Perceptual Development Corporation v Versi Pty Ltd

[1988] FCA 464

JUDGMENT No.

NOT FOR DISTRIBUTION

C A T C H W O R D S

PRACTICE AND PROCEDURE - pleading - particulars - specific

discovery.

Federal Court Rules 0.15 r.8

PERCEPTUAL DEVELOPMENT CORPORATION v VERSI PTY	LTD, DONALD LEE
ZIMMERMAN and WINIFRED CAROLINE ZIMMERbAN NO. WAG 18 Of 1981
FRENCH J. PERTH
1 7 AUGUST 1988
IN THE FEDERAL COURT	)
OF AUSTRALIA

WESTERN	AUSTRALIA	1
DISTRICT	REGISTRY	1

GENERAL DIVISION	No. WAG 78 of 1987
B E T W E E N :	PERCEPTUAL  DEVELOPMENT COR ORA ION

Applicant

and

VERSI PTY LTD

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First Respondent i

and

DONALD LEE ZIPIPIERMAN

Second Respondent

and	i .
WINIFRED CAROLINE ZIMMERMAN

Third Respondent

MINUTE OF ORDER	\
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JUDGE MAKING ORDER: FRENCH J.

DATE OF ORDER: 17 AUGUST 1988

PERTH	MADE:	WHERE
THE COURT ORDERS THAT:
A. On the Respondents' motion filed 26 July 1988:-

1. The respondents have leave to amend the defence in

accordance with the minute filed on	26 July 1988.	1 .
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2.    The respondents have leave to amend their further and better particulars of defence in accordance with the

i minute filed in Court on 17 August 1988.

3 . Filing and service of the Minutes stand as filing and

service of the amended pleading and particulars.

4. The respondents are to pay the applicant's costs of the

motion and any costs thrown a ay in any event.

5.    The applicant do on or before 31 August 1988 file and deliver further and better particulars in answer to

request ll(g) in the respondents' request dated 18 may

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1988.

B. On the applicant ' S motion filed 15 July 1988:-

1.	Paragraph 5	(f)(i) of the re-amended defence	is struck
out.

2.    All words after and including "or alternatively" up to and including "the licensing agreement" in paragraph 7

of the re-amended defence are struck out.

3 .    The respondents are to plead their positive case in

answer to paragraphs 6A and 11B of the re-amended

statement of claim.

4.	The respondents will have leave to file and deliver a
further amended defence on or before 7 September 1988.

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5. The respondent will have leave to file and deliver

substituted particulars of the amended defence	on	or
before 14 September 1988.

6. No order as to the costs of the motion, but the

respondents are	to pay the applicant's costs thrown away
by reason of the further amendments to the defence	or
particulars.	! '
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l .	The applicant is to file and deliver any reply by	28
September 1988.

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

IN THE FEDERAL COURT )

AUSTRALIA OF 1

WESTERN	AUSTRALIA	)
DISTRICT	REGISTRY	1

GENERAL	DIVISION	)	No. WAG 78 of 1987
B E T W E E N :	PERCEPTUAL	DEVELOPMENT	COR ORA ION
Applicant

and

VERSI PTY LTD

First Respondent	I
i

and	1''
DONALD LEE ZIMMERMAN

Second Respondent

and

WINIFRED CAROLINE ZIMNERMAN

Third Respondent

CORAM:	FRENCH J.
-	17 August 1988

EX TEMPORE REASONS FOR JUDGMENT

ON MOTIONS TO AMEND DEFENCE	AND TO STRIKE
OUT PARTS OF DEFENCE AND	PARTICULARS

Before the Court today are two motions, one brought by

the respondents and the other by the applicant in relation to the

respondents' defence and particulars of the defence. The first

motion seeks accordance with minutes filed on leave to amend the defence and particulars in

26 July 1988 and on 17 August

1988.   Having heard argument on that motion, I am satisfied that

there is no reason why the amendments should not be allowed,

subject to the more general attack on the pleadings and

particulars b ought under the applicant's motion. The

respondents also seek the provision of further and better

particulars in answer to their request filed 23 may 1988 and an

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order for specific discovery.

Particulars of Passing Off - Question Il(g)

I am satisfied that the applicant should give further

and better particulars in answer to question ll(g) in the

respondents' request relating to the allegation of passing off.

It is	central to that allegation that the manner	in which the
passing off is said to be effected should be specified,	so	that

the respondents know whether they face a case of explicit

misrepresentation, or implicit misrepresentation	by	reason	of
get-up labelling or some other combination	of	conduct on	their

part. I will order that further and better particulars be

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delivered in answer to question ll(g).	r
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Particulars of Damages	- Question 13

I will not require the applicant to provide further

particulars of damages immedlately, but the respondents have

liberty to apply on that question. They are plainly entitled to

receive a better indication of the basis of the applicant's

claimed damages than they have to date, but I accept that that is

a process which may have to await the assembly of evldence

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including answers to interrogatories.

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Other Particulars Sought

So far as the other particulars sought are concerned,

the requests are drawn widely and in a common form that displays

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an adherence to convention coupled with a failure to consider !

precisely what elaboration of the pleadings is necessary.	In	my	r
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opinion, notwithstanding the wide form of the requests which raise

their own risks and difficulties, the particulars that have been

provided are sufficient for the purpose. The respondents are not

entitled to a detailed account of how the applicant proposes to	I
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conduct its case.	t i
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Specific Discovery

AS to specific discovery, this is governed by 0.15 r.8

of the Federal Court Rules which provides:-

"Where, at any stage of the proceeding, it appears to the

Court from evidence or from the nature or circumstances

of the case or from any document filed in the proceeding

that there are grounds for a belief that some document

or class of document relating to any matter in question I

in the proceeding may be or may have been in the

possession, custody or power of a party, the Court may

order that party -

(a)	to file any affidavit stating whether that document or any document of that class is or has been in his
possession, custody or power and, if it has been
and is not then in his possession, custody or i
power, when he parted with it and what has become I

of it; and

(b) to serve the affldavit on any other party."

The respondents seek specific discovery of what is described as

"source books, research papers, text books, bibliography reference

material and published	or unpublished works relevant to the "Irlen
Technology"" and rely	in so doing upon the affidavit of discovery

I sworn by Mrs Irlen on behalf of the applicant and in particular

para.5 of that affidavit which reads:-

"I am in consultation with the applicant's solicitors as

to what reference material and published works need to

be listed as part of the applicant's discovery. The

present list of documents is the list which I can

specify at the moment. The	applicant will seek orders
for exchange of expert evidence.	As may be necessary
all reference material to which I	will be referring will
then be listed in	a supplementary affidavit."

The mention in para.5 of the affidavit of discovery of

reference material does not indicate that that is necessary

relevant material of a discoverable character in the power o r

possession of the applicant, and I-Ir Stevenson says that his

instructions are that there is no such additional material. In

the circumstances,	I	am not satisfied that grounds have been
established, in terms of	0.15	r.8, for an order for particular

discovery and on that aspect the respondents' motion fails.

Applicants' Strike Out Motion

The principal debate concerned the applicant's motion

which seeks to strike out certain paragraphs of the amended

defence and particulars, and an order that further and better

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particulars be delivered. M r Stevenson for the applicant, was

content to deal with this motion on the basis of the defence	and
particulars as amended and, without objection, widened his	attack
on certain aspects of	the pleadings beyond those of which notice

was given. In order to expedite the disposition of this matter

today, I allowed him to do that and have dealt with his objections
on that basis. ; > ,

It is convenient to proceed by dealing with each

impugned paragraph of the re-amended defence seriatim.	!
Paragraph 2.2

This paragraph pleads to para.2 o f the re-amended

statement of claim which alleges:-

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"2(1) The First Respondent is a company incorporated in

and according to the laws of Nestern Australla on 15

December 1986. On 19 January 1987 the Second and Third
Respondents obtained control of the First Respondent and

were appointed directors thereof.

(2) On 30 march 1987 the Second Respondent resigned as

a director of the First Respondent but continues to take

part in the management of the First Respondent and is

personally concerned in the carrying on of business by

the First Respondent as pleaded in paragraphs	11 to
14(c) below.

( 3 ) The Third Respondent is the wife of the Second

Respondent. She continues to be a director of that

corporation, and is personally concerned in the management and business of the First Respondent."

In answer to 2(2) above, the re-amended defence pleads in 2.2:-

:

"2.2 The Respondents admit that the Second Respondent

resigned as a Director of the First Respondent on 30

March 1987 but otherwise	deny paragraph 2 ( 2 ) of the
Re-Amended Statement of	Claim and say that the Second

Respondent is, and was at all material times, a

consultant to the First Respondent.''

The applicant's objection seems to be that a false issue is raised

by the assertion that the second respondent is and was at all

material times a consultant to the first respondent. In my

opinion it is a proper response to the plea in para. 2 ( 2 ) . Some suggestion was made that it might link over to a later intention that an agreement in question imposed a restraint of trade on the

second respondent, but I am unable to see any such linkage. So

far as the objection to 2 . 2 of the re-amended defence is

concerned, it will be dismissed.

Paragraph 3

This paragraph pleads in answer, inter alia, to 6A of

the re-amended statement of claim which says:-

"6A. Prior t o the licensing agreement pleaded in

paragraph 8 none of the Respondents had used or applied

or taken any steps towards developing any techniques	or
Technology".

technologies the same as or similar to the Irlen

Paragraph 3 is a simple denial of that and a number of o t h e r

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paragraphs of the re-amended statement of claim. By that denial

it implicitly sets up a positive case that the respondents had

used or applied or taken some steps towards developing techniques

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or technologies the same as or similar to the Irlen Technology.

However, this implicit, positive case is not pleaded. The

respondents say that all they want	to do is put the applicant to
proof in relation to the pleading in	6A and that in any event it
is their consistent contention that the technology	in question is

not co-extensive with the Irlen Technology so-called in the

statement of claim. It seems to me that the applicant is entitled

to know the positive case of the respondents in relation to this

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denial.	The denial by itself is insufficient and for that reason	i',
I would require the respondents to expand their pleading	in para.3	l ,
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to assert the true response to para.6A. That does not require a

striking out order, but rather a direction that an amended defence

embodying such a plea	be delivered.
Paragraph 4

This is a plea to para. 8 of the re-am lended statement of

claim which alleges that:-

"8. By an agreement (hereinafter called "the Licensing

agreement") made 24 January, 1986 between the Applicant

and the Second Respondent, the Second Respondent was
granted a licence for the use within Australia of the

Irlen Technology on the terms and conditions contained

therein."

Paragraph 4 denies para.8 but goes on to say that by an agreement

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made 24 January 1986 between the applicant and the second

respondent the second respondent	was allowed	to utilise "the
technology" referred to in the	licensing agreement on	the terms

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and conditions therein contained. The point of difference between
the respondents and the applicant raised by this plea is as to the

characterisation of the subject matter of the agreement, that is a

reference	to	"the	technology"	rather	than	to	"the	Irlen
Technology"	and	to	that	extent	it	properly	sets	up the

respondents' own case and	is not embarrassing and the objection to
it will be dismissed.

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Paragraph 5

Paragraph 5 responds to para.9 of the re-amended

statement of claim which sets out various terms of the licensing

agreement relied upon by the applicant. Certaln of the sub-paras.

(a) and (e) of 9 are admitted, whereas (b), (c), (d) and (f) are

denied. The defence goes on to plead the respondents' own

characterisation of the terms of the licensing agreement which are

put in issue by their denials. That is not an embarrassing plea.

It might be that it could have been more elegantly expressed, but

in the circumstances I am not prepared to strike out 5(c), (d) and

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(e).

Sub-paragraph 5 ( f ) goes further to assert that c1.4 of

the licensing agreement insofar as it purports to restrain the

second respondent from using the technology referred to in the

licensing agreement is unenforceable and it sets up two grounds

for that unenforcibility. The first is pleaded as follows:-

"(i)	By reason of section	45 of the Trade Practices Act,
1974 in that it has the purpose,	o r	would have or be

likely to have the effect,	of substantially lessening
competition."

That plea is, in my opinion, insufficient. It does not plead an

important material fact, namely the relevant market. The

competition in question in	s.45,	is competition in a market
(s.45(3)).	As it stands para.5(f)(i) is	defective and should be

struck out. I will, however, give the respondents leave to

amend if they wish to persist with the s.45 defence.

5(f)(ii) is an allegation that clause 4 is an

unreasonable restraint of trade and certain particulars of that

unreasonableness are set out, namely that the technology in

question is not a trade secret, is not confidential to the

applicant and is within public knowledge. In my opinion that

plea, is not	on the face of it, embarrassing or otherwise amenable
to be summarily struck out. There may be a case for	the argument

that further and better particulars of the basis upon which it is
said to be unreasonable restraint of trade should be provided,

however having regard to the general proposition that once a

clause is properly characterised as a restraint of trade, the onus

rests upon the proponent of the restraint to show that it is	i
reasonable. I	am not prepared at this time to direct further	1
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particulars as to the basis upon which the second respondent makes

his case in that regard. He does, however, run the risk of an

argument at trial that in the absence of further particulars he is

not	entitled	to	argue	the	points	of	scope,	geographical	I .
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application and time. At the moment on the face of the pleading,

it is not, in my opinion, able to	be struck out.	!
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Paragraph 7

This paragraph responds to para.10 of the re-amended

statement of claim,	which pleads that pursuant to the provisions
of clause 4	of the licensing agreement, the second respondent's

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rights to use the Irlen Technology and Irlen Lenses were L '

determined on 25 January 1987 when the applicant did not renew or

extend the licensing agreement. Subject to a plea which again

raises the issue of "the technology" which was properly the

subject matter of the agreement, the parties seem to be ad idem on

termination. For some reason, however, the respondents have

asserted that the agreement was terminated in the alternative by reason of the second respondent's election exercised in letters of

27 October 1986 and 20 January 1987. Given the common ground that

they have on the facts	of	termination, it seems to me that the
plea in the alternative raises	a false issue and ought to	be

struck out and	I will so direct but that only relates to all words
after "or alternatively" in para.7	of the re-amended defence and

up to and including "the licensing agreement".

Paragraph 8

There is here a denial of a negative assertion contained

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in para.llB of the re-amended statement of claim. The assertion

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in 11B is that save for	such rights as flowed from the licensing
agreement whilst it was current, the respondents had no right	to
use the Irlen Technology. This is simply denied in para. 8 .	The

denial raises a positive case and I think the positive case should

I be pleaded. Again, I will require the respondents to bring in

some additional pleading of their case in relation to para.ll(b).

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That disposes of the questions that arise under the

amended defence. Mr Stevenson has also attacked certain aspects

of the particulars. I don't propose now to canvass those in any

detail. The respondents have Indicated through their counsel that

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they will bring in a substituted statement of particulars. I

said in	argument that certain aspects of the way in which	the
matters relied upon	to negative confidentiality are set out	in

l ( 5 ) of the partlculars are unsatisfactory. Sub-paragraph	(d)
seems to have no bearing on the question	of confidentiality and as

to (e), there 1 s difficulty in understanding just what it means.

The answers to l(5) carry over into para.3(1) which incorporates

them. If it is intended on the part of the respondents to rely

upon particular incidents di closure of as negativing

confidentiality, then those incidents should be set out in a

reasonably coherent fashion. That is not to say that the

particulars are necessarily to be limited	to things which happened
on specified dates but their proper form should	fol low some kind
of list or chronology.

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I	?	J.L.
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The last particular debated relates to the respondents'

contention that the technology the subject of the action is not I -

properly capable of being owned by the applicant. Whilst in	one
sense that raises a question of	law, it might be said that there

are specific attributes or characteristics of the thing called

"the technology" or "the Irlen Technology" that render it

incapable of ownership at law. To the extent that that raises

factual issues I think the respondents should indicate what those

attributes are. On the other hand	if their assertion goes no
further than that the technology	as described by the applicant is
incapable of ownership	at law, then that may well be a sufficient
plea, but given that they seem to think they are talking about	two

different things, one side talking about "the Irlen Technology",

the other about "the technology", the prudent course would	be to
specify those characteristics	so that the Court and the parties

know properly the basis upon which that plea is advanced.

In accordance with these reasons the Orders I make are

as follows:-

A . On the Respondents' motion filed 26 July 1988:-

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1. The respondents have leave to amend the defence in

accordance with the minute filed on 26 July 1988.

2 .    The respondents have leave to amend their further and better particulars of defence in accordance

with the minute filed In Court on 17 August 1988.
3 .	Filing and service of the minutes stand as filing
and service the of amended pleading and

particulars.

4 .    The respondents are to pay the applicant's costs of the motion and any costs thrown away in any event.

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5.    The applicant do on or before 31 August 1988 file

and deliver further and better particulars in

answer to request ll(g) in the respondents' request
dated 18 May 1988

B.	On the applicant's motion filed 15 July 1988:-
1. Paragraph 5(f)(i) of the re-amended defence is

struck out.

2 . All words after and including "or alternatively" up

to and including "the licensing agreement" in

paragraph	7 of the re-amended defence are struck
out.

3 .    The respondents are to plead their positive case in

answer to paragraphs 6A and 118 of the re-amended

statement of claim.

4 .    The respondents will have leave to file and deliver

a further amended defence on or before 7 September

1988.

5.    The respondent will have leave to file and deliver

substituted particulars of the amended defence on

or before 14 September 1988.

6 .    No order as to the costs of the motion, but the

respondents are to pay the applicant's costs thrown

away by reason of the further amendments to the

defence or particulars.

7. The applicant is to file and deliver any reply by

28 September 1988.

I certify that the preceding

thirteen (13) pages are a true copy of the Ex Tempore Reasons

for Judgment of his Honour

Justice French.

Associate: pL3 L4

Counsel for the Applicant: M r H.J. Stevenson

Solicitors for the Applicant: Jackson McDonald

Counsel for the Respondents: Hr S.G.	Leslie
Solicitors for the Respondents: Phillips	Fox

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Date of Hearing: 17 August 1988

Date of Judgment:  17 August 1988

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