Showtime Touring Group Pty Ltd v Mosley Touring Inc

Judgment 1BATHURST CJ: This is an application for leave to appeal against an order by the primary judge striking out a claim brought by the applicant ("Showtime") against the second respondent ("Mr Mosley"). Showtime alleged that Mr Mosley had knowingly participated in the misleading or deceptive conduct of the first respondent ("Touring") pursuant to s 75B of the Trade Practices Act 1974 (Cth) ("the Act") and claimed damages under s 82 and s 87 of that Act. 2The facts and litigation history may be stated briefly. Touring is a company incorporated in and carrying on business in the United States of America. Mr Mosley is a musical performance artist who uses the stage name "Timbaland". In the Amended Statement of Claim filed on 29 March 2011, Showtime alleged that Mr Mosley is "the alter ego, guiding mind and an officer of the first defendant". Mr Mosley is a resident of the United States of America and was served with the Amended Statement of Claim in that country. He has not entered an appearance. 3By the Amended Statement of Claim, Showtime alleged that it entered into an agreement with Touring to the effect that Mr Mosley would perform various concerts in Australia and New Zealand in August 2008. Mr Mosley failed to perform and it was alleged that, as a consequence, Touring breached the contract. However, Hislop J struck out the claim on the basis that it was a contract made and to be performed in the United States of America and the Court had no jurisdiction to hear it. No appeal is brought from that decision. 4The Amended Statement of Claim also pleaded that Touring made representations in Australia that Mr Mosley would perform at certain venues in Australia and New Zealand in August 2008. The representations were made by way of press release and audio drops, namely messages from Mr Mosley that he was coming to Australia to tour. It was pleaded that the representations were misleading because Touring was negotiating with promoters in Poland and Finland for Mr Mosley to perform at the Poland Coca Cola Music Festival on 22 August 2008 and in Finland on 23 August 2008. Showtime claimed that Touring's representations were misleading or deceptive and it suffered loss and damage in acting in reliance upon them. 5It is not contested that this claim disclosed an arguable cause of action. 6However, the primary judge determined that the claim brought by Showtime against Mr Mosley under s 75B of the Act did not disclose a cause of action. He did so for two reasons. First, the primary judge concluded that Showtime had not pleaded that Mr Mosley knew that Touring's conduct was misleading or deceptive, which is a prerequisite for accessorial liability under s 75B of the Act: Yorke v Lucas [1985] HCA 65; (1985) 158 CLR 661 at 667-670. Second, he concluded that for there to be accessorial liability, the conduct of the accessory must occur in Australia. The Amended Statement of Claim did not plead any conduct by Mr Mosley in this country. As a consequence, the primary judge set aside service of the Amended Statement of Claim upon Mr Mosley pursuant to r 12.11(1)(b) of the Uniform Civil Procedure Rules 2005 ("UCPR"). 7The Statement of Claim originally filed in the proceedings had been struck out by Hislop J on 3 September 2010. Hislop J also ordered that Showtime pay the costs of each of Touring and Mr Mosley. Touring and Mr Mosley made an application before the primary judge that the costs order made by Hislop J be payable forthwith. The primary judge held that costs should be paid forthwith. His reasons for doing so were set out in pars [61] and [66] of his judgment in the following terms: "[61] ... However I have reached the view that I should give the defendants leave to have their costs of the motion before Hislop J assessed forthwith. My reasons are these: (1) The order was made on 3 September 2010. At that stage, the only cause of action pleaded was in contract. Both defendants succeeded in having service set aside. Although the ASC has been served on the first defendant, the only count in it which can run in this court against it is that under the TPA . No doubt the circumstances surrounding the creation of the contract will achieve some relevance in that case, but as Hislop J has found, the case said in the pleading to arise from the contract cannot be heard in this court. That is a separate and identifiable issue, which in effect has concluded: Fiduciary at [11]. (2) A large part of the delay in taking this matter further was due to the fact that the plaintiff took almost seven months to seek leave to serve an amended pleading, then a further period of almost two months to serve the ASC. Before the proceedings finally conclude, a great deal more time may elapse: Fiduciary at [13]. (3) The case against the second defendant in this court cannot, on the current pleading, run. So as far as he is concerned, the proceedings against him have not progressed since he was first served, almost two years ago, and indeed are now finished. (4) So far as the second defendant is concerned, this is not a case where there are likely to be other costs orders along the way, some of which might be in favour of the plaintiff; so there will be no need or opportunity to have a balancing of orders at the end of the proceedings: Richards v Kadian (No 2) [2005] NSWCA 373 at [7]. (5) The liability for the costs does not change. It has always been there. All that is different now is that the costs will be paid earlier than they would have been absent my giving leave. ... [66] I have formed the view that I should make a gross sum costs order. My reasons are these: (1) As against the second defendant, as I have explained above, the proceedings cannot go further, on the current pleading. (2) There has been an assessment (although not a final one) made by a costs assessor, and her evidence was not challenged; Mr Baran conceded the assessor has a thorough knowledge of costs. (3) The making of the order will eliminate the need for a formal assessment. (4) The plaintiff has now pleaded two cases, one in contract, the other under the TPA, against the second defendant, and has failed to save either when challenged." 8The primary judge assessed these costs at $70,000. 9Showtime has sought leave to appeal against both his Honour's orders striking out the accessorial liability claim against Mr Mosley and his variation of the costs order made by Hislop J.

The pleading issue 18Showtime accepted correctly that to establish a cause of action for damages in reliance on s 75B of the Act, it was necessary to plead material facts alleged to give rise to the primary cause of action (in this case misleading or deceptive conduct in contravention of s 52 of the Act), and further, material facts demonstrating that the accessory had knowledge of the conduct and that it was misleading or deceptive: Yorke v Lucas supra. 19In the present case the Amended Statement of Claim, although hardly elegant, pleaded such material facts. I have set out the relevant portions of the Amended Statement of Claim above. Primary conduct is pleaded in par [41] of the Amended Statement of Claim and the facts said to make that conduct misleading or deceptive are pleaded in par [45]. Paragraph [49] of the Amended Statement of Claim pleads that Mr Mosley gave instructions to make the representations pleaded in par [41]. It can thus be inferred that he knew of the representations. Further, par [49] also pleads that at the same time he gave instructions to carry out the negotiations for his appearances in Poland and Finland. That is material from which it can be inferred that Mr Mosley knew the representations as to the proposed appearances in Australia were misleading or deceptive. 20In these circumstances, subject to the need for conduct in Australia, it seems to me that the material facts necessary to give rise to a claim against Mr Mosley in reliance on s 75B of the Act, have been pleaded. 21I do not accept the submission of Showtime that it is unnecessary to plead that some conduct of the accessory occurred in Australia. Bray v F Hoffman-La Roche Ltd supra, concerned a claim under s 75B of the Act for knowing participation in a contravention of s 45 of the Act. Merkel J held that it was necessary that at least some of the conduct said to give rise to accessorial liability occur in Australia. He stated the position in the following terms: "[50] Whether a statutory provision has extra-territorial operation is a question of construction of the Act as a whole. With the TPA, as in Meyer Heine, it is not necessary to rely on any canon of construction in respect of s 5 as s 5(1) has provided for extra-territorial operation of the provisions of Pts IV, IVA, V (other than Div 1AA), VB subject to certain conditions. As with s 9(b) of the Australian Industries Preservation Act, s 5 of the TPA is to be accounted for only on the basis that the Act as a whole, including s 5 itself, has been framed on the assumption that when conduct is made a contravention of the Act it is only conduct in Australia that is meant unless the conditions set out in s 5 apply. ... [54] Part VI is not a Part of the TPA to which the extended application of the TPA provided for in s 5(1) applies. Although the Court may make orders under ss 80 and 82 against persons contravening s 45, and against persons involved in the contravention as set out in s 75B, ss 45 and 75B are not to be regarded as equivalent types' of provision. As was explained by Fisher J in Yorke v Ross Lucas Pty Ltd (1983) 68 FLR 268 at 270; 46 ALR 319 at 321: '...neither s 75B nor s 82 deem the accessor to have committed a contravention, but rather proceed on the basis that in one or other of the specified ways he was involved' in the commission of the primary offence. Section 75B it can be said is procedural in the sense that it merely purports to indicate the various ways in which one person can be involved in the commission of a contravention by another to such an extent as to render it just that he contribute to recoupment of the loss suffered by others in consequence of the contravention.' [55] Thus, a person involved in a contravention, although liable under Pt VI to pay damages (s 82) or to an injunction (s 80) does not contravene the Act. In those circumstances, the extended operation of the Act under s 5(1) only relates to persons who have contravened or are bound by a provision of the Parts referred to in s 5(1). Accordingly, as the extended application of the Act under s 5 does not apply to Pt VI, for the reasons set out above, s 75B is to be construed as only being applicable to conduct in Australia. In Australia Meat Holdings at 355 Wilcox J arrived at a similar conclusion." 22That decision has been followed by the Federal Court and implicitly approved by the Full Court of that Court: Australian Wool Innovation Ltd v Newkirk supra at [54]; Worldplay Services Pty Ltd v Australian Competition and Consumer Commission supra at [17]-[18]. It has also been followed in this Court: Cauvin v Philip Morris Ltd supra at [33]-[34]. In my respectful opinion these cases were correctly decided and their reasoning is compelling. 23It follows that the pleading, to demonstrate a good cause of action, must plead material facts which demonstrate that Mr Mosley participated in the misleading or deceptive conduct in Australia. 24In my opinion, the Amended Statement of Claim does not plead such facts. The representations in par [41] were all said to have been made by Touring. The participation of Mr Mosley was limited to the giving of instructions and directions to the other officers of Touring. There are no facts pleaded to suggest that this conduct took place in Australia. 25It may well be that Showtime could plead the case that Mr Mosley participated in the alleged misleading or deceptive conduct by making representations in Australia through the medium of the audio drops. However, such a claim was not pleaded. Although par [50] of the Amended Statement of Claim pleads provision of the audio drops, it does not plead that the making of the representations in those audio drops constituted participation by Mr Mosley in the alleged conduct of Touring. 26It follows that the primary judge was correct in his conclusion that an arguable cause of action was not pleaded against Mr Mosley. However, in the circumstances, as the respondents' counsel effectively conceded was inevitable, leave should be given to Showtime to plead its claim against Mr Mosley in such manner as it may be advised. 27I would grant leave to appeal against the orders of the primary judge so as to make it clear that Showtime has leave to further amend the Amended Statement of Claim so as to bring a properly constituted cause of action against Mr Mosley, if it is able to do so.

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