Unilever Aust Ltd v RFC Nominees Pty Ltd

[2000] FCA 1838

FEDERAL COURT OF AUSTRALIA

Unilever Aust Ltd v RFC Nominees Pty Ltd [2000] FCA 1838

UNILEVER AUSTRALIA LIMITED (ACN 004 050 828) v

RFC NOMINEES PTY LTD (ACN 067 545 117) AND OTHERS

NG 732 of 1998

HILL J
12 DECEMBER 2000
SYDNEY

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	NG 732 OF 1998

BETWEEN:

UNILEVER AUSTRALIA LIMITED (ACN 004 050 828)
APPLICANT/CROSS-RESPONDENT

AND:

RFC NOMINEES PTY LIMITED (ACN 067 545 117)
FIRST RESPONDENT/FIRST CROSS-CLAIMANT

GEORGE KAROUNOS
SECOND RESPONDENT/SECOND CROSS-CLAIMANT

SABRE INTERNATIONAL LIMITED
THIRD RESPONDENT

JUDGE:	HILL J
DATE:	12 DECEMBER 2000
PLACE:	SYDNEY

EX TEMPORE REASONS FOR JUDGMENT

1. Listed for hearing this morning before me is an application by Unilever Australia Limited (“Unilever”) to which RFC Nominees Pty Limited (now known as Revelinu Proprietary Limited but herein referred to as “RFC Nominees”), Mr George Karounos and Sabre International Limited are respondents.  Each of the first and second respondents has cross-claimed against Unilever.

2. The proceedings commenced by application dated 22 July 1998.  As originally constituted, the only parties were Unilever as applicant and RFC Nominees as respondent.  By its application, Unilever in the proceedings challenges the registration obtained on 4 January 1995 by RFC Nominees of the mark “REAL” and the mark “REAL FISH’N CHIPS and Device” in various classes.  It says that the word “real” is not capable of being a trade mark and seeks in addition, if it is so capable, a declaration that it has not infringed the registration obtained by RFC Nominees. 

3. For some time the proceedings continued with only RFC Nominees as respondent.  That company was represented by a firm of solicitors and affidavit evidence was filed by it.  In particular two affidavits by Mr Karounos were filed, one dated 29 April and the other dated 28 May 1999.  In the affidavit dated 29 April 1999, Mr Karounos said that he was the appointor pursuant to a deed of trust, constituting the RFC Trust of which he was initially trustee, in the period from September 1994 to December 1994.  The beneficiaries of that RFC Trust were members of his family.  He then resigned and appointed RFC Nominees as trustee of that trust.  RFC Nominees continued as trustee until Mr Karounos terminated its trusteeship in June 1997 when he became trustee of the trust again on that date.  In both affidavits, he claimed to be authorised to make the affidavits on behalf of RFC Nominees.

4. In or around July of this year, it became apparent that RFC Nominees had been struck from the register.  Through a solicitor Mr Karounos undertook to this Court to make application forthwith to the Australian Securities and Investment Commission to restore that company to the register.  At or around the same time Mr Karounos became a party to the proceedings in his own right.  So far as the Court file shows, that was done by consent.  It was not, so far as the Court file discloses, forced upon Mr Karounos.

5. It seems that the application to register the relevant marks under challenge was made on 4 January 1995.  So far as appears, that registration was obtained by RFC Nominees but, when Mr Karounos became trustee of the trusts for the benefit of members of his family, the registration was transferred by RFC Nominees to him.  Subsequently Mr Karounos assigned the marks, the subject of the proceedings, to a company Real Corporation Australia Proprietary Limited to enable, so he said, the commercialisation of the “real” trademarks and allow the RFC Trust to raise working capital by selling down part of its shareholding in Real Corporation. 

6. Mr Karounos also mortgaged the marks to another party, Sabre International Limited, which thereafter sought to take possession of them as mortgagee and to become the registered owner of them.  Proceedings were instituted on behalf both of the trust and Real Corporation in South Australia and interim orders were made by O'Loughlin J restraining Sabre from dealing further in the marks pending further orders.

7. Subsequently an application was made by Unilever to add Sabre International as a party.  That company has generally not been represented by solicitors in these proceedings and by a letter dated 8 December 2000 Sabre confirmed that it would not be legally represented at the hearing and that the extent of its involvement would be limited in essence to the making of written submissions after the evidence had been heard.  It was pointed out to Mr Heinrich, who with leave then represented Sabre, that those submissions could not be made by reference to whatever documents may have been discovered but only by reference to material which was, in fact, in evidence.  Mr Heinrich acknowledged that he understood and accepted that.

8. The overall course of the proceedings since they were initiated has not been a happy one in that there have been 35 directions hearings many of which were initiated by Mr Karounos or those representing RFC Nominees.  At one stage the matter was set down for hearing in October of this year for four days.  That hearing date was vacated largely because Sabre had only shortly before become a party and it was said to be impossible that it be ready in time for a hearing.  Application for the adjournment of the hearing in October was supported vigorously by Mr Karounos who submitted that there was so much material that he could not possibly be ready for a hearing in October either.  The matter was then re-listed for hearing in December for four days commencing on 12 December 2000.  By consent the hearing was limited to the question of the validity of the marks and infringement.  Any issue as to damages was to be determined at a later date.

9. Yesterday, on 11 December 2000 Mr Karounos applied for the hearing date to be vacated.  It must be noted, however, that between October and December Mr Karounos had on a number of occasions foreshadowed his desire to have the December hearing dates vacated.  The Court refused the proposed vacation of the hearing dates and announced that reasons would be provided on a later date.  These are those reasons.

10. One of the matters upon which Mr Karounos based the application made yesterday was what he claimed was a problem of discovery.  He said that because the applicant had failed to provide proper discovery he had just not had time to adequately read and consider what he claimed to be 1672 pages of evidence.  He said also that experts that he wished to call, had not had the opportunity to read the material either.  Having regard to what Mr Karounos said on the issue of discovery it is appropriate to outline the chronology.  In doing so, it must be borne in mind that while Mr Karounos was not directly a party until June this year, he had participated closely in the instructions given to those representing RFC Nominees and in having that company restored to the register.

11. Initially an application was made by RFC Nominees on or around 3 May 1999 for general discovery.  Ultimately, the solicitors for RFC Nominees and the applicant agreed that discovery be given in nine specified categories.  That discovery, so far at least as the applicant was concerned, was given and ultimately inspection took place in Sydney by the solicitors of RFC Nominees on 3 June 1999.  Copies of documents were forwarded to the solicitors to complete discovery subject to a question that arose as to certain documents in respect of which confidentiality was claimed.

12. The issue of confidentiality was resolved ultimately on 23 August 1999 when an undertaking was given by the solicitors to keep material confidential.  Subsequently, a supplementary list of documents was prepared by the applicant and inspection of those documents was given on or around 26 August 1999.  Further discovery was given of documents outside the relevant categories on 5 October 1999, a matter which was later dealt with by a direction dated 12 November 1999.

13. The matter remained in that state until Mr Karounos became personally a party.  He then made application for discovery and inspection on 5 June 2000.  At that stage Mr Karounos was represented, although he ceased to be represented on 8 August 2000.  Mr Karounos, understandably, wished to see the documents already discovered and in respect of which the solicitors for RFC Nominees had given confidentiality undertakings.  Ultimately, on 17 July discovery and on 26 July inspection were given of some additional documents.  There was, however, a problem with respect to confidential documents raised by Unilever.

14. Mr Karounos was permitted to inspect the confidential documents on 20 September 2000 but not at that stage to have copies made.  On 25 September I considered all documents in respect of which the question of confidentiality was raised weighing the claimed confidentiality against the obvious need for Mr Karounos as a party, then unrepresented, to be aware of all material that might be relevant to the issues raised by the pleadings.

15. With some minor exceptions, I ordered Mr Karounos be given copies with one or two marginal deletions which had nothing whatsoever to do with the case, but which were said to contain marketing or other information, confidential to Unilever. On 13 November, less than a month before the matter was listed for hearing today, Mr Karounos made an application for general discovery.  I refused, in the circumstances, to order general discovery.

16. However, having considered affidavit material which Mr Karounos read and taking into account a submission that there could exist some material of forensic relevance at least which had not been discovered to him, I ordered further limited discovery be given to Mr Karounos within seven days.  In essence, I ordered that there be discovered and produced for inspection all documents, writings or things in the possession of the applicant which related to the applicant’s decision to use, or its actual use of, the word “real”, whether alone or in conjunction with the word “Rosella” or “Continental” and being contained in all or any of certain files which were identified.  I ordered that the list of documents be given within seven days.  In fact, one day later than the seven days, the list was provided to Mr Karounos on 21 November.

17. It is true that there were a large number of pages of material discovered.  I am told that the list in question comprised some 32 documents.  The non-confidential documents were forwarded to Mr Karounos by courier on 23 November, that being approximately a quarter of the material.  On 27 November Mr Karounos apparently attended and inspected the confidential documents without blacking out and he was notified that copies would be provided to him with blacking out of confidential material.  The confidential material was to be ready for collection by him on or around 30 November 2000.

18. In fact Mr Karounos did not pick these documents up until 7 December.  I should say, so far as the material the subject of discovery is concerned, there may be grave doubt ultimately of the usefulness of it.  As earlier indicated I have seen some of the material discovered so far as it relates to decisions to use and the use by the applicant of the word “real” in its packaging and marketing.  That the applicant did decide to use and did use the word “real” is hardly controversial.  What is in issue in the case is whether the applicant, RFC or Mr Karounos used the word “real” as indicative of the trade origin of goods.  Whether the use by Unilever of the word “real” was use by it as a trademark is the ultimate question for decision.

19. Mr Karounos has chosen not to appear at the hearing this morning.  That is his prerogative.  It might be thought to have been more courteous had he made his intention not to appear known both to the legal advisors for the applicant and to the Court.  In material which Mr Karounos forwarded to the applicant’s representatives and asked to be put before the Court today, Mr Karounos commenced by saying that he had only recently been joined in these proceedings.  If I may say so, that is a half truth.  It is of course true that Mr Karounos was not a party to the proceedings directly until June of this year, but it is likewise true that he has at all times controlled the trust of which RFC Nominees was trustee and for that matter, as successor trustee, had access to all the material that RFC Nominees had access to.  Further he has been closely involved in instructing legal representatives of RFC at all times since the proceedings began.

20. The fact that, as he says, he relies upon the evidence to be put forward by RFC Nominees is no doubt true but of little significance given that the evidence clearly is either his affidavit evidence or evidence of experts which one might easily deduce in the circumstances were obtained by solicitors on Mr Karounos’ instructions. 

21. In deciding whether or not to grant to Mr Karounos an adjournment yesterday, a number of factors were taken into account by me.  First there was the question of the involvement of RFC Nominees.  Once that company was restored to the register, it was placed into management.  One might wonder whether this occurred as an attempt to have the matter delayed (particularly in the context of repeated applications for adjournment).  But, whether this inference should be drawn, the consequence of the appointment of a manager was that so far as that company is concerned, the proceedings could not continue against it, at least for a reasonable time, to enable the manager to investigate whether to participate in the hearing.

22. The material before me suggested that the manager had sought an opinion from Dr Emmerson of senior counsel and that a reply is awaited.  I accordingly agreed, so far as the cross-claim brought by RFC Nominees Pty Ltd is concerned, that that cross-claim not proceed in December but that it be set down for hearing for four days commencing 19 February 2001.  That assumes that the administrator ultimately decides to proceed with the cross-claim.  It is not unlikely that it will not.  It might be mentioned that the applicant announced to the Court that it wished to discontinue the proceedings against RFC Nominees in any event as no relief was ever sought against that company.  Hence there is a reasonable possibility that there will be no need for the hearing in February to proceed.

23. In deciding not to grant an adjournment to Mr Karounos in the proceedings, I had regard to the fact that he has been closely involved throughout the two years in which the proceedings have continued as the successor trustee of RFC Nominees and appointor of the trust of which that company was trustee.  I had regard also to the fact that if the matter did not commence now but was adjourned to February, there was a reasonable probability that more than four days would be required for the hearing in February.  However, I have virtually no available hearing days in 2001 to which the matter could then be adjourned.

24. I am conscious of the importance of attempting  to balance consideration of justice to both parties. The Court’s convenience is not a matter of immense significance.  The case has proceeded for some two years.  It is clear that the issue of the registerability of the mark “real” will most likely turn less on evidence than on matters of law.  It is desirable that the matter be resolved as soon as possible, particularly where the respondents seek damages for infringement if its trade mark registrations are valid.

25. After the matter was called and the failure of Mr Karounos to appear was noted, senior counsel for the applicant opened the applicant’s case and read the affidavit evidence of the applicant subject to the need to tender the trade mark registration and additional evidence in respect of one package that has not yet been tendered.  All evidence was admitted subject to a question of relevance so far as it related to the use of the word “real” in phrases that clearly on no view of the matter could be use of the word as a mark.

26. The matter will now, because of the non-attendance of Mr Karounos but on the assumption that he may still have an interest in the litigation, be adjourned until 19 February 2001.  Should Mr Karounos wish to participate in the hearing on that date, it will be open to him to do so.  Should he wish to cross-examine those witnesses to whom notices to attend have been given or, should he wish to file any additional evidence, it will be a matter for him to seek leave to do so.  The time for filing of evidence has long since passed.   The same opportunities will of course be available to RFC Nominees should it wish to proceed with its cross-claim.

27. Copies of the transcript of this morning’s proceedings of course are available to any party to purchase from Auscript.

28. Accordingly, I will adjourn the proceedings until 19 February 2001 and reserve the question of costs.

I certify that the preceding twenty eight (28) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Hill.

Associate:

Dated:             12 December 2000

Counsel for the Applicant:	A Bennett SC,  R J Webb
Solicitor for the Applicant:	Baker & McKenzie
Date of Hearing:	12 December 2000
Date of Judgment:	12 December 2000