Old Digger Pty Limited v Pasdonnay Pty Limited

"SDS has suffered loss and damage as a result of the breach of the Agreement by Pasdonnay and by Mr Rear referred to in paragraph 7."

It was argued by Mr Kennelly, who appeared for the respondent, that par 7.5 and par 9, read together, have the effect that SDS is seeking damages for the failure of the sale to proceed, or at least for the delay in the sale. I make no comment on whether that is a proper claim or not. However, it does seem to me that the pleading probably does mean that. Obviously, if that is what it does mean then the Western Australian Supreme Court may be asked to determine what intellectual property rights the respondent may have in relation to "Millennium Flow" hammers. On the other hand, in the Western Australian proceedings the respondent has denied that the contract continues in operation and argues to the effect that the sale agreement is at an end. It may be expected that the question of whether the contract has been terminated or not, and the effect of that, will be the major issue before the Western Australian Supreme Court.

4 The affidavit of Mr Rear filed herein shows that the applicant in this case is related to the plaintiff in the Western Australian proceedings in that the shareholdings of both are ultimately owned, or primarily owned, by the same person, Mr Moir. The inference sought to be drawn from this is that the proceedings brought by the applicant in this Court raise the same issue as one that is, or may be, raised in the Western Australian proceedings, namely which of the respondent or the "Moir Group" has the intellectual property rights to the compensation rings that form part of the "Millennium Flow" hammers. 5 The respondent has applied by Notice of Motion seeking to have these proceedings transferred to the Supreme Court of Western Australia, or in the alternative transferred to the Western Australian Registry of this Court, or in the alternative to have the proceedings in this Court stayed pending the completion of the Western Australian Supreme Court proceedings. In regard to that application the following further matters have been established: · The Western Australian proceedings are apparently in an expedited list. The Western Australian Supreme Court is expected to call over the proceedings before it sometime in the next month and to list those proceedings for hearing in the near future, perhaps as early as next June or July. · The proceedings in this Court are obviously not as advanced as those in Western Australia. In particular, no defence has been filed. There has been no discovery. It is unlikely that these proceedings could be heard as early as June or July. · There are other proceedings involving the applicant and the respondent. In particular, on 3 September 1999, the respondent issued proceedings in the Supreme Court of Western Australia (Action Number CIV 1988 of 1999) seeking orders in relation to an alleged licence in relation to the applicant's patents numbered 638571 and 656724. On 22 September 1999, the applicant issued proceedings in this Court alleging a breach of those patents by the respondent (Action Number S 81 of 1999). The proceedings in this Court were initially delayed because the case raised some of the same issues that were considered in the matters of Old Digger Pty Ltd v Azuko Pty Ltd (2000) 51 IPR 43 and Old Digger Pty Ltd v Azuko Pty Ltd (2002) 52 IPR 75. Since then the proceedings have apparently not progressed because the parties have preferred to progress the Western Australian proceedings. The Western Australian proceedings have progressed to the stage where interlocutory processes are almost complete. · Although the respondent did submit that the issue of proceedings in the South Australian Registry did suggest some perfidy by the applicant, all that has been established is that the applicant, being a company based in South Australia and with South Australian legal advisers, has issued proceedings in this State. On the other hand, the respondent, being a company based in Western Australia and with Western Australian legal advisers, has issued proceedings in Western Australia. What has been established does not involve perfidy - it involves the proper exercise by each of them of their constitutional and statutory rights. · It would seem clear from the material before me that in these proceedings a number of witnesses may need to be called. Those witnesses will be residents of at least Western Australia, South Australia and Victoria. Although each party has legal advisers in both States, the legal advisers are primarily from South Australia in respect of the applicant, but primarily from Western Australia in respect of the respondent. 6 In Re Wakim; Ex parte McNally (1999) 198 CLR 511, the High Court held invalid certain aspects of the cross-vesting scheme by which "State jurisdiction" was conferred upon the Federal Court. Of course that decision did not suggest that there could not be cross-vesting of federal jurisdiction between State and Federal Courts - indeed, such cross-vesting would seem to fall squarely within the powers conferred upon the Commonwealth Parliament by s 77 of the Commonwealth Constitution. 7 In this case there are relevantly two statutory bases which would support the cross-vesting of the proceedings in the Western Australian Supreme Court. The first is s 5(4) of the Jurisdiction of Courts (Cross-Vesting) Act 1987 (Cth) ("Cross-Vesting Act") which provides, so far as is relevant: "Where: (a) a proceeding (in this subsection referred to as the 'relevant proceeding') is pending in the Federal Court or the Family Court (in this subsection referred to as the 'first court'); and (b) it appears to the first court that: (i) the relevant proceeding arises out of, or is related to, another proceeding pending in the Supreme Court of a State or Territory and it is more appropriate that the relevant proceeding be determined by that Supreme Court; (ii) … or (iii) it is otherwise in the interests of justice that the relevant proceeding be determined by the Supreme Court of a State or Territory; the first court shall transfer the relevant proceeding to that Supreme Court." 8 The proceedings in this Court cannot be said to "arise out of" the Western Australian proceedings: see Re Hamilton-Irvine and the Companies Act 1985 (1990) 94 ALR 428, 432. Consequently, in order that the cross-vesting provision be applicable in this case it is necessary that it appear to this Court either that the proceedings are so related to the proceedings in the Western Australian Supreme Court that it is more appropriate that the proceedings be transferred to that Court, or that it is in the interests of justice that they be transferred. 9 It would seem clear that there is some relationship between the two proceedings, if only because of the involvement of Mr Moir. But is there a sufficient relationship that it can be said that it is more appropriate that the proceedings should be transferred? I think not. First the relationship appears to be tenuous. It is based upon a pleading which suggests that SDS is seeking, in the Western Australian proceedings, damages on the basis that it has not had the advantage of the finalisation of a contract. The contract does not specify that the respondent has the intellectual property rights which are claimed by the applicant in these proceedings. If, as the respondent claims, SDS and the applicant are effectively the agents of Mr Moir then it can be expected that SDS would accept that it is the applicant, and not the respondent who has the rights to the compensation ring, and not seek damages in relation to that. On the other hand, if SDS and the applicant are at "arms length" then the connection between the two actions effectively disappears. As a practical matter it seems unlikely that the two proceedings will, in fact, raise the same issues. 10 Another reason for being cautious at least in this context is the possibility of causing dislocation to the proceedings in the Western Australian Supreme Court. It would seem from the information given to me that that Court may be ready to list the proceedings before it relatively soon. If the proceedings in this Court were transferred to the Western Australian Supreme Court, it would seem to me to be at least likely that the Western Australian proceedings would not be able to proceed on the same timetable, if only because the proceedings in this Court are not so advanced. Clearly if the proceedings in this Court simply paralleled those in Western Australia this would not be a major consideration, but in circumstances where the issues raised in this Court may be of limited relevance to the Western Australian proceedings it seems to be to be an important consideration. 11 In this same context I also note the possibility of future dislocation. Both this Court and the Western Australian Supreme Court have first instance jurisdiction in relation to patent matters pursuant to s 154, s 155 and Sch 1 of the Patents Act 1990 (Cth) ("Patents Act"). For this reason I reject the submission put by Mr Abbott QC for the applicant that I should take into account in considering any application for a transfer that this Court has a special expertise in patent law. If the Parliament has not recognised any such expertise I cannot see how it could be relevant under the cross-vesting scheme. However, s 158 of the Patents Act provides that an appeal lies to this Court from a judgment of the Western Australian Supreme Court in relation to "matters arising under this Act". Assuming (without deciding) that this includes "accrued" federal jurisdiction, there is nevertheless the possibility that where the two proceedings are not so connected that all aspects of both proceedings form part of the same "matter", then the one judgment could give rise to two separate lines of appeal - the patent "matter" (including accrued jurisdiction) to this Court, and the remainder to the Western Australian Full Court. Such a result is sufficiently inconsistent with what was intended by the Parliament in enacting the Cross-Vesting Act that it seems to me that it would not be in the interests of justice to transfer the proceedings unless it appeared that there was a single matter with the reasonable prospect of a single line of appeal. The information before me is not sufficient to conclude that there is a single matter. 12 Of course, I accept that the Cross-Vesting Act in general, and the words "in the interests of justice" in particular, should be read broadly so as to achieve their evident purpose: see Bourke v State Bank of New South Wales (1988) 85 ALR 61, 77. But I am not satisfied either that it is more appropriate that the proceedings in this Court be determined in the Supreme Court or that it is in the interests of justice that the proceedings be transferred. 13 This does not mean, of course, that further or other information may not lead to a different result. If, for example, it becomes clear that the issues raised in the proceedings before this Court are central to those being considered by the Western Australian Supreme Court, or that one or other of the parties is significantly prejudiced by the failure to transfer the proceedings then the matter would need to be revisited. For this reason I will request the Registrar to bring these reasons to the attention of the Registrar of the Western Australian Supreme Court. At the very least that Court should be aware of the proceedings in this Court. 14 Having reached this conclusion it is unnecessary for me to deal at any length with Mr Abbott's argument that I should not deal with the application to exercise the powers under the Cross-Vesting Act because the application did not comply with the requirement of O 10A r 51 of the Federal Court Rules. If it had appeared that it was in the interests of justice that the proceedings be transferred I doubt that the failure to meet a procedural requirement would have been fatal to the ultimate success of the application. But in the circumstances it is unnecessary to consider that question further. 15 The other statutory power to transfer the proceedings arises from s 157 of the Patents Act. That section provides: "(1) A prescribed court in which proceedings under this Act have been started may, on the application of a party made at any stage in the proceedings, by order, transfer the proceedings to another prescribed court having jurisdiction to hear and determine the proceedings. (2) Where a court transfers proceedings to another court: (a) all documents of record relevant to those proceedings filed in the transferring court shall be sent to the other court by the Registrar or other appropriate officer of the transferring court; and (b) the other court shall proceed as if the proceedings had been started in the other court and as if the same steps in the proceedings had been taken there as had been taken in the transferring court." 16 The discretionary power under s 157 may be broader than under the Cross-Vesting Act. The power to transfer is both a power to transfer and a power to decide not to do so. It is discretionary. Whatever the breadth of the discretion it is to be exercised judicially. Clearly it would be inappropriate to transfer a proceeding unless it were in the interests of justice to do so. Consequently, for the reasons already given I would not exercise my discretion to transfer the proceedings, at least on the information currently available to me. 17 This leaves the application for alternative orders of a stay or a transfer to the Western Australian Registry. It seems to me that both of these must fail for the reasons given above. In particular, on the material before me I do not accept that it is more appropriate that the proceedings in this Court are more appropriately heard in Western Australia. Again it may be that as these proceedings approach trial it will become clear that the balance of convenience is that the proceedings be heard in Western Australia. That is not the case at present. 18 For these reasons I reject the application to have these proceedings transferred to the Supreme Court of Western Australia, or in the alternative transferred to the Western Australian Registry of this Court, or in the alternative to have the proceedings in this Court stayed pending the completion of the Western Australian Supreme Court proceedings. 19 The final application is that these proceedings be adjourned to such time as the Western Australian proceedings have been finalised. This application did not require the Notice of Motion which should be dismissed. 20 As to the question of an adjournment the applicant accepts that it may be appropriate that the summons for direction in this proceeding be adjourned until a date perhaps in July, although on the understanding that the proceedings may need to progress expeditiously thereafter. The respondent accepts that qualification. 21 I order that the summons for direction be adjourned to 9.30 am on 7 July 2003. 22 I will hear the parties as to costs. I certify that the preceding twenty-two (22) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Selway.

Associate: Dated: 3 April 2003 Counsel for the Applicant: Mr M L Abbott QC