Schütz Australia Pty Ltd v VIP Plastic Packaging Pty Ltd

JUDGE: MCKERRACHER J DATE: 3 MAY 2013 PLACE: PERTH

INTRODUCTION: 1 By interlocutory application filed on 28 February 2013, the applicants/cross respondents (to whom I will refer collectively as Schütz) seek leave to file a number of affidavits out of time and rely on those affidavits at the substantive hearing commencing in August this year. The leave is approved. The relief sought by Schütz is in the following terms: 1 The applicants/cross-respondents be granted leave to file and serve the following affidavits pursuant to the orders made on 17 May 2012 as varied on 13 August 2012, 4 December 2012 and 13 February 2013 and to rely on that evidence at the trial of this action, subject to any order in respect of any objection raised by the respondents/cross-claimants to be determined at a later date: 1.1 Affidavit of Sabine Rojahn sworn on 25 February 2013; 1.2 Affidavit of Manfred Neef affirmed on 26 February 2013; 1.3 Affidavit of Rolf Heinz Pürckhauer affirmed on 26 February 2013; and 1.4 Affidavit of Philip Darren Pease sworn on 13 March 2013. 2 The applicants/cross-respondents be granted leave to rely upon the following affidavits filed pursuant to the orders made on 17 May 2012 as varied on 13 August 2012, 4 December 2012 and 13 February 2013 at the trial of this action, subject to any order in respect of any objection raised by the respondents/cross-claimants to be determined at a later date: 2.1 Fourth Affidavit of Robert James Banks sworn on 7 December 2012; 2.2 Tenth Affidavit of Stephen Edward Oliver Johnston sworn on 11 December 2012; 2.3 Affidavit of Dr Patrick Germain Marie Van Rymenant sworn on 17 December 2012; 2.4 Second Affidavit of Dr jur. Jürgen Friedrich Wilhelm Hübbe affirmed on 8 January 2013; 2.5 Second Affidavit of Thilo Klein affirmed on 8 January 2013; 2.6 Affidavit of Udo Joachim Schütz affirmed on 30 January 2013; 2.7 Affidavit of Rolf Schneider affirmed on 30 January 2013; 2.8 Affidavit of Winfried Robert Heibel affirmed on 30 January 2013; 2.9 Affidavit of Klaus Georg Goldhausen affirmed on 30 January 2013; 2.10 Affidavit of Wilhelm Müller affirmed on 30 January 2013; 2.11 Affidavit of Christof Baumann affirmed on 30 January 2013; 2.12 Affidavit of Dr Manfred Seidel affirmed on 30 January 2013; 2.13 Affidavit Dr Eberhard Paul Wildfeuer affirmed on 30 January 2013; 2.14 Affidavit of Holger Georg Gelhard affirmed on 30 January 2013; 2.15 Second Affidavit of Dr Patrick Germain Marie Van Rymenant sworn on 7 February 2013; 2.16 Affidavit of Peter Heinz Krass affirmed on 18 February 2013; 2.17 First Affidavit of Thilo Klein affirmed on 18 February 2013; 2.18 Affidavit of Peter Schmidt affirmed on 18 February 2013; 2.19 First Affidavit of Christian Alexander Dammann affirmed on 19 February 2013; 2.20 Second Affidavit of Christian Alexander Dammann affirmed on 19 February 2013; 2.21 Third Affidavit of Christian Alexander Dammann affirmed on 19 February 2013; 2.22 Fourth Affidavit of Christian Alexander Dammann affirmed on 19 February 2013; 2.23 Fifth Affidavit of Christian Alexander Dammann affirmed on 19 February 2013; 2.24 Sixth Affidavit of Christian Alexander Dammann affirmed on 19 February 2013; 2.25 Seventh Affidavit of Christian Alexander Dammann affirmed on 19 February 2013; 2.26 Eighth Affidavit of Christian Alexander Dammann affirmed on 19 February 2013; 2.27 Ninth Affidavit of Christian Alexander Dammann affirmed on 19 February 2013; 2.28 Tenth Affidavit of Christian Alexander Dammann affirmed on 19 February 2013; 2.29 Eleventh Affidavit of Christian Alexander Dammann affirmed on 27 February 2013; 2.30 Twelfth Affidavit of Christian Alexander Dammann affirmed on 27 February 2013; and 2.31 Thirteenth Affidavit of Christian Alexander Dammann affirmed on 27 February 2013. 2 For reasons which follow, I am prepared to make orders in terms of paragraphs 1 and 2 subject to Schütz paying costs thrown away by reason of the amendment.

Relevant procedural steps to date in relation to the filing of evidence 3 This proceeding, which is of considerable complexity, has proceeded reasonably smoothly but not entirely so. On 14 December 2010 I made orders for the exchange of evidence in the proceeding and between 28 February 2011 and 17 March 2011 Schütz served its evidence in chief on the infringement issues in part only. On 11 March 2011 VIP served its evidence in chief on the ECODRUM infringement issues. On 13 May 2011 I made orders extending the evidence in chief deadline on the revocation issues as well as the evidence in answer and reply on both the infringement and revocation issues. I granted leave on 17 August 2011 to Schütz to file further affidavits in chief on the infringement issues and vacated the remaining orders concerning the exchange of evidence. As a consequence of those orders, evidence was due on 7 October 2011. 4 Schütz failed to file its further evidence in chief by 7 October 2011 and on 2 December 2011 I extended the deadline for Schütz to file its further evidence in chief on the infringement issues until 16 February 2012. Orders were also made in relation to the exchange of the remainder of the evidence in the proceedings. 5 On 16 February 2012, being the date of the extended deadline, Schütz only filed part of its further evidence in chief on the infringement issues. 6 On 17 May 2012, orders were made requiring Schütz to file and serve its evidence in chief on the infringement issues by 28 May 2012. Orders were made that any evidence filed and served by the parties after the time given in the orders would not be admitted into evidence in the proceedings without leave of the Court. Orders were also made for the filing and service of evidence in chief on the revocation issues, evidence in answer on the infringement issues, evidence in answer on revocation issues, evidence in reply on the infringement issues and evidence in reply on the revocation issues. 7 On 28 May 2012, Schütz filed the last of its further evidence in chief on the infringement issues and on 13 August 2012 orders were made extending the deadline for compliance with the remaining orders which were made on 17 May 2012 by one week. 8 On 20 August 2012, VIP filed its evidence in chief on the revocation issues and its evidence in answer on the infringement issues. On 29 November 2012 Schütz was to file and serve its evidence in answer on the revocation issues and the reply on the infringement issues. It failed to meet its deadline on all aspects. 9 On 4 December 2012, I made further orders for the exchange of Schütz' evidence in answer on the revocation issues and in reply on the infringement issues, requiring that evidence to be served in tranches on 5, 7 and 19 December 2012. 10 The first tranche was filed on 5 December, the second tranche which was due on 7 December 2012 but not all of it was filed at that time and on 19 December Schütz was to file and serve the third tranche of its evidence in accordance with the orders made on 4 December but failed to file all of its evidence by that time. 11 On 28 February 2013, Schütz made the present application seeking leave to rely upon affidavit evidence filed out of time. 12 On 19 March 2013, Schütz filed and served all of its outstanding evidence in reply on the infringement issues and in answer on the revocation issues. 13 It can be seen that Schütz has been in default of a number occasions in meeting deadlines and by this application seeks a further substantial indulgence.

Justification by Schütz for the orders sought 14 The supporting affidavit sworn by a solicitor for Schütz explains that 29 of the affidavits were served on VIP's solicitors in advance of filing them with the Court. The delay was attributed to the need to arrange translations of the original affidavits once they were sworn and affirmed. It was necessary for Schütz to rely upon an interpreter for 15 affidavits. Those affidavits were either affirmed in the German language and required complete translation or they were notarised in Germany and required the notary's declaration to be translated. 15 Difficulties were encountered in translating the evidence due to its technical nature. A different translator was engaged. 16 The supporting affidavit also explains the numerous steps taken in preparing the evidence including the fact that the solicitors have visited witnesses in Germany for the purpose of preparing that evidence. The supporting affidavit explains in detail the considerable delays that have been incurred in preparing the evidence. 17 The most contentious additional evidence is that of Mr Philip Pease who is an independent expert witness engaged by the solicitors for Schütz. 18 The supporting affidavit explains that after VIP filed evidence on 20 August 2012, the solicitors for Schütz briefed Mr Pease in his capacity as an independent consultant in the field of dangerous goods regulations and intermediate bulk containers. Between 14 October 2012 and 30 October 2012, Mr Pease conducted investigations and inquiries in Australia in relation to the contents of his report. During his visit to Australia, the solicitors also met with Mr Pease. He explained to them that he was engaged in numerous work commitments in the United Kingdom (UK) and throughout Europe. Time differences and other factors including the Christmas break and ill health on the part of Mr Pease, together with his unavailability in February, meant that the evidence he adduced in his report was later than anticipated. 19 Schütz contends that if it is not entitled to rely upon the affidavits in respect of which leave is sought, particularly the Pease affidavit, it will be significantly prejudiced in the presentation of its case. 20 Schütz argues that the relief it seeks should be granted for several reasons: 1. as a result of VIP's request to vacate the original trial dates listed from 3 June 2013 to 14 June 2013, the trial is now not listed to commence until August 2013 which is 157 clear days after the last affidavit of Schütz would be filed and served; 2. a grant of leave to Schütz to rely on its evidence would cause no disruption to the trial dates; and 3. Schütz will suffer substantial prejudice if leave is not granted. 21 Schütz argues that the Court has the power to make any order that it considers appropriate in the interests of justice pursuant to r 1.32 of the Federal Court Rules 2011 (Cth). Notwithstanding Aon Risk Services Australia Ltd v Australian National University (2009) 239 CLR 175, the decision of Dawson, Gaudron and McHugh JJ in State of Queensland v JL Holdings (1997) 189 CLR 146 emphasises that 'justice is the paramount consideration' in determining an application for an indulgence of the Court. 22 Schütz acknowledges that it failed to accurately estimate the time needed to settle 24 affidavits of which 11 were German translation affidavits. The complexity of the technical matters dealt with in the affidavits compounded the difficulties in translation.

Opposition by VIP 23 VIP's opposition to the application is supported by an affidavit of its solicitor which stresses the dilatory performance by Schütz. More importantly, it contends that the majority of Mr Pease's affidavit is in the form of evidence in chief, relating to the claims by Schütz, rather than constituting evidence in reply to that advanced by VIP on infringement. It asserts that only 24 paragraphs of Mr Pease's affidavit (paragraphs [217] to [241]) refer to the evidence of VIP's witnesses and appear to be genuinely in reply to the evidence of VIP witnesses. Rather, Mr Pease seeks to introduce new evidence into the proceedings on the infringement issues which is different from the evidence filed to date by Schütz. He also seeks to supplement and expand the evidence on the infringement issues already filed by Schütz in chief. Specific paragraphs are pointed to in this regard. The point is made that VIP's evidence on infringement has been closed since August 2012. In order to rely on any additional evidence in relation to the infringement issues, VIP would need to seek the leave of the Court. Therefore if Schütz is permitted to rely on the evidence objected to, VIP submits that it would need to undertake substantial additional work and incur significant additional costs to respond to the evidence. In short, VIP claims that in many respects, VIP will need to start again with its evidence in answer to the infringement issues. This in turn will involve VIP incurring additional substantial costs and will also interfere with VIP's preparation of its evidence in reply. 24 VIP raises a particular complaint about the new evidence given by Mr Pease concerning his interviews with representatives from the Australian dangerous goods industry. Mr Pease deposes that he made enquiries with 24 representatives from the Australian dangerous goods and packaging industry located in Western Australia, Victoria and New South Wales between 13 October 2012 and 31 October 2012, including representatives of regulators in Victoria, Western Australia and New South Wales. That exercise was carried out after VIP filed its evidence on the infringement issue in August 2012. 25 Prior to the filing Mr Pease's affidavit, Schütz had not indicated that it was undertaking such an extensive exercise. There was no suggestion at the case management conference held earlier this year in February that this exercise was being carried out. VIP complains that in order to respond to this evidence VIP would need to attempt to contact each of the 24 individuals that Mr Pease had interviewed and, in turn, interview a number of them. VIP's solicitor deposes that this process is likely to involve interstate travel at least to those individuals in Western Australia and Victoria and other potential witnesses in the industry who may be capable of giving evidence responsive to that given by Mr Pease. VIP says it would then have to prepare affidavit evidence to be filed from some or all of the witnesses identified in the process in response to by Mr Pease's evidence. 26 VIP's solicitor estimates that this would take one to two lawyers around six to eight weeks to repeat the exercise given that Mr Pease has spent some five months on and off pursuing the exercise. In addition there would be costs thrown away in relation to evidence already collated by VIP on infringement issues and the need to reinterview various witnesses who have already given sworn affidavits. 27 VIP's solicitor further submits that Mr Pease's affidavit introduces new evidence in relation to the reconditioning practices in Australia. This evidence is given at some length. VIP says that it would have to conduct a similar exercise in response to it. Similar complaints are raised in relation to new evidence on the likelihood of confusion arising from cross-bottling, specific safety risks of cross-bottled IBCs, and practices and entities in the UK (said by VIP to be of dubious significance). VIP complains that there would be serious interruption to its existing evidence preparation and a significant impact on the timetable. In particular, the current timetable is computed on the premise that a further mediation is to occur by 20 June 2013. VIP's solicitor deposes that it is unlikely, if Schütz is permitted to rely on the paragraphs in Mr Pease's affidavit to which VIP objects, that VIP will be in a position to deal with matters fully at the proposed mediation. VIP submits that if the evidence is permitted, a further extension to the timetable will be necessary. 28 VIP complains that Schütz has failed to explain why Mr Pease was not briefed earlier given that he has been instructed in the proceeding for over 12 months. Further, large parts of Mr Pease's affidavit were filed in parallel UK proceedings in 2011 when Mr Pease gave evidence in the proceedings which were the subject of the decision in Schütz (UK) Limited & Schütz GMBH & Co KGAA v Delta Containers Limited & Protechna SA [2011] EWHC 1712 (Ch). Given that a large amount Mr Pease's affidavit repeats matters raised in his report for the 2011 UK proceedings, there is no explanation offered, VIP says, why that material could not have been filed in this proceeding before March 2013. 29 Similar but more limited objections are raised to the affidavit of Mr Banks in relation to his observations in respect of VIP cross-bottled IBCs. Mr Banks' affidavit concerns VIP's certification approvals, pleaded by Schütz at paragraph [26] of the current Fifth Further Amended Statement of Claim filed on 19 December 2012. VIP complains that it has not had the opportunity to respond to this material which is essentially evidence in chief. 30 In particular VIP stresses that the evidence in Mr Banks' affidavit is in the nature of evidence in chief rather than evidence in reply and that VIP has not had the opportunity to respond to that evidence. 31 VIP relies upon a summary by Finklestein J and Black & Decker (Australasia) Pty Ltd v GMCA Pty Ltd [2007] FCA 1623 (at [5]) where his Honour considered that the principles applicable to the exercise of the Court's discretion to grant leave took into account: (a) the direct and indirect prejudice to the opposing party; (b) the impact of the delay on the proceedings; (c) the reason for the delay; (d) good faith or lack of good faith on the part of the party seeking to be excused; and (e) the effect of putting off a trial both on other litigants and generally on the Court's ability to efficiently manage its cases. 32 VIP complains it would suffer serious prejudice if Schütz were permitted to rely upon the further evidence in chief contained in Mr Pease's affidavit. A substantial amount of additional work would have to be carried out given the size of the formerly undisclosed project carried out by Mr Pease. The impact of the delay on the proceedings would be significant. 33 As VIP is presently preparing responsive evidence to the seven expert reports and 13 lay witness affidavits filed by Schütz on the revocation issues, it is fully engaged in existing tasks of substantial scope. It says that it is inevitable that there would be necessary extensions to the remainder of the timetable deferral of the trial dates at considerable inconvenience costs and prejudice. It has also complained with some force that the adequacy of the explanation given for the late filing of Mr Pease's affidavit is insufficient given that Schütz is seeking the indulgence of the Court for a second time having filed evidence outside of the terms of leave previously given. 34 VIP submits that it is the only available inference in the absence of a proper explanation is that the timing of the filing of Mr Pease's evidence was the result of a forensic decision not to deploy his evidence in chief and thereby afford VIP the opportunity to respond to it, but rather to hold it back until a reply and to obtain a forensic advantage thereby.

DisCUSSION 35 There is force in VIP's complaint. It is obvious that VIP will sustain the prejudice of considerable delay and substantial additional cost. 36 Despite the tardiness by Schütz, there is still a substantial period between now and the present listings of the trial dates. It has not been specifically suggested that the trial dates will be lost although it has been suggested that VIP will not be in a position to fully deploy all its evidence for the purpose of the mediation which must take place in June. As counsel for Schütz indicates, that is more likely to be a disadvantage which Schütz will incur rather than VIP and in any event some flexibility in the date for the mediation does not seem out of the question. 37 Although VIP complains that much of the evidence of Mr Pease is in the nature of evidence in chief rather than reply, in the circumstances of this case there is still a substantial period of time to the commencement date of the trial and some capacity for adjustment concerning trial dates. 38 If the evidence of Mr Pease properly puts forward the case which Schütz seeks to advance then, subject of VIP being compensated in costs, it seems to me that Schütz should be permitted to rely on so much of the evidence of Mr Pease as is not the subject of the specific objection, on the basis that specific objections to identified portions of the affidavit material will be addressed prior to the trial. 39 In the circumstances of this particular case where there is something approaching 150 days prior to the trial and recognising that specific objections will still be open, I would favour the course of permitting Schütz to rely on the affidavit evidence if it fully fleshes out the case Schütz seeks to advance. 40 In doing so, I recognise there may at the very least be some adjustments required to the current timetable and I recognise that VIP is entitled to costs thrown away by this further, significant breach of important programming orders by Schütz. 41 On a broad overview of the Pease affidavit, while I accept that specific objections may be upheld at the trial, it appears to be me to be arguable that it does respond to material contained in the affidavits filed by VIP even if in a rather indirect manner. Counsel for Schütz made reference to such matters in the course of this argument. While it is clear that it does raise some new matters, it is arguable that at least some of those matters are responsive to evidence adduced by VIP. For those reasons, while VIP should be compensated in costs and with liberty to apply generally, I would permit Schütz to file and rely upon the affidavit material subject to specific objections which may arise prior to trial. 42 The following orders are made: 1. The applicants/cross-respondents be granted leave to file and serve the following affidavits pursuant to the orders made on 17 May 2012 as varied on 13 August 2012, 4 December 2012 and 13 February 2013 and to rely on that evidence at the trial of this action, subject to any order in respect of any objection raised by the respondents/cross-claimants to be determined at a later date: 1.1 Affidavit of Sabine Rojahn sworn on 25 February 2013; 1.2 Affidavit of Manfred Neef affirmed on 26 February 2013; 1.3 Affidavit of Rolf Heinz Pürckhauer affirmed on 26 February 2013; and 1.4 Affidavit of Philip Darren Pease sworn on 13 March 2013. 2. The applicants/cross-respondents be granted leave to rely upon the following affidavits filed pursuant to the orders made on 17 May 2012 as varied on 13 August 2012, 4 December 2012 and 13 February 2013 at the trial of this action, subject to any order in respect of any objection raised by the respondents/cross-claimants to be determined at a later date: 2.1 Fourth Affidavit of Robert James Banks sworn on 7 December 2012; 2.2 Tenth Affidavit of Stephen Edward Oliver Johnston sworn on 11 December 2012; 2.3 Affidavit of Dr Patrick Germain Marie Van Rymenant sworn on 17 December 2012; 2.4 Second Affidavit of Dr jur. Jürgen Friedrich Wilhelm Hübbe affirmed on 8 January 2013; 2.5 Second Affidavit of Thilo Klein affirmed on 8 January 2013; 2.6 Affidavit of Udo Joachim Schütz affirmed on 30 January 2013; 2.7 Affidavit of Rolf Schneider affirmed on 30 January 2013; 2.8 Affidavit of Winfried Robert Heibel affirmed on 30 January 2013; 2.9 Affidavit of Klaus Georg Goldhausen affirmed on 30 January 2013; 2.10 Affidavit of Wilhelm Müller affirmed on 30 January 2013; 2.11 Affidavit of Christof Baumann affirmed on 30 January 2013; 2.12 Affidavit of Dr Manfred Seidel affirmed on 30 January 2013; 2.13 Affidavit Dr Eberhard Paul Wildfeuer affirmed on 30 January 2013; 2.14 Affidavit of Holger Georg Gelhard affirmed on 30 January 2013; 2.15 Second Affidavit of Dr Patrick Germain Marie Van Rymenant sworn on 7 February 2013; 2.16 Affidavit of Peter Heinz Krass affirmed on 18 February 2013; 2.17 First Affidavit of Thilo Klein affirmed on 18 February 2013; 2.18 Affidavit of Peter Schmidt affirmed on 18 February 2013; 2.19 First Affidavit of Christian Alexander Dammann affirmed on 19 February 2013; 2.20 Second Affidavit of Christian Alexander Dammann affirmed on 19 February 2013; 2.21 Third Affidavit of Christian Alexander Dammann affirmed on 19 February 2013; 2.22 Fourth Affidavit of Christian Alexander Dammann affirmed on 19 February 2013; 2.23 Fifth Affidavit of Christian Alexander Dammann affirmed on 19 February 2013; 2.24 Sixth Affidavit of Christian Alexander Dammann affirmed on 19 February 2013; 2.25 Seventh Affidavit of Christian Alexander Dammann affirmed on 19 February 2013; 2.26 Eighth Affidavit of Christian Alexander Dammann affirmed on 19 February 2013; 2.27 Ninth Affidavit of Christian Alexander Dammann affirmed on 19 February 2013; 2.28 Tenth Affidavit of Christian Alexander Dammann affirmed on 19 February 2013; 2.29 Eleventh Affidavit of Christian Alexander Dammann affirmed on 27 February 2013; 2.30 Twelfth Affidavit of Christian Alexander Dammann affirmed on 27 February 2013; and 2.31 Thirteenth Affidavit of Christian Alexander Dammann affirmed on 27 February 2013; 3. The applicants/cross respondents pay the costs thrown away of the respondents/cross claimants, to be taxed if not agreed. 4. There be general liberty to apply. I certify that the preceding forty-two (42) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice McKerracher.