back (e] 244. {1477 IN THE FEDERAL COURT ) ) No, VG 29 of 1977 OF AUSTRALIA ) BETWEEN: L. GROLLO & CO. PTY, LTD. Plaintiff and - © PERMACON FLOORS PTY. LTD. RAYMOND WILLIAM PLANT SHIRLEY MARGARET PLANT R.W. PLANT PTY. LTD. GIOVANNI ATTISTA SCANU and Defendants ANDREW LAWSON ORDER JUDGE MAKING ORDER: Northrop J. in Chambers DATE OF ORDER: 18th May 1977 oO WHERE MADE: Melbourne @ IT IS ORDERED THAT: 1. The statement of claim endorsed on the writ be struck out and that the plaintiff's action be dismissed with costs to be taxed. 2. That the summons dated Sth May, 1977 taken out by the Plaintiff be dismissed with costs to be taxed. 3. That the matters were proper for the attendance of Counsel in Chambers. reste et we ah he ak eo, od Rabin Pr tor el ee ee Late a oh pCa tet Sve oe IN THE FEDERAL COURT ) ) No. VG 29 of 1977 OF AUSTRALIA ) BETWEEN: L. GROLLO & CO. PTY. LTD, Plaintiff and PERMACON FLOORS PTY. LTD. RAYMOND WILLIAM PLANT SHIRLEY MARGARET PLANT R.W. PLANT PTY. LTD. GIOVANNI ATTISTA SCANU and Defendants ANDREW LAWSON JUDGMENT NORTHROP J. IN CHAMBERS 18TH MAY 1977 On 29th July, 1976, the plaintiff (hereinafter called "Grollo") commenced proceedings by writ of summons against the defendants in the Australian Industrial Court. Pursuant to Section 3, Federal Court of Australia (Consequential Provisions) Act 1976, the proceedings were transferred to the Federal Court of Australia on lst February, 1977. The proceedings are to be conducted in accordance with the Rules of the High Court; s.38, Federal Court of Australia Act 1976, Order 2 r.1, Federal Court of Australia Rules and Regs. 78L and 78P of the Conciliation and Arbitration Regulations. This is the return of a summons taken out by the first four defendants seeking orders that paragraphs 15 to 41 inclusive of the statement of claim endorsed on the writ be struck out on the grounds that the same are unnecessary or scandalous or tend to prejudice, embarrass, or delay the fair trial of the action or alternatively, on the grounds that the same do not disclose a reasonable cause of action, and further or in the alternative, that all further proceedings in the action be stayed. Heard concurrently wath that summons was an application on summons by Grollo that 1t have leave to join the Master Builders Association of Victoria (hereinafter called the "M.B.4.V.") and the Australian Institute of Building (hereinafter called the "A.I.B.") as defendants to the writ and to amend the statement of claim endorsed on the writ by substituting therefor a new statement of claim. At the hearing, Mr. Heerey of Counsel appeared for the first four defendants and Mr. Hercules, Solicitor, appeared for Grollo. -/2... The other two defendants did not appear. In support of the summons taken out by his clients, Mr. Heerey relied upon the High Court Rules 0.20 r.29, striking out pleadings and 0.26 r.18, striking out pleadings where no reasonable cause of action disciosed. Reference may be made also to 0.63 r.2, stay of proceedings on the ground of abuse of process. The principles to be applied to applications of this kind are stated by Barwick, C.J. in General Steel Industries Inc. v_Commissioner for Railways (N.S.W.) and others (1969) 112 C.L.R. 125, at pages 128 to 130 and I quote the following extracts :- "The plaintiff rightly points out that the jurisdiction summarily to terminate an action is to be sparingly employed and 1s not to be used except in a clear case where the Court is satisfied that 1t has the requisite material and the necessary assistance from the parties to reach a definite and certain conclusion. I have examined the case law on the subject, to some of which I was referred in argument and to which I epoend a list of references. ...... It is sufficient for me to say that these cases uniformly adhere to the view that the plaintiff ought not to be denied access to the customary tribunal which deals with actions of the kind he brings, unless his lack of a cause of action - if that be the ground on which the court is invited, as in this case, to exercise its powers of summary dismissal - is clearly demonstrated. The test to be applied has been variously expressed; "so obviously untenable that it cannot possibly succeed"; "manifestly groundless"; "so manifestly faulty that it does not admit of argument"; "discloses a case which the Court 1s satisfied cannot succeed"; "under no possibility can there be a good cause of action"; "be manifest that to allow them" (the pleadings) "to stand would involve usless expense", ...... Dixon J. (as he then was) sums up a number of authorities in Dey v Victorian Railways Commissioners (1949) 78 C.L.R. 62 where he Says at p.91: "A case must be very clear indeed to justify the summary intervention of the court to prevent a plaintiff submitting his case for determination in the appointed manner by the court with or without a Jury. The fact that a transaction is intricate may not disentitle the court to examine a cause of action alleged to grow out of it for the purpose of seeing whether the proceeding amounts to an abuse of process or 1S vexatious. But once it appears that there 1s a real question to be determined whether of fact or law and that the rights of the parties depend upon it, then it is not competent for the court to dismiss the action as frivolous and vexatious and an abuse of process." Although I can agree with Latham C.J. 1n the same case when he said that the defendant should be saved from the vexation of the continuance of useless and futile -/3.. ware hte RS mm mas te ee ae i etn ee fm hy erento Aerts des rhe Se Jt ne proceedings at p.84, in my opinion great care must be exercised to ensure that under the guise of achieving expeditious finality a plaintiff 1s not improperly deprived of his opportunity for the trial of his case by the appointed tribunal. On the other hand, I do not think that the exercise of the jurisdiction should be reserved for those cases where argument 1S unnecessery to evoke the futility of the plaintiff's claim. Argument, perhaps even of an extensive kind, may be necessary to demonstrate that the case of the plaintiff is so clearly untenable that it cannot possibly succeed." See also Heidt v Chrysler Australia Limited a decision of the Australian Industrial Court given on 22nd November, 1976. In the present case, I express no opinion on the nature or extent of any inherent power the Federal Court of Australia may have to prevent an abuse of its process, see R.V. Forbes ex parte Bevan (1972) 127 C.L.R. 1. The statement of claim endorsed on the writ is confused, verbose and difficult to follow. It fails to comply with the High Court Rule 0.21 r.2 in that 1t does not allege the facts upon which it 1s claimed that the matter 1s one within the original jurisdiction of the Federal Court. This has made difficult the task of identifying the causes of action contained in it. Paragraphs 1 to 12 deal with formal matters. They allege that the first defendant (hereinafter called "Permacon") 1s a company incorporated in Victoria, the second and third defendants are directors of Permacon, the fourth and fifth defendants are shareholders of Permacon and the sixth defendant (hereinafter called "the Arbitrator") 1s an arbitrator nominated by the President of the M.B.A.V. Paragraph 7 alleges that the second, third and fifth defendants, and the Arbitrator are corporations for the purposes of the Trade Practices Act 1974. No such allegation is Made against Permacon. Paragraph 8 alleges that Grollo is a builder and is and at all material times was a structural concrete contractor. Paragraphs 9 and 12 allege that the M.B.A.V. is an organisation registered under the Conciliation and Arbitration Act 1904 and, together with other associations in other Australian States and Territories, forms part of the Master Builders Federation of Australia Inc. Paragraphs 10 and 11 ellege that o/4eee Grollo is not and never has been a member of the M,.B.A.V. and that Permacon is and was at all material times a member of the M.B.A.V. At the hearing of the summons an Affidavit was tendered on behalf of Permacon stating that at the time of the making of the Agreement hereinafter referred to (23rd October, 1974) the issue of the writ of summons and at the present time Permacon was not and is not a member of the M.B.A.V. Mr. Hercules did not accept this claim and so an issue of fact arises. Having regard to the nature of the proceedings before me, I make no finding on this issue but proceed on the basis of the allegation contained in the statement of claim. There is no paragraph 13 to the statement of claim but paragraph 14 alleges that Permacon held itself out at all material times to be a specialist in "hard wearing, heavy duty concrete floors". At the hearing Mr. Hercules claimed that this allegation formed the basis for a claim under s.52, Trade Practices Act, but this is not adverted to in the statement of claim. Paragraph 15 alleges that on 23rd October, 1974 Grollo and Permacon entered into a written agreement (hereinafter called "the Agreement"). At the hearing before me the parties tendered and relied upon the terms contained in the Agreement. The Agreement is called a sub-contract document and is on a form compiled by the Exchange and Contracts Committees of the M.B.A.V. It is marked "Copyright". The form of the Agreement 1s one 1n common use and 1s drawn to deal with the situation where a builder has entered into a head contract and then sub-contracts part of the work to be carried out by the builder under the head contract to the sub- contractor. In the present case, Grollo is the builder and Permacon is the sub-contractor. The recitals to the Agreement state that Grollo has entered into a building contract with a proprietor to build certain works identified by reference to the head contract and has requested Permacon, as sub-contractor, to carry out and complete 1n accordance with the provisions of the head contract, certain works described in the Agreement as :- "provide trowel hands to finish concrete wharehouse floors and partplace and screed concrete. If required, 'lace sand, polythene and mesh to ground slabs. Sand @ 20 cents Pre Polythene @ 10 sf" Mesh @ 25 " /" ~/5.. Tender documents to be attached as part of this document." The sub-contract sum as stated in the Agreement is as follows :- "plzce_and finish concrete to warehouse slab at $1.55 per m2, Place and screed concrete at 90 cents per m2." Under the "rise and fall" clause of the Agreement, the method of adjustment is stated as follows :- "firm to December 24th then any rises in wages there- after to apply to unfinished work." The Agreement contains all the normal clauses to be found in a contract of this type including Clause 38 relating to arbitration. Under this clause, Permacon had the benefit of any remedy at arbitration that Grollo had under the head contract and Grollo was required to do all things necessary to give effect to the rights of Permacon. Further the clause provided that if any dispute or difference arose between Grollo and Permacon as to certain identified matters, that dispute or difference would be submitted to arbitration by a named person, or if that person refused to arbitrate, to the President of the M.B.A.V. or his nominee, that the award made by the Arbitrator was to be final and that neither party was entitled to commence or maintain any action upon the dispute or difference until the matter had been referred to and determined by the Arbitrator. Paragraph 16 alleges that Grollo engaged Permacon to do the work the subject of the Agreement since the method to be used was new to Grollo and Permacon "was alleged and held itself out to be the expert in the field". Paragraphs 17 to 21 describe the Agreement and refer in deta1l to a number of the terms and conditions contained in 1t including the arbitration clause, allege Permacon worked on the project but failed to complete the work and that the work was badly performed whereby Grollo suffered loss and damage. Paragraphs 22 to 26 allege facts purporting to be the basis for a claim for damages under Division 2 of Part V of the -/6.4- were et ren - ne a, ee me ce an ne Trade Practices Act but at the hearing Mr, Hercules conceded that Grollo was not a consumer within the meaning of that word as used in that Division and therefore these paragraphs disclose no cause of action against the defendants or any of them - see s.4(3) and (4) Trade Practices Act. Paragraphs 27 to 29 allege facts which purport to be the basis for a claim for damages and or injunctions against the first five defendants based on a common law conspiracy to do acts contrary to unspecified provisions of the Trade Practices Act. At the hearing these provisions were identified as Sections 45 and 46 of the Act and possibly Sections 52 and 53 of the Act. No particulars are given as to when these alleged facts occurred or when the alleged conspiracy took place. Particulars given include the use of telephones as a method by which the conspiracy was conducted and allege also that as a result of this conspiracy, Permacon gave notices of dispute under Clause 38 of the Agreement and that the President of the M.B.A.V. had nominated the Arbitrator to arbitrate on the matters in dispute. Paragraphs 30 and 31 refer to a letter dated 23rd June, 1976 from the Arbitrator to Grollo and Permacon stating that the Arbitrator had agreed to arbitrate and setting out the conditions under which he would so act including a statement that his fees would be in accordance with the scale of charges approved by the A.I.B., namely not less than $35 per hour plus ali out-of~pocket expenses and that the preliminary hearing before him would commence on 2nd July, 1976. Paragraphs 32 to 35 claim that Grollo is not prepared to accept the decision of the Arbitrator as "final and binding" and 1s not agreeable to pay the fees charged by him, that Clause 38 of the Agreement ousts the jurisdiction of the Federal Court, that Permacon will be at an advantage because it is a member of the M.B.A.V. while Grollo is not (bias) and that Clause 38 1s a violation of unspecified provisions of the Trade Practices Act in that it purports to give powers to the President of the M.B.A.V. over Grollo which is not a member of that Association. Paragraph 36 alleges the absence of any clearance or authorisation under the provisions of the Trade Practices Act LJ Tes eteccenn en cmmaahanes Mans Can mae waster A Kietalweend B dbs esibliems in mee RRO me ok os obtained by Permacon for or in respect of the Agreement. Paragraph 37 alleges a contract or conspiracy between the Arbitrator and the A.I.B. and its members to "violate" the Trade Practices Act in relation to price fixing. Paragraphs 38 to 40 refer to applications for clearances and authorisations made by the M.B.A.V. then pending before the Trade Practices Commission but allege that those proceedings do not permit or allow the conduct alleged against the defendants. Paragraph 41 claims a return of moneys, totalling $19,468.50, paid by Grollo to Permacon under the terms of the Agreement. The specific claims made by Grollo are obscure. They include the seeking of declarations that the defendants have violated various unspecified provisions of the Trade Practices Act and should be restrained from further breaches, orders restraining the Arbitrator from proceeding with the hearing of the arbitration and that he be disqualified from hearing the arbitration, and orders declaring that Grollo is not indebted to Permacon and that Permacon be directed to re-pay the $19,468.50 to Grollo, an order that the Agreement, or an unspecified part of it, be declared void or illegal or that Grollo be at liberty to rely upon the conditions and warranties contained in the Trade Practices Act, a declaration that Grollo be at liberty to proceed, in an appropriate Court, to recover from Permacon such amount as Permacon owes to 1t without first obtaining an award from the Arbitrator, that the clearances and authorities do not authorise the "aforesaid violations" of the Trade Practices Act, that Clause 38 of the Agreement is void and of no effect and orders varying the terms of the Agreement in such Manner as the Court considers just and equitable. Under Section 19 Federal Court of Australia Act 1976, the Federal Court has such original jurisdiction as is vested in it by laws made by the Parliament, being jurisdiction in respect of matters arising under laws made by the Parliament. Section 86 Trade Practices Act 1974 1s as follows :- -/8... she tiie Lamlee med ee ee a rn eae ea Ne me a ae ee ieee amet AR fa te Oe ek oe teem dese ape eels nets tH "86, Jurisdiction is conferred on the Court to hear and determine actions, prosecutions and other proceedings under this Part and that jurisdiction is exclusive of the jurisdiction of any other court, other than the jurisdiction of the High Court under section 75 of the Constitution." In that Act, "Court" is defined as meaning the Federal Court of Australia. Part VI of the Trade Practices Act is headed "Enforcement and Remedies". Section 82 provides that a person who suffers loss or damage by an act of another person that was done in contravention of a provision of Part IV or V may recover the amount of the loss or damage by action against that other person. Section 80 empowers the Court, on the application of any person, to grant an injunction restraining a person from engaging in conduct that constitutes or would constitute a number of specified matters including :- ""(a) a contravention of a provision of Part IV or V (j) conspiring with others to contravene such a provision." Section 87 provides that where in a proceeding instituted under Part VI the Court finds that there has been a contravention of a provision of Part IV or V, the Court, in addition to granting an injunction or ordering the payment of damages, may make such ancilliary orders of a type specified to redress injury caused by the conduct to which the proceeding relates. For present purposes, reference may be made to Sections 45 and 46 as contained in Part IV of the Act and Sections 52 and 53 as contained in Division 1 of Part V of the Act. It 1s sufficient to quote Section 45(2) :- "45,(2) A corporation shall not - (a) make a contract or arrangement, or enter into an understanding, in restraint of trade or commerce; or (b) give effect to a contract, arrangement or understanding to the extent that it is in restraint of trade or commerce, whether the contract or arrangement was made or the understanding was entered into before or after the commencement of this sub-section." f/Iene ~ Pe ema ed eee eee em RL my me ere Other provisions of Section 45 exclude certain types of contracts, arrangements or understandings from the prohibition contained in Section 45(2). Section 46 of the Act prohibits certain conduct by a corporation in relation to monopolisation. Section 52(1) provides :- "52.(1) A corporation shall not, in trade or commerce, engage in conduct that is misleading or deceptive." Section 53 prohibits a corporation, in trade or commerce, from making specified types of false representations. Reference should be made also to Section 79 contained in Part VI of the Act. See also R.V. Australian Industrial Court ex parte C.L.M. Holdings Pty. Ltd., a decision of the High Court delivered on 10th February, 1977. During the course of the hearing Mr. Hercules made submissions to the effect that provided an individual person made use of postal, telegraphic or telephonic services, that individual would be a corporation for the purposes of the conduct proscribed by Sections 45, 46, 52 and 53 of the Trade Practices Act. Those submissions were made despite the provisions of Section 6(3) of the Act and despite the views expressed in ex parte C.L.M. Holdings Pty. Ltd. (supra) and Strickland v Rocla Concrete Pipes Limited (1971) 124 C.L.R. 468. In my opinion these submissions, even 1f accepted, are of no assistance to Grollo in these applications and I do not express any view on their validity. Likewise the evidence submitted on behalf of Grollo relating to the delay of the first four defendants in the making of their application and the events occurring immediately prior to the issue of their summons, are not relevant to the issues presently before me, The immediate issues between Grollo and Permacon arise from a normal building contract containing the normal terms and conditions. As is not uncommon under building contracts, allegations of bad workmanship are made by Grollo and Permacon claims payment for work done. Grollo seeks redress for the bad workmanship. Under the terms of the Agreement these matters must, as a condition precedent to action being taken in Courts of law, be determined py the Arbitrator, generally see paragraphs 15 to 21 of the statement of claim. These are matters which frequently come before the Common -/10..- a ey ~~ ee i en Nene ee Pena oan irnete woe ve td eet ee eet me ha ees eee a ater sae Beene - 10- Law Courts and the legal principles to be applied are clear. The normal issues relate to questions of fact only. All the terms of the Agreement between Grollo and Permacon are clearly stated in the Agreement including the rates to be charged for the work done by Permacon. There is no basis for saying that of themselves these paragraphs raise matters which come within the jurisdiction of the Federal Court. It is important to note the chronological order of events. The Trade Practices Act 1974 was assented to on 24th August, 1974 and Sections 1 and 2 came into operation on that day. Apart from Sections 55, 45(1) and (2), 47(1) and 49(1), subject to certain exceptions, the other sections of the Act came into operation on lst October, 1974, Section 2(3), (4) and (5). Sections 45(1) and (2), 47(1) and 49(1) came into operation on lst February, 1975 while Section 55 came into operation on 27th September, 1975. The Agreement between Grollo and Permacon was entered into on 23rd October, 1974. It is difficult to know what cause of action 1s claimed on the basis of the facts contained in paragraphs 14 and 16 of the statement of claim. Nowhere is there any allegation that Permacon is or was not a specialist in "hard wearing, heavy duty concrete floors" nor was not an "expert in the field of the method of concreting and finishing the concrete floors" the subject of the Agreement. Nowhere is there an allegation that Permacon engaged in conduct that was misleading or deceptive within the meaning of Section 52 of the Trade Practices Act. In any event, any such conduct would have had to be engaged in by Permacon between lst and 23rd October, 1974. There is certainly no suggestion that Permacon was engaged in any such conduct at the time of the issue of the writ. No submission was put to me which disclosed any cause of action within the jurisdiction of the Federal Court. It is difficult to ascertain the basis of any claim based upon the conspiracy allegations contained 1 paragraphs 27 to 29 of the statement of claim. They do not appear to be directed to the validity of the Agreement entered into between Grollo and Permacon. They do not relate to future conduct by the M.B.A.V. and its members. Section 82, Trade Practices Act confers no jurisdiction on the Federal Court to award damages for conspiracy. Under Section 80, ./ll.. 2 hin we ie vb ee ere CPO Se een ani ant Seen IL ein, SeonTEeY oe ee ee meet este -ll- conduct constituting conspiracy with others to contravene a provision of Part IV or V of the Act may justify the granting of an injunction to restrain further such conduct. This is not being claimed here. In any event, the M.B.A.V. 1s not a party to these proceedings. The matters referred to in paragraphs 30 to 35 of the statement of claim do not come within any cause of action created by the Trade Practices Act and coming within the jurisdiction of the Federal Court. They relate to matters that frequently come before the Common Law Courts which have clearly stated the principles of law to be applied. The Federal Court has no jurisdiction over Matters which it 1s alleged the defendants are attempting to oust. Likewise the allegations relating to clearances and authorisations and contained in paragraphs 36, 38, 39 and 40 of the statement of claim have no relevance to any matters raised which are within the jurisdiction of the Federal Court. Paragraph 37 of the statement of claim does not raise any issue between Grollo and the first four defendants. Insofar as it relates to the fees to be charged by the Arbitrator that cannot affect the validity of the Agreement between Grollo and Permacon, Finally, paragraph 41 of the statement of claim does not raise any matter within the jurisdiction of the Federal Court. It follows therefore that, in my opinion, the statement of claim does not disclose any reasonable cause of action within the jurisdiction of the Federal Court and is frivolous or vexatious. Before considering what order should be made, it is necessary to consider the application by Grollo to add the two defendants and to amend the statement of claim by substituting a proposed new statement of claim. This application is made under High Court Rules 0.16 r.4 and 0.29 rr.l and 2. It remains true however that under the proposed statement of claim the main issue between Grollo and Permacon remains the same namely their rights and obligations under the Agreement of 23rd October, 1974. By adding the two proposed defendants, namely the M.B.A.V. and the A.I.B., Grollo is attempting to widen any cause of action 1t might have against the present defendants to include claims for -/12..-- ee me - 12 - orders directed to the propcsed defendants and directed to many of the activities of those two associations. In my opinion, it 1s not appropriate that those two associations be jo1zned to proceedings in which the statement of claim discloses no cause of action against the defendants to that action and where the issues proposed to be raised extend far beyond the limited matters affecting the rights and obligations arising from the Agreement between Grollo and Permacon. I therefore refuse that part of the application by Grollo to add the two proposed defendants. It is not necessary to consider in detail the terms of the proposed statement of claim. It contains allegations against each of M.B.A.V. and A.I.B. Paragraphs 17 to 23 purport to found a cause of action based upon Section 52 Trade Practices Act but again in relation to the Agreement of 23rd October, 1974. Paragraphs 24 and 25 allege the conspiracy while paragraphs 26 to 35 allege facts which may be relevant generally to a cause of action against the associations based on Sections 45 and 46 Trade Practices Act rather than against Permacon and, in particular, relate to future conduct. Paragraphs 36 to 40 relate to the arbitration and allegations of ousting the jurisdiction of the Federal Court while paragraphs 59 and 60 relate to allegations of bias against the Arbitrator. Paragraphs 41 to 58 relate to allegations of conspiracy to f1x prices and again relate to future conduct. Having regard to my finding that the present statement of claim does not disclose a reasonable cause of action against the existing defendants and is frivolous and vexatious, having regard to my refusal to give leave to Grollo to add the M.B.A.V. and the A.I.B. as defendants and having regard to the form of the proposed statement of claim framed as it is on the basis of two added defendants and their future conduct, I refuse leave to the plaintiff to amend its statement of claim by substituting for it the proposed statement of claim. Finally, 1t is necessary to consider what order should be made on the summons issued by the first four defendants. On the findings already made, under High Court Rules 0.26 r.18, I strike out the whole of the plaintiff's statement of claim. Under the same rule there is power to order that the action be dismissed. I have already expressed the view that the issues between Grollo and Permacon are ones which frequently arise in the Common Law Courts. I am conscious of the fact that Grollo, in attempting to find -/13..- - 13- causes of action against Permacon based upon the Trade Practices Act, is seeking to avoid its obligation freely entered into on 23rd October, 1974,and in particular to avoid the submission of the matters in dispute between itself and Permacon to the Arbitrator and, subject to common law, to abide the result of that submission. The arguments addressed to me in support of the jurisdiction of the Federal Court and based on the statement of claim are, in my opinion, manifestly groundless. To allow the proceedings to continue would, in my opinion, involve useless expense. In all the circumstances, I am of the opinion that the proper course is to dismiss the plaintiff's action against all defendants. ORDERS On the summons issued on behalf of the first four defendants, I strike out the whole of the plaintiff's statement of claim and dismiss the plaintiff's action with costs to be taxed. The summons issued on behalf of the plaintiff is dismissed with costs to be taxed. I certify for Counsel.