Qudos Mutual Limited v Infosys Limited (No 2)

• Jurisdiction: Australia Federal only
• Judge: BURLEY J
• Judgment Date: 27 August 2019
• Neutral Citation: [2019] FCA 1373
• Date: 27 August 2019
• Court: Federal Court

FEDERAL COURT OF AUSTRALIA

Qudos Mutual Limited v Infosys Limited (No 2) [2019] FCA 1373

File number:	NSD 2075 of 2018
Judge:	BURLEY J
Date of judgment:	27 August 2019
Catchwords:	COSTS – application for preliminary discovery pursuant to r 7.23 of the Federal Court Rules 2011 (Cth) – where prospective applicant was successful in obtaining discovery from first prospective respondent but in narrower categories than claimed – where further documents requested following an initial discovery – discretion in making costs orders pursuant to s 43(2) of the Federal Court of Australia Act 1976 (Cth)
Legislation:	Federal Court of Australia Act 1976 (Cth) s 43(2) Federal Court Rules 2011 (Cth) r 7.23
Cases cited:	Pfizer Ireland Pharmaceuticals v Samsung Bioepis AU Pty Ltd (No 2) [2019] FCA 657 Qudos Mutual Limited v Infosys Limited [2019] FCA 702
Date of hearing:	2 May 2019
Date of last submission:	11 June 2019
Registry:	New South Wales
Division:	General Division
National Practice Area:	Intellectual Property
Sub-area:	Copyright and Industrial Designs
Category:	Catchwords
Number of paragraphs:	15
Counsel for the Prospective Applicant:	Mr R. Cobden SC with Mr P. Flynn
Solicitor for the Prospective Applicant:	Gilbert + Tobin
Counsel for the Prospective Respondents:	Mr J. Hennessy SC with Mr C. Burgess
Solicitor for the Prospective Respondents:	Allens

ORDERS

		NSD 2075 of 2018
BETWEEN:	QUDOS MUTUAL LIMITED (ACN 087 650 557) Prospective Applicant
AND:	INFOSYS LIMITED (A FOREIGN COMPANY TRADING AS A FOREIGN REGISTERED COMPANY IN AUSTRALIA, REGISTERED IN AUSTRALIA AS INFOSYS TECHNOLOGIES LIMITED) (ABN 52 090 591 209) First Prospective Respondent ; INFOSYS TECHNOLOGIES AUSTRALIA PTY LIMITED (ACN 054 141 365) Second Prospective Respondent

JUDGE:	BURLEY J
DATE OF ORDER:	27 August 2019

THE COURT ORDERS THAT:

1. Pursuant to r 7.23 of the Federal Court Rules 2011 (Cth), the first prospective respondent (Infosys) produce to the prospective applicant (Qudos):

   1. by 3 September 2019, a copy of:

      1. the source code of the user acceptance testing website (the Qudos UAT site) hosted by Infosys on the NextDC data centre (or any equivalent data centre) which contained a copy of the online and mobile banking platform developed by Infosys for Qudos pursuant to the Master Banking Services Agreement dated 25 March 2015, as at 19 February 2018;

      2. the source code of the user experience and user interface of the mobile and online banking solution that Infosys developed for Australian Military Bank Limited (the AMB UX code) as at 19 February 2018, including the revision history thereof up to that date; and

   2. by 17 September 2019:

      1. documents recording the development and preparation by Infosys of the source code identified in (1)(a)(ii) up to 19 February 2018, including minutes of meetings and correspondence between Infosys and Australian Military Bank Limited related to its development and preparation.

2. Qudos pay 20% of Infosys’ costs of the preliminary discovery application.

3. If no proceedings are commenced by Qudos within 60 days of the date of compliance with the orders for preliminary discovery in Order 1 above, alleging that by producing computer software in the circumstances outlined in [1] of Qudos Mutual Limited v Infosys Limited [2019] FCA 702, Infosys acted in breach of confidence, infringed copyright or acted in breach of contract, Qudos is to pay Infosys’ reasonable costs of compliance with the orders for preliminary discovery in Order 1 above and with the orders made on 20 December 2018.

4. Otherwise than provided by Order 3 above, the costs of compliance with the orders for preliminary discovery be costs in the cause of the proceedings identified therein.

5. Qudos pay the second prospective respondent’s costs of the preliminary discovery application.

6. The proceedings otherwise be dismissed.

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

REASONS FOR JUDGMENT

BURLEY J:

1. By originating application dated 5 November 2019, the prospective applicant Qudos Mutual Limited sought orders for preliminary discovery under r 7.23 of the Federal Court Rules 2011 (Cth) (FCR). On 20 December 2018, the Court made consent orders for the production of some of the categories of discovery sought by Qudos in its originating application (20 December 2018 orders). Following production by the first prospective respondent, Infosys, Qudos amended its originating application to include additional proposed categories of discovery. Infosys resisted the provision of documents and on 20 May 2019, I delivered my decision (Qudos Mutual Limited v Infosys Limited [2019] FCA 702), determining that Qudos is entitled to orders for the production of a limited class of the documents that it sought, corresponding to the categories set out in [5] of Qudos Mutual (20 May 2019 categories). Prior to making final orders, I allowed the parties an opportunity to file written submissions on the questions of costs as well as the time required for compliance with the form of order set out at [5] in Qudos Mutual, which the parties have now done. In these reasons I adopt the abbreviations used in Qudos Mutual.

2. The parties have now agreed on a time for compliance with the form of order that was made in Qudos Mutual at [5]. However, they disagree as to the appropriate orders to be made regarding costs.

3. Qudos submits that there should be no order as to costs, save that its costs of and incidental to the application, and Infosys’ reasonable expenses of compliance, should be the costs in any proceeding commenced by Qudos against Infosys, provided that the proceeding plead some or all of the facts or matters relied upon in the application for preliminary discovery of documents within the 20 May 2019 categories, and provided that, subject to further order, the proceeding is commenced within 60 days of the date of compliance with the orders for preliminary discovery. Alternatively, it submits that if no such proceedings are commenced, Qudos should pay Infosys’ costs of compliance with the 20 May 2019 categories.

4. Infosys contends that Qudos should pay 75% or alternatively 50% of Infosys’ costs of the application and all of its costs of compliance, and that Qudos should pay all of the second prospective respondent’s costs, against whom the application was unsuccessful.

5. The principles relevant to the award of costs in relation to preliminary discovery are summarised in Pfizer Ireland Pharmaceuticals v Samsung Bioepis AU Pty Ltd (No 2) [2019] FCA 657 (Burley J) (Pfizer No 2) at [25], and in the cases referred to there. Ultimately, the award of costs involves the exercise of the discretion conferred by s 43(2) of the Federal Court of Australia Act 1976 (Cth), having regard to the circumstances of the case.

6. In the present case, the following matters are salient to the consideration of the award of costs:

1. After the proceedings were commenced in November 2018, Infosys voluntarily supplied documents to address some of the matters raised in the affidavits in support; Qudos Mutual at [23];

2. The documents produced included a copy of the then current version of the source code underlying the AMB UX;

3. After reviewing those documents, Qudos formed the view, supported by the expert evidence of Mr Rodney McKemmish, that it required further documents for inspection and in particular that it required the February 2018 source code of the AMB UX; Qudos Mutual at [30];

4. Qudos also pressed for production of...