Federal Court of Australia

Vehicle Monitoring Systems Pty Limited v SARB Management Group Pty Ltd trading as Database Consultants Australia (No 10) [2023] FCA 1214

ORDERS

THE COURT ORDERS THAT:

1.    The stay referred to in paragraph 24 of the final orders dated 21 June 2023 be extended pending the determination of the first respondent’s appeal or further order of the Court.

2.    Subject to further or other order, and pursuant to s 37AF(1)(b) and s 37AG(1)(a) of the Federal Court of Australia Act 1976 (Cth), the time in paragraph 4(b) of the confidentiality orders dated 21 June 2023 be extended pending the determination of the first respondent’s appeal.

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

REASONS FOR JUDGMENT

BESANKO J:

Introduction

1    These reasons address two issues. The issues arise on an application by the first respondent and relate to whether existing orders of the Court should be extended. The first respondent was unsuccessful in defending patent infringement proceedings at the suit of the applicant and its cross-claim alleging patent invalidity was dismissed. The first issue is whether a stay of orders made by the Court, including orders for injunctions and the payment of costs, should be extended until the hearing and determination of an appeal by the first respondent. The second issue is whether non-publication orders made at the request of the first respondent under s 37AF and s 37AG of the Federal Court of Australia Act 1976 (Cth) should be extended to 16 May 2029.

Background

2    The circumstances in which the orders came to be made in the first place, albeit for a limited period of time, are set out in Vehicle Monitoring Systems Pty Limited v SARB Management Group Pty Ltd trading as Database Consultants Australia (No 9) [2023] FCA 632 (VMS (No 9)) and those reasons (especially at [9]–[18], [82]–[84]) should be read with these reasons.

3    The evidence before the Court consists of two affidavits affirmed by Peter John Edmond Neale who is the Chief Executive Officer of Orikan Group Pty Ltd (previously known as DCA Cities Holdings Pty Ltd). The first affidavit was affirmed on 3 August 2023. The second affidavit was affirmed on 21 September 2023. In addition, the evidence before the Court included two volumes of documents consisting of affidavits, corporate searches, agreements, correspondence and previous submissions.

4    The issue of whether a stay should be granted has been far from straightforward. It has a relatively long history involving a number of twists and turns related, for the most part, to the details attending the sale of a business and the sale of shares. It has only been after full disclosure of the unredacted copies of the relevant agreements that the position has become clear. This is unfortunate because it has meant, for example, that the parties’ respective written submissions on the application were made on a basis that is not correct.

5    There are three relevant agreements. The first relevant agreement is the Business Sale Agreement between SARB Management Group Pty Ltd as trustee for the SARB Enterprises Hybrid Trust and DCA Cities Holdings Pty Ltd (now Orikan Group Pty Ltd) dated 31 May 2022 (the BSA). The second relevant agreement is the Transitional Services Agreement between SARB Management Group Pty Ltd as trustee for the SARB Enterprises Hybrid Trust and DCA Cities Holdings Pty Ltd dated 31 October 2022 (the TSA). The third relevant agreement is the Share Sale Agreement between SARB, Ignition BidCo Pty Ltd and Ignition TopCo Pty Ltd dated 1 September 2022 (the SSA).

6    Neither the BSA nor the SSA had been provided at the time of my reasons in VMS (No 9).

7    Between my reasons in VMS (No 9) and SARB’s application for an extension of the orders dated 2 August 2023, there was correspondence between the respective solicitors for the parties. On 24 July 2023, the solicitors for SARB wrote to VMS stating that their “clients” did not rely on the SSA in support of the request for an extension of the stay and that was because the SSA did not have any bearing on their clients’ interests in the extension of the stay. They further advised VMS that the SSA would not be provided. They also pointed out to VMS that it had been aware for many months of the nature of the share sales that took place in 2022.

8    At the outset of the application for a stay, SARB produced redacted copies of the BSA and the TSA. It did not produce the SSA. VMS served a Notice to produce on SARB seeking the production of a complete and unredacted copies of each of the BSA, TSA and SSA. SARB applied for an order that the Notice to produce be set aside. I dismissed SARB’s application and unredacted copies of the three agreements were then produced.

9    [REDACTED]

10    As I have said, Mr Neale affirmed two affidavits. The second affidavit was affirmed and provided on the eve of the day fixed for the oral argument. Relevantly, Mr Neale deposed to the following:

System upgrade of PinForce Version 3

5    Over the past few months, Orikan has been working towards a system upgrade to PinForce Version 3. This system upgrade has recently been rolled out for a number of the clients to whom Orikan currently supplies PinForce products, such that they no longer use PinForce Version 3. In addition, all future contracts for PinForce products will utilise the upgraded system, not PinForce Version 3.

6    However, a total of seven council clients who are currently utilising PinForce Version 3 have not yet received this system upgrade. As the timing for these upgrades can be dependent on the clients and is not exclusively determined by Orikan, it is not possible for me to provide precise timing for when this upgrade will be complete for all seven remaining clients.

11    Three matters addressed in VMS (No 9) should be noted at this point. First, I said that the appeal by SARB is genuine and based on reasonable grounds and it was confined to two fairly concise points. Secondly, I referred to the need at that time for the identification of the proper party and for appropriate disclosure. Thirdly, I indicated that absent a stay, a business will be shut down and the subject matter of the appeal will not be preserved. As I understand Mr Neale’s second affidavit, that is no longer the case. [REDACTED] The system upgrade to PinForce Version 3 has been implemented save in the case of seven council clients who are currently utilising PinForce Version 3.

12    Rule 36.8 of the Federal Court Rules 2011 (Cth) provides that an appeal does not operate as a stay of execution or a stay of any proceedings under the judgment subject to the appeal. It further provides that an appellant may apply to the Court for an order to stay the execution of the proceeding until the appeal is heard and determined.

13    SARB’s appeal is limited to two issues. First, the patents are invalid because they fail to describe the best method of performing the invention. Secondly, as a matter of construction, the relevant claims do not apply to PinForce Version 3. The appeal is listed for hearing before the Full Court of this Court on 23 November 2023.

14    The application for a stay is supported by an undertaking from Orikan Group Pty Ltd and Orikan Australia Pty Ltd which is in the following terms:

A.    Orikan Group Pty Ltd and Orikan Australia Pty Ltd (known until 16 May 2023 as DCA City Holdings Pty Limited and DCA Technologies Pty Limited respectively) (collectively and individually, Orikan) by their counsel undertake to the Court to be bound by any findings and orders made in the proceedings against the First Respondent that affect Orikan’s activities in relation to the Pinforce Version 3 (as defined in order 2(a) below).

15    The second issue relates to the continuing confidentiality and non-publication of a document known as Annexure A. For reasons I will give, I consider that the non-publication order with respect to this document should be maintained until the hearing and determination of the appeal. It can be reconsidered at that stage and, in particular, it can be reconsidered with a view to the document being provided to those who give instructions on behalf of VMS.

Analysis

16    The matters which are relevant on an application for a stay are well known.

17    In Advanced Building Systems Pty Ltd v Ramset Fasteners (Aust) Pty Ltd [1997] HCA 24; (1997) 145 ALR 121, McHugh J affirmed the principle that a successful party is presumed to be entitled to the benefits of the judgment obtained. The applicant for a stay has the burden of persuading the Court that it should be granted. Nevertheless, the Court in the exercise of its discretion will not hesitate to stay proceedings when it is necessary to preserve the subject matter or the integrity of the litigation. The Court will not hesitate to grant a stay where the refusal of a stay could grant practical difficulties in terms of the relief which the Court could grant (at [122]). In Henderson v Amadio Pty Ltd (No 3) (1996) 65 FCR 66; (1996) 136 ALR 593 (Henderson v Amadio), Heerey J followed Alexander v Cambridge Credit Corp Limited (1985) 2 NSWLR 685 to the effect that it is not necessary for an applicant for a stay to show that there are special or exceptional circumstances. In Federal Commissioner of Taxation v Myer Emporium Ltd [1986] HCA 13; (1986) 160 CLR 220, Dawson J identified one circumstance where a stay would be granted and that was in circumstances where, because of the respondent’s financial state, there was no reasonable prospect of recovering monies paid pursuant to the judgment at first instance. That was not the only case where a stay was appropriate and a stay may be granted in circumstances where there is a real risk that it would not be possible for a successful appellant to be restored substantially to his former position if the judgment against him is executed.

18    In Henderson v Amadio, Heerey J said that a relevant consideration is whether the appeal is genuine and based on reasonable grounds. I have already concluded that SARB’s appeal in this case is genuine and based on reasonable grounds.

19    In Red Bull Australia Pty Ltd v Sydneywide Distributors Pty Ltd [2001] FCA 1750, Sydneywide was found to have infringed Red Bull’s trade marks. The primary judge in that case granted injunctive relief and that included an order restraining Sydneywide from selling, offering or exposing for sale, distributing or marketing any can displaying the packaging getup of the can depicted in the annexure to the orders, or any getup substantially identical with or deceptively similar to. Sydneywide appealed and applied for a stay. Red Bull opposed the application. Hely J declined to order a stay. His Honour considered it to be a relevant matter that Red Bull had been asked to provide an undertaking as to damages to Sydneywide, but had declined to provide the undertaking. His Honour considered that to be a factor which was clearly relevant to the exercise of the discretion to grant a stay. His Honour reached the conclusion that both parties would suffer hardship in the event that the decision went against them. His Honour decided that a stay was not appropriate because the delay in prosecuting the application suggested that the hardship to Sydneywide was not of an overwhelming nature.

20    In this case, VMS has not offered an undertaking as to damages and, in my opinion, that is a relevant consideration which points in favour of granting a stay.

21    I consider the continuation of the stay to be finely balanced. I think there is a clear enough indication as to ownership of the business and the parties who are likely to suffer a loss if a stay is not granted. Those parties include SARB [REDACTED]. In VMS (No 9), I concluded that absent a stay, a business will be shut down and the subject matter of the appeal would not be preserved. That is no longer the position on SARB’s and Orikan’s own case. [REDACTED]. Furthermore, VMS submitted that the continuation of the provision of services to these councils will not amount to authorisation or joint tortfeasorship according to the main reasons which I have delivered (Vehicle Monitoring Systems Pty Limited v SARB Management Group Pty Ltd trading as Database Consultants Australia (No 8) [2023] FCA 182). In those circumstances, it is no longer true to say that absent a stay, a business will be shut down. In addition, it is not obvious to me that SARB and Orikan could not have fully disclosed the position as at the time of VMS (No 9) or at least shortly thereafter. These matters weigh in favour of refusing to continue the stay.

22    On the other hand, the appeal will be heard shortly and, as I have said, the appeal is genuine, based on reasonable grounds and confined to fairly concise points. Furthermore, there may be arguments about the scope of the system upgrade to PinForce Version 3 and issues about authorisation. In my opinion, there is a sufficient prospect of a loss to justify a stay (noting the absence of an undertaking from the applicant). Finally, it is not obvious to me that I should put any significant weight on the fact (if it be the fact) that SARB failed to perform its obligation [REDACTED] in a timely fashion. On balance, I think it is appropriate to grant a stay and I will so order. The stay will extend to the costs order and the quantum stage of the proceedings will not proceed until the appeal is heard and determined.

23    With respect to the continued confidentiality of Annexure A, the real issue in dispute at this stage appears to be whether those providing instructions on behalf of VMS and, in particular, Mr Saxon Hill, should have access to the annexure at this stage. I do not think there is a need for him to have access to the annexure before the hearing and determination of the appeal. The chief purpose of granting access to Annexure A to Mr Hill would be so that he could provide instructions with respect to the second stage of the proceedings. That stage will be stayed until the hearing and determination of the appeal. I will make an order that the non-publication order remain in place until the hearing and determination of the appeal. I make it clear that a matter relied on by SARB, being the fact that Mr Hill has written to some of SARB’s clients advising them of the outcome of the proceedings, has played no part in this decision because I do not consider on the argument presented that it is relevant.

Conclusions

24    The orders of the Court are as follows:

(1)    The stay referred to in paragraph 24 of the final orders dated 21 June 2023 be extended pending the determination of the first respondent’s appeal or further order of the Court.

(2)    Subject to further or other order, and pursuant to s 37AF(1)(b) and s 37AG(1)(a) of the Federal Court of Australia Act 1976 (Cth), the time in paragraph 4(b) of the confidentiality orders dated 21 June 2023 be extended pending the determination of the first respondent’s appeal.

Associate:    

Dated:    12 October 2023