Sammy Russo Supplies Pty Ltd v Australian Safeway Stores Pty Ltd
[1998] FCA 617
•4 JUNE 1998
FEDERAL COURT OF AUSTRALIA
PRACTICE AND PROCEDURE - pleadings - statement of claim - trade practices - application to dismiss proceedings - relevant considerations - fourth statement of claim - whether statement of claim pleaded material facts - loss and damage - necessity to plead causal link between alleged contravention and damage suffered.
TRADE PRACTICES - pleadings - statement of claim - application to dismiss proceedings - essential elements in pleading causes of action under ss 45(2)(a)(ii), 45(2)(b)(ii) and 48 - whether statement of claim pleaded material facts of contract, arrangement or understanding relied upon, the relevant market and nature and extent of competition.
COSTS - application for indemnity costs - circumstances when appropriate to grant.
Trade Practices Act 1974 (Cth): s 45, s 45(2)(a), s 45(2)(b), s 48, s 75B
Pt IV
Mitanis v Pioneer Concrete (Vic) Pty Ltd (1997) ATPR ¶41‑591 - applied
Bruce v Odhams Press Limited [1936] 1 KB 697 - followed
Colgate Palmolive Co v Cussons Pty Ltd (1993) 46 FCR 225 - applied
Re Wilcox; Ex parte Venture Industries Pty Ltd (No 2) (1996) 141 ALR 727 - applied
Fountain Selected Meats (Sales) Pty Ltd v International Produce Merchants Pty Ltd (1988) 81 ALR 397 - applied
J‑Corp Pty Ltd v Australian Builders Labourers Federated Union of Workers - Western Australia Branch (No 2) (1993) 46 IR 301 - applied
Davids Holdings Pty Ltd v Coles Myer Limited (1995) ATPR ¶41‑383 - applied
State of Queensland v JL Holdings Pty Ltd (1997) 189 CLR 146 - followed
Wickstead v Browne (1992) 30 NSWLR 1; on appeal (1993) 10 Leg Rep 522 - followed
SAMMY RUSSO SUPPLIES PTY LTD & ANOR v AUSTRALIAN SAFEWAY STORES PTY LTD & ORS
VG 313 of 1997
GOLDBERG J
MELBOURNE
4 JUNE 1998
IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY
VG 313 of 1997
BETWEEN:
SAMMY RUSSO SUPPLIES PTY LTD
ACN 005 434 202
First ApplicantPERFECT CREATIONS PTY LTD
ACN 063 476 193
Second ApplicantAND:
AUSTRALIAN SAFEWAY STORES PTY LTD
ACN 004 319 939
First RespondentWOOLWORTHS (VICTORIA) PTY LTD
ACN 004 177 155
Second RespondentBARTTER ENTERPRISES PTY LTD
ACN 000 451 374
Third RespondentJUDGE:
GOLDBERG J
DATE OF ORDER:
4 JUNE 1998
WHERE MADE:
MELBOURNE
THE COURT ORDERS THAT:
The applicants be refused leave to file and deliver an amended application and an amended statement of claim in the form of the amended application and amended statement of claim being exhibits “FR‑1” and “FR‑2” to the affidavit of Frank Russo sworn 8 May 1998.
The applicants have leave to apply to the Court on or before 1 July 1998 for leave to deliver an amended application and further amended statement of claim limited to making allegations giving rise to a cause or causes of action under ss 48, 96 and 75B of the Trade Practices Act 1974 (Cth) which application, if made, is to be supported by an affidavit exhibiting the proposed amended application and further amended statement of claim.
Any such application shall be returnable at 9.30am on Thursday 30 July 1998.
Any respondent wishing to oppose the application shall file and serve their written submissions by 4.00pm on 10 July 1998.
The applicants shall file and serve their written submissions in reply by 4.00pm on 20 July 1998.
The Notice of Motion for security for costs filed 8 September 1997 and the Notice of Motion filed by the first and second respondents on 28 October 1997 be adjourned to 9.30am on Thursday 30 July 1998.
The directions hearing be adjourned to 9.30am on Thursday 30 July 1998.
The applicants pay the respondents’ costs of the Motion filed 8 May 1998 on an indemnity basis.
And that pursuant to O 62 r3(2) those 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 313 of 1997
BETWEEN:
SAMMY RUSSO SUPPLIES PTY LTD
ACN 005 434 202
First ApplicantPERFECT CREATIONS PTY LTD
ACN 063 476 193
Second ApplicantAND:
AUSTRALIAN SAFEWAY STORES PTY LTD
ACN 004 319 939
First RespondentWOOLWORTHS (VICTORIA) PTY LTD
ACN 004 177 155
Second RespondentBARTTER ENTERPRISES PTY LTD
ACN 000 451 374
Third Respondent
JUDGE:
GOLDBERG J
DATE:
4 JUNE 1998
PLACE:
MELBOURNE
REASONS FOR JUDGMENT
Introduction and background
The applicants apply for leave to deliver a further amended statement of claim and the document propounded is the fourth statement of claim upon which the applicants wish to rely. The initiating application and first statement of claim were filed on 27 June 1997. Despite an invitation from the first and second respondents’ solicitors (I will refer to the first and second respondents collectively as “Safeway”) and despite an enquiry from me at the first directions hearing on 1 August 1997 the applicants declined to re‑plead the first statement of claim. On 19 August 1997 Safeway filed a motion to strike out numerous paragraphs in the statement of claim and on 9 September 1997 the third respondent (“Bartter”) filed a motion to strike out the statement of claim or alternatively numerous paragraphs in it. On 1 September 1997 Safeway filed and served submissions setting out in some detail what it saw as the deficiencies in the statement of claim. The statement of claim made allegations said to give rise to causes of action under ss 45, 46, 47, 48 and 75B of the Trade Practices Act 1974 (Cth) (“the Act”). When the motions came on for hearing on 12 September 1997 the applicants, after argument, did not wish to support the statement of claim and leave was given to the applicants to deliver an amended statement of claim. On 26 September 1997 an amended statement of claim was filed and delivered. On 28 October 1997 Safeway filed a motion supported with detailed written submissions seeking to strike out various paragraphs of the amended statement of claim. On 7 November 1997 the applicants filed and delivered their submissions in response to Safeway’s strike out motion. There was annexed to those submissions a further amended statement of claim (being the third statement of claim delivered by the applicants) which differed from the amended statement of claim delivered on 26 September 1997. Safeway’s strike out motion came on for hearing on 24 February 1998 and counsel for Safeway submitted that both amended statements of claim delivered 26 September 1997 and 7 November 1997 should be struck out as failing to disclose causes of action. Safeway’s motion was supported by Bartter. After argument counsel for the applicants, acknowledging that further amendments were needed, did not wish to continue to uphold the further amended statements of claim and I ordered that leave be given to the applicants to apply for leave to deliver a further amended statement of claim.
On 8 May 1998 the applicants filed a motion seeking leave to deliver an amended application and a further amended statement of claim being the fourth statement of claim on which they wish to rely. Safeway and Bartter have opposed that motion and Safeway has filed a motion seeking orders that the application be dismissed with indemnity costs. In the second and third statements of claim the applicants had made allegations said to give rise to a number of causes of action under ss 45, 46, 47, 48 and s 75B of the Act. They had sought to plead a relevant market within which they alleged that they and Safeway were competitors. In the proposed amended statement of claim now before the Court the applicants no longer seek to rely on causes of action under ss 46 and 47 of the Act.
The proposed amended statement of claim
It is necessary to set out in summary form the allegations in the proposed amended statement of claim.
The applicants carry on the business of retail butchers from two premises situated at Chirnside Park Shopping Centre at Chirnside Park, Victoria. The second applicant also carries on the business of a poultry supplier. Safeway carries on the business of retail supermarkets in Victoria and New South Wales at various premises including premises situated at the Chirnside Park Shopping Centre. Bartter is a wholesaler of poultry products including eggs. Between July 1994 and early May 1997 Bartter supplied eggs to the applicants at various prices and between March 1996 and May 1997 supplied eggs or other poultry products to Safeway in Victoria and New South Wales. Between July 1994 and early May 1997 the applicants sold eggs at retail prices less than the retail prices at which Safeway sold eggs at the Chirnside Park Shopping Centre.
The applicants allege that in March 1996 a Bartter representative telephoned a representative of the applicant and said that Bartter had received complaints from Safeway about the applicants selling eggs too cheaply and that the applicants should increase the prices of their eggs or otherwise Bartter would have problems from Safeway. In or about July or August 1996 a representative of the applicants telephoned a representative of Bartter and asked why Bartter was not supplying the applicants with the full amount of their orders and the Bartter representative replied that the applicants should increase the selling price of their eggs during the shortage and that he was getting pressure to diplomatically arrange for the applicants to increase the selling price of eggs. In later conversations representatives of Bartter told a representative of the applicants that the selling price of their eggs was too low and Bartter wanted the applicants to increase the selling price of their eggs as Safeway had complained and this would remove the pressure placed by Safeway on Bartter. In May 1997 the supply of eggs by Bartter to the applicants was terminated and they were told that this was because of an arrangement with Safeway. On or about 5 May 1997 Bartter increased the wholesale price of eggs to the applicants.
The only affirmative allegations of fact against Safeway are found in paragraphs 17 and 18 of the proposed amended statement of claim in the following terms:
“17.During the period in and between March 1996 and in about May 1997, Safeway made it known to Bartter that if Bartter continued to supply eggs to the Applicants-
(a)Safeway would restrict orders for the Safeway supplies from Bartter for the supply of eggs and other poultry products in Victoria and/or new South Wales;
(b)Safeway would not place fresh orders with Bartter for the supply of
(i)eggs; and/or
(ii)other poultry products,
in Victoria and/or New South Wales.
...
18.Alternatively to paragraph 17 hereof, during the period in and between in about March 1996 and in about May 1997, Safeway made it known to Bartter that unless Bartter persuaded the Applicants to increase their retail price of eggs to a retail price close to Safeway’s retail price of eggs at its Chirnside Park Shopping Centre supermarket-
(a)Safeway would restrict orders for the Safeway supplies from Bartter;
(b)Safeway would not place fresh orders with Bartter for the Safeway supplies.”
Particulars are given under these paragraphs of discussions between a Safeway representative and a Bartter representative.
The applicants then allege that between March 1996 and May 1997 Bartter suggested to the applicants that they increase their retail price for eggs to a price close to the retail price offered by Safeway at its Chirnside Park Shopping Centre supermarket.
The applicants then plead allegations designed to raise causes of action under s 45 of the Act in the following terms:
“20.By reason of the matters alleged in paragraphs 9, 10, 11, 13, 14, 15, 16, 17, 18 and 19 during the period in and between in about March 1996 and in about May 1997, Safeway and Bartter made a contract or arrangement or reached an understanding with each other alternatively Safeway attempted to so make a contract or arrangement or reach an understanding which contained provisions to the effect that-
(a)Bartter should refuse and/or restrict supply of eggs to the Applicants; or
(b)Bartter should refuse and/or restrict supply of eggs to the Applicants unless the Applicants agreed to increase their retail price for eggs, supplied by Bartter to a retail price close to the retail price offered by Safeway at its Chirnside park supermarket.
...
21.Each of the provisions of the contract, arrangement or understanding or the attempted contract, arrangement, or understanding referred to in paragraph 20 above had the purpose of substantially lessening competition by preventing, restricting or limiting the supply of eggs to the Applicants by Bartter and thereby was an exclusionary provision within the meaning of sections 4D(1), (b)(i) and/or (ii) of the Act.”
It is then alleged that the matters alleged in paragraphs 20 and 21 constitute a contravention or attempted contravention of s 45(2)(a) and s 45(2)(b) of the Act. Paragraph 24 alleges in the alternative that:
“... each of the provision (sic) of the contract, arrangement or understanding referred to in paragraph 20 above had the purpose or had or would have had or was likely to have the effect of fixing, controlling or maintaining or providing for the fixing, controlling or maintaining of the prices of eggs supplied, or to be supplied by the Applicants to customers or potential customers at the Chirnside Park Shopping Centre and thereby deemed pursuant to section 45A of the Act to have the purpose, effect or likely to effect, or substantially lessening competition.” (sic)
In paragraphs 25 to 27 it is alleged that from 6 May 1997 Bartter has refused to supply the applicants with eggs because of Safeway’s complaints.
It is then alleged that between March 1996 and May 1997 Bartter engaged in the practice of resale price maintenance in contravention of s 48 of the Act by doing acts referred to in s 96(3)(a), (b) and (d) of the Act.
There then follows in paragraph 30 the only other affirmative allegation against Safeway in the following terms:
“By engaging in the conduct referred to in paragraph 25 and/or 28 above, Safeway-
(a)aided, abetted, counselled or procured the contravention by Bartter of Section 48 of the Act;
(b)induced the contravention by Bartter of Section 48 of the Act; and/or
(c)was directly or indirectly, knowingly concerned in, or party to the contravention by Bartter of section 48 of the Act,
and thus was involved in the contravention within the meaning of Section 75B of the Act.”
(It was accepted in argument that the references to paragraphs 25 and 28 were incorrect references to paragraphs 17 and 18.)
Loss and damage is then alleged in the following terms:
“31. By reason of-
(a)the contravention by Safeway and Bartter of Section 45 of the Act;
(b)the contravention by Bartter of Section 48 of the Act; and/or
(c)the involvement of Safeway within the meaning of Section 75B of the Act in the contravention by Bartter of section 48 of the Act,
the Applicants have suffered loss and damage.
PARTICULARS
The Applicants have suffered loss of profits, damage to their goodwill and reputation. From 6 May 1997 the Applicants had no supply of eggs and could not sell eggs or had restricted volume of sale of eggs from its stores.”
After the filing of the proposed further amended statement of claim, Safeway and Bartter filed written submissions objecting to the leave sought and outlining the deficiencies in the pleading. The applicants filed written submissions in answer.
Is a cause of action under s 45 of the Act properly pleaded?
In their outline of submissions the applicants acknowledged that the paragraphs which rely upon a breach of s 45(2)(a)(i) and s 45(2)(b)(i), which were predicated upon the existence of an exclusionary provision as defined in s 4D of the Act, were deficient as they had not alleged that Safeway and Bartter were competitors and the applicants said in their submissions that they did not seek to proceed with claims of contravention of s 45(2)(a)(i) and s 45(2)(b)(i). However, the applicants have persisted with the proposed amended statement of claim to the extent to which they say it raises causes of action under s 45(2)(a)(ii) and s 45(2)(b)(ii) against Safeway and Bartter, a cause of action of resale price maintenance pursuant to s 48 of the Act against Bartter and a cause of action under s 75B against Safeway in relation to Bartter’s contravention of s 48.
In considering whether the applicants have adequately pleaded causes of action under the Act it is well to remember that it is a fundamental rule of pleading that a pleading contain statements of material facts and not the evidence by which those facts are to be proved: O 11 r2 of the Federal Court Rules; Bruce v Odhams Press Limited [1936] 1 KB 697, 712; Trade Practices Commission v David Jones (Australia) Pty Ltd (1985) 7 FCR 109, 112 ‑ 114; Trade Practices Commission v Australian Iron & Steel Pty Ltd (1990) 92 ALR 395; Mitanis v Pioneer Concrete (Vic) Pty Ltd (1997) ATPR ¶41,591. It is trite law but necessary in the circumstances of this case to repeat the oft‑quoted observation of Scott J in the Court of Appeal in Bruce v Odhams Press Limited (supra) at 711 ‑ 713:
“... but it is beyond question that there is a radical distinction [between a statement of material facts and particulars] and none the less so that in cases near the dividing line there is a penumbra where the two may and often do overlap, just as between night and day there is a zone of doubt which we call dusk ...
The cardinal provision in r. 4 is that the statement of claim must state the material facts. The word ‘material’ means necessary for the purpose of formulating a complete cause of action; and if any one ‘material’ fact is omitted, the statement of claim is bad; it is ‘demurrable’ in the old phraseology, and in the new is liable to be ‘struck out’ ...
The function of ‘particulars’ under r. 6 is quite different. They are not to be used in order to fill material gaps in a demurrable statement of claim - gaps which ought to have been filled by appropriate statements of the various material facts which together constitute the plaintiff’s cause of action. The use of particulars is intended to meet a further and quite separate requirement of pleading, imposed in fairness and justice to the defendant. Their function is to fill in the picture of the plaintiff’s cause of action with information sufficiently detailed to put the defendant on his guard as to the case he has to meet and to enable him to prepare for trial. Consequently in strictness particulars cannot cure a bad statement of claim. But in practice it is often difficult to distinguish between a ‘material fact’ and a ‘particular’ piece of information which it is reasonable to give the defendant in order to tell him the case he has to meet; hence in the nature of things there is often overlapping.”
When pleading a cause of action under s 45(2)(a)(ii) it is necessary to identify and plead material facts in relation to:
(a) the making of a contract or arrangement or the arriving at an understanding;
(b) the identification of a provision in that contract, arrangement or understanding;
(c)an allegation that the provision has the purpose, or would have, or be likely to have the effect, of substantially lessening competition;
(d)an allegation identifying the relevant market in which competition would be lessened and the manner in which competition would be lessened.
If s 45A is relied upon it is still necessary to allege that the parties to the contract, arrangement or understanding are in competition with each other.
For the purposes of a cause of action based on s 45(2)(b)(ii) it is also necessary to set out an allegation of material facts that the respondents gave effect to the provision. In other words, conduct has to be alleged and pleaded.
It is not sufficient simply to allege that a provision of a contract had the purpose of substantially lessening competition. It is necessary to allege material facts identifying a relevant market. This is made clear by s 45(3) of the Act which provides:
“For the purposes of this section and section 45A, ‘competition’, in relation to a provision of a contract, arrangement or understanding or of a proposed contract, arrangement or understanding, means competition in any market in which a corporation that is a party to the contract, arrangement or understanding or would be a party to the proposed contract, arrangement or understanding, or any body corporate related to such a corporation, supplies or acquires, or is likely to supply or acquire, goods or services or would, but for the provision, supply or acquire, or be likely to supply or acquire, goods or services.”
Section 45A of the Act contains a deeming provision in relation to what I will call loosely “price‑fixing” but that deeming provision only deems price‑fixing to have the purpose of substantially lessening competition if the contract, arrangement or understanding is made or reached by and between parties “in competition with each other.”
In my opinion, the applicants have not pleaded sufficient material facts to disclose a cause of action under s 45(2)(a)(ii) and s 45(2)(b)(ii). The contract, arrangement or understanding relied upon is set out in paragraph 20 but it is pleaded as a conclusion by use of the expression “Safeway made it known to Bartter”; no allegations of material fact are set out as to how the contract arrangement or understanding came about. The contract, arrangement or understanding is said to have occurred by reason of the allegations in paragraphs 9, 10, 11, 13, 14, 15, 16, 17, 18 and 19 but, of those paragraphs, only paragraphs 17 and 18 make allegations against Safeway. However, those allegations do not support or warrant the conclusion alleged in paragraph 20. Paragraphs 9, 10, 11, 13 and 14 simply set out conversations between a representative of the applicants and a representative of Bartter; they are not conversations in which a Safeway representative is a participant. They do not profess to be particulars of the contract, arrangement or understanding. Paragraphs 15 and 16 refer to a failure by Bartter to fill completely the applicants’ orders for eggs and to Bartter increasing the wholesale price of eggs charged to the applicants.
The supply of particulars does not cure a defect or an inadequacy in the pleading of material facts: Bruce v Odhams Press Limited (supra) at 711 ‑ 713; H 1976 Nominees Pty Ltd v Galli (1979) 30 ALR 181, 186 ‑ 187. But even if one attempts to use the particulars provided to explain or clarify the allegations of material fact the matter is not further elucidated. The contract, arrangement or understanding, or the attempt to make the same, is said to be partly oral and partly to be implied and reliance is placed on the specified paragraphs, the conversations set out as particulars to paragraph 19 and the conduct described in those conversations. Six conversations are set out between a representative of the applicants and a representative of Bartter. There are no conversations involving a Safeway representative as a participant. The particulars refer to discussions between Helen Raymond of Safeway and Simon Bartter wherein it is said:
“(a)Safeway complained to Bartter about the fact that the Applicants were selling their eggs too cheaply;
(b)Safeway required that Bartter arrange for the Applicants to increase the selling price of their eggs;
(c)Safeway would be increasing the purchase orders for eggs from Bartter.”
The existence of such conversations is said to be confirmed by the six conversations set out in the particulars to paragraph 19 but those conversations do not support these particulars. There is a further difficulty which is that the highest the allegation is put against Safeway is that “Safeway made it known to Bartter ...”. As I have already observed the particulars do not support the allegation which follows.
Paragraph 20 purports to raise two causes of action - the making of a contract or arrangement or the reaching of an understanding or alternatively an attempt by Safeway so to make a contract or arrangement or reach an understanding. Part IV of the Act does not make an attempt to make a contract or arrangement or reach an understanding a contravention of the Act. Section 80(1)(b) gives the court the power to grant an injunction where there is an attempt to contravene a provision of Part IV of the Act. No injunctions are sought in the Application; the claim made is for damages.
There is a further deficiency which is at paragraph 21 which alleges that the provisions of the contract, arrangement or understanding relied upon “had the purpose of substantially lessening competition ...”. But there is no allegation setting out material facts which identify the relevant market within which competition will be substantially lessened or the elements of that market either in product or geographic terms.
The allegation relied upon to support the contravention or attempted contravention of s 45(2)(b)(ii) of the Act is that:
“By engaging in the conduct set out in paragraph 20 hereof Safeway has given effect to or attempted to give effect to the provisions referred to in paragraph 21 in contravention or attempted contravention of s 45(2)(b) of the Act.”
There is no conduct alleged in paragraph 20 which refers to the making of the contract or the arrangement or the reaching of the understanding relied upon. Conduct relied upon as being the conduct giving rise to the making of a contract or arrangement or the reaching of an understanding cannot, at one and the same time, constitute giving effect to the same contract, arrangement or understanding: Australian Competition and Consumer Commission v Mobil Oil Australia Limited (1997) ATPR ¶41‑568 at 43,896.
Even if the pleading of the relevant contract, arrangement or understanding were capable of more refinement so that it could properly plead and particularise a contract, arrangement or understanding, the applicants have an insurmountable barrier in their way to pleading a cause of action under s 45. They recognised belatedly, but correctly, in their written submissions that they could not plead a proper cause of action under either s 45(2)(a)(i) or s 45(2)(b)(i) because:
“... the proposed statement of claim is deficient in that it does not allege that Safeway and Bartter are competitors.”
Accordingly they abandoned their claims of contravention of s 45(2)(a)(i) and s 45(2)(b)(i). But the same problem arises with their claims under s 45(2)(a)(ii) and s 45(2)(b)(ii). Even if they are relying on the deeming provision of s 45A(1), the deeming of the substantial lessening of competition only exists and applies to deem a provision of a contract, arrangement or understanding to have the relevant purpose or effect where the parties to the contract, arrangement or understanding are “in competition with each other”. That cannot be established in this case and is contrary to the allegations in the proposed statement of claim. Safeway and Bartter are not alleged, in the proposed statement of claim to be in competition with each other. Rather they are in a supply relationship. They are, in economic terms, in a vertical relationship; they are not in a horizontal relationship. Accordingly a case against Safeway and Bartter under s 45(2)(a)(ii) and s 45(2)(b)(ii) relying upon s 45A(1) cannot be sustained.
I am therefore satisfied that the applicants should not be given leave to deliver an amended statement of claim which relies on causes of action under ss 45(2)(a) and 45(2)(b) of the Act, nor is there any purpose in giving them a further opportunity to try and do so. The commercial relationship between Safeway and Bartter on which they rely does not allow such a pleading to go forward.
Is a cause of action under s 48 properly pleaded?
The allegation of resale price maintenance against Bartter is also inadequately pleaded so far as allegations of material facts are concerned. Rather, the applicants plead a litany of the relevant statutory provisions in s 96(3)(a), (b) and (d) of the Act which are pleaded as a result of the matters alleged in paragraphs 20 to 27. However, such a pleading is embarrassing because those paragraphs do not bear upon the allegations of material fact required to justify a cause or causes of action under s 96.
The only other affirmative allegation against Safeway is found in paragraph 30 which attempts to justify an allegation that Safeway has been involved in a contravention of s 48. However, that allegation, relying on s 75B of the Act is predicated on what is said to be conduct by Safeway referred to in paragraphs 25 and 28, an incorrect reference to paragraphs 17 and 18. (Paragraphs 1(b) and 2(b) of the proposed amended application which relate to the s 48 claim incorrectly refer to paragraphs 15 and 19. I take these paragraphs in the proposed amended application to be referring to paragraphs 17 and 18).
The pleading in relation to the s 48 claim does not suffer the insurmountable hurdle facing the s 45 claim. The criticisms made of the plea of resale price maintenance may be able to be pleaded properly. Although this is the fourth statement of claim propounded by the applicants, the earlier statements of claim had been abandoned because of the s 45 causes of action. The motion presently before the Court was the first time there has been an active consideration of the s 48 and s 75B causes of action, notwithstanding the fact that earlier written submissions of Safeway contained criticisms of the pleading of these causes of action.
Notwithstanding the inadequate pleading of material facts in the proposed amended statement of claim generally, I consider that there may (and I emphasise may) be sufficient facts spread throughout the pleading which when properly pleaded justify a pleading of a breach of s 48 by reference to s 96. For example, in relation to the cause of action predicated on s 96(3)(d) there are allegations pleaded variously in paragraphs 9, 10, 11, 13, 14 and 19 that may support the proposition that Bartter withheld the supply of eggs to the applicants for the reason that the applicants had not agreed not to sell eggs at a price less than a price specified by Bartter. In this context the price does not have to be a specified figure but may involve an element of approximation: Trade Practices Commission v Bata Shoe Co of Australia Pty Ltd (No 1) (1980) 44 FLR 145, 159‑ 160; Trade Practices Commission v Sony (Australia) Pty Ltd (1990) ATPR ¶41‑031, 51,488 ‑ 51,489. The difficulty with the pleading in its present form is that it does not set out in a coherent series of allegations of material fact the relevant elements of each cause of action; they are dispersed throughout the pleading.
Consistently with the principles identified by the High Court in State of Queensland v JL Holdings Pty Ltd (1997) 189 CLR 146, I consider that the applicants should be given the opportunity to re-plead the causes of action based on ss 48 and 96 of the Act.
I make the same observations in relation to the allegations against Safeway based upon s 75B of the Act. Paragraph 30 in its present form, by referring back to what should be paragraphs 17 and 18, does not adequately or properly plead a cause of action under s 75B in relation to a contravention or contraventions of ss 48 and 96. It is correct to say, as Safeway submits, that in order to establish that a party has been knowingly concerned in a contravention of s 75B(1)(c) it is necessary to establish that the party had knowledge of the essential elements of the contravention: Yorke v Lucas (1985) 158 CLR 661, 670. A similar position applies to the other subparagraphs of s 75B(1): Richardson & Wrench (Holdings) Pty Ltd v Ligon No 174 Pty Ltd (1994) 123 ALR 681, 693. This is not clearly articulated in the pleading but it may be possible to do so having regard to the allegations and matters dispersed throughout the pleading. Consistently with the principles in State of Queensland v JL Holdings Pty Limited (supra) the applicants should be given the further opportunity to amend their pleading.
There is a further respect in which the proposed amended statement of claim is deficient as a matter of pleading and this is in respect of the allegation of loss and damage in paragraph 31. As I observed in Mitanis v Pioneer Concrete (Vic) Pty Ltd (supra) at 44,154:
“It is also not sufficient simply to allege loss and damage as a result of the alleged contraventions; it is necessary to identify a causal connection between the impugned contract, arrangement or understanding and conduct such loss as is said to have been suffered by the applicants: Bond Corporation Pty Ltd v Thiess Contractors Pty Ltd (1987) 14 FCR 193, 222.”
There are no material facts alleged in paragraph 31 which show the required causal link between the alleged contraventions and any damage suffered. This allegation needs re‑pleading.
I am conscious of the fact that I am, in effect, striking out the s 45 claims whilst giving the applicants the opportunity to go forward with a s 48 claim against Bartter and a s 75B claim against Safeway. In this context I have considered the observations of Kirby P in Wickstead v Browne (1992) 30 NSWLR 1 at 5 where he dissented from the majority’s view that a cause of action in negligence should be dismissed when other causes of action were allowed to proceed. Kirby P said:
“However, for five reasons I do not believe that that part of the case should be excised from the proceedings and terminated at this stage:
1. Conformably with the decision of this Court, the matter will now proceed to trial. It will be tried upon the two causes of action which the Court has unanimously upheld, viz, the statutory count based upon the Code and the claim for breach of fiduciary duty. If there were to be no trial, there might be particular reasons for affirming the conclusion which Handley JA and Cripps JA have reached. Then, the summary termination of this claim might save the respondent altogether from the ‘vexation of the continuance of useless and futile proceedings’: see Dey v Victorian Railways Commissioners (1949) 78 CLR 62 at 84; Pannizutti v Trask (1987) 10 NSWLR 531 at 536. But as the trial must now proceed, there is merit (as it seems to me) in permitting the appellant to present his case in various ways. The marginal utility to the respondent of preventing the appellant from proceeding upon the alternative cause of action in negligence is minimal. But the marginal cost of doing so would be very great if, subsequently, the trial was concluded, limited by the orders proposed, and it was then held, either by this Court or by the High Court of Australia, that the appellant’s cause of action in negligence was viable;
2. Common experience teaches that it is usually more efficient and just to consider the viability of a cause of action when the facts said to support it are adduced and the suggested action can be judged with a full understanding of all relevant evidence. Testimony gives colour and content to the application and development of legal principle.”
The High Court granted special leave to appeal from the decision of the New South Wales Court of Appeal dismissing the negligence claim and allowed the appeal and expressed general agreement with the reasons of Kirby P for the conclusion that the negligence claim should be dismissed: Wickstead v Browne (1993) 10 Leg Rep 522. However in the case presumably before the Court, the s 45 claims cannot be sustained for the reasons to which I have referred and there is no point in allowing them to go forward. In any event the issues involved in a s 45 claim which requires a consideration of a relevant market and the nature and extent of the competition give rise to a substantially greater range and extent of factual issues than arise for consideration in a s 48 claim.
Costs
The respondents seek the costs of the applicants’ motion on an indemnity basis.
In Fountain Selected Meats (Sales) Pty Ltd v International Produce Merchants Pty Ltd (1988) 81 ALR 397 Woodward J said at 401:
“I believe that it is appropriate to consider awarding ‘solicitor and client’ or ‘indemnity’ costs, whenever it appears that an action has been commenced or continued in circumstances where the applicant, properly advised, should have known that he had no chance of success. In such cases the action must be presumed to have been commenced or continued for some ulterior motive, or because of some wilful disregard of the known facts or the clearly established law.”
In J‑Corp Pty Ltd v Australian Builders Labourers Federated Union of Workers - Western Australia Branch (No 2) (1993) 46 IR 301 French J, after referring to Fountain Selected Meats said at 303:
“Although there is said to be a presumption in such cases that the action was commenced or continued for some ulterior motive or in wilful disregard of known facts or clearly established law, it is not a necessary condition of the power to award such costs that a collateral purpose or some species of fraud be established. It is sufficient, in my opinion, to enliven the discretion to award such costs that, for whatever reason, a party persists in what should on proper consideration be seen to be a hopeless case”.
In Colgate Palmolive Co v Cussons Pty Ltd (1993) 46 FCR 225 Sheppard J set out at 232 ‑ 234 a number of relevant principles in relation to the exercise of the Court’s discretion to award indemnity costs. These principles have been adopted in a number of later cases: Re Wilcox; Ex parte Venture Industries Pty Ltd (No 2) (1996) 141 ALR 727. Sheppard J referred to a number of examples or circumstances in which an indemnity costs order had been made.
In Davids Holdings Pty Ltd v Coles Myer Limited (1995) ATPR ¶41‑383 Drummond J said at 40,303:
“If a Respondent at any appropriate stage, which may be at the very outset or at some later stage, e.g after it has received a pleading or after discovery, puts an Applicant on notice that it regards the action as misconceived and goes further and sets out its detailed reasons for so thinking, then if the Applicant nevertheless proceeds without indicating any justification for doing so and fails, there may be good reason to consider whether indemnity costs should be ordered.”
In my opinion, an application of these principles to the circumstances of this case warrants an order for indemnity costs. Right from the start the applicants were put on notice of the deficiencies in the statement of claim. Each succeeding statement of claim did not cure the deficiencies and on each occasion the further statements of claim were propounded substantial reasons were advanced by the respondents as to why the pleading was deficient. The applicants could not help but have known of the problems they faced yet they persisted in propounding inadequate and deficient statements of claim.
I therefore order that the applicants pay the first and second respondents’ costs of the motion on an indemnity basis.
I will grant the applicants leave to apply to deliver an amended application and a further amended statement of claim raising allegations against Bartter which allege contraventions of s 48 and s 96 of the Act and raising allegations against Safeway under s 75B of that Act in relation to those allegations against Bartter. Any application for such leave must be filed and served by 4.00pm on 29 June 1998 and the proposed further amended statement of claim must be exhibited to an affidavit. If any such motion is filed and served it is to be made returnable before me on 30 July 1998 and in such circumstances, Bartter and Safeway are to file and serve an outline of submissions if they intend to oppose such leave by 4.00pm on 10 July 1998 and the applicants must file and serve an outline of their submissions by 4.00pm on 20 July 1998.
For the reasons to which I have referred Safeway and Bartter are entitled to the costs of the motion for leave to deliver a further amended statement of claim and are also entitled to those costs on an indemnity basis and I order pursuant to O 62 r3(2) that those costs be paid forthwith, notwithstanding that the proceeding is not concluded.
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: 4 June 1998
Counsel for the Applicant: Mr M Dreyfus Solicitor for the Applicant: Pryles & Defteros Counsel for the First and Second Respondents: Mr L Glick Solicitors for the First and Second Respondents: Clayton Utz Counsel for the Third Respondent: Mr J M Morris Solicitor for the Third Respondent: Jerrard & Stuk Date of Hearing: 29 May 1998 Date of Judgment: 4 June 1998
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