Global Brand Marketing Inc v YD Pty Limited - [2010] FCA 323 - FCA 2010 case summary — Zoe

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Global Brand Marketing Inc v YD Pty Limited

[2010] FCA 323

Federal Court of Australia|2010-04-01|Before: Streeton J

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At a glance

Source facts

Court

Federal Court of Australia

Decision date

2010-04-01

Before

Streeton J

Catchwords

PRACTICE - PLEADINGS - AMENDMENT - Application to amend defence and to join a party - whether leave should be granted - vacation of trial date - relevant principles

Source

Original judgment source is linked above.

Catchwords

PRACTICE - PLEADINGS - AMENDMENT - Application to amend defence and to join a party - whether leave should be granted - vacation of trial date - relevant principles

Judgment (49 paragraphs)

[1]

The applicants have leave to file and serve an amended statement of claim on or before 16 April 2010.
The respondents, including Pegasus Investments & Holdings Pty Ltd ("Pegasus"), file and serve any defences on or before 30 April 2010.
The first and second respondents have leave to file and serve a proposed further amended defence and cross claim in the form initialled by the judge, dated 1 April 2010 and placed on the court file.
The respondents have leave to join Pegasus.
Any party objecting to the pleading of any other party shall, on or before 14 May 2010, file and serve a notice identifying and setting out the basis of the objection or objections.
Any party objecting to the pleading of any other party shall, on or before 14 May 2010, file and serve a notice identifying and setting out the basis of the objection or objections.
The mediation fixed for 6 April 2010 is vacated.
The trial date fixed for 7 April 2010 is vacated.
The first and second respondents' notice to produce dated 30 March 2010 be stood over to such date as shall be refixed for the trial.
The first and second respondents pay the applicants and Pegasus' costs of the notice of motion dated 25 March 2010 and the applicants' costs thrown away by reason of the amendment.
A directions hearing is fixed for 21 May 2010.

[2]

[4]

introduction 1 By a notice of motion dated 25 March 2010, the first respondent and cross claimant, YD Pty Limited ("YD") and the second respondent, Mr Todd Trenear ("the respondents") seek: (a) leave to join Pegasus Investments & Holdings Pty Ltd ("Pegasus") as a respondent to the proceeding; (b) leave to file and serve an amended defence exhibited to the affidavit of Mr Khajaque Kortian sworn on 25 March 2010; and (c) that the applicants pay the costs of the notice of motion. 2 The respondents' applications for joinder and amendment were opposed by the applicants and Pegasus, the proposed third party. 3 The applications are supported by the affidavit of Khajaque Kortian sworn 25 March 2010. 4 The affidavit of Lisa Egan of the applicants' solicitors sworn 31 March 2010 was in opposition. 5 The issue for determination is whether the respondents should be permitted to amend (and as a consequence, join Pegasus) in circumstances where: 6.1 The respondents applied to amend and to join Pegasus on 25 March 2010. 6.2 The trial on the quantum of damages for infringement of the applicants' registered designs for footwear by, inter alia, the respondents' sale of infringing footwear is fixed for 7 April 2010. 6.3 The respondents consented to declarations made by Sundberg J on 1 April 2008 that they had infringed the applicants' registered designs. 6.4 The respondents, in about July 2009, discovered upon the return of subpoena to Pegasus, that Pegasus was one and the same as "Coastal" (their supplier of the infringing footwear) and had executed a deed of settlement dated 9 January 2007 with Global to settle its proceeding issued against Pegasus for infringement of registered designs, including those the subject of this proceeding. 6.5 The deed of settlement (which had previously been subject to confidentiality) contained a release expressed to extend to Pegasus' customers for claims arising from the subject matter of the proceeding. 6.7 Upon becoming aware of the deed of settlement, the respondents immediately entered into correspondence with the applicants' solicitors alleging that the release applied to them as customers of Pegasus and was relevant to the present proceeding; and seeking an explanation for the applicants' conduct in relation to the deed of settlement. 6.8 From August 2009 until its proposal to amend the pleading in March 2010, the respondents did not communicate with the applicants in relation to the claims based on the deed of settlement and release. 6.9 The respondents' explanation for their failure to seek leave to amend until now, despite their earlier awareness of the deed of settlement, was that counsel had only in the preceding week became aware of Lindgren J's decision in Airberg Pty Ltd v Cut Price Deli Pty ltd BC9803548 ("Airberg"), which, in essence, held that a third party not privy to, but apparently the subject of a release, may claim the benefit of the promise thereunder upon joinder of the promisee privy to the deed. Lindgren J contemplated that such joinder was procedural but observed that an unwilling promisee might be compulsorily joined as a trustee of the promise. The respondents considered that the Airberg decision provided a basis on which they could claim the benefit of the release, in contrast to the more limited principle recognised in Trident General Insurance Co Ltd v McNiece Bros Ltd (1988) 165 CLR 107 ("Trident v McNiece"). 6.10 The applicants submitted that the inclusion of the reference to "customers" in the release was a mistake and that if the respondents were granted leave to amend and to join Pegasus, they would also seek to amend to claim rectification of the deed of settlement, which would entail new pleadings, discovery and the calling of witnesses. 6.11 The applicants did not admit that either of the respondents was a customer of Pegasus. 6.12 Pegasus also opposed the application to join it, submitting that it was too late, that there was no proposed pleading against it and that its joinder was, in any event, unnecessary for the relief the respondents now claimed on the basis of the release. 6.13 While the applicants primarily opposed the application, initially both the applicants and the respondents expressed a preference for the quantum trial to proceed on 7 April 2010 should the respondents' applications be granted and the applicants plead rectification of the deed of settlement in reply. The applicants contended that the proceeding was old and that they had secured a number of overseas and interstate witnesses to give evidence at the quantum trial, whose future attendance and cooperation might be unavailable. 6.14 Subsequently, however, the applicants altered their position in relation to vacation of the quantum trial. They submitted that if the respondents were granted leave to amend, then the quantum trial should be vacated. The applicants contended that it would be unfair and prejudicial if the quantum trial proceeded as listed but the new matters were tried subsequently, either as separate questions or as part of the same trial, although heard later. 6.15 The respondents contended that the quantum trial should proceed as scheduled, and that the new matters, which were discrete and relatively confined, should be heard later, but as part of the same trial.

[29]

Correspondence re: Release 25 By a letter dated 20 November 2005 to Mr Kortian, Middletons, the applicants' solicitors, sought release from confidentiality to disclose the identity of the respondents' supplier. By a letter dated 30 November 2005, the respondents consented. 26 By letter to Mr Kortian dated 5 May 2009, Middletons informed Mr Kortian that the respondents' supplier, Coastline, was the trading name and "one and the same" as Pegasus against which the applicants had issued a Federal Court proceeding. That proceeding had settled, and the terms of settlement had been retrieved. The letter stated that proceeding had concerned the Carlos and Ecko designs and could be relevant. The applicants were prepared, in so far as possible, to make the confidential settlement terms available. The letter inquired as to the seven subpoenas the respondents had issued (returnable 13 May 2009) by order of Registrar Allaway. 27 By his letter to Middletons dated 28 July 2009, Mr Kortian referred to the terms of the deed of settlement and asserted that cl 7 of the deed operated as a complete release extending to customers of Pegasus. He stated that Middletons must have been aware of those matters while the applicants were pursuing the quantum claim against the respondents. The letter sought an urgent explanation for pressing the quantum claim notwithstanding the deed of settlement. Mr Kortian's letter to Middletons dated 10 August 2009 sought a response to his letter of 28 July. It also sought security for costs. The letter stated that the respondents had not been aware of the Pegasus proceedings or of the deed of settlement until they were produced under the subpoenas. It suggested that the applicants had sought to rely on the confidentiality terms of the deed to prevent the respondents from becoming aware of the release. The letter sought consent to disclosure of the deed to Mr Trenear in order to obtain further instructions. 28 By letter dated 11 August 2009, Middletons referred to a heads of agreement dated 18 October 2006 and maintained that it indicated that the release was never contemplated to apply to customers such as the applicants (against whom litigation was on foot at the time). The letter asserted that the inclusion of the term "customers" was a mistake and the deed was signed by applicants in the belief that it reflected the mediation and the heads of agreement. 29 The letter of Middletons dated 14 August 2009 refused security for costs and referred to the admission of infringement. It stated that Middletons had informed Mr Kortian by a letter dated 3 July 2006 in some detail about the Pegasus proceeding, but asserted that the applicants were neither obliged nor entitled to disclose the heads of agreement or deed of settlement, and were, in any event, unaware of the deed's effect on the proceeding against YD and Mr Trenear. 30 By an email dated 24 March 2010, Mr Kortian sought consent to file the third further amended defence and cross claim. He stated that the applicants had been aware of the issue arising from the release, so they would not be prejudiced. 31 By a letter dated 24 March 2010, Middletons stated that it did not consent to the proposed amended defence. Middletons referred to its letter dated 11 August 2009 and stated that until the 17 March email, it had not heard from Mr Kortian since August 2009.

[41]

39 In AON, the primary judge permitted a party to make substantial amendments on the third day of trial. The amendments involved allegations of breaches of duty of care, negligence, misleading and deceptive conduct and breaches of the ASIC Act 2001 (Cth). No explanation of why it was necessary to seek leave to amend was provided. 40 In AON, the plurality (Gummow, Hayne, Crennan, Kiefel and Bell JJ) stated: An application for leave to amend a pleading should not be approached on the basis that a party is entitled to raise an arguable claim, subject to payment of costs by way of compensation. There is no such entitlement. All matters relevant to the exercise of the power to permit amendment should be weighed. The fact of substantial delay and wasted costs, the concerns of case management, will assume importance on an application for leave to amend. [111] 41 Their Honours also stated that: The salient features of the application for leave to amend in this case were, as Lander J pointed out in his dissent, that the amendments sought to introduce new and substantial claims; they were so substantial as to require Aon, in effect, to defend again, as from the beginning; the application was brought during the time set for the trial of the action and would result in the abandonment of the trial if granted; and there was a question whether costs, even indemnity costs, would overcome the prejudicial effects on Aon if the litigation to this point was not productive of an outcome. [104] 42 The plurality also emphasised that "given…the effects associated with delay" [216] it was incumbent on the party seeking to amend to "tender an explanation as to why the matter had been allowed to proceed to trial in its existing form. It needed to explain why it was seeking leave to amend at the time of the trial…[The applicant's] solicitor could have said that [it] only realised the potential for claim as a result of confidential communications, but he made no such claim… This evidence was no basis for a finding that there had been an oversight and that [the applicant's] lawyers had not appreciated [the respondent's] possible involvement until the mediation talks" [216] 43 In Genworth Financial Mortgage Insurance Pty Ltd v Peter Clisdell Pty Ltd BC 200908259, Jagot J stated: Inevitably my attention has been drawn to the recent decision of the High Court in Aon Risk Services Australia Limited v Australian National University [2009] HCA 27 (Aon), particularly at [5], [35] and [96]-[103]. The respondents have noted that there are many differences between the facts in Aon and the present case. First, this is an application to amend a defence by a defendant, not, as in Aon, an application to amend by an applicant which already had the advantage of consent orders reached through a process of mediation. Second, the Federal Court Rules, specifically Order 13 r 2, are different from the rules of the ACT Supreme Court (Court Procedure Rules 2006 (ACT)), particularly the inclusion therein of the requirement in r 21(1) that in civil proceedings there be a just resolution of the real issues with minimum delay and expense. Third, in Aon, it seems that there was no adequate explanation for the delay in the application to amend, and indeed the delay may have been a tactical decision. The same certainly could not be said in the present case. Finally, in Aon, the majority of the High Court noted at [102] that even where r 21 of the Court Procedure Rules, or a rule to that effect, applied, not every application for an amendment should be refused because it will involve the waste of some cost, and some degree of delay. Factors such as the nature and importance of the amendment to the party applying cannot be overlooked. Hence, as the majority recognised at [102]:

[49]

50 The respondents submitted that it would be unfair to shut out the proposed amendment when the applicants had long known of the deed of settlement and the arguments based on the release. The timing of the application to amend was satisfactorily explained and in contrast to AON, the proposed amended defence was served on 25 March 2010, three weeks prior to the scheduled commencement of the quantum trial. Further, the amendment raised discrete questions and unlike AON, did not require the applicants substantially to re‑litigate. The quantum trial could proceed as part of a "split" trial. 51 Although the respondents were alert to the issue much earlier, they have sought to amend a late point, jeopardising the quantum trial date in a matter which should be concluded. Nevertheless, it is clear that the applicants were equally aware, at an earlier date, of the arguments now sought to be pleaded. The respondents' explanation for the timing of the application to amend is counsel's recent awareness of the Airberg decision. I accept that explanation. 52 Despite their initial preference, the applicants ultimately resisted the option of proceeding with the scheduled quantum trial if the application for leave is granted. They submitted that although the relevant quantum witnesses would need to be called in any event, some witnesses might need to be recalled in relation to the new matters. Further, it would be unfair to require the applicants to examine and cross‑examine witnesses in a split trial and in the context of the uncertainties generated by the respondents' proposed amendments. 53 The respondent sought to proceed with the scheduled quantum trial. It was not readily apparent that there were insuperable obstacles to such a course, which would have minimised inconvenience and the waste of time and costs. I concluded, however, that it should not be imposed on the applicants. 54 The vacation of the quantum trial therefore became a necessary incident of granting the respondents' applications. 55 In all the unusual circumstances of this case, including: the existence of the release, its apparent relevance as the basis for an arguable claim; its relatively circumscribed scope; the respondents' belated knowledge of the deed and their conduct thereafter; the impact of the decision in Airberg only recently appreciated by the respondents' counsel; the applicants' preference that the quantum trial should not proceed if the amendments be allowed; the fact that although the proceeding has been long on foot, there has already been one trial and the parties have apparently acquiesced in various stages of non‑progression: in my opinion, weighing all relevant matters, including the nature and importance of the amendment to the respondents, notwithstanding the delay, wasted costs and prejudice to the applicants (which may not be wholly compensable by a costs order) the respondents' applications to amend and to join Pegasus should be allowed. 56 Late on the day of the hearing the application (31 March 2010), the respondents filed and served a further amended version of the proposed pleading. 57 On the following day (1 April 2010), whilst these reasons were in preparation, the applicants sought to be heard in relation to the new proposed pleading. As it is necessary to decide expeditiously whether the quantum trial should be vacated, I do so on the basis that the respondents will be granted leave to file an amended defence, which broadly pleads the release issue, without prejudice to the right of other parties to be heard on its precise form. I certify that the preceding fifty-seven (57) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Dodds-Streeton.

Global Brand Marketing Inc v YD Pty Limited

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Judgment (49 paragraphs)

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Legislation Cited (5)

Cases Cited (7)

Cited By (1)