FEDERAL COURT OF AUSTRALIA

Industrial Galvanisers Corporation Pty Ltd v Road & Construction Supplies of Australia Pty Limited [2005] FCA 907

PRACTICE AND PROCEDURE – discovery – where use of term ‘ARMCO’ is alleged to be misleading and deceptive and to constitute passing off – residual reputation and goodwill – where respondent seeks further discovery of additional invoices for goods supplied over lengthy period of time – samples already provided – further discovery – further discovery oppressive – liberty however to apply

Trade Practices Act 1974 (Cth)

Federal Court Rules 1976 (Cth) Order 15

Supreme Court Rules (SA) 1987 (SA)

Federal Court of Australia Practice Note 14

F Hoffman-LA Roche AG v Chiron Corporation (2000) 171 ALR 295

Australian Competition & Consumer Commission v Advanced Medical Institute Pty Ltd [2005] FCA 366

Mark Foys Pty Ltd v TVSN (Pacific) Ltd (2000) 104 FCR 61

ConAgra Inc v McCain Foods (Aust) Pty Ltd (1992) 33 FCR 302

Equity Access Pty Ltd v Westpac Banking Corporation (1989) 16 IPR 431

Norman Kark Publications Ltd v Odhams Press Ltd [1962] RPC 163

Pinetrees Lodge v Atlas International Pty Ltd (1981) 38 ALR 187

.au Domain Administration Ltd v Domain Names Australia Pty Ltd (2004) 207 ALR 521

Campomar Sociedad, Limitada v Nike International Ltd (2000) 202 CLR 45

Weitmann v Katies Ltd (1977) 29 FLR 336

Taco Co (Aust) Inc v Taco Bell Pty Ltd (1982) 42 ALR 177

Hancock v South Australian Tourism Commission [2000] SASC 172

Shanahan’s Australian Law of Trade Marks & Passing Off, 3^rd ed, 2003

INDUSTRIAL GALVANISERS CORPORATION PTY LTD TRADING AS INGAL CIVIL PRODUCTS v ARMCO BARRIERS PTY LIMITED AND ROAD & CONSTRUCTION SUPPLIES OF AUSTRALIA PTY LIMITED

NSD 1598 of 2005

CONTI J

1 JULY 2005

SYDNEY

THE COURT ORDERS THAT:

1.         The respondents’ request for further and better discovery by the applicants be refused.

2.         The costs of the respondents’ application for further and better discovery be reserved.

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

REASONS FOR JUDGMENT

1                     This is a motion brought by Armco Barriers Pty Limited and Road & Construction Supplies of Australia Pty Limited (to be referred to together as ‘Armco Barriers’ for convenience) seeking discovery of three categories of documents from Industrial Galvanisers Corporation Pty Ltd, trading as Ingal Civil Products (‘Ingal’), by way of supplement to existing discovery.  The request for further discovery arises in the context of proceedings instituted by Ingal, the respondent on the motion, against Armco Barriers in respect of the latter’s use of the term ‘ARMCO’ inter alia in the names of their business and their products, which is said to constitute passing off at common law and also to infringe ss 52 and 53 of the Trade Practices Act 1974 (Cth) (‘the TPA Act’) on the basis that such usage is misleading and deceptive. 

2                     It is first useful to record some general principles of relevance which operate in relation to discovery.  The Court has wide and flexible powers in respect of the making of orders for discovery: F Hoffman-LA Roche AG v Chiron Corporation (2000) 171 ALR 295 at [2] (per Burchett J).  It is rare for the Court to grant leave to a party to give a notice pursuant to Order 15 r 1 of the Federal Court Rules requiring general discovery: Australian Competition & Consumer Commission v Advanced Medical Institute Pty Ltd [2005] FCA 366 at [23] (per Lindgren J) and Practice Note 14.  What is sought here is for an order for the provision of discovery in respect of the three further categories that remain in dispute.  Counsel for Ingal maintains that were such orders to be made, they would operate beyond an order for general discovery.  The framework within which discovery may be ordered, and by reference to which the submissions of both sides were directed, is fixed by the pleadings: F Hoffman-LA Roche AG at [3].  It is from the pleadings that the issues are defined and from those issues that the categories of documents subject to discovery may be identified. 

3                     Both Ingal and Armco Barriers manufacture, supply and install buried corrugated metal structures and highway hardware products (called ‘guardrails’) and building products, which together are referred to by the parties as ‘fabricated steel products’.  In its statement of claim, Ingal alleges that over a period of years until 1987, Ingal and its predecessor corporate forms developed a substantial and valuable goodwill throughout Australia in the name ‘ARMCO’ in relation to fabricated steel products generally and in respect of the products produced by Ingal in particular.  It is alleged that the name ‘ARMCO’ signifies to the trade and to the Australian public products sold by Ingal and it alone.  This association is said to arise from:

(i)                  the residual reputation which arose from the use, up until 1987, of the name ‘ARMCO’ by the original owners of the business operations and activities now owned by Ingal in their business names, product names, trademarks, and in marketing and advertising to members of the trade and to the public generally; and

(ii)                since 1987, the extensive marketing, advertising and promotion to members of the trade and to the public generally of Australia of the products formerly subject to trademarks still carrying those names, as well as of Ingal’s business operations generally, by reference to the historical association of that business with the ARMCO name and the origins of Ingal’s business in the original ARMCO entities, being Armco, Inc, a United States parent company and Armco (Australia) Pty Ltd. 

4                     This alleged association between the Ingal business and its products and the term ‘ARMCO’ forms the basis for the relief sought by Ingal against Armco Barriers under the TPA Act and the general law.  It is alleged that by reason of the unauthorised use of the ‘ARMCO’ name by Armco Barriers in association with the name of its business(es), its internet site, its pending trademark applications and its products, Armco Barriers have breached ss 52, 53(a), 53(aa) and 53(d) of the TPA Act by falsely representing that they are connected in trade or otherwise associated or affiliated with Ingal and Ingal’s predecessors in ownership of the fabricated steel products business and the products produced by the same.  It is alleged further that these false representations constitute conduct that is misleading or deceptive or likely to mislead or deceive.  Moreover it is alleged that this conduct is such that Armco Barriers have engaged in conduct in the course of trade which has led, or alternatively is likely to lead, members of the trade and the Australian public to believe that the fabricated steel products which Armco Barriers have manufactured, supplied or installed are in fact the goods and services of Ingal or are associated with the goods and services of Ingal or sponsored by Ingal.  This conduct is alleged to constitute passing off.  Ingal seeks injunctive as well as compensatory relief for the loss or damage caused by Armco Barrier’s alleged conduct. 

5                     The notice of motion refers to three categories of documents (‘the disputed categories’) over which Armco Barriers seeks orders for discovery.  For ease of reference, I will adopt the category numbers used by the parties during the motion hearing:

(1)        all purchase orders, requests to supply, pricing requests, or invitations to quote for fabricated steel products, or any other correspondence with customers or potential customers referring to Fabricated Steel Products, received in the period 1 January 2000 to date (‘the relevant period’);

(4)        all documents created by Ingal in the period 1 January 2000 to date which contain the word ‘ARMCO’; and

(9)        all documents created in the period 1 January 2000 to date recording or evidencing:

a.       the identity of the customers of the Business; and

b.      the quantity and value of the fabricated steel products purchased by those customers.

6                     Those disputed categories comprise three of the nine categories contained in a list of further categories of documents sent on 9 December 2004 to Ingal’s solicitors by Armco Barriers’ solicitors, Clayton Utz.  That list defines the term ‘Business’ as the business owned by Ingal since 1996 involving the manufacture, supply and installation of fabricated steel products in Australia and the predecessor businesses now owned by Ingal.  The description category fabricated steel products is given the same definition as in Ingal’s statement of claim which I have referred to above, namely, buried corrugated metal structures, highway hardware products and building systems.

7                     Counsel for Armco Barriers tendered in evidence an affidavit sworn 12 May 2005 by Mr Cunningham, an employed solicitor of Clayton Utz.  Annexed to that affidavit is the considerable correspondence entered into between the solicitors for Ingal (Blake Dawson Waldron) and Clayton Utz since December 2004 in relation to the list of nine further categories of documents whereof Armco Barriers has sought discovery.  It is sufficient to say in respect of the other categories appearing on that list that Ingal has either provided further discovery or Armco Barriers have decided not to press their discovery demands.  Armco Barriers now seek orders that Ingal file and serve a list of documents in relation to the three disputed categories within 14 days, and further that within 7 days thereafter, Blake Dawson Waldron make available to Clayton Utz electronic copies of the documents listed in Part A of the aforementioned list of documents.  Armco Barriers also seeks the costs of and incidental to the motion. 

8                     The hearing of the motion took place over two days; the first on 24 May 2005 and the second on 9 June 2005.  It became clear towards the end of the first day’s hearing that some of the issues sought to be resolved through further discovery may be better addressed through the use of interrogatories.  It was also apparent at that time that Armco Barriers harboured concerns about the possibility of further evidence in chief being adduced by Ingal closer to trial relating to the association between Ingal and its predecessor companies, namely ARMCO Australia.  In addition to granting leave to Armco Barriers to administer interrogatories, I invited Ingal to file any further evidence that it would seek to rely on during the upcoming trial before the second day of hearing on the motion.  Ingal filed a verified statement in answer to those interrogatories in Court on the second day of hearing, but did not file any further evidence by way of affidavit. 

9                     Counsel for Armco Barriers tendered [92] to [101] and specifically referred me to [92], [95] and [97] of the first affidavit of Donald Johnson, Group General Manager of Ingal sworn 23 September 2004.  It is apparent that Mr Johnson is Ingal’s primary witness in the proceedings.  The above paragraphs appear in the section of the affidavit in which Mr Johnson discussed the alleged association between Ingal and the ‘ARMCO’ name.  In [92], Mr Johnson explained the importance of the historical origins of Ingal’s business in Australia being the entity formerly known as Armco (Australia) Pty Ltd.  It was said that ‘the identity of the [Ingal] Business as the “original Armco” is an important defining characteristic of Ingal.’  Mr Johnson further attested that Ingal continues to make its customers aware of this historical association with the ‘ARMCO’ name and Ingal’s history in Armco (Australia) Pty Ltd.  In [95], Mr Johnson states that ‘the sales staff of [Ingal] still regularly remind our customers that as the “original ARMCO”, [Ingal] introduced W-beam guardrail and corrugated steel pipes into Australia [two types of fabricated steel products]’.  This was augmented by [97] as follows:

‘Even though [Ingal] no longer actively uses the word ‘ARMCO’ as a trade mark, because of its use by [Ingal] for so many years in Australia, in my experience the “ARMCO” brand continues to be synonymous with the various steel products produced by [Ingal], particularly guardrail.  [Ingal] continues to enjoy a very strong residual reputation in the “ARMCO” name within the civil engineering and construction industries in Australia.  In my experience the “ARMCO” name is strongly associated with Ingal Civil Products by traders in the civil engineering and construction industries in Australia.’

I have replaced Mr Johnson’s repeated use of the expression ‘Business’, which was defined in [2] of the affidavit as the manufacture and supply of buried corrugated metal structures and highway hardware in Australia and South East Asia by Ingal, with ‘Ingal’ for ease of expression. 

10                  Counsel for Armco Barriers also tendered a bundle of correspondence and invoices that Ingal has received from customers and other members of the civil engineering and construction industries in Australia over the last few years, which is exhibit “DAMJ 42” to the first affidavit of Mr Johnson.  There are 78 documents within this exhibit, each of which have presumably been selected by Ingal because in some way they refer to either the business operated by Ingal, or the products manufactured and supplied by Ingal, as ‘ARMCO’. 

11                  The only other evidentiary material relied upon was the second affidavit of Mr Johnson, sworn and filed 1 April 2005, which was read by counsel for Ingal.  The affidavit is expressed to have been furnished in response to Armco Barriers’ request for documents falling within category 1, that is, the category concerned with acquiring purchase orders, quotes and like materials.  Mr Johnson exhibited as “DAMJ 53” a further nine purchase orders received by Ingal from its customers during 2004, which refer to the term ‘ARMCO’ in the context of either guardrail or corrugated steel pipe.  Mr Johnson attested at [6] that he had requested each sales team within Ingal to forward to him any purchase orders they have received for guardrail or corrugated steel pipe that use the term ‘ARMCO’; presumably this request is intended to operate from the date when it was made, which is not specified in the affidavit.  On the basis of the documents contained in exhibits “DAMJ 42” and “DAMJ 53” and the average number of purchase orders received each year, Mr Johnson provided an estimate of the proportion of all purchase orders for guardrail and corrugated steel pipe received by Ingal that contained a reference to the term ‘ARMCO’.  The estimated proportion is 1% of all such orders.  Finally, Mr Johnson gave evidence of the burden of verifying the precise proportion of purchase orders which contain a reference to the term ‘ARMCO’ in [6] – the purchase orders received by Ingal are contained in approximately 20,000 files in 6 premises.  This estimate of 1% was reiterated and translated to a figure of 200-250 orders in Ingal’s verified answer to one of Armco Barriers’ interrogatories which asked ‘[h]ow many orders placed with [Ingal] during the relevant period refer to the word “ARMCO”?’ 

Category 1

12                  It was submitted by Armco Barriers in relation to the documents sought in category 1 that they were first concerned to test whether the purchase orders and other documents referring to the term ‘ARMCO’, which were exhibited by Mr Johnson to his affidavits, are truly representative of the whole universe of orders placed with Ingal over the indicated period of time.  Initially at least, Armco Barriers pressed for discovery of each and every product order, quotation and piece of correspondence between Ingal and its customers relating to fabricated steel products from the relevant period.  This course was said to be taken for two reasons.  The first was so as to test the extent of the association between the term ‘ARMCO’ and the business of Ingal by Ingal’s customers.  It was said that this could be achieved ‘by showing as a percentage of all orders received that there is a very well, perhaps an insignificant understanding in the business community as to any association’.  The second was in order to determine the manner in which the ‘ARMCO’ name was used in each particular order or document.  What was meant by ‘manner’ was said by counsel for Armco Barriers to be whether the term ‘ARMCO’ was being used in a generic sense to refer to the product itself, or ‘in a sense which identifies or suggests that the customer has some association between the name itself and the business of Ingal’.  Counsel for Armco Barriers insisted throughout argument that it is their case that members of the trade and the Australian public associate the term ‘ARMCO’ with fabricated steel products generally, and not merely with those produced by Ingal.  This alleged association does not appear, at least explicitly, in Armco Barriers’ filed defence.  Ingal have produced copies of each of the purchase orders and related documents referred to in exhibits “DAMJ 42” and “DAMJ 53” to Mr Johnson’s affidavits.  At least insofar as those documents are concerned, Armco Barriers have had an opportunity to analyse the ‘manner’ in which the customers have used ‘ARMCO’. 

13                  As I have observed above, Mr Johnson provided in his second affidavit an estimate of the percentage of total orders for guardrail and corrugated steel pipe in the relevant period which contain the word ‘ARMCO’.  That estimate of 1% or approximately 200-250 purchase orders was reiterated in an answer to one of the interrogatories administered to Ingal subsequently to the first day of the motion hearing.  Armco Barriers pressed for discovery of each of those 200-250 purchase orders.  However that figure was only an estimate, and Ingal's concern was that to verify that estimate, by actually producing all purchase orders mentioning the term ‘ARMCO’, would require the review of 20,000 files spread over 6 different locations.  It is implicit in that request that Ingal acknowledge the possibility, and indeed likelihood, of there being further purchase orders or documents of this kind in existence.  There is however no indication that Ingal have the intention of relying upon any other material of this nature, Ingal having chosen not to accept my invitation made during the first day of hearing to put on additional evidence in chief. 

14                  In response to Mr Johnson’s evidence of oppression, counsel for Armco Barriers reiterated an offer that it originally made in correspondence dated 22 December 2004 from Clayton Utz to Blake Dawson Waldron (and which is annexed to the affidavit of Mr Cunningham) for Ingal to produce a sample of the documents referred to in category 1 covering a few limited time periods, coupled with an admission that those periods are representative of the longer time period.  I presume that this would operate in such a way that certain selected periods were chosen in which Ingal would have to locate each purchase order referring to the term ‘ARMCO’ for that period, and which would then be discoverable in addition to documents within the 75-plus purchase orders already exhibited to the two affidavits of Mr Johnson, which also fell within the selected period.  As I indicated during the motion hearing, sampling does not necessarily mitigate the burden of discovery under this ground.

15                  Counsel for Ingal disputed category 1 on two grounds.  First, in its current form of expression, that category would require the production of documents not caught by an order for general discovery, since it would require the production of all correspondence with and orders placed by customers with Ingal.  Counsel pointed out that there is no restriction expressed in that category to documentation referring to ‘ARMCO’ or to Ingal’s trading history with Armco (Australia) Pty Ltd.  In any event, counsel secondly submitted that none of the documents caught by this category were relevant to the proceedings.  It was submitted that whether the purchased orders produced to date by Ingal are representative of the practices of all, or any number or percentage of customers of Ingal is not relevant to the fact which Ingal must prove, which is the existence of a reputation amongst a significant number of persons.

16                  Although no express submission was made to this effect, it appears that the latter contention draws upon the decision of the Full Federal Court (Beaumont, Tamberlin and Emmett JJ) in Mark Foys Pty Ltd v TVSN (Pacific) Ltd (2000) 104 FCR 61.  At [46] and [47], their Honours distinguished the following dicta of Lockhart J appearing at page 353 of his Honour’s reasons for judgment in ConAgra Inc v McCain Foods (Aust) Pty Ltd (1992) 33 FCR 302 relating to claims for passing off and misleading conduct:

‘In my opinion, the failure of the appellant to establish a relevant reputation in Australia for the purposes of the law of passing off must cause it to fail also in its case of contravention of Pt V of the [TPA Act] as there is not a sufficiently substantial number of people in Australia aware of the appellant’s products…’

(emphasis added by their Honours in Mark Foys).

17                  Their Honours distinguished that dictum in the following terms (at [47]):

‘His Honour’s conclusion in that case was based on a finding of fact as to the number of persons who may be aware of the products.  Such a factual issue does not arise in the present case because the evidence indicates that there is a significant awareness in a section of the community of Old Mark Foys and this awareness is precisely what is exploited by TVSN’s promotion.’ (My emphasis.)

18                  Counsel for Armco Barriers contested any suggestion that the proceedings initiated by Ingal were entirely analogous to the Mark Foys case.  Mark Foys was of course a Part V of the TPA Act case and no claims of passing off were made.

19                  It was further submitted by Ingal that the requirement to locate all such documents falling within this category which referred in some way to ‘ARMCO’ was oppressive, relying upon Mr Johnson’s second affidavit, and in particular his evidence of the number and distribution of Ingal’s customer files.

Category 4

20                  In relation to the category 4 documents (all documents created by Ingal in the relevant period which contain the word ‘ARMCO’), counsel referred me to [19] of Ingal’s statement of claim reading as follows:

‘At all material times since 1987 [Ingal] has marketed, advertised and promoted extensively to members of the trade and to the public in Australia, and continues to market, advertise and promote extensively to members of the trade and to the public in Australia:

(a)   the Armco Products [a defined term referring to a number of Fabricated Steel Products formerly manufactured and supplied by the predecessor companies of Ingal and which were subject to registered and unregistered trade marks, defined as the Product Marks] under and by reference to the Product Marks; and

(b)   [Ingal] and its Fabricated Steel Products generally, and the Armco Products in particular, by reference to the historical association of [Ingal] with the ‘ARMCO’ name and the origins of [Ingal] in Armco, Inc [a former parent company based in the United States] and Armco (Australia) Pty Ltd.

Particulars

(i)                 [Ingal] has marketed, advertised and promoted [Ingal], its Fabricated Steel Products and the Armco Products in brochures, pamphlets and other promotional materials which were widely circulated to members of the trade and to the public of Australia.

(ii)               [Ingal] has marketed, advertised and promoted [Ingal], its Fabricated Steel Products and the Armco Products via [Ingal’s] website at www.ingalcivil.com.

(iii)             Further particulars will be provided after discovery.’

Counsel also drew my attention again to Mr Johnson’s first affidavit, particularly to [92] in support of the above pleading, in which Mr Johnson attested that Ingal continues to make its customers aware of the identity of Ingal as the ‘original Armco’ through its advertising and promotional material and furthermore, that Ingal has ‘consistently reminded’ its customers and the civil engineering and construction industries in Australia of Ingal's historical association with the ‘ARMCO’ name and the company’s history of operation as Armco (Australia) Pty Ltd.  Exhibit “DAMJ 39” is a copy of a letter from Ingal to the NSW Roads and Traffic Authority (the ‘RTA’) dated 16 November 1999, which was not tendered during the hearing though I would infer from its location in the affidavit that this letter is an example of the ‘reminding [of customers]’ and ‘promotional material’ of the kind referred to in [92].  Mr Johnson also attested to the fact of Ingal sales staff having ‘regularly remind[ed]’ its customers that as the ‘original ARMCO’, Ingal ‘introduced W-beam guardrail and corrugated steel pipes into Australia’ (at [95]).  At [97] Mr Johnson said that although Ingal no longer actively uses the term ‘ARMCO’ as a trade mark, nevertheless because of its use by Ingal for so many years in Australia, it ‘continues to enjoy a very strong residual reputation in the “ARMCO” name within the civil engineering and construction industries in Australia.’ 

21                  By reason of the apparent importance placed by Ingal’s case on its alleged promotion of the connection between its business and the ‘ARMCO’ name, it was submitted that I should order the production of all documents created by Ingal since 2000 which contain the word ‘ARMCO’.  Counsel for Armco Barriers contended that what he sought to prove was in effect a negative proposition, being that there is actually an absence of documentation falling within the defined category, for the reason that Ingal has not since actively promoted that connection at any material time.  Counsel conceded that the highest basis for justification of this discovery request was that it would act almost as a form of insurance against the possibility that the trial judge would not draw an inference adverse to Ingal from the apparent absence of advertising and related promotional material in the period from 1 January 2000 to the effect that in fact it had not marketed the alleged connection so as to consistently enliven the ‘residual reputation’ in the ‘ARMCO’ name.  It was not apparently disputed by Ingal that an inference of this nature was open to be drawn in the event that documentary evidence of such promotion was ultimately found to be lacking.

22                  An attempt was made by Armco Barriers through the use of three interrogatories to obtain an admission sufficient to dispose of the demand the subject of category 4.  The first interrogatory asked whether the letter from Ingal to the RTA comprising exhibit “DAMJ 39” to the first affidavit of Mr Johnson was the most recent hard copy document produced by Ingal for provision to a customer or customers referrable to the name ‘ARMCO’.  The answer to this was in the negative.  The second interrogatory pressed for a description of the documents brought into existence after the date of that letter which meet the same description.  Ingal provided an example of another document meeting that description from the list of documents discovered to date, and otherwise objected to answering the interrogatory on the ground that searching for every hard copy document fitting that description would be vexatious and oppressive.  The third and final interrogatory directed to this category required Ingal to reproduce the pages of each document provided to a customer or customers which refer to the name ‘ARMCO’.  This was objected to on the ground that it was not a proper interrogatory.  As I indicated above, the use of interrogatories was contemplated towards the end of the first day’s interlocutory hearing as a way of reducing the ambiguity inherent in Ingal’s affidavit evidence, particularly that of Mr Johnson.  It was seemingly understood that an interrogatory along the lines of ‘when did Ingal cease to use the term “ARMCO” in media advertising, promotional material, invoices, letterheads and any other form of media?’ should be administered.  As is apparent from the three interrogatories I have identified above, Armco Barriers chose not to draft their interrogatories in relation to this category in so direct a fashion.  I would observe that the form that the relevant interrogatories took seems to have been designed to elicit precisely the sort of material which Armco Barriers sought on its motion in respect of category 4. 

Category 9

23                  Category 9 refers to all documents created in the relevant period ‘recording or evidencing the identity of the customers of [Ingal] and the quantity and value of the Fabricated Steel Products purchased by those customers’.  This would appear, on its face, to at least include purchase orders, the likes of which are also covered by category 1.  At this point I would hasten to add that another of the interrogatories administered to Ingal by Armco Barriers asked what is the total number and total value of orders placed with Ingal during the relevant period.  In response, Ingal estimated that approximately 23,4000 orders were placed with it during the relevant period for guardrail and corrugated steel pipe products. Ingal also provided figures for the ‘total value of all sales’ of ‘all products’ for each year during the relevant period.  The two answers therefore do not appear to relate to one another. 

24                  In his written submissions, counsel for Armco Barriers stated that discovery is sought under category 9 to enable it to test the proposition that those in the relevant industry hold the view that ‘ARMCO’ is associated with Ingal’s business, rather than being simply a generic term used by that industry to refer to fabricated steel products.  Since Ingal’s customers are part of that industry, Armco Barriers claimed to be entitled to know their identify in order to test whether participants in the industry hold Ingal’s asserted view of the association.  It was then contended by Armco Barriers that since Ingal will be likely to invite the Court to infer, from the 75-plus purchase orders and related documents mentioning the term ‘ARMCO’ and exhibited to Mr Johnson’s affidavits, that a ‘substantial or significant number of persons are likely to have been misled’, presumably by Armco Barriers’ alleged conduct, that ‘[i]n this context, the issue of whether a substantial or significant number of persons are likely to have been misled is not confined to absolute numbers.  It was further submitted by Armco Barriers that substantial or significant invokes the concept of proportionality (counsel’s emphasis) and hence not only should Armco be given access to the identity of Ingal’s customers, being all of their customers and not just those who made purchase orders referring to ‘ARMCO’, but also to the size of their customers’ purchases so as to demonstrate the proportion that the latter business reflects either of Ingal’s total custom or that of the industry as a whole. 

25                  By way of support for that proposition, I was referred to a passage from Hill J’s reasons for judgment in Equity Access Pty Ltd v Westpac Banking Corporation (1989) 16 IPR 431 at 441 in which his Honour cited the test applied in passing off cases as surmised by Wilberforce J (as he then was) in Norman Kark Publications Ltd v Odhams Press Ltd [1962] RPC 163 at 168, which test framed was in the following terms:

‘The test in passing off cases is usually expressed as being whether a “substantial number of persons likely to become purchasers… are liable to be deceived by the defendant’s use of the name.  On the other hand it is not necessary to show that all, or substantially all, persons in the market associate the name with the plaintiff’s goods, if this can be shown of a substantial proportion of persons who are probably purchasers of the goods of the kind in question.” (The emphasis in non-italics is that of counsel for Armco Barriers.)

Counsel also referred me to dicta of French J in ConAgra at 380 that ‘the term “substantial” is evaluative and relative to such factors as the size and distribution of the population of prospective customers, and to that of Ellicott J in Pinetrees Lodge v Atlas International Pty Ltd (1981) 38 ALR 187 at 194 reading ‘[t]he ultimate question is whether a significant proportion of the public are likely to be deceived is a matter peculiarly for the judge’.  I observe that French J conveyed his dicta in the context of the test to be applied in passing off cases whereas Ellicott J’s dictum was in relation to a s 52 cause of action. 

26                  It is not clear from counsel for Armco Barriers’ written submissions whether the material sought to be discovered in category 9 is contended to be relevant to the claims for misleading and deceptive conduct made under the TPA Act, or to the claim of passing off, or to both.  In any event it became apparent throughout argument on the second day of the interlocutory hearing that the courts have distinguished in recent years the relevant tests of deception to be applied in the different contexts of those two heads of claim.

27                  Counsel for Ingal referred me to a segment of Finkelstein J’s reasons for judgment in .au Domain Administration Ltd v Domain Names Australia Pty Ltd (2004) 207 ALR 521 where his Honour discussed the methodology for determining claims brought under s 52 of the TPA Act in relation to alleged misrepresentations made to the public at large or to a section of the public.  In that context his Honour referred to the decision of the High Court in Campomar Sociedad, Limitada v Nike International Ltd (2000) 202 CLR 45, where the Court was said by his Honour (at [16]) to have set down two rules:

‘First, where the persons allegedly misled are not identified individuals but are members of a class it is necessary to isolate “a representative member” of the class and enquire whether this hypothetical individual is likely to be deceived.  Second, when considering the likely effect of the misrepresentation on this hypothetical person he (or she) should be judged as an “ordinary” or “reasonable” member of the class.  In this way, reactions to the representation that are “extreme” or “fanciful” will be disregarded.’

Counsel for Ingal then referred me to what his Honour went on to say at [22]:

‘[22] The final point in relation to “representation to the public” cases concerns the requirement, which has been stated in many decisions both at first instance and on appeal, that for the representation to be actionable it must be shown that significant numbers of the group to whom the representation is directed are likely to have been misled or deceived…’

His Honour proceeded to address the decision of this Court in Weitmann v Katies Ltd (1977) 29 FLR 336, in which Franki J had held that in the context of a s 52 case, he was required to consider, similarly as in passing off cases, ‘whether a reasonably significant number of potential purchasers would be likely to be misled or deceived just in the same way as this question should be considered in a passing off action.’  Notwithstanding that decision in Weitmann and a number of Full Federal Court decisions which have since adopted that test, his Honour indicated at [25] that:

‘[i]t seems to me that there is simply no warrant for imposing a requirement that in a “representation to the public” case significant members of the public must be misled by the impugned conduct before there can be a contravention of s 52…’

Finkelstein J explained this approach at [26] as follows:

‘I am of opinion that the dictum [of Franki J] cannot survive the High Court’s decision in Campomar Sociedad.  By laying down the rule that in a “representation to the public” case the question whether conduct is misleading or deceptive is to be assessed by reference to the reaction of the hypothetical representative member of the class to whom the representation is directed, the High Court has left no scope for the operation of the requirement that it must also be shown that a significant number of members of the class have been misled.  That is, the two requirements cannot sit side by side.  I take the position now to be that the dictum imposed in Weitmann v Katies Ltd has been overtaken.’

28                  Counsel for Ingal contended on that footing that the basis for Armco Barriers’ request for further discovery in the present context took no account of that recent restatement of the applicable principle, since whether a substantial or significant number of persons are likely to have been misled by Armco Barriers’ conduct is not an issue relevant to disposal of the proceedings. 

29                  Were I to accept that such was the applicable approach in relation to the actions brought by Ingal under ss 52 and 53 of the TPA Act, the test to be applied in resolution of Ingal’s passing off action appears to be different.  Counsel for Armco Barriers emphasised the further passage appearing in Finkelstein J’s judgment in Domain at [23], which appears to have been passed over by counsel for Ingal in the course of his submissions:

‘Franki J [in Weitmann v Katies Ltd (1977) 29 FLR 336] was correct in stating that in a passing off action it is necessary for the plaintiff to show that a large number of consumers are liable to be deceived by the defendant’s use of a particular name or get-up…  This is hardly surprising.  The basis for a passing off action is a proprietary right in goodwill established through the use of a name or get up in connection with the plaintiff’s goods:  A G Spalding & Bros v A W Gamage Ltd (1915) 32 RPC 273 at 284…  The action is for damage done or threatened to be done to that property by the defendant.  That is the reason the plaintiff must show that a significant number of people are likely to be misled.  Unless many people are misled it is unlikely that the plaintiff’s goodwill will be damaged.’

30                  Theoretically that leaves the secondary or at least alternative submission advanced by counsel for Ingal at the level whereby the Court should refuse to order the further discovery sought as a matter of discretion, since the relevance of the proportion of persons who have been misled may be of such limited import.  As the latter passage in Domain appears to demonstrate, should Ingal continue with its cause of action for passing off (and there has been no indication that it intends otherwise), the number or proportion of persons liable to be deceived by Armco Barriers’ alleged conduct would be a matter of some relevance in the proceedings. 

31                  There appears however to have been some uncertainty on the part of counsel for both sides as to how those tests should operate in the circumstances of the present proceedings.  This stems from the lack of clarity in Armco Barriers’ demonstration of how category 9 documents relate to the issues raised by the pleadings.  No doubt some of the confusion was caused by the querulous relationship between the approaches taken to s 52 and s 53 of the TPA claims and those for passing off.  Whilst it is beyond question that the respective bases of the two actions are distinct (see, for example, Taco Co (Aust) Inc v Taco Bell Pty Ltd (1982) 42 ALR 177 at 197 per Deane and Fitzgerald JJ), many of the principles relevant in the passing off context have been of assistance to the resolution of s 52 claims (see M Davison et al Shanahans Australian Law of Trade Marks & Passing Off, 3^rd ed, 2003 at 611-612).  How those principles are to operate in the context of this pending action were not the subject of submissions of either counsel, and it is not therefore germane to attempt to comprehensively define the issues at this point in time.

32                  For my part, I am unable presently to appreciate how the grant to Armco Barriers of at least access to information indicative of the number and identity of each of Ingal’s customers over the relevant period, together with the respective sizes of each customer’s business with Ingal, will be of material assistance or detriment to either party in these proceedings.  There might be something to be said for the contention that if the category of documentation sought had been framed so as to limit the customers to those who refer to either Ingal or its products with the term ‘ARMCO’, the consequential scope of discovery would be appropriate, as counsel for Armco Barriers submitted in writing, to ‘test the proposition that those in the industry hold that view [that ‘ARMCO’ is distinctive of Ingal’s business]’.  Any such limitation would however tend to give rise to precisely the same discovery burden as the other two categories presently in dispute.  In light of Ingal’s admission that only about 1% of its total orders refer in some way to ‘ARMCO’, I am not persuaded that I should put Ingal to the burden of cost and inconvenience of the extent and scope of discovery presently sought by Armco Barriers.  As to Armco Barriers’ other submission in support of category 9 of its further discovery request, namely that Ingal may ask the Court to draw the inference from the 75-plus purchase orders exhibited to Mr Johnson’s affidavits that a more substantial number of persons are likely to have been misled by Armco Barriers’ conduct, the same appears to again seek to address the possibility of an inference being drawn against the viability of Armco Barriers’ defence of the proceedings.  Were Ingal to attempt to use the purchase orders in that fashion, I can only presume that Ingal would also seek to demonstrate through the tender of appropriate evidence that those customers were at least relatively speaking significant in number or size such as to go some distance towards satisfying the test in passing off causes of action. 

33                  As a final matter, my research has revealed that the question of whether discovery may be used to obviate the possibility of an inference not being drawn against the party subject to a putative discovery order (such as Ingal here) has been briefly considered in Hancock v South Australian Tourism Commission [2000] SASC 172.  In that case, the plaintiff claimed damages for unfair dismissal and for breach of an employment agreement from the South Australian Tourism Commission, of which she had been formerly the chief executive officer.  The plaintiff appealed from the decision of a Master of the Supreme Court of South Australia refusing an order pursuant to Rule 58.04(e) of the Supreme Court Rules (SA) 1987 for ‘further and better discovery’ in respect of eleven categories of documents.  That rule provided as follows:

‘[The Court may on application for discovery made at any stage of the proceedings ] … where it appears to the Court that there are grounds for a belief that some document or class of documents relating to any matter in question in the proceedings may be or may have been in the possession, custody or power of a party, order that party:

(i)                 to file an affidavit stating whether that document, or any of that class, is or has been in his possession, custody or power and, if it has been but is not presently, to state when he parted with it and what has become of it;

(ii)               to deliver the affidavit to any other party;…’

34                  The relevant category of documents sought was all ‘papers’ of the board of directors of the Tourism Commission for the period of the plaintiff’s employment and a short time thereafter.  Counsel for the plaintiff submitted that the Commission was required to discover, not just those documents falling within that category which contained some comment on the performance of the plaintiff, but also documents which contained no such comment.  The latter class of documents were said to be relevant to a matter in the proceedings, since they had the potential to support the proposition that an inference could be drawn that until the final six months of the plaintiff’s employment, there was no board discussion of unfavourable conduct by her – that is, the plaintiff sought discovery of documents to prove a negative proposition, albeit of perhaps some or at least potential strategic value to her case against the Commission. 

35                  After referring to the pleadings and identifying the central issue in dispute as whether the plaintiff had ‘loyally, skilfully, and assiduously carried out her obligations pursuant to the terms and conditions of her employment’ as she had alleged, Duggan J observed that there was no issue as to the Commission not having provided all board minutes which in some way mentioned her performance as an employee.  His Honour observed that the Commission’s list of already discovered documents contained references to a series of minutes of meetings in respect of the six-month period leading up to the notice of dismissal from employment.  Counsel for the plaintiff contended that the universe of board papers must be discovered so to enable the drawing of the favourable inference sought by the plaintiff.  Duggan J rejected the submission, finding that the class of documents was ‘too wide and nebulous’.  Although his Honour considered at [14] that ‘[t]here might be cases where it is appropriate for a document to be discovered where the absence of a reference to a particular topic makes it relevant in some way’, the more appropriate way to prove the negative in this instance was through the adoption of a notice to admit.  A notice to admit is of course served on an opposing party and is in the nature of an allegation of certain facts, the truthfulness of which is deemed to have been admitted by that other party for the purposes of that proceeding if no answer to the notice is given within a certain period of time:  see Supreme Court Rules 1987 (SA) rr 54.02, 54.03.

36                  Duggan J’s dicta provides some limited support for Armco Barrier’s request in that his Honour countenanced the possibility of using discovery to support an inference proving a negative proposition.  However it is relevant to observe his Honour’s preferred solution, which was the adoption of the notice to admit procedure, which is also available under Order 18 of the rules of this Court.  Nevertheless I record that I granted leave to Armco Barriers to administer interrogatories during the period intervening between the two days of motion hearing, though that grant of leave did not of course pre-empt subsequent dispute as to the scope of interrogatories that might be administered.

Conclusion

37                  Having regard to the circumstances presently prevailing, I would exercise my discretion to refrain from making an order as to further and better discovery of the relevant categories of documents presently sought, but leave open the possibility of a renewal of the application should the requirements of procedural fairness so demand.  Nothing in these reasons should be taken to constitute any concluded reason or reasoning as to admissibility of viva voce or documentary evidence at the hearing, whether per se or subject to conditions. 

38                  In the circumstances it is premature for me to make an order for costs in respect of the discovery dispute to date, and costs of the proceedings to date relative to that dispute are accordingly reserved. 

Associate:

Dated:              1 July 2005