Cilli v Abbott

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY	NO. G31 of 1981
GENERAL DIVISION

BETWEEN: DICK SMITH

ELECTRONICS PTY.

LIMITED

Applicant

AND :	-	HARRY	CHOJNA
Flrst Respondent

AND :

PETER

ALPAR

Second Respondent

AND :

FUTURETRONICS

(AUSTRALIA) PTY.

LIMITED

Third Respondent

AND :

ATARA

INC.

Fourth Respondent

JUDGE MAKING ORDER:

Deane J.

DATE OF

ORDER:

5 June, 1981

WHERE MADE:

Sydney

ORDERS

I order

that

the

following

struck

out

of the

Statement of Claim:

-2-

( a )

The words "a power i n

r e l a t l o n

t o

the

market

in Aus t ra l ia wi th in the meaning of

s.46

t h e

Trade Practices Act

1974"

i n paragraph

16:

(b) The words

power

i n

r e l a t i o n

t o

t h e

s a i d

market i n Austral ia within the meaning

of s.46

the

Trade

Pract

ices

Act

1974"

paragraph

19:

( c )

The words

"market

i n A u s t r a l i a

f o r

t h e s a l e

t o

r e t a i l e r s o f e l e c t r o n i c c o m p u t e r

games

o f

t h e

same

c l a s s

a s

t hose

manufac tu red

under

l i c e n c e

f r o m

t h e

f o u r t h

r e s p o n d e n t "

i n

paragraph

the S ta tement of

C l a i m :

( d ) Paragraphs l1 and 2 1 of the

Statement

Claim.

2 .

o r d e r

t h a t

t h e

f o l l o w i n g

p a r t i c u l a r s

i n c l u d e d

i n

the S ta tement

Clalm be s t ruck out :

( a )

P a r t i c u l a r

( a )

u n d e r

p a r a g r a p h s

1 2 ,

1 3 ,

and

23 of

the

Statement

Clalm;

(b)

P a r t i c u l a r s 4,

6 , under

paragraph

1 7 of

t h e

Statement of Claim.

3 .

I give

the

applicant

leave

amend

the

Statement

of Claim in accordance with

the reasons for judgment.

Amended copy of the Statement

of Claim to be filed and served

on or

before 10 June, 1981.

4. I DIRECT:

(a)

That the applicant amend the Statement of Claim by adding new particulars in the place

of present particular (a) under paragraphs

12,

13, 22 and 23;

(b) That saving

all

proper

objections

and

exceptions the applicant

on or

before 24 June,

1981 furnish to the first, second and third

respondents such further and better

particulars of the Statement of Claim as may

be requested by or on behalf of the first,

second or third respondents	on or before 19
June, 1981.

the and determinatlon of these proceedings or further order from

applicant be restrained

until

the

hearing

5. That

by itself or its directors, servants or agents

or otherwise

howsoever making, issuing or publishing or causing to be made issued or published any statement or comments to any member of the publlc and/or to any representative of the press or

any other form of media

-4-

(a) which pre~udges

any of the matters in issue or

deals with the evidence relating

to any of the

said matters in issue in these proceedings;

(b)

which is in disparagement or harassment of or

creates pre~udice agalnst any

of the first,

second and/or third respondents, in relation

to or arising out

of -

(i) their position as a respondent in these

proceedings:

(ii) the matters in issue

or the evidence

relating to the matters in issue in

these proceedings.

I direct

that

the

first

three

respondents

file

and

serve their defences

on or before 14 July, 1981.

I reserve liberty to the applicant and

to the first

three respondents to apply to have prayer 4 of the Notice of

Motion and any further contempt proceedings that the said

respondents may commence brought on for directions	or hearing
in accordance with the rules.

-5-

I reserve

all

questions

of costs. I direct that in

so far as such costs relate

to so much of the proceedings as

concerned prayer 4 of the Notice of Motion that those costs

be dealt with either by

me on a subsequent application

to me

or by a Judge of this Court dealing with

any further hearing

of prayer 4 of the Notice

of Motlon or any subsequent

contempt proceedings or by the trial judge. I direct that in so far as the other costs of the proceedings before me are concerned that such costs be dealt wlth either by me on a subsequent application or by the trial judge.

9.	I reserve	liberty	to all	parties	to	apply
generally.

10.

I adlourn

the

further

directions

hearing

to 16

July, 1981 at 10.00 a.m.

IN THE FEDERAL COURT

OF AUSTRALIA )

)

NEW SOUTH WALES DISTRICT REGISTRY	)	NO. G31 of	1981
)

DIVISION

GENERAL

)

BETWEEN: DICK SMITH

ELECTRONICS PTY.

LIMITED

Applicant

AND :	HARRY	CHOJNA
-

First Respondent

AND :	PETER	ALPAR
-

Second Respondent

AND :

FUTURETRONICS

(AUSTRALIA) PTY.

LIMITED

Third Respondent

AND :	ATARA	INC.
-
Fourth Respondent

CORAM: Deane	J .
5 June, 1981.

REASONS FOR JUDGMENT

have

reached a firm view in relatlon to

the

questions

which

presently circumstances, I think it preferable that I deliver

arise

for

declsion.

these

~udgment

I . ' L t

-2-

forthwith. I am conscious of the fact that, in adopting this course, it is likely that I shall do less than justlce to the submissions of counsel on the varlous matters which arlse for

consideration.

Introductory

The Court

has before it a Notice

of Motion filed in

proceedings instituted by Dick Smith Electronics Pty. Limited

( "the applicant") against Mr. Harry Cho jna ( "the first

respondent"), Mr.

Peter Alpar

( "the second respondent"),

Futuretronics

(Australia)

Pty.

Limlted

("the

third

respondent" or "Futuretronics") and Atari Inc.

("the fourth

respondent" or "Atari").

In the proceedings, the applicant

seeks inlunctive relief and damages against the respondents.

The appllcation instituting the proceedings has

not, as yet,

been served upon the fourth respondent. The present Notice

of Motion is taken out by the first three respondents.

the

Statement

of Claim filed with

the

Application, the applicant alleges

that Futuretronics has

engaged in the practice

of resale price maintenance

contraventlon of s . 4 8 of the Trade Practlces

Act, 1974 ("the

Act") and in the practice of monopolization in contravention

of s . 4 6 of the Act.

The appllcant's allegation that

Futuretronics has engaged in resale price maintenance is

? _ '

. e

-3-

based on allegatlons that Futuretronlcs

has engaged in the

practices

described

paragraphs

(a)

(b)

(c)

(d)(i)

and/or (d)(ii), of s.96(3) of the Act. The allegation that Futuretronics has engaged in the practice of monopolization is in relation to the retail market in Australia for the sale

of the more sophisticated and comparatively expensive

electronic computer games and

of cartridges and also

relation to the retail market in Australia for the sale

electronic computer games and cartridges bearing the name

mark "Atari" and being manufactured

by, or under licence

from, the fourth respondent.

It is alleged that the first,

second and fourth respondents have, in a variety of ways, been accessaries to, or involved in, these practices on the part of Futuretronics.

By the Notice of Motion presently before the Court,

the first three respondents seek a variety

of orders agalnst

the appllcant.

In them amended form, the specific orders

which these three respondents seek

are:

"1.

THAT this proceeding be dismissed generally alternatively be forever stayed.

2. THAT the Statement of Claim herein be struck

out.

3 . Alternatively to Paragraph

1. hereof, and

further or alternatively to Parasraph 2. hereof,

- -

that the Applicant

do file and serve such further

or other Statement of Claim and such further and

better particulars as

the Court shall direct.

-4-

4 . THAT an injunction be granted herein until the

Hearing

and

determination

of this

Action

further order restraining the Applicant by itself

or its directors servants or agents or otherwise

howsoever from making issuing or publishing or

causing to be made

issued or published any

statements or comments to any member

of the public

and/or to any representative of the press or any

other form of media -

(a)

In relation to any matters in issue or relevant to these proceedings or the proper determination thereof:

(b)

In relation to the merits of the case of any party to these proceedings:

(c)

In disparagement or harassment of any of the

said Respondents

to these proceedings:

(d) Which relate

to these proceedings and are

false or misleading or likely to mislead or

deceive.

5. THAT this proceeding be transferred to the Victoria District Registry of this Court and all further proceedings herein be conducted and continued at Melbourne".

Argument on the question whether the proceedings should be

transferred from the New South Wales Registry of

the Court to

the Victorian Registry (prayer

supra) has been deferred

pendlng resolution of the other matters in dispute on

the

Notice of Motion. The evidence and argument before

me has

been concerned with the other specific orders sought by

the

flrst three respondents under the Notice of Motion (prayers

1, 2, 3 and 4, supra).

-5-

Issues on Notice of Motion

The orders presently sought by the first

three

respondents raise

a number of distinct issues between

themselves and the applicant.

A s

see the matter, those

issues may be defined by reference to the following general

submissions made

on behalf of the first three respondents:

that, the proceedings should be dlsmissed or be struck out, in whole or in part, for the reason that, on the material before the Court, it is apparent that they will fail;

that

the

proceedings should be struck out or

stayed on the grounds that they ar vexatious and an abuse of the process of thls Court for the reason that they are brought for a collateral

purpose:

that parts of the Statement of Claim should be

struck out as a matter of pleading:

that some

of the particulars provided in the

Statement of Claim should be struck out as embarrassing or irrelevant;

-6-

(V)

in so far as the claim for injunctive relief is concerned, that there is a prima facie case, in the relevant sense, that the applicant has and

will, unless restrained

by the Court, engage in

activities which are in contempt of the Court

and

that injunctive relief should

be granted at thls

stage pending a final hearing of

the appllcation

for an injunction.

Before I proceed to a consideration of these

various issues, It is desirable that I set out, in summary

form, some of the circumstances which appear from the

evidence before me and which provide	the context of the
present appllcation.
Background
(a) The factual context

The fourth respondent, Atari, is a United States

corporation which manufactures (and licenses others to

manufacture) certain types

of video computer systems and the

programmes used in those systems. These systems consist

of a

console which can be plugged into a television set together

with stick controls which enable video computer games to be

played on the television set when programme cassettes are

inserted in the console. Atari is the reglstered proprietor

-7-

of two trade marks in respect

of this apparatus. Under an

agreement between Atari and Futuretronics, Futuretronlcs is

the sole distributor and licensee in Australia of the

relevant Atari video computer systems.

1980,

through lawful channels, the applicant

purchased in Hong Kony

a quantity of Atari video computer

systems and

programmes.

The applicant commenced to sell

these products through

a chain of retail outlets which it

operates

in Australia. There is some dispute as to the

appropriate comparison between the price at which the

applicant sold its imported Atari products and the prlce	at
which those products could be purchased from other retail

outlets which had been supplled by Futuretronics.

Be thls as

it may, it is clear that Futuretronics,

of which the first

and second respondents are ~oint

managing directors, strongly

objected to the appllcant importing and retailing the Atari video computer system and programmes independently of it. Futuretronics enlisted the aid of Atari to prevent the

applicant’s activities.

There is

no suggestlon that the systems

and

programmes which the applicant Imported

and sold were

inferior to those imported and distributed by Futuretronics.

Those systems and programmes properly bore

the Atari trade

marks in the sense that they had apparently been manufactured

with the authority

of Atarl and

the Atari trade mark

had,

2 . ,i

-8-

wlth like authority, been afflxed

to them. The complaint was

not that the relevant systems

and programmes had been

manufactured. It was not that, without authority, they bore

the Atari trade mark. The complaint

was that the systems

and

programmes had been Imported into Australia by the applicant

and were being sold by the applicant in this country. This,

so it was suggested, was damaging

to the general marketing of

the Atari products

and was prone to cause confusion

particularly in relation to the availability	of	warranty
services.

(b) Proceedings in the Supreme Court

of Victoria

On 21 November, 1980, Atari instituted proceedings

in the Supreme Court of Victorla against the applicant. On

that day, an interim injunction was granted against the

applicant by the Supreme Court

restraming the advertising of

offers to sell the “Atari“ systems. On 26 November, 1980,

Starke J., in

the

Supreme

Court,

granted

Atari

interlocutory injunction against the applicant restraining

the applicant, by its servants agents or whosoever otherwlse,

selling, offering for sale or advertising for sale video

computer systems bearlng the “Atari“ trade mark or computer

programmes for use in those systems. The considerations

which led his Honour to grant that interlocutory in]unctlon

appear from hls Honour‘s judgment which has been reported

(see (1980) 3 3 A.L.R.

20).

An appeal from that lnterlocutory

injunction to the Full Court

this Court was lodged on

behalf of the applicant but subsequently abandoned.

-9-

Notwlthstanding at

least

two

ubsequent

applications to the Victorian Supreme Court either to

dissolve or vary

the

interlocutory

injunction,

that

injunction remains operative. The action In the Victorian of this year.

The Statement of Claim

The primary allegations in the Statement of Clalm

are, as has been indicated, against Futuretronics. They can

be conveniently divided under the general headings of alleged

resale price maintenance

(s.48

of the

Act)

and

alleged

monopolization (s.46 of the Act).

The allegations against

the first, second and fourth respondents are that they have

been involved in

Futuretronics'

contraventions.

The

Statement of Claim contains a general allegation (paragraph 2 5 ) that the applicant has suffered substantial loss and damage, including loss of profits and goodwill, as a result of the actions of the respondents referred to therein. In

addition to in~unctive

relief, the applicant claims

damages.

-10-

(a) Resale price Maintenance

The various allegations

of resale prlce malntenance

are framed In general terms that correspond to descriptions of practices which are specifically identified as resale

prlce malntenance by various clauses

of S .96 (3) of the Act.

Dlstinct

allegations

are

made

the

ffect

hat

Futuretronics engaged in the practlces descrlbed in clauses

(a),

(c),

(d) and (b) of that sub-section (Statement

Claim, paragraphs 7.8,9 and 10).

Paragraph 11 of the Statement of Claim contains a general allegation that, by reason

of the matters alleged in

the specific paragraphs, Futuretronics

has engaged in the

practice

resale price maintenance contrary to the

provisions of s.48 of the Act. Paragraphs

12, 13, and 14

respectively allege against the first, second and fourth

respondents that the relevant respondent is, in the various

manners referred to in s.75B of the Act, involved in the

actlons of the third respondent.

(b) Monopolization

In the Statement of Claim, the applicant claims

that in November and December, 1980, and subsequently, Futuretronics was a corporation in a position substantlally

-11-

to control both the market

In Australia for the sale to

retallers of electronic computer games

and cartridges

"manufactured by or under licence from" Atari and "bearing

the name or mark Atarl" and "the market in Australia for the

sale to retailers of electronic computer games of the same

class as those manufactured by or under licence from the

fourth respondent and cartridges containing various

programmes for use in the said electronic appliances". The

Statement of Claim alleges that, during that period of time,

Futuretronics took advantage and has contlnued to take

advantage of a power "within the meaning

of s.46 of the" Act

in relation to each market, which

It had by virtue of being

in Its position

of substantial control, for the purpose

preventing the entry

of the applicant into the retail market

in Australia for the sale

of the relevant goods and/or for

the purpose of deprlving or preventing the applicant engaging In competitive conduct in the retail market in Australia for the sale of the said goods.

Upon analysis, the Statement

of Clalm alleges that

Futuretronics has engaged in monopolization under

s.46(l)(b)

and s.46(l)(c) in respect of two different markets, the first

of which is, presumably, alleged to be a sub-market of the

second. The first market is the market in Australia for the

sale to retailers of the fourth respondent's electronic

computer games and cartridges. The second market

1 s

the

market in Australia for the sale

to retailers of computer

games and cartridges "of the same class" as the fourth

respondent's. Paragraphs

22, 23 and 24 of the Statement of

Claim respectively allege against the first, second

and

fourth respondents that

the relevant respondent is involved,

In the variety of manners mentioned in s.75B

of the Act, In

the

practices

of monopolization

alleged

against

Futuretronlcs.

Submission that the proceedings	should be dismissed for the
reason that they must fail

The first three respondents

seek to have the

proceedings dismissed at this stage on the ground that

i is

apparent that the applicant must ultimately fail.

In this,

they undertake a heavy burden.

respondent is

not, under

the guise of a submission that the applicant must ultimately

fail, entitled to force a defendant to a pre-trlal

of the

issues which will be In dispute on the hearing.

A respondent

is only entitled to have proceedings dismissed in limine

the ground that the applicant must fail if, albeit after

argument perhaps of an extensive kind, It is demonstrated

that the case

of the applicant is clearly untenable and that

it cannot succeed (see, generally, v. Victorian Railway Commissioners (1949) 78 C.L.R. 62 at p. 91 and the cases there mentioned: General Steel Industries Inc. v.

Commissioner for Railways

( N . S . W . )

(1964) 112 C.L.R. 125 at

pp. 129-130).

As Dixon J. said in

~ Cox v. Journeaux (No. 2)

((1935) 52 C.L.R. 713 at p. 720):

-1 3-

I'	The inherent jurisdiction of the Court to stay

an action as vexatious is to be exercised only when the action is clearly without foundation

and

when to allow it to

proceed would impose a

hardship upon the defendants which may

be avoided

without risk of injustice to the plaintiff. The

principle, in general paramount, that a claim

honestly made by a suitor for judicial relief must

be investigated and decided

in the

manner

appointed, must be observed.

litigant is

entitled to submit for determination according	to
the due course of procedure a claim which	he

believes he can establish, although its foundation

may in fact be slender".

"he relevant inherent jurisdiction

of the Court in question

was described

Williams

J. in

v. Victorian

Railways

Commissioners (supra, at p. 109) as the jurisdiction of the court "to strike out or stay an action which is shown to be

frivolous or vexatious or an abuse

its process". The

jurlsdiction in question corresponds wlth	at referred to in
Order 20 Rule 2 of the rules of thls Court.

A considerable body of evidence has been placed

before me on behalf

of the first three respondents. By

reference

the

particulars provided in the Statement of

Claim and that evidence, the first three respondents argue

that it is plain that the applicant must fail to make good

any of the allegations that the third respondent has engaged

in resale price maintenance. It is said to be likewise clear

that, as regards the clalmed monopolization, the applicant

must fail to make good the allegation of a separate market in

the relevant Atari products, the allegation that the third

-14-

respondent was in a position

to control the alleged wider

market in products "of the same class", the allegations that

the third respondent had taken advantage

a power in

relation those alleged markets

or the allegations that the

third respondent had acted with the various purposes alleged

in paragraphs 17 and 2 0 of the Statement of Claim.

In the

result, so it is submitted, it IS apparent that the applicant

has no chance of succeeding on the hearing of the action.

The proceedings should be either dismissed or stayed at this

stage for the reason

that, being foredoomed to failure, they

are frivolous or vexatious or an abuse of the process of the Court. Alternatively, it is said that, if I am not prepared

to dismiss or stay the whole proceedings,

I should strike out

particular allegations as being plainly unsustainable.

It may be that,

if the evidence

on the hearing were

to be restricted to the material which

1 s presently before

me, the applicant would fail in respect

of he allegations in

question wlth the result that the action would fall

completely. The question with which

I am presently concerned

is not however whether, on the material presently before me,

the applicant' S allegations are pkima facie refuted or even

whether it appears, on that material, that those allegations

are probably without foundation. The question wlth which

am presently concerned is whether

It is so clear that the

-15-

applicant will ultimately fail In establishlng some or all

those allegations that

I should take the extreme step of

either striking out some or all

of the allegations or

dismissing or staying the proceedings at this stage.

So to

do, would deprive the applicant

of the opportunity to submit

Its allegations for determination according to	the due course
of ordinary procedure.

In view of the conclusion to which I have come, it seems to me to be undesirable that l attempt any detailed analysis or evaluation of the material placed before me or indicate any tentative views on the various questions of fact

or law which,

as I see the positlon,

are involved in the case

the applicant seeks

to make. It suffices

to say that,

notwlthstandlng the careful and helpful argument

of Mr. Lyons

Q . C . ,

and

Mr.

Merkel (in reply) for the first three

respondents, consideration

of the material before me,

including the cross examination of

Mr. Cho-Jna,

has failed to

persuade me of the abovementioned allegations,

absence,

regards

any

the

of	any real question to be

determined between

the applicant and the respondents. More

to the point, I am unpersuaded either that any of the above

allegations or the overall proceedings are plainly without

foundation or that it is inevitable that the applicant will

fail in relation to them if the matter is permltted to

proceed to a hearing in

the ordinary way. It

1 s true that

the applicant has seen fit to refrain from calllng evidence

-1

or engaging In a pre-trial

of the issues involved in the

proceedings. This

it was plainly entitled to do.

A s I have

already indicated, the procedure of

applying to strike out

proceedings should not be seen as a means

forclng an

applicant to submit to a pre-trial

issues which are

appropriate to be submltted for determination in accordance with the ordinary procedure of the Courts. Nor should it be

seen as a device to be used for

the tactical purpose

forclng a defendant into evidence before the actual hearing.

The first three respondents have failed

to persuade me that,

If the

proceedings

are

allowed

go to trial, It 1 s

inevitable that the applicant will fail. Subject

two

particular matters, to which I shall subsequently refer,

I am

of the view that

it would be quite wrong to dlsmiss or stay

the proceedings or strike out any

the allegations

contained in the Statement of Claim on the ground presently

under consideration.

The two particular matters

to which I have referred

relate, first, to paragraphs 9(il) and 10 of the Statement of Claim and, second, to paragraphs 11, 12, 22 and 23 of the Statement of Claim. I pass to a consideration of those matters.

-1 7-

Paragraph 9(il) of the Statement

of Claim reads:

"In November,

1980 the third respondent withheld

the supply

of goods to the applicant for the

reason that the applicant	-
........ ........ ........ .......

(ii) was likely

to sell the goods supplied

to the

applicant by the third respondent at a price

less than the price specified by the third

respondent as the price	below which the goods
were not to be sold".

Paragraph 10 of the Statement

of Claim reads:

"In November, 1980 the third respondent attempted

to induce the applicant not to sell certain goods

namely "The Atari Video Computer System"

price less than the price specified by the third

respondent as the price below which the said goods

were not to

be sold".

These sections of the Statement of Claim are plainly based,

respectively, upon s.96(3)(d)(ll) and s.96(3)(b)

of the Act

whlch include among the acts which constitute resale price

maintenance:

"(a)

the supplier withholding the supply of goods to a second person for the reason that the second person -

.	........ ........ ..

ii) has sold, or is likely to sell, goods

supplied to him by the supplier, or

goods supplied to him by a third person

who,

directly

indirectly,

has

obtained the goods from the supplier,

at a price less than a price specified

by the supplier as the price below

which the goods are not to

be sold;

-18-

and

"(b) the supplier inducing,

or attempting to

induce, a second person not

to sell, at a

price less than a price specified by

the

supplier, goods supplied

to the second person

by the supplier or by a third person who, directly or indirectly, has obtained the goods from the supplier;"

It 1 s submitted on behalf of the first three

respondents that the reference to "goods supplied" in each of ~.96(3)(d)(iii) and s.96(3)(b) is a reference to goods whlch have been or are in fact supplied and does not include goods

of which the supply was in contemplation but which in fact were never supplied. This construction of clause (b) of s.96 (3) is supported by the decision of Keely J. In Trade Practices Commissioner v. Bursill (22 April, 1980).

It is common ground in

the present case that no

relevant goods were supplied

the applicant either by

Futuretronics or by

a person

who, directly or indirectly, had

obtained the goods from Futuretronics. That being so, if the respondents' construction of the provisions of the Act upon which they are based is accepted, the allegations contained

in paragraphs 9(ii) and

10 could not be made good.

The provisions of S. 96 (3

) (d)

( ii) correspond, for

present purposes, with the provisions of ~.66B(2)(d)(ii) of the Trade Practices Act, 1965-1971. In Mlkasa ( N . S . W . ) Pty.

-19-

Limited v. Festival Stores	1972) 127 C.L.R. 167, the view
appears to have been taken	)y all members of the Full High

Court of/ Australia that the phrase

"goods supplied" In the

old ~.66B(2)(d)(ii) extended

to goods the supply of which was

contemplation.

Barwick

P.J. (with whom

McTiernan J.

agreed) commented (supra, at p.

634):

"It is hardly likely that

the Parliament should

have intended to confine par.d(ii) to persons who

had at least one supply of the goods from the

supplier and to have excluded from the operation

of the paragraph persons who were seeking the

supply of the

goods

for

the

first

time.

Grammatically the expression "is likely to sell goods supplied to him by the supplier" is quite inapt at the one time to include goods supplied and goods to be supplied, particularly in the

context

of a provision

dealing

with

the

withholding of supply.

The sense

the

provision, in my opinion, is that the supply has been withheld for the reason that the person from

whom it has been withheld is likelly to sell the

goods, if supplied to him, at a price less than the price specified. In my opinion that is the proper construction of the paragraph and this

submission of the appellant should

be rejected".

Menzies J. (with whom Walsh J. and Gibbs J. agreed on this point) and Stephen J. indicated a similar view (supra, at p. 642 and pp.660-661). To quote Menzies J., the words "goods supplied" in ~.66B(2)(d)(ii) covered "not only goods supplied

in the past

but goods supplied in

the future".

It is

at least arguable that the words

"goods

supplied"

S . 9 3 ( 3 ) (d) (ii)

should

be given the meaning they

bore when used in a corresponding context in ~.66B(2)(d)(ll)

of the 1965 Act.

It is also, in my view, arguable that the

-20-

words in s.96(3)(b) of the present Act

have the same meaning

as they have in s.96(3)(d)(il)

of the Act.

In the view I

take, it would be inappropriate to strike out elther

paragraph 9(ii) or paragraph 10 of the Statement of Claim and

thereby place the applicant in a position where it must

either appeal from my decision In that regard at this stage

or be precluded from maintaining a series of allegations

which are open

to it upon an arguable construction

of the

relevant clauses of S .96(3) of the Act. In this regard,

is relevant to note that it would seem unlikely

that any

reduction in evidence

on the hearing would result from my

striking out paragraph

10 alone.

The first three respondents

have also submitted

that paragraphs 11, 12, 22 and 23 should be struck out on the ground that it is apparent that the applicant must fall to

make them good.

has

been indicated, these paragraphs

allege against the first and second respondents involvement,

in the various manners mentioned in

s.75B of the Act, in the

alleged contraventions by Futuretronics. It is said that the

particulars make it clear that what is alleged against the

first two respondents are acts done in the performance of

their functions as ]oint

managing directors of Futuretronics

and that such activities do not constitute involvement

of the

type referred to in s.75B In general or conspiring with

Futuretronics in particular. It suffices, for present

purposes, to say that, that whlle the argument

of the flrst

-21-

three respondents raises some interesting questions whlch

will required to be determined on the hearing in the light

the evidence then adduced, I

am not persuaded that either the

whole or any part of paragraphs 11, 12, 22 or 23 should be struck out on the ground that it 1s demonstrated that the applicant has no prospect either of establishing the allegations contained in them or, by virtue of such allegations, succeeding against the flrst or second respondents.

Finally, it should be mentloned that

it has also

been submltted that the particulars provided make

it clear

that the applicant must fall in relation

to paragraphs 7 and

9(i) of the Statement

of Claim. Senior counsel for the

applicant indicated, in some detail, the argument which

it is

desired to advance in reliance on those paragraphs. It

possible that that argument might appeal

to some. In vlew of

the fact that it would seem unlikely that retention

paragraphs 7 and 9(i)

will involve any significant increase

in the evidence on the hearing, I conslder it would

be wrong

to preclude the applicant from relying

on the particular line

of argument by striking out the relevant parts	of the
Statement of Claim.

-22-

Submission that

proceedings should be dismissed for reason

that they are brought for a collateral purpose

It is submitted,

on behalf of the first three

respondents, that the material before me establishes that

the present proceedings are an abuse

of process in the sense

that the process of the law IS being abused

"to effect an

object not within the scope

of the process" (per Tlndal

C.J.,

Grainger v. Hill (4 Bing. N.C.

212 at p. 2 2 1 ) ) .

The ob~ect

and purpose

of the proceedings is,

so it is said, not the

rellef sought in the proceedlngs nor the removal

any

detriment to

the applicant resulting from the

unlawful

practices in which the third respondent

alleged

to be

engaging wlth the alleged ald and support

the other

respondents. The proceedings are, it

is alleged, brought by

the appllcant for the ulterior and improper purpose

procuring the removal of Futuretronics as the dlstributor In as such distributor.

The remedy to achieve an improper collateral purpose

of staylng proceedings which are brought

is a strong one.

It should only be exerclsed in exceptional cases. Where the facts are clear and the process of the court is belng so abused however, such relief should be granted (see, generally, Varawa v. Howard Smith (1911) 13 C.L.R. 35 at pp. 55,70; Goldsmith v. Sperrings Ltd. C19771 1 W.L.R. 478 at pp. 489-490, 498 and 503).

-2 3-

present

bring the present proceedings for the relief which it seeks

in them. It is true that there is obviously a background of

ill-feeling and other litigation between the parties. It is

case, I

unpersuaded

the

material before

me that the applicant does not genuinely

true that the evidence discloses that the applicant wished

buy the relevant products, for resale in its

own

and In

associated outlets, dlrect from Atari

and

not through

Futuretronics. It may be that, if monopolization and resale prlce maintenance are eventually established and enjoined In

the present proceedings, the applicant will achieve an

ob~ect

being able

buy the relevant goods other than from

Futuretronics. It

nay be that it may be able to buy direct

from Atari or licensed manufacturers of Atari products. Such objectives are however neither inconsistent with the present proceedings being brought by the applicant for the

purpose of obtaining the rellef which

it seeks in them nor

improper.

The first three respondents

have, in my view,

qulte failed to establish

that the present proceedings should

be stayed on the grounds that they are an abuse of process

for the reason they are brought	to	achieve a collateral
purpose.

I ’

, . ..

-24-

Submission that certain paragraphs

of the Statement of Claim

should be struck out

as a matter

of pleadinq

Order 11 Rule 2 of the Federal Court Rules provides

that, subject to the Rules, a pleading

of a party shall

contain, and contain only, a statement in a summary form of

the materlal facts on which he relies, but not the evldence

by which those facts are to be proved. Order

12 Rule 1 of

the Rules provides that a party pleading shall state, in the

pleading or in a document filed and served with it, the

necessary particulars of any claim, or other matter pleaded

by him.

The Statement

of Claim in the present matter adopts

the

common

and permissible

practice of setting

out

“Particulars“ of the allegations contained In a paragraph	of
the Statement of Claim after the relevant paragraph.

In Bruce v. Odhams Press Limited

(C19361 1 K.B. 680

at pp. 712-713) Scott L.J. summarized the distinction between

the allegations which must be contained in the pleading and

information to be provided by way

of particulars in the

following passages from	his judgment with whlch I would
respectfully agree:

-25 -

The

cardinal provision in r.4

is that the

statement of claim must state the material facts.

The word

"material" means necessary for the

purpose of formulating a complete cause

of action:

and if

any one "material" fact is omitted, the

statement of claim is bad: it is "demurrable" in the old phraseology, and in the new is liable to be "struck out" . . . or "a further and better

statement

claim" may be ordered under Order

XIX., r.7.

The function

of "particulars" under

r.6 is

quite different. They are not

to be used in order

to fill material gaps in a demurrable statement

claim - gaps which ought to have been filled by

appropriate statements

of the various material

facts which together constitute the plaintiff's

cause of action. The

use of particulars

intended to meet a further and quite separate requirement of pleading, imposed in fairness and justice to the defendant. Their function is to

fill in the picture

of the plaintiff's cause

action with information sufficiently detailed to

put the defendant on his guard as to the case he

has to meet and to enable him to prepare for

trial.

Consequently

strictness

particulars

cannot cure a

bad statement

of claim. But in

practice it is often difficult to distinguish

between a "material fact"

and a "particular" piece

of information which it is reasonable to give the

defendant in order to tell him the case

h has to

meet:

hence in the nature

of things there is

often overlapping. And the practice

of sometimes

putting particulars into the statement

of claim

and sometimes delivering them afterwards either

voluntarily, or upon request

or order, without any

reflection as

to the true legal grounds upon which

they are to

be given has become so common that it

has tended to obscure the very real distinction

between them".

It has been submitted on behalf

of the first three

respondents that, regardless of whether the general attack

the statement of claim succeeded, a number

of specific parts

of the Statement of Claim should be struck

out because of the

form they take. The paragraphs in question are paragraphs

8, 9, 10, 11, 12, 13, 15, 16, 17, 18, 19, 20, 21, 22 and 23.

-26-

The general approach adopted

In the Statement

Claim is to follow the provisions of the Act and to allege, sometlmes in general terms, the various matters of material

fact which are specified in the Act

constituting the

particular practice

of monopolization or resale price

maintenance. The clauses of

the

Statement

of Clalm

themselves identify relevant dates

and, in general terms,

alleged

markets.

The

particulars

set

out after

various

paragraphs fill in the picture of the applicant'	S case with
more detailed information.

It is arguable that a statement

claim, as

distinct from the particulars provided

In or with it, should

be more specific and detailed than

is the Statement of Claim

in the

present

matter.

To put

the

matter

somewhat

differently, a number

of the allegations in the Statement

Claim in the present matter consist, upon analysis, of allegatlons of secondary rather than allegatlons of primary

fact. To some

extent,

however,

this

1 s inevitable.

For

example, it would be absurd to require that a statement	of
clalm allege not that the defendant drove a motor vehicle

down a street but

to allege all of the particular acts

of the

defendant which constltute driving a motor vehicle together

with the fact that the motor vehicle

was moving down the

street. The principles

of pleading are not so technlcal as

to require that

consideratlons of common

sense

disregarded.

N o r should the position

be allowed to develop

where pleadings, which are, wlth proper particulars, adequate

to enable identification

of the real issues between the

parties, are unnecessarily mutilated upon the spikes	of
technical and argumentative ojections.

In the view I take, the overall approach adopted the pleader in the Statement of Claim in the present matter

is a permissible one.	I do not uphold the general attack	on
the pleader’s approach.

A variety

of particular objections was made to

specific parts of the Statement of Claim.	I uphold the
following:

(a) the reference in paragraphs l6 and

19 to the

third respondent having

“a power in relation

to the

(said) market in Australia within the

meaning of s . 4 6 of the Trade Practices

Act” is

objectionable in that

it requires a conclusion

of law before it is possible to identify the

subject matter

of the reference:

(b)	the reference to “market In Australia for the sale to retailers of electronic computer games

of the same class as those manufactured by or

-28-

under licence from the fourth respondent" In

paragraph 18 is embarrassing in that it lacks

adequate precision;

11 and 21 of the

Statement of Claim involve conclusions

f law.

In one sense, they provide

convenient

division of the Statement of Claim and

have no

real detrlmental effect. Slnce objection is

taken to them however,

I consider that I

should hold them to be objectionable.

Those parts of the Statement of Claim referred to In (a), (b) and (c) should be struck out. In the case

of the

matters referred to in (a) and (b), leave should

be given to

the applicant to amend the relevant paragraphs	of the
Statement of Claim.

It should be added that, during the course

of the

submissions of senior counsel for the applicant,

it seemed to

me	that there may well be some divergence between the

contents of the

paragraphs of the Statement of Claim

containing allegations

resale price maintenance and the

particulars provided

of those paragraphs and the detailed

case which the applicant wished ultlmately

to present. Thls

posslble divergence did not, in the view

take, warrant

striklng out the relevant paragraphs

of the Statement

claim on any of the grounds pressed on behalf of the first three respondents. If it had been allowed to continue, the consequences would have been on the applicant's head. The

existence of it was conflrmed when, thls morning, the

applicant sought leave to amend the Statement

of Claim in

accordance with

the contents of an Amended Statement

of Clalm

which was handed to me.	I shall refer subsequently to that
application.

Submission that certain particulars should

be struck out

argued

on behalf of the first three

respondents that a number

of the particulars included in the

Statement of Claim should be struck out as embarrassing. It

further

argued

that

the

particulars

provided

are

defective.

As has been seen, the Notice of Motion seeks an

order that the applicant file and serve such further and

better partlculars as the Court shall direct.

On the question of particulars, it 1s relevant to

note that when the matter was before Ellicott J. on 1 May.

1981, his Honour directed that

any further particulars be

sought on or before 5 May, 1981, and that any such further particulars be supplied on or before 8 May, 1981. In fact,

for reasons mentioned by Mr. Merkel in the course

submissions this morning, the first three respondents sought

no further particulars prior to the flling

of the Notlce of

Motion.

In this regard, it is also relevant

to note that the

first three respondents did not, before the filing

of the

Notice of Motion, indicate to the applicant either that they

objected to particular portions

of the Statement of Claim on

specific pleading grounds or that they objected

to certaln of

the particulars set

out in the Statement

of Claim.

The first three respondents, at

my request,

furnished a list

of the particulars which they sought

to have

struck

out.

lengthy

list

which,

on analysis,

includes most of the particulars provided in the Statement Claim. The respondents are not required to plead

the

particulars and I

have formed the clear view that, in all the

circumstances, the only particulars which should be ordered to be struck out are those which I consider to be positively embarrassing to the first three respondents. These are:

(i)

particular (a) to paragraphs

1 2 , 13, 22 and

23 of the Statement

of Claim. Objection

havlng been taken to the particular in this

form, the

applicant

should identify

precisely which of the particulars furnished

with each of the paragraphs referred to are

applicable in that some of such particulars

would appear not to be relevant:

-31 -

(ii)

p a r t i c u l a r s

( i v )

(v)

( v i )

paragraph

1 7

o f

t he

S t a t emen t

Claim.

These

p l a i n l y

refer

t o m a t t e r s

proposed

evldence

and

are embarrass ing .

was

the c a s e

w i t h

t h e

p a r a g r a p h s

o f

t h e

Statement

C l a i m r e l a t i n g

t o

resale

pr ice

maintenance,

seemed t o me, on a number o f

o c c a s i o n s ,

t h a t

h e r e

may

some dlvergence

between

some

the

p a r t l c u l a r s

t h o s e

paragraphs

set

o u t

i n t h e S t a t e m e n t

Claim and the detai led

c a s e

which

t h e

a p p l i c a n t

may

w i s h

u l t i m a t e l y

t o

p r o p o u n d .

Again,

th is i s confirmed

the

Amended

Statement

C l a i m

which

was

anded

t o

m e

t h i s

m o r n i n g .

t u r n

t o

c o n s i d e r a t i o n of

t h a t

document.

Leave to amend Statement of

C l a i m

T h e

app l i can t

s eeks

l eave

t o amend

paragraphs 5 ,

7 ,

9 and

10 of the S ta t emen t

Clalm i n the manner

i n d i c a t e d

i n the Amended Statement of Claim

(M.F.I.

4 )

whlch

i s

i n i t i a l l e d

b y

m e

and

placed

w i t h t h e

p a p e r s .

I t

a l s o

s e e k s

l e a v e

t o

amend t h e Par t icu lars of paragraphs 7. 8, 9 and 10

the

Statement of

C l a i m i n the manner

i n d l c a t e d m

tha t

document.

Subject

t o

q u e s t i o n s

c o s t s ,

c o n s i d e r

t h a t

should

a l low

these

amendments.

They

would

seem

t o remove

t h e

apparent

dlvergence

between

the

o r ig ina l

S t a t emen t

C l a i m

and

P a r t i c u l a r s

and

t h e manner

i n wh ich

the app l i can t

seemed

t o m e

t o be

l i k e l y t o w i s h u l t i m a t e l y t o p u t

i t s case .

-32-

The Amended Statement of Claim

involves

amendments

t o

p a r a g r a p h

t h e

S t a t e m e n t

C l a i m

o f

i n

t w o

comparatively

minor

respects

and

amendments

t o p a r a g r a p h s

and 19 of the

Statement

Claim

which

w i l l overcome

t h e

d i f f i c u l t y

i n

r e l a t l o n

t o

t h o s e

p a r a g r a p h s

t o

which

have

r e f e r r e d

and

which

come

w i t h i n

t h e

l e a v e

t o

amend

which

have a l ready indica ted should

g ran ted

i n

r e l a t i o n

t o

t h o s e

paragraphs.

The app l i can t

shou ld

be g iven

leave

t o make such

amendments.

The

a p p l i c a n t

s h o u l d

a l s o

g i v e n

l e a v e

t o

amend paragraph 18 and the

Pa r t i cu la r s

unde r

pa rag raphs

and 18 of

the

tement

o f

C l a i m

i n

t h e

manner

Ind ica t ed i n

t h e Amended

Statement of

C l a i m .

I n t h e r e s u l t ,

o f

t h e v i e w

t h a t

t h e a p p l i c a n t

should be g iven

l eave

t o

amend

the S ta t emen t o f C la im in

the

manner

sought by

it.

C l a i m for

i n j u n c t i v e r e l i e f

has

been

seen ,

the

p rayer

for

i n j u n c t i v e

re l ief

i n

t h e n o t i c e o f m o t i o n

w a s

framed

in ve ry wide

terms.

Af t e r

a n I n i t i a l

amendment,

t he

ln junc t lon sough t

w a s

for

l i m i t e d

term,

namely,

u n t i l

t h e

h e a r i n g

and

d e t e r m i n a t i o n

o f

t h e

a c t i o n

f u r t h e r

d e r .

t h e

I n

c o u r s e

h i s

f i n a l

s u b m i s s i o n s ,

s e n i o r

c o u n s e l

f o r

t h e

f i rs t

th ree

r e sponden t s

i n d i c a t e d t h a t h i s

c l i e n t s

d id no t

press

f o r

a n i n j u n c t i o n i n

the

wide

terms appea r ing

i n

t he

No t i ce

o f

Motion

b u t

sought

o n l y a

much

narrower

form

o f i n j u n c t i o n .

-33-

A number of problems in relation to the application

for in~unctlve

relief emerged on the hearing. The applicant

was not provided with advance information as

to the case

which the first three respondents were advancing against

it.

Indeed, that case plainly varied and expanded as the hearing

progressed. Thus, it was indicated at an early stage of the

proceedings that it was no part of the case presented that

the applicant had actually committed a contempt of court: by

the time

of closing addresses,

it was alleged that there were

six separate heads	of alleged contempt	of court by the
applicant.

In these circumstances, I took the view

that the

application for an injunction restraining publication should

be dealt with Initially on a purely interlocutory

basis, that

1s to say, as an application for interim relief pending a

full hearing

of the prayer for relief contained in the Notice

Motion. The application for

an injunction restraining

publication was, as I understood the matter, proceeded with

on that purely interlocutory basis.

At the conclusion of his final submissions, senior

counsel for the applicant indicated that while his client

strongly disputed that any event which could constitute

contempt of court had occurred or was Intended, the applicant

was prepared to give an undertaking to the Court

to the

effect of the narrowed form

of inlunction for which the flrst

three respondents were then pressing. Alternatively, it was

indicated that if the first three respondents were not

content wlth an undertaking, the appllcant consented to the

grant of an interim injunction in that narrowed form.

Counsel for the first three respondents informed the Court

that his cllents were	not content wlth an undertaking and
pressed for in~unctive	relief.

In the circumstances,

I propose to grant an interim

injunction in the narrowed form

now sought by the first three

respondents. The basis

on which that interim injunction is

granted is that it is lnterlocutory in character in the sense

that it will be open to elther side to have prayer

4 of the

Notice of Motion called

on for further hearing. I would add

that it will be open to either side to apply

t any time for

directlons aimed at brlnglng the issues ralsed by prayer

4 of

the Notice

of Motion on for hearing in a state whlch will

Gnable them to be dealt with on a full and proper basis. I propose to reserve liberty in that regard.

-35-

Further and better particulars

The particulars of the Statement of Claim which

have been supplied

are, in one sense, inadequate in that

there are some general allegatlons in the Statement

of Claim

which are left unsupported

and unparticularlzed.

To some

extent, this position is

on the first three respondents' own

head in that they failed

to take advantage

of the opportunity

given them by Ellicott

J. to seek further

and better

particulars. Notwithstanding that failure,

I consider that

further and better particulars should be supplied by	the
applicant.

I have been troubled as

to whether the more

appropriate course

is simply to order the applicant to supply

further and better partlculars or to glve to the first three

respondents an opportunity

of seeking such further and better

particulars as they may be advised. I have come to the view

that, in all the circumstances, the appropriate course

is to

allow the first three respondents a further opportunity	to
seek further and better particulars.

(His Honour proceeded to make orders and

glve directions in

the form of the annexed document. By consent, all costs were

reserved).

[1981] FCA 70

5 Jun 1981