a "_ JUDGMENT No. Satya - CATCHWORDS High Court and Federal Judiciary - Federal Court of Australia - Restraint of prosecution of Supreme Court proceedings by a respondent party in Federal Court proceeding - Grounds justifying. Trade Practices Act 1974 - Part VI Jurisdiction of Courts (Miscellaneous Amendments) Act 1987 Companies (Victoria) Code - 5.364(1)(a) ciendship Corporation Pty. Ltd. v. Adamad Pty. dad. (1984) 57 A.L.R. 81 AMUST COMPUTER CORPORATION PTY. LTD. AND ORS. v. AUSTRALIA ENTRE BUSINESS CENTRES PTY. LTD. AND ORS. VG118 of 1987 Jenkinson J. Melbourne 8 October, 1987 RECEIVED 120CT 1987 FEDERAL COURT OF AUSTRALIA PRINCI REGISTR IN THE FEDERAL COURT OF AUSTRALIA ) VICTORIA DISTRICT REGISTRY ) No. VG118 of 1987 GENERAL DIVISION d». BETWEEN AMUST. COMPUTER CORPORATION PTY. LTD., X.A.B.S. PTY. LTD., ROBERT ALAN KNOWLES, ANTHONY RICHARD WARR GARY WILLIAM SMITH CALDANDRA PTY. LTD., and PETER BENNETT COBURN Applicants AND: AUSTRALIA ENTRE BUSINESS CENTRES PTY. LTD. , ENTRE COMPUTER CENTERS NATIONAL INC., ENTRE COMPUTER __C S INC. JAMES DUDLEY GALLAGHER, JAMES JOSEPH WEBSTER and RY _ GEORGE PENNA Respondents CORAM: Jenkinson J. PLACE: Melbourne DATE: 8 October, 1987 REASONS FOR JUDGMENT Motion for injunctions to restrain the prosecution of proceedings pending in the Supreme Court of Victoria. The applicants, by which the injunctions are sought, allege that by misleading conduct for which the respondents are liable in damages under Part VI of the Trade Practices Act 1974 the second applicant was induced to enter into an agreement in writing constituting it holder of a "franchise to sell computers and equipment for use in computers, and was induced also to borrow money from the first respondent. It is alleged that some of the applicants were induced to guarantee repayment of what had been borrowed. The representations said to have constituted misleading conduct are alleged to have been fraudulent misrepresentations. The applicants also allege that the representations constituted warranties in consideration of the giving of which the second respondent entered into the franchise agreement; and further that the making of the representations constituted negligence which caused the applicants damage. In the Supreme Court of Victoria there 1s pending a motion (1987 No. Co. 342) by the first respondent for the winding up of the second applicant om the ground of that company's inability to pay its debts, a ground sought to be established by proof of a failure to pay, or to secure or compound for, a sum made the subject of a demand under s.364(2)(a) of the Companies Code. The sum is $36,794.69, alleged by the first respondent to be due for goods sold and delivered. The purchases of goods were made in the course of, and for the purpose of carrying on, the business the subject of the franchise agreement. The second applicant denies that the sum claimed i5 in fact due and says further that its claims for unliquidated damages made in the proceeding in this Court greatly exceed in amount the sum claimed to be due by it. There is also pending 1n the Supreme Court of Victoria one action (1987 C.L. 279) by the first respondent against the second applicant for $201,917.67 alleged to be due on a promissory note given in respect of money lent. Another action (1987 C.L. 278) is pending in that Court, by the first respondent against the 3rd, 4th and Sth applicants, for the same amount, payment of which by the second applicant is alleged to have been guaranteed by those three applicants. This Court is moved for orders restraining prosecution of those three proceedings in the Supreme court of Victoria until the proceeding in this Court has been heard and determined. The existence of power to make such an order is not in doubt. The ground on which such an order may be justified is perhaps not so easily to be ascertained. It can confidently be said, in my opinion, that the motion for restraint of the prosecution of the proceedings for winding-up ought not to be granted. Beaumont J. has pointed out, in Friendship Corporation Pty. Ltd. v. Adamad Pty. Ltd. (1984) 57 A.L.R. 81 at 83-84 that winding-up proceedings raise issues quite separate from those which may arise in proceedings under Part VI of the Trade Practices Act 1974 and that those two classes of proceedings could not comprehend one "matter", within the meaning of that word ain s.77(1) of the Constitution. The questions whether a company 15 insolvent and whether 1ts existence should be terminated under provisions for winding-up by order of a Supreme Court of a State or Territory are questions quite outside the scope of a controversy of which an issue under the Trade Practices Act 1974 constitutes part, in my opinion. There is therefore no question here of the kind which arose in Stack v. Coast Securities (No. 9) Pty. Ltd. (1983) 154 C.L.R. 261, as to whether this Court, having 4. jurisdiction to determine all the issues arising in such a "matter", should restrain the prosecution in another Court of a proceeding comprehending some of those issues while this Court exercised that jurisdiction. Another part of the reasoning of Beaumont J. in Friendship Corporation Pty. Ltd. v. Adamad Pty. Ltd. was contradicted by the submission of counsel for the applicants that an order for winding-up the second applicant would render nugatory the relief which this Court might grant that applicant. His Honour observed (57 A.L.R. at 84): "Moreover, in my view, it cannot be said that to permit the wainding-up proceeding to continue would, in the language of Fitzgerald J, vender nugatory any substantive relief which 1s within the court's power ain the proceedings under 5 52: at worst, from the applicant's standpoint, if a winding-up order 1s made, it is open to the liquidator to continue the proceedings through the name of the applicant company." That observation disclosed, it was said, a failure to recognise a company's legitimate interest in the continuation of its own existence. If it be the correct conclusion that an order for the winding-up of the second applicant ought not to be made until the claims it asserts against the first respondent for damages have been judicially determined, there is in my opinion no impediment to the Supreme Court's recognising that to be so, or to that Court's making orders giving effect to the conclusion. There is 5. no reason to doubt that the Supreme Court will reach that conclusion if that Court is persuaded that at least one of the claims asserted by the second applicant in this Court 1s based on substantial grounds. (See A. Ravi Builder ty. Ltd. v. Jones (1986) 4 A.C.L.C. 647 at 649 and cases there cited.) No occasion, therefore, is shown for restraint of the first respondent's prosecution of its motion for an order that the second applicant be wound up. The amendments to the Trade Practices Act 1974 which were effected by the Jurisdiction of Courts (Miscellaneous Amendments) Act 1987 having come into operation onl September 1987, the Supreme Court is now invested with jurisdiction with respect to the matter of the second applicant's claims against the first respondent for damages for conduct done in contravention of 3.52 of that Act if a civil proceeding in respect of that matter be instituted in that Court by the second applicant, or if the matter be transferred to that Court by this Court : see Trade Practices Act 1974, ss. 75B, 86(2), 86A(1), (2) and (3). No impediment to the Supreme Court's achievement of what the law, of whatever source, prescribes, or of what justice toall parties requires, 1s presented by any lack of jurisdiction in that Court. This Court would not lack jurisdiction to determine the Claims which are presently being prosecuted inthe other two Proceedings in the Supreme Court, if those claims are part of a single "matter" of which the applicants' claims under the Trade Practices Act 1974 form part. But neither does the Supreme Court lack jurisdiction, since 1 September 1987, to determine all the Claims constituting, or forming part of, such a "matter" as I have postulated. If to the awarding, or to the enforcing, of judgment 6. for the first respondent in either of those two proceedings any claim presently being prosecuted in this Court by an applicant ought to be recognised to be an obstacle, there is no reason to fear that the Supreme Court will not accord that recognition. No occasion for restraint by this Court of the first respondent's prosecution of either proceeding has been shown, in my opinion. No applicant has made in respect of any matter arising in this proceeding an application of the kind contemplated by sub-section 86A(1) of the Trade Practices Act 1974, but it was submitted on behalf of the applicants that, if the injunctions sought on this motion were refused, I should of my own motion exercise the power conferred by the sub-section. The proceeding in this Court is some way advanced towards trial. Substantial costs have been incurred by the parties. The respondents do not support the applicants' submission concerning transfer. If a judge of the Supreme Court were to form and to express the view that any of the matters arising in this proceeding ought to be determined in a civil proceeding in that Court, application for transfer of the matter could be then made, 1f that course were thought necessary. Or a civil proceeding could be instituted in that Court, raising the matter for determination. Considerations sufficient to attract an exercise, of the Court's own motion, of the power to transfer have not at present been shown, in my opinion. 7. The motion will be dismissed. I certify that this and the 6 preceeding pages are a true copy of the Reasons for Judgment herein of The Honourable Mr. Justice Jenkinson. Dated: 8 October, 1987 Counsel for the Applicants : Mr. P.J. O'Callaghan QC and Mr. N. Lucarelli Solicitors for the Applicant 3 Barton and Partners Counsel for the Respondents : Mr. A.C. Archibald QC and Mr. P.J. Jopling Solicitors for the Respondents 3 Arnold Bloch Liebler Dates of Hearing : 30 September, 1987 and 1 October, 1987