et ne ey Pewee te ee ee oe aes a emer "RCC ee bP lt teks oats IN THE FEDERAL COURT No. VG 62 of 1977 OF AUSTRALIA BETWEEN: L. GROLLO DARWIN MANAGEMENT PTY. LTD. Plaintiffs and L. GROLLO & CO. PTY. LTD. and VICTOR PLASTER PRODUCTS PTY. LTD. Defendants and AUSTRALIAN GYPSUM LIMITED Courts ~- Practice and procedure - Application to strike out statement of claim - stay action - grounds ~- frivolous and vexatious - vexatious and oppressive - High Court Rules 0.20 r.29, 0.26 r.18, 0.63, xr.2. eae ee ee etree et teenies teen needs Senha may mein ante date em tee at Nee Ih he at a ene nt ret * IN THE FEDERAL COURT No. VG 62 of 1977 OF AUSTRALIA BETWEEN: L. GROLLO DARWIN MANAGEMENT PTY. LTD. Plaintiffs JUDGE MAKING ORDER DATE OF ORDER WHERE MADE and L. GROLLO & CO. PTY. LTD. and VICTOR PLASTER PRODUCTS PTY. LTD. Defendants and AUSTRALIAN GYPSUM LIMITED ORDER Northrop J. (in Chambers) . 15th November, 1977 Melbourne THE COURT ORDERS: 1. That the action be stayed until further order. That the defendants' costs of this summons be taxed and paid by the plaintiffs and I certify for Counsel. That the defendants' costs of obtaining the order made on the 4th October, 1977 be taxed and paid by the plaintiffs. week. eee ee ee arene me mene em le mn ne A At RE Hn TE IN THE FEDERAL COURT No. VG 62 of 1977 OF AUSTRALIA BETWEEN: L. GROLLO DARWIN MANAGEMENT PTY. LTD. Plaintiffs and L. GROLLO & CO. PTY. LTD. and VICTOR PLASTER PRODUCTS PTY. LTD. and AUSTRALIAN GYPSUM LIMITED Defendants NORTHROP J. REASONS FOR JUDGMENT 1977 This is the return of a summons taken out by the defendants seeking orders that the statement of claim delivered by the plaiuntiffs be struck out and that the action be dismissed or stayed. In support of the summons Dr. Griffith, who appeared for the defendants, relied upon High Court Rules 0.20, r.29, 0.26, r.18 and 0.63, r.2. Mr. Hercules, who appeared for the plaintiffs, opposed the making of the orders sought. 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 pp. 128-130. Recently, these principles were discussed and applied in the Federal Court in L. Grollo & Co. Pty. Ltd. v Permacon Floors Pty. Ltd. and Others, unreported, 18th May, 1977. Although an appeal was taken against that decision, nothing was said by the Full Court contrary to the principles of law stated in the reasons for decision and I refer to and apply these principles to the present application. By a generally endorsed writ of summons issued on 24th August, 1977, the plaintiffs sought relief expressed as follows: "The plaintiffs claims are for - 1. A declaration that -the defendants and each of them by, inter alia, the first named defendant commencing proceedings in the Supreme Court of the Northern Territory Case No. 349 of 1977 «/2.e- --- a ee against the first named plaintiff, have in trade or commerce engaged in practice that is misleading and deceptive within the meaning of s.52 of the Trade Practices Act 1974 (as amended) of Australia and that both such defendants have violated s.52 of such Act. 2. Damages sustained and being sustained by the plaintiffs and each of them as a result of the defendants' said violation of s.52 of such Act." The plaintiffs gave notice that they required pleadings and filed a statement of claim dated 20th September, 1977. Paragraphs 1 to 4 of the statement of claim deal with formal matters. They allege facts upon which it is claimed that the matter is one within the original jurisdiction of the Federal Court and that each party is incorporated and is a corporation within the meaning of the Trade Practices Act 1974 (the Act). Paragraph 5 alleges that the second named plaintiff (hereinafter called "Grollo") and a company named Wincope (Australia) Pty. Ltd. in May 1975 entered into a contract with the Darwin Reconstruction Commission for the designing and construction of houses at Darwin. Paragraph 6 alleges that Grollo engaged a company, Reign Plumbing Pty. Ltd., to do plumbing work involved in the construction of the houses. Paragraph 7 alleges that in or about June or July 1975 the defendants or one or other of them entered into an agreement with Reign Plumbing Pty. Ltd. to supply goods to that company. Paragraph 8 alleges that about the end of June 1976 "the plaintiffs alternatively one of them entered into an arrangement with the defendants alternatively one of them" whereby the first named plaintiff (hereinafter called "Grollo Darwin") would pay the July 1976 account of Reign Plumbing Pty. Ltd. for goods supplied during the month of July 1976 to Reign Plumbing Pty. Ltd. by the defendants or one or other of them pursuant to the agreement referred to in paragraph 7. The arrangement was alleged to have been subject to certain terms and conditions namely: " (i) That the Defendants acknowledged that neither Plaintiffs were under any legal obligation to do so. (ii) That such arrangement in no way varied or modified the said contract. o[/3e06 ~ wee ae eee cow nee we epee ne eee oe 2 re ee Ul eR et ee ce ee i nee ee tn ee nee le SF (iii) That by so arranging there was no agree- ment by the Plaintiffs or either of them to take over or assume the obligaticns liabilities or debts of Reign Plumbing. (iv) That upon payment of the said July account of Reign Plumbing with the Defendants and each of them they and each of them had no cause of action whatsoever against the Plaintiffs or either of them. (v) The Plaintiffs would not be invoiced or charged for any other goods supplied by ' the Defendants or either of them to Reign Plumbing." Paragraph 9 alleges that the arrangement alleged in paragraph 8 was carried out. Paragraph 10 alleges that thereafter the defendants and each of them wrongfully sought to charge the plaintiffs for goods supplied to Reign Plumbing Pty. Ltd. and have taken proceedings against the plaintiffs for payment thereof. Particulars given include the delivery of invoices and statements by the defendants, and giving of two notices to Grollo Darwin under s.222(2) of the Companies Ordinance 1963-73 of the Northern Territory including one dated 7th June, 1977 claiming the amount of $59,778.22, each of which claimed moneys owing for goods sold and delivered and each of which notices has been withdrawn, and the issue by the first named defendant (hereinafter called Victor Plaster) of a writ in the Supreme Court of the Northern Territory (hereinafter called "the Northern Territory proceedings") in which Victor Plaster claims against Grollo Darwin the sum of $59,778.22 for goods delivered over various periods of time up to January 1977. Paragraph 11 is as follows: "The Defendants alternatively one of them did, in trade and commerce, engage in conduct which was misleading and deceptive within the meaning of Section 52 of Part 5 of the said Act in that it entered into the said arrangement with the Plaintiffs or one of them when at all times they or alternatively one of them had no intention whatsoever of observing or keeping the said arrangement so made." Paragraph 12 alleges that as a result of the matters set out in paragraph 11, the plaintiffs or one or other of them have suffered loss and damage by an act of the defendants or one or other of them which was an act done in contravention of s.52 of the Act. In the of4uee a ee - e e cl ee ee ee wee. statement of claim the plaintiffs claim a declaration "thal the defendants or one of them have violated s.52 of the said Act" and damages. It is necessary to make brief reference to the Northern Territory proceedings. They were instituted by writ numbered 349 of 1977 in which Victor Plaster is claiming against Grollo Darwin the sum of $59,778.22 being the balance due for goods sold and delivered by Victor Plaster to Grollo Darwin at the request of Grollo Darwin. An appearance to the writ was entered on behalf of Grollo Darwin and Victor Plaster delivered a statement of claim in which it alleges that on or about the 5th July, 1976 Grollo Darwin entered into an agreement with Victor Plaster for the purpose of the sale by Victor Plaster to Grollo Darwin of 3,000 rolls of insulwool at the rate of $1.75c per square meter net F.I.S. Darwin, that Victor Plaster delivered to Grollo Darwin in Darwin the said 3,000 rolls of insulwool and that Grollo Darwin has neglected or refused to pay for the goods so sold and delivered. Grollo Darwin then issued a summons seeking orders that it have leave to withdraw its appearance and enter a conditional appearance, that the action be transferred to the Supreme Court of Victoria, that the hearing of the action be stayed pending the hearing of the action VG 62 of 1977 in the Federal Court of Australia (hereinafter called the "Federal Court proceedings") and certain consequential orders. From the material filed in the Northern Territory proceedings, it is clear that Grollo Darwin denies the agreement alleged by Victor Plaster in its statement of claim and alleges that the insulwool which was in fact delivered to Darwin was ordered from Australian Gypsum Limited by Reign Plumbing Pty. Ltd. and alleges the arrange- Ment or agreement referred to in the statement of claim in the Federal Court proceedings. Affidavits filed on behalf of Victor Plaster deny the claims made by Grollo Darwin. Before me, neither party objected to this material being referred to since it constituted part of the Norhtern Territory proceedings being the proceedings referred to in the statement of claim in the Federal Court proceedings. On the llth October, 1977, the Northern Territory Supreme Court ordered that Grollo Darwin have leave to withdraw its avpearance and enter a conditional appearance and that thereafter the action, being the Northern Territory proceedings, be stayed until further order. The reasons for the order so made o/Deee fe ee pe ermine nmi Lee nt he th ee ne een i te ee ee are not available to me but Mr. Hercules stated that the order was not based upon the existence of the Federal Court proceedings. In considering applications for orders under 0.26, r.18 the Judge or Court is limited to a consideration of information contained in the statement of claim, including documentary material referred to therein, while affidavit material may be used to support applications for orders based on the inherent power of the Court to stay actions which are frivolous and vexatious and an abuse of the process of the Court as also in applications made under 0.63, r.2. Generally see General Steel Industries Inc. v Commissioner for Railways (N.S.W.), supra, at p.130. The parties ' before me agreed that I was entitled to look at affidavits filed in the Federal Court proceedings which exhibited copies of documents filed in the Northern Territory proceedings, see Day v William Hill (Park Lane) Ltd. (1949) 1 K.B. 632. No affidavit material was placed before me for any other purpose. The claim endorsed upon the writ in the Federal Court proceedings is, to say the least, somewhat startling. The state- ment of claim modifies that claim and pursuant to 0.21, r.3 I am prepared to proceed on the basis that the claim is that contained in the statement of claim. The substance of that claim is the allegation of the arrangement between the plaintiffs or one of them and the defendants or one of them, the allegation that the defendants or one of them entered into that arrangement with the plaintiffs or one of them when at all times the defendants or one of them had no intention of observing the arrangement and the allegation that thereafter the defendants have sought to charge the plaintiffs for ' goods supplied to Reign Plumbing Pty. Ltd. The plaintiffs then alleged that the defendants or one of them by entering into the arrangement when at all times the defendants or one of them had no intention of observing or keeping the terms of the arrangements so made thereby arein breach of the provisions of s.52 Trade Practices Act 1974. At the time of the making of the alleged arrangement s.52(1) of the Act was as follows: "A corporation shall not, in trade or commerce, engage in conduct that is misleading or deceptive." of/6.656 3 ten 8 By the Trade Practices Amendment Act 1977, s.29, the following words were added to the end of s.52(1) of the Act; "or is likely to mislead or deceive". At the time of the making of the alleged arrangement the word "conduct" was given an extended meaning by the definition of that word as contained in s.4(1) of the Act but the amending Act of 1977 deleted that definition and inserted a new sub-section, s.4(2), into the Act, see s.5 of the amending Act. The plaintiffs bring the Federal Court proceedings pursuant to s.82 of the Act and the Federal Court has exclusive jurisdiction to hear and determine such a claim, s.86 of the Act. Section 52 of the Act is contained in Part V of the Act and that Part is headed "Consumer Protection". It is the first section in Division 1 of that Part and that Division is headed "Unfair Practices". In considering the meaning of s.52 of the Act, Mason J. in Re Credit Tribunal; Ex parte General Motors Acceptance Corporation (Australia) 1977 14 A.L.R. 257 said at p.268: "Its meaning therefore is apt to be influenced, indeed decisively influenced, by the context in which it is found. Here the setting in which s.52(1) appears is shown by the headings "Part V - Consumer Protection" and "Division 1 - Unfair Practices", In this context the prohibition contained in the sub-section emerges as an important general prohibition against a corpor- ation in the course of trade or commerce engaged in a form of conduct, a trade practice, which is unfair." The submission by Mr. Hercules that a corporation engages in conduct that is misleading or deceptive within the meaning of s.52 of the Act if it enters into an arrangement or agreement and at that time has no intention of observing or keeping the terms of the arrangement or agreement is very far reaching. If the submission be correct it follows wherever a person, being a corporation, in trade or commerce enters into a contract and fails to observe a term of that contract not only is he liable to be sued in a Common Law Court for breach of contract but also, if that person had, at the time of entering into the contract, no intention of observing or keeping the contract, he is liable to be sued in the Federal Court of Australia for damages pursuant to the Trade Practices Act. I have grave doubts as to the correctness of the of Tee - te eee - oe eee geen sce - --e- aw eee ee a eaten oe O. =e submission but I am not satisfied that I have received the necessary assistance from the plaintiffs to enable me to reach such a definite and certain conclusion to justify the summary striking out of the statement of claim as not disclosing a reasonable cause of action and to dismiss the action thoreby depriving the plaintiffs from submitting their case for determination in this Court. The contract alleged by Victor Plaster in the Northern Territory proceedings is different from the arrangement alleged by the plaintiffs in the Federal Court proceedings. The Supreme Court of the Northern Territory, or the Supreme Court of the State, is the appropriate Court to try the issues raised in the action commenced by Victor Plaster. Victor Plaster is not alleging or purporting to rely upon the arrangement referred to in the state- ment of claim in the Federal Court proceedings and if Victor Plaster succeeds in its claim it would not be acting in breach of the alleged arrangement. I have formed the clear opinion that the plaintiffs commenced the Federal Court proceedings as a basis for an attempt to stay or delay the hearing of the claim by Victor Plaster in the Northern Territory proceedings. Irrespective of the outcome of the Northern Territory proceedings, the plaintiffs in the Federal Court proceedings will be able, if so advised, to prosecute their claim against the defendants after the conclusion of the Northern Territory proceedings or proceedings in the appropriate Supreme Court. It is my opinion that at the present time the action commenced in the Federal Court is frivolous and vexatious within the meaning of 0.26, r.18 and that it is vexatious and oppressive within the meaning of 0.63, r.2. Accordingly I propose to order that this action, being No. VG 62 of 1977, be stayed to enable Victor Plaster Products Pty. Ltd. to prosecute its claim against L. Grollo Darwin Management Pty. Ltd. I propose to order that the plaintiffs pay the defendants' costs of this summons. The defendants issued and served their summons before the time limited for the delivery of their defence. The return date on the summons was shortly after the time limited for delivery of defence. After receipt of the summons and with knowledge of it, the plaintiffs' solicitors wrote to the defendants' [Bees nln art nat mm ee ere atl NL Aaa NR AL AE RK a te lem -8- solicitors to the effect that unless a defence was delivered, judgment would be entered and thereafter the plaintiffs' solicitors failed to return telephone calls to the defendants' solicitors. By an ex parte order made on 4th October, 1977, the Court extended the time for delivery of defence by the defendants and reserved the costs of that ex parte application. After hearing argument, I propose now to order that the plaintiffs pay the costs reserved by the order of the 4th October, 1977. ORDER 1. That the action be stayed until further order. 2. That the defendants' costs of this summons be taxed and paid by the plaintiffs and I certify for Counsel. 3. That the defendants' costs of obtaining the order made on the 4th October, 1977 be taxed and paid by the plaintiffs. dee ae tee Pe a Ae Lake bine oe ah ere te ee ne are IN THE FEDERAL COURT No. VG 62 of 1977 OF AUSTRALIA BETWEEN: L. GROLLO DARWIN MANAGEMENT PTY. LTD. Plaintiffs and L. GROLLO & CO. PTY. LTD. and VICTOR PLASTER PRODUCTS PTY. LTD. Defendants and AUSTRALIAN GYPSUM LIMITED Courts ~ Practice and procedure - Application to strike out statement of claim - stay action ~ grounds - frivolous and vexatious - vexatious and oppressive - High Court Rules 0.20 r.29, 0.26 r.18, 0.63, r.2. Daneel emai nian tee Habe a ee A a Nae i a net dt ta ee ae ee a a mn ee et, ee en net ners emma ae IN THE FEDERAL COURT No. VG 62 of 1977 OF AUSTRALIA BETWEEN: - L. JUDGE MAKING ORDER DATE OF ORDER WHERE MADE GROLLO DARWIN MANAGEMENT PTY. LTD. Plaintiffs and L. GROLLO & CO. PTY. LTD. and VICTOR PLASTER PRODUCTS PTY. LTD. Defendants and AUSTRALIAN GYPSUM LIMITED ORDER Northrop J. (in Chambers) 15th November, 1977 Melbourne THE COURT ORDERS: 1. That the action be stayed until further order. That the defendants' costs of this summons be taxed and paid by the plaintiffs and I certify for Counsel. That the defendants' costs of obtaining the order made on the 4th October, 1977 be taxed and paid by the plaintiffs. eee Re IM THE FEDERAL COURT No. VG 62 of 1977 OF AUSTRALIA BETWEEN: L. GROLLO DARWIN MANAGEMENT PTY. LTD. Piaintiffs and L. GROLLO & CO. PTY. LTD. and VICTOR PLASTER PRODUCTS PTY. LTD. and AUSTRALIAN GYPSUM LIMITED Defendants NORTHROP J. REASONS FOR JUDGMENT 1977 This is the return of a summons taken out by the defendants seeking orders that the statement of claim delivered by the plaintiffs be struck out and that the action be dismissed or stayed. In support of the summons Dr. Griffith, who appeared for the defendants, relied upon High Court Rules 0.20, r.29, 0.26, r.18 and 0.63, r.2. Mr. Hercules, who appeared for the plaintiffs, opposed the making of the orders sought. 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 pp. 128-130. Recently, these principles were discussed and applied in the Federal Court in L. Grollo & Co. Pty. Ltd. v Permacon Floors Pty. Ltd. and Others, unreported, 18th May, 1977. Although an appeal was taken against that decision, nothing was said by the Full Court contrary to the principles of law stated in the reasons for decision and I refer to and apply these principles to the present application. By a generally endorsed writ of summons issued on 24th August, 1977, the plaintiffs sought relief expressed as follows: "The plaintiffs claims are for - 1. A declaration that the defendants and each of them hy, inter alia, the first named defendant commencing proceedings in the Supreme Court of the Northern Territory Case No. 349 of 1977 o/2.-. against the first named plaintiff, have in trade or commerce engaged in practice that is misleading and deceptive within the Meaning of s.52 of the Trade Practices Act 1974 (as amended) of Australia and that both such defendants have violated s.52 of such Act. 2. Damages sustained and being sustained by the plaintiffs and each of them as a result of the defendants' said violation of s.52 of such Act." The plaintiffs gave notice that they required pleadings ' and filed a statement of claim dated 20th September, 1977. Paragraphs 1 to 4 of the statement of claim deal with formal . matters. They allege facts upon which it is claimed that the matter is one within the original jurisdiction of the Federal Court and that each party is incorporated and is a corporation within the meaning of the Trade Practices Act 1974 (the Act). Paragraph 5 alleges that the second named plaintiff (hereinafter called "Grollo") and a company named Wincope (Australia) Pty. Ltd. in May 1975 entered into a contract with the Darwin Reconstruction Commission for the designing and construction of houses at Darwin. ' Paragraph 6 alleges that Grollo engaged a company, Reign Plumbing Pty. Ltd., to do plumbing work involved in the construction of the houses. Paragraph 7 alleges that in or about June or July 1975 the defendants or one or other of them entered into an agreement with Reign Plumbing Pty. Ltd. to supply goods to that company. Paragraph 8 alleges that about the end of June 1976 "the plaintiffs alternatively one of them entered into an arrangement with the defendants alternatively one of them" whereby the first named plaintiff (hereinafter called "Grollo Darwin") would pay the July 1976 account of Reign Plumbing Pty. Ltd. for goods supplied during the month of July 1976 to Reign Plumbing Pty. Ltd. by the defendants or one or other of them pursuant to the agreement referred to in paragraph 7. The arrangement was alleged to have been subject to certain terms and conditions namely: " (i) That the Defendants acknowledged that neither Plaintiffs were under any legal obligation to do so. (ii) That such arrangement in no way varied or modified the said contract. a a tr tel te enema eh etait ne att Re el aL Ak RN i Ree ei be eee Re A ee Ce ee -3- (iii) That by so arranging there was no agree- ment by the Plaintiffs or either of them to take over or assume the obligations liabilities or debts of Reign Plumbing. (iv) That upon payment of the said July account of Reign Plumbing with the Defendants and each of them they and each of them had no cause of action whatsoever against the Plaintiffs or either of them. (v) The Plaintiffs would not be invoiced or charged for any other goods supplied by ' the Defendants or either of them to Reign Plumbing." Paragraph 9 alleges that the arrangement alleged in paragraph 8 was carried out. Paragraph 10 alleges that thereafter the defendants and each of them wrongfully sought to charge the plaintiffs for goods supplied to Reign Plumbing Pty. Ltd. and have taken proceedings against the plaintiffs for payment thereof. Particulars given include the delivery of invoices and statements by the defendants, and giving of two notices to Grollo Darwin under s.222(2) of the Companies Ordinance 1963-73 of the Northern Territory including one dated 7th June, 1977 claiming the amount of $59,778.22, each of which claimed moneys owing for goods sold and delivered and each of which notices has been withdrawn, and the issue by the first named defendant (hereinafter called Victor Plaster) of a writ in the Supreme Court of the Northern Territory (hereinafter called "the Northern Territory proceedings") in which Victor Plaster claims against Grollo Darwin the sum of $59,778.22 for goods delivered over various periods of time up to January 1977. Paragraph 11 is as follows: "The Defendants alternatively one of them did, in trade and commerce, engage in conduct which was misleading and deceptive within the meaning of Section 52 of Part 5 of the said Act in that it entered into the said arrangement with the Plaintiffs or one of them when at all times they or alternatively one of them had no intention whatsoever of observing or keeping the said arrangement so made." Paragraph 12 alleges that as a result of the matters set out in paragraph 11, the plaintiffs or one or other of them have suffered loss and damage by an act of the defendants or one or other of them which was an act done in contravention of s.52 of the Act. In the i. mmm ea ae eee ee ek i a es me ae ee ee ee ee am ee Eel et ee em ee statement of claim the plaintiffs claim a declaration "that the defendants or one of them have violated s.52 of the said Act" and damages. It is necessary to make brief reference to the Northern Territory proceedings. They were instituted by writ numbered 349 of 1977 in which Victor Plaster is claiming against Grollo Darwin the sum of $59,778.22 being the balance due for goods sold and delivered by Victor Plaster to Grollo Darwin at the request of Grollo Darwin. An appearance to the writ was entered on behalf of Grollo Darwin and Victor Plaster delivered a statement of claim in which it alleges that on or about the 5th July, 1976 Grollo Darwin entered into an agreement with Victor Plaster for the purpose of the sale by Victor Plaster to Grollo Darwin of 3,000 rolls of insulwool at the rate of $1.75c per square meter net F.I.S. Darwin, that Victor Plaster delivered to Grollo Darwin in Darwin the said 3,000 rolis of insulwool and that Grollo Darwin has neglected or refused to pay for the goods so sold and delivered. Grollo Darwin then issued a summons seeking orders that it have leave to withdraw its appearance and enter a conditional appearance, that the action be transferred to the Supreme Court of Victoria, that the hearing of the action be stayed pending the hearing of the action VG 62 of 1977 in the Federal Court of Australia (hereinafter called the "Federal Court proceedings") and certain consequential orders. From the material filed in the Northern Territory proceedings, it is clear that Grollo Darwin denies the agreement alleged by Victor Plaster in its statement of claim and alleges that the insulwool which was in fact delivered to Darwin was ordered from Australian Gypsum Limited by Reign Plumbing Pty. Ltd. and alleges the arrange- ment or agreement referred to in the statement of claim in the Federal Court proceedings. Affidavits filed on behalf of Victor Plaster deny the claims made by Grollo Darwin. Before me, neither party objected to this material being referred to since it constituted part of the Norhtern Territory proceedings being the proceedings referred to in the statement of claim in the Federal Court proceedings. On the lith October, 1977, the Northern Territory Supreme Court ordered that Grollo Darwin have leave to withdrav its appearance and enter a conditional appearance and that thereafter the action, being the Northern Territory proceedings, be stayed until further order. The reasons for the order so made o[Deeos ee tt mate Oe we ee a nee ee ee anne ee tees eee are not available to me but Mr. Hercules stated that the order was not based upon the existence of the Federal Court proceedings. In considering applications for orders under 0.26, r.18 the Judge or Court is limited to a consideration of information contained in the statement of claim, including documentary material referred to therein, while affidavit material may be used to support applications for orders based on the inherent power of the Court to stay actions which are frivolous and vexatious and an abuse of the process of the Court as also in applications made under 0.63, r.2. Generally see General Steel Industries Inc. v Commissioner for Railways (N.S.W.), supra, at p.130. The parties before me agreed that I was entitled to look at affidavits filed in the Federal Court proceedings which exhibited copies of documents filed in the Northern Territory proceedings, see Day v William Hill (Park Lane) Ltd. (1949) 1K.B. 632. No affidavit material was placed before me for any other purpose. The claim endorsed upon the writ in the Federal Court proceedings is, to say the least, somewhat startling. The state- ment of claim modifies that claim and pursuant to 0.21, r.3 I am prepared to proceed on the basis that the claim is that contained in the statement of claim. The substance of that claim is the allegation of the arrangement between the plaintiffs or one of them _ and the defendants or one of them, the allegation that the defendants or one of them entered into that arrangement with the plaintiffs or one of them when at all times the defendants or one of them had no intention of observing the arrangement and the allegation that thereafter the defendants have sought to charge the plaintiffs for goods supplied to Reign Plumbing Pty. Ltd. The plaintiffs then alleged that the defendants or one of them by entering into the arrangement when at all times the defendants or one of them had no intention of observing or keeping the terms of the arrangements so made thereby arein breach of the provisions of s.52 Trade Practices Act 1974. At the time of the making of the alleged arrangement s.52(1) of the Act was as follows: "A corporation shall not, in trade or commerce, engage in conduct that is misleading or deceptive." ~/6..4. eo pt tris in ce ale Bb nln i he 0 eres eles en nen ee NR Al aE nl plete ne anette Ne ra By the Trade Practices Amendment Act 1977, s.29, the following words were added to the end of s.52(1) of the Act; "or is likely to mislead or deceive". At the time of the making of the alleged arrangement the word "conduct" was given an extended meaning by the definition of that word as contained in s.4(1) of the Act but the amending Act of 1977 deleted that definition and inserted a new sub-section, s.4(2), into the Act, see s.5 of the amending Act. The plaintiffs bring the Federal Court proceedings pursuant to s.82 of the Act and the Federal Court has exclusive jurisdiction to hear and determine such a claim, s.86 of the Act. Section 52 of the Act is contained in Part V of the Act and that Part is headed "Consumer Protection". It is the first section in Division 1 of that Part and that Division is headed "Unfair Practices". In considering the meaning of s.52 of the Act, Mason J. in Re Credit Tribunal; Ex parte General Motors Acceptance Corporation (Australia) 1977 14 A.L.R. 257 said at p.268: "Its meaning therefore is apt to be influenced, indeed decisively influenced, by the context in which 1t is found. Here the setting in which s.52(1) appears is shown by the headings "Part V - Consumer Protection" and "Division 1 - Unfair Practices". In this context the prohibition contained in the sub-section emerges as an important general prohibition against a corpor- ation in the course ef trade or commerce engaged in a form of conduct, a trade practice, which is unfair." The submission by Mr. Hercules that a corporation engages in conduct that is misleading or deceptive within the meaning of s.52 of the Act if it enters into an arrangement or agreement and at that time has no intention of observing or keeping the terms of the arrangement or agreement is very far reaching. If the submission be correct it follows wherever a person, being a corporation, in trade or commerce enters into a contract and fails to observe a term of that contract not only is he liable to be sued in a Common Law Court for breach of contract but also, if that person had, at the time of entering into the contract, no intention of observing or keeping the contract, he is liable to be sued in the Federal Court of Australia for damages pursuant to the Trade Practices Act. I have grave doubts as to the correctness of the - - -—o - eee atom ee ee tr oe een Eee He ee Le nate submission but I am not satisfied that I have received the necessary assistance from the plaintiffs to enable me to reach such a definite and certain conclusion to justify the summary striking out of the statement of claim as not disclosing a reasonable cause of action and to dismiss the action thereby depriving the plaintiffs from submitting their case for determination in this Court. The contract alleged by Victor Plaster in the Northern Territory proceedings is different from the arrangement alleged by the plaintiffs 1n the Federal Court proceedings. The Supreme Court of the Northern Territory, or the Supreme Court of the State, is the appropriate Court to try the issues raised in the acticn commenced by Victor Plaster. Victor Plaster is not alleging or purporting to rely upon the arrangement referred to in the state- ment of claim in the Federal Court proceedings and if Victor Plaster succeeds in its claim it would not be acting in breach of the alleged arrangement. I have formed the clear opinion that the plaintiffs commenced the Federal Court proceedings as a basis for an attempt to stay or delay the hearing of the claim by Victor Plaster in the Northern Territory proceedings. Irrespective of the outcome of the Northern Territory proceedings, the plaintiffs in the Federal Court proceedings will be able, if so advised, to prosecute their claim against the defendants after the conclusion of the Northern Territory proceedings or proceedings in the appropriate Supreme Court. It is my opinion that at the present time the action commenced in the Federal Court is frivolous and vexatious within the meaning of 0.26, r.18 and that it is vexatious and oppressive within the meaning of 0.63, r.2. Accordingly I propose to order that this action, being No. VG 62 of 1977, be stayed to enable Victor Plaster Products Pty. Ltd. to prosecute its claim against L. Grollo Darwin Management Pty. Ltd. I propose to order that the plaintiffs pay the defendants' costs of this summons. The defendants issved and served their summons before the time limited for the delivery of their defence. The return date on the summons was shortly after the time Limited for delivery of defence. After receipt of the summons and with knowledge of it, the plaintiffs' solicitors wrote to the defendants' rane note solicitors to the effect that unless a defence was delivered, judgment would be entered and thereafter the plaintiffs' solicitors failed to return solicitors. By an ex parte the Court extended the time defendants and reserved the telephone calls to the defendants' order made on 4th October, 1977, for delivery of defence by the costs of that ex parte application. After hearing argument, I propose now to order that the plaintiffs pay the costs reserved by the order of the 4th October, 1977. ORDER 1. That the action be stayed until further order. 2. That the defendants' costs of this summons be taxed and paid by the plaintiffs and I certify for Counsel. 3. That the defendants" costs of obtaining the order made on the 4th October, 1977 be taxed and paid by the plaintiffs.