releases and discharges should, it was submitted by Mr Pearce, be taken into account by me. BME responded by submitting that this is a matter for defences and reply. It will dispute the breadth and application of any such release. Again, this is a matter for trial rather than determination here. It cannot in my opinion serve as a platform for a finding of abuse of process.
The defendants criticise the proposed second further amended statement of claim. Some of those criticisms are justified. The plea in relation to the loans totalling $216,729.86 is inadequate. It does not even allege that the monies claimed are due and owing, still less the basis for the allegation that they are so. The substantive pleading should of course set out the terms of the loans, with specific reference to the allegation (assuming the plaintiff makes it) that it enjoys a present right to repayment. Further particulars are needed of the faxes and conversations to which reference is made in the presently inadequate particulars under proposed paragraph 40.
The defendants also contend that the pleas in relation to the trade practices claims are defective. I agree, although I do not take this as evidence of an abuse of process. The proposed second further amended statement of claim, as the defendants point out, fails to allege reliance by BME on any representations. Depending on the way the plaintiff puts this part of its case, this may or may not be a defect. What seems impossible to excuse is the failure to link causally the alleged contraventions with any loss. The bald statement in proposed paragraph 24 that “As a result of the matters referred to above BME has suffered loss and damage” lacks all necessary specificity, especially given that it follows allegations of breach not only of the Trade Practices Act and the Fair Trading Acts but also of contract and copyright.
The above examination of the present draft of the second further amended statement of claim is not necessarily comprehensive. Mr Pearce, for example, submitted that no particulars have been given of the defendants’ alleged unconscionable conduct. I do not rule on this point; it is sufficient for me to say that the proposed second further amended statement of claim remains in a form which does not allow me to grant leave that it be filed. Mr Pierce also submitted, however, that some at least of the causes of action may be out of time – but, as pleaded, the statement of claim in its several manifestations does not enable the defendants to make a considered assessment of this aspect of any possible defence. To the extent possible, the fresh draft of the statement of claim should assist the reader to ascertain the time at which any relevant limitation period commenced to run.
For the reasons which I have endeavoured to express, I will not accede to the defendants’ application to dismiss the proceeding for want of prosecution or for abuse of process, or for any combination of them. But nor will I will give leave to the plaintiff to file the draft second further amended statement of claim presently before me. That draft requires further work. Whether the next draft is adequate remains to be seen. It would not be appropriate for me to give, in advance, leave to file it. In those circumstances, the preferable course, it seems to me, is to give the plaintiff leave to submit a further draft. This should be in the defendants’ hands by 4.00pm on Wednesday 19 January 2005. A directions hearing will be convened on Wednesday 2 February at which I will consider any submissions the parties might wish to put to me about the draft or about an appropriate interlocutory timetable. I will at that time also hear the parties an the question whether I should, pursuant to rule 47.04 of the Rules of the Supreme Court, order the separate trial of the issue raised by the release contained in the Deed of Novation and Amendment. There may also be other issues perhaps suitable for this procedure; and I will then hear the parties about that. I indicate that a separate trial could commence on Wednesday 30 March next year. Two days have been set aside against that eventuality.
The plaintiff must pay the defendants’ costs of and associated with the hearing before me on 30 June. I will hear the parties on any additional consequential orders.
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