Microsoft Corporation v Ezy Loans Pty Ltd

[2002] FCA 1425

FEDERAL COURT OF AUSTRALIA

Microsoft Corporation v Ezy Loans Pty Ltd [2002] FCA 1425

Federal Court of Australia Act 1976 (Cth) ss 53A, 53C

MICROSOFT CORPORATION, MICROSOFT PTY LIMITED AND MICROSOFT LICENSING INC v EZY LOANS PTY LTD TRADING AS HARMONY TELECOMMUNICATIONS AND BUSINESS EQUIPMENT AND EARL SEYMOUR DAVIS

N1129 OF 2001

COOPER J
BRISBANE
18 OCTOBER 2002

IN THE FEDERAL COURT OF AUSTRALIA
QUEENSLAND DISTRICT REGISTRY	N1129 OF 2001

BETWEEN:

MICROSOFT CORPORATION
FIRST APPLICANT

MICROSOFT PTY LIMITED
(ACN 002 589 460)
SECOND APPLICANT

MICROSOFT LICENSING, INC
THIRD APPLICANT

AND:

EZY LOANS PTY LTD (ACN 093 279 826)
TRADING AS HARMONY TELECOMMUNICATIONS AND BUSINESS EQUIPMENT
FIRST RESPONDENT

EARL SEYMOUR DAVIS
SECOND RESPONDENT

JUDGE:

COOPER J

DATE OF ORDER:

18 OCTOBER 2002

WHERE MADE:

BRISBANE

THE COURT ORDERS THAT:

(1)The notice of motion filed by the first and second respondents on 4 October 2002 is dismissed.

(2)The first and second respondents pay the applicant’s costs of and incidental to the notice of motion to be taxed if not agreed.

(3)These proceedings be referred to the Honourable Justice Dowsett of this court for mediation in respect of the matters arising in the proceedings with a view to settling the same or identifying any issues which may be settled between the parties, and for that purpose, his Honour have the protections and immunities provided for by s 53C of the Federal Court of Australia Act 1976 (Cth).

(4)The parties attend before his Honour for mediation at 2.15 pm on Monday, 21 October 2002 on the 7th level of the Commonwealth Law Courts Building, Brisbane.

Note:   Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA
QUEENSLAND DISTRICT REGISTRY	N1129 OF 2001

BETWEEN:

MICROSOFT CORPORATION
FIRST APPLICANT

MICROSOFT PTY LIMITED
(ACN 002 589 460)
SECOND APPLICANT

MICROSOFT LICENSING, INC
THIRD APPLICANT

AND:

EZY LOANS PTY LTD (ACN 093 279 826)
TRADING AS HARMONY TELECOMMUNICATIONS AND BUSINESS EQUIPMENT
FIRST RESPONDENT

EARL SEYMOUR DAVIS
SECOND RESPONDENT

JUDGE:	COOPER J
DATE:	18 OCTOBER 2002
PLACE:	BRISBANE

REASONS FOR JUDGMENT

1. This is an application by the first and second respondents to seek to have the proceedings against them dismissed on the basis of a compromise allegedly entered into between the parties.  The compromise is said to be contained in a document bearing the date 13 September 2001, which was signed by the first and second respondents.  The second respondent inserted in paragraph 1, as the amount of compensation at the time the document was signed, a figure of $1.00.  The document was sent with an accompanying cheque in an amount of $1.00 to the solicitors for the applicants.

2. The letter, which the first and second respondents executed, was, they contend, an offer capable of acceptance, which offer was accepted by them in September of 2002, it not having been earlier withdrawn by the applicants or their legal representatives.  The letter of 13 September 2001, which is marked as a draft without prejudice confidential communication, has to be read in conjunction with another letter of 13 September 2001, to the second respondent.  This letter indicates that there had been, prior to 13 September 2001, discussions between the parties regarding the possible settlement of the proceedings.

3. The letter contains the following paragraph:

   “Despite the strong evidence, our clients are prepared to negotiate a settlement of this matter.  We enclose a copy of the terms on which our client would be prepared to resolve the proceedings.  An essential element of any settlement would be compensation to our clients.  You will see that the amount of compensation has been left blank in paragraph 1 of the settlement terms.  Our clients invite you to make an offer in this regard.  In making this offer, you should take into account:

   (a)the number of computer which your business has supplied loaded with Microsoft Office and Windows; and

   (b) the revenue which Microsoft normally derives from the supply of authorised copies of Microsoft Office and Windows.

   In relation to (b) above, the relevant minimum amounts are set out in the Notice to Admit which has been sent to you under separate cover.  You will see that these amounts are less than the normal retail price of the programs and therefore a basis for calculation of compensation which is generous to the Respondents.”

   The letter concludes:

   “We look forward to hearing from you.”

4. Properly construed, the document of 13 September 2001 constituted an invitation to treat.  There was no offer capable of immediate acceptance by the first or second respondents.  Rather, there was an indication that, subject to the insertion of a sum by way of compensation, which was acceptable to the applicants, the applicants would settle on the basis of the other terms indicated.  There was, on the material, after September 2001, contact between the applicants and the respondents which clearly indicates that the matter was not, at that stage, regarded as concluded.   The material does not indicate that a willingness on the part of the applicant to settle on the indicated terms, provided a satisfactory figure for compensation was arrived at, was ever withdrawn.

5. The materials signed by the first and second respondents, including the provision of a figure of $1 in paragraph 1, and the provision of a cheque in the amount of $1, when forwarded to the solicitors for the applicants, constituted an offer on behalf of the first and second respondents to settle on those terms.  The materials indicate that that offer was rejected by the solicitors for the applicants.  In those circumstances, the matter has not been resolved, and there is no compromise agreement between the parties, which would entitle the first and second respondents to the relief which they seek on the notice of motion.  The notice of motion will therefore be dismissed.

6. Well, so far as this notice of motion is concerned, it is a discrete matter, and costs ordinarily follow the event.  Accordingly, I order that the applicants on the notice of motion pay the respondents their costs of and incidental to the notice of motion to be taxed if not agreed.

7. After submissions on a reference to mediation I order, pursuant to s 53A of the Federal Court of Australia Act 1976 (Cth):

   (1)that these proceedings be referred to the Honourable Justice Dowsett of this court for mediation in respect of the matters arising in the proceedings with a view to settling the same or identifying any issues which may be settled between the parties, and for that purpose, his Honour have the protections and immunities provided for by section 53C of the Federal Court of Australia Act.

   (2)I order the parties attend before his Honour for mediation at 2.15 pm on Monday, 21 October 2002 on the 7th level of the Commonwealth Law Courts Building, Brisbane.

I certify that the preceding seven (7) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Cooper

Associate:

Dated:            20 November 2002

Counsel for the Applicant:	Mr M. Gonsalves
Solicitor for the Applicant:	Mallesons Stephen Jaques
Second Respondent appeared in person on his own behalf and on behalf of the First Respondent.
Date of Hearing:	18 October 2002
Date of Judgment:	18 October 2002