Forty Two International Pty Ltd v Barnes

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FEDERAL COURT OF AUSTRALIA

Forty Two International Pty Limited v Barnes [2010] FCA 397

Citation: Forty Two International Pty Limited v Barnes [2010] FCA 397
Parties: FORTY TWO INTERNATIONAL PTY LIMITED ACN 095 622 889 and BLUEFREEWAY LIMITED ACN 122 262 819 v KIM BARNES and LEE HAWKSLEY
File number: NSD 2018 of 2008
Judge: YATES J
Date of judgment: 30 APRIL 2010
Catchwords:

PRACTICE AND PROCEDURE – application to stay or dismiss the proceeding as an abuse of process – whether the proceeding was commenced on the basis of documents produced by the respondents in answer to subpoenas issued in a separate proceeding in the court and on information derived from the production by them of those documents – whether the use of the documents and information in the present proceeding was in breach of an obligation to the court, imposed by law, to use the documents and information only in and for the purposes of the other proceeding – relevant principles discussed – whether the applicants are relieved from such obligation by operation of O 15 r 18 FCR – whether the contents of the documents were disclosed within the meaning of O 15 r 18 FCR –  whether O 15 r 18 FCR has an ambulatory operation – whether leave can be granted retrospectively to use the documents and information in and for the purposes of this proceeding – whether leave should be granted

HELD: Leave should be granted nunc pro tunc to use the documents and information in and for the purposes of this proceeding

PRACTICE AND PROCEDURE – application to stay or dismiss the proceeding as an abuse of process – whether the proceeding commenced for the collateral and improper purpose of intimidating or harassing the respondents as potential witnesses in another proceeding in the court and assisting the applicants as party respondents in that other proceeding

HELD: Relief refused – the proceeding was not commenced solely or substantially for the collateral and improper purpose alleged

PRACTICE AND PROCEDURE – whether the statement of claim should be struck out pursuant to O 11 r 16 FCR

HELD: The statement of claim should be struck out in part

PRACTICE AND PROCEDURE – whether leave should be granted to file an amended application and an amended statement of claim substantially in the form proposed by the applicants.

HELD: Leave refused   
Legislation:

Copyright Act 1968 (Cth), ss 36(1), 43(1), 43(2), 104, 115(3), 116(2)(a) and 116(2)(b)
Corporations Act 2001 (Cth) ss 181, 182 and 183

Civil Procedure Rules 1998 (United Kingdom), r 31.22(1)
Federal Court Rules, O 11 r 16, O 15 r 18, O 20 r 5
Cases cited: Ainsworth v Hanrahan (1991) 25 NSWLR 155
Alister v The Queen (1984) 154 CLR 404
Alterskye v Scott [1948] 1 All ER 469
Arnold Mann v Medical Defence Union Ltd [1997] FCA 45
Australian Rugby Union Ltd v Hospitality Group Pty Ltd [1999] FCA 1136
Campaign Master (UK) Limited v Forty Two International Pty Ltd (No 4) [2010] FCA…
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Details
Case
[2010] FCA 397
Decision Date

CaseChat Overview and Summary

In the case of Forty Two International Pty Ltd v Barnes, the dispute involves allegations of breaches of contract and misrepresentations made in relation to the development and marketing of software known as "Campaign Master." The matter was before the court to decide on the applicants' motion for leave to amend their application and statement of claim, to join a third applicant, and to address certain pleading deficiencies.

The primary legal issues before the court were whether the applicants should be granted leave to amend their application and statement of claim, and if so, under what conditions. The court had to assess the pleading deficiencies and determine whether the proposed amendments would sufficiently address these issues. Additionally, the court needed to decide whether the proposed third applicant should be joined to the proceeding.

The court found that while the proposed statement of claim contained several pleading deficiencies, the applicants should be given the opportunity to amend their pleadings to reflect the new causes of action they sought to raise. The court outlined specific deficiencies that needed to be addressed, including clarity in causation and the need to properly plead the elements of any new causes of action. The court granted leave for the proposed third applicant to be joined, subject to the applicants' ability to adequately amend their pleadings.

The court ordered that the applicants be given the opportunity to further amend their application and statement of claim to address the identified deficiencies. The proposed third applicant was to be joined, provided the applicants could satisfactorily amend their pleadings. This decision allowed the applicants to refine their claims while ensuring that the proceeding could move forward with all relevant parties.

Orders

Orders of the court

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Background

Background to the litigation

In relation to the applicants’ motion, I am of the view that leave should not be granted to the applicants to file an amended application and amended statement of claim in the terms of the documents annexed to the applicants’ motion. The proposed statement of claim contains a number of pleading deficiencies, which I discuss later in these reasons. Nevertheless, the applicants should be given the opportunity to propose further amendments in conformity with these reasons to reflect the new causes of action they seek to raise. That opportunity will carry with it leave to join the proposed third applicant. BACKGROUND In order to understand the setting for the respondents’ motion in this proceeding it is necessary to refer to and record certain events that occurred in relation to the conduct of the 651 proceeding. In the 651 proceeding CM(UK) seeks damages and other relief against the present applicants based on representations alleged to have been made by them in contravention of s 52 of the Trade Practices Act 1974 (Cth). The alleged representations relate to (amongst other things) the development and marketing of software known as “Campaign Master”. CM(UK) alleges that, in reliance on these representations, it entered into certain written contracts with the first applicant, namely, a licence agreement and a maintenance and support agreement, both dated 21 May 2007. It alleges a number of breaches of contract, some by the first applicant, others by both the applicants. It also alleges that it has suffered loss or damage arising from these matters. As pleaded, the loss includes the payment of the licence fee under the licence agreement, although this aspect of its claim is no longer pressed by CM(UK). Each of the respondents was a director of and shareholder in the first applicant. They participated in negotiations with CM(UK) leading to the making of the licence agreement and the maintenance and support agreement. Under a share purchase agreement dated 24 October 2006 the second applicant purchased the shares held by each of the respondents in the first applicant. The share purchase was completed in December 2006. Under contractual arrangements subsequently associated with the share purchase, the respondents remained directors of the first applicant until 8 November 2007. They ceased their association with the applicants pursuant to the terms of an exit agreement made in October 2007, to which the applicants and respondents (amongst other persons) were parties. The 651 proceeding was commenced on 9 May 2008. On 22 October 2008 the CM(UK) subpoena was issued. It was served on each of the respondents. It sought production of the following categories of documents: 1.All documents containing, evidencing or recording meetings, including but not limited to meeting minutes in relation to the negotiation and execution of the Licence Agreement dated 21 May 2007 (“Licence Agreement”) and the Maintenance and Support Agreement dated 21 May 2007 (“Maintenance Agreement”) between the Applicant and the First Respondent in the period from 1 January 2007 to 21 May 2007;2.All documents containing, evidencing or recording meetings, including but not limited to meeting minutes in relation to the development of the Campaign Master software (“the Software”) from 21 May 2007;3.All documents containing, evidencing or recording meetings, including but not limited to meeting minutes in relation to the maintenance of the Software from 21 May 2007;4.All documents containing, evidencing or recording the Respondents expenditure on continuing development of the Software, including development of software enhancements from 21 May 2007;5.All documents containing, evidencing or recording the development work undertaken on the Software by the Respondents from 21 May 2007, including but not limited to release notes, developer logs, developer time sheets, test plans and schedules;6.All documents containing, evidencing or recording the Respondents expenditure of the maintenance fees paid by the Applicant to the Respondents as defined in the Maintenance Agreement from 21 May 2007;7.All documents relating to any reports or assessments prepared by the Respondents which relate to the bugs, issues and defects in the Software and the future development of the Software;8.All documents relating to the cessation of your employment with the First Respondent;9.All documents containing, evidencing or recording any bugs or issues with the Software notified to the Respondents by the Applicant and the work undertaken by the Respondents to rectify those bugs or issues;10.All documents relating to any marketing or cross selling undertaken by the Respondents to assist the Applicant in marketing the Software in the UK and Ireland (“the Territory”);11.All documents containing, evidencing or recording requests by the Applicant for access to the source code for the Software and the Respondents consideration of those requests;12.All documents containing, evidencing or recording the Respondents development and marketing of Traction and the “Blu Platform” in the Territory or otherwise.

Evidence

Evidence Before The Court

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Decision

Reasons for decision

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Ratio Decidendi

Legal Principle Established

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