NEW SOUTH WALES DISTRICT REGISTRY IN THE FEDERAL COURT OF AUSTRALIA GENERAL DIVISION CORAM: DATE PLACE: WILCOX J. NOT FOR DISTRIBUTION BETWEEN No. G.105 of 1985 RAINBOW CUSTOM PRODUCTS INCORPORATED Applicant BRIAN LAWLOR AUTOMOTIVE PTY LIMITED Respondent BRIAN LAWLOR AUTOMOTIVE PLY LIMITED Cross Claimant RAINBOW CUSTOM PRODUCTS 27 MARCH 1986 SYDNEY INCORPORATED Cross Respondent MINUTE OF ORDERS a THE COURT ORDERS THAT: 1. The respondent to file and serve any further amended ' Cross claim on or before Tuesday 8 April 1986. 2. The respondent in the principal proceeding pay the applicant's costs of the motion. NOTE Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. ' | r wecoore So tate NOT FOR DISTRIBUTION IN THE FEDERAL COURT OF AUSTRALIA CORAM DATE: PLACE \ \ - sy pregr eee > ) ) NEW SOUTH WALES DISTRICT REGISTRY ) ) GENERAL DIVISTON ) BETWEEN cry WILCOX J. 27 MARCH 1986 SYDNEY No. G.105 of 1985 RAINBOW CUSTOM PRODUCTS INCORPORATED Applicant BRIAN LAWLOR AUTOMOTIVE Pry LIMITED Respondent BRIAN LAWLOR AUTOMOTIVE PTY LIMITED Cross Claimant RAINBOW CUSTOM PRODUCTS INCORPORATED Cross Respondent EXTEMPORE REASONS FOR JUDGMENT eee ee nee: ceiene re oe mer ' i ee aay TP par wy, a op ep ree This matter was last before me on 7 March when I acceded to an application made by the applicant to strike out the cross claim as pleaded in the Defence and Cross claim filed on 15 August 1985. By the Cross claim as it then stood the cross claimant, the respondent in the principal proceeding, sought to recover damages in respect of two matters arising under contracts alleged to have been made between the parties in 1983 and 1984 respectively. I was of the view that those claims did not arise out of a common substratum of facts with the claim made in the principal proceeding and which is within the ordinary jurisdiction of the Court. By The claim made in the principal proceeding is brought under s.52 of the Trade Practices Act 1974. The essence of the claim is that the applicant, which is an American company, markets a product referred to as tinted window film under the name "Sunshine Window Film" and packaged in a particular way. It is alleged' that since September 1984 the respondent has marketed tinted window film under the same name and with the same packaging. The allegation is that the respondent's conduct constitutes misleading or deceptive conduct infringing s.52. The Defence filed admits that the respondent has supplied tinted window film, although it denies most of the specific allegations in regard to the method of marketing. By - "a er wae aee ee sstre ert ce ee en eg tte pe - oo. . 7 gee een ee peoer yee cree eee Te weer ieee para.5 of the Defence the respondent pleads what would appear to be an alternative defence: that by an agreement made in about August 1984 the applicant granted to the respondent a licence to use the name "Sunshine Window Film" in Australia. It is further alleged that any reputation and goodwill attaching to the name "Sunshine Window Film" and to the packaging used by the applicant has thereby been acquired by the respondent and that the applicant is estopped from claiming the relief sought. I am not sure that estoppel is the appropriate concept but, as I understand it, the essence of the case sought to be made by the Defence is that its conduct is not misleading or deceptive because it is marketing a product which suggests an association with the product of the | applicant but with the leave and licence of the applicant, so that in truth there is an association. Perhaps an alternative way of saying this is to say that its conduct is not deceptive in any way. It is obviously fundamental to this alternative defence that the respondent rely upon and prove the agreement referred to. During the argument on the previous application I was informed of the fact of an agreement dated 31 August 1984, which dealt with this matter and which also deait with the matter of a credit to be issued by the cross respondent in favour of the cross claimant in the sum of $23,733 upon the "oN foot vee an lrme - pan i ee wa, ee th at alien) sy wen mene EIN 7 f oe we, hoof — , 3 return by the cross claimant to the cross respondent of certain window film previously supplied and said to be defective. The previous Cross claim made no reference to the agreement of 31 August 1984 but I expressed the view that it was arguable that a claim arising out of that agreement, being a document central to'at least one of the defences pleaded in the principal proceeding, arose out of a common substratum of fact with the issues in the principal proceeding. I gave leave to the respondent to amend the Cross claim within 14 days. In fact the respondent did file an amended Cross claim. The amended Cross claim repeated virtually unchanged the whole of the material in the earlier Cross claim but added four new paragraphs, being paras.11 to 14, in which reference was made to the agreement of 31 August 1984. The applicant has now made a further application to strike out the Cross claim, contending that it suffers from the same vices as the earlier version. It seems to me that in relation to paras.1 to 10 this is correct. These paragraphs may perhaps be regarded as background to the agreement of 31 August 1984, so as to show that there had been disputes between the parties regarding two particular orders and to explain why it was that in the agreement of 31 August 1984 the cross respondent should be prepared to agree -- conditionally on return of the defective window film ~- to issue a credit in the sum of $23,733. a Be i a t ¥ iy , Date pare ne aren saan arabes of et cre pet ee ee ere + 7 . * pets . ara oe T at Leaving aside whether it would have been necessary to plead the detail of the previous claims by way of background, the position is that paras.1 to 10 are not able to be construed as merely background material. In terms, claims are made for damages in respect of each of these earlier alleged breaches of contract -- see paras.5 and 10 respectively. It seems to me that they are in exactly the same position as the matters alleged in the earlier Cross claim, and this is not surprising since they are virtually unchanged. There is a question in my mind whether it is open to the cross claimant to bring any action in respect of these alleged earlier defaults, having regard to the agreement of 31 August 1984, and I note in that connection that the current version of the Cross claim opens para.1l with a statement that that agreement was: "By way of settlement of the claims against the cross respondenty detailed in paragraphs 1 to 10 of this Cross clain." I am told from the bar table that this might be erroneous in relation to the claim in paras.6 to 10 inclusive and it is, therefore, possible that these causes of action are still available. If so, I am of the clear opinion that they are not available in this Court; since they do not arise out of the same substratum of fact_as the issues required to be litigated in the principal proceeding. If the cross claimant wishes to pursue these claims then, regrettably in my opinion, it has to be sent away to a different court for that purpose. Wom ne Fie me peer, ee ee he at worn ee rn oa a ' In relation to the matters sought to be raised by paras.11 to 14 I am of the opinion that some amendment of the drafting is required. However, a properly drafted Cross claim which alleges the making of the agreement of 31 August 1984, that is the same agreement as is referred to in para.6 of the Defence, and which refers to two obligations undertaken by the cross respondent -- one being the grant of exclusive distributorship, a matter directly arising under para.6 of the Defence, and the other being an obligation to pay $23,733 upon return of the defective window film -- would be a matter arising out of a common substratum of fact. The agreement would have to be tendered in the principal proceeding if the respondent desires to pursue the defence raised by para.6, and the claim for the sum of $23,733 arises directly from this agreement. It seems to me, therefore, that the overlap of factual material is extensive. It is true that one further matter would have to be proved -- namely, that the defective window film was, in fact, returned; but the authorities in the High Court dealing with common substratum of fact do not suggest that it is essential that there be no other item of evidence required. Indeed, it is commonplace that there is some additional evidence arising, for example, out of a different method of quantifying damage. The essential point men terre nese cere = spe ream oe . bona Me a WOR PLO OGM TR, ETE ETE IIE PHY ELSE EE SEE ELE OILE ETIE ERT SIE ES 'is that the matters to be relied upon as the basis of liability be substantially similar to those which arise in the princpal proceeding out of which the Court's jurisdiction arises. It is not possible to deal with the matter simply by striking out paras.1 'to 10 of the amended Cross claim and leaving paras.11 to 14 to stand. As I have said, some redrafting will be necessary, particularly because the opening words of para.11 would be unintelligible if paras.1 to 10 are struck out. Under those circumstances it is, I think, appropriate to allow to the respondent one further opportunity to plead an effective cross claim. I think that this should be regarded as the final opportunity in that regard, and the amendment should be filed within five working days from the present time. Having regard to the intervention of Easter, this means that any further amended cross claim should be filed no later than Tuesday 8 April next. In relation to costs, Mr Jacobson, on behalf of the applicant, seeks the costs of the motion. Mr Coombs says that his client has had some success and that the costs should be costs_in the principal. I do not think that this. would be an appropriate order because the fact is that the applicant has been forced to make this application in order to have the pleadings varied so as to accord with the PUTA MN EE OTT ETE OPT Ie Teo ~ Jurisdiction of the Court. It is regrettable that the respondent faces a second order for 'costs in relation to a motion to strike out the Cross claim; but I do not see why the applicant should be deprived of the costs incurred by it in making the application which has been successful. I have i no alternative other than to order that the respondent in the principal proceeding pay the applicant's costs of the motion. I so order. I certify that this and the seven (7) preceding pages are a true copy of the Reasons for Judgment herein of his Honour Mr Justice Wilcox. Associate: Yoonne ae HttFoow Date: 16 April 1986 | Counsel for the applicant: Mr P Jacobson Solicitors for the applicant: Messrs Freehill, Hollingdale & Page Counsel for the respondent: Mr J A Coombs Solicitors for the respondent: Messrs Michie, Shehadie & Co Date of hearing: 27 March 1986 r \. ' ie 7 OSS RTA ne ree tr ee ee Wate wal eens me en Tt 5 "e 2 ~re wwe | t . | : he eiearsaeaealllinenn nedienincietstmmecammeianealinn hemeessantindisacae entices aneentiae neeenene ocioenemanetieennnan uanacammeneenamen aan te aceasta a a