Prodata Solutions Pty Ltd v South Australian Fire and Emergency Services Commission (No 3)

[2020] FCA 1210

The applicant, Prodata, alleged that it was the owner of copyright subsisting in software components of a database forming part of an integrated system of software programs and that the respondents had infringed copyright in the software components and had breached an equitable obligation of confidence in respect of their content.

There were three applications the subject of this decision. The first involved an application by Prodata to dispense with the requirement that a company be legally represented, allowing it to be represented by its managing director. The second and third applications were by each of the respondents seeking, among other things, orders that the proceedings be dismissed.

The proceedings had a long and tortured history. They were commenced in December 2017, with Prodata seeking urgent interlocutory relief. Prodata was legally represented. The application for urgent relief was dismissed and the matter proceeded on the pleadings. In early August 2018, Prodata replaced its lawyers with a second set of lawyers and new counsel was appointed. In November 2018, Prodata was required to provide security for costs for each of the respondents (AU$175,000 and AU$155,000 respectively). On 2 August 2019, Prodata again changed lawyers and appointed new counsel. On 26 September 2019, the matter was set down for trial commencing on 31 August 2020. Prodata’s counsel agreed to the trial dates. The Court prompted the parties to commence preparation of their affidavit evidence.

In February 2020, the COVID-19 pandemic affected the work of the Court, although Prodata did not approach the Court to indicate that the pandemic was causing it any issues with evidence preparation. In March 2020, Prodata raised discovery issues with the respondents asserting it was impacting its ability to determine the scope any expert report and that, as a result, it would not be able to finalise its lay evidence.

At a case management conference on 1 May 2020, the Court made orders for Prodata’s expert evidence to be filed by 22 May 2020 and its lay evidence to be filed by 19 June 2020. Prodata’s Counsel did not submit that the deadlines were burdensome. Similarly, at a case management conference on 19 May 2020, Prodata’s counsel made no submission that the deadline for filing lay evidence could not be achieved.

On 8 June 2020, Prodata lodged a defective “Notice of termination of lawyer’s retainer” and a week later filed a “Notice of acting – change of lawyer”, thereby appointing its fourth set of lawyers and new counsel. On 30 June 2020, Prodata filed a notice purportedly in accordance with r 4.04(2) of the Federal Court Rules. This led to the application by Prodata for leave to represent itself.

Prodata did not make any application before the expiry of the ordered deadline for the filing of evidence to have the deadline or the trial date set aside or varied. Such was the state of affairs when the Court heard the three applications before it in July 2020.

The Court noted that in civil proceedings before the Federal Court, directions may be given about the practice and procedure to be followed (citing the Federal Court of Australia Act 1976 (Cth) (“FCA Act”), s 37P(2), ss 37P(3)(a) and (b)). If a party fails to comply with a direction, the Court may make such order or direction as it thinks appropriate including an order dismissing the proceeding in whole or in part (FCA Act, s 37P(5) and (6)(a)). The Court stated that its practice and procedure provisions:

must be interpreted and exercised in a way that best promotes the overarching purpose, namely to “facilitate the just resolution of disputes according to law and as quickly, inexpensively and efficiently as possible”: s 37M(1). [Emphasis in original]

Charlesworth J (at [90]) did not consider it appropriate to characterise the requirement of s 37M as a consideration capable of being outweighed by countervailing considerations. Nor was it to be understood as merely listing a variety of countervailing factors to be weighed in the balance in the exercise of the power in question. Instead, her Honour observed that:

Rather, s 37M(1) conditions the manner in which all powers conferred by the Court’s practice and procedure provisions are to be interpreted and exercised. It confines the latitude that might otherwise be available to the Court in the exercise of those powers: given a choice between outcomes, the Court must choose the outcome that best promotes the overarching purpose.

Citing Beach J in Southcorp Brands Pty Ltd v Australia Rush Rich Winery Pty Ltd [2019] FCA 720, Charlesworth J refused to dispense with the rule requiring a company to be legally represented. The Court had particular regard to Prodata being the applicant in commercial litigation that had been on foot since December 2017, the managing director (who would be running the case) being a critical witness and his lack of legal training, the timing of the application, the volume of evidentiary material, and that there was no evidence of any financial impediment to Prodata engaging competent legal representation. Charlesworth J nevertheless accepted that if the matter was then to proceed, there was a high likelihood that Prodata would again perceive itself to have irreconcilable differences with its lawyers.

In relation to the respondents’ applications to dismiss the proceedings, Charlesworth J noted that Prodata’s past conduct was significant as it showed that Prodata made deliberate choices not to avail itself of a fair opportunity to progress its substantive claims to trial and it had created an unjust circumstance in the proceedings that could not be remedied by an award of costs. Prodata was in default and had failed to prosecute its claim diligently. There were simply no explanations for the default beyond Prodata’s conduct – no financial issues, no COVID-19 practical difficulties, no mistaken estimates of the time needed to prepare affidavits, and no late discovery of documents.

Charlesworth J concluded that:

[a] litigant in Prodata’s position is not entitled to have the matter proceed to trial and to obtain an adjudicated outcome by whatever procedural means and in whatever timeframe the litigant desires.  […] [A]n order that a prosecuting party take a step in the proceedings by a fixed date is to be understood as both permissive and coercive.

It was critical that Prodata (which had been legally represented for most part of the proceedings) made no application to vary the case management orders or to vary the trial dates. The practical consequence of the proceedings being permitted to remain on foot would mean Prodata would be rewarded for “a gross departure from the Court’s case management principles” and this would seriously undermine the public’s confidence in the administration of justice.

Accordingly, Charlesworth J dismissed the originating application, with the question of costs and suppression of publication orders to be addressed in due course.

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