Sunshine General Industries Pty Ltd v Everdure Pty Ltd

600,90

JUDGMENT No. ....-...,...... . ,-

TICE AND PROCEDUM - cross-claim - service out of jurisdiction - leave to file cross-claim against third party - relevant considerations - relief claimed under ss.82 and 87 of m d e Practices Act 1974 - relevant conduct out of Australia - need for ministerial consent - conduct related to principal controversy - leave to serve cross-claim out of jurisdiction -

relevant considerations.

Trade Practices Act; 1974 ss.5(3), 5(4), 5(5), ss.52, 82 and 87

co~vriaht Act ss 74, 77

Federal Court Rules 0.6 r.6, 0.8 r.1

SUNSHINE GENERAL INDUSTRIES PTY LTD v BVERDURE PTY LTD
EVERDURE PTY LTD v GRAND HALL ENTERPRISES CO LTD

No. WAG 183 of 1988

French J.
Perth

2 October 1990

IN THE FEDERAL COURT )
OF AUSTRALIA 1
WESTERN AUSTRALIA )
DISTRICT REGISTRY 1
GENERAL DIVISION

1 NO. WAG 183 of 1988

B E T W E E N : SUNSHINE GENERAL INDUSTRIES
PTY LTD

Applicant
and
EVERDURE PTY LTD
Respondent

and
EVERDURE PTY LTD
Cross-Claimant

and
GRAND HALL ENTERPRISES CO
LTD
Cross-Respondent

JUDGE MAKING ORDER: FRENCH J.

DATE OF ORDER: 2 OCTOBER 1990

WHERE MAL)E: PERTH

W E COURT ORDERS THAT2
On the respondent's motion filed 21 September 1990:

That Everdure have leave to file and serve a cross claim against Grand Hall Enterprise Co. Ltd in terms of the minute exhibited to the affidavit of John Ferguson sworn 20 September 1990 subject to the excision of the claim for relief under s.87 of the

Trade Practices Act.
That there be leave to serve the cross-claim out of
the jurisdiction at Taipei, or such other place
within Taiwan as Grand Hall Enterprise Co. Ltd may
have its principal office.
That Everdure do also serve upon Grand Hall
Enterprise Co. Ltd with the cross-claim, copies of
the amended statement of claim and defence and of
this order.

There be liberty to the parties to apply generally.

5 . The costs of the motion will be in the cross-claim.

On the applicant's motion filed 10 September 1990:

1. That pursuant to 0.29 r.2 of the Federal Court Rules, the question of the liability of the respondent be tried separately and prior to the question of damages in these proceedings.
That the costs of the motion be in the cause.
Note: Settlement and entry of orders is dealt with in

Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT )
OF AUSTRALIA )
WESTERN AUSTRALIA )
DISTRICT REGISTRY 1
GENERAL DIVISION

1 No. WAG 183 of 1988

B E T W E E N : SUNSHINE GENERAL INDUSTRIES PTY
LTD

Applicant
and
EVERDURE PTY LTD
Respondent

and
EVERDURE PTY LTD
Cross-Claimant

and
GRAND HALL ENTERPRISES CO LTD
Cross-Respondent

C O W : FRENCH J.
2 OCTOBER 1990

EX TEWPORE REASONS FOR JUJXMBNT

These proceedings, which were commenced on 7 December 1988, involve a claim by Sunshine General Industries

Pty Ltd ("Sunshine") against Everdure Pty Ltd ("Everdure") arising out of the importation into Australia of a component of a barbecue known as a gas cock extension piece. Without descending into the detail of the claim, in broad terms Sunshine alleges that it is the owner of copyright subsisting in Australia in a drawing of the extension piece prepared by one of its employees in May 1987. And it says that from at least in or about April 1988 to December 1988 when the application issued, the respondent has been importing reproductions of that item, and selling them in this country. It alleges that Everdure has thereby infringed the copyright in the artistic work comprised in the drawing. It is also said that Everdure's conduct was misleading or deceptive or likely to mislead or deceive in contravention of s.52 of the

Trade 1974. The misleading or deceptive conduct

arose out of implied representations to purchasers or prospective purchasers that Everdure had the right to offer the item for sale and like implied representations to customs authorities that it had the right to import it. The relief claimed includes injunction, damages and an account of pro£ its.

By its defence, Everdure puts the applicant's ownership of copyright in the drawing in issue, sets out denials of various of the allegations of importation and sale, and denies that the importation was done in the knowledge that the claim was an infringing reproduction of the applicant's

purchaser for value from a Taiwanese manufacturer called Grand work. In that respect Everdure says that it was a bond fide

Hall Enterprise Company Limited ("Grand Halln) of 8,000 of the

gas cock extension pieces manufactured by that company in Taiwan. At no time prior to 8 November 1988 did that company inform it of any agreement to manufacture the items for Sunshine in accordance with a drawing provided by that company. Defences under ss.77 and 74 of the co~vriaht Act are also raised. It is contended that the applicant has

industrially applied a corresponding design reflected in the artistic work and that it thereby lacks protection under the

aht Act.

By a notice of motion filed on 21 September and returnable today, Everdure seeks leave to file and serve a cross-claim against Grand Hall and leave, pursuant to 0.8 r.2 to serve the cross-claim out of the jurisdiction at Taipei or such other place within Taiwan as Grand Hall may be found. The motion is supported by an affidavit sworn by the General Manager of Everdure, Mr Ferguson, in which he says that in the course of a recent review of discovered documents, some of which were only discovered within the last seven days, and following discussion with its solicitors, Everdure now considers that if it is found to be liable to the applicant, it is entitled to be indemnified by Grand Hall and, alternatively, that the actions and omissions of Grand Hall will have amounted to breaches of the Trade Practices Act causing Everdure to suffer loss.

A minute of the proposed cross-claim was exhibited to the affidavit and asserts, inter alia, that Grand Hall is and was at all material times a company duly incorporated under the laws of Taiwan, a foreign corporation for the purposes of s . 4 of the Trade Practices Act, and engaged from May 1987 in trade or commerce between Australia and places outside Australia. And, it is said, Grand Hall made certain representations to Everdure that it had an unrestricted right to supply components, a sample of which was given to Everdure as an off the shelf standard stock item. The representations are said to have been made orally in Taiwan and by facsimile transmission from Grand Hall to Everdure on various dates which are set out in the particulars to para.7 of the proposed cross-claim. And it is further contended in para.8 that Grand Hall failed to advise Everdure of the existence of a contract between itself and Sunshine, the fact that Sunshine had supplied to it a two dimensional representation of the extension piece on a confidential basis, and that copyright in the representation was owned or alternatively claimed by Sunshine. Also it was said to have failed to have disclosed that Sunshine had, prior to the delivery to Everdure in Australia on 7 September 1988 of some 4 , 0 0 0 of the extension pieces, contacted Grand Hall inquiring whether Everdure had approached it to be supplied with Grand Hall extensions and reiterating its claim.

In para. 11 of the proposed cross-claim it is contrary to 9.52 of the Trade Practices Act and that if

acts and omissions, engaged in misleading or deceptive conduct alleged that Grand Hall has, by reason of its representations,

Everdure is found to be liable to Sunshine, it is entitled to be indemnified by Grand Hall for any damages, profits or costs it may be ordered to pay, and if Sunshine is entitled to any other relief, then Everdure will suffer loss or damage. Everdure claims relief under ss. 82 and 87 of the Act.

There is a threshold problem with the relief claimed under 8.87 because it appears to rely upon conduct engaged in outside Australia. In sub-s.5(4) of the Act it is said that:

"A person other than the Minister or the Commission is not entitled to make an application to the Court for an order under sub-S. 87 (1) or (1A) in a proceeding in respect of conduct to which a provision of this Act extends by virtue of sub- section (1) or (2) of this section except with the consent in writing of the Minister."

Sub-section 5(5) requires the Minister to give a consent unless in the opinion of the Minister the law of the country in which the conduct concerned was engaged in required or specifically authorised the engaging in of the conduct and it is not in the national interest that the consent be given. So far as the relief claimed under sub-6.87 is concerned therefore, the application cannot be made before ministerial consent is given. The position with respect to the claim

not entitled to rely at a hearing in respect of that under 8.82 appears to be different, for sub-s.5(3) provides "where a claim under 8.82 is made in a proceeding, a person is

proceeding on conduct to which a provision of this Act extends by virtue of sub-section (1) or (2) of this section except with the consent in writing of the Minister". That allows for the possibility of an application being filed and issued where a claim is made under 8.82. At the point of a hearing, and it may be also in interlocutory proceedings, where the conduct upon which that relief is based is to be relied upon, the Minister's consent is required. And again, sub-s.5(5) sets up the requirement for that consent to be given except where the conditions specified are in effect. It follows that if the cross-claim is to be allowed, it can only be allowed in respect of the claim under s.82 and the claim for contribution.

The question whether the cross-claim should be allowed I think is readily answered. It is evident that the dispute between Grand Hall and Everdure evidenced in the minute of cross-claim relates to essentially the same controversy as that between Grand Hall and Sunshine. It is therefore probable that the cross-claim will allow costs to be saved and a more convenient disposition of the controversy effected, than if Everdure were required to file a fresh application. The question of whether, and to what extent, issues arising under the cross-claim may be tried concurrently with the trial of issues between the applicant and the
respondent can be addressed under the provisions of 0.6 r.6 as a matter of case management.

The other question which arises is whether this is a case in which leave should be given under 0.8 to serve the process outside the Commonwealth. I note the general principles governing the exercise of this discretion, that first it should be exercised with great care, second the onus to satisfy the court that such service should be permitted

lies on the person seeking the order, third, the substance of the matter must be within one of the categories in 0.8 r. l, fourth, if there is a doubt as to whether a case is within one of these categories it should be resolved in favour of the proposed respondent, fifth, even where a case falls within one of the categories, it is a matter of discretion, and sixth there must be a full and fair disclosure where there is an ex parte application. I regard this motion as ex parte, for Grand Hall is not represented here today. I am satisfied that the cause of action relied upon in the proposed cross-claim can be brought at least within 0.8 r.1 para.(c) where the proceeding is founded on a breach wherever occurring of an Act and is brought in respect of or for the recovery of damage suffered wholly or partly in the Commonwealth. I think also there is a reasonable argument for the proposition that the cross-claim falls within r.lA. as founded on a cause of action arising in the Commonwealth. The cause of action under 8.82 of the Trade Practices Act has loss as one of its elements. The cross-claim asserts the suffering of that loss or damage

within Australia. My determination in that respect is in a sense provisional in that the other party, Grand Hall, is not

represented here and it will be open to it to move to set aside the leave now granted either on discretionary bases or the basis that the jurisdiction is not properly founded on 0.8

r.1. But on the material before me at the moment, I consider that there is a case for the leave to be granted.

In the circumstances, I propose to make the

appropriate orders. On the respondent's motion filed 21

September 1990 it will be ordered:

l

C

That Everdure have leave to file and serve a cross claim against Grand Hall Enterprise Co. Ltd in terms of the minute exhibited to the affidavit of John Ferguson sworn 20 September 1990 subject to the excision of the claim for relief under s.87 of the Trade Practices Act.

That there be leave to serve the cross-claim out of the jurisdiction at Taipei, or such other place within Taiwan as Grand Hall Enterprise Co. Ltd may have its principal office.

That Everdure do also serve upon Grand Hall Enterprise Co. Ltd with the cross-claim, copies of the amended statement of claim and defence and of this order.

There be liberty to the parties to apply generally. The costs of the motion will be in the cross-claim.

The applicant in this case, moves for orders that the question of liability be tried separately and prior to the question of damages and that evidence at the hearing be by way of affidavit. As to the separate trial of the issue of liability, I have come to the view that that is a convenient way to proceed in this matter, subject to one reservation, and that is that I will be requiring in later directions that the applicant give particulars of the damages that it claims, a matter which it has not yet attended to and a matter upon which I think the respondent is entitled to be properly informed as soon as possible so that the question of any settlement or payment in can be addressed before further expense is incurred. So far as evidence by way of affidavit is concerned, the respondent opposes that element of the application saying that there are questions of credit in the case and that the Court ought to be given the opportunity to observe the demeanour of witnesses giving their evidence-in- chief orally. The propositions are put fairly broadly, but I

have no reason to believe that what Mr Fletcher says as to

issues of credit does not reflect the bona fide view of the respondent and its advisers at the present time. I am inclined therefore not to accede to the motion in that regard, although I think that there can be a saving of time and expense if the parties are required to exchange statements of evidence at some time prior to the hearing so that cross-examination may be more readily prepared, concessions made where it is apparent that they ought to be made, and issues not in dispute more properly identified. And, of course, in a case where a

out that from the respondent's view point or the applicant's statement of evidence is furnished prior to trial and it turns

viewpoint the statement does not give rise to any matters of controversy, then the statement itself may be tendered in evidence by consent. So the orders I propose to make on the applicant's motion filed 10 September 1990 are:

1.

That pursuant to 0.29 r.2 of the Federal Court Rules, the question of the liability of the respondent be tried separately and prior to the question of damages in these proceedings.

That the costs of the motion be in the cause.

I also make the following directions:

1. Leave to the applicant to interrogate in terms of the amended draft filed 25 September 1990 subject to the deletion of the words "or a substantial reproduction" when they variously appear in interrogatory 3 and subject to the opening words of interrogatory 5 being in the following terms "look at Exhibit MJP 6 to the affidavit of Michael John Pekin sworn 6 December 1988 and say" and subject to the insertion of the word "barbeques" after the word "those" in the second last line of interrogatory 5(c)(vi).
The respondent to file and serve answers to the interrogatories on or before 9 October.

The applicant to file and serve particulars of its
damages on or before 23 October.
The documents which the parties intend to use at the
hearing to be compiled by the applicant's solicitors
in chronological order and paginated.
The parties no later than 28 days prior to trial
exchange outlines of the evidence to be given by each
witness to be called, provided that a party may
furnish a statement of the evidence in lieu thereof.
The applicant to apply to the Registrar on or before
25 October 1990 for an appointment to fix a hearing
date.
There will be liberty to apply on the question of the
trial of the cross-claim.
Costs of these directions will be in the cause.
That the parties attend before the Registrar in
confidential conference at a date to be fixed on or
after 25 October 1990 with a view to reaching a
mediated resolution of the proceedings.
I certify that this and the preceding ten (10)
pages are a true copy of the Ex Tempore
Reasons for Judgment of his Honour
Justice French.
Associate: 4iLLv-&'

Date: 2 O c f d w 1990

Counsel for the Applicant: Mr K.J. Martin Solicitors for the Applicant: Parker & Parker
Counsel for the Respondent and Cross-Claimant: Mr P.F.
Fletcher
Solicitors for the Respondent and Cross-Claimant: Solomon
Brothers
Date of Hearing: 2 October 1990 Date of Judgment: 2 October 1990

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Citations

Sunshine General Industries Pty Ltd v Everdure Pty Ltd [1990] FCA 600

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A minute of the proposed cross-claim was exhibited to the affidavit and asserts, inter alia, that Grand Hall is and was at all material times a company duly incorporated under the laws of Taiwan, a foreign corporation for the purposes of s . 4 of the Trade Practices Act, and engaged from May 1987 in trade or commerce between Australia and places outside Australia. And, it is said, Grand Hall made certain representations to Everdure that it had an unrestricted right to supply components, a sample of which was given to Everdure as an off the shelf standard stock item. The representations are said to have been made orally in Taiwan and by facsimile transmission from Grand Hall to Everdure on various dates which are set out in the particulars to para.7 of the proposed cross-claim. And it is further contended in para.8 that Grand Hall failed to advise Everdure of the existence of a contract between itself and Sunshine, the fact that Sunshine had supplied to it a two dimensional representation of the extension piece on a confidential basis, and that copyright in the representation was owned or alternatively claimed by Sunshine. Also it was said to have failed to have disclosed that Sunshine had, prior to the delivery to Everdure in Australia on 7 September 1988 of some 4 , 0 0 0 of the extension pieces, contacted Grand Hall inquiring whether Everdure had approached it to be supplied with Grand Hall extensions and reiterating its claim.
In para. 11 of the proposed cross-claim it is contrary to 9.52 of the Trade Practices Act and that if	acts and omissions, engaged in misleading or deceptive conduct alleged that Grand Hall has, by reason of its representations,
Everdure is found to be liable to Sunshine, it is entitled to be indemnified by Grand Hall for any damages, profits or costs it may be ordered to pay, and if Sunshine is entitled to any other relief, then Everdure will suffer loss or damage. Everdure claims relief under ss. 82 and 87 of the Act.
There is a threshold problem with the relief claimed under 8.87 because it appears to rely upon conduct engaged in outside Australia. In sub-s.5(4) of the Act it is said that:

l	C	That Everdure have leave to file and serve a cross claim against Grand Hall Enterprise Co. Ltd in terms of the minute exhibited to the affidavit of John Ferguson sworn 20 September 1990 subject to the excision of the claim for relief under s.87 of the Trade Practices Act.
That there be leave to serve the cross-claim out of the jurisdiction at Taipei, or such other place within Taiwan as Grand Hall Enterprise Co. Ltd may have its principal office.
That Everdure do also serve upon Grand Hall Enterprise Co. Ltd with the cross-claim, copies of the amended statement of claim and defence and of this order.
There be liberty to the parties to apply generally. The costs of the motion will be in the cross-claim.

Counsel for the Applicant: Mr K.J. Martin	Solicitors for the Applicant: Parker & Parker
Counsel for the Respondent and Cross-Claimant: Mr P.F. Fletcher Solicitors for the Respondent and Cross-Claimant: Solomon Brothers
Date of Hearing: 2 October 1990 Date of Judgment: 2 October 1990

[1990] FCA 600

2 Oct 1990