FEDERAL COURT OF AUSTRALIA Vans, Inc. v Offprice.Com.Au Pty Ltd [2006] FCA 137 PRACTICE AND PROCEDURE – Application for leave to appeal against decision of docket judge refusing an application to enter summary judgment in favour of applicant – No prima facie defence shown on the evidence – Whether summary judgment ought to be refused where a respondent merely seeks to put applicant to proof of its case – Significance of recent enactment of s 31A of Federal Court of Australia Act – Effect of the formula 'no reasonable prospect of successfully defending the proceeding' – Application for leave to appeal granted. Federal Court of Australia Act 1976 (Cth), s 31A VANS, INC. v OFFPRICE.COM.AU PTY LIMITED, MARJORY PTY LTD, MICHAEL WAGNER, MICHAEL O'SHEA VID131 of 2006 WILCOX J 22 FEBRUARY 2006 MELBOURNE IN THE FEDERAL COURT OF AUSTRALIA VICTORIA DISTRICT REGISTRY VID131 of 2006 BETWEEN: VANS, INC. APPLICANT AND: OFFPRICE.COM.AU PTY LIMITED FIRST RESPONDENT MARJORY PTY LTD SECOND RESPONDENT MICHAEL WAGNER THIRD RESPONDENT MICHAEL O'SHEA FOURTH RESPONDENT JUDGE: WILCOX J DATE OF ORDER: 22 FEBRUARY 2006 WHERE MADE: MELBOURNE THE COURT ORDERS THAT: 1. The applicant, Vans, Inc., be granted leave to appeal against the order of Finkelstein J, made on 3 February 2006 in Federal Court Proceeding No VID382 of 2005, dismissing an application for summary judgment against the second respondent, Marjory Pty Limited. 2. The directions for trial made by Finkelstein J on 17 February 2006 be stayed, pending determination of the appeal, or earlier order of a judge. 3. The costs of this application be costs in the appeal. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. IN THE FEDERAL COURT OF AUSTRALIA VICTORIA DISTRICT REGISTRY VID131 of 2006 BETWEEN: VANS, INC. APPLICANT AND: OFFPRICE.COM.AU PTY LIMITED FIRST RESPONDENT MARJORY PTY LTD SECOND RESPONDENT MICHAEL WAGNER THIRD RESPONDENT MICHAEL O'SHEA FOURTH RESPONDENT JUDGE: WILCOX J DATE: 22 FEBRUARY 2006 PLACE: MELBOURNE REASONS FOR JUDGMENT WILCOX J: 1 This is an application for leave to appeal against a decision of Finkelstein J, made on 3 February 2006, dismissing an application for summary judgment against one of four respondents, in respect of all of whom the applicant made allegations of infringement of trademark. That respondent is the second respondent, Marjory Pty Limited ('Marjory'). I understand the applicant is likely to discontinue its action against the other respondents. 2 The action concerns shoes that bear the applicant's trademark. There was evidence before Finkelstein J that the shoes are counterfeit. That evidence came in an affidavit made by Larry Bendo Anastacio, an employee of a company associated with the applicant. Mr Anastacio set out his experience in detecting counterfeit 'Vans' products and gave detailed reasons why, in his opinion, the subject shoes are counterfeit. 3 There was no evidence contradicting Mr Anastacio's opinion. However, the third respondent, Michael Wagner, who was concerned, at least at one stage, with the management of Marjory, said the shoes were purchased from a business in Hong Kong, Warner Shop Limited ('Warner'), which he believed to be authorised to sell Vans footwear. Mr Wagner said he believed the goods were 'genuine footwear made by or under the authority of the Applicant'. 4 There was also some evidence of a hearsay nature, but admitted by his Honour, that a paralegal, employed by the respondents' solicitors, telephoned Warner in Hong Kong and was told that, for the past two years or so, Warner had been selling Vans products which were purchased from Joint Power International Limited ('Joint Power'), an authorised Vans dealer. The paralegal then rang Joint Power. She was told that Joint Power was an authorised distributor of Vans products, and that Warner Shop was one of the clients to whom it supplied Vans products. 5 As was submitted by Mr D Shavin QC, who appeared with Ms M Barker on behalf of the applicant for leave, this evidence does not provide a defence to the claim. However, it shows a provenance of the shoes that is consistent with the possibility that they are not counterfeit. Of course, it would be possible for an authorised dealer also to sell counterfeit goods. There is no material to say whether this happened in the present case. The point made by Mr B Fitzpatrick, counsel for Marjory, is that this is a matter requiring investigation. 6 In reasons for judgment delivered on 3 February 2006, Finkelstein J mentioned the recently enacted s 31A of the Federal Court of Australia Act 1976 (Cth). Subsection (1) of that section reads as follows: 'The Court may give judgment for one party against another in relation to the whole or any part of a proceeding if: (a) the first party is prosecuting the proceeding or that part of the proceeding; and (b) the Court is satisfied that the other party has no reasonable prospect of successfully defending the proceeding or that part of the proceeding.' 7 Mr Shavin referred me to several cases in which members of this Court have entered summary judgment in favour of applicants claiming trademark infringement on the basis of, similar evidence to that of Mr Anastacio. Typically, such evidence involves a person familiar with the particular applicant's products inspecting the subject goods and offering an opinion that they are counterfeit, for reasons then expressed. It was put to me that this case raises an important question of principle: whether the Court should continue to apply the approach taken in those cases. 8 It is important to remember that every application for summary judgment must be determined on its own merits and according to the facts of the particular case. No two cases are factually identical; although, no doubt, it was correct for Mr Shavin to say that solicitors who regularly act for trademark owners tend to file similar affidavits in each case. 9 Finkelstein J was unhappy about the decisiveness of the evidence put before him. He did not say Mr Anastacio's evidence should be rejected. At para 20 of his judgment, Finkelstein J expressly said he did not doubt that Mr Anastacio believes the goods he inspected were counterfeit. However, his Honour added: '… he did not produce original Vans shoes so that I myself could undertake the comparison (if needs be, assisted by the witness) and so determine the correctness of his evidence. I think this is a matter that should be investigated at a trial rather than relying on the applicant's untested evidence, especially in a situation where there is some possibility that the goods are not counterfeit.' 10 I have sympathy with the view expressed by Finkelstein J. There is much to be said for the principle that a party, against whom proceedings are taken, is entitled to its/his/her day in court to test that evidence. The principles in force before the enactment of s 31A would, I think, have required the rejection of a summary judgment application in this case. It is sufficient for me to refer to authorities such as Dey v Victorian Railways Commissioners (1949) 78 CLR 62 and General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125. 11 The strength of the application for leave to appeal is, in my view, the recent enactment of s 31A. There is a real question as to the effect of the formula, 'the Court is satisfied that the other party has no reasonable prospect of successfully defending the proceeding'. It can rarely be said there is no prospect of a party successfully defending a proceeding. There is almost always a possibility that the case of the party bearing the onus of proof will break down at trial. If s 31A is to be construed so as to exclude summary judgment where there is only this possibility, then, as Mr Shavin says, it is difficult to see the point of its enactment. Also, it should be borne in mind that subs (3) of s 31A goes on to say that: 'For the purposes of this section, a defence or a proceeding or part of a proceeding need not be: (a) hopeless; or (b) bound to fail; for it to have no reasonable prospect of success.' 12 It seems to me it is, at least, arguable that the effect of s 31A is that there can be summary judgment for an applicant, notwithstanding the possibility that the applicant's case will break down at trial; in other words, it is now not enough for a party resisting a summary judgment application to seek merely to put the other side to proof. If that view is correct, there is a firm basis for believing that Finkelstein J may have overlooked the significance of the new section. 13 In fairness to his Honour, I repeat that he did mention s 31A. He set out its terms. However, he seems not to have put to himself the statutory question: whether he was satisfied that Marjory has no reasonable prospect of successfully defending the proceeding. Had he asked himself that question, he would have been able to answer it in the negative only by saying there was a possibility that the applicant's case would break down. Such an answer would then have raised the question whether that it is now enough. 14 My mind has fluctuated in relation to the fate of this application. As a general principle, judges should not give leave to appeal in relation to a pre-trial ruling by a docket judge on a matter of practice and procedure. His Honour has made directions designed to facilitate a trial in April. Particularly in the case of a trial that is expected to be short (as in this case), it is usually preferable to bring on the trial, rather than to have appeals about summary judgement and strike out applications. Moreover, if leave to appeal is granted, it will be necessary, in order to avoid the trial coming on before the appeal, for there to be a stay of the trial. Judges should not lightly interfere with the orderly handling of another judge's docket. It should not be enough that the judge hearing the leave application feels doubt about the wisdom or legal correctness of the docket judge's order. There ought to be something more. In this case, there is something more. I have been persuaded, not only that there is sufficient doubt about the application of s 31A, in his Honour's approach, for me to conclude that it is at least fairly arguable that he fell into legal error, but also that the case has some general significance. There is a real question as to whether (and if so how) the new section affects the approach previously taken by judges of the Court. So far as I am aware, this would be the first occasion on which a Full Court would have had the opportunity of considering that matter. Given the number of applications for summary judgment made in this Court, it seems desirable that there be early consideration of the section at a Full Court level. Accordingly, I have decided to accede to the application and grant leave to appeal. 15 It follows that I should also order that the directions given by Finkelstein J on 17 February 2006 be stayed, pending determination of the appeal or earlier order of a judge. The appropriate order in regard to the costs of this application is that they be costs in the appeal. I certify that the preceding fifteen (15) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Wilcox. Associate: Dated: 7 March 2006 Counsel for the Applicant: Mr D Shavin QC with Ms M Barker Solicitor for the Applicant: Corrs Chambers Westgarth Counsel for the Respondent: Mr B Fitzpatrick Solicitor for the Respondent: W Lawyers Date of Hearing: 22 February 2006 Date of Judgment: 22 February 2006