Novasonic Corporation Pty Ltd v Hagemeyer (Australasia) B.V

[1983] FCA 235

Re: NOVASONIC CORPORATION PTY. LIMITED
And: HAGEMEYER (AUSTRALASIA) B.V. (1983) 78 FLR 69
No. G4 of 1983
Practice and Procedure - Trade Practices - High Court and Federal Judiciary
8 ACLR 303

COURT

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION
Lockhart J.(1)

CATCHWORDS

Practice and Procedure - Interlocutory injunctions - Application for injunction to restrain respondent proceeding with an action in Supreme Court of N.S.W. - Applicant's Federal Court claim against respondent under Trade Practices Act 1974, Part IV - Respondent's Supreme Court claim for winding up of applicant - Whether Federal Court has jurisdiction to hear application - Constitutional issue potentially involved - Pending High Court decision - Factors to be considered in hearing such application.

Judiciary Act 1903,s. 78B

Trade Practices Act 1974, ss. 46, 47, 48, 82

Trade Practices - Restrictive trade practices - Winding-up proceedings commenced in Supreme Court of New South Wales, Equity Division - Proceedings commenced in Federal Court of Australia alleging contraventions of Pt IV of the Trade Practices Act 1974 (Cth) - Damages - Injunctions - Urgent interim relief sought in Federal Court to restrain respondent from proceeding further with Supreme Court action - Jurisdiction - Whether or not Federal Court had exclusive jurisdiction to hear and determine s. 82 claim and winding-up action in Supreme Court - Reserved decision of High Court of Australia pending - Case pending in Federal Court - Matter arising under the Constitution - Notice to Attorneys-General of the Commonwealth and New South Wales - Urgent relief of interim nature - Interests of justice.

Practice and Procedure - Winding up proceedings commenced in Supreme Court of New South Wales, Equity Division - Proceeding commenced in Federal Court of Australia alleging contraventions of Pt IV of the Trade Practices Act 1974 (Cth) - Damages - Injunctions - Urgent interim relief sought in Federal Court of Australia to restrain respondent from proceeding further with Supreme Court action.

High Court and Federal Judiciary - Jurisdiction - Whether or not Federal Court had exclusive jurisdiction to hear and determine s. 82 claim and winding-up action commenced in Supreme Court - Trade Practices Act 1974 (Cth), ss 46, 47, 48, 78, 82 - Judiciary Act 1903 (Cth), s. 78B - Federal Court Rules O. 51, r. 1.

HEADNOTE

On 5 November 1982, proceedings were commenced in the Supreme Court of New South Wales, Equity Division, by a company which sought to wind up the applicant company. In December 1982, the respondent company gave notice in the Supreme Court action that it intended to appear to support the application to wind up the applicant. The respondent's application to be substituted as plaintiff in the winding-up action, which was opposed by the applicant, was adjourned until 30 August 1983.

On 7 January 1983, the applicant commenced proceedings in the Federal Court of Australia, alleging contraventions by the respondent of ss 46, 47 and 48 of the Trade Practices Act 1974 (the Act), and seeking damages pursuant to s. 82 of the Act. On 3 August 1983, the applicant filed a notice of motion in the Federal Court seeking to restrain the respondent from proceeding further with the Supreme Court action, pending further proceedings in the Federal Court.

The motion proceeded on the basis of an application for urgent relief of an interim nature pursuant to s. 78B(5) of the Judiciary Act 1903 (N.S.W.), and the necessary notices were given to the Attorneys-General of the Commonwealth and New South Wales. It was not disputed by the parties that the judgment, which was currently reserved, of the High Court of Australia in Stack v. Coast Securities (No.9) Pty Ltd (1983) 57 ALJR 731 would probably determine whether or not the Federal Court had exclusive jurisdiction to hear and determine not only the s. 82 claim, but also the winding-up action in the Supreme Court.

Held: (1) The respondent would be restrained until further order from seeking to be substituted as the plaintiff in the Supreme Court action or otherwise proceeding further with such action.

(2) Each party would be at liberty to restore to the list on two day's notice the applicant's motion of 3 August 1983 and the application for damages under s. 82 of the Trade Practices Act 1974.

HEARING

Sydney, 1983, August 25, 26. #DATE 26:8:1983

NOTICE OF MOTION.

The applicant company filed a notice of motion in the Federal Court of Australia seeking to restrain the respondent from proceeding further with an action in the Supreme Court of New South Wales, Equity Division, pending further proceedings in the Federal Court.

The motion proceeded on the basis of an application for urgent relief of an interim nature pursuant to s. 78B (5) of the Judiciary Act 1903 and ex tempore reasons for judgment were delivered.

D. A. Staff Q.C. and H. G. Shore, for the applicant.

D. H. Hodgson Q.C. and F. G. Lever, for the respondent.

Solicitors for the applicant: Charles T. Cominol & Co.

Solicitors for the respondent: Hall & Hall.

J.D.W.

ORDER

1. That the respondent be restrained until further order from seeking to be substituted as the plaintiff in action No. 3900 of 1982 in the Supreme Court of New South Wales Equity Division or otherwise proceeding further with such action.

2. That each party be at liberty to restore to the list on two days notice the applicant's motion of 3 August 1983 and the application for damages under s. 82.

3. That the costs of this motion be the applicant's costs in proceedings in this Court in matter G4 of 1983.

4. That the applicant shall, on or before Thursday 1 September 1983, file and serve on the respondent and on the Attorneys-General of the Commonwealth and New South Wales a notice of a constitutional matter which shall comply with sub-rules 1(ii) and (iii) of Order 51 mutatis mutandis and which shall state the date to which this matter is to be adjourned.

5. The applicant shall file an affidavit of the service of the said notice on or before Wednesday 7 September 1983.

6. The application and the motion of 3 August 1983 be adjourned to 15 September 1983 at 9:30 a.m.

Orders accordingly.

JUDGE1

Novasonic Corporation Pty. Limited trading as Hi-Fi City ("the applicant"), seeks to restrain Hagemeyer (Australasia) B.V. ("the respondent") from proceeding further with action No. 3900 of 1982 in the Supreme Court of New South Wales, Equity Division pending the determination of certain proceedings in this Court to which I shall refer in a moment.

The Supreme Court action was commenced on 5 November 1982 by Mayne Nickless Limited trading as Freight Management International, which, until recently, sought to wind up the applicant. In December 1982 the respondent gave notice in the Supreme Court action that it intended to appear and to support the application to wind up the applicant. On 1 June 1983 the Master in Equity was informed that the Mayne Nickless claim against the applicant had been satisfied as to both debt and costs. It appears that the Mayne Nickless claim was settled but not on the basis of payment of the full amount claimed.

Counsel appearing for the respondent then informed the Master that it was the respondent's intention to apply to be substituted as plaintiff in the winding up action. Counsel appearing for the applicant informed the Master that such application would be opposed. The matter was then adjourned by the Master to 20 June 1983. Since then the matter has been adjourned from time to time and presently stands adjourned until 30 August 1983.

On 7 January 1983 the applicant commenced proceedings in this Court by filing an application and statement of claim seeking damages pursuant to s. 82 of the Trade Practices Act 1974 occasioned by alleged contraventions by the respondent of Part IV of the Trade Practices Act, in particular ss. 46, 47 and 48. Directions were given, by consent, by this Court on 18 February 1983 for the seeking and furnishing of particulars, the filing of a defence by the respondent and discovery and interrogatories.

Those directions were varied by consent on 3 June 1983. Other directions were given on 10 August 1983. Further and better particulars of the statement of claim were sought and furnished. A defence was filed by the respondent. A list of documents was filed by the applicant on 11 August 1983, but the respondent disputes its completeness. On 3 August 1983 the applicant filed the notice of motion in this Court seeking to restrain the respondent from proceeding further with the Supreme Court action. That motion came on for hearing before me yesterday.

The respondent's claim against the applicant on which it bases its application for substitution as plaintiff in the winding up action, arises out of the sale by the respondent to the applicant of stereo sound reproduction equipment and in particular what is known as hi-fi equipment under the brand name JVC. The respondent is an importer and distributor of such equipment and the applicant is a retailer of it.

The precise amount claimed by the respondent to be due to it by the applicant is not entirely clear, but it is somewhere in the order of $270,000 to $284,000. The applicant concedes that it owes the respondent $184,000 but disputes its liability for the balance.

The applicant's claim for damages under s. 82 of the Trade Practices Act in the proceedings before this Court has not been quantified, but counsel for the applicant informed me that the applicant estimates the damages as being in the vicinity of $700,000.

After the commencement yesterday of the application to restrain the respondent from proceeding further with the Supreme Court action there was discussion between counsel for each party and myself as to the effect, if any, of s. 78B of the Judiciary Act 1903 on the application for damages under s. 82, and, indeed, on the motion for a restraining order. One of the submissions advanced by counsel for the applicant is that in cases such as the one at hand, under the doctrine of associated jurisdiction, jurisdiction is conferred on this Court exclusive of the Supreme Court with respect, not only to the claim for damages under s. 82 (which is exclusively within this Court's jurisdiction), but also to the winding up action in the Supreme Court.

Reference was made to various cases, including the judgment of the High Court in Fencott v. Muller 57 ALJR 317 and Stack v. Coast Securities (No. 9) Pty. Limited a judgment of another Judge of this Court delivered on 23 March 1983. Stack's case has been removed to the High Court pursuant to s. 40 of the Judiciary Act. I am informed that argument has concluded before the High Court and that judgment is reserved. It was not disputed by the parties that the judgment of the High Court in Stack's case will probably determine one way or another the correctness of the submission that this Court has exclusive jurisdiction to hear and determine, not only the s. 82 claim, but also the winding up action in the Supreme Court.

In these circumstances the motion proceeded before me on the basis of an application for urgent relief of an interim nature pursuant to sub-s. 78B(5) of the Judiciary Act. It was agreed that directions should be given to the applicant to give the necessary notices to the Attorneys-General of the Commonwealth and New South Wales pursuant to that section. That the argument as to this Court having exclusive jurisdiction to hear the damages claim under s. 82 and the winding up action in the Supreme Court is fairly open. When the High Court gives its judgment in Stack's case the fate of that argument will probably be known. If it is a correct argument the applicant's case for an order restraining the respondent from proceeding further with the Supreme Court action must be strong indeed. In my view this consideration supports the application for the order sought in the motion, at least until the High Court judgment in Stack's case is known.

However, there are other considerations which support the granting of the order sought. The applicant submits that in the winding up action in the Supreme Court it will be able to rely on its s. 82 claim in this Court to support its assertion that the winding up action should be adjourned pending the determination of the s. 82 claim. If the applicant succeeds in that s. 82 claim and recovers an amount of damages in excess of the amount of the respondent's lawful claim against it, various possibilities may arise. The respondent may not then be a creditor of the applicant or, if a creditor, may not be entitled to proceed to a winding up order against the applicant, or may not be entitled to the benefit of any presumption of the applicant's insolvency flowing from non-compliance with the usual statutory notice under the Companies Legislation.

On the other hand the position may simply be that the Supreme Court, in the exercise of its discretion, would not order the winding up of the applicant unless the s. 82 claim is determined against the applicant, or, if determined in its favour, in an amount less than the amount proved by the respondent.

There is some conflict of authority as to the precise effect on the respondent and its status in the Supreme Court action that would be occasioned by any successful claim under s. 82 by the applicant, but nothing turns on this, and certainly it does not call for me to attempt to resolve it.

As the s. 82 claim can be determined only by this Court it seems to me that the interests of justice point strongly to restraining the respondent from proceeding further in the Supreme Court action at least until the result of Stack's case is known. The respondent would not in my view be prejudiced by this course. It is true that it cannot in the meantime proceed with the Supreme Court action, but it is difficult to see how that action can proceed to a final hearing without this Court first determining the applicant's claim for damages under s. 82. I have no view of the strength or weaknesses of the s. 82 claim, but it was not suggested before me that it is other than bona fide.

The Court can ensure by appropriate directions that the applicant diligently prosecutes its claim in this Court. I propose to restrain the respondent from proceeding further in the Supreme Court action until further order, but there will be liberty to either party to restore the applicant's motion for a restraining order to the list.

I will not circumscribe the respondent's right to put the motion back in the list, but the applicant must understand that there are circumstances which would incline the Court to consider revoking the injunction. These could include any failure by the applicant to prosecute its s. 82 claim with all due diligence and expedition, or any attempt by it to seek from the Supreme Court a dismissal of the winding up action during the pendency of the injunction or the taking of any step in the Supreme Court action without reasonable prior notice to the respondent.

The orders of the Court are as follows:-
1. That the respondent be restrained until further order from seeking to be substituted as the plaintiff in action No. 3900 of 1982 in the Supreme Court of New South Wales Equity Division or otherwise proceeding further with such action.
2. That each party be at liberty to restore to the list on two days notice the applicant's motion of 3 August 1983 and the application for damages under s. 82.
3. That the costs of this motion be the applicant's costs in proceedings in this Court in matter G4 of 1983.
4. That the applicant shall, on or before Thursday 1 September 1983, file and serve on the respondent and on the Attorneys-General of the Commonwealth and New South Wales a notice of a constitutional matter which shall comply with sub-rules 1(ii) and (iii) of Order 51 mutatis mutandis and which shall state the date to which this matter is to be adjourned.
5. The applicant shall file an affidavit of the service of the said notice on or before Wednesday 7 September 1983.
6. The application and the motion of 3 August 1983 be adjourned to 15 September 1983 at 9:30 a.m.

(Discussion then ensued between the Bench and counsel).

Following the orders already made there has been discussion between counsel and myself as to whether certain additional orders should be made.

I note the undertaking to the Court given by the applicant through its counsel that it will not make any application to the Supreme Court of New South Wales, Equity Division in action No. 3900 of 1982, Equity Division without 7 days prior notice of its intention to make such an application having been given in writing to the respondent.

I direct that all exhibits tendered before me yesterday, except Exhibit 3, may be handed out after Wednesday 31 August 1983, and that in the meantime either party may make copies of those exhibits. Exhibit 3 is to be returned to the Supreme Court of New South Wales today. The documents produced in response to subpoenas may also be returned after Wednesday 31 August 1983, and in the meantime either party may make copies of the documents so produced.

The costs of the two motions to set aside the subpoenas which I dealt with yesterday will be the respondent's costs in application G4 of 1983.