FEDERAL COURT OF AUSTRALIA Lamb v Hog's Breath Company Pty Ltd ( No 3) [2007] FCA 972 PRACTICE AND PROCEDURE – interrogatories – pleadings – whether interrogatories should be permitted prior to filing of defence – no point of principle Copyright Act 1968 (Cth) s 115(4), s 116(1) Lamb v Hog's Breath Company Pty Ltd (No 2) [2007] FCA 201 cited JOHN CHARLES LAMB v HOG'S BREATH COMPANY PTY LTD ACN 011 054 970, HOG'S BREATH CAFE (AUSTRALIA) PTY LTD ACN 071 132 655, HB INVESTMENTS PTY LIMITED ACN 060 678 328, HOG'S BREATH CLOTHING CO PTY LTD ACN 060 678 355 AND DONALD RICHARD ALGIE WAD 300 OF 2006 FRENCH J 28 JUNE 2007 PERTH IN THE FEDERAL COURT OF AUSTRALIA WESTERN AUSTRALIA DISTRICT REGISTRY WAD 300 OF 2006 BETWEEN: JOHN CHARLES LAMB Applicant AND: HOG'S BREATH COMPANY PTY LTD ACN 011 054 970 First Respondent HOG'S BREATH CAFE (AUSTRALIA) PTY LTD ACN 071 132 655 Second Respondent HB INVESTMENTS PTY LIMITED ACN 060 678 328 Third Respondent HOG'S BREATH CLOTHING CO PTY LTD ACN 060 678 355 Fourth Respondent DONALD RICHARD ALGIE Fifth Respondent JUDGE: FRENCH J DATE OF ORDER: 28 JUNE 2007 WHERE MADE: PERTH THE COURT ORDERS THAT: On the First, Third, Fourth and Fifth Respondents' motion filed 15 June 2007: 1. The respondents are to file and serve their defences by 31 August 2007. 2. The applicant is to file and serve any reply by 21 September 2007. 3. The first, third, fourth and fifth respondents' motion is otherwise dismissed. 4. The costs of the motion are costs in the cause. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. IN THE FEDERAL COURT OF AUSTRALIA WESTERN AUSTRALIA DISTRICT REGISTRY WAD 300 OF 2006 BETWEEN: JOHN CHARLES LAMB Applicant AND: HOG'S BREATH COMPANY PTY LTD ACN 011 054 970 First Respondent HOG'S BREATH CAFE (AUSTRALIA) PTY LTD ACN 071 132 655 Second Respondent HB INVESTMENTS PTY LIMITED ACN 060 678 328 Third Respondent HOG'S BREATH CLOTHING CO PTY LTD ACN 060 678 355 Fourth Respondent DONALD RICHARD ALGIE Fifth Respondent JUDGE: FRENCH J DATE: 28 JUNE 2007 PLACE: PERTH REASONS FOR JUDGMENT ON FIRST, THIRD, FOURTH AND FIFTH RESPONDENTS' MOTION TO VACATE ORDERS FOR INTERROGATORIES 1 John Lamb, a citizen of the United States, says he is the owner of copyright in a cartoon of a pig known as the "Wave Hog Work". He claims to have produced the work in 1987 for use on shirts in order to promote a restaurant called "The Hog's Breath Saloon" in Florida. 2 In proceedings commenced in this Court on 24 October 2006 Mr Lamb sought declarations that his copyright had been infringed by the respondents. He sought injunctive relief and damages and an account of profits. He alleged, in substance, that from 1996 onwards companies controlled by Mr Donald Algie, a former employee of the Hog's Breath Saloon in Florida, had infringed his copyright in the Wave Hog Work in various ways. These have involved the application of the cartoons to various articles including articles of clothing and in connection with restaurant services supplied by Hog's Breath cafes in Australia. 3 On 26 February 2007 I made orders in the following terms: 1. The applicant is to file and serve a substituted statement of claim on or before 26 March 2007. 2. The respondents are at liberty to provide to the applicant on or before 12 March 2007 information by way of letter or disclosure of documents or by an affidavit sworn by their solicitor upon instructions, setting out: (i) their respective functions as members of the Hog's Breath group of companies in Australia; (ii) their respective roles in the use of the Hog's Breath Works as defined in the statement of claim and/or the registered trade marks referred to in the statement of claim; (iii) the ways in which the Hog's Breath Works and/or the registered trade marks have been used by them in respect of the classes of goods and services to which they relate. I also made orders relating to the costs of the respondents' strike out motion and adjourned the directions hearing to 11 April 2007: Lamb v Hog's Breath Company Pty Ltd (No 2) [2007] FCA 201. 4 In argument prior to the delivery of that judgment counsel for Mr Lamb said that he did not have a clear picture of the respective functions of the respondent companies within the Hog's Breath group. In the original statement of claim it was said that HB Investments Pty Limited (HB Investments) held registered trade marks and that the principal case against it was that it had authorised infringement of Mr Lamb's copyright in the Wave Hog Work by licensing to the other corporate respondents the right to use those trade marks. What trade marks were licensed to which respondents did not appear. A significant obstacle in the way of a more precise pleading on Mr Lamb's part was the absence of information about which of the companies took that role within the Hog's Breath group and which was responsible for the production and marketing of the various articles said to bear infringing productions of the work or of a substantial part thereof. As noted in that judgment want of knowledge does not of itself excuse a pleading which does not identify which cause of action is raised against which respondent or which fails to identify the material facts constituting each such cause of action. Although O 15A of the Federal Court Rules may well have been available to enable Mr Lamb to identify the persons against which he might have a cause of action, or the causes of action he might have, it was not availed of. 5 A substituted statement of claim was filed on 10 April 2007. It was a much more substantial document than its predecessor and was settled by senior counsel. It identifies Hog's Breath Company Pty Ltd (Hog's Breath Company) as the master franchisor, since 24 October 2006, of a franchised chain of restaurants around the world known as "Hog's Breath Cafes". A list of Australian franchisees is scheduled to the statement of claim. Hog's Breath Cafe (Australia) Pty Ltd (Hog's Breath Cafe (Australia)), the second respondent, is identified as the master franchisee of the Australian franchisees since at least 24 October 2006. HB Investments is said to be the registered owner of Australian registered trade mark numbers 701388 and 1013512, both of which involve the image described, inter alia, as "Hog, cartoon wears sunglasses & crossed bandages, adhesive on body". Hog's Breath Clothing Co Pty Ltd (Hog's Breath Clothing) is said to be the owner and operator of a business selling merchandise under the name "Hog's Breath Clothing" through a website and through the Australian franchisees. The fifth respondent, Mr Algie, is said to be a director, secretary and majority shareholder of Hog's Breath Company and to have been a director of Hog's Breath Cafe (Australia) between September 1995 and April 2000. He is also said to be a director, secretary and majority shareholder of HB Investments and a director, secretary and majority shareholder of Hog's Breath Clothing. 6 Paragraphs 7 to 12 assert subsistence and ownership of copyright in the Wave Hog Work by Mr Lamb. Paragraphs 13 and 14 plead and particularise Mr Algie's access and exposure to the Wave Hog Work and his knowledge that the respondents are not, and have not, been the owners of copyright in that work. It is alleged that the work depicted in Schedule B to the application is a reproduction of the whole or a substantial part of the Wave Hog Work ([15]). Paragraphs 16 to 21 deal with the conduct of the Australian franchisees asserting, inter alia, that they have displayed the infringing work on restaurant signage and on banners and have distributed or offered for sale or exhibited to the public various items depicting that work. These items are set out in a schedule to the substituted statement of claim. 7 The substituted statement of claim then sets out the bases of Mr Lamb's copyright claim against Hog's Breath Company ([22]-[38]), Hog's Breath Cafe (Australia) ([39]-[54] inclusive), HB Investments ([55]-[66] inclusive), Hog's Breath Clothing ([67]-[83] inclusive) and Mr Algie ([84]-[103] inclusive). There are allegations of a common design entered into by the various respondents ([104]) and pleading of facts relied upon to support a claim for additional damages under s 115(4) of the Copyright Act 1968 (Cth) and conversion damages under s 116(1) of that Act ([105]-[106]). Moral rights claims are also raised against the respondents ([107]-[175]). The substituted statement of claim concludes with allegations that the registration by HB Investments of the Australian registered trade marks was and remains unlawful. 8 The day following the filing of the substituted statement of claim, the matter came back for directions and the hearing was adjourned to 24 April 2007. The parties were directed to confer with a view to agreeing so far as was possible further programming orders. 9 On 24 April 2007 orders were made extending the time which had been permitted for the applicant to file his substituted statement of claim to 10 April 2007. A stay of proceedings caused by Mr Lamb's failure to provide security for costs within a time limit previously fixed was lifted as security had been provided. The respondents were directed to serve any requests for particulars by 16 May 2007 and Mr Lamb to provide a response to any request by 31 May 2007. Order 6 gave Mr Lamb leave to administer interrogatories before 31 May 2007 relevant to: (a) the respondents' respective functions as member (sic) of the Hog's Breath group of companies in Australia; (b) the respondents' respective roles in the use of the HB Works as defined in the statement of claim and/or the registered trademarks referred to in the statement of claim; (c) the ways in which the HB Works and/or the registered trademarks have been used by the respondents in respect of the classes of goods and services to which they relate. The respondents were directed to provide answers to the interrogatories by 15 June 2007 subject to any just objections. The parties were also required to confer on or before 31 May 2007 with respect to categories of documents to be discovered and Mr Lamb by that date to file and serve a request for discovery by reference to agreed categories and otherwise by reference to such categories as he might specify. The directions hearing was adjourned to 22 June 2007. 10 The purpose of the order for leave to interrogate made on 24 April 2007 was to enable Mr Lamb to identify with precision the respective functions of the respondent companies in the Hog's Breath group in Australia, their roles in the use of the alleged infringing works and/or registered trade marks and the ways in which these had been used in respect of the classes of goods and services to which they related. 11 On 13 June 2007 a notice to answer interrogatories was filed on behalf of Mr Lamb directed to the various respondents. The scale and detail of those interrogatories went well beyond what I contemplated in making the orders in [6.1] of the orders made on 24 April 2007. Interrogatories were also delivered late and without the benefit of any extending order by the Court. This delay was explained in Mr Mallon's affidavit. Draft interrogatories, completed by 24 May 2007, were provided to junior counsel in Sydney on 25 May 2007 and submitted to senior counsel who informed Mr Mallon on 31 May 2007 that he would require further time to settle the interrogatories. It appears that the solicitors for the first and third to fifth respondents consented to the further time. As to that I note that an agreement between the parties is not effective to dispose of the obligation imposed by the Court's directions. 12 On 15 June 2007 the first, third, fourth and fifth respondents filed the motion presently before the Court asking that the orders relating to the filing of interrogatories be vacated and that they proceed directly to file their defences. They submitted that now that Mr Lamb has delivered a detailed and comprehensive statement of claim the appropriate course would be for the usual interlocutory steps to take place, ie pleadings followed by discovery, including interrogatories if necessary, and inspection of documents. They submitted that the mechanism put in place for conferral, early interrogatories and disclosure was largely designed to facilitate the resolution of issues concerning generalised allegations in the former statement of claim in the context of the vertical inter-relationship of each of the respondents. It was submitted that the delivery of their defences will assist in defining the real issues and necessarily limit the ambit of discovery and thereby reduce its burden. It would also mean that the interrogatories would not be necessary. Interrogatories recently served on behalf of Mr Lamb were said to contain 90 separate questions. 13 It was submitted on behalf of Mr Lamb that he still does not have a clear picture of the respective functions of the respondents in the group that they collectively constitute. Since the judgment given on 26 February 2007 no new information has emerged which changes this nor have the respondents elected to provide any information to him despite repeated requests on his behalf. The substituted statement of claim was filed and served on 10 April 2007, providing the respondents with two weeks prior to the directions hearing to review it and form the view apparently now held that Mr Lamb had delivered a detailed and comprehensive statement of claim such that the appropriate course would be for the usual interlocutory steps to take place. 14 Having regard to the procedural history of the matter to date and the extent to which the proposed interrogatories seem to go into a level of detail beyond what was contemplated under order 6, it is preferable that the respondents now be afforded the opportunity to file their defences before the question of discovery and interrogatories is revisited. 15 Having regard to the fact that the applicant did not comply with the time limit specified in the orders made on 24 April 2007 and that no extension was granted, there is no need to vacate those orders. The interrogatories that were filed, were filed without leave because the leave had expired. I will make orders accordingly for the filing of defences and replies. This does not of course prevent applications for leave to interrogate and for discovery after the close of pleadings. I certify that the preceding fifteen (15) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice French. Associate: Dated: 28 June 2007 Counsel for the Applicant: Mr JD MacLaurin Solicitor for the Applicant: Mallon & Co Lawyers Pty Ltd Counsel for the First, Third, Fourth and Fifth Respondents: Mr A Crowe SC and Mr I Erskine Solicitor for the First, Third, Fourth and Fifth Respondents: Tucker & Cowen Counsel for the Second Respondent: Ms M Sedic Solicitor for the Second Respondent: Lavan Legal Date of Hearing: 22 June 2007 Date of Judgment: 28 June 2007