Loscam Ltd v Brambles Holding Ltd

[1989] FCA 192

\

JUDGMENT No . ... }~.fAJJ. %_~

LIMITED DISTRIBUTION

CATCHWORDS

PRACTICE AND PROCEDURE - Application for stay of Victorian

Supreme Court proce~dings.

TRADE PRACTICES ACT 1974 s. 46 - Whether prosecution o f

Victorian proceedings constitute predatory conduct - whether

such proceedings can be stayed as an abuse of process of the

Federal Court.

JURISDICTION OF COURTS (CROSS-VESTING) ACT 1987 - Primary and

accrued jurisdiction- "Special Federal Matter".

Trade Practices Act 1974
Jurisdiction of Courts (Cross Vesting) Act 1987 (Cth)

Jurisdiction of Courts (Cross Vesting) Act 1987 (Vic)

-----

LOSCAM LIMITED v BRAMBLES HOLDINGS	LIMITED and JOHN E.
FLETCHER
NG 144 of 1989

A

LOCKHART J.	RECEIVED
SYDNEY	- 4MAY 1989

/

14 APRIL 1989 \. FEDERAL COURT OF

X•\ AUSTRALIA

PRINCIPAL /':; 1

~GISTAY /'·~'/

~ .---- /

LIMI TED DISTRIBUTION

IN THE FEDERAL, COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY	No.NG 144 of 1989
GENERAL DIVISION

BETWEEN:  LOSCAM LIMITED

Applicant

AND:	BRAMBLES	HOLDINGS
LIMITED

First Respondent

AND:  JOHN E. FLETCHER

Second Respondent

14 April 1989

REASONS FOR JUDGMENT

LOCKHART J.

Yesterday I heard a motion by Loscam Limited seeking

orders (a) that Brambles (Holdings) Limited ("Brambles") be

commenced in the commercial list of the Supreme Court of	restrained from taking any further step in proceedings
Victoria · by Brambles and (b) that those proceedings be
transferred to this Court.

At the conclusion of counsels ' addresses I said that I

had formed the opinion that the motion should be dismissed . As it was late in the afternoon I decided to give my reasons

for judgment this morning.

2 .

Some account of the facts, including the curial history

of the matter, is necessary. Brambles has carried on since

1958 the business of hiring pallets and associated materials

in all States and Territories of Australia under a variety of

business names incorporating the name Chep . Loscam carries

on a similar business and has done so since 1986 in all

States and Territories of ~ustralia.

Loscam is a competitor of Brambles in the market in Australia for the supply to customers of pallets and associated materials handling equipment. Certain of these

facts, I should say, I derive from the pleadings in these

proceedings. Whether they are eventually substantiated, of

course, is a matter to be determined in due course.

On 18 April 1988 Brambles commenced proceedings in the

Supreme Court of Victoria against Loscam in which Brambles

asserts that Loscam has misappropriated Chep pallets and what

are described in the statement of claim in the Victorian proceedings as substituted Chep pallets.

Brambles' case is based on alleged trespass to goods,

conversion, contravention of ss. 11 and 12(e) of the Fair

Trading Act 1985 of Victoria , misleading or deceptive conduct

under s. 52 of the Trade Practices Act 1974 (Cth) ("the Trade

Practices Act"), unconscionable conduct under s. 52A of the

Trade Practices Act, also contravention of s . 53(d) of that Act . Other causes of action asserted in the Victorian proceedings by Brambles are infringement of certain

registered trademarks and passing off .

Injunctive relief, damages, an account of profits and corrective orders under relevant legislation together with interest are also sought in those proceedings.

Loscam filed a defence to the Victorian proceedings. Further and better particulars of the statement of claim in

those proceedings have been sought and furnished.

The Victorian proceedings were initially in the

commercial list; following various interlocutory procedures,

on 5 August 1988 the case was fixed for trial in Melbourne

with an estimated hearing time of two weeks. On 5 December

1988 the Victorian Supreme Court ordered that the matter be removed from the commercial list. In February 1989 the case

was tentatively fixed as a special fixture for trial to

commence on 1 May 1989.

On 31 March this year, the Listing Master of the Supreme

Court of Victoria informed counsel for the parties that the

matter would proceed on 1 May as a special fixture. He was then informed of the commencement of the proceedings in this Court, to which I shall refer later, and of the notice of motion taken out by Loscam which is presently before me.

The Listing Master was informed by counsel for Loscam

that, as these proceedings, having been brought in this

4 .

Court, Loscam would seek leave to amend its defence in the

Victorian proceedings so as to raise the issues under Part IV of the Trade Practices Act which are the subject of the

proceedings in the Federal Court; and that, if leave were

granted, Loscam would not be ready for trial on 1 May since the amendment would increase the issues and the scope of the

evidence considerably.

Counsel for Loscam said in Court yesterday that they wish the Part IV proceedings which have been commenced in this Court to remain here although they do not shut themselves out from approaching the Supreme Court for leave

to amend the relevant pleadings there to raise those issues

as foreshadowed earlier to the Listing Master.

The Listing Master gave certain directions with a view

to preparing the matter for trial; and it appears from the evidence and from what I have been told by counsel from the

bar table that the trial will proceed in Melbourne on 1 May

this year .

There was a change of solicitors acting for Loscam in

the Victorian proceedings, the present solicitors having

received instructions on 28 February this year. Those solicitors consulted senior and junior counsel and they came to the conclusion early in March this year that there cold be

a major issue to be determined between the parties, namely, whether Brambles had contravened ss. 46, 47 and 52 of the Trade Practices Act and in particular whether the institution

and prosecution of the Victorian proceedings in the Supreme

Court of Victoria by Brambles constituted a breach of s . 46 .

Conferences were held with witnesses and officers of

Loscam and between counsel and solicitors and in the result

the view was formed by the solicitors for Loscam now acting

for it that the proceedings which have been instituted in

this Court should be instituted . The proceedings were

commenced in this Court by Loscam on 30 March 1989 . There

could obviously be no suggestion whatever of the proceedings having been instituted here and the Part IV issues raised

before the Listing Master in the Supreme Court other than

with expedition on the part of Loscam's solicitors. But the

fact remains that, until there was a change of solicitors,

the prospect of Part IV of the Trade Practices Act being

raised in the Victorian proceedings was not one that had been

alluded to. It is only of very recent origin.

I do not suggest that Loscam's case under Part IV is

strong, weak or otherwise. I have no idea of that whatever ;

but it is a very relevant matter that the Victorian

proceedings had gone as far as they have before the Part IV

matters entered into the picture.

As I have said, the Federal Court proceedings were

commenced on 30 March last . A statement of claim has been

filed but as yet no defence has been filed . The stateme n t

of claim alleges, amongst other things, that Brambles has a

substantial degree of powe r in the relevant market and that

6 .

during the period 1987 to date it has taken advantage of its

power by engaging in conduct which is pleaded in paragraphs

10 to 29 of the statement of claim.

Amongst the conduct pleaded is the following:

that Bramble& has selectively offered to customers and

potential customers of Los~am by reason of their status as

such, reduced rates of hire for pallets which are below

prevailing market rates and lower than the rates being

charged by Brambles to its own customers, being rates which could be offered only by a company enjoying Brambles market

power and being rates calculated either to prevent or deter

Loscam from effectively competing for the business of those

customers or substantially to damage Loscam by forcing it to

write business at uncommercial rates: para. 10;

Paragraph 13 asserts that Brambles has purchased and

offered to purchase from suppliers from whom it expected

Loscam to seek supplies of timber suitable for making wooden pallets for the purpose of removing from commerce sufficient raw material to prevent Loscam's needs from being met;

Paragraph 14 asserts that Brambles has selectively

offered financial advantages and benefits to selected

customers of Loscam in order to induce them not to make

payments in accordance with their contractual obligations to

Los cam;

Paragraph 15 alleges that Brambles has informed

suppliers and potential suppliers of pallet timber to Loscam

that Loscam would be unable to pay for pallet timber which it

might purchase .

Paragraph 29 alleges that the Victorian proceedings have

been conducted by it with a view to maximizing the incurrence

of legal costs by Loscam in the expectation of eliminating or damaging the ability of Brambles' competitors to compete with

it, whatever the outcome of the litigation might be;

Paragraph 32 of the statement of claim alleges that

Brambles has taken advantage of its substantial degree of

power in the market in various respects (which are pleaded)

for the purpose of eliminating Loscam, more substantially

damaging it or deterring it from engaging in competitive

conduct in the market and preventing it from engaging in

competitive conduct in the market contrary to the provisions

of s. 46 of the Trade Practices Act.

In all the circumstances Loscam asserts in its pleading

that Brambles has also engaged in the practice of exclusive dealing contrary to the provisions of s. 47 of the Act; also

that its conduct is misleading or deceptive within the

meaning of s. 52 of the Trade Practirces Act . Loscam also

sues the second respondent, Mr. Fletcher, who is an executive director of Brambles, as a person who has, so it is alleged,

aided, abetted, counselled or procured or been directly or

indirectly knowingly concerned in the relevant conduct of
Brambles. Consequential relief is sought against him also.

Loscam claims injunctions, damages and other relief which I

was told yesterday is intended to include relief under s. 87

of the Trade Practices Act. In these circumstances orders
for the stay of the Victorian proceedings are sought.

The first o£ the two grounds advanced by Loscam in support of the motion is that the prosecution of the

Victor ian proceedings itself constitutes predatory conduct in contravention of Part IV of the Trade Practices Act and hence

should be restrained by order of this Court. Reliance is

placed upon the principle that a court will restrain conduct

that is an abuse of its process.

The second ground on which Loscam relies is that this

Court has primary jurisdiction to hear the case under Part IV

of the Trade Practices Act and accrued jurisdiction with respect to the causes of action on which the Victorian proceedings are based (alternatively, jurisdiction conferred

upon it by virtue of the cross-vesting legislation).

The Victorian Supreme Court has jurisdiction with

respect to the latter but only secondary jurisdiction with respect to the former becaue it is as "Special Federal

Matter" within the meaning of the cross-vesting legislation.

Hence, so it is said, this Court should hear the whole matter

in dispute between the parties and make the orders sought in
the notice of motion.

If I restrain Brambles from proceeding further in the Victorian Supreme Court I will not of course have reached any

final view that the prosecution of those proceedings

contravenes Part IV and therefore is an abuse of process of this Court. But there is a strong argument that in those

circumstances the Part IV case should be heard first by this Court before the issues in the Victorian proceedings are

heard. If the Victorian proceedings are an abuse of process it would not be necessary to explore in this Court the issues there raised and hence no trial would be necessary with respect to the issues there involved. However, it is

inappropriate to decide this question finally. Any hearing

.

of the issues presently in this Court under Part IV of the

Trade Practices Act shall be tried in due course. But the

point remains that by bringing all the issues between the parties into this Court there may have to be severed, for the

reasons I have touched upon, the Part IV issues and the

issues in the Victorian proceedings and the latter may be set at nought on one view of the matter and the pretrial work

that has been carried out in Melbourne rendered abortive.

That is not the primary reason for my taking the view

that the· orders sought in the notice of motion should be

refused. This Court no longer has exclusive jurisdiction

with respect to Part IV matters. Such proceedings are,

however, "Special Federal Matters" under the cross-vesting

legislation. The Federal Court has primary jurisdiction with

re ~pect to them. If Loscam seeks to raise the Part IV issues

as a defence or cross-claim or both, that application to the
Victorian Supreme Court to amend may or may not succeed.

That is a matter for the Victorian Supreme Court to decide.

If Loscam succeeds in that application to amend, the

trial which can take place on 1 May and which will subsist

for some weeks thereafter will almost certainly not take

place and the fixture will be vacated. The Victorian Supreme

Court will have before it the problem of deciding (since Part

IV issues matters are "Special Federal Matters") whether

those issues should stay with this Court where it first arose

or be heard by the Supreme Court of Victoria.

Being a "Special Federal Matter" the cross-vesting

legislation requires that the Part IV case be heard in this

Court and transferred to it if it arises in the Victorian

proceedings once the conditions precedent stiupulated in the

cross-vestng legislation have been satisfied. It is not for

this Court, of course, to advise the Victorian Supreme Court

what it should do in these circumstances. The comity between

superior courts which is of the essence of the cross-vesting

Victorian Supreme Court Judge or Master who hears any	legislation will, of course, be present to the minds of the	relevant motion for amendment or transfer if amendment is
allowed. Prima facie the issues presently in the Victorian proceedings should be heard by the Victorian Supreme Court and the issues presently before this Court heard by this Court.

What detriment is suffered by the parties or any of them

if this course continues?

The Victorian proceedings have been on foot for 12 months and are ready for trial. A certain or almost certain

date of 1 May has been given for the commencement of the

trial of those proceedings. It is true that the change of

Loscam's solicitors which 9ccur~ed very recently has led to

the motion before me at this stage and indeed to the

institution of the Part IV proceedings in this Court. But it

is a serious step for one superior court to restrain a party

to proceedings before another superior court from having his

case heard there when the trial is imminent and the

proceeding has been on foot for 12 months . The Part IV

proceedings instituted in this Court can proceed through pre

trial stages to a final hearing expeditiously. It is plainly

a case calling for expeditious conduct by all parties in pre

trial procedures and for an expedited final hearing; and I am

prepared to make any necessary orders to achieve those

objects. Each proceeding can in my view be heard in the
appropriate court without undue hardship to any party.

Although there is an undoubted overlap of fact to some degree, the legal issues involved in each proceeding are

dis tinct. If for example, Los cam wins its case in this

Court, then Brambles, if it wins in the Victorian Supreme

Court, may be deprived on one view of the matter of the

fruits of its victory there by the very nature of the Part IV

case before this Court .

I have not found this an easy matter to decide; but what

weighs most heavily with me in the end is the fact that the

Victorian proceedings are on the threshold of final hearing

which will be set at nought more likely than not if I accede

to the motion. I realise that the Victorian Supreme Court

may i tself vacate the fixture there if it gives leave to Loscam to raise the Part IV matter in those proceedings. I

cannot help that; but as at present advised the letter and

spirit of the cross-vesting legislation in my opinion would require the Part IV case already instituted in this Court to

remain here and be prosecuted here . Th e motion is dismissed.

As to costs of the motion, in my view Loscam has failed

in the motion but it is not a motion which in all the circumstances was unreasonably brought. I think the proper order for costs is that the costs of the motion be Brambles' costs in the proceeding.

eleven (11) pages are a true copy of the	I certify that this and the preceding	reasons for judgment herein of the
Honourable Mr. Justice Lockhart.
Associate
Date: 14 April 1989

J..).

Counsel for the Applicant:	Mr. C.A. Sweeney Q.C. and
Dr. G. Flick
Solicitors for the Applicant:	Minter Ellison
Counsel for First and Second
Respondents:	Mr. A.C. Archibald Q.C. and
Mr. J.M. Ireland
Solicitors for First and
Second Respondents:	Corrs Pavey Whiting & Byrne
Date of Hearing:	13 April 1989
Date of Judgment:	14 April 1989