Panasonic Australia Pty Ltd v Ngage Pty Ltd [2006] NSWSC 399

Reported Decision : 69 IPR 595

New South Wales Supreme Court

CITATION : Panasonic Australia Pty Ltd v Ngage Pty Ltd [2006] NSWSC 399

HEARING DATE(S) : 10 March 2006

JUDGMENT DATE : 10 May 2006

JURISDICTION : Equity Division

JUDGMENT OF : Young CJ in Eq

DECISION : Application for preliminary discovery granted. Costs reserved.

CATCHWORDS : PROCEDURE [83]- Application for preliminary discovery- Possible claim for breach of confidence or under Trade Practices Act- How far court needs to be satisfied of strength of plaintiff's claim- How far approach of Federal Court on similar rules should be followed- Whether condition of payment of expenses should be imposed.

LEGISLATION CITED : Trade Practices Act 1974 (Cth), s 52 Uniform Civil Procedure Rules 2005, r 5.3

Aitken v Neville Jeffress Pidler Pty Ltd (1991) 33 FCR 418 CASES CITED : Cairns v Unicomb [2005] NSWSC 1279 Hooper v Kirella Pty Ltd (1999) 96 FCR 1 Paxus Services Ltd v People Bank Pty Ltd (1990) 99 ALR 728

PARTIES : Panasonic Australia Pty Limited (P) Ngage Pty Limited (D)

FILE NUMBER(S) : SC 4825/05

COUNSEL : A S McGrath and K E Day (P) No appearance for defendant

SOLICITORS : Henry Davis York (P)

IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION

YOUNG CJ in EQ

Wednesday 10 May 2006

4825/05 – PANASONIC AUSTRALIA PTY LTD v NGAGE PTY LTD JUDGMENT 1 HIS HONOUR: This is an application for preliminary discovery under Uniform Civil Procedure Rules 2005, rule 5.3. That rule provides as follows: "5.3(1) If it appears to the court that: (a) the applicant may be entitled to make a claim for relief from the court against a person (the prospective defendant) but, having made reasonable inquiries, is unable to obtain sufficient information to decide whether or not to commence proceedings against the prospective defendant, and (b) the prospective defendant may have or have had possession of a document or thing that can assist in determining whether or not the applicant is entitled to make such a claim for relief, and (c) inspection of such a document would assist the applicant to make the decision concerned, the court may order that the prospective defendant must give discovery to the applicant of all documents that are or have been in the person's possession and that relate to the question of whether or not the applicant is entitled to make a claim for relief." 2 The plaintiff entered into a confidentiality deed with the defendant on 15 November 2004. The subject matter of the deed was an arrangement between the parties whereby Westfield shopping malls would be supplied with equipment called "plasma screens" on which it could display advertising and those screens would be installed and maintained. 3 The plaintiff says that pursuant to that deed it provided technical and functional specifications and pricing for its video streaming software known as "NM Stage" to the defendant for the purpose of the contract. 4 On 4 February 2005, the parties entered into a memorandum of understanding (MOU). The plaintiff says that by this memorandum the defendant represented its intention to purchase 704 plasma screens and associated video streaming software, licences and players over a three year period on an exclusive basis from the plaintiff for installation in Westfield shopping centres. The memorandum also dealt with how the purchase was to be financed and the pricing. It was a term of the agreement that its existence and terms were confidential and that disclosure was subject to prior written consent of the parties. It was a further term that the parties would maintain open and honest communications. 5 I will return to the memorandum of understanding in due course. 6 The plaintiff has reason to believe that at the time that the parties entered into the memorandum the defendant was also involved in discussions with LG Electronic Australia Pty Ltd (LG) with a view to the defendant purchasing plasma screens from it. The plaintiff says that prior to and on 4 February 2005, Mr Lewis of the defendant, stated that the defendant had chosen to purchase the plasma screens and software from the plaintiff and therefore implicitly represented that it would not be purchasing them from LG. 7 On about 7 February 2005, compact disks containing updated software were delivered by the plaintiff to the defendant and about the same time the plaintiff established what it calls "a project team" dealing with various issues which it expected to arise on the project and appointed a project manager. In February and March liaison between the parties led to the plaintiff arranging for an engineer to fly out from Japan to assist in setting up the software. 8 On 21 February 2005, the defendant informed the plaintiff by email that its first firm order would be for 20 fifty inch plasma screens and 20 players. The plaintiff placed an order with its Japanese head office for delivery in April 2005. 9 On about 3 March 2005, a representative of a company known as Total Concept Projects Pty Ltd (TCP), contacted the plaintiff indicating that it had been approached by the defendant regarding the supply of TCP's video streaming technology to Westfield. The plaintiff became concerned about the confidentiality deed. During March 2005 there were further indications of close relations between the parties. This continued up to May 2005. 10 I have taken these details from the plaintiff's submissions, but the footnotes truly show where the material appears in the evidence. 11 The problem emerges in May 2005 when it appeared that Westfield was now asking the defendant for a $2 million guarantee where it had previously asked for only $1 million. The defendant could not provide that guarantee, but LG was willing to assist. The plaintiff was asked to assist but refused to do so. 12 During May rumours were circulating in the industry that the defendant had signed a contract with LG to supply the plasma screens for the Westfield malls. These rumours were denied by the defendant but the defendant did say that it was still trying to meet Westfield's requirement for a guarantee and that LG was continuing to make increasingly attractive offers. The defendant was given a final agreement to sign on 15 June but it declined to do so until the issues over the Westfield guarantee had been resolved, though Mr Lewis for the defendant said it was still their preference to do business with the plaintiff. 13 In June/July/August, the Westfield screens were being installed using LG and TCP equipment. 14 The defendant did not appear on the present application so that the only facts that I have have been taken from the plaintiff's evidentiary material. Mr A S McGrath and Ms K E Day appeared for the plaintiff and supplied written submissions. They put that the material demonstrated that the plaintiff has or may have an arguable case against the defendant within the jurisdiction of this Court, namely: