Costa Vraca v Bell Regal Pty Ltd

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FEDERAL COURT OF AUSTRALIA

Costa Vraca v Bell Regal Pty Ltd [2003] FCA 65

TRADE PRACTICES – claims for loss and damage by tomato growers in Australia against an Israeli producer of infected tomato seeds – the producer supplied the seeds in a sealed package for resale by its exclusive distributor in Australia – leave to serve the originating process out of the jurisdiction – whether certain statements made on the package and by the producer to its exclusive distributor in Australia constitute conduct by the producer in Australia – whether the Australian tomato growers have a prima facie case for the relief they claim against the producer

COURTS – Practice and procedure – security for costs – whether security should be ordered in circumstances where those standing behind an applicant will benefit from the litigation but are not prepared to bear any risks as to the applicant’s costs of the litigation.

Trade Practices Act 1974 (Cth) ss 5(1), 52 and 86
Federal Court Rules 1979 (Cth) O 8 r 2(2), O 28 r 3(1)(b)
Foreign States Immunity Act 1985 (Cth) ss 9, 11(1) and 13
Federal Court of Australia Act 1976 (Cth) s 56
Corporations Act 2001 (Cth) s 1335(1)

Cell Tech Communications Pty Ltd v Nokia Mobile Phones (UK) Ltd (1995) 58 FCR 365 - applied
Bray v F Hoffman-La Roche Ltd (2002) 190 ALR 1 - applied
Handbury v Nolan (1977) 13 ALR 339 - cited
Costa Vraca Pty Ltd v Berrigan Weed & Pest Control Pty Ltd (1998) 155 ALR 714 - cited
Dovuro Pty Ltd v Wilkins (2000) 105 FCR 476 - cited
Graham Barclay Oysters Pty Ltd v Ryan [2002] HCA 54 - cited
Woods v Multi-Sport Holdings Pty Ltd (2002) 186 ALR 145 - cited
Donoghue v Stevenson [1932] AC 562 - cited
The Council of the Shire of Wyong v Shirt (1980) 146 CLR 40 - applied
Schellenberg v Tunnel Holdings Pty Limited (2000) 200 CLR 121 - cited
Johnson Tiles Pty Ltd v Esso Australia Pty Ltd (2000) 104 FCR 564 - cited
Henry v Henry (1996) 185 CLR 571 - cited
Beach Petroleum NL v Johnson (1992) 10 ACLC 525 - cited
MHG Plastic Industries Pty Ltd v Quality Assurance Services Pty Limited [2002] FCA 821 - cited
Rosenfield Nominees Pty Ltd v Bain & Co (1988) 14 ACLR 467 - cited
Acohs Pty Ltd v Merck Ltd [1997] FCA 573 - considered
Bell Wholesale Co Ltd v Gates Export Corporation (1984) 2 FCR 1 - cited
Bryan E Fencott Pty Ltd v Eretta Pty Ltd (1987) 16 FCR 497 - cited
Laundry Coin-Wash Nominees Pty Ltd v Dunlop Olympic Ltd (1985) ATPR 40-584 - cited

Harpur v Ariadne Australia Limited (1984) 2 Qd R 523 - cited
Jalpalm Pty Ltd v Hamilton Island Enterprises Pty Ltd (1995) 16 ACSR 532 - cited

COSTA VRACA PTY LTD v BELL REGAL PTY LTD AND OTHERS
VG 773 OF 2000
A & F & D MERCURI PTY LTD v BELL REGAL…

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Details
Case
[2003] FCA 65
Decision Date

CaseChat Overview and Summary

Costa Vraca, an Australian tomato grower, brought a proceeding against Bell Regal, an Australian distributor, and Hazera, an Israeli seed producer, alleging various breaches of Australian consumer protection laws and negligence. Vraca claimed that the seeds sold by Bell Regal on behalf of Hazera did not meet the quality standards described in the Hazera catalogue and brochure. The respondents argued that the Federal Court lacked jurisdiction and that the proceedings should be stayed as Vraca's claims depended on the testing procedures of the Plant Protection and Inspection Services in Israel, which was not subject to Australian jurisdiction.

The Court had to decide if Vraca had a prima facie case for the relief sought, if the Court had jurisdiction over the proceeding, and if the proceeding met the requirements of Order 8 rule 2(2) of the Federal Court Rules. The Court also had to consider if the Federal Court was an appropriate forum for the dispute.

The Court found that Vraca had a prima facie case against Hazera for breach of the Australian Consumer Law and in negligence. It held that the Court had jurisdiction under s 86(1) of the Trade Practices Act, and that the negligence claim was part of the "matter" raised by the s 52 claim, which was within the Court's accrued jurisdiction. The Court also found that the proceeding met the requirements of Order 8 rule 2(2). The Court dismissed the respondents' contention that the Federal Court was an inappropriate forum for the proceeding.

The Court dismissed the respondents' applications, ordered the respondents to pay Vraca's costs, and granted Vraca leave to amend its statement of claim within 28 days. It also ordered Vraca to pay a specified amount for security for costs within 30 days or provide a bank guarantee for the payment of those costs in a form acceptable to a Registrar of the Court. The Court reserved its liberty to apply for further orders.

Orders

Orders of the court

1. The Notice of Motion of the second and third respondents dated 15 February 2002 be dismissed.

2. The second and third respondents pay the applicant’s costs of and incidental to the motion.

3. The applicant have leave to further amend its statement of claim within 28 days.

4. The Notice of Motion of the first and fourth respondents dated 6 June 2001 for security for costs be dismissed.

5. The first and fourth respondents pay the applicant’s taxed costs of and incidental to the Notice of Motion for security for costs.

1. The Notice of Motion of the second and third respondents dated 15 February 2002 be dismissed.

2. The second and third respondents pay the applicant’s costs of and incidental to the motion.

3. The applicant have leave to further amend its statement of claim within 28 days.

4. Within 30 days the applicant either pay into Court the sum of $20,000 for security for costs or provide a bank guarantee for the payment of those costs in a form acceptable to a Registrar of the Court.

5. Reserve liberty to apply.

6. The applicant pay the taxed costs of the first and the fourth respondents of and incidental to their Notice of Motion dated 6 June 2001 for security for costs.

1. The Notice of Motion of the second and third respondents dated 15 February 2002 be dismissed.

2. The second and third respondents pay the applicant’s costs of and incidental to the motion.

3. The applicant have leave to further amend his statement of claim within 28 days.

1. The Notice of Motion of the second and third respondents dated 15 February 2002 be dismissed.

2. The second and third respondents pay the applicants’ costs of and incidental to the motion.

3. The applicants have leave to further amend their statement of claim within 28 days.

1. The Notice of Motion of the second and third respondents dated 15 February 2002 be dismissed.

2. The second and third respondents pay the applicant’s costs of and incidental to the motion.

3. The applicant have leave to further amend its statement of claim within 28 days.

4. Within 30 days the applicant either pay into Court the sum of $10,000 for security for costs or provide a bank guarantee for the payment of those costs in a form acceptable to a Registrar of the Court.

5. Reserve liberty to apply.

6. The applicant pay the taxed costs of the first respondent of and incidental to its Notice of Motion dated 6 June 2001 for security for costs.

1. The Notice of Motion of the second and third respondents dated 15 February 2002 be dismissed.

2. The second and third respondents pay the applicants’ costs of and incidental to the motion.

3. The applicant have leave to further amend their statement of claim within 28 days.

1. The Notice of Motion of the second and third respondents dated 15 February 2002 be dismissed.

2. The second and third respondents pay the applicant’s costs of and incidental to the motion.

3. The applicant have leave to further amend its statement of claim within 28 days.

4. Within 30 days the applicant either pay into Court the sum of $15,000 for security for costs or provide a bank guarantee for the payment of those costs in a form acceptable to a Registrar of the Court.

5. Reserve liberty to apply.

6. The applicant pay the taxed costs of the first and the fourth respondents of and incidental to their Notice of Motion dated 6 June 2001 for security for costs.

Background

Background to the litigation

The main issues raised by the Hazera respondents’ applications, are whether the Court is satisfied that:·the applicants have a prima facie case for the relief sought on the basis of any of the causes of action relied upon by the applicants against the Hazera respondents;·the Court has jurisdiction in the proceeding, in the sense that it has jurisdiction to grant any of the relief sought in relation to the causes of action in respect of which the applicants have a prima facie case.See Hoffman-La Roche at 11.Background(a) Costa Vraca In 1996 representatives of Costa Vraca were given copies of the Hazera catalogue when they attended at the second respondent’s display stand at an agricultural exhibition in Israel. The catalogue provided information about each of the varieties of seed produced by the Hazera respondents and stated, inter alia, that the Daniela tomato plant was a “highly productive hybrid with very firm fruit and long shelf-life”. The catalogue also stated, inter alia, that the Hazera respondents were long established and prominent seed marketing companies that employed:“State-of-the-art Quality Control systems ensuring that only top quality seeds are marketed to our customers’ full satisfaction.” Costa Vraca’s representatives were informed by representatives of the Hazera respondents at its display stand that the tomatoes grown by the Daniela seed was their best tomato and the “best tomato in the world”. In 1997, after representatives of Costa Vraca visited a number of properties in Queensland and Western Australia where commercial crops of tomatoes were being grown from the Hazera respondents’ Daniela seed, Costa Vraca proceeded to plant a trial crop using the seed. Costa Vraca’s trial crop resulted in “excellent yields”, with no problems “whatsoever” and obtained from them the “highest prices at market”. Late in 1997 Mr Josip Balint, a representative of Lefroy Valley, provided Mr Joseph Vraca with a copy of the Daniela brochure. The brochure contained photographs of the Daniela tomato and detailed product information extolling the “[s]uperior yield”, “excellent quality” and “[v]ery long shelf life” of the tomatoes grown from the Daniela seed. In addition to the product information the brochure stated that “Hazera have a tremendous depth in technical knowledge for tomato production that is available to growers around the world”. The brochure also stated that “All Hazera varieties will be available in original packaging”. A Hazera “Quality Seeds” logo was prominently displayed in the brochure. On 29 May 1998 Costa Vraca decided to purchase three million Daniela seeds from Bell Regal. In September or October 1998 it purchased an additional 300,000 Daniela seeds. The seeds were produced by the Hazera respondents in Israel, supplied by the Hazera respondents to their exclusive distributor in Australia, and then sold and delivered by Bell Regal to Costa Vraca in the Hazera respondents’ sealed packaging. The packaging describes the seeds as Hazera’s Daniela seeds and states their origin is Israel, and notes the Lot number of the seeds and the dates on which the seeds were “Tested” and “Germ Tested” (July 1998 and June 1998 respectively). It is clear that the seeds were intended to be sold and delivered to purchasers or to nurseries nominated by the purchasers in the Hazera respondents’ “specially processed packed and sealed” packages. The package marked Exhibit “A3” displayed a guarantee by the Hazera respondents, but stickers placed on the package covered the details of the “guarantee” and other statements on the sealed package.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

MERKEL J
Accordingly, although I recognise the difficulty of making the above findings on the extremely limited evidence before me, I am satisfied that the applicants also have a prima facie case in negligence against the Hazera respondents.Order 8 rule 2(2) - Conclusions For the reasons set out above, I am satisfied that the applicants have a prima facie case for damages in respect of the conduct of the Hazera respondents in contravention of s 52 of the TPA and also in negligence. As I have found a prima facie case in negligence and under s 52 it is unnecessary for me to consider the other claims made against the Hazera respondents. The Court has jurisdiction in respect of the contravention of s 52 under s 86(1) of the TPA. There is a sufficient overlap in the factual issues involved in the s 52 and the negligence claims for those claims to form part of the “matter” before the Court: see Johnson Tiles Pty Ltd v Esso Australia Pty Ltd (2000) 104 FCR 564 at 599. Accordingly, the negligence claim is part of the “matter” raised by the s 52 claim and is therefore within the accrued jurisdiction of the Court. The final requirement under O 8 r 2(2) is the requirement in sub-rule (b) that r 1 applies to the proceeding. It is clear that the proceeding is founded on a cause of action arising in the Commonwealth, being the contravention of s 52 of the TPA, with the consequence that O 8 r 1(1)(a) applies. Insofar as the negligence claim is based on tortious acts or omissions committed outside the Commonwealth O 8 r 1(1)(ad) applies as the proceeding is for the recovery of damage suffered in the Commonwealth caused by a tortious act or omission, wherever occurring. Accordingly, I am satisfied that the requirements of O 8 r 2(2) have been met. The prima facie case that I have found has been made out on the evidence, is not one which strictly conforms to the cases pleaded by the applicants. In the circumstances it is appropriate to grant the applicants leave to amend their pleadings. The amendments should also take into account the criticisms of the pleadings made by the Hazera respondents.Inappropriate forum The Hazera respondents final contention is that the Federal Court is a clearly inappropriate forum for the determination of the dispute between the parties and that the applicants’ proceedings against them should be stayed: see Henry v Henry (1996) 185 CLR 571 at 587. The contention is primarily based upon the claim of the Hazera respondents that, if the proceedings are contested in Australia, they will be unable to bring a cross-claim in respect of the tests carried out by the PPIS, which is an agency in the State of Israel. In that regard reliance is placed by the Hazera respondents on s 9 of the Foreign States Immunity Act 1985 (Cth) (“the Immunities Act”) which provides that, except as provided by the Immunities Act, a foreign state is immune from the jurisdiction of the Courts of Australia in a proceeding. There are a number of problems with this contention. First, it is hypothetical at this stage as to whether the Hazera respondents have, or will bring, any claim against the PPIS or the State of Israel. While the PPIS appear to have carried out certain inspections and issued certain declarations, it is far from clear that any of the deficiencies in the testing procedures that I have adverted to earlier in these reasons are deficiencies in the testing procedures of the PPIS, rather than deficiencies in the testing procedures of the Hazera respondents or other bodies it engaged to conduct tests.

Ratio Decidendi

Legal Principle Established

Established by: MERKEL J

Full text does not contain this section.