Re Star Micronics Pty Ltd and Star Micronics Co Limited v General Synthetics Pty Ltd (Trading As General Control Systems) [1991] FCA 639 (17 December 1991)

FEDERAL COURT OF AUSTRALIA

Re: STAR MICRONICS PTY. LTD. and STAR MICRONICS CO. LIMITED
And: GENERAL SYNTHETICS PTY. LTD. (trading as GENERAL CONTROL SYSTEMS)
No. V G390 of 1991
FED No. 868
Practice and Procedure

COURT

IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY
GENERAL DIVISION
Heerey J.(1)

CATCHWORDS

Practice and Procedure - Anton Piller order - computer printers - alleged infringement of copyright - consideration of principles on which order will be granted - feared destruction or concealment of evidence - infringing goods small part of long established business - whether alleged representations constitute nefarious conduct.

HEARING

MELBOURNE
17:12:1991

Counsel for the Applicants: Mr R. Kendall

Solicitors for the Applicants: Stephens

No appearance for the Respondent.

DECISION

Mr Kendall of Counsel has presented a very thorough and careful argument in support of this application, characterised to a high degree by that fairness and candour which the Court is entitled to expect in an ex parte application. However, I shall refuse the application and briefly give my reasons for taking that course.

2. The applicant seeks an Anton Piller order in respect of documents described in paragraph 7 of the application as:
.....any catalogues, invoices, receipts, books of account and

other such documents or other records, including computer disks,
relating to the production or manufacture, or purchase, or sale,
or hire, or distribution, or importation, or other dealing with or
in relation to "Star" computer printers;

3. The first applicant is the exclusive licensee in Australia of the second applicant, the Japanese manufacturer of "Star" computers and printers. The applicants' case centres around a complaint that the respondent, which operates some 11 retail shops in Queensland, New South Wales and Victoria, is selling what are admittedly genuine "Star" printers, but ones not designed for use in Australia in that they are designed for use with voltage of 220, whereas of course Australian electricity supplies are at 240 volts.

4. Further, it is said, and there is some evidence of this, that the respondent in making sales of the printers has represented to customers that they are backed by a 12 month warranty by the manufacturer, which is not in fact the case. There is no suggestion that the respondent obtained the printers unlawfully in the sense that it does not have title to them, but it is said that dealing with them involves a breach of the copyright in the computer program contained in the printer which is owned by the second applicant, a proposition that was established after a contested hearing in another action brought by the applicants against other retailers: Star Micronics Pty Ltd v Five Star Computers Pty Ltd (1990) 18 IPR 225.

5. If this were an opposed application for an interlocutory injunction, the material thus far would leave me with little hesitation in reaching the conclusion that this would be an appropriate case to order an interlocutory injunction pending trial, although the precise terms of that injunction might depend upon the circumstances or evidence adduced by the respondent. For example, it might be confined to an injunction against making representations as to the existence of a warranty, coupled with an undertaking by the respondent to keep an account of profits.

6. However, what is before me is an application of a very different nature, and it is realistically accepted by Mr Kendall that the application for an injunction is only made ex parte because were that not so, it would be pointless to seek an Anton Piller order. So the case really boils down to a question as to whether the requirements of that remedy are satisfied. In the Anton Piller case itself, that is Anton Piller KG v Manufacturing Processes Limited (1976) Ch 55 at p 61, Lord Denning MR said:

It seems to me that such an order can be made by a judge ex parte,
but it should only be made where it is essential that the
plaintiff should have inspection so that justice can be done
between the parties: and when, if the defendant were forewarned,
there is a grave danger that vital evidence will be destroyed,
that papers will be burnt or lost or hidden, or taken beyond the
jurisdiction, and so the ends of justice be defeated: and when
the inspection would do no real harm to the defendant or his case.

7. There has been some elaboration by commentators of the second of those requirements, that is a fear of destruction of evidence. In Equitable Remedies, 4th Edition by Dr I.C.F. Spry QC, the learned author says at p 549:

First, an Anton Piller order may involve considerable hardship or
prejudice to the defendant, and the plaintiff should be granted
this remedy only where there is so great a risk that the normal
processes of the law would be rendered nugatory if some immediate
and effective measure were not available that, despite any
possible prejudice and inconvenience to the defendant and other
relevant considerations, it is just that the order should be made.
So it was said by Scott J., "The Draconian and essentially unfair
nature of Anton Piller orders from the point of view of
respondents against whom they are made requires, in my view, that
they be so drawn as to extend no further than the minimum amount
necessary to achieve the purpose for which they are granted,
namely, the preservation of documents or articles which might
otherwise be destroyed or concealed. Anything beyond that is, in
my judgment, impossible to justify."
Secondly, the degree of cogency of the evidence to be adduced by
the plaintiff on his application depends on all the circumstances
including the imminence and nature of the apprehended injury.
Generally the nature of the application renders strong and clear
evidence appropriate, although the extent of risks of the
destruction or concealment of property or documents is often
necessarily largely a matter of inference.

8. The learned author then refers to Yousif v Salama (1980) 1 WLR 1540 and continues:

Where dishonest or suspicious behaviour is established a court may
infer that there is a sufficient risk of the destruction or
secretion of property or documents to render the grant of an order
appropriate.

9. And in Discovery and Interrogatories, 2nd Edition by Simpson, Bailey and Evans, the learned authors say at p 279:

Notwithstanding the oft repeated warning of Lord Denning in the
Anton Piller case that such orders were to be granted only in an
extreme case, English courts have not been reluctant to exercise
the jurisdiction to make them. In those cases in which the
plaintiff's allegations are of clandestine or criminal dealings,
the court has been prepared to assume on the basis of such
allegations alone that there exists a real possibility that
without an ex parte order, the documents or articles sought to be
preserved will be destroyed. The necessity for some evidence,
whether inferential or direct, to establish that such a
possibility exists is, however, emphasised in strong dissenting
judgment of Donaldson L.J. (as he then was) in Yousif v Salama.

10. It was said in the present case that there was evidence showing reasonable grounds for fear because the respondent's conduct had been "nefarious", and it had made representations of "a very dishonest kind".

11. The essential argument put was that a respondent who would engage in conduct which answered that description would be likely to take the extreme step of destroying relevant records once he became aware that action was being taken against him. To my mind, however, the evidence falls well short of that required to attach such a description to the respondent's conduct.

12. As to the breach of copyright itself, it would not I think be immediately obvious to the general public or those engaged in commerce that a sale of a computer printer involved a breach of copyright. That issue was still alive in the courts until the judgment of Davies J. in Star Micronics Pty Limited v Five Star Computers Pty Limited was delivered on 9 October 1990, and although it was apparently conceded as being correct by counsel in a subsequent case in the Federal Court, the decision could not be regarded as establishing the proposition was a matter of general knowledge.

13. It was also said that there was nefarious conduct demonstrated by the representations about the warranties. It is true that on the evidence before me the salesmen who made the representations to purchasers made representations that were deceptive and misleading, but it could not be said that the representations were necessarily made dishonestly. For example, it is equally consistent with the evidence that the representations were made with the usual enthusiasm of salesmen in the honest but mistaken belief that every new product was backed by a warranty from its manufacturer. They may have dealt in other "Star" products which were in fact backed by the warranty and assumed that the printers in question were also. I stress that there is no direct evidence to this. It is just that to my mind the mere fact that a misrepresentation was made about the existence of a warranty does not strike me as necessarily dishonest or nefarious.

14. There are other circumstances which I think point strongly against the desirability of making the order sought. The respondent company has been in the computer business for some 30 years. It has two administrative premises, one in Melbourne and one in Sydney, those being places where it was sought to enforce the order, and some 11 retail outlets. There was tendered in evidence a three page advertisement by the respondent in the issue of the magazine "Australian Personal Computer" for November 1991, which shows that the respondent was offering for sale a very large range of software and hardware.

15. So it seems to me not sufficiently likely for the purposes of invoking the drastic Anton Piller jurisdiction that a company of the nature of the respondent would take the dishonest step of destroying evidence simply in relation to one particular product which formed a very small part of it total business. Also, there is nothing to suggest that the respondent has any particular links with business outside the country and thus a familiar element in the Anton Piller scene, indeed, one referred to in the classic statement of Lord Denning, that is, a fear that the documents in question will be taken beyond the jurisdiction, does not seem to me to be present here. The respondent is bound, amongst other things by the income tax law, to keep its business records, and I do not think that I can infer that it will take the drastic steps suggested.

16. I should add also that not only is there no evidence of "clandestine or criminal dealings", but it is clear from the evidence that the printers in question are sold in boxes which are clearly labelled "220 volts" so as to indicate to any purchaser that on the face of it they are designed for some voltage other than the normal voltage. There is some slight evidence that the lower voltage may have caused some malfunction, but Mr Kendall very fairly did not urge on me that there was any element of physical risk to the public involved.

17. So for those reasons I will dismiss the application for an Anton Piller order and that being so, I think it must follow that any grounds for making an injunctive order ex parte disappear. The alleged wrong has been known to the applicant since about the end of October. There has been no letter of demand or any other attempt to warn the respondent against repeating the conduct complained of. If the applicant wishes to seek an interlocutory injunction, it will have to do so on notice. The application is dismissed.