Australian Competition and Consumer Commission v Pacific Dunlop Ltd

[2001] FCA 740

FEDERAL COURT OF AUSTRALIA

Australian Competition and Consumer Commission v Pacific Dunlop Limited (2001) FCA 740

PRACTICE & PROCEDURE – leave to amend statement of claim and application – to add cause of action – requirements for grant of leave – discretion of court not to grant leave – where failure to explain delay in seeking amendment – whether application made in bad faith

PRACTICE & PROCEDURE – injunctive relief – jurisdiction of court to grant injunctive relief – whether applicant entitled to injunctive relief – whether claim for injunction was hopeless – whether sufficient nexus in pleadings between conduct alleged and injunctive relief sought - whether injunction lacked utility

PRACTICE & PROCEDURE – declaratory relief – entitlement of applicant to seek declaration – jurisdiction of court to grant declarations – where declaration of public right – whether declaration lacked utility

TRADE & COMMERCE – consumer protection – s 52 Trade Practices Act 1974 (Cth) – whether silence can constitute misleading or deceptive conduct – where alleged failure to warn of dangers of product

LIMITATION OF ACTIONS – injunction and declaration – whether any limitation period applicable to relief sought – Trade Practices Act 1974 (Cth)

Trade Practices Act 1974 (Cth), ss 52, 75AD, 75AQ, 80 and 82.
Federal Court Rules, O 6 r 1, O 6 r 6 and O 13 r 2
Federal Court of Australia Act 1976 (Cth), s 21.

The Commonwealth of Australia v Verwayen (1990) 170 CLR 394, followed
Ainsworth v Criminal Justice Commission (1992) 175 CLR 564, followed
Karedis Enterprises Pty Ltd v Antoniou (1996) 137 ALR 544
ACCC v Real Estate Institute Of Western Australia Inc (1999) 95 FCR 114, followed
Gregg v Tasmanian Trustees Ltd (1997) 73 FCR 91, considered
Rhone-Poulenc Agrochimie SA v UIM Chemical Services Pty Ltd (1986) 12 FCR 477, cited
Demagogue Pty Ltd v Ramensky (1992) 39 FCR 31, followed
Johnson Tiles Pty Ltd & Ors v Esso Australia & Ors [1999] FCA 477, referred to
Hampic Pty Ltd v Adams (2000) ATPR 41-737, considered
ACCC v Z-Tek Computer Pty Ltd (1997) 78 FCR 197, considered
Tobacco Institute of Australia Limited v Australian Federation of Consumer Organisations Inc (No 2) (1993) 41 FCR 89, considered
RAIA Insurance Brokers Limited v FAI General Insurance Co Limited (1993) 41 FCR 164, cited
ACCC v Goldy Motors Pty Ltd [2000] FCA 1885, considered
State of Queensland and Anor v J L Holdings Pty Limited (1997) 189 CLR 146, considered
Tildesley v Harper (1878) 10 Ch D 393, considered
Cropper v Smith (1884) 26 Ch D 700, considered
Shannon v Lee Chun (1912) 15 CLR 257, considered
Clough and Rogers v Frog (1974) 48 ALJR 481 at 482, cited
Williams v Spautz (1992) 174 CLR 509, followed

AUSTRALIAN COMPETITION AND CONSUMER COMMISSION v PACIFIC DUNLOP LIMITED

V 25 OF 2000

NORTH J
18 JUNE 2001
MELBOURNE

IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY	V 25 OF 2000

BETWEEN:	AUSTRALIAN COMPETITION AND CONSUMER COMMISSION APPLICANT
AND:	PACIFIC DUNLOP LIMITED RESPONDENT
JUDGE:	NORTH J
DATE OF ORDER:	18 JUNE 2001
WHERE MADE:	MELBOURNE

THE COURT ORDERS THAT:

1.Leave is granted to the applicant to amend its statement of claim in the terms of exhibit MJW1 to the affidavit of Mark Jonathan Walter sworn 23 February 2001, and to amend its application in the form of exhibit LMN2 to the affidavit of Lisa Michelle Nichols sworn 16 March 2001.

2.The applicant pay the costs of the respondent thrown away as a result of the amendment referred to in paragraph 1 hereof.

3.The costs of and incidental to the motion, notice of which was filed by the applicant on 23 February 2001, are reserved.

IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY	V 25 OF 2000

BETWEEN:	AUSTRALIAN COMPETITION AND CONSUMER COMMISSION APPLICANT
AND:	PACIFIC DUNLOP LIMITED RESPONDENT

JUDGE:	NORTH J
DATE:	18 JUNE 2001
PLACE:	MELBOURNE

REASONS FOR JUDGMENT

1. By a motion, notice of which was filed on 23 February 2001, the applicant, the Australian Competition and Consumer Commission (ACCC) sought leave to amend its statement of claim and application in this proceeding.

2. The proceeding was commenced by the ACCC against the respondent, Pacific Dunlop Limited (PDL) on 21 January 2000.

3. The cause of action pleaded in the original statement of claim relied upon s 75AD of the Trade Practices Act 1974 (Cth) (the Act) which relevantly provides:

   “75AD.          Liability for defective goods causing injuries – loss by injured individual

   If:

   (a)a corporation, in trade or commerce, supplies goods manufactured by it; and

   (b)they have a defect; and

   (c)because of the defect, an individual suffers injuries;

   then:

   (d)the corporation is liable to compensate the individual for the amount of the individual’s loss suffered as a result of the injuries; and

   (i)the individual may recover that amount by action against the corporation …”

4. Section 75AC(1) provides:

   “75AC  Meaning of goods having defect

   (1)For the purposes of this Part, goods have a defect if their safety is not such as persons generally are entitled to expect.”

5. An action brought under s 75AD is called a liability action: s 75AA. Section 75AQ provides:

   “75AQ.          Representative actions by the Commission

   (1)       The Commission [ACCC] may, by application, commence a liability action on behalf of one or more persons identified in the application who has suffered the loss for whose amount the action is commenced.

   (2)       The Commission may only make an application under this section if it has obtained the written consent of the person, or each of the persons, on whose behalf the application is being made.”

6. The present proceeding was commenced by the ACCC on behalf of Ms Sarndra June Robinson under s 75AQ.

7. The original cause of action alleged that PDL made and sold household use rubber gloves under the name “Ansell”, “Ansell Australia” or “Ansell International” during the period from 1988 to 1997 (which period is referred to in the pleadings as “the period”).  It alleged:

   “8.The goods had a defect within the meaning of S.75AC(1) of the Act in that the safety of the goods was not such as persons generally were entitled to expect (‘the defect’).

   PARTICULARS

   The labelling and packaging of the goods in the period contained no warning or statement to the effect that use of the goods:-
   (a)       could cause the development of an allergy to latex in the user with the risk of injury or even death;
   (b)       could cause the development of an increased sensitivity to latex in the user with the risk of injury or even death; and/or
   (c)       could cause injury or even death in persons suffering from an allergy or hypersensitivity to latex;
   (d)       should, in the event of the development of symptoms of allergy or increased sensitivity to latex, be immediately discontinued.

   9.Because of the defect, Sarndra June Robinson used and continued to use the goods during the period.

   10.By reason of her use and continued use of the goods, Sarndra June Robinson has suffered and continues to suffer injury, loss and damage.”

   It then alleged that PDL was liable to compensate Ms Robinson for the loss suffered as a result of her injuries.

   THE AMENDMENT SOUGHT

8. The amendment which the ACCC sought was designed to add a cause of action alleging a breach by PDL of s 52 of the Act in the following terms:

   “12.Further and alternatively, persons using the goods in the period were, by reason of such use, at risk of injury being:

   (a)the development of hypersensitivity and/or allergy to natural rubber latex; and/or

   (b)an adverse physical reaction to exposure to natural rubber latex consequent upon hypersensitivity and / or allergy thereto (‘the risk’).

   13.From in or around February 1995, the Respondent knew of the existence of the risk.

   Particulars of Knowledge

   The Respondent was from in or around February 1995 in possession of a pamphlet setting out the dangers of Latex exposure.  A copy of the relevant material from the pamphlet is in the possession of the Applicant’s solicitors and may be inspected upon the making of an appointment.

   The Applicant will provide further particulars of knowledge after completion of discovery.

   14.From in or around February 1995 to the end of the period the Respondent, whilst engaged in supply of the goods, refused to make known, alternatively refrained from making known (otherwise than inadvertently) the existence of the risk to persons using the goods.

   15.By refusing to make known, alternatively refraining from making known (otherwise than inadvertently) the existence of the risk to persons using the goods from February 1995 to the end of the period, the Respondent impliedly represented to such persons that the risk did not exist (‘the implied representation’).

   16.In the premises the implied representation was false and untrue.

   17.By reason of the matters aforesaid, in making the implied representation the Respondent, in trade or commerce, engaged in conduct which was misleading or deceptive or likely to mislead or deceive in contravention of s 52 of the Act.”

9. The consequential amendment to the application claimed:

   “2. A declaration that the Respondent, by reason of the matters alleged in paragraphs 12 to 16 of the Further Amended Statement of Claim, engaged in conduct which was misleading or deceptive or likely to mislead or deceive in contravention of s.52 of the TPA.”

10. The hearing of the motion took place on four separate days, namely, 8, 19, 21 March and 23 April 2001.  On the second occasion, 19 March 2001, the ACCC sought leave to make an additional amendment to the application.  PDL contended that the circumstances in which the further amendment to the application was sought were relevant to certain arguments raised on the motion.  This matter will be revisited later.  At present it is necessary to observe only that the further amendment claimed an injunction requiring PDL to implement a compliance program.  The amendment sought was in the following terms:

    “3.An order, pursuant to subsection 80(5) of the Trade Practices Act 1974 that the Respondent forthwith implement a Trade Practices compliance program substantially in accordance with the schedule to this Application or otherwise as the Court may determine.”

    The schedule referred to in the proposed amended par 3 of the application provided as follows:

    “1.The respondent shall place responsibility for the implementation of the program with xxxxxx.  The program will be implemented within three calendar months of this order.

    2.The respondent shall appoint xxxxx as its Trade Practices Compliance Officer.  The Trade Practices Compliance Officer will receive training in trade practices law.  The Trade Practices Compliance Officer shall be appointed within two months of this order.

    3.The respondent will ensure that the program is approved by an independent external auditor with appropriate knowledge of trade practices law prior to implementation.

    4.The respondent shall require the Trade Practices Compliance Officer to review the current labelling of household latex gloves manufactured by the Respondent (‘the consumer products’) to ensure it is adequate and sufficient to convey the risk of latex allergy it poses for consumers based on current scientific knowledge.

    5.The respondent shall require the Trade Practices Compliance Officer to review all marketing (in any form) of the consumer products to ensure that it complies with section 52 of Part V of the Trade Practices Act 1974 (Cth) (‘the Act’) in that if there is a risk of injury posed by the goods, that risk will be disclosed to consumers in an appropriate form.

    6.The respondent shall require the Trade Practices Compliance Officer to periodically review the marketing of the consumer products to determine whether any consumer product poses a risk to consumers in light of any developments in scientific knowledge.

    7.The respondent shall require the Trade Practices Compliance Officer to maintain a documentary record of the compliance reviews of all forms of marketing.  Such documentary record will include:

    (a)a description of the marketing method;

    (b)a description of the publication (including name, date, pages(s) and publisher);

    (c)a copy of the advertisement or other marketing method;

    (d)written advice that the marketing has been reviewed and cleared by the Trade Practices Compliance Officer (including the date on which the marketing was reviewed);

    (e)written advice of any possible contraventions of the Act that were identified by the Trade Practices Compliance Officer and the actions taken to address these possible contraventions.

    8.The respondent shall ensure that the documentary records of the compliance reviews of all marketing are available to the Australian Competition and Consumer Commission to be reviewed from time to time.  Such records are to be available from one week after the date of any marketing undertaken for a period of three years after that date.  Such records are to be provided to the Australian Competition and Consumer Commission within five working days of a written request for those records.

    9.The respondent shall ensure that, prior to implementation of the program, the processes which the respondent intends to implement in order to comply with the program are approved by a firm of solicitors with expertise in trade practices law.

    10.The respondent shall ensure that a firm of solicitors with expertise in trade practices law conducts training in relation to misleading or deceptive conduct which involves the making of representations in contravention of section 52 of the Act, to the respondent’s staff on six occasions during the three year period following the making of this order. The first of these training programs is to be completed within three calendar months of this order and the remaining five on a six monthly basis thereafter.

    11.The respondent shall retain a firm of solicitors with expertise in trade practices law to provide the Australian Competition and Consumer Commission with three annual reports (being at 12 months, 24 months and 36 months following the making of this order) on the respondent’s compliance with the program, and these reports shall be provided to the Australian Competition and Consumer Commission within:

    (a)13 months of this order;

    (b)25 months of this order, and

    (c)37 months of this order

    respectively.

    12.The annual reports shall include the review and reporting of:

    (a)The respondent’s adherence to the undertaking;

    (b)The implementation of the compliance program, its consistency with Australian Standard AS-3806 and the achievement of its objectives over the preceding twelve months; and

    (c)Any recommended changes to the compliance program that may be necessary to ensure achievement of its objectives.”

11. Several matters relevant to the arguments to be considered should now be referred to.

    THE COUNTY COURT ACTION

12. On 23 December 1999 Ms Robinson filed a writ in the County Court of Victoria against PDL. She claimed damages suffered as a result of a reaction to natural rubber latex from wearing Ansell latex rubber gloves. She claimed that she had regularly used such gloves since 1988 but had become aware of the reaction after an incident on 4 January 1997 when she suffered a severe allergic reaction to the latex in the gloves. Ms Robinson pleaded three causes of action. She brought a liability action under s 75AD of the Act, a claim relying on s 52 of the Act and a claim in negligence at common law.

13. On 6 March 2000 the Country Court action was transferred into the Federal Court and numbered V160/00.  Some ancillary orders were made.  The relevant orders provided as follows:

    “1.I direct the County Court of Victoria, pursuant to section 86A(4) and section 75AS of the Trade Practices Act 1974, that proceeding numbered 6796 of 1999 between Sarndra June Robinson and Pacific Dunlop Ltd, the Robinson proceeding, be transferred to this court for hearing and determination.

    2.That this application and the Robinson proceeding be listed for hearing together and subject to any order of the trial judge, that the evidence called in this application stand as evidence in the Robinson proceeding and vice versa.

    3.That the cause of action in the Robinson proceeding, by which it is alleged that the plaintiff therein is entitled to compensation from the Respondents pursuant to section 75AD of the Trade Practices Act be dismissed.”

14. The next relevant matter to which reference should be made concerns the dealings between the ACCC and PDL prior to the issue of proceedings on the question of labelling household latex rubber gloves.

    THE LABELLING AGREEMENT BETWEEN ACCC AND PDL - 1998

15. On 17 March 1998 the ACCC wrote to PDL raising Ms Robinson’s complaint, the danger of allergic reactions to latex in rubber gloves, and the lack of warnings as to this danger on gloves made by PDL.  Shortly afterwards the ACCC and PDL held several meetings on the matter.  Then on 3 July 1998 the ACCC wrote to Mr Stern, a partner in Freehill Hollingdale and Page, solicitors who then acted for PDL in its dealings with ACCC.  Relevantly the letter stated:

    “3.      Ansell’s New Labelling Proposal

    Thank you for providing this office with examples of your client’s proposed new labelling of its latex and non-latex domestic use gloves.  I enclose photocopies of the proposed labelling you provided this office.

    I note your client’s advice the proposed labelling of all its domestic use latex glove products will display the following representations on the lower right hand side of the front panel of the packaging:

    ‘CONTAINS NATURAL RUBBER LATEX’.

    I note also your client’s advice the proposed labelling of all its domestic use latex glove products will display the following representations on the top left hand side of the back panel of the packaging:

    ‘Caution:  This product contains natural
               rubber latex which may cause allergic
               reactions in some people’.

    I note the proposed packaging refers consumers to an alternative style glove which does not contain latex and consumers are also referred to a Consumer Line should they require further information in respect of the product.

    I note your advice the Consumer Line will be staffed during business hours by your client’s consumer service operators who will answer consumer questions relating to your client’s glove products as well as Veleda home care products.  I also note your advice the operators will have expertise in dealing with a wide range of consumer queries including latex allergy and statutory warranties.

    I further note your advice all your client’s domestic use gloves will be re-labelled with the proposed labelling by September 1998 and the Consumer Line will operate to include advice for your client’s glove products from late July 1998.

    I advise the proposed new labelling for your client’s domestic use glove products has been considered by the full Commission.  The Commission had concerns regarding the size of the font and the extent of the warning.  Commissioners were of the view that a more explicit warning may be necessary regarding the risks associated with latex allergy, having regard to the serious reactions that may potentially occur and direction on what action to take if such allergic reaction occurs.

    However, the Commission noted your client’s advice the prevalence of latex allergy in the general community (excluding health care workers) is minimal.  In particular, the Commission noted your client’s claim the incidence of latex allergy in the general community ranges between 0.1 to 0.4%.

    On the basis that the foregoing information provided by your client is correct, the Commission directed staff to inform you it accepts the labelling proposal by your client in respect of its domestic use glove products.

    I advise the Commission will be writing to the other importers of latex gloves in the market advising of the potential for product liability claims and the possibility of breaching section 52 by failing to provide warnings on their latex glove products.

    You may wish to note the Commission may issue a media release at the conclusion of this matter regarding the need for manufacturers/importers of latex goods to be alert to product liability issues and to implement efficient labelling practices to reduce the potential for such liability through the provision of appropriate product information to consumers.

    Subject to your confirmation regarding your client’s proposed actions outlined above, the Commission’s concerns regarding the labelling of your client’s domestic use latex gloves will be satisfied.

    Please note however, the Commission reserves its right to review its position in respect of the matter and take whatever options are available to it under the Act in the event of further consumer complaints and/or the information upon which the Commission’s decision is based is subsequently proved to be incorrect.”
    (underlining added)

1. Following these negotiations, all domestic use latex gloves manufactured from about the first quarter of 1999 by PDL were labelled in accordance with the requirements stated letter from ACCC. 

2. As to future sales of gloves, Mr Shute, the solicitor acting for PDL in these proceedings, on 6 March 2001, deposed to his belief that PDL “intends to continue to incorporate that warning in the packaging of all its latex gloves for household and domestic use sold in Australia”.

3. In a later affidavit sworn by Mr Shute on 20 April 2001 he explained that although all new stock made after early 1999 and distributed on behalf of PDL carried the warning label, “there might be a few stores where stock turnover is low, which still retain some of the old stock which does not bear the agreed warning”.  Mr Shute explained further:

   “4(b)Pacific Dunlop manufactures household use latex gloves for sale by large retailers as their ‘generic’ or ‘house’ brands.  The design of the packaging of these brands is the responsibility of the retailers.  Changes were made to the artwork of the generic brand products, to incorporate the warnings agreed between Pacific Dunlop and the ACCC, in about August 2000.  New packaging, incorporating the warnings, was printed and commenced to be distributed in October 2000.  However, there is still potentially old stock of generic or house brand latex gloves products manufactured by Pacific Dunlop in retail warehouses or stores which do not bear the agreed warning.  Again, these matters were not known to Dr Sarandopolous when he provided me the information contained in paragraph 10 of my first affidavit.  For the purposes of providing that information to me, Dr Sarandopolous had himself made inquiries of the product managers of Ansell household use latex gloves and officers of Freudenberg [distributors for PDL].  Neither the product managers nor the officers of Freudenberg informed Dr Sarandopolous that there might still be generic or house brand latex gloves manufactured by Pacific Dunlop available for purchase by consumers which were not labelled in accordance with the agreement with the ACCC.  Dr Sarandopolous only became aware of those matters on 18 April 2001.”

4. Mr Shute gave these explanations to clarify his earlier affidavit and to ensure that it did not convey the wrong impression, namely, that all latex gloves for household use made by PDL now on the market carry the agreed warning.

5. I now turn to the arguments raised by PDL in opposition to the application.

   POWER OF THE COURT – ORDER 13 RULE 2

6. Order 13 Rule 2 subrules (1) and (2) of the Federal Court Rules (the Rules) provide:

   “(1) Subject to the following provisions of this rule, the Court may, at any stage of any proceeding, on application by any party or of its own motion, order that any document in the proceeding be amended, or that any party have leave to amend any document in the proceeding, in either case in such manner as the Court thinks fit.

   (2) All necessary amendments shall be made for the purpose of determining the real questions raised by or otherwise depending on the proceeding, or of correcting any defect or error in any proceeding, or of avoiding multiplicity of proceedings.”

7. Mr Karkar QC, who appeared with Ms Harris of counsel for PDL, relied upon O 13 r 2(2). Mr Karkar submitted that the existing proceeding, including the transferred proceeding, related to the injury suffered by Ms Robinson. While the ACCC was the applicant in the s 75AD proceeding it was acting on her behalf. On the other hand, the proposed amendment did not relate to the injury to Ms Robinson. It was concerned with the failure to warn members of the public generally about latex allergy in household gloves manufactured by PDL. The ACCC brought that claim in its own right as the body charged with the enforcement of obligations imposed by the Act. Mr Karkar described the difference between the two proceedings thus:

   “The present action is in truth that of Mrs Robinson.  The proposed amendment has nothing to do with Mrs Robinson’s case.”

8. He argued that the amendment did not raise any question between Ms Robinson and PDL.  As a result, the amendment did not fall within O 13 r 2(2) because it could not impact on the determination of any question between PDL and Ms Robinson.

9. This argument suffers from two vices.  First, it assumes that O 13 r 2(2) defines the limits of the power of the Court to allow amendments.  That is to say, the argument assumes that unless a proposed amendment falls within O 13 r 2(2) the amendment cannot be allowed.  This approach fails to take account of the primary power conferred in O 13 r 2(1).

10. Order 13 r 2(2) requires the Court to allow amendments which fall within its scope.  But it does not prevent the Court allowing other amendments in exercise of the wide discretion conferred by O 13 r 2(1).  Thus, the first answer to the argument of PDL is that the Rules do not require that the amendment have the purpose of determining the issues raised by the existing proceedings.  It is sufficient if there are other discretionary reasons for allowing the amendment.

11. Subject to the arguments yet to be considered, in the exercise of the discretion, the amendment should be allowed as a convenient means of disposing of all of the issues raised in the existing and proposed causes of action. There is sufficient commonality in the factual investigations necessary to make it convenient to deal with all causes of action together. In particular, the s 52 cause of action brought by Ms Robinson is a specific instance of the general complaint raised in the s 52 cause of action brought by the ACCC in the proposed amendment.

12. The second vice in the argument of PDL is that even if O 13 r 2(2) is read as a code which establishes the only reasons for which an amendment may be allowed, one of the reasons referred to is to avoid a multiplicity of proceedings. In the present case this consideration would justify the amendment because, if the amendment is refused, the ACCC could, subject to the other arguments yet to be determined, issue independent proceedings against PDL under s 52. In order to avoid the commencement of a new action between the same parties over the alleged failure to warn consumers of the dangers of latex gloves he amendment would permit the proposed cause of action to be considered together with the existing cause of action in a single proceeding.

    CLAIM IN DIFFERENT CAPACITIES

13. At one point PDL suggested that the proposed amendments should not be permitted because to do so would allow claims brought by the ACCC in different capacities to be litigated in the same action. In the s 75AD claim the ACCC sued on behalf of Ms Robinson. In the proposed s 52 claim it sues in its own right.

14. However, there is no prohibition against an applicant suing in different capacities in the same action.  Order 6 Rule 1 acknowledges the very situation as follows:

    “Subject to rule 6 an applicant, whether claiming in the same or different capacities, may, in any proceeding, claim relief in respect of more than one cause of action.”

15. Order 6 Rule 6 provides:

    “Where any joinder of parties or of causes of action may complicate or delay trial of the proceeding or is otherwise inconvenient, the Court may order separate trials or make such other order as the Court thinks fit.”

16. In my view the proposed additional claim would not add to or complicate the trial to an extent which makes it undesirable or inconvenient to permit the amendment.

    FUTILITY

17. PDL contended that to allow the amendment would be futile as the claims it raises are bad in law because:

    ·    there is no utility in granting a declaration;

    ·    the cause of action sought to be raised by the amendment is statute barred; and

    · there is no cause of action under s 52 for misrepresentation by silence.

18. The principles which govern the grant or refusal of leave to amend were explained by Dawson J in The Commonwealth of Australia v Verwayen (1990) 170 CLR 394 at 456 as follows:

    “In granting leave to amend, a court is concerned with the raising of issues and not with their merits.  Of course, an amendment which is futile because it is obviously bad in law will not be allowed.  But it is no ground for refusing an amendment that it raises a claim or defence which ought not to succeed.  That will be an issue upon trial.  An amendment may, however, be refused because it is made at such a late stage that neither costs nor an adjournment can compensate the other side for the failure to raise the issue at an earlier stage.”

    Non-utility

19. In Ainsworth v Criminal Justice Commission (1992) 175 CLR 564 the majority (Mason CJ, Dawson Toohey and Gaudron JJ) said at 582, in relation to the power to make declarations:

    “…it is confined by the considerations which mark out the boundaries of judicial power.  Hence, declaratory relief must be directed to the determination of legal controversies and not to answering abstract or hypothetical questions [See In re Judiciary and Navigation Acts (1921) 29 CLR 257].  The person seeking relief must have ‘a real interest’ [Forster v Jododex Australia Pty Ltd (1972) 127 CLR 421 at 437, per Gibbs J; Russian Commercial and Industrial Bank v British Bank for Foreign Trade Ltd [1921] 2 AC 438 at 448 per Lord Dunedin] and relief will not be granted if the question ‘is purely hypothetical’, if relief is ‘claimed in relation to circumstances that [have] not occurred and might never happen’ [University of New South Wales v Moorhouse (1975) 133 CLR 1 at 10 per Gibbs J] or if ‘the Court’s declaration will produce no foreseeable consequences for the parties’ [Gardner v Dairy Industry Authority (NSW) (1977) 52 ALJR 180 at 188 per Mason J; see also p 189 per Aickin J; 18 ALR 55 at 69, 71 respectively].”

20. PDL argued that the declaration sought lacked utility and therefore could not be granted by the Court.  The conduct about which complaint was made was the failure to warn.  Since the conclusion of the agreement between the ACCC and PDL in 1998, PDL has placed warnings on household use latex gloves made by and distributed for PDL.  It was contended that there is therefore no chance of repetition of the conduct. 

21. This submission was first made when the evidence about the extent of labelling was that contained in Mr Shute’s first affidavit sworn 6 March 2001.  This affidavit arguably left the reader with the impression that no household use latex gloves made by PDL after early 1998 where sold without the warning label.  Mr Shute’s second affidavit sworn on 20 April 2001 and relevantly extracted in par 17 of these reasons explained that such an impression would be mistaken.  Indeed, even today there may be on sale some gloves without the warning which were distributed during the relevant period.  In other words, the effect of offending conduct, namely, placing gloves on the market during the relevant period without a warning of the dangers of latex, may be continuing. 

22. Presumably the submission that a declaration lacked utility was originally made on the assumption that if there was a continuing effect of offending conduct the declaration sought would not be hypothetical or theoretical.  This assumption is correct.  Subject to a number of the other arguments yet to be considered, the existence of the effect of continuing offending conduct would provide a reason for the declaration sought. 

23. PDL also contended that there was no utility in making the declaration because there was no evidence that any person other than Ms Robinson had suffered injury and Ms Robinson’s interest was addressed by the existing causes of action.  The evidence led on behalf of PDL was that injury from exposure to latex in gloves would manifest very quickly so that any claims which were to be made would already have been made.  Again this submission was made before Mr Shute’s second affidavit revealed that there may still be gloves sold without the warning label.  Further, in the course of the hearing, some internal documents of the ACCC were tendered which indicated that the injury from use of latex gloves could take a significant time to manifest.  An application for leave to amend is not the occasion to determine a question of fact such as this.  On such an issue it is appropriate to allow the amendment and thereby allow the ACCC in due course to establish the utility of the declaration sought, if it is able, in the course of a trial on the factual issues.

24. In some circumstances the claim for a declaration such as the one sought by the ACCC could be justified as a “springboard” which establishes the unlawfulness of certain conduct and thereby provides a basis for other injured consumers to take legal action in respect of the conduct declared unlawful. PDL argued that such a basis for the declaration in this case does not exist. It contended that any claim by an injured consumer for damages under s 82 of the Act was statute barred. The time limit for commencement of an action under s 52 claiming damages is three years. The amendment pleads that PDL failed to warn of the dangers of latex gloves in the period ending in 1997 and that injury resulted from use of the gloves in that period. There is contention on the facts as to the time taken for the injury to manifest. The use of gloves within the period may not produce injury until some time after that use. The cause of action for damages under s 82 arises when the applicant suffers injury or could reasonably have appreciated that some injury was suffered: Karedis Enterprises Pty Ltd v Antoniou (1996) 137 ALR 544. It cannot be said that the claim for a declaration is therefore hopeless. The amendment should be allowed so that the pleadings can then define what, if any, issues concerning the limitation of actions arise.

25. Even if it were demonstrated that there were no other injured persons who could sue for damages, it does not follow that the declaration lacks utility in the relevant sense.  The Court may be persuaded that there is a wider public interest in declaring that certain defined past conduct was unlawful.  French J considered such a purpose as justification for a consent order in ACCC v Real Estate Institute Of Western Australia Inc (1999) 95 FCR 114; [1999] FCA 1387. The order provided for publication of advertisements outlining the outcome of the proceedings which involved the Court declaring that certain rules and conduct of the Real Estate Institute of Western Australia had an anti-competitive effect and were in breach of the Act. The conduct was spent in that the offending rules of the Institute had been changed. Nevertheless, his Honour said at 133:

    “Such advertisements in cases involving contraventions of Pt IV are within the power conferred by s 80 if they are directed to informing the relevant markets of the outcome of the litigation so that those in the market have at least a broad understanding of the ways in which the contravenors have had to change their conduct. This will at least alert those in the markets to question or inquire about the lawfulness of conduct in the future which may seem to contravene the Act and/or breach the injunctions which have been granted. In this way, public advertising as proposed may aid in the enforcement of the primary orders and the prevention of the repetition of the contravening conduct.”

26. It was also contended by PDL the declaration would have no utility for future claims by injured persons because each claim for damages will depend on its own particular facts.  There would, however, be utility in a declaration concerning certain important elements of a claim such as the fact, if it were shown, that PDL knew of, and failed to warn about, the dangers of latex in the relevant period.  That factor would be common to all claims even if there are other elements which are specific to a particular case. 

    The proposed amendments raise claims which are statute barred

27. PDL argued that the claims for declarations and injunctions in the proposed amendment could not succeed because they were statute barred. The conduct alleged occurred from 1988 to 1997. More than three years had elapsed when the notice of motion seeking leave to amend was filed on 23 February 2001. It was contended that a three year limitation period applied to these claims by analogy with the express limitation periods prescribed for claims for damages under s 82 (s 82(2)) or for compensation under s 87 (s 87(1CA)(b)).

28. It is clearly arguable that no such limitation period applies. The fact that the Act makes specific provision for limitation periods in respect of claims for damages and claims for compensation and makes no provision in respect of claims for injunctions strongly suggests that no time limitation was intended in respect of the latter. No authority was cited to support the existence of a limitation period in respect of the proposed amended claims. On the contrary, the decision of Merkel J in Gregg v Tasmanian Trustees Ltd (1997) 73 FCR 91 at 132-134 is to the opposite effect.

29. Even if the proposed amended claim was statute barred, the Court would not be prevented from allowing the amendment sought.  Order 13 Rule 2(3) of the Rules relevantly provides:

    “(3)     Where an application to the Court for leave to make the amendment mentioned in subrules … (7) is made after any relevant period of limitation current at the date of commencement of the proceeding has expired, the Court may, nevertheless, grant such leave in the circumstances mentioned in that subrule if it thinks it is just to do so.”

30. Subrule 7 provides:

    “(7)     An amendment may be made notwithstanding that the effect of the amendment will be to add or substitute a new claim for relief or another foundation in law for a claim for relief if the new claim for relief or foundation in law for that claim arises out of the same facts or substantially the same facts as those already pleaded to support existing claims for relief by the party applying for leave to make the amendment.”

31. For reasons already given, the proposed amended claims arise substantially out of the same facts as the existing claims within the meaning of O 13 r 2(7).  PDL raised no specific argument under O 13 r 2(3) that it was not otherwise just to allow the amendments.

    No liability for misrepresentation by silence under s 52

32. PDL argued that authorities such as Rhone-Poulenc Agrochimie SA v UIM Chemical Services Pty Ltd (1986) 12 FCR 477 establish that mere silence without more does not constitute misleading or deceptive conduct under s 52. Only silence in the face of an obligation to disclose constitutes a misrepresentation. PDL then argued that the proposed amendment pleads silence alone as constituting the breach of s 52. Consequently, the cause of action would be bound to fail.

33. This characterisation of the authorities appears to fail to take account of later developments which, at the least, make the starting point of the argument contentious.  For instance in Demagogue Pty Ltd v Ramensky (1992) 39 FCR 31 Black CJ said at 32:

    “Silence is to be assessed as a circumstance like any other.  To say this is certainly not to impose any general duty of disclosure;  the question is simply whether, having regard to all the relevant circumstances, there has been conduct that is misleading or deceptive or that is likely to mislead or deceive.  To speak of ‘mere silence’ or of a duty of disclosure can divert attention from that primary question.  Although ‘mere silence’ is a convenient way of describing some fact situations, there is in truth no such thing as ‘mere silence’ because the significance of silence always falls to be considered in the context in which it occurs.  That context may or may not include facts giving rise to a reasonable expectation, in the circumstances of the case, that if particular matters exist they will be disclosed.”

34. At 40-41 Gummow J (with whom Cooper J agreed at 46) said:

    “‘Conduct’ within the meaning of s 52 includes refusing to do an act and refusal to do an act includes a reference to ‘refraining (otherwise than inadvertently) from doing that act’: s 4(2).  But in any case where a failure to speak is relied upon the question must be whether in the particular circumstances the silence constitutes or is part of misleading or deceptive conduct.  The expanded meaning given by s 4(2) to ‘conduct’ should not distract attention from the fundamental issue in the case at hand.  Spender J indicated in the passage I have set out earlier in these reasons, that the present case concerns both a positive misrepresentation, as to the provision of vehicular access, and misleading conduct from the failure to say anything about the Road Licence, with the whole of the circumstances creating in the respondents the clear but erroneous impression that there was nothing unusual concerning access to the site.

    In my view, to inquire in such a case whether an independent ‘duty to disclose’ has arisen is to digress from the application of the terms of s 52. Thus in Rhone-Poulenc (supra) the basic proposition for which the appellants unsuccessfully contended was that a manufacturer who sells a product it knows is bought by consumers for the purpose for which it was made, contravenes s 52 if the sale and use of the product is unlawful and the product is liable to forfeiture and the manufacturer has not made this known to consumers: see Rhone Poulenc at 505-506, per Lockhart J.  Again, in Henjo Investments Pty Ltd v Collins Marrickville Pty Ltd (1988) 79 ALR 83, the positive statement on behalf of the restaurant vendor that the restaurant seated 128 people was, in the circumstances of the case, misleading when unqualified by words which distinguished the actual capacity from the licensed capacity, that being a matter of vital importance given the nature of the business being sold. In my view it is unhelpful to describe that result, involving as it does a contravention of s 52, as the product of the breach of any ‘duty’ imposed upon the vendor by that section.

    The use of the term ‘duty’ is apt to suggest a necessary connection with the general law, which does not exist and is not required by the statue: cf Lam v Ausintel Investments Australia Pty Ltd [1990] ATPR 50,866 at 50,880-50,881. I agree with what was said by Samuels JA in Commonwealth Bank of Australia v Mehta (1991) 23 NSWLR 84 at 88:

    ‘[S]ilence is not misleading only where there is a duty to disclose at common law or in equity.  It may simply be the element in all the circumstance of a case which renders the conduct in question misleading or deceptive.’

    See also Lee Gleeson Pty Ltd v Sterling Estates Pty Ltd (1991) 23 NSWLR 571 at 582, per Brownie J.

    It is true, as was pointed out by French J in State Government Insurance Corporation v Government Insurance Office of New South Wales (1991) 28 FCR 511 at 561-562, that the large number of cases brought under the Act in respect of conduct analogous to passing-off has encouraged the notion that some representation must be demonstrated as an element of conduct in contravention of s 52. But, consistently with regard to the natural meaning of the terms of s 52, the question is whether in the light of all relevant circumstances constituted by acts, omissions, statements or silence, there has been conduct which is or is likely to be misleading or deceptive. Conduct answering that description may not always involve misrepresentation…”

1. The proposed amendment pleads that PDL supplied the gloves, that the gloves were unsafe, that there was no warning of the danger on the gloves, that PDL knew of the dangers, and that, in the terms of s 4(2) of the Act, which defines the concept of “engaging in conduct” for the purpose of, inter alia, s 52, PDL refused to make known or refrained from making known (other than inadvertently) the existence of the risk to persons using the gloves. These allegations, if proved, would sustain the claim under s 52 on the approach taken in Demagogue.  See also Johnson Tiles Pty Ltd v Esso Australia Ltd [1999] FCA 477 at pars 4 and 5. Indeed in Hampic Pty Ltd v Adams (2000) ATPR 41-737, which has similarities to the case pleaded, the New South Wales Court of Appeal held that the seller of a drain clearing preparation was in breach of s 52 by failing to warn a consumer adequately of the dangers of personal injury which arose from the use of the preparation with hot water.

2. In the light of the authorities referred to, the case pleaded in the proposed amendment is not hopeless.  The fact that the cause of action is not certain to succeed but rather is arguable, is not a reason to refuse the application for leave to amend.

   NON-AVAILABILITY OF INJUNCTIVE RELIEF

3. PDL argued that the ACCC was not entitled to the injunction sought and the claim for the injunction was hopeless.  It relied upon the decision of Merkel J in ACCC v Z-Tek Computer Pty Ltd (1997) 78 FCR 197 which concerned an advertisement which the ACCC contended was in breach of ss 52, 53(e) and 53C of the Act. The parties agreed on orders under s 80 that the respondent implement a trade practices compliance program. His Honour refused to make certain of the orders sought. He described the limitations on the power of the Court to grant injunctions at 202-3 as follows:

   “The width of the power conferred by s 80 and its public interest character obviously give the Court great amplitude in determining appropriate injunctive orders in a particular case. However there are limitations on the Court’s power under the section. Confinement of the power by reference to the scope and purpose of the TPA, and in particular s 80, is one limitation on the power. However, there are at least two further limitations. The power to make orders under s 80 is only enlivened in a proceeding which alleges that there has been a contravention of a provision of Pt IV, IVA or V of the TPA. As was said by Gummow J in ICI at 267, the terms of an injunction granted under s 80 must, on their face, operate upon a range of conduct which has “the relationship required by s 80 with contravention of the Act”. Irrespective of whether the injunction is sought or granted under s 80(1) or 80(1AA) there must be a nexus between the conduct alleged or found to constitute the relevant contraventions and the injunctions granted.

   …

   There is also a constitutional limitation which operates to ensure that there is a relationship between the relief granted under s 80 and the case or controversy between the parties which gave rise to the exercise of jurisdiction under the section. The Federal Court exercises judicial power under Ch III of the Constitution in a ‘matter’. For present purposes, it is sufficient to state that, in its constitutional sense, a ‘matter’ means the justiciable controversy or dispute, or the subject matter for determination, in a legal proceeding…

   …

   If the Court grants relief which has no nexus or relationship to the case or controversy before the Court it will not be exercising judicial power within the confines of Ch III of the Constitution. Accordingly, orders under s 80 must have the requisite relationship with the case or controversy the subject of the proceeding in the Court.”

4. His Honour observed that orders requiring implementation of compliance programs have been accepted in a number of cases to be within the power granted by s 80. The vice in the orders proffered in Z-Tek was that, in his Honour’s view, the compliance program related to the Act generally and not to the specific provisions of Part V which were alleged to have been contravened.

5. PDL contended that the injunction sought in the present case suffered from the same vice. 

6. Z-Tek was concerned with the final stage of the proceeding, that is to say, the making of final orders. That fact marks a significant difference between that case and the issue which arises in the present case. At this stage in the present case the only question is whether there is an arguable case for the relief sought. It is arguable that the injunctive relief sought is sufficiently connected to the conduct alleged to be in breach of s 52 which is the subject of the proposed amendment. Paragraph 4 of the proposed compliance program provides:

   “4.The respondent shall require the Trade Practices Compliance Officer to review the current labelling of household latex gloves manufactured by the Respondent (‘the consumer products’) to ensure it is adequate and sufficient to convey the risk of latex allergy it poses for consumers based on current scientific knowledge.”

7. The review to be undertaken by the Trade Practice Compliance Officer is limited to the labelling of household latex gloves manufactured by PDL. The requirement for training referred to in par 10 of the proposed compliance program, relates to representations in breach of s 52. The compliance program is structured around the conduct allegedly in contravention of s 52 which is the subject of the proposed amendment. These connections between the conduct and the compliance program make it arguable that the required nexus exists. It is another question whether the Court will grant the relief sought at the end of the hearing of all of the evidence. At that point it would be relevant to consider the scope of the existing compliance program, the danger of repetition of the conduct and other discretionary matters. Even if it were unlikely on the evidence so far before the Court that such an order would be made, the claim is not hopeless so that the ACCC should be prevented from raising it by the amendment.

8. In further reliance on Z-Tek PDL submitted that the lack of any nexus between the conduct alleged and the injunction sought meant that there was no ‘matter’ for the purposes of the exercise of judicial power.  This argument fails in the light of the conclusion that there is sufficient nexus in the pleading to justify the amendment.

9. Then it was contended that the injunction claim would be bound to fail on the merits.  An injunction of this nature may only be granted in furtherance of the public interest.  It was argued that in the absence of any danger of repetition of the offending conduct an injunction would only be granted in exceptional circumstances.  Here PDL agreed to label the gloves as required by the ACCC and already has a compliance program in place.  Thus, PDL submitted, the injunction sought would serve no useful purpose and would be wholly redundant.  These matters may be persuasive against the grant of injunctive relief at the trial of the proceeding.  But they will need to be considered in light of the entirety of the evidence produced to the Court.  An application for leave to amend is not the occasion to lead evidence relevant to the questions in issue, nor is it the occasion for the Court to make a final assessment of the issue.  The proposed pleading raises an arguable case for an injunction. 

   ENTITLEMENT OF ACCC TO SEEK A DECLARATION

10. In its written submissions PDL contended that the ACCC was not entitled to seek a declaration in the terms sought. The reasons offered for this contention were not particularly clear. They were not much elaborated in oral submissions, and none of the leading cases cited by the ACCC against this proposition were dealt with by PDL. Doing the best I can to understand the argument, the first reason relied upon by PDL seemed to be that there is no express power in the Act authorising the ACCC to seek a declaration that conduct is in breach of s 52. Provision is made for claims for injunctions (s 80), claims for damages (s 82), and claims for compensation (s 75AD) but no provision is made for the grant of declaratory relief.

11. Earlier in these reasons (par 51-57) it was determined that the ACCC is entitled to bring the claim for an injunction as sought in the proposed amendment. The jurisdiction of the Court to grant such an injunction is found in s 80. Section 21(1) of the Federal Court of Australia Act 1976 (Cth) provides:

    “The Court may, in relation to a matter in which it has original jurisdiction, make binding declarations of right, whether or not any consequential relief is or could be claimed.”

12. Where an injunction is sought under s 80 the Court is empowered by s 21(1) to grant declaratory relief. Not only is this conclusion arguable it is the subject of authority of the Full Court binding on me: Tobacco Institute of Australia Limited v Australian Federation of Consumer Organisations Inc (No 2) (1993) 41 FCR 89 per Sheppard J at 97-98 (with whom Foster J agreed at 106) and per Hill J at 110; RAIA Insurance Brokers Limited v FAI General Insurance Co Limited (1993) 41 FCR 164 at 175-7.

13. The next argument was explained in PDL’s written submissions as follows:

    “Further, a person who had used latex gloves supplied by Pacific Dunlop would have no right to seek a declaration in the terms proposed in the amended application and statement of claim because, without a pleading of loss or damage occasioned to that person as a result of Pacific Dunlop’s conduct in breach of section 52 – thereby providing the foundation for the pursuit of some right by that person (see Wardley Australia Limited v Western Australia (1992) 175 CLR 514 at 525, 526-527 per Mason CJ, Dawson, Gaudron and McHugh JJ;  Gardner v The Dairy Industry Authority of New South Wales (1978) 52 ALJR 180 at 184) – any declaration would be hypothetical and would produce no foreseeable consequences for the parties. The applicant would therefore have no sufficient interest in the maintenance of the proceedings. The ACCC can be in no better position in seeking a declaration in respect of Pacific Dunlop’s supply of gloves to an unidentified and unlimited group of people, none of whom are said to have suffered any injury.”

14. The essence of this submission seems to be that in the absence of an allegation that persons other than Ms Robinson had suffered injury as a result of wearing the gloves, those persons had no interest sufficient to obtain a declaration. It followed that the ACCC could have no sufficient interest to seek a declaration that PDL had infringed s 52.

15. Mr Nettle QC, who appeared with Mr Murdoch of counsel for the ACCC, however, argued that the ACCC was seeking a declaration to vindicate a public right, not private rights of injured persons. Whilst a claim for damages under s 82 for a contravention of s 52 requires proof of loss and damage, a claim for an injunction or a declaration does not. Mr Nettle relied on the Tobacco Institute case. The Institute published an advertisement minimising the effect of passive smoking. A consumer group sought a declaration that the advertisement was in breach of s 52 of the Act. The Institute contested the right of the consumer group to claim a declaration. Hill J at 108 described its submission as follows:

    “Simply put, the submission is that the court has power only to make declaratory orders declaring, inter se, the rights of the parties to the litigation.  An order declaring that conduct of the respondent is misleading and deceptive is not declaratory of the rights of the applicant.  If anything, it is a declaration of a wrong committed by the respondent, not of the violation of any right of the applicant.”

16. Sheppard J (with whom Foster J agreed at 106) said at 98 and 99:

    “The declaration, if made, will be a declaration of right because the right which will be declared will be a public right, namely, the right of the public not to be misled or deceived by factual statements in an advertisement concerning the effects of passive smoking.

    …

    It is true that the conclusion I have reached, namely, that the court has power to make a declaration in a case brought by a person other than the Minister or the Trade Practices Commission for injunctive relief, would enable a member of the public, provided he had an arguable case for an injunction, to make out a case for a declaration notwithstanding that he himself had suffered no damage and that the case was found not to be one appropriate for injunctive relief.  But anxiety that that circumstance may lead to a proliferation of applications for declaratory relief by a variety of persons should be allayed because the remedy is a discretionary one and the court will not grant declaratory relief in hypothetical cases nor in cases where the making of a declaration is of no utility.  Furthermore, a consequence of holding that the court had no power to make a declaration in a case such as this would mean that the court would have no such power in proceedings brought under s 80 by the Minister or the Commission (it may be noted that, whilst the Minister may institute proceedings under s 163A, the Trade Practices Commission may not: subss(2) and (3)).  This does not seem to me to have been the likely intention of Parliament.”

17. Hill J said at 110:

    “There can be little doubt that a declaration might be obtained by a regulatory authority that particular conduct is in breach of a statutory provision, whether or not injunctive relief is appropriate:  cf Australian Softwood Forests Pty Ltd v Attorney-General (NSW) (Ex rel Corporate Affairs Commission) (1981) 148 CLR 121 at 125. It has never been suggested that no power exists to grant such declaratory relief merely because the consequence of a declaration is to declare the existence of a wrong. The declaration that an offence has been committed is the concomitant of the non-existence of a right. Semantically, it may be said to be the declaration of a negative right. It is appropriate, in my view, to refer to it as a declaration of right.”

18. In the result the Court made the declaration that an advertisement which stated that there was little evidence and none which proved that cigarette smoke caused disease in non-smokers was misleading and deceptive and contrary to s 52 of the Act.

19. In ACCC v Goldy Motors Pty Ltd [2000] FCA 1885 the ACCC sought a declaration that advertisements which stated that purchases by 30 June 2000 of motor vehicles from the respondent would be GST free and that no finance application would be refused were in breach of s 53(g) of the Act. Section 53(g) concerns misrepresentation about the existence or effect of contractual rights and obligations. The respondent admitted that the advertisements were in breach of ss 52 and 53(e) of the Act and agreed to declarations and injunctions in respect of those breaches. The respondent, however, disputed the alleged breaches of s 53(g) and the claim to declarations in respect of those breaches. Carr J found that there had been breaches of s 53(g) and he made declarations to that effect. In so doing he said of the declarations at par 34:

    “They will serve to vindicate the applicant’s claim that the respondent has contravened s 53(g) and may be of some assistance to it in future in carrying out the duties which are conferred upon it by the Act. There is some degree of public interest in the determination and declaration that the respondent by its conduct has contravened this further provision. Section 53(g) is a piece of legislation of some importance to consumers and others engaged in trade and commerce.”

20. On the basis of these authorities it is at least arguable that the ACCC is entitled to seek a declaration of public right that PDL acted in breach of s 52 of the Act.

    DISCRETION

    Failure to offer an explanation for the delay

21. PDL relied heavily on the failure of the ACCC to provide any explanation for the delay in seeking the amendment.  In the State of Queensland and Anor v J L Holdings Pty Limited (1997) 189 CLR 146 Kirby J said at 170:

    “Considerations which tend to argue against the grant of an indulgence include many which are the counterparts of the foregoing.  Thus, the failure of a party to offer anything by way of explanation for a late application [for leave to amend] has been held relevant [see Amatek v Botman (1995) 13 ACLC 1729 at 1732].”

22. In early 1998 the ACCC first raised the issue of the danger to consumers of the gloves manufactured by PDL. It filed the original proceedings in January 2000. The affidavits filed on behalf of the ACCC in support of the motion for leave to amend did not explain why the leave was not sought until February this year. I permitted cross-examination of a deponent of an affidavit filed on behalf of the ACCC, Ms Nada Karadzic, the Assistant Director of the Melbourne office of the ACCC, principally in relation to the allegation yet to be considered that the application for leave to amend was brought for an ulterior purpose. In the course of the cross-examination Ms Karadzic was asked about the reason for the delay in bringing the application for leave to amend. She explained that prior to 6 March 2000, when the County Court proceeding was transferred into this Court, the ACCC was reluctant to make the s 52 claim sought in the proposed amendment out of a concern that such an application might jeopardise the application to transfer the County Court proceedings into this Court. She did not provide any explanation for the delay of nearly one year after 6 March 2000. I must therefore approach the application on the basis that there has been no explanation for the delay since 6 March 2000.

23. Mr Nettle contended that the lack of explanation for the delay in this period was no basis for refusing the amendment.  In written submissions he asserted:

    “Self evidently, the added claims are capable of providing a determination of public rights which will be of real benefit to other consumers, and Pacific Dunlop is in no way prejudiced by reason that the claim for declaration has not been made until now.”

24. In that submission and in further oral submissions Mr Nettle unduly minimised the importance of the failure to explain the delay.  To allow about a year to pass and then to approach the Court without explaining why it took so long to decide to pursue the proposed added claims could be viewed by PDL as high handed conduct on the part of the ACCC.  It is unfortunate that a public regulatory body such as the ACCC might allow itself to become the subject of such possible perception.  The question before the Court however is whether that conduct disqualifies the ACCC from obtaining the leave it seeks. 

25. Whilst absence of an explanation is a relevant consideration on an application for leave to amend, it must be balanced against other relevant considerations.  In particular, an order for costs thrown away as a result of any amendments allowed (which order for costs the ACCC does not resist) answers much of the prejudice suffered by PDL as a result of the delay.  Against any remaining limited prejudice is the consideration that the proposed amendment seeks to litigate an issue of concern to the public, namely, the alleged danger from unsafe products.  It is noteworthy that the case referred to by Kirby J in the extract from JL Holdings concerned an application to amend made at the trial of the action.  In the present case the application is made in the course of interlocutory steps well in advance of the final hearing.

    Bad faith

26. One of the discretionary grounds relied upon by PDL to oppose the granting of leave to amend was that the ACCC made the application in bad faith.

27. In Tildesley v Harper (1878) 10 Ch D 393 Bramwell LJ said at 396-397:

    “My practice has always been to give leave to amend unless I have been satisfied that they party applying was acting malâ fide …”

28. In Cropper v Smith (1884) 26 Ch D 700 Bowen LJ said at 710 in relation to applications to amend:

    “Speaking for myself, and in conformity with what I have heard laid down by the other division of the Court of Appeal and by myself as a member of it, I know of no kind of error or mistake which, if not fraudulent or intended to overreach, the Court ought not to correct, if it can be done without injustice to the other party.”

1. Both formulations of the principle governing applications for leave to amend were adopted by the High Court in Shannon v Lee Chun (1912) 15 CLR 257 by Barton J at 260-261(with whom O’Connor J agreed at 263). Issacs J also agreed at 266 and added:

   “Of course good faith is an essential condition …”

   (see also Clough and Rogers v Frog (1974) 48 ALJR 481 at 482.)

2. Bad faith in the commencement or continuation of proceedings exists where the applicant does not genuinely want the relief sought in the litigation but rather pursues the litigation for a collateral purpose.  Where the applicant has more than one purpose, bad faith will be shown if the pursuit of the collateral purpose is the predominant purpose.  These principles have been formulated in cases which considered whether a proceeding should be struck out as an abuse of process.  That learning is directly applicable to the question of amendment presently before the Court.  In Williams v Spautz (1992) 174 CLR 509 Mason CJ, Dawson, Toohey and McHugh JJ said in the leading case concerning abuse of process at 526 – 527:

   “To say that a purpose of a litigant in bringing proceedings which is not within the scope of the proceedings constitutes, without more, an abuse of process might unduly expand the concept.  The purpose of a litigant may be to bring the proceedings to a successful conclusion so as to take advantage of an entitlement or benefit which the law gives the litigant in that event.

   Thus, to take an example mentioned in argument, an alderman prosecutes another alderman who is a political opponent for failure to disclose a relevant pecuniary interest when voting to approve a contract, intending to secure the opponent's conviction so that he or she will then be disqualified from office as an alderman by reason of that conviction, pursuant to local government legislation regulating the holding of such offices.  The ultimate purpose of bringing about disqualification is not within the scope of the criminal process instituted by the prosecutor.  But the immediate purpose of the prosecutor is within that scope.  And the existence of the ultimate purpose cannot constitute an abuse of process when that purpose is to bring about a result for which the law provides in the event that the proceedings terminate in the prosecutor's favour.

   It is otherwise when the purpose of bringing the proceedings is not to prosecute them to a conclusion but to use them as a means of obtaining some advantage for which they are not designed  [In Re Majory [1955] Ch 600 623-624] or some collateral advantage beyond what the law offers [Goldsmith v. Sperrings Ltd. [1977] 1 WLR 498-499; see also Varawa v Howard Smith Co Ltd (1911) 13 CLR 35 at 91.

3. Their Honours continued at 529:

   “It has been suggested that the criterion for abuse of process is whether the improper purpose is the sole purpose of the moving party  [See, for example, the use of the word "merely" by Isaacs J. in Varawa at p 91].  However, in more recent times it has been said, in our view correctly, that the predominant purpose is the criterion.  That was the test applied by Lord Denning in Goldsmith v. Sperrings Ltd. [(1977) 1 WLR 478 at 496] and by the English Court of Appeal in Metall and Rohstoff v. Donaldson Inc. [[1990] 1 QB 391 at 469]. In giving the judgment of the Court in the latter case, Slade L.J. observed at 469:

   ‘[A] person alleging such an abuse must show that the predominant purpose of the other party in using the legal process has been one other than that for which it was designed.’

   It is, of course, well established that the onus of satisfying the court that there is an abuse of process lies upon the party alleging it.  The onus is ‘a heavy one’, to use the words of Scarman L.J. in Goldsmith v Sperrings Ltd [at 498] and the power to grant a permanent stay is one to be exercised only in the most exceptional circumstances [Jago v District Court (NSW) (1989) 168 CLR 23 at 34; see also Reg v Sang [1980] AC 402 at 455].”

4. PDL alleged that the ACCC brought the application to exert pressure on PDL to settle Ms Robinson’s claim for damages.  I take it that PDL alleged that this was the predominant purpose of the application.

5. PDL relied on a number of circumstances to support its allegation. The primary circumstance was the timing of the application. The ACCC was aware of its right to bring a claim under s 52 in 1998 when the question of labelling was agreed with PDL. It did not bring the application when the proceeding was originally filed in January 2000. On 10 October 2000 a mediation was conducted. It failed to settle the proceeding. The Commissioner in charge of the case for the ACCC, Mr Sitesh Bhojani, attended the mediation. On leaving the mediation he instructed lawyers for the ACCC to consider amending the existing proceedings to make the claim under s 52.

6. PDL argued that the timing of the application pointed to the real reason for seeking leave because the facts known to the ACCC could not have been regarded by a body acting in good faith as justifying the making of the application for leave to amend.  Those facts were that PDL had agreed to label the latex gloves following the letter of 3 July 1998 from the ACCC.  Further, latex allergy manifests very quickly so that there was no reason to make a claim against PDL now in relation to the use of gloves in 1997.  And since about 1994 PDL has operated a comprehensive trade practices compliance program.  The ACCC has participated in the conduct of that program.

7. Also, the ACCC and PDL had an informal arrangement in place in the past whereby the ACCC would raise any trade practices compliance matters of concern with PDL before taking action.  Initially the contact was directly with Mr Stern, then a partner in Freehills, who handled PDL’s trade practices compliance issues.  The ACCC did not utilise this process prior to making the present application. 

8. Then Mr Karkar contended that Mr Bhojani was bound to obtain approval to bring the amendment application from the ACCC but had failed to do so.  This confirmed, so it was alleged, an agenda on the part of Mr Bhojani to pursue PDL without regard to the internal requirements of the ACCC. 

9. Mr Karkar emphasised the evidence that the ACCC had given no explanation for failing to bring the application at any time after March 2000 when the County Court proceedings were transferred into this Court.

10. PDL also relied on the fact that after the transfer of the County Court proceedings some staff members of the ACCC held the view that the public interest in ensuring protection against latex exposure was sufficiently answered by the existing s 75AD action. For instance, the project officers, Ms Olliffe and Ms Karadzic, prepared a minute for Mr Bhojani dated 12 April 2000 which stated:

    “Staff note your concerns in respect of the wider public interest issue in this case.  Staff are of the view that the public interest issue would be served by the section 75AD action in that it would send the message to other manufacturers, especially latex glove product manufacturers, that if they have knowledge of a risk that its products will injure consumers, then it is under an obligation to warn consumers.”

11. Finally, PDL submitted that the circumstances in which the claim for injunctive relief was made disclosed the lack of real commitment of the ACCC to obtaining the relief sought.  The injunction was not sought originally when the motion seeking leave to amend was filed.  It was raised on the second day of hearing after I expressed some initial doubts about the power of the Court to grant declaratory relief alone.  It is likely that the ACCC added the claim for an injunction as a matter of caution in light of the discussion. 

12. The evidence initially lead by the ACCC as to its purpose in seeking the amendment was an affidavit sworn by Ms Karadzic on 16 March 2001 in which she stated:

    “The Commission, as the body charged with enforcing the Trade Practices Act, takes the view that it is a matter of public importance that the conduct in which it alleges the Respondent engaged, be declared to be in breach of Section 52 of the Act, and that it obtain orders that the Respondent engage in a trade practices compliance program concerning the matters arising in this proceeding, in terms similar to the orders granted to the Applicant in the matter of ACCC v Z-Tek Computer Pty Ltd.”

13. She was cross-examined by Mr Karkar.  One relevant exchange was as follows: 

    “… Now, did Mr Bhojani say to you that in his view the utility of a declaration against PDL is that it would cause other manufacturers to label their gloves? --- Yes.

    And because of that, it would fulfil the commission’s public interest role? --- Yes.

    Would that be the reason why you are bringing this action now against PDL? --- I had a more fulsome discussion with Bhojani C.

    Is that one of the reasons that you’re bringing this action against PDL? --- To fulfil the public interest, yes.

    Yes, to fulfil the public interest in that you would send a message out to other manufacturers? --- That would be one aspect of it, yes.”

14. As mentioned earlier in these reasons, the Commissioner in charge of this case was Mr Bhojani. It was accepted by the parties that his purpose should be regarded as the purpose of the ACCC. Mr Bhojani did not give evidence. That was unfortunate. Had Mr Bhojani given evidence the process of establishing his purpose would have been quicker and more efficient. Further, it would have demonstrated an openness and fairness in dealing in a way which the course adopted did not. PDL was forced to serve a notice to produce on ACCC in order to gain access to documents which might reveal its purpose in making the application for leave to amend. One of those documents was an email from Mr Bhojani to Ms Karadzic dated 16 October 2001 concerning the instructions to be conveyed to the lawyers advising the ACCC in relation to the proposed s 52 claim. In that email Mr Bhojani said:

    “David / Nada,

    I had suggested to our Counsel/Solicitor/staff on leaving the mediation to arrange for a conference once they had reconsidered the s52 issue re Mrs Robinson (ie when PDL was not labelling).  In particular, it’s imperative that our lawyers appreciate that –

    - s52 does not have a limitation period (the limitation period is for s82 proceedings – and by the way also note the comments of Drummend [sic] J in our Shell case [(1997) ATPR 41-552] as to when the limitation period for a s87 (1A) or (1B) application begins to run for the Commission – and s80 does not have a limitation period and expressly includes sub-sections (4) and (5) which may be important here);

    - s52 (as with most of the provisions of the TPA) has a significant element of public interest in it or as the Courts keep saying it specifies a ‘norm of conduct’ – see for example the recent High Court judgment in the Truth About Motorways case [(2000) ATPR 41-757 at para [17] per Gleeson CJ and Mchugh J [sic] and at paras [78] & [79] per Gummow J] in the context of deciding on standing issues for the purposes of the TPA.;

    -s52 in respect of Mrs Robinson is reasonably straight forward (not necessarily easy) ie PDL knew their product was risky/dangerous/unsafe etc for a significant class of people and did not warn that class of people (this will be ground breaking stuff in one sense re silence as misleading conduct and will need to deal with the authorities on this eg Merkel J’s summary in Johnson Tiles Pty Ltd & Ors v Esso Australia Ltd & Ors (1999) ATPR 41-696 at p42,888).  As I understand our case Counsel/staff have indicated all along that we have a strong case and good info re PDL’s knowledge of the health risks of their latex gloves (that was re-iterated in the lead up to the mediation) – that is NOT an academic exercise if PDL disputes, as it certainly does, that their conduct was misleading.
    (In those circumstances the fact that the grant of declarations is discretionery [sic] is really not to the point – Jenkinson J declined to grant us a declaration in ACCC v Telstra Corporation (1997) ATPR 41-540 because Telstra had never put in issue the allegations on which the Commission relied to obtain the declaration [see p43,506] – hardly likely to be the case here! Counsel should also note discussion re discretion on granting an injunction on the previous page [43,505] of that case where despite Telstra’s strong opposing submissions Jenkinson J granted an injunction. Other cases are also relevant on these issues where we have constantly obtained declaratory/injunctive orders).

    - A s80 case by us will also underpin detailed findings of fact in the final order which can be used by Mrs Robinson in her private proceedings to reduce the length/costs of that litigation (possibly to just an assessment of damages case) – clearly what the Parliament intended by enacting s83 of the TPA – ie again part of our public interest rationale in pursuing the matter. Also such a declaration/findings of fact would send a strong message to other manufacturers regarding the labelling of their latex products (many of which I understand are still not labelling their products) – which is part of the broader public interest the Commission wanted to pursue in bringing this case and what distingushes [sic] us from being just a defacto ‘legal aid agency’.

    - The direct management of the tensions in such representative cases between all our interests and all of the complainant’s interests is and has always been difficult – but needs to be (and has been in many matters) pursued as effectively as possible to achieve real outcomes for all of us (either by way of settlement [eg Shell / Hamilton Island etc] or if necessary by trial [eg Glendale / Top Snack Foods / SNK / Farrington Fayre etc]).

    Please let me know when the issues can be further discussed.

    regards,
    Sitesh.”

15. Ms Karadzic’s evidence as to Mr Bhojani’s views, and his own consideration of the issues contained in the email clearly point to a concern that the s 52 claim pleaded in the proposed amendment should vindicate the public interest. There is no suggestion in the evidence that Mr Bhojani did not desire the Court to grant the relief sought in the amendment. Further, the fact that Mr Bhojani consulted counsel in relation to the s 52 claim is consistent with the conclusion that he genuinely wanted the Court to grant the relief sought. It was only after cross-examination of Ms Karadzic and the tender of the email from Mr Bhojani and some other ACCC documents that some picture emerged of the purpose of the ACCC which countered the circumstantial evidence relied upon by PDL.

16. In the face of the evidence of Mr Bhojani’s purpose Mr Karkar was driven to submit as follows:

    “In Sitesh’s [Mr Bhojani] view, the utility of such – and I’ll ask your Honour to note that – the utility of such a direction [sic declaration] is that it would cause other manufacturers – other manufacturers – to label their gloves and hence to fulfil the commission’s public interest.

    …

    No, he doesn’t settle it [the mediation], and I accept that, but I am going to ask your Honour to draw the inference [of bad faith] because that purpose [warning other manufacturers] could not be a proper purpose.  This is the best that he could come up with for the purposes of documentation …”

17. In other words, Mr Bhojani expressed the view in the email that the amendment was to vindicate the public interest but this did not reflect his real view.  Rather, his real or, at least, predominant purpose was to exert pressure on PDL to settle with Ms Robinson.

18. This argument is quite far fetched.  There is no reason for Mr Bhojani to have written an email disguising his true purpose.  He was not to know at the time of writing that the email would be used in evidence.  The email is a fulsome reference to a series of legal issues of concern to a person instructing counsel to consider the merits of the legal action.  It reflects the thinking of a person pursuing the legal action for the legitimate purpose of vindicating rights given by statute.

19. Mr Karkar then contended that the justification for the s 52 claim used by Mr Bhojani in the email, namely to ensure that manufacturers of gloves placed warning labels on their products, was unsustainable because PDL had already included warnings on gloves made by it. However, Mr Bhojani recorded in the email his understanding that many manufacturers were still not labelling gloves. This view is supported by an email dated 19 October 2000 from Ms Karadzic to Mr Bhojani as follows:

    “… In respect of the issue of the current market situation regarding warnings, as indicated by a recent survey, there may only be one or two small manufacturers, and the Hercules brand, which do not carry warnings.  Astra, which probably has the second largest market share to Ansell, appears to have been taken over by another company and its disposable latex gloves now carry warnings.  We are about to undertake a full market survey to get a clear, up to date and accurate picture and will provide you with the results shortly.”

20. Further, Mr Bhojani was present at the meeting of the enforcement committee on 13 February 1998 when the original complaint over the gloves made by PDL was dealt with.  The written submission to the committee dealt with the time taken for injury from latex exposure to manifest as follows:

    “Mild symptoms such as skin reactions and runny nose are usually experienced within a few minutes of contact to latex.  Anaphylaxis mainly develops through repeated exposure to latex over a number of years.  This may not be the rule however, as increasingly young children have shown signs of severe reactions to latex.  The increasing number of children affected has resulted in the introduction of a latex-free theatre at the Royal Children’s Hospital.”

21. As to the public health dangers, the submission stated:

    “National statistics have not yet been obtained but staff have been provided with the following statistics:

    There have been 21 cases of latex allergy patients who are at risk of anaphylaxis who have presented to the Department of Allergy & Clinical Immunology at the Alfred Hospital over the past 12 months.  3 of these cases are not in any identified high risk occupational groups, and include Ms Robinson.  The other 2 were a middle aged woman who had undertone [sic] multiple surgical procedures, and the other was a woman involved in food handling.

    It is estimated that about 2.5 per cent of the general population might suffer allergic reactions to latex.  It is not yet known whether there have been any Australian deaths related to latex allergy as it is often difficult to diagnose the cause of death in such circumstances.”

22. In the various submissions received by Mr Bhojani from staff there was material which allowed him to form the view which he expressed that there was a public interest in ensuring that other manufacturers labelled latex gloves made by them. 

23. In the result, PDL has not established that the ACCC brought this application for the predominant purpose of exerting pressure on PDL to settle with Ms Robinson, and not for the purpose expressed of vindicating the public interest and ensuring that latex glove manufacturers warn of dangers in the use of their products.

    CONCLUSION AND COSTS

24. It follows from these reasons that none of the arguments put by PDL opposing the application for leave to amend have been accepted.  Thus, leave to amend will be granted.  The ACCC did not resist an order that it pay the costs thrown away as a result of the amendment. 

25. The remaining question is whether PDL should pay the costs of the application for leave on the basis that it has failed in its opposition.  There are strong grounds for making an order that PDL pay the ACCC’s cost of the application.  Many of the arguments raised by PDL were unsustainable and most of those were obviously so.  Indeed, a number of these arguments were answered by decisions of Full Courts binding on me; those authorities were not addressed by PDL in reply after they had been raised by the ACCC.  An order for costs would not only compensate the ACCC for resisting the arguments of PDL, but would also register the disapproval of the Court for the waste of public resources occasioned by the need to hear and determine arguments with no merit. 

1. On the other hand, on the material presently before the Court there are grounds for regarding the conduct of the ACCC both in respect of this particular application and in respect of the wider handling of the complaint and subsequent litigation with some concern.  These matters have been traversed in these reasons.  If they are borne out at trial they may be persuasive against ordering PDL to pay the costs of the application.  Usually matters material to making an order for costs of an application for leave to amend are fully exposed at the end of the application for leave.  In the present case it is possible that the conduct of the ACCC of the litigation will be clearer after the trial of the action.  Consequently, it is preferable in the circumstances of this case to reserve the question of the costs of the application for leave to amend.

I certify that the preceding one hundred and three (103) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice North.

Associate:

Dated:             18 June 2001

Counsel for the Applicant (V25/00):	Mr G Nettle QC, with Mr N Murdoch
Counsel for the Applicant (V160/00) (8/3/01 only):	Mr Paine
Solicitor for the Applicant:	Slater and Gordon
Counsel for the Respondent:	Mr J Karkar QC, with Ms W Harris
Solicitor for the Respondent:	Phillips Fox
Date of Hearing:	8, 19, 21 March and 23 April 2001
Date of Judgment:	18 June 2001