Lubrizol Corporation Inc v Woolworths Ltd
[1997] FCA 310
•3 Apr 1997
IN THE FEDERAL COURT OF AUSTRALIA ) ) NEW SOUTH WALES DISTRICT REGISTRY ) No. NG 76 of 1997 ) GENERAL DIVISION )
BETWEEN: THE LUBRIZOL CORPORATION INC
ApplicantAND: WOOLWORTHS LIMITED & ANOR
RespondentCORAM: EMMETT J PLACE: SYDNEY DATED: 3 APRIL 1997
EX TEMPORE REASONS FOR JUDGMENT
This is an application brought under order 15A rule 6 of the Federal Court Rules seeking an order that the respondents within 14 days make discovery to the applicant of the documents which are described in schedule A to the application. The documents fall into 2 categories. The first, dealt with in paragraphs (a) and (b) of schedule A, comprises documents describing the manner in which certain materials consisting of products designated Klea 134a, Klea 66 and Klea 61 and lubricants under the Emkarte trade name were combined in the retrofitting of the first respondent's Penrith supermarket in 1993 and documents referring to the role of the first and second respondents in that retrofitting.
The second category of documents comprises documents recording or referring to the replacement of those products at the first respondent's Penrith supermarket subsequent to the initial retrofitting in 1993 and documents referring to the involvement of the second respondent in retro fitting of any other supermarkets of the first respondent with those products in or after 1993.
The applicant contends that there is reasonable cause to believe that the applicant has or may have the right to obtain relief in this court from the respondents within the meaning of rule 6(a) and that is common ground between the parties.
The products in question, it appears, were supplied by ICI Australia to the first respondent. The applicant believes that the way in which the products were used in connection with a retro fitting of the first respondent's Penrith Plaza Supermarket in 1993 constitutes an infringement of the patent no. 638710 of which the applicant is the registered proprietor. The material which prompted concern on the part of the applicant comprises an article which was published in the January 1994 edition of Frozen and Chilled Foods published by FMJ International Publications Ltd (UK) and a document entitled "Klea 61 Case Study" which on its face appears to have been published by what I shall refer to as the ICI organisation.
The receipt of that material prompted the applicant's solicitors to write to ICI Australia Ltd on 9 April 1996 asking to be provided with:
(a) documents “which show the chemical composition of any lubricants which have been imported into or manufactured in Australia by or on behalf of ICI since 16 November 1990 under the Emkarate tradename”,
(b) documents “which show the chemical composition of any material which have been imported into or manufactured in Australia by or on behalf of ICI since 16 November 1990 under the Klea tradename” and
(c) documents “which show the chemical composition of any ICI products used since 16 November 1990 in the conversion to HFC refrigerants of the air conditioning and/or frozen food and refrigeration display cases at Woolworths supermarket at Penrith”.
ICI in effect declined to provide the applicant with those documents or any documents which satisfy that description.
Alternatively, a request was made for samples of the products which were described. ICI also declined to provide samples but indicated where they could be obtained commercially. The applicant subsequently obtained the products and caused analyses to be carried out.
On 5 December 1996 the applicant's solicitors wrote to each of the respondents referring to the patent and saying that the applicant had become aware of a media report suggesting that the first respondent's Penrith supermarket's air conditioning and refrigeration systems had been converted or retrofitted by Austral Refrigeration and that the chlorofluorocarbon refrigerant and lubricant in the air conditioning and refrigeration unit had been replaced with an ICI HFC refrigerant marketed under the brand name Klea and an ICI synthetic ester lubricant marketed under the brand name Emkarate.
The letter stated the applicants did not know a number of matters which were enumerated in the letters in the form of questions. The letters contained a request either that those questions be answered or, if the recipient of the letters refused to answer the questions that confirmation be given that the recipients had in their possession documents bearing upon those questions. The letters described particular categories of documents which correspond in general terms with the documents described in schedule A to the application.
The solicitors for the present respondents replied on 3 February 1997, acting on behalf of ICI Australia Operations Pty Limited, and referred to the letters to the present respondents. A further letter was written by the solicitors for the respondents on 13 March 1997 in which they indicated that they then acted for the present respondents. That letter was written after the commencement of the proceedings and made a number of statements in relation to the categories of documents in schedule A to the application.
In relation to the first category which I have briefly described above, reference was made to the letter of 3 February 1997 and it was said that the respective roles of Woolworths and Austral were apparent from the letter and the Klea 61 Case Study. The letter of 13 March went on to summarise statements contained in the letter of 3 February and the Case Study.
In relation to the second category of documents, the letter of 13 March said that “the information contained in documents in that category appeared to be directed towards establishing the number of occasions on which an alleged act of infringement had occurred” and that “that enquiry was primarily relevant to the quantum of damages or an account to which the applicant may be entitled” and that “it was not apparent to the respondents that such information was relevant for the purpose of ascertaining whether the applicant had the right to obtain relief”.
In the course of argument counsel for the respondents indicated that he had instructions to make a concession although he made it clear that he did not accept that it was not apparent from the letter of 13 March 1997 that that position had not prevailed from that time. The concession, as I call it although as I indicated, Mr Catterns does not concede that it was a concession, was that the respondents acknowledge that the two statements extracted from the letter of 3 February 1997 were accurate, namely, that ICI Australia supplied Klea refrigerant and Emkarate lubricant to the first respondent for the retrofit of its Penrith Plaza supermarket in 1993 and that the retrofit procedures followed were those described in a copy of a document entitled “Retrofit Procedure” which was provided by ICI Australia to Austral under cover of its facsimile of 22 January 1993, a copy of which had been furnished to the applicant.
Mr Catterns also indicated that he was instructed to acknowledge that statements contained in the Case Study document were accurate. The Case Study document is annexure B to the affidavit of Martin Joseph O'Connor sworn 4 February 1997 which was read in the hearing of the application. The statements which Mr Catterns was instructed to acknowledge were correct were the first sentence on the first page of that document together with the statements contained under the heading "ICI's Solution" down to the heading "Performance of the System" on that page although he indicated that there was some question as to the accuracy of a statement that the training required to perform the retrofit took a matter of hours. That does not appear to be significant in the present context.
In the light of those acknowledgments, counsel for the applicant acknowledged that there was no need to press for discovery of the categories of documents described in paragraphs (a) and (b) of schedule A, although a question of costs may turn on the circumstances in which the acknowledgment was made and the time at which it was made. In effect, therefore, the question which I am called upon to decide is whether there should be an order under order 15A rule 6 in relation to the category of documents recording or referring to the replacement of Klea and Emkarate by other products at the first respondent's Penrith supermarket or recording or referring to the involvement of the second respondent in retrofitting of any other supermarkets in Australia of the first respondent.
The substance of the opposition to that order was that foreshadowed in the letter to which I referred above, namely, that the information contained in such documents appears directed towards establishing the number of occasions on which an alleged act of infringement has occurred and that that is primarily relevant to the quantum of damages or an account. Mr Catterns relied upon the language of rule 6(c) in conjunction with the language of rule 6(b). Those paragraphs require that the applicant establish that it does not have sufficient information to enable a decision to be made whether to commence a proceeding in the court to obtain relief, being the relief that it believes it has the right to obtain, and that the applicant believes that the respondents are likely to have possession of any document relating to the question whether the applicant has the right to obtain the relief.
Mr Catterns contended for a narrow reading of that language on the basis that if the documents go simply to the question of damage, they are not relevant to the question of whether the applicant has the right to obtain the relief. However, he was prepared to accept that they may well be material to the question of whether or not a decision should be made to commence proceedings. Mr Gleeson, junior counsel for the applicant, responded that, quite apart from the question of whether or not it was reasonable for a prospective applicant to have some notion of the seriousness or degree of infringement, one form of relief which would be sought would be an injunction to restrain further infringement based upon establishing a threat of such infringement.
It would be relevant to whether or not there was such a threat to know whether or not the second respondent had since 1993 been involved in retrofitting of other supermarkets. It would also be relevant to that question to know whether the products which appear to have been installed in the Penrith supermarket in 1993 remained in the Penrith supermarket so as to constitute a continuing infringement in that regard.
Mr R.V. Gyles QC, senior counsel for the applicant, referred me to several authorities, being judgments of this court, in relation to the operation of order 15A.
In Hughes Aircraft Systems International v Civil Aviation Authority (28 June 1995 unreported), Davies J referred to the fact that one of the issues in that case was whether Hughes had sufficient information to enable a decision to be made. The evidence before him indicated that there had been a brief advice from senior counsel for the applicant that the applicant had good prospects of establishing that the respondent was guilty of false or misleading conduct in breach of section 52 and that that applicant had reasonable prospects of establishing that the conduct of that respondent in issue was in breach of contract.
His Honour considered that, notwithstanding those matters, on the present information available to it, that applicant would be unlikely to have sufficient information for it responsibly to commence proceedings in the court. He accepted that access to the documents sought was necessary to furnish counsel for the applicant with the evidentiary facts required in order to reach a decision whether Hughes should proceed to institute a claim for damages.
His Honour appears to have thought it significant that Hughes did not possess copies of the crucial documents or have actual knowledge of their content. The documents sought were documents in the possession of the respondent which were relevant and his Honour found that inspection of the documents on behalf of the applicant would assist in enabling Hughes to make its decision whether or not to institute proceedings.
There is of course no statement of general principle in those observations. Nevertheless it does emerge, from what fell from Davies J, that an applicant for an order under Order 15A will not be refused relief even though he has been advised that he has good prospects of success. The applicant is entitled to have access to documents which furnish some evidentiary material in support of the claim sought to be made.
In Concrete Constructions Group Pty Ltd v The Commonwealth of Australia (22 April 1996 unreported), Sheppard J gave reasons as to why he would disposed to make orders under Order 15A. His Honour formulated a number of propositions as follows:
“First the rule is to be given a beneficial construction. It would be unfortunate if a rule designed to amplify the court's power to penetrate obscurities and uncertainties in the interests of justice were to be weakened by restrictive and unnecessary glosses. I think the rule is of a beneficial kind and ..... should be given the full scope which the language will reasonably allow.”
The latter remarks were adopted from the decision of Burchett J in Paxus Services Ltd v The People's Bank Pty Ltd& Ors. 99 ALR 728. Second, Sheppard J said:
“It is no answer to an application under rule 6 to say that the proceedings are in the nature of a fishing expedition.”
I interpose that, by definition, in effect, that is what is authorised by rule 6. Third his Honour said:
“It was acknowledged that there is a failure to establish that “an applicant for an order must establish each of the elements”.
Sheppard J then paraphrased each of the three paragraphs in rule 6 in a way which probably does not advance the matter so far as the decision I have to make is concerned.
I was also referred to a decision of Lindgren J in Alpha & Farm Pty Limited v Eli Lilly Australia Pty Limited (24 May 1996 unreported), apparently given without knowledge of the other two decisions to which I have referred. Lindgren J also endeavoured to set out a number of propositions. Relevantly propositions 8, 9 and 10 may be of assistance in the present context. His observations were:
“Rule 6 is not necessarily rendered unavailable by the fact that the applicant already has available evidence establishing a prima facie case for the granting of relief. That is made clear by the reference in paragraph (a) to existence of reasonable cause to believe that the applicant has ...... the right to obtain relief....
It would impose an artificial constraint on rule 6...to exclude, a priori, all cases in which the insufficiency of the information possessed by the applicant to enable a decision to be made whether to litigate, is due to a matter of “defence” which would defeat the prima facie case. Rule 6 does not provide a means by which an applicant will be enabled to have available to it every document which would assist it in deciding whether to litigate. If that were the intention...the additional condition set out in paragraph (b) would not be necessary.”
Finally his Honour observed:
“Paragraph 6(b) contemplates that after making all reasonable inquiries the applicant has come up against a problem, namely, that it is lacking a piece of information or pieces of information reasonably necessary to enable it to decide whether to commence a proceeding.”
In so far as the present applicant seeks information as to whether or not there is a real threat of continued infringement such as would justify an injunction, it appears to me it would be entitled to documents of the categories still in issue. I would therefore be disposed to make an order under Order 15A for discovery and inspection of the documents in that category subject to any limitation that may be necessary to ensure that there is no oppression.
There remains the question of the costs of the proceedings. My present view is that the appropriate order is to reserve costs until such time as the order has been complied with and for a reasonable time thereafter to ascertain whether the applicant does in fact commence proceedings for the relief to which it believes it may be entitled. The appropriate order, if such proceedings were commenced, will be that the cost of these proceedings be costs in those proceedings.
Mr Gleeson, however, suggests that quite apart from the appropriateness of such an order there are matters which require to be considered when the question of orders comes before the court, assuming I do reserve on that question. First it is said that it was not until today, or perhaps until receipt of Mr Cattern's written outline of submissions yesterday afternoon, that it was apparent that the accuracy of the statements contained in the letter of 3 February and the statements contained in the case study was to be acknowledged by the respondents. Mr Gleeson contends, in effect, that had unequivocal statements been made along the lines of the acknowledgments given by Mr Catterns today, it may have been unnecessary to bring the proceedings at all.
I consider there is some element of ambiguity in the letter of 13 March to which I have referred above which would have justified bringing these proceedings such that if proceedings are not commenced by the applicant, it may well be that the appropriate course would be to order the respondents to pay the costs of the motion in so far as the costs relate to documents the need to produce which was obviated by the concession.
If, however, proceedings are commenced then I adhere to the view which I expressed that the appropriate course would be to make the costs of the motion costs in the proceedings. Having expressed those tentative views I propose to make no order as to costs. I will either stand the matter down or adjourn it until tomorrow to enable some short minutes to be brought in that might reflect the reasons which I have indicated for making an order under part 15A.
I will make orders in accordance with the document entitled "Order" which bears today's date and which I will initial and place with the papers.
I certify that this and the preceding eleven pages are a true copy of the Reasons for Judgment of his Honour Justice Emmett.
Associate:
Dated: 3 April 1997
Heard: 3 April 1997
Place: Sydney
Decision: 3 April 1997
Appearances:
Counsel for the applicant: R.V. Gyles QC
Justin Gleeson
Solicitor for the applicant: Norton Smith
Counsel for the respondent: D.K. Catterns QC
Solicitor for the respondent: Blake Dawson & Waldron
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