Sherwood Overseas Co Pty Ltd v Jaymac Inta**l Pty Lt d (No.2)
[2008] FMCA 690
•30 May 2008
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| SHERWOOD OVERSEAS CO PTY LTD v JAYMAC INTERNATIONAL PTY LTD (No.2) | [2008] FMCA 690 |
| TRADE PRACTICES – Misleading and deceptive conduct – misrepresentation. PRACTICE & PROCEDURE – Discovery – whether appropriate in the interests of administration of justice. |
| Federal Magistrates Act 1999 (Cth) s.45(1) Federal Magistrate Court Rules 2001 (Cth) r.13.04 Trade Practices Act 1974 (Cth) ss.4(2)(a), 52, 53(d) and 80 |
| Abrahams v Qantas Airways (No.2) (2007) 210 FLR 314; [2007] FMCA 639 Balding v Ten Talents Pty Ltd (No.2) (2007) 160 IR 115; [2007] FMCA 161 Bartucciotto v Western Health Care & Ors (2007) 94 ALD 387; [2007] FMCA 26 Campomar Sociedad, Limitada v Nike International Ltd (2000) 202 CLR 45; [2000] HCA 12 Compagnie Financiere du Pacifique v Peruvian Guana Co (1882) 11QBD 55 Donaldson v Harris (1973) 4 SASR 299 Genovese v BGC Construction Pty Ltd [2006] FMCA 1507 Helco Pty Ltd v O’Haire (1991) 28 FCR 230 Hornsby Building Information Centre Ltd (1978) 140 CLR Lezam Pty Ltd v Seabridge Australia Pty Ltd [1992] ATPR 41-171 Marks v GIO Australia Holdings Ltd (1998) CLR 494; [1998] HCA 69 Mulley v Manifold (1959) 103 CLR 341 National Exchange Pty Ltd v ASIC (2004) 61 IPR 420; [2004] FCAFC 90 Olsen v Wellard Feeds Pty Ltd [2007] FMCA 1885 Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd (1982) 149 CLR 191 Sherwood Overseas Co Pty Ltd v Jaymac International Pty Ltd [2008] FMCA 495 TPC v Lamova Publishing Corp Pty Ltd (1979) 28 ALR 416 |
| Applicant: | SHERWOOD OVERSEAS CO PTY LTD |
| Respondent: | JAYMAC INTERNATIONAL PTY LTD |
| File Number: | PEG 10 of 2008 |
| Judgment of: | Lucev FM |
| Hearing date: | 6 May 2008 |
| Date of Last Submission: | 6 May 2008 |
| Delivered at: | Perth (by telephone to Brisbane) |
| Delivered on: | 30 May 2008 |
REPRESENTATION
| Counsel for the Applicants: | Mr P D Evans |
| Solicitors for the Applicant: | Freehills |
| Counsel for the Respondent: | Mr K Philp |
| Solicitors for the Respondent: | Bennett & Philp |
ORDERS
The parties are to confer with a view to producing a consent order putting into effect the judgment of the Court with respect to discovery and mediation. Further, the parties should incorporate in the proposed orders the orders otherwise agreed in the Minute of Proposed Orders tendered to the Court on 6 May 2008, with the following changes:
(a)all steps up to and including proposed order 10 in the Minute of Proposed Orders of 6 May 2008 to be completed by 4.00pm on 30 September 2008;
(b)there be liberty to apply on two days notice;
(c)the matter be adjourned to 10.15am on 13 October 2008 for:
(i)any further directions; and
(ii)programming of any further application by the Respondent for a change of venue, such application, supported by affidavit, to be made on or before 4.00pm on 6 October 2008;
(d)to grant leave to the Applicant to delete the word “licensed” from paragraph 1 of the Application; and
(e)any necessary consequential amendments.
If the parties are able to agree a draft consent order to reflect the terms of this judgment the parties are to file a draft consent order under r.13.04 of the Federal Magistrates Court Rules 2001 (Cth) by 4.00pm on 11 June 2008.
If the parties are not able to reach agreement on a consent order they are to advise the Acting Associate to Federal Magistrate Lucev accordingly by 5.00pm on 11 June 2008, and in that event there will be a further directions hearing at 11.00am on 16 June 2008 to deal with the final terms of the order.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT PERTH |
PEG 10 of 2008
| SHERWOOD OVERSEAS CO PTY LTD |
Applicant
And
| JAYMAC INTERNATIONAL PTY LTD |
Respondent
REASONS FOR JUDGMENT
Application
The originating application in these proceedings alleges that the Respondent has:
a)engaged in conduct that is misleading or deceptive, or likely to mislead or deceive, a member of the public in contravention of s.52 of the Trade Practices Act 1974 (Cth);[1]
b)in trade or commerce, in connection with the supply or possible supply of goods or services, or in connection with the promotion by any means of the supply or use of goods or services misrepresented a sponsorship, approval or affiliation that it does not have in contravention of s.53(d) of the TP Act,[2]
and seeks injunctive relief under s.80 of the TP Act in relation to various matters connected with the Respondent’s alleged use of the name, logo and products of a pool cleaning device known as the Kreepy Krauly, and associated products.[3] The Applicant also seeks damages, alternatively an account of profits, interest and costs.
[1] “TP Act”.
[2] “Conduct”.
[3] “Products”.
The Respondent has filed a Response in which it joins issue with the Applicant.
Following an unsuccessful application by the Respondent for the transfer of the substantive proceedings from the Perth Registry to the Brisbane Registry of this Court, the Court ordered that the parties confer in writing and by telephone with a view to drawing appropriate directions for a directions hearing on 5 May 2008.[4]
[4] Sherwood Overseas Co Pty Ltd v Jaymac International Pty Ltd [2008] FMCA 495 (“Sherwood No.1)”).
The matter came on for directions on 6 May 2008[5] at which time the parties were able to indicate that proposed orders were agreed between them, with some exceptions. Those exceptions related to certain categories of documents to be discovered, there otherwise being agreement as to discovery, subject to this Court making a declaration that it is appropriate, in the interests of the administration of justice, that there be an order for discovery in this case.[6]
[5] The directions hearing listed for 5 May 2008 having been adjourned to 6 May 2008 by reason of the Labour Day public holiday in Queensland.
[6] Federal Magistrates Act, 1999 (Cth), s.45(1); Abrahams v Qantas Airways (No.2) (2007) 210 FLR 314; [2007] FMCA 639 (“Abrahams (No.2)”).
Obtaining an order for discovery – principles in this Court
In Abrahams (No.2) this Court summarised what was necessary in order to obtain an order for discovery in this Court. The Court there said:
“In summary, it appears that in order to obtain an order for discovery in this Court the Court must determine on the available evidence that it is in the interests of the administration of justice to do so, and in making that determination must have regard to whether allowing discovery would be likely to contribute to the fair and expeditious conduct of the proceedings, and such other matters as the Court considers relevant. Those other matters might include:
a) the relevance of any documents sought to be discovered;
b) the volume of documents sought to be discovered;
c) whether there is a court book containing relevant documents, and the extent to which relevant documents are included in the court book;
d) whether discovery would narrow the issues;
e) whether both parties seek discovery;
f) whether there is consent to discovery;
g) whether discovery is “of benefit” in the litigation; and
h) the effect of discovery on litigants, especially, vulnerable litigants.”[7]
[7] Abrahams (No.2) FLR at 321 per Lucev FM; FMCA at para. 25 per Lucev FM (footnotes from original quote excluded).
The making of a declaration that discovery is appropriate in the “interests of the administration of justice” is “directed to the consideration of the interests of the management of justice, which must mean management by the Court of the proceedings pending before the Court”.[8]
[8] Genovese v BGC Construction Pty Ltd [2006] FMCA 1507 at para. 28 per Lucev FM (and see also paras. 24-26 per Lucev FM); applied in Bartucciotto v Western Health Care & Ors (2007) 94 ALD 387 at 392 per Lucev FM; [2007] FMCA 26 at paras. 26-27 per Lucev FM and Balding v Ten Talents Pty Ltd (No.2) (2007) 160 IR 115 at 120 per Lucev FM; [2007] FMCA 161 at para. 27 per Lucev FM.
In this case the parties have largely agreed on the documents to be discovered. In relation to those agreed documents:
a)the documents are relevant and only certain categories, at this stage, of higher level documentation are sought to be discovered;
b)the volume of documents is limited by reason of the discovery of higher level documents only, and of documents not already exhibited or annexed to affidavits, and there is no onerous burden imposed on either party or the Court by the volume of documents sought to be discovered;
c)there is no court book – it is too early in the proceedings for that – but it has been foreshadowed that there may be a trial bundle with agreed relevant documents included in that bundle;
d)discovery may narrow some issues, although generally the issues are properly and sufficiently articulated through the Application and Response;
e)both parties seek discovery and consent to discovery (except to the limited extent that they disagree); and
f)discovery is likely to be of benefit to the litigation, indeed it is difficult to see how relevant issues as to liability, and particularly damages (if the latter becomes necessary), can be resolved without discovery.
The level of discovery agreed between the parties will in the Court’s view assist with the management of this case by the Court, and is particularly necessary to enable the Court to understand the case that is to be put before it and to assist in the determination of liability and relief (if any). The Court is therefore prepared to declare that it is appropriate in the interests of the administration of justice that there be discovery in this matter, at least to the extent of the discovery agreed between the parties.
Whether, and if so to what extent, it might be appropriate in the interests of the administration of justice to make a declaration with respect to discovery concerning the disputed areas of discovery is a matter dealt with below.
Discovery – general approach
Discovery is confined to what is in issue on the pleadings.[9] The documents sought must relate to the issue or issues, and may be relevant if they advance a party’s case or damage the other party’s case, alternatively, if they can lead to a course of inquiry having that effect: that is, that it throws light on the case.[10]
[9] Mulley v Manifold (1959) 103 CLR 341.
[10] Compagnie Financiere du Pacifique v Peruvian Guano Co (1882) 11 QBD 55 at 63 per Brett LJ; Donaldson v Harris (1973) 4 SASR 299.
Pleadings in this Court include affidavits which have been filed, and the affidavits provide both particulars and evidence.[11]
[11] Olsen v Wellard Feeds Pty Ltd [2007] FMCA 1885 at para. 5 per Lucev FM.
Pleadings must be read broadly or liberally in the context of the application of these general principles, and a document deemed relevant for discovery purposes is one which helps explain the controversy between the parties.[12] A document deemed relevant for discovery purposes using these general principles must then be exposed to the test as to what is necessary in order to obtain an order for discovery in this Court as set out above.[13]
[12] BC Cairns, Australian Civil Procedure (4th Edn), (North Ryde: LBC Information Services, 1996), p.363.
[13] See para. 5 above.
Disputed discovery in this case
The Applicant’s proposed orders provide for discovery by category of document in two annexures to the proposed orders, Annexure 1 being the categories of documents to be discovered by the Respondent and Annexure 2 being the categories of documents to be discovered by the Applicant. The Respondent’s proposed categories for discovery are contained in an email to the Applicant’s solicitors dated 2 May 2008.
Each of the disputed items are dealt with below.
Respondent’s discovery – Annexure 1
Item 2
From the Application what is put is that:
a)the Respondent was until 23 June 2006[14] an authorised wholesaler of the Products;[15]
b)an agreement between the Applicant and the Respondent for the sale and distribution of the Products[16] was terminated on the Termination Date;[17]
c)from the Termination Date the Respondent ceased to be entitled to sell the Products;[18]
d)from 23 June 2006 the Respondent engaged in the Conduct;[19] and
e)the Conduct contravened ss. 52 and 53(d) of the TP Act.[20]
[14] “Termination Date”.
[15] Application, para. 3.
[16] “Sales and Distribution Agreement”.
[17] Application, para. 4.
[18] Application, para. 5.
[19] Application, para. 6. The numbering of the Application is awry: what should be para.6(a)-(f) is also numbered as paras. 7-13.
[20] Application, para. 14(a) and (b). Because the numbering of the Application is awry what should be para. 14(a) and (b) is numbered as paras. 15 and 16, but allowing for the mistake in numbering in para. 6 the para. numbered para. 14 should be para. 7 and paras. 15 and 16 (which the Court has treated as para. 14(a) and (b)) should in fact be paras. 7(a) and (b).
The Response takes issue with the allegation that the Respondent engaged in the Conduct.[21]
[21] Response, paras. 1(b), 2(b) and 3 to 10.
There is no dispute that the Applicant terminated the Sales and Distribution Agreement with the Respondent on 23 June 2006, the Sales and Distribution Agreement having allowed the Respondent to be an authorised wholesaler of the Applicant of the Products in Queensland.
By Item 2 the Applicant seeks, amongst other things:
a)sales figures for various categories of the Product for a period of two years before and after the termination of the agreement on 23 June 2006;
b)documents recording all “clone products” (being clones of the Products) that the Respondent bought and sold, again for a period of two years before and after the termination of the agreement on 23 June 2006; and
c)the terms of acquisition (including price) of the “clone products”.
The Applicant says that these documents are sought in an endeavour to identify, as it says is suggested by the affidavits of Mr Rose (presently the Respondent’s sole director), whether clone products were being substituted for the Products after the Termination Date in relation to customers who were seeking the Products, and also to establish a baseline in the period prior to the Termination Date of the level of sales of clone products in the preceding two years. The Applicant asserts that two years is a reasonable baseline comparison.
The Respondent says that the documents are irrelevant because the Applicant’s case is that the agreement was terminated on 23 June 2006, and the conduct which is complained of as contravening ss.52 and 53(d) of the TP Act, occurred after the Termination Date. The Respondent also says that the terms of acquisition (including price) of the clone products are also irrelevant on the pleadings. The Respondent says that there is no relevance to the acquisition cost except perhaps that the cost of purchase might be taken into account in calculating profit or damages.
The Applicant says that a baseline must be established otherwise there is no point of comparison in relation to the impact of the alleged contravening conduct.
The documents for the period before the Termination Date may assist the Applicant to advance its case. For example, they may enable a comparison to be made as to sales before and after the Termination Date. That may enable the Applicant to argue, if only by inference, that the Conduct had a certain effect, and that that effect has caused loss or damage to the Applicant. The documents are therefore, based on general principles, discoverable.
The Respondent concedes that, at least in a limited way that the cost of purchase might be taken into account in calculating the net profit or damages.[22] Again, the documents are therefore relevant, at least for discovery purposes.
[22] Transcript at 8.
Item 7 – part of para 3
Paragraph 3 of Item 7 seeks that the Respondent discover:
All documents recording or referring to any arrangements between the Respondent or anyone acting for the benefit of the Respondent and any service provider in relation to the design operation and maintenance of those addresses and the associated content for those addresses.[23]
[23] The addresses referred to are and (“Addresses”).
It appears to be the discovery arising from the words “in relation to the design operation and maintenance of those addresses and the associated content” to which objection is taken.[24]
[24] Transcript at 9.
The allegation is that the Respondent “caused” the Addresses “to display or direct visitors to its [the Respondent’s] registered website”.[25] In submissions the Respondent incorrectly characterised this as an allegation “that as a matter of fact” the Respondent “has had these sites set up and that constitutes the conduct complained of”.[26]
[25] Application, para 6(b).
[26] Transcript at 9.
The issue here (and it is an issue which has been joined by the Respondent)[27] is whether the Respondent did cause a visitor to the Addresses to have displayed to them, or direct them to, the Respondent’s website.[28]
[27] Response, para 6.
[28] >
Conduct under s.52 of the TP Act must be examined as a whole: not in some isolationist or fragmentary way.[29] How the display or diversion was caused to occur may be conduct for the purposes of s.52 of the TP Act.[30] To determine how it was “caused” it may be necessary to examine how the Addresses were designed, operated and maintained. Therefore, the issue of the design, operation and maintenance of the Addresses and their associated content is relevant to the question of whether visitors were diverted to the Addresses, and how that was “caused” to occur. If it could be inferred that such a result (namely, the display or diversion) was intended it is arguable that the Court might more readily make a finding of engaging in misleading conduct.[31] Determination of how the display or diversion was caused might also go to whether any loss or damage was caused by the alleged contravention, and the determination of remedies other than damages or an account of profits.[32]
[29] TPC v Lamova Publishing Corp Pty Ltd (1979) 28 ALR 416; Helco Pty Ltd v O’Haire (1991) 28 FCR 230 at 232 per Davies, Gummow and Hill JJ; Lezam Pty Ltd v Seabridge Australia Pty Ltd [1992] ATPR 41-171 at 40,344 per Sheppard, Burchett and Hill JJ.
[30] TP Act, s.4(2)(a).
[31] Campomar Sociedad, Limitada v Nike International Ltd (2000) 202 CLR 45 at 63 per Gleeson CJ, Gaudron, McHugh, Gummow, Kirby, Hayne and Callinan JJ; [2000] HCA 12 at para 32 per Gleeson CJ, Gaudron, McHugh, Gummow, Kirby, Hayne and Callinan JJ; National Exchange Pty Ltd v ASIC (2004) 61 IPR 420 at 428 per Dowsett J and 439 per Jacobson and Bennett JJ; [2004] FCAFC 90 at para 28 per Dowsett J and para 63 per Jacobson and Bennett JJ. The Court recognises that intent is not however necessarily relevant to whether conduct is misleading or deceptive, or likely to be so: Hornsby Building Information Centre Ltd (1978) 140 CLR at 223 per Stephen J; Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd (1982) 149 CLR 191 at 197 per Gibbs CJ.
[32] Marks v GIO Australia Holdings Ltd (1998) 196 CLR 494 at 527 per Gummow J; [1998] HCA 69 at para. 95 per Gummow J.
The objection of the Respondent is self-defeating: removal of the words objected to would in fact be removing words of limitation. Without the words objected to the scope of discovery would be enlarged and not diminished under this category.
The documents to which objection has been taken are relevant and discoverable for discovery purposes based on general principles.
Item 12
Discovery is sought of product displayed, and advertised, promoted or offered for sale by the Respondent as an alternative or substitute for any of the Products for the two years prior to, and at all time after, the Sales and Distribution Agreement was terminated.
These documents are relevant for the same types of reasons as set out above,[33] namely:
a)the necessity to examine the course of Conduct complained about as a whole;
b)to determine how the Conduct was caused to occur;
c)to determine whether the Conduct was intentional; and
d)whether any loss or damage was caused by the alleged contravention, and the determination of appropriate remedies in relation to the alleged contravention other than damages or an account of profits.
[33] See para. 28 above.
Item 13
This item seeks financial accounts for each financial year from and including 2004 – 2005 (or alternatively, high level accounting records showing the financial position of the business of the Respondent). The Applicant says that these documents are relevant because they go to a claim in the affidavit of Mr Rose that the business of the Respondent has been decimated by the termination of the Sales and Distribution Agreement.
Because, in this Court, affidavits provide both evidence and particulars,[34] that claim makes relevant financial information both before and after the Termination Date.
[34] See above at para. 11.
The documents to which objection has been taken are therefore relevant and discoverable based on general principles.
Applicant’s discovery – Annexure 2
There is no dispute as to the terms of the discovery sought of the Applicant in Annexure 2 of the Proposed Order. However, there is dispute in respect of further discovery sought of the Applicant by the Respondent, and set out below are the disputed categories of documents itemised by reference to the item numbers contained in an email from the Respondent’s solicitors to the Applicant’s solicitors dated 2 May 2008.
Item 1
Under this item the Respondent seeks all documentary evidence (license agreements or otherwise) by which the Applicant claims to have acquired the right to use the name “Kreepy Krauly” within Australia.
The Applicant has seemingly not discovered any documents regarding this item on two bases:
a)that it must not or can not be suggested that the Applicant has been selling the Products under the Kreepy Krauly name for many years when it had no right to do so; and
b)that it has evinced an intention in its Reply to amend paragraph 1 of the Application to delete the word “licensed”, the Applicant having alleged that it is the “licensed Australian manufacturer” of the Products.
The deletion of the word “licensed” is not in issue, and the Court is prepared to grant leave to the Applicant to delete this word from paragraph 1 of the Application. It will therefore be unnecessary to discover any “license agreements” as such.
The Respondent has not admitted the existence of any arrangement under which the Applicant is the Australian manufacturer of the Products.
The Court understands that there probably is an agreement under which the Applicant is the Australian manufacturer of the Products, but the Court cannot assume that to be the case (in the absence of agreement by the Respondent), nor can the Court assume the terms and conditions in such agreement (if any).
The Applicant asserts that it is the Australian manufacturer of the Products, and, if not expressly then certainly by implication in the Application, that it is entitled to use the name “Kreepy Krauly” within Australia, and that the Respondent is not.
The documents sought by the Respondent are relevant and discoverable based on general principles, save for agreements which are “license agreements”.
Item 2
The Respondent seeks documents relating to the establishment of goodwill in the Kreepy Krauly brand in Australia “over the last 30 years” and “all documentation showing the continuous use of that brand over the last 30 years”.
The Court considers documents relating to goodwill to be relevant to the Application. It is clear that the Applicant’s goodwill is not admitted.
Documents concerning the Applicant’s goodwill are relevant, and therefore discoverable based on general principles.
The Applicant points to the evidence of Mr Rose in relation to the Kreepy Krauly name being a generic name for pool cleaning devices for around the last 15 years.[35] This is not sufficient to constitute an admission or particulars of an admission by the Respondent that the Applicant has established a substantial reputation and goodwill in the Kreepy Krauly brand.
[35] Rose’s Affidavit, par. 9.
The documents sought by the Respondent are relevant and discoverable based on general principles.
Item 5
The Respondent seeks all correspondence or other documentation (including any contract or agreement) by which the Applicant seeks to establish that, upon termination of the Sales and Distribution Agreement, the Respondent ceased to be entitled to sell or distribute the Products.
The Response puts in issue whether the termination of the Sales and Distribution Agreement did in fact terminate the Respondent’s right to sell and distribute the Products.[36]
[36] Response, para. 4(p).
The question of the Respondent’s rights to sell the Products after the Termination Date is a fundamental issue in the litigation. As such, documents concerning that issue are relevant, and discoverable based on general principles.
Item 6
This item seeks various categories of documents evidencing the sale of the Products by the Applicant, or a company called Automated Pool Products, or any other third party by or on behalf of the Applicant to the Respondent where the sales and consequent delivery of products occurred after 23 June 2006, or, where sales contracts were entered into prior to 23 June 2006, but the Product was delivered to the Respondent after 23 June 2006.
The discovery sought relates to the question discussed under Item 5, namely the right of the Respondent to continue to sell the Products. As indicated above, that is in issue.
The documents sought are therefore relevant and discoverable based on general principles.
Item 7
What was ultimately sought in respect of Item 7 was “discovery of any correspondence from Automated Pool Products to…[the Respondent], specifically, letters of 12 July 2006 and 25 August 2006.”[37] What is in fact sought in relation to the two letters specified is the copy sent from Automated Pool Products to the Applicants of the letter to the Respondent.[38] However, it would also appear that what is sought by the Respondent is any document evidencing the authority given to Automated Pool Products to on sell the Products to the Respondent after the Termination Date.[39]
[37] Transcript at 13.
[38] Transcript at 13.
[39] Transcript at 13.
The Court considers that the copies of the letters sent by Automated Pool Products to the Applicant are relevant and discoverable on general principles. Further, the Court considers that if there are documents evidencing the authority of Associated Pool Products to re-sell the Products, either generally in the areas previously serviced by the Respondent, or specifically to the Respondent, then those documents are also relevant and discoverable based on general principles.
Item 8
Item 8 seeks the discovery of all documentation of any description including any correspondence which contains or evidences the “challenge” pleaded at paragraph 6(e) of the Application. Paragraph 6(e) of the Application provides as follows:
“When challenged by the Applicant [the Respondent] discontinued certain of those activities (most particularly by the disconnection of certain “1800” telephone numbers) in such manner as to make it appear that Kreepy Krauly pool cleaners and Associated Products were no longer available for sale in Queensland”.
Paragraph 8 of the Response says that paragraph 6(e) of the Application is embarrassing and that the Respondent will not plead to it until proper particulars are provided.
By way of response to a request for particulars the Applicant stated that the “request was made by way of three letters from Freehills, solicitors for the Applicant, to the Respondent respectively dated 10 September, 2007, 21 September 2007 (facsimile letter) and 8 October 2007 (facsimile letter).[40]
[40] Further and better particulars of allegations in the Grounds of Application and the Application (filed by the Applicant’s solicitors on 20 March 2008), para. 8.
The Applicant’s characterised this request for discovery as discovery for discoverys sake the three letters referred to already being in the possession of the Respondent.
Whilst the Applicant is probably correct in relation to its assertion that this is discovery for discoverys sake as the relevant documents are already in the possession of the Respondent, it is nevertheless the case that these documents are relevant, and would be discoverable based on general principles.
Item 9
The Respondent seeks all documentation relied upon to evidence the claim that the Respondent’s discontinuance of certain activities was made in such a manner “as to make it appear that Kreepy Krauly Pool Cleaners and associated products were no longer available for sale in Queensland”.[41] The Respondent pleaded that the allegation was embarrassing and sought particulars. The particulars provided were that the activities discontinued included:
[41] Application, para. 6(e).
“(a) the removal of signage from premises and vehicles;
(b) the termination of telephone numbers;
(c) the removal of graphic images and references from websites”
and that those activities occurred on dates not then known to the Applicant, but to be further particularised after discovery.
The documents sought are plainly relevant and discoverable based on general discovery principles.
Item 10
The documentation sought by the Respondent under Item 10 was largely withdrawn at hearing, with a reservation of rights to seek further discovery later if the necessity arose.[42] What is now sought relates to an allegation by the Applicant that Products sold by the Respondent were “deceptively similar” to the Products.[43] Issue is joined with respect to that matter in the Response.[44]
[42] Transcript at 14.
[43] Application, para. 6(f).
[44] Response, para. 9.
The Respondent says that its request for discovery is on the basis of relevance, whilst the Applicant says that it has already put into evidence in Mr Jackson’s affidavit material that it has seen on the Respondent’s website in relation to this issue.[45]
[45] Transcript at 18.
The classes of documents on which discovery is sought are relevant and for general discovery purposes are discoverable.
Should a declaration issue for disputed categories found to be discoverable on general principles
The question then arises as to whether the various categories of documents which have been held to be discoverable on the basis of general discovery principles ought to be the subject of a declaration that it is appropriate in the interests of the administration of justice for there to be discovery of those documents.
In the Court’s view discovery is likely to contribute to the fair and expeditious conduct of these proceedings, particularly in circumstances where the documents are:
a)relevant;
b)the volume of documents sought to be discovered has been reduced by reason of discovery not being required of documents already contained in affidavits;
c)there is a possibility that discovery will narrow some of the issues between the parties;
d)both parties seek discovery; and
e)the discovery will be “of benefit” in the litigation for reasons previously expressed.[46]
[46] See para. 8 above.
That general view is however subject to what follows with respect to various of the items that the Respondent, in its email of 2 May 2008 to the Applicant’s solicitors, seeks to have the Applicant discover.
Item 2
There does not appear to be any significant dispute that the Applicant has used the Kreepy Krauly brand in Australia for many years, and the suggestion that it ought to be required to discover documents “over the last 30 years” on which its alleged goodwill and reputation has been established, and “all documentation showing the continuous use of that brand over the last 30 years” imposes an unnecessary and onerous burden upon it. The establishment of its “substantial reputation and goodwill” in the Kreepy Krauly brand can be dealt with by the Court on the basis of the documents that the Applicant relies upon to establish that reputation and goodwill, and only those documents that it seeks to rely upon.
For those reasons, the Court considers and will declare that it is appropriate in the interests of the administration of justice that the Applicant ought only be required to discover those documents upon which it actually relies to establish that it has a substantial reputation and goodwill in the Kreepy Krauly brand in Australia.
No doubt the Court will in any event be assisted by expert evidence on this issue in due course, and that has been a further consideration in limiting the scope of discovery at this stage.
Item 6
In relation to this issue the Respondent is in a position through its own documents to establish that it had a right of resale from those whom it ordered and sold the relevant Products. The Respondent is in a position to say what it ordered and what it sold, and what rights it relied upon in so doing. It seems wholly unnecessary for the Applicant to have to then produce “all correspondence, purchase orders, quotes, tax invoices or delivery dockets or like forms or other documentation evidencing sales” of the Products by the Applicant, or its new distributor, or any other third party by or on behalf of the Applicant to the Respondent.
There will be no declaration that discovery of the documents under this item is appropriate in the interests of the administration of justice.
Item 8
The Applicant will be limited at hearing to reliance upon the three letters referred to in the particulars provided, namely Freehills’ letters (the Applicant’s solicitors) to the Respondent dated 10 and 21 September 2007 and 8 October 2007. Those are the documents which evidence the “challenge” pleaded, and nothing further need be discovered. Furthermore, as indicated above, the Applicant will be limited in terms of its documentary evidence of the “challenge” to these documents.
There will be no declaration that discovery of the documents under this item is appropriate in the interests of the administration of justice.
Item 10
The Applicant has indicated that it has relied upon information obtained from the Respondent’s website and no more. Apart from any documents now produced by the Respondent as a consequence of the orders to be made by the Court the Applicant will be limited to reliance upon the documents already discovered by way of annexure to affidavits in relation to the “deceptively similar” issue.
There will be no declaration that discovery of the documents under this item is appropriate in the interests of the administration of justice.
Mediation
Both parties agreed that there ought to be mediation.
The parties disagree as to venue.
Against the judgment of the Court in Sherwood Overseas (No.1) that the venue for the hearing would not be transferred from the Perth Registry to the Brisbane Registry of this Court the Applicant, for the purposes of mediation, is prepared to concede that mediation might be held in Adelaide as a half-way point between the parties. The Respondent contends (but there is no evidence in relation to this) that it cannot afford to attend a mediation outside of Brisbane, or at least, that scarce resources might have to be reallocated to allow that to occur.
The Court will order that there be mediation of the Application between the parties. Having regard to the concession made by the Applicant as to venue, that mediation will occur in the Adelaide Registry before an Adelaide based Registrar of this Court. That mediation is to occur on or before 31 July 2008.
Orders and further case management
The parties are to confer with a view to producing a consent order putting into effect the judgment of the Court with respect to discovery and mediation as set out above. Further, the parties should incorporate in the proposed orders the orders otherwise agreed in the Minute of Proposed Orders tendered to the Court on 6 May 2008, with the following changes:
a)all steps up to and including proposed order 10 in the Minute of Proposed Orders of 6 May 2008 to be completed by 4.00pm on 30 September 2008;
b)there be liberty to apply on two days notice;
c)the matter be adjourned to 10.15am on 13 October 2008 for:
i)any further directions; and
ii)programming of any further application by the Respondent for a change of venue, such application, supported by affidavit, to be made on or before 4.00pm on 6 October 2008;
d)to grant leave to the Applicant to delete the word “licensed” from paragraph 1 of the Application; and
e)any necessary consequential amendments.
If the parties are able to agree a draft consent order to reflect the terms of this judgment the parties are to file a draft consent order under r.13.04 of the Federal Magistrates Court Rules 2001 (Cth) by 4.00pm on 11 June 2008.
If the parties are not able to reach agreement on a draft consent order they are to advise the Acting Associate to Federal Magistrate Lucev accordingly by 5.00pm on 11 June 2008, and in that event there will be a further directions hearing at 11.00am on 16 June 2008 to deal with the final terms of the order.
I certify that the preceding eighty-five (85) paragraphs are a true copy of the reasons for judgment of Lucev FM
Acting Associate: S Gough
Date: 30 May 2008
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