NGI Investments P/L v Trace Technology P/L

[1992] FCA 941

JUDGMENT NO. ... .a . . . 99' . . . . . . s ! qa- .m . . . .m* . . .

IN THE FEDERAL COURT OF AUSTRALIA)

NEW SOUTH WALES DISTRICT REGISTRY)	No NG 445 of 1992
GENERAL DIVISION	)

BETWEEN NGI INVESTMENTS PTY

LIMITED

Applicant and First

Cross-Respondent

AND TRACE TECHNOLOGY PTY

LIMITED

First Respondent and

Second Cross-Respondent

S Y M E E L E C T R O N I C

COMMUNICATIONS P T Y LIMITED tradina as INTERCITY SALES AND INSTALLATION

Cross-Claimant

LIFEBOAT CONSULTING PTY

LIMITED

Third Cross-Respondent

EX TEMPORE JUDGMENT

EINFELD J-- -- SYDNEY 29 OCTOBER 1992

of claim the first three weeks of Parker's employment by	Trace, he made certain representations to the applicant which
were misleading or deceptive contrary to the Fair Trading Act and the Trade Practices Act.
~t was not until at least one year later, so far as the statement of claim is concerned, that the applicant contracted with Syme for the purchase of the equipment about which Parker is said to have made the representations. The statement of claim is defective in a number of respects but one of them is

By application and statement of claim on 2 July 1992, this action was commenced by the applicant against three respondents, Trace Technology, Syme Electronics and Ross Parker. It turns out that Ross Parker's involvement was as an employee of Trace for a short period in 1989. The applicant's claim in relation to Parker is based upon an assertion that prior to 24 August 1989, which was according to the statement

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that there is no assertion of any ., reliance by the applicant

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upon the representations of Parker a year gr, moke before the I I

contract was entered into. As a matter .of, common sense and

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logic, it seems unlikely that a company 'o*fm:,slize lwould enter

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into a contract for the purchase of equipment',relying upon

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representations made to them a year befbre *by someone who was

no longer employed by the vendor.

I should add, though it is not particularly relevant to the

present mster, that there seems to me to be very little -

reason why this case should be tried in this Court and

consideration might have to be given as to whether it should

be sent to another place. However, the matter before the

Court at the moment arises in the following way. On 6 August the matter was first mentioned for directions before me and on that occasion, by consent, I made orders that the respondents file and serve their defences and any cross-claims on or before 24 August.

In that period of time, that is on 24 August itself, Trace filed its defence and at the same time filed a cross-claim against Parker. It described Parker as having been employed by Trace on or about 17 July 1989 as a monitor salesman. It alleged that his contract of employment required that he would not make representations or engage in conduct towards third parties except in the marketing and sale of Trace's range of television-type monitors. In a rather strange assertion in the cross-claim, Trace said that it did not admit that Parker engaged in the conduct or made the representations to the applicant as alleged in the statement of claim but if he did, and as a consequence Trace was held liable to the applicant, then the conduct and representations asserted were a breach of Parker's contract of employment. They therefore claimed contribution or indemnity from Parker for any damages awarded to the applicant from Trace.

The matter -- was mentioned again on 25 August when further -- directions were made by consent for the request and supply of

particulars, for Parker's defence to the cross-claim of Trace	and any cross-claims that he wished to launch, and for the
filing of defences to all cross-claims. On each of these occasions Parker was represented by a solicitor or counsel. There was another mention of the matter on 22 September when Parker was given leave to issue a notice to produce to Trace returnable before a registrar and other orders were made which enabled Parker to launch a security of costs application
against Trace. Subpoenas were also made returnable before a registrar.
The notice to produce issued by or on behalf of Parker addressed to Trace sought documents designed in substance to form the basis of its case on the cross-claim. It was listed before Registrar Jurd on 1 October and was stood over to 6 October. On 6 October it seems to have been listed before Registrar Inga but nothing occurred then, probably because on that day Trace filed a discontinuance of its proceedings against Parker. However, the matter was mentioned that day before Justice Hill who, apparently by consent, made the order for the discontinuance with no order as to costs.
It turns out that the supposed consent as to costs was mistaken in that there had been no agreement by Parker or his representatives that the discontinuance would take place on
the basis-of no order as to costs. Before Justice Hill on 6 ..
October there was representation for Trace but not for Parker,
and the short minutes of order presented to his Honour were signed by a solicitor representing Trace but not signed by
anyone representing Parker. Although this was explained to me on 9 October as some form of misunderstanding, it seems to have been a "misunderstanding" of a quite serious kind.
I have not conducted an inquiry into how that occurred
because, when the matter came before me on 9 October, by consent I set aside Justice Hill's order with respect to costs
and stood over to today what then became an application by Parker for indemnity costs on the cross-claim against Trace. I also made orders by way of a timetable for the filing of evidence. That evidence reveals today - and it is in any event conceded by way of submission from the bar table on behalf of Trace - that the cross-claim against Parker was commenced without an investigation of the facts upon which the applicant was relying for its assertion that Parker made the representations. What is more important, as it seems to me, is that the important missing assertion in the statement of claim, viz. that the applicant relied upon Parker's alleged representations when it entered into the contract with Syme a year later, was not pressed as between Trace and the applicant.
As presently drafted, the statement of claim could not assert or place any weight on the alleged representations of Parker
because of that gap. As I said earlier, it should have been -- ..
obvious to anyone reading the statement of claim that it was
a year after the alleged representations would have been in fact quite unlikely that a contract entered into more than
influenced in any material respect by the representations made so long before. It should also have been obvious to anyone looking at the statement of claim that that vital missing link in the assertions concerning Parker would need to be filled before it would be remotely possible to assert any liability in Parker at all for any damages to the applicant.
~ o t only was that not done; when - as the evidence reveals - Parker's solicitors sought quite early in the history of the matter, namely by letter of 15 September 1992, the discontinuance of the cross-claim against Parker consequent upon the discontinuance of the applicant of its claim against Parker, a reply was given on behalf of Trace which was confrontational and bordering on the offensive. They refused to discontinue the proceedings, they asserted that there is "a very genuine suggestion" that Parker had acted without instructions and outside the scope of his employment and then went on:

Furthermore i t i s not t h e p r a c t i c e o f t h i s firm o r

i t s c l i e n t s t o make a s s e r t i o n s without foundation.

I can say nothing about the practice of the firm but it would be surprising if it had never had a client who had made an assertion without foundation. Most lawyers meet such people on quite 7 regular basis. In this particular case, the f irm has been shown to have done that very thing. Arrogance is not

often a successful professional tactic.

As a consequence of that response, the matter dragged out until the withdrawal in fact on 6 October. Absolutely no evidence has been placed before the Court in this application for indemnity costs that Trace ever had the slightest skerrick of evidence against Parker. It turns out, so I understand from concessions from the bar table on behalf of Trace, that they based themselves merely on the statement of claim, and that when they in fact investigated the matter they found there was no basis for the claim. That is when they withdrew the cross claim.

I am informed today by the solicitor representing Parker that

although Trace has now agreed to pay the party and party costs as assessed or taxed in relation to the cross-claim brought against Parker, there is a significant discrepancy between the costs that are likely to be allowed on such a taxation and the costs which Parker will actually have to pay to his solicitor for the work done, perhaps as high as $1000.

On the evidence before me, Parker is not a man of particular means or with particularly highly paid employment. $1000, even $500 or $100, to individual litigants who have only their own resources to pay costs, is a significant sum of money. No ground has been given at all for Parker's involvement in this litigation -- and certainly none for the cross-claim. Whatever the applicant had available to it at the time it made its

even less. Litigation may not be commenced merely on the assertions in the statement of claim against Parker, Trace had

possibility that the person sued can be liable, especially

when such a person is an individual who will then be put to expense, trouble, tension, worry, and interference with privacy and peace of mind as a consequence. Litigation may only be commenced when there are reasonable grounds to believe and reasonable evidence to support the possible or actual liability of the person being sued to the person who is issuing the process. No evidence has been brought forward of that kind today and none is suggested to be in existence. Indeed, the applicant's discontinuance against Parker tends to lead to the conclusion that there never was any such evidence and that in the circumstances Parker's involvement in these proceedings has been entirely gratuitous and completely meritless.

I order that the costs of Parker on the cross-claim should be paid on an indemnity basis.

p r c c e d ~ : ~ ~	p-.;?S er. a trss copy of the
RET.:J,~s fcr Ju l j rpxnt hercln of h,;	Honour

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