De Brett Seafood Pty Ltd v Qantas Airways Limited [2011] FCA 1059 | Case summary

Leave be granted to each of the third, fourth and fifth respondents to file and serve on Korean Airlines Company Limited (ARBN 003 938 261) a notice of cross-claim for contribution or indemnity in respect of a claim against it in the proceeding on or before 23 September 2011.
The proceeding be listed for mention on 19 September 2011 at 9:30 am. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT 1 The applicant commenced this class action in 2007. The respondents are international carriers of air-freight. It is alleged that they engaged in cartel conduct in contravention of the provisions of s 45(2) of the Trade Practices Act 1974 (Cth) (now the Competition and Consumer Act 2010 (Cth)). 2 The respondents filed their defences in February this year. Procedural directions were given on 15 July 2011 pursuant to which any cross-claims by any of the respondents were to be filed and served on or before 29 July 2011. 3 On 15 August 2011 the third and fourth respondents ("Singapore Airlines") and the fifth respondent ("Cathay Pacific") filed cross-claims against Société Air France, Koninlijke Luchvaart Maatschappij NV, Martinair Holland NV and Cargolux Airlines International SA ("the proposed cross-respondents"). In these cross-claims Singapore Airlines and Cathay Pacific sought contribution or indemnity from the proposed cross-respondents in respect of the claims made by the applicants against them in the proceeding. Although none of the proposed cross-respondents was pursued by the applicants, each fell within the definition of "other cartel participants" as defined in paragraph 94 of the applicants' sixth amended statement of claim. Each was alleged to have been a participant in each of the global cartel arrangements which gave rise to the class action. 4 Korean Airlines Company Limited ("Korean Airlines") also falls within the definition of "other cartel participants" contained in the sixth amended statement of claim. 5 By interlocutory applications both Singapore Airlines and Cathay Pacific have moved the Court for orders granting retrospective leave to them to file and serve their cross-claims for contribution or indemnity against the proposed cross-respondents. They have also each sought leave to file and serve a notice of cross-claim for contribution or indemnity on Korean Airlines. 6 The application relating to Korean Airlines was opposed by that company and by the applicants. 7 Counsel appearing for the proposed cross-respondents reserved his position pending a ruling on the applications relating to Korean Airlines. 8 The making of cross-claims is, relevantly, governed by rr 15.04 and 15.05 of the Federal Court Rules 2011 (Cth). Those provisions read: "15.04 Time for bringing cross-claim A notice of cross-claim must be filed at the same time as the filing of: (a) the respondent's defence; or (b) the respondent's affidavit in reply to the applicant's affidavit in the principal proceeding. 15.05 Application for extension of time to file cross-claim (1) A respondent who wants to file a notice of cross-claim, but has not complied with rule 15.04, must apply to the Court for leave to file a notice of cross-claim. (2) An application under subrule (1) must be accompanied by: (a) an affidavit stating: (i) briefly but specifically, the nature of the cross-claim and its relationship to the subject matter of the proceeding; and (ii) why the notice of cross-claim was not filed in accordance with rule 15.04; and (b) a draft notice of cross-claim that complies with rule 15.02." 9 Senior counsel for Korean Airlines opposed the grant of leave on two main grounds. They were: The unexplained delay on the part of Singapore Airlines and Cathay Pacific in making their applications; and The failure of the proposed cross-claim (in each case) to specify, in sufficient detail, the material allegations made against it. 10 At all relevant times the applicants and the respondents have been aware that Korean Airlines was an alleged participant, together with the respondents, in the impugned cartel arrangements and conduct. The applicants have chosen not to join Korean Airlines as a respondent. Singapore Airlines and Cathay Pacific have, to this point in the litigation, chosen not to claim contribution or indemnity from Korean Airlines. 11 What then has caused Singapore Airlines and Cathay Pacific to seek leave to pursue a cross-claim against Korean Airlines? The answer lies in developments which have occurred in a proceeding, commenced in the New South Wales District Registry of the Court, by the Australian Competition and Consumer Commission ("the ACCC") against Korean Airlines in which pecuniary penalties are sought in respect of the alleged cartel conduct which is the subject of the present proceeding: see Australian Competition and Consumer Commission v Korean Airlines Company Limited NSD 220/2010. On 2 September 2011 senior counsel for the ACCC advised the Court that: "I'm in a position to advise the court that, in principal (sic), agreement for settlement of all issues between the applicant and Korean Airlines has been reached. The parties will seek to finalise that agreement as soon as possible. Once that's done, leave will be sought to list the matter before another judge as was done in the Japan Airlines matter for approval of the proposed settlement." 12 This intimation provided the catalyst for Singapore Airlines and Cathay Pacific to seek leave to cross-claim against Korean Airlines. They do so on the assumption that Korean Airlines' settlement with the ACCC will involve an admission of liability or partial liability on the part of Korean Airlines. 13 Neither of the affidavits supporting the leave applications, in terms, states the reason for the delay. What is clear is that both Singapore Airlines and Cathay Pacific made a considered decision, prior to 29 July 2011, not to take advantage of the leave then available to cross-claim against Korean Airlines. Counsel for Singapore Airlines and Cathay Pacific submitted that the obvious reason that their clients held their hands was avoidance of costs at a time when Korean Airlines was maintaining that it had not engaged in contravening conduct. They were prepared to assume (and to bear the costs risk of making the assumption) that Korean Airlines' decision to compromise the proceeding brought against it by the ACCC would involve admissions of liability on the part of Korean Airlines. Once aware of the anticipated settlement they acted immediately to apply for the necessary leave to cross-claim against Korean Airlines in the present proceeding. 14 There was no dispute that the requirements of Rule 15.05(2), apart from sub-paragraph (ii), had been complied with by Singapore Airlines and Cathay Pacific. 15 As I earlier observed, the supporting affidavits filed by these airlines explain why (in part at least) the proposed cross-claims are only now being made. They do not expressly explain why those cross-claims had not been filed when their defences were filed in February 2011. I am, however, prepared to accept that it is implicit in both affidavits that Singapore Airlines and Cathay Pacific's failure to comply with Rule 15.04(a) was, in each case, founded on Korean Airlines denial of liability in proceeding NSD 220/2010 and their concern about the costs involved in prosecuting a cross-claim against Korean Airlines in these circumstances. I am, therefore, satisfied that Singapore Airlines and Cathay Pacific have met the requirements of Rule 15.05(2). 16 Korean Airlines' second objection to the granting of leave relates to the terms in which the proposed cross-claims are pleaded against it. Specifically, attention was directed to paragraph 11 of Singapore Airlines' cross-claim and paragraph 12 of Cathay Pacific's cross-claim. These two paragraphs are in substantially the same terms. They aver that, if contrary to the cross-claimant's defence, the allegations made by the applicants are held to be true, the cross-claimant pleads that: "[Korean Airlines] is an 'other cartel participant' (as defined in paragraph 94 of the Sixth ASOC); and The allegations as against the respondents in the 6 ASOC are referred to and repeated against [Korean Airlines], as if set out seriatim, and as references in the 6 ASOC to the respondents are read as including [Korean Airlines]." 17 Korean Airlines complains that this formulation of the proposed cross-claims against it deprives it of the opportunity to plead to the specific allegations which are picked up mutatis mutandis by paragraphs 11 and 12 of the proposed cross-claims. Korean Airlines also complains that this lack of specificity will, in some way, prevent it from relying on any statute of limitations defences which it may have. 18 I do not accept these submissions. Singapore Airlines and Cathay Pacific have adopted an orthodox approach in pleading their cross-claims. In summary form, they allege that Korean Airlines has engaged in the same contravening conduct as the respondents in entering into and prosecuting the impugned cartel arrangements. Any difficulty which Korean Airlines may experience in pleading to the cross-claim and, in particular, difficulties relating to the pleading of limitation of action defences, can be remedied, if need be, by procedural orders. 19 The Court's power to grant leave to file a late cross-claim is plainly discretionary. Korean Airlines submitted that were the Court's discretion to be exercised in favour of Singapore Airlines and Cathay Pacific's applications for leave, there would be no principled basis for rejecting similar claims by respondents in the event that "other cartel participants" were, at some time in the future, to follow Korean Airlines' example, abandon denials of impugned conduct and settle proceedings brought against them by the ACCC. 20 I do not accept this contention. A cross-claim could have been filed against Korean Airlines pursuant to leave already granted up until the end of July 2011. The applications presently under consideration were made only a matter of weeks after the previous grant of leave expired. They were made at a time which will allow the proposed cross-claims to be accommodated with minimal difficulty within the existing pre-trial arrangements. The efficient and just conduct of the proceeding will not be impeded by grants of leave. The further the case proceeds towards trial the less will be the weight that this consideration will bear. It cannot, therefore, be assumed that any future applications by the respondents to file cross-claims against other cartel participants will be treated in the same manner. 21 The orders sought by Singapore Airlines and Cathay Pacific in relation to Korean Airlines should be made. My provisional view is that their costs of the application should be costs in the cause. I will, however, hear the parties if any of them wish to contend for another costs order. I will also hear counsel for the proposed cross-respondents on whether, in the light of these reasons, any of them wish to be heard in opposition to the making of the first of the interlocutory orders sought by Singapore Airlines and Cathay Pacific. I certify that the preceding twenty-one (21) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Tracey.

De Brett Seafood Pty Ltd v Qantas Airways Limited

At a glance

Court

Decision date

Before

Catchwords

Source

Catchwords

Judgment (30 paragraphs)

Parties

Legislation Cited (4)

Cited By (2)