FEDERAL COURT OF AUSTRALIA Voxson Pty Ltd v Telstra Corporation Limited (No 7) [2017] FCA 267 File number: NSD 2436 of 2013 Judge: PERRAM J Date of judgment: 20 March 2017 Catchwords: PRACTICE AND PROCEDURE – whether pleading can be amended under the Federal Court Rules 2011 (Cth) to add a statute barred cause of action – whether new claim for relief arose out of the same facts or substantially the same facts – whether amendment operates from date of commencement of proceeding or date of order allowing amendment Legislation: Acts Interpretation Act 1901 (Cth) s 15AC Federal Court Rules 1979 (Cth) (repealed) Order 13 Rule 2, Order 13 Rule 2(1), Order 13 Rule 3A Federal Court Rules 2011 (Cth) rr 1.32, 1.33, 8.21, 8.21(1), 8.21(1)(g)(i), 8.21(2), 16.53 Cases cited: Australian Securities and Investment Commission v Australian Property Custodian Holdings Ltd (No2) [2013] FCA 409; (2013) 213 FCR 289 Brimaud v Honeysett Instant Print Pty Ltd (1988) 217 ALR 44 Clasul Pty Ltd v Commonwealth [2014] FCA 1133 Kuligowski v Metrobus [2004] HCA 34; (2004) 220 CLR 363 McGrath v HNSW [2014] FCA 165; (2014) 219 FCR 489 Re Sterling; Ex parte Esanda Ltd [1980] FCA 61; (1980) 44 FLR 125 Somodaj v Australian Iron and Steel Ltd [1963] HCA 50; (1963) 109 CLR 285 Tamaya Resources Limited (in liq) v Deloitte Touche Tohmatsu (A Firm), in the matter of Tamaya Resources Limited (in liq) [2015] FCA 1098 Voxson v Telstra [2015] FCA 1490 Voxson v Telstra (No.3) [2015] FCA 1492 Voxson v Telstra (No.6) [2017] FCA 13 Pearce D and Geddes R, Statutory Interpretation in Australia (8th ed, Lexis Nexis Butterworths, 2014) Date of hearing: 2 February 2017 Date of last submissions: 3 February 2017 Registry: New South Wales Division: General Division National Practice Area: Intellectual Property Sub-area: Patents and Associated Statutes Category: Catchwords Number of paragraphs: 39 Counsel for the Applicant: Mr D Shavin QC Solicitor for the Applicant: DibbsBarker Counsel for the First Respondent: Ms C Bembrick and Ms F St John Solicitor for the First Respondent: Spruson & Ferguson Lawyers Counsel for the Third and Sixth Respondents: Mr A Lang Solicitor for the Third and Sixth Respondents: Baker & McKenzie Counsel for the Fifth Respondent: Ms C Cochrane Solicitor for the Fifth Respondent: Allens ORDERS NSD 2436 of 2013 BETWEEN: VOXSON PTY LTD (ACN 005 291 458) Applicant AND: TELSTRA CORPORATION LIMITED (ACN 051 775 556) First Respondent OPTUS MOBILE PTY LIMITED (ACN 054 365 696) Third Respondent VODAFONE HUTCHISON AUSTRALIA PTY LIMITED (ACN 096 304 620) Fifth Respondent OPTUS NETWORKS PTY LIMITED (ACN 008 570 330) Sixth Respondent JUDGE: PERRAM J DATE OF ORDER: 20 MARCH 2017 THE COURT ORDERS THAT: 1. The parties are to bring in short minutes of order giving effect to these reasons within 14 days. 2. The matter be stood over for a further case management hearing on Friday, 7 April 2017 at 9:30am. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011. REASONS FOR JUDGMENT PERRAM J: 1. Introduction 1 These reasons concern the Vox 1 patent and assume familiarity with the subject matter of these proceedings. In Voxson v Telstra (No.6) [2017] FCA 13 I resolved certain issues relating to discovery that had arisen between the parties. The parties' appetite for interlocutory disputation remains, however, undiminished. 2 Part of the machinery put in place by No.6 required the Respondents to serve on the Applicant, by 28 February 2017, process descriptions of the way in which certain services and applications were supported on the Respondents' mobile networks. The operation of the Respondents' networks has varied over time so that the requirement that the Respondents give the process descriptions necessarily entails the positing of a period, or periods of time, over which these descriptions are to be given. 3 The earliest point in time that the process descriptions should be required to encompass is the point at which it may reasonably be regarded that any earlier alleged acts of infringement by the Respondents would be statute barred. On this, at least, the parties are in agreement. 4 The dispute between them relates to when that time is. That depends, or may depend, upon when the substance of Voxson's present claims is taken to have been commenced. Although it has subsequently been further amended, the parties are in agreement that the basic form of Voxons's present claims should be taken to have come into existence on 18 January 2016 when its various second further amended statements of claim (one for each Respondent) were filed (collectively 'the 2FASOC'). 5 Prior to the 2FASOC, a critical part of Voxson's case was the contention that each Respondent operated an A-GPS server which could provide local positioning information to devices on the Respondents' networks. Its case was that by operating their networks with services of that kind, so as to provide A-GPS services to their customers, the Respondents infringed the Vox 1 patent. 6 Upon the filing of the 2FASOC, Voxson accepted that the Respondents, apart from Telstra, did not operate A-GPS servers (also called SUPL servers). It transpired that in the case of the Respondents other than Telstra, and even Telstra in relation to its 4G network, the local positioning information was provided to customers across the networks from third parties, such as Nokia and Apple, using servers not situated within the networks and not owned by the Respondents. This entailed that the local positioning information travelled across the networks as part of their ordinary data traffic (specifically, across the Respondents' traffic channels rather than their corresponding control channels). This amounted to the collapse of Voxson's original infringement case against Optus, Vodafone and Telstra in relation to its 4G (but not 2G or 3G) networks. Its new case articulated in the 2FASOC was that the Respondents would be indirectly liable for authorising the third party server operators to provide local positioning information to the Respondents' customers. It continued its former case against Telstra in relation to its 2G and 3G networks. 7 Voxson was granted leave to file the 2FASOC by Bennett J on 23 December 2015 and at the same time leave was granted to amend the originating application: see Voxson v Telstra [2015] FCA 1490. At the time, with the agreement of the parties, the issue of when the amendments contemplated by the twin grants of leave would take effect was left for later determination: see [103]. It is that issue which now presents itself for resolution. I deal first with the position of the originating application and then with the 2FASOC. 2. Fixing the Date at which Amendments to an Originating Application take effect 8 Rule 8.21 of the Federal Court Rules 2011 (Cth) ('FCR') is as follows: '8.21 Amendment generally (1) An applicant may apply to the Court for leave to amend an originating application for any reason, including: (a) to correct a defect or error that would otherwise prevent the Court from determining the real questions raised by the proceeding; or (b) to avoid the multiplicity of proceedings; or (c) to correct a mistake in the name of a party to the proceeding; or (d) to correct the identity of a party to the proceeding; or (e) to change the capacity in which the party is suing in the proceeding, if the changed capacity is one that the party had when the proceeding started, or has acquired since that time; or (f) to substitute a person for a party to the proceeding; or (g) to add or substitute a new claim for relief, or a new foundation in law for a claim for relief, that arises: (i) out of the same facts or substantially the same facts as those already pleaded to support an existing claim for relief by the applicant; or (ii) in whole or in part, out of facts or matters that have occurred or arisen since the start of the proceeding. Note: For paragraph (1)(b) and the avoidance of multiplicity of proceedings, see section 22 of the Act. (2) An applicant may apply to the Court for leave to amend an originating application in accordance with paragraph (1)(c), (d), (e) or subparagraph (g)(i) even if the application is made after the end of any relevant period of limitation applying at the date the proceeding was started. (3) However, an applicant must not apply to amend an originating application in accordance with subparagraph (1)(g)(ii) after the time within which any statute that limits the time within which a proceeding may be started has expired. Note 1: Applicant, claim and originating application are defined in the Dictionary. Note 2: For the Court's power to make rules amending a document, see section 59(2B) of the Act. Note 3: Rule 9.05 deals with joinder of parties by court order.' 9 Although the parties and her Honour were aware that some of Voxson's fresh claims might be statute barred, it was agreed that the date upon which the amendments took effect would be determined at a later date. Consequently, no attention was given to whether Voxson's new claims arose out of substantially the same facts. In terms, this appears to have had the consequence that all involved overlooked that FCR 8.21(1) only authorised statute barred amendments arising out of substantially the same facts. 10 The position the parties and her Honour adopted was, if I may say with respect, orthodox and consistent with the operation of the former Federal Court Rules 1979 (Cth) Order 13 Rule 2 and 3A which FCR 8.21 replaced in 2011. Those Rules were as follows: 'FEDERAL COURT RULES - ORDER 13 RULE 2 General (1) Subject to the following provisions of this rule, the Court may, at any stage of any proceeding, order that any document in the proceeding be amended, or that any party have leave to amend any document in the proceeding, in either case in such manner as the Court thinks fit. (3) Where an application to the Court for leave to make the amendment mentioned in subrules (4), (5) or (6) or paragraph (7) (a) is made after any relevant period of limitation current at the date of commencement of the proceeding has expired, the Court may, nevertheless, grant such leave in the circumstances mentioned in that subrule if it thinks it is just to do so. (4) Where there has been a mistake in the name or identity of a party, an amendment to correct the name of the party may be made notwithstanding that the effect of the amendment is to substitute another person as a party. (5) Where an order to correct a mistake in the name of a party has the effect of substituting another person as a party, the proceeding shall be taken to have commenced with respect to that person on the day the proceeding commenced. (6) An amendment to alter the capacity in which a party sues may be made if the new capacity is one which that party had at the date of the commencement of the proceeding or has since acquired. (7) An amendment may be made even if the effect of the amendment is to add a new claim for relief or foundation in law for a claim for relief (whether by way of substitution for an existing claim for relief or foundation in law or not) if the new claim for relief or foundation in law: (a) arises out of the same facts or substantially the same facts as those already pleaded to support an existing claim for relief by the party applying for leave to make the amendment; or (b) subject to subrule (9), arises, in whole or in part, out of facts or matters that have occurred or arisen since the commencement of the proceeding. (8) Subject to subrule (9), an amendment of a pleading may be made even if the amendment pleads a fact or matter that has occurred or arisen since the commencement of the proceeding. (9) Paragraph (7) (b) and subrule (8) do not permit an amendment that would have an effect inconsistent with any statute that limits the time within which an action or a proceeding of a particular kind may be brought or instituted. FEDERAL COURT RULES - ORDER 13 RULE 3A Date when amendment takes effect Unless the Court otherwise orders, an amendment of a document that is made under rule 2 or 3 takes effect: (a) if the amendment is made under paragraph 2 (7) (b), subrule 2 (8) or subrule 3 (3) -- on the date when the amendment is made; and (b) in any other case -- on the date when the document was first filed.' 11 The approach of the parties was no doubt also encouraged by this statement appearing in the Explanatory Statement accompanying the introduction of the 2011 Rules: 'The new Rules do not substantially alter existing practice and procedure but rather explain it in a way that it can be more easily followed and applied.' 12 That aspirational statement cannot, in this case, be correct (cf. Acts Interpretation Act 1901 (Cth) s 15AC). The effect of former Rule 2(1) was that a statute barred amendment could be made which did not arise out of substantially the same facts but a power existed in Rule 3A to fix the date at which it took effect as some date other than the date of original filing ('unless the Court otherwise orders…'). This facilitated the common practice of postponing to some later point in time, the question of whether amendments arose out of substantially the same facts. 13 Unfortunately, the drafter of FCR Division 8.3 has omitted an analogue to Rule 3A. In Tamaya Resources Limited (in liq) v Deloitte Touche Tohmatsu (A Firm), in the matter of Tamaya Resources Limited (in liq) [2015] FCA 1098 ('Tamaya') at [140], Gleeson J reasoned that she could fix such a time as a condition on a grant of leave to amend (imposed presumably under FCR 1.33) ('the Court may make an order subject to any conditions the Court considers appropriate'). In Australian Securities and Investment Commission v Australian Property Custodian Holdings Ltd (No2) [2013] FCA 409; (2013) 213 FCR 289 at 293, Murphy J observed, in an obiter dictum, that FCR 8.21(2) in fact contained such a power. With respect, I do not think that is correct. 14 Tamaya does not assist in this case because Bennett J has already granted leave and I do not see that I can impose a condition on that grant retrospectively, at least not with complete confidence. I do consider, however, that I can exercise the power in FCR 1.32 ('The Court may make any order that the Court considers appropriate in the interests of justice') in such a case. 15 The former rules certainly provided that a Respondent should not generally lose its right to a successful limitation defence where an amendment arose out of facts which were not substantially the same by making provision for an 'otherwise order': former Rule 3A. The new rules were not intended to operate differently. I am persuaded, therefore, that in the case of an originating application, the Court has the power to order that amendments to it take effect from some date other than the date of original filing. 3. Pleadings 16 The situation under the FCR in the case of pleadings is not satisfactory either. Some might have thought the reference in FCR 8.21(1)(g)(i) to claims arising out of the same facts was a little incongruous in relation to originating processes which often have no facts alleged in them. Such a rule would more naturally find its home amongst the rules dealing with pleadings which are contained in FCR Part 16. But there such a rule is, unfortunately, not to be found. That is to say, the FCR do not currently provide that a pleading may in some circumstances, be amended even though a limitation period has expired. 17 This is another serious drafting error. It makes available an argument that the rule in Weldon v Neal (1887) 19 QBD 394 at 395 has been revived although, at least at first instance, that spectre has been warded off for the time being: Australian Securities and Investment Commission v Australian Property Custodian Holdings Ltd (No.2) [2013] FCA 409; (2013) 213 FCR 289 at 293 per Murphy J; McGrath v HNSW [2014] FCA 165; (2014) 219 FCR 489 at 501 per Cowdroy J. It was not contended before me that the impact of this lacuna was that a pleading could not be amended to add a statute barred cause of action nor was such an argument mounted before Bennett J. As both Murphy and Cowdroy JJ observed, the presence of a power to permit just such an amendment in the case of originating applications makes it difficult to think that an amendment in the case of pleadings cannot be made in the same circumstance. 18 I would go further. The grant of power in FCR 8.21 to amend an originating application to raise statute barred claims arising out of substantially the same facts would be rendered nugatory in cases proceeding by pleadings if a power to amend the corresponding pleading did not exist. It therefore follows that the effectual exercise of the power conferred by FCR 8.21 must be attended by a concomitant but implied power in relation to pleadings. This is an example of the principle that where a power is conferred by legislation there is an implied power to perform it: see Pearce D and Geddes R, Statutory Interpretation in Australia (8th ed, Lexis Nexis Butterworths, 2014) p 84 [2.43]; Re Sterling; Ex parte Esanda Ltd [1980] FCA 61; (1980) 44 FLR 125 at 130 per Lockhart J. Put another way, it would not be possible to amend an originating process in a case proceeding on pleadings unless the pleading itself could be amended in the same circumstance. Hence, such a power must exist. 19 The consequence of this reasoning is that there is implied into the Rules dealing with the amendment of pleadings by leave, a set of provisions precisely mirroring those dealing with originating applications in FCR 8.21. 20 This conclusion is unsurprising if only because, as noted above, the introduction of the new rules in 2011 was not intended to bring about any substantial alteration to the previous rules' operation. 21 Accordingly, I conclude that the Court has the power to grant leave to amend both an originating process and a pleading to add a statute barred cause of action but only in the circumstances referred to in FCR 8.21(2). It would be helpful if FCR 16.53 were explicitly brought into line with FCR 8.21 but in fact, as a matter of implication, it already operates that way. The Court also has the power in both cases to make the date upon which such an amendment is to take effect, a date other than the date on which the proceedings were initiated for analogous reasons. 4. 'Substantially the same facts' 22 There is no dispute that the amendments which were manifest in the 2FASOC raised claims which were statute barred. For the reasons I have already given, the Court only had power to grant leave to amend to Voxson to pursue these statute barred claims if the amendments, relevantly, arose out of substantially the same facts. Bennett J granted leave to amend. As a matter of logic, this might imply that the Court must have concluded that the claims did arise out of substantially the same facts as the earlier claim, otherwise the power to amend could not have arisen. 23 I do not think this would be a productive way to reason. The parties agreed that the limitation issues could be argued at a later time. The fact is that the question of whether the claims arise out of substantially the same facts has not been argued or been the subject of reasoned resolution (although her Honour did consider the related, but different, question of whether the nature of the case had changed: see Voxson v Telstra [2015] FCA 1490 at [49]-[50]). 24 As an interlocutory judgment which did not finally determine any substantive issues between the parties, the grant of leave by Bennett J would not ordinarily create any issue estoppels or res judicata: cf. Somodaj v Australian Iron and Steel Ltd [1963] HCA 50; (1963) 109 CLR 285 at 297-298 per Kitto, Taylor and Menzies JJ; Kuligowski v Metrobus [2004] HCA 34; (2004) 220 CLR 363 at 374-375. It is true that matters which have been determined at an interlocutory hearing may not endlessly be revisited: Brimaud v Honeysett Instant Print Pty Ltd (1988) 217 ALR 44 at 46-47 per McLelland CJ in Eq. But in this case, the point has never been argued. I do not therefore regard Bennett J's orders as resolving the issue before me. 25 As I have already indicated above at [5], Voxson's initial claims included the proposition that the Respondents used their own A-GPS servers to communicate local positioning services to customers' devices on their networks. This contention proved to be factually incorrect. The Respondents, apart from Telstra in respect of its 2G and 3G networks, did not operate their own A-GPS servers. The local positioning information was communicated by third parties and was transmitted across the Respondents' mobile networks as ordinary data traffic. It was Voxson's acceptance of this state of affairs which eventually led to the 2FASOC. 26 In her Honour's costs judgment in Voxson v Telstra (No.3) [2015] FCA 1492 at [70] Bennett J summarised what had happened this way: '70 Voxson finally proposed amendments and acknowledged Optus' repeated position as to the implementation of the claimed system with the proposed March pleading. The amendments could not be called "minor", as submitted by Voxson. Voxson's prior position was unreasonable, was not based on any factual material and was contrary to its own evidence. Voxson should pay Optus' costs of the strike out application and of Voxson's applications to amend on an indemnity basis up to the serving of the proposed March pleading and on the ordinary basis thereafter. Voxson should pay Optus' costs thrown away by reason of the various amendments, from the date of service of the proposed March pleading up to the service of the proposed amended pleading, on the ordinary basis. Voxson should also pay the costs of the contested applications for the costs of the strike out application and applications to amend.' [emphasis added] 27 The Respondents' point is in part based upon the statement in this passage that Voxson's initial claim was 'not based on any factual material and was contrary to its own evidence'. How could the claims in the 2FASOC, asked the Respondents rhetorically, arise out of substantially the same facts as the original claims when the original claims were not based on any facts at all? 28 To this Voxson rejoined that the inquiry thrown up by the 'substantially the same facts' test is not a narrow one, citing Clasul Pty Ltd v Commonwealth [2014] FCA 1133 at [41]-[51] per Gleeson J. Her Honour there collected the relevant authorities. Various judicial parsings of the expression were referred to: what was called for was a 'fairly broad brush comparison', did the amendments invoke 'a new set of ideas' or was what was involved 'a new story'. The same authorities also make clear that 'substantially the same facts' does not mean 'the same facts'. 29 Here, Voxson's initial claims were that the Vox 1 patent was directly infringed by the Respondents providing local positioning information from their own A-GPS servers to their customers' devices. Now its case is that the Respondents are derivatively liable for infringement by third parties, such as Nokia or Apple, providing that information from their own A-GPS servers to the customers' devices. 30 In my view, this is not the same story and is a new set of ideas even allowing the application of a fairly broad brush approach. Apart from both stories having the Vox 1 Patent as their principal character, the cases are different. 31 There are, for example, new and substantial facts in the 2FASOC which are not in its earlier iteration. One of these is that the local positioning information is not provided by the Respondents but instead by third parties who do not necessarily conduct a mobile telephone network. This has the knock-on effect that Voxson can no longer claim that the Respondents infringe its Vox 1 patent by operating their networks, because their network operations do not encompass the giving of local positioning information to their customers' devices. This forces Voxson into a corner where it alleges that the Respondents authorise rather than directly commit the infringements. This is a large change in its case. 32 In saying that, I am aware that Voxson's submissions to me during the hearing were that the general allegations against the Respondents, except for Telstra (which I deal with below), have not changed substantially because both cases involve positioning information from satellites being used together with positioning information from the relevant network in order to improve GPS functionality of the equipment used by the Respondents' customers. Put more simply, it seems to me that this submission asks me to conclude that it is only the means of the information being transmitted to the Respondents' customers which has changed, and that at all material times the manner in which that information was transmitted remained unauthorised. Put that way, however, Voxson's argument tends to diminish the important structural distinctions at play. In my view, these amendments are not a mere adjustment or a trimming of a sail. The internal mechanics of the case are entirely different. 33 I also reject Voxson's argument that to approach the matter in this fashion is to punish it a second time when it has already been subjected to an indemnity costs order by Bennett J in Voxson v Telstra (No.3) [2015] FCA 1492. To the contrary, the matter is simply driven by the fact that the case in the 2FASOC is a new case arising out of substantially different facts. It would be quite unfair to let this new case date back to the date of filing of the earlier and different claim. I do not need therefore to deal with the Respondents' arguments based on Voxson's failure to explain the reason for its delay. 34 What has been written above establishes that Voxson should not be permitted to have its amendments date from the commencement of the proceedings. There remains a choice to my mind, however, as to whether they should date from when the documents embodying them were finally filed or, instead, some earlier time when the application to amend (of whatever procedural form) was first made. In principle, it seems to me that it must be the latter. If it were otherwise, acts of which an applicant was wholly innocent might lead to claims being statute barred. For example, a respondent might draw out the process of determining the amendment application or the Court might reserve for an extended period of time. 35 The question then becomes when was it that Voxson first sought to articulate something resembling its current case. Bennett J gave consideration to this issue in her costs judgment: Voxson v Telstra (No.3) [2015] FCA 1492. Her Honour's view was that Voxson first desisted from making the baseless allegation that the Respondents (apart from Telstra in relation to its 2G and 3G networks) implemented A-GPS on their networks only on 23 March 2015 when it served another iteration of its pleadings: [17]. It seems to me that this is the relevant date. I accept that many changes were made after 23 March 2015 but I do not think these were, as the changes on 23 March 2015 were, a paradigm shift. 36 In that circumstance, I propose to order that the amendments to the various 2FASOCs and the originating applications take effect from 23 March 2015. 5. Telstra 37 In the case of Telstra's 2G and 3G networks, Telstra did in fact provide local positioning information from its own servers. In the case of those networks, Voxson's initial claims included an allegation to that effect. The new claims in the 2FASOC are, therefore, in relation to the Telstra 2G and 3G networks new claims in addition to these old claims. In relation to the Telstra 4G network (and the other Respondents) the claims in the 2FASOC are new claims in substitution for an abandoned case. 38 This does not cause me to change my views of when the new claims against Telstra should take effect. They do not arise out of substantially the same facts even if, in the case of the Telstra 2G and 3G networks, there was a basis for the earlier claims. The difficulties I have identified above still exist. Accordingly, those new claims will also take effect from 23 March 2015. 6. Orders: 39 The parties are to bring in short minutes of order giving effect to these reasons within 14 days. I certify that the preceding thirty-nine (39) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Perram. Associate: Dated: 20 March 2017