Australian Competition and Consumer Commission v Stern's Playland Pty Ltd and Anor Stern's Playland Pty Ltd v Testrite Laboratories Pty Ltd and Ors

[1997] FCA 1418

FEDERAL COURT OF AUSTRALIA

Practice and Procedure - application for leave to file amended pleading - leave refused.

AUSTRALIAN COMPETITION AND CONSUMER COMMISSION V STERN’S PLAYLAND PTY LTD AND AQUA FUN AUSTRALIA PTY LTD

NG 1047 OF 1996

JUDGE:         BEAUMONT J
PLACE:         SYDNEY
DATE:           10 NOVEMBER 1997

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	NG 1047  of   1996

BETWEEN:	AUSTRALIAN COMPETITION AND CONSUMER COMMISSION APPLICANT
AND:	STERN’S PLAYLAND PTY LTD FIRST RESPONDENT
AQUA FUN AUSTRALIA PTY LTD SECOND RESPONDENT
AND BETWEEN:	STERN’S PLAYLAND PTY LTD CROSS-CLAIMANT
AND	TESTRITE LABORATORIES PTY LTD FIRST CROSS-RESPONDENT
FLO-TEST PTY LIMITED SECOND CROSS-RESPONDENT
JOHANN NESER THIRD CROSS-RESPONDENT
GEOFFREY ROBERT DOHERTY (PROPOSED) FOURTH CROSS-RESPONDENT
DAVID ALLAN CARSON (PROPOSED) FIFTH CROSS-RESPONDENT

JUDGE:	BEAUMONT J
DATE OF ORDER:	10 NOVEMBER 1997
WHERE MADE:	SYDNEY

ORDERS:

1. Leave to file MFI 1 refused.

1. Costs reserved.

1. The notice of motion of the first cross-respondent and proposed fourth and fifth cross-respondents stood over to a date to be fixed.

Note:Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	NG 1047 of 1996

BETWEEN:	AUSTRALIAN COMPETITION AND CONSUMER COMMISSION APPLICANT
AND:	STERN’S PLAYLAND PTY LTD FIRST RESPONDENT
AQUA FUN AUSTRALIA PTY LTD SECOND RESPONDENT
AND BETWEEN:	STERN’S PLAYLAND PTY LTD CROSS-CLAIMANT
AND	TESTRITE LABORATORIES PTY LTD FIRST CROSS-RESPONDENT
FLO-TEST PTY LIMITED SECOND CROSS-RESPONDENT
JOHANN NESER THIRD CROSS-RESPONDENT
GEOFFREY ROBERT DOHERTY (PROPOSED) FOURTH CROSS-RESPONDENT
DAVID ALLAN CARSON (PROPOSED) FIFTH CROSS-RESPONDENT

JUDGE:	BEAUMONT J
DATE:	10 NOVEMBER 1997
PLACE:	SYDNEY

REASONS FOR JUDGMENT

BEAUMONT J:

By its application filed on 31 December 1996, the Australian Competition and Consumer Commission sued Stern's Playland Pty Limited (“Stern’s”) and Aqua Fun Australia Pty Limited (“Aqua Fun”) in this Court (“the principal proceedings”), invoking ss 52, 55, 65C(1) and 80 of the Trade Practices Act 1974 (“the Act”) and seeking declaratory and injunctive relief in respect of its claim that, in their marketing of children's swimming vests, Stern's and Aqua Fun had engaged in misleading and deceptive conduct contrary to s 52 and s 55 of the Act. The Australian Competition and Consumer Commission also claimed that contrary to s 65C, the vests did not comply with the prescribed consumer product safety standard.

The principal proceedings were settled before trial.  At the time of announcement of the settlement on 15 January 1997, Stern's (Aqua Fun having been then dismissed from the proceedings) stated that arising from the matters agitated in the principal proceedings, it proposed to bring its own proceedings by way of cross-claim against other parties.  Stern's now seeks to do this in the form of the proposed amended cross-claim MFI 1 which is annexed to these reasons.

It is common ground that being out of time, at least to proceed against Messrs Doherty and Carson, and arguably for other reasons, Stern’s needs leave to bring its proposed amended cross-claim.  The grant of leave is opposed by Testrite Laboratories Pty Limited (“Testrite”) and Messrs Doherty and Carson, who are directors of Testrite, on substantive grounds, namely, that the proposed cross-claim is frivolous and vexatious and discloses no arguable cause of action against them.  They not only oppose the grant of this leave, but also seek summary dismissal of the cross-claim on the same grounds. 

The position of Mr Neser and of Flo-Test Pty Limited (“Flo-Test”), of which Mr Neser is a director, is different from that of Testrite and Messrs Doherty and Carson.  Mr Neser appeared in person and handed up a defence on behalf of himself and Flo-Test to the proposed cross-claim.  It appears that Mr Neser's present position, taken, it would seem, without the benefit of legal advice, is that he and Flo-Test should be treated, for the purpose only of this interlocutory application, as submitting parties.

Having had the benefit of written and oral submissions from Senior Counsel representing the parties presently in contest in these applications, I indicated to Counsel the tentative view that the proposed amended cross-claim was embarrassing in a number of important respects.  In particular, by attempting to “roll-up” a number of complex claims, the proposed pleading fails to segregate properly the series of alternative claims advanced.  Paragraph 21 is an example of this approach.  Other illustrations were given in the course of argument.  Senior Counsel for Stern's then acknowledged the need for clarification of the different causes of action.  I accept, of course, that it may be possible, especially where simple claims are involved, to make an alternative allegation on a “mutatis mutandis” footing.  But, in the present case, the claims are complicated and it has been noted that the cross-respondents are divided into two separate camps.

My tentative view expressed in the course of argument was to refuse leave to file MFI 1 on the ground that it was embarrassing to plead to it.  I still adhere to that view and I so order.  Costs will be reserved.

I further remain of the view, again expressed provisionally in argument, that as a matter of case management, the appropriate course is to stand over the applications for summary dismissal, at this stage.  In my view, it is not appropriate to embark upon that application until a proper pleading by way of a cross-claim is filed and MFI 1 does not achieve that standard.  If no such pleading is filed, no doubt the cross-claim will be summarily dismissed.

ORDERS

1. Leave to file MFI 1 refused.

1. Costs reserved.

1. The notice of motion of the first cross-respondent and proposed fourth and fifth cross-respondents stood over to a date to be fixed.

I certify that this and the preceding two (2) pages are a true copy of the Reasons for Judgment herein of the Honourable Justice Beaumont

Associate:

Dated:             10 November 1997

Counsel for the Cross-Claimant:	Mr M F Holmes QC with  Mr G P Segal
Solicitor for the Cross-Claimant:	Reid & Vesely
Counsel for the First Cross-Respondent and (proposed) Fourth and Fifth Cross-Respondents:	Mr R B S Macfarlan QC with Mr P Durack
Solicitor for the First Cross-Respondent and (proposed) Fourth and Fifth Cross-Respondents:	Hunt & Hunt
For the Second and Third Cross-Respondents:	Mr Neser appeared in person and for the Second Cross-Respondent
Date of Hearing:	7 November 1997
Date of Judgment:	10 November 1997