' This is an extempore judgement on an application to stay proceedings. It is of no general interest and should not be circulated. a aN © TONGS IN THE FEDERAL COURT OF AUSTRALIA '" 13 NOV 1984 =| ) ' 1 NEW SOUTH WALES DISTRICT REGISTRY 1 No. 6.277 of 1984 wi ' * / GENERAL DIVISION ee BETWEEN : GLENWOOD TRADING PTY LIMITED Applicant AND: LEO MAGNANI AND WIFE PTY LIMITED Respondent REASONS FOR JUDGMENT CORAM: WILCOX J DATE: 31 AUGUST 1984 PLACE: SYDNEY This matter was before me in the directions list last Friday. I was informed that the originating process had not been served upon the respondent. and the matter was adjourned until today. The Application, the Statement of Claim and the supporting affidavit of Mr Phillip Lazarus. sworn 11 Auqust 1984, were apparently served on the first respondent last Monday. This morning. by consent I have allowed the Amendment of the Application and Statement of Claim to add a further respondent. Associated Italian Manufacturers Pty Limited. Mr Karkar appears on behalf of both respondents and submits that the Application and Statement of Claim should be staved or dismissed pursuant £9 rule 2 of arder 20, on the around that the proceedings do not disclose any reasonable cause of action. In support of that submissian he has analvsed the alleaations made in the Statement of Claim. The Application relies upon three separate discernible causes of action - paragraphs 1 and 2 relv upon section 52 of the Trade Practices Act: paragraph 5 relies upon section 53: paraaqraph 2 alleges passing off, Paraaraph 4 1s difficult to identifv in terms of cause of action, and Mr Evatt has told me that 1t will not be pressed. It i5 common. in the circumstances of this case, to each of those causes of action that there must be an allegation that the aoods. the subiect of the praceedinas. he introduced on to the market in circumstances where thev are represented as being qoods of the applicant, either because thev are so labelled or otherwise identified. or because the application has such a reputation inte annds as to cause people to believe that the caoods must be those of the applicant, so that the sellina of such aoods amounts to deceptive or misleading conduct under section 52. or one of the false representations referred to in section 53. It is. of course, an ingredient of the action ot passing off that the qoods he represented be those of the applicant. Mr Karkar points out that. although the Statement of Claim alleges that the qoods were manufactured 1n accordance with the desian and specifications of the applicant, the Statement of Claim nowhere alleges that the qoods bear any identification associating them with the applicant, nor does 1t alleqe such a reputation as to constitute the sale by the respondent of such qoods as misleading or deceptive conduct or a false representation. A sample of the qoods has been tendered. and it is apparent that there is no label associatina the qoods with that of the applicant. Thev onlv label refers to the manufacturer in Yuaoslavia,. It seems to me that the Statement of Claim as originally prepared is demurrable. and that the situation is sufficiently clear as to justify the exercise of the court's powers under rule 2. I say that having regard to the principle that an action should only be struck out in the clearest of cases and I have in mind the tests laid down by Chief Justice Barwick in General Steel Industries v Commissioner for Railways 112 CLR 125, During the araqument Mr Evatt for the applicant indicated that his client would be prepared to amend the Statement of Claim so as to include an alleaation that it had acquired a reputation in the qoods such as to constitute the sale by the respondent of identical qoods as being misleadina or deceptive conduct or the making of false representations. Depending upon the precise form of the allegation it seems to me that such an amendment would result in a Statement of Claim which ought not to be struck out. I savy nothing as to the prospects of success of such an action because it seems to me that some difficult questions are involved in determining the extent to which one trader may put on the Market qoods identical or substantiallv similar to those of another trader without being involved in breach of sections 52 or 53. If have in mind that this matter was referred to in the decision in the High Court in Parkdale Custom Built Furniture Pty Limited v_ Puxu Pty Limited 149 CLR 191. It appears from what was said that the mere fact that qoods are substantially similar 15 not enough to mean that there has been a breach of sections 52 or 53 of the Trade Practices Act. I think the course that should be taken is for me to stay further proceedings upon the Statement of Claim as presently framed but. in view of the indication qiven by the applicant that it would wish to amend. to qrant leave to amend. The costs of the application to strike out should be paid by the applicant. It may be that the applicant would have amended the Statement of Claim of its own volition without the necessity for argument if it had considered the matter at areater lenath. It 1s perhaps unfortunate that it did not have a lonaer period in which to consider the complaint by the respondent that the Statement of Claim was demurrable. However. it seems that this is a result of the considerable delay in serving the initiatina process. That process was filed on 8 Auqust and apparently not served until 27 Auadust. In respect of the strikeout application I stay any further proceedings upon the Statement of 'laim as presentlv framed. I arant leave to the applicant to amend the Statement of Claim so as to add such alleaations regarding reputation as 1t may be advised. I order that the costs of this application be paid by the applicant. In relation to the future conduct of the proceedings and on the basis that there will he an amendment, I think it is desirable that the matter proceed by way of affidavit evidence. «Counsel addressed re directions) In reswect of directions. I direct that the applicant file and serve its amended Statement of Claim not later than Thursdav, 13 September 1984. I direct that the applicant file and serve on the respondents all affidavits upon which it will relv in the proceedinas not later than Thursday, 11 October 1984 and that the respondents file and serve copies of all affidavits «won which they will relv not later than Thursdav, 1 November 1984, I direct that not later than Thursdav. 8 November 1984, each party furnish to the other a list of documents for discovery and the necessary inepections take place not later than Thursdav, 15 November. The matter will stand over for further directions on Fridav, 9 November 1384. I certify that this and the #2 Cs) preceding pades are a true copv of the Reasons for Judgement herein of His Honour Mr Justice Wilcox. Sssostace OVAL wo eR "2 i/e[ se