FEDERAL COURT OF AUSTRALIA Ranier Pty Limited v John [2007] FCA 1442 RANIER PTY LIMITED (ACN 001 295 227) v PHILIP JOHN, JULIE ANN JOHN, RICHARD STEPHEN JOHN, RACHAEL VIRGINIA JOHN AND HI CRAFT GROUP PTY LIMITED (ACN 113 552 499) NSD 769 OF 2007 GRAHAM J 28 AUGUST 2007 SYDNEY IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY NSD 769 OF 2007 BETWEEN: RANIER PTY LIMITED (ACN 001 295 227) Applicant AND: PHILIP JOHN First Respondent JULIE ANN JOHN Second Respondent RICHARD STEPHEN JOHN Third Respondent RACHAEL VIRGINIA JOHN Fourth Respondent HI CRAFT GROUP PTY LIMITED (ACN 113 552 499) Fifth Respondent JUDGE: GRAHAM J DATE OF ORDER: 28 AUGUST 2007 WHERE MADE: SYDNEY THE COURT ORDERS THAT: 1. The application under Order 15A rule 6 of the Federal Court Rules filed 3 May 2007 be dismissed. 2. The applicant pay the respondents' costs. 3. The costs be assessed on an indemnity basis. 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 NSD 769 OF 2007 BETWEEN: RANIER PTY LIMITED (ACN 001 295 227) Applicant AND: PHILIP JOHN First Respondent JULIE ANN JOHN Second Respondent RICHARD STEPHEN JOHN Third Respondent RACHAEL VIRGINIA JOHN Fourth Respondent HI CRAFT GROUP PTY LIMITED (ACN 113 552 499) Fifth Respondent JUDGE: GRAHAM J DATE: 28 AUGUST 2007 PLACE: SYDNEY REASONS FOR JUDGMENT 1 By an Application filed 3 May 2007 Ranier Pty Limited (ACN 001 295 227) has sought an order that some five prospective respondents make discovery to the applicant of documents which, in the case of each respondent, it is said that he, she or it has, or is likely to have, or has had, or is likely to have had, possession relating to the question whether the applicant has the right to obtain relief against the respondents. 2 The Application seeks discovery by each of the five respondents of 101 separate categories of document. Counsel for the applicant has kindly assisted by identifying the topics covered by the 101 separate categories. They are said to relate to (a) dealings, (b) correspondence, (c) tender, (d) design, (e) replication, (f) manufacturer (sic), (g) supply, (h) leasing rental or licensing of garments, (i) launderings of garments, (j) briefing, (k) purchase orders, (l) quotations, (m) invoices, (n) meetings. To make some sense of these groupings and categories of documents it is necessary to state a little of the history of this matter. 3 The evidence relied upon by the applicant is contained in an affidavit of Ross McKay, the Managing Director of the applicant, sworn on an unspecified date in March 2007, but only filed in the Court on 3 May 2007. Amongst other things, the affidavit refers to a freedom of information application which was the subject of proceedings in the Administrative Decisions Tribunal, which were commenced on or about 11 January 2006. It was said in Mr McKay's affidavit that a Ms Pearson, a member of the Administrative Decision Tribunal, reserved her decision as to whether the applicant would be granted access to the information which it sought on or about 28 September 2006. 4 I was informed by counsel for the applicant from the bar table that, presumably after Mr McKay swore his affidavit, but before the affidavit was filed, or at least before now, Ms Pearson handed down her decision on the freedom of information application and that decision resulted in access to some documents of Star City Casino Pty Ltd ('Star City') being made available to the applicant and other documents not being made available. No evidence has been tendered by the applicant as to the decision of Ms Pearson, or its consequences in terms of providing information that may be relevant to the current Application. 5 The applicant is an aggrieved former supplier of uniforms to Star City. In paragraph 4 of his affidavit, Mr McKay said: '4. During 1995 Ranier [referring to the applicant] made the successful bid for the SHC [Sydney Harbour Casino Pty Ltd, later Star City] Supply and Laundry Service Agreement Tender ['SLSAT'].' 6 A copy of that agreement made 13 September 1995, was attached to Mr McKay's affidavit. The recitals to that agreement provided: 'A. Ranier carries on the business of the manufacture/supply of garments and of dry cleaning and laundering. B. SHC is the holder of the licence under the Casino Control Act 1992 (NSW) to operate a casino in Sydney. C. SHC has requested and Ranier has agreed to provide a uniform supply and a dry cleaning and laundry service to the Casino on the terms set out in this agreement.' 7 Clause 2.1 of the Supply and Laundry Service Agreement provided as follows: '2.1 Subject to clause 2.2, SHC grants to Ranier the exclusive right to provide the Service in accordance with this agreement.' The word 'Service' was defined in clause 1.1 of the agreement in the following terms: '1.1 The following words have these meanings in this agreement unless the contrary intention appears: … "Service" means the obligations of Ranier to SHC under this agreement to manufacture, supply, dry clean and launder the Uniforms at the Cost.' The word 'Uniforms' was defined in clause 1.1 as follows: '"Uniforms" means the garments of the type, style, size, colour and fabric as ordered from time to time by SHC as back of house uniforms to be supplied by Ranier under this agreement.' The expression 'back of house uniforms' was not defined, but it is apparent that it literally covered the people who worked in the casino in back of house roles, such as chefs, kitchen-hands and so on. The word 'Cost' was defined in clause 1.1. to mean: '"Cost" means the price per garment specified in Schedule A multiplied by the number of garments specified in Schedule C.' 8 Clause 3 of the agreement provided that the term of the agreement would be from the commencement date until the termination date. It provided: '3. Ranier must supply the Service from the Commencement Date until the Termination Date unless the agreement is terminated earlier pursuant to clause 7.' The 'Commencement Date' was defined to mean 1 September 1995, or as otherwise agreed in writing between the parties and the 'Termination Date' was defined to mean 1 March 1998 or as otherwise agreed in writing between the parties. 9 There is no evidence to suggest that any other agreement was entered into and it is clear that the Supply and Laundry Service Agreement came to an end on 1 March 1998. It may be that the applicant continued to provide services, similar to those provided under the Supply and Laundry Service Agreement after the agreement came to an end. But it had no right to insist on the casino continuing to use its services. 10 In paragraph 5 of the affidavit of Mr McKay, mention was made of another agreement between the applicant and Star City. Paragraph 5 provided: '5. During 1997 Ranier participated in an open tender for the Design and Supply of custom uniforms for the permanent casino, Star City. The plaintiff was successful and awarded the contract.' 11 No attempt was made by the applicant to provide any evidence as to the terms of that contract. In these proceedings there has been no indication that the applicant contends that Star City has breached any contract it had with the applicant, or otherwise engaged in any wrongful conduct, which has caused the applicant to suffer any loss or injury. 12 As it transpires Hi-Craft Group Pty Limited ACN 113 552 499 ('Hi-Craft Group') has secured orders for the supply of uniforms to Star City. The applicant asserts that it has, or may have, the right to obtain relief in the Court from the respondents, but does not have sufficient information to enable a decision to be made whether or not to commence a proceeding in the Court to obtain that relief against the respondents. 13 The applicant contends that it has reasonable cause to believe that the respondents have, or are likely to have, or have had or are likely to have had possession of documents relating to the question whether the applicant has the right to obtain relief against them and that inspection of documents of the respondents, by the applicant, would assist the applicant in making the decision whether or not to commence a proceeding. For that reason, it seeks an order for discovery from the respondents as prospective respondents in accordance with Order 15A rule 6 of the Federal Court Rules ('the Rules'), which provides as follows: '6 Where – (a) there is reasonable cause to believe that the applicant has or may have the right to obtain relief in the Court from a person whose description has been ascertained; (b) after making all reasonable inquiries, the applicant has not sufficient information to enable a decision to be made whether to commence a proceeding in the Court to obtain that relief; and (c) there is reasonable cause to believe that that person has or is likely to have or has had or is likely to have had possession of any document relating to the question whether the applicant has the right to obtain the relief and that inspection of the document by the applicant would assist in making the decision; the Court may order that that person shall make discovery to the applicant of any document of the kind described in paragraph (c).' 14 The applicant's evidence is that an employee of the applicant, Karen Wallace, informed Mr McKay of a telephone conversation said to have taken place between Ms Wallace and a Vanessa Thompson of Star City in late 2001. The report of the conversation was: 'I have had a telephone call from Vanessa Thompson at Star City Casino. She said that they are refurbishing the "High Rollers Area", the Endeavour Room, and that this would require us to develop a completely new uniform for them. We have been requested to work with a Melbourne based design company called Cornwall (sic) Design who are undertaking all of the concept design work – including concepts for the new uniforms.' 15 As it transpires, a business which trades as Cornwell provided a number of what I would call schematic designs for new uniforms to Star City. 16 On 14 June 2002 the applicant provided an acknowledgment directed to 'TO WHOM IT MAY CONCERN' acknowledging that it had no rights in relation to Cornwell's designs. The document was signed by Mr McKay as the Managing Director and sole director of the applicant. Whilst it bears the typed date 14 June 2002, it is clear that it was signed by Mr McKay on 17 June 2002. The substantive part of the document, which had been requested by a Mr Boone, the Manager of the Purchasing Department of Star City on or about 14 June 2002, provided as follows: 'I, Ross McKay, Sole Director of Ranier Pty Ltd ABN 69 001 295 227, provide Star City Pty Ltd (sic) ACN 060 510 410 with the following undertaking. Ranier Pty Ltd acknowledges that it has received copies of Conceptual Uniform Designs provided to Star City Pty Ltd by Cornwell Designs. Ranier Pty Ltd has no ownership of the said Conceptual Uniform Designs and we will not make any claim now or in the future that it has any intellectual property rights in the Cornwell Private Gaming Uniform Concepts.' 17 According to Mr McKay the applicant produced detailed design boards based on the broad brush design concepts provided by Cornwell. The applicant went on to develop a sample collection of uniforms. When the first collection of sample garments was presented to the Star City Gaming Department executives, they rejected the concept and requested Cornwell to develop a new design concept. 18 Cornwell apparently presented a new concept on paper to Star City which resulted in the applicant commencing work on a second prototype sample uniform collection. Mr McKay says that during about late April 2002, the applicant was asked to send a complete set of the Endeavour Room sample uniforms to Star City for a 'photo shoot'. It is said that a complete set of sample uniforms was shipped by the applicant to Star City during about June 2002, but not returned to the applicant when requested. 19 On or about 4 June 2002, it would appear that an employee of the applicant received advice that the applicant's then proposal for uniforms had not been approved, and that Star City had decided to put the work out for tender. 20 By way of opposition to the applicant's motion, the respondents have read two affidavits, one affirmed by Philip John on 13 July 2007 and the other affirmed by Richard Stephen John on 13 July 2007. Each of these deponents was required for cross-examination, and was cross-examined at length. Mr Philip John, who is the Managing Director of Hi-Craft Group, gave evidence first. Mr Richard Stephen John, a Director of Hi-Craft Group, gave evidence second. He apparently worked in the safety and industrial side of the Hi-Craft business and had virtually nothing to do with the provision of uniforms to Star City. He was, however, the first point of contact between the casino and Hi-Craft. 21 The first four respondents are members of the John family and the fifth respondent is Hi-Craft Group. It appears that Hi-Craft Group was incorporated in, or about March 2005. Prior to that the Hi-Craft business traded under a number of business names, including Hi-Craft Clothing. 22 On or about 26 May 2002 Mr Richard John received a telephone call from Mr Tim Lawson of Star City, a person who worked in the purchasing department of the casino, under Mr Boone, who was the Manager of that department. A conversation took place to the following effect: 'I am interested in purchasing a number of winter jackets for our car park attendants. I have phoned King Gee and they can't help us, but they have suggested we ring Hi-Craft Clothing. Would you be interested in coming to see us and bringing some samples?' 23 The net result of this conversation was that Hi-Craft came to have contact with Star City. The story continues through the evidence of Mr Philip John, as the Managing Director of Hi-Craft. Relevantly, in relation to uniform designs for the Endeavour Room at the casino, a conversation would appear to have taken place between a Vanessa Thompson, the Wardrobe Manager at the casino, and Mr Philip John on 7 June 2002 in words to the effect: 'We are wishing to introduce a new uniform for our Private Gaming Room and are interviewing suppliers who may be able to provide our requirements. There will be a very short lead time. Shall we meet tomorrow?' 24 According to Mr Philip John an appointment to meet with Vanessa Thompson on the following day was put in place. On 8 June 2002, Mr Philip John and Mr Richard John attended at the offices of the purchasing department at the casino. Present at that meeting were Vanessa Thompson, the casino's Wardrobe Manager, and a Mr Rod Rumming. During the course of the meeting, certain documents were provided to the Messrs John. One of these documents was a one page list headed 'Endeavour Room Uniform' which listed 27 items that the casino required. The document, printed in landscape form, had column headings 'ITEM', 'COLOUR', 'FABRIC', 'SIZE' and 'QAUANITY (sic)'. 25 Apart from being provided with the list recording the 27 items, the Messrs John were also provided with certain Cornwell schematic designs. These were, according to the evidence, fewer in number than the schematic designs of Cornwell which were included in one of the annexures to Mr McKay's affidavit. It would appear that there were a number of words and sketches recorded in manuscript form on the Cornwell designs which were provided to Hi-Craft. It would appear there was also the provision of some sample colours. 26 The applicant attempted to portray Hi-Craft as a down-market uniform supplier. It did so by relying upon an advertisement published by Hi-Craft Clothing in the 'Sutherland Shire Leader' newspaper on 10 February 2004. In his affidavit, Mr McKay said that the advertisement depicted Hi-Craft: '… as primarily a supplier of industrial workwear not high specification custom uniforms.' 27 This evidence was met by Hi-Craft including as part of Mr Philip John's evidence a number of figurative representations of uniforms provided by Hi-Craft for Sydney Airport and for the Sydney Turf Club. It would seem to me that Mr McKay's decription of Hi-Craft did not, in the light of the other evidence, bear analysis. 28 I was significantly impressed by the evidence of Mr Philip John. It was evident that he was a true professional, who had a very good memory and was a businessman of the first order in the area in which he worked. His unchallenged evidence is that he did not have access to any sample uniforms provided by the applicant to Star City and that he did not have access to any design boards prepared by the applicant and made available to Star City. He says that he approached the task of tendering for Star City's uniforms by taking a number of samples of his company's products and showing them to representatives of Star City with a view to identifying precisely what was required by the casino. In his affidavit he said that on 14 June 2002 Mr Boone visited his business's premises to make an inspection and to obtain answers to a number of questions relating to Hi-Craft's production capacity, quality control procedures and client references. Mr Philip John says that he raised a number of concerns regarding the suitability of fabrics which Star City had selected for the Endeavour Room, and that he was asked to document his concerns, which he proceeded to do. 29 Mr Philip John provided a quality assurance certificate in respect of Hi-Craft's product to the casino on 20 June 2002. In paragraphs 14 and 36 of his affidavit, he said: '14. Of the 27 items included in the uniform range, 12 were merely variations in colour and 4 were accessory items (belts, ties, tiepins & scarves). Therefore, there were only 11 garment styles required for the Private Gaming Room Uniform. Of these 11 items, 6 items required no design work at all (ie generic garments like trousers & regular shirts), 4 items required minor modifications to existing Hi-Craft patterns and only 1 item required more substantial changes to an existing Hi-Craft pattern. I was told words to the effect "No design work is required, but merely a quotation on the design developed by Cornwall (sic) Design". … 36. Hi-Craft did not conduct the entire development process within a two week period. The tender for the Endeavour Room uniforms was awarded based on prices and indicative samples of our regular stock service garments. In addition, of the 15 different items [the 27 items previously mentioned less the 12 which only involved variations in colour], four of the items were standard accessories and 6 of the items were standard garments that did not require any design changes. Four items required minor modifications to existing Hi-Craft product lines. One item required more extensive modification. In essence, the Endeavour Room uniforms were a very simple design. All but one fabric were available from fabric suppliers as stock‑service products. The design for this fabric was supplied by Cornwall (sic) Design.' 30 In paragraph 25 of his affidavit, Mr Philip John said: '25. At the time of John Boones (sic) visit on or about 14 June 2002, he also requested that we produce samples of the 5 garment styles (items 2, 6, 8, 12 & 15) for the Endeavour Room that required modification from existing Hi‑Craft styles. We had the advantage of in-house patternmaking, in-house production and in-house embroidery. This enabled us to make the pattern modifications required and to produce the samples within approximately 1 week. Items 2, 6, 8 & 12 were produced by our in-house tailors and item 15 was produced by our regular outsourced blouse maker. Items 2, 6, 8 & 12 required approximately half a day labour each by an experienced tailor to produce. We employed 3 full-time tailors at that time so this did not stretch our resources unreasonably. As the fabric requested for the vests and female tunic had to be woven-to-order, we substituted an alternative fabric for the purposes of this exercise.' 31 Mr Philip John was extensively cross-examined about the modifications that were made to five of the current Hi-Craft designs. Item 2, which was for female vests, involved a different shape at the bottom of the garment and involved – as I understand it – the introduction of side splits at the bottom of the vest. Item 6 was modified from the standard Hi-Craft product to be longer and rounded at the bottom. Item 6 concerned male vests made of black brocade and grey brocade. Item 8 required a minor variation to the shaping; basically, Mr Philip John thought they were made a little longer, with the pockets omitted for the uniforms to be worn as female jackets on the gaming floor. There was a collar on the sample which was provided and this was not removed. In relation to item 15, female blouses, there were some minor modifications made. 32 My understanding is that Hi-Craft provided a number of samples to the casino for its consideration and they selected what they required by reference to the samples that were made available, rather than adherence precisely to the Cornwell schematic design. In relation to the female tunic (item 12), more significant changes were made. It was the one item requiring a substantial change from the standard Hi-Craft product. There was a stand-up collar, buttons went to the neck, there were shorter sleeves, there was a rounded shaping at the bottom and there was a pleat, or dart, introduced. 33 On 11 June 2002, Hi-Craft Clothing submitted a proposal to Star City that contemplated the approval of designs, loom samples, wool fabrics, polycotton fabrics, embroidery, felt logos and satin fabrics by certain dates in June 2002 if the production schedule sought by Star City was to be achieved. On 13 June 2002 Star City suggested that it had received other submissions for the supply of staff uniforms for the Private Gaming Room and Gaming Department and it proceeded to request a review of Hi-Craft's pricing. On 14 June 2002 Hi-Craft responded by confirming the pricing which it had previously provided and indicating delivery of uniforms on Friday, 12 July 2002. 34 Further information was provided by Hi-Craft to Star City on 18 June 2002 and delivery times were then specified, which depended upon the receipt of an order on Thursday, 20 June 2002. The delivery dates contemplated were in late July and August and for some other items lead times of three weeks and four weeks were specified. 35 On 20 June 2002 Hi-Craft advised Star City that in the event of an order being placed by Monday, 24 June 2002, it would be able to provide delivery of all 27 product lines by Friday, 16 August 2002. The evidence is silent as to precisely when orders were placed, but it is evident that Star City started to use Hi-Craft as a supplier of uniforms. 36 It is apparent that in 2004, Hi-Craft became involved in the supply of back of house stewards' uniforms and chefs' garments for the casino as well. In his affidavit Mr Philip John said, amongst other things: '37. At no time did Star City provide Hi-Craft with access to Rainier's (sic) uniform samples designs or specifications … 38. The first time I have seen the Rainier (sic) Design Boards for the Star City Endeavour Room was in the attachments to the Ross Mackay (sic) affidavit. … … 41. Hi-Craft has at no time had access to or copied the uniform designs of Rainier (sic). …' 37 The applicant suggests that the respondents may have copied the new designs prepared by the applicant for the Endeavour Room uniforms, that they may have copied existing designs of back of house uniforms provided by the applicant to the casino, and that they may have copied a procedure for fixing tracking system barcodes to uniforms used in the casino. 38 It is apparent that to identify uniforms the casino affixes a barcode, which when the applicant was providing uniforms was contained in a pocket in the uniform. I gather that similar pockets were included in garments provided by Hi‑Craft, but without any copying of any unique features of any pocket that may have been included in the applicant's uniforms. 39 The justification for the Application proffered by the applicant is to be found in paragraphs 45 and 46 of Mr McKay's affidavit. These relevantly provided: '45. During December 2003 Mr. Andrew Baldry, an employee of Ranier, working in the role of a Garment Rental Serviceman/Driver for the Star City Supply and Laundry Service Agreement, was responsible for collecting soiled/used chefs and stewards clothing from Star City wardrobe and taking these soiled garments to Ranier's contracted commercial laundry for washing and pressing and he would also deliver clean garments at the time of collecting soiled garments from Star City Uniform Wardrobe Department. 46. Mr Baldry said to me words to the effect of: "Ross, I have just seen hundreds of new rust coloured steward tunics hanging in the Star City Wardrobe Dept. They look the same as the Ranier stewards tunics and it looks like these new garments are being scanned into Star City's computer inventory system." "I think they are from Hi-Craft, their new uniform supplier".' 40 It seems to me blindingly obvious that his hearsay evidence could not, even if true, establish a case for infringement of copyright, or any other relevant relief on the part of the applicant against the respondents collectively, or any of them individually. It is a matter of guesswork as to whether or not the uniforms which Mr Baldry observed were in fact produced by Hi-Craft and Mr Baldry's observation, that they 'look the same' is without any support in the absence of any evidence of any particular features which mark them out as look-alikes. 41 In relation to relief that may be sought against the respondents, counsel for the applicant directed my attention to certain provisions of the Copyright Act 1968 (Cth). Relevantly, these included ss 31(1)(b)(i), 21(3)(a), 36(1) and 115. It seems to me that the evidence before the Court could not reasonably cause the Court to believe that the applicant has, or may have, the right to obtain relief in the Court from any of the respondents for infringement of copyright. 42 The applicant also faintly suggested that the respondents may have engaged in some conduct which, somehow or other, was misleading or deceptive within the meaning of s 52 of the Trade Practices Act 1974 (Cth). I am unable to see how such a case could be formulated on the evidence before the Court. 43 Apart from there being no reasonable cause to believe that the applicant has, or may have, the right to obtain relief in the Court from the respondents, it is clear that the applicant has failed to demonstrate that it does not have sufficient information to enable a decision to be made whether or not to commence a proceeding in the Court to obtain the relief, and further that it has made all reasonable inquiries. 44 As has rightly been pointed out by counsel for the respondents, there has been a complete non-disclosure of the information which the applicant possesses, of the documents that it has access to, of the inquiries which it has made and what it has learned. It is true that there is evidence that freedom of information proceedings were instituted against the casino, but there is no indication as to what documents were sought or what documents have been provided. I am not satisfied that after making all reasonable inquiries, the applicant does not have sufficient information to enable a decision to be made whether to commence a proceeding in the court to obtain infringement of copyright or trade practices relief. 45 I had some difficulty understanding the detailed evidence provided in the affidavits of the Messrs John. It was explained to me by counsel for the respondents that Hi-Craft sought to put its cards on the table and make it abundantly clear, as I believe the evidence has done, that the applicant could not have an arguable case to run against the respondents collectively or any of them individually. 46 In my opinion this is not a proper case for discovery to be ordered by the respondents, or any of them, as prospective respondents in an action that the applicant may hereafter commence. Were it otherwise necessary for me to do so, I would also significantly limit the scope of the discovery sought, but given that the threshold issues have not been satisfied, I do not propose to undertake that task. 47 In the circumstances I propose to dismiss the application with costs. An application has been made for the costs to be paid by the applicant to the respondents to be assessed on an indemnity basis. It seems to me that the Application, supported by the evidence which was read by the applicant, was so unmeritorious that it stands out as a case which does warrant an indemnity costs order. I certify that the preceding forty-seven (47) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Graham. Associate: Dated: 13 September 2007 Counsel for the Applicant: C E Moschoudis Solicitor for the Applicant: T K Legal Counsel for the Respondents: M K Meek Solicitor for the Respondents: Hunt & Hunt Date of Hearing: 28 August 2007 Date of Judgment: 28 August 2007