CATCHWORDS Federal Court - jurisdiction - application to restrain winding up proceeding in Supreme Court - alleged debt owed by applicant - claim under s.52 Trade Practices Act, 1974 for unliquidated damages against respondent - no single matter - no accrued jurisdiction - whether inherent jurisdiction should be exercised. Federal Court Act, 1976 - s.23 - con. Stack v. Coast Securities No.9 Pty. Ltd.(1983) 46 A.L.R. 451; (1982) 49 A.L.R. 193 - con. Novasonic Corp. Pty. Ltd. v. Hagemeyer (Australasia) B.V. - unreported - Lockhart, J. 27 October 1983 - con. FRENDSHIP CORPORATION PTY. LIMITED v. ADAMAD PTY. LTD. & ANOR. No. G295 of 1984 Beaumont, J. 20 November 1984. Sydney. IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY GENERAL DIVISION No. G295 of 1984 IN THE MATTER of the Trade Practices Act 1974 BETWEEN : FRENDSHIP CORPORATION PLY. LIMITED . Applicant AND: ADAMAD PTY. LIMITED First Respondent Hz Zz lee] LES DYER Second Respondent iO ee) les] t0 Judge making order: Beaumont, J. Date order made: 20 November 1984. Where made: Syvdnev. THE COURT ORDERS THAT: we The apolication the subiect of the notice of motion 2. dated 16 November 1984 be dismissed. 2. The applicant pay the respondents' costs of the application (excluding the costs of the preparation and service of the notice under s.78B of the Judiciary Act 1903). IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY ~ revere GENERAL DIVISION No. G295 of 1984 IN THE MATTER of the Trade Practices Act 1974 BETWEEN : FRENDSHIP CORPORATION PTY. LIMITED .- Applicant AND: ADAMAD PTY. LIMITED First Respondent AND: LES DYER Second Respondent CORAM: Beaumont, J. DATED: 20 November 1984. REASONS FOR JUDGMENT This is an application for interim relief made in the course of principal proceedindgs brought by the applicant against the respondents alleging contraventions of 5.52 of the Trade Practices Act, 1974. In the present application, made bv notice of motion filed on 193 November 1984. the 2. applicant now seeks to restrain the first respondent from proceeding with an application made by the first respondent to the Supreme Court of New South Wales for an order that the applicant be wound up. The application to the Supreme Court is made pursuant to s.364(1)(e) of the Companies (New South Wales) Code, the allegation being that the applicant is unable to pay its debts. To support that application. the first respondent relies upon a statutory notice of demand served upon the applicant on 2 Auaust 1984. The notice demanded payment within 21 days of its service of the sum of $52,566.49 said to be owing by the applicant to the first respondent in respect of fees for services rendered as the advertising agent of the applicant. No payment has been made in response to the demand. By letter dated 23 Auaqust, the applicant, by its solicitors, denied that it was indebted to the first respondent, and referred to the institution of these proceedings and foreshadowed a claim for injunctive relief in the event that the first respondent proceeded on the notice of demand. On 21 August. shortly prior to the expiration of the period stipulated in the statutory notice cf demand. the applicant commenced these proceedings. By its statement of claim. the applicant alleaes the retainer by it of che first resecndent as its advertising agent for 3. the purpose of producing and placing television and radio advertisements and media publications in the form of newsletters. It further alleqes that the second respondent acted as aqent for the first respondent for the purpose of procuring aqreements between the first respondent and the applicant. The statement of claim then alleges contraventions of s.52 and consequent damage in this wav: "6. Prior to entering into the agreement the First Respondent and alternatively the Second Respondent on behalf of the First Respondent during the course of negotiations in respect of the agreement made certain representations to the applicant that is to say:- (a) That the First Respondent was an accredited advertising agent. (b) That the First Respondent had experience in handling large clients such as Norman Ross Discounts. Nock & Kirbv and Kaiser Corporation and that this experience would be applied to the Applicant's television. radio and media programs. (c) That existing retailers and distributors would be qciven initially high impact media support ona regional basis and this would ensure a substantial up-surge in sales from existing locations. 7. In making such statements the First Respondent and the Seccnd Respondent enaaged in trade and commerce in Australia which was at all material times misleading and/or deceptive or likely to mislead and/or deceive in contravention of section 52 of the Trade Practices Act. 1974 - 1980 and each of the representation (sic) of fact which was likelv to and did induce the Applicant to enter into 4. a contract and each representation was false at the time it was made. 8. In consequence of the true state of affairs the Applicant has lost six distributors as television advertisements did not contain 'supers' which would detail the place where the Applicant's products could be purchased through distributors and printed materials were not made available in time for the television and radio campaign." By its application filed with the statement of Claim. the applicant seeks, inter alia, the following velief: a declaration that the first respondent engaged in conduct in contravention of s.52: a declaration that the agreement between the first respondent and the applicant is void or of no effect: an order that the first respondent be restrained from taking any action or commencing any proceedings or proceeding with any proceedings already commenced relating to the recovery of any amount under the agreement: and damages. On 28 September, a directions hearing in the principal proceedings took place before Wilcox, J.. By censent of the parties. orders were made for the filing of Pleadings and for discovery and interrogatories. The matter was stood over to 8 February 1985. On 10 October 1984, the first respondent filed in the Equity Division of the Supreme Court a summons seekina Q = che winding up of the applicant pursuant to 3.264(1::2) Oo 5. the Companies (New South Wales) Code. The affidavit supporting the summons alleges that the applicant is insolvent and relies on the applicant's failure to comply with the statutory notice of demand. The summons was served on ll October. It was returnable on 7 November. On that dav, it was adjourned by consent to 21 November. In support of its notice of motion. the applicant read an affidavit by its solicitor. Mr. G.B. Veitch. reciting the history of the litigation 'as set out above. Mr. Veitch swore a further affidavit in these terms: "ll. I am the Solicitor for the Applicant in this matter. 2. I refer to the affidavit sworn by me on 15 November 1984 and filed in these proceedings. 2. From my knowledge of the carriage of this matter and the instructions received by me I say that the Statement of Claim filed by the Applicant is based upon the agreement which gives rise to the debt alleaqed by the Respondents and that the damages claimed by the Applicant are equal to or areater than the said debt." Although Mr. Veitch was not cross-examined, the Los) material contained in paragraph of his affidavit is on its face arqumentative. and thus of little. if anv, weight. No cther evidence was adduced. A question arises at the outset as to the * jurisdiction of this Court to restrain winding-up proceedings taken in the Supreme Court (see Novasonic Corporation Ptv. Limited v. Hacemever (Australasia) B V - unreported - 27 October 1983, Lockhart. J.) The applicant relies. for jurisdiction for the relief it now seeks. upon s.23 of the Federal Court Act, 1976. Reference is also made to the reasoning of Fitzgerald. J. in Stack v. Coast Securities No. 9 Ptv. Limited (1983) 46 A.L.R. 451 at p.487-8 and the cases there cited. His Honour there held that: ",.. while the decision of the Hi¢h Court in Thomson Australian Holdings Ptv Ltd v Trade Practices Commission, supra, establishes that s 80 of the Trade Practices Act is the exclusive source of this court's power to grant a final injunction restraining conduct which is in contravention of a provision of that Act. it is at least sufficiently arguable for interlocutory purposes that the court has power to Grant interlocutory injunctions restraining conduct which is not in contravention of the Act but which might render nuagatory any substantive relief which is within the court's power in the proceedings:". His Honour relied for this purpose on the inherent power of the Federal Court and referred also to ss.5. 21, 22 and 23 of the Federal Court Act. Section 80 of the Trade ted yactices Act was widened after the decision in Thomson, but ct fox is seems immaterial for present purposes. In my opinion. the present case can be distin- guished from cases such as Stack, supra. In the context of a suit for specific performance and claims made under s.52 of the Trade Practices Act in that very connection. as the High Court later there held (see (1983) 49 A.L.R. 193). it can properly be said that only one "matter" is involved. In that way. the Federal Court can exercise its accrued jursidiction over the non-federal claim and thus resolve the dispute between the parties. Here, however, there are "distinct and severable claims. The proceedings for the winding-up of the applicant should, in my opinion, be seen as raising issues quite disparate and removed from the federal claim now made under the Trade Practices Act. In the winding up proceedings, although the debt of the first respondent is a necessary ingredient (cf. IOC Australia Ptv. Limited v. Mobil Oil Australia Limited (1976) 11 A.L.R. 417 at p.427). the ultimate issue is the solvency of the applicant. The question whether relief is there to be granted will be considered by that Court on the footing that the interest of creditors aenerallv is paramount (see the observations made by Lockhart. J. in Novasonic, supra, at p.9). In particular, it has been said that a windindg-up petition is not to be used as machinery for trving a common law action 'see In Re Imperial Guardian Life Assurance Societv C1869) L.R. 9 Eq. 447 at p.450:; Club Marconi of Bosslev Park Social Recreation Sporting Club Limited v. Remnat Constructions Pty. Limited C1980] A.C.L.C. 34,199 at 8. p.34,202; Re Jeff Reid Pty. Limited and the Companies Act (1980) 5S A.C.L.R.: In Re OBS Ptv. Limited £1967] Qd. R. 218: Processed Sand Ptv. Limited v. Thiess Contractors Ptv. Limited C1983] 1N.S.W.L.R. 384). - These considerations indicate that it is not appropriate to treat the claim made under the Trade Practices Act in this Court and the windina-up proceedinas as one matter. In my opinion. therefore. this Court has no jurisdiction; as part of its" accrued or attached jurisdiction. to deal with the winding-up proceedings, Moreover. inmy view, it cannot be said that to permit the winding-up proceeding to continue would, in the language of Fitzgerald. J., render nugatory any substantive relief which is within the Court's power in the proceedinds under s.52: at worst from the applicant's standpoint. if a winding-up order is made. it is open to the liquidator to continue the proceedings through the name of the applicant company. At best from the applicant's standpoint, it is still open to it to seek to persuade the Supreme Court that the debt is. within the meaning of the authorities in this area, a genuinely disputed one and that. in any event. it is solvent. In those circumstances, the Supreme Court would ordinarily order that the petition be dismissed or staved, or adjourn it to some future date. However, nothing that I have said in these reasons is in anv way intended to govern or even suagest the course that the Supreme Court should take in that connection. In the result. I am of the opinion that the relief now souadht should be refused. I propose to dismiss the application for interim relief. | certify that this andthe ® preceding pages are a true copy of the reasons for judgment herein of The Honourable Mr Justice Beaumont. Pot proven IS Associate Dated 23 novent Pt