Riot Nominees Pty Ltd v Suzuki Australia Pty Ltd

[1981] FCA 45

Re: RIOT NOMINEES PTY. LTD.
And: SUZUKI AUSTRALIA PTY. LTD.SUZUKI AUSTRALIA (SALES) PTY.LTD.,SUZUKI
CORNELL AUSTRALIAA PTY.LTD.,SUZUKI AUSTRALIA (IMPORTS) PTY.LTD.,SUZUKI CORNELL
AUSTRALI (RETAIL) PTY.LTD.,GRAHAM FREDERICK CORNELL, TOMOHIRO FUJITA, RAY
SPENCER and JOHN HAMISH MARTIN CORNELL (1981) 52 FLR 265
V.G. No. 65 of 1981
Practice and Procedure - Practice

COURT

IN THE FEDERAL COURT OF AUSTRALIA

VICTORIA DISTRICT REGISTRY
GENERAL DIVISION
Keely J.(1)

CATCHWORDS

Practice and Procedure - application by respondents for order that applicant shall provide security for costs - applicant a trustee - whether suing "for the benefit of some other person" - Federal Court Rules Order 28 Rule 3(1)(b)

Practice - Security for costs - Applicant a trustee - Whether applicant suing for benefit of some other person - Federal Court Rules, O. 28, r. 3(1)(b).

HEADNOTE

In proceedings under s. 80 of the Trade Practices Act 1974 seeking interlocutory injunctions against the respondents the applicant alleged that the first and second respondents had engaged in the practice of exclusive dealing within s. 47 of the Act and that the first to fifth respondents had given effect to a contract, arrangement or understanding that contained an exclusionary provision within the meaning of s. 45 of the Act. Interim injunctions were granted to the applicant. The applicant was not a trading company itself but was a trustee which conducted business on behalf of a family trust. The respondents sought an order that security for costs be given by the applicant under O. 28, r. 3(1)(b) of the Federal Court Rules.

Held: (1) Order 28, r. 3(1)(b) did not apply to a proceeding instituted by a trustee whose duty it is to carry out the terms of a trust.

White v. Butt, (1909) 1 KB 50, applied.

(2) Further (a) the respondents had not shown that there was reason to believe that the applicant would be unable to pay the costs of the respondents; (b) as a matter of discretion on the material before the court the application for security for costs should be dismissed.

HEARING

Melbourne, 1981, April 13-14, 23. #DATE 23:4:1981

APPLICATIONS.

A.R. Castan Q.C. and A.C. Archibald, for the applicant.

J.D. Merralls Q.C. and J.D. Loewenstein, for the respondents.

Cur. adv. vult.

Solicitors for the applicant: Rockman & Rockman.

Solicitors for the respondent: Arthur Robinson & Co.

T.J. GINNANE

ORDER

1. Upon the applicant by its counsel undertaking to pay to any party adversely affected by this injunction such compensation (if any) as the court thinks just, in such manner as the court directs, it is ordered that, until the hearing and determination of this action or further order:

(a) the first and second respondents and each of them by themselves, their directors, officers, servants, agents or howsoever otherwise, be restrained from refusing to supply the applicant with Suzuki motor cycles spare parts and accessories and the services associated therewith (to the extent that the respondents are able to do so in the ordinary course of trade) on the same terms and conditions under which the first or second respondents supply other sellers of Suzuki motor cycles, spare parts and accessories with any such goods (and such associated services) for retail sale to the public in the metropolitan area of Melbourne;

(b) the third, fourth and fifth named respondents and each of them by themselves, their directors, officers, servants, agents or howsoever otherwise, be restrained from doing or attempting to do all or any of the following, that is to say:

(i) giving effect to any agreement between the respondents or two or more of them whereby the third, fourth and/or fifth respondents refuse to supply to the applicant Suzuki spare parts to the extent that the respondents are able to supply in the ordinary course of trade;

(ii) giving effect to any agreement between the respondents or two or more of them whereby the third, fourth and/or fifth respondents refuse to deal with or to supply Suzuki spare parts to the applicant on the same terms and conditions as apply to other sellers of Suzuki spare parts in the metropolitan area of Melbourne.

2. Reserve liberty to any party to apply.

3. The costs of all parties in respect of the directions hearing, the application for interim injunctions and the application for security for costs shall be costs in the cause. Orders accordingly.

JUDGE1

By its statement of claim Riot Nominees Pty Ltd (the applicant) alleges, inter alia, that:

"8. The first and second Respondents are and at all material times from 1st February 1981 or thereabouts have been carrying on the business of importing into Australia and selling by wholesale motor cycles, spare parts and accessories manufactured by Suzuki Motor Car Limited and distributed under the name 'Suzuki'.

1. The third fourth and/or fifth Respondents are and at all material times have been carrying on the business of importing into Australia and selling inter alia by wholesale Suzuki spare parts.

1. The first and second Respondents on the one hand and third, fourth and/or fifth Respondents on the other hand are parties who are competitive with each other or are deemed to be competitive with each other in relation to the supply of Suzuki motor cycles spare parts and accessories for the purposes of Section 4D and Section 45 of the Trade Practices Act 1974.

1. At all times from in or about 1969 the Applicant has carried on the business of retailing and dealing in Suzuki and other brands of motor cycles, spare parts and accessories and of servicing Suzuki and other brands of motor cycles and in the course of carrying on the said business under the name of Peter Stevens Motor Cycles has generated substantial goodwill in Suzuki motor cycles spare parts and accessories.

1. (a) At all material times prior to 1st February 1981 or thereabouts Suzuki motor cycles spare parts and accessories were supplied to the Applicant by the predecessor in business of the first and/or second Respondents at wholesale or better than wholesale prices.

(b) At all material times prior to 9th February 1981 or thereabouts the Applicant was supplied with Suzuki spare parts and accessories by the third, fourth and further or alternatively the fifth Respondents at wholesale or better than wholesale prices.

1. On and from 1st February 1981 or thereabouts the first and further or alternatively the second Respondents have refused and failed to supply to the Applicant Suzuki motor cycles, spare parts and accessories ordered or sought by the Applicant for the reason that the Applicant was a retailer of and dealer in motor cycles spare parts and accessories of other brands in addition to Suzuki.

1. On and from 9th February 1981 or thereabouts the third, fourth and further or alternatively fifth Respondents have refused and failed to supply to the Applicant Suzuki spare parts and accessories other than and except at retail prices for the reason that the Applicant was a retailer of and dealer in motor cycles, spare parts and accessories of other brands in addition to Suzuki.

1. The engaging by the first and second Respondents and by the third,, fourth and/or fifth Respondent in the conduct aforesaid has the purpose or has or is likely to have the effect of substantially lessening competition.

1. By reason of the foregoing the first and second Respondents have engaged in the practice of exclusive dealing.

1. Further, on or about 1st February 1981 or alternatively 9th February 1981 the first and/or second Respondent made a contract or arrangement or entered into an understanding with the third fourth and/or fifth Respondent -

(a) that the first and second Respondents should refuse and fail to supply to the Applicant Suzuki motor cycles spare parts and accessories;

(b) that the third, fourth and further or alternatively fifth Respondents should refuse and fail to supply spare parts to the Applicant other than at retail prices.

1. Thereafter -

(a) the first and second Respondents have given effect to the said contract arrangement or understanding by refusing and failing to supply to the Applicant Suzuki motor cycles spare parts and accessories;

(b) the third, fourth and further or alternatively the fifth Respondents have given effect to the said contract, arrangement or understanding by refusing and failing to supply spare parts to the Applicant other than at retail price.

1. By reason of the foregoing the first, second, third, fourth and fifth names Respondents:

(a) have made a contract, arrangement or understanding which contains an exclusionary provision for the purposes of the Trade Practices Act 1974;

(b) have given effect to a provision of a contract, arrangement or understanding which is an exclusionary provision for the purposes of the Trade Practices Act 1974."

The applicant was granted leave, without objection by the respondents, to amend its application under s.80 of the Trade Practices Act 1974 (the Act) for injunctions (including interim injunctions - the subject of the present proceeding) to read as follows:
"(1) Injunctions pursuant to Section 80 of the Trade Practices Act 1974 (including both interim and interlocutory injunctions) restraining the first and second respondents by themselves their directors officers servants agents or howsoever otherwise from doing or attempting to do all or any of the following, that is to say,

(a) refusing or failing to supply to the Applicant Suzuki motor cycles spare parts and accessories ordered or sought by the Applicant;

(b) giving effect to each and every agreement between the Respondents whereby -

(i) the first and second Respondents would refuse or fail to supply to the Applicant Suzuki motor cycles spare parts and accessories;
(ii) the third, fourth and further or alternatively fifth Respondents would refuse or fail to supply spare parts to the Applicant at other than retail price."

"(1A) Injunctions pursuant to section 80 of the Trade Practices Act 1974 including both interim and interlocutory injunctions restraining the third, fourth and fifth respondents by themselves, their directors, officers, servants, agents or howsoever otherwise from doing or attempting to do all or any of the following, that is to say -

(a) giving effect to each and every agreement between the respondents or two or more of them whereby the third, fourth and/or fifth respondents refuse or fail to supply spare parts to the applicants at other than retail price;
(b) giving effect to each and every agreement between the respondents or two or more of them whereby the third fourth and/or fifth respondents refuse or fail to deal with or to supply spare parts to the applicant on the same terms and conditions as apply to other retailers of Suzuki spare parts."

Mr Merrals Q.C. who appeared with Mr Loewenstein for all of the respondents, handed up a form of order to which his clients would be prepared to submit. The draft order, as amended in the course of the hearing, was in the following terms:
"Upon applicant giving the usual undertaking as to damages and upon its undertaking until the trial of this application or further order that it will not by advertisement, sign or in any other way or by any other means hold itself out as being an accredited agent or accredited dealer in Suzuki motor cycles that the first and second respondents and each of them be restrained from refusing to supply the applicant with Suzuki motor cycles spare parts and accessories and the services associated therewith (to the extent that the respondents are able to do so in the ordinary course of trade) on the same terms and conditions under which the first or second respondents supplies other sellers of Suzuki motor cycles, spare parts and accessories with any such goods (and such associated services) for retail sale to the public in the metropolitan area of Melbourne.

Reserve liberty to either party to apply."

Mr Castan Q.C., who appeared with Mr Archibald for the applicant, stated that he would not press for an interim injunction in the terms of paragraph (1) of the amended application if the court was prepared to make an order in the terms put forward by Mr Merralls but omitting the second undertaking therein.

Mr Merralls submitted that the court should require the giving of the second undertaking as a condition of the granting of an injunction. During the hearing he made it clear that the undertaking sought was intended to have the effect - and in his submission would have the effect - of requiring the applicant to refrain from holding itself out by advertisement, sign or in any other way or by any other means, as being an agent or dealer in Suzuki motor cycles. In his submission, although the applicant would be a dealer in Suzuki motor cycles in a general sense, it would be prohibited by the proposed second undertaking from advertising that it was such a dealer because the word "dealer" has acquired a special connotation. He conceded that there was not a great deal of evidence before the court at this stage as to the connotation in the trade of the words "dealer" and "agent". He submitted that:
"The applicant has no right, by grant from us or under the Act, to describe himself or to require us to allow him to describe himself as being an accredited agent or dealer. A great deal of the case when it comes for trial will be concerned with the significance of dealerships. The Act merely entitles a plaintiff or a person to protection against certain proscribed practices. Our refusal to allow the present applicant to describe himself as an accredited agent or accredited dealer is not a proscribed practice.

So he would be doing something which is his neither by contract nor by the operation of superior law if he were to describe himself as an accredited agent or accredited dealer."
I accept that submission, but I am not persuaded by the material before me that the applicant would be acting wrongly in advertising itself as a "dealer" in Suzuki motor cycles. Further, I accept the submission put in reply by Mr Archibald on behalf of the applicant that it has not been shown that the respondents are likely to suffer any prejudice if the undertaking is not given.

As this is an interlocutory proceeding it is not desirable that I should form any concluded view as to the evidence. In my opinion the applicant has shown that, if the evidence remains as it is, there is a probability that it will succeed at the trial and further, that it would be likely to suffer injury if an injunction were refused. On the other hand, the evidence does not show that the respondents would suffer injury if an injunction were granted.

I accept Mr Merralls' submissions as to the general principles to be applied in this matter, namely, that an interim injunction should be for the protection of the applicant against an apprehended wrong to it, that it should not be excessive and that it should be certain. In my opinion the form of order put forward by Mr Merralls, with the second proposed undertaking deleted from it, is consistent with those principles.

I also consider that interim injunctions should be granted restraining the third, fourth and fifth named respondents by themselves, their directors, officers, servants, agents or howsoever otherwise from doing or attempting to do all or any of the following, that is to say -

(a) giving effect to any agreement between the respondents or two or more of them whereby the third, fourth and/or fifth respondents refuse to supply to the applicant Suzuki spare parts to the extent that the respondents are able to supply in the ordinary course of trade;

(b) giving effect to any agreement between the respondents or two or more of them whereby the third, fourth and/or fifth respondents refuse to deal with or to supply Suzuki spare parts to the applicant on the same terms and conditions as apply to other sellers of Suzuki spare parts in the metropolitan area of Melbourne.

Again, liberty is to be reserved to any party to apply.

It was common ground that the applicant is not a trading company itself, but is a trustee which conducts business on behalf of a family trust. Mr Merralls on behalf of the respondents sought an order that security for costs be given by the applicant. His application was expressly made not under s.363 of the Companies Act, but under Order 28, Rule 3(1)(b) of the Federal Court Rules which reads as follows:
"3.(1) Where, in any proceeding, it appears to the Court on the application of a respondent -
. . .
(b) that an applicant is suing, not for his own benefit, but for the benefit of some other person and there is reason to believe that the applicant will be unable to pay the costs of the respondent if ordered to do so;
. . . "
Mr Merralls submitted that the applicant was suing not for its own benefit, but for the benefit of some other person within the meaning of that sub-rule. In White v. Butt (1909) 1 K.B. 50 at p.54, Buckley L.J. said that he was "startled by the contention set up by the defendant that trustees so suing can be called 'nominal plaintiffs'." He pointed out that they "are the only possible plaintiffs" and are to be distinguished from nominal plaintiffs or fictitious plaintiffs, saying (at pp.55-56):
"An example of the kind of case in which that expression 'nominal plaintiff' is applicable is where a person in whom a cause of action was vested, not being minded to bring an action himself, has assigned that cause of action to another, whom he puts forward for the purpose of suing, but who has no beneficial interest in the subject-matter of the litigation. There are obvious reasons why in the case of a person so put forward to sue in respect of a cause of action in which he is not really interested, and who, being a pauper, is substituted for the person really interested, in order to protect the latter from liability for costs, there should be an order for security for costs. . . . That is the class of case in which a plaintiff has been spoken of as a 'nominal plaintiff.' When a plaintiff is in that sense a nominal plaintiff and is insolvent, no doubt security for costs ought to be ordered. But I fail to see any resemblance between such cases and the present. . . . "
His Lordship added (at p.56):
"This case has no analogy to one in which a person has substituted some one else for himself as legal owner of a debt in order that the transferee may sue for the benefit of the transferor. . . . If this proposition were true, it would apply equally to any trustees, whether of a marriage settlement or a will, or for debenture-holders, and it would follow that trustees could be ordered, if impecunious, to give security for costs in any action brought by them as trustees, on the ground that they, personally, had no beneficial interest in the subject-matter of the action. Such a proposition appears to me altogether untenable. I am therefore of opinion that the appeal must be dismissed."
Vaughan Williams L.J. said (at p.53) that trustees of "an ordinary settlement . . . are not within the meaning" of the words "nominal plaintiffs". Kennedy L.J. agreed.

The present Rules of the Supreme Court (U.K.) in Order 23 Rule 1 contain provisions which are virtually identical to the provisions in Order 28 Rule 3(1)(a), (c) and (d) of the Federal Court Rules. However, as to paragraph (b), the comparable rule contains additional words referring to "a nominal plaintiff". The paragraph, set out in the Annual Practice 1979, is in the following form:
"(b) that the plaintiff (not being a plaintiff who is suing in a representative capacity) is a nominal plaintiff who is suing for the benefit of some other person and that there is reason to believe that he will be unable to pay the costs of the defendant if ordered to do so, . . . "
In his reply Mr Merralls asked:
". . . the rhetorical question: if there is no difference, why is the language not the same? The language is different, and in our submission, the draftsman of the Federal court rules has sought to avoid the difficulty and limitation inherent in the phrase 'nominal plaintiff' in the English rules."

However, the note in the Annual Practice as to the scope of the order is in the following terms:
"This Order is taken from R. S. C. (Rev.), 1962, O. 23, which replaced the former O. 65, rr.6, 6A, 6B and 7, and embodied the previous case law dealing with the power of the Court to order security for costs."
The Annual Practice for both 1907 and 1908 sets out the relevant provisions (Order 65 Rules 6 and 6A) which did not refer in terms to the case of a plaintiff suing for the benefit of some other person. The provisions were as follows:
"6. In any cause or matter in which security for costs is required, the security shall be of such amount, and be given at such times, and in such manner and form, as the court or a judge shall direct.

6A. A plaintiff ordinarily resident out of the jurisdiction may be ordered to give security for costs, though he may be temporarily resident within the jurisdiction."
It follows that the rule in the United Kingdom Supreme Court Rules at the time of White v. Butt did not contain the words "nominal plaintiffs" and that those words came from "the previous case law" - to use the words of the note in the Annual Practice.

In my opinion Order 28 Rule 3(1)(b) does not show an intention to depart from the common law position and is not intended to apply to a proceeding instituted by a trustee, whose duty it is to carry out the terms of a trust.

Further, I accept the submission put by Mr Castan that, on all of the evidence - documentary and oral - before the court, the respondents have failed to show that there is reason to believe that the applicant would be unable to pay the costs of the respondents. In any event, I accept Mr Castan's alternative submission that, as a matter of discretion, security for costs should not be ordered on the material before the court. Accordingly the application for security for costs is dismissed.

As to costs, I accept Mr Merralls' submissions that the costs of the parties on all issues should be costs in the cause.