The submissions of the parties
4 The applicants submitted their application to amend should be allowed because the pleading as proposed to be amended was satisfactory, there was no disentitling delay or other discretionary factor, and it would meet the statutory requirements of determining all matters in controversy and avoiding multiplicity of proceedings, referring to s 22 of the Federal Court of Australia Act 1976 (Cth). The applicants submitted that if the amendments were allowed, the Court should grant leave to serve the second and third respondents in Singapore in accordance with r 10.43.
5 The parties agreed that the relevant principles for leave to amend were set out by Burley J in University of Sydney v ObjectiVision Pty Ltd [2016] FCA 1199, as follows:
62. The onus is on the party seeking leave to amend to persuade the Court that such leave should be given: Dye v Commonwealth Securities Limited (No 2) [2010] FCAFC 118; (2010) 63 AILR 101 at [17].
63. The principles articulated by the High Court in Aon Risk Services Australia Limited v Australian National University (2009) 239 CLR 175 (Aon) apply to matters in this Court: Cement Australia Pty Ltd v Australian Competition and Consumer Commission (2010) 187 FCR 261 (Cement Australia) at [43]. A Full Court of this Court in Tamaya Resources Limited (in liq) v Deloitte Touche Tohmatsu (A Firm) [2016] FCAFC 2; 332 ALR 199 at [125] (Tamaya) recently approved the following statement of the primary judge (Gleeson J at [127]) of relevant matters that the Court is to consider:
(1) The nature and importance of the amendment to the party applying for it: Aon at [102];
(2) The extent of the delay and the costs associated with the amendment: Aon at [102];
(3) The prejudice that might be assumed to follow from the amendment, and that which is shown: Aon at [5], [100] and [102];
(4) The explanation for any delay in applying for that leave: Aon at [108];
(5) The parties' choices to date in the litigation and the consequences of those choices: Aon at [112] and Luck v Chief Executive Officer of Centrelink [2015] FCAFC 75 (Luck) at [44];
(6) The detriment to other litigants in the Court: Aon at [93], [95] and [114] and Luck at [44]; and
(7) Potential loss of public confidence in the legal system which can arise where a court is seen to accede to applications made without adequate explanation or justification: Aon at [5], [24] and [30].
64 The weight to be given to the considerations identified in Aon, individually and in combination, and the outcome of the balancing process, may vary depending on the facts in the individual case: Cement Australia at [51].
65 Parties must have a sufficient opportunity to identify the issues they seek to agitate: Aon at [94], [98] and [112]. …
…
67 Significantly, the Court will consider whether the proposed amendments disclose a reasonable cause of action, or whether they have a tendency to cause prejudice, embarrassment or delay in the proceeding: Research in Motion Ltd v Samsung Electronics Australia Pty Limited (2009) 176 FCR 66 at [21] to [22]; Wotton at [59].
6 The applicants submitted that the proposed amendments were significant to the applicants' case, and would significantly add to the relief available to the applicants in vindication of their rights if successful at trial. In essence, the applicants submitted, the amendments added claims of misuse of confidential information to the patent infringement claims; and asserted those claims against the present respondent and:
(a) Safe Barriers Pte Ltd (Singapore company), the company responsible for the design and development of the Defender Barrier 70 product range imported and sold by the present respondent, alleged by the applicants to infringe the patent in suit, and to have been designed with the benefit of the applicants' confidential information;
(b) Mr Russell Hood, a director of the present respondent, a former director of the Singapore company and a former employee of the second applicant; alleged by the applicants to have breached his employment contract, an equitable duty of confidence, s 182 of the Corporations Act 2001 (Cth), authorised the infringement of the patent in suit and to have been a joint tortfeasor in that infringement;
(c) Mr David Moule, a director and the company secretary of the present respondent, a former employee of the second applicant, alleged by the applicants to have committed the same wrongs as Mr Hood.
7 The applicants submitted there was no disentitling delay. The relevant period was from the start of the proceedings until May 2019 when the proposed amendments were foreshadowed and a timetable ordered for the application to amend the pleadings. The applicants submitted that the time between the making of a mediation order and the mediation itself (about three months) should not be held against them. They submitted that the evidence showed that they thought they did not have enough information to bring the proposed additional claims at the commencement of the proceedings. As the present application demonstrated, the applicants submitted, they now considered that they did have enough information, including because of documents produced on discovery that the applicants maintained were not publicly available. That was the explanation for the timing of the application and in those circumstances, the applicants submitted, the passage of time was not undue. No evidence had been filed in the proceeding. No hearing date for the trial had been set. There was no prejudice to the present respondent arising from the timing of the application. The mere fact of delay was not a reason to refuse leave to amend, the applicants submitted.
8 The applicants submitted there was no other unfair prejudice to the respondent. The present respondent identified what it regarded as deficiencies in the proposed amended pleading but, the applicants submitted, none of these should cause the application to be refused. The applicants summarised those issues, and their answers, as follows:
(a) The identity of clients and suppliers ([34], [36], [59]). As to suppliers, the applicants submitted they included at least Holmes Solutions Limited Partnership and Dynamic Traffic Systems (HK) Ltd. As to clients, they included at least Fulton Hogan Ltd. The applicants stated that they did not wish to name further clients in a publicly-accessible pleading or submission due to commercial sensitivities.
(b) Alleged lack of clarity as to how pleaded conduct involves a breach of particular contractual terms or a duty of confidence ([35], [37], [41], [60], [72]). The applicants submitted this complaint was misconceived. The conduct had been pleaded. The contractual terms had been pleaded. The applicants submitted that it was wholly conventional to plead in a conclusory way that the conduct involved a breach. If the present respondent (or additional respondents) disagreed, they would deny the allegation.
(c) Identification of confidential information ([38], [56]). The applicants submitted that the paragraphs adequately pleaded the information they alleged to be confidential. The complaint about the particularised documents, which the applicants submitted had now been produced to the respondent, was without merit.
(d) Allegedly conclusory and unparticularised allegations ([40], [59]). The allegations in these paragraphs were clear, the applicants submitted. The respondent's complaints about these paragraphs related to matters of detail which, if the allegations were true, would be within the respondent's (or additional respondents') knowledge. If the respondent(s) disputed the allegations, they would be denied. The applicants also referred to their response to the complaint concerning identification of clients.
9 As to joinder and service out, the applicants submitted that the proposed additional respondents were necessary parties to ensure that each issue in dispute in the proceeding was able to be heard and finally determined.
10 As to service out, the relevant rule provides:
10.43 Application for leave to serve originating application outside Australia
(1) Service of an originating application on a person in a foreign country is effective for the purpose of a proceeding only if:
(a) the Court has given leave under subrule (2) before the application is served; or
(b) the Court confirms the service under subrule (6); or
(c) the person served waives any objection to the service by filing a notice of address for service without also making an application under rule 13.01.
Note: A respondent may apply to set aside an originating application or service of that application - see rule 13.01.
(2) A party may apply to the Court for leave to serve an originating application on a person in a foreign country in accordance with a convention, the Hague Convention or the law of the foreign country.
(3) The application under subrule (2) must be accompanied by an affidavit stating:
(a) the name of the foreign country where the person to be served is or is likely to be; and
(b) the proposed method of service; and
(c) that the proposed method of service is permitted by:
(i) if a convention applies - the convention; or
(ii) if the Hague Convention applies - the Hague Convention; or
(iii) in any other case - the law of the foreign country.
(4) For subrule (2), the party must satisfy the Court that:
(a) the Court has jurisdiction in the proceeding; and
(b) the proceeding is of a kind mentioned in rule 10.42; and
(c) the party has a prima facie case for all or any of the relief claimed in the proceeding.
Note 1: The law of a foreign country may permit service through the diplomatic channel or service by a private agent - see Division 10.5.
Note 2: Rules 10.63 to 10.68 deal with service of local judicial documents in a country, other than Australia, that is a party to the Hague Convention.
Note 3: The Court may give permission under subrule (4) on conditions - see rule 1.33.
(5) …
11 The applicants submitted that the affidavit required by r 10.43(3) was provided in the two Collins affidavits. The applicants submitted that the Court had jurisdiction in the proceeding, that the proceeding was of a kind mentioned in r 10.42, and that the applicants had a prima facie case for relief in the proceeding, each criterion being apparent from the face of the proposed amended pleading.
12 The respondent submitted that these proceedings were commenced in July 2018 and pleadings closed two months later. The only issue, presently, was patent infringement. After an interlocutory dispute, both parties gave discovery. After an unsuccessful mediation on 12 March 2019, the deadline for the applicants' evidence in chief on its patent infringement claim was 3 May 2019. On 2 May 2019, the applicants told the respondent that they were "taking instructions in relation to possible amendments to the pleadings" and sought deferral of the timetable for its patent infringement evidence. One and half years into the proceedings, the applicants had not put on any evidence in support of that case, the respondent submitted.
13 The respondent submitted that the proposed claim against it suffered from at least two vices.
14 First, contrary to the basal requirement that the alleged confidential information be identified with precision (citing O'Brien v Komesaroff (1982) 150 CLR 310 at 326-8), the applicants had pleaded 13 very broad categories of information, referring to [38] and [56] of the proposed amended pleading. An allegation that a former employee has stolen confidential information is of the "utmost seriousness" - as a matter of fairness, the identification of the alleged confidential information "must be in more than general terms", the respondent submitted, referring to Liberty Financial Pty Ltd v Scott (No 2) [2005] VSC 26; 11 VR 629 at [13].
15 Some of those categories concerned supplier, customer and potential clients' names and information, none of which were particularised, the respondent submitted, referring to 38-(f) and 56-(g). It was not apparent from the proposed amended pleading why that information was confidential, the respondent submitted, and the law did not presume that to be so, referring by way of example to Weldon & Co Services Pty Ltd v Harbinson [2000] NSWSC 272 at [11], [70], [71]. A pleader must identify what it is about the information which attracts the notion of being confidential, the respondent submitted, referring to Lynx Engineering Consultants Pty Ltd v ANI Corp Ltd (No 2) [2009] FCA 363 at [58], and also at [48]-[51]. The applicants had particularised 17 categories of material, some containing multiple documents, without identifying what information within it was the confidential information. Reliance on the whole of documents said to constitute confidential information did not suffice as a matter of pleading, the respondent submitted, referring for comparison to Lynx at [54], [68]. The respondent submitted that the proposed amended pleading suffered from the problem identified in Ocular Sciences Ltd v Aspect Vision Care Ltd [1997] RPC 289 at 360 (approved in GlaxoSmithKline Australia Pty Ltd v Ritchie [2008] VSC 164; 77 IPR 306 at [38]).
16 Secondly, the respondent submitted, the breach of confidential information allegation was entirely speculative. A confidential information case ought not to go forward on that basis, it submitted, referring to ACM Services Pty Ltd v Linmac Cranes Australasia Pty Ltd [2008] FCA 76 at [29].
17 Although it was unclear from the particulars to the proposed amended pleading at [72], the respondent submitted that [69] and [72] (read with [40], [45], [59], [64] and [71]) appeared to be to the effect that: (1) the directors stopped working for the applicants (it was pleaded at [21] and [53] that the directors were employed by the second applicant) and then worked for the respondent; (2) the respondent released its own product; and (3) the respondent approached unidentified clients of the applicants (the nature of the approaches not being properly particularised). Without more, the respondent submitted, "the mere fact that the defendants called on some people who were customers of the plaintiff would not of itself be sufficient to constitute a breach of confidential information", referring to Forkserve Pty Ltd v Pacchiarotta [2000] NSWSC 979; 50 IPR 74 at [23]. The applicants had filed no evidence on the interlocutory application concerning (3), the respondent submitted.
18 Further, the absence of any explanation for the delay both told against granting leave to amend and suggested that the applicants could not offer any explanation favourable to it on the interlocutory application, the respondent submitted, referring to Aon Risk Services Australia Ltd v Australian National University [2009] HCA 27; 239 CLR 175 at [108]. They submitted that this also provided further context by which to assess the deficiencies in the proposed amended pleading.
19 The applicants wrote to the respondent in March 2018 seeking preliminary discovery in respect of the confidential information allegation they now sought leave to add, but chose not to pursue preliminary discovery. This was relevant for three reasons, the respondent submitted. First, as the applicants accepted, they considered at the time that they did not have a sufficient basis to allege misuse of confidential information. Secondly, the applicants made a "deliberate strategic choice" not to pursue preliminary discovery in respect of that claim and, instead, to commence proceedings for patent infringement only, the respondent submitted, comparing Fewin Pty Ltd v Burke [2016] FCA 503 at [63]. Thirdly, the applicants would inevitably seek wide-ranging discovery in support of their confidential information claim if amendment were allowed.
20 As to the applicants' submission that they now had a sufficient basis to allege misuse of confidential information against the respondent because of documents obtained in discovery in the present proceedings, this should be rejected, the respondent submitted. There was no basis for the Court to find that the applicants' position was materially different from that in March 2018. No representative of the applicants had gone on affidavit to provide a proper evidentiary basis for the applicants' assertion. Nor was it apparent that the proposed amended pleading pleaded any documents obtained from discovery. The applicants had not explained why they did not seek preliminary discovery, the respondent submitted, comparing Repacholi Aviation Pty Ltd v Civil Aviation Safety Authority [2011] FCAFC 122 at [10]-[11].
21 In any event, even if the applicants' assertions were accepted, they had not explained why they waited until the day before the evidence deadline to raise the issue of amendment, the respondent submitted. Discovery was provided on 7 December 2018. The High Court had made clear that courts will not "indulge parties who engage in tactical manoeuvring that impedes the 'just, quick and efficient' resolution of litigation", the respondent submitted, referring to UBS AG v Tyne [2018] HCA 45; 360 ALR 184 at [45]. The chronology, and the absence of any explanation for the delay from December 2018, suggested that this was precisely what the applicants had done, the respondent submitted.
22 As to joinder/service out, the respondent submitted that joinder required an "affirmative case" (referring by way of example to Brisbane Slipways Operations Pty Ltd v Pantaloni [2010] FCA 654; 270 ALR 13 at [151]-[154]), while service out required a prima facie case per r 10.43(4)(c) of the Federal Court Rules.
23 The respondent submitted that the applicants' approach, that the asserted prima facie case against each proposed respondent was "apparent from the face" of the pleading, was not the correct approach. On service out, the question was whether the evidence before the Court supported the facts for which the party seeking the Court's leave contended, the respondent submitted, referring to Vringo Infrastructure Inc v ZTE (Australia) Pty Ltd (No 4) [2015] FCA 177; 323 ALR 138 at [38]-[41]. The respondent submitted that the requirement for evidence may also apply in the joinder context.
24 As to the Singapore company, the applicants sought to allege patent infringement but had not adduced any evidence establishing a prima facie case, the respondent submitted. A prima facie case for patent infringement needed to be made out by evidence, the respondent submitted, comparing, for example, Vringo at [163]. The mere fact that there was an existing patent infringement allegation against the respondent did not suffice. Further, there was no evidence on the interlocutory application concerning a breach of confidential information by the proposed second respondent, which was also deficiently pleaded, the respondent submitted.
25 As to the directors, the respondent submitted, each of the claims sought to be added - patent infringement by authorisation or joint tortfeasance, misuse of confidential information, breach of contract and breach of the Corporations Act - must also fail because there was insufficient evidence to support a prima facie (or arguable/affirmative) case.
26 Further and in any event, the respondent submitted, the allegations had not been properly pleaded and the nature of the case the applicants sought to bring was opaque. Despite having had nearly 5 months to do so, the applicants had not addressed the detailed list of pleading deficiencies provided by the respondent at the applicants' request on 15 July 2019 (referring to Mr Burrows' affidavit at 23 and to the document there annexed), each of which the respondent maintained in resisting the interlocutory application.
27 In addition, the deficiencies included a failure to indicate what conduct by the directors was relied on to make out the causes of action. Although there "must at least be precision in identification of what it is that constitutes the breach", the respondent submitted, referring to Lynx at [49], the allegations as to the impugned conduct were conclusory and not, or improperly, particularised.
28 The respondent's submissions concerning delay were said to apply mutatis mutandis in the joinder and service out contexts.
29 Irrespective of the outcome of the interlocutory application, and consistent with authority that it was usual for the parties seeking an indulgence to pay costs, the respondent submitted that the applicants should pay its costs of the interlocutory application.