Theo Holdings Pty Ltd v Hockey (No 2)

[2000] FCA 810

FEDERAL COURT OF AUSTRALIA

Theo Holdings Pty Ltd v Hockey (No 2) [2000] FCA 810

Trade Practices Act 1974 (Cth), s 65F, subs 65J(7)

THEO HOLDINGS PTY LTD AND BAROK INDUSTRIES PTY LTD v
JOSEPH BENEDICT HOCKEY AND AUSTRALIAN COMPETITION AND CONSUMER COMMISSION
Q 144 OF 1999

AUSTRALIAN COMPETITION AND CONSUMER COMMISSION v
THEO HOLDINGS PTY LTD AND BAROK INDUSTRIES PTY LTD
Q 192 OF 1999

DOWSETT J
5 JUNE 2000
BRISBANE

IN THE FEDERAL COURT OF AUSTRALIA
QUEENSLAND DISTRICT REGISTRY	Q 144 OF 1999

BETWEEN:

THEO HOLDINGS PTY LTD
FIRST APPLICANT

BAROK INDUSTRIES PTY LTD
SECOND APPLICANT

AND:

JOSEPH BENEDICT HOCKEY
FIRST RESPONDENT

AUSTRALIAN COMPETITION AND CONSUMER COMMISSION
SECOND RESPONDENT

IN THE FEDERAL COURT OF AUSTRALIA

QUEENSLAND DISTRICT REGISTRY

Q 192 OF 1999

BETWEEN:

AUSTRALIAN COMPETITION AND CONSUMER COMMISSION
APPLICANT

AND:

THEO HOLDINGS PTY LTD
FIRST RESPONDENT

BAROK INDUSTRIES PTY LTD
SECOND RESPONDENT

JUDGE:	DOWSETT J
DATE OF ORDER:	5 JUNE 2000
WHERE MADE:	BRISBANE

THE COURT DECLARES THAT:

1.Section 65F of the Trade Practices Act 1974 did not empower the first respondent to issue to each of the first and second applicants notices dated 8 June 1999 and published in the Commonwealth of Australia Gazette of 9 June 1999 in respect of fire doors (“the recall notices”).

2.The second respondent was in breach of subs 65J(7) in failing to inform the applicants that it proposed to consider documents concerning the voluntary recall by Korab Industries Pty Ltd of fire doors distributed by that company.

THE COURT ORDERS THAT:

1.The decision of the first respondent to issue to the applicants the recall notices dated 8 June 1999 be set aside.

2.The costs of these proceedings be paid as follows:

(a)the respondents pay the applicants’ costs of the hearing on 8 July 1999;

(b)there be no order as to costs of the hearings on 27 and 28 July 1999;

(c)the respondents pay 75 per cent of the applicants’ remaining costs of the proceedings.

Note:    Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA
QUEENSLAND DISTRICT REGISTRY	Q 144 OF 1999

BETWEEN:

THEO HOLDINGS PTY LTD
FIRST APPLICANT

BAROK INDUSTRIES PTY LTD
SECOND APPLICANT

AND:

JOSEPH BENEDICT HOCKEY
FIRST RESPONDENT

AUSTRALIAN COMPETITION AND CONSUMER COMMISSION
SECOND RESPONDENT

IN THE FEDERAL COURT OF AUSTRALIA

QUEENSLAND DISTRICT REGISTRY

Q 192 OF 1999

BETWEEN:

AUSTRALIAN COMPETITION AND CONSUMER COMMISSION
APPLICANT

AND:

THEO HOLDINGS PTY LTD
FIRST RESPONDENT

BAROK INDUSTRIES PTY LTD
SECOND RESPONDENT

JUDGE:	DOWSETT J
DATE:	5 JUNE 2000
PLACE:	BRISBANE

REASONS FOR JUDGMENT

1. It has emerged this morning that there may be an aspect in which my original reasons are deficient.  It has been proposed by counsel for the Minister and for the Australian Competition and Consumer Commission (“ACCC”) that there be a declaration as follows:

   In reporting to the First Respondent for the purposes of s.65K of the Trade Practices Act 1974, the Second Respondent failed to observe the requirements of procedural fairness in relation to its reference to the purchaser ("New Korab") of their business having voluntarily conducted a recall, but that failure was not, in itself productive of any invalidity in the First Respondent's decision to issue the recall notices.

2. Because I have disposed of the matter upon the basis that there was no jurisdiction to proceed under s 65F in any event, it is not strictly necessary that I determine the consequences of the procedural irregularity referred to in the proposed declaration. It was for that reason that I did not deal with those consequences as fully as perhaps I should have. I indicate, however, that I am of the view that the irregularity was such as to invalidate the Minister’s decision. Although the Minister received submissions from the applicants concerning the New Korab recall, he subsequently referred the matter to ACCC pursuant to the Act. Subsequently, he received the ACCC’s report and acted upon it. Although he was technically aware of the applicant's response to the New Korab recall, I would infer that upon receipt of the ACCC report he would have proceeded upon the basis that ACCC had investigated that matter, observing appropriate procedures, and that its report was based upon such investigation. As I have demonstrated, the ACCC had failed to extend to the applicants an appropriate opportunity to be heard. The report was therefore tainted by that oversight. As I infer that the Minister acted upon the report and would have had no reason to suspect the irregularity, I consider that the Minister's decision should be treated as tainted by it. As I have said, it is not necessary to take the matter further because these proceedings have been disposed of on another ground.

3. I turn to the question of costs.  The applicants initially applied for an interim stay of the notices, which application was heard on 8 July 1999.  It is, as I understand it, not disputed that they should have the costs of that hearing.  I so order.

4. The substantive matter was subsequently heard on 27 and 28 July 1999.  Although the ACCC was represented at those hearings, it was only on 27 July that there was any suggestion that it should be joined.  This occurred, and partially as a result of that joinder, the matter was adjourned.  It seems to me that all three parties ought to have realised prior to 27 July that ACCC was an appropriate and necessary party in the proceedings.  In those circumstances, I consider that the parties are jointly responsible for any costs thrown away in respect of those hearings.  I therefore intend to make no order as to the cost of them.

5. The substantive matter was heard over three days in April of this year.  The applicants were successful on two of the four grounds which they argued.  They are therefore prima facie entitled to the costs of the proceedings, save to the extent that those costs were unreasonably or unnecessarily increased by their conduct.  It is clear that the mere fact that an applicant fails on one or more issues is not of itself sufficient to displace the general rule that costs should follow the event, provided that such party’s conduct in raising the unsuccessful issues was not unreasonable.

6. Insofar as concerns the issue relating to the meaning of the term "consumer", I do not consider that its ventilation significantly extended proceedings, nor do I consider that it was unreasonable for the applicants to raise it, notwithstanding the fact that they were unsuccessful on it.  There should be no variation to the usual order as to costs on that account.

7. As to the issue concerning fire engineering, it is clear that it was addressed by the parties at the ACCC conference.  In those circumstances it was, in my view, unreasonable for the applicants to complain of procedural irregularity in respect of that issue which was the subject of a substantial amount of the material filed in these proceedings.  In those circumstances, the order for the balance of the costs of these proceedings should be tailored to reflect the unreasonableness of this conduct.  However it must be kept in mind that the applicants have been substantially successful.  In all of the circumstances, I think that the best order would be, dealing with all matters other than those which have already been the subject matter of costs orders, that the respondents pay the applicants' costs of the proceedings limited to 75 per cent of the costs which would otherwise be payable.

8. In Q192 of 1999 there will be an order by consent in terms of the draft.  In Q144 of 1999 there will be declarations in terms of paragraphs 1 and 2 of the draft as amended.  The notices will be set aside.  The orders as to costs will be as I have indicated.

I certify that the preceding eight (8) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Dowsett.

Associate:

Dated:             15 June 2000

Q 144 of 1999

Counsel for the Applicants:

Mr R Oliver

Mr S A McLeod

Solicitor for the Applicants:

Baker Johnson

Counsel for the First Respondent:

Mr J A Logan SC

Solicitor for the First Respondent:

Australian Government Solicitor

Counsel for the Second Respondent:

Mr M Swan

Solicitor for the Second Respondent:

Australian Government Solicitor

Dates of Hearing:

17, 18, 19 April 2000, 5 June 2000

Date of Judgment:

5 June 2000

Q 192 of 1999

Counsel for the Applicant:

Mr M Swan

Solicitor for the Applicant:

Australian Government Solicitor

Counsel for the Respondents:

Mr R Oliver

Mr S A McLeod

Solicitor for the Respondents:

Baker Johnson

Dates of Hearing:

17, 18, 19 April 2000, 5 June 2000

Date of Judgment:

5 June 2000