WA Pines Pty Ltd v Bannerman

[1980] FCA 79

Re: HOUSEWIVES UNITED BUYERS CO-OPERATIVE LIMITED
And: REDDY CUT GARMENTS PTY. LIMITED; THE TRUSTEES OF THE SISTERS OF ST.
JOSEPH
(1980) 42 FLR 106
No. G74 of 1979
Motion for Contempt

COURT

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION
Sweeney J.(1)

CATCHWORDS

Motion for Contempt - Breach of undertaking in terms of settlement - Whether undertaking was an undertaking to the Court - Construction of undertaking - Ambiguity thereof - Whether breach clearly shown to have taken place - No evidence on which damages could be assessed.

Trade Practices Act

Contempt - Breach of undertaking in terms of settlement - Whether undertaking was undertaking to court - Construction of undertaking - Ambiguity therin - Whether breach clearly shown to have taken place - No evidence on which damages could be assessed - Trade Practices Act 1974 (Cth) - Federal Court of Australia Rules, O.37; O.40, r.6.

HEADNOTE

An action by the applicant against the respondent and another alleging breaches of the Trade Practices Act 1974 was settled upon the respondent giving certain undertakings. The action was then dismissed by the court by consent. The respondent constituted a body corporate and conducted primary and secondary schools. The undertaking placed restrictions on the respondents "advertising in school bulletins". The applicant by motion sought orders including damages against the respondent alleging that the undertaking had been breached.

Held: (1) The undertaking given by the respondent was an undertaking to the court and not merely an undertaking inter partes as: (a) The undertaking was included in the terms of settlement which were before the court and on the faith of which the court had sanctioned a particular course of action and made orders dismissing the application and for costs; Australian Consolidated Press Ltd. v. Morgan (1965), 112 CLR 483, referred to. (b) The solicitor for the respondent had given the undertaking on behalf of his client and it had been noted by trial judge. (2) The applicant had not established that the undertaking had been breached by the respondent as: (a) There was no evidence as to the authority of the person whose act was alleged to have breached the undertaking; Heaton's Transport (St. Helens) Ltd. v. Transport and General Workers' Union, (1973) AC 15, applied. (b) The undertaking was ambiguous as to the obligation it imposed on the respondent. (c) In any event a breach of the undertaking had not been shown as - (i) the circular of the respondent said to breach the undertaking was not "advertising", and (ii) the circular had been dispatched by the respondent before the terms of settlement had been received.

HEARING

Sydney, 1980, May 16, 21, 23, 26; June 3. #DATE 3:6:1980

NOTICE OF MOTION

Notice of motion that the respondents be punished for contempt of court.

Janet Coombs, for the applicant.

G. Q. Taperell, for the respondent.

Cur. adv. vult.

Solicitors for the applicant: Vincent Love & Co.

Solicitors for the respondent: Carroll & O'Dea.

T. J. GINNANE

ORDER

1. The application be dismissed.

2. The costs of the Secondnamed Respondent in this motion be paid by the Applicant.

Application dismissed with costs.

JUDGE1

This is a motion brought by Housewives United Buyers Co-operative Limited ("the applicant"), in which orders are sought against The Trustees of the Sisters of St. Joseph, ("the trustees"). The applicant is a co-operative trading society registered under the Co-operation Act, 1923. The trustees constitute a body duly incorporated under the Roman Catholic Church Communities' Lands Act, 1942.

Proceedings between the applicant and the trustees and a company registered under the Companies Act, 1961 were brought in 1979. The applicant then alleged that the company and the trustees had entered into a contract, arrangement or understanding which was in breach of Sections 45 and 46 of the Trade Practices Act, 1974. It sought orders restraining the respondents from carrying out or acting in accordance with the terms of the contract, etc., damages and costs.

After a number of interlocutory proceedings, the application came before Franki J. on 18 April, 1980. Counsel for the applicant then announced that the matter had been settled and handed up terms. The terms in Paragraph 1 set out a number of undertakings. These were expressed as undertakings by the respondents to the applicant. Paragraph 2 provided for an order for the dismissal of the application and Paragraphs 3 and 4 made certain provisions for costs.

His Honour, having read the terms, asked counsel for the applicant, then the plaintiff, if she wished to add anything and counsel for the company also said that he had nothing to add, as did the solicitor for the trustees. His Honour then asked, "You are all satisfied that these undertakings are quite clear, they are understood?", and counsel for the applicant and the solicitor for the trustees answered in the affirmative. The solicitor for the trustees was then asked, "Then, Mr. Harrison, on behalf of your clients do you give the undertakings set out in the Terms of Settlement?", he replied "Yes, Your Honour". His Honour then said that he would initial the terms of settlement and date them and note the undertakings which had been give and by consent dismiss the application, making the orders asked as to costs.

The motion now before me sought orders that:

1. The trustees issue a circular in compliance with the terms of settlement.

2. Sequestration of the trustees.

3. Damages for breach of undertakings in the terms of settlement.

4. Committal of the trustees for Contempt of Court.

5. Costs.

6. Further or other orders.

It was conceded however, that committal of a corporation was not an appropriate order, the order for sequestration was not pressed and no further orders as mentioned in (6) were sought.

Despite the provisions of Order 37 of the Federal Court Rules, the order of Franki J. was not taken out and entered until 23 May, 1980, when this hearing was well under way. No reason was advanced for the failure to do this. The Notice of Motion had endorsed on it a Statement of Charge in the following terms:

The contempt of which the Trustees of the Sisters of St. Joseph are alleged to be guilty is failure to comply with undertaking 1(c) of terms of settlement dated 18/4/80.

During the hearing I ruled that such a statement did not specify the contempt as required by Order 40 rule 6 and on 23 May, 1980 a further Statement of Charge was filed and served.

The first question raised was whether the undertaking given in the circumstances referred to, was an undertaking to the Court. It was argued that it was purely an undertaking inter partes, however, I think the important consideration is that it was included in the terms of settlement which were before the Court.

On the faith of the terms of settlement, the Court sanctioned a particular course of action and made orders dismissing the application and for costs. Such an undertaking is, in my opinion, an undertaking to the Court. There seems no direct authority on the point, but I note that in Australian Consolidated Press Limited v. Morgan and Anor, 112 CLR 483, the High Court dealt with an undertaking then before it as being an undertaking to the Court. In that case an action was brought in the Metropolitan District Court at Sydney for damages for an alleged breach of copyright. The action was compromised, one party giving a written undertaking to the other.

After an interval of some time and the occurrence of numerous events, the party to whom the undertaking had been given brought a suit in the Supreme Court of New South Wales by originating summons, claiming an immediate injunction to restrain further breaches of the undertaking which it had already been given and to restrain further infringement of copyright. Upon that summons coming before the Court, the respondent in the suit gave a certain undertaking and the Supreme Court thereupon ordered that the originating summons stand over until the hearing of the suit and that pleadings be filed. This last undertaking was described by the Court as an undertaking to the Court and a breach of it was treated as being a contempt no less than a breach of an order, See Australian Consolidated Press Limited v. Morgan and Anor, supra, per Barwick C.J. p. 489 and Windeyer J. at p. 495-6 and 502).

So in this case the undertaking is something more than a bargain inter partes. Had it been no more than that and His Honour having read it when the terms were handed up to him, there would seem no purpose in him asking the solicitor for the trustees if he gave on behalf of his clients, the undertakings set out in the terms of settlement and indeed there would seem no point in the solicitor then doing so.

His Honour noted the terms of settlement and then acting on the faith of them and having noted the undertakings, dismissed the application and made the other orders. This being so, I think the undertaking was an undertaking to the Court.

Turning then to the present application, it sought orders for committal of the trustees and for sequestration of their estates, but they were abandoned or not pressed at the hearing.

The next matter for consideration is whether there was a breach of the undertaking as charged. The Statement of Charge as ultimately filed on 23 May, makes it plain that the breach complained of, is one by the trustees. It should be added that the trustees conducted primary schools at Revesby and Milperra in the western suburbs of Sydney and a girls' secondary school at Mount St. Joseph. Matters complained of concern St. Lukes School. The relevant part of the undertaking is in these terms

"The second Respondent (the trustees) will, on every occasion of advertising in School bulletins or circulars of uniform items available from a school shop or P. & F. shop of the abovementioned schools, also advertise in the said circular or bulletin that equivalent uniform items are available at the Applicant's store (to be referred to as Housewives' United Buyers Co-operative Limited) and if prices of uniform items available at the school or P. & F. shops are advertised then the prices of equivalent uniform items available at the Applicant's store shall also be advertised. This obligation shall continue so long as the Applicant supplies lists of uniform items and their prices to the second Respondent every three months and on the occasion of any price change, or of ceasing to stock any item. The second Respondent shall not be obliged by this undertaking to advertise any uniform item during any period when the Applicant has ceased to stock that item. For the purpose of the above the Applicant will not be treated as having ceased to stock by reason only of a temporary shortage of stocks. Any notice required to be given to the Applicant in accordance with these undertakings shall be given by sending it by registered post or by delivering it to the Applicant's store at 85-87 River Road, Revesby. . . . .

and the allegation in the final Statement of Charge is that this was breached in that the trustees, through their servants and agents, at St. Lukes School, Revesby, including Sister Theresa Margaret, principal of the school, issued a circular dated 28 April, 1980 to parents. No evidence was put before me as to the authority of Sister Theresa Margaret. She filed an affidavit and described herself as a member of the congregation and as principal of the school, but there is no evidence as to her authority, implied or express.

If it is sought to make a corporation liable for an act of a servant or agent then there must be proof of the authority of that servant or agent, (Heatons Transport (St. Helens) Ltd v. Transport and General Workers Union (1972) 3 All E.R. 101).

The Court does not know anything of the authority given expressly and does not have any material from which the scope of her authority can be implied. This is probably sufficient in itself to dispose of the matter but since questions of meaning of the undertaking were debated at some length before me, I think it proper that I deal with them.

It was submitted that the undertaking was ambiguous. It is a fact that at the St. Lukes Primary School the Parents and Friends Association, in about March, 1979, decided that it should buy and sell to students and their parents some items of a school uniform and since then the Association has conducted a clothing pool at the school which supplies some only of the full range of uniform items.

The pool has the use of a large cupboard at the school in which the stocks are stored. The pool is opened and sales made at Association meetings which are held once per month. In addition, the Association each year appoints two representatives and they and their telephone numbers are notified in school bulletins. Orders can be made by telephoning one of them to purchase from the pool.

At least at the relevant time there was but a limited range of uniform items available. There were no new items of uniform for boys, but some second hand ones. There were no new cardigans, blouses or tunics for girls. There were new T-shirts and some other second hand items of uniform.

At the relevant time the applicant conducted a shop near the school at which some new items of uniform were stocked. They did not include tunics, which appear to be regarded as the basic part of the girls uniform. The clothing pool also sold patterns and material from which certain items of uniform, including tunics and slacks, might be made but in April, 1980, the applicant did not have either patterns or stocks of material.

Against this background, the undertaking seems to me to be ambiguous. It requires certain things to be done on every occasion of advertising of uniform items available from the clothing pool. I assume that the term "clothing pool" is within the scope of the words "P. & F. Shop" used in the undertaking. Apart from the difficulties arising from the word, "advertising", which may range from a mere notification to a notice drawing attention to quality, etc., it is not clear whether the advertising must be of uniform items available at that point. On such an occasion of advertising there must be an advertisement that equivalent uniform items are available at the applicant's store. Just what equivalent means is uncertain; whether a new tunic, blouse, slacks, etc., is equivalent to a used one or not.

The undertaking does not state any date for its commencement but provides that the obligation is to continue so long as the applicant supplies certain lists and there is no obligation to advertise any uniform items during a period when the applicant has ceased to stock that item. I regard the undertaking as ambiguous but even if there is no ambiguity, the breach must be shown clearly to have taken place.

The breach alleged was in the issue of a circular by Sister Theresa Margaret Keane on 28 April, 1980. She was the principal of the school and her evidence was that she was not present in Court during the hearing on 18 April, 1980 and she had not prior thereto seen a copy of the terms of settlement. She had a conversation with the principal of Mount St. Joseph Girls' Secondary School who informed her that the case had been settled and that "When we advertise our school shops we must advertise the H.U.B. store also. When we advertise our prices we have to advertise their prices".

School term at the school ended on 2 May, 1980. It had always been her practice to send out a circular to parents at the end of term mentioning their requirements for uniforms for the next term. On 24 April, 1980, or thereabouts, she drafted a circular to parents of students at the school. Friday, 25 April, 1980 was a school holiday. On 28 April, the school secretary was instructed to type the circular and copies of it were then delivered to the students for them to take home. Thereafter, on 28 April, a letter came from the applicant enclosing a price list of certain items of the uniforms.

The evidence was that not all of these items were then available at the applicant's shop. Sister Keane at the same time received from the solicitors for the trustees a copy of the terms of settlement. On 6 May, 1980 the applicant's solicitors complained to the trustees' solicitors that the circular dated 28 April, 1980 was a breach of the undertaking. This was denied by the trustees solicitors on 9 May, 1980.

Sister Keane had left the school at the end of term and was on holidays out of Sydney. On 8 May, 1980 she spoke by telephone with the solicitors for the trustees who informed her of the complaint from the applicant's solicitors. He advised that he did not think the circular constituted a breach of the terms of settlement but she advised him that she proposed to deliver a circular to the school children on the resumption of school, informing students and their parents that uniform items were available from the applicant's store and some from the clothing pool. This was done on 20 May, 1980 and it set out in detail the winter school uniform for boys and girls and the sports uniforms and advised that boys and girls winter uniforms could be purchased from, inter alia, the applicant's store at 85 River Road, Revesby or at any store of the parents choice. It advised also that the clothing pool carried certain items.

In an affidavit filed in the proceedings, Sister Keane stated:

"So that there will be no problem in future I will ensure that on every occasion when any mention is made in school bulletins or circulars of school uniforms a statement will be made in the same place that uniform clothing is available at the applicant's store and Halaby's store. In addition, whenever prices for uniform items purchased from the clothing pool are mentioned the prices of equivalent items at the applicant's store will also be shown."

Sister Keane's evidence was that she did not regard the circular of 28 April, 1980 as being an advertisement within the meaning of the terms of settlement. In that circular there was firstly set out that next term the children would wear winter uniform and the uniforms were then detailed. It included a reference to a new style tunic which, on the evidence, had been approved in February, 1980. The circular then continued, "For any query re winter uniform please phone Mrs. P. Shrume on 771.5495 or Lorraine Muscat on 771.3160." Particulars were also given of track suits to be worn on sports days.

It is clear that the circular does not advertise that some or any of these uniform items are available from a school shop or P. & F. shop. It was submitted for the applicant, however, that the reference to the two ladies, from whom enquiries might be made, should be regarded as a code which would be understood by parents as an advertisement that those uniforms were available from those two ladies who were the elected representatives of the Parents and Friends Association to deal with the clothing pool. Hence it was submitted it was an advertisement within the meaning of the undertaking. I think this is not so. Evidence was given of other school circulars issued but in not one of them do like messages appear.

Sister Keane said that queries were, from time to time, received from parents about uniforms, colours, materials and other matters and that these queries were dealt with by the two ladies referred to. I think it entirely far-fetched to regard the words as being any sort of code.

Sister Keane's evidence was that she had prepared the circular and indeed it had been distributed before she received, through the mail, the copy of the terms of settlement and that her subsequent circular of 20 May, was prepared in view of the fact that a complaint had been made on 6 May, 1980.

For these reasons I am satisified that the trustees acted quite properly in that the copies of the terms of settlement were distributed by post by the solicitors on 24 April, 1980. In my view it is not shown that Sister Keane was a servant or agent of the trustees and even if it were I am satisfied that nothing she did was or led to a breach of the undertaking.

Towards the conclusion of her address, counsel for the applicant made a further submission that the trustees obligation under the undertaking commenced when the list of school uniform items available at the applicant's store was received by the trustees by forwarding it to the principal of the school. This was clearly on 28 April, 1980 after the circular bearing that date had been prepared and issued. It was further alleged that the trustees were in contempt in that they had not previously ensured that the principal of the school received a copy of the terms of settlement. I am unable to accept this. In the first place it emphasises the lack of clarity and indeed ambiguity of the undertaking in that at least two versions of the commencement of the obligation of the trustees arises. In so far as any contempt is concerned, I do not see that the applicant can complain when the terms of settlement were actually received at the school prior to the list of uniform items supplied by the applicant.

I would add that so far as the claim for damages is concerned, there was no evidence before me on which, even if a breach had occurred, damages could be assessed. It was claimed that the shop had failed to make sales it might have otherwise made, but on the evidence this was due to the fact that the applicant's store did not obtain a copy of the pattern for girls tunics or specimens of the appropriate material until 20 May, 1980. Even at the time of the hearing the applicant did not have stocks for sale.

Even if there were a breach of the undertaking and a contempt for which an award of damages was appropriate and I do not reach any of these conclusions, then there is clearly no evidence on which damages could be assessed.

In the circumstances, I am satisfied no contempt was committed.

I dismiss the application and order that the trustees' costs be paid by the applicant.