T R Flanagan Smash Repairs Pty Ltd v Jones [1999] FCA 1391

FEDERAL COURT OF AUSTRALIA

T R Flanagan Smash Repairs Pty Ltd v Jones [1999] FCA 1391

No question of principle

T R FLANAGAN SMASH REPAIRS PTY LTD v BRUCE JONES N 993 OF 1999 HELY J 7 OCTOBER 1999 SYDNEY

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY N 993 OF 1999

BETWEEN: T R FLANAGAN SMASH REPAIRS PTY LTD

Applicant

AND: BRUCE JONES

Respondent

JUDGE: HELY J

DATE: 7 OCTOBER 1999

PLACE: SYDNEY

REASONS FOR JUDGMENT 1 On 20 September 1999 I granted an interlocutory injunction which restrained the respondent from reproducing, publishing or authorising the reproduction or publication of the applicant's AutoQuote Vehicle Directory and the applicant's AutoQuote Parts Database. The injunction was granted because I was satisfied, on the material before me, that the applicant had established a prima facie case of copyright infringement. 2 My reasons for decision, a copy of which was forwarded to both parties, indicated that the evidence at the time established, to the requisite degree, both that copyright subsisted in the publications in question and the applicant was the owner of that copyright. The evidence also established that the respondent had copied the material in question and that he intended to continue to do so. For the reasons which I gave in par 11 of that decision, I noted that the respondent appeared to me to be acting on a misconception of his legal entitlements. The application which was then before me was for an interlocutory injunction therefore I did not, and could not, determine the ultimate rights and wrongs of the matter. What I had to do was to consider whether the applicant had established a sufficiently arguable case to justify a maintenance of the status quo and to consider where the balance of convenience lay. In that sense, the decision which I gave was akin to a discretionary judgment because it was based on a practical evaluation of what was the best thing to do rather than an ultimate determination of the rights or wrongs of the matter. 3 I now have before me an application for leave to appeal by Mr Jones from that decision. Because my decision was an interlocutory judgment an appeal can only be made with the leave of the Court: see s 24(1A) of the Federal Court of Australia Act 1976 ("the Act"). Leave to appeal can be granted either by a single judge or by the Full Court: s 25(2)(a) of the Act. 4 Once an application for leave to appeal is determined by a single judge there is no further avenue of appeal to the Full Court: Thomas Borthwick and Sons (Pacific Holdings) Ltd v Trade Practices Commission (1988) 18 FCR 424 at 433. When Mr Jones first indicated that he was seeking leave to appeal from my decision, I explained to him that if the application were made to me and if it failed then he would have no further recourse to the Full Court. He told me that he understood this, and that he wanted me to adjudicate on the question of leave to appeal. 5 Decor Corporation Pty Ltd v Dart Industries Inc (1991) 33 FCR 397 at 398 to 400 establishes that generally, whether or not leave to appeal should be granted, is governed by two considerations: first, whether, in all the circumstances, the decision is attended by sufficient doubt to warrant its being reconsidered by the Full Court and, second, whether substantial injustice would result if leave were refused supposing the decision to be wrong. 6 Nothing has been put to me by Mr Jones which would tend to suggest that the decision which I originally gave upon the basis of the material then before me, was attended by sufficient doubt to warrant its reconsideration by the Full Court. Rather, what he has sought to do is to rely upon affidavit material which was not before me on 20 September 1999, which is designed to show that there is no originality in the works for which copyright protection is claimed, and that for a couple of other reasons copyright does not subsist in those works. 7 If I were to approach the matter strictly, there would be a question as to whether fresh evidence should be received, having regard to the provisions of s 27 of the Act and Order 52 rule 36 of the Federal Court Rules. Generally speaking, a party will only be entitled to adduce fresh evidence on appeal if, amongst other things, reasonable diligence was exercised to procure the evidence which was not adduced at first instance. That test could not be satisfied here. 8 However, even approaching the matter on a less technical basis, and taking into account the material on which Mr Jones seeks to rely, it seems to me that it falls far short of indicating that the applicant's claim to copyright, at least on the basis of a compilation, is one which will not succeed. What Mr Jones has done is to take certain of the lines in the applicant's work and to indicate that in relation to some of those lines in some cases they resemble, and in some cases they are identical with, lines which appear in documents emanating from manufacturers or the Motor Traders Association. At the highest, this simply indicates that when this matter comes on for final hearing there is a serious question to be tried upon the issue of originality and ownership of copyright. It really has nothing to do with the question as to whether or not in the meantime the status quo should be preserved by injunctions of a type which I granted on 20 September 1999. 9 Nor has it been established that substantial injustice would result if leave to appeal was refused, supposing my earlier decision was wrong. Mr Jones remains free to trade, subject to his obedience to the injunctions which I granted. He has either not commenced trading or has only very recently commenced trading. He readily admits that he has no paying customers, thus the risk of lost sales is largely hypothetical, and, in any event, it is covered by the undertaking as to damages should Mr Jones ultimately succeed. 10 A further consideration, which is relevant to the issue of substantial injustice, is that if both parties approach the preparation for this matter for final hearing with diligence it would be my expectation that it could be heard, upon the basis of a final hearing, in about the same time as would be taken if I were to grant leave to appeal and if the matter were reviewed by the Full Court. For these reasons I would refuse leave to appeal and I would dismiss the notice of motion taken out by Mr Jones on 27 September 1999 in which he sought that relief. 11 I propose to dismiss that application with costs. 12 The respondent has filed a cross claim in which he seeks amongst other things relief in relation to a computer program which I will refer to as the "Foxquote" program. The respondent seeks interlocutory relief in association with that cross-claim. The interlocutory relief which he seeks includes the following: 1. That the applicant be ordered to deliver up to the respondent a working copy of his latest "AutoQuote Imaging Windows Program" (AQIWP) so that it can be thoroughly inspected by the respondent for any suspected breaches of the Copyright Act 1968; 2. That the applicant be restrained from further licensing its AQIWP until the Court is satisfied the applicant has not breached the Copyright Act 1968 and copied any of the respondent's Foxquote program features into the applicant's own AQIWP; 3. That the applicant be ordered to delete the Foxquote program from its machines; and 4. That the applicant should swear a statutory declaration, that it will never ever copy any features of the Foxquote program into any of the applicant's computers or computer programs. 13 For the purposes of this interlocutory application, I am satisfied as to the following matters, at least at the level of a prima facie case. First, the applicant's AQIWP system was commercially available in October of 1997 and was then at the point where it was up and running. Second, on 7 November 1998 the respondent installed two working copies of his Foxquote computer program onto two laptop computers owned by the applicant. Third, this installation was performed on the understanding that the applicant was to use the respondent's programs solely for the purpose of evaluating its usefulness. Fourth, the respondent wrote to the applicant on 4 January 1999, demanding that the applicant delete the copies of the Foxquote computer program installed for the purposes of evaluation from the applicant's computers. The respondent also demanded that all hardcopy reproductions of the Foxquote programs be shredded. The respondent cautioned the applicant against reproducing the respondent's programs, claiming such reproduction would be in breach of both copyright and confidence. Fifth, the applicant never responded to the respondent's letter. Sixth, on 20 September 1999, in proceedings in this Court, the applicant by its counsel, undertook to delete from any of its computers, the respondent's Foxquote program and to deliver up to the respondent any hardcopy reproductions of the Foxquote program and material contained therein forthwith. Seventh, on 1 October 1999, the applicant filed an affidavit sworn on 27 September 1999 by one of its employees, Mr Dennis Lai. Mr Lai deposed to the fact that on 27 September 1999 he inspected two computers of the applicant which, in his belief, could have been the only two laptop computers on which the respondent could have loaded the Foxquote program in November of 1998. On one of those computers he found no Foxquote program. On the other he found a program entitled Foxquote and he printed out a complete copy of the program which he annexed to his affidavit. He then deleted the program from the computer. 14 Whilst the respondent seeks interlocutory relief, he frankly admits that he is not a person of financial substance. He has told me from time to time that he does not have the money to meet costs orders which I have made against him. I do not think that he proffers an undertaking as to damages. It would not be sensible of him to do so, and even if an undertaking were proffered, it would be practically valueless. 15 Two things in particular concerned me. One is that the applicant does not assert any entitlement to use the Foxquote computer program or any of its modules. Clearly, it was installed for a limited purpose and any permission associated with that installation has since been withdrawn. The other is that the applicant chose to ignore requests made by the respondent in January of this year, to which I have already referred. Whilst the evidence of Mr Lai goes a long way towards establishing that the Foxquote program has been deleted from the applicant's computers, it does not establish that fact with certainty, nor does it deal with the possibility that, prior to deletion, copies of the program might have been obtained. 16 For those reasons, I indicated to counsel for the applicant that I was minded to grant interlocutory relief subject to the undertaking as to damages problem, limited to restraining the applicant from using the Foxquote material for any of its purposes. In the light of that indication, counsel for the applicant proffered without any admission, an undertaking to the court that the applicant by itself, its servants or agents will not make any use of copies of any material which the respondent has installed on its computers in November 1998 which remains on those computers, nor will it use or copy that material if any of it remains on the applicant's computers. 17 That undertaking being given to the Court is equivalent to an injunction in those terms and it satisfies the concern which I had flowing from the failure to respond to the respondent's demand and the incomplete nature of the evidence as to deletion. I am not satisfied that the respondent has established a prima facie case of likely misappropriation by the applicant of the Foxquote system or any of its modules. 18 The relief which is sought on an interlocutory basis goes beyond mere preservation of the status quo. The second of the interlocutory injunctions sought, if granted, would enjoin the operation of the applicant's ongoing business without the protection of an effective undertaking as to damages. The respondent has delayed for a period of up to a year in propounding his claim for interlocutory relief. Having regard to all of those circumstances, and upon the applicant giving the undertaking to the Court which I have earlier read out, I refuse the claim for interlocutory relief. 19 I note that that undertaking is given. I certify that the preceding nineteen (19) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Hely.