Hamlan Homes Pty Ltd trading as Hamlan Homes and Geelong Homes v Levonix Homes Pty Ltd
[2024] FedCFamC2G 931
•20 SEPTEMBER 2024
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 2)
Hamlan Homes Pty Ltd trading as Hamlan Homes and Geelong Homes v Levonix Homes Pty Ltd [2024] FedCFamC2G 931
File number(s): MLG 938 of 2024 Judgment of: JUDGE MANOUSARIDIS Date of judgment: 20 September 2024 Catchwords: INTELECTUAL PROPERTY – Practice and procedure – application for particulars of defence – whether applicant entitled to the particulars sought for the stated purposes – not so entitled – application for an order vacating discovery order made earlier in the proceeding – whether it was appropriate, in the interests of the administration of justice, for the discovery order to have been made – not appropriate – discovery order set aside – application to split liability from quantum – premature to determine whether such order should be made – application to adjourn hearing of application for summary dismissal to the final hearing of the matter – application for adjournment dismissed – application for summary dismissal also dismissed – matter listed for further directions hearing. Legislation: Copyright Act 1968 (Cth), ss 10, 32(1), 202
Federal Circuit and Family Court of Australia Act 2021 (Cth), s 176
Federal Court Rules 2011 (Cth), rr 16.45(1), 20.14
Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth), Sch 1, rr 1.06(3), 13.13, 14.02, 17.05(2)(c), 18.02
Cases cited: Australian Building & Construction Commissioner v CFMEU & Ors (No.5) [2018] FCCA 1100
Australian Securities and Investments Commission v Marco (No 15) [2024] FCA 347
Bupa Australia Pty Ltd v iSelect Limited (No 1) [2012] FCA 587
Commonwealth Bank of Australia v Goater [2016] NSWSC 710
Devine Marine Group Pty Ltd v Fair Work Ombudsman [2013] FCA 442
Hartnett Legal Services Pty Ltd v Ballantyne [2016] FCA 1116
In Re Wills’ Trade-Marks [1892] 3 Ch 201
Luo v Zhai (No 6) [2016] FCA 805
The Compagnie Financiere et Commerciale du Pacifique v The Peruvian Guano Company: (1882) 11 QBD 55
Division: General Number of paragraphs: 43 Date of hearing: 29 August 2024 Place: Sydney Counsel for the Applicant: Mr M Fleming Solicitor for the Applicant: K&L Gates Solicitor for the Respondents: Mr Y Hazan, Hazan Hollander Solicitors ORDERS
MLG 938 of 2024 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)
BETWEEN:
HAMLAN HOMES PTY LTD TRADING AS HAMLAN HOMES AND GEELONG HOMES
ApplicantAND: LEVONIX HOMES PTY LTD ACN 168 777 384
First RespondentZACHARY RAMSEY
Second RespondentJENNIFER RAMSEY
Third Respondent
ORDER MADE BY:
JUDGE MANOUSARIDIS
DATE OF ORDER:
20 SEPTEMBER 2024
THE COURT ORDERS THAT:
1.The applicant’s interlocutory application in a proceeding filed on 12 July 2024 is dismissed.
2.Pursuant to r 17.05(2)(c) of the Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth), the declaration made on 7 May 2024, and order 5 of the orders made on 7 May 2024, are set aside.
3.The respondents’ application to adjourn the hearing of the respondents’ claim for order 2 made in the application in a proceeding they filed on 2 July 2024 is dismissed.
4.The respondents’ claims for orders 2 and 3 made in the application in a proceeding they filed on 2 July 2024 are dismissed.
5.The costs of the applications in a proceeding referred to in orders 1 and 4 are reserved.
6.The proceeding be listed for directions at 9:30 am on 4 October 2024 or at such other time as may be convenient to the parties and to the Court.
Note: The form of the order is subject to the entry in the Court’s records.
Note: The Court may vary or set aside a judgment or order to remedy minor typographical or grammatical errors (r 17.05(2)(g) Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 17.05 Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth).
REASONS FOR JUDGMENT
INTRODUCTION
In this proceeding the applicant (Hamlan) alleges the respondents infringed copyright Hamlan claims it owns in certain building and façade plans (Alleged Copyright Works). The respondents deny they infringed any copyright Hamlan may own in any of the Alleged Copyright Works and, moreover, the first respondent (Levonix) claims that Hamlan made threats against the first respondent to commence a proceeding for copyright infringement that were unjustifiable.
The proceeding, which Hamlan commenced by an application and statement of claim, came before me on a first court date on 7 May 2024. On that day I made orders requiring the respondents to file their defences and any cross-claim, and an order (Discovery Order) requiring the respondents to give discovery of documents that fall within the categories of the documents described in the annexure to the Discovery Order. The parties had agreed to the description of the categories; and, by their legal representatives, the parties consented to my making the Discovery Order.
The respondents filed their (joint) defence on 31 May 2024; and Levonix filed a cross-claim claiming declarations and orders pursuant to s 202 of the Copyright Act 1968 (Cth) (Copyright Act). These include a declaration that Hamlan’s threats of commencing legal proceedings against Levonix because of copyright infringement are unjustifiable, and an injunction restraining Hamlan from continuing to make unjustifiable threats of legal proceedings for copyright infringement. A number of disputes, however, have arisen after 7 May 2024.
(a)One has arisen out of the respondents’ refusal to provide to Hamlan the addresses of five houses (Alleged Infringing Houses) which, in their defence, the respondents say they built in accordance with plans (Alleged Infringing Levonix Plans) Hamlan alleges (and the respondents deny) constitute infringing reproductions of the Alleged Copyright Works.
(b)A second dispute relates to the Discovery Order. The respondents contend that the order should be set aside because the categories of documents which the Discovery Order requires the respondents to produce are very broad and, at the time they consented to the Discovery Order, the respondents understood the scope of the Discovery Order to be significantly narrower than it in fact is. The respondents further contend that it was not appropriate, in the interests of the administration of justice, that the Discovery Order be made; and it is not appropriate, in the interests of the administration of justice, that it should remain on foot.
(c)A third dispute relates to the claims Hamlan makes against the second and third respondents. The respondents contend that the claims are liable to be summarily dismissed pursuant to r 13.13 of the Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth) (GFL Rules).
These disputes led Hamlan and the respondents to each file applications in a proceeding. In its application, Hamlan seeks an order pursuant to r 16.45(1) of the Federal Court Rules 2011 (Cth) (Federal Court Rules) that the respondents provide the addresses of the Alleged Infringing Houses.[1] In their application in a proceeding, the respondents seek an order setting aside the Discovery Order; and an order pursuant to r 13.13 of the GFL Rules that the proceeding against the second and third respondents be dismissed. The respondents also claim an order pursuant to r 18.02 of the GFL Rules that the Court hear Hamlan’s claim for copyright infringement separately from all other issues, including issues relating to pecuniary relief.
[1] Rule 16.45 of the Federal Court Rules applies by the combined operation of r 1.06(3) of the GFL Rules, and Schedule 1 to the GFL Rules
At the hearing of the applications in a proceeding, Mr Hazan, who appeared for the respondents, informed me that the second and third respondents would not, at the hearing, proceed with their application for dismissal, but submitted that their application should be stood over to the final hearing.[2] Mr Fleming, who appeared for Hamlan, opposed this course, and submitted that the second and third respondents’ application for dismissal should be dismissed.[3]
[2] T16.5
[3] T26.20
In these reasons for judgment, therefore, I consider four questions: should the respondents be required to provide the addresses of the Alleged Infringing Houses? Should the Discovery Order be set aside? Should an order be made pursuant to r 18.02 of the GFL Rules? And should the second and third respondents’ application for dismissal be stood over for hearing at trial, or should it be dismissed?
Before I address these questions it is necessary to set out the pleadings.
THE PLEADINGS
The statement of claim
In its statement of claim Hamlan alleges as follows:[4]
[4] Statement of Claim, [1]-[22]
(a)Since 1983 Hamlan has been a designer and builder of residential homes.
(b)Levonix is also a builder and designer of residential homes. The second respondent, Mr Ramsey, is the sole director and company secretary of Levonix; and the third respondent, Ms Ramsey, is employed by Levonix as its general manager.
(c)On 11 August 2017 Mr Done, an employee of Hamlan, acting in the course of his employment, created an original floorplan for a house design called “Riverside 221” (Riverside Plan). The Riverside plan was an adaptation of an original floor plan for a house design called the “Explorer 117” (Explorer Plan) which Mr Done created on 11 July 2013.
(d)Since at least 2017 Hamlan has marketed, sold, and built houses in accordance with the Riverside Plan.
(e)Between 2013 and 22 June 2015 Ms Wild and Mr Yttrup, employees of Hamlan, acting in the course of their employment, created an original floorplan for a house design called “Cumberland” (Cumberland Plan). The Cumberland Plan was adapted from an original floorplan for a house design Ms Wild created in the middle of 2013 called “Liberty” (Liberty Plan).
(f)Between 20 August 2012 and 6 November 2014 Ms Wild and Mr Edge, employees of Hamlan, acting in the course of their employment, created an original floorplan for a house design called “Bickford 174” (Bickford Plan). The Bickford Plan was adapted from an original floorplan for a house design called “G3” (G3 Plan).
(g)Since at least 2018 Hamlan has marketed, sold, and built houses in accordance with the Bickford Plan.
(h)On 25 August 2016 Ms Wild and Mr Yttrup, employees of Hamlan, acting in the course of their employment, created original plans for a façade called the “Prism Façade” (Prism Plan).
(i)In 2017 Hamlan began marketing, selling, and building houses featuring the Prism Plan.
(j)From June 2007 to April 2017 Mr Ivelja, Ms Wild, and Mr Done, employees of Hamlan, acting in the course of their employment, created original plans for a façade called “Coastal Façade” (Coastal Plan). The Coastal Plan was adapted from two plans, one being a plan Mr Ivelja created on 25 June 2007 for an original façade plan called the BH Plan, , and the other being a plan Ms Wild created on 14 August 2012 that featured a single roofline and no door arch (V2 BH Plan), which was adapted from the BH Plan.
(k)Since at least 2017 Hamlan has marketed, sold, and built houses in accordance with the Coastal Plan.
(l)Each of Mr Done, Ms Wild, Mr Yttrup, and Mr Ivelja were at all material times “qualified persons” pursuant to s 32(1)(a) of the Copyright Act; and each of the Riverside Plan, Cumberland Plan, Bickford Plan, Prism Plan, and Coastal Plan (these are the plans I earlier identified as the Alleged Copyright Works) is an original artistic work pursuant to s 10 of the Copyright Act, and copyright subsists in those works pursuant to s 32 of the Copyright Act. In these circumstances, Hamlan is the owner of the copyright in the Alleged Copyright Works and is also the owner of all rights to sue in respect of copyright infringement of such works.
(m)On dates not presently known to Hamlan, Levonix, without the licence or authority of Hamlan, reproduced in a material form the whole or a substantial part of each of the Alleged Copyright Works, or authorised a third party to do so, or communicated a reproduction or substantial reproduction of each of the Alleged Copyright Works to the public. The bases of this set of allegations are that, from a date not known to Levonix:
(i)Levonix reproduced the whole or substantial part of the Riverside Plan, or authorised others to engage in such activity, to prepare a plan known as “Southside” (Southside Plan), and the Southside Plan has been featured on Levonix’s website (Levonix Website);
(ii)Levonix reproduced the whole or a substantial part of the Cumberland Plan, or authorised others to engage in such activity, to prepare a plan known as “Seachange” (Seachange Plan), and that the Seachange Plan has been featured on the Levonix Website;
(iii)Levonix reproduced the whole or a substantial part of the Bickford Plan, or authorised others to engage in such activity, to prepare a plan known as “Juc” (Juc Plan), and that the Juc Plan has been featured on the Levonix Website;
(iv)Levonix reproduced the whole or a substantial part of the Prism Plan, or authorised others to engage in such activity, to prepare a plan known as “The Point” (Point Plan), and that the Point Plan has been featured on the Levonix Website;
(v)Levonix reproduced the whole or a substantial part of the Coastal Plan, or authorised others to engage in such activity, to prepare a plan for a façade referred to as the “Grove Tribeca” (Grove Tribeca Plan), and that the Grove Tribeca Plan has been featured on the Levonix Website; and
(vi)Levonix commenced construction of two display homes in Leopold, Victoria (Levonix Displays) that reproduce the whole or a substantial part of the Cumberland Plan and the Prism Plan.
(n)The preparation by the respondents of each of the Southside Plan, the Seachange Plan, the Juc Plan, the Point Plan, and the Grove Tribeca Plan (these being what I identified in the beginning of these reasons as the Alleged Infringing Levonix Plans) by the means alleged in (m) constituted the infringement by the respondents of Hamlan’s copyright in the Alleged Copyright Works.
The defence
In their defence the respondents do not admit the allegations relating to the creation of the Alleged Copyright Works and the other matters on which Hamlan relies for claiming that copyright subsists in the Alleged Copyright Works, and that it is the owner of the copyright in those works; and the respondents say they are not in a position to otherwise plead to those allegations because Hamlan has failed and refuses to provide particulars to enable the respondents to fully plead to those paragraphs. The respondents deny the Alleged Copyright Works are artistic works pursuant to s 10 of the Copyright Act, and that copyright subsists in those works pursuant to s 32 of the Copyright Act.
The respondents also deny that the Alleged Infringing Levonix Plans were a reproduction or a substantial reproduction of the Alleged Copyright Works. Additionally, in relation to the allegation that Levonix commenced construction of two display homes in Leopold, Victoria (Levonix Displays) which reproduce the whole or a substantial part of the Cumberland Plan and the Prism Plan, in paragraph 19(c) of their defence the respondents plead as follows:
[I]n further answer to paragraph 19 of the Statement of Claim says that:
(i) the First Respondent constructed one house in accordance with the First Respondent’s Southside Plan (as defined at Particular (i) of paragraph 19(c) of the Statement of Claim);
(ii)the First Respondent constructed four houses in accordance with the First Respondent’s Seachange Plan (as defined at Particular (iii) of paragraph 19(c) of the Statement of Claim);
(iii)the First Respondent has not constructed any houses in accordance with the First Respondent’s Juc Plan (as defined at Particular (v) of paragraph 19(c) of the Statement of Claim);
(iv) the First Respondent, without admissions, undertakes to the Court that it shall not itself advertise, offer for sale, sell or construct houses in accordance with the First Respondent’s Southside Plan, Seachange Plan or Juc Plan (for clarity copies of each of these plans are Annexed to this Defence and marked “A”) in the future, nor shall it authorise a third party to do so; and
(v) the First Respondent’s Point Façade and Grove Tribeca Façade were independently created by the First Respondent.
SHOULD THE RESPONDENTS BE REQUIRED TO DISCLOSE ADDRESSES?
Hamlan applies for an order that the respondents provide the addresses of the Alleged Infringing Properties on the basis that the addresses constitute particulars of the defence; and Hamlan seeks those particulars pursuant to r 16.45 of the Federal Court Rules,[5] which provides:
[5] Which, because of r 1.06 and Schedule 1 of the GFL Rules, apply to proceeding to which the GFL Rules apply
(1)If a pleading does not give a party fair notice of the case to be made against that party at trial and, as a result, the party may be prejudiced in the conduct of the party’s case, the party may apply to the Court for an order that the party who filed the pleading serve on the party:
(a)particulars of the claim, defence or other matter stated in the pleading; or
(b)a statement of the nature of the case relied on; or
(c)if there is a claim for damages—particulars of the damages claimed.
(2)An application under subrule (1) may be made only if:
(a) the particulars in the pleading are inadequate; and
(b) the party seeking the order could not conduct the party’s case without further particulars.
(3)A respondent who applies to the Court for an order under subrule (1) before filing the respondent’s defence must satisfy the Court that an order is necessary or desirable to enable the respondent to plead.
In its written submissions Hamlan submits that the Alleged Infringing Houses are centrally relevant to the issues in dispute in the proceeding; and that is because the Court will need to determine, among other issues, whether the respondents have, by creating the Southside and Seachange Plans, and by constructing houses in accordance with those plans, reproduced or authorised the reproduction of, or a substantial part of, the Alleged Copyright Works. Hamlan further submits as follows:
Hamlan submits that it requires particulars of the addresses of the Levonix Houses now so that it can, at the earliest possible opportunity:
(a)inspect the houses insofar as possible, at least from the outside and, with permission from the owners of the houses, from the inside;
(b)ascertain whether the owners of the houses previously visited Hamlan display homes, consulted with Hamlan in relation to the potential construction of houses on their respective properties and if so whether they were provided by Hamlan with copies of Hamlan's relevant Copyright Works. This will be a relevant matter to the issue of potential access and reference to the Copyright Works;
(c) communicate with the owners of these houses in relation to the above matters in sub-paragraphs (a) and (b);
(d) if it is considered necessary and appropriate, seek leave to serve subpoenas upon the owners (or former owners) of the Levonix Houses seeking production of documents relating to the above matters in sub-paragraphs (a) and (b) and the history of or the development of the design and plans of these houses, including relevant correspondence with Hamlan and third parties which might not otherwise be included in the respondents’ evidence or discovery;
(e) if it is considered appropriate, put the owners of the Levonix Houses or any architects or draftspeople they engaged on notice of any claims Hamlan has against them for infringement of the Copyright Works; and
(f) if it is considered appropriate, seek leave of the Court to join to the present proceeding the owners of the Levonix Houses and/or the architects or draftspeople they engaged.
In their written submissions, the respondents submit Hamlan does not, and cannot identify why the addresses of the Alleged Infringing Houses are necessary for it to fairly conduct its case, and it has not identified how it may be prejudiced in the conduct of its case if the addresses are not provided. Further, it is clear from Hamlan’s own submissions that it seeks the addresses as part of a fishing expedition in search of potential claims against third parties.
I do not accept Hamlan’s submission that the Alleged Infringing Houses are centrally relevant to the issues in dispute in the proceeding. In their defence the respondents admit that Levonix built one of the Alleged Infringing Houses “in accordance with” its Southside Plan (one of the Alleged Infringing Levonix Plans), and that Levonix built four of the Alleged Infringing Houses “in accordance with” its Seachange Plan (another of the Alleged Infringing Levonix Plans). If Hamlan succeeds on its claims that the Southside Plan and the Seachange Plan are reproductions or substantial reproductions of two of the Alleged Copyright Works, namely, the Riverside Plan and the Cumberland Plan respectively, Hamlan will necessarily succeed in establishing that Levonix’s building of the Alleged Infringing Houses “in accordance with” those plans would have constituted an unauthorised reproduction in three dimensional form of two of the Alleged Copyright Works. Hamlan will so succeed whether it knows or does not know the addresses of the Alleged Infringing Houses.
I accept the respondents’ submission that Hamlan has not articulated why its being notified of the addresses of the Alleged Infringing Houses are necessary for it to fairly conduct its case, and it has not identified how it may be prejudiced in the conduct of its case if the addresses are not provided. I also accept the respondents’ submission that the purposes for which Hamlan, as it states in its written submissions, seeks the addresses of the Alleged Infringing Houses is to enable Hamlan to make further inquiries, not in relation to the issues that arise on the pleadings, but in relation to whether persons who are not parties to the proceeding may have infringed Hamlan’s copyright in the Alleged Copyright Works; and, for that reason, the purposes for which it seeks the addresses extends beyond the purposes for which particulars may be ordered pursuant to r 16.45 of the Federal Court Rules.
It is the case that the addresses of the Alleged Infringing Houses are potentially relevant to issues of relief. If Hamlan succeeds on its claim that the Southside Plan and the Seachange Plan are infringing reproductions of some of the Alleged Copyright Works, and, as Levonix alleges, it built the Alleged Infringing Houses in accordance with those plans, it will be relevant to Hamlan to know the addresses. The addresses will enable Hamlan to identify the Alleged Infringing Houses and assess what, if any, profit Hamlan made from building the Alleged Infringing Houses, or whether the sale of those houses deprived Hamlan of the opportunity to sell houses that were or would have been built on the basis of the Alleged Copyright Work. Hamlan, however, has not submitted that it seeks particulars of the addresses of the Alleged Infringing Houses for these purposes.
I am satisfied that Hamlan is not, at least at this stage of the proceeding, entitled to be informed of the addresses of the Alleged Infringing Houses; and certainly not for the purposes for which Hamlan submits it is entitled to be informed of the addresses of the Alleged Infringing Houses.
APPLICATION TO SET ASIDE THE DISCOVERY ORDER
Background to, and the making of, the Discovery Order
On 3 May 2024 Hamlan’s lawyers (KLG) sent an email to the respondents’ former lawyers (ML) attaching proposed short minutes of order to be made at the first court date that had been appointed at 9.30 am on 7 May 2024.[6] The proposed short minutes of order included an order for discovery by way of categories of documents described in Annexure A to the proposed short minutes of order. ML responded by email sent on 6 May 2024 in which they attached an amendment to the short minutes of order KLG had proposed. In relation to discovery ML stated:[7]
We can agree to the provision of discovery by our client on the proviso that the categories are narrowed in the manner marked up and there is an appropriate redaction regime in place to protect our client’s commercially sensitive and confidential information (see proposed order 5)
[6] Affidavit of H Ottaway, 22.07.2024, p.5
[7] Affidavit of H Ottaway, 22.07.2024, p.21
Later on the same day ML sent an email to KLG attaching a further draft of the proposed short minutes of order. The draft included a proposed order for the redaction of commercially sensitive information contained in documents that were to be discovered.
At the first court date I was provided with draft proposed orders that included an order for the redaction of documents. I heard short submissions on that question, and decided I would not make any such order at that stage off the proceeding. The parties otherwise agreed that I should make an order for discovery in the terms provided in the draft proposed short minutes of order. After noting I was satisfied that it was appropriate and in the interests of the administration of justice to allow the discovery provided for in the proposed short minutes of order, I made the following orders and declaration:
THE COURT ORDERS THAT:
1.By 17 May 2024, the Applicant is to provide, by way of inspection, the documents particularised in the Applicant’s Statement of Claim regarding the Copyright Works.
2.By 31 May 2024, the Respondents to file and serve their defence and any proposed cross-claim.
3.By 14 June 2024, the Applicant file and serve any reply to the Respondents' defences and any defence to cross-claim.
THE COURT DECLARES THAT:
4.Pursuant to s 176(2) of the Federal Circuit and Family Court of Australia Act 2021 (Cth) it is appropriate in the interest of the administration of justice to allow discovery as set out in order 3 and Annexure A herein and that the production of the documents so ordered is likely to contribute to the fair and expeditious conduct of the proceedings.
THE COURT ORDERS THAT:
5.By 28 June 2024 the Respondents disclose to the Applicant such of the documents in Annexure A that are in their possession, custody or control.
6.The matter be listed for a case management conference at 9:30 am on 23 July 2024.
7.The parties have liberty to apply on such notice as the circumstances warrant.
Annexure A to the orders is as follows:
Annexure A – Respondents' Disclosure
Defined terms have the same meaning as in the Statement of Claim dated 16 April 2024 save where otherwise indicated
No. Category of documents for discovery
1. Copies of all documents relating to the creation of the Levonix Plans and/or the Display Plans. 2. Copies of all communications and documents passing between any of the respondents and any third party architect or draftsperson in connection with:
(a) the creation of the Levonix Plans and/or the Display Plans; and
(b) the construction of any houses in connection with the plans in (a), above (Levonix Houses).3.
Copies of all communications passing between any of the respondents and the owners or former owners of any the Levonix Houses (Owners) in connection with the creation of the Levonix Plans. 4. Copies of all construction plans for the Levonix Houses constructed to date, including façade plans. 5.
Copies of the first respondent's design files for each of the Levonix Plans and the Display Plans, including:
(a) any instructions provided in respect of the preparation of the relevant plan;
(b) all reference material, including any pre-existing third party plans or designs, referred to or relied upon in connection with the preparation of the Levonix Plans; and
(c) all previous drafts and designs.6. Copies of all contracts for the construction of Levonix Houses (including the construction of any future Levonix Houses).
Respondents’ submissions
The respondents submit this Court has jurisdiction under r 17.05(2)(c) of the GFL Rules to set aside the Discovery Order because the order is “interlocutory”; and the power conferred by that rule is confined only by the demands of the interests of justice.[8] The respondents further submit that the interests of justice favour the vacation of the Discovery Order. First, the provisions that regulate the ordering of discovery by this Court are predicated on “the presumption that discovery is not usually necessary for the fair and expeditious disposal of the proceeding”;[9] and the mere fact that the parties have consented to an order for discovery does not alone make the order for discovery appropriate.[10]
[8] Respondents’ Submissions in Support of Respondents’ Application in a Proceeding (Respondents’ Submissions), [8], referring to Luo v Zhai (No 6) [2016] FCA 805, [15] (Perram J referring to r 39.05 of the Federal Court Rules 2011 (Cth))
[9] Respondents’ Submissions on Discovery Order, [9], quoting from the judgment of Lander J in Devine Marine Group Pty Ltd v Fair Work Ombudsman [2013] FCA 442, at [54]
[10] Respondents’ Submissions, [10]
Second, both Federal and State courts have generally refused early application for discovery.[11] The respondents referred to two cases one of which is Commonwealth Bank of Australia v Goater, where Adamson J said:[12]
[I]is necessary, before an order for discovery is made, for the Court to be satisfied that it is in the interests of justice and consistent with the just, quick and cheap determination of the real issues in the proceedings, having regard to ss 56, 57, 58, 59 and 60 of the Civil Procedure Act 2005 (NSW).
Furthermore, the time at which discovery is ordered is also important. There are good reasons for deferring discovery until after affidavit evidence has been filed.
[11] Respondents’ Submissions, [11]
[12] Commonwealth Bank of Australia v Goater [2016] NSWSC 710, at [32]-[33]
Third, the scope of the Discovery Order is broader than what the second and third respondents had understood to have been the case; and it would be oppressive for them to be required to comply with the order. The respondents rely on an affidavit their solicitor, Mr Whitehead, made in which he deposed on information and belief to the following matters:[13]
(a)The categories of documents for discovery are broad in that the Discovery Order requires the respondents to search all their records for “all documents”, “all communications”, “all plans”, and “all reference material” in relation to numerous plans. This would require the respondents to search all of the email records, all text messages, all Microsoft Teams communications between relevant staff, “the HubSpot CRM software” Levonix uses.
(b)Levonix has 7 or 8 staff members, each of whom communicate with each other, with clients, and with external draft persons, and they do so by text message, emails, and Microsoft Teams; and all of these communications will need to be reviewed to determine whether they fall within any one of the categories.
(c)In relation to some of the relevant plans, there are more than 50 drafts of the plan before a final version was approved; and in relation to each draft there are numerous communications exchanged internally by staff.
(d)It will take potentially 10 to 15 days for the respondents to locate, collate, and review each of the documents that may potentially fall within the category of documents.
(e)At the time it was made, the second and third respondents did not know or understand the extent of the obligation imposed on them by the Discovery Order. They understood the Discovery Order to only require them to discover a small number of emails in relation to the design plans, not that it would require them to trawl through all text messages, emails and other records.
[13] Affidavit of P Whitehead, 28.06.2024, [4(a)]- [5]
In these circumstances, the respondents submit that the appropriate course is for the Discovery Order to be set aside, for the parties to file their evidence, and for discovery to be ordered later, if necessary.
Hamlan’s submissions
Hamlan submits as follows:
(a)Although the Court has power to revisit interlocutory orders, and it is only the consideration of the interests of justice that confine the exercise of that power, the power must be exercised judicially, and only in exceptional circumstances.[14]
[14] Applicant’s Outline of Submissions (Applicant’s Submissions), [4], referring to Australian Securities and Investments Commission v Marco (No 15) [2024] FCA 347
(b)In determining whether “it was open for a party to re-litigate a matter previously the subject of an interlocutory order”, one or more of four factors should be present: there is new material or new evidence which was not available, or reasonably available, to the parties when the orders were made; there has been a material change in the circumstances since the interlocutory order was made; there are exceptional circumstances which warrant re-consideration of the matters; and, as a matter of discretion, the justice of the matter requires “that the applicants be allowed to revisit the matter”.[15]
[15] Applicant’s Submissions, [5]
(c)The respondents have not shown there are any exceptional circumstances to warrant revisiting the Discovery Order. Hamlan relies on the following:
(i)The respondents do not seek to vacate the declaration made on 7 May 2024 that it is appropriate, in the interests of the administration of justice, to allow the Discovery Order.[16]
(ii)The Discovery Order was not made merely on the basis of the parties’ consent; I made the order after I expressed the view that this was a case where the documentary imbalance between the parties justified allowing discovery.[17]
(iii)The categories of documents that are the subject of the Discovery Order are plainly relevant to the key issues of liability and quantum.[18]
(iv)The scope of the Discovery Order is not oppressive because the obligation to give discovery goes no further than requiring the respondents to undertake “a good faith proportionate search” for the documents.[19]
(v)It is reasonable to infer from its defence that the respondents have already undertaken relevant searches of their records, including searches of physical or electronic files for each of the Alleged Infringing Plans, and the Alleged Infringing Homes.[20]
(vi)The respondents seek to avoid discovery altogether, without attempting to address the scope of each of the categories of documents. It is impossible to see how it could be suggested that producing copies of “construction plans” (category 4), “design files” (category 5), and “contracts for the construction” (category 6) of the Alleged Infringing House would require extensive searches.[21]
(vii)The respondents’ submissions about the extent of the searches they will be required to undertake are speculative.[22]
(viii)The respondents delayed in applying to set aside the Discovery Order.
[16] Applicant’s Submissions, [10]
[17] Applicant’s Submissions, [11]
[18] Applicant’s Submissions, [12]
[19] Applicant’s Submissions, [13], referring to Bupa Australia Pty Ltd v iSelect Limited (No 1) [2012] FCA 587, at [46]
[20] Applicant’s Submissions, [14]
[21] Applicant’s Submissions, [15]
[22] Applicant’s Submissions, [16]
Approach
It is the case that the authorities on which Hamlan relies support the principle that the power conferred by r 17.05(2)(c) of the GFL Rules must be exercised judicially, and only in exceptional circumstances; but these authorities concern the setting aside of interlocutory orders that were made in response to matters that were fully litigated between the parties. That is not the case with this Discovery Order; it was made with the consent of the parties.
It is true that, in making the Discovery Order, I considered whether it was appropriate, in the interests of the administration of justice, to allow discovery; but I considered that question in the course of a directions hearing list and, moreover, on the basis that the parties had agreed that I do so, it being my approach to case management not to unduly interfere with parties’ agreements about what interlocutory orders should be made. In short, I made the Discovery Order without hearing submissions on, and without giving proper consideration to, whether it is appropriate, in the interests of the administration of justice, to allow discovery by making the Discovery Order; and it would not be appropriate to let the Discovery Order stand without my properly considering that question.
In these circumstances, the principal question I must consider on the respondents’ application to set aside the Discovery Order is whether it was appropriate, in the interests of the administration of justice, to allow discovery in the form of the Discovery Order. If that question is answered in the affirmative, the Discovery Order will stand; if not, then, subject to any discretionary considerations, the Discovery Order should be set aside.
Principles
The starting point is s 176 of the Federal Circuit and Family Court of Australia Act 2021 (Cth) (FCFC Act), which provides:
(1)Interrogatories and discovery are allowed in relation to family law and child support proceedings in the Federal Circuit and Family Court of Australia (Division 2).
(2)However, interrogatories and discovery are not allowed in relation to any other proceedings in the Federal Circuit and Family Court of Australia (Division 2), unless the Court or a Judge declares that it is appropriate, in the interests of the administration of justice, to allow the interrogatories or discovery.
(3)In deciding whether to make a declaration under subsection (2), the Federal Circuit and Family Court of Australia (Division 2) or a Judge must have regard to:
(a) whether allowing the interrogatories or discovery would be likely to contribute to the fair and expeditious conduct of the proceedings; and
(b) such other matters (if any) as the Court or the Judge considers relevant.
In Australian Building & Construction Commissioner v CFMEU & Ors (No.5) I considered in some detail the proper construction of the predecessor of s 176(2) of the FCFC Act and the predecessor of r 14.02 of the GFL Rules.[23] I there held as follows:
[23] Australian Building & Construction Commissioner v CFMEU & Ors (No.5) [2018] FCCA 1100
(a)The word “discovery”, as it appears in s 176(2) of the FCFC Act, means an obligation by a party to a proceeding to search for and disclose documents and make them available for inspection by another party to the proceeding.[24]
[24] Australian Building & Construction Commissioner v CFMEU & Ors (No.5) [2018] FCCA 1100, [7]
(b)To “allow discovery”, for the purposes of s 176(2) of the FCFC Act, means to permit the Court to make an order for discovery pursuant to some rule or rules of the Court which provide for the giving of discovery.[25] Rule 14.02(2) of the GFL Rules is the relevant rule, which provides:
[25] Australian Building & Construction Commissioner v CFMEU & Ors (No.5) [2018] FCCA 1100, [8]
If a declaration [under s 176(2) of the FCFC Act] is made, the Court or a Registrar may make an order for disclosure:
(a) generally; or
(b) in relation to particular classes of documents; or
(c) in relation to particular issues; or
(d) by a specified date.
(c)Subrule 14.02(2) of the GFL Rules provides for three forms of disclosure. The first is “disclosure . . . generally”. As construed by Rangiah J in Hartnett Legal Services Pty Ltd v Ballantyn,[26] the expression “order for disclosure . . . generally” in r 14.02(2)(a) of the GFL Rules means “standard discovery” as provided for by r 20.14 of the Federal Court Rules.[27] Under r 20.14(1), “standard discovery” means a party’s giving discovery of documents (a) that are directly relevant to the issues raised by the pleadings or in the affidavits; (b) or which, after a reasonable search, the party is aware; and (c) that are, or have been, in the party’s control. Further, under r 20.14(2) of the Federal Court Rules, the documents a party is required to discover when giving “standard discovery” under r 20.14(1) must meet at least one of four criteria: the documents are those on which the party required to give discovery intends to rely; the documents adversely affect the party’s own case; the documents support another party’s case; and the documents adversely affect another party’s case.
(d)The second form of disclosure provided for by r 14.02(2) of the GFL Rules is “particular classes of documents”. That is not an independent method of describing the documents that must be disclosed; the expression “particular classes of documents” is a limitation on the documents that would otherwise be liable to be disclosed if an order for disclosure “generally” were made. In other words, the classes of documents, whatever the stated basis of classification, that may be ordered to be disclosed if an order were made pursuant to r 14.02(2)(b) of the GFL Rules, must still be documents that are directly relevant to an issue in the proceeding.[28]
(e)The third form of disclosure provided for by r 14.02(2) of the GFL Rules is disclosure “in relation to particular issues”. That simply requires an order that the party discover documents that are relevant to an issue or issues arising on the pleadings.[29]
[26] Hartnett Legal Services Pty Ltd v Ballantyne [2016] FCA 1116, at [33]
[27] Australian Building & Construction Commissioner v CFMEU & Ors (No.5) [2018] FCCA 1100, at [22]
[28] Australian Building & Construction Commissioner v CFMEU & Ors (No.5) [2018] FCCA 1100, [24]
[29] Australian Building & Construction Commissioner v CFMEU & Ors (No.5) [2018] FCCA 1100, [30]
What I say in the preceding paragraph identifies the classes of “discovery” the Court, pursuant to s 176(2) of the FCFC Act, may declare is appropriate to allow in the interests of the administration of justice. In CFMEU I also considered the circumstances in which it would be appropriate in the interests of the administration of justice to allow such discovery; and it would be convenient if I repeat here what I said in CFMEU:[30]
[W]hether or not it would be appropriate in the interests of the administration of justice to allow discovery will depend on the circumstances of the case. One circumstance may be where the person against whom discovery is sought (respondent to discovery) acted or is alleged to have acted in some fiduciary or analogous capacity in the interests of the applicant for discovery, and the proceeding relates to that person’s conduct in that capacity. Discovery may be appropriate in these circumstances because, given the relationship between the parties, the applicant for discovery may know nothing more than that the respondent to discovery may hold documents that may be relevant to an issue or issues in the proceeding, but the applicant for discovery otherwise is in no position to identify with any particularity or sufficient particularity what those documents might be. That, at least according Lindley LJ, accounted for the origin of the equitable jurisdiction to order discovery: [31]
The old practice of the Court of Chancery was limited to cases with which the Chancery Courts were familiar, such as breaches of trust where all the documents were in the possession of the trustee, and the cestui que trust knew nothing about the matter; and in that class of case the practice of the Court of Chancery was admirable, and without it it would have been impossible to administer justice.
Another set of circumstances where it might be appropriate in the interests of the administration of justice to allow discovery is where information that is relevant to an issue in the proceeding is peculiarly within the knowledge of the respondent to discovery. This will usually be the case where the state of mind of the respondent to discovery is an issue in the proceedings, or where the asserted cause of action or an element or elements of the asserted cause of action occurred in some secrecy. In these circumstances allowing discovery might be appropriate in the interests of the administration of justice because, given that the relevant information is or is likely to be peculiarly within the possession of the respondent to discovery, or the event occurred in some secrecy, the applicant would be unable to determine, or at least will have difficulty in determining, whether the respondent to discovery has any relevant documents and, if so, the sort of documents he or she might have.
The two circumstances I have identified suggest that it may be appropriate in the interests of the administration of justice to allow discovery whenever there is a substantial imbalance between the parties of their knowledge, or means of acquiring knowledge, of the existence of documents that are relevant to all or some of the issues in the proceeding. Where such an imbalance exists, it may be appropriate to impose on the party that has the knowledge, or means of acquiring knowledge, the burden of searching for and disclosing documents in that party’s power or possession that are relevant to some or all the issues in the proceeding, rather than leave the party who does not have the knowledge or means of acquiring knowledge to do the best he or she can to obtain by subpoena the documents of whose existence he or she is not in a position to know. Where, on the other hand, there is no such imbalance of knowledge or means of acquiring knowledge, it is reasonable to expect that the interests of the parties in identifying and gaining access to relevant documents before the hearing will usually be met by the availability of the issue of subpoenas for production, not only against third parties, but also against each other.
[30] Australian Building & Construction Commissioner v CFMEU & Ors (No.5) [2018] FCCA 1100, [38]-[40]
[31] In Re Wills’ Trade-Marks [1892] 3 Ch 201. Incidentally, this is a trade mark case where the Court of Appeal discharged an order for discovery in a proceeding seeking the removal of a trade mark from the register
Should the Discovery Order be set aside?
The threshold question is whether the Discovery Order falls within any of the three classes of disclosure provided for by r 14.02(2) of the GFL Rules; and that question is to be answered in the negative.
The Discovery Order requires discovery of documents that fall within the six categories described in Annexure A to the Discovery Order; but a moment’s analysis will reveal that each of the categories denotes documents that extend not only beyond the documents that would be required to be discovered under “standard discovery”; they denote documents that extend beyond documents that are relevant, directly or indirectly, to any issue that arises on the pleadings. That is, each category describes documents, whether or not the categories describe documents on which the respondents intend to rely, or documents that adversely affect the respondents’ case, or documents that support Hamlan’s case, or documents that adversely affect Hamlan’s case; or documents that are not relevant, directly or indirectly, to an issue that arises on the pleading.
The feature of the six categories of documents that requires the discovery of documents that extend beyond those that would need to be disclosed by standard discovery, and, more generally, beyond documents that are relevant, is that the categories are not described by reference to an issue that arises on the pleadings; they are described by reference to a particular subject matter, it being assumed, perhaps, that every document that falls within or relates to the subject matter will be relevant to an issue in the proceeding. That assumption, however, is not correct. Take, for example category 1. It calls for copies of “all documents relating to the creation of the” Alleged Infringing Levonix Plans. Assume there are no documents falling within this category that support, directly or indirectly, Hamlan’s case. Category 1 would nevertheless require the respondents to discover “all documents relating to creation of the” Alleged Infringing Levonix Plan, including documents on which the respondents do not intend to rely and which are not adverse to Hamlan. Assume, on the other hand, there are documents that fall within category 1 that do favour Hamlan’s case or damage the respondents’ case; category 1, however, would nevertheless include documents that could not adversely affect the respondents’ case, or support Hamlin’s case. That would be the case either because, considered by themselves, the documents will be incapable of supporting Hamlin’s case or harming the respondents’ case, or, although incapable of having such effect, the documents may nevertheless lead Hamlin “to a train of inquiry, which may have either of these [two] . . . consequences”, this being the now repudiated test of relevance for discovery given by Brett LJ in The Compagnie Financiere et Commerciale du Pacifique v The Peruvian Guano Co.[32] Examples of such documents would include communications setting up meetings; minutes of meeting; and communications attaching drafts of plans or commenting on plans. The same analysis may be applied with greater force to each of the other five categories described in Annexure A to the Discovery Order.
[32] The Compagnie Financiere et Commerciale du Pacifique v The Peruvian Guano Company: (1882) 11 QBD 55, at page 63
I am satisfied that I ought not to have made the Discovery Order, because it compels a form of disclosure of documents that falls outside the three forms of disclosure provided for by r 14.02(2) of the GFL Rules. The Discovery Order, therefore, is beyond the scope of the “discovery” the allowance of which the Court may declare under s 176(2) of the FCFC Act to be appropriate, in the interests of the administration of justice. Moreover, and in any event, the Discovery Order calls for the discovery of documents that would include documents that are not relevant, directly or indirectly, to issues that arise on the pleadings; and, for that reason, would require the discovery of documents beyond any broader form of discovery order this Court may have power to make.
The only discretionary matter on which Hamlan relies for my not setting aside the Discovery Order is that the respondents’ delayed in applying to set it aside. That may be a factor relevant to costs; but I do not consider it a factor that should weigh against my exercising the discretion to set aside the Discovery Order.
SEPARATE DETERMINATION OF LIABILITY FROM QUANTUM?
It is the case, as the respondents submit, that courts have noted that it is customary in intellectual property cases for issues of liability to be heard and determined separately from questions of quantum.[33] It is also the case, however, as Hamlan submits, that the power to order separate trials on liability and quantum should be exercised with caution.[34] In particular, care is required to ensure there is no overlap between issues of liability and quantum where the credit of any one or more witnesses may be relevant to both liability and quantum.
[33] Respondents’ Submissions, [24]
[34] Applicants’ Submissions, [32]
It is premature to consider at this stage of the proceeding whether an order should be made splitting liability from quantum, and I therefore do not propose to make any such order at this stage of the proceeding.
ADJOURN APPLICATION FOR SUMMARY DISMISSAL?
There would be no utility in adjourning the second and third respondents’ application for summary dismissal to be heard at trial. The question at trial will be whether Hamlan has made out its claims against the second and third respondents; it will not be whether Hamlan has no reasonable prospects of succeeding in its claims against the second and third respondents.
I therefore do not propose to adjourn the second and third respondents’ application for summary dismissal for hearing at trial. Given that the second and third respondents have not pressed for the summary dismissal of the claims made against them, their application for summary dismissal is to be dismissed.
DISPOSITION
I propose to:
(a)dismiss Hamlan’s application in a proceeding seeking an order for particulars;
(b)set aside the Discovery Order;
(c)dismiss the respondents’ application to adjourn the second and third respondents’ application for summary dismissal, and otherwise dismiss the respondents’ interlocutory application; and
(d)reserve the costs of each interlocutory application.
I will also list the matter for a further directions hearing at 9.30 am on 4 October 2024, or at such other time as may be convenient to the parties and the Court.
I certify that the preceding forty-three (43) numbered paragraphs are a true copy of the Reasons for Judgment of Judge Manousaridis. Associate:
Dated: 20 September 2024
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