| IN TBE | FEDERAL COURT OF AUSTRALIA ) |
| N E W SOUTE W A L E S DISTRICT REGISTRY | 1 | No. G 923 of 1988 |
| ) |
| GENERAL DIVISION |
| Between: XANLEY (AUST) | PTY LIMITED |
Applicant
| _. | And: | CITER SOUVENIRS PTY LIMITED |
CORAM: Einfeld J.
EX-TEMPORE JUDGMENT
| These proceedin- | us corn | lenced in Chambers when | I | granted leave to serve |
short notice of the application and the statement of claim making the
application returnable today.
The application sought:
| (a) | an interim injunction to prevent the distribution or circulation |
| of | the letter and restrict the commercial activities | of | the | |
| respondent which the applicant alleges have brought | or would | |
bring disadvantage to itself;
| (b) other orders designed to impede what the applicant alleges to | be |
misleading or deceptive representations by the applicant within
| the meaning | of section 52 of the Trade Practices Act | 1974 (the |
permanent restraining orders, inter alia, designed to remedy
what the applicant alleges has already taken place at the hands
of the respondent or its representatives to the detriment of the
applicant's business.
The parties are commercial traders operating at least in Sydney. This
| dispute arose when the respondent notified the applicant on | 6 May 1988 |
by facsimile that it was proposing to send out to its Sydney customers a
| letter critical of certain actions and statements of a representative | of |
| the applicant. |
| On the same day, | 6 May 1988, the applicant's solicitors by letter |
threatened defamation proceedings and action under the Act, as well as
| actions for breaches of the Anti Discrimination Act | 1977 | (NSW) arising |
| out of the proposed letter | - 'proposed' because at the moment the only |
evidence before me suggests that it has not yet been distributed.
These stark partly novel threats were met by a first letter from the respondent on 9 May 1988 in the course of which the respondent says:
| "We will have our letter to customers thoroughly scrutinized |
| by our legal advisers prior to despatching | it to our |
| customers later | this week." |
| The respondent also indicated | an intention 'subject to legal advice yet |
to be sought' to take action against the applicant under the Act, the
common law and what is described as 'under any other act or law that may
| be relevant'. The possibilities are intriguing. | In | particular, the |
respondent indicated a desire to pursue relief, inter alia, for breaches
| of | the Act, damage to | its | reputation, loss of income and punitive |
| damages. However, it extended the olive branch | of |
"at this early stage prior to the incurring of substantial legal costs and prior to the expense of considerable
management time a settlement out of court."
| The basis | of the settlement proposed was: |
| a payment by ,the applicant to the respondent of 'about | $ 5 0 , 0 0 0 ' |
| before 13 May 1988; |
| a letter in approved wording | from | the applicant to all their |
| customers apologising | for their conduct towards the respondent; |
an undertaking that the applicant would cease to utter untrue and malicious statements about the respondent, its employees and directors; and
| an undertaking that the applicant would not, | in the future, copy |
the respondent's designs, nor offer for sale any such copies.
| The applicant was 'generously' given | 2 4 hours to respond to that | offer, |
| failing which the respondent intended to instruct | Mr. Toltz of Clayton |
| Utz, solicitors. | No doubt apprehending that the | 2 4 | hours given was |
moving along with unrelenting speed, the solicitors for the applicant
| apparently had | a conversation with the principal | of the respondent on | 9 |
| May 1988 and also wrote to the respondent | on he same day. |
| The applicant's letter of 9 May 1988 relates that | in the immediately |
| preceding | telephone | conversation, | the | respondent | had | advised | the |
applicant's solicitor that the letter had not been sent to customers, and takes issue with some of its contents. The letter also indicates
| that in the | conversation, | the | respondent | reaffirmed | that | it | was |
| obtaining legal advice and sought | an undertaking by '12 | pm on | 10 May |
| 1988' | (by which I understand the letter to be talking about | 12 noon |
rather than some nefarious nocturnal pursuit), that the respondent would
| desist.frorn sending the letter | 'in any matter (sic) or form'. | I do not |
| know | what the expression was intended to have meant. It was not |
asserted at the hearing before me to have been a typographical error. If the undertaking was not received, the solicitors for the applicant indicated that they would seek an urgent injunction.
| On the same day, the respondent sent | a | hank you note by facsimile to |
the solicitors for the applicant which informed them that if the
| applicant accepted the respondent's proposal | to settle the matter, the |
letter to customers would not be distributed. The respondent also
| forecast that it would be replaced by | a letter from the applicant in |
| accordance with the proposed terms of settlement | and advised the |
| applicant's solicitors that there would be |
| "no need to seek injunctive relief and thereby add to your |
| client's costs. | " |
| The second | 9 May 1988 letter from the respondent proffered that the |
| legal advice was still not being sought pending | a | reply to the |
| respondent's first letter of | 9 May 1988. |
| By 10 May 1988 the Sword of Damocles was about to fall. | In a letter of |
| that date to the applicant's solicitors and expressed | to be 'without |
| prejudice', perhaps to the | 2 4 hour ultimatum earlier given | for a reply, |
the respondent rang down the curtain on conciliation by informing the
| applicant's solicitors that it was requesting | its solicitors to seek |
| from the Court what is described as | 'a minimum damages award' | of |
| $100,000 (thus indicating that the interest rates | in the community had |
| risen, | or | the value of the dollar had fallen, rather dramatically in |
| that 2 4 hour period). The respondent was also seeking | an award of what |
| is | described | as | 'full | costs' | against | the | applicant | and | suitable |
undertakings that the applicant cease to cause damage to the respondent.
| The letter indicated | a belief in the respondent that there would be no |
further action until later that day, but the respondent suggested that
the parties might approach the Court for simultaneous injunctions and
notified that he certainly wished to be heard by the Court on such a
matter.
| On | the | same | day, | the | applicant's | olicitors | responded | to | the |
| circumstances and intentions indicated by the respondent | i the first | 9 |
May letter. The applicant refused the offer of settlement but extended
| the time for the written undertaking to not later than | 5 pm on 11 May |
1988. At 4 . 5 0 pm, or thereabouts, on 11 May 1988, the respondent's
solicitors supplied a letter to the applicant's solicitor taking issue
| with some of the requests | or forms of requests that had been made to |
| their client but advising nonetheless | of the respondent's undertaking |
| not to circulate the proposed letter | o its customers. |
| Against that background;the respondent seeks today | a dismissal of the |
application and costs, arguing that because the applicant gave the
| respondent until | 5 pm last night to give the undertaking sought and that |
the respondent gave the undertaking before the time expired, the
proceedings were and are unnecessary.
The applicant opposes these orders on two principal grounds:
| 1. | that the undertaking profferred in the letter of 11 May from the
respondent's solicitor to the applicant's solicitor delivered
just before the end of the ultimatum period last night, is not |
in terms of the undertaking sought. The undertaking was sought
| in the broad and general form of 'non-distribution | in a y matter | |
(sic) or form', whereas what has been undertaken is that it will
not be circulated to the respondent's; customers; |
| 2. | | that | the | applicant | is | still | seeking | substantive | permanent | |
relief, that it wishes to amend its statement of claim, and that
there are matters in dispute between the parties which are not
dealt with by the undertaking and were not intended to be dealt
with when the undertaking was sought. |
~
| There is no formal application, | in terms of a written document before |
| ~ | the | Court, for the | summary | dismissal | of | the | action, | nor | is | there |
| l |
| ~ | affidavit evidence. It is agreed by the applicant that its solicitors |
| ~ |
| did receive the letter from the respondent's solicitors | a about | 4 . 5 0 | pm | |
| 1 |
| ! |
| l | on | 11 | May | 1988, | and the applicant cannot and does not deny that it |
| j |
approached the Court for relief and received that relief before that
I
i
| I | time. |
| It is not appropriate, in my opinion, to | deal with a summary dismissal | |
| application from the bar table and without | a | proper application | |
| supported by affidavit evidence such as would enable the applicant to |
| oppose the application with its | own evidence if it wishes to do | so and | |
cross-examine any deponents upon whom the respondent relies for such
orders. Further, the applicant seeks other orders and directions for |
| the further preparation of this case, and | I think it should certainly be | |
| allowed to pursue that course. |
| On the other hand, it does not seem to me | on | the face of the material | |
| available that the action is likely | to be one for substantial damages. | |
| In | the circumstances, the parties should emerge from this initial | |
| exchange with | a | sense of responsibility for the costs that wili be | |
| incurred by | a | long perpetuation of these proceedings against any | |
possible result that either party could genuinely hope to gain from the
Court. |
For those reasons, I accede to the applicant’s request to give further
time for the preparation and therefore give the following directions: |
The applicant is to file and serve any amended statement of
claim and application upon which it wishes to rely by not later
than 4 pm on Monday 23 May 1988.
The respondent is to file and serve any application to strike
| out | or for | summary dismissal of the amended application and |
| statement of claim by not later than | 4 pm, Wednesday 1 June |
| 1988, together with any affidavits upon which | it intends to rely |
| in those proceedings. |
| The applicant is to file and serve any affidavits upon which | it |
| wishes to rely in opposition to the application | for | summary |
| relief by not later than | 4 pm on Friday 10 June 1988. |
!
| (d) | The matter is to stand over | for further directions at | 9.30 am on |
Thursday 16 June 1988 before me on which day the parties should
| be ready to argue any application for summary relief filed | on |
behalf of the respondent. To that end, the parties should give
| each other notice by not later than Monday | 13 June 1988 of the |
witnesses whom it is desired to cross-examine.
The costs of today in relation to the application for permanent relief are reserved. In view of all the circumstances, it is my view that the application for interim relief was premature and that therefore the applicant should pay the respondent's costs
| of that application. However, I direct that costs are not | t o be |
| taxable | or | payable until the matter is before the Court on | 16 |
June 1988 for further order in that regard.