Federal Court of Australia Orientile Pty Ltd v Salitrosa Holdings Pty Ltd [2021] FCA 1154 File number(s): NSD 541 of 2021 Judgment of: CHEESEMAN J Date of judgment: 24 September 2021 Catchwords: PRACTICE AND PROCEDURE - application for non-standard discovery pursuant to r 20.15 of the Federal Court Rules 2011 (Cth) – application for discovery by categories – where Redfern Schedule procedure has been undertaken – whether the making of an order is consistent with the overarching purpose – whether the circumstances of the case warrant an order for discovery being made before the filing of the parties' lay evidence – Held: application dismissed – limited mutual discovery order in respect of one modified category Legislation: Copyright Act 1968 (Cth), ss 36, 37, 38, 115(1), 115(4) Federal Court Rules 2011 (Cth), rr 20.15, 21.01 Cases cited: Anchorage Capital Partners Pty Limited v ACPA Pty Limited (No 1) [2014] FCA 765 Austal Ships Pty Ltd v Incat Australia Pty Ltd (No 3) [2010] FCA 795; 272 ALR 177 Brown v Deloitte Touche Tohmatsu (A Partnership) (No 2) [2021] FCA 425 Buurabalayji Thalanyji Aboriginal Corporation v Onslow Salt Pty Ltd (No 6) [2019] FCA 1711 Construction, Forestry, Maritime, Mining and Energy Union v Os Mcap Pty Ltd [2020] FCA 1435 Hanson-Young v Leyonhjelm (No 2) [2019] FCA 393 Division: General Division Registry: New South Wales National Practice Area: Intellectual Property Sub-area: Copyright and Industrial Designs Number of paragraphs: 39 Date of hearing: 20 September 2021 Counsel for the Applicant: Ms P Arcus Solicitor for the Applicant: Davies Collison Cave Counsel for the Respondents: Mr C McMeniman Solicitor for the Respondents: Gilbert + Tobin ORDERS NSD 541 of 2021 BETWEEN: ORIENTILE PTY LTD ACN 105 113 782 Applicant AND: SALITROSA HOLDINGS PTY LTD ACN 003 307 015 First Respondent DEDDE JOWONO Second Respondent order made by: CHEESEMAN J DATE OF ORDER: 24 SEPTEMBER 2021 THE COURT ORDERS THAT: 1. The applicant's interlocutory application filed on 3 August 2021 be dismissed. 2. Pursuant to r 20.15 of the Federal Court Rules 2011 (Cth): (a) The applicant produce to the respondents high resolution versions, in native format, of each of the images incorporated in Schedules A to C of the amended statement of claim. (b) The respondents produce to the applicant high resolution versions, in native format, of a sample tile for each category of tile (having regard to dimension, surface texture and colour) that is the subject of the admissions in the amended defence at [15] – [16]. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011. REASONS FOR JUDGMENT CHEESEMAN J: Introduction 1 The applicant, Orientile Pty Ltd, has applied for orders requiring the respondents, Salitrosa Holdings Pty Ltd and Dedde Jowono, to give discovery of documents in six categories before evidence is filed. The application is opposed. The second respondent, Mr Jowono, is one of two directors of Salitrosa. The parties have engaged in the preparation and exchange of a Redfern Discovery Schedule (in accordance with [8.4] to [8.7] of the Commercial and Corporations Practice Note). Regrettably that process has not resulted in much meaningful agreement in limiting the discovery dispute. The critical, although not the only issue, is whether discovery should be ordered before or after the filing of lay evidence. The substantive proceedings 2 Orientile alleges that copyright subsists in, and it is the owner of copyright, in two designs, the Orientile Design and the Modified Orientile Design (together the Designs), which were first published in June 2018 in Australia. The claim is brought by Orientile as the owner of the copyright asserted, pursuant to s 115(1) of the Copyright Act 1968 (Cth). 3 Orientile alleges that from at least September 2020, Salitrosa has imported into Australia and sold tiles, in various sizes, finishes and colours under the series name "Timeless", which reproduce, without authorisation, a substantial part of one or more of the Designs (the Impugned Tiles). Mr Jowono is alleged to have authorised Salitrosa's conduct in this regard. Mr Jowono is alleged to have been in effective control of Salitrosa at all material times and been aware of the conduct of Salitrosa and its servants and agents. 4 Salitrosa is alleged to have known, or ought reasonably to have known, that if the Impugned Tiles were made in Australia, that would have been an infringement of copyright in the Designs. Orientile alleges that Salitrosa has infringed and continues to infringe its copyright in the Designs pursuant to s 36(1) (unauthorised reproduction), s 37(1) (importation) and s 38(1) (sale and dealings) of the Act. Orientile further alleges that Salitrosa's conduct has been flagrant and claims additional damages on that basis under s 115(4)(b)(i) of the Act. 5 Mr Jowono is alleged to have infringed Orientile's copyright pursuant to s 36 of the Act by authorising, and continuing to authorise, Salitrosa's alleged infringement. 6 Mr Jowono admits that he is a director of Salitrosa and that he has responsibility for Salitrosa's importation and sale of tile products. The respondents assert that Orientile's allegations as to Mr Jowono's effective control and awareness of the conduct of Salitrosa and its servants and agents is "embarrassing and therefore deny" those allegations. 7 The respondents deny that the Designs are original artistic works and that copyright subsists in the Designs. 8 The respondents admit that Salitrosa has from about September 2020 imported, advertised and sold the Impugned Tiles but deny that those tiles reproduce in whole or in substantial part, one or more of the Orientile Designs. Salitrosa admits it was not licenced by Orientile but denies that it required a licence from Orientile. 9 Salitrosa denies it knew, or ought reasonably to have known, that the making of the Impugned Tiles in Australia would have constituted an infringement of copyright in the Designs. 10 Accordingly, the respondents deny that they infringed the copyright asserted by Orientile. 11 The hearing of the proceedings will be in two tranches, first as to liability, second if required, an assessment of damages. 12 The pleadings have closed. The operative pleadings comprise an amended statement of claim and an amended defence to the amended statement of claim. The statement of claim is drafted in a way that is not conducive to eliciting a discrete series of admissions. Central allegations are in a rolled up form and deploy defined terms that embed the essential allegation of infringement. This has resulted in a repeated plea of "and otherwise deny" in many parts of the defence. Allegations of fact which may have attracted unqualified admissions are included as particulars rather than as primary allegations requiring a responsive pleading. The consequence is that the real issues in dispute between the parties have not been defined with the clarity that one would expect at the close of pleadings. Reading the pleadings together with the secondary references to the open correspondence between the parties which has been particularised and on which the parties relied in submissions, but curiously did not provide to the Court, the principal battleground appears to be whether the Designs comprise original artistic works capable of attracting copyright (ss 32, 10(1)), use of the Designs by Salitrosa, Salitrosa's knowledge relevant to infringement (ss 36(1), 37(1), 38(1) and Mr Jowono's alleged authorisation of Salitrosa's alleged conduct (s 36). Principles Discovery 13 Orientile seeks discovery by category pursuant to rule 20.15 (non-standard discovery) of the Federal Court Rules 2011 (Cth). Orientile has not sought to obtain discovery on a broader basis than the "direct relevance" standard in rule 20.14 (1) of the Rules. 14 The applicable principles were summarised by McKerracher J in Buurabalayji Thalanyji Aboriginal Corporation v Onslow Salt Pty Ltd (No 6) [2019] FCA 1711 (at [4] – [7]): 4 Pursuant to r 20.11 of the Federal Court Rules 2011 (Cth), a party must not apply for an order for discovery unless the making of the order sought will facilitate the just resolution of the proceeding as quickly, inexpensively and efficiently as possible. This principle reflects the overarching purpose of civil practice and procedure of the court stated in s 37M of the Federal Court of Australia Act 1976 (Cth). 5 The intent of the Rules to prevent unnecessary discovery is emphasised by r 20.12, which provides that a party must not give discovery unless the Court has made an order for discovery. 6 Standard discovery in this Court is controlled by the 'directly relevant' test prescribed by r 20.14(1) of the Rules, which is intended to be more limited in scope than discovery under the 'train of inquiry' test derived from Compagnie Financiere et Commerciale du Pacifique v Peruvian Guano Company (1882) 11 QBD 55: see, for example, Adelaide Brighton Cement Limited, in the matter of Concrete Supply Pty Ltd v Concrete Supply Pty Ltd (Subject to Deed of Company Arrangement) (No 3) [2018] FCA 1058 per Besanko J (at [5]-[12]). 7 It will be incumbent on the party seeking particular discovery to satisfy the Court that the document should be discovered in the circumstances of the case. In addition to the documents being relevant, the Court needs to be satisfied that discovery of the document will facilitate the efficient conduct of the proceedings. 15 In Anchorage Capital Partners Pty Limited v ACPA Pty Limited (No 1) [2014] FCA 765, Perram J noted, in the context of a case where the pleadings had not closed and evidence had not been filed, that postponing discovery until after evidence will often but not invariably reduce the ambit of discovery (at [20]). 16 I further note, and respectfully agree with, the observation of Stewart J in Brown v Deloitte Touche Tohmatsu (A Partnership) (No 2) [2021] FCA 425 at [34] that: CPN-1 at paragraph [10] sets out the Court's general approach to discovery. Relevantly, there is nothing set out there or in Pt 20 of the Federal Court Rules 2011 (Cth), which governs discovery, that states when in the course of a proceeding discovery orders can or cannot, or should or should not, be made – save that r 20.13(3) provides that an application for discovery may not be made until 14 days after all respondents have filed a defence. … There is no default position, or predetermined expectation, that discovery should only take place after the parties' evidence is on, or vice versa. Each case must be decided on its own circumstances. 17 In Construction, Forestry, Maritime, Mining and Energy Union v Os Mcap Pty Ltd [2020] FCA 1435, Rangiah J, referring to the decisions of Anchorage Capital Partners and Buurabalayji Thalanyji Aboriginal Corporation, neatly encapsulated the competing considerations as to whether discovery should precede or follow the filing of evidence (at [30]): These cases neatly describe the conflicting considerations concerning the timing of discovery in a case where the evidence-in-chief is to be given by way of affidavit. Once the issues in the case are defined by the pleadings, orders for discovery may assist the parties to prepare their affidavits; and there are considerable advantages in the parties being able to do so comprehensively, rather than in a piecemeal fashion. On the other hand, the exchange of affidavits before discovery may result in reduction of the issues in dispute and may thereby minimise or obviate the need for discovery. Discovery before the exchange of evidence may ultimately prove to have been at least partly unnecessary, while discovery after the exchange of evidence may necessitate the preparation of further evidence. Whichever course is taken, there is always the possibility of inefficiency and unnecessary costs being incurred. However, what is common to the judgments in Anchorage Capital Partners and Buurabalayji Thalanyji Aboriginal Corporation is their Honours' emphasis upon the necessity for the appropriate procedure to be tailored to the particular circumstances of the particular case. Categories 18 Orientile seeks discovery pursuant to the following categories: (1) All Documents relating to the creation of the Salitrosa Designs and/or the Salitrosa Tiles by: (a) Next Gen International Pte Ltd; (b) the First Respondent; and/or (c) any other person or company including but not limited to: (a) any written communications between: (i) the First Respondent and Next Gen International Pte Ltd; and/or (ii) the First Respondent and any other person or company in relation to the creation or preparation of the Salitrosa Designs and/or the Salitrosa Tiles; (b) any written communications between: (i) the Second Respondent and Next Gen International Pte Ltd; and/or (ii) the Second Respondent and any other person or company in relation to the creation or preparation of the Salitrosa Designs and/or the Salitrosa Tiles; and (c) any Design Materials. (2) All Documents relating to the First Respondent's decision to purchase a container of Precious Travertine tiles from the Applicant in March 2020 (the Purchase), including: (a) all internal communications, including by or between employees, agents and directors of the First Respondent relating to the Purchase; (b) all documentation recording the receipt of the products the subject of the Purchase by the First Respondent (including any shipping or warehouse records); and (c) all documentation and/or communications relating to any disposal (by sale or otherwise) by the First Respondent of the products the subject of the Purchase. (3) All Documents which relate to the involvement of the Second Respondent in the creation of the Salitrosa Designs and/or the Salitrosa Tiles by the First Respondent. (4) All Documents which relate to the involvement of the Second Respondent in the importation and sale of the Salitrosa Tiles by the First Respondent. (5) A high-resolution photograph of a sample of each of the Salitrosa Tiles. (6) A summary document, verified by a director of the First Respondent, containing information identifying: (a) total number of Salitrosa Tiles manufactured by, imported by, or supplied to the First Respondent from 1 September 2020 to 30 June 2021; (b) total monthly value of sales of the Salitrosa Tiles sold by the First Respondent ("Sales") from 1 September 2020 to 30 June 2021; (c) total expenses incurred by the First Respondent in respect of the Sales from 1 September 2020 to 30 June 2021; and (d) total profits made by the First Respondent in respect of the Sales from 1 September 2020 to 30 June 2021. Consideration Category 5 19 It is convenient to first address category 5. On the eve of the hearing the respondents made an offer to resolve this disputed category provided that discovery on this issue was mutual. That offer was rejected. During the hearing and as a result of meaningful engagement with the substance of the proposal, the parties accepted that production in respect of this category should be mutual and broadly in accordance with that which had been proposed by the respondents. I am satisfied that with respect to the amended version of this category, that mutual discovery before the filing of evidence is likely to promote the overarching purpose. In particular it will address the fairly arid issue on the pleadings in relation to whether the images in Schedule C of the Statement of Claim are depictions of the Impugned Tiles. Making discovery mutual in this regard will facilitate efficient preparation of the parties' lay evidence and may expedite meaningful resolution discussions. 20 Accordingly, I will make orders that Orientile produce to the respondents high resolution versions in native format of each of the images incorporated in Schedules A to C of the statement of claim and that Salitrosa produce to Orientile high resolution images in native format of a sample tile referrable to each of the admissions (as to tile dimension, surface texture and colour) in the defence at [15] - [16]. Category 1 21 The defined terms used in category 1 are drawn from [13] and Schedule C of the statement of claim. Salitrosa Tile is defined as tiles which bear the Salitrosa Designs, photographs of which are alleged to be reproduced in Schedule C of the statement of claim. The material facts in relation to the manufacture of the Impugned Tiles are contained in the particulars to [13] of the statement of claim in which it is stated that Salitrosa through its lawyers admits that the tiles "were manufactured for [Salitrosa] by Chinese Company Next Gen International Pte Ltd, and then shipped to Australia in September 2020". 22 The respondents submit that the creation of the Salitrosa Designs and/or the Salitrosa Tiles by the [r]espondents will be addressed by the [r]espondents' evidence. Further that category 1 is extremely broad and will likely result in discovery of documents irrelevant to determination of the substantive issues in the proceedings. I accept the respondents' submissions. 23 The filing of the respondents' lay evidence will likely significantly refine this category so that any discovery required will be targeted. Orientile has not demonstrated that documents in this category were documents which it required for the purpose of its lay evidence. Should it prove to be the case that Orientile does seek to lead additional lay evidence after any future discovery is provided by the respondents, Orientile may apply for leave in that limited respect at that time. Accordingly, in the context of the present proceedings I am not satisfied that it is compatible with the efficient conduct of the proceedings to order discovery before lay evidence is filed in the broad terms in which category 1 is framed. Category 2 24 Category 2 is directed to obtaining all documents relating to Salitrosa's purchase from Orientile in March 2020 of a container of tiles bearing the Designs. Again, the material allegation concerning that purchase is contained in particulars to the statement of claim and so is not the subject of a responsive plea: statement of claim, [18] particular (iii). 25 The fact of the purchase appears to be common ground and appears from the submissions made by the parties to have been the subject of open correspondence between the parties' lawyers. The respondents submit that the purchase will be the subject of evidence from Salitrosa. For the same reasons as apply with respect to category 1, I am not satisfied that an order for discovery on this issue should be made at this stage of the proceedings. The efficient conduct of the proceedings is likely to be enhanced and unnecessary and potentially irrelevant discovery is likely to be avoided if discovery is postponed until after the filing of the respondents' lay evidence, at which time an application for discovery, if required, may be appropriately targeted. Categories 3 and 4 26 These categories are again, exceptionally broad, calling for all documents which relate to the involvement of Mr Jowono in the creation, importation and sale of the Salitrosa Designs and/or Salitrosa Tiles by Salitrosa. On the pleadings the respondents admit that Mr Jowono is a director of Salitrosa and has responsibility in his role for Salitrosa's importation and sale of tile products. 27 In their submissions the respondents state that Mr Jowono's involvement in the business of Salitrosa will be the subject of its lay evidence. Further, it is submitted that the evidence will address Mr Jowono's "meeting in October 2019 in relation to the creation of the travertine tile". Orientile alleges that Mr Jowono authorised the reproduction and communication to the public of the Designs, and in doing so authorised the infringement of Orientile's copyright: statement of claim, [27] - [28]. The respondents deny this, including on the basis that the respondents deny that the Impugned Tiles infringe Orientile's copyright. The respondents submit that these issues will be the subject of the respondents' evidence and that if there are any documents that Orientile considers it requires after reviewing the respondents' evidence, it may seek discovery of them at that time. 28 I accept the respondents' submissions. I am not satisfied that it is consistent with the efficient conduct of the proceedings to require discovery in this broad category before the respondents file their lay evidence. Orientile may review an application for discovery of these documents, if so advised, in a more focussed manner after consideration of the respondents' lay evidence. Category 6 29 Category 6 is in the nature of an interrogatory. It calls for preparation of a verified "summary document" containing information in respect of the total number of Impugned Tiles, the total monthly value of sales of such tiles from 1 September 2020 to 30 June 2021, the total expenses incurred in respect of such sales in that period and the total profits from such sales in that period. 30 Orientile submits that the category is not burdensome, harsh or oppressive. That submission is based on the bare assertion that Salitrosa is likely to have basic accounting software that could readily produce the summary information in relation to the particular product range that comprises the Impugned Tiles. The respondents did not engage with that submission by leading evidence. They were in a position to do so. Unsupported by evidence, the respondents submitted that it was unlikely given the nature of Salitrosa's business as a nationwide tile supplier, operating via warehouses in four states and distributing to retail stores and commercial projects, that information as to expenses and profit were likely to be captured at the level of individual product ranges. 31 Orientile submits that the information is just and necessary despite the bifurcation of the hearing of liability and damages because such information will assist in reasonable and proportionate decision making in relation to the proceedings including mediation. 32 Orientile also submits that the information sought may be relevant to the assessment of the respondents' conduct after they were put on notice of Orientile's infringement allegation, whenever that was (the date not being specified in the statement of claim), for the purpose of assessing Orientile's claim for additional damages: s 115(4)(b). The respondents counter submit that the fact of ongoing sale of the Impugned Tiles is not in issue. That being so, the information sought can only go to the amount of any damages not the liability for additional damages relying on Raben Footwear Pty Ltd v Polygram Records Inc (1997) 75 FCR 88 at [104] (Burchett J). 33 Critically, Orientile has not identified any basis for why it requires this information in order to prepare its lay evidence. 34 The relevant rule for the administration of interrogatories is rule 21.01 of the Rules. Orientile has not made an application for leave to administer interrogatories under rule 21.01, although that is in substance what it seeks in category 6 under the guise of its non-standard discovery application under rule 20.15. 35 The administration of interrogatories is a form of discovery and just as the Court has now limited the scope for wide ranging discovery, "the circumstances [in] which leave to administer interrogatories will be granted is increasingly rare": Austal Ships Pty Ltd v Incat Australia Pty Ltd (No 3) [2010] FCA 795; 272 ALR 177 at [7] (McKerracher J). 36 In Hanson-Young v Leyonhjelm (No 2) [2019] FCA 393 White J observed: 14 In general, the Court will order a party to provide written answers to interrogatories only when it is necessary for the fair disposition of the proceeding or to save costs. The ultimate aim of the process of discovery of information by interrogatories is to shorten the trial and save costs: [Alliance Craton Explorer Pty Ltd v Quasar Resources Pty Ltd [2012] FCA 290] at [25]. Interrogatories enable a party to litigation to obtain discovery of material facts in order to support or establish proof of his or her own case, to find out the case (but not the evidence) the party has to meet, or to destroy or damage the case brought by his or her opponent: ibid. In Alliance Craton at [36], Mansfield J noted that, if the energy, effort, time and cost required to address the interrogatories is not reasonably proportionate to the end sought to be achieved, then the interrogatories should not be allowed. 15 One of the reasons why the Court seldom orders a party to answer interrogatories is that the process is often an expensive and unnecessary means of securing the proper disclosure of information: Alliance Craton at [27]. However, the relative infrequency with which orders are made for the answering of interrogatories does not mean that such orders will not be appropriate in a given case. Ultimately, an evaluation has to be made having regard to the particular circumstances of each case. 37 In the present case, unsurprisingly perhaps given that neither party grappled with what was in fact required by category 6, Orientile did not seek to demonstrate why it would be appropriate to administer an interrogatory of this type at this stage of the proceedings. It is not necessary to engage with the breadth or the burden imposed by category 6, and in the absence of evidence it is inappropriate to do so, because the essential objection is, again, as to timing. 38 Orientile has not established that it would be efficient to order the respondents to provide the information sought in category 6 at this stage of the proceedings. Deferring the making of an order of the type sought by Orientile until after the respondents' lay evidence is likely to facilitate a more focussed means of obtaining information of the type requested, if the need to do so remains after the exchange of evidence. Any such application can be timed so as to facilitate the provision of the information ahead of any court-annexed mediation or other alternative resolution process. Accordingly, I decline to make an order that the information requested in category 6 be provided at this stage. Conclusion 39 For these reasons, I dismiss the interlocutory application. I will hear from the parties on costs. I certify that the preceding thirty-nine (39) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Cheeseman. Associate: Dated: 24 September 2021