Sterling Winthrop Pty Limited v The Boots Company (Australia) Pty Limited
[1995] FCA 991
•4 DECEMBER 1995
CATCHWORDS
PRACTICE and PROCEDURE - Application to strike out paragraphs of defence - Application to postpone discovery - equitable defence of acquiescence - equitable defence of estoppel - conduct disentitling injunctive relief - remoteness of representations - non-withdrawal of representations - whether any reliance on earlier representations - whether sufficient nexus or proximity of representations - equitable defence of "unclean hands" - whether conduct directly and immediately related to transaction - whether applicant taking advantage of own wrong - relevance of public interest under Trade Practices Act - Application to postpone discovery - whether postponed discovery reduces extent of discovery - whether postponed discovery will reduce time and expense - whether preferable to make discovery before filing evidence.
EQUITY - equitable defence of acquiescence - equitable defence of estoppel - equitable defence of "unclean hands" - whether necessary relation to equity sued for - whether protection of own wrong - remoteness.
TRADE PRACTICES - conduct disentitling injunctive relief - remoteness of representations - whether reliance on earlier representations - relevance of public interest under Trade Practices Act.
Trade Practices Act 1974 (Cth) ss 52, 53C, 80, 82 and 87
Meagher, Gummow, Lehane, Equitable Doctrines and Remedies 1992, 3rd ed.
Waltons Stores (Interstate) Ltd v Maher (1988) 164 CLR 387
Commonwealth v Verwayen (1990) 170 CLR 394
Glev Pty Ltd v Glev Franchises Pty Ltd (1994) 16 ATPR 41-229
ICI Australia Operations Pty Ltd v Trade Practices Commission (1992) 38 FCR 248
FAI Insurances Ltd v Pioneer Concrete Services Ltd (1987)
15 NSWLR 552
Atwood v Small [1835-42] All ER Rep 258
Meyers v Casey (1913) 17 CLR 90
Moody v Cox and Hatt [1917] 2 Ch 71
General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125
STERLING WINTHROP PTY LIMITED v
THE BOOTS COMPANY (AUSTRALIA) PTY LIMITED
No NG 605 of 1995
Tamberlin J
Sydney
4 December 1995
IN THE FEDERAL COURT OF AUSTRALIA )
NEW SOUTH WALES DISTRICT REGISTRY ) No. NG 605 of 1995
GENERAL DIVISION )
BETWEEN: STERLING WINTHROP
PTY LIMITED
Applicant
AND: THE BOOTS COMPANY
(AUSTRALIA) PTY LIMITED
Respondent
CORAM: TAMBERLIN J
PLACE: SYDNEY
DATED: 4 DECEMBER 1995
MINUTE OF ORDERS
THE COURT ORDERS THAT:
Paragraphs 16 to 20 of the Defence filed 4 September 1995 be struck out.
Both respondent and applicant to file and verify lists of documents in relation to the topics and categories set out in the letter which is annexure E of the affidavit of Cameron Andrew Moore, affirmed 8 November 1995, on or before 28 February 1996.
Leave be granted to the applicant to amend the application and pleadings to reflect the changes to the applicant's name.
The respondent pay the costs of the applicant in relation to both Notices of Motion.
The matter be stood over until 9.30 am on 7 March 1996 for further directions.
NOTE: Settlement and entry of orders is dealt with in accordance with Order 36 of the Federal Court Rules.
IN THE FEDERAL COURT OF AUSTRALIA )
NEW SOUTH WALES DISTRICT REGISTRY ) No. NG 605 of 1995
GENERAL DIVISION )
BETWEEN: STERLING WINTHROP
PTY LIMITED
Applicant
AND: THE BOOTS COMPANY
(AUSTRALIA) PTY LIMITED
Respondent
CORAM: TAMBERLIN J
PLACE: SYDNEY
DATED: 4 DECEMBER 1995
REASONS FOR JUDGMENT
There are two applications before me. The first is to strike out certain paragraphs of the Defence on the ground that they do not disclose a defence. The second seeks an order that discovery be postponed until the parties have filed and exchanged statements of experts.
The Strike Out Application
In its Statement of Claim filed on 25 August 1995 the applicant alleges that the respondent has engaged in deceptive conduct in contravention of s 52 of the Trade Practices Act and has contravened s 53(c) of the Trade Practices Act (1974) by misrepresentations as to performance characteristics of a pharmaceutical product known as "Nurofen" which is a pain
reliever. The applicant seeks an injunction, damages and corrective advertising.
Paragraph 21 of the Statement of Claim alleges that advertisements for the product included certain representations with respect to the tolerability of "Nurofen" and paragraph 22 gives particulars as to the basis on which it is said the representations are false.
The Defence, filed on 4 September 1995, alleges in paragraphs 16 to 20 that the applicant supplied a product between March 1989 and 1991 under the brand name "Niapren". In promoting sale of that product, the applicant made claims, which are said to be substantially similar to those presently alleged to be false. On the basis of these statements the respondent seeks to raise equitable defences of acquiescence, estoppel and conduct which disentitles the applicant to discretionary relief.
The respondent also seeks to rely on the matters raised in paragraphs 16 and 17 by way of defence on substantive (as opposed to discretionary) grounds, to the allegations made in the Statement of Claim. In relation to this last contention, the Defence, does not specify how the respondent relies on the representations asserted in paragraphs 16 and 17 as a substantive defence. On my reading, paragraphs 15, 16 and 17 of the Defence are directed to equitable defences arising from the alleged conduct spelt out in paragraph 17. These grounds are specifically expressed in paragraphs 18-20. I reject the submission that paragraphs 16 and 17 can be relied on as a substantive (as opposed to discretionary) defence to the Statement of Claim.
In relation to paragraph 18, I consider that the conduct alleged cannot arguably amount to acquiescence. The discretionary defence of acquiescence requires a determination that the applicant consented to the conduct of the respondent about which it now complains. It is suggested that because the earlier representations during 1989-1991 were not specifically withdrawn by the applicant, they can arguably be said to amount to present conduct on the basis that they should be taken as still continuing or expressing the current opinions of the applicant. In my view, the previous statements are too remote. The non-withdrawal of statements made four to six ago cannot, on the material before me, afford a ground of defence founded on acquiescence.
In relation to paragraph 19, there is no allegation of any of the necessary elements required to be established to ground an estoppel. It is not stated how the applicant is said to have been induced by or to have relied on the earlier representations in making its present representations. There are no particulars of any of the elements necessary to make out an estoppel. The paragraph simply contains a bald assertion that there is an estoppel. I think this paragraph must be struck out. Cf Waltons Stores (Interstate) Ltd v Maher (1988) 164 CLR 387 at 423-424 and 428-429; Commonwealth v Verwayen (1990) 170 CLR 395.
With respect to paragraph 20, which relates to conduct disentitling the applicant from relief, the respondent says that the paragraph should not be struck out. It is said that it is a question of fact and degree as to whether the earlier representations had a sufficient nexus or proximity to the representations presently being alleged such that the applicant comes before the Court with "unclean hands". Essentially this is a submission claiming that as the applicant has made "similar" representations in 1989-1991 it should not be granted relief in 1995. With the passage of time it is possible that developments in scientific and medical research and other relevant circumstances over at least four years could well affect the accuracy of any previous representations.
It is apparent on a reading of the Act and also on the authorities, that in proceedings under the Trade Practices Act there is a substantial element of public interest. As was pointed out in Glev Pty Ltd and Glev Franchises Pty Ltd v Kentucky Fried Chicken Pty Ltd (1994) 16 ATPR 41-299, by von Doussa J, due to this element of public interest, the Court will be slower to withhold relief than would an equity court in a private suit in which there is no such public interest. The "unclean hands" argument is a matter which can be taken into account but it may not be a controlling matter if the
public interest requires a remedy for the protection of consumers. See also ICI Australia Operations Pty Limited v Trade Practices Commission (1992) 38 FCR 248; and FAI Insurances Pty Ltd v Pioneer Concrete Services Ltd (1987) 15 NSWLR 552 at 555-557, 562 per Young J. Considerations of the interests of consumers may prove to be especially important in proceedings alleging misrepresentation with respect to the qualities or efficiency of pharmaceutical products designed for regular use by the public.
The equitable defence of "clean hands" has been formulated in different ways. In Atwood v Small [1835-42] All ER Rep 258, it is said that the conduct must not only be connected with the transaction in question, but must be shown to be the very ground on which the transaction took place and which gave rise to the contracts.
In Myers v Casey (1913) 17 CLR 90 at 124, Isaacs J said:
"It is altogether different from the cases where the right relied on, and which the Court of equity is asked to protect or assist, is itself to some extent brought into existence or induced by some illegal or unconscionable conduct of the plaintiff, so that protection for what he claims involves protection for his own wrong. No Court of equity will aid a man to derive advantage from his own wrong, and this is really the meaning of the maxim." (Emphasis added)
The Court of Appeal in Moody v Cox and Hatt (1917) 2 Ch 71 at 87-88 said that:
".... equity will not apply the principle about clean hands unless the depravity, the dirt in question on the hand, has an immediate and necessary relation to the equity sued for...." (Emphasis added)
Meagher, Gummow and Lehane in Equitable Doctrines and Remedies 3rd ed, 1992 at para 327 pose the question whether the impropriety complained of is directly and immediately related to the equity relied on.
Young J in FAI Insurances (supra) at 561 concluded after a review of the authorities:
" ..... it is only if the right being sought to be vindicated ... is one which if protected, would mean the plaintiff was taking advantage of his own wrong, that the court will either debar him from relief or ... say he is not a proper plaintiff in a representative suit." (Emphasis added)
His Honour goes on to say at 562:
"In the instant case it does not seem to me that any misleading conduct ... has that sufficiently close nexus to the plaintiff's case in this suit as to permit an amendment to allow that defence now to be raised." (Emphasis added)
In this matter, I do not consider that it is reasonably arguable that the conduct relied on in paragraphs 16 to 20 of the Defence is directly or immediately related to the representations of which the applicant complains, so as to be capable of giving rise to an equitable defence. The remoteness in time of statements made four to six years ago is
such that there is no relevant nexus. There is no allegation that the representations were or were believed to be false or misleading when made. Nor can it can be said that the applicant is taking advantage of its own wrong in pursuing the present matter. Further, I am not persuaded that this is a case where it can be said that the conduct complained of arguably was brought about or induced by earlier statements of the respondent.
In reaching my decision I considered the need for exceptional caution and the need for a very clear case. Cf. General Steel Industries Inc. v Commissioner for Railways (NSW) (1964) 112 CLR 125 at 129 and Webster v Lampard (1993) 177 CLR 598 at 602-3 and 619. In my view the present case is a clear case.
For the above reasons my conclusion is that paragraphs 16 to 20 of the Defence should be struck out.
Discovery
The respondent submits that the Court should not make orders at this stage for discovery but rather should direct the parties to file expert evidence within a suitable time and then return to the Court for directions with respect to discovery.
This submission is based on the proposition that discovery at the present stage would do little to narrow or identify the issues. The essential issue is said to be a medical or scientific one, namely the comparative tolerability of paracetamol and ibuprofen. The submission is that expert evidence should first be filed without the benefit of discovery on the "objective" question as to whether the conduct is misleading. Then after discovery further evidence can be filed relating to matters of intention and honest or reasonable belief.
The documentation and data relating to the question of deceptive conduct may be relevant to the evidence, expert or otherwise, to be put forward by the parties. It could also well be important in testing the evidence of the applicant.
The Defence makes the assertion, in paragraph 14, that certain beliefs of the respondent were honestly held and reasonably based on recognised medical and scientific data, including published literature. This assertion calls for an examination of the relevant literature and data relied on.
The second reason advanced by the respondent is that discovery before evidence of experts is filed, would impose considerable burden on both parties, in particular on the respondent, without any commensurate gains. Some evidence was filed as to the likely cost and time involved. This estimate involved substantial figures, both as to time and expense. It is also said by the respondent that many of the discovered documents may ultimately have no use. A further reason given is that the proposal of the applicant to limit discovery will not significantly reduce the burden.
In the letter dated 7 November 1995, the applicant's solution has suggested discovery by reference to certain topics and categories of documents. These limitations, however, are cast in wide terms to include medical and scientific papers, reports of research findings, inter-company correspondence and memoranda, which record research findings, correspondence to regulatory bodies and companies within each party's group and customer complaints and replies. This suggested limitation will still require extensive discovery.
It is apparent that in a case such as this discovery will be lengthy, complex and expensive. However, extensive discovery will have to be made at some stage, and in my view, it is preferable in the interests of effective case management that it be made prior to the filing of the evidence of experts and other witnesses.
I am not convinced that the normal practice should be departed from. If discovery is ordered before evidence is filed then the evidence can be prepared in a systematic and orderly way, rather than in a "piecemeal" fashion. This course will ultimately reduce the need to have amending statements of evidence or affidavits and amending responses which will fragment the presentation of the matter. Until there is discovery the evidence of the parties and their experts cannot be properly or fully formulated. It is in the interests of all the parties and the Court that witness's statements or affidavits should deal fully and thoroughly with all relevant matters in the light of the available documentary material.
The applicant, which opposes postponed discovery, is entitled to present its case in a comprehensive and orderly manner and not be bound to proffer evidence in a premature or contingent way. It is appropriate that the expert witnesses should form their own views with the benefit of access to all relevant documents.
Accordingly, I refuse the application for postponement of discovery in this matter.
Conclusion
My conclusion is that paragraphs 16 to 20 of the Defence should be struck out and that the respondent should pay the applicant's costs of both motions. I direct that each party file and verify lists of documents in relation to the topics and categories set out in the letter which is Annexure E to the affidavit of Cameron Andrew Moore affirmed on the 8 November 1995, on or before 28 February 1996. The applicant is granted leave to amend the application and pleadings to reflect the changes of the applicant's name. These proceedings are stood over to 9.30 am, on 7 March 1996, before me.
I certify that this and
the preceding ten (10)
pages are a true copy of the
Reasons for Judgment herein of
his Honour Justice Tamberlin.
Associate:
Date: 4 December 1995
Counsel for Applicant: Miss K Howard
Solicitors for Applicant: Freehill Hollingdale & Page
Counsel for Respondent: Mr J Gleeson
Solicitors for Respondent: Minter Ellison
Date of Hearing: 8 & 13 November 1995
Date Judgment Delivered: 4 December 1995
0
11
0