SST Australia Pty Ltd v Fulton

[2007] FCA 2051

FEDERAL COURT OF AUSTRALIA

SST Australia Pty Ltd v Fulton [2007] FCA 2051

SST AUSTRALIA PTY LTD (ACN 052 845 833) AND JOHN ILLINGWORTH v ROBERT GORDON FULTON, BLUESTAR DIRECT PTY LTD (FORMERLY GULLF.AG PTY LTD (ACN 087 286 351), GULLF.AG PTY LTD (FORMERLY BLUESTAR DIRECT PTY LTD (ACN 103 517 184), RODMAN BLAYNE PTY LTD (FORMERLY RYGEL AUSTRALIA PTY LTD (ACN 104 905 900), RYGEL AUSTRALIA PTY LTD (FORMERLY AXIOM BIO-PRODUCTS) (ACN 106 839 007), BARKLY CONSULTING PTY LTD (ACN 059 146 066), IDEIN AUSTRALIAN PTY LTD (ACN 109 229 936) AND CHEMCOLOUR INDUSTRIES (NZ) (NEW ZEALAND COMPANY NO 424479)

VID 1350 OF 2006

MIDDLETON J
20 APRIL 2007
MELBOURNE

IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY	VID 1350 OF 2006

BETWEEN:

SST AUSTRALIA PTY LTD (ACN 052 845 833)
First Applicant

JOHN ILLINGWORTH
Second Applicant

AND:

ROBERT GORDON FULTON
First Respondent

BLUESTAR DIRECT PTY LTD (FORMERLY GULLF.AG PTY LTD (ACN 087 286 351)
Second Respondent

GULLF.AG PTY LTD (FORMERLY BLUESTAR DIRECT PTY LTD (ACN 103 517 184)
Third Respondent

RODMAN BLAYNE PTY LTD (FORMERLY RYGEL AUSTRALIA PTY LTD (ACN 104 905 900)
Fourth Respondent

RYGEL AUSTRALIA PTY LTD (FORMERLY AXIOM BIO-PRODUCTS) (ACN 106 839 007)
Fifth Respondent

BARKLY CONSULTING PTY LTD (ACN 059 146 066)
Sixth Respondent

IDEIN AUSTRALIAN PTY LTD (ACN 109 229 936)
Seventh Respondent

CHEMCOLOUR INDUSTRIES (NZ) (NEW ZEALAND COMPANY NO 424479)
Eighth Respondent

JUDGE:	MIDDLETON J
DATE:	20 APRIL 2007
PLACE:	MELBOURNE

REASONS FOR JUDGMENT

1. I have a number of applications before me but the purpose of these reasons is to deal with an application by the applicants to amend their statement of claim and application in these proceedings.

2. There was, by notice of motion dated 19 February 2007, an application by the sixth, seventh and eighth respondents that sought, among other things, that the applicants’ original statement of claim be struck out pursuant to O 11 r 16 of the Federal Court Rules.  In light of the fact that there is now an amended statement of claim, it seems appropriate, and in my view in accordance with principle, to deal with the proposed amendment and determine whether that amendment should be allowed prior to dealing with any matters that may arise in relation to the original statement of claim to which the notice of motion dated 19 February 2007 was directed.  I therefore now direct my attention to that proposed amendment.

3. A number of matters were raised in relation to the amended statement of claim, and it seems to me that the way in which the pleading seeks to progress the matter in relation to the sixth, seventh and eighth respondents is either by way of dealing with the question as one of the possibility of access to the confidential information that is the subject of this proceeding, pursuant to the operation of the Corporations Act 2001 (Cth) and company law, or through the plea in paragraph 49D, which raises the issue of there being an equity or interest in at least some of the confidential information.

4. I am approaching this matter with regard to whether or not the applicants can proceed at all in relation to these particular issues rather than by having regard to technical matters of pleading.  I am mindful of the early stage of this proceeding and the fact that the applicants may not be able to have access to information in order to elaborate on some of the material allegations.

5. A rehearsal of the principles to be applied is probably not necessary, although it seems to me that Tamberlin J in Hicks v Ruddock [2007] FCA 299 at [13] summarised the position that I should take, namely:

   In a case where evidence can give colour and content to allegations and where questions of fact and degree are important, the court should be more reluctant to dismiss a proceeding on the face of a pleading.  … The underlying principle is that the need for a summary judgment must be clear before the court will intervene to prevent a plaintiff submitting a case for determination in the usual way. Once it appears that there is a real issue to be determined, whether it be of fact or law, and that the rights of the parties depend on it, the court should not terminate the action by way of summary judgment.

6. It seems to me, in the circumstances of this case, that it would be wrong to terminate the proceeding insofar as it is relates to the sixth, seventh and eighth respondents.  If I came to the view that there was no possible basis for their inclusion in this proceeding, taking the principles enunciated by Tamberlin J, then I would not hesitate to have the matter dismissed against the relevant respondents.  I am not, however, able to come to that view on the basis of the evidence before me at this time.   

7. Putting aside whatever may be the position in relation to the arguments raised concerning corporate law, which I must say at the moment I consider to be weak, it does seem to me that there is a real issue to be determined, both of fact and law, in relation to the issue identified in paragraph 49D of the pleading.  The way in which it is articulated, that is, in reliance upon the principle that had been enunciated in relation to the nature of the unit trust (that the holder of a unit trust has an equitable proprietary interest in all the property of the trust, subject to the trust deed and its terms), may give rise to an argument in favour of the applicants which would entitle them to relief of an injunctive nature against the sixth, seventh and eighth respondents.

8. It seems to me that this may well depend upon the nature of the trust deed itself, but I am not going to preclude this matter from proceeding to trial just because the nature of the trust deed is not before the Court, although it perhaps should be set out so that the nature of the equity and interest that are relied upon is clear.  I am also, for the purposes of this application, proceeding on the basis that, as pleaded in paragraph 49D or at least implicit within it, the sixth, seventh and eighth respondents are, relevantly, unit holders.  If this turns out not to be the case, then I do not preclude any further application based upon that particular fact being demonstrated to the Court, namely that they are not unit holders, contrary to the allegation made in paragraph 49D.

9. I refer generally, in relation to the nature of unit holder interests in a unit trust, to the cases of Karingal 2 Holdings Pty Ltd v Commissioner of State Revenue [2002] VSC 431, and Schmidt v 28 Myola Street Pty Ltd [2006] VSC 343. There is little dispute about the various principles relied upon by the applicants in that regard.

10. There was another matter raised in relation to the trademark infringement, which arose primarily because there was not a relevant reference to all the ‘SST’ trademarks as described earlier in the pleading.  It does seem to me that there is only a pleading in relation to Kwickin and that this may be a matter which should be dealt with when the applicants amend their pleading.

11. Whilst unnecessary to deal with this matter having regard to the fact that I will not dismiss the matter in relation to the sixth, seventh and eighth respondents, I want to mention paragraph 44(b) of the amended statement of claim which provides as follows:

    In or about August 2004 Orion entered into an arrangement or otherwise requested Chemcolour to manufacture for it the Schedule 5 products, inter alia, Kwickin, and Brownout and Foli-on. 

    Particulars are given as follows:

    The arrangement at present is to be implied from the fact that Orion does not have chemical manufacturing capabilities.  Chemcolour is a chemical manufacturer for itself and third parties according to the third parties formulas, and that [sic] the address stated on Orion’s website for “manufacturing deliveries and dispatch” is the same address as Chemcolour’s premises in Auckland.  Further and better particulars will be provided after discovery and inspection.

12. I have had some doubt in my mind as to whether or not this plea should be allowed to stay, but have come to the view that, having regard to the fact that Chemcolour is to remain in the proceeding, the paragraph is entitled to remain.  I note that further and better particulars are to be provided after discovery and inspection.  I do however say that without further and better particulars, it would be impossible for the allegation to succeed. 

13. Subject to hearing counsel, I propose to allow the applicants the opportunity to re-plead, if they so desire, so as to make clear the position in relation to the trademark infringement, being that Kwickin seems to be the only trademark that is, relevantly, followed up in the pleading. 

14. It seems to me, putting aside the question of the terms of the unit trust, which will need to be determined before trial, that the pleader needs to better articulate the connection between the existence of the unit trust and the necessary facts that relate to each of the respondents, so as to indicate why injunctive relief should be granted.  It is a matter which I think should be clarified so that each of the relevant respondents is clearly apprised of the way in which the matter is put against them.  It may well be, if the matter is formulated simply in relation to equitable interest and what is perceived to be a future operation, that their involvement in this litigation can be curtailed by appropriate undertakings or, if they are not forthcoming, an early determination by this Court. 

15. My own initial view is that the applicants will have to show, in relation to these respondents, that there has been some access to the property or that there is a threat of access to the property that is the concern of the applicants, in relation to which they seek injunctive relief.  The mere fact that someone may have an opportunity to access the property would not normally be enough, unless there was a threat that that was going to occur.  There are cases where a third party will escape an injunction because he or she has not used the information and does not threaten to do so.  I refer to one such case, Interfirm Comparison (Aust) Pty Ltd v Law Society of New South Wales [1975] 2 NSWLR 104. In any event, the applicants currently plead their case on the basis of an interest in the property by virtue of the unit trust. As I have said, that is a matter which raises issues of law and fact, and should not be determined against the applicants at this stage.

16. So, for those reasons, I will make appropriate orders after hearing counsel as to the way in which this matter should now progress.

I certify that the preceding sixteen (16) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Middleton.

Associate:

Dated:       19 December 2007

Counsel for the Applicants:	Foster Harris Lawyers
Counsel for the 1st to 4th Respondents:	L Watts
Solicitor for the 1st to 4th Respondents:	T J Mulvany & Co
Counsel for the 5th to 8th Respondents:	M Goldblatt
Solicitor for the 5th to 8th Respondents:	McNab Lawyers
Date of Hearing:	20 April 2007
Date of Judgment:	20 April 2007