Herold v Seally

Case [2017] FCA 42

FEDERAL COURT OF AUSTRALIA

Herold v Seally [2017] FCA 42

File number: NSD 2139 of 2016
Judge: BURLEY J
Date of judgment: 19 January 2017
Catchwords: PRACTICE AND PROCEDURE – application for leave to serve originating application outside Australia under rules 10.42 and 10.43 of the Federal Court Rules 2011 (Cth) – whether Court has jurisdiction – whether prima facie case exists – leave granted
Legislation:

Copyright Act 1968 (Cth) s 202

Trade Marks Act 1995 (Cth) ss 88, 191

Federal Court Rules 2011 (Cth) rr 10.42, 10.43

Cases cited:

Bell v Steele [2011] FCA 1390; (2011) 198 FCR 291

Kadam v MiiResorts Group 1 Pty Ltd (No 2) [2016] FCA 1343
Date of hearing: 19 January 2017
Registry: New South Wales
Division: General Division
National Practice Area: Intellectual Property
Sub-area: Trade Marks
Category: Catchwords
Number of paragraphs: 51
Counsel for the Applicants: Mr M Hall SC
Solicitor for the Applicants: James Beatty & Associates

ORDERS

NSD 2139 of 2016
BETWEEN:

LARS HEROLD

First Applicant

GREEN LIGHT GROUP PTE LTD (SINGAPORE COMPANY REGISTRATION NO 201215105Z)

Second Applicant
AND:

JONATHON SEALLY

First Respondent

PODWAY LTD

Second Respondent

JUDGE:

BURLEY J

DATE OF ORDER:

19 JANUARY 2017

THE COURT ORDERS THAT:

1.Pursuant to FCR 10.43 leave is granted to the Applicants to serve the originating application, the amended interlocutory application dated 9 January 2017, the affidavit of Lars Herold made on 12 December 2016 and a sealed copy of these orders (together, “Documents”) on the Second Respondent by sending the Documents by international registered post with return receipt to the registered office of the Second Respondent at 5, 17/F Bonham Trading Centre, 56 Bonham Strand, Cheung Won, Hong Kong.

2.The Applicants are directed to:

(a)Provide copies of the affidavits of James Douglas Beatty sworn on 19 January 2017 and Malcolm Neil Bell sworn on 16 January 2017, the written submissions of their counsel dated 19 January 2017 and the text of the Hague Convention provided to the Court at the hearing on 19 January 2017, to the Second Respondent by registered post to its registered office; and

(b)Inform the Second Respondent that the proceedings will be returnable at a case management conference on 31 January 2017 before the Federal Court of Australia in Sydney.

3.Costs be reserved.

Note:   Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.


REASONS FOR JUDGMENT
(Revised from transcript)

BURLEY J:

  1. These reasons concern an application by the first applicant (Herold) and the second applicant (Green Light) for leave pursuant to r 10.43 of the Federal Court Rules 2011 (Cth) (Rules) to serve the originating application filed on 13 December 2016, an amended interlocutory application dated 9 January 2017, the affidavit of Lars Herold made on 12 December 2016 and any orders made by the Court arising from this application (collectively, the Documents) on the second respondent (Podway) by international registered post at an address in Hong Kong.

  2. Podway is a…

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Details
AGLC
Herold v Seally [2017] FCA 42
Case
[2017] FCA 42
Decision Date

CaseChat Overview and Summary

The case of Herold v Seally involved an application for leave to serve an originating application outside Australia. The applicant, Mr Herold, a German national who had been living in Australia for the past 12 years, sought leave to serve the originating application and related documents on Mr Seally, the defendant, who was a resident in Hong Kong. The application was made under rules 10.42 and 10.43 of the Federal Court Rules 2011. The central legal issues before the court were whether the Court had jurisdiction to grant the application and whether a prima facie case existed that warranted leave to be granted.

The court determined that the requirements of rules 10.42 and 10.43 had been met. It was satisfied that the application had been made in good faith and that there was a sufficient connection between the Court and the matter, given the activities of the parties in Australia. The affidavits and submissions made supported the existence of a prima facie case. The court held that the applicants had demonstrated a reasonable prospect of success on the merits and that the balance of convenience favoured granting leave. Consequently, the court granted the application for leave to serve the originating application outside Australia, subject to certain conditions regarding the service of additional documents and the scheduling of a case management conference.

In summary, the Federal Court of Australia granted the application for leave to serve the originating application on the defendant in Hong Kong. The court directed that specific documents be served by international registered post and that additional materials be provided to the defendant by registered post. The second respondent was also informed of the date for the case management conference. The costs were reserved for later determination.

Orders

Orders of the court

1. Pursuant to FCR 10.43 leave is granted to the Applicants to serve the originating application, the amended interlocutory application dated 9 January 2017, the affidavit of Lars Herold made on 12 December 2016 and a sealed copy of these orders (together, “Documents”) on the Second Respondent by sending the Documents by international registered post with return receipt to the registered office of the Second Respondent at 5, 17/F Bonham Trading Centre, 56 Bonham Strand, Cheung Won, Hong Kong.

2. The Applicants are directed to:

(a) Provide copies of the affidavits of James Douglas Beatty sworn on 19 January 2017 and Malcolm Neil Bell sworn on 16 January 2017, the written submissions of their counsel dated 19 January 2017 and the text of the Hague Convention provided to the Court at the hearing on 19 January 2017, to the Second Respondent by registered post to its registered office; and

(b) Inform the Second Respondent that the proceedings will be returnable at a case management conference on 31 January 2017 before the Federal Court of Australia in Sydney.

3. Costs be reserved.

Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

Background

Background to the litigation

I grant the application for leave, pursuant to r 10.43 of the Rules.Background The following summary is taken largely from the affidavit of Mr Herold. Mr Herold is a German national who has lived in Australia for the past 12 years. He is a specialist consultant in rail transport and infrastructure. Green Light is a company incorporated in Singapore. It was created by Mr Herold and his partner as a holding company for the intellectual property created in the course of their activities. Mr Herold claims that he met Mr Seally, when the two worked together in 2011, and later in 2013, Mr Herold worked with Mr Seally as a subcontractor to another company owned by Mr Seally for a program called “Fixing the Trains”. During and after the Fixing the Trains project, Mr Herold and Mr Seally had a number of discussions about autonomous transport systems. The two conducted research and shared ideas between January 2014 and June 2015. Mr Herold says that on 9 September 2014, he used the name “Podways” in relation to the project. The two men’s activities during this period are described in great detail in Mr Herold’s affidavit. Mr Herold says that during this time, with very few exceptions, their meetings all took place in Sydney. The exceptions were meetings with investors in Silicon Valley in the United States conducted over two separate weeks in March 2015 and May to June 2015. Between June 2015 and February 2016, Mr Seally became less involved in the project. First, he said he wanted to take a break from the project, and then by February 2016, Mr Seally had indicated that he was no longer interested in participating at all. In March 2016, Mr Herold began to recruit a new team, and on 30 August 2016, Mr Herold met Mr Seally for lunch at a Mexican restaurant on Pitt Street in Sydney. Mr Herold disclosed to Mr Seally that he had started recruiting a new team whom he had offered “sweat equity”. He offered Mr Seally the opportunity to rejoin in return for equity of 14%. Mr Seally “went berserk” and accused Mr Herold of stealing his “solution”. On 16 September 2016, Mr Herold received a letter from Mr Bell entitled “Podways – Potential Breach of Confidence and Copyright Infringement” (POFL letter). The letter asserted that “Mr Seally is the inventor of the Podways system of autonomous ground or air-based vehicles (pods) capable of following a route using a set speed and directional protocol”. It asserted that Mr Seally was either the sole owner or joint owner together with Mr Herold of the copyright in various works related to the project, all of which were confidential. The letter demanded that by 5 pm on 30 September 2016, Mr Herold sign another letter which contained various undertakings and acknowledgements in relation to the allegedly copyright works and allegedly confidential information. After receiving the letter, Mr Herold discovered that Mr Seally had apparently been undertaking his own activities in relation to the project for some time. The letter itself referred to a US provisional patent entitled “Podway Control System”. Mr Herold’s own researches further revealed that on 15 October 2015, Mr Seally had registered the company Podway Ltd in Hong Kong (that is, the second respondent) and become its sole director. On 29 September 2015, he had filed an application on behalf of Podway for the registration of the trade mark PODWAY in the United States, and on 1 February 2016, he had filed an application to register the trade mark PODWAY in his own name in Australia. On 25 July 2016, Mr Seally had also lodged a further United States trade mark application, this time for the mark PODWAYS.

Evidence

Evidence Before The Court

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Decision

Reasons for decision

Mr Beatty deposes that on 19 December 2016, the originating application and the Herold affidavit were sent by registered post to the registered office of Podway. However, since then additional materials have been advanced and relied upon to support the application for leave. Accordingly, I do not consider that it is appropriate to give an order confirming service pursuant to r 10.43(6). Conclusion and disposition I am satisfied that the requirements of rr 10.42 and 10.43 have been met. In light of the affidavits read and the submissions made, in my view it is appropriate to make the order sought in the amended interlocutory application at [3], subject to the requirement that, in addition to the documents referred therein, the affidavits of Mr Beatty and Mr Bell, as well as the written submissions provided to me in the present application by the applicants and the copy of the Hague Convention that was supplied to me are also provided by way of service in the manner indicated. I reserve the question of costs. I also direct that the second respondent be informed that the return date of the originating application be nominated as the date for the case management conference before the docket judge, which might be anticipated to be the first occasion on which all of the relevant parties appear before the Court.

Ratio Decidendi

Legal Principle Established

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