FEDERAL COURT OF AUSTRALIA Dixon Projects Pty Ltd v Hallmark Homes Pty Ltd [2002] FCA 1206 PRACTICE AND PROCEDURE – Parties – joinder of additional respondents –whether joinder necessary to determine dispute between parties – where proceedings properly constituted – where substantial delay in bringing joinder application – where attempt to cause commercial harm to respondent – where joinder would cause additional delay and expense. Federal Court Rules O 6 r 2, O 6 r 8, O 13 r 2 News Limited v Australian Rugby Football League Limited (1996) 64 FCR 410 (FC) Appl Australian Tape Manufacturers Association Ltd v Commonwealth of Australia (1990) 64 ALJR 530 Foll Trade Practices Commission v Westco Motors (Distributors) Pty Ltd (1981) 58 FLR 384 Foll Bishop v Bridgelands Securities Limited (1990) ATPR 41,060 Appl Eagle Homes Pty Ltd v Austec Homes Pty Ltd (1999) 87 FCR 415 (FC) Cited Williams v Spautz (1992) 174 CLR 509 Refd Walton v Gardiner (1993) 177 CLR 378 Refd DIXON PROJECTS PTY LTD (ACN 010 828 172) v HALLMARK HOMES PTY LTD (ACN 007 959 524) Q159 OF 2001 COOPER J BRISBANE 27 SEPTEMBER 2002 IN THE FEDERAL COURT OF AUSTRALIA QUEENSLAND DISTRICT REGISTRY Q 159 OF 2001 BETWEEN: DIXON PROJECTS PTY LTD (ACN 010 828 172) APPLICANT AND: HALLMARK HOMES PTY LTD (ACN 007 959 524) RESPONDENT JUDGE: COOPER J DATE OF ORDER: 27 SEPTEMBER 2002 WHERE MADE: BRISBANE THE COURT ORDERS THAT: 1. The application to join Graham Gilbertson as a second respondent and Gerard Walker as a third respondent and to deliver an amended statement of claim is dismissed. 2. The applicant to pay the respondent its costs of and incidental to the notice of motion, including reserved costs, if any, to be taxed if not agreed. 3. The proceedings are adjourned to 9.30 am Friday 11 October 2002, for further directions. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. IN THE FEDERAL COURT OF AUSTRALIA QUEENSLAND DISTRICT REGISTRY Q 159 OF 2001 BETWEEN: DIXON PROJECTS PTY LTD (ACN 010 828 172) APPLICANT AND: HALLMARK HOMES PTY LTD (ACN 007 959 524) RESPONDENT JUDGE: COOPER J DATE: 27 SEPTEMBER 2002 PLACE: BRISBANE REASONS FOR JUDGMENT 1 The applicant commenced proceedings against the respondent by the filing of an application and statement of claim on 17 July 2001. It alleged infringement of its copyright in plans and drawings for a house, marketed by it under the name "Grand Vista", by the respondent. It also alleged that the respondent engaged in misleading and deceptive conduct in contravention of s 52 of the Trade Practices Act 1974 (Cth) in the marketing of the alleged infringing copy. 2 On 17 August 2001, the respondent filed its defence. The applicant sought further and better particulars of the defence, which were provided and filed on 31 August 2001. The respondent in its defence denied infringing any copyright claimed by the applicant, and in its particulars identified Graham Gilbertson, its managing director, and Gerard Walker, an employed draftsman of the respondent, as the persons who independently produced the "Montego" plans which it is said infringe the applicant's copyright. 3 On 4 June 2002 the applicant filed a notice of motion seeking leave pursuant to O 6 r 2 or O 6 r 8 of the Federal Court Rules ("the Rules") to join Mr Gilbertson and Mr Walker as respondents, and leave pursuant to O 13 r 2 to file and serve a further amended application and statement of claim. 4 The application is opposed by the respondent. 5 Order 6 rule 2 of the Rules provides : "2. Two or more persons may be joined as applicants or respondents in any proceeding: (a) where: (i) if a separate proceeding were brought by or against each of them, as the case may be, some common question of law or of fact would arise in all the proceedings; and (ii) all rights to relief claimed in the proceeding (whether they are joint, several or alternative) are in respect of or arise out of the same transaction or series of transactions; or (b) where the Court gives leave so to do." 6 Order 6 rule 8 of the Rules provides : "8(1) Where a person who is not a party: (a) ought to have been joined as a party; or (b) is a person whose joinder as a party is necessary to ensure that all matters in dispute in the proceeding may be effectually and completely determined and adjudicated upon; the Court, on application by him or by any party or of its own motion, may order that he be added as a party and make orders for the further conduct of the proceeding. (2) A person shall not be added as an applicant without his consent." 7 The proceedings against the respondent were properly constituted when they were initiated by the applicant. They are complete as to parties, in the sense that they would not be subject to abatement for want of a party. There is no party other than the existing respondent who is concerned in the relief claimed against the respondent. In those circumstances, Mr Gilbertson and Mr Walker were not persons who ought to have joined as a party and the applicant fails to make out a right to joinder under O 6 r 8(1)(a): News Limited v Australian Rugby Football League Limited (1996) 64 FCR 410 (FC) at 523 - 525. 8 The question in issue is whether or not the respondent, as a corporation acting by and through its servants or agents, infringed any copyright held by the applicant in the house plans in issue, or made any misleading and deceptive statements as alleged. That those servants or agents may be necessary witnesses in the respondent's defence of the proceedings does not make them a "necessary" party, for the purpose of r 8(1)(b) in order to effectually and completely determine and adjudicate upon the dispute between the applicant and the respondent: Australian Tape Manufacturers Association Ltd v Commonwealth of Australia (1990) 64 ALJR 530 at 531 - 532; Trade Practices Commission v Westco Motors (Distributors) Pty Ltd (1981) 58 FLR 384 at 386 - 387. In those circumstances, the applicant does not make out a right of joinder under O 6 r 8(1)(b). 9 I turn now to joinder under O 6 r 2 of the Rules. 10 There is jurisdiction with leave to join parties under O 6 r 2(a) or (b) after the commencement of the proceedings: O 6 r 4 of the Rules; Trade Practices Commission v Westco Motors (Distributors) Pty Ltd at 388. The question is whether, as a matter of discretion, the jurisdiction should be exercised: Bishop v Bridgelands Securities Limited (1990) ATPR 41,060 at 51,765. 11 The respondent submits that there has been unexplained delay on the part of the applicant in bringing the application for joinder, that joinder will unnecessarily delay the proceedings when all interlocutory steps have been completed, and the matter only awaits a trial date and trial directions, and, that the applicant seeks to delay the proceedings by the joinder in circumstances which amount to an abuse of process. The respondent also submits that it will be prejudiced in the conduct of its defence if joinder is allowed. 12 The applicant filed no affidavit material as to why it failed to seek to join Mr Gilbertson and Mr Walker when the applicant became aware of their identity. It simply relied on a letter from the applicant's solicitors to the respondent's solicitors dated 3 June 2002 as containing a satisfactory explanation. For reasons I set out below, it is not an explanation which I accept. 13 The material filed by the respondent discloses : (a) by letter dated 5 July 2001, the respondent's solicitors disclosed to the applicant's solicitors that production of the "Montego" plans commenced with changes made in red ink to one of the respondent's portfolio of plans (the "Callais") which were developed into final plans by a draftsman employed by the respondent: paragraph 2. (b) by letter dated 12 July 2001, the applicant's solicitors asked the identity of the draftsperson or designer responsible for creation of the "Montego" plans; (c) by letter dated 18 July 2001, Mr Gilbertson was identified as the person who made the changes in red ink to the "Callais" plan. Mr Walker was not identified in that letter as the draftsman who carried the changes into fuller effect as they finally appeared in the "Montego" plans; (d) on 30 July 2001, the respondent sought further and better particulars of the applicant's statement of claim which sought, inter alia, particulars of the alleged actual copying of the "Grand Vista" design, identifying the person responsible and the occasion of the copying; (e) in further and better particulars dated 2 August 2001, the applicant stated that it did not know the identity of the persons who copied the "Grand Vista" design: paragraph 4(d); (f) On 14 August 2001, the respondent by letter of that date sought particulars as to the case alleged against it by the applicant; (g) on 17 August 2001, the respondent filed its defence in which it denied copying of the "Grand Vista" design and pleaded that the "Montego" plans were developed from the respondent's "Callais" plan; (h) on 31 August 2001, an order was made by consent for delivery by the applicant of further particulars of its statement of claim by 10 September 2001; (i) on 31 August 2001, the respondent filed further and better particulars of its defence in which it identified Mr Gilbertson and Mr Walker as the two persons responsible for the development of the "Montego" plans and set out the manner in which the plans were developed by them: paragraph 4; (j) on 24 September 2001, the applicant filed a reply which simply adopted the admissions in the defence and otherwise put all matters in issue; (k) by letter dated 22 October 2001 together with attachments, the respondent set out in detail the steps taken in the development of the "Montego" plans, commencing with the "Toorak" plan in September 1998 and provided copies of all relevant documents. The documents identified Mr Gilbertson as having marked up in red ink the "Calais" plan on 16 February 2001, and Mr Walker as having developed the marked up drawing to the stage of a CAD floor plan and elevations produced on 3 May 2001; (l) on 27 December 2001, the applicant filed an amended statement of claim pursuant to leave given by the Deputy District Registrar on 7 December 2001; (m) on 18 January 2002, the respondent filed an amended defence in which it again pleaded how the "Montego" plans were developed. It also incorporated the further and better particulars of 31 August 2001 and the documentation attached to its letter of 22 October 2001 as part of its pleading by way of defence. (n) on 4 March 2002, the applicant amended its application pursuant to an order of the Deputy District Registrar made on 26 February 2002; (o) on 26 April 2002, the parties attended on a Court ordered mediation which was unsuccessful in resolving the matter; (p) by letter dated 20 May 2002, the applicant's solicitors advised the respondent's solicitors that they had been instructed to seek leave to join Mr Gilbertson and Mr Walker personally as respondents to the proceedings; (q) the respondent's solicitors responded by letter dated 22 May 2002. In the letter they complained as to the lateness of the proposed joinder, and accused the applicant of attempting to put pressure upon the individuals to produce a commercial settlement of an unmeritorious claim which it contended was an abuse of process of the Court; (r) the applicant's solicitors responded by letter of 3 June 2002 that the individuals had not been joined earlier in the hope that the matter would be resolved in mediation and that the cost and expense of joinder would, in consequence, be avoided. Mediation having failed, and the individuals being proper parties, the applicant intended to seek the joinder; (s) on 26 June 2002, the applicant's solicitors wrote letters in the following form to two of the respondent's sales staff : "Dixon Projects Pty Ltd -ats- Hallmark Homes Pty Ltd We act for Dixon in proceedings against Hallmark. We understand that you are an independent sales consultant, who provides services to Hallmark. The purpose of this letter is to inform you of the following. 1. Dixon owns copyright in the 'Grand Vista' house design; 2. In the action against Hallmark, Dixon alleges that : (a) the 'Montego' house design marketed by Hallmark, the Montego display home at Lot 301 Karinya Place, Twin Waters and any other Montego house infringes copyright in the Grand Vista; and (b) in marketing the Montego and making the Montego display home available to the public, Hallmark is making misleading and deceptive representations that : (i) the Montego and the Montego display home were created without copying the Grand Vista; (ii) the Montego was created lawfully by Hallmark; and (iii) the Montego display home and any Montego house are built lawfully. 3. We are aware that sales consultants for Hallmark may be: (a) marketing the Montego and Montego display home, whilst aware that these are very similar to, and may infringe copyright in, Dixon's Grand Vista design; and (b) making representations described above, whilst aware that they may be misleading and deceptive or likely to mislead or deceive. 4. Whilst Dixon does not want to join any sales staff in its action against Hallmark unnecessarily, it is considering bringing an action against any individual sales staff engaged in the above activities. We invite you to contact us if you have any concerns in relation to the above. ..." 14 The applicant applies to amend again its statement of claim to reflect the joinder it seeks. The draft further amended statement of claim was filed on 4 June 2002 as an exhibit to an affidavit of Ms Newcombe. It alleges that each of the proposed second (Gilbertson) and third (Walker) respondents has infringed the applicant's copyright. As against the proposed second and third respondents, the applicant pleads the matters contained in the document "Schedule of Development of the Montego Plan" delivered to the applicant under cover of the respondent's solicitor's letter of 22 October 2001, and particularised in the respondent's defence, as the relevant infringing conduct: paragraph 9(b) and (c) and particular (i). The document then states, in paragraph 9, particular (ii) : "The applicant is unable to provide further and better particulars pending interlocutory steps." 15 There is no allegation made in the draft statement of claim that either Mr Gilbertson or Mr Walker actually directly copied the "Grand Vista" design. All that is alleged is that the "Montego" plans and "Montego" house reproduce the whole or a substantial part of the "Grand Vista" design and the "Grand Vista" houses (paragraphs 7 and 8), and that Mr Gilbertson's infringement lay in "creating a sketch which reproduced the whole or a substantial part of the Grand Vista design" (paragraph 9(b)(i)). Likewise the infringement of Mr Walker is alleged to lie in "creating and/or participating in the creation of the Montego plans" (paragraph 9(c)). 16 As discovery between the applicant and the present respondent is now complete, I infer from the state of the pleadings and the history of the litigation as set out above that the applicant has no evidence available to it of actual direct copying by either Mr Gilbertson or Mr Walker of the materials in which the applicant claims copyright. In these circumstances, the case it pleads is one based upon a comparison of the "Grand Vista" design and the "Grand Vista" houses with the "Montego" plans and the "Montego" house and asking that the Court find that there is sufficient objective similarity in that material and there exist sufficient other circumstances to enable an inference to be drawn of subjective copying by Mr Gilbertson and/or Mr Walker: Eagle Homes Pty Ltd v Austec Homes Pty Ltd (1999) 87 FCR 415 (FC) at 438. 17 I am not satisfied that the applicant now wishes to pursue the proceedings in an expeditious way to vindicate its rights, if any, to the copyright in the "Grand Vista" design or in the "Grand Vista" houses. The applicant has since 31 August 2001 at the latest, known of Mr Gilbertson and Mr Walker and the role of each in the development of the "Montego" plans. On 22 October 2001, the applicant was given the documentary material on which the respondent will reply at trial to contend that the "Montego" plans were developed independently of, and without copying, the "Grand Vista" design or the "Grand Vista" houses. Since that time the applicant has amended its application and statement of claim and has shown no interest in joining either Mr Gilbertson or Mr Walker as a respondent to the proceedings. Until this application for joinder, there was no suggestion that the case advanced by the applicant, and the one it sought to litigate, was one against the respondent alone. The first time there is a suggestion of joining Mr Gilbertson and Mr Walker as respondents is after the applicant failed to achieve in the mediation a commercial settlement which was satisfactory to it. The failure of mediation is the only relevant change in circumstances to occur since October 2001, when it received the documentation outlining the involvement of Mr Gilbertson and Mr Walker in the development of the "Montego" plans. 18 I am satisfied that the attempt to join Mr Gilbertson and Mr Walker as respondents, and the threats to join Mr Alan O'Mara, a sales consultant at the respondent's Twin Waters display home, and Mr Peter Jenkins, a sales consultant at the Pelican Waters display home, as respondents to the present proceedings, is an attempt to use the proceedings to cause commercial harm to the respondent. I am also satisfied that it is an attempt to impose the burden of the litigation on the individuals, in the absence of any evidence that those persons had or were engaged directly in any copying of the applicant's material, or, were knowingly making any false or misleading representations of the type alleged against the respondent. 19 The sending of the letters to the sales consultants with the threat of joinder was an attempt to use the proceedings as a means of procuring the refusal of the sales consultants to market houses to be constructed by the respondent to its "Montego" plans. The conduct of the applicant in making these threats colours my view of the purpose of the applicant in seeking to join Mr Gilbertson and Mr Walker as respondents. I am satisfied that the applicant's sole purpose in seeking to do so is to visit the burden of personal litigation on the two individuals to put pressure on them to procure the respondent to desist from and abandon the sale of houses constructed to its "Montego" plans with or without coming to a commercial arrangement with the applicant to conclude the proceedings. I am satisfied that the applicant now does not intend to bring the proceedings to a successful conclusion so as to take advantage of an entitlement or benefit which the law gives to it. Rather, it now seeks to maintain the proceedings in being as a means of causing harm to the respondent in its commercial dealings to procure an abandonment by the respondent of its rights, if any, in its "Montego" plans. 20 It is unnecessary to determine whether or not the attempt to join Mr Gilbertson and Mr Walker is in itself an abuse of process, although I am inclined to the view that it may be: see Williams v Spautz (1992) 174 CLR 509 at 518 ff in the judgment of Mason CJ, Dawson, Toohey and McHugh JJ, and, Brennan J at 532 - 533, 537; Walton v Gardiner (1993) 177 CLR 378 at 392 - 395, 410 - 411. It is sufficient for the exercise of the present discretion to hold that the joinder of the proposed respondents would not be conducive to the just resolution of the dispute between the applicant and the respondent. Rather, I am satisfied that the joinder will create delay in the final determination of the proceedings and add to the costs of the litigation. I am not satisfied that the joinder would be unlikely to result in unfairness to the respondent and to the proposed respondents: Bishop v Bridgelands Securities Limited at 51,765. Further, there is no prejudice to the applicant in the conduct of the proceedings against the respondent. On the materials presently available to the applicant, its case is, and will remain, one based on a comparison of the plans and houses and the drawing of such inferences as are available from the circumstances found to exist at the time the "Montego" plans were produced. If the applicant succeeds in the existing proceedings, there is no suggestion that it will not obtain full and complete relief from the respondent. Nor is there any evidence that the proposed respondents benefited in any material way, other than perhaps the receipt of their usual salary whilst developing the "Montego" plans, or that they threaten to infringe any copyright of the applicant in the "Grand Vista" design or the "Grand Vista" houses if the respondent fails in its defence. 21 The application for joinder and leave to deliver an amended statement of claim is dismissed. Costs should follow the event in the usual way. 22 The matter will be listed for directions leading to the trial of the action. I certify that the preceding twenty-two (22) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Cooper. Associate: Dated: 27 September 2002 Counsel for the Applicant: Mr DLK Atkinson Solicitor for the Applicant: Mallesons Stephen Jaques Counsel for the Respondent: Mr D Logan Solicitor for the Respondent: Minter Ellison Date of Hearing: 23 July 2002 Date of Judgment: 27 September 2002