YPG IP Limited v Yellowbook.com.au Pty Limited HC Auckland CIV 2007-404-2839

[2010] NZHC 1734

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2007-404-002839

UNDER  the Copyright Act 1994

AND UNDER                 the Fair Trading Act 1986
AND UNDER                 the Trade Marks Act 2002

BETWEEN  YPG IP LIMITED First Plaintiff

ANDYELLOW PAGES GROUP LIMITED Second Plaintiff

ANDYELLOWBOOK.COM.AU PTY LIMITED

First Defendant

ANDDAVID KHOURY Second Defendant

ANDROBERT G COLES Third Defendant

Hearing:         23 September 2010

Appearances: M C Hayes and K W McLeod for Plaintiffs

S McLaughlin and S A Grant for First and Second Defendants
No appearance for Third Defendant

Judgment:      23 September 2010

ORAL JUDGMENT OF HON. JUSTICE FRENCH

A.	The three-week trial commencing 18 October 2010 is vacated.
B.	The plaintiffs’ application for a split trial is declined.
C.	The plaintiffs are to pay costs on a 2B basis.
D.	Timetabling  directions  are  made  regarding  the  security  for application.	costs

YPG IP LIMITED AND ANOR V YELLOWBOOK.COM.AU PTY LIMITED AND ORS HC AK CIV-2007-

404-002839  23 September 2010

Introduction

[1]      This  proceeding  was  scheduled  for  a  three-week  trial  commencing  18

October 2010.

[2]      On 14 September 2010 the plaintiffs applied for a split trial under r 10.4, having earlier signalled the possibility of doing so.

[3]      The application is made against the following background.

[4]      The plaintiffs claim the defendants have breached intellectual property rights in respect of the business directory known as the Yellow Pages.  The current version of the statement of claim pleads three causes of action:

i)        Copyright infringement.

ii)       Breach of the Fair Trading Act 1986. iii)         Trade mark infringement.

[5]      A problem has arisen because the second plaintiff and the first and second defendants have lodged appeals with the Court of Appeal relating to interlocutory matters.   The appeals will not be heard before the scheduled fixture date of 18

October.  Indeed, counsel tell me it is likely the appeals may not be heard until mid-

2011.  As a result, all counsel agree (and I accept) that because of the outstanding appeals the full substantive claim cannot be heard this year.

[6]      The interlocutory appeals all relate to the copyright cause of action, and accordingly the plaintiffs propose that five days of the allocated fixture could be utilised to hear the trade mark and breach of Fair Trading Act claims, leaving the second plaintiff’s copyright action for hearing next year.

Grounds of application for split trial

[7]      In support of the application, counsel Mr McLeod advanced the following arguments.

[8]      First it was submitted that the trade mark and Fair Trading Act claims are discrete causes of action and do not involve any, or any significant, overlap in legal and evidential issues.  As a result, it will be possible, in his submission, for different Judges to hear the two hearings without there being any real risk of conflicting findings or res judicata matters.  There will be no unnecessary increase in costs and no wasteful duplication of Court time.

[9]      Secondly it was argued that if the application is not granted there will be prejudice to the plaintiffs.  The longer the delay in having the case heard, the longer their exposure to adverse damages claims created by an undertaking as to damages given at the time the plaintiffs obtained an interim injunction.

Discussion

[10]     Rule 10.4 provides:

10.4     Court may order separate trials

When justice requires, the court may order separate trials of causes of action and it may also direct the sequence of the separate trials and make any supplementary order that is just.

[11]   As noted in McGechan, r 10.4 confers a broad discretion.   The major considerations influencing the exercise of that discretion are the balance of convenience to the parties and to the Court.

[12]     I have carefully considered all of Mr McLeod’s submissions, which have been well made.  However, I have come to a clear view that a split trial would be problematic and that the balance of convenience clearly tells against it.

[13]     I have come to that conclusion for the following key reasons.

[14]     First, in my view the plaintiffs’ submissions understate the degree of overlap between the various causes of action.  I am satisfied that at the very least, not only will the same witnesses have to give evidence at the proposed two trials, but there will also be duplication as regards the giving of the same substantial background evidence.  Both trials will need to deal with such background matters as the business

arrangements between the defendants, the intentions of the parties, as well as the respective businesses.   In my assessment, this represents inefficient use of Court time, and will result in unnecessary duplication.

[15]     There is also the very real prospect, given the history of this matter, of a party dissatisfied with the outcome of the trade mark/Fair Trading Act hearing to appeal the decision.  That would obviously lead to only more delay in having the copyright matter resolved.

[16]     My concerns are heightened further by the consideration that if granted, this application may in fact result in three hearings, the parties apparently having already agreed that liability and quantum should be the subject of separate trials.

[17]     Secondly, in my view, a split trial is unfairly prejudicial to the defendants.  I

consider that they would be prejudiced in two ways.

[18]     First, the defendants all reside in Australia, and a split trial would mean they would have to travel twice to New Zealand.  They are said to be of limited means.

[19]     The second way in which they are prejudiced relates to their ability to be able to prepare in time for the proposed split trial.   As I have already mentioned, the application for the split trial was filed on 14 September.  That was the day before the first and second defendants’ counsel, Mr Elliott, left to go overseas.   He does not return until 10 October, and until recently had clearly been operating on the basis that this case was not proceeding at all this year.   It is clear he would have been aware of the possibility of the plaintiffs applying for a split trial, as that had been raised as a suggestion much earlier, but nothing had ever eventuated.  The plaintiffs’ briefs of evidence, which would have been due in the ordinary course of events, have for example never been filed.

[20]     Mr McLeod suggested that the preparatory work required for a hearing on the trade mark and Fair Trading Act causes of action would be limited, because of the work that has already been done for the interim injunction hearing.   However, it

appears that at that stage the first and second defendants were unrepresented, and that there were some deficiencies in the material they provided to the Court.

[21]     There is also a possibility that the defendants’ counsel, Mr Elliott, may not even be available on 1 November (the proposed start date for the split trial), due to another fixture.   There is some doubt about that, but even if he is available on 1

November, I am satisfied that the prejudice to the defendants is significant and it would not be in the interests of justice to compel them to proceed for a hearing.

[22]     Thirdly, I am also satisfied that the prejudice to the defendants is greater than the prejudice that will be suffered by the plaintiff if the application for a split trial is denied.  An important consideration is that the plaintiffs have the protection of the interim injunction that was granted some time ago.  I accept there is a concern about continuing exposure to an adverse damages claim, but that consideration has to be tempered by reference to the fact that according to the defendants a successful outcome for them on the trade mark/Fair Trading Act issue would not enable them to set up business (and so reduce the amount of any damages claim) anyway because they would still be restrained by the copyright component of the injunction.  If they are wrong about that, then any losses sustained by the defendants would be due to their own misinterpretation of the restraints imposed by the injunction.  Accordingly, the amount of any adverse damages recoverable would not be as large as advanced.

[23]     Finally, as regards the convenience of the Court, the Executive List Judge has advised me that the time will not be wasted because of the number of back-up fixtures that have been put in place for the three weeks that would otherwise have been taken up by this case.   The loss of the fixture therefore does not create significant inconvenience to the Court.

[24]     All in all, having regard to all the circumstances, I am satisfied that the balance of convenience clearly weighs in favour of the defendants against the granting of the plaintiffs’ application.  The application is therefore declined.

[25]     Costs are awarded against the plaintiffs on a 2B basis on the usual premise of costs following the event.

[26]     Finally, for completeness, I record a concern raised by Mr Coles, the third defendant.   He was not able to be present here today, but sent a fax to the Court opposing the application.

[27]     In  his  faxed  memorandum  he  raised  a  concern  about  the  fact  that  the plaintiffs have amended their original statement of claim to include the Fair Trading Act and trade mark infringement causes of action.  He asked the Court to enquire into the ability of the plaintiffs to effect such an amendment.

[28]     I am satisfied that the plaintiffs were fully entitled to amend their pleadings in accordance with the High Court Rules, which allow a party to amend pleadings at any time, and even after a case has been set down for a hearing to do so with the leave  of  the  Court.    Mr  Coles’  concerns  on  that  matter  are  therefore  not  well founded.

[29]     There is still outstanding an application for security for costs.  In respect of that application, I make the following timetabling orders:

i)        A half-day fixture is to be allocated on the next available date.

ii)The plaintiffs are to file affidavits in support of the  notice of opposition at least seven working days before the hearing date.

iii)The first and second defendants are to file and serve affidavits in reply and submissions in support of their application, and prepare the appropriate bundles, at least three working days before the hearing date.

iv)The plaintiffs are to file and serve submissions in opposition at least one working day before the hearing date.

Solicitors:

A J Park Solicitors, Auckland

Ellis Terry, Wellington

Clive Elliott, Auckland

Copy to Third Defendant – R G Coles