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  • Unreported Judgment

Hanrahan v Shek

 

[2006] QSC 110

 

SUPREME COURT OF QUEENSLAND

 

PARTIES:

FILE NO:

Trial

PROCEEDING:

Application

ORIGINATING COURT:

DELIVERED ON:

12 May 2006

DELIVERED AT:

Supreme Court at Brisbane

HEARING DATE:

10 November 2005

JUDGE:

Douglas J

ORDERS:

1) Leave to proceed in each matter granted
2) Matters to be heard together
3) Further submissions invited as to costs and directions required to advance the matters to trial

CATCHWORDS:

PROCEDURE — COURTS AND JUDGES GENERALLY — COURTS — DISMISSAL OF PROCEEDINGS FOR WANT OF PROSECUTION — PRINCIPLES APPLICABLE — RELEVANT CONSIDERATIONS - where applications for leave to proceed brought by plaintiffs – where corresponding applications to strike out action for want of prosecution brought by first, third and fourth defendants – where no action taken by plaintiffs to advance the matter to trial since July 2001 – where plaintiffs have been defending action in another jurisdiction over that period  - where plaintiffs suffer financial hardships due to the conduct of the defendants – where plaintiffs’ rights would be prejudiced if actions struck out – where defendants suffer no prejudice as a result of the delay – whether leave to proceed ought be given

Uniform Civil Procedure Rules 1999 (Qld), r. 5, r. 389

Tyler v Custom Credit Corporation Ltd [2000] QCA 178, applied.

COUNSEL:

S S Monks for the plaintiffs
S di Carlo for the defendants

SOLICITORS:

Phillips Fox for the plaintiffs
No instructing solicitors for the defendants

[1] These are applications for leave to proceed brought by the plaintiffs and corresponding applications to strike out the actions brought by the first, third and fourth defendants (“the defendants”). The plaintiffs brought their first proceeding in 1995 and obtained interlocutory relief in support of their actions for infringement of patent, trademark and design rights and passing off on 18 December 1995 and on 27 May 1997.  Allied to that action is another matter commenced in 1997 where they also obtained an injunction against the son of the first and fourth defendants to the principal proceedings restraining the further disposition of a house that the first and fourth defendants had transferred to him.

[2] The actions were delayed to some extent by the defendants during the years after 1997 but, since late 2001, the plaintiffs have taken little action to advance the matters to trial after the service of a request for a trial date on the defendants in June 2001.  The defendants did not sign or return that request but the plaintiffs did nothing to force the matters on.

[3] On 30 August 2005 the defendants brought applications to dismiss the proceedings for want of prosecution which the plaintiffs countered by applications for leave to proceed.  The main reason for the plaintiffs’ delay in proceeding was their alleged impecuniosity caused in part by their need to defend a lengthy South Australian action brought against them, eventually unsuccessfully.  They say that that action was brought by business associates of the defendants.

[4] The principal action alleges that the defendants have misappropriated designs of fish tanks patented and owned by the plaintiffs.  Because of the nature of the action the argument for the plaintiffs includes, as a proposition, that there is likely to be little prejudice caused by the passage of time. They argue that the quality of the evidence will not depend significantly on witnesses’ memories but more on the ability to compare the plaintiffs’ fish tanks with the defendants’ allegedly infringing copies.

[5] The conduct alleged against the defendant, Mr Les Shek, occurred before 25 August 1995.  He had been employed by the plaintiffs since 11 October 1993.  The plaintiffs instituted the proceedings promptly, a little over three months after Mr Shek’s dismissal by the plaintiffs. There was an assertion that Mr Shek had sued for wrongful dismissal but no such action appears to have been filed. Pleadings in these actions are closed and there seems to be substantial evidence to support the plaintiffs’ case; see the affidavit of Mr Hanrahan filed on 5 December 1995. There are also allegations that the defendants have breached undertakings to the Court and the injunctions against them, including further alleged misuse of the plaintiffs’ intellectual property. 

[6] There was a failure by the defendants to make proper disclosure initially.  That required an order by Ambrose J on 27 May 1997 obliging them to do so.  They were then also ordered to pay costs.  Other delays before 2001 occurred when the defendants changed solicitors and on 27 April 2001 a “guillotine” order was made by Ambrose J requiring service of lists of documents by the defendants. 

[7] A mediation was agreed between the parties in May 2001 but that did not occur, the blame for which appears to have been attributable to the defendants being unwilling to pay a share of the mediator’s fee.  There was a further proposal for a mediation when these applications were heard initially, on 30 August 2005, which did not elicit a useful response from the defendants.

[8] The hearing of the matter was adjourned from 30 August 2005 to allow the defendants to produce evidence of any prejudice they would suffer where the matter to proceed to trial.  There was little such evidence produced relevant to the proper conduct of the litigation should it go to trial.  As I have said, much will turn on documentary evidence and expert testimony as to whether the defendants’ fish tanks infringe the plaintiffs’ patents or design rights. 

[9] The defendants say that they have been unable to contact the second defendant, Wayne Durance. They say he is a potential witness relevant to their case.  It is not suggested that he is dead, but that it is difficult to contact him.  He was a tradesman familiar with the making of fish tanks, also previously employed by the plaintiffs, who is alleged to have set up business with Mr Shek in competition with the plaintiffs. It is not necessarily the case that his evidence will be conclusive one way or the other in respect of the issues dealing with alleged infringement. Although Mr Durance was said by Mr Shek to be the constructor and designer of the allegedly infringing copies, an objective test will still be applicable to the question whether the tanks built by the defendants are infringing copies. Also, the efforts to find him by both sides of the litigation suggest that he is still in existence.  He was a young man in 1995 and Mr Hanrahan has seen him approximately every three to six months between 1997 and 2003 at Runaway Bay shopping centre and has received information about the premises where he now works. 

[10] The defendants also said that a number of other witnesses are important to their case whom they have had difficulty locating.  They are not obviously critical to the issue of whether the allegedly infringing tanks did in fact infringe the plaintiffs’ rights.  They may be relevant to questions of damages but that is an issue where the onus lies on the plaintiffs and where the absence of these witnesses would probably affect them as much as the defendants. One, a Mr Stephenson, is said to be the foreman of the factory where the tanks were manufactured.  Another, a Mr Kau Chan, is said to be in Hong Kong and to have relevant evidence significant to allegations that Mr Shek “undermined Austmarine” and offered tanks infringing their patent to another company.  Another, Mr Sun Shu Bin, is said to be in China and to have been involved in a joint venture which collapsed after Mr Shek was dismissed by the second plaintiff, Austmarine Pty Ltd.  Other potential witnesses are said to be a Mr Lyons, a Mr Fung and a person called “Yamma Buta” by the defendants, who may be able to give relevant evidence about the type of tanks that the defendants were selling and any differences between them and the plaintiffs’ tanks.  Yamma Buta is also said to be able to give evidence to show that Mr Shek did not rely on the second plaintiff’s name as his selling point. 

[11] In spite of Mr Shek’s claims not to be able to contact these potential witnesses, Mr Hanrahan was able to provide contact details for many of them at quite short notice, while contesting whether they were relevant witnesses to the issues sought to be litigated.  Otherwise there is little real evidence of prejudice.  Mr Shek claims to have been unable to manufacture fish tanks but he is only restrained from building infringing tanks which, as the plaintiffs rightly point out, is an incident of their patent or design rights in any event.

[12] The plaintiffs have spent approximately $125,000 in costs on these proceedings so far.  They also criticise the tactics adopted by the defendants in the litigation.  The first and fourth defendants’ transfer of their house to their son and their construction of fish tanks outside Australia allegedly in breach of orders of the Court were the focus of those submissions together with their delays in the earlier conduct of the litigation. The plaintiffs also submit that the injunction preventing the sale of the house needs to be preserved to stop the defendants from dissipating the proceeds of any such sale before a judgment in the action.

[13] The main issue is the explanation for the delay based on the South Australian litigation.  The plaintiffs undoubtedly devoted their energies to defending that action, as it turned out, successfully. Initially they represented themselves, being unable to afford legal representation earlier in the proceedings and then spent approximately $211,000 in defending them.

[14] Mr di Carlo, for the defendants here, criticised the plaintiffs’ claim to impecuniosity arising out of that South Australian litigation, pointing to 18 overseas trips that Mr Hanrahan had taken in recent years.  These were explained, however, as trips required to maintain and develop the plaintiffs’ business.  It also requires little imagination to realise that the resources of a small private company would be stretched in the extreme by the need to conduct simultaneously two separate and major actions in different courts in different states.  There was also evidence that the conduct complained of by the defendants in these proceedings had damaged the plaintiffs’ business and contributed to their financial problems. The explanation for the delay is understandable and rings true.

[15] The evidence linking the plaintiffs in South Australia to the defendants in these proceedings was, however, tenuous.  It was not such as to permit me to link the defendants’ behaviour in this case conclusively with that of the South Australian plaintiffs’ conduct of their litigation. The circumstances otherwise, however, provide a plausible and reasonable explanation for the delay here. 

[16] There is no suggestion that the plaintiff’s lawyers in this matter were to blame for the relevant delay since 2001 so, if it were relevant, they appear to have no remedy in that direction.  If this action were terminated now the plaintiffs’ rights, as well as the significant amount they have already spent, would be lost as the relevant limitation periods have expired.

[17] The purpose of the Uniform Civil Procedure Rules 1999 is to facilitate the just and expeditious resolution of the real issues in the proceedings at a minimum of expense; see r. 5. The plaintiffs’ lack of expedition here certainly works against them and leads to a finely balanced exercise of the discretion whether or not to grant them leave to proceed.

[18] Taking into account their explanation for the delay and the apparent justification for the bringing of the action in the first place, the plaintiffs’ loss of their rights should the action be terminated, the lack of strong evidence of prejudice against the defendants because of the nature of the evidence needed for the case, and because of the defendants’ own conduct of the litigation in particular, it seems to me that, when the discretionary considerations discussed by the Court of Appeal in Tyler v Custom Credit Corporation Ltd [2000] QCA 178 at [2] are weighed up, the appropriately just conclusion is that leave to proceed in each matter should be granted.  I would also order that the matters be heard together. 

[19] I shall hear further submissions as to costs and any further directions needed to advance the matters to trial.

Close

Editorial Notes

  • Published Case Name:

    Hanrahan & Anor v Shek & Ors

  • Shortened Case Name:

    Hanrahan v Shek

  • MNC:

    [2006] QSC 110

  • Court:

    QSC

  • Judge(s):

    Douglas J

  • Date:

    12 May 2006

Litigation History

No Litigation History

Appeal Status

No Status