FEDERAL COURT OF AUSTRALIA Australian Consulting & Training Pty Ltd v Tiltform Pty Ltd [2001] FCA 1072 Council for the City of Gold Coast v Pioneer Concrete (Qld) Pty Ltd (1998) 157 ALR 135 General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125 Murex Diagnostics Australia Pty Ltd v Chiron Corp (1995) 55 FCR 194 Surridge's Patents, Ld v Trico-Folberth Ld (1936) 53 RPC 420 U & I Global Trading (Australia) Pty Ltd v Tasman-Warajay Pty Ltd (1995) 32 IPR 494 Luna Advertising Co v Burnham & Co (1928) 45 RPC 258 AUSTRALIAN CONSULTING AND TRAINING PTY LTD v TILTFORM PTY LTD, TILTFORM LICENSING PTY LTD AND ROBERT R SLADOJEVIC S 134 OF 2000 MANSFIELD J ADELAIDE 7 AUGUST 2001 IN THE FEDERAL COURT OF AUSTRALIA SOUTH AUSTRALIA DISTRICT REGISTRY S134 OF 2000 BETWEEN: AUSTRALIAN CONSULTING AND TRAINING PTY LTD (ACN 066 300 427) APPLICANT AND: TILTFORM PTY LTD (ACN 083 034 413) FIRST RESPONDENT TILTFORM LICENSING PTY LTD (ACN 083 878 666) SECOND RESPONDENT ROBERT R SLADOJEVIC THIRD RESPONDENT JUDGE: MANSFIELD J DATE OF ORDER: 7 AUGUST 2001 WHERE MADE: ADELAIDE THE COURT ORDERS THAT: 1. Subparagraphs 8.11, 26.1, 26.3, 26.4 and 26.5 of the further amended statement of claim filed on 28 June 2001 be struck out. 2. The applicant do file and serve further and better particulars of subparagraphs 8.5, 8.6, 8.7, 8.9, 8.10 and 27.1 of the further amended statement of claim in accordance with the reasons for decision given 7 August 2001. 3. The applicant have leave to file and serve such further and better particulars of subparagraphs 26.1, 26.3 and 26.4 of the further amended statement of claim as it may be advised. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. IN THE FEDERAL COURT OF AUSTRALIA SOUTH AUSTRALIA DISTRICT REGISTRY S134 OF 2000 BETWEEN: AUSTRALIAN CONSULTING AND TRAINING PTY LTD (ACN 066 300 427) APPLICANT AND: TILTFORM PTY LTD (ACN 083 034 413) FIRST RESPONDENT TILTFORM LICENSING PTY LTD (ACN 083 878 666) SECOND RESPONDENT ROBERT R SLADOJEVIC THIRD RESPONDENT JUDGE: MANSFIELD J DATE: 7 AUGUST 2001 PLACE: ADELAIDE REASONS FOR JUDGMENT 1 The applicant's claim is based principally upon s 128 of the Patents Act 1990 (Cth) ("Patents Act") and provisions of Pt IV of the Trade Practices Act 1974 (Cth) ("TP Act"). The present issue concerns its further amended statement of claim filed on 28 June 2001 ("the statement of claim"). The respondents contend that it is deficient in significant respects, and so seek that a number of paragraphs be struck out or alternatively that they be provided with further and better particulars of the allegations made. The applicant resists those orders. 2 There is no issue about the relevant principles. It is not necessary to refer to them. The respondents' application, if successful, will not, in my view, put the applicant out of Court in relation to the impugned allegations, save for those in subpars 8.5, 8.7, 8.8, 8.9 and 8.10. The applicant would be given a further opportunity to replead its case, except in those cases. In my view, in that circumstance, in ruling upon the objections generally, I should be guided by the objective of ensuring a fair and efficient hearing. That involves ensuring that the respondents are sufficiently put on notice of the case they have to meet, and that the issues are sufficiently defined so that the preparation of the case and the trial can be controlled: see for example per Drummond J in Council for the City of Gold Coast v Pioneer Concrete (Qld) Pty Ltd (1998) 157 ALR 135 at 143. 3 I propose to deal with the objections in the order in which they appear in the statement of claim. I will adopt the definitions used in that document. paragraphs 4.4 and 30 4 I do not consider that the claim that Sladojevic was knowingly concerned in the contraventions of the TP Act alleged against Tiltform or Licensing is inadequately pleaded. The allegation is that he was so concerned "in his capacity as a director, servant or agent" of those entities. He is alleged to be the sole director and secretary of Tiltform and the secretary and a director of Licensing. His alleged conduct is specific. His conduct is specifically the subject of allegations in pars 8, 11, 14, 15, 18, 26, 31 and 32 of the statement of claim. Those allegations are tied to the conclusions in pars 4.4 and 30 of the statement of claim by appropriate cross-references. To avoid any room for misunderstanding, I record that the applicant has made it clear that neither par 4.4 nor par 30 are "free standing". That is, the applicant does not allege that Sladojevic was knowingly concerned in the contraventions alleged simply because he was a director, servant or agent of Tiltform or Licensing, but alleges that he was so involved because he engaged in the conduct alleged in the particular paragraphs of the statement of claim referred to. paragraph 5.3 5 I do not consider that par 5.3 of the statement of claim is embarrassing. The reference to the invention called the ACT Formwork System is clear (par 5.2), and the patent application by reference to which it is defined has been provided to the respondents, accepting that it has the limitations of a provisional specification. In my view, the claim to "all rights and property" in the ACT Formwork System does not disadvantage the respondents from knowing the case they have to meet at trial. paragraph 8 6 In my view, it is not necessary for the applicant to further particularise the "infringement proceedings" allegedly threatened by the respondents. It is not incumbent upon the applicant to characterise the nature of the threatened infringement proceedings, as distinct from providing proper particulars of the conduct which is said to constitute that threat or those threats. The application identifies s 128 of the Patents Act as the statutory source for the relief claimed. subparagraphs 8.1, 8.3, 8.9 and 8.10 7 The complaint about these subparagraphs is that they do not identify precisely the threats, nor identify recipients of the threats. In my view, subpars 8.1 and 8.3 do adequately identify the particular communication alleged. The pleading could have set out the text of those documents, but as the respondents are entitled to inspect those documents, I do not consider that it is necessary to take that aspect further. The balance of those two subparagraphs then identifies what the applicant claims to be the threatened infringement proceedings to be derived from them. Subparagraph 8.11 of the statement of claim recognises that the Hicrete statements, the Reid statements and the Actech statements in subpars 8.9 and 8.10 are not adequately particularised. The nature of the threatened infringement proceedings is made clear in those subparagraphs, but they do not contain adequate details of the nature of the Hicrete statements (that is whether they were oral or written) nor the timing of those statements. Even the maker of the oral and written statements alleged in subpar 8.10 is not spelled out. The respondents cannot be expected to plead to subpar 8.11 and in my view it should be struck out. Subparagraphs 8.9 and 8.10 should provide the best particulars the applicant can provide of the timing of and the recipients of the Hicrete statements, the Reid statements and the Actech statements. If those particulars, when provided, do not enable the respondents to be fairly put on notice as to the allegations, then those subparagraphs must be struck out. The applicant is therefore directed to provide, to the best of its ability, those particulars. In the meantime, I consider the respondents should not be required to plead to those subparagraphs. subparagraphs 8.5, 8.6, 8.7, 8.8, 8.9 and 8.10 8 This complaint about these subparagraphs (other than subpar 8.6) is that the conduct pleaded is not capable of constituting threats of infringement proceedings within the meaning of s 128(1) of the Patents Act. If those objections are upheld, those subparagraphs of the statement of claim will be struck out. The principles applicable to striking out a pleading are clear: General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125; Murex Diagnostics Australia Pty Ltd v Chiron Corp (1995) 55 FCR 194. The Court should only strike out a pleading in very clear cases. 9 I do not consider that any of the subject pleadings are clearly incapable of constituting threats of infringement proceedings within the meaning of s 128 of the Patents Act, although the allegations in subpar 8.9 are perhaps closed to the margin of what is arguably maintainable on that score. On an application such as the present, it is not necessary to determine whether those allegations, if established, would amount to threats of infringement proceedings. The resolution of such an issue is generally best left to the trial. It is only necessary to determine whether they are capable of amounting to threats of infringement. That decision must be made in the light of the circumstances in which the impugned conduct took place: Surridge's Patents, Ld v Trico-Folberth Ld (1936) 53 RPC 420 at 423 and 424; and from the perspective of a reasonable recipient of the communication in those circumstances: U & I Global Trading (Australia) Pty Ltd v Tasman-Warajay Pty Ltd (1995) 32 IPR 494 at 500 per Cooper J. It may not be necessary for there to be an explicit reference to enforcement proceedings: Luna Advertising Co v Burnham & Co (1928) 45 RPC 258. 10 In the light of those principles, I am not persuaded that any of the impugned subparagraphs, if the faults alleged in them are made out, have no real prospect of being found as a fact to constitute threats of infringement proceedings in the light of evidence as to the context and circumstances in which those communications took place. 11 The respondents also complain of lack of adequate particulars in these subparagraphs. I my view, the particulars provided are generally sufficient. Subparagraphs 8.5, 8.6, 8.7 and 8.9 do not specifically allege that the statements referred to were oral or written, but I think it is clear enough that they were oral. If that is not correct, I direct the applicant to provide to the respondents particulars of the documents by which the statements were made. Subparagraphs 8.5 and 8.6 identify the occasions of the making of the alleged statements, but not the place where the communications occurred. Again, I direct the applicant to provide those particulars. Subparagraphs 8.9 and 8.10 do not identify with any accuracy the occasion or occasions referred to. I have dealt with that matter and the other complaints about lack of particularity in the Hicrete statements, the Reid statements and the Actech statements in the preceding section of these reasons. subparagraphs 8.13 and 8.14 12 I do not consider that these subparagraphs are defective. The complaint is that the foundation for the claim that the alleged threats of infringement proceedings is not specifically identified. However, I have rejected that contention earlier in these reasons. These subparagraphs are, as I read them, assertions by way of complex facts or conclusions based upon the preceding subparagraphs alleging primary facts. I do not consider, in the light of that understanding, that subpar 8.14 is inconsistent with those earlier subparagraphs. At the hearing, the applicant will be held to that understanding, unless it raises at the next directions hearing the claim that subpars 8.13 and 8.14 perform some other function. If they do, it will be necessary to address whether they do so fairly and sufficiently. subparagraph 12.3.1 13 Paragraphs 11 - 15 contain the allegations intended to make out contraventions of s 52 of the TP Act. Paragraph 11 pleads the representations, and par 12 the facts by which it is claimed that the representations were misleading and deceptive. It includes the claim in subpar 12.3.1 that it was misleading for the respondents to claim (as they are alleged to have done) that usage of the ACT Formwork System would give rise to rights in the respondents to bring infringement proceedings against the user, and it is claimed that part of the factual basis for demonstrating that that claim was misleading is the ACT Patent Application terms. I agree that the reference to the ACT Patent Application itself may be misconceived, but on a fair reading of the pleading, I think that it is clear enough that, as the applicant contends, that is a compendious way of referring to the facts and matters upon which the ACT Patent Application was made, that is to the Act Formwork System. The respondents will have to deal with those allegations in their defence, as they constitute earlier parts of the statement of claim. In my view, the case of the applicant is clear and the respondents are not disadvantaged in responding to it. I do not propose to strike out that subparagraph. subparagraph 21.1 14 Paragraphs 16 - 22 of the statement of claim relate to the applicant's claim that the respondents have induced a breach of the Bianco contract. The respondents contend that the allegation that the failure of Bianco Concrete, in breach of the Bianco contract, to pay the applicant for formwork equipment supplied (subpar 21.1) does not support the allegation that it was the conduct of the respondents (alleged in par 19 which adopts by reference the matters alleged in subpars 8.1 to 8.14) which caused that breach. In my view, that is a matter for evidence. Subparagraph 21.1 contains particulars of the breach of the Bianco contract. The applicant's claim that the reason Bianco Concrete breached that contract in that way was the pleaded conduct of the respondents. I consider that that pleaded conduct is capable of being conduct to cause Bianco Concrete to act in that way. Whether it did so, and if it did, whether it did so for that reason is a matter to be explored at trial. In my view subpar 21.1 should not be struck out, and the respondents can fairly be expected to respond to it. paragraph 26 15 Paragraphs 23 - 32 of the statement of claim concern the claim that the respondents Tiltform and Licensing have contravened s 47(2) of the TP Act and that Mr Sladojevic was knowingly concerned in that contravention. After pleading the markets relied upon, and the participation of the parties in the market, par 26 alleges the supply of goods or services by Tiltform and Licensing in the markets and the condition upon which they have engaged in that supply (which condition is said to fall within s 47(2)(d) of the TP Act). It is contended that the particular facts then alleged, assuming they are proved, do not amount to imposing the condition that the client of Tiltform or Licensing will not acquire similar goods or services from the applicant. 16 The particular facts alleged include the alleged threats of infringement proceedings in subpars 8.1 to 8.15 of the statement of claim, and then par 26 repeats that allegation by specifically referring to the Hicrete statements (subpar 8.9) and the Reid statements and the Actech statements (subpar 8.10) and the 13 September 2000 statements (subpar 8.5), the 14 September statements (sub par 8.6), and the 22 September 2000 statements (subpars 8.7). No explicit reference is made to the further 22 September 2000 statements (subpar 8.8), so I suspect no reliance is placed upon them in this context, although the general adoption of the particulars to par 8 might take them in. It is only the specifically identified statements (subpars 8.5 - 8.7 and 8.9 - 8.10) which are relied upon. The pleading then continues : "... and [the applicant says] that the Respondents made it a condition of continued supply after the making of those statements that the relevant parties identified not deal with the [applicant]." 17 I do not consider that the pleading is satisfactory. It identifies clearly the conduct of Tiltform and Licensing which falls within s 47(2)(a) and the condition which falls within s 47(2)(d). It is unclear however what are the facts alleged upon which that condition upon their supply of services was imposed. If those facts were confined to those alleged in subpars 8.5 - 8.7 and 8.9 - 8.10, then the pleading would be comprehensible and (arguably at least) that conduct could constitute the imposition of the condition alleged. But, in my view, subpars 26.3 and 26.4 as expressed leave open the prospect, and indeed may positively suggest, that some additional facts beyond those pleaded may also be relied upon. I think that the words "... and say that ..." permit of that prospect. They may not be intended to do so, but the respondents are entitled to be told whether that is the case. At present I have significant reservations about whether the allegations in subpars 8.1 - 8.4 and 8.11 - 8.15 could properly particularise the condition pleaded to activate s 47(2)(d). It is not clear whether that is intended. I think it is unfair to the respondents to be confronted with the allegation in subpar 26.1 which invokes those claims in the context of s 47(2)(d). In my view, subpar 26.2 is in proper form. Subparagraph 26.5 is not a particular. I will strike it out. If the applicant learns of further matters which it should particularise in relation to this part of its claim, it may seek leave to add further particulars. 18 I propose therefore to strike out subpars 26.1 and 26.3 - 26.5. The applicant is given leave to file and serve amended particulars of the allegations directed to identifying how Tiltform and Licensing imposed the condition which attracts the application of s 47(2)(d). paragraphs 27 and 28 19 The relevant fact for the purpose of s 47(10) of the TP Act has been pleaded in par 27. The particular facts upon which that purpose is pleaded are identified only as the conduct of the respondents. Although on a fair reading of the statement of claim, I think it is clear enough that that conduct is the conduct pleaded elsewhere in the statement of claim, the particulars are not so limited. It is possible that the conduct referred to may be different. The respondents are entitled to know if that is the case. Accordingly, I direct the applicant to give further and better particulars of the conduct referred to in subpar 27.1. That task might be fulfilled simply by referring to that conduct by reference to other allegations in the statement of claim. 20 Paragraph 28 pleads the alternative that conduct of Tiltform and Licensing has substantially lessened competition in the Adelaide market. It identifies the restriction upon the applicant's ability to compete in that market by reason of the conduct of Tiltform and Licensing, as the substantial lessening of competition. If that be the applicant's case, I do not consider that further particularity is required. It is up to the applicant then to prove that that conduct has substantially lessened competition in that market. The "particular" that an expert report will be provided is, in a sense, gratuitous. It need not be responded to in the defence. paragraph 33 21 Paragraphs 33 - 36 provide the foundation for a claim for "unlawful interference" with the applicant's business. The fact of the interference is said to be the conduct set out in subpars 8.1 - 8.14. In my view, those subparagraphs do provide particulars of conduct by which there may have been an interference with the applicant's business, but they do not allege actual interference with the applicant's business. In my judgment, it is necessary for the applicant to plead that interference. However, par 36 pleads that loss and damage was caused by that pleaded conduct, and particulars of the loss and damage are given by reference to subpars 10.1 to 10.3. The respondents have not made any complaint about the adequacy of those subparagraphs. Consequently, I consider that the alleged interference with the applicant's business has been adequately particularised. orders 22 For the reasons set out above, I have ordered that the applicant provide further and better particulars of subpars 8.5, 8.6, if necessary 8.7, 8.9, 8.10 and 27.1. I have struck out subpars 26.1 and 26.3 to 26.4 on the basis that the applicant have leave to file and serve fresh particulars of those matters, in the light of these reasons. Finally, I have struck out subpars 8.11 and 26.5. These further particulars can be provided by the filing and service of a separate document, rather than by the filing and service of a second further amended statement of claim. I will hear the parties as to the timetable for those particulars to be provided, and as to other directions which ought to be made. I certify that the preceding twenty-two (22) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Mansfield. Associate: Dated: 7 August 2001 Counsel for the Applicant: Mr N Rochow and Mr S Doyle Solicitor for the Applicant: Royle & Co Counsel for the Respondent: Mr G McGowan Solicitor for the Respondent: Norman Waterhouse Date of Hearing: 2 August 2001 Date of Judgment: 7 August 2001