FEDERAL COURT OF AUSTRALIA Checked-Out Pty Ltd v Eagle Eye Inspections Pty Ltd [2003] FCA 1179 CHECKED-OUT PTY LTD v EAGLE EYE INSPECTIONS PTY LTD & ORS N169 OF 1999 EMMETT J 1 OCTOBER 2003 SYDNEY IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY N169 OF 1999 BETWEEN: CHECKED-OUT PTY LTD (ACN 071 965 798) APPLICANT AND: EAGLE EYE INSPECTIONS PTY LTD (ACN 084 722 234) FIRST RESPONDENT JOSEPH WILLIAMS SECOND RESPONDENT WAYNE THOMAS COOK THIRD RESPONDENT TIMOTHY BOLLINS FOURTH RESPONDENT DEBORAH JEAN WILLIAMS FIFTH RESPONDENT PETER ADAMS trading as PETER ADAMS, SOLICITORS & ATTORNEYS SIXTH RESPONDENT KATARINA MUC trading as G H HEALEY & CO BLACKTOWN and BRUCE McCANN trading as B E McCANN & CO, SOLICITORS SEVENTH RESPONDENT MARK KELADA trading as MARK KELADA SOLICITORS EIGHTH RESPONDENT MICHAEL QUINN trading as QUINNS SOLICITORS NINTH RESPONDENT JOHN MICHAEL NOYCE and GREGORY LAURENCE MARTIN trading as NOYCE LAWYERS TENTH RESPONDENT HENRY GRECH trading as GRECH PARTNERS SOLICITORS ELEVENTH RESPONDENT GREGORY PETER GUY trading as GUY & ASSOCIATES SOLICITORS TWELFTH RESPONDENT JUDGE: EMMETT J DATE OF ORDER: 1 OCTOBER 2003 WHERE MADE: SYDNEY THE COURT ORDERS THAT: 1. leave be granted to the first to fifth respondents to file in Court the affidavits of Michael Henry Atkinson sworn 30 September 2003; 2. the hearing dates, fixed provisionally for 13 October 2003 to 17 October 2003, be vacated; 3. the proceeding be listed for directions, and any current notices of motion, on Thursday 16 October 2003 at 10.15 am; 4. documents 174 and 175, being the affidavit of 13 paragraphs of Philip Julian Hardcastle sworn 29 September 2003 and the affidavit of Anna Wilczak sworn 26 September 2003, be removed from the Court file and returned to the applicant; 5. costs be reserved. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY N 169 OF 1999 BETWEEN: CHECKED-OUT PTY LTD (ACN 071 965 798) APPLICANT AND: EAGLE EYE INSPECTIONS PTY LTD (ACN 084 722 234) FIRST RESPONDENT JOSEPH WILLIAMS SECOND RESPONDENT WAYNE THOMAS COOK THIRD RESPONDENT TIMOTHY BOLLINS FOURTH RESPONDENT DEBORAH JEAN WILLIAMS FIFTH RESPONDENT PETER ADAMS trading as PETER ADAMS, SOLICITORS & ATTORNEYS SIXTH RESPONDENT KATARINA MUC trading as G H HEALEY & CO BLACKTOWN and BRUCE McCANN trading as B E McCANN & CO, SOLICITORS SEVENTH RESPONDENT MARK KELADA trading as MARK KELADA SOLICITORS EIGHTH RESPONDENT MICHAEL QUINN trading as QUINNS SOLICITORS NINTH RESPONDENT JOHN MICHAEL NOYCE and GREGORY LAURENCE MARTIN trading as NOYCE LAWYERS TENTH RESPONDENT HENRY GRECH trading as GRECH PARTNERS SOLICITORS ELEVENTH RESPONDENT GREGORY PETER GUY trading as GUY & ASSOCIATES SOLICITORS TWELFTH RESPONDENT JUDGE: EMMETT J DATE: 1 OCTOBER 2003 PLACE: SYDNEY REASONS FOR JUDGMENT 1 The applicant claims to be the owner of copyright in certain literary works described as 'the applicant's software' and 'the applicant's documents' in the fifth further amended statement of claim ('the statement of claim') (together 'the Works'). The applicant alleges that the first respondent has infringed its copyright in relation to the Works. The second, third, fourth, and fifth respondents are said to have been involved in, or authorised, directed, procured and participated in, the infringement, to a greater or lesser extent. The sixth to twelfth respondents are solicitors who are also alleged to have infringed copyright in relation to the applicant's documents. 2 The matter has had an unfortunate history. Part of the misfortune that the litigation has suffered is the result of lack of legal representation, from time to time, of the applicant. 3 On 15 May 2003, I directed the respondents to file and serve, no later than 25 July 2003, an outline of all evidence on which they intend to rely in relation to the matters alleged in par 9 of the statement of claim, which deals with the allegation of ownership of copyright in the Works. That direction was not complied with and some explanation was given on behalf of the respondents pursuant to directions that I gave on 7 August 2003. 4 At some stage in early August, the first to the fifth respondents made available to the Court and to the applicant a document outlining the evidence intended to be relied upon. That document indicated that considerable reliance would be placed upon the evidence of the second respondent, Mr Williams. Reference was made in the document to Mr Kevin Pavert, a former director and employee of the applicant, but it was not suggested that there would be evidence from Mr Pavert. 5 On 7 August 2003, I stood the matter over for further directions on 13 August 2003. On that day, I provisionally fixed the matter for hearing on 13 October 2003 for five days on all issues, other than issues concerning relief, and stood the matter over until 15 August 2003. On 15 August 2003, there were further directions concerning access to computer disks and programmes. The matter next came before me on 25 August 2003 at which time I foreshadowed directions. On 1 September 2003, I directed the respondents to file and serve, no later than 16 September 2003, all statements of evidence, including expert evidence, upon which they intended to rely on the question of liability. There were also further directions concerning access to computer disks. 6 In the course of the directions hearings, the question of possible mediation was raised and, on 1 September 2003, I ordered that the proceeding be referred to mediation on terms approved by the Court. The mediator originally proposed was not available for several weeks and, on 5 September 2003, I directed that the proceeding be referred to mediation by the Hon M J R Clarke QC on 24 September 2003, in accordance with a mediation agreement, to which I referred in the directions. 7 In the course of the directions hearing on 5 September 2003, I inquired of the parties as to whether the matter would be ready for mediation on 24 September 2003 and the parties indicated that that was a suitable date. At that stage, the solicitor for the applicant indicated that it would be necessary for the applicant to know the case against it as soon as possible. Counsel for the first to fifth respondents indicated at that stage that there may be one problem with complying with the direction that outlines of evidence be filed by 16 September 2003. The one problem to which counsel referred was the difficulty with an expert. I indicated that, if the evidence was produced later than 16 September 2003, the matter may not be ready for mediation. Counsel for the first to fifth respondents said that if the date for the filing of evidence was left, it should be noted that the expert evidence may run over by a few days. 8 I declined to vary the date in relation to the expert evidence and suggested that the first to fifth respondents do the best they could. In that context, counsel for the first to fifth respondents referred to difficulties with the availability and reading of computer disk. I made clear to the applicant's solicitor that he should co-operate in ensuring that the disk be made available or that any further information as to the contents of the disk be made available to the first to fifth respondents. 9 At that stage, the applicant's solicitor indicated that, while there may be some difficulty with the expert, he required that the lay evidence not be delayed and that it should be available on 16 September 2003, no matter what. I indicated that that was the direction that was made and if there were a further application later on to vary it, I would deal with it when one was made. I indicated that I would not extend the time for compliance with the direction at that stage. 10 I also explored with the parties the question of whether a hearing was still feasible on 13 October 2003 if the mediation were not successful. The parties again confirmed that that date was convenient and I confirmed that the proceeding had been provisionally fixed for that date and that the parties should work towards that date for the time being. 11 Counsel for the first to fifth respondents at that point raised the question of legal representation of the applicant and stated that it was the position of the first to fifth respondents that the Rules concerning representation be enforced. Notwithstanding that, I gave leave for the applicant to be represented by Mr Hardcastle on 26 September 2003 on the basis that, on that day, I would be doing nothing more than receiving a report concerning the result of the mediation. 12 When the matter came before me on 26 September 2003, Mr Hardcastle complained about lateness of service of lay statements by the first to fifth respondents. Specifically, reference was made to statements of the second respondent, Mr Joseph Williams, and of Mr Kevin Pavert. Other statements had been made available on or within a day or so of the date directed. The only explanation for the lateness of Mr Williams' statement is the indisposition of the solicitor for the first to fifth respondents for several days in September. I do not doubt the genuineness of that claim. On 26 September 2003, the only explanation for the lateness of Mr Pavert's statement was an assertion that there had been difficulty in communicating with him. No indication of the difficulties was given. 13 Today, a further affidavit was filed concerning the so-called 'difficulties'. That affidavit indicates that, on 16 November 1999, the first to fifth respondents' solicitor attended upon Mr Pavert to obtain a statement. Mr Pavert provided him with a mobile telephone number. Nothing was done for nearly four years until 29 August 2003 when the solicitor for the first to fifth respondents attempted to contact Mr Pavert on the mobile telephone number but was advised that it was no longer Mr Pavert's number. The solicitor at that stage decided to make some inquiries in order to locate Mr Pavert. Those inquiries took approximately two weeks. Those circumstances rather suggest that Mr Pavert was either an oversight or an after thought, or that the solicitor did not begin to prepare until 29 August 2003. Either way, the net result was that the statements, which would have been significant to a mediation, were not made available until the day before the mediation. Whether or not that had an adverse effect on the mediation and the possible outcome is not to the point at present. What is significant is that Mr Pavert is now to be called as a witness. 14 There was no compliance with my direction of 15 May 2003 in relation to the evidence of Mr Pavert and there was no compliance with my direction of 15 August 2003 concerning the evidence of Mr Pavert. Mr Pavert's evidence does appear to me to be of considerable significance concerning the question of ownership of copyright. Mr Pavert claims to have been responsible for the incorporation of the applicant and to have invited Mr Hardcastle to join him in the business of the applicant. Mr Pavert gives detailed evidence in his affidavit, sworn 23 September 2003, concerning the creation of the Works. 15 I do not consider that it is appropriate to commence the hearing of the proceeding on 13 October 2003 in circumstances where the non compliance with the directions that I have given concerning preparation would almost inevitably lead to an adjournment to enable the applicant to complete inquiries and investigations that would be justified and should have been carried out months ago, if there had been compliance with my directions. Therefore, I do not propose to confirm the fixture for 13 October 2003. I will list the matter for further directions at a time when I would expect that the applicant would have legal representation who is able to tell me precisely what further steps need to be taken for the preparation of the case for hearing. I will then give directions and I would expect that those directions be complied with by both parties, without any failure. I certify that the preceding fifteen (15) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Emmett. Associate: Dated: 31 October 2003 Counsel for the Applicant: P J Hardcastle, with leave Counsel for the First to Fifth Respondents: J S Drummond Solicitor for the First to Fifth Respondents: Bateman Battersby Counsel for the Sixth, Eighth to Eleventh Respondents: M W Young Solicitor for the Sixth, Eighth to Eleventh Respondents: Noyce Lawyers Solicitor for the Seventh Respondent: David Somerfield & Co Counsel for the Twelfth Respondent: B Morris Solicitor for the Twelfth Respondent: R E Barros & Co Date of Hearing: 1 October 2003 Date of Judgment: 1 October 2003