Centronics Systems Pty Ltd v Nintendo Co Ltd

[1992] FCA 584

THE FEDERKG COURT OF AUSTRALIA

VICTORIA DISTRICT REGISTRY

GENERAL DIVISION

BETWEEN:  McKAY A U S m I A LTD

(Applicant)

AND :  MOLLINS WHEELS PTY LTD

Coram:	Ryan J
Place:	Melbourne

17 AUG 1992

Date:  6 ~ugust 1992

DERAL COURT OF

EX TEMPORE REASONS FOR JUDC~ZMENT REGISTRY

By its statement of claim the

manufacturer of a truck tyre rim known as the "Freightmate" rim, has pleaded that the respondent, which is the distributor of a rival truck tyre rim, the "Delta" rim, published of and concerning the applicant's "Freightmate" rim the following letter:

"The Delta 8 .25x22 .5 Tubeless Demountable Rim has been well accepted on the Australian market, and it is now being sold and stocked by most major tyre companies. It is belng used by many truck operators, and OE trader manufacturers.

the statements in the letter were false in that:

T h ~ s rim is a superior alternative to the Freightmate rim, which has a high level of c l a m s in this country. These claims have added to the operating costs of tyre services and truck operators, and they have also resulted in tyre damage in many instances.

The Delta rim is covered by a 5 year pro-rata warranty, fully supported by Mullins Wheels Pty. Ltd.

..

The Delta rim is a proven world-wide design, used by all of the major tubeless rim manufacturers in the world. None of these manufacturers have the hlgh claim rate that hae been experienced an the McKay/Freightmate product."

It is then pleaded by paragraph 4 of the statement of claim that

"(a) the Frezghtmate rim did not and does not have a high level of claims in Australia, such claims comprising only about 0.6% of total sales;

(b) the operating costs of tyre services and truck operators have not been added to as a result of the level of claims in Australia concerning Freightmate rims, srnce such claims have only comprised about 0.6% of total sales;

(c) tyre damage could not have occurred an many instances, since such

claims have only comprised about 0.6% of total sales;

-	(d) since the Delta rim 1s only in use in a few countries (about 5 or
. . .	. so), it is not a proven world wlde deslgn, nor the Delta run used by
L.' , .-	-all' of the ma]or tubeless run manufacturers in the world: Michelin does not use that deslgn, nor does the applicant, whlch is the only rim

. manufacturer in Australia. Consequently, the statement to the effect

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, . that none of the malor manufacturers have experienced the high claim

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l I	rate as that whzch has been experienced in the ~c~ay/Fre~ghtmate product is untrue."
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, 'By its defence the respondent has admitted the publication of the

.. .	letter,alleged in paragraph 3 of the statement of claim and has
continued to plead, after denying paragraph 4:

"5. Further to paragraph 4 if, whrch is expressly denied, the level of clazms in Australia in respect of the Fre~ghtmate run represents only about 0.6% of total sales then the Respondent will contend that the same represents a high level of claims by industry standards.

6.     Further to Paragraph 4 the Delta rim is of proven world wide deslgn in that

(a)	tubeless demountable rlms are used malnly in the Unlted states of America, Canada, Australza, New Zealand and Papua New Guinea.
(b)	in all such countries, save Australia, the Delta rim, or a design similar to that of the Delta rim and dassimalar or substantially dissimilar to the Freightmate rim, is

commonly used.

7.     Further to Paragraph 4 the style of the Delta rim is used by all of the major tubeless rim manufacturers in the world in that:-

(a)	the malority of runs of the 8.25 X 22.5 demountable type are manufactured by Hyundaz (Korea), Topy (Japan), Motor Wheel Corporation (U.S.A.), Accuride Corporation (U.S.A. & Canada) and the Applicant;
(b)	the Delta rim is manufactured by Hyundai (Korea). The

designs of the 8.25 X 22.5 demountable rims manufactured by

Topy (Japan), Motor Wheel Corporation (U.S.A.) and Accuride Corporation (U.S.A. & Canada) are similar to the design of the Delta rim and dissmilar to the design of the Frelghtmate rim;

(c) Michelzn has since 1986-7 ceased to manufacture atubeless demountable rim of a type similar to the Freightmate rim. Prior to such cessation it released plans disclosing an intention to change its design and manufacture a style of demountable rim similar to that of the Delta rim and dissimilar to the design of the Freightmate rim."

By a motion on notice dated 2 August 1992 the applicant has moved for orders, inter alia:

"2. That pursuant t o Order 15 r u l e 8 of t h e Rules of t h i s Honourable

Court,	t h e Respondent f i l e an Aff idavi t s t a t i n g whether it has,	o r has
had,	i n its possessron custody o r power,	any document of t h e following

class o r descrrptr0n:-

( i )                    documentation r e l a t i n g t o t h e acceptance of t h e "Delta" rim

a s compared t o t h e "Freightmate" rim on t h e Austral ian

market ;

(ii) documentatron r e l a t r n g t o t h e s e l l i n g and stocking of t h e

"Delta" r i m by most major t y r e companies;

(iii)	documentation r e l a t i n g t o t h e use of t h e "Deltan rim by
many t ruck opera tors and o r i g i n a l equipment t r a ~ l e r

manufacturers;

( i v )	documentation r e l a t i n g t o t h e comparative q u a l i t i e s of t h e
"Delta" r i m and t h e "Fre~ghtmate" run together with
documentation re levant t o t h e l e v e l of warranty claims
r e l a t i n g t o t h e "Freightmate" r i m i n Aust ra l ia ;
( V )	documentation r e l a t i n g t o t y r e damage t o warranty clalms i n
r e spec t of t h e "Freightmate" r i m ;

( v i )                 documentation r e l a t r n g t o warranty claims l n respect o f t h e

"Delta" r i m ;

documentation re levant t o t h e "Delta" r i m a s a proven world

( v i i )               wide desrgn, used by a l l of t h e t u b e l e s s r i m manufacturers

m t h e world, and re levant t o warranty clalms Ln respect of
a l l t h e major tube less r i m manufacturers i n t h e world;
( v i r i )	documentation c o n s t i t u t i n g such records a s t h e Respondent
has o r has had with r e spec t t o warranty claims f o r t h e
"Delta" rim f o r t h e f i n a n c i a l yea r s endrng 30 June 1986, 30

June 1987, 30 June 1988, 30 June 1989 and 30 June 1990."

by the respondent as implied by the description of various items	The applicant points to the nature of the documents discovered
in the respondent's affidavit of documents as indicating that no documents of the kind which it seeks-in its notice of motion have been included in that affidavit. It also relies on a letter written by the respondent's solicitors, apparently in response to a letter before action on behalf of the applicant, in which it is recited, amongst other things:

"We are instructed to respond to the allegations in your letter as
follows:

(i)   Our client denies any and all allegations that our client's letter dated 18 May 1990 was misleading or deceptive or defamatory of your client. In particular, our client instructs us that it would be in a position to substantiate all of the clalms referred to in its letter dated 18 May 1990 which are the subject of comments in your letter. Our client considers that it has not acted in a "reckless" manner in all the circumstances.

(ii)  Our cllent considers that the facts stated on the basis of a comparison of our respective cllents' products are founded upon factual material, which would be able to be proved in Court proceedings (if proceedings were instituted by your client).

( h i ) Our client considers that its actions represent nothing more than ordinary commercial promotional actlvity in respect to the sale of the products, as it is entitled to do in a competitive market place. Consequently, our client considers that your client's characterization of what it considers to be normal commercial conduct as wrongful are ludicrous and represents an unduly sensitive attitude towards competition in the market place."

By an affidavit partly in opposition to the motion of the applicant it has been sworn by a solicitor employed by the respondent's solicitors:

"11. I refer to the discovery made in these proceedings by the Respondent. I am instructed by the respondent that it has no documents in its possession power or control in relation to the matters in issue in t h ~ s proceedlng other than those discovered by it in its list

verified by Aff~davit sworn 11 May 1992..."

Order 15 r.8 of the Rules of this Court provides:

"8.

Where, at any stage of the proceeding, it appears to the Court from evldence or from the nature or circumstances of the case or from any document filed in the proceedlng that there are grounds for a belief that some document or class of document relating to any matter in question ln the proceedins may be or mav have been in the possession, custody o;power o f a party, the Court may order that party -

(a)	to file any affidavit stating whether that document or any document of that class is or has been in his possession, custody or power and, if -it has been but is not then in his possession,- custody or power, when he parted with it and what has become of it; and
(b)	to serve the affidavit on any other party."

In my view it has been unequivocally asserted that there are no documents now or at any earlier time relating to the matters in issue in this litigation which have not been discovered on behalf of the respondent. It is submitted on behalf of the applicant that the applicant is concerned by this motion to assure itself that there is not, shortly prior to, or during, the trial, production of further documentary material by way of supplementary discovery. It may also be inferred that the applicant is concerned to obtain an admission to the effect that there was no documentary basis for the assertions in the respondent's letter of which it complains other than that afforded by documents of which discovery has already been given. Both of those objectives are readily intelligible and legitimately to be pursued by the applicant in the interests of conducting this litigation as effectively as possible.

However, I am not persuaded on the material as it stands that the requirements of 0.15 r.8 have been satisfied to the extent that a reasonable probability has been indicated that other documents of the kind specified do, in fact, exist.

Court's discretion to require the respondent to file a document

I therefore consider it would be an inappropriate exercise of the

formally negating the existence of those documents in the light of the assertions which have been made in affidavits of documents, in the pleadings, and in .the affidavit of Mr Green to which I have already referred. Of course, if at a later stage the denial of the existence of any such documents is contradicted, that is a matter which the Court may take into account in dealing with the costs of this action or by grant of an adjournment or in some other way appropriate to protect the

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interests of the applicant.	I . I
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In view of the conclusion to which I have come on the applicant's
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motion, it is unnecessary for me to deal with the contention	I
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advanced by M r McCullagh, who appeared for the respondent, that	i
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the documents, or some of the documents specified in the	1..
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applicant's notice of motion go beyond matters in issue on the	i i
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pleadings in any event.	-.:! I
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By a cross-motion on notice dated 3 August 1992, the respondent	! _
seeks orders:	i

That the Applicant f ~ l e and serve a further list of documents

conformrng with the requirements of Order 15 Rule 6 w~thin 14

days of the date of this order;

That the further list of documents to be served and frled by the

Applicant include:-	-
(1)	Budgets and forecasts in relation to sales of its products
in Australia from 1986 to 1989 (inclusive);

(2) Annual reports of the Applicant. for 1986 to -1989

(inclusive);

(3)	Results of tests carried out by the Applicant or carried out at its request upon McKay and Hyundai 8.25 by 22.25 demountable r m s in the years 1989 to 1990 (inclusive);
(4)	Results of the field research carried out by the Applicant
in relation to alleged problems with imported demountable
runs;
(5)	Any documents touching upon or evidencing the decisron made 1 :.
by the Appl~cant to put into production its "Frontrunner" t
range of demountable rims including the design
documentation relevant to these rims..." F - .

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I am not persuaded that the document2 specified in subparagraphs	l:
t '
(3) and (4) which I have just quoted are relevant to any issue	I
between the parties as disclosed by the pleadings.	I am inclined

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to the view that annual reports of the applicant for 1986 to 1989	1.
being, as M r Bevan-John, who appeared for the applicant, submitted, merely secondary documents, may also not be discoverable by the applicant.
I gather that the budgets and forecasts in relation to sales of
the applicant's product which are described in subparagraph (1) which I have just quoted are claimed to be comprehended within item 8 of Schedule 1 to the Amended List of Documents of the applicant which is in these terms:

"Lever arch frles contaaning the applicant's sales records of the Freightmate rim for each month of the financial years ended 30 June 1986, 30 June 1987, 30 June 1988, 30 June 1989, 30 June 1990, 30 June 1991, and 31 March 1992."

Complaint is made on behalf of the respondent that that description does not conform with 0.15, r. 6, of the Rules of this

Court which requires, inter alia:  -

"6. (1) A list of documents requared by or under this Order shall, unless the Court otherwase orders, conform to the requirements of this rule.

or have been m the possessaon, custody or power of the party making ( 2 ) A list of documents shall enumerate the documents which are

the list.

A list of documents shall enumerate the documents in ,a convenrent sequence and as shortly as possible, but shall describe each	document or, in the case of a group of documents of the same nature,
shall describe the group, suffrciently to enable the document or group to be identifred..."

(3)

It seems to me that part of the difficulty in this case has arisen because inspection of the documents of which discovery has been given has not yet taken place. That, I gather, is in part due to the fact that the parties have not formulated appropriate arrangements for keeping confidential documents of a commercially sensitive nature which the applicant accepts it is obliged to discover and which include those documents collected, whether too succinctly or not I am unable to say, in item 8 of Schedule 1 quoted above.

In all the circumstances I consider it to be an inappropriate exercise of the Court's discretion to make any order at this stage on the respondent's motion on notice. The better course is to make orders giving effect to the submission on behalf of the applicant that appropriate undertakings as to confidentiality should be given in respect of its commercially sensitive documents. There should then be full inspection of the documents. If there then remains any complaint about discovery, that can be ventilated in a less abstract way than has occurred today. Accordingly, I order that each of the motions on notice be dismissed.

I certify that this and the

preceding seven (7) pages are a true copy of the Reasons for

Mr Justice Ryan

Judgment herein of his Honour *

Associate:

Date:  6 &j&

Counsel for the Applicant:  Mr M T Bevan-John

Solicitor for the Applicant: Abbott Tout Russell Kennedy

Counsel for the Respondent:  Mr B J McCullagh

Solicitor for the Respondent: Corrs Chambers Westgarth