FEDERAL COURT OF AUSTRALIA Huili Building Materials Pty Ltd v Unilin Beheer BV [2008] FCAFC 94 Unilin Beeher BV v Huili Building Materials Pty Ltd (No 2) [2007] FCA 1615 upheld Coulton v Holcombe (1986) 162 CLR 1 applied HUILI BUILDING MATERIALS PTY LTD (ACN 113 490 225), BAOJIA SUN T/AS HUILI AUSTRALIA TRADING, GONG DAO ZHANG T/AS HUILI AUSTRALIA TRADING, HUILI AUSTRALIA TRADING PTY LTD (ACN 112 792 202) and HUILI FLOORING PTY LTD v UNILIN BEHEER BV NSD 2316 of 2007 HEEREY, GYLES, MIDDLETON JJ 27 MAY 2008 SYDNEY IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY NSD 2316 of 2007 ON APPEAL FROM A SINGLE JUDGE OF THE FEDERAL COURT OF AUSTRALIA BETWEEN: HUILI BUILDING MATERIALS PTY LTD (ACN 113 490 225) First Appellant BAOJIA SUN T/AS HUILI AUSTRALIA TRADING Second Appellant GONG DAO ZHANG T/AS HUILI AUSTRALIA TRADING Third Appellant HUILI AUSTRALIA TRADING PTY LTD (ACN 112 792 202) Fourth Appellant HUILI FLOORING PTY LTD Fifth Appellant AND: UNILIN BEHEER BV Respondent JUDGES: HEEREY, GYLES, MIDDLETON JJ DATE OF ORDER: 27 MAY 2008 WHERE MADE: SYDNEY THE COURT ORDERS THAT: 1 The appeal of the second appellant be dismissed. 2 The second appellant pay the costs of the respondent. (Note: The appeal of the first, third, fourth and fifth appellants was dismissed earlier.) Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. The text of entered orders can be located using eSearch on the Court's website. IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY NSD 2316 of 2007 ON APPEAL FROM A SINGLE JUDGE OF THE FEDERAL COURT OF AUSTRALIA BETWEEN: HUILI BUILDING MATERIALS PTY LTD (ACN 113 490 225) First Appellant BAOJIA SUN T/AS HUILI AUSTRALIA TRADING Second Appellant GONG DAO ZHANG T/AS HUILI AUSTRALIA TRADING Third Appellant HUILI AUSTRALIA TRADING PTY LTD (ACN 112 792 202) Fourth Appellant HUILI FLOORING PTY LTD Fifth Appellant AND: UNILIN BEHEER BV Respondent JUDGES: HEEREY, GYLES, MIDDLETON JJ DATE: 27 MAY 2008 PLACE: SYDNEY REASONS FOR JUDGMENT HEEREY J: 1 I will ask Gyles J to give the first judgment. GYLES J: 2 The notice of appeal in the present case is not framed in a way which can be easily understood. Notwithstanding directions, no outline of submissions was received by the members of the Court until this morning and, indeed, it is clear that they were not made available until yesterday. Those submissions isolate two grounds of challenge to the decision below (Unilin Beeher BV v Huili Building Materials Pty Ltd (No 2) [2007] FCA 1615). Before turning to those grounds I should say something about the nature of the case and the procedural background to it. 3 The judgment appealed from is an order assessing a claim for an account of profits arising from infringement of a patent. The judgment below sets out in considerable detail, indeed up to [66], the procedural history of the matter. It is clear from that account that the respondents in the proceedings below had been, to say the least, uncooperative in their manner of approach to preparation of the litigation. It is not necessary to go into the reasons for that save to note that his Honour, conscious of what had taken place in the past, took considerable care to ensure that the parties, who were effectively unrepresented by that time, were made aware of the precise nature of the claim made against them. Indeed, he ordered that a report be served setting out in detail the method of calculation and called for responses to that report. During the course of the hearing no attempt was made to contest any aspect of the report of the expert concerned, Mr Dunstan. Indeed, there was no cross-examination of the expert at all and there was no expert evidence filed in response. 4 The first of the matters raised today is said to be an error in relation to the cost of goods sold, which was an issue dealt with by his Honour under the heading "The question of apportionment". The error his Honour is said to have made is identified by the active appellant as contained in [76] to [79] of the judgment. The substance of it was that there was an inaccurate calculation of attributable infringing products because non-infringing products were included and not, as it were, stripped out. It is submitted on the part of the respondent to the appeal that this was not a matter raised before his Honour. 5 His Honour's findings were firmly based upon the opinion of Mr Dunstan, the expert, and his Honour, not simply being prepared to accept those conclusions, gave his own attention to the matter of attribution and proposed a method more favourable to the appellants than had been proposed by the expert. There is no indication in the material that the particular point now sought to be made was raised before the trial judge. That being the case, it is not appropriate to be raised on appeal. If the particular claim about non-infringing products and the identification of them had been raised at trial it could have been dealt with, and the attempt to do so now is in clear breach of the principles laid down by the High Court in Coulton v Holcombe (1986) 162 CLR 1. 6 The second matter sought to be raised was an error in relation to the calculation of overheads. This topic was dealt with by his Honour at [71] and following of the judgment. His Honour explained that Mr Dunstan had made no allowance for general overheads. He had no basis for doing so. His Honour expressly dealt with the consequence of that. He pointed out that no attempt was made by the then respondents to identify and quantify a relevant general overhead. His Honour said that such a straightforward business concept would be understood by them and that, as the calculation of that overhead depended upon facts only within the knowledge of those respondents, it lay upon them to produce the material which would justify the striking of a general overhead. As his Honour pointed out, the sale of the infringing floor panels was only part of the business conducted. His Honour also relied upon the incomplete documentation provided by the respondents below, notwithstanding that there had been ample pre-trial arrangements made to have complete documentation produced. To the extent that the ground now sought to be pursued goes into detail about particular issues, there is no indication that they were raised before the trial judge. Again, the failure to do so is fatal to a success on this appeal. 7 Under the circumstances it is not appropriate to seek to tease out of the filed grounds of appeal any other substantive matter. In my opinion, the appeal should be dismissed with costs. HEEREY J: 8 I agree. MIDDLETON J: 9 I agree. HEEREY J: 10 The order of the Court is that the appeal of the second appellant be dismissed with costs. I certify that the preceding ten (10) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justices Heerey, Gyles, Middleton. Associate: Dated: 30 May 2008 The Second Appellant appeared in person Counsel for the Respondent: Mr C Dimitriadis Solicitor for the Respondent: Davies Collison Cave Solicitors Pty Ltd Date of Hearing: 27 May 2008 Date of Judgment: 27 May 2008