Mountain Trail Engineering Pty Ltd v Foster

1. The second, third, and fourth respondents' interlocutory application dated 23 June 2023 is dismissed.
2. The second, third, and fourth respondents pay the applicants' costs of the interlocutory hearing dated 26 June 2023. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

O'CALLAGHAN J 1 This is an interlocutory application filed on 23 June 2023 by the second, third, and fourth respondents (respondents) to vary an order that I made on 23 March 2023, viz: 5. Until the determination of this proceeding or further order, the Respondents and the Additional Respondents, whether by themselves, their officers (in the case of the Second Respondent and Yarravans), their employees or agents or otherwise howsoever, be restrained from, without the licence or authority of the Applicants manufacturing or continuing to manufacture, promoting, offering for sale or selling the Seisia Caravan (as defined in the Amended Statement of Claim) promoted and sold to date and any other products developed (either entirely or in part) by using any of the MTRV documents (or any part of such documents). (Order 5) 2 I made Order 5 including in circumstances where Mr David Foster, the first respondent, had admitted in an affidavit affirmed on 22 November 2022 that, despite his earlier denials, he had retained copies of the first applicant's files after his employment with the first applicant ceased; transferred those materials to a computer owned by the second respondent; and used some of them in the course of designing a "Seisia Caravan". (The Seisia Caravan is defined in the applicants' amended statement of claim dated 23 March 2023, including by reference to photographs at annexure D). 3 Mr Foster also admitted that he was "able to work out" that 60 parts of the Seisia Caravan were each designed using one of the first applicant's parts to begin the design process. 4 I granted the relief sought by the applicants on 23 March 2023, including Order 5, in part because the respondents' counsel conceded, quite properly, that the applicants had made good a prima facie case of the pleaded misuse of confidential information and could not proffer any particularly convincing reason why the balance of convenience did not favour the applicants. I did so on the basis that the applicants had made good a prima facie case, as pleaded, both as to the interior design and the design of the chassis of the Seisia Caravan. 5 At the interlocutory hearing on 22 March 2023, I also granted the respondents liberty to apply. 6 By their interlocutory application, the respondents now seek to vary Order 5 to permit them to use a redesigned "V208" Seisia Caravan on a promotional trek of the Gibb River Road commencing on 12 July 2023. A copy of the contract with the promoter of that trek was in evidence. The application is therefore urgent, and it is desirable that I give my ruling on it immediately. These reasons are thus briefer than they would be had there been more time available to prepare them. 7 I turn first to the question of the relevant principles about the undoubted power of the court to vary interlocutory orders. In Paras v Public Service Body Head of the Department of Infrastructure (No 2) [2006] FCA 652; (2006) 152 IR 352 at 354 [4]-[5], Young J summarised the relevant principles, about which there was no dispute, as follows: …the power is discretionary, and the authorities in this Court indicate that it is ordinarily only exercised in exceptional circumstances … The authorities indicate that the kind of exceptional circumstances that might attract the power of discharge or variation include where an interlocutory order was obtained by fraud or non-disclosure of material facts, or through an accident or mistake that occurred without the fault of the parties … The court's discretion to vary aside an order is to be exercised with great caution having regard to the importance of the public interest in the finality of litigation … Further, as Spender J emphasised in Dudzinski [v Centrelink [2003] FCA 308] … the rule [of the court] is not an alternative to the appellate procedure in respect of interlocutory judgments, nor is it to be invoked for the purpose of allowing a party to present a case a second time to its better advantage. In my opinion, these principles apply, a fortiori, where the party applying for discharge of an interlocutory order seeks to reargue the issues that have already been determined by reference to additional evidence that was available to it on the earlier occasion but which it chose not to advance[.] 8 I should add that no appeal was brought from any of the orders made on 23 March 2023. 9 The gist of the respondents' case is that as a result of changes to the design of the interior of the V208 Seisia Caravan, which they called a "clean room design", and which were described in general terms and by reference to some diagrams in an affidavit of Mr Dean Allan Goudie affirmed 23 June 2023, I should be satisfied that the redesigned caravan did not fall within the ambit of the pleaded case against the respondents. 10 It was further submitted that the new evidence of Mr Eddie van den Berg, a mechanical engineer with extensive expert knowledge of the design and construction of vehicles and trailers, to the effect that caravan chassis are usually similar because of engineering design fundamentals and regulatory requirements, among other things, "elucidat[ed] critical weaknesses" in the applicants' prima facie case insofar as it relates to the V208 Seisia Caravan chassis. 11 The respondents relied on the evidence of Mr van den Berg, not challenged by the applicants, that similar design elements of caravan chassis are (a) inevitable in order to obtain an optimal design for the trailer's function, (b) result from compliance with Australian Design Rule ADR62/02 and Australian Standard AS4177, (c) have been in the public domain for a number of years, and (d) are features that predate both manufacturers' designs. 12 The respondents contended that Mr van den Berg's report "casts serious doubt" on the applicants' claim that their caravans have laser-cut, fully-wielded chassis and suspension, which have not been used by other caravan manufacturers, other than the respondents. 13 The applicants opposed the making of any variation to Order 5. 14 The applicants submitted that recent analysis conducted on documents obtained by the applicants on subpoena established at least a prima facie case that Mr Foster used confidential information belonging to the applicants - in particular, engineering drawings - to design the V208 Seisia Caravan chassis. Ms Heidi Edwards, business manager of the first applicant, deposed as follows in her 25 June 2023 affidavit: 17. … I have reviewed copies of documents obtained under the Subpoenas. I have undertaken a further review of the documents obtained under subpoena from UMW and identified an email chain between Mr Foster and Mr Raguso relating to the chassis for the V208 Seisia Caravan. I have reviewed this email chain and observed that on 2 March 2022 Mr Foster emailed Mr Raguso asking "[a]re you able to please laser cut and fold 1 set of attached files; only 3 materials again and all folds are simple straight folds that can be done on full length top and bottom tooling." Mr Foster also wrote "[s]ame as other order I need these ASAP please. I apologise for the rush on this but we got our hands on extra show space in Melbourne and Sydney so want to make the most of it." Mr Foster attached a file named "V208 CHASSIS FOLDED LASER 01.03.22.zip". Now produced and shown to me and marked "HE-33" is a copy of this email and all files in the attached ZIP folder which are in PDF format (the other files are .dxf or .step files). Now produced and shown to me and marked "CONFIDENTIAL HE-34" are printouts of 2 of the PDF files in the zip folder attached to this email which are engineering drawings for Red Centre parts with numbers 120039 and 120012 together with printouts of equivalent documents for part numbers 0100258-B and 0100063-A for MTRV's LXV 6.7 chassis. 18. On the basis that Mr Foster opened engineering drawings for the chassis for MTRV's caravans at the time he was designing the Seisia chassis and at least two parts of the Seisia chassis are very similar to MTRV's LXV 6.7 chassis. I believe Mr Foster used the MTRV documents as the basis to design the Seisia chassis. 15 The applicants submitted that there thus remains a prima facie case that the respondents, at Mr Foster's behest, used their confidential information to design the chassis, at least in part. 16 They also stressed the abstract nature of Mr van den Berg's report, who obviously could not, and did not, opine about that question. 17 As to the interior changes, Ms Edwards deposed that the drawings of the V208 Seisia Caravan interior (at confidential annexure DAG-2 to Mr Goudie's 23 June 2023 affidavit), simply did not provide enough detail for her to express any view on whether the redesigned interior is, or is not, similar to the Seisia Caravan, as defined in the amended statement of claim. 18 In my view, and particularly having regard to the principles governing applications of this type, the respondents have not made good any case to vary Order 5. As far as the chassis is concerned, those reasons include the following. 19 First, the evidence demonstrates that a variety of the first applicant's materials for their designs were regularly accessed on Mr Foster and the respondents' IT assets from 8 February 2022. 20 Secondly, the V208 Seisia Caravan was created in a very short period and closely emulates the first applicant's LXV 6.7 and LXV 6.2 caravans, in circumstances where it was not disputed that it took the applicants more than eight years to develop its allegedly unique construction method and build a substantial product library, which it uses to create its caravans. 21 Thirdly, Mr Foster accessed the files for the parts in the chassis section around the time that the V208 chassis was created. 22 Fourthly, Mr Foster was using the first applicant's materials in February 2022 in circumstances where the creation date for the 60 parts he admitted using was March 2022. 23 The applicants also made this submission about discovery, which is to take place by the end of this week: The [r]espondents are due to make discovery of the design drawings and files, including schematics, engineering drawings and CAD files for the [r]espondents V160 and V208 models of the Seisia caravan this Friday, 30 June 2023. Once discovery is made, the [a]pplicants will be in a position to properly interrogate the creation of the V208 model and V160 model of the Seisia caravan, including by engaging expert/s (as appropriate) to understand the derivation of the files created and/or used by the [r]espondents. 24 The fact that the respondents have brought this application prior to giving this important further discovery makes it difficult for the court to reach any firm conclusions at this hearing as to the circumstances in which the V208 Seisia Caravan was developed. It is, of course, undesirable in an application of this sort that the court should reach any firm conclusions about matters of this sort. But in my view, the evidence does not enable the making of any of the conclusions contended for by the respondents. As to the redesigned interior, in particular, I am not satisfied that there is any sufficient basis to vary the order because, quite apart from anything else, as Ms Edwards deposed, it simply has not been explained, other than in the most general and abstract of terms, how the new interior differs from the old one. 25 Further, and in any event, as was apparent from my recitation of the principles that govern applications of this sort to vary interlocutory orders, no sufficient explanation was provided as to why Mr van den Berg's report could not have been produced at the March 2023 interlocutory hearing. 26 As to the balance of convenience, as the applicants submitted, the respondents have not led any evidence which would lead me to reconsider the question of the balance of convenience since the March 2023 interlocutory hearing. 27 As to the Gibb River Road promotional trek, the evidence is clear that the respondents have been aware of the contractual obligations with the promoter since at least July 2022, which is before this proceeding was commenced. As the applicants submitted, to the extent that the respondents are inconvenienced by not being able to send the V208 Seisia Caravan on the promotional trek, that inconvenience is to a large degree one of their own making. And as the applicants also submitted, in any event, the contract with the promoter does not require a Seisia Caravan to be used on the promotional trek. Presumably, the respondents could send any other of their caravans on the trek, and comply with their contractual obligations. The respondents did not contend otherwise. 28 For those reasons, the respondents' interlocutory application dated 23 June 2023 is dismissed. I certify that the preceding twenty-eight (28) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice O'Callaghan.