Glowatzky v Insultech Group Pty Ltd (1997) 39 IPR 220

1 MASTER NEWNES: This is an application by the plaintiff for discovery from a potential party under O 26A r 4 of the Rules of the Supreme Court 1971.

"4(1) This rule applies if a person who may have a cause of action against a party ... ('the potential party') wants -

(a) to commence proceedings against the potential party

...

but the person, after reasonable enquiries, has not been able to obtain sufficient information to enable a decision to be made as to whether to commence or take proceedings.

(2) If there are reasonable grounds for believing that the potential party had, has, or is likely to have had or to have, possession of documents that may assist in making the decision, the person may apply for an order under this rule."

3 In an affidavit filed in support of this application Mr Thorncroft, a director of the plaintiff, says that the plaintiff is a builder and the owner of the copyright in the design of a house called "Le Majestic". The plaintiff had engaged Peter Robinson Designer to prepare the design.

4 Mr Thorncroft says that in about 2002 he became aware of a house being constructed on the corner of Fletcher and McCrae Streets in Applecross which he believed significantly copied the features of "Le Majestic".

5 Shortly afterwards another director of the plaintiff, Mr Zorzi, contacted a representative of the builder, Capehill Enterprises Pty Ltd, to arrange a meeting with representatives of Capehill and the home owner to determine whether or not the house under construction breached the plaintiff's copyright. Mr Thorncroft says that neither Capehill nor the owner would agree to such a meeting.

6 The plaintiff then arranged for Mr Robinson, the designer of "Le Majestic", to view the building so far as he could without entering onto the property and to provide his opinion on its similarities to "Le Majestic".

7 Mr Robinson wrote to the plaintiff's solicitors on 15 July 2002, expressing the opinion that the front elevation of the residence had been "duplicated" from "Le Majestic". He went on:

"Although I was unable to walk through the residence or view plans from the council, the appearance of the residence indicates there has been a deliberate intent to copy, in whole or in part, my design. From this you can only assume there may be some similarities with internal layouts and features."

8 Mr Thorncroft says the plaintiff then instructed its solicitors to write to the defendants to advise them that the plaintiff intended to seek damages for breach of copyright. On 24 July 2002 the plaintiff's solicitors wrote to the defendants expressing the view that the plaintiff's copyright had been infringed and that the copying was blatant. They demanded that the defendants pay to the plaintiff compensation in the sum of $160,000 within 14 days, failing which proceedings would be issued in the Federal Court for damages.

9 A copy of that letter was sent to Capehill under cover of a letter dated 7 August 2002, advising that if the plaintiff were obliged to commence proceedings, Capehill and its directors would be joined as parties.

10 The defendants responded by letter dated 8 August 2002 in which they denied that the plan of their house was the same as "Le Majestic" and said that they had developed their own design. They said they had evidence to prove that.

11 Capehill responded by its solicitors. In their letter of 20 August 2002 Capehill's solicitors said that Capehill was unaware of the "Le Majestic" design and had reasonable grounds to believe that the building plans supplied to it by the defendants were original architectural plans and that the defendants were authorised to use them. They indicated that their client would rely on s 115 of the Copyright Act if the allegation of infringement was made out. In addition, the solicitors referred to a clause in the building agreement by which the defendants warranted to Capehill that the design did not breach any copyright and undertook to indemnify the builder if the builder became liable for breach of copyright.

12 Capehill's solicitors also said that since it had become aware of the plaintiff's claim Capehill had inspected a display home called "Le Majestic". It considered that the exterior design was "an extremely generic or commonplace Mediterranean design" and that the interior layout was "substantially different to the interior layout of the allegedly infringing building and consequently the claim of infringement of copyright is not regarded as being well-founded". The solicitors requested a copy of the plans of "Le Majestic" to enable them to provide advice to their client. They also requested particulars of the claim to copyright and suggested that the plans of both buildings be submitted to an independent architect for assessment.

13 The plaintiff's solicitors replied that the plaintiff took seriously the issues raised by Capehill and would be prepared to make the plans of "Le Majestic" available if Capehill would make available the plans for the defendants' property.

14 The solicitors for Capehill responded saying that in the absence of the provision of particulars of copyright and agreement to submit the plans to an independent expert for assessment their client would not make the plans of the property available. They suggested the plaintiff direct their request for a copy of the plans to the defendants or to the person who prepared the plans.

15 That suggestion was taken up by the plaintiff's solicitors, who wrote to the defendants on 21 November 2002 asking them to provide a copy of the building plans and foreshadowing an application for pre-action discovery if they were not provided. No response was received.

16 Mr Thorncroft deposes to a belief that the defendants may have infringed the plaintiff's copyright in "Le Majestic". He says that the plaintiff is unable to obtain sufficient information to enable a decision to be made as to whether or not to commence proceedings.

17 The defendants have filed an affidavit in which they deny that they have infringed the plaintiff's copyright and say that they have never had in their possession, nor have they viewed, the plans or drawings for "Le Majestic". The defendants say that in about 2000 they developed a design for the construction of their home and employed a draftsperson to produce plans which were duly submitted to the City of Melville for approval. The plans were not approved and certain changes were required. Around the beginning of 2001 they engaged Capehill to make the necessary alterations and to construct the home. The amended plans prepared by Capehill were approved by the City of Melville and construction of the house began on 21 August 2001.

18 The defendants have opposed this application on several grounds. First, they say that the plaintiff has not established that it may have a cause of action because it has not provided any evidence that it is entitled to the copyright in the design of "Le Majestic".

19 The plaintiff, in an affidavit of Mr Thorncroft dated 23 January 2003, says that the plaintiff is the owner of the copyright, the design having been prepared by Peter Robinson Designer on its behalf. In a further affidavit of 19 March 2003, Mr Thorncroft says that the layout and design of "Le Majestic" was prepared on its behalf by Mr Robinson in May 1997 while he was working for the plaintiff and pursuant to an agreement that the plaintiff was entitled to the copyright in all designs prepared by him for the plaintiff. It has produced a copy of a letter from Mr Robinson to the plaintiff dated 2 September 1996 confirming that agreement.

20 The defendants say, in addition, that the plaintiff has no entitlement to copyright in the design of "Le Majestic" because the design is an extremely generic or commonplace Mediterranean design. There is no evidence of that. The only reference to it is the assertion in the letter from Capehill's solicitors to the plaintiff's solicitors of 20 August 2003 that the exterior design is of that nature.

21 Whether or not the plaintiff does in fact have a cause of action for infringement of copyright in the design of "Le Majestic" is not an inquiry which can properly be carried out on an application under O 26A: McCarthy & Ors v Dolpag Pty Ltd [2000] WASCA 106. On the material before me I am satisfied that the plaintiff may have a cause of action for infringement of copyright.

22 The defendants also say that by making its own enquiries and from the inspection of Peter Robinson, and through the advice of its solicitors and correspondence with Capehill and the defendants, the plaintiff has obtained sufficient information to enable a decision to be made as to whether or not to issue proceedings against the defendants.

23 I do not consider that that contention has been made out. A critical issue is whether the interior layout and design of the defendants' house have been copied from the interior layout and design of "Le Majestic". Mr Robinson's inspection did not extend beyond the exterior of the building and could not do so because he did not have a right of access to it. Both the defendants and Capehill have declined to provide a copy of the interior design and layout to the plaintiff. It has not been suggested that the plaintiff could obtain details of the interior layout and design of the defendants' house in some other way.

24 The defendants also contend that the plaintiff has already made a decision to commence proceedings against the plaintiffs. Their counsel referred to the letter of 24 July 2000 in which the plaintiff's solicitors said that proceedings would be commenced if the sum of $160,000 was not paid within seven days.

25 It is clear that an order will not be made if the applicant has made a decision to commence proceedings: Cohen v Walthamstow Pty Ltd, unreported; SCt of WA; Library No 980148; 30 March 1998.

26 I do not, however, consider that at the time this application was made the plaintiff had made a decision to commence proceedings. Although it certainly appears to be the case that its initial intention was to commence proceedings, the correspondence indicates that it had second thoughts when it was met with firm denials by both the defendants and Capehill that there had been any infringement of copyright. The defendants asserted that they had evidence that they had developed their own design. Capehill, which as a builder might be expected to have some degree of expertise in such matters, said that it had since inspected a "Le Majestic" display home and the interior layout was "substantially different" to the interior layout of the defendants' house. The plaintiff, of course, did not have any material by which to test those assertions, apart from the very limited benefit of Mr Robinson's exterior inspection.

27 The defendants' counsel submitted that it was also evident from the statement in the letter from the plaintiff's solicitors of 21 November 2002, to the effect that the plaintiff remained of the belief that the defendants had infringed the plaintiffs' copyright, that the plaintiff still intended to commence proceedings. It had never resiled from that.

"Our client remains of the view that the property at the corner of Macrae Street and Fletcher Street, Applecross infringes our client's copyright.

We note that in the letter of 8 August 2002, you assert that you developed the plan concept of your own design and that you have enough evidence to substantiate the above facts.

We request that you provide us with copies of the building plans so that we may assess them to determine whether it is appropriate for our client to take further action.

We request that these plans be provided to us within 7 days from the date of this letter. If such plans are not provided, we advise we intend to make an Application for Pre-Action Discovery seeking the Court order that the plans be provided."

29 I do not consider that the letter evinced an intention to commence proceedings for infringement of copyright. Rather it reflected the fact that by then the plaintiff considered it did not have sufficient information to decide whether or not to commence proceedings.

30 The defendants' counsel also submitted that, in any event, once a party had decided to commence proceedings, the procedure under O 26A r 4 was no longer open to it even if, in the light of subsequent events, it changed its mind and considered that it did not have enough information to decide whether or not to commence proceedings. The original decision, once made, simply barred the party thereafter from resort to this procedure.

31 I do not accept that submission. In my view there is no basis for it in the wording of the Rule and it would be contrary to the object of the Rule. The Rule is intended to enable a person to obtain sufficient information to make an informed decision as to whether or not they should commence proceedings. The benefits to the parties concerned and to the administration of justice are obvious. It would make no sense to deprive a person of that opportunity simply because at one point they had made a decision to commence proceedings, if, before implementing it, they realised it was precipitous and that in fact they did not have enough information to make such a decision.

32 In my view, therefore, it is not to the point that at some earlier stage a party had intended to commence proceedings if subsequently it genuinely resiles from that position and at the time the application is made considers it does not have sufficient information to enable a decision to be made whether or not to commence proceedings. Of course, in such cases the Court will examine the bona fides of the applicant with particular care to ensure that the change of heart is genuine and not a tactic designed to circumvent the requirements of the Rule.

33 In this case I am satisfied that this is not a tactic by the plaintiffs designed to get around the requirements of O 26A r 4(1) but rather that in the light of the responses it received to the letter of demand it now considers it does not have sufficient information to enable it to make a decision.

34 I am also satisfied that the plaintiff has made reasonable enquiries and that it has been unable to obtain sufficient information to enable a decision to be made. It is difficult to see what further reasonable enquiries the plaintiff could have made to make that decision. None has been suggested by the defendants.

35 On the affidavit evidence there is every reason to believe that the defendants have information which would enable the plaintiff to make that decision.

36 The plaintiff has sought discovery of the following documents:

"(a) Plans, designs and specifications for the property constructed at 38 McCrae Road, Applecross.

(b) The Building Contract for the property constructed at 38 McCrae Road, Applecross and any variations thereto.

(c) Instructions, correspondence, minutes of any meetings and designs by and to any designer and/or architect in respect of the property at 38 McCrae Road, Applecross.

(d) Any other documents relating to the design and construction of the property at 38 McCrae Road, Applecross."

37 I consider the plaintiffs are entitled to discovery and inspection of the documents referred to in par 1(a) and (b) of the application. I consider that par 1(c) and (d) go too far. On their face they would include, for instance, documents going to the actual building work. I am not satisfied that that material is required for the purposes of O 26A r 4. It may be appropriate to make orders to a similar effect relating to documents relating to the design of the property but not to its construction.

38 I will hear the parties as to the precise form of the orders and as to costs.