FEDERAL COURT OF AUSTRALIA Arrowcrest Group Pty Limited v DTM Racing Wheels Pty Limited [2003] FCA 564 Federal Court of Australia Act 1976 (Cth) s 48 National Mutual Holdings Pty Ltd v The Sentry Corporation (1988) 19 FCR 155 applied Australian Competition and Consumer Commission v Pauls Ltd [2002] FCA 71 noted ARROWCREST GROUP PTY LIMITED (ACN 007 521 280) v DTM RACING WHEELS PTY LIMITED (ACN 093 118 122), THOMAS LEE AND STARCORP HOLDINGS PTY LIMITED (ACN 089 450 368) AND EVOLUTION RACING WHEELS PTY LTD (ACN 097 473 928) S 238 OF 2002 MANSFIELD J 6 JUNE 2003 ADELAIDE IN THE FEDERAL COURT OF AUSTRALIA SOUTH AUSTRALIA DISTRICT REGISTRY S 238 OF 2002 BETWEEN: ARROWCREST GROUP PTY LIMITED (ACN 007 521 280) APPLICANT AND: DTM RACING WHEELS PTY LIMITED (ACN 093 118 122) FIRST RESPONDENT THOMAS LEE SECOND RESPONDENT STARCORP HOLDINGS PTY LIMITED (ACN 089 450 368) THIRD RESPONDENT EVOLUTION RACING WHEELS PTY LTD (ACN 097 473 928) JUDGE: MANSFIELD J DATE OF ORDER: 6 JUNE 2003 WHERE MADE: ADELAIDE THE COURT ORDERS THAT: 1. The application is dismissed. 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 S 238 OF 2002 BETWEEN: ARROWCREST GROUP PTY LIMITED (ACN 007 521 280) APPLICANT AND: DTM RACING WHEELS PTY LIMITED (ACN 093 118 122) FIRST RESPONDENT THOMAS LEE SECOND RESPONDENT STARCORP HOLDINGS PTY LIMITED (ACN 089 450 368) THIRD RESPONDENT EVOLUTION RACING WHEELS PTY LTD (ACN 097 473 928) FOURTH RESPONDENT JUDGE: MANSFIELD J DATE: 6 JUNE 2003 PLACE: ADELAIDE REASONS FOR JUDGMENT 1 The first, second and fourth respondents (the DTM respondents) have applied by notice of motion under s 48 of the Federal Court of Australia Act 1976 (Cth) and O 10 r 1(2)(f) of the Federal Court Rules to transfer these proceedings to the New South Wales District Registry of the Court. The consequence would be that the New South Wales District Registry would become 'the proper place' of the proceedings and, subject to any order under O 36 r 6(2) of the Rules, the trial would be conducted in New South Wales. 2 Section 48 provides that: "The Court or a judge may, at any stage of a proceeding in the Court, direct that the proceeding or a part of the proceeding be conducted or continued at a place specified in the order, subject to such conditions (if any) that the Court or judge imposes.' Order 10 r 1(2)(f) does not really take the matter any further. At present the proper place of the proceeding, and therefore the place where the trial will proceed, absent any order under O 30 r 6(2) directing that the trial or part of the trial be held at some other place, will be in Adelaide. 3 There is no issue as to the applicable principles in considering the present application. They are found in National Mutual Holdings Pty Ltd v The Sentry Corporation (1988) 19 FCR 155. The Court said at 162: 'The factors which the Court is entitled to take into account in considering whether one city is more appropriate than another for interlocutory hearings or for the trial itself are numerous. The Court must weigh those factors in each case. Residents of parties and of witnesses, expense to parties, the place where the cause of action arose and the convenience of the Court itself are some of the factors that may be relevant in particular circumstances.' … Ultimately the test is: Where can the case be conducted or continued most suitably bearing in mind the interests of all the parties, the ends of justice in the determination of the issues between them, and the most efficient administration of the Court. It cannot and should not be defined more closely.' 4 It must also be borne in mind that the issue as to the proper place of the proceedings is related to, but is not the same as, the issue as to where the trial or part of the trial should be conducted. The proper place of the proceedings is where the proceedings ought properly to be conducted, including all pre-trial and interlocutory issues. It is as a consequence of the proper place of the proceedings being in a particular registry that, generally speaking, the trial will take place there. Order 30 r 6(2) provides however that the Court may direct that the trial, or part of a trial, of a proceeding be held at a place other than the proper place. It is not uncommon that the Court, in the exercise of its power and having regard to the convenience of the parties or witnesses, and the most efficient and economic means of conducting a trial, directs that part of a trial, or the evidence of a particular witness or witnesses, be heard in another place. There is presently no application under O 30 r 6(2), but ruling on the present motion does not preclude the DTM respondents from making such an application to the trial judge if it is appropriate prior to the hearing. 5 In fact, virtually all of the contentions of the DTM respondents by counsel are directed more appropriately to where the trial of the proceeding should take place. With one reservation, the contentions have been directed to the convenience or inconvenience of the DTM respondents and their witnesses in relation to the hearing of the matter rather than at any earlier point in time. That is not surprising in the present circumstances. The proceeding was commenced by application and statement of claim. The pleadings have been completed. The pleadings include cross-claims by the DTM respondents against the applicant, and by the third respondent against the DTM respondents. There has been no suggestion of any difficulty in that process. Discovery has been given by all parties. The Court has made interlocutory orders, including injunctive orders, again without any apparent inconvenience to any party. The Court has given directions for the exchange of witness affidavits so that the matter may be listed for trial. The witness affidavits have all been filed and served. The matter is therefore, subject possibly to minor ongoing interlocutory issues, ready to be listed for hearing. There is nothing to indicate that its conduct up to the present time has caused any difficulty to the DTM respondents in giving instructions or in conducting those various pre-trial and interlocutory issues. Essentially, the remaining step is the listing of the matter for trial, subject to whether the Court should direct mediation by the parties in the meantime. 6 The one qualification to which I referred is a submission by counsel for the DTM respondents on the motion that the institution of the proceedings by the applicant in the South Australian District Registry of the Court was improper, because it was not a proper place at which to institute the proceedings. It is contended that the purpose of the applicant in instituting the proceedings in the South Australia District Registry was to cause inconvenience and embarrassment to the DTM respondents. I do not accept that. I think it is an unfounded allegation. The applicant was incorporated in South Australia and its principal place of business is in South Australia. Its main cause of action is for breach of a registered design, in circumstances where the registered design was registered by application made in South Australia through a patent attorney resident in South Australia. The contravening conduct alleged involves the import into New South Wales of wheels of a design which is said to contravene a registered design of the applicant, and then distributed by the DTM respondents for sale by retail. It is unclear whether the distribution for sale by retail was Australia wide. 7 There are two principal causes of action. The applicant seeks a declaration that the respondents have infringed the applicant's registered design 146825 under the Designs Act 1906 (Cth). It secondly alleges that the third respondent has contravened s 53(c) of the Trade Practices Act 1974 (Cth) (the TP Act) by representing that certain wheels it was selling have the sponsorship and approval of the applicant which they do not have, and that each of the respondents contravened s 53(a) of the TP Act by representing that the imported wheels have a particular standard, quality, grade, value or composition which they do not have. Consequential orders are sought in addition to declaratory orders. The application included a claim for interlocutory relief which, to date, has been resolved with the acquiescence of the respondents. 8 The pleadings indicate the areas of significant factual dispute. The applicant is registered as the owner of the registered design from 19 September 2001 in respect of vehicle wheels. From or in about August 2002, the fourth respondent imported into Australia without the applicant's consent certain vehicle wheels from Hong Kong or Taiwan and then provided the wheels to the first respondent for it to sell or supply them to retail wheel suppliers for sale by retail. The retailers include the third respondent. The first and fourth respondents are related entities. The second respondent is a director of each. The third respondent sold or offered to sell the wheels. It is claimed that the imported wheels infringed the applicant's monopoly in its registered design. It is further claimed that by the sale of the imported wheels under the name 'DTM Fury' compared to the applicant's registered design using the name 'Fury', the third respondent represented the wheels as having the applicant's sponsorship affiliation or approval when they did not do so. It is also alleged that the markings cast on the imported wheels represent that the imported wheels conform to a Japanese automotive industry standard specified, and can bear an axle load of 695 kilograms, when they do not in fact conform to that standard and cannot safely bear that axle load. Consequently, it is alleged the respondents contravened s 53(a) of the TP Act. 9 The only positive allegation in the defences is to challenge the validity of the applicant's design. It is claimed that it is not a new or original design, and that it ought not to have been registered and should be expunged from the register on the basis of registration, publication or use in Australia of another design which differs only in immaterial details from the applicant's design and which preceded the priority date for the applicant's design. It is further claimed that the imported wheels were not a fraudulent or obvious imitation of the applicant's design. Consequently, the DTM respondents by cross-claim seek expungement of the applicant's registered design under s 32 of the Designs Act. They identify the previous registered design as being a design by Holden Ltd registered on 16 January 2002, and the previous publication as being certain wheels imported by Avantek Corporation Pty Ltd (Avantek) into Australia on 2 July 2001, and the promotion of the Avantek Wheels in catalogues from that date so as to amount to prior use of a design in Australia which differed only in immaterial respects from the applicant's registered design. The applicant's defence to the cross-claim denies that the Holden Ltd design means that the applicant's registered design is not new or original, and denies any publication in relation to the Avantek wheels amounted to prior use in Australia of a design that differed only in immaterial details from the applicant's registered design. 10 There is also a cross-claim by the third respondent against the DTM respondents, in effect for indemnity, on the basis that any contravention by it of the applicant's registered design or of the TP Act resulted from representations by the DTM respondents to it about the source and quality of the imported wheels and that they did not infringe any registered design of the applicant. 11 Hence, the real issues are as to the validity of the applicant's design in respect of the earlier registered design of Holdens Ltd and any earlier publication in relation to the Avantek wheels. The pleadings indicate there is no real issue about the importation or distribution of imported wheels by the DTM respondents. The full extent of the importation and distribution of the imported wheels is not precisely pleaded, understandably no doubt because at the time the applicant was not fully aware of those matters. It should be resolved through discovery and, I suspect, by the tender at the hearing of such documents as are necessary if the facts are not agreed to prove importation and distribution and sale. 12 There is no reason why, with respect to the substantive issues, the New South Wales District Registry is more appropriately the proper place of the proceeding than the South Australia District Registry. The applicant has its registered office and its principal place of business in South Australia. Its design was registered through a patent attorney in South Australia. The imported wheels come from Taiwan. The evidence indicates that they were sold to various retailers in States throughout Australia, apparently other than South Australia. It is unclear where the Holden Ltd registered design was lodged for registration, or if evidence is to be led about it, where that evidence can be most conveniently led. Avantek imported the Avantek tyres into Victoria from Taiwan. I do not think the fact that the first and fourth respondents' registered offices are in New South Wales and that the imported tyres were themselves imported into New South Wales leads to the view that the proper place of proceedings should be transferred to New South Wales. Given the real issues, the place of importation and the means of distribution to retailers is unlikely to be contentious. For what it is worth, I accept that the cause of action for contravention of the applicant's registered design (if proved) initially occurred in New South Wales, but whether the contravention of ss 53(a) and (c) of the TP Act took place in New South Wales, or only in New South Wales, is unclear. 13 The real issues, however, are whether the applicant's registered design is valid, having regard to the Holden Ltd design, and the importation and use by Avantek of the Avantek wheels and material relating to them. There is no special connection to New South Wales in respect of those issues. The other issue is as to the characteristics of the applicant's wheels and of the imported wheels. Again, particularly as the evidence as to the characteristics of the imported wheels (from the DTM respondents' affidavits) is by a witness from Taiwan, there is no special connection to New South Wales in respect of those matters. 14 In addition, I am also not persuaded that there is any preponderance of convenience in favour of transferring the proceedings to the New South Wales District Registry for the benefit either of the DTM respondents or for other reasons. The evidence shows the principal place of business of the DTM respondents is New South Wales, but its directors other than the second respondent reside in Hong Kong. There is no claim that the first and fourth respondents have no place of business outside New South Wales. The claim that it is more convenient for its directors to come to New South Wales to give evidence, as there is no direct Adelaide/Hong Kong flight, is of no real consequence as there is nothing to indicate that its directors propose to, or need to, give evidence other than the second respondent. Indeed the claim of convenience or inconvenience of those proposing to give evidence from overseas is somewhat specious. It may be assessed against an affidavit of the solicitor for the DTM respondents that they 'intend to call a witness who resides in Melbourne. It is more convenient for him to come to Sydney in terms of distance'. 15 Their solicitor deposes to the businesses of the first and fourth respondent being 'small in size'. That is a relative and unhelpful description. It is too general to provide any real evidence in support of the submission that the conduct of the trial in Adelaide, or the continued conduct of the proceedings in Adelaide, should require the (unidentified) senior executives of the DTM respondents 'to spend considerable time in Adelaide which would result in interference with their duties in their home state as well as their livelihood'. I am simply not satisfied that is the case. The senior executives are not identified. The real issues (which counsel for the DTM respondents accepted in the course of argument) are not of the kind that suggest why any senior executives of the first and fourth respondents would need to give evidence at the hearing. No doubt the second respondent may need to do so, and will wish to attend the hearing to give instructions. But the issues are not those which would require detailed instructions regarding the operations of any of the DTM respondents. Indeed, it is unclear how long the trial will take: there is no proposed independent expert evidence from the DTM respondents to controvert that of the applicant, in particular that of its patent attorney and its independent engineering expert. On the other hand, the reference to 'senior executives' suggests a range of personnel of the DTM respondents who might be available to give instructions if the second respondent is not available, and a range of personnel available to continue the operations of the DTM respondents if one of their senior executives such as the second respondent is required to attend the hearing. I regard the submission as to the extent of the inconvenience to the DTM respondents of the continued conduct of the proceeding in the South Australia District Registry as an ambit claim unsupported by cogent evidence and I do not accept it. 16 I accept that the second respondent would incur increased expenses whilst attending a hearing in Adelaide, and to some extent therefore that his ability to conduct his business affairs might be impaired. What is not clear is why that adverse effect should be much greater if he were to attend the same hearing in Sydney. I am not told what his business activities are. I do not accept, as there is no evidence to support it, the contention that him being in Adelaide during the trial would 'affect his ability to meet his obligations such as legal fees'. 17 The proposed witnesses of the DTM respondents who have been identified and whose witness affidavits have now been filed are the second respondent, two witnesses from Taiwan, one from Melbourne, and one from Hong Kong. Each is said to require an interpreter to assist in giving evidence, although their sworn statements of evidence do not show any assistance of an interpreter in the fiat clause. One proposed witness from Taiwan is a director of the company which exported the imported tyres from Taiwan to Avantek in Victoria. It is not clear why that evidence will be contentious, but the witness does not depose to any particular difficulty attending a hearing in Adelaide rather than Sydney, and his company has capital in excess of $US 8 million. The other proposed witness from Taiwan is from the same company and deals with the technical performance of the infringing wheels. It may be significant evidence. The witness statement from the Melbourne witness is 10 paragraphs long. It is unclear that it will be contentious. One statement from the Hong Kong (or New South Wales) witness, a director of the fourth respondent, is four paragraphs long only but does not seem to be contentious as he says he does not know anything of the relevant issues. His address on his affidavit is a New South Wales address although the solicitor's affidavit says he resides in Hong Kong. 18 Consequently judging from the witness affidavits of the DTM respondents, significant evidence will come from the second respondent and from one witness in Taiwan. I accept that the second respondent will attend the trial and therefore incur inconvenience and expense. I accept the witness attending from overseas will also incur inconvenience and expense, but it is not clear that his attendance in Adelaide rather than Sydney will in any significant way increase the expense or inconvenience which he might suffer. 19 The remaining matter put by the DTM respondents is that their solicitor has been for many years acting for them, and his principal place of business is in Sydney. There is no evidence or suggestion that the solicitor cannot instruct counsel in Adelaide (or Sydney), or that to do so would cause any particular difficulty. There is no evidence or suggestion that conducting the matter through the Sydney solicitor of the DTM respondents has caused any difficulty in the past, or will cause difficulty in the course of the hearing. To date pleadings have been completed, discovery given, witness affidavits exchanged, and interlocutory procedures including injunctive relief dealt with without any apparent difficulty. I accept that, if the DTM respondents continue to retain their present solicitor, and the trial takes place in Adelaide, they will incur additional expense beyond that which they would incur in Sydney. But otherwise there is nothing to suggest that the conduct of the matter generally has been or will be disadvantaged in any significant way by the proper place of the proceedings being Adelaide rather than Sydney. 20 To counterbalance the inconvenience and expense which the DTM respondents may incur, the applicant may on the other hand also incur inconvenience and expense if the proper place of the proceedings were to become Sydney. It is a South Australian registered company. Its principal place of business is in South Australia. Its solicitors and counsel are located in South Australia. Its five identified proposed witnesses reside in South Australia, and will all (according to their affidavits) give significant evidence, including the independent patent attorney and the independent engineering consultant. 21 Consequently, I find little to weigh in the scales in favour of accepting the application for a change in the proper place of the proceedings. The respective balance of convenience to the parties comes down more in favour of retaining the proper place of the proceedings in Adelaide than in Sydney. That is confirmed by the fact that the pleadings and the procedural steps to date have been taken without difficulty. The fact that the third respondent has made no submissions in support of the application raises a possible inference that it does not perceive a pressing need to change the proper place of the proceedings: cf Australian Competition and Consumer Commission v Pauls Ltd [2002] FCA 71 at [20]. There have been no other factors which, supported by evidence, bear any real weight in support of the application than those which I have addressed. 22 I accordingly dismiss the application. 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: 5 May 2003 Counsel for the Applicant: Mr I Robertson Solicitor for the Applicant: Cosoff Cudmore Knox Counsel for the First, Second & Fourth Respondents: Mr W Chan Solicitor for the First, Second & Fourth Respondents: William Chan & Co Counsel for the Third Respondent: Ms T Wacyk Solicitor for the Third Respondent: Townsends Date of Hearing: 21 May 2003 Date of Judgment: 6 June 2003