3. On the basis of the allegations in the statement of claim, the applicant by its application claims extensive relief. It is tempting, and I think accurate, to say that the application has been compiled with little regard to any consequences that might ordinarily be thought to arise if the allegations in the statement of claim should be established, or even to the identity of the parties to the proceedings. First, a series of declarations is claimed: declarations that the applicant was joint inventor of the device with the second respondent; that the respondents made false statements and misrepresentations to the Commissioner of Patents in the patent applications; that the respondents have in trade and commerce engaged in misleading and deceptive conduct; that the second respondent has committed the offences provided for by s 79 of the Trade Practices Act 1974 and s 62 of the Fair Trading Act 1987 (NSW); and that the respondents have breached their contractual obligations to the applicant. Next, orders are sought setting aside the petty patent granted to the first respondent for the device, setting aside the application for a patent and, alternatively, directing the Commissioner for Patents to amend the patent to include the applicant as a joint inventor. The Commissioner is not a party. Then orders are claimed that the first and second respondents "grant" to the applicant a 50% shareholding in the first respondent; restraining the respondents from "further breaching" ss 52 and 79 of the Trade Practices Act and ss 42 and 62 of the Fair Trading Act; and requiring the respondents to file an affidavit giving detailed particulars concerning the manufacture, supply and sale of the device. The applicant then asks for inquiries as to profits and damages and the catalogue is completed by claims for "damages including aggravated damages and punitive damages", interest, an account of profits, such further or other orders as to the Court seems (sic) necessary and costs.

4. The applicant has filed a notice of motion which supersedes, apparently, a notice of motion which he had previously filed. The applicant's motion is not at present before me, but it was referred to extensively during argument on the respondents' motion. If the applicant moves in accordance with his motion, he will seek leave to add AOL Australia Pty Limited (a company in which apparently he is interested) as second applicant and Worldwide Resources Limited (a company in which apparently the second respondent is interested) as third respondent; he will also seek certain interlocutory relief. A proposed amended application and a proposed amended statement of claim are attached to the notice of motion. In broad terms, the amended statement of claim would add additional matter to the existing statement of claim but, apart from amendments which clarify somewhat the allegations in relation to the patent applications, would leave the existing allegations in the statement of claim untouched. The new matter comprises a series of allegations concerning a sub-licence between the proposed third respondent, as sub-licensor, and the proposed second applicant as sub-licensee. By the sub-licence agreement the third respondent is said to have granted the second applicant an exclusive sub-licence to market, distribute and sell "the orthotic devices" and certain other goods in Australia; there is an allegation that the third respondent breached the agreement by selling goods in competition with the second applicant; it is alleged that the third respondent wrongfully purported to terminate the sub-licence; and the second applicant says that it is, and always has been, ready and willing to perform its obligations under the sub-licence agreement.

5. The proposed amendments to the application are by no means entirely consistent either internally or, apparently, with the claims in the application as it stands at present. There would be added a series of claims for relief in relation to the sub-licence: injunctions restraining breach by the third respondent, a form of specific performance and a declaration that the purported termination was wrongful and that the third respondent has defaulted under the agreement. There would also, however, be added a claim for "a declaration that the Licence Agreements and Sub-Licence Agreements described in the Amended Statement of Claim are void and of no effect". That gives rise to the internal inconsistency to which I referred. The apparent lack of consistency with the existing (and continuing) allegations and claims is that, although the amended pleading does not attempt to fill the gap between the grantee of the patent and the grantor of the sub-licence, the claims based on the sub-licence appear to assume the validity of the grant of the patent and the efficacy of certain intervening dealings between the parties. Evidence on the summary dismissal motion

6. Those intervening dealings were the subject of affidavit evidence of the second respondent and the applicant read on the respondents' motion for summary dismissal under O 20 r 2. According to the second respondent, in 1993 the applicant became a director of, and was allotted 1% of the shares in, the first respondent. He had previously, as an employee of the first respondent, entered into two successive agreements by which he undertook to keep the affairs, particularly the intellectual property, of the first respondent confidential and to disclose and assign to the first respondent any inventions or discoveries he might make in the course of his employment. As a director of the first respondent, the applicant signed a document by which it transferred the patents to a company called Paramount Capital Exchange Corporation which, apparently, entered into a licence with Worldwide Resources Limited, the proposed third respondent. According to the evidence of the second respondent, the applicant ceased to be a director of the first respondent on 31 January 1995 and on the same day transferred his shares in the first respondent to Paramount Capital Exchange Corporation. Again in very broad terms, the applicant in his affidavit appears not to dispute that those transactions happened: he claims not to have been aware of the precise content or effect of certain of the documents and claims apparently that though he signed the confidentiality and assignment agreements with the first respondent he did not do so as an employee.

Order 11 rule 16 - strike-out application

7. There is before me correspondence between the solicitors for the parties in which the solicitors for the respondents have made plain their objections to the statement of claim and sought further particulars; some of those particulars have been supplied by the solicitors for the applicant. However, the respondents say that the particulars supplied by no means make good the deficiencies in the statement of claim; the principal complaint is that it pleads conclusions rather than material facts. The applicant replies that the statement of claim pleads material facts and that what the respondents (impermissibly) seek is the pleading of evidence, as opposed to facts.

8. It will be recalled that the principal allegations in the statement of claim concern two ways in which the respondents are said to have engaged in misleading or deceptive conduct. It is necessary to consider the way in which the statement of claim deals with each of them.

9. The misleading or deceptive conduct first alleged relates to the application for, and grant of, the petty patent. Paragraph 3 of the statement of claim says this:

In the period 1989 - 1990 the Applicant and the

Second Respondent carried out work and research on

their own behalf in respect of the invention of a

mouldable orthotic device to be adapted for

insertion into an article of footwear (orthotic

device).

Particulars

The Applicant and the Second Respondent invented

the orthotic device jointly.

10. The statement of claim then pleads the applications for the patents in which the second respondent was named as sole inventor, the grant of a petty patent to the first respondent and that because of the misdescription of the second respondent as sole inventor the position was misrepresented to the Commissioner of Patents; if the true position had been made known (i.e. that the applicant and second respondent were joint inventors) the petty patent would not, or should not, have been granted.

11. The respondents make a number of complaints about this aspect of the statement of claim. First, they say that no facts are pleaded in support of the conclusion that the applicant was an inventor of the device. All that is said is that he "carried out work and research ... in respect of the invention"; some further particulars have been given but all they do is specify in detail some of the particular work that the applicant claims to have done rather than any facts which might indicate that he was in any sense an inventor of the device. That complaint, it seems to me, is justified: what was the inventive step, and how did the applicant contribute to it? Neither the statement of claim nor the further particulars throw light on either question. Secondly, the respondents sought particulars of the expression "on their own behalf" and received a response that the phrase was self explanatory. So, in some circumstances, it might be: here, however, the applicant in paragraph of his statement of claim (dealing with the second alleged category of misleading and deceptive conduct) says that "the Applicant carried out work for and on behalf of the First and Second Respondents and researched (sic) into the orthotic device and other work and research ...". The two allegations together hardly, in my view, give the respondents a clear idea of what precisely is, in this respect, the case they have to meet. Thirdly, the respondents say that assuming that the applicant was properly to be described as an inventor, the result stated in paragraph 6 of the statement of claim - that the misrepresentation as to the identity of the inventor was "of such nature that the said applications for the patent and the patent should be set aside and declared invalid" - does not follow, at least in the absence of other facts, none being stated. That may well be right; in any event, it is not easy to see from paragraph 6 and the particulars accompanying it precisely what the applicant's complaint is. I have quoted the concluding words of the paragraph which assert that the patent should be set aside and declared invalid. The concluding sentence of the particulars reads:

Had the true position been known that the

Applicant and the Second Respondent were joint

inventors, the patent would not, or should not,

have been granted to the First Respondent.

12. It is, I think, not unfair to ask, is the complaint (as the pleading says) that a patent has been granted which is liable to be set aside or that a patent has been granted, as a result of the alleged misrepresentation, so as to deprive the applicant of some proprietary right of his as an inventor?

13. In my view, the statement of claim, in relation to the allegations about the invention and the patent, have the vice of the pleadings dealt with in Trade Practices Commission v David Jones (Aust) Pty Ltd [1985] FCA 228; (1985) 7 FCR 109 and those considered in Davids Holdings Pty Ltd v Coles Myer Ltd (1993) ATPR 41,146; it is, additionally, embarrassing by reason of its internal inconsistency.

14. The second allegation of misleading or deceptive conduct relates to the alleged agreement that the second respondent would make the applicant "a full partner and 50% shareholder in the First Respondent". Again, there are a number of difficulties with the pleading. One is that the nature of the applicant's case is not made clear: we are not told what, if anything, "a full partner" adds to "50% shareholder in the First Respondent". Nothing in the pleading or in the particulars provided clarifies that issue. Secondly, the "agreement" is said to have been one between the applicant and the second respondent: it is not said that the first respondent was a party to the "agreement" or to representations that may have been made; no material facts are alleged in support of a statement that relevant representations were made on its behalf. Thirdly, what apparently is pleaded by way of reliance is work said to have been done "on behalf of the First and Second Respondents" which seems to be the same work said in paragraph 3 of the statement of claim to have been done by the applicant and second respondent "on their own behalf"; and in those circumstances a simple pleading "by reason whereof the Applicant has suffered loss or damage" is hardly sufficient, having regard to what precedes it, as a statement of material facts supporting a conclusion that the applicant suffered loss by reason of particular misleading or deceptive conduct.

15. The applicant referred me to a number of the authorities, which are well known, dealing with the distinction between material facts on the one hand and evidence on the other, the blurring of the distinction between pleadings and particulars and the proposition stated by Beaumont J in Pancontinental Mining Ltd v Posgold Investments Pty Ltd [1994] FCA 983; (1994) 121 ALR 405 at 414:

... under the modern system of pleading, the

question is not whether the facts pleaded are in

themselves sufficient to give rise to a cause of

action. Rather, the question is whether it would

be open to the applicant upon the pleadings to

prove facts at the trial which would constitute a

cause of action ...

16. In my opinion, however, the statement of claim in this case states, in several significant respects, conclusions rather than material facts and, because it is in significant ways inconsistent and confusing, is embarrassing. The embarrassment becomes all the more evident, I think, when one considers the extravagant, and in some respects obviously inappropriate, claims for relief in the application. Once that conclusion is reached, it inevitably follows in my view that the statement of claim should be struck out in whole.

Order 20 rule 2 - summary dismissal

17. Counsel for the respondents argued vigorously that, applying the test in General Steel Industries Inc v Commissioner for Railways (NSW) [1964] HCA 69; (1964) 112 CLR 125, I should dismiss the proceedings summarily on the basis that they are manifestly groundless. I have already referred to the evidence before me on this motion. That evidence is not such as to inspire confidence in the applicant's case; nor does the rather different case which, apparently, the applicant proposes to make (based on the sub-licence) inspire confidence in his case as it stands at present. I have already held that the statement of claim is deficient to the extent that it should be struck out in its entirety. It is a significant additional step, however, to shut an applicant out by dismissing the proceedings; and in view of the areas of factual dispute between the parties, limited as the evidence before me suggests that they are, I do not think it is one which I should take.

18. Accordingly, having ordered that the statement of claim be struck out, I shall give the applicant the opportunity to replead. I have already mentioned some obvious difficulties with the amended statement of claim (and amended application) foreshadowed at present. It also seems clear (this was touched upon during argument) that if the applicant sought to proceed with the claims based on the sub-licence, to the exclusion of the present claims, there would be a serious question whether this is the appropriate court in which to continue the proceedings.

19. In the result, I order that the statement of claim be struck out. The applicant should pay the respondents' costs of the motion. I grant the applicant leave to file and serve, within 28 days from today, an amended statement of claim.