Lincoln Electric Co (Australia) P/L v Malthus P/L

[1992] FCA 387

1 JUDGMENT NO. ..3.8.z . . 12,&,~

IN THE FEDERAL COURT OF AUSTRALIA

WESTERN AUSTRALIAN DXSTRICT REGISTRY ) No. WG 2 of 1992

GENERAL DIVISION )

Between: THE LINCOLN ELECTRIC CO

(AUSTRALIA) PTY LTD

Applicant

and: MALTHUS PTY LTD

Respondent

EX TEMPORE JUDGMENT

EINEELD J PERTH 9 MARCH 1992

On 15 October 1991 the applicant before this Court issued out of the Supreme Court of Western Australia (the Supreme Court) an amended statement of claim following an original statement of claim filed on 24 September 1991. The statement of claim and its amended version sought the payment by the respondent of a total sum of some $150,816.62 plus interest.

particular significance, mainly because the amended statement of	of claim, for present purposes that is not a matter of any
claim does nothing of any substantive significance to the legal basis of the claim originally made.
Upon the filing of the defence, the present applicant issued a chamber summons for summary judgment in the Supreme Court dated
16 October 1991. However, when this matter came before the
Supreme Court, it was cross vested to this Court pursuant to the Jurisdiction of Courts (Cross-Vesting) Act 1987 (WA) because of the nature of the respondent's defence. This is essentially a counter-claim that the respondent has itself lost a sum of money as a result of the anti-trust contravention of section 47 of the Trade Practices Act 1974. It is this cross-vested chamber summons that is now before this Court for decision.
The respondent agrees says that it incurred the debt as claimed by the applicant. It received the goods which were the subject of the agreement, and it on-sold the goods as was always the parties' intention. However, the respondent says that its agreement with the applicant entitled it on an ongoing basis to
own customers. After an initial shipment of goods which is the supply of goods at a discounted price for on-selling to its
covered by the statement of claim, the contract between the parties was peremptorily terminated by the applicant on three months' notice. The situation thereafter is that the respondent received the goods at the original discounted price, has sold all or most of the goods and received the appropriate proceeds, but has not paid the applicant for the supply of the goods in the first instance.
The defence seeks to set off a claim that through the price and other requirements of the agreement, and its method of termination, the applicant has deprived the respondent of the anticipated opportunity to make considerable sums of money. The defence does not particularise the damages claim and nothing has been said in the Court which would enable me even to put what is familiarly known as a "ballpark" figure on the amount involved. However, I am prepared to assume for present purposes that the respondent's cross-claim or set-off amounts to a claim for both loss of profits and a loss of opportunity to make other profits which when accumulated would represent a significant sum of money, either equal to or of the order of the amount claimed by the applicant in its original and amended statement of claim. It is not necessary for my present purposes to quantify the possible counter-claim any further than that.
Hence the cross-vested chamber summons for summary judgment raises the question whether the contested cross-claim should be permitted to delay the receipt by the applicant of the fruits of
pleadings and one affidavit filed on each side. The affidavit its claim. The matter falls to be considered on the basis of the
filed on behalf of the applicant verifies the assertion made in the amended statement of claim that nothing has been paid. It argues as a matter of law that the respondent's counter-claim ought not to stand in the way of summary judgment because it does not raise an equitable set-off which the applicant says would alone provide a defence to this action in the current circumstances.
The respondent's affidavit fills out the facts, the relevant details of which I have already stated. It argues that there was a breach of section 47 but does not assert a connection between the cross-claim and the principal claim of a kind which the applicant asserts is needed to entitle the respondent as a matter of equity to raise the matters alleged in its cross-claim in the same action as the plaintiff's undisputed claim.
It is established law that summary judgment ought not to be pronounced unless there is no arguable defence to the claim. It is sometimes put that there needs to be a real question to be tried and sometimes other formulae of language are used, but the position is perfectly clear that summary relief, whether for or against a claiming party, must be demonstrated as the necessary, indeed essential, result of the pleadings before the Court. In this particular case, so far as the applicant's position is concerned, there is no argument at all. The respondent does not contend that it does not owe the applicant the moneys claimed in the statement of claim. It does not even suggest that the amount
to any other defect which would cast doubt on the success of the claimed is excessive or mathematically inaccurate or is subject
claim itself.
The only issue that has arisen in the course of argument is whether the counter-claim or set-off ought to be heard in the same action. The applicant submitted that there are some significant defects in the section 47 claim brought by the respondent such as to make it susceptible to defeasance, one of which was that no particulars of damage had been given. It is not necessary for me to pronounce finally upon that argument, but
I: think that it is possible to glean from the facts of the matter
as they presently stand the type of damages claim which the respondent would make in the event of a successful proof of the necessary prerequisites to section 47. Therefore, I do not uphold that aspect of the applicant's submissions. Indeed, it appears that the respondent does have an arguable case against the applicant. The nature of the claim as it has emerged in the course of discussion seems to provide the respondent with the outlines of a counter-claim of this kind which, if supported by evidence withstanding cross-examination and contrary evidence, could be successful.
However, the question here is whether that arguable claim of the respondent ought to be heard in the same action as the applicant's undisputed claim. Once again there is extensive authority on the right of a party with a cross-claim against someone whose claim is otherwise undefended to have the action
heard at the same time and place.
There is some argument in the authorities that a claim for unliquidated damages, which is the case in the respondent's cross-claim, cannot generally be set off against a liquidated sum. This appears to have been moderated by more recent authority which suggests that if the claimant for unliquidated damages can establish some equity in its claim such that it would be inequitable to allow the recovery of the principal claim without taking into account the cross-claims, then the actions can be heard together and consolidated into one action: see
Truck Rentals Ptv Ltd v Newborouah Ptv Ltd [l9871 4 SR (WA) 292 at 295-6 per White J.
The most widely quoted authority in relation to this aspect of the law is the judgment of Woodward J sitting as a judge of the ACT Supreme Court in D Galambos & Son Ptv Ltd v McIntvre [l9741 5 ACTR 10. Woodward J enunciated a series of generally available statements of principle in cases such as this. The substance of what was said there and in other authorities on this subject matter is that there must be some connection or link between the liquidated claim which is not defended, and the unliquidated claim which is sought to be set off against it. It is sometimes said that the set-of f claim must impeach the claim against which it is sought to be set off. At least there must be some relationship between the claims such that the respective rights are so bound up together as to render it unjust to allow one to proceed without the other being allowed to proceed at the same time. In very direct terms the injustice at which such formulations are directed would seem to be that one party should
not have to pay out its money to the other when there is a connected claim which may result in less money being required to be paid or in a payment the other way, because the matters being litigated in each of the two claims are so interrelated that such a result would be unfair and unconscionable.
By contrast it is clear that a claim and cross-claim should not be heard in the same action where there is no relationship between them other than that they are between the same parties. One useful test for example would be whether the same evidence would be called to prove the one as would be required to prove the other. This is not just superficial in the sense that the same persons are in the witness box, but goes to the substance of the subject matter as the central feature of the litigation.
The agreement pursuant to which the applicant supplied and delivered the goods in issue was entered into on 29 May 1990. The goods were delivered between about 19 June 1990 and 4 April 1991. It appears from the documentation made available to me that invoices were sent as the goods were despatched over that period, but it seems that most of the goods had been received and most of the expenditure incurred by about February 1991. In fact it seems that most of the payments became due in January and February 1991. Therefore, most of the applicant's claim has now been outstanding for a little over 12 months. The respondent's cross-claim by contrast has not yet been particularised at all.
yet, although it should have been possible by now for the The evidence does not even establish whether it has crystallised
respondent to provide fairly precise particulars of the loss claimed to have been sustained.
In an attempt to find a link between the claim and the cross- claim, other than in terms of the parties and the basic contract between them, it is necessary to find the basis upon which the outcome or proof or acceptance of the applicant's claim comes within the framework of the respondent's claim. The applicant establishes for present purposes that the goods in question were all supplied. There is no suggestion on the part of the respondent that the applicant's alleged conduct in contravention of section 47 either altered the basic agreement or arose because of or pursuant to the agreement. Indeed, as I understand it, the alleged conduct seems to have taken place after the agreement, and had no connection at all with the goods which are the subject of the statement of claim. These were supplied, it is not disputed, at the discounted price. They were not affected by what the respondent alleges was the peremptory and unjustified termination of the agreement. By contrast, the section 47 cross- claim relates to or affects the goods that would have been supplied in the future at prices that were not discounted, as provided for by the agreement.
The applicant's claim is based in contract whereas the respondent's is a statutory claim. The contract claim is obviously based upon the agreement. The statutory claim is based
with. Even if it could be said that the respondent's claim arose on the applicant's conduct after the agreement had been complied
out of the agreement, it seems to me that it neither impeaches the applicant's claim nor does it give rise to an independent equity of the kind in discussion here.
The respondent argued that there was some form of temporal connection between the claim and the cross-claim. I doubt that that is so, but even if it were true it does not seem to me to provide the necessary link between the two claims. I think it is difficult for a respondent to establish an equity to entitle it to delay the applicant's receipt of moneys indisputably owed because the respondent has taken or had the use of the goods, sold them and received the proceeds but not paid for the goods, even pro rata to its cross-claim. That strikes me as a fundamental blockage to establishing an equitable right, and is additional to the other matters to which I have referred. The respondent can hardly establish an equity or a preponderance of equity in its favour, when its own conduct has been inequitable.
The applicant pointed out that a section 47 claim is quite different to an action for a simple undisputed debt. The method of proving a section 47 claim in an evidentiary sense, the issues that would arise, the arguments, the authorities, indeed the whole concept under discussion, are totally different to those that would arise on a debt, even one that was disputed. I am not sure that this itself would be an argument for holding that a counter-claim should be heard in a separate action. There will
be many circumstances where there is a connection between the counter-claim and the claim, but where the legal bases of each
are different. However, this matter seems to be beyond serious dispute. There is no equitable right established by the respondent to have its cross-claim heard as part of the applicant's undefended claim for a liquidated sumwhere the goods on which the applicant is suing are not the goods on which the respondent is suing. The respondent is suing about goods which were never supplied; the applicant is suing on goods which were

The claim is for a simple debt. Had it not been defended, it would in the ordinary course of events have been the subject of a default judgment for the liquidated sum claimed, and the matter now before this Court would have been litigated in quite a different way. As events occurred, however, the present respondent filed a defence and counter-claim to the original statement of claim on 8 October 1991. Although an amended defence has not been filed since the amendment of the statement

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supplied. The respondent is suing about something that would have happened; the applicant is suing about something that did happen. The respondent is seeking to establish an independent claim quite unrelated to the applicant's claim and with which the applicant's claim has no common ground at all; the applicant makes a simple claim for the cost of the goods which it supplied.

In the circumstances it seems to me quite clear that the applicant should be entitled to the summary relief which it seeks. I therefore pronounce judgment for the applicant against the respondent in the sum of $150,816.62 together with interest at the appropriate rate under the appropriate statute. I order that the respondent pay the applicant's costs of the action including the motion ox summons for summary judgment, such costs to be assessed or taxed in the usual way.