Re. Group Pty Ltd v Kazal (No 2) [2017] FCA 698

FEDERAL COURT OF AUSTRALIA

Re. Group Pty Ltd v Kazal (No 2) [2017] FCA 698 File number(s): NSD 2080 of 2016

Judge(s): PERRAM J

Date of judgment: 20 June 2017

Legislation: Federal Court Rules 2011 (Cth) Part 20

Date of hearing: Determined on the papers

Date of last submissions: 5 May 2017 (Applicants) 3 May 2017 (Respondents)

Registry: New South Wales

Division: General Division

National Practice Area: Intellectual Property

Sub-area: Copyright and Industrial Designs

Category: No Catchwords

Number of paragraphs: 11

Counsel for the Applicants: Mr A Leopold SC with Mr R Jedrzejczyk

Solicitor for the Applicants: Ashurst Australia

Counsel for the Respondents: Mr A Coleman SC with Mr R Potter

Solicitor for the Respondents: Mitry Lawyers

ORDERS NSD 2080 of 2016

BETWEEN: RE. GROUP PTY LTD ACN 166 255 947 First Applicant

NAVEN DAVID SINGH Second Applicant

AND: ADAM KAZAL First Respondent

CHARIF KAZAL Second Respondent

JUDGE: PERRAM J DATE OF ORDER: 20 June 2017

THE COURT ORDERS THAT:

1. The parties bring in appropriate draft orders within seven (7) days. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

PERRAM J:

Determination of Discovery Issues 1 Both sides of the record seek discovery from the other. On 5 June 2017, I determined that the First Respondent, Mr Adam Kazal, should give discovery of categories 1-4 sought by the Applicants and that the Second Respondent, Mr Charif Kazal, should give discovery of categories 5-6 and 9. I disallowed categories 7-8 which related to the Second Respondent only. I also determined that the Applicants should give discovery to the Second Respondent of categories 3-5 of his discovery application subject to a date range 1 January 2008 – 1 January 2010. I disallowed categories 1-2 and 6-11. On 6 June 2017, the solicitor for both Respondents requested I give reasons for that determination. These are those reasons. 2 It is necessary, first, to understand the nature of the dispute between the Applicants and the Respondents if only in broad outline. Prior to these proceedings, the Second Applicant and the Respondents have had a toxic falling out over a business venture which has left the Respondents, so it seems, with the impression that they have been denied financial gains to which they believe themselves to have been entitled. They contend that the Second Applicant has secured for himself a profit of around $180 million which the Respondents say really belongs to them. The commercial transaction giving rise to the dispute has its origins in 2008. An important event which has generated some of the heat between the parties was a conversion of debt into equity which occurred on 28 January 2010. There followed proceedings in the Grand Court of the Cayman Islands later in 2010. Eventually, in December 2010, the shares in question were sold. 3 The Respondents in 2016 began making adverse statements about the Applicants. The First Respondent took, inter alia, to driving vehicles around Sydney with a photograph of the Second Applicant, Mr Singh, on them together with colourful statements that he was a corporate thief. Other things were said too. Similar signs were put on telegraph poles in the Eastern Suburbs of Sydney. The Applicants contend that the Second Respondent did much the same thing on a website. 4 The First Applicant alleges that it owns the copyright in the photograph. The Applicants sue the Respondents for copyright infringement and in the tort of injurious falsehood. As part of that latter case they allege that the matters appearing on the vans, the telegraph poles and on the website are not true. They set out in detail in their pleading their version of the underlying dispute between the parties. In their defences, the Respondents deny these allegations. 5 The Court's 'Central Practice Note: National Court Framework and Case Management (CPN-1)' issued on 25 October 2016 sets out an approach to determining discovery applications in Part 10 which makes clear that primacy should be given to proceedings being resolved as quickly, inexpensively and efficiently as possible and that such applications should be determined conformably with Part 20 of the Federal Court Rules 2011 (Cth). It is well-known that discovery can be burdensome and that an applicant must adequately justify the need for formal discovery. The request must be proportionate to the nature, size and complexity of the litigation at hand. With those observations in mind, I turn to consider the applications presently before me. 6 Both parties seek discovery about the truth of the dispute. The Applicants seek this by their categories 7-8 and the Second Respondent by his categories 1-2 and 6-11 (the First Respondent does not seek discovery). I do not consider that it would be useful to permit this to occur. Assuming the Applicants succeed in proving that the representations they attribute to the Respondents were actually made, their case is that the statements were false. They have pleaded their version of events. They know what their side of the commercial dispute is. They do not need discovery to help them with this. 7 The Respondents formally deny these allegations. Assuming they made the statements, they presumably believe their own version of events. If one person calls another a thief the first person must know why they are willing to say such a thing. Again, I fail to see that the Second Respondent needs discovery to aid him in proving the truth of his own allegation. Whilst I accept that discovery might assist both sides to improve their respective positions it would come at the price of significantly complicating the case. I do not think that the likely forensic advantage deriving from granting discovery would warrant turning this case into a large commercial trial of the underlying dispute. Two men have called another a thief. Let the parties prove what they can. 8 For those reasons I disallowed all of the categories relating to the truth of the underlying dispute (except, as will be seen below, those that were agreed). 9 In relation to the Applicants' remaining categories (1-6 and 9) the First Respondent made no submissions against categories 1-4 (which related only to him) and the Second Respondent consented to categories 5-6 (which related only to him). Category 9 sought communications between the Second Respondent and, broadly speaking, the internet service provider hosting his website. He does not admit who downloaded from that site. In my view, this material should be discovered. It is quite possible that it will bear upon this non-admission. 10 In relation to the Respondents' remaining categories (3-5) these were not objected to. I imposed a date restriction on them, however, of 1 January 2008 – 1 January 2010. This was an error and the reference to 1 January 2010 should have been to 31 December 2010. The date range represents the earliest date in the transaction through to the sale of the shares in Global Renewables Ltd to Ironbridge Capital. I do not think that the burden in requiring discovery past the date of the initial sale of the shares to Ironbridge Capital is warranted given the absence of direct material after that date. 11 The parties should bring in appropriate draft orders within seven (7) days. I certify that the preceding eleven (11) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Perram.