FEDERAL COURT OF AUSTRALIA

Austshade Pty Ltd v Revolva Shade Pty Ltd [2010] FCA 1375

THE COURT ORDERS THAT:

1.    The Respondents’ application for an adjournment be refused; and

2.    The Respondents’ application to amend their defence and cross-claim in the form of Exhibit 1 be refused.

Note:    Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. The text of entered orders can be located using Federal Law Search on the Court’s website.

REASONS FOR JUDGMENT

1    These proceedings were commenced by application filed on 10 December 2009, with a statement of claim. They arise out of arrangements allegedly made between the applicants and the respondents concerning the manufacture and distribution of shade umbrellas of the kind used in gardens and in conjunction with buildings. The application raises disputes concerning ownership of trademarks and patents, although those matters seem to be secondary to the major cause of action which arises out of the contractual relations between the parties.

2    The matter was before me for directions on 4 February 2010. At that stage I gave directions as to the filing and serving of the defence and cross claim, and a reply to the defence and defence to the cross claim. There were directions that the parties confer on the scope of discovery and for discovery, mediation, and other orders relating to expert evidence. On 9 April 2010 the matter was again before me for directions as to the trial. The trial was fixed to commence today, 29 November, and to continue until Monday, 6 December 2010. Further directions were given as to discovery and inspection and as to the delivery of evidence in chief by way of affidavit. The parties were, in effect, to file and serve all affidavits containing evidence in chief, including expert reports, by 30 July 2010 and, by 30 August 2010, to file any material in reply. The experts were to confer by 13 September 2010 and, if possible, file a joint report. On 14 October 2010, certain of the orders were vacated, and further directions given for the filing of evidence in chief by 5 November 2010 and evidence in reply by 17 November 2010. Orders were again made as to conferences between experts, a joint report, and provision of an agreed list of material to be included in the court book.

3    The applicants filed their evidence in chief on 5 and 8 November 2010, but no material has been filed by the respondents. On Thursday of last week I was approached by those acting for the respondents, seeking to list the matter for mention, which I did on that afternoon. I was told by counsel for the respondents that they proposed to make substantial amendments to the defence and cross claim but were not then able to provide a draft. It was indicated to me that counsel and instructing solicitors proposed to work over the weekend in order to be in a position to advise me, today, as to their proposed future conduct of the matter. It was made clear at all stages that there was to be a substantial change in the direction of the respondents’ case.

4    This morning counsel for the respondents asked for an adjournment of the trial to enable them to assemble their case. Although a draft pleading was provided, counsel indicated that the respondents were not presently firmly wedded to it, and that they would, in the event that they were given an adjournment, be able to deliver a defence and cross claim in final form within a fairly short period of time.

5    In support of the application for adjournment of the trial, the second respondent swore an affidavit in which he asserts that he was born in Germany and moved to Australia as an adult. He has qualifications in mechanics in Germany and appears to have significant business experience. He then asserts a version of events, in his dealings with the applicants, which differs significantly from that alleged by the applicants, and from that which appears in the existing defence and cross claim, although there are some common features.

6    The respondents do not assert that there is any substantial overall similarity between the case which they have raised in the defence and cross claim, and that which they now seek to raise. Indeed, as I have said, counsel has at all times made it clear that he acknowledges that there will be a substantial departure from the defence and cross claim. However the respondents assert that the divergence between the case which they wish to advance, and that which appears in the defence and cross claim, has been brought about by misunderstandings as between the respondents’ previous solicitors and Mr Bauer, the second respondent.

7    Mr Bauer does not seek to rely upon any general inability to converse in English. Indeed, counsel has indicated that he is proficient in English. However he asserts that some specific misunderstandings must have occurred between him and his solicitor, leading to the defence and cross claim taking the form which it has, and his not detecting it at some earlier stage. The former solicitors terminated their retainer on 3 November 2010, just before the affidavits in chief were to be delivered. Mr Bauer, however, says that he asked the solicitors to stop acting for him in late October or in the first week of November. He said that on numerous occasions between early this year and November, he had been asked by his solicitors to produce documents. He says that he kept asking his solicitors why he had to disclose documents concerning umbrellas which he had sold, whilst Mr Koehn, the second applicant, was not obliged to do so. He asserts that explanations given by his solicitors suggested to him that they were concentrating on the patent and trademark aspects of the case rather than on the claim for moneys arising out of the partnership dealings between the applicants and the respondents. He says that he did not understand the significance of the orders made on 14 October.

8    The exact circumstances in which the retainer was terminated are not presently clear. That may not matter. In the course of argument this morning, after having read Mr Bauer’s affidavit and the outline of submissions on his behalf, I pointed out that the assertion of misunderstanding was very general and not really supported by any evidence other than Mr Bauer’s assertions. I also pointed out if it were to be alleged that the solicitor had in some way misunderstood the case, or had not taken appropriate instructions, one would expect references to the correspondence between the solicitors and the client. In light of that intimation, counsel indicated that he was in a position to waive any claim to privilege in relation to the correspondence file of the former solicitors. The file was subsequently produced and examined by counsel for the applicants, who then tendered certain documents from it. Those documents comprise exhibit 4. It is not appropriate that I refer to each item of the correspondence which commenced on 19 January 2010 and finished in October 2010. It is sufficient to say that the solicitors appear to have drawn Mr Bauer’s attention to the need to examine carefully the draft pleading and to provide instructions as to relevant matters.

9    Mr Bauer did not, at any stage, express the view that the solicitors were being unreasonable, or that they did not understand the case which he wished to advance. In particular, a draft witness statement was taken in January and sent to Mr Bauer to “make any amendments or add information that you think is relevant”. It was pointed out that it was “very important that this witness statement accurately reflects your understanding and recollection of the background because it will form the basis of information for the defence”. There is then reference to my directions and to the drawing of the defence and a request for further information. There were also regular requests by the solicitors that they be put in funds. It seems that from a quite early stage, Mr Bauer failed to comply with the solicitor's requirements in this regard, leading to two earlier terminations of the retainer.

10    In the correspondence, there are also references to the need to comply with orders and, in the latter stages, to the fact that time was running out for compliance, and that the trial date was getting near. Nothing in any of this seems to support Mr Bauer’s assertion that the solicitors had not understood the case that he wished to advance, or that he had, himself, not properly communicated appropriate instructions to the solicitors.

11    Further, the assertions that the matter was said to be getting close to trial and that compliance with the various orders was necessary, and the apparent absence of any real response to the solicitor’s urgings, suggest to me very strongly that Mr Bauer was not particularly interested in bringing the matter to trial. I say this in view of the fact that there is no suggestion that he was significantly handicapped in his dealings by a lack of understanding of English. I accept that there probably was some small degree of disadvantage in that regard.

12    It is also curious that on 13 October 2010 he caused another firm of solicitors, Connor Hunter, to write to the second applicant and his wife, complaining about alleged defamation of him by her, at a trade fair said to have occurred on 18 September 2010. It is particularly odd that the complaint was not made until 13 October 2010, although the alleged defamatory remarks (which related to the subject matter of these proceedings in one way or another) were made to Mr Bauer’s son and to other people in his son's presence. It is also said that a customer had told Mr Bauer that Ms Koehn had telephoned her and made defamatory remarks about him.

13    If such events occurred, it is not surprising, in the context of these proceedings, that such a letter should have been written, but it is odd that there should have been such a long delay from 18 September to 13 October 2010. Further, another letter was written on 4 November 2010 by the same firm of solicitors, by which time the solicitors previously acting in this litigation had terminated their retainer or had it determined. In that letter the same complaints are again made and proceedings threatened. The curiosity of this letter is the proximity in time to the termination of the instructions of the previous solicitor. I also note that the trial was getting even closer. The delay between the termination of the previous solicitor's instructions and Mr Bauer’s consulting other solicitors was a period of almost three weeks, notwithstanding the looming trial and the advice he had been given by his previous solicitors as to steps which had yet to be taken. There is at least an implicit suggestion, by reference back to para 124, that the delay was caused by Mr Bauer’s not knowing other solicitors. Yet it seems that he had previously instructed Connor Hunter in a matter closely related to the subject matter of this litigation. It may be that he did not consider that those solicitors had appropriate expertise, but one would have thought that he might at the very least have asked them for some advice. One would, in any event, have expected him to do something before 23 November 2010.

14    In the circumstances, I am not satisfied that the respondents have properly explained to me the reasons for this application for amendment at such a late stage. I have suspicions as to why it has occurred, but I prefer to dispose of the matter on the basis that I am simply not satisfied that they have explained to me the circumstances in which their predicament has arisen so as to justify me in allowing an adjournment for the purpose of formulating a proposed amendment at this late stage in the proceedings.

15    A substantial amount of the likely prejudice to the applicants, incidental to such an adjournment, could be avoided by an appropriate order as to costs, although it would have to be on an indemnity basis. However the detriment of delay in resolving the matter cannot be so remedied. In those circumstances, I decline the application for an adjournment, which I think is the only application that is presently before me. For the reasons which I have given, I consider that it is not in the interests of justice that the amendment be allowed. I consider that the injustice to the applicants in having their trial further delayed would outweigh any injustice suffered by the respondents, given that it seems to me, on the material, that they are largely the authors of their own wrong.

Associate:

Dated:    3 February 2011