Cadbury Schweppes Pty Ltd v Kenman Developments Pty Ltd

Re: CADBURY SCHWEPPES PTY LTD
And: KENMAN DEVELOPMENTS PTY LTD; HERAKLIS KENOS; SPIRO MANDYLAS and
KENMAN FOODS PTY LTD
No. V G270 of 1990
FED No. 212
(1991) 13 ATPR 41-116

COURT

IN THE FEDERAL COURT OF AUSTRLIA

VICTORIA DISTRICT REGISTRY
GENERAL DIVISION
Olney J.(1)

HEARING

MELBOURNE

#DATE 28:3:1991

Counsel for Cross-respondent: Mr R. Castan QC and

Mr P. Santamaria

Solicitors for Cross-respondent: Arthur Robinson and Hedderwicks

Counsel for Cross-claimant: Mr R.C. Macaw QC and

Ms E. Strong

Solicitors for Cross-claimant: Bazzanis

JUDGE1

The cross-respondent in these proceedings (Cadbury) seeks orders for the striking out, dismissal or permanent staying of the cross-claim or parts of it.

The original application was filed on 13 September 1990 and was accompanied by a statement of claim. The relief sought included declarations as to alleged breaches of section 52 and/or 53 of the Trade Practices Act 1974 and injunctive relief (including interlocutory relief) to restrain alleged passing-off and false labelling of products then thought to be distributed and sold by the 1st respondent (Kenman Developments).
On 21 September 1990 Cadbury filed notice of motion for leave to join the 5th respondent (Kenman Foods) and to file an amended application and statement of claim. On 25 and 26 September 1991 the applicant filed substantial affidavit material in support of its application for interlocutory injunctive relief which was heard by Jenkinson J on those two days.
On 26 September 1990 Jenkinson J made orders adjourning Cadbury's claim for interlocutory relief sine die and granting leave to add Kenman Foods as a party. Further orders were made to facilitate the amendment of the application and statement of claim and the filing of defences and any cross-claim.
An amended application and statement of claim were filed on 3 October 1990 and on 22 October 1990 Kenman Developments filed a defence and the other respondents also filed a separate defence. The latter pleading included a cross-claim by Kenman Foods against Cadbury.
On 29 October 1990 orders were made to facilitate the filing of replies and a defence to the cross-claim and for discovery and inspection of documents.
The notice of motion presently before the Court was filed on 27 November 1990 and was supported by an affidavit to which is exhibited copies of the original application and statement of claim, the order of Jenkinson J of 26 September 1990, the amended application and statement of claim and the defences and cross-claim. The reasons of Jenkinson J, delivered ex tempore on 26 September 1990, are also before me and were referred to by counsel during argument.
The short facts, as pleaded in the amended statement of claim are these. Cadbury, or its predecessor in business, has for over 50 years manufactured, distributed and sold in Australia rectangular blocks of milk chocolate under the name 'Dairy Milk' in distinctive royal purple wrappers which have a white panel surrounded by a gold border on the top half of the front of the wrapper with the words 'Dairy Milk' printed in large dark letters one above the other in the panel (hereafter referred to as the get-up). Dairy Milk blocks are widely and favourably known to customers by the get-up and Cadbury has acquired a substantial and exclusive reputation and goodwill in relation to Dairy Milk blocks and get-up. The get-up has, amongst customers and retailers throughout Australia, come to be associated with Cadbury or its business and products, and retailers and customers acquiring goods by reference to the get-up expect to acquire goods from Cadbury and in doing so rely on the reputation of Cadbury's products. In about August or September 1990 Kenman Developments and/or Kenman Foods (hereafter referred to as the Kenman companies) carried on and proposed to carry on the business of distributing and selling rectangular blocks of compounded chocolate of the same dimensions as the Dairy Milk block in royal purple wrappers with a white panel surrounded by a gold border on the top half of the front of the wrapper with the words 'Fine Milk' printed in large dark letters written one above the other in the panel but does not have the words 'Compounded Chocolate'. The blocks are packaged in a manner commonly associated with chocolate intended for immediate consumption (not being compounded chocolate) and have the words 'Fine Milk Choc' on the carton in which the blocks of compounded chocolate are supplied or packaged in bulk to and for retailers. The business of the Kenman companies has no connection or association with Cadbury and does not have the licence, authority or approval of Cadbury.
Cadbury complains that by distributing and selling the compounded chocolate blocks referred to above the Kenman companies have passed the same off as and for Cadbury's and have represented that they are of the standard, quality, grade, composition, style and model of Cadbury's, which is not the case; that they have Cadbury's sponsorship or approval, which is not the case; that the Kenman companies have the sponsorship or approval of Cadbury in relation to the blocks or are affiliated with Cadbury, which is not the case; and that the blocks originate from Cadbury, which is not the case. It is said that the Kenman companies have thereby contravened the provisions of sections 53(a), 53(c), 53(d) and 53(eb) of the Trade Practices Act. Furthermore it is said that the same conduct is misleading or deceptive or is likely to mislead or deceive and is contrary to section 52 of the Trade Practices Act. It is further pleaded that the conduct of the Kenman companies is calculated to mislead and deceive and is likely to mislead and deceive retailers and consumers into the belief that the product is a milk chocolate when it is not, contrary to section 52 of the Trade Practices Act. The same conduct is also said to contravene section 53(a).
Other breaches of the Trade Practice Act are pleaded in relation to the alleged distribution and sale by the Kenman companies of two other products, namely products known as 'Creamy White' and 'Fruit and Nut' or 'Milk Crackle' which are said to be compounded chocolate products sold in rectangular blocks of the same size as Dairy Milk blocks and in a get-up which is commonly associated with chocolate. (It is not said that these latter products are passed off as Cadbury's).
By reason of their involvement in the management and control of the Kenman companies and their position as directors thereof it is said the 2nd, 3rd and 4th respondents have contravened sections 52 and 53 of the Trade Practices Act.
Kenman Developments denies any involvement in the conduct complained of and it appears to be the case that it is, or was, wrongly shown on the register of business names as the proprietor of the name under which the products referred to are sold.
By their defence, the 2nd to 5th respondents (inclusive) admit that:

a) from March 1990 Kenman Foods manufactured and sold 200 gram tablets of compounded chocolate in a wrapping of pearlised laminated film of a purple-blue colour with a white rectangle bearing the words 'Fine Milk' and 'Compounded Chocolate' in black;

b) in June or July 1990 the packaging of Fine Milk tablets was changed to a lighter shade of wrapper and the words 'Compounded Chocolate' were replaced by the words 'Smooth Tasting' on some products sold in Australia; c) since 18 October 1990 all Fine Milk tablets manufactured and sold by Kenman Foods in Australia have been marked 'Compounded Chocolate' in place of 'Smooth Tasting'; d) Fine Milk tablets are packaged in a manner which shows they are intended for immediate consumption, which they are.

Facts more or less similar to the above are also pleaded in relation to the 'Creamy White' and 'Fruit and Nut' products referred to in the statement of claim.
I turn now to consider the cross-claim of Kenman Foods. Apart from pleading formal details as to the corporate status of the parties and the nature of Cadbury's business the cross-claim asserts as follows:

33. Cadbury has by itself or an association with related bodies corporate (MacRobertson Pty Ltd and Beatrice Confectionery Australia Pty Ltd (trading as Red Tulip) a substantial degree of power in -

(a) the market of supplying chocolate, compounded chocolate and confectionery products for distribution to retailers in Australia ("the general confectionery market");

(b) the market of supplying chocolate and compounded chocolate products in tablet form for distribution to retailers in Australia ("the moulded chocolate market")

PARTICULARS

(i) Cadbury has 43.9 percent of the general confectionery market according to the Nielsen Retail Index May/June 1990 ("the Nielsen Index");

(ii) Cadbury has 43.3 percent of the market in bars made from chocolate, compounded chocolate and confectionery ("the bar market") according to the Nielsen Index;

(iii) Cadbury manufactures five of the top ten selling products in the bar market: Cherry Ripe, the Europe Range, Crunchie, Twirl and Moro;

(iv) Cadbury have 77.7 percent of the moulded chocolate market according to the Nielsen Index;

(v) Cadbury manufactures nine of the top ten selling products in the moulded chocolate market - Cadbury Dairy Milk

Cadbury Fruit and Nut

Cadbury Hazelnut

Cadbury Caramello

Cadbury Snack

Cadbury Top Deck

Cadbury Roast Almond

Cadbury Peppermint

Cadbury Old Jamaica;

(vi) Cadbury owns Allstates Confectionery Suppliers Pty Ltd ("Allstates"), the only national distributor of products in the general confectionery market;

(vii) Cadbury is in a position of great financial strength having an annual turnover of approximately $930 million for its general confectionery and soft drink products;

(viii) by reason of the demand for its products in each of the general confectionery market and the moulded chocolate market and the matters referred to above Cadbury does not need to court the goodwill of distributors or retailers in either of those markets and is not subject to the constraints which would otherwise make it reluctant to take untenable or unreasonable court actions against small competitors for fear of attracting opprobrium;

(ix) in the premises the applicant is easily able and is prepared to lose considerable sums of money in unsuccessful court actions against small competitors.

34. Kenman Foods is a competitor of Cadbury in each of the general confectionery market and the moulded chocolate market.

35. Cadbury has taken advantage of the power referred to in paragraph 33 by -

(a) making claims in this proceeding based on an alleged deceptive similarity between the Kenman Foods FINE MILK tablet packaging and the packaging of the Cadbury Dairy Milk chocolate tablet ("the passing off action");

(b) persisting with the passing off action after being refused an interlocutory injunction and notwithstanding findings by the learned judge that the appearance of the two packages was quite different and the chances of anyone mistaking one for the other were remote in the extreme;

(c) making claims in this proceeding that the use of the word "choc" on shipping cartons containing compounded chocolate tablets manufactured and sold in Australia by Kenman Foods and the failure by it to label some of those tablets "compounded chocolate" was conduct which contravened the provisions of the Trade Practices Act 1974 ("the labelling action");

(d) commencing the labelling action in circumstances where Cadbury adopted similar labelling practices: in the case of its compounded chocolate covered "Chomp" product, by marking the wrapper "covered with a delicious choc coating" and by failing to label the product "compounded chocolate" and in the case of its solid compounded chocolate Milk Freddo product by marketing the product in association with other (chocolate covered) Freddo products without labelling it "compounded chocolate";

(e) persisting with the labelling action notwithstanding an undertaking by Kenman Foods made prior to the hearing of the interlocutory application to change the packaging of its compounded chocolate tablet products by deleting reference to "choc" on the shipping cartons and clearly marking all such products as "compounded chocolate";

(f) persisting with the labelling action notwithstanding being refused an interlocutory injunction and Kenman Foods making good its undertaking referred to in paragraph (e);

(g) commencing and persisting with the passing off and labelling actions not for the bona fide purpose of protecting its rights or the interests of consumers but for the purpose of damaging and intimidating Kenman Foods.

36. Cadbury engaged in the conduct referred to in paragraph 35 for the purpose of -

(a) eliminating or substantially damaging Kenman Foods in the general confectionery market and further or alternatively in the moulded chocolate market;

(b) preventing the entry of Kenman Foods into the moulded chocolate market;

(c) deterring or preventing Kenman Foods from engaging in competitive conduct in the general confectionery market and further or alternatively the moulded chocolate market.

37. In the premises Cadbury has engaged and is proposing to engage in conduct that constitutes contravention of s.46 of the Trade Practices Act.

38. Kenman Foods has suffered loss and damage by the acts of Cadbury referred to above and unless that conduct is restrained will continue to suffer loss and damage.

By way of relief Kenman Foods seeks:

A. A declaration that the acts of the cross respondent referred to in paragraphs 35 and 36 of the cross claim constitute conduct that is in contravention of s.46 of the Trade Practices Act 1974.

B. An injunction restraining the cross respondent by itself its servants or otherwise howsoever from -

1. instituting proceedings against the cross claimant for the purpose of -

(a) eliminating or substantially damaging it in the general confectionery market or the moulded chocolate market,

(b) preventing its entry into the moulded chocolate market,

(c) deterring or preventing it from engaging in competitive conduct in the general confectionery market or the moulded chocolate market.

2. otherwise howsoever acting in relation to the cross claimant in contravention of s.46 of the Trade Practices Act.

C. Damages, including the difference between the costs recovered on a party/party basis as a result of this proceeding and the costs actually incurred on a solicitor/client basis.

D. Such further or other orders under s.87 of the Trade Practices Act as may be necessary to compensate the cross claimant for loss or damage or to prevent or reduce the loss or damage.

E. Such further or other orders directions and relief as to the court may seem appropriate.

The orders sought by Cadbury in its notice of motion are:

1. That the Cross-claim herein dated 22nd October, 1990 be struck out or alternatively be dismissed or dismissed generally or alternatively be forever stayed on the grounds that -

(a) such discloses no reasonable cause of action;

(b) such has a tendency to prejudice, embarrass or delay the proceedings;

(c) such is frivolous, scandalous or vexatious;

(d) such constitutes an abuse of the process of the Court.

2. Alternatively, that paragraphs 35, 36, 37 and 38 of the said Cross-claim herein be struck out or alternatively be dismissed or dismissed generally or alternatively be forever stayed on the abovementioned grounds.

3. Such further or other orders as to the Court seem fit.

4. That the Cross-Claimant pay the Cross-Respondent's costs of and connected with this application.

Counsel for Cadbury relies on the provisions of Order 11 Rule 16 and Order 20 Rule 2 of the Rules of the Federal Court as the basis of the Court's authority to grant the relief sought.
Before proceeding to address the issues raised by the notice of motion it is necessary to deal briefly with the reasons given by Jenkinson J in dealing with Cadbury's application for interlocutory relief.
In respect of the alleged passing off His Honour said, after referring briefly to the relevant principles:

But when every proper weight is given to those considerations - and many of them, if not all of them, strongly favour the case that the applicant seeks to make - I remain still convinced that the occasions on which any consumer would be misled would be very few indeed. The appearance of the two packs are, as I would find, quite different in their impact on the uninstructed eye, that is to say the eye which had not previously ever seen either before. The overwhelming majority of consumers would of course be persons to whom the applicant's block was a very familiar sight indeed, whether the consumer was a person who ate chocolate, or ate Cadbury's chocolate, or not. The Cadbury's pack get-up is, as I would find, extremely well known throughout the community, known in the subconscious sense as well as in any conscious sense, and I think the risk of any mistaken act by a consumer under the influence of the respondents' packaging is remote in the extreme. (Reasons, pp 2-3)

Having said that, His Honour then proceeded to consider the balance of convenience, lest contrary to his impression, there could be said to be an arguable question of fact to be tried. His conclusion was that the balance fell in favour of not interrupting the marketing of the product by interlocutory relief.
Although no relevant facts are pleaded, it is part of Cadbury's case that the sale of 'Fine Milk' and 'Creamy White' blocks under those descriptions breached Regulations Q3(7) and Q3(8) of the Food Standards Code (Victoria). Part of the relief sought was an injunction restraining the production, advertising, sale etc. of products in breach of those regulations.
In dealing with this aspect of the case Jenkinson J said:

So far as the other class of claims is concerned, I take first the claim for interlocutory restraint of the use of the word "milk", or the phrase "fine milk", on the packaging of chocolate put into trade by the respondent, which does not satisfy the food standards prescribed by the code which in turn is given legal effect under the Victorian legislation. Undoubtedly, on the evidence, there is a strong case for the conclusion that the chocolate presently being sold under that kind of packaging, that is to say packaging which features the word "milk", does not satisfy the code standard for what the code calls "milk chocolate". The code provides its own definition of what shall be considered to be milk chocolate. There is also a strong case, as it seems to me, for the conclusion that consumers looking at the packaging of the kind shown in exhibit JLC1, that is to say the blue or purple packaged chocolate in exhibit JLC1, would take, and reasonably take, the wrapping to be asserting that within was milk chocolate, although the word "chocolate" does not appear on the packaging. But while that establishes, it may be, a prima facie case of breach of Victorian food standards legislation, it does not establish in my opinion the case of misleading conduct. What is shown is that the consumer is likely to be led into the belief that what is within the package is milk chocolate. I do not have, as I consider, evidence to constitute, at any rate, a substantial arguable case that to apply that description, namely the description "milk chocolate" to what is inside this packet, is to apply a false or misleading description. What consumers generally, or any particular class of consumers, apart from the class of consumers who are thoroughly familiar with the relevant provisions of the code, think is meant by the expression "milk chocolate" I do not know, and I do not consider that the evidence provides me with the means of knowing. And accordingly I do not find an arguable case - or at any rate, I do not find a substantial arguable case - of misleading conduct in that respect. (pp 4-5)

The judge then turned his attention to the matter of the absence from the packaging of Kenman's products of any warning that the product is "compounded chocolate". Having posed the question of whether conduct is properly to be described as misleading which puts into trade, particularly into retail trade in close physical association with what could be called ordinary chocolate the compounded chocolate got up to look in all respects like ordinary chocolate, His Honour answered it for the purpose of the proceedings then before him by saying:

It may be that there is an arguable case for saying that that is misleading conduct, but it will be, in my opinion, sufficient, in the circumstances of this case, to await for the time being the expected performance by the respondent of the proposal it has said it has to change the packaging, the wrapping, in such a way that, within a matter of two or three weeks, its compounded chocolate will be going on to the market in wrapping which includes in a fairly prominent position the expression "compounded chocolate". It does not seem to me to be necessary or appropriate to exact an undertaking, or to make an order. I will adjourn to a date to be fixed the further hearing of the claims for interlocutory relief; and, if the applicants are dissatisfied with the course of events that occur hereafter, they will be able to come back to the Court, if they do not decide that a more effective measure might be to communicate with the persons responsible for administering the Food Act. At all events, so far as the interests which this Court exercising this jurisdiction is concerned to consider, it does not seem to me to be necessary to make an order in relation to this question of compounded chocolate. And the same, I think, is true of the claim made in respect of the substance sold packaged as is shown in the same exhibit in the yellow wrapping that the substance so wrapped is not chocolate either within the meaning of the code or, as Mr Middleton submits, within the ordinary meaning or ordinary conception of chocolate. It, the evidence indicates, contains no cocoa at all, and Mr Middleton's submission is that a substance which has no cocoa component cannot, as a matter of ordinary English, be described as chocolate. He also relies on the circumstances that this substance does not answer the code definition. There is, I think, an arguable case that to sell this substance so wrapped in association with undoubted chocolate and items proclaiming themselves on their wrappings to be chocolate, is to engage in misleading conduct, that is to say conduct tending to mislead the consumer into the belief that what is within the wrapping is white coloured chocolate. As I say, I think it is an arguable case, and I do not say that I think it is a strong case, but it is an arguable case, I think. But again, the respondent has indicated an intention to add to the wrapping of this substance the word "confectionery", and in those circumstances I do not think that anything more is required than that the application for interlocutory relief be adjourned to a date to be fixed. (pp 6-7)

Jenkinson J concluded his reasons by admitting to having difficulty in formulating any finding at all as to what, in the minds of consumers, is necessarily involved in the word 'chocolate'. He then went on:

If the contentions that have been advanced by the applicant in this hearing were to be fully examined at a trial, I find it very very difficult indeed to predict the ultimate outcome. I do not suggest that there are not what may prove to be quite important questions in the administration of the consumer protection provisions of the Trade Practices Act involved in the case, or the series of cases, that the applicant presents, but it does not seem to me that on an interlocutory hearing any substantial reason has been shown for intervention by the Court pending the hearing. (p 8)

The basis upon which Kenman Foods seeks relief against Cadbury is its assertion that Cadbury has engaged in conduct in contravention of section 46 of the Trade Practices Act. So far as presently relevant that section provides:

46. (1) A corporation that has a substantial degree of power in a market shall not take advantage of that power for the purpose of -

(a) eliminating or substantially damaging a competitor of the corporation or of a body corporate that is related to the corporation in that or any other market;

(b) preventing the entry of a person into that or any other market; or

(c) deterring or preventing a person from engaging in competitive conduct in that or any other market.

(2) ......

(3) In determining for the purposes of this section the degree of power that a body corporate or bodies corporate has or have in a market, the Court shall have regard to the extent to which the conduct of the body corporate or of any of those bodies corporate in that market is constrained by the conduct of -

(a) competitors, or potential competitors, of the body corporate or of any of those bodies corporate in that market; or

(b) persons to whom or from whom the body corporate or any of those bodies corporate supplies or acquires goods or services in that market.

(4) In this section -

(a) a reference to power is a reference to market power;

(b) a reference to a market is a reference to a market for goods or services; and

(c) a reference to power in relation to, or to conduct in, a market is a reference to power, or to conduct, in that market either as a supplier or as an acquirer of goods or services in that market.

(5) ......

(6) ......

(7) Without in any way limiting the manner in which the purpose of a person may be established for the purposes of any other provision of this Act, a corporation may be taken to have taken advantage of its power for a purpose referred to in sub-section (1) notwithstanding that after all the evidence has been considered the existence of that purpose is ascertainable only by inference from the conduct of the corporation or of any other person or from other relevant circumstances.

To be caught by the section a corporation must

a) have a substantial degree of power in a market, b) have taken advantage of of that power, and c) have done so for one or other of the proscribed purposes.

Subsection 46(3) may be useful in assisting to determine whether or not a corporation has a substantial degree of power in a market, but it is not relevant to the question of whether a corporation that does have such a degree of power, has taken advantage of it for one of the proscribed purposes.

On the facts as pleaded in paragraphs 33-34 of the cross-claim there is a basis to assert that Cadbury has a substantial degree of power in the general confectionery market and the moulded chocolate market, and that Kenman Foods is a competitor of Cadbury in each such market. This is not to say that every particular pleaded in paragraph 33 is relevant to the question of Cadbury's degree of power in the markets concerned, and in this context I observe that I have not specifically addressed particulars (vii), (viii) and (ix).
Paragraph 35 particularises eight sets of facts which are said to indicate that Cadbury has taken advantage of its substantial power in the markets in question. All of the particulars pleaded have to do with Cadbury's conduct of these proceedings.
I do not think it is seriously suggested that particulars (a) and (c) taken separately could amount to taking advantage of substantial market power. Rather it seems that particulars (a) and (b) are intended to constitute one course of conduct which amounts to taking advantage of market power and particulars (c), (e) and (f) another. Central to each of these allegations is the claim that Cadbury has persisted with these proceedings after being refused interlocutory relief. There can be little doubt that this claim is coloured by Kenman Foods' belief, as expressed in sub-paragraphs 33 (viii) and (ix) that the proceedings are untenable and unreasonable, that they will be unsuccessful and as a result Cadbury will lose considerable sums of money. Those beliefs do not appear to have been shared by Jenkinson J when he heard the application for interlocutory relief. Indeed the application was not dismissed but adjourned to a date to be fixed by any party on reasonable notice. Furthermore, had the claims been thought to be untenable and unreasonable it is unlikely that His Honour would have addressed the question of balance of convenience as he did. In so doing he postulated the situation that would arise if ultimately Cadbury were successful in the passing off action. And towards the end of his reasons after expressing difficulty in making any finding as to the understanding of consumers of what is meant by 'chocolate' he commented that if the contentions advanced by the applicant (Cadbury) were to be fully examined at trial, he would have great difficulty in predicting the ultimate outcome.
Paragraph 35(d) adds a further dimension to Kenman Foods' complaints. In effect it accuses Cadbury of doing something similar to what Kenman Foods has done and which Kenman Foods says is quite unobjectionable. But at the root of the complaint is the fact that Cadbury has commenced the proceedings.
Similarly, paragraph 35(g) alleges a lack of bona fides on Cadbury's part in commencing and continuing with the proceedings.
The single question which calls for an answer in this application is what conduct is it said that Cadbury has engaged in which amounts to taking advantage of its substantial market power. The only answer can be that Cadbury has commenced, and apparently intends to persist with, proceedings against Kenman Foods for alleged contraventions of the Trade Practices Act and other related matters. I do not understand it to be said on behalf of Kenman Foods that the commencement and continuation of proceedings by a corporation with substantial market power against a competitor necessarily amounts to taking advantage of market power. The real complaint against Cadbury is the allegation that it has an improper motive in commencing and continuing with the proceedings which it (Kenman Foods) believes to be untenable, unreasonable and doomed to failure. The only basis upon which such a motive could be found is by inference from the facts, and the only relevant facts are the facts of the proceedings having been commenced and persisted with. There is nothing in the material on which Kenman Foods seek to rely that justifies such an assessment of the proceedings. Certainly, the fact that Jenkinson J did not grant the interlocutory relief sought does not lead to such a conclusion. And that appears to be the only basis pleaded in the cross-claim.
There may well be circumstances in which the unreasonable pursuit of a claimed legal right against a less powerful competitor by a corporation with substantial market power could amount to taking advantage of that power but that case is not this case. The sole basis upon which Kenman Foods supports its cross-claim is Cadbury's failure to obtain interlocutory relief at a very early stage of the proceedings. In my view, in the circumstances of the case as revealed in the pleadings and the reasons of Jenkinson J, Cadbury's conduct cannot be categorised as unreasonable.
The facts as pleaded in paragraphs 35 and 36 of the cross-claim do not support the allegation that Cadbury has contravened section 46 of the Trade Practices Act. The cross-claim therefore does not disclose a case appropriate to the nature of the pleading. Furthermore, by asserting as fact an unsustainable opinion as to the result and effect of the application for interlocutory injunction, and the likely outcome of the application itself, the pleading has a tendency to cause prejudice and embarrassment. In my opinion the proper remedy is for the cross-claim to be struck out.

[1991] FCA 212

28 MARCH 1991