Dollinger Filtration Ltd v Laminar Air Flow Pty Ltd

Federal Court of Australia|2021-07-16|Before: Stewart J

The respondent has leave to amend its further amended defence in the form of the draft second further amended defence exhibited to the affidavit of John Fasha filed on 16 July 2021, save for the amendment to paragraph 50 which is refused.
The respondent to file the second further amended defence in accordance with order 1 by 19 July 2021
The applicants to file any amended reply in consequence of the second further amended defence by 20 July 2021.
The respondent to pay the costs thrown away by the amendments.
The respondent to pay the costs of the application to amend. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

Introduction 1 Shortly before the trial, the respondent sought to make extensive amendments to its further amended defence (FAD). For the most part, those amendments delete a defence, or defences, previously advanced and were unsurprisingly not opposed by the applicants. Two of the amendments were, however, opposed. Although they interrelate, during the hearing the applicants accepted that one of the amendments on its own caused them no prejudice and no longer opposed it, with the result that there was really only one amendment that was opposed. I will identify it shortly. 2 Save for that one opposed amendment which I refused, at the end of the interlocutory hearing I made orders allowing the amendments. These are my reasons for refusing the proposed amendment. 3 This case concerns the long history of ownership, use and registration of two Australian trademarks referred to as the VOKES marks. The earlier mark is referred to as the 414 mark and the later mark is referred to as the 505 mark. 4 The central contention advanced by the applicants is that the respondent is wrongly listed in the Register of Trade Marks as the registered owner of each of the VOKES marks. In that respect, it is contended that the first applicant (Dollinger) is the owner of those marks having acquired ownership from SPX Vokes Ltd in 2008 to whom the second applicant (Vokes UK) had assigned them in 2007. A critical issue is whether Vokes UK owned the 505 mark at the time of the first assignment. Obviously, if it did not own it then it was not able to assign it. 5 A fact of significance in the history of the 505 mark is the identity of the company that filed the original application for the registration of that mark with the Registrar of Trade Marks on 28 July 1971 in the name of "Vokes Ltd". It is not necessary to identify the detail of that history beyond what I deal with below from the relevant pleadings.

The disputed amendment 6 As the pleadings now stand, the applicants in paragraph 1A of the amended statement of claim (ASOC) plead that Vokes UK is and has been since at least 1959 a company incorporated pursuant to the laws of the United Kingdom. 7 The respondent in paragraph 1A of the FAD denies the allegations in paragraph 1A and pleads further that: a. Vokes Limited (Company number 00314592) (now "DCE Group Limited") (Vokes Group) was incorporated on 27 May 1936 pursuant to the laws of the United Kingdom in the name of "Vokes Limited" and is and has been since that date, a company incorporated pursuant to the laws of the United Kingdom. Vokes Group changed its name on 30 September 1960 to "Vokes Group Limited". b. Vokes Limited (Company number 00671542) (Vokes UK) was incorporated on 30 September 1960 in the name "Vokes Limited" and is, and has been since that date, a company incorporated pursuant to the laws of the United Kingdom. 8 In their reply, the applicants admit the matters pleaded in paragraph 1A(a) and (b) of the FAD and add that the 505 mark was filed in the name of Vokes Ltd at a time when Vokes UK had that name, that Vokes UK was formed to, and did, conduct the business that had hitherto been conducted by Vokes Group and that Vokes Group transferred its interest in the business and in the 414 mark to Vokes UK. The reply then pleads that if the 414 mark was not transferred by Vokes Group to Vokes UK then the 414 mark is not owned by Vokes UK or the respondent. 9 The applicants in paragraph 4 of the ASOC plead that between 1959 and 1983 Vokes UK filed applications for the registration of the VOKES marks and became registered as the owner of the VOKES marks. 10 In response to that paragraph, the respondent in paragraph 4 of the FAD refers to and repeats paragraph 1A of the FAD and then: a. admits that an entity called "Vokes Ltd" filed an application for Australian trade mark number 152414 (414 Mark) on 23 January 1959 and "Vokes Ltd" was registered as the owner of the 414 Mark on this date but that a company number was not specified; b. admits that an entity called "Vokes Ltd" filed an application for Australian trade mark number 250505 (505 Mark) on 28 July 1971 and became registered as the owner of the 505 Mark on that date but that a company number was not specified; c. otherwise denies each and every allegation in paragraph 4, and says further that: A. Vokes UK was not incorporated as at 23 January 1959; … 11 The applicant's proposed amendment that was initially opposed and subsequently not opposed is to introduce a further sub-sub-paragraph to paragraph 4(c) of the FAD as follows: F. the registration of the 505 Mark was subject to a condition that that registration was "associated" with the 414 Mark, within the meaning of ss 36-37 of the Trade Marks Act 1955 (Cth), during the period in which that Act was in force. 12 Turning now to the disputed amendment, it appears underlined as an addition to paragraph 50 of the FAD as follows: 50. In the alternative to paragraph 4 above, on 28 July 1971, Vokes UK filed a trade mark application for what was to become the 505 Mark, and the 505 Mark was subsequently registered taking effect from that date. 13 The applicants admitted that paragraph (in its unamended form) in paragraph 8A of their reply. 14 The significance of the proposed insertion in paragraph 50 of the FAD is that the respondent wishes to contend at trial, as indeed it has done in its written opening submissions, that "the 505 Mark was applied for by the original 'Vokes Limited', because of the association between the 414 Mark and 505 Mark under s 36(1) of the Trade Marks Act 1955 (Cth)." The applicants object to that contention on the basis that it is contrary to the respondent's pleaded case, particularly in paragraph 50 of the FAD. It is that objection that led to the respondent applying for the amendment. 15 The respondent submits that in paragraphs 1A and 4 of the FAD it pleads only that the application for the registration of the 505 Mark in 1971 was done in the name of "Vokes Ltd" and not that that was necessarily Vokes UK even though on its pleading at that time the only company that had the name "Vokes Ltd" was what is now referred to as Vokes UK. It says that the effect of "otherwise den[ying] each and every allegation in paragraph 4" of the ASOC is to deny that Vokes UK filed the application for registration of the 505 Mark. 16 On that basis, the respondent says that the positive averment in paragraph 50 of the FAD that Vokes UK indeed filed the 505 mark application is inconsistent with what is pleaded in paragraph 4 of the FAD and therefore contrary to r 16.06 of the Federal Court Rules 2011 (Cth) which provides that a party must not plead inconsistent allegations of fact or inconsistent grounds or claims except as alternatives. It submits that the proposed amendment saves it from contravention of that rule. 17 Against that approach is the contention that even if paragraphs 1A and 4 on their own are not properly understood as pleading that it was Vokes UK that filed the 505 mark application, the express pleading to that effect in paragraph 50 clears up any ambiguity. 18 On any view, the pleading in paragraph 50 that Vokes UK filed the application for the 505 mark is, on its face, an admission or a pleading "that benefits another party", namely the applicants, within the meaning of r 26.11(2) of the Rules. Since the applicants do not consent to the amendment, the respondent requires leave to make the amendment in respect of which special requirements apply.

The applicable principles 19 I recently had cause in Selvaratnam v St George - A Division of Westpac Banking Corporation (No 2) [2021] FCA 486 at [27] to identify the applicable principles with regard to whether leave to withdraw an admission or other pleading that benefits another party should be granted. They are the following, noting that for simplicity I will refer only to the withdrawal of an admission: (1) The court has a broad discretion to weigh up all matters with the overall question being to ensure that there is a fair trial: Jeans v Commonwealth Bank of Australia Ltd [2003] FCAFC 309; 204 ALR 327 at [18] and [23] per Hill, Madgwick and Conti JJ. (2) The court will require an explanation for the making of the admission which is now sought to be withdrawn; the explanation must be a sensible one based on evidence of a solid and substantial character: Celestino v Celestino [1990] FCA 449 at 8 [12] per Spender, Miles and von Doussa JJ (noting that the AustLII MNC for this case is [1990] FCA 299). (3) The object of the courts is to decide the rights of the parties, and not to punish them for mistakes they make in the conduct of their cases; if the mistake is not fraudulent or intended to overreach, can be corrected without injustice to the other party, and if not corrected will not lead to a decision on the real matters in controversy, it should generally be corrected: Celestino at 7 [10]. (4) The overriding consideration is the interests of justice: Australian Competition and Consumer Commission v Construction, Forestry, Mining and Energy Union [2007] FCA 1390 at [4] per Finn J. (5) The court will not lightly permit a party to withdraw an admission where the other party has acted to its detriment on the admission or is otherwise prejudiced by the withdrawal; if the other party has in good faith relied on the admission to its detriment so as to give rise to an estoppel the court will not permit the admission to be withdrawn: Celestino at 10 [14]. 20 The applicants place particular reliance on a statement of Lord Bridge of Harwich in Langdale v Danby [1982] 1 WLR 1123 at 1134 (cited in Celestino at 8 [12]) to the effect that the court, and other parties to litigation, are entitled to make the assumption that counsel or solicitors who make an admission in the course of the conduct of litigation whether in pleadings or in correspondence have satisfied themselves that the admission was, on their client's version of the facts, a proper admission to make. It is for that reason, as identified in the summary of principles above, that where leave to withdraw an admission is sought a court will require an explanation for the making of the admission, which explanation must be a sensible one based on evidence of a solid and substantial character. 21 Even aside from the withdrawal of a pleading that is to the benefit of the applicants, the respondent would require leave to amend the FAD under r 16.53 of the Rules because r 16.51 does not apply. In those circumstances, an additional set of considerations apply. With reference to Aon Risk Services Australia Ltd v Australian National University [2009] HCA 27; 239 CLR 175 at [5], [30], [71], [93], [98] and [102], those include the following: (1) prejudice to another party that cannot be adequately compensated by an award of costs, which would include the inevitable prejudice of unnecessary delay where that exists; (2) inefficiencies in the use of the court as a publicly funded resource arising from the vacation or adjournment of trials; (3) the need to maintain public confidence in the judicial system, which has a potential to be lost where a court is seen to accede to applications made without adequate explanation or justification; (4) the objective of doing justice between the parties; (5) the objective that the pleadings identify the "real" issues between the parties; (6) the overriding purpose of the civil practice and procedure provisions in s 37M of the Federal Court of Australia Act 1976 (Cth), namely to facilitate the just resolution of disputes according to law and as quickly, inexpensively and efficiently as possible; and (7) the nature and the importance of the amendment to the party that is seeking it.

The evidence 22 The respondent relies on the affidavit of its solicitor, John Fasha. Relevantly, Mr Fasha gave the following evidence: (1) The respondent intends to argue at trial that the 505 Mark was applied for by the original "Vokes Ltd" because of the association between the 414 mark and 505 mark under s 36(1) of the Trade Marks Act 1955 (Cth). (2) The respondent denies the applicants' contention that that submission is contrary to the respondent's pleaded case on the basis that it is open on paragraph 4 of the FAD and that to the extent that paragraph 50 of the FAD is an obstacle: (a) It is contrary to r 16.06 as it is inconsistent with paragraph 4; and (b) That is cured by making it an alternative in the way in which the proposed amendment does. 23 There is nothing in Mr Fasha's affidavit to explain how, or on what basis, it came to be pleaded in the FAD by, amongst others, senior counsel, that Vokes UK applied for the registration of the 515 mark or on what basis it is now said that that was an error. 24 The applicants rely on the affidavit of their solicitor, Jennifer McEwan, whose evidence includes the following: (1) By letter dated 5 April 2019, the respondent gave further and better particulars to its defence which included saying that there was a written assignment of both the 414 and 505 marks from Vokes UK to BTR Industrial Holdings Pty Ltd in or around August 1998. That is consistent with the averment in paragraph 50 of the FAD that the 505 mark was applied for by Vokes UK because it would not otherwise have been in a position to assign that mark in 1998. (2) In the long history of the dispute between the parties about the VOKES marks, the respondent has on several identified occasions since 2015 accepted that both marks were registered in the name of Vokes UK. (3) The applicants have acted to their detriment in reliance on paragraph 50 of the FAD and what is stated in the further and better particulars by preparing their evidence on the basis that the respondent did not contest that Vokes UK filed the application for the 505 mark. It is said that it would prejudice the applicants if the respondent were permitted to withdraw the admission on the eve of trial, particularly because the matter in question relates to historical events involving overseas-based entities dating back at least to the early 1970s.

Consideration 25 In my view paragraphs 1A and 4 of the FAD are ambiguous with regard to whether they accept or deny that Vokes UK applied for the 505 mark in 1971. Given that it is pleaded in paragraph 1A that at that time there was only one company with the name "Vokes Ltd" and that that company was Vokes UK, it is a quite natural reading of paragraph 4 that it was Vokes UK that applied for the 505 mark in 1971. However, I accept that on another reading paragraph 4 says that the 505 mark was applied for in the name of "Vokes Ltd" and the residual denial has the effect of denying the assertion in the ASOC that it was Vokes UK that made the application. Hence the ambiguity. 26 Paragraph 50, on the other hand, admits of no ambiguity. In expressly stating that Vokes UK applied for the 505 mark, it clears up any ambiguity that there might be in paragraph 4. In the circumstances, in my view paragraph 50 is not inconsistent with paragraph 4 and r 16.06 accordingly has no application. 27 The principal factors weighing against allowing the amendment are, firstly, that there is no explanation of how or on what basis the relevant averment came to be pleaded in the first place or on what basis it is now sought to resile from that, and, secondly, the prejudice to the applicants if the amendment were to be allowed. 28 Insofar as the first factor is concerned, it is relevant that the respondent has over a long period of time accepted that Vokes UK applied for the 505 mark and that that is consistent with its further and better particulars. That all suggests that there was a proper evidential basis to the pleading of the relevant fact - which is in any event to be assumed in the absence of evidence of it having been done in error. There is, however, no identified evidential basis to resile from that pleading. The only suggested basis is that since, on the respondent's version, in 1971 the 414 mark was owned by the original Vokes Ltd company, i.e., Vokes Group, it is to be inferred that the 505 mark was applied for by the same company, even though it had a different name at that time, because of the condition of registration of the 505 mark that the two marks were "associated" within the meaning of s 36(1) of the 1955 Act. 29 In that regard, that section allowed the registration of a mark that was substantially identical to another mark which was already registered only if, amongst other requirements, the registration was "in the name of the same proprietor." The object was to ensure that confusingly similar marks would remain in the same ownership, which included, by s 37, providing that associated trade marks were assignable or transmissible only as a whole and not separately. See Caterpillar Loader Hire (Holdings) Pty Ltd v Caterpillar Tractor Co [1983] FCA 143; 77 FLR 139 at 151 per Lockhart J. 30 The difficulty for the respondent is that the system of registration of trade marks under the 1955 Act and under the Trade Marks Act 1995 (Cth) (TMA) is not a Torrens-type system of ownership by registration, but is rather a system of registration of ownership: Accor Australia & New Zealand Hospitality Pty Ltd v Liv Pty Ltd [2017] FCAFC 56; 345 ALR 205 at [170] per Greenwood, Besanko and Katzmann JJ. Thus, what was reflected on the Register on the acceptance of the application for registration of the 505 mark in 1971 did not necessarily record who was actually the owner of that mark. Thus, even if the 414 mark was owned by Vokes Group in 1971 and the marks were associated within the meaning of s 36 of the 1995 Act, it does not necessarily mean that the registration for the 505 mark was not made by Vokes UK, or that Vokes UK was not registered as the owner. 31 The point is that the inference the respondent submits should be drawn with regard to which company was the "Vokes Ltd" that filed the application for registration in 1971 and was then registered as the owner of the 505 mark by virtue of the association of the VOKES marks within the meaning of s 36 of the 1995 Act, is an insufficient evidential basis to demonstrate that the admission in paragraph 50 of the FAD is an error that should be corrected. 32 Insofar as the second factor is concerned, the proposed amendment was notified in the week before the trial, which is listed for seven days and has been so listed for a long time. For the applicants to have to investigate, at this late stage, who instructed the solicitors in 1971 to apply for the registration of the 505 mark would be very difficult and almost certainly impossible before the start of the trial. The relevant events occurred 50 years ago. All available documents from IP Australia with regard to that registration have already been obtained. I infer that they do not answer the question of who filed the application other than that it was in the name of "Vokes Ltd" because if they did one or other side of the case would have adduced the relevant document(s) in support of their position on the amendment. 33 To investigate which company, as a matter of fact, gave the instructions to the solicitors and used the name Vokes Ltd for the purpose of the application would involve, it seems to me, at least two lines of inquiry. One would be with the solicitors at the time, Callinan & Newton of Richmond, Victoria. Tracking down any documents, if they exist and, if they do not, which after this period of time would seem most likely, the people involved, would likely be a long and involved process. The other line of inquiry would be in the Vokes UK and Vokes Group companies, which would likely be equally long and involved and possibly fruitless. 34 Given the proximity of the trial, it would be impossible to exhaust those enquiries in time for the commencement of the trial. The AON factors identified above count against vacating the trial dates to accommodate such enquiries. 35 The respondent advances a number of contentions in favour of allowing the amendment. I will address them in summary form. 36 The respondent submits that by pleading in paragraph 2(a) of their reply that they "say" that the 505 mark was filed in the name of Vokes Ltd at a time that Vokes UK was called by the name "Vokes Ltd", the applicants have taken on the burden of proving that fact with the result that the amendment does not change anything for them. I reject that submission for two reasons. First, paragraph 2(a) of the reply does not aver the same fact that paragraph 50 of the FAD avers, namely that it was Vokes UK that applied for registration of the 505 mark. Secondly, in seeking to establish any particular fact at trial a party is entitled to rely on an admitted fact without the need to adduce evidence to prove it. As explained above, the combination of paragraphs 1A, 4 and 50 of the FAD in response to paragraph 4 of the ASOC has the effect of admitting that it was Vokes UK that applied for registration of the 505 mark. That is why leave to withdraw the admission, or the pleading in the applicants' favour, is required. 37 The respondent submits that the applicants have already investigated the history of the application for registration of the 515 mark as demonstrated by one of their witnesses exhibiting the relevant file from IP Australia to her affidavit. On that basis, the respondent submits that there is no prejudice to the applicants by the proposed amendment. I do not accept that submission because that file, presumably, for the reasons already given, does not identify with any certainty which Vokes Ltd company applied for the mark. It is only once that question is put in issue, which is what the amendment seeks to do, that the applicants will have any need to investigate it. 38 The respondent submits that the allegation in paragraph 50 of the FAD is but one allegation within a series of allegations in paragraphs 43-61 that form the factual basis for alternative positions, or defences, taken by the respondent; namely, that if Vokes UK can establish its previous ownership of the 414 and 505 marks, then the respondent relies on the court's discretion in ss 85 and 88 of the TMA, estoppel, abandonment, laches, acquiescence and unconscionability. In that regard, the respondent points to 12 different paragraphs of the FAD that refer to and in that way incorporate paragraphs 43-61. On that basis, the respondent submits that paragraph 50 is already pleaded in the alternative and all that the amendment seeks to do is to make that clearer. 39 The difficulty with the respondent's submission is that the first of the 12 times that paragraph 50 of the FAD is referred to in the FAD is not an alternative pleading. Paragraph 29 of the ASOC pleads that by reason of various matters already pleaded, the name of the registered owner presently listed in the Register in respect of each of the VOKES marks is an error in each such entry in the Register within the meaning of s 85 of the TMA and that the name Vokes UK was wrongly omitted from the Register in respect of the VOKES marks within the meaning of that section. 40 Paragraph 29 of the FAD pleads to that paragraph as follows: 29. It denies the allegations in paragraph 29 and says further: a. repeats and relies on the matters alleged in paragraphs 25F and 25G of this Defence; b. for the reasons as pleaded at paragraphs 34-60 below, the section 85 discretion is not enlivened (Anchorage Capital Partners Pty Limited v ACPA Pty Ltd [2018] FCAFC 6); c. or in the alternative, on the ground that the Vokes Trade Marks, if in the hands of the Applicants, are liable to deceive or confuse pursuant to section 89(1)(b) of the Act. 41 It is paragraph 29(b) that refers to and in that way incorporates paragraph 50 of the FAD which it pleads as a specific and primary defence to the applicants' paragraph 29. The series of paragraphs 43-61 are in a section of the FAD headed "Legal Ownership of the Trade Marks". They set out a detailed chronology of the respondent's case with regard to the ownership and registration of the marks. That chronology is relied on, at least in paragraph 29(b), as a primary defensive position adopted by the respondent. It is not an alternative position. 42 The respondent submits that it is in the interests of justice for the case to be determined on its merits, and that the particular submission with regard to the merits that the respondent wishes to make, i.e., that the association between the two marks means that it was not Vokes UK that filed the application for the registration of the 505 mark, should not be foreclosed by what it describes as "a technical pleading point." As already explained, the difficulty with that submission is that paragraph 50 pleads a specific point of fact which has been, in effect, common ground between the parties for a long period of time and the applicants have prepared their evidence on that basis. It would not be in the interests of justice for the applicants to have to try and prove that point at this late stage given the passage of 50 years since the relevant events and the proximity of the trial.

Disposition 43 For the reasons given above, in my view it is not in the interests of justice to allow the proposed amendment. 44 Although the applicants have indicated that they seek costs orders which would cover the costs of all the effort that they have been put to in dealing with and responding to the evidence that the respondent has filed in support of the parts of its defence which by the undisputed amendments it has now abandoned, I decided that I would not deal with those costs at this stage. They are reserved. I will only deal with the conventional costs that are thrown away by an amendment to a pleading. Those are costs dealing with wasted pleadings and consequential pleadings, not with evidence. 45 There is no reason why the respondent should not have to pay the conventional costs thrown away by the amendments to its FAD. 46 Insofar as the costs of the application to amend are concerned, the respondent submits that since there were two amendments that were initially opposed and which necessitated the application, namely the insertion of paragraph 4(c)(F) and the insertion in paragraph 50, and it lost on only one of those, that should mean that it should not have to pay the costs, or all of the costs, of the application. 47 I reject that submission because it was always made clear by the applicants that their opposition was in substance to the point about paragraph 50, and the opposition to paragraph 4(c)(F) was based on what was said to be the relationship between those two paragraphs. It was during the interlocutory hearing that the applicants accepted that the insertion of paragraph 4(c)(F) did not contribute to the prejudice created by paragraph 50, but the point of substance remained, being the prejudice created by paragraph 50. There was thus really always only one substantial point of contention in the application, and on that the respondent lost. It was not suggested that if the respondent had not sought to amend paragraph 50 that the applicants would have maintained their opposition to paragraph 4(c)(F) such as to still require the application for leave to amend. 48 For those reasons, the respondent must pay the costs of the application for leave to amend the FAD. I certify that the preceding forty-eight (48) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Stewart.

Federal Court Rules 2011(Cth)rr 16.06, 16.51, 16.53, 26.11

Trade Marks Act 1955(Cth)ss 36, 37

Trade Marks Act 1995(Cth)ss 85, 88

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