Dick Smith Electronics v Harry Chojna & Ors [1981] FCA 70

Federal Court of Australia|1981-07-01|Before: Deane J

BETWEEN: DICK SMITH ELECTRONICS PTY. LIMITED Applicant AND: HARRY CHOJNA First Respondent AND: PETER ALPAR Second Respondent AND: FUTURETRONICS (AUSTRALIA) PTY. LIMITED Third Respondent AND: ATARA INC. Fourth Respondent JUDGE MAKING ORDER: Deane J. DATE OF ORDER: 5 June, 1981 WHERE MADE: Sydney ORDERS

I order that the following be struck out of the

The words "a power in relation to the market in Australia within the meaning of s.46 of the

The words "a power in relation to the said market in Australia within the meaning of s.46 of the Trade Practices Act 1974" in paragraph

The words "market in Australia for the sale to retailers of electronic computer games of the same class as those manufactured by or under licence from the fourth respondent" in

I give the applicant leave to amend the Statement of Claim in accordance with the reasons for judgment. Amended copy of the Statement of Claim to be filed and served

(a) That the applicant amend the Statement of Claim by adding new particulars in the place of present particular (a) under paragraphs 12,

(b) That saving all proper objections and exceptions the applicant on or before 24 June, 1981 furnish to the first, second and third respondents such further and better particulars of the Statement of Claim as may be requested by or on behalf of the first, second or third respondents on or before 19

That the applicant be restrained until the hearing and determination of these proceedings or further order from by itself or its directors, servants or agents or otherwise howsoever making, issuing or publishing or causing to be made issued or published any statement or comments to any member of the public and/or to any representative of the press or

(a) which prejudges any of the matters in issue or deals with the evidence relating to any of the

(b) which is in disparagement or harassment of or creates prejudice against any of the first, second and/or third respondents, in relation

(ii) the matters in issue or the evidence relating to the matters in issue in

I direct that the first three respondents file and

I reserve liberty to the applicant and to the first three respondents to apply to have prayer 4 of the Notice of Motion and any further contempt proceedings that the said respondents may commence brought on for directions or hearing

I reserve all questions of costs. I direct that in so far as such costs relate to so much of the proceedings as concerned prayer 4 of the Notice of Motion that those costs be dealt with either by me on a subsequent application to me or by a Judge of this Court dealing with any further hearing of prayer 4 of the Notice of Motion or any subsequent contempt proceedings or by the trial judge. I direct that in so far as the other costs of the proceedings before me are concerned that such costs be dealt with either by me on a

I reserve liberty to all parties to apply generally. 1o. I adjourn the further directions hearing to 16

) NEW SOUTH WALES DISTRICT REGISTRY ) NO. G31 of 1981

Applicant AND: HARRY CHOJNA First Respondent AND: PETER ALPAR Second Respondent AND: FUTURETRONICS

I have reached a firm view in relation to the questions which presently arise for decision. In these

circumstances, I think it preferable that I deliver judgment

forthwith. I am conscious of the fact that, in adopting this course, it is likely that I shall do less than justice to the submissions of counsel on the various matters which arise for

The Court has before it a Notice of Motion filed in proceedings instituted by Dick Smith Electronics Pty. Limited ("the applicant") against Mr. Harry Chojna ("the first respondent"), Mr. Peter Alpar ("the second respondent"), Futuretronics (Australia) Pty. Limited ("the third respondent" or "Futuretronics") and Atari Inc. ("the fourth respondent" or "Atari"). In the proceedings, the applicant seeks injunctive relief and damages against the respondents. The application instituting the proceedings has not, as yet, been served upon the fourth respondent. The present Notice

of Motion is taken out by the first three respondents.

In the Statement of Claim filed with the Application, the applicant alleges that Futuretronics has engaged in the practice of resale price maintenance in

contravention of s.48 of the Trade Practices Act, 1974 ("the

Act") and in the practice of monopolization in contravention of s.46 of the Act. The applicant's allegation that

Futuretronics has engaged in resale price maintenance is

based on allegations that Futuretronics has engaged in the practices described in paragraphs (a), (b), {c), (d)(i) and/or (d)(ii), of s.96(3) of the Act. The allegation that Futuretronics has engaged in the practice of monopolization is in relation to the retail market in Australia for the sale of the more sophisticated and comparatively expensive electronic computer games and of cartridges and also in relation to the retail market in Australia for the sale of electronic computer games and cartridges bearing the name or mark "Atari" and being manufactured by, or under licence from, the fourth respondent. It is alleged that the first, second and fourth respondents have, in a variety of ways, been accessaries to, or involved in, these practices on the

By the Notice of Motion presently before the Court, the first three respondents seek a variety of orders against the applicant. In their amended form, the specific orders

"1. THAT this proceeding be dismissed generally or alternatively be forever stayed.

THAT the Statement of Claim herein be struck out.

Alternatively to Paragraph 1. hereof, and further or alternatively to Paragraph 2. hereof, that the Applicant do file and serve such further or other Statement of Claim and such further and better particulars as the Court shall direct.

THAT an injunction be granted herein until the Hearing and determination of this Action or further order restraining the Applicant by itself or its directors servants or agents or otherwise howsoever from making issuing or publishing or causing to be made issued or published any statements or comments to any member of the public and/or to any representative of the press or any other form of media -

(a) In relation to any matters in issue or relevant to these proceedings or the proper determination thereof;

(b) In relation to the merits of the case of any party to these proceedings;

(ad) Which relate to these proceedings and are false or misleading or likely to mislead or deceive.

continued at Melbourne". Argument on the question whether the proceedings should be transferred from the New South Wales Registry of the Court to the Victorian Registry (prayer 5, supra) has been deferred pending resolution of the other matters in dispute on the Notice of Motion. The evidence and argument before me has been concerned with the other specific orders sought by the

first three respondents under the Notice of Motion (prayers

The orders presently sought by the first three respondents raise a number of distinct issues between themselves and the applicant. As I see the matter, those issues may be defined by reference to the following general

submissions made on behalf of the first three respondents:

(i) that, the proceedings should be dismissed or be struck out, in whole or in part, for the reason that, on the material before the Court, it is

(ii) that the proceedings should be struck out or stayed on the grounds that they are vexatious and an abuse of the process of this Court for the reason that they are brought for a collateral

(iii) that parts of the Statement of Claim should be

(iv) that some of the particulars provided in the Statement of Claim should be struck out as

(v) in so far as the claim for injunctive relief is concerned, that there is a prima facie case, in the relevant sense, that the applicant has and will, unless restrained by the Court, engage in activities which are in contempt of the Court and that injunctive relief should be granted at this stage pending a final hearing of the application

Before I proceed to a consideration of these various issues, it is desirable that I set out, in summary form, some of the circumstances which appear from the evidence before me and which provide the context of the

The fourth respondent, Atari, is a United States corporation which manufactures (and licenses others to manufacture) certain types of video computer systems and the programmes used in those systems. These systems consist of a console which can be plugged into a television set together with stick controls which enable video computer games to be played on the television set when programme cassettes are

inserted in the console. Atari is the registered proprietor

of two trade marks in respect of this apparatus. Under an agreement between Atari and Futuretronics, Futuretronics is the sole distributor and licensee in Australia of the

In 1980, through lawful channels, the applicant purchased in Hong Kong a quantity of Atari video computer systems and programmes. The applicant commenced to sell these products through a chain of retail outlets which it operates in Australia. There is some dispute as to the appropriate comparison between the price at which the

applicant sold its imported Atari products and the price at which those products could be purchased from other retail outlets which had been supplied by Futuretronics. Be this as it may, it is clear that Futuretronics, of which the first and second respondents are joint managing directors, strongly objected to the applicant importing and retailing the Atari video computer system and programmes independently of it. Futuretronics enlisted the aid of Atari to prevent the

There is no suggestion that the systems and programmes which the applicant imported and sold were inferior to those imported and distributed by Futuretronics. Those systems and programmes properly bore the Atari trade marks in the sense that they had apparently been manufactured

with the authority of Atari and the Atari trade mark had,

with like authority, been affixed to them. The complaint was

not that the relevant systems and programmes had been

manufactured. It was not that, without authority, they bore

the Atari trade mark. The complaint was that the systems and programmes had been imported into Australia by the applicant and were being sold by the applicant in this country. This, so it was suggested, was damaging to the general marketing of the Atari products and was prone to cause confusion particularly in relation to the availability of warranty

On 21 November, 1980, Atari instituted proceedings in the Supreme Court of Victoria against the applicant. On that day, an interim injunction was granted against the applicant by the Supreme Court restraining the advertising of offers to sell the "Atari" systems. On 26 November, 1980, Starke J., in the Supreme Court, granted Atari an interlocutory injunction against the applicant restraining the applicant, by its servants agents or whosoever otherwise, selling, offering for sale or advertising for sale video computer systems bearing the "Atari" trade mark or computer programmes for use in those systems. The considerations which led his Honour to grant that interlocutory inyunction appear from his Honour's judgment which has been reported (see (1980) 33 A.L.R. 20). An appeal from that interlocutory

injunction to the Full Court of this Court was lodged on

behalf of the applicant but subsequently abandoned.

Notwithstanding at least two subsequent applications to the Victorian Supreme Court either to dissolve or vary the interlocutory injunction, that injunction remains operative. The action in the Victorian Supreme Court is expected to come on for hearing in October

The primary allegations in the Statement of Claim are, as has been indicated, against Futuretronics. They can be conveniently divided under the general headings of alleged resale price maintenance (s.48 of the Act) and alleged monopolization (s.46 of the Act). The allegations against the first, second and fourth respondents are that they have been involved in Futuretronics' contraventions. The Statement of Claim contains a general allegation (paragraph 25) that the applicant has suffered substantial loss and damage, including loss of profits and goodwill, as a result of the actions of the respondents referred to therein. In

addition to injunctive relief, the applicant claims damages.

The various allegations of resale price maintenance are framed in general terms that correspond to descriptions ef practices which are specifically identified as resale price maintenance by various clauses of s.96(3) of the Act. Distinct allegations are made to the effect that Futuretronics engaged in the practices described in clauses (a), (ec), (d) and (b) of that sub-section (Statement of

Paragraph 11 of the Statement of Claim contains a general allegation that, by reason of the matters alleged in the specific paragraphs, Futuretronics has engaged in the practice of resale price maintenance contrary to the provisions of s.48 of the Act. Paragraphs 12, 13, and 14 respectively allege against the first, second and fourth respondents that the relevant respondent is, in the various manners referred to in s.75B of the Act, involved in the

In the Statement of Claim, the applicant claims that in November and December, 1980, and subsequently,

Futuretronics was a corporation in a position substantially

to control both the market in Australia for the sale to retailers of electronic computer games and cartridges "manufactured by or under licence from" Atari and "bearing the name or mark Atari" and "the market in Australia for the sale to retailers of electronic computer games of the same class as those manufactured by or under licence from the fourth respondent and cartridges containing various programmes for use in the said electronic appliances". The Statement of Claim alleges that, during that period of time, Futuretronics took advantage and has continued to take advantage of a power "within the meaning of s.46 of the" Act in relation to each market, which it had by virtue of being in its position of substantial control, for the purpose of preventing the entry of the applicant into the retail market in Australia for the sale of the relevant goods and/or for the purpose of depriving or preventing the applicant engaging in competitive conduct in the retail market in Australia for

Upon analysis, the Statement of Claim alleges that Futuretronics has engaged in monopolization under s.46(1)(b) and s.46(1)(c) in respect of two different markets, the first of which is, presumably, alleged to be a sub-market of the second. The first market is the market in Australia for the sale to retailers of the fourth respondent's electronic computer games and cartridges. The second market is the

market in Australia for the sale to retailers of computer

games and cartridges "of the same class" as the fourth respondent's. Paragraphs 22, 23 and 24 of the Statement of Claim respectively allege against the first, second and fourth respondents that the relevant respondent is involved, in the variety of manners mentioned in s.75B of the Act, in the practices of monopolization alleged against

Submission that the proceedings should be dismissed for the reason that they must fail

The first three respondents seek to have the proceedings dismissed at this stage on the ground that it is apparent that the applicant must ultimately fail. In this, they undertake a heavy burden. A respondent is not, under the guise of a submission that the applicant must ultimately fail, entitled to force a defendant to a pre-trial of the issues which will be in dispute on the hearing. A respondent is only entitled to have proceedings dismissed in limine on the ground that the applicant must fail if, albeit after argument perhaps of an extensive kind, it is demonstrated that the case of the applicant is clearly untenable and that

it cannot succeed (see, generally, Dey v. Victorian Railway

Commissioners (1949) 78 C.L.R. 62 at p. 91 and the cases

Commissioner for Railways (N.S.W.) (1964) 112 C.L.R. 125 at

pp. 129-130). As Dixon J. said in Cox v. Journeaux (No. 2)

The inherent jurisdiction of the Court to stay an action as vexatious is to be exercised only when the action is clearly without foundation and when to allow it to proceed would impose a hardship upon the defendants which may be avoided without risk of injustice to the plaintiff. The principle, in general paramount, that a claim honestly made by a suitor for judicial relief must be investigated and decided in the manner appointed, must be observed. A litigant is entitled to submit for determination according to the due course of procedure a claim which he believes he can establish, although its foundation may in fact be slender".

The relevant inherent jurisdiction of the Court in question

was described by Williams J. in Dey v. Victorian Railways

Commissioners (supra, at p. 109) as the jurisdiction of the court "to strike out or stay an action which is shown to be frivolous or vexatious or an abuse of its process". The jurisdiction in question corresponds with that referred to in

A considerable body of evidence has been placed before me on behalf of the first three respondents. By reference to the particulars provided in the Statement of Claim and that evidence, the first three respondents argue that it is plain that the applicant must fail to make good any of the allegations that the third respondent has engaged in resale price maintenance. It is said to be likewise clear that, as regards the claimed monopolization, the applicant must fail to make good the allegation of a separate market in

the relevant Atari products, the allegation that the third

respondent was in a position to control the alleged wider market in products "of the same class", the allegations that the third respondent had taken advantage of a power in relation those alleged markets or the allegations that the third respondent had acted with the various purposes alleged in paragraphs 17 and 20 of the Statement of Claim. In the result, so it is submitted, it 1s apparent that the applicant has no chance of succeeding on the hearing of the action. The proceedings should be either dismissed or stayed at this stage for the reason that, being foredoomed to failure, they are frivolous or vexatious or an abuse of the process of the Court. Alternatively, it is said that, if I am not prepared to dismiss or stay the whole proceedings, I should strike out

particular allegations as being plainly unsustainable.

It may be that, if the evidence on the hearing were to be restricted to the material which is presently before me, the applicant would fail in respect of the allegations in question with the result that the action would fail completely. The question with which I am presently concerned is not however whether, on the material presently before me, the applicant's allegations are prima facie refuted or even whether it appears, on that material, that those allegations are probably without foundation. The guestion with which I

am presently concerned is whether it is so clear that the

applicant will ultimately fail in establishing some or all of those allegations that I should take the extreme step of either striking out some or all of the allegations or of dismissing or staying the proceedings at this stage. So to do, would deprive the applicant of the opportunity to submit its allegations for determination according to the due course

In view of the conclusion to which I have come, it seems to me to be undesirable that I attempt any detailed analysis or evaluation of the material placed before me or indicate any tentative views on the various questions of fact or law which, as I see the position, are involved in the case the applicant seeks to make. It suffices to say that, notwithstanding the careful and helpful argument of Mr. Lyons Q.C., and Mr. Merkel (in reply) for the first three respondents, consideration of the material before me, including the cross examination of Mr. Chojna, has failed to persuade me of the absence, as regards any of the abovementioned allegations, of any real question to be determined between the applicant and the respondents. More to the point, I am unpersuaded either that any of the above allegations or the overall proceedings are plainly without foundation or that it is inevitable that the applicant will fail in relation to them if the matter is permitted to proceed to a hearing in the ordinary way. It is true that

the applicant has seen fit to refrain from calling evidence

or engaging in a pre-trial of the issues involved in the proceedings. This it was plainly entitled to do. As I have already indicated, the procedure of applying to strike out proceedings should not be seen as a means of forcing an applicant to submit to a pre-trial of issues which are appropriate to be submitted for determination in accordance with the ordinary procedure of the Courts. Nor should it be seen as a device to be used for the tactical purpose of forcing a defendant into evidence before the actual hearing. The first three respondents have failed to persuade me that, 1f the proceedings are allowed to go to trial, it is inevitable that the applicant will fail. Subject to two particular matters, to which I shall subsequently refer, I am of the view that it would be quite wrong to dismiss or stay the proceedings or strike out any of the allegations contained in the Statement of Claim on the ground presently

The two particular matters to which I have referred relate, first, to paragraphs 9(i1) and 10 of the Statement of Claim and, second, to paragraphs 11, 12, 22 and 23 of the

Statement of Claim. I pass to a consideration of those

"In November, 1980 the third respondent withheld the supply of goods to the applicant for the reason that the applicant -

(ii) was likely to sell the goods supplied to the applicant by the third respondent at a price less than the price specified by the third respondent as the price below which the goods were not to be sold".

to induce the applicant not to sell certain goods namely "The Atari Video Computer System" at a price less than the price specified by the third respondent as the price below which the said goods were not to be sold".

These sections of the Statement of Claim are plainly based, respectively, upon s.96(3)(d)(11) and s.96(3)(b) of the Act which include among the acts which constitute resale price

"(d) the supplier withholding the supply of goods to a second person for the reason that the second person -

(ii) has sold, or is likely to sell, goods supplied to him by the supplier, or goods supplied to him by a third person who, directly or indirectly, has obtained the goods from the supplier, at a price less than a price specified by the supplier as the price below which the goods are not to be sold;

"(b) the supplier inducing, or attempting to induce, a second person not to sell, at a price less than a price specified by the supplier, goods supplied to the second person by the supplier or by a third person who, directly or indirectly, has obtained the goods from the supplier;"

It is submitted on behalf of the first three respondents that the reference to "goods supplied" in each of s.96(3)(d)(iii) and s.96(3)(b) is a reference to goods which have been or are in fact supplied and does not include goods of which the supply was in contemplation but which in fact

were never supplied. This construction of clause (b) of

s.96(3) is supported by the decision of Keely J. in Trade

Practices Commissioner v. Bursill (22 April, 1980).

It is common ground in the present case that no relevant goods were supplied to the applicant either by Futuretronics or by a person who, directly or indirectly, had obtained the goods from Futuretronics. That being so, if the respondents' construction of the provisions of the Act upon which they are based is accepted, the allegations contained

The provisions of s.96(3)(d)(ii) correspond, for present purposes, with the provisions of s.66B(2)(d){(ii) of

the Trade Practices Act, 1965-1971. In Mikasa (N.S.W.) Pty.

Limited v. Festival Stores (1972) 127 C.L.R. 167, the view appears to have been taken by all members of the Full High Court of, Australia that the phrase "goods supplied" in the old s.66B(2)(da)(ii) extended to goods the supply of which was in contemplation. Barwick ¢.J. (with whom McTiernan J.

"It is hardly likely that the Parliament should have intended to confine par.d(ii) to persons who had at least one supply of the goods from the supplier and to have excluded from the operation of the paragraph persons who were seeking the supply of the goods for the first time. Grammatically the expression "is likely to sell goods supplied to him by the supplier" is quite inapt at the one time to include goods supplied and goods to be supplied, particularly in the context of a provision dealing with the withholding of supply. The sense of the provision, in my opinion, is that the supply has been withheld for the reason that the person from whom it has been withheld is likelly to sell the goods, if supplied to him, at a price less than the price specified. In my opinion that is the proper construction of the paragraph and this submission of the appellant should be rejected".

Menzies J. (with whom Walsh J. and Gibbs J. agreed on this point) and Stephen J. indicated a similar view (supra, at p. 642 and pp.660-661). To quote Menzies J., the words "goods

supplied" in s.66B(2)(d)(ii) covered "not only goods supplied

It is at least arguable that the words "goods supplied" in s.93(3)(d)(ii) should be given the meaning they bore when used in a corresponding context in s.66B(2)(d) (11)

of the 1965 Act. It is also, in my view, arguable that the

words in s.96(3)(b) of the present Act have the same meaning as they have in s.96(3)(d)(i1) of the Act. In the view I take, it would be inappropriate to strike out either paragraph 9(ii) or paragraph 10 of the Statement of Claim and thereby place the applicant in a position where it must either appeal from my decision in that regard at this stage or be precluded from maintaining a series of allegations which are open to it upon an arguable construction of the relevant clauses of s.96(3) of the Act. In this regard, it is relevant to note that it would seem unlikely that any reduction in evidence on the hearing would result from my

The first three respondents have also submitted that paragraphs ll, 12, 22 and 23 should be struck out on the ground that it is apparent that the applicant must fail to make them good. As has been indicated, these paragraphs allege against the first and second respondents involvement, in the various manners mentioned in s.75B of the Act, in the alleged contraventions by Futuretronics. It is said that the particulars make it clear that what is alleged against the first two respondents are acts done in the performance of their functions as joint managing directors of Futuretronics and that such activities do not constitute involvement of the type referred to in s.75B in general or conspiring with Futuretronics in particular. It suffices, for present

purposes, to say that, that while the argument of the first

three respondents raises some interesting questions which will required to be determined on the hearing in the light of the evidence then adduced, I am not persuaded that either the whole or any part of paragraphs 11, 12, 22 or 23 should be struck out on the ground that it 1s demonstrated that the applicant has no prospect either of establishing the allegations contained in them or, by virtue of such allegations, succeeding against the first or second

Finally, it should be mentioned that it has also been submitted that the particulars provided make it clear that the applicant must fail in relation to paragraphs 7 and 9(i) of the Statement of Claim. Senior counsel for the applicant indicated, in some detail, the argument which it is desired to advance in reliance on those paragraphs. It is possible that that argument might appeal to some. In view of the fact that it would seem unlikely that retention of paragraphs 7 and 9(i) will involve any significant increase in the evidence on the hearing, I consider it would be wrong to preclude the applicant from relying on the particular line of argument by striking out the relevant parts of 'the

Submission that proceedings should be dismissed for reason that they are brought for a collateral purpose

It is submitted, on behalf of the first three respondents, that the material before me establishes that the present proceedings are an abuse of process in the sense that the process of the law is being abused "to effect an object not within the scope of the process" (per Tindal C.J.,

Grainger v. Hill (4 Bing. N.C. 212 at p. 221)). The object

and purpose of the proceedings is, so it is said, not the relief sought in the proceedings nor the removal of any detriment to the applicant resulting from the unlawful practices in which the third respondent is alleged to be engaging with the alleged aid and support of the other respondents. The proceedings are, it is alleged, brought by the applicant for the ulterior and improper purpose of procuring the removal of Futuretronics as the distributor in Australia of the relevant Atari goods and its own appointment

The remedy of staying proceedings which are brought to achieve an improper collateral purpose is a strong one. It should only be exercised in exceptional cases. Where the facts are clear and the process of the court is being so abused however, such relief should be granted (see,

generally, Varawa v. Howard Smith (1911) 13 C.L.R. 35 at pp.

55,70; Goldsmith v. Sperrings Ltd. [1977] 1 W.L.R. 478 at

In the present case, I am unpersuaded by the material before me that the applicant does not genuinely bring the present proceedings for the relief which it seeks in them. It is true that there is obviously a background of ill-feeling and other litigation between the parties. It is true that the evidence discloses that the applicant wished to buy the relevant products, for resale in its own and in associated outlets, direct from Atari and not through Futuretronics. It may be that, if monopolization and resale price maintenance are eventually established and enjoined in the present proceedings, the applicant will achieve an object of being able to buy the relevant goods other than from Futuretronics. It may be that it may be able to buy direct from Atari or licensed manufacturers of Atari products. Such objectives are however neither inconsistent with the present proceedings being brought by the applicant for the purpose of obtaining the relief which it seeks in them nor improper. The first three respondents have, in my view, quite failed to establish that the present proceedings should be stayed on the grounds that they are an abuse of process for the reason they are brought to achieve a collateral

Submission that certain paragraphs of the Statement of Claim should be struck out as a matter of pleading

Order 11 Rule 2 of the Federal Court Rules provides that, subject to the Rules, a pleading of a party shall contain, and contain only, a statement in a summary form of the material facts on which he relies, but not the evidence by which those facts are to be proved. Order 12 Rule 1 of the Rules provides that a party pleading shall state, in the pleading or in a document filed and served with it, the necessary particulars of any claim, or other matter pleaded

The Statement of Claim in the present matter adopts the common and permissible practice of setting out "Particulars" of the allegations contained in a paragraph of

the Statement of Claim after the relevant paragraph.

In Bruce v. Odhams Press Limited ([1936] 1 K.B. 680

at pp. 712-713) Scott L.J. summarized the distinction between the allegations which must be contained in the pleading and information to be provided by way of particulars in the following passages from his judgment with which I would

statement of claim must state the material facts. The word "material" means necessary for the purpose of formulating a complete cause of action; and if any one "material" fact is omitted, the statement of claim is bad; it is "demurrable" in the old phraseology, and in the new is liable to be "struck out" ... or "a further and better statement of claim" may be ordered under Order XIX., r.7.

The function of "particulars" under r.6 is quite different. They are not to be used in order to fill material gaps in a demurrable statement of claim - gaps which ought to have been filled by appropriate statements of the various material facts which together constitute the plaintiff's cause of action. The use of particulars is intended to meet a further and quite separate requirement of pleading, imposed in fairness and justice to the defendant. Their function is to fill in the picture of the plaintiff's cause of action with information sufficiently detailed to put the defendant on his guard as to the case he has to meet and to enable him to prepare for trial. Consequently in strictness particulars cannot cure a bad statement of claim. But in practice it is often difficult to distinguish between a "material fact" and a "particular" piece of information which it is reasonable to give the defendant in order to tell him the case he has to meet; hence in the nature of things there is often overlapping. And the practice of sometimes putting particulars into the statement of claim and sometimes delivering them afterwards either voluntarily, or upon request or order, without any reflection as to the true legal grounds upon which they are to be given has become so common that it has tended to obscure the very real distinction between them".

It has been submitted on behalf of the first three respondents that, regardless of whether the general attack on the statement of claim succeeded, a number of specific parts of the Statement of Claim should be struck out because of the form they take. The paragraphs in question are paragraphs 7,

8, 9, 10, 11, 12, 13, 15, 16, 17, 18, 19, 20, 21, 22 and 23.

The general approach adopted in the Statement of Claim is to follow the provisions of the Act and to allege, sometimes in general terms, the various matters of material fact which are specified in the Act as constituting the particular practice of monopolization or resale price maintenance. The clauses of the Statement of Claim themselves identify relevant dates and, in general terms, alleged markets. The particulars set out after various paragraphs fill in the picture of the applicant's case with

It is arguable that a statement of claim, as distinct from the particulars provided in or with it, should be more specific and detailed than is the Statement of Claim in the present matter. To put the matter somewhat differently, a number of the allegations in the Statement of Claim in the present matter consist, upon analysis, of allegations of secondary rather than allegations of primary fact. To some extent, however, this is inevitable. For example, it would be absurd to require that a statement of claim allege not that the defendant drove a motor vehicle down a street but to allege all of the particular acts of the defendant which constitute driving a motor vehicle together with the fact that the motor vehicle was moving down the street. The principles of pleading are not so technical as

disregarded. Nor should the position be allowed to develop where pleadings, which are, with proper particulars, adequate to enable identification of the real issues between the parties, are unnecessarily mutilated upon the spikes of

In the view I take, the overall approach adopted by the pleader in the Statement of Claim in the present matter is a permissible one. I do not uphold the general attack on

A variety of particular objections was made to specific parts of the Statement of Claim. I uphold the

(a) the reference in paragraphs 16 and 19 to the third respondent having "a power in relation to the (said) market in Australia within the meaning of s.46 of the Trade Practices Act" is objectionable in that it requires a conclusion of law before it is possible to identify the

(b) the reference to "market in Australia for the sale to retailers of electronic computer games

under licence from the fourth respondent" in paragraph 18 is embarrassing in that it lacks

(c) the allegations in paragraphs 11 and 21 of the Statement of Claim involve conclusions of law. In one sense, they provide a convenient division of the Statement of Claim and have no real detrimental effect. Since objection is taken to them however, I consider that I

Those parts of the Statement of Claim referred to in (a), (b) and (c) should be struck out. In the case of the matters referred to in (a) and (b), leave should be given to the applicant to amend the relevant paragraphs of the

It should be added that, during the course of the submissions of senior counsel for the applicant, it seemed to me that there may well be some divergence between the contents of the paragraphs of the Statement of Claim containing allegations of resale price maintenance and the particulars provided of those paragraphs and the detailed case which the applicant wished ultimately to present. This possible divergence did not, in the view I take, warrant

striking out the relevant paragraphs of the Statement of

claim on any of the grounds pressed on behalf of the first three respondents. If it had been allowed to continue, the consequences would have been on the applicant's head. The existence of it was confirmed when, this morning, the applicant sought leave to amend the Statement of Claim in accordance with the contents of an Amended Statement of Claim which was handed to me. I shall refer subsequently to that

Submission that certain particulars should be struck out

It is argued on behalf of the first three respondents that a number of the particulars included in the Statement of Claim should be struck out as embarrassing. It is further argued that the particulars provided are defective. As has been seen, the Notice of Motion seeks an order that the applicant file and serve such further and

On the question of particulars, it is relevant to note that when the matter was before Ellicott J. on 1 May, 1981, his Honour directed that any further particulars be sought on or before 5 May, 1981, and that any such further particulars be supplied on or before 8 May, 1981. In fact,

for reasons mentioned by Mr. Merkel in the course of

submissions this morning, the first three respondents sought no further particulars prior to the filing of the Notice of Motion. In this regard, it is also relevant to note that the first three respondents did not, before the filing of the Notice of Motion, indicate to the applicant either that they objected to particular portions of the Statement of Claim on specific pleading grounds or that they objected to certain of

The first three respondents, at my request, furnished a list of the particulars which they sought to have struck out. It is a lengthy list which, on analysis, includes most of the particulars provided in the Statement of Claim. The respondents are not required to plead to the particulars and I have formed the clear view that, in all the circumstances, the only particulars which should be ordered to be struck out are those which I consider to be positively

embarrassing to the first three respondents. These are:

(i) particular (a) to paragraphs 12, 13, 22 and 23 of the Statement of Claim. Objection having been taken to the particular in this form, the applicant should identify precisely which of the particulars furnished with each of the paragraphs referred to are applicable in that some of such particulars

(ii) particulars (iv), (v), (vi) of paragraph 17 of the Statement of Claim. These plainly

As was the case with the paragraphs of the Statement of Claim relating to resale price maintenance, it seemed to me, on a number of occasions, that there may be some divergence between some of the particulars of those paragraphs set out in the Statement of Claim and the detailed case which the applicant may wish ultimately to propound. Again, this is confirmed by the Amended Statement of Claim which was handed to me this morning. I turn to a

The applicant seeks leave to amend paragraphs 5, 7, 8, 9 and 10 of the Statement of Claim in the manner indicated in the Amended Statement of Claim (M.F.I. 4) which is initialled by me and placed with the papers. It also seeks leave to amend the Particulars of paragraphs 7, 8, 9 and 10 of the Statement of Claim in the manner indicated in that document. Subject to questions of costs, I consider that I should allow these amendments. They would seem to remove the apparent divergence between the original Statement of Claim and Particulars and the manner in which the applicant seemed

to me to be likely to wish ultimately to put its case.

The Amended Statement of Claim involves amendments to paragraph 15 of the Statement of Claim in two comparatively minor respects and amendments to paragraphs 16 and 19 of the Statement of Claim which will overcome the difficulty in relation to those paragraphs to which I have referred and which come within the leave to amend which I have already indicated should be granted in relation to those paragraphs. The applicant should be given leave to make such amendments. The applicant should also be given leave to amend paragraph 18 and the Particulars under paragraphs 17 and 18 of the Statement of Claim in the manner indicated in

the Amended Statement of Claim. In the result, I am of the view that the applicant should be given leave to amend the Statement of Claim in the

As has been seen, the prayer for injunctive relief in the notice of motion was framed in very wide terms. After an initial amendment, the injunction sought was for a limited term, namely, until the hearing and determination of the action or further order. In the course of his final submissions, senior counsel for the first three respondents indicated that his clients did not press for an injunction in the wide terms appearing in the Notice of Motion but sought

A number of problems in relation to the application for injunctive relief emerged on the hearing. The applicant was not provided with advance information as to the case which the first three respondents were advancing against it. Indeed, that case plainly varied and expanded as the hearing progressed. Thus, it was indicated at an early stage of the proceedings that it was no part of the case presented that the applicant had actually committed a contempt of court: by the time of closing addresses, it was alleged that there were six separate heads of alleged contempt of court by the

In these circumstances, I took the view that the application for an injunction restraining publication should be dealt with initially on a purely interlocutory basis, that 1s to say, as an application for interim relief pending a full hearing of the prayer for relief contained in the Notice of Motion. The application for an injunction restraining publication was, as I understood the matter, proceeded with

At the conclusion of his final submissions, senior counsel for the applicant indicated that while his client strongly disputed that any event which could constitute contempt of court had occurred or was intended, the applicant

was prepared to give an undertaking to the Court to the

effect of the narrowed form of injunction for which the first three respondents were then pressing. Alternatively, it was indicated that if the first three respondents were not content with an undertaking, the applicant consented to the grant of an interim injunction in that narrowed form. Counsel for the first three respondents informed the Court that his clients were not content with an undertaking and

In the circumstances, I propose to grant an interim injunction in the narrowed form now sought by the first three respondents. The basis on which that interim injunction is granted is that it is interlocutory in character in the sense that it will be open to either side to have prayer 4 of the Notice of Motion called on for further hearing. I would add that it will be open to either side to apply at any time for directions aimed at bringing the issues raised by prayer 4 of the Notice of Motion on for hearing in a state which will enable them to be dealt with on a full and proper basis. I

The particulars of the Statement of Claim which have been supplied are, in one sense, inadequate in that there are some general allegations in the Statement of Claim which are left unsupported and unparticularized. To some extent, this position is on the first three respondents' own head in that they failed to take advantage of the opportunity given them by Ellicott J. to seek further and better particulars. Notwithstanding that failure, I consider that further and better particulars should be supplied by the

I have been troubled as to whether the more appropriate course is simply to order the applicant to supply further and better particulars or to give to the first three respondents an opportunity of seeking such further and better particulars as they may be advised. I have come to the view that, in all the circumstances, the appropriate course is to allow the first three respondents a further opportunity to

(His Honour proceeded to make orders and give directions in the form of the annexed document. By consent, all costs were reserved).

At a glance

Court

Decision date

Before

Source

Judgment (173 paragraphs)

Cited By (1)