Metropage Pty Limited v Alistair Woodward Little & Ors (2)

Legislation Cited: Evidence Act 1995 (NSW)
Limitation Act 1969 (NSW)

Cases Cited: Dasreef Pty Ltd v Hawchar (2011) 243 CLR 588; [2011] HCA 21
Makita (Australia) Pty Ltd v Sprowles (2001) 52 NSWLR 705; [2001] NSWCA 305

Category: Procedural rulings

Parties: Metropage Pty Limited (Plaintiff)
TressCox (Defendants)

Representation: Counsel:
A Avery-Williams (Defendants)
Solicitors:
T Hall (Plaintiff)
K&L Gates (Defendants)

File Number(s): 2023/00171551

Publication restriction: Nil

EX-TEMPORE Judgment (REVISED)

1. I am dealing with the admissibility of the opinion evidence of Mr Edward A. Pennington whom I am satisfied is a highly qualified, experienced and eminent intellectual property lawyer practising in Washington DC in the United States of America. His affidavit, which attaches his report, is, in the end, tendered to prove the following opinion (at p 9 of the report of 22 June 2024):

"Had Metropage been competently and appropriately represented in the negotiations, it may well have received a settlement equal to 75%, or more, of the offer of USD5.5 million. That is, a settlement of the order of USD4 million or more. While a significant sum for Metropage, it would have been an insignificant amount for a company of Apple's resources and in the circumstances of an impending new product launch."

2. Taken out of the full context of the report, what I have said may seem a little obscure, so I will detail as briefly as I can the background facts to this dispute between Metropage Pty Limited (“Metropage”) and the defendants, being the solicitors who formerly acted for it for a period in District Court proceedings in 2017 (“TressCox”). Those proceedings were settled on a "walk away" basis, that is to say by means of the effective dismissal of the proceedings supported by a deed of release with each party bearing its or their own costs.

Background facts

3. It is necessary to say something about the background because the previous proceedings had been brought by Metropage against a different law firm who had acted for Metropage in relation to a disputed trademark application in 2009. Metropage had lodged the application in about 2007 after a previous application had lapsed. Apple Inc (“Apple”) lodged an opposition to that second application. The trademark which Metropage sought to have registered was "IPAD". That name, on the evidence I have received, and which is yet untested, was devised by the guiding mind of Metropage, Mr Bolton, who, as it happens, is also legally qualified, in relation to a touchscreen electronic kiosk that Metropage had been developing at that time. He explained in his affidavit that IPAD was an acronym for the essential characteristics of the kiosk.

4. In any event, Apple's opposition had been set down for hearing on 13 November 2009, and Metropage instructed the law firm to assist it with the preparation of its evidence in rebuttal of Apple's opposition. As the hearing date approached, Metropage also asked the law firm to assist in negotiating a potential settlement of the dispute between itself and Apple. That retainer was also accepted. Prior to embarking upon that course, Metropage had had the benefit of counsel's advice about its prospects of defeating Apple’s opposition. Without going into any more detail, settlement was successfully concluded in the sum of $65,000 only three days before the hearing date.

5. Mr Bolton developed some misgivings about that outcome and later made inquiries in relation to the outcome of proceedings between Apple and another multinational IT company in the United States. He learnt those proceedings had been settled on vastly more attractive terms.

6. It should be said that at the time of Metropage’s settlement, people in the IT industry, including Mr Bolton and the lawyers he had instructed, were aware of strong speculation that Apple was about to launch the “iPad”, a personal electronic device in tablet form with which everyone is now familiar. However, that was not the ground of Apple’s opposition to Metropage's application. That information was kept as commercial-in-confidence and would have, in any event, been irrelevant to the outcome of the application.

7. The Apple iPad was launched in July 2010. Mr Bolton's misgivings continued to grow, and he consulted counsel whom he knew and received a preliminary advice in relation to prospects of bringing a successful action against the solicitors for negligence in the conduct of the negotiations resulting in Metropage’s settlement. The opinion was necessarily quite heavily qualified given that counsel was not briefed with all of the material, not for any nefarious reasons, but simply because Mr Bolton wanted counsel's first impressions, it might be said.

8. Counsel also gave some advice about some necessary steps that should be taken before a decision was made about suing the lawyers. As it transpired, the action against the lawyers was not commenced until just before the expiration of the six-year limitation period in 2015. Initially, Metropage were represented by a legal practice that Mr Bolton had since incorporated and through which he practised. For personal reasons which I need not go into for the purpose of this interlocutory ruling, Mr Bolton ceased to act in a professional capacity for Metropage but continued to conduct the proceedings in his capacity as Metropage's director.

9. The matter was duly set down for hearing in the District Court on 5 and 6 June 2017. On 5 April 2027, Mr Bolton, with the hearing date fast approaching, instructed TressCox, as they then were, and in particular Mr Little, a partner, who worked on the case with his associate or employed solicitor, Ms Tran. At that time, as was pointed out to Mr Bolton and as he was no doubt aware, there was no extant expert evidence of any kind ‑ I will put it this way ‑ as to the true value of his formerly contested trademark rights.

10. The lawyers appointed to represent the former solicitors were taking what might be described as a “hardball” or “hard‑nosed” approach to the defence. In any event, advice was taken from counsel upon whom TressCox and Mr Bolton agreed. Despite the urgency with which the advice was sought, quite detailed advice (but said to be in a short form) was able provided by counsel. It must be said, the advice was very pessimistic as to Metropage’s prospects.

11. An outstanding informal settlement conference was convened with the begrudging consent of the solicitors for the defendant law firm, who made it quite clear at the ISC that under no circumstances would any monetary offer be made, and that the best terms they were instructed to offer, notwithstanding the efforts of TressCox to inveigle or entice them into a settlement, was the “walk away” offer to which I have already referred.

12. There is a dispute between Metropage and the lawyers about what advice was actually given and in what context instructions were given by Mr Bolton on behalf of Metropage to accept what must have been a completely and wholly disappointing offer. In any event, as things remained at that time, there was no evidence as to the true value of Metropage's former rights, either in the marketplace, assuming there was one, or any special value they may have had for Apple at the time of the previous settlement.

The current proceedings

13. These current proceedings were brought, on one view of it, on the last day possible within s 14 of the Limitation Act 1969 (NSW), and on another view, one week late. It's unnecessary for me to resolve that issue for present purposes.

14. The case against TressCox is that, and I paraphrase it, given the intransigence of the solicitors for the defendant law firm, the only proper advice for TressCox to have given was to advise Metropage to apply for an adjournment of the hearing in the District Court for the purpose of an application to transfer the proceedings into this Court because Metropage were firmly of the view, being informed by the inquiries made elsewhere, that the settlement was, as I have indicated, a vast undervalue, even of its contested rights. It is unnecessary for me to delve into those matters further except to say, again, that at the time the settlement was agreed upon on 23 May 2017 and the deed giving effect to it was signed on 30 May 2017, no expert opinion as to valuation was extant.

Mr Pennington’s expertise

15. Mr Pennington's affidavit was sworn on 22 June 2024. This is the first time that what purports to be an expert opinion has been brought into existence in relation to the case. Mr Pennington was part of the legal team who represented, according to his affidavit, the multinational corporation that held the United States trademark application for the iPad trademark in 2010, which was settled on the vastly superior terms. His report does not say, as I read it, what the amount of that settlement was or when it was achieved and, given what one thinks one knows about the American legal system, what the costs were. However, his report is quite detailed and what I have extracted (at [1] above) is really only his final conclusion.

Summary of argument

16. Mr Hall, solicitor, who appears for Metropage, has urged the opinion upon me as an expert opinion. Alternatively, he submits that I could admit it as evidence of fact of what Apple paid in a similar case in the United States, from which I could infer something material about the value of Metropage’s contested IPAD trademark to Apple in 2009.

17. Ms Avery‑Williams of counsel, who appears for TressCox, objects on a number of bases including relevance, the absence of any relevant specialised knowledge on the part of Mr Pennington and also, as to what might be referred to as, Makita (Australia) Pty Ltd v Sprowles (2001) 52 NSWLR 705 (“Makita”) grounds. I will return to Makita in a moment.

Determination

18. The scope of s 79 Evidence Act 1995 (NSW) and the conditions of admissibility which it imposes on expert evidence were discussed by the High Court of Australia in Dasreef Pty Ltd v Hawchar (2011) 243 CLR 588; [2011] HCA 21. At p 602 (paras [31]-[32]), a plurality of French CJ, Gummow, Hayne, Crennan, Kiefel and Bell JJ dealt with admissibility of expert evidence under s 79 in this way (bearing in mind that the opinion rule excludes evidence of opinion: s 76(1) Evidence Act):

"In considering the operation of s 79(1) it is thus necessary to identify why the evidence is relevant: why it is ”evidence that, if it were accepted, could rationally affect (directly or indirectly) the assessment of the probability of the existence of a fact in issue in the proceedings” [s 55(1) Evidence Act]. That requires identification of the fact in issue that the party tendering the evidence asserts the opinion proves or assists in proving.

To be admissible under s 79(1), the evidence that is tendered must satisfy two criteria. The first is that the witness who gives the evidence “has specialised knowledge based on the person's training, study or experience”; the second is that the opinion expressed in evidence by the witness ”is wholly or substantially based on that knowledge”.

19. Their Honours continued (at p 604, para [37]):

"The way in which s 79(1) is drafted necessarily makes the description of [the requirements of admissibility] very long. But that is not to say that the requirements cannot be met in many, perhaps most, cases very quickly and easily. That a specialist medical practitioner expressing a diagnostic opinion in his or her relevant field of specialisation is applying 'specialised knowledge' based on his or her 'training, study or experience', being an opinion 'wholly or substantially based' on that 'specialised knowledge', will require little explicit articulation or amplification once the witness has described his or her qualifications and experience and has identified the subject matter about which the opinion is proffered.”

20. Their Honours made clear however by reference to the judgment of Heydon JA (as his Honour then was) in Makita at p 744 para [85] that:

"The expert's evidence must explain how the field of 'specialised knowledge' in which the witness is expert by reason of 'training, study or experience' and on which the opinion is 'wholly and substantially based' applies to the facts assumed or observed so as to produce the opinion propounded."

21. The other member of the Court was Heydon J. It may be said that his Honour adhered to the views he expressed in Makita. While it cannot be said that the plurality judgment embraced everything his Honour had said in Makita, it certainly said nothing to disapprove of it.

22. It seems to me applying those dicta and acknowledging fully Mr Pennington's expertise and eminence as an attorney practising in his specialised intellectual property field, there is no evidence before me to demonstrate that he possesses any other specialised knowledge, even one acquired solely by experience. Nor do the contents of his report explain how, if one assumes that he has acquired additional specialised knowledge as a highly competent and skilled negotiator, his evidence applies to the circumstances of this case. I will return to these topics briefly because I may have put the cart before the horse.

23. It is not clear to me how Mr Pennington’s opinion is relevant to any issue in these proceedings as between Metropage and TressCox. Certainly, there is nothing about Mr Pennington's opinion which in any way says anything about any failure on TressCox’s part to observe the requirements of reasonable care, applying the universal standard of the reasonable lawyer in their position. I should say, in fairness, Mr Pennington is not put forward as an expert who can cast light, except in one respect, upon the standards to be observed by legal practitioners in Australian jurisdictions. He does criticise the previous lawyers in terms of their negotiating tactics. But it would seem to me that although all lawyers must negotiate at times, in express terms he was applying a very high standard of competence and skill in negotiation rather than any purported standard of reasonable care (see p 23 of the report).

24. It may be said, perhaps, that Mr Pennington’s opinion goes no further than questions of quantum should the liability hurdle be cleared by Metropage in terms of its case against TressCox. But even then, what I have said about his purported expertise remains relevant. I should say that Mr Bolton, taking his evidence at face value, may have already been firmly of the view, with respect, that Metropage's claim against the previous lawyers could have been worth “millions”. Even so, I repeat, there was no evidence of value from any properly qualified expert at the time he instructed TressCox, nor at the time of the ISC.

25. It is quite clear to me that the tenor of Mr Pennington's report is that the IPAD trademark at the material time had a special value to Apple given what is now known about its then commercial intent. But one may say that his opinion is based solely upon his experience in the one case he spoke about being involved in in the United States of America. At one point in his report (at p 20), he states that in China:

"Apple was widely reported to have paid US$60 million for the rights to the iPad trademark. In other instances, Apple has reputedly shown its willingness to pay 7‑figure sums for trademarks such as 'iOdene', and for the iCloud.com domain name." (My emphasis.)

26. He does not provide any other hearsay examples. In my opinion, his direct experience in one case only, with the greatest of respect, is not sufficient experience for the purpose of s 79 to elevate him as an expert on what Apple is likely to pay in a commercial negotiation of a contested trademark it may be interested in; assuming that to be a branch of specialised knowledge, which I sorely doubt. Indeed giving weight to the hearsay, the vast difference between what is “widely reported” to have been paid in China compared to the result that Mr Pennington’s legal team was apparently able to extract in the United States on behalf of another multinational, tends to suggest that there is no science involved; and no specialised knowledge involved.

27. Obviously, what a commercial entity may or may not pay may be subject to many different factors, none of which are actually explained or expressed in the body of Mr Pennington's report. Even where I am satisfied there was a specialised branch of knowledge in how Apple might respond to a commercial opportunity in which it is interested, which I do not believe has been established, Mr Pennington has not explained what the criteria of that branch of specialised knowledge are, and how it might be applied in the different context of the particular trademark dispute between Metropage and Apple in 2009.

Conclusion

28. Notwithstanding the overall content of the report, I am of the view that Mr Pennington's opinion, even assuming a branch of specialised knowledge, and that Mr Pennington possesses it, does not rise above the “bare i**pse dixit" referred to with approval by Heydon JA in Makita (at [59]) by reference to the judgment of Lord President Cooper in Davie v Lord Provost, Magistrates and Councillors of the City of Edinburgh [1953] SC 34, pp 39‑40. To complete the quote, his Lordship said:

"In particular, the bare ipse dixit of a scientist, however eminent, upon the issue in controversy, will normally carry little weight, for it cannot be tested by cross‑examination nor independently appraised, and the parties have invoked the decision of a judicial tribunal and not an oracular pronouncement by an expert."

29. I should say that Ms Avery‑Williams also referred to, in those circumstances, the difficulty of testing by way of cross‑examination or otherwise, the soundness of Mr Pennington's opinion. The process would be, in accordance with Heydon JA's analysis, like a journey into the dark perhaps resulting in the usual consequences.

30. For these reasons, I reject the affidavit of Mr Pennington.

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