FEDERAL COURT OF AUSTRALIA

FAI Home Security Pty Ltd v Jay-N-Tee Pty Ltd [1999] FCA 1408

FAI HOME SECURITY PTY LTD V JAY-N-TEE PTY LTD, ROBERT JAMES GILL, CRAIG MICHAEL BROWNE AND CRAIG BROWNE PTY LTD

S 74 OF 1999

JUDGE:          FINKELSTEIN J

DATE:            13 SEPTMEBER 1999

PLACE:          MELBOURNE

UPON the Applicant by its counsel undertaking that it will pay to any party adversely affected by the interlocutory injunction such compensation (if any) as the Court thinks just, in such manner as the Court directs.

THE COURT ORDERS THAT:

1.                  Order No 1 made by Finkelstein J on 1 September 1999 be continued up to and including 4.15 pm (Eastern Standard Time) on 5 October 1999.

2.                  The First and Second Respondent’s Notice of Motion dated 8 September 1999 be dismissed.

3.                  The Third and Fourth Respondent’s Notice of Motion dated 8 September 1999 be dismissed.

4.                  The First and Second Respondent’s pay 80% of the Applicant’s costs of the Notice of Motion referred to in paragraph 2 above.

5.                  The Third and Fourth Respondent’s pay 80% of the Applicant’s costs of the Notice of Motion referred to in paragraph 3 above.

6.                  Leave be granted to the Applicant to amend the Subpoena to Produce dated 7 September 1999 to Mr Peter Giannoss by deleting “9 September 1999” as the return date and inserting in its place “16 September 1999”.

7.                  The Subpoena to Produce dated 7 September 1999 to Jay-N-Tee Pty Limited be amended by:

(a)                deleting the word “to” in the first line of paragraph 1 of the Schedule and inserting in its place the word “or”;

(b)               deleting the words “or sales documents’ in the first line of paragraph 2 of the Schedule;

(c)                deleting the word “to” in the first line of paragraph 2 of the Schedule and inserting in its place the word “or”; and

(d)               deleting the words “evidencing or” in the first line of paragraph 3 of the Schedule;

8.                  The Subpoena to Produce dated 7 September 1999 to Peter Giannoss be amended by:

(a)                deleting the words “or sales documents’ in the first line of paragraph 2 of the Schedule;

(b)               deleting the words “evidencing or” in the first line of paragraph 4 of the Schedule;

9.                  The Subpoena to Produce dated 7 September 1999 to Craig Michael Browne, Craig Browne Pty Limited, Alex Kratz, Sam Bessell, Craig Haldane and Robert James Gill be amended by:

(a)                deleting the words “or sales documents’ in the first line of paragraph 2 of the Schedule;

(b)               deleting the words “evidencing or” in the first line of paragraph 3 of the Schedule;

10.              The Subpoena to Produce dated 7 September 1999 to Jay-N-Tee Pty Limited, Peter Giannoss, Craig Michael Browne, Craig Browne Pty Limited, Alex Kratz, Sam Bessell, Craig Haldane and Robert James Gill be adjourned to 10.00 am (Central Standard Time) on Thursday 16 September 1999 before the Registrar in Adelaide.

11.              The further hearing of the application for Interlocutory Injunctions is adjourned to 2.15 pm (Eastern Standard Time) on Tuesday 5 October 1999.

THE COURT DIRECTS THAT:

12.              The parties attend a mediation conference before the Registrar in Adelaide at a time to be agreed upon by the parties.

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

REASONS FOR JUDGMENT

1                     The applicant, FAI Home Security Pty Ltd, in an interlocutory application, is seeking relief including injunctions in consequence of the alleged misuse of a literary work described as a "sales script" and a literary work described as a flip chart used in connection with its business of selling home security systems and fire protection equipment.  The relief is sought only against the first respondent, Jay-N-Tee Pty Ltd, trading as EHS Security.  This respondent was a former distributor of the applicant's products, but is now a competitor. 

2                     The applicant alleges that the first respondent's sales staff are making use of a sales script that is the same as the applicant's and are also making use of a flip chart that is substantially the same as the applicant's.  It has direct evidence of the use of the flip chart, but only inferential evidence as to the use of the sales script. 

3                     To make out its case for interlocutory relief, the applicant has served on a number of persons, including the respondents, a subpoena for the production of certain documents that are described in the schedule to each subpoena.  Two subpoenas were served on the first respondent, one on or shortly after 30 August 1999 and the second on 7 September 1999.   The applicant accepts that the second subpoena has, for all practical purposes, replaced the first with the consequence that the first respondent is no longer under any obligation to comply with the first subpoena.  The categories of documents that are sought by the second subpoena are as follows:

“1.       The original or copy of the flip charts used by you to your employees, agents or consultants for use in sales presentations relating to home security alarm systems during the period from 1 January 1999 to the date of the issuing of this Subpoena to Produce.

2.         The original or copy of the sales scripts or sales documents used by you to your employees, agents or consultants for use in sales presentations relating to home security alarm systems during the period from 1 January 1999 to the date of the issuing of this Subpoena to Produce.

3.         The original or copy of the documents evidencing or recording any part of the sales presentation given or to be given by your employees, agents or consultants in relation to home security alarm systems during the period from 1 January 1999 to the date of the issuing of this Subpoena to Produce.

4.         The original or copy of the flip chart used by Mr Peter Giannos, also known as Giannokopoulos, a sales representative of the First Respondent, or in his possession or custody, at 48 Dorien Avenue, Woodcroft, South Australia, on 20 July 1999.

5.         The original or copy of the sales script or sales document used by Mr Peter Giannos, also known as Mr Peter Giannokopoulos, a sales representative of the First Respondent, or in his possession or custody at 48 Dorien Avenue, Woodcroft, South Australia, on 20 July 1999.”

4                     The remaining subpoenas, apart from that directed to Peter Giannoss, also known as Peter Giannokopoulos, describe the documents to be produced in different terms to the subpoena directed to Jay‑N‑Tee Pty Ltd.  It will be sufficient if I refer to only one subpoena, that directed to Robert James Gill, the second respondent.  The schedule to that subpoena reads as follows:

“1.       The original or copy of the flip charts used by you in sales presentations relating to home security alarm systems sold or supplied by Jay-N-Tee Pty Limited trading as EHS Security during the period from 1 January 1999 to the date of the issuing of this Subpoena to Produce.

2.         The original or copy of the sales scripts or sales documents used by you in sales presentations relating to home security alarm systems sold or supplied by Jay-N-Tee Pty Limited trading as EHS Security during the period from 1 January 1999 to the date of the issuing of this Subpoena to Produce.

3.         The original or copy of the documents evidencing or recording any sales presentation given by you in relation to home security alarm systems sold or supplied by Jay-N-Tee Pty Limited trading as EHS Security during the period from 1 January 1999 to the date of the issuing of this Subpoena to Produce.”

5                     Objection is taken to the production of the documents called for under each subpoena and motions to set aside the subpoenas are returnable this morning.   The respondents bring these motions.  Insofar as the non-parties are concerned, there was no issue that the respondents lacked standing to make that application, notwithstanding that the non-parties did not make an application on their own behalf.

6                     There are a number of grounds upon which the respondents rely to challenge the subpoenas.  I propose to deal with each of them briefly. 

7                     Some of the complaints are directed to all subpoenas and some of the complaints apply to only some of them.  The first complaint is that the subpoenas are “fishing”.  I think that the word “fishing” is used in two senses: fishing for evidence and fishing for a cause of action,  compare the use of the expression “fishing bill” in the Court of Chancery.

8                     As to the flip chart, one of the principal documents sought to be obtained under cover of the subpoenas, in my view the subpoenas are not fishing for evidence or for a cause of action.  The applicant has direct evidence of the use by the first respondent of a chart similar to its own, but it does not have the document itself.  It is entitled to have the document produced in order to establish, as the evidence thus far suggests, that the first respondent is making use of a flip chart which is substantially similar to the applicant's flip chart.  Once the applicant has shown, prima facie at least, that the first respondent is using a flip chart which is substantially the same as its own, calling for the production of that document for the purposes of its application for interlocutory relief could hardly be described as “fishing” for evidence or “fishing” for a cause of action.

9                     It is true that there is no evidence of use being made by the applicant of a sales script, or at least no direct evidence of such conduct.  However, for the purposes of the motions to set aside the subpoenas, it is reasonable to infer that because the first respondent appears to have obtained a copy of the applicant's flip chart, it also has a copy of the sales script which, according to the evidence, was used by the applicant in conjunction with its flip chart.  As that is a reasonable assumption or inference to be made, I do not regard the subpoenas as “fishing” for evidence or “fishing” for cause of action with regard to the sales script.

10                  The second ground relied upon is that the documents in question should not be required to be produced on subpoena and that the applicant should await the outcome of discovery. 

11                  To my mind there are two answers to this submission.  The first and most important is that the applicant seeks production of the documents for the purposes of its application for interlocutory relief.  That application has come on before any orders for discovery have been made.  This is hardly surprising given the nature of the application, namely one where interlocutory injunctions and other relief are sought pending trial.  Although the parties to such applications are usually confined to affidavit evidence, that need not always be so.  If the applicant had in its possession the flip chart used by the first respondent, no doubt it would have annexed it to an affidavit, as it would have if it had possession of the sales script.  There is no reason why the applicant should be required to delay its application for interlocutory relief pending discovery of the flip chart, if it exists, or pending discovery of the sales script, if it exists and they are in the possession of any of the respondents.  If the applicant did delay prosecuting its application for interlocutory relief while waiting the outcome of discovery, it would no doubt be met by an argument that relief should be denied by reason of that very delay.  I should also mention in this context, that whilst there is no evidence of the existence of the sales script, I have said that a reasonable inference is available, at least for the purposes of the current application, that if the first respondent has the applicant's flip chart, it also has possession of the applicant's sales script.  As I have said, there is no reason why the applicant should be forced to wait discovery to obtain this document for the same reason that it should not be forced to await discovery to obtain the sales script. 

12                  The second reason which does not apply to all persons served with the subpoenas, it only applies to the non-parties is that discovery is not available against those persons. 

13                  The next ground of complaint is that the subpoenas are oppressive because they place on each of the parties to whom the subpoenas are directed an obligation to form a judgment as to which of the documents to be produced relate to an issue between the parties to the litigation.  By way of example, reference can be made to the subpoena directed to Jay‑N‑Tee Pty Ltd and the first category of documents referred to, namely copies of flip charts used in sales presentations "relating to home security alarm systems" during the specified period.  It is said that by use of the phrase "relating to" the person to whom the subpoena is directed is required to form a judgment about the litigation.  Similar expressions appear in other paragraphs of the subpoena, as well as in the other subpoenas. 

14                  In my view there is no basis for the assertion that the subpoenas are oppressive for the reason mentioned, subject to the question whether the documents called for are sufficiently described.  The persons upon whom the subpoenas have been served are not required to form any judgment concerning which of the documents relate to an issue between the parties, as raised by the statement of claim, being the only pleading that has presently been filed.  The schedule to each subpoena is self-contained, in the sense that it requires no reference to the pleadings or to any other document in order to determine what documents must be produced.  No exercise in judgment is called for; all that is required is that the person to whom the subpoena is addressed must ascertain whether or not documents answering the categories described are in its or his possession. 

15                  Another ground relied upon is that the documents called for are not specified with sufficient precision.  In most respects I reject that contention, but in some respects I think that it is made out.  The documents that are sought to be produced fall into a number of categories, some broad and some narrow.  They include “flip charts”, “sales scripts”, “sales documents” and “documents evidence or recording any part of the sales presentation” given by certain persons.  The respondents did not suggest that there was any difficulty with the use of the expression “flip chart”, no doubt for good reason.  Flip chart is defined in the Oxford English dictionary as “a display pad, erected on a stand or bound so that each page (usually containing prepared information) can be turned over at the top to show the next”.

16                  Nor was it suggested that there was any ambiguity in the meaning of the expression “sales script”.  That expression means what it says, it is the text that has been prepared for use in selling goods or services.  I am, however, troubled by two of the expressions adopted by the applicant in its subpoenas.  Again, I will refer to the subpoena directed to Jay‑N‑Tee Pty Ltd, but the point I am about to make is also applicable to the subpoenas directed to the remaining respondents and non-parties.  The first is the expression that appears in par (2) of the subpoena, namely “sales scripts or sales documents used by” certain identified persons.

17                  I rather think that the language is probably clear enough, but it does seem to me that what is being sought is a class of documents that falls outside what are likely to be relevant documents.  I have the ability to delete words from a subpoena if I form the view that words should not have been included, provided what remains is clear and unambiguous.  Taking par (2) of the schedule of the subpoena to Jay‑N‑Tee Pty Ltd I would delete the words “or sales documents” appearing in the first line and I would make a similar alteration in respect of each subpoena that adopts the language of clause 2. 

18                  There is also a difficulty with par (3) of the schedule.  There what are sought are original copies of documents “evidencing or recording any part of the sales presentation given or to be given” by certain named persons.  I think some confusion might be brought about if the words “evidencing or” remain in that paragraph.  When I raised the point with Mr Martin, who appears for the applicant, he did not suggest that there was a good reason to keep those words in and I propose that they also be deleted both from the subpoena directed to Jay‑N‑Tee Pty Ltd and from the other subpoenas that adopt the same form.

19                  While dealing with par (3) of the subpoena to Jay‑N‑Tee Pty Ltd I should also mention that complaint was directed to the words appearing in line two, namely “to be given by”.  What is being sought are documents that record sales presentations, not only in the past, but for the future as well.  Objection was taken that these documents were not relevant to the application for interlocutory relief .  Although I am not absolutely satisfied that there is real need for the applicant to obtain documents concerning future sales presentations, it must be remembered that its case is that the first respondent is making improper use of copyright material and for the purposes of obtaining interlocutory relief the applicant is required to show, to a greater or lesser extent, a risk of repetition of the alleged offending conduct.  The documents in question might establish that issue on the interlocutory hearing.

20                  In addition, with regard to the subpoena directed to Jay‑N‑Tee Pty Ltd, complaint is made about par (4) and (5) of the schedule.  Here the complaint is that in order to comply with the subpoena, the company must make inquiry of Mr Giannoss concerning what flip chart or sales script, if any, was used by him in his presentation on 20 July 1999. I was troubled by these paragraphs, in particular because they require the company to make inquiries of Mr Giannoss in order to satisfy its obligations under the subpoena.  In the end, however, I think that the documents sought are permissibly sought.  Any subpoena directed to a large organisation imposes an obligation on the organisation to make some inquiries as to the existence of the documents mentioned in the subpoena.  Mr Giannoss is said to be a sales representative of Jay‑N‑Tee Pty Ltd.  The evidence on the interlocutory application, at least such of it as I have read, suggests that Mr Giannoss was acting as an agent of some sort of Jay‑N‑Tee Pty Ltd on 20 July 1999 when seeking to sell its products.  I do not think that imposing an obligation upon Jay‑N‑Tee Pty Ltd to make inquiries of Mr Giannoss as to precisely what documents, if any, he used on 20 July 1999 in the process of seeking to bring about a sales of Jay‑N‑Tee's products is an onerous obligation such as would invalidate those clauses in the subpoena.

21                  There is one other issue that requires separate comment.  It concerns the subpoena directed to Mr Giannoss.  Par (5) of that subpoena is in the following terms:

“The black folder and its contents in your possession or custody when you attended the Federal Court of Australia, Level 8, 25 Grenfell Street, Adelaide, South Australia, on 1 September 1999.”

22                  The black folder is not as mysterious as it seems.  According to the evidence filed in support of the application for interlocutory relief, Mr Giannoss did have in his possession on 20 July 1999 a black folder which it has been asserted contained the flip chart used by him as part of his sales presentation.  The evidence also shows that what appears to have been the same black folder was in the possession of Mr Giannoss when he attended the Federal Court in South Australia on 1 September 1999 in answer to an earlier subpoena that had been served on him. 

23                  The evidence also discloses that the black folder, namely the one that Mr Giannoss had when he attended at Court, is or is likely to be the same as the black folder that he had with him on 20 July 1999.   It may be that if the black folder is still in the same form as it was on the earlier occasions or if its form can be reproduced, the allegedly offending sales script or the alleged offending flip chart will be produced for the interlocutory hearing. 

24                  I do not regard par (5) of the Giannoss subpoena as “fishing”, nor do I regard it as irregular for any other reason.  It is not fishing because it is seeking to obtain production of the very documents the subject of the copyright claim.  It is possible, indeed some might say that it is likely, that the black folder contains other documents, but I do not regard that fact as sufficient to invalidate par (5).  There are many occasions where irrelevant documents are produced on subpoena, the only consequence being that they are then returned to the party producing them. 

25                  I have indicated the respects in which the various subpoenas require amendment.  There is one final issue that I should deal with which also raises a question of amendment.  Again, I return to the subpoena directed to Jay‑N‑Tee Pty Ltd and in particular, par (1) and (2).  There is some confusion in the language employed in those paragraphs, in particular in the first line where reference is made in par (1) to “flip charts used by you to your employees” and in par (2) reference is made to “sales scripts used by you to your employees”.  Having regard to the terminology employed in par (4) and (5), I think that the word “to” in the expressions referred to is an error and the word “or” was intended to be the word employed.  I think it appropriate that I order that the relevant subpoenas should be amended to substitute the word “or” for the word “to” when used in the first line of the relevant paragraphs. 

Associate:

Dated:              13 October 1999