Relief sought under r 7.23 of the Rules
64 Manolo Blahnik seeks an order pursuant to r 7.23 of the Rules that Estro give discovery of five categories of documents that relate to the relationship between Estro and its supplier and the extent of the "MANOLO BLAHNIK" branded stock held and sales of such goods made by Estro (see [4] above).
65 Estro makes two principal submissions in relation to the order sought by Manolo Blahnik under r 7.23 of the Rules.
66 First, Estro submits, based on the September 2019 Letter (see [28(1)] above) and some of the evidence relied on in support of this application, for example, the conclusions drawn by Mr Randles that the Purchased Hangisi Shoe and the Purchased Nadira Shoe were not authentic Manolo Blahnik products (see [18]-[20] and [23]-[25] above), that Manolo Blahnik cannot utilise r 7.23 of the Rules. Estro submits that this is because Manolo Blahnik has already formed the view that it has available causes of action against Estro.
67 Secondly, Estro submits that, to the extent Manolo Blahnik seeks preliminary discovery against Estro in order to form a view about whether to bring a proceeding against the Supplier, r 7.23 of the Rules provides only for documents to be produced by a prospective respondent in relation to relief sought against that person or entity.
68 In order to obtain the relief sought by it under r 7.23 of the Rules, Manolo Blahnik must satisfy each of the three requirements set out in r 7.23(1). That is, that it has a reasonable belief that it may have a right to obtain relief from Estro; that, after making reasonable inquiries, it does not have sufficient information to start a proceeding to obtain that relief; and that it reasonably believes Estro has or is likely to have in its control documents which are directly relevant to the question whether Manolo Blahnik has a right to obtain relief and inspection of which would assist in making that decision.
69 The issue raised in relation to the first requirement of r 7.23(1) is not, as is usually the case, that Manolo Blahnik's belief that it may have a right to obtain relief is not reasonably held, but rather that its belief has gone beyond the realm of speculation and is so firmly held that it does not require any further assistance by way of preliminary discovery to assist it in making a decision as to whether to commence a proceeding for the identified relief.
70 True it is that the evidence relied on by Manolo Blahnik establishes that it has formed the view that the Purchased Hangisi Shoe and the Purchased Nadira Shoe are counterfeit and that the September 2019 Letter is written in emphatic terms. Manolo Blahnik submits that the September 2019 Letter was, in effect, a letter of demand and that it was written having regard to the requirement for parties to comply with the Civil Dispute Resolution Act 2011 (Cth) prior to commencing any proceeding. The September 2019 Letter commenced the dialogue with Estro. At its conclusion MBIL, on whose behalf the letter was written, made a number of demands of Estro including that it provide the following information:
(1) the identity, contact information of the supplier(s) and/or manufacturers of the Disputed Products;
(2) the quantity of the Disputed Products received and the price paid for the Disputed Products;
(3) the quantity of the Disputed Products sold and the selling price(s) for the Disputed Products; and
(4) the quantity of the unsold stock of the Disputed Products held by it.
71 Given the circumstances in which the September 2019 Letter was written and what MBIL had hoped to achieve by it, its tone is hardly surprising.
72 However, in my opinion, neither the concluded view about the authenticity of the Purchased Hangisi Shoe and the Purchased Nadira Shoe nor the September 2019 Letter put relief under r 7.23 of the Rules out of Manolo Blahnik's reach.
73 First, I would not conclude based only on those matters that Manolo Blahnik had reached the state of satisfaction attributed to it by Estro. There is also less emphatic evidence given by Ms Caton who deposes in her affidavit that Manolo Blahnik believes that it may have a right to obtain relief against Estro and its supplier as outlined in the September 2019 Letter.
74 Secondly, as Manolo Blahnik submits, other than in the case of the Purchased Hangisi Shoe and the Purchased Nadira Shoe, it has only had access to Estro's online store and been able to view some of the Disputed Products offered for sale on a visit by a paralegal in the employ of its solicitors to two of Estro's stores. Thus, it does not know if any of the other shoes offered for sale are, for example, "grey market goods", which I understand to be goods purchased from an authorised retailer and offered for re-sale, or whether they are genuine Manolo Blahnik products or not.
75 Thirdly, as Estro conceded, documents going to the question of the extent or quantum of damages can be obtained on an application under r 7.23 of the Rules. As recognised by the Full Court in Optiver and the other authorities referred to above (see [51]-[56] above), even where a prospective applicant has a reasonable belief that it may have a right to relief, it may need information in order to assess whether the cost and risk of bringing a proceeding is worthwhile.
76 As to the second requirement of r 7.23(1) of the Rules, Manolo Blahnik must establish that, after making reasonable inquiries, it does not have sufficient information to decide whether to start a proceeding to obtain the identified relief.
77 There is no suggestion on the part of Estro that Manolo Blahnik has not made reasonable inquiries. As the evidence demonstrates, Manolo Blahnik requested Estro to provide information substantially in the categories it now seeks pursuant to r 7.23 of the Rules on two occasions: first, in the September 2019 Letter (see [28(1)] above); and then by a letter dated 25 November 2019 (see [28(2)] above). At least up until the commencement of this proceeding, no such information was forthcoming from Estro, being the only party which could have provided Manolo Blahnik with the information it seeks.
78 The issue that arises is whether Manolo Blahnik has "sufficient information" to decide whether to start a proceeding against Estro in relation to the identified relief. I am satisfied that it does not. This is particularly so in relation to documents going to quantum which, as I have already observed and as is confirmed on the current state of the authorities, are documents that are relevant to such a decision.
79 In addition, and in contrast to the position contended for in BCI Media (see [54] above), Manolo Blahnik also says that the documents sought by way of preliminary discovery are relevant to identifying the extent of any alleged infringing conduct. This is because the provision of documents identifying a description of the Disputed Products sold by Estro, including style, colour-way and size, will assist in identifying whether the goods are counterfeit or may have been sourced via parallel importing.
80 Estro submits that, having regard to the evidence given by Mr Autore since the commencement of this proceeding, the order sought pursuant to r 7.23 of the Rules is not warranted. In other words, as I understand Estro's submission, it is that, to the extent Estro has the information sought, it has been provided by Mr Autore.
81 Mr Autore's evidence is summarised at [8]-[10] and [33]-[35] above. Manolo Blahnik submits that I would not accept Mr Autore's evidence given its lack of detail and particularity and what it described as inconsistencies between his evidence and "what is a matter of common sense" that arises from the documents. It contends that it is implausible that Estro did not maintain or keep records of the actual number of shoes returned to the Supplier and that it is implausible for, on the one hand, Mr Autore to give evidence about the Supplier conducting independent activities in one of Estro's stores and, on the other, not to know what that independent entity was in fact selling at the time. Manolo Blahnik says that is particularly so in circumstances where, in light of the issues raised by it, Estro stopped selling "MANOLO BLAHNIK" branded shoes and returned its stock of those shoes to the Supplier some six weeks prior to the Supplier conducting independent activities in one of Estro's stores.
82 In my opinion, Mr Autore's evidence is not a complete answer to Manolo Blahnik's application pursuant to r 7.23 of the Rules. While Mr Autore has provided some evidence about the number of the Disputed Products Estro received from the Supplier and their sale price range, he has not provided the specific information sought by Manolo Blahnik. Mr Autore says that, for the purposes of his affidavit, he has "endeavoured to determine the precise number" of "MANOLO BLAHNIK" branded products that were obtained from and then returned to the Supplier and that, based on Estro's records, the best he can ascertain is an approximate number.
83 However, the evidence before me establishes that Estro runs a number of retail stores (up to four at one point in the recent past), provides its customers with detailed invoices showing size, colour, style and price of products sold and operates a website which depicts products for sale, their sale price and the size range available. In those circumstances, while I accept that Mr Autore has done his best to provide an estimate of the Disputed Products that Estro had in its possession, of the numbers sold and returned and the price range for those products, I do not accept that more precise information is not available. By way of illustration, I note that Mr Autore's evidence is that the best he can provide, based on Estro's records, is the approximate number of the Disputed Products that were obtained from and returned to the Supplier. However, Mr Autore then goes on to provide a precise number of Disputed Products that Estro purchased from the Supplier as opposed to receipt on consignment. He then provides only scant information about sale price and profit made without disclosing the cost price for the goods received, whether by purchase or on consignment from the Supplier.
84 The third requirement of r 7.23(1) of the Rules concerns Manolo Blahnik's belief that Estro has or is likely to have had in its control documents directly relevant to the question whether it has the right to obtain the relief and that inspection of those documents would assist it in making the decision about whether to start a proceeding. Manolo Blahnik must identify the issues in relation to which the documents are likely to be directly relevant and in relation to which there is an insufficiency of information. The extent of preliminary discovery is limited to the information reasonably necessary to overcome the insufficiency of information already in Manolo Blahnik's possession, having made all reasonable inquiries to enable it to make a decision about whether to commence a proceeding (see [50] above).
85 Relevantly, as Estro submits, r 7.23 concerns the provision of preliminary discovery by a prospective respondent in relation to a prospective applicant's consideration of whether to commence a proceeding for the relief it believes it may have a right to obtain from the prospective respondent, that is Estro, and not any third party, in this case, the Supplier.
86 As observed at [10] above, Estro has identified the Supplier. In those circumstances it is not clear, and Manolo Blahnik has not specified, how documents relating to Estro's relationship with the Supplier are relevant to the decision whether to commence a proceeding against Estro. Similarly, it is not clear how the style, colour-way, size and quantity of the Disputed Products returned to the Supplier could be relevant to a decision whether to commence a proceeding against Estro.
87 There is also evidence that the Disputed Products which had not been sold were returned to the Supplier on or about 21 October 2019. This seems to be borne out by the evidence relied on by Manolo Blahnik that, as at 19 October 2019, there were no Disputed Products on display at Estro King Street and Estro Pitt Street and, as at May 2020, Estro's website did not display any "MANOLO BLAHNIK" branded products. In those circumstances, categories seeking documents in relation to Disputed Products that remain in Estro's possession, custody or control could not be directly relevant to the decision whether to commence a proceeding against Estro.
88 That said, I am satisfied that, insofar as Manolo Blahnik seeks documents going to the quantity, style and price of goods received from the Supplier and then sold, they are relevant to Manolo Blahnik's consideration of whether it should commence a proceeding for the relief it believes it may have against Estro.
89 Once it is satisfied of the matters set out in r 7.23(1) of the Rules, the Court has a discretion as to whether it will order a prospective respondent to give discovery to a prospective applicant: see r 7.23(2) of the Rules. I am satisfied that I should make an order in Manolo Blahnik's favour requiring Estro to give discovery of documents in the nature of those described in the preceding paragraph as sought by Manolo Blahnik. Manolo Blahnik has satisfied the requirements of r 7.23(1) of the Rules and there is no reason why I would exercise my discretion not to make an order. On the contrary, Manolo Blahnik has taken steps over a relatively lengthy period to obtain voluntarily the information it now seeks by way of this application. While some information was provided, albeit after the commencement of this proceeding, that information is not sufficient to enable it to make a decision about whether to commence a proceeding. The information provided is imprecise and in the form of an estimate including as to profits made, which appear to be modest. In the circumstances of this case, Manolo Blahnik is entitled to seek and obtain more information before making its decision.