Polystyrene Australia Pty Ltd v Trebol Plastics Pty Ltd

[2000] FCA 723

FEDERAL COURT OF AUSTRALIA

Polystyrene Australia Pty Ltd v Trebol Plastics Pty Ltd [2000] FCA 723

POLYSTYRENE AUSTRALIA PTY LTD v TREBOL PLASTICS PTY LTD
V 571 OF 1999

FINN J
MELBOURNE
30 MAY 2000

IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY	V 571 OF 1999

BETWEEN:

POLYSTYRENE AUSTRALIA PTY LTD
(ACN 075 812 270)
APPLICANT

TREBOL PLASTICS PTY LTD
(ACN 003 281 472)
RESPONDENT

AND BETWEEN:

(By Counterclaim)

TREBOL PLASTICS PTY LTD
(ACN 003 281 472)
APPLICANT BY CROSS-CLAIM

POLYSTYRENE AUSTRALIA PTY LTD
(ACN 075 812 270)
FIRST RESPONDENT BY CROSS-CLAIM

NOEL GODFREY
SECOND RESPONDENT BY CROSS-CLAIM

JUDGE:

FINN J

DATE OF ORDER:

30 MAY 2000

WHERE MADE:

MELBOURNE

THE COURT ORDERS THAT:

1.   Paragraphs 52-70 of the Second Further Amended Defence and Cross-Claim be struck out;

2. The cross-claimant be given liberty to apply for leave to file and serve a further cross-claim, with a repleaded s 46 claim to replace the one struck out by virtue of order 1 (any such application to have annexed to it a copy of the proposed further cross-claim in final form);

3.   The cross-respondents’ costs of their strike out motion to be paid by the cross-claimant on an indemnity basis and to be taxed forthwith.

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	V 571 OF 1999

BETWEEN:

POLYSTYRENE AUSTRALIA PTY LTD
(ACN 075 812 270)
APPLICANT

TREBOL PLASTICS PTY LTD
(ACN 003 281 472)
RESPONDENT

AND BETWEEN:

(By Counterclaim)

TREBOL PLASTICS PTY LTD
(ACN 003 281 472)
APPLICANT BY CROSS-CLAIM

POLYSTYRENE AUSTRALIA PTY LTD
(ACN 075 812 270)
FIRST RESPONDENT BY CROSS-CLAIM

NOEL GODFREY
SECOND RESPONDENT BY CROSS-CLAIM

JUDGE:	FINN J
DATE:	30 MAY 2000
PLACE:	MELBOURNE

REASONS FOR JUDGMENT

1. I have before me contending applications.  The first, filed on 29 October 1999, seeks variously to strike out under O 11 r 16 of the Federal Court Rules or to dismiss under O 22 r 2, what for convenience I will describe as a Trade Practices Act 1974 (Cth) s 46 claim for misuse of market power that is contained in the Second Further Amended Defence and Cross-Claim filed by Trebol Plastics Pty Ltd ("Trebol") in the proceeding instituted against Trebol by Polystyrene Australia Pty Ltd ("PSA"). It is PSA who has brought the motion of 29 October.

2. The second application, raised before me today, in effect accedes to the strike out motion but seeks leave to replead the s 46 claim. That application has generated a predictably and warrantedly hostile response from PSA.

3. The matter has a now significant history.  On 25 February 1999, Trebol filed and served an amended defence and counterclaim in the Victorian Supreme Court.  On 21 September 1999, the Supreme Court ordered that the proceeding be transferred to the Federal Court.  On 29 October 1999, PSA filed and served a motion to strike out the misuse of market power claim contained in the counterclaim.  On 5 November 1999, at the first return date of the motion, counsel for Trebol conceded that the misuse of market power claim required redrafting.

4. On 15 November 1999, Trebol delivered a proposed further amended defence and cross-claim to PSA.  On 10 December 1999, Finkelstein J expressed the view that the pleading of the misuse of market power claim as it then stood was inadequate, and ordered Trebol to deliver to PSA a further proposed pleading which remedied the inadequacies identified.  His Honour provided guidance on how deficiencies in the pleading could be addressed.

5. On 7 February 2000, Trebol delivered a proposed second further amended defence and cross-claim to PSA. On 28 March solicitors for PSA wrote to Trebol's solicitors detailing at some length their criticism of the proposed repleading of the s 46 claim. That letter was peremptorily - and I would suggest quite misguidedly - rejected on 14 April in a letter from Trebol's solicitors who, in this matter, have seemed slow to learn.

6. On 19 April and in apparent disregard of the views expressed by Finkelstein J, Trebol filed a motion for discovery in (inter alia) the s 46 claim.

7. On 3 May directions were given by Finkelstein J timetabling submissions in PSA's motion.  PSA filed its submissions on 23 May.  Trebol did not, and has not, filed submissions.  The explanation I have been given is that senior counsel for Trebol came into the case some days ago and has, in the time since, accepted the substance of some of PSA's criticisms and seeks leave to replead the matter to accommodate them.  I was not provided with a draft of the proposed pleading, nor of any affidavit that would indicate its character and evidentiary base.

8. Mr Murdoch QC nonetheless outlined to me in some detail what the nature of the claim would be.  It departs quite substantially from that that has so far been pleaded - most notably in a complete redefinition of the market in which PSA is said to have substantial power.

9. As I indicated at the hearing - and as counsel for PSA, Mr Maxwell QC, strenuously pressed upon me - I have real doubts as to whether in the event a court would accept there to be a market as is proposed to be defined. I equally have doubts, on what has been foreshadowed, whether it would be found that PSA had a substantial degree of power in that market and, in the circumstances complained of, that it had taken advantage of that power for a purpose prescribed by s 46.

10. The difficulty I have though is that I simply do not have any documentary material before me by reference to which I could evaluate the proposal against the General Steels test:  General Steel Industries Inc v Commissioner for Railways (1964) 112 CLR 125.

11. Mr Maxwell invites me not to attempt to do so but to dismiss the s 46 claim here and now. The essence of his submissions is that even as repleaded the claim is doomed to failure, but, more importantly, Trebol has had more than enough opportunities to get its pleadings in order. It has even had the benefit of judicial guidance from Finkelstein J but failed to heed that.

12. There is force in the criticism made. I am not in a position to sheet responsibility for the apparently casual indifference displayed on Trebol's side to the needs of this matter to one or other of Trebol or its advisers. This said, I am equally not satisfied on the material before me that Trebol has acted in bad faith. For that reason I am not prepared to block Trebol out from having a properly pleaded s 46 claim heard in this Court. But it is necessary that I impose conditions both in providing it with the opportunity to have this occur and on account of the unnecessary waste that has occurred today and leading up to today. Some of those conditions relate to the appropriate costs award that should be made in light of the events I have narrated. The manner in which the pleading of the cross-claim has been conducted by Trebol warrants the award of costs on an indemnity basis. "The justice of the case so requires": Re Wilcox:  Ex parte Venture Industries Pty Ltd (1996) 141 ALR 727 at 733.

13. Accordingly I will order that (i) paragraphs 52-70 of the Second Further Amended Defence and Cross-Claim be struck out; (ii) the cross-claimant be given liberty to apply for leave to file and serve a further cross-claim, with a repleaded s 46 claim to replace the one struck out by virtue of order (i) (any such application to have annexed to it a copy of the proposed further cross-claim in final form); (iii) the cross-respondents' costs of their strike out motion to be paid by the cross-claimant on an indemnity basis and to be taxed forthwith.

I certify that the preceding thirteen (13) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Finn.

Associate:

Dated:             31 May 2000

Counsel for the Applicant:	Mr C Maxwell QC with Mr I Stewart
Solicitor for the Applicant:	Minter Ellison
Counsel for the Respondent:	Mr P Murdoch QC with Mr P Cawthorn
Solicitor for the Respondent:	Pritchard Udovenya
Date of Hearing:	30 May 2000
Date of Judgment:	30 May 2000