Kotan Holdings P/L v Trade Practices Commission
[1991] FCA 507
•15 AUGUST 1991
Re: KOTAN HOLDINGS PTY LTD; BIG ROCK PTY LTD and COLIN SAUL ROCKMAN
And: TRADE PRACTICES COMMISSION
Nos. WA G46, 58 and 62 of 1991
FED No. 507
Trade Practices - Practice and Procedure
COURT
IN THE FEDERAL COURT OF AUSTRALIA
WESTERN AUSTRALIA DISTRICT REGISTRY
GENERAL DIVISION
French J.(1)
CATCHWORDS
Trade Practices - notices under s.155 Trade Practices Act 1976 - alleged improper purposes - statement of claim struck out - appeal dismissed - leave to file new statement of claim sought - claim for interim injunctive relief - prevention of access by Commission to documents produced pursuant to notices - requirement for serious case to be tried - no evidence tendered - oral motion for summary judgment dismissing applications - notice required.
Practice and Procedure - interim injunction - serious case to be tried - not demonstrated by mere pleading - evidence required - balance of convenience - effective remedy available if order refused.
Trade Practices Act 1974 s.155
HEARING
PERTH
#DATE 15:8:1991
Counsel for the Applicants : Mr P. Rowe
Solicitors for the Applicant : Robinson Cox
Counsel for the Respondent : Mr S. Owen-Conway
Solicitors for the Respondent : Australian Government Solicitor
ORDER
1. The applicants are to file and serve any motion for leave to file an amended statement of claim together with a minute of the proposed amended statement of claim on or before 5 September 1991.
2. The motion be returnable on 19 September 1991 at 10 am.
3. Any motion to dismiss the application and any affidavit in support be filed and served on or before 12 September 1991 and returnable on 19 September 1991 at 10 am.
Note: Settlement and entry of Orders is dealt with in Order 36 of the Federal Court Rules.
JUDGE1
ON MOTION FOR INTERLOCUTORY RELIEF
In the statement of claim in these consolidated proceedings, which was filed on 17 June 1991, allegations were made by two dealers in Toyota motor vehicles concerning the conduct of the Trade Practices Commission in the issue of notices under sub-s.155(1)(c) of the Trade Practices Act 1974 requiring the attendance of persons connected with the dealers for examination and to produce documents. Paragraphs 17 and 18 of the statement of claim referring to two sets of the notices, were in the following terms:
"17. The Second Notices and the Third Notice were issued and the examinations have been conducted for the purpose, alternatively for purposes that include the purpose of:-
(i) providing the Commission with admissible evidence intended to be tendered in the envisaged proceedings for contravention;
(ii) relieving the Commission from the effects of its inability to obtain discovery or to interrogate in penalty proceedings;
(iii) depriving the proposed defendants of the effective benefits of their immunity from discovery and interrogation;
(iv) effectively removing from the jurisdiction of the Court the power to restrict discovery and interrogation;
(v) obtaining evidence to be used in penalty proceedings on the question of quantum of any penalty.
18. The First and Second Examinations hitherto conducted under the Second Notices have been conducted by Mr Owen-Conway for the purposes aforesaid."
Various forms of declaratory and injunctive relief were sought against the Commission in relation to the notices and the examinations said to have been conducted pursuant to them.
On 24 June 1991 on a motion by the Commission, I made an order striking out the statement of claim and requiring that the applicants pay the Commission's costs of the motion. That order was the subject of an application for leave to appeal to the Full Court and, leave having been granted, the appeal was dismissed with costs on 7 August 1991. There were published at that time joint reasons for judgment by Davies and Foster JJ. and separate reasons by Lockhart J. In the joint reasons it was said of para.17 that:
"Paragraphs 17(ii), (iii) and (iv) could, if read on their own, stand in a different position. These paragraphs, if read on their own, could be taken to allege a positive intent on the part of the Commission to interfere with the due process of and the course of the envisaged legal proceedings. Such a purpose could be an ulterior purpose which could invalidate the issue of the s.155 notice. The s.155 power was not conferred for such a purpose but to aid the Commission in the carrying out of its functions under the Act. However, paragraphs 17(ii), (iii) and (iv) were not separately relied upon before the trial Judge or in the appeal and were not separately referred to in the notice of appeal. Before the trial Judge and in the appeal, these paragraphs were treated as another way of putting the points made in paragraphs 17(i) and
(v), namely, that the s.155 power ought not to be used for the purpose of enabling the Commission to obtain evidence which could be used in the envisaged legal proceedings, evidence which could not be obtained in those proceedings through the ordinary process of discovery in those proceedings. As this is the way the matters have been put rather than as positive separate claims, and as indeed paragraphs 17(ii), (iii) and (iv) appear as if they are another way of putting the matters raised in paragraphs 17(i) and (v), the matters which these paragraphs raise do not provide an arguable case." (p 13)
Their Honours in the joint reasons agreed that the proper course was to strike out the statement of claim but observed that as the application remained on foot that step would not preclude the applicants from seeking leave to replead should they wish to rely upon an arguable claim, if there be one, such as that the decision to issue the notice was unreasonable in the Wednesbury sense, or that the action was excessive or undertaken for an ulterior purpose, such as to coerce or intimidate the applicants or others in the industry. Lockhart J. expressed similar conclusions and said at p.11 of his reasons:
"It is thus seriously arguable that, if the Commission issued notices under s.155 directed to certain of the applicants for any of the purposes (if they were to be construed distributively) mentioned in sub-paragraphs
(ii), (iii) or (iv) of paragraph 17, it may in some circumstances be an improper exercise of the power."
He expressed the matter in that way because he had, as he said, "no firm view on it other than to say that for the purposes of an application to strike out a statement of claim any such assertions would not be so manifestly untenable that they should not proceed to trial. But this necessarily presupposes that the relevant matters would be pleaded afresh in a new statement of claim."
The matter comes back before me today for directions and the applicants seek orders in the following terms:
"1. The Respondent be restrained until 4.00 p.m. on 5 September, 1991 from opening the sealed envelopes containing the documents produced by Big Rock Pty. Limited or Colin Saul Rockman to the Respondent on 24 June, 1991 in response to notices issued under Section 155 of the Trade Practices Act, together with all copies of such documents, notes taken from such documents and tapes or computer records of such documents or notes.
2. The Applicants have leave to file an Amended Statement of Claim in the consolidated proceedings by 4 September, 1991.
3. The directions hearing in this matter be otherwise adjourned to 5 September, 1991.
4. The costs of the directions hearing be costs in the consolidated action."
These orders were supported by an affidavit sworn by one of the solicitors for the applicants and reference was there made to an undertaking given on 25 June 1991 by the Australian Government Solicitor on behalf of the Trade Practices Commission, that documents produced by Mr Rockman, together with copies of those documents, notes or tapes, if any, recording their contents, would be placed in a sealed envelope and held in the Australian Government Solicitor's Office in Perth pending the determination of the appeal against the order striking out the statement of claim. Following the decision of the Full Court on 7 August, the solicitors for the applicants wrote to the Australian Government Solicitor on 13 August seeking an extension of the undertaking until the present proceedings are disposed of or further directions given by the Court. The Australian Government Solicitor wrote back on 14 August in the following terms:
"I refer to your facsimile dated 13 August 1991 and advise that the Trade Practices Commission is not prepared to extend its undertaking which expired upon determination of the Full Court appeal on 7 August 1991."
I am informed from the bar table by counsel for the Commission, that it proposes to proceed with the conduct of examinations under the notices which are the subject of these proceedings. No restraint order is sought in relation to those examinations.
The question for decision is whether or not a restraint should be ordered in the terms sought by the applicants. The applicants have foreshadowed that they propose to file an amended statement of claim with a view to pleading as separate heads of improper purpose, matters of the kind referred to in paras.17(ii), (iii) and (iv) of the previous statement of claim in the consolidated action. And reliance is placed upon observations in the judgment of the Full Court which suggest that so pleaded the statement of claim could disclose an arguable cause of action. However, in determining whether or not to grant interlocutory relief, the interdependent criteria that I have to address are whether or not there is a serious case to be tried and where the balance of convenience lies in the event that a serious case is established. The demonstration of the existence of a serious case to be tried, requires more than the mere foreshadowing of an intention to plead an arguable case. Indeed, it requires more than the existence of a pleading which discloses an arguable case. What is necessary is evidence to show some basis for the pleaded allegations. At present there is no such evidence before the Court. I was referred by counsel to para.15 of an affidavit sworn by Mr Colvin of the solicitors for the applicants in which he deposes to a conversation with Mr Owen-Conway, counsel for the Commission, which conversation is said to have taken place on 28 March 1991. In that conversation counsel for the Commission is said to have informed Mr Colvin that it was likely he would have to examine each of a number of Toyota dealers because evidence obtained by way of admission from one would not be admissible against another, and it was necessary to obtain evidence in admissible form before commencing any action against them. That may disclose a purpose of the kind specified in 17(i) of the previous statement of claim, namely, that the notices were issued and examinations conducted for the purpose of providing the Commission with admissible evidence intended to be tendered in proceedings for contravention then envisaged. It does not however, disclose a basis for the allegation that the purpose of the issue of the notices or the examinations was any one of those referred to in sub-paras. (ii), (iii) and (iv) of para.17. There is therefore no material before me upon which it could be said that the applicants have disclosed that they have a serious case to be tried. Further, on the question of balance of convenience, the disclosure of the documents to the Commission does not irrevocably deprive them of any remedy should they ultimately succeed in demonstrating that it has issued the notices and conducted the examinations and/or required the production of documents for purposes which are beyond its power. Should an application succeed on that basis it would, in my opinion, and it was not disputed by counsel for the applicant, be within the power of the Court to make orders requiring the delivery up of documents taken into the custody of the Commission pursuant to the impugned notices, together with copies and notes made in relation to those documents. And to the extent that there would be a concern that the production of the material would have provided the Commission with admissible evidence not otherwise obtainable through discovery or interrogatories, that concern would be met.
I do not by so saying foreshadow what, if any, would be the appropriate relief if the applicants were to be successful in the application on the foreshadowed basis. It simply has not been able to be demonstrated to me that they would necessarily suffer an irrevocable prejudice if a stay were not granted, assuming they have a serious case to be tried. For these reasons, I do not propose to make the injunctive order.
The other order that is sought is that the applicants have leave to file an amended statement of claim in the consolidated proceedings by 4 September. Mr Owen-Conway has, today, orally moved to dismiss the applications relying in part upon an exchange between senior counsel for the applicants and the Full Court in the course of the hearing on 16 July in which he said that it was suggested to the Court that the consolidated statement of claim, in so far as it made allegations relating to the conduct of counsel for the Commission and the Commission, was based upon lengthy transcripts of hearing which had been available to counsel for the applicants. Mr Owen-Conway contends that transcripts of the hearings did not become available until after the consolidated statement of claim was filed in this Court on 17 June 1991. However that may be, and I take it that the implication is that the foreshadowed cause of action is frivolous or speculative, I don't think it appropriate to deal with those issues or the question of whether or not the application should be dismissed upon an oral motion made without notice and without any proper opportunity to the applicants to respond. If the respondent seeks to have the application dismissed on an appropriate basis under the Rules, then it must move in the ordinary way and support its motion, if it be other than on a pleading point, by appropriate evidence. At the same time I do not think that I should give the applicants general leave to file an amended statement of claim. They should seek that leave with a minute which can be placed before the Court so that questions of the disclosure of any cause of action and the viability of the pleading can be dealt with at the same time as the question of leave and I propose to make directions accordingly.
The orders I propose to make are the following:
1. The applicants are to file and serve any motion for leave to file an amended statement of claim together with a minute of the proposed amended statement of claim on or before 5 September 1991.
2. The motion be returnable on 19 September 1991 at 10 am.
3. Any motion to dismiss the application and any affidavit in support be filed and served on or before 12 September 1991 and returnable on 19 September 1991 at 10 am.
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