Hamlan Homes Pty Ltd trading as Hamlan Homes and Geelong Homes v Levonix Homes Pty Ltd (No 2)
[2024] FedCFamC2G 1024
•11 October 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 (No 2) [2024] FedCFamC2G 1024
File number(s): MLG 938 of 2024 Judgment of: JUDGE MANOUSARIDIS Date of judgment: 11 October 2024 Catchwords: INTELLECTUAL PROPERTY – Practice and procedure – application for discovery by way of categories of documents – not appropriate to make discovery by such means – whether appropriate in the interests of the administration of justice to allow for discovery by way of disclosure provided for by r 14.02 of the Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth) – appropriate to order disclosure in relation to particular issues arising on the pleadings. Legislation: Federal Circuit and Family Court of Australia Act 2021 (Cth) ss 176(2), 190, 191
Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules (Cth) rr 14.02(2)(c), 14.03
Cases cited: Brookfield v Yevad Products Pty Ltd [2004] FCA 1164
Hamlan Homes Pty Ltd trading as Hamlan Homes and Geelong Homes v Levonix Homes Pty Ltd [2024] FedCFamC2G 931
Division: General Number of paragraphs: 16 Date of hearing: 4 October 2024 Counsel for the Applicant: Mr M Fleming, by video Solicitor for the Applicant: K&L Gates Solicitor for the Respondents: Mr Y Hazan of Hazan Hollander Solicitors, by video 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
Applicant
AND: LEVONIX HOMES PTY LTD ACN 168777384
First Respondent
ZACHARY RAMSEY
Second Respondent
JENNIFER RAMSEY
Third Respondent
ORDER MADE BY:
JUDGE MANOUSARIDIS
DATE OF ORDER:
11 OCTOBER 2024
THE COURT DECLARES THAT:
1.Pursuant to s 176(2) of the Federal Circuit and Family Court of Australia Act 2021 (Cth) it is appropriate, in the interests of the administration of justice, to allow discovery by making an order pursuant to r 14.02(2)(c) of the Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules (Cth) (GFL Rules) that the respondents make disclosure in accordance with r 14.03 of the GFL Rules in relation to the issues that arise from the respondents’ defence to paragraphs 19, 20, 22, 23, and 25 of the statement of claim.
THE COURT ORDERS THAT:
2.Pursuant to r 14.02(2)(c) of the GFL Rules the respondents make disclosure in accordance with r 14.03 of the GFL Rules in relation to the issues that arise from the respondents’ defence to paragraphs 19, 20, 22, 23, and 25 of the statement of claim, such disclosure to be made by 8 November 2024 or by such later time as the parties may agree or the Court may order.
3.The matter be listed for a directions hearing at 9.30 am on 15 November 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
On 20 September 2024 I published reasons for judgment (earlier reasons) on the basis of which I set aside an order for discovery I made on 7 May 2024 (earlier discovery order).[1] I also ordered that the matter be listed for a directions hearing at 9:30 am on 4 October 2024.
[1] Hamlan Homes Pty Ltd trading as Hamlan Homes and Geelong Homes v Levonix Homes Pty Ltd [2024] FedCFamC2G 931
At 12:11 pm on 2 October 2024 the respondents’ lawyers sent to my Associate an email stating that the parties have not been able to agree on the directions that should be made on 4 October 2024, and attached a draft of the orders the respondents proposed I should make at the directions hearing. At 1:50 pm on 2 October 2024 the applicant’s lawyers sent an email to my Associate attaching a draft of the orders the applicant proposed I should make on 4 October 2024. From the competing proposed orders, it was apparent that the parties were principally in dispute about whether I should make an order for discovery. At the directions hearing on 4 October 2024 I heard argument on what further directions I should make, including whether I should make an order for discovery in terms of the draft the applicant proposes.
After hearing argument, I reserved my decision, and listed the matter for further directions at 10:00 am on 11 October 2024, at which time I indicated I would pronounce my orders, although I noted I did not know whether I would also give reasons for those orders. As it is, I have had the opportunity, not only to consider what orders I should make, but also to prepare written reasons for the orders I consider I should make.
DISCOVERY
Parties’ submissions
The applicant seeks an order that the respondents give discovery of the 10 categories of documents that are listed in the first of three columns that constitute Annexure A to a revised draft of orders the applicant’s lawyer provided to my Associate. The second column identifies the relevance the applicant submits each of the categories of documents has to the issues raised on the pleadings; and the third column sets out the respondents’ responses to each category.
After counsel for the applicant made submissions to the effect that each of the 10 categories of documents are relevant to issues that arise on the pleadings, I asked counsel for the applicant why the applicant submits it is appropriate, in the interests of the administration of justice, for the Court to allow discovery. Counsel made the following submissions:
Yes. Well, there are – briefly, yes, your Honour – well, there are two issues. The first is – and I don’t need to revisit or go back to your Honour’s decision. Your Honour set out the principles from CFMEU, and we don’t challenge that . . . .
[Y]our Honour identified in your reasons from the last occasion the principles for discovery at paragraph 32. We don’t propose to travel beyond those. And in CFMEU, your Honour identified the paragraphs at 38 to 40 of that decision, and your Honour said there that there are circumstances in which – that it may be appropriate and in the interests of the administration of justice. And, in particular, where information that’s relevant is peculiarly within the knowledge of the respondent to discovery, and that will usually be the case where state of mind of the respondent to discovery is an issue in the proceeding.
Now, state of mind is in issue because there is an allegation of innocent infringement here, so – and that’s an allegation that my friend puts. So that is covered. In these circumstances, allowing discovery might be appropriate in the interests of justice because the relevant information is likely to be peculiarly within the possession of one party. And then your Honour identifies the more general principle. It may be appropriate and in interest where there’s a substantial imbalance between the parties of their knowledge or means of acquiring knowledge of the existence of documents 25 relevant to some or all of the issues. Now, what we say about the categories generally is they’re largely directed at three things: (1) access or knowledge, (2) copying . . .
Counsel for the applicant also referred to Federal Court’s Intellectual Property Practice Note (IP-1), and in particular to paragraph 7.1 which is as follows:
In the normal case, a proceeding for trade mark infringement, copyright infringement or registered design infringement should not require intensive case management. In most cases there will not be any need for discovery except where it directly relates to proof of copying, knowledge or intention by or on the part of the party alleged to have infringed or other specific topics directly relevant to an issue in the proceeding. However, the Court is unlikely to make an order requiring extensive discovery unless satisfied that it is necessary for the just disposition of the proceeding.
In their written submissions the respondents submit that the applicant has still not established why it is appropriate, in the interests of the administration of justice, for discovery to be ordered now, further submitting that the appropriate course would be for the matter to proceed to evidence. The respondents further submit that, in any event, the categories of documents as described in Annexure A to the revised proposed orders suffer from the same deficiencies as the categories of documents I considered in the earlier reasons. In his oral submissions Mr Hazan, who appeared for the respondents, submitted that there has been no change since 20 September 2024 when I published the earlier reasons, and that in substance the applicant is seeking the same documents as the documents that were the subject of the earlier discovery I set aside. Mr Hazan also submitted that by applying for discovery the applicant is seeking to force the respondents to put on their evidence first, and is therefore trying to reverse the usual practice of the Court.
Determination
As stated in the earlier reasons, I set aside the earlier discovery order for two reasons. The first is that the form of discovery required by the earlier discovery order, namely, discovery by categories, is not a form of discovery provided for by the Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth) (GFL Rules). The second is that the categories of documents the earlier discovery order required to be disclosed included documents that are not directly relevant. I did not in the earlier reasons, however, hold or suggest that I was not satisfied that it would be appropriate, in the interests of the administration of justice, to allow for discovery in this proceeding.
The first of the two reasons for which I set aside the earlier discovery order are not addressed by the applicant in its fresh application for discovery; and that is because the applicant seeks discovery by reference to categories. For that reason alone, I do not propose to make a declaration under s 176(2) of the Federal Circuit and Family Court of Australia Act 2021 (Cth) (FCFC Act) that it is appropriate, in the interests of the administration of justice, to allow discovery by means of disclosure of documents that fall within the 10 categories described in Annexure A to the applicant’s revised proposed orders. That conclusion, however, is not the end of the matter.
There are issues of fact that arise on the pleadings, the truth or falsity of which, or the means for determining the truth or falsity of which, it is reasonable to suppose lies peculiarly within the knowledge or power of the respondents. The issues are those that arise on the respondents’ defence to the facts and matters alleged in paragraphs 19, 20, 22, 23, and 25 of the statement of claim, namely, infringement, and loss (or gain).[2] To the extent, therefore, there are documents that are relevant to those issues, they are likely to be in the power or possession of the respondents. In those circumstances, it would be reasonable to require the respondents to search among the documents that are in their possession or control for documents that are relevant to the issues arising on the respondents’ defence to paragraphs 19, 20, 22, 23, and 25 of the statement of claim, and to disclose such documents as are or at any time were in their possession or control, or otherwise to verify that they do not hold or never held any such documents. That would be a more efficient procedure than leaving the applicant to seek to obtain such documents by describing categories of documents in a subpoena or notice to produce, because the respondents would have knowledge that the applicant does not have about the documents that are in their possession or power.
[2] There is no paragraph 24 in the statement of claim.
It would also be reasonable, at this stage of the proceeding, to require the respondents to search for and disclose documents relevant to the issues that arise on their defence to paragraphs 19, 20, 22, 23, and 25 of the statement of claim.
(a)First, it may reasonably be supposed that, in seeking to discharge the duty imposed by s 191 of the FCFC Act to conduct the proceeding “in a way that is consistent with the overarching purpose” (being the purpose identified in s 190(1) of that Act), the respondents and their lawyers would have sought access to, and would have analysed or now intend to analyse, documents in the respondents’ possession that are relevant to determining, to the extent it is their power to do so, the truth or falsity of the allegations in the statement of claim the respondents have put in issue. Requiring the respondents to search for and disclose documents that are relevant to facts in issue would require the respondents to do something which in large part they will have done or will in any event do for the purpose of the defences they propose to conduct.
(b)Second, unless there is a suggestion that ordering discovery before parties are required to file their evidence gives rise to the risk that a party (or his or her witnesses) will tailor his or her evidence to documents the other party may disclose on discovery (a risk which is commonly accepted arises in cases based on oral contracts, oral representations, or otherwise rely on contested conversations), the giving of discovery before the parties file their evidence adds to the efficiency of the proceeding. The applicant will be able to include in its evidence in chief relevant documents the respondents may disclose in discovery, rather than the applicant having to seek to obtain such documents by subpoenas or notice to produce after the respondents file their evidence. Leaving the applicant to seek documents by subpoena or notice to produce after the respondents have filed their evidence would raise the risk of the applicant being required not only to seek leave to adduce any additional documents they may obtain by subpoena or notice to produce, but also to seek to file additional evidence to deal with matters that may be revealed in documents that may be produced.
(c)Third, requiring parties to search for and disclose relevant documents is more likely to lead the parties to focus their attention on the strengths and weaknesses of their respective cases before they go to the trouble and expense of preparing their evidence; and this may increase the probability of issues being narrowed, and also the prospects of settlement.
What I say in the previous two paragraphs reflects the purposes for which discovery had been traditionally ordered or otherwise made available as of right; and it would be useful if I refer to the proposes that have been identified. First, there is the following passage from Bray:[3]
A party was entitled to discovery in order to ascertain facts material to the merits of his case, either because he could not prove them, or in aid of proof and to avoid expense . . . to deliver him from the necessity of procuring evidence . . . to supply evidence or to prevent expense and delay in procuring it . . . to save expense and trouble . . . to prevent a long enquiry and to determine the action as expeditiously as possible.
[3] E Bray The Principles and Practice of Discovery London (1885), pages 1-2
Second, there are the purposes Lander J identified in Brookfield v Yevad Products Pty Ltd:[4]
The purpose of including a regime which allowed for discovery was to ensure that the parties had full access to all relevant material whether in their hands or their opponents. The process enables the parties to obtain documents from their opponents which support their own case, and which destroy their opponents’ case. . . . It enables the parties to assess their own prospects of success before trial and to ensure that they are not ambushed at trial.
[4] Brookfield v Yevad Products Pty Ltd [2004] FCA 1164 at [365]-[366]
For these reasons, I am satisfied that it is appropriate, in the interests of the administration of justice, to allow discovery in relation to the issues that arise from the respondents’ defence of paragraphs 19, 20, 22, 23, and 25 of the statement of claim.
DISPOSITION
I propose to make a declaration under s 176(2) of the FCFC Act that it is appropriate, in the interests of the administration of justice, to allow discovery by making an order pursuant to r 14.02(2)(c) of the GFL Rules that the respondents make disclosure in accordance with r 14.03 of the GFL Rules in relation to the issues that arise from the respondents’ defence of paragraphs 19, 20, 22, 23, and 25 of the statement of claim; and an order that the respondents make such disclosure by 8 November 2024, or by such later time as the parties may agree or the Court may order. I also propose to list the matter for a directions hearing at 9.30 am on 15 November 2024 or at such other time as may be convenient to the parties and to the Court.
The parties have proposed my making other orders; but I do not propose to consider at this stage whether I should make any other orders.
I certify that the preceding sixteen (16) numbered paragraphs are a true copy of the Reasons for Judgment of Judge Manousaridis. Associate:
Dated: 11 October 2024
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