Benson v Liszka

REASONS FOR JUDGMENT 1 On 14 May 2007, the applicant, Richard Benson, filed a Statement of Claim against Dan Liszka, as respondent. That Statement of Claim is in these terms: 1A. The application is related to Breach of the Copyright, Breach of Confidential Agreement, Fraud and Attempt to Commit Fraud by Mr. Dan Liszka, Managing Director which is representing Alchemy Innovation and Development Pty Ltd. The applicant claims the following: 1. I am the inventor of the World's newest Medical Device Class 1, a nasal device which aims to prevent chronic Snoring and Obstructive Sleep Apnoea. 2. I have registered this Innovation Patent through Canberra Patent Office as well as through PCT-Geneva 2005. 3. Hard work was performed to ensure the maximum success will prevail and over two years work was performed to finalise this project. 4. A letter was received from Mr. Dan Liszka which introduced himself as a Managing Director of Alchemy Innovation Development Pty Ltd, NSW (with whom I never met personally!) and offered his services to promote my invention. 5. Clear reference was made that the Innovation Patent was published public but there was no confidential information or technology information of the Product and requested to provide it to him. 6. A Pre-Contractual Confidential Disclosure Deed was sent and signed by Mr. Dan Liszka and returned to me which was made clear that he must protect all confidentiality of the Innovation. 7. A confirmation letter was sent to Mr. Liszka to confirm receiving the confidential form signed and because we didn't get the chance to meet personally, Appropriate warning was issued to care about my Innovation. Several documents and hard copies has been sent to Mr. Liszka's office to commence his scheduled work, as he requested. 8. A list with international potential manufacturers was provided to me and several were cut back as not appropriate chosen for this type of product and remained a list of 32 altogether of which we both agreed. 9. A general Quotation list was sent by Mr. Liszka to me to prove the amount of work involved and a fee was requested (as well as twice more afterwards) all paid in full as requested. 10. A 65 pages Information Memorandum which contained strictly confidential information and sensitive information of my Innovation Patent, was sent to me and backwards for a few times as there was clearly need it to improve the literature of the whole content and more information was added or changed as it wasn't right done, until was finalised and approved as finally appropriately done and ready to be delivered. 11. The only approval given to Mr. Dan Liszka was strictly related to the version, literature and content of each document which was carefully checked and considered by me before was ready to be sent away. 12. Never, at no time, there was not given any approval or consent to Mr. Dan Liszka to send over any document which contained wholly or partially sensitive and confidential information of the Innovation Patent owned by me to anyone prior having the Confidential Disclosure Deed signed and returned signed to me, as he was clearly instructed from the start. 13. Before approving this large 65 pages file, a letter was sent to Mr Liszka to ensure he will no send any of this information of this kind to anyone until a confidential disclosure form is signed by anyone before this file is delivered. 14. The confidential form Mr. Liszka signed suppose to be enough to protect all Innovation Patent's confidentiality, but some weaknesses were detected and there the trust became weaker towards Mr. Liszka and I started to become worried in silence hopping everything will be alright. 15. Few responses came lately saying they have received the Information Memorandum, a 65 pages file sent by Mr. Dan Liszka. 16. A negotiation failed due to Mr. Liszka's incompetency. 17. Another document was made by another solicitor experienced in Intellectual property, due to Mr. Dan Liszka's inability to formulate it appropriately. Again, Mr Liszka requested for approval as a version for contents and literature of the letter wrote by this solicitor. 18. As the doubts arose, a request to show and prove his work was never returned by Mr. Liszka. 19. Small enquiry was conducted and as a result, few company listed by Mr. Liszka responded positive to receiving Information Memorandum from Mr. Liszka. 20. At the same time, few companies from Mr. Liszka's list responded negative to receiving any Information Memorandum. 21. The request to see all confidential forms in original signed by any international manufacturers to whom he supplied the Information Memorandum, I have never received it - as requested by me. 22. Mr. Liszka never responded since and refuse to prove anything. Reports have never been received to prove his accuracy in his work for which I was charged $10,518.86AUD. 23. Once everything failed, a letter was received from Mr. Liszka with a newspaper article of ResMed, based in USA. 24. After knowing he failed, Mr. Liszka came up with a proposal saying in one of many calls to me "Your products are better than ResMed's. I know other ways of "Promoting your invention, but you have to come up with more money". 25. Proposal was refused as Mr. Liszka's intent was clear and couldn't be trusted. 26. From 1st June 2007, my Innovation Patent National Phase expire. 27. My Innovation Patent for which I invested a large amount of money and spent more than two and a half years working hard on became a high international risk of being copied and sold by the manufacturers to whom all information was supplied by Mr. Liszka. 28. I can see a dream of a lifetime gone as anyone to whom Mr. Liszka supplied all sensitive and confidential information, are free to copy and sell it anywhere in the world as they please anytime after 1st June 2007. 29. The only chance in life was ruined by Mr. Liszka due to breach of trust, breach of Copyrights, breaches of Confidential Agreement and breach of self duty of care. 2 The application which accompanied the filing of the Statement of Claim sought, by way of interlocutory relief, the following: 1. The respondent to return all hard copies and documents which contains wholly or partially confidential information which is belong to the Applicant or to bring them to the Court on the proceeding day and hand them over. 2. The respondent to delete all confidential information held electronically in any medium in his possession and/or control. 3. The respondent to destroy all copies of any documents (including analysis, confirmations, reports and memorandum) which are based on wholly or partially of the confidentially information supplied by the Applicant, and delete all such documents held electronically in any medium in respondent's possession and/or control. 4. The respondent to provide a proof to the Court, a list showing to whom he delivered and supplied the Information Memorandum, 65 pages file, which contained full confidential and sensitive information of the Innovation Patent which was belong to the Applicant. 5. The respondent is to provide to the Court, with any proof of any Confidential Agreement Deed signed by any of the international potential manufacturers to whom the responded supplied full confidential and sensitive information of the Innovation Patent of the Applicant. 6. The respondent to provide to the Federal Court, the proof with all 32 international potential manufacturers as per contract to whom the respondent has been in contact and declared that worked was performed and charged the Applicant with the amount of $10.518.86AUD. 3 I am presently concerned with the application by Mr Benson for that interlocutory relief. I also heard, conjointly with that application for interlocutory relief, a Notice of Motion by the respondent seeking to strike out the Statement of Claim pursuant to O 20, r 2(1) of the Federal Court Rules. 4 That rule provides as follows: 2(1) Where in any proceeding it appears to the Court that in relation to the proceeding generally or in relation to any claim for relief in the proceeding - (a) no reasonable cause of action is disclosed; (b) the proceeding is frivolous or vexatious; or (c) the proceeding is an abuse of the process of the Court, the Court may order that the proceeding be stayed or dismissed generally or in relation to any claim for relief in the proceeding. 5 It is plain that Mr Benson, who is appearing for himself, misunderstands and misconceives the nature of interlocutory relief. The basis for his claims for interlocutory orders, as appears from the oral discussions with the Bench today, seems to be solely the assertion that he is the owner of the information in respect of which he seeks a return, or destruction. 6 In respect of what is sought in paragraphs 4 to 6 inclusive of the application, Mr Benson seeks that the respondent provide proof of various matters, namely: the list to whom an Information Memorandum was sent; proof of any confidential disclosure deed signed by any of the persons to whom it was sent; proof of the contact that the respondent had with 32 international potential manufacturers of the nasal device; and proof that the work done for those manufacturers by the respondent was work for which the applicant was charged $10,518.86. 7 It is plain that the misunderstanding of Mr Benson is the reason for the claims for interlocutory orders, which have no basis in any of the material put before the Court. I decline to grant any interlocutory relief and the application for interlocutory relief is dismissed. 8 In relation to the Notice of Motion to strike out the proceeedings, it is apparent that the applicant's pleaded claims are in breach of the obligation to plead material facts which support a cause of action. 9 The requirements of a pleading in the Federal Court was considered by the High Court in Dare v Pulham (1982) 148 CLR 658 at 664 where Murphy, Wilson, Brennan, Deane and Dawson JJ identified the requirements of pleadings, saying: Pleadings and particulars have a number of number of functions: they furnish a statement of the case sufficiently clear to allow the other party a fair opportunity to meet it (Gould and Birbeck and Bacon v. Mount Oxide Mines Ltd. (in liq) (1916) 22 C.L.R 490, at p. 517); they define the issues for decisions in the litigation and thereby enable the relevance and admissibility of evidence to be determined at the trial (Miller v. Cameron (1936) 54 C.L.R 572 at pp. 576-577); and they give a defendant an understanding of a plaintiff's claim in aid of the defendant's right to make a payment into court. Apart from cases where the parties choose to disregard the pleadings and to fight the case on issues chosen at the trial, the relief which may be granted to a party must be founded on the pleadings (Gould and Birbeck and Bacon (1916) 22 C.L.R., at pp. 517,518; Sri Mahant Govind Rao v. Sita Ram Kesho (1898) L.R. 25 Ind. App. 195, at p.207). 10 In respect of the nature of pleadings and their function, the Full Court of the Federal Court (Spender, Tamberlin, Bennett JJ) in Wride v Schulze [2004] FCAFC 216, after referring to the observations of the High Court in Dare v Pulham, said at [25]: Further, the pleadings must disclose a reasonable cause of action against the party against whom the cause of action is brought and must state all material facts necessary to establish that cause of action and the relief sought. A "reasonable cause of action" for this purpose means one which has some chance of success if regard is had only to the allegations and the pleading relied on by the applicant. 11 It is plain that the applicant's Statement of Claim contains much material which is argumentative, embarrassing or otherwise objectionable. Paragraphs 5 and 14 fall into that category. However, the fundamental defect in the Statement of Claim is that the obligation referred to by the Full Court in Wride v Schulze has not been met. 12 First, in relation to the alleged breach of the confidential Disclosure Deed, it is plain from the material that the deed was executed by Alchemy Innovation and Development Pty Ltd (Alchemy). Notwithstanding that the signature of Mr Liszka appears on the deed, he is not a party to it. He signed in his capacity as Director of Alchemy, and so that any obligation which the deed imposes was not imposed on Mr Liszka personally. Any breach of any obligation contained in that deed is, therefore, not actionable against Mr Liszka. 13 In relation to the Information Memorandum and what is said to be the breaches of confidential information that were brought about by the distribution of it by Alchemy to potential licensees of Mr Benson's nasal device, there is nothing which identifies the "confidential information and sensitive information" which is said to have been disclosed by Mr Liszka. 14 Notwithstanding that there is material in the Information Memorandum which is not contained in the patent specification, there has not been an identification or particularisation of any information which can arguably be considered confidential or sensitive, such as to impose an obligation of confidentiality and which would provide a cause of action for breach if disclosed. 15 I have looked at the 65 page Information Memorandum and there is nothing in that material which persuades me that there has been a disclosure of confidential information and sensitive information to either Mr Liszka or Alchemy, let alone any breach of any obligation of confidentiality in respect of that information. Moreover, in relation to what is alleged in paragraphs 11 and 12 of the Statement of Claim, the respondent swore, in his affidavit filed 5 July 2007, that on 13 December 2006: Alchemy completes IM and sends final draft to and requests that, Applicant approve the work. Applicant responds as follows in several emails "Hi Dan. Well, well done. Let me know about the outcome. Did you prepared for ResMed, right? In mean time will make that short presentation/demonstration of the product and I will send it to you ASAP. Loking [looking] forward to hearing from you. Regards Richard" & "Hi Dan I just sent it back to you. Looks excellent and ready to be sent forward. Hopefully we will get goos [good] response from it. Looking forward to hearing from you with big news at once. Thank you. Regards Richard" & "Excellent. Well done, finally" (Emphasis added) 16 Further, the respondent swears that on 14 December 2006: Alchemy sends the final copy of IM to Applicant for his records and Applicant responds as follows "Hi Dan. Great work, exceptional done. Approved. Regards Richard Benson" 17 Mr Liszka swears that on 20 December 2006, after these emails: Alchemy mails out of the IM to 32 companies and another one mailed on 21/12/2007. 18 It is impossible, in these circumstances, to conclude that there was not an authorisation of the disclosure of the contents of the Information Memorandum, constituted by Alchemy (or the respondent) sending it to the potential licensees of Mr Benson's nasal device, with Mr Benson's approval. 19 In relation to copyright, nothing in the material provides a basis for concluding that there has been a breach by Alchemy or Mr Liszka of any copyright in Mr Benson by the distribution of the Information Memorandum. 20 Further, no basis for the serious allegation of fraud has been made out. 21 In respect of all of the alleged causes of action, there has been no particularisation of the facts constituting those causes of action and also no allegation of loss or damage has been pleaded, this being a necessary ingredient of any of the claimed causes of action. 22 It is true that the Statement of Claim asserts, in paragraph 28: I can see a dream of a lifetime gone as anyone to whom Mr. Liszka supplied any sensitive and confidential information, are free to copy and sell it anywhere in the world as they please anytime after 1st June 2007. 23 And in paragraph 29: The only chance in life was ruined by Mr Liszka due to breach of trust, breach of Copyrights, breaches of Confidential Agreement and breach of self duty of care. 24 In my opinion, there is nothing in the material which alleges an arguable cause of action. 25 There is nothing on the material presently available to me which suggests that there is a cause of action which might be pleaded in the future. 26 However, my decision that the present statement of claim alleges no causes of action and is properly to be struck out pursuant to the provisions of O 20 r 2, is interlocutory in nature and does not preclude the applicant from bringing a proper application disclosing a proper cause of action in accordance with the requirements of pleading that the Federal Court Rules call for. The present pleading does not permit any such cause of action to be discerned. 27 I am satisfied that on this material it is proper to strike out the proceedings. As I have indicated, that does not preclude the bringing of another action, properly constituted, should that be possible, however, on the material before me, I doubt very much if that is the case. 28 For the reasons which I have given, the applicant's claim for interlocutory relief is dismissed, with costs, and I strike out the proceedings pursuant to O 20 r 2, with 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 Spender.