Holden Ltd v TTF Dandenong Pty Ltd
[2004] VSC 175
•21 May 2004
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMERCIAL & EQUITY DIVISION
INTELLECTUAL PROPERTY LIST
No. 8946 of 2003
| HOLDEN LTD AND ANOTHER | Plaintiffs |
| v | |
| TTF DANDENONG PTY LTD AND OTHERS | Defendants |
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JUDGE: | HARPER J | |
WHERE HELD: | MELBOURNE | |
DATE OF HEARING: | 11 MAY 2004 | |
DATE OF JUDGMENT: | 21 MAY 2004 | |
CASE MAY BE CITED AS: | HOLDEN LTD & ORS v TTF DANDENONG PTY LTD & ORS | |
MEDIUM NEUTRAL CITATION: | [2004] VSC 175 | |
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PRACTICE AND PROCEDURE – Pleadings – Alleged infringement of design and unauthorised use of trade mark – Alleged misleading and deceptive conduct and passing off – Whether particulars given in defences sufficient – Admissions by some defendants that they were sole directors and shareholders of various corporate defendants – Non-admission of day to day control - Inference of control of corporate defendants open on such admissions – Risk that at trial defendants will not be permitted to call evidence to meet such an inference in the absence of any particulars of denial of control – Inconsistent pleading in relation to ownership of design and monopoly rights in it – Requirement under Intellectual Property list Rules that particulars of any invalidity of design be given .
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiffs | Mr G Fitzgerald | Phillips Ormonde & Fitzpatrick |
| For the First to Seventhnamed Defendants | Mr N Jones | Deacons |
| For the Eighthnamed Defendant | Mr A Patterson | Leo Dimos & Associates |
HIS HONOUR:
I have before me on a directions hearing in the Intellectual Property List a dispute about the sufficiency of the pleadings and particulars put forward on behalf of the first to seventh defendants.
The first plaintiff, Holden Ltd., is the well known Australian motor vehicle manufacturer. The second plaintiff, General Motors Corporation, is its American parent. According to the plaintiffs, the defendants are involved in the business of selling wheels and wheel caps for motor vehicles. It is alleged in the amended statement of claim that some of the wheels in which the defendants trade incorporate a design of which the first plaintiff is the registered proprietor and over the use of which that plaintiff has a monopoly; or, alternatively, incorporate a fraudulent or obvious imitation of that design. It is also alleged in the amended statement of claim that the second plaintiff is registered as the owner of two trade marks (a lion with ball device and the word “HOLDEN”). According to the amended statement of claim, the defendants or some of them have illegally traded in wheel caps that bear the lion trade mark (referred to in the amended statement of claim as the “Lion Trade Mark”), or a deceptively similar trade mark. Moreover, the first defendant, without the licence or authority of either of the plaintiffs, has in relation to vehicle wheels used as a trade mark a sign that is substantially identical with or deceptively similar to the “HOLDEN” trade mark. Allegations of misleading and deceptive conduct and passing off are also made.
The fourth defendant is, so the amended statement of claim alleges, the sole director of the first and second defendants. The fifth defendant occupies the same position in relation to the third defendant; and, according to the amended statement of claim, the seventh defendant is in turn the sole director of the sixth. Each of these allegations is admitted. By contrast, it is not admitted that any of the individual defendants were in control of the day to day activities of the company in respect of which that defendant was the sole director.
The plaintiffs assert that there is a tension or latent ambiguity in the defendants’ position on this aspect of their defence. Accordingly, they now seek that which are described in a letter dated 10 March 2004 from the solicitors for the plaintiffs to the solicitors for the first to seventh defendants as "full particulars of the control of the day to day activities of the first, second, third and sixth (corporate) defendants." The response, which is set out in a letter dated 10 May 2004 from the solicitors for the relevant defendants to the solicitors for the plaintiffs, is that this request is vague, oppressive and irrelevant and therefore should be rejected. The letter of 10 May goes on to assert that, in the context of the defendants' failure to admit day to day control, it is implicit that the plaintiffs are thereby put "to the task of proving that the relevant individual defendants were in control of the activities and/or conduct of the corporate defendants."
The dispute must, of course, be resolved in conformity with the relevant Rules of the Supreme Court. Those in Chapter I are well known. By r.13.02, every pleading shall contain in a summary form a statement of all the material facts on which the party relies – but not the evidence by which those facts are to be proved. Moreover, by r.13.07, every defence must plead specifically any fact or matter which makes any claim of the plaintiff non-maintainable, or if not pleaded specifically might take the plaintiff by surprise. Likewise, each defence must plead specifically any fact or matter which raises questions of fact not arising out of the statement of claim. Furthermore, by r.13.10 every pleading shall contain the necessary particulars of any fact or matter pleaded; and it follows that particulars shall be given if they are necessary to enable the opposite party to plead or to define the questions for trial or to avoid surprise at trial. Thus, as is explicitly provided by r.13.12, a general denial of the allegations, or a general statement that they are not admitted, shall not be sufficient. It also follows, and r.13.12 again explicitly provides, that where the party pleading intends to prove facts which are different to those pleaded by the opposite party, it shall not be sufficient for the party merely to deny or not to admit the facts so pleaded, but the party shall plead the facts it intends to prove.
Relevant rules are also to be found in Chapter VIII of the Supreme Court Rules. This chapter contains the Intellectual Property Rules 1996, by r.6.03 of which a party who disputes the validity of a registered design shall by the pleading in which the party disputes such validity set out the grounds of invalidity. More generally, r.2.04 empowers the judge on the hearing of a summons for directions to give such directions with respect to the conduct of the proceedings as the judge thinks fit; and, without limiting the generality of that provision, the judge may make orders with respect to the defining of the issues by pleadings, by particulars, or by admissions of fact or of documents.
In my opinion, these rules should be applied liberally and so as to advance the concept of truth in pleading. In Fieldturf Inc v Balsam Pacific Pty Ltd & Anor[1] Finkelstein J said that if the parties do not identify precisely just what is and what is not in dispute, the Court should intervene. This in my opinion is the correct approach, at least in relation to cases in the Intellectual Property List of this Court. I also agree with his Honour that the earlier the Court acts, the better it will be for the parties.
[1]V905 of 2002, 1 August 2003, at p.5.
The point is well illustrated in the present case. Once it is admitted that an individual defendant is the sole director of a corporate defendant then, in the absence of any evidence to the contrary, the Court is entitled to assume that that individual is in a position, as an individual, to comply with all the obligations that the law places upon directors of corporations. The Court is therefore also, it seems to me, entitled likewise to assume that the sole director of a corporation will, in the absence of evidence to the contrary, exercise ultimate control over the affairs of that corporation. This will in many instances involve day to day control over those affairs.
A sole director who seeks to avoid the tribunal of fact acting on that assumption has two alternatives. He or she may do no more than deny the allegation on which it is based. But that has its risks. The Court may (and, in the absence of evidence to the contrary, probably will) infer that degree of control which may be expected to be exercised by a sole director. In other words, merely putting the plaintiff to its proof on this point will be an empty exercise by a defendant because once the sole directorship is admitted the inference of control will follow.
The other alternative is for the director/defendant to accept that in the circumstances postulated he or she carries the burden of introducing evidence pointing to the conclusion that the inference of day to day control should not be drawn.
But if evidence of this kind is to be introduced, then it should only be introduced in accordance with the rules. The rules are designed to prevent surprise. It follows that, if the defendant wishes, by calling evidence, to avoid the inference being drawn, then he or she must give particulars explaining how it is that he or she is at once the sole director while at the same time not exercising that control which would ordinarily be exercised by someone in that position.
In this case, it is for the relevant defendants, having been given appropriate legal advice, to make the relevant decisions. They have presently chosen to deny that they were in control of the day to day affairs of the companies in respect of which they were, admittedly, the sole directors. If they introduce no evidence to support those denials, it may be that the Court will find that, on the balance of probabilities, the contrary has been established by reason of the admission of the sole directorship. On the other hand, if the defendants wish to sustain their denials by calling evidence in support, then proper particulars must be given.
Perhaps assuming that the latter position will be adopted at the trial, the plaintiffs made the request to which I referred at paragraph [4] above. They now pursue that request by application made in this directions hearing for an order that the particulars to which they claim they are entitled be provided. In my opinion, as things stand at present, the order they seek should not be made. The defendants need not supply the particulars sought; but if they do not, resort to the proposition that the plaintiffs were thereby put to their proof might be successfully met by the response that, once the admissions of sole directorships are made, the plaintiffs have done all they need to do to support an inference of control. Any attempt to avoid the drawing of the inference by calling evidence may well be met, in the absence of appropriate particulars, by a refusal by the Court to allow that step to be taken.
The defendants deny that the design the subject of the claim is valid and of full force and effect. They also deny that the first plaintiff is the owner of the monopoly in that design. On the other hand, they admit that the first plaintiff was at all material times the registered proprietor of it. The plaintiffs submit that these pleas are unsatisfactory because they are inconsistent and ambiguous.
In my opinion the plaintiffs are correct. If - as here - there is but one registered proprietor of a design, s.25 of the Designs Act 1906 provides that, as the sole owner, that proprietor has a monopoly in that design. And Order 6 of the Supreme Court (Intellectual Property) Rules provides that a party who disputes the validity of a registered design shall by the pleading in which the challenge is made set out the grounds for invalidity. The challenge is made in the defence. The grounds for invalidity are not set out in it. The defendants must rectify this omission.
Paragraph 8 of the amended statement of claim alleges that the first three defendants, to which it refers as “the retail defendants”, each infringed the first plaintiff’s monopoly in the design. The defendants deny this. At one level, that denial could be on the basis either that the design is invalid, or that the first plaintiff is not the monopoly holder, or that there was no infringement. Or the defendants might rely on some combination of these. But the first plaintiff’s registration as the proprietor of the design is admitted. It follows as a matter of law that it is the holder of the monopoly in the design. Accordingly, the only remaining basis for the denial of infringement is that, contrary to the allegations made by paragraph 8, the retail defendants did not sell, or import, or keep for sale, vehicle wheels to which the design or a fraudulent or obvious imitation of it has been applied. The defendants are entitled to put the plaintiffs to their proof on these matters. Accordingly, they are entitled to plead a bare denial to the allegations in paragraph 8 of the amended statement of claim. Nor can they be required to provide particulars of that denial. If the denial represents the truth, the retail defendants did not do that which the plaintiffs allege they did. And you cannot provide particulars of something you did not do.
The plaintiffs suggest that the denial cannot represent the truth. They point to an affidavit sworn on the defendants’ behalf by Mr Rod Daw. It is dated 12 December 2003. But it speaks of supply to the defendants, not what they have themselves done since. It therefore does not contradict the position taken by the defendants in their pleading; and even if it did, that would not necessarily require an amendment to the defence. The plaintiffs could simply put the affidavit in evidence and rely upon it to demonstrate that the defendants’ stance as pleaded was untenable.
Paragraph 12 of the amended statement of claim is concerned with wheel caps. It alleges that each of the retail defendants has, without the licence or authority of either plaintiff, manufactured or imported wheel caps to which the Lion Trade Mark or a like sign has been applied. The retail defendants have also, the allegation continues, advertised, distributed, supplied and sold or offered for sale wheel caps with that mark or sign. They have, in addition, used – in relation to vehicle wheels - a sign which is deceptively similar to the Lion Trade Mark.
The defendants deny that any[2] of the retail defendants have manufactured or imported counterfeit wheel caps. They otherwise do not admit the allegations contained in paragraph 12 of the amended statement of claim. The plaintiffs assert that this is not good enough. They again point to the Daw affidavit – but, in my opinion, with the same lack of relevance. By their defence, the defendants have put the plaintiffs to their proof. This is a response which they are entitled to make. And they need not accede to the plaintiffs’ request for “particulars of the basis of any denial”. For the reasons set out above, they cannot be required to give particulars of something which, on the assumption that the denial is not disproved by the plaintiffs, they must be taken not to have done.
[2]The defence uses the word “each”, but I take it that that merely echoes the amended statement of claim, and that the sense of the defence is captured by the word “any”
I of course stress that nothing I have said about the obligation of the defendants to provide particulars is intended to derogate from the proposition that they must not, by any omission properly to plead or to give particulars, render the plaintiffs subject to surprise at the trial.
In paragraphs 14 and 15 of the amended statement of claim, the plaintiffs plead that the first defendant has, since no later than September 2003, used as a trademark a sign that is substantially identical with or deceptively similar to the HOLDEN Trade Mark in relation to vehicle wheels. This use has been without the licence or authority of either of the plaintiffs. The first defendant has, accordingly, infringed the HOLDEN Trade Mark.
Each of these paragraphs is denied by the defendants. In the 10 May letter from the first to seventh defendants' solicitors to the solicitors for the plaintiffs, however, the first defendant refines its denial by stating that it applies to that defendant's use of the HOLDEN Trade Mark as a trademark. As I read the correspondence, the first defendant thereby accepts, in effect, that the trademark appeared on its receipts. If the trial judge is of a like mind, the plaintiffs will be able to put the first defendant's position, as thus revealed in the correspondence, to the Court as an admission. Its relevance to the question of improper use of the trade mark, or whether there was any use of the trade mark at all, would doubtless thereafter be the subject of submissions. In any event, the circumstances are not such as in my opinion would require the defendants or any of them to accede to the plaintiffs' request to "provide full particulars of the basis of any denial".
The next paragraphs in controversy are paragraphs 17 to 22 of the amended statement of claim. These deal with representations allegedly made by the retail defendants. As alleged in the amended statement of claim, the representations were that those counterfeit wheels and counterfeit wheel caps which were marketed, distributed and sold by the retail defendants are wheels and wheel caps "of the first plaintiff" and are of a standard, quality and composition similar to such wheels; and they have similar performance characteristics. The retail defendants also (so it is alleged) represented to the public that the counterfeit wheels and counterfeit wheel caps marketed, distributed and sold by the retail defendants had the sponsorship or approval of the second plaintiff.
These representations were, according to the plaintiffs, false. They were therefore misleading or deceptive or likely to mislead or deceive. They also amounted to passing off. As a result, the plaintiffs have suffered and are likely to continue to suffer loss and damage.
Each of these allegations is denied by the defendants. The plaintiffs seek "full particulars of the basis of such denials". For reasons to which I have already adverted, it seems to me that the defendants cannot be required to supply them.
The amended statement of claim alleges, by paragraphs 23 to 26, that the fourth, fifth, sixth, seventh and eighth defendants, or (as the case requires) one or more of them were liable as accessories to the infringements of the design and of the Lion Trade Mark. They were likewise accessories to the passing off and to the misleading and deceptive conduct. Each such allegation is denied. But the denial is to be read in the light of the relevant admissions concerning sole directorships. In my opinion, for the reasons to which I have already adverted, once the corporate wrongdoing has been proved on the balance of probabilities then, in the absence of any exculpatory evidence put on behalf of an individual sole director, the Court would be entitled to infer that that individual knew of and was involved in the contravention. Any failure by a defendant to provide particulars of exculpatory matter may result in that defendant being unable at the trial to call exculpatory evidence. Of course the burden of proof remains with the plaintiffs. But that burden may be held to be discharged by the admissions unless the defendants introduce evidence, of which proper particulars have been given, suggesting that the alleged involvement did not occur.
The final group of controversial paragraphs of the amended statement of claim consists of paragraphs 30, 31 and 33. It is sufficient to say of them that they give rise to the same point as that which is relevant to paragraphs 23 to 26. Accordingly, I need say no more about them.
In the result, both the plaintiffs and the defendants have had some success in the debate which occurred at the directions hearing on 11 May. In the circumstances I will hear the parties on the question of costs.
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