Australian Mud Company Pty Ltd v Coretell Pty Ltd

Federal Court of Australia|2014-07-04|Before: McKerracher J

The applicants provide standard discovery in accordance with Rules 20.14, 20.16 and 20.17 of the Federal Court Rules 2011 (Cth) within 7 days of any 'order' referred to in the copy invoices at pages 926, 927, 928 and 929 of the affidavit of Mr Michael John Williams sworn on 29 May 2014.
The interlocutory application is otherwise dismissed.
The first respondent is to pay the costs of the applicants, to be taxed if not agreed. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

IN THE FEDERAL COURT OF AUSTRALIA WESTERN AUSTRALIA DISTRICT REGISTRY GENERAL DIVISION NSD 2082 of 2011

REFLEX INSTRUMENTS ASIA PACIFIC PTY LTD ACN 124 204 191

MINCREST HOLDINGS PTY LTD ACN 068 672 471 (TRADING AS CAMTEQ INSTRUMENTS)

KLEYN INVESTMENTS PTY LTD ACN 118 967 687 (TRADING AS CAMTEQ INTERNATIONAL SERVICES)

JUDGE: MCKERRACHER J DATE: 4 JULY 2014 PLACE: PERTH

A MID-TRIAL APPLICATION 1 By amended interlocutory application filed on 27 June 2014 following the first 12 days of the trial the first respondent seeks: (a) orders for particular discovery against the applicants; (b) orders permitting a Mr Christopher Bradford access to certain of the documents produced by the applicants under cover of an affidavit of the applicants' solicitor, Mr Michael Williams, sworn on 29 May 2014; and (c) leave to file and serve a fifth further amended particulars of invalidity.

FURTHER DISCOVERY 2 The further discovery sought is substantial even though there have been 12 days of hearing of the trial. The fundamental contention in support of the further discovery is that the applicants failed to comply with pre-trial discovery orders despite repeated requests and repeated assurances that all discovery had been given. 3 At about the time of filing the original (now amended) application, an affidavit was filed voluntarily by Mr Michael John Williams, the solicitor for the applicants, on 30 May 2014, attaching approximately 950 further pages of documents which responded to categories in respect of which the applicants' witnesses had been cross-examined (New Documents). The applicants' witnesses who were cross-examined include Messrs Weston, Brown and Parfitt. During the course of the substantive trial I observed that it might be of assistance to the Court for evidence to be provided of searches for the documents in respect of which the cross-examination was conducted. It was primarily in response to that request that the New Documents were produced by Mr Williams after extensive searches which he detailed. 4 The first respondent argues that most of the New Documents ought to have been discovered prior to trial, whereas the applicants say there was no obligation whatsoever to discover those documents. 5 The applicants' position is also that all of the New documents provide absolutely no assistance to the account given by Mr Bradford, the former employee of the applicants whose evidence has been called to support a cross-claim on secret or prior use. I make no comment on that submission at this stage. 6 The first respondent contends that it is manifestly clear from the cross-examination and the New Documents that further discovery is required. It also complains that those further documents should be the subject of an affidavit of discovery by an officer of the company. It contends that it is impossible to properly adjudicate upon its cross-claim given the deficiency in discovery. Finally, the first respondent contends that inadequate discovery in this proceeding will somehow impact upon a third proceeding. This argument was not fully developed and I have put it to one side.

CONSIDERATION 7 At the heart of the first respondent's interlocutory application is the contention that there has been default by the applicants in compliance with discovery orders made by Justice Nicholas on 4 May 2012. 8 For reasons which follow I am not persuaded that there has been any deficiency in discovery or default in compliance with the orders. Nor am I persuaded that there is any good reason (no evidence having been adduced to support any good reason) why the first respondent did not pursue an application of this nature prior to the commencement of the trial. 9 The relevant discovery order in respect of which it is contended there has been non-compliance is order 5(c) of the orders made by Justice Nicholas, which requires the applicants to provide standard discovery in relation to the development and first exploitation of the relevant tool as defined in para 58 of the respondents' statement of cross-claim filed on 30 March 2012. 10 What is fundamental and must have been clear to the first respondent at all times is that para 58 of the cross-claim as it then appeared did not contain any cross-claim of secret use or prior use. The cross-claim as then pleaded, and which has now been abandoned, contended a lack of entitlement. No lack of novelty or secret use claim had been made by the respondents against the applicants at the time the discovery orders were made by Justice Nicholas. The discovery orders there made were relevant only to the role played by the inventor and various employees in the development of the relevant tool, which went to the question then advanced on the cross-claim of the 'entitlement to grant'. The contention of the respondents at that point, which has been abandoned, was that Mr Parfitt was not the sole inventor. 11 The pursuit of the very extensive discovery at this late stage in the trial, does not accord with the principles reflected in r 20.11 of the Federal Court Rules 2011 (Cth), with Practice Note CM5 or with s 37M(1) of the Federal Court of Australia Act 1976 (Cth). As the respondents effectively acknowledge, compliance with the discovery and the other orders which they seek would almost inevitably cause delay of the hearing of the balance of the trial which has been fixed for some time in the mid to latter part of July. In this regard I refer to the comments I have previously made in respective discovery of this nature in Schutz DSL (Australia) Pty Ltd v VIP Plastic Packaging Pty Ltd (No 14) [2011] FCA 1159 (at [13] and [27]), Alanco Australia Pty Ltd v Higgins (No 2) [2011] FCA 1063 (at [7]) and, more recently in Harcourts WA Pty Ltd v Roy Weston Nominees Pty Ltd (No 2) [2014] FCA 107 (at [12]). Litigation of this nature cannot be conducted on the speculative premise that there may or must be more documents out there in the face of evidence of extensive searches and sworn assurances that there are not. 12 These are long running and bitterly fought proceedings. They in turn follow another set of substantial proceedings and an appeal. Every issue has been hard fought including the range of discovery initially sought in the hearing before Justice Nicholas, whose orders are relied upon by the first respondent. The specific nature of the discovery orders granted accords entirely with modern practice of this Court. The new cross-claim raising the matters on which the first respondent now relies at trial is entirely different in its content. Why the first respondent did not, prior to trial, apply for new discovery orders specifically referable to the new claim is unclear. Nothing in the extensive correspondence and affidavit evidence relied upon in this application makes this clear. But either way, the applicants have done more now in the disclosure of the further 950 pages of documents than they were required to do. 13 The resistance to the further discovery requests is not based on some technical or hard line response to them. The first respondent has been on notice that there is a real question of whether there would be utility for further discovery given that the first respondent has already exhaustively explored this issue at trial, has advanced evidence at trial from several witnesses in support of its cross claim and has at least one further witness to cross examine on the issue. Despite that and notwithstanding the voluntary production of some 950 pages, the first respondent has pointed to only one specific document which it identifies as probably providing further support for its cross claim. 14 It is significant, in my view, that the first respondent has only been able to point to one such document. Nevertheless, having done so, I am of the view that it would not be on the face of it unduly burdensome to the applicants to give the discovery sought in respect of that document. It must be said though that on the present state of the evidence Mr Williams has made it clear that no such documents exist. I will order that the applicants discover, if they exist, any of the 'orders' referred to in the invoices at pp 926, 927, 928 and 929 of the affidavit of Mr Williams, sworn on 29 May 2014. As pointed out by senior counsel for the first respondent, given that there are electronic records available, it may be possible to search those records in order to obtain the details of that order. 15 In relation to the complaint that the further affidavits have not been sworn by an officer of the company, the basis of this complaint is apparently that if it is sought to tender the New Documents as business records, it would be necessary for an officer of the company to swear that they are business records. There is no substance in this complaint. It is quite clear that it is proposed to tender Mr Williams's affidavit as business records and it is clear on the face of the documents that they are business records. That will suffice to warrant their admissibility. It would be unduly onerous at this late stage to require a company officer to conduct the same searches in order to be able to swear to the same matters to which Mr Williams has deposed. 16 The applicants also oppose the discovery application on the grounds that: (a) it is unwarranted and irresponsible (given the false basis for making the application and the thorough searches and document production the subject of Mr Williams' evidence by two affidavits); (b) it would cause grave and unjustifiable prejudice to the applicants (in circumstances where it is preparing for the resumption and completion of the trial); (c) it is likely to result in the July 2014 hearing dates being vacated; and (d) in any event, it would lack utility given that any conceivably relevant document has been produced. 17 I do not propose to consider at this stage the balance of the arguments advanced in opposition to the discovery application as I am satisfied that there has been no default on the part of the applicants in compliance with discovery orders and inadequate or no explanation on the part of the first respondent for the failure to seek discovery in support of those parts of its cross-claim prior to commencement of the trial. 18 I will supplement my reasons in respect of the dismissal of the application for further discovery in my substantive reasons for judgment.

APPLICATION FOR EXAMINATION OF DOCUMENTS BY MR BRADFORD 19 Mr Bradford is a former employee of the applicants. He (and others) have given evidence which may have the capacity, amongst other things, to support the cross-claim of the first respondent on secret or prior use. Again, reserving the right to more fully supplement these reasons in the substantive reasons for judgment in this matter, I must observe that if this form of discovery application had been pursued prior to trial, it may then have been possible for Mr Bradford to have given instructions as to the documents. On many of the documents Mr Bradford could offer no apparent assistance given that, on the face of them, it seems he was not involved in the events which the documents recorded. 20 No indications have been given as to how long this exercise would take, whether it could be conducted prior to the resumption of the trial, whether and if there would be an application to recall Mr Bradford and other witnesses to make further observations in relation to the documents, and whether (as would seem likely) it would be necessary to adjourn the trial. Given the imminence of the resumption and completion of the trial, and for the same reasons expressed above in respect of the need for efficiency in the conduct of the litigation, I am not persuaded that it is appropriate to permit Mr Bradford to examine and give instructions on the documents that have been produced or that sufficient utility in this course has been made out. I decline to make the order sought.

AMENDMENT OF PARTICULARS 21 The proposed fifth amendment of particulars of invalidity is based entirely on the New Documents that have been produced. The proposed amendment is extensive. It is, as I take to be conceded by counsel for the first respondent, somewhat speculative. The one example on which oral submissions were made by both parties, namely, the first proposed amendment to the particulars, is constructed upon a small extract of a set of minutes from a meeting on 18 March 2004 in respect of which the primary factual event sought to be particularised would be little more than conjecture. As pointed out by senior counsel for the applicants, the fact which is particularised is directly contrary to the fact in respect of which evidence has been sworn on affidavit and is to be given by Mr Miitel for the applicants who will be available for cross-examination. No doubt the record can be put to him. Against that proposed affidavit evidence, the mere possibility of an event occurring is not sufficient, at this stage of the trial, for this and the other extensive amendments to the particulars of similar nature to be permitted. The proposed amendments would inevitably result in an adjournment of the trial given the necessity for the applicants to take instructions and to recall witnesses. The amendment is disallowed.

ORDER OF CLOSING ADDRESSES 22 There is an incidental matter. The preparations of both parties appear to be on the basis that senior counsel for the applicants will address first and senior counsel for the respondents, second. There was some discussion about the order of addresses in the context of other arrangements being made for the calling of witnesses. Given that the parties have prepared on the basis that the applicants will address first, I propose to maintain that order of addresses with the first closing address (for the applicants) commencing on Wednesday, 23 July 2014. The address from the respondents will be on Thursday, 24 July 2014.

CONCLUSION 23 For the foregoing reasons, which will be supplemented in the substantive reasons for judgment, the following orders are made: 1. The applicants provide standard discovery in accordance with Rules 20.14, 20.16 and 20.17 of the Federal Court Rules 2011 (Cth) within 7 days of any 'order' referred to in the copy invoices at pages 926, 927, 928 and 929 of the affidavit of Mr Michael John Williams sworn on 29 May 2014. 2. The interlocutory application is otherwise dismissed. 3. The first respondent is to pay the costs of the applicants, to be taxed if not agreed. I certify that the preceding twenty-three (23) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice McKerracher.

Federal Court Rules 2011(Cth)rr 20.11, 20.14, 20.16, 20.17

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