Visible Results Properties Inc v Sushi Train (Australia) Pty Limited [2005] FCA 1159 (23 August 2005)

Last Updated: 25 August 2005

FEDERAL COURT OF AUSTRALIA

Visible Results Properties Inc v Sushi Train (Australia) Pty Limited [2005] FCA 1159

PRACTICE AND PROCEDURE – general approach to preparation of matter for trial – duty of the parties to co-operate

Ashmore v Corporation of Lloyd’s [1992] 1 WLR 446 referred to
State of Queensland v J L Holdings Pty Ltd [1997] HCA 1; (1997) 189 CLR 146 referred to
A Zuckerman, Civil Procedure (2003) referred to




























VISIBLE RESULTS PROPERTIES INC AND ANOR v SUSHI TRAIN (AUSTRALIA) PTY LIMITED
NSD 460 OF 2004

ALLSOP J
23 AUGUST 2005
SYDNEY

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	NSD 460 of 2004

BETWEEN:	VISIBLE RESULTS PROPERTIES INC FIRST APPLICANT AND FIRST CROSS-RESPONDENT VISIBLE RESULTS AUSTRALIA PTY LIMITED SECOND APPLICANT AND SECOND CROSS-RESPONDENT
AND:	SUSHI TRAIN (AUSTRALIA) PTY LIMITED RESPONDENT AND CROSS-CLAIMANT
JUDGE:	ALLSOP J
DATE OF ORDER:	23 AUGUST 2005
WHERE MADE:	SYDNEY

THE COURT ORDERS THAT:

1. Pursuant to Order 6 Rule 8 Visible Results Asia Pacific Limited is joined as third applicant to the proceeding.
2. Pursuant to Order 13 Rule 2 the applicants are granted leave to amend their Statement of Claim, Reply and Defence to Cross-Claim to incorporate the third applicant in the pleadings.
3. The applicants pay any costs of the respondent thrown away as a consequence of those amendments.
4. The notices of motion filed by the respondent dated 13 April 2005 and 22 April 2005 be dismissed.
5. The costs of the respondent’s notices of motion be reserved.
6. On or before 14 October 2005 the applicants file and serve a document entitled "Issues and Steps for Trial" to be prepared by the parties in accordance with [31] of the reasons published today.
7. The proceedings stand over for directions to 9.30 am 19 October 2005.

Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	NSD 460 of 2004

BETWEEN:	VISIBLE RESULTS PROPERTIES INC FIRST APPLICANT AND FIRST CROSS-RESPONDENT VISIBLE RESULTS AUSTRALIA PTY LIMITED SECOND APPLICANT AND SECONDE CROSS-RESPONDENT
AND:	SUSHI TRAIN (AUSTRALIA) PTY LIMITED RESPONDENT AND CROSS-CLAIMANT

JUDGE:	ALLSOP J
DATE:	23 AUGUST 2005
PLACE:	SYDNEY

REASONS FOR JUDGMENT

1 The following motions were before the Court on 18 April 2005:

(a)	A notice of motion filed by the respondent on 13 April 2005 in which the following orders were sought:

1. The claim of the First Applicant be struck out.
2. Further, or alternatively, the claim of the Second Applicant be struck out.
3. The Register of Patents be rectified by:

a. removing any reference to the First Applicant as patentee of standard patent No 748796 ("the patent");
b. removing the entry of the second applicant as exclusive licensee of the patent.

4. Such further or other order, direction or relief as to the Court shall seem appropriate.
5. Indemnity costs.

In support of this motion, affidavits of Mr David Roy Kay were filed on 13 April 2005 and 18 April 2005.

(b)	A notice of motion filed by the applicants to join a party to the proceedings in the following terms:

1. Pursuant to Order 6 Rule 8 Visible Results Asia Pacific Limited is joined as Third Applicant to the proceeding.
2. Pursuant to Order 13 Rule 2 the Applicants are granted to amend their Statement of Claim, Reply and Defence to Cross-Claim. (sic)
3. The Applicants pay any costs of the Respondent thrown away as a consequence of those amendments.

In support of this motion the following affidavits were filed of Mr Michael Jeffery Whittaker sworn 6 April 2005 and filed 8 April 2005, Mr Christopher Edmund Duvall Williams sworn 21 March 2005 and filed 23 March 2005, sworn and filed on 13 April 2005, and Mr Mark A Morton sworn 12 April 2005 and filed 18 April 2005.

2 In the hearing of the respondent’s motion the affidavit of Mr Kay was read without objection on the basis that the correspondence was only admitted as correspondence in that form. In that motion the applicants read Mr Whittaker’s affidavits to which I have referred, to which there was no objection, and Mr Morton’s affidavit, to which there was no objection.

3 A little background is necessary. The proceedings relate to Australian patent no 748796. At the commencement of the proceedings Visible Results Properties Inc (VRP Inc or the first applicant) was the patentee recorded on the Register of Patents. Visible Results Australia Pty Limited (VRA or the second applicant) was said in the statement of claim to be the exclusive licensee. It is now registered as the exclusive licensee. VRA derived its licence from Visible Results Asia Pacific Limited (VRAP or the proposed third applicant).

4 There has been in the applicants’ camp somewhat of a corporate muddle. It was explained by Mr Whittaker, who was the chief executive officer of the "Visible Results Group". In summary he said that when the proceedings were commenced on 1 April 2004 VRP Inc, though recorded as patentee on the Register had, in fact, in February 2001, assigned the patent to VRAP, the proposed third applicant, but that the assignment had not been registered. He said that as at 1 April 2004 VRAP had granted VRA an exclusive licence. This was not recorded on the Register of Patents until 18 February 2005. Also on 18 February 2005, VRAP was entered on the register of patents as patentee. The error in registering VRP Inc as patentee was said to be "administrative" within the group.

5 These mistakes were compounded by the fact that, unbeknown to Mr Whittaker, on 1 April 2004 VRP Inc had been de-registered in the United States. Mr Whittaker’s affidavit explained in some detail the commercial transaction under which intellectual property was purchased and the corporate structure established in respect thereof. A corporate re-organisation took place in 2003. As part of that reorganisation, documentation was inadvertently signed for the dissolution of VRP Inc.

6 After checking with advisers and authorities in the United States, Mr Whittaker gave instructions for VRP Inc to be reinstated in Delaware. On 30 March 2005, it was so reinstated. The certification of dissolution that he had signed was declared null and void by the relevant Delaware authorities.

7 Mr Morton is a Delaware attorney and an active member of the Delaware Bar. His evidence was to the effect that even after the filing of a certificate of dissolution the corporation continued to exist for three years. By his evidence it would appear that at all relevant times VRP Inc existed as a corporate entity with the power to prosecute and defend suits.

8 The respondent’s notice of motion was originally brought on based on the apparent dissolution of VRP Inc. Mr Logan, who appears for the respondent, said in opening the motion that this basis was no longer pressed. Rather, he said that he now sought the orders in that motion based on paragraphs 1(b), (c) and (d) of the amended defence and cross claim filed on 9 August 2004, which were in the following terms:

(b) the respondent admits that the first applicant is, and was at all material times, entered on the Register of Patents as proprietor of Australian standard patent n. 748,796 ("the patent");
(c) by a written patent assignment made and effective on 1 February 2001, the first applicant assigned to Visible Results Asia Pacific Ltd. ("VRAP"), inter alia, the patent (therein described by its application number as Australian patent application 57113/98);
(d) accordingly, on and from 1 February 2001 the first applicant was not the owner of the patent and not entitled to be registered as proprietor of the patent;

9 As at 18 April 2005, when this claim on the motion was articulated there was no pleading in the cross-claim for rectification of the Register.

10 Initially it was put to me that this should be done on a summary basis under Order 20 rule 2 and Orders 11 and 16, that is, rectify the Register of Patents on a summary application. Though the form of motion sought an order under Order 29 for the trial of a separate issue, on Mr Logan’s request, on 18 April 2005, I removed that reference by way of amendment to the motion.

11 After discussion with counsel on 18 April 2005, I permitted the respondent to amend its cross-claim and to file a notice of motion seeking orders for the trial of a separate issue under Order 29. I also heard the parties as far as that was helpful on the existing motions.

12 On 18 April 2005, I made orders giving leave for the filing of a notice of motion by the respondent seeking orders under Order 29, for further submissions and for further notice to be given to the Commissioner of Patents. I later varied those orders in chambers. I stood the matter over for directions or judgment. I am able to give judgment on the motions.

13 On 22 April 2005, the respondent filed a Further Amended Defence and Amended Cross-Claim and another notice of motion.

14 This notice of motion sought the following orders:

1. An order that the following issues, as pleaded in paragraphs 1, 2, 21, 22, 23, 24 and (iii) and (iv) of the prayer for relief in the Further Amended Defence and Amended Cross-claim be decided as separate questions, pursuant to Order 29:
(a) that the first applicant is not, and was not at any material time, entitled to be registered as patentee or proprietor of the patent;
(b) that the second applicant is not, and was not at any material time, an exclusive licensee within the meaning of that term as used in the Patents Act 1990;
(c) that the orders for rectification of the Register of Patents, sought in paragraphs (iii) and (iv) of the prayer for relief in the Amended Cross-claim, be made.
2. That the application insofar as it relates to the claim of the first applicant, be dismissed.
3. Further and alternatively, that the application insofar as it relates to the claim of the second applicant, be dismissed.
4. Such further or other orders, directions or relief as to the Court shall seem appropriate.
5. An order that the applicants pay the respondent’s costs of and incidental to this motion, and the application, on an indemnity basis.

15 The parties have filed detailed submissions. In those submissions there is no substantive basis put forward for my not making the orders sought in the notice of motion of the applicants joining VRAP as the third applicant. Plainly the third applicant should be on the record. This is sought to be done by an amendment to these proceedings. I propose to allow that amendment. This will not prejudice the respondent from arguing that until 13 April 2005 when the application for joinder was made, there was no suit or application for suit by the third applicant on foot. It may be necessary to debate in due course at a final hearing the effect of the leave to amend and the joinder on any relief granted.

16 As I have observed, the parties have filed detailed written submissions. The respondent’s submissions were filed in chambers on 18 April 2005 shortly prior to the motions being called on for hearing on that date. In response to those detailed submissions the applicants filed submissions of 35 pages together with a detailed chronology. In response to those submissions the respondent filed submissions in reply which are also recorded on the file of some 7 pages of length. The issues raised by the parties in their written submissions range over matters of procedure, possible matters of substance which include the question as to whether earlier decision of single judges of this Court should be followed and matters of interpretation and construction of the Patents Act.

17 This is a motion to strike out and a motion to order a separate issue in terms set out earlier. It would be unproductive to set out all the permutations of the arguments put forward. I have left the submissions on the file.

18 The respondent wants the proceedings brought by the first and second applicants dismissed summarily and the third applicant (which I propose to join) required to file new fresh proceedings to which at least the second applicant would be a party. The applicants say this is unproductive procedural nitpicking. The applicants simply wish the third applicant joined and the proceedings move forward. If the applicants are wrong as to their view that this procedural complexity does not stand in the way of substantive resolution of the proceedings that matter can be dealt with in due course at the hearing. That is to say if the respondent’s view that no one was entitled to complain of its conduct until such time as the third applicant was on the Register and a party to these proceedings then that can be dealt with in due course.

19 The applicants in their submissions raise important questions as to the operation of the Patents Act and the correctness of earlier judgments of judges of this Court. The applicants deny the proposition that the various mistakes to which I earlier referred in the conduct of the Visible Results Group led to the inability of the parties being the first and second applicants to commence and propound the suit until the third applicant was joined. If they are right in that respect that is an important matter of substance that may affect any relief to which they may be entitled. If they are wrong about that then as a matter of substance there will be consequences for remedy and costs.

20 It is important to understand that no substantive opposition is put forward by the respondent to the joinder of the third applicant.

21 I am not prepared to strike out any part of the statement of claim or dismiss the statement of claim or application as brought by the first or second applicants based on the mistakes that have earlier occurred. These matters will be matters for trial.

22 Further, in my view, all the issues in the proceedings (save perhaps damages) should be heard together. For the reasons expressed in the submissions of the applicants I do not think that these issues are properly ripe for determination as separate issues. There may be evidential questions involved. They appear to be substantive issues. Those substantive issues appear to be able to be dealt with in connection, and together, with the substantive claims for relief. The joinder of the third applicant is not opposed and so the substantive claims for relief will move forward. Questions of costs can be dealt with in due course together with any questions of relief which may flow from the parties’ respective contentions as to the position of the first and second applicants up to the joinder of the third applicant.

23 If it is to be said in due course that there is a fatal flaw in these proceedings, including the third applicant being joined such contentions can be dealt with on the merits when or if they are raised.

24 I do not think that there should be a trial of a separate issue. I come to this view partly as a result of the considerations to which I have referred and also because in the bringing of this matter forward to trial and final disposition I think it would be potentially productive of confusion and delay to be breaking issues of this kind up for early determination.

25 The parties should get on with preparing this matter for a hearing and disposition on the merits as soon as possible.

26 The orders that I make will be as follows:

(a)	Orders in accordance with the notice of motion filed on behalf of the applicants on 13 April 2005.
(b)	Dismissing the notice of motion brought by the respondent and filed on 13 April 2005 and 22 April 2005.

27 I propose to reserve the question of costs of the respondent’s motions to the hearing.

28 The parties (and for the moment I speak collectively) have expended a large amount of effort and time on matters which are either procedural or sufficiently arguable to be dealt with at that trial.

29 Procedure is not an end in itself. The rules and procedure are always only guides to the just and proportionate resolution of disputes. In the exercise of judicial power as the judicial arm of government resolving controversies between parties, the parties and their legal advisers have duties of co-operation in the conduct of litigation: cf Ashmore v Corporation of Lloyd’s [1992] 1 WLR 446, 453-54 per Lord Templeman. The court system is a finite public resource. Judicial time expended on the resolution of one case is time not spent on the resolution of the controversies of other litigants. The parties and their legal advisers have a duty to the Court to co-operate in order to minimise the issues in dispute to those matters of substance upon which reasonable compromise is not possible. A proportionate use of Court resources will be devoted to those issues. This is the entitlement of the litigant to call on the resources of the state for the resolution of the matter: no more, no less. These considerations now expressly underpin the new Civil Procedure Rules in England: see generally A Zuckerman, Civil Procedure (2003) Chapter 1. They have, however, underpinned and informed civil practice in this Court and in State and Territory Supreme Courts for over twenty years. Nothing in State of Queensland v J L Holdings Pty Ltd [1997] HCA 1; (1997) 189 CLR 146 is to the contrary of this approach.

30 The parties and their advisers in this matter should now apply themselves expeditiously to the task of identification of any steps necessary for the preparation of this case for trial. I propose to hear this case in the first quarter of 2006. If any party wishes to have discovery, that party should assume that I will generally (unless I am persuaded of the appropriateness of a different course) require affidavit evidence to be completed before discovery, require substantiation from an expert witness on oath why he or she requires further documentation, and require the parties to address the issue why, as a matter of discretion in the case management of my docket and taking into account the guidance in Practice Note 14, I should not approach the question of discovery, where relevant, along the lines of paras 5.1 and 5.2 of Practice Direction 63 of the United Kingdom Civil Procedure Rules.

31 I propose to require the applicant to provide me with a written report (drafted or settled by counsel anticipated to run the matter) by the end of September, identifying the issues in the case, the claims that both sides are making for the deployment of interlocutory steps, the anticipated evidence to be called and the anticipated length of the case. The draft of this report is to be provided to the respondent by the end of the third week in September (together with an electronic version). The respondent (in terms drafted or settled by counsel anticipated to run the matter) is to identify succinctly and without elaboration by way of submission any disagreements by interposing in appropriate places its comments. The final document (headed "Issues and Steps for Trial") with such agreement and disagreement is then to be filed. I expect the solicitors and counsel to co-operate in the preparation of this document.

I certify that the preceding thirty-one (31) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Allsop.

Associate:

Dated: 23 August 2005

Counsel for the Applicant:	Mr R Cobden
Solicitor for the Applicant:	Cutler Hughes and Harris
Counsel for the Respondent:	Mr D Logan
Solicitor for the Respondent:	Michael Sing Lawyers
Date of Hearing:	18 April 2005
Date of Judgment:	23 August 2005