Skywillow P/L v Budget Rent-a-car International

[1992] FCA 980

JUDGMENT NO. ..... ?go, ,,, uennn8n 1992

IN THE FEDERAL COURT OF AUSTRALIA )

) No. NG 457 of 1992

NEW SOUTH WALES DISTRICT REGISTRY j

1

GENERAL DIVISION 1

BETWEEN :	SKYWILLOW PTY LIMITED
m
Applicants
AND :	BUDGET  RENT-A-CAR
INTERNATIONAL
First Respondent
BUDGET RENT A CAR PTY L I M I T E D [ I N LIOUIDATION)
Second Respondent PETER LEONARD CROUCH Third Respondent JOHN IAN HOWARD Fourth Respondent JOHN DUNPHY Fifth Respondent

CORAM :	WILCOX J
PLACE :	SYDNEY
DATE :	30 NOVEMBER 1992
John Horne.

EXTEMPORE REASONS FOR JUDGMENT

WILCOX J: There are before the court two notices of motion. The first of them, filed today, seeks to substitute a number of people as applicants. The only matter raised in regard to that notice of motion is the presence on the list of Kevin

It appears from the evidence given by Mr Horne today that one of the other proposed applicants, Illawarra Car and Truck Rentals Pty Limited, which is controlled by him is owed money by Eastern Suburbs Auto Rentals, but it does not appear that he personally is owed any money.

I think there is a question about M r Horne's entitlement to sue. But it is inappropriate to determine the

question today. There has been little opportunity for the

matter to be considered by counsel for the applicants. I

propose to make the orders sought in the notice of motion, but

to reserve leave to the respondents to apply on notice of

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motion for the deletion from that 1ist'"of the name -of Kevin John Horne. This will enable the issue of I& hornens	X , !	!
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continued presence amongst the applicants .to .be determined . .

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with the benefit of such additional:. evidence as may be * ,

available and with argument focused on that':.point.	,'
In relation, therefore, to that motion, the order I make is as set out in para.2 of the notice of motion dated

today; but I add the rider which I just mentioned.

The other matter which is before the Court is a notice of motion filed on 21 August 1992. At that time the Statement of Claim was in a different form. It was pleaded as a representative action under the new part IVA of the Federal Court of Australia Act 1976. Having heard the evidence in regard to the facts giving rise to the claim for damages, I took the view that the cause of action (if any) of the persons within the represented class arose before the commencement of that Part. Accordingly I held that the matter should not proceed as a representative action. However, I indicated that thought might be given to its being conducted on the basis of named applicants, in the single proceeding. That is the course now proposed. It gave rise to the list of applicants to which I have already made reference.

The respondents seek to have the service of the Application outside Australia, on those of them who are not within Australia - namely the first, fourth and fifth respondents - set aside pursuant to order 9 rule 7. That rule empowers the Court, on application made by a respondent, to make any one of a number of orders, including an order setting aside the service of the originating process on that respondent.

The approach which is generally taken in regard to such applications is to consider whether service outside the	jurisdiction was validly made in the first place, or ought to
be confirmed pursuant to order 8 rule 2. Order 8 rule 2 requires the court to be satisfied of a number of matters, including that the applicant has a prima facie case for the relief sought.
In the present case the amended Statement of Claim relies upon three causes of action. The first of them is described as misleading conduct. It alleges contraventions of ss.52 and 51A of the Trade Practices Act 1974. The second cause of action is in deceit and the third in negligence.
In regard to the s.51A claim, counsel for the respondents concedes that it would be inappropriate to require the applicants to show a prima facie case. The conduct referred to in s.51A is future action. But he contends that it would be appropriate to require a prima facie case in respect of the misleading conduct relied on pursuant to 6.52. He also complains of the institution of an action of deceit without evidence of the respondents' knowledge of the falsity of the representations.
In reply to this submission, counsel for the applicant referred to the fact that, within two years of the representations being made, the first respondent - the company in regard to which the representations were made - went into liquidation owing debts exceeding $56,000,000. Counsel says
that the mere speed and size of the collapse suggests the falsity of the representations that were made.
I think there is something in this argument; but it may perhaps, be put too highly. From one point of view, two years is not a long time, certainly in the life of most companies; but it would be possible for statements to be correct when made and yet, for a company operated on the scale on which the first respondent was apparently conducted, to go into liquidation owing a debt of this dimension.
If this was all there was in the case, I would think it appropriate to decline to confirm the service at this stage; and/or to uphold the application to set aside service. However, once it is conceded that the application was properly served in relation to the s.51A claim, other matters come into play. The s.51A claim relates to representations made in the same Sky Channel broadcast as the representations relied upon under 6.52. The litigation of that claim inevitably covers the ground involved in the s.52 claim. The s.51A claim will require the applicants to prove the making of the broadcast, the circumstances which then applied, and the subsequent financial operation of the first respondent. It seems to me that, if there is any element of discretion involved, it would be artificial to hive off the s.51A claim from the s.52 claim and remit the applicants to suing the respondents in regard to the factual representations which were made in some other proceeding, perhaps in the United Kingdom.
Much the same consideration applies when one considers the negligence claim. Essentially the same ground has to be covered.
In regard to the deceit claim I have a different view. Deceit is a particularly upsetting allegation to be brought against any respondent. I do not think that I ought to allow the allegations in deceit to go further without some positive evidence of knowledge of falsity at the time. The allegations may well have been false and yet not known to be false to each or any respondent.
I think that, as Mr Clay submits, I do have a discretion in regard to the course to be taken. Order 9 rule
7 confers a discretion to et aside the service. It does not
impose this course as a duty. Order 8 rule 2, which looks at the obverse matter, the granting of leave, is also couched in discretionary terms. And, of course, overriding all of the rules is the general discretion to grant relief from the rules conferred by order 1 rule 8.
I do no think that there would be any injustice in my exercising that discretion so as to maintain the service of the proceeding insofar as it relies upon the Trade Practices
m and negligence claims. This is not a case of people who
have no real connection with Australia being sued in an Australian court. The second respondent appears to have been
the prime backer of the first respondent, an Australian corporation engaged in a substantial enterprise in this
country. It is alleged that the fourth and fifth respondents were participants in the making of the representations. These were representations directed to Australian franchisees within Australia.
It seems to me that it would be in the interests of justice for these claims to be litigated in a single proceeding in this country. Accordingly to the extent that I need to resort to the discretion granted under order 1 rule 8,
I do so. I think that this is the just course to take.

The order that I make is as follows: I dismiss the

application to set aside service made in the notice of motion dated 21 August 1992, subject to the amended Statement of Claim being further amended so as to delete any reliance upon deceit.

There is also the matter of the granting of leave for the applicant to sue the second respondent, a company which is in liquidation. Having regard to the view that I have taken about the other matters, I propose to grant that leave. I grant leave to the applicants to institute proceedings against the second respondent, subject to the condition that no action will be taken to enforce any judgment against that respondent without the leave of this Court or the Supreme Court of Victoria.

[Counsel addressed on costs.]

I order the applicant to pay the costs of all respondents of 17 September 1992. The costs of today will be costs in the cause. I think that, if the respondents should prevail it would be unjust to require them to pay the costs of today. On the other hand, if the applicant wins, it would be fair enough for those costs to cover today. I stand the matter over to the directions list at 9.30 on Friday 4 December.

I certify that this and the preceding seven (7) pages ate a true copy of the Reasons for Judgment

of the Honourable Justice Wilcox.	- -
Associate: .
Dated:  30 November 1991

APPEARANCES

Counsel for the Applicant:	P R Clay
Solicitors for the Applicant:	Price Brent
Counsel for the Respondent:	A J Meagher
Solicitors for the Respondent:	Mallesons Stephen Jaques
Dates of hearing:	30 November 1992