Mitanis, Angelo v Pioneer Concrete (Vic) Pty Ltd
[1998] FCA 234
•25 FEBRUARY 1998
FEDERAL COURT OF AUSTRALIA
TRADE PRACTICES - Section 4D Trade Practices Act 1974 - exclusionary provisions - application to strike out part of statement of claim - essential elements in pleading a cause of action under s 45(2) Trade Practices Act 1974 - necessary to plead contract, arrangement or understanding and competitive relationship of parties - whether parties in competition or organised co‑operation for acquisition of cartage services.
PRACTICE AND PROCEDURE - pleadings - application to strike out part of amended statement of claim - role of pleadings - whether statement of claim pleaded material facts - essential elements in pleading a cause of action under s 45(2) - necessary to identify causal connection between impugned contract, arrangement or understanding and conduct and loss.
COSTS - exercise of discretion under O 62 r3(2) Federal Court Rules
Trade Practices Act 1974 (Cth): s 4D, s 45(2)(a)(i), s 45(2)(b)(i), s 52
Fair Trading Act 1985 (Vic): s 12
Federal Court Rules: O 11 r16, O 62 r3(2)
ANGELO MITANIS AND HELEN MITANIS v PIONEER CONCRETE (VIC) PTY LTD & ORS
VG 343 of 1997
GOLDBERG J
MELBOURNE
25 FEBRUARY 1998
IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY
VG 343 of 1997
BETWEEN:
ANGELO MITANIS and HELEN MITANIS
Applicants
AND:
PIONEER CONCRETE (VIC) PTY LTD
(ACN 004 375 302)First Respondent
DELTA DIRECTIONS PTY LTD
(ACN 052 201 215)Second Respondent
STAN DADALIAS
PETER METAXAS
KEITH SEPTIMUS MURFET
TOM TIESI
ATHANASIOS TOPOUZIAS
GIUSEPPE MESSINAThird to Eighth Respondents
PASQUALE MORLACCI
JIM ZOITOS
JAMES LESLIE MAGGSNinth to Eleventh Respondents
JUDGE:
GOLDBERG J
DATE OF ORDER:
25 FEBRUARY 1998
WHERE MADE:
MELBOURNE
THE COURT ORDERS THAT:
The applicants have leave to amend further paragraphs 1 to 50 and 71 to 82 inclusive of their statement of claim in the form and terms set out in the proposed further amended statement of claim which is exhibit CK‑1 to the affidavit of Constantine Kellargias sworn 31 October 1997.
Leave be refused to the applicants to amend further paragraphs 51 to 70 of their statement of claim in the form and terms set out in the said proposed further amended statement of claim.
The applicants pay the respondent’s taxed costs of and incidental to the applicant to amend further the statement of claim and that pursuant to O 62 r3(2) such taxed costs be paid forthwith notwithstanding that the proceeding is not concluded.
Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules
IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY
VG 343 of 1997
BETWEEN:
ANGELO MITANIS and HELEN MITANIS
Applicants
AND:
PIONEER CONCRETE (VIC) PTY LTD
(ACN 004 375 302)First Respondent
DELTA DIRECTIONS PTY LTD
(ACN 052 201 215)Second Respondent
STAN DADALIAS
PETER METAXAS
KEITH SEPTIMUS MURFET
TOM TIESI
ATHANASIOS TOPOUZIAS
GIUSEPPE MESSINAThird to Eighth Respondents
PASQUALE MORLACCI
JIM ZOITOS
JAMES LESLIE MAGGSNinth to Eleventh Respondents
JUDGE:
GOLDBERG J
DATE:
25 FEBRUARY 1998
PLACE:
MELBOURNE
EXTEMPORE REASONS FOR JUDGMENT
HIS HONOUR: On 10 October 1997 I ordered that paragraphs 51, 52 and 53 of the amended statement of claim, filed 27 August 1997, be struck out. I gave the applicants liberty to apply to the court to amend further their statement of claim and any proposed amendment was to be exhibited to an affidavit. Thus at the present time the statement of claim, in its unamended form, comprises paragraphs 1 to 50 and 54 to 65. The applicants have applied to the Court to amend further the statement of claim. The proposed amended statement of claim contains a number of amendments other than what was found in paragraphs 51 to 53. But substantially the causes of action relied upon are the same, namely breach of contract, entering into an agreement, arrangement or understanding which contains an exclusionary provision as defined in s 4D of the Trade Practices Act 1974 (Cth) (“the Act”) and the invalid removal of the first applicant as a director of the second respondent.
I approach the application for leave which is before me on the basis that if the amendments which are sought to be made had appeared in a statement of claim, would I be disposed, as an exercise of discretion, to strike out those amendments under one or other of the heads allowed for by O 11 r16 of the Federal Court Rules.
The allegations in the proposed further amended statement of claim leading up to the challenged paragraphs are substantially the same as the allegations which I recited in my earlier reasons, although there are some differences. The pleading in relation to the exclusionary provision is quite different, albeit relying on the same cause of action. It is necessary for the purposes of this application to summarise those allegations.
Prior to 1990 the first respondent, Pioneer Concrete (Vic) Pty Ltd (“Pioneer”) engaged the first applicant and the third to eighth respondents as owner‑drivers to transport materials from Pioneer’s quarries to its concrete plants. It arranged these engagements by way of radio contact between its radio room and the owner‑drivers. In 1990 Pioneer announced that it would no longer engage owner‑drivers directly and proposed that the applicants and the owner‑drivers form a company (the second-respondent) which Pioneer would engage to transport materials from its quarries to its concrete plants.
As a result of that proposal, Pioneer and the other owner-drivers entered into an agreement said to be partly oral and partly to be implied, whereby they formed the second respondent Delta Directions Pty Ltd (“Delta”), to act as trustee of the unit trust in respect of which the first applicant and the other owner‑drivers would become directors and shareholders and the owners of units in the unit trust. By that agreement Pioneer was to engage Delta to cart materials from its quarries to its concrete plants and other sites and Delta was to engage the unit holders to perform the carting services.
By the agreement the parties were to endeavour to ensure a fair and equitable distribution of cartage services between the unit holders and Delta would not, without due cause, fail or cease to engage any of the unit holders to perform a fair share of the cartage services. But if it did, then Pioneer would engage the unit holder directly to perform a volume of cartage services that would make the total value of the cartage in any given month as near as practicable to what would otherwise have been the unit holder's fair share of the cartage services. That is later referred to in the pleading as the re-engagement term.
It is alleged that pursuant to the agreement Delta was incorporated as the trustee of the Wollert Contractors Unit Trust which was formed, and the first applicant and the other owner-drivers became directors of Delta and took up units in the trust. Pioneer entered into an agreement with Delta on 27 June 1991 for the provision of cartage services and that agreement is before me on this application. Pioneer continued to contact relevant owner-drivers from its radio room, although the cartage services were provided through the medium of Delta.
It is further alleged that from June 1991, Delta and the unit holders entered into a subcontracting agreement whereby unless there was insufficient capacity, only the unit holders would be engaged by Delta to perform the cartage services and there was to be a fair and equitable distribution of the cartage services between the unit holders. By that agreement Delta was not without due cause to fail or cease to engage in the unit holders to perform cartage services, or terminate the original agreement without reasonable notice. It is said that subsequently the ninth to eleventh respondents became parties to, and bound by, the original agreement and the subcontracting agreement.
It is alleged that in 1993 the first applicant suffered from health problems as a result of which the applicants were unable to perform any cartage services between September 1993 and February 1994, during which period Pioneer and Delta allocated work that would otherwise have been performed by the applicants to the remaining unit holders with the applicants’ consent. In January 1994 the applicants became able to perform some of the cartage services on a part‑time basis and after two weeks they were allocated part-time work. Eight months thereafter they became able to perform full-time cartage services but Delta failed to inform Pioneer of that fact, this constituting a breach, it was said, of the subcontracting agreement by Delta.
It is then said that in October 1994 Delta told Pioneer that Delta was holding a letter of resignation on behalf of the applicants and that they would not be returning to full-time cartage work and that the first applicant had resigned as a director of Delta. As a result, the applicants were allocated less of the cartage services than they otherwise would have been given, as a result of which Delta breached the subcontracting agreement and alternatively, the third to eleventh respondents breached the original agreement. It is alleged in the alternative that the representations or statements made by Delta to Pioneer were negligent and constitute misleading and deceptive conduct contrary to s 12 of the Fair Trading Act 1985, Victoria, s 52 of the Act.
It is then alleged that in October 1994 the first applicant informed Pioneer directly that the applicants were available to perform cartage services on a full‑time basis and that Pioneer requested Delta to give it a copy of the purported letter of resignation on behalf of the applicants, which Delta failed to provide, and that Delta requested the applicants to resign from performing any of the cartage services and terminate their involvement in the subcontracting agreement which they refused to do. There was a short period of two months when Pioneer allocated cartage services to the applicants on a full-time basis but thereafter Delta told Pioneer that the applicants had been sacked in relation to the performance of cartage services. Thereafter Pioneer and Delta ceased engaging the applicants to perform any cartage services.
It is said that as a result, Delta had breached the subcontracting agreement and Pioneer breached the original agreement, and that the third to eleventh respondents caused or permitted Delta to breach its obligations under the subcontracting agreement in breach of their obligations under the original agreement. It is also alleged that the first applicant was invalidly removed as a director of Delta.
As I understand it, none of the allegations up to and including paragraph 50 are the subject of attack on this occasion. Rather, the submissions made by the respondents is that leave should not be given to amend the statement of claim as sought in paragraphs 51 to 70 inclusive. Paragraphs 1 to 50 and 71 to 82 are not the subject of challenge. In due course, subject to anything further counsel may say, I would be disposed to grant leave to amend in accordance with the document reflecting those paragraphs.
It is necessary to read and understand paragraphs 51 to 70:
“51.At all material times the first respondent carted materials from its quarry at Wollert to its concrete plants and other sites by use of trucks which it:
a)owned; and
b)operated
in its own right.
52.The first respondent operated the trucks referred to in paragraph 51 by use of drivers which were employees of the first respondent.
53.During 1992 and 1993 Mr Brian Essing was an employee of the first respondent.
54.In 1992:
a)Mr Essing informed the first applicant; and
b)it was the case -
that
c)the first respondent owned and operated in Victoria, approximately 68 trucks to cart materials from its quarries to its concrete plants or other sites; and
d)the first respondent formed the view that the said number of trucks was too many for it to have.
55. In 1993:
a)Mr Essing the first applicant; and
b)it was the case -
that the first respondent owned and operated in Victoria approximately 60 trucks to cart materials from its quarries to its concrete plants.
56.It was a term of the Delta Cartage Agreement that if at any time the second respondent was unable to provide the volume of Cartage Services nominated in the agreement, then the first respondent was permitted to use its own trucks or other contractors to provide such Cartage Services.
Particulars
The term is contained in Clause 5 of the Delta Cartage Agreement, the particulars of which are sub‑joined to paragraph 13 herein.
57.In fact, the practice of the first respondent was to allocate Cartage Services in such a manner that preference was given first to trucks that the first respondent owned and operated in its own right, secondly to the second respondent and thirdly to other owner‑drivers.
Particulars
The first respondent utilised the services of its own trucks and drivers and owner‑drivers other than those associated with the second respondent at the first respondent’s quarries at Lysterfield, Bulla, Harkaway and Kilmore.
58.By reason of the matters pleaded in paragraphs 51 to 57 herein, the first and second respondents were in competition with each other in relation to the acquisition by them of Cartage Services or like services from the applicants.
59.Further, by reason of the terms of the Original Agreement alleged in sub‑paragraphs 12(g) and (h) hereof, the first and second respondents were under an obligation to ensure that the applicants were allocated a fair and equitable share of the Cartage Services.
60.Further, by reason of the term of the Original Agreement alleged in sub‑paragraph 12(i) hereof, the first respondent was, in the event of the second respondent failing, neglecting or refusing to allocate a fair and equitable share of the Cartage Services to the applicants, under a continuing obligation to engage the applicants to perform a volume of Cartage Services that would have made the total volume of Cartage Services performed by the applicants (whether engaged by the first or second respondent) as near as practicable to the fair and equitable share that the applicants would have performed had the second respondent not failed, neglected or refused to allocate such share.
61.By reason of the matters pleaded in paragraphs 59 and 60 and those pleaded in paragraphs 23, 31, 46 and 46A hereof, the first and second respondents were both under an obligation, as at the time of the matters referred to in paragraphs 23, 31, 46 and 46A, to acquire Cartage Services from the applicants.
62.Further or in the alternative to paragraph 58, by reason of the matters pleaded in paragraphs 59 to 61, the first and second respondents were in competition with each other n relation to the acquisition by them of Cartage Services or like services from the applicants.
63.At or about a time shortly after the events referred to in paragraph 43, the first and second respondents made a contract or arrangement, or arrived at an understanding, a provision of which was that from or soon after that point in time:
a)the second respondent would not honour its obligations under the Re‑engagement term; or alternatively that -
b)neither the First or second respondent would engage the Applicants to perform any Cartage Services or like services; and
c)the first respondent would, subject to the use of its own trucks, continue to acquire all, or alternatively the vast majority, of Cartage Services from the second respondent-
‘the Provision’.
Particulars
The contract, arrangement or understanding was made or arrived at by persons unknown but believed by the first applicant to include Mr J D Rowlands on behalf of the first respondent and Mr Stan Dadalias and or alternatively Mr Tom Tiesi on behalf of the second respondent.
64.The Provision had the effect that the first respondent would and did acquire a larger volume and value of Cartage Services from the second respondent than would have been the case had the first respondent:
a)honoured its obligations under the Re‑engagement Term; or
b)in any event acquired from the Applicants:
i)what would, under the Original Agreement, have been their fair share of the Cartage Services; or
ii)any Cartage Services whatsoever.
65.By reason of the matters pleaded in paragraphs 51 to 57 and 62 to 64 inclusive, the provision had the purpose of preventing, restricting or limiting the acquisition of Cartage Services or like services by the first and second respondents from the Applicants in that the quantum of Cartage Services that the Applicants supplied to either the first or second respondent was reduced from what would, pursuant to the Original Agreement, have been its fair share of the Cartage Services to zero.
66.By reason of the matters pleaded in paragraphs 51 to 57 and/or 62 to 65 hereof and the operation of s.4D(1) of the Trade Practices Act, the provision is to be taken to be an exclusionary provision within the meaning of s.45 of that Act.
67.By reason of the matters pleaded in paragraphs 51 to 66, the first and second respondent contravened s.45(2)(a)(i) of the Trade Practices Act.
68.By reason of the matters pleaded in paragraphs 46 and 46A herein;
a)the first and second respondents have effect to the provision; and
b)thereby contravened s.45(2)(b)(i) of the Trade Practices Act.
69.At or around the time that the First and Second respondents made the contract or arrangement, or arrived at the understanding which included the Provision:
a)the applicants were or alternatively had very recently been performing Cartage Services or like services;
b)the applicants’ truck was in a condition suitable for the performance by the applicants of their fair share of the Cartage Services;
c)the first applicant was ready and able to drive the truck to perform the applicants’ fair share of the Cartage Services; and
d)the applicants would have made a profit on any Cartage Services had they been engaged to provide them.
70.Because the first and second respondents gave effect to the Provision as alleged in paragraph 68, the Applicants:
a)did not make the profit that they would have had they been engaged to perform further Cartage Services; and
b)accordingly suffered loss and damage.
Particulars
The applicants refer to and repeat the particulars sub‑joined to paragraph 50.
The key pleading which raises the issue of the exclusionary provision as defined in s 4D of the Act is paragraph 63. I was given notice of a further amendment to it and in its form as now proposed is as follows:
“At or about a time shortly after the events referred to in paragraph 43 and prior to 16 December 1994, the first and second respondents made a contract or arrangement or arrived at an understanding, a provision of which was that from or soon after that point of time
(a)the first respondent would not honour its obligations under the re‑engagement term, or alternatively that ...”
Subparagraphs (b) and (c) remain the same. Paragraph 63 relies upon a contract, arrangement or understanding which is said, in a subsequent pleading, to contain an exclusionary provision as defined in s 4D of the Act and it is alleged that as a consequence there is a breach of ss 45(2)(a)(i) and 45(2)(b)(i), that is making a contract, arrangement or arriving at an understanding, if it contains an exclusionary provision, or giving effect to a provision of a contract, arrangement or understanding if the provision is an exclusionary provision. Accordingly there are two key issues which needed to be pleaded to invoke properly the causes of action contemplated by those statutory provisions.
Firstly, one has to plead in a proper form, a relevant contract, arrangement or understanding. Secondly, it is necessary to plead that the parties to that agreement or contract, arrangement or understanding are competitive with each other as provided for in s 4D(1)(a) of the Act, or alternatively, if it is sought to invoke the deeming provision in s 4D(2) it is necessary to plead (and I paraphrase the provision) that the two persons who are the parties to the contract, arrangement or understanding would be, or would be likely to be, in competition with each other in relation to the supply or acquisition of goods or services to which the relevant provision of the contract, arrangement or understanding relates.
I propose to deal firstly with the pleading raising the competitive relationship between the parties. This is found in paragraphs 51 to 58 inclusive. Paragraphs 51 to 55 intend to set out the cartage requirements of Pioneer.. Paragraph 56 raises clause 5 of the Delta cartage agreement - which was the agreement of 27 June 1991 between Pioneer and Delta - and relies upon and pleads clause 5 of that agreement which is in the following terms:
“If it any time the contractor (Delta) is not able to service the said broadly nominated volumes at any of the quarries or to service any of the concrete plants, Pioneer may use its own trucks or other contractors to service such demand.”
I should also point out that preamble (c) of that agreement provides that:
“Delta has agreed with Pioneer to provide cartage services for stone and sand for the quarries and concrete plants listed in schedule A and otherwise as provided for in this agreement.
Schedule A refers to the Wollert quarry and the Epping quarry, if and when it re‑opens. There is also a reference to a number of concrete plants.
Mr Comans, who appeared for the first respondent (and his submissions were adopted by Mr Jones who appears for the remaining respondents) submitted that the structure of the relationship between Pioneer, Delta and the owner‑drivers as pleaded was such that there was, and is in fact, no competition between Pioneer and Delta or any likelihood of it in relation to the acquisition of services from the applicants or any of the other owner‑drivers who are parties to the documentation referred to in the pleading. Rather, it was submitted that instead of there being a relationship of what Mr Comans called “rivalrous competition”, there was a relationship of organised or contractual co‑operation.
I agree with that submission and consider that it accurately reflects what is pleaded to be the relationship between all relevant parties, and in particular Pioneer and Delta. I turn, in particular, to the terms of what was said to be the original agreement. It will be recalled that the original agreement was entered into between the applicants, Pioneer, and the third to eight respondents or before July 1991.
The terms of the original agreement are set out in paragraph 12 and I draw attention in particular to the terms in subparagraphs (h), (i) and (j) that:
“(h)the Company and the first respondent (Pioneer) would not, without due cause, fail or cease to engage any of the Unit Holders to perform a fair share of the Cartage Services;
(i)if the Company (Delta) did, without due cause, fail or cease to engage any of the Unit Holders to perform a fair share of the Cartage Services, then the first respondent (Pioneer) would engage such Unit Holder directly to perform a volume of Cartage Services that would make the total value of Cartage Services, in any given month as near as practicable to what would otherwise have been that Unit Holder’s fair share of the Cartage Service (the ‘Re‑engagement Term’);
(j)the first respondent would continue its practice of contacting the relevant driver directly through its radio room.”
When one looks in particular at those clauses, as well as the other terms of the agreement between the parties relied upon, the factual situation as pleaded is rather that Pioneer ceased dealing with owner‑drivers directly and their services were to be provided through the medium of Delta. In certain circumstances, if Delta was not able to provide these services, certain other situations might arise to which I will refer shortly.
The proposed further amended statement of claim pleads, in paragraph 58 that:
“By reason of the matters pleaded in paragraphs 51 to 57, the first respondent (Pioneer) and the second respondent (Delta) were in competition with each other in relation to the acquisition by them of cartage services or like services from the applicants.”
But the pleading, properly analysed, does not bear that out. Rather, the facts alleged in the pleading to which I have already referred identify a situation where there was to be a contractual relationship regulating the manner in which the applicants’ and other owner‑drivers’ services were to be used. In a sense, the very structure of the contractual relationship relied upon was antithetical to the concept or the notion that there was competition between Pioneer and Delta for the services of the owner-drivers. Indeed paragraph 56 refers to clause 5 of the Delta agreement, which only relates to the Wollert quarry and the Epping quarry when it re‑opened.
Paragraph 57 then refers to what is said to be Pioneer’s practice in relation to quarries at Lysterfield, Bulla, Harkaway and Kilmore but not, I emphasise, in relation to Wollert. However, even if that were so, it does not seem to me that that practice alleged against Pioneer does result in a competitive situation thereupon and thereby occurring vis‑a vis the applicants and other owner drivers as between Pioneer and Delta.
A similar situation, although the facts were different, appeared in the recent unreported decision of Drummond J and CSR Ltd v Chuwar Transport Pty Ltd, (unreported, Drummond J, 29 August 1996). It is not necessary to refer to that judgment because the facts were different, but it is useful to note that there his Honour looked at the situation as between the owner-drivers and the applicant and concluded that there was not the relevant competitive situation for their services.
So it seems to me that on the face of the pleading, and in particular paragraphs 51 to 58 inclusive, it cannot be said that Pioneer and Delta were in competition with each other in relation to the acquisition by them of cartage services or like services from the applicants. Rather, they regulate by contract the manner in which those services were to be supplied or acquired or used.
However, Mr Harvey who appears for the applicants, says in substance that there was competition between them in two ways. The first way, he said, arose out of the terms of the original agreement alleged in paragraphs 12(g), (h) and (i) which are referred to in paragraphs 59 and 60. It was submitted by Mr Harvey that because of those provisions set out in paragraph 12(g), (h) and (i), it was likely that Pioneer would be calling on the applicants in the circumstances which arose, that is, a failure or neglect to refuse to allocate a fair and equitable share of the cartage services to the applicants and the continuing obligations referred to. However, if that be so, and I assume for the purpose of the argument that it is, although it by no means follows, that would come about not at all because of competition between Pioneer and Delta, but rather because of the lack of it. That is, it would come about because of the fact that Delta had failed to engage the applicants to provide the required cartage services, which the applicants say they should have been asked to provide.
Indeed sub‑paragraph 12(g), (h) and (i) proceed on the basis, that if a competitive situation does not exist then there is a contractual obligation on one or other of Pioneer and Delta to correct the situation. In those circumstances a contractual obligation regulated what was occurring and what was to occur. In my view, the fact situation contemplated by sub‑paragraphs 12(g), (h) and (i) to which Mr Harvey referred in support of his proposition or submission, that it would be likely that Pioneer would be calling on the applicants, would occur because of the fact of no competition existing in those circumstances for the acquisition of services from the applicants, or indeed the other owner‑drivers.
Secondly, Mr Harvey put it on the basis, that if Delta was not able to supply the services sought by Pioneer because it was full of work then there was likely to be competition between Pioneer and Delta because Pioneer would be looking for the provision of services, either from the owner‑drivers or maybe, from other owner‑drivers who might in some way come within the umbrella of the contractual arrangements. However, it seems to me that if that fact situation occurred, that Delta was full of work so it could not supply the services sought by Pioneer, in such circumstances there would in fact be no competition between Pioneer and Delta for the owner‑drivers’ services because the owner‑drivers working at that time when that situation arose would all be working, as they are obliged to do, for Delta because Delta was full of work and demand had exceeded supply.
It is apparent from the documentation and the pleading that the applicants and the other owner‑drivers were tied to Delta, as unit holders, to provide their services to Delta. It follows in my view that if, as Mr Harvey submitted, Delta was full of work, then the competitive situation which he contemplated would not in fact exist or it would not be likely to exist.
It seems to me in all those circumstances that if all those facts pleaded are established, then it is not established that Pioneer and Delta are competitive with each other or likely to be competitive with each other in relation to the services of the applicant, or indeed the other owner‑drivers, so that the relevant fact situation required to be pleaded in order to invoke s 4D of the Act is not established. It follows, in my opinion, that there is not a pleading which asserts or which justifies the relevant competitive situation for the purposes of s 4D.
In those circumstances the cause of action relied upon under s 45(2)(a)(i) and s 45(2)(b)(i) raised in the pleading by the applicants cannot be sustained because they cannot make out that the contract, arrangement or understanding arrived at contains, or gives effect to, an exclusionary provision. It is not sought to plead, and the applicants do not rely on the alternative limb of s 45, that the contract, arrangement or understanding has the purpose, or has or is likely to have the effect, of substantially lessening competition. They nail their cause of action, so far as the Act is concerned, to the mast of the exclusionary provision and as I have already noted, that mast cannot be established. In those circumstances, if paragraphs 51 to 70 inclusive were in a pleading and it was sought to strike them out, I would grant the application to strike them out for that reason. It seems to me in those circumstances that it is an appropriate exercise of my discretion not to allow the pleadings in those paragraphs to go forward and grant leave to amend in those circumstances.
I should also draw attention to an alternative argument that was put which was in relation to the contract, arrangement or understanding which was pleaded in paragraph 63. Mr Comans submitted that when one looked at the explanation or justification for that pleading - found in the applicants’ written submissions filed in support of their application for leave to amend on 17 November 1997, it seemed that what the applicants were seeking to do was to go further than the pleading and rely upon inferences and other particulars to be gleaned from allegations in the proposed further amended statement of claim.
Paragraph 63 is certainly an improvement on the last pleading of the contract, arrangement or understanding, which simply uttered the litany of the provisions of the statute. This time the pleading goes further and alleges a number of provisions recited in the sub‑paragraphs. The particulars are sparse but they do identify that the contract, arrangement or understanding is believed to have occurred between nominated persons. If that paragraph had stood alone I would not have been disposed to have refused to allow it to proceed, or if it was an existing statement of claim, I would not have struck it out.
But when I look at paragraph 4 of the written submissions it seems to be apparent that what counsel for the applicants is saying is that the applicants are seeking to justify that contract or arrangement or understanding, not so much in terms of the sparse particulars but rather on the basis of inferences to be drawn from other facts and matters pleaded in the statement of claim. Paragraph 4 starts:
“It is submitted that the facts pleaded in paragraphs 28 to 31 and 39 to 46A, having regard of the pleaded facts of the antecedents, are material facts upon which the court reasonably could conclude that there was a community of purpose between the first and second defendants. The pleaded facts show such a concurrence of time direction and results as naturally to lead to the inference that the separate acts of the first and second respondents were the outcome of pre‑concert or some neutral contemporaneous engagement, or that they were themselves’ the manifestations of mutual consent to carry out a common purpose.”
I make no finding and draw no conclusion as to whether what is said in paragraph 4 of the written outline of submissions can be made out. What is important for present purposes, is that if that is the submission to be made in relation to how the contract, arrangement or understanding exists or is to be determined or proved that is not the way it is pleaded in paragraph 63.
As an exercise of discretion, having regard to that difference between the pleading and the submission, if it had not been for the issue arising about the inability to identify the competitive relationship between Pioneer and Delta, I would have granted the applicants leave to re‑plead paragraph 63 or alternatively, to withdraw the submission in paragraph 4. Paragraph 4 of the written submission and paragraph 63 of the proposed further amended statement of claim in its present form cannot stand together. The purpose of pleadings is to inform the respondents of the case they have to meet and it is not good enough at a later point of time for the applicants to say, “Well, although we have pleaded paragraph 63 in a particular way, we explained it in paragraph 4 of our outline of submissions on 17 November.”
However, in all the circumstances that situation does not arise, because having regard to my conclusions as to the lack of pleading properly raising a competitive relationship between Pioneer and Delta, there is no point in giving the applicants leave to re‑plead the contract, arrangement or understanding - that is to amend further paragraph 63 and perhaps add to it because that does not solve the deficiency raised by the inability to properly raise s 4D.
For all of those reasons I refuse the applicants leave to amend further the statement of claim in accordance with paragraphs 51 to 70 inclusive, of the proposed further amended statement of claim, which is exhibit CK1, to the affidavit of Constantine Kellargias sworn 31 October 1997.
Subject to what counsel may wish to say, and I will hear them on the matter, it seems to me the appropriate order to make on the application before me is that the applicants have leave to amend further the statement of claim in the form and terms set out in paragraphs 1 to 50 inclusive, and 71 to 82 inclusive, of the proposed further amended statement of claim exhibited to the said affidavit.
It also seems appropriate that I should further order that the leave sought by the applicant to further amend the statement of claim in accordance with paragraphs, and in the terms of, paragraphs 51 to 70 be refused. Subject to what counsel say, it seems to me the appropriate order as to costs is that the applicants pay the costs of the respondents of and incidental to the application before me this day to amend further the statement of claim.
In the ordinary course, an order for costs which is made is not allowed to be taxed and paid until the conclusion of the proceedings which recognises the number of differing applications which may be made in an interlocutory way before the final disposition of a matter. In the case before me, Mr Comans has submitted that the effect of my order is to remove, both factually and legally, one of the three causes of action against his client from the arena of dispute between the parties. It seems to me that that submission is correct. It was a cause of action which arose and is separate and quite distinct from the breach of contract cause of action and the invalid removal of the first applicant as a director of Delta. It seems to me it is appropriate then, as an exercise of my discretion under O 62 r3(2), in relation to the costs order I have made, to order that those costs to be taxed and paid by the applicant to the respondents be paid forthwith, notwithstanding that the proceeding is not concluded, and I so order.
I certify that this and the preceding fifteen (15) pages are a true copy of the Reasons for Judgment herein of the Honourable Justice Goldberg
Associate:
Dated: March 1998
Counsel for the Applicants: Mr M Harvey Solicitor for the Applicants: Watkins Boag O’Connor & Dunne Counsel for the Firstnamed Respondent: Mr C P Comans Solicitor for the Firstnamed Respondent Arthur Robinson & Hedderwicks Counsel for the Secondnamed to Eleventhnamed
Respondents:
Mr P Jones Solicitor for the Secondnamed to Eleventhnamed Respondents: Tress Cocks & Maddox Date of Hearing: 25 February 1998 Date of Judgment: 25 February 1988
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