Federal Court of Australia

Cantarella Bros Pty Ltd v Lavazza Australia Pty Ltd (No 2) [2021] FCA 894

ORDERS

THE COURT ORDERS THAT:

1.    The applicant’s/cross-respondent’s application for the imposition of additional conditions on the grant of leave given to the respondents/cross-claimant on 8 June 2021 to adduce and rely on further affidavit evidence, be refused.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

YATES J:

Introduction

1    On 8 June 2021, at the conclusion of a contested interlocutory hearing, I granted leave to Lavazza Australia Pty Ltd and Lavazza Australia OCS Pty Ltd (collectively, Lavazza) to adduce and rely on further affidavit evidence (the Molinari affidavits) in support of their case that the applicant/cross-respondent, Cantarella Bros Pty Ltd, is not the proprietor of registered trade marks 829098 and 1583290. Each registration is for the word ORO in class 30 in respect of, amongst other goods, coffee.

2    The grant of leave was in these terms:

1.    Leave be granted to the respondents/cross-claimant to adduce and rely on:

(a)    the affidavit of Fabrizio Mengoli signed 17 May 2021;

(b)    the affidavit of Fabrizio Mengoli signed 7 June 2021;

(c)    the affidavit of Maurizia Baraccani signed 19 May 2021; and

(d)    the affidavit of John Dominic Lee sworn 21 May 2021,

    on the basis that those affidavits be read subject to any objections as to admissibility properly taken, and that the overseas witnesses be available for cross-examination (if required) by video link from Italy at a time to be determined by the Court in consultation with the parties.

3    The grant of leave was made in the context of a final hearing, adjourned part-heard, of Cantarella’s claim that Lavazza has infringed, and continues to infringe, the two marks.

4    Lavazza Australia and Lavazza Australia OCS have raised Cantarella’s alleged lack of proprietorship of the two marks as a defence. Lavazza Australia has also cross-claimed for cancellation of the registrations on the same basis, as well as on the basis that the two marks are not inherently adapted to distinguish Cantarella’s goods in respect of which they are registered.

5    On the fourth day of the hearing for final relief, which commenced on 7 December 2020, Lavazza sought to tender, over Cantarella’s objection, certain invoices purportedly issued by Caffè Molinari SpA. The evident aim of the tender was to adduce evidence to establish the use, in Australia, by Molinari of ORO as a trade mark in respect of coffee products (Molinari coffee), before Cantarella’s first use of the two registered marks. I rejected the tender: Cantarella Bros Pty Ltd v Lavazza Australia Pty Ltd [2020] FCA 1895.

6    Broadly speaking, the Molinari affidavits cover the same subject matter of that tender, albeit now in considerably more detail concerning the contended use by Molinari of ORO as a trade mark in Australia.

7    On 8 June 2021, I also granted leave to Lavazza Australia and Lavazza Australia OCS to amend their further amended defence dated 6 November 2020, and to Lavazza Australia to amend Annexure A to its amended statement of cross-claim dated 6 November 2020, by changing certain dates. The scope of these amendments is modest.

8    Cantarella has now filed a further amended defence to the cross-claim, dated 9 July 2021. This pleading was filed pursuant to consent orders made on 24 June 2021. The further amended defence to the cross-claim raises a substantial number of additional grounds on which Cantarella resists Lavazza Australia’s claim for cancellation of the registrations.

9    Despite what appears to have been a considerable expansion of Cantarella’s defence to the cross-claim, I have been informed by leading counsel for Cantarella, Mr Bannon SC, that the additional evidence on which Cantarella will seek to rely, in its defence, is relatively confined. It will comprise an affidavit by an employee of Cantarella to supplement and confirm affidavit evidence given by Mr Audi, Cantarella’s Group Financial Controller; possibly two affidavits to show, by reference to use of the “Wayback Machine”, that Molinari coffee said to have been sold by Molinari to C.M.S. Coffee Machine Services Pty Ltd, and imported by C.M.S. into Australia, was not advertised for sale by C.M.S.; and an affidavit to show that in proceeding NSD 113 of 2011 (Cantarella Bros Pty Limited ACN 000 095 607 v Modena Trading Pty Limited ACN 140 018 015) (the Modena proceeding)—a proceeding in which Cantarella sued Modena for, amongst other things, infringement of the first of the registered marks, based on Modena’s importation of Molinari coffee—the issue of Cantarella’s proprietorship of ORO as a trade mark was not raised.

10    As to the last-mentioned matter, I have questioned whether evidence is required. It is sufficiently clear that, in the Modena proceeding, Modena raised no issue concerning Cantarella’s proprietorship of ORO as a trade mark, even though facts existed which might prove that the importation of Molinari coffee into Australia might have defeated Cantarella’s proprietorship and, if so, might have provided Modena with a defence in that proceeding.

11    At the request of the parties, this proceeding was listed for case management on 21 July 2021 because the parties were unable to agree on the directions that should be made for the further conduct of the proceeding.

The present dispute

12    Leaving aside certain procedural steps which, in principle, no longer seem to be in dispute, the substantial disagreement between the parties is whether I should revisit the grant of leave I made on 8 June 2021 to allow Lavazza to adduce and rely on the Molinari affidavits, by imposing further conditions requiring Lavazza to obtain documents from Molinari, and to produce those documents to Cantarella. The documents are:

(a)    Documents that constitute the books and records investigated by Fabrizio Mengoli and his team referred to in paragraph 18 of the affidavit of Fabrizio Mengoli dated 17 May 2021 (Mr Mengoli’s affidavit).

(b)    Documents that constitute or record Molinari’s decision to adopt the packaging appearing at paragraph 23 of Mr Mengoli’s affidavit.

13    In his affidavit, Mr Mengoli says that he is Molinari’s Sales, Marketing and Export Manager; that he commenced his employment with Molinari on 18 March 1996, as an Export Manager; and that at the time he commenced his employment, Molinari used certain packaging for its coffee products (for convenience, referred to as historical packaging), which he illustrates.

14    In paragraph 18 of his affidavit, Mr Mengoli says:

My team and I have reviewed Molinari’s books and records and investigated the matter, and I have not identified anything to suggest that there was any different packaging for Caffè Molinari Oro in 1995. I also do not recall being informed of any packaging changes shortly prior to my joining the business in March 1996, so I am confident that the above historical packaging was in circulation in 1995.

15    Mr Mengoli discusses the use of this packaging and, in paragraph 23 of his affidavit, says that the packaging of the Molinari Oro product has been updated. He illustrates the way in which he says the product was updated from May 2010, from June 2011, and from 2013 (to the present time).

16    The effect of the conditions which Cantarella now says should be imposed is to place on Lavazza an antecedent obligation to obtain documents from Molinari in relation to the two matters referred to, as if by discovery. Any failure to do so, or to provide the product of that “discovery” to Cantarella, would result in Lavazza being denied the opportunity, already granted on terms, to adduce and rely on the Molinari affidavits.

17    Despite the detailed submissions, both written and oral, advanced by Cantarella at the interlocutory hearing on 8 June 2021, no submission was made that, if it were otherwise appropriate to grant leave to Lavazza to adduce and rely on the Molinari affidavits, a condition of that leave should be its obligation to obtain the production of documents from Molinari.

The parties’ submissions

18    Cantarella submits that, in paragraph 18 of his affidavit, Mr Mengoli does not identify the books and records that he and his team investigated, which form the basis for his statement that he has not identified anything to suggest that there was packaging for Molinari coffee in 1995 that was different to the packaging he observed when he commenced his employment with Molinari on 18 March 1996. Cantarella argues that it does not know what books or records were consulted, and cannot test Mr Mengoli’s statement directed to the state of packaging in 1995, in so far as it is based on that investigation. It submits that it is not practicable for it to seek access to these books and records by means of a subpoena or other court process, given that Molinari is outside Australia.

19    Cantarella makes a similar submission with respect to the production of documents that constitute or record Molinari’s decision to adopt the packaging depicted in paragraph 23 of Mr Mengoli’s affidavit. It submits that such documents might cast light on the state of packaging before the dates given in that paragraph; the reason(s) for the change; and whether Molinari has abandoned any prior rights it might have had to use ORO as a trade mark in Australia.

20    Cantarella submits that the Court has the power to impose the conditions it seeks. It submits that it would not be procedurally fair if the Court did not impose those conditions.

21    Lavazza contends that it would be “inappropriate” to impose these conditions on the leave that has already been granted. It points to the fact that, at the hearing on 8 June 2021, Cantarella said nothing about the imposition of these conditions.

22    Lavazza submits that the categories of documents are far from what would be allowed for discovery against an Australian party to the proceeding or that would be permitted in a subpoena to produce documents.

23    Lavazza submits that, in paragraph 18 of his affidavit, Mr Mengoli says no more than that, having investigated Molinari’s books and records, he has not identified packaging for Molinari coffee in 1995 that is different to the packaging he observed in March 1996 when he commenced his employment with Molinari. Lavazza submits that this does not mean that these books and records, whatever they are, would be subject to an order for discovery. Mr Mengoli’s sworn statement is that the books and records he investigated (whatever they were) did not identify or suggest different packaging. Therefore, prima facie, the documents that Cantarella seeks cannot support Cantarella’s case or adversely affect Lavazza’s case.

24    As to paragraph 23 of Mr Mengoli’s affidavit, Lavazza points to the fact that the depicted packaging changes for Molinari coffee are from May 2010 onwards, after the registration date of the first of Cantarella’s registered marks (24 March 2000). Thus, any use in Australia of Molinari’s packaging after 24 March 2000 (i.e., use of the packaging depicted in paragraph 23) cannot ground a challenge to Cantarella’s proprietorship of the first registered mark.

25    As to Cantarella’s further amended defence to the cross-claim, Lavazza submits that the documents sought with respect to paragraph 23 of Mr Mengoli’s affidavit are not relevant to most of the new grounds that Cantarella has pleaded.

26    Lavazza draws attention to Cantarella’s newly-pleaded allegation that Molinari has abandoned its use in Australia of ORO as a trade mark. It contends that this ground faces a particular difficulty. Cantarella successfully sued Modena in the Modena proceeding for trade mark infringement, based on Molinari’s use of ORO as a trade mark on the packaging of the Molinari coffee. In that proceeding, Cantarella’s claims covered acts of infringement (use of ORO in Australia as a trade mark) many years after the date of registration of its first registered mark, including the use, from May 2010, of the first depicted packaging in paragraph 23 of Mr Mengoli’s affidavit. Lavazza submits that the allegation of abandonment now pleaded by Cantarella in its further amended defence to the cross-claim is inconsistent with the case it advanced in the Modena proceeding with regard to Molinari’s use of ORO as a trade mark: it cannot be said, sensibly, that Molinari had abandoned its use of ORO as a trade mark prior to the date of registration of Cantarella’s first registered mark.

27    Further, Cantarella does not contend that use of the second and third depicted packaging in paragraph 23 of Mr Mengoli’s affidavit is trade mark use of the word ORO. Lavazza submits that if Cantarella contends that use of the second and third packaging signifies Molinari’s abandonment of ORO as a trade mark, then it does not need documents that constitute or record Molinari’s decision to adopt that packaging.

Consideration

28    Lavazza required leave to adduce and rely on the Molinari affidavits. It was within the power of the Court to make an order granting leave subject to conditions: r 1.33 Federal Court Rules 2011 (Cth). Conditions were imposed on the grant of leave made on 8 June 2021: [2] above. No other conditions were sought.

29    The grant of leave was an interlocutory order. The Court has the power to revisit the making of such an order. The question is whether the Court should revisit the grant of leave made on 8 June 2021 by imposing the additional conditions that Cantarella seeks.

30    In the case of an interlocutory order of a substantial nature made after a contested hearing—in contemplation that the order will operate until the final disposition of the hearing—the usual rule is that a variation (or discharge) of the order must be founded on a material change in circumstances since the original application was heard, or the discovery of new material which could not reasonably have been put before the Court on the hearing of the original application: Brimaud v Honeysett (1988) 217 ALR 44 (Brimaud) at 46; Adam P Brown Male Fashions Proprietary Limited v Philip Morris Incorporated (1981) 148 CLR 170 (Adam P Brown) at 177-178; Hutchinson v Nominal Defendant [1972] 1 NSWLR 443 (Hutchinson) at 447.

31    The grant of leave made on 8 June 2021 is not of the same character as, say, an order made, after a contested hearing, appointing a provisional liquidator (Brimaud) or granting a stay of proceedings (Hutchinson); nor is it of the same character as an undertaking given to the Court in lieu of an interlocutory injunction in contested proceedings (Adam P Brown). On the other hand, I do not think it can be characterised as an order of a merely procedural nature. The application for leave raised an important question as to whether, at such a late stage in the proceeding, Lavazza should be permitted to lead evidence which had been served well outside the time provided for in the Court’s case management orders. The application was of a substantial nature: it was strenuously opposed by Cantarella; the hearing occupied the better part of one day; and the application proceeded on the basis of comprehensive written submissions supplemented by extensive oral argument.

32    In its written and oral submissions at that hearing, Cantarella complained of: the lateness of Lavazza’s service of the Molinari affidavits and the consequences of that lateness; the fact that Lavazza did not inform the Court or Cantarella of its intention to obtain, or its activities in relation to obtaining, the Molinari affidavits; the fact that, based on its pleadings, Lavazza must always have been aware of the need to prove Molinari’s earlier use in Australia of ORO as a trade mark; and the prejudice that Cantarella said it would suffer if leave were granted. Cantarella also advanced submissions directed to (what it said were) deficiencies in the Molinari affidavits and the commercial documents to which they referred. The gist of these submissions was that the evidence, for which leave was sought, was so lacking in probative value that leave should be refused for that reason alone.

33    As to the prejudice it would suffer if leave were to be granted, Cantarella submitted that it would need to be afforded an opportunity to make its own inquiries of Molinari and to test the evidence to be given through the Molinari affidavits. It referred to “additional challenges” in that regard. It canvassed the practical and procedural, and possibly legal, difficulties attending the issue and service of a subpoena to produce documents on a person outside Australia: Titan Enterprises (Qld) Pty Ltd v Cross [2016] FCA 890; Ceramic Fuel Cells (in liq) v McGraw-Hill Financial Inc [2016] FCA 401; 245 FCR 340; Kraft Foods Group Brands LLC v Bega Cheese Ltd (No 4) [2018] FCA 1055. It foreshadowed the possibility that, even if those difficulties could be overcome, the person on whom the subpoena is served might simply elect not to provide any documents. Similarly, it argued that even if a Sabre order were to be made (Sabre Corporation Pty Ltd v Russ Calvin’s Hair Care Company (1993) 46 FCR 428) against Lavazza with reference to Molinari, Molinari could elect not to provide documents to Lavazza. Once again, these arguments were raised as a reason why leave to adduce and rely on the Molinari affidavits should be refused.

34    I considered these, and the other arguments advanced by Cantarella, in opposing the grant of leave. I was nevertheless persuaded that, despite those arguments, the character of the proposed evidence was such that the just resolution of the proceeding would be facilitated by leave being granted to adduce and rely on the Molinari affidavits on the conditions then propounded. The proprietorship of the two registered marks is a central issue in the proceeding. It is an issue that transcends the interests of the immediate parties, bringing into consideration the wider public interest in the purity of the Register of Trade Marks. Further, considerable latitude had been given to Cantarella to adduce evidence to support its claim to proprietorship of the two registered marks.

35    As to the last-mentioned consideration, it is appropriate that I should say something more about the course of the proceeding up to 8 June 2021.

36    Originally, the final hearing was listed to commence on 7 December 2020, with an estimated duration of four days (to 10 December 2020). On 2 November 2020, an order was made that the hearing be extended by an additional day to 11 December 2020.

37    Early in the case management of the proceeding, a regime was put in place for the notification, and possible resolution, prior to the commencement of the hearing, of objections to evidence. On 2 November 2020, an order was made that the proceeding be listed on 1 December 2020 to determine any outstanding objections. That hearing took place, as appointed. A number of rulings were made. However, the determination of some objections was deferred on the basis that they might be overcome by further consultation between the parties’ legal advisers, or by the service of supplementary affidavits.

38    One such objection concerned the evidence that Cantarella intended to adduce to prove its first use in Australia of ORO as a trade mark. Such proof is central to its claim of proprietorship of the two registered marks. This led Cantarella to serve three affidavits by Mr Audi who is, as I have said, Cantarella’s Group Financial Controller. Mr Audi’s affidavits were made on 4 December, 9 December, and 11 December 2020, respectively. They identify and explain certain financial records relating to Cantarella’s sale of products said to bear the ORO trade mark.

39    Mr Audi’s affidavits were served on Lavazza on a rolling basis—immediately before the commencement of the hearing (his affidavit of 4 December 2020), and in the course of the hearing (his affidavits of 9 December 2020 and 11 December 2020)—well outside the time by which Cantarella’s affidavit evidence was ordered to be filed and served.

40    Lavazza raised a number of objections to Mr Audi’s affidavits. The objections were directed to a number of passages whose admissibility is critical to the case on proprietorship that Cantarella wishes to establish.

41    On 11 December 2020, the last day appointed for the hearing, a number of objections to Mr Audi’s affidavits were still being argued. For reasons which I need not detail here, I was persuaded that rulings on those objections would best be made in the context of a voir dire.

42    Therefore, the proceeding was adjourned part-heard to 8 June 2021 to conduct the voir dire and any cross-examination of Mr Audi that might then be required. Two further hearing dates (15 and 16 June 2021) were appointed for closing submissions. A period of much earlier dates, in March/April 2021, was offered to the parties, but the Court was informed that Cantarella’s leading counsel was not available within that period.

43    On 19 May 2021, in the intervening period, Lavazza served copies of Mr Mengoli’s affidavit and Ms Baraccani’s affidavit of 18 May 2021. At the same time, it foreshadowed the pleading amendments to which I have referred. It sought a response from Cantarella as to whether it would agree to orders permitting Lavazza to rely on the two affidavits and to amend the defence and cross-claim, as I have indicated.

44    On 21 May 2021, Cantarella, through its solicitors, stated that it opposed the making of those orders.

45    On 1 June 2021, the proceeding was relisted at Lavazza’s request. On that day, I granted leave to Lavazza to file an interlocutory application (dated 21 May 2021) seeking leave to adduce and rely on the two affidavits noted above, and an affidavit made by Mr Lee, a partner in the firm acting for Lavazza in this proceeding. The interlocutory application also sought leave to make the pleading amendments to which I have referred. I made other procedural directions and set down the interlocutory application for hearing on 8 June 2021, the date to which the hearing had already been adjourned for the voir dire and possible cross-examination of Mr Audi.

46    At the resumed hearing on 8 June 2021, the objections raised by Lavazza with respect to Mr Audi’s affidavits were resolved by agreed rulings. The need for the voir dire, and any subsequent cross-examination of Mr Audi, was obviated.

47    Lavazza’s interlocutory application for leave to adduce and rely on the Molinari affidavits was then heard. As I have said, it was strenuously opposed. Nevertheless, at the conclusion of the hearing, I granted leave on the terms set out above. This then led to the vacation of the hearing dates appointed for 15 and 16 June 2021, because I readily acceded to the proposition that Cantarella should have the opportunity to respond to the Molinari affidavits.

48    It is not unimportant to observe that had Cantarella not delayed in serving Mr Audi’s affidavits, and had the hearing concluded as originally appointed in December 2020, the opportunity for Lavazza to obtain the Molinari affidavits would not have arisen.

49    It is true that, when the proceeding was adjourned part-heard on 11 December 2020, Lavazza did not inform the Court or Cantarella that it intended to approach Molinari with a view to obtaining evidence as to Molinari’s first use of ORO in Australia. I accept, however, that at that time, Lavazza did not know that it could obtain such evidence. I accept that Lavazza was, and remains, dependent on Molinari’s goodwill and cooperation in that regard. There is no evidence before me that, when it approached Molinari for assistance, Lavazza had any reason to expect that Molinari would provide the Molinari affidavits, particularly given that: the Molinari affidavits deal with events more than 20 years ago; Molinari has no direct interest in the outcome of this proceeding; and that, at the time that Molinari’s assistance was sought, Italy was badly affected by another wave of the COVID-19 pandemic, which provided a reason to think that, in those circumstances, Molinari might not be inclined to commit resources to provide the assistance that Lavazza was seeking.

50    I accept that Lavazza could have, and should have, approached Molinari much earlier than it did. But Cantarella has also been dilatory in obtaining its own evidence to support its claim to proprietorship of the ORO mark.

51    When regard is had to the submissions made by Cantarella on 8 June 2021 concerning the prejudice it would suffer if Lavazza were to be granted leave to adduce and rely on the Molinari affidavits, it is plain that the present application is not based on any change in circumstances or the discovery of new and relevant material. Nothing has been put in support of the present application that was not, in substance, put or could have been put at the time the leave application was argued.

52    Further, it is instructive to consider what the position would have been had Lavazza obtained the Molinari affidavits at an earlier time—within the time limit originally set by the Court for Lavazza to file and serve its affidavit evidence. If the Molinari affidavits had been filed and served within time, I can think of no reason why I would have imposed conditions, such as now sought, on Lavazza’s use of those affidavits in the proceeding.

53    In this Court, evidence is routinely adduced through affidavits. In order for a party to adduce evidence by that means, it is not a requirement that a deponent provide discovery of documents in relation to the matters raised in the affidavit or that the party seeking to rely on the affidavit obtain, as if by discovery, documents from the deponent, as a condition of the party relying on that affidavit. The same is true of evidence that is sought to be adduced from witnesses who are brought to court under subpoena.

54    The party against whom the evidence is to be adduced can avail itself of the processes available to all litigants in the Court to obtain documents from non-parties, such as through a subpoena to produce documents and by non-party discovery. I accept that, in the case of a deponent or witness who is outside Australia, there may be procedural and practical difficulties in doing so. But it does not follow from such difficulties that another party’s ability to adduce evidence through, say, an overseas deponent should be conditioned in the way that Cantarella seeks. The fact that the Molinari affidavits are late-served, does not seem to me to warrant a different conclusion.

55    I accept that, within reason, Cantarella should now be placed in the position it would have been in had the Molinari affidavits been served within the time limit originally set by the Court for Lavazza to file and serve its affidavit evidence. That, however, does not require the imposition of the additional conditions that Cantarella seeks. This is because, save for the inevitable and unfortunate delay in bringing the hearing to a conclusion, Cantarella is in no worse a position, procedurally, than it would have been in had the Molinari affidavits been served within time. The delay in bringing the hearing to a conclusion lies as much at Cantarella’s feet as it does at Lavazza’s feet.

56    For these reasons, I am not persuaded that I should revisit the grant of leave I made on 8 June 2021 to impose the additional conditions that Cantarella seeks.

57    In these circumstances, it is not necessary for me to reach a final conclusion on Lavazza’s submissions recorded at [22] – [27] above, other than to say that Lavazza has raised a number of substantial arguments as to why, in another context, discovery by reference to the categories sought might not be ordered.

58    Therefore, Cantarella’s application for the imposition of additional conditions on the grant of leave made on 8 June 2021 will be refused.

Associate:

Dated:    4 August 2021