J. C. Hutton Pty Ltd v Darling Downs Co-operative Bacon Association Ltd

[1988] FCA 155

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IN THE F'EDESAL COURT OF AUSTRALI&	1
QUEENSLAND DISTRICT REGISTRY	) QLD G192 of 1987
GENERAL DIVISION	)

BETWEEN: J. C. HUTTON PROPRIETARY LIMITED

Applicant

AND: DARLING DOWNS CO-OPERATIVE BACON ASSOCIATION

LIMITED

Respondent

AND:  DARLING DOWNS CO-OPERATIVE BACON ASSOCIATION
LIMITEQ

Cross-Claimant

AND:  J. C. HU'ITON PROPRIETARY LIMITED

First Cross-Respondent

AND: TANCRED BROS. PTY. LIMITED

Second Cross-Respondent

AND:  F'RED PAUL (MERRYLANDS) PTY. LTD.

Third Cross-Respondent

1 .

A

.

MINUTES OF ORDER

3.	the costs of the directions hearing other than
those relating to the notice of motion be costs in
the proceedings;

JUDGE MAKING ORDER:	PINCUS J.
DATE OF ORDER:	24 MARCH 1988
WHERE MADE:	BRISBANE
THE COURT ORDERS	THAT:

1. the time for service of the notice of motion filed

23 March 1988 be abridged;

2 .    the application made by the notice of motion be otherwise dismissed;

4.    the costs of and incidental to the notice of motion

be taxed and paid by the first and second

cross-respondents to the cross-claimant;

5. the cross-respondents deliver any request f o r

particulars of the cross-claimant's pleading on or

before Wednesday, 6 April 1988;

6. the cross-claimant respond to such request on or

before Wednesday, 20 April 1988;

7. the pleading of the cross-respondents to the

cross-claim and	the applicant's pleading to the
defence be filed and served on or before 27	April
1988;

8. the matter be listed for review and further

directions on Wednesday, 4 May 1988, at 9.15 for

one hour.

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

.

IN THE FEDERAL COURT OF AUSTRALIA )

QUEENSLAND DISTRICT REGISTRY ) QLD G192 of 1987

GENERAL DIVISION

BETWEEN:	J. C. HUTTON PROPRIETARY	LIMITED
Applicant

AND:  DARLING DOWNS CO-OPERATIVE BACON ASSOCIATION
LIMITED

Respondent

AND:	DARLING DOWNS CO-OPERATIVE BACON ASSOCIATION
LIMITED

Cross-Claimant

AND:  J. C. HUTTON PROPRIEI!ARY LIMITED

First Cross-Respondent

AND:  TANCRED BROS. PTY. LIMITED

Second Cross-Respondent

AND:  F'RED PAUL (MERRYLANDS) PTY. LTD.

Third Cross-Respondent

PINCUS J . 24 MARCH 1988

M TEMPORE REASONS FOR JUDGMENT

This is a date for review and further directions, in an

application which was filed on 14 October 1987. The applicant has

taken the opportunity to apply by notice of motion for dismissal

of the respondent's cross-claim or, alternatively, for an	order
that the cross-claim be heard	and determined separately from the

applicant's claim. The notice of	motion was filed on	23 March -
that is, yesterday - and	an abridgement of time for service	is

sought. Counsel for the respondent, Mr Drummond Q.C., with whom

Hr King-Scott appeared, had inadequate notice but since the matter

was not complex it appeared to me that	it	could be adequately
argued; it was.

The third cross-respondent, represented by Ms. Gibney,

has mentioned the possibility of making some similar application
and anything which is said in respect of the application made by
the applicant and second cross-respondent is, of course, without
prejudice to the third cross-respondent's right to apply in

respect of the cross-claim against it.

In the course of argument, Mr Muir Q.C., who appeared

with Mr Cooper on the notice of motion, rather broadened it to

suggest that, if the cross-claim should not be dismissed for want

of prosecution, it should be dismissed on the basis that it dld

not comply with 0 . 5 , r.1(2) and I have given consideration to the

matter on that basis.

The first polnt taken, was that the cross-clam had been

brought and pursued in a dilatory fashion and should be dlsmissed

for that reason. "hat aspect of it seems to have no substance at

all. The delays which have occurred are by no means sufficiently

great to enable one seriously to consider striking out the

cross-claim on that ground. One aspect of the delay which should

particularly be mentioned is that a complaint was made of the

circumstance that the pleading on behalf of the respondents did not come in until 27 January 1988. An examination of the papers shows, however, that the pleading was not really as reprehensibly

late as one might think from the circumstance that it was to have
been delivered in December; the orders for directions which were
made in November contemplated delivery of particulars by the

applicant before the defence was filed and those particulars were,

themselves, late. I do not propose, however, to discuss further

the suggestion that there is a ground for dismissal on the basis

of want of prosecution. It is not seriously arguable.

A more substantial point, in my opinion, made by Mr

Uuir, was that the cross-claim should not be allowed because it
was not one in compliance with the rules and the allied suggestion
that it is so remote from the applicant's clam that it would be
incovenient to try the two together. Those points require some

conslderation of the pleadings.

The amended statement of claim filed on 23 December 1987

sets up an agreement made between the applicant and the respondent

on 1 April	1985	under which, in conslderation of a certaln
payment, the respondent was granted excluslve permission	to	use

certain marks upon goods for sale in thls State and in New South

Wales. The statement of claim alleges that the agreement was

subsequently completed and that the respondent became entltled to
use the marks, but that the respondent breached the agreement in
certain respects and therefore the applicant was entitled to a
declaration that the agreement had been validly terminated. There

were claims, connected with those just mentioned, of breaches of

the Trade Practices Act	1974 and for relief under that Act. The
cause of action is thus, putting it	simply, one relating to the

use of marks under an agreement of 1 April 1985.

The amended defence and cross-claim filed on 24 February

1988 makes various answers to the	applicant's claim but says	by
way of	cross-claim that the agreement	on which the applicant

relies was connected with another one. Paragragh 17 of the cross-claim says that, at the time of making of the agreement on

which the applicant relies, the applicant was manufacturing

products of the kind referred to in that agreement, and its

parent, the second cross-respondent, was also manufacturing such products. The cross-claim says that the applicant and the respondent entered into the agreement at the same time as another agreement was made between the applicant's parent (the second cross-respondent) and the respondent, under which the second cross-respondent undertook to comply with certaln covenants in the agreement between the applicant and the respondent made on the same day. The cross-claim goes on to say that the conslderatlon for the second cross-respondent's promises was the maklng of the

agreement between the applicant and the respondent. Then the

pleading sets up that the second cross-respondent breached what I

shall call for short the associated agreement; complaint havlng

been made of that, and as a dodge (putting it simply) the second cross-respondent set up the third cross-respondent to do much the same thing.

The cross-claim seeks damages for breach of contract

against the first cross-respondent	(the applicant) on the basis
that it allegedly should have, but did not, keep up	registration

..d

of a certain mark. It seeks damages against the second

cross-respondent for breaches of the associated contract and	an
injunction, and also seeks similar relief against the third cross-reapondent.

The terms of the rule upon which Mr Muir relied in

support of his submission that the cross-claim should not be

allowed to proceed further are as follows: 0.5, r.1(2) says:

"A respondent may cross-claim against any person

whether another party or a third party for any

relief which is related to or connected with the
subject of the proceeding."

Mr Muir contended that the relief sought against the second and third cross-respondents is not within the meaning of the rule, related to or connected with the subject of the proceeding.

Our rule is in a form which is signiflcantly different from other comparable rules. The tradltional form of such rules

is to give a right, not to "cross-claim'' but to "counter-clalm";

claims arising in the proceedings other than counter-clams are

dealt with separately in such rules.

Here, claims against all persons other than the

applicant are lumped together in 0.5, r.l(Z). Under what might be

called the traditional form of rule, it was early held in Furness

v. Booth (1876) 4 Ch.D. 586 and other cases that the pleading to

be a "counter-claim", must seek relief against the plaintiff. The

principle applicable to such rules appears still to be alive, as

is exemplified by the decision in Watkins Limited v. Plancorp No.

6 Ptv. Ltd. C19833 2 Qd.R. 501, especially at p.506. That

principle has no application to 0 . 5 , r.l(2). Nevertheless, the

rule in this Court follows what might be called the old plan,

which goes back to the Judicature Act, of permitting claims of

this sort to be made only on the condition that the relief sought

is related to	or connected with the subject of the proceeding.
The	connection between the two contracts in question here is

obvious and close. The more debatable point is whether the relief
sought against the second and third cross-respondents is related

to or connected with the subject of the proceeding.

The subject of the proceeding could be identified as

being the working of the contract of	1 April between the applicant
and respondent, or more broadly as being	a dispute concerning the

respondent's right to have the market, to a certain extent,

cleared for its own operations.

Khichever way the subject of the proceeding is defined,

it seems to me that the connection is sufficiently close. Indeed,

it is fairly comparable with that which was held to be sufficient

in the Queensland case to which I have just referred. Although

the dispute there arose in quite a different context, the

situation was similar in outline in that there were two related contracts with different parties; the claim was made on one and the counter-claim made on the other.

I am therefore of the opinion that the relief claimed

against the second and third cross-respondents has a relation to

..

. . 7.

and a connection with the subject of the proceeding, defining that

as being or including the applicant's claim.

"he last point to be considered on the notice of motion

is whether it is, as a practical matter, convenient to try the

cross-claim with the applicant's claim. It is not as easy to

judge that at the present stage as it is likely to be later, but

it appears to me to have been a convenient course on the part of

the applicant to raise the matter now, before the cross-claim goes

any further, because it is, or seems likely to be, a complex

matter, as is indeed the applicant's claim.

It would perhaps be more convenient from the Court's

point	of	view to separate out the claim from the cross-clalm,
because the case may well be	an	onerous one to try, but the

practical or commercial connection between the Issues raised 1 s so

close that it would be a little absurd to decline to try the

collection of disputes in one hearing.

Putting the matter rather too simply, what one side says

is that the arrangement giving the respondent exclusivity is at an

end because of the respondent's illegalities; what the other side

says is that the arrangement still subsists, despite attempts, of

which it complains, by the applicant's owner to subvert it.

"he order will therefore be, as to the notice of motlon

filed yesterday, that the time for service of the motion be