Huhtamaki Australia Ltd v Australia Pak Pty Ltd

REASONS FOR JUDGMENT 1 By an amended statement of claim filed on 20 September 2005, the applicant (Huhtamaki) pleads that the first respondent (Australia Pak) has, by importing, manufacturing and selling certain fruit trays, infringed Huhtamaki's monopoly in certain registered designs. The claim further pleads that the second and third respondents (Cicciarelli and Bui) are also liable for the infringement. 2 By motion, notice of which was filed on 10 November 2005, Cicciarelli and Bui seek the striking out of pars 3, 4, 11, 12, 13, 14, 15 and 16 of the claim pursuant to Order 11 rule 16(a) and/or (b) of the Rules of Court. That is, they contend that the impugned paragraphs disclose no reasonable cause of action against them and/or have a tendency to cause prejudice, embarrassment or delay in the proceeding. 3 The impugned paragraphs are as follows: "3. The second respondent ("Cicciarelli") is and was at all material times: (a) a natural person able to be sued; (b) one of the two directors of Australia Pak; and (c) involved in the management of Australia Pak's business. 4. The third respondent ("Bui") is and was at all material times: (a) a natural person able to be sued; (b) one of the two directors and the company secretary of Australia Pak; and (c) involved in the management of Australia Pak's business. ... 11. To the extent that Australia Pak did the acts pleaded in paragraphs 7 to 9 above, Cicciarelli: (a) entered into a common design with or participated with or induced or procured it to do those acts; (b) directed or procured it to do those acts, or deliberately or recklessly directed the commission of those acts so as to make the conduct his own. 12. The acts of Cicciarelli pleaded in paragraph 11 above were done without the licence or authority of Huhtamaki. 13. By reason of the facts, matters and circumstances pleaded in paragraphs 11 and 12 above, Cicciarelli has infringed Huhtamaki's monopoly in the Registered Designs." Paragraphs 14 to 16 repeat the allegations in pars 11 to 13, but in relation to Bui (and with the cross-references in pars 15 and 16 necessarily altered). 4 A director of a company that infringes the monopoly in a registered design may be liable as an accessory to that infringement in the same way that a director of a company that commits a tort may be liable as an accessory to the commission of that tort: see Oakley Inc v Oslu Import and Export Pty Ltd [2000] FCA 700 at [35] and Oakley Inc v Oslu Import and Export Pty Ltd [2001] FCA 385 per Finn J. 5 In Pioneer Electronics v Lee [2000] FCA 1926 at [45] I said that there was judicial support for four views on the personal liability of a director of a company that commits a tort. First, that a director will be liable if he or she has procured or directed the company to commit the tort. Secondly, that a director will be liable if he or she has made the company's wrongful act his or her own. Thirdly, that a director will be liable if he or she has assumed responsibility for the company's acts. And fourthly, that a director is not liable for procuring the company to infringe the rights of others. At [46], I said that "[t]he clear preponderance of authority, especially in this Court, favours the first approach". Other courts also favour the first approach: see Johnson Matthey (Aust) Ltd v Dascorp Pty Ltd (2003) 9 VR 171 at [201] per Redlich J. 6 The principal complaint against the pleas contained in the impugned paragraphs is twofold. First, they do not contain any - let alone sufficient - material facts to support the allegations against Cicciarelli and Bui. Secondly, they are in the form of conclusions rather than facts. Cicciarelli and Bui's solicitor has deposed that she is "unable to seek any meaningful instructions from my clients … because nothing is identified as constituting the conduct said to amount to [the relevant] causes of action". In response, it is contended that Cicciarelli and Bui can be in no doubt about the nature of the case that is sought to be made against them. Further, to elucidate that case would require the (impermissible) pleading of evidence. 7 In my view, the principal complaint is well-founded. The responses to it are beside the point and fallacious respectively. The parties did not dispute that mere directorship of a company - even mere sole directorship of a company - is insufficient to establish the liability of such a director for the torts of such a company. Therefore, pars 3 and 4 of the claim cannot, on their own, avail the applicant. However, the remaining impugned paragraphs add nothing in the way of material facts to pars 3 and 4. Taken together, the impugned paragraphs disclose no reasonable cause of action against Cicciarelli and Bui and are embarrassing. They ought to be struck out. 8 In large part, par 11 (and its counterpart in par 14) merely repeats the various formulations of the test for when a director will be liable for a tort committed by his or her company. The words of judges expounding the common law - just like the words of statutes - cannot alone amount to material facts for the purposes of a pleading. The first approach referred to at [5] is found at the commencement of sub-par (b). A form of the second approach referred to at [5] is found at the conclusion of sub-par (b). The concept of a "common design" referred to at the commencement of sub-par (a) is found in the discussion of joint tortfeasors in Thompson v Australian Capital Television Pty Ltd (1996) 186 CLR 574 at 580-581 per Brennan CJ, Dawson and Toohey JJ and at 600 per Gummow J. In each case, the claim, as Spender J said in Davids Holdings Pty Ltd v Coles Myer Ltd [1993] ATPR 41-227 at 41,148, "merely state[s] a conclusion drawn from facts which are not set out in the … claim". Nor do I think it necessary to go into evidence in order to give some facts in support of those conclusions. 9 Even if they could, the further and better particulars of the claim and the affidavits filed in opposition to the motion would not cure the impugned paragraphs' deficiencies. 10 I will allow the motion with costs. I will also provide the parties with an opportunity to obtain further directions without the need for a further appearance before me. I certify that the preceding ten (10) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Sundberg.