Fy » boo IN THE FEDERAL COURT OF AUSTRALIA WESTERN AUSTRALIA DISTRICT REGISTRY GENERAL DIVISION BETWEEN: JUDGE MAKING ORDER: DATE OF ORDER: WHERE MADE: JUDGMENT No. 642/21... FRENCH J. 28 OCTOBER 1987 NOT INTENDED FOR GENERAL DISTRIBUTION No. WAG 47 of 1987 JLV CONSTRUCTORS PTY LTD Applicant and JLV EARTHMOVING PTY LTD First Respondent CAMBALLIN FARMS PTY LTD Second Respondent GRAHAM ST JOHN SPENCER-LAITT and DARRYL JOHN CALLIGARO Third Respondents and CAMBALLIN FARMS PTY LTD Cross Applicant and JLV CONSTRUCTORS PTY LTD First Cross Respondent and JAMES PATRICK JOHNSON Second Cross Respondent MINUTE OF ORDER PERTH FEDERAL cau AUSTRALIA PRINGIP: ALAN poyewe THE COURT ORDERS THAT: The First Respondent have leave to cross-claim against the Applicant, JLV Corporation Pty Ltd and James Patrick Johnson. The Cross-Applicant have leave to amend its Defence and Cross-Claim in the terms of the Minute of Proposed Amended Defence and Cross-Claim filed herewith. The costs of this motion, and the costs if any thrown away by the amendments to the Cross-Claim by the Cross-Applicant, be costs in the Cross-Claim, Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. reg i > ar IN THE FEDERAL COURT OF AUSTRALIA DISTRICT REGISTRY ) ) WESTERN AUSTRALIA ) ) ) GENERAL DIVISION BETWEEN: CORAM: venture agreement between the applicant, JLV Constructors Pty Ltd, FRENCH J. 28 October 1987 NOT INTENDED FOR GENERAL DISTRIBUTION No. WAG 47 of 1987 JLV CONSTRUCTORS PTY LTD Applicant and JLV EARTHMOVING PTY LTD First Respondent CAMBALLIN FARMS PTY LTD Second Respondent GRAHAM ST JOHN SPENCER-LAITT and DARRYL JOHN CALLIGARO Third Respondents and CAMBALLIN FARMS PTY LTD Cross Applicant and JLV CONSTRUCTORS PTY LTD First Cross Respondent and JAMES PATRICK JOHNSON Second Cross Respondent EX TEMPORE REASONS FOR JUDGMENT These proceedings arise out of a dispute over a joint a rar peene Vee men acne x POINT ak De , tr OE Ee te nee 7 ee ft Es cceeininearaamemeentnn eeaiatendiecemeedd te 14 * tee 2. and the second respondent, Camballin Farms Pty Ltd ("Camballin"). As it emerges from the pleadings, 1t appears that on or about 30 August 1985 Camballin and JLV Constructors agreed to carry on the business of earthmoving contractors as a "joint venture" with each other. They subsequently carried on that business together through a company called "JLV Earthmoving Pty Ltd". Camballin and JLV Constructors were the only shareholders in JLV Earthmoving. On 24 June 1986, JLV Constructors and Camballin agreed to terminate the joint venture. This was done by a written agreement. JLV Constructors alleges that it agreed to sell its interest as joint venturer to Camballin on various terms and conditions which are set out in the amended statement of claim. One of those terms was that it would procure that the name "JLV Earthmoving" be changed to one which did not include the name or style "JLV". Camballin has, according to JLV Constructors, failed to do this. JLV Earthmoving is also attacked on the basis that its failure to change its name constitutes conduct in trade or commerce which is misleading or deceptive or likely to mislead or deceive in contravention of s.52 of the Trade Practices Act 1974. Comte per re rye at 3. It 1s further said to be in contravention of s.53({(d) of that Act. By retaining and trading under the name or style "JLV" it is alleged to have represented that it has the sponsorship or approval of JLV Constructors. Camballin and its directors, Spencer-Laitt and Calligaro, are said to have been party to the s.53(d) conduct. JLV Constructors says it has suffered damage thereby. Credit managers of various plant hire companies are said to have assumed that JLV Earthmoving 1s associated with it. Upon the failure of JLV Earthmoving to meet payments of accounts due, legal action has been instituted against JLV Constructors and it has suffered termination or limitation of credit facilities and loss of tender opportunities. Damages are claimed for the alleged contraventions and at common law. JLV Constructors also claims an order for specific performance against Camballin and for damages. Camballin has cross-claimed against JLV Constructors and Johnson, who is one of its directors and shareholders. It pleads the agreement of 24 June 1986 under which it says it paid to JLV Constructors the sum of $100,000.00 for that company's share in JLV Earthmoving and $1.7 million for various items of plant and equipment. It says that it was induced to enter into the agreement by various false representations made by we" 4. Johnson on behalf of JLV Constructors. These related to the existing financial position of JLV Earthmoving, its financial prognosis and the cost of completion of a contract with Worsley Alumina Pty Ltd. The representations are said to have been made negligently and in breach of warranty. Breaches of covenants under the agreement concerning the provision of financial information relating to JLV Earthmoving are also pleaded. Camballin alleges that by reason of these various Matters, JLV Constructors has engaged in conduct which is misleading or deceptive or likely to mislead or deceive in contravention of s.52 of the Trade Practices Act. Johnson is said to have been an accessory to these contraventions. It also alleges a breach of fiduciary duty by JLV Constructors arising out of failure to fully disclose information relevant to the financial position of JLV Earthmoving. By notice of motion Camballin seeks to extend its cross-claim and JLV Earthmoving seeks leave to cross-claim against another company called JLV Corporation Ltd, and Johnson, So far as the extension of the Camballin cross-claim reflected in paras. 44 and 45 of the proposed amended cross-claim is concerned, there is no real controversy. By this amendment, aay a Mop Ie weve a a 5. Camballin raises a fresh allegation that it was a term of the agreement of 24 June 1986 that JLV Constructors would deliver to Camballin various documents and records relating to JLV Earthmoving. This, it is said, has not been done. Camballin seeks orders for the delivery up of the documents. There is no difficulty with that amendment to the cross-claim and I will give leave accordingly. The cross-claim which JLV Earthmoving now seeks to bring against JLV Corporation is embodied in new paragraphs 33 to 43 of the proposed amended cross-claim. The relationship between JLV Corporation and JLV Constructors is not spelt out with clarity in the pleading. However, it appears to be suggested that JLV Corporation has somehow "incorporated" JLV Constructors. In any event, JLV Earthmoving alleges that JLV Corporation has put itself forward to the Australian Federation of Building Constructors ("AFBC") as a candidate for its Construction Achievement Award for 1987. In its submission to the AFBC, it is said that JLV Corporation represented that:- (a) Notwithstanding the sale of its interest in JLV Earthmoving to Camballin, JLV Constructors had ae me ne 6. retained the right to any benefit from construction that was performed by JLV Earthmoving ; and (b) By reason of the fact that JLV Constructors had been "incorporated" into JLV Corporation, JLV Corporation had the right to submit the construction of the Boddington Gold Mine, Freshwater Dam for consideration in the AFBC's Construction Achievement Award for 1987. These representations are said to have been false in that after the agreement of 24 June 1986, JLV Constructors had "no right to any benefit for construction that had been performed by JLV Barthmoving". The conduct is said to be in contravention of s.52 of the Trade Practices Act. Johnson is named as an accessory in this contravention, as is JLV Constructors. Further, JLV Corporation is alleged to have used certain charts in the AFBC submission. JLV Earthmoving claims to be the owner of the copyright in these charts and says that their reproduction is an infringement of copyright. The relevant provisions of the Federal Court Rules are Oo. 5 r. 1, 0.5 £.8 and 0.5 r.3:- "1. (1) A respondent may cross-claim against an applicant for any relief to which the respondent would be entitled against the applicant if the applicant were a respondent in a separate proceeding commenced in the Court by the respondent for that purpose. Mere mae ea ee ee wes way ee 7. (2) A respondent may cross-claim against any person whether another party or a third party for any relief which is related to or connected with the subject of the proceeding. (3) Without prejudice to the generality of sub-rule (2), a respondent may cross-claim for contribution or indemnity. 8.(1) Subject to sub-rules 9(1) and (2), a respondent may cross-claim against an applicant or any other party without the leave of the Court, but may not cross-claim against any other person not being a party without such leave. (2) Subject to sub-rule (4), a respondent shall not cross-claim against an applicant before he has filed an affidavit in reply to the applicant's claim. (3) A cross-claim shall be in or substantially in the forms numbered 8 or 9 in the First Schedule, and shall be accompanied by an affidavit stating - (a) the nature of the cross-claim; (b) the material facts on which the cross-claimant relies; and (c) the facts showing that the cross-claim is one to which rule 1 of this Order applies. (4) A respondent who cross-claims against an applicant only may include the matters referred to in sub-rule (3) in his affidavit in reply to the applicant's claim, and need not file a separate affidavit in support of the cross-claim. 9.(1) A respondent desiring to cross-claim after the directions hearing shall obtain all necessary directions at the directions hearing in relation to the cross-claim, including the time within which the cross-claim is to be filed. (2) A respondent who does not obtain directions pursuant to sub-rule (1) shall not cross-claim after the directions hearing without the leave of the Court." . a we teen wows WN ge teste cae, cues 8. It is obviously in the interests of all concerned to have one rather than separate pieces of litigation. So much is recognised in s.22 of the Federal Court Act. On the other hand, there is implicit in 0.5 r.9 and r.ll, a recognition of the need for expedition in instituting cross-claims. In Wasley v Frost (1974) 7 SASR 506, it was said that leave to issue a third party notice should generally not be granted if by reason of the lateness of the application, there would be inconvenience to a defendant in not having a principal proceeding and the third party claim heard at one and the same time. These proceedings were commenced on 28 April 1987. They have only just reached the stage where pleadings could be considered closed. Particulars have been requested and supplied. No discovery has, as yet, been given, aithough this was to have been done by 7 October 1987 and inspection was to have been completed by 13 October. I refer to my directions of 29 July and 25 September in that regard. While the JLV Earthmoving cross-claim seems at first glance to be a fairly minor and makeweight element of the overall dispute, it is, I think, sufficiently connected to the matters already in issue between the parties to justify the leave sought in this case. I am not satisfied that the leave sought will result in such delay or inconvenience to the applicant as to wer ae ees oe a it rapt ay sofa ' eae ene ene as cere 9. warrant its refusal and I propose to accede to the application. I am therefore prepared to make the orders which are sought in the notice of motion. I certify that this and the preceding eight (8) pages are a true copy of the Reasons for Judgment of his Honour Justice French. Associate: pole WAR pate: Qe- 10-8) Counsel for the Applicant and Cross Respondents: Mr A. Goldfinch Solicitors for the Applicant and Cross Respondents: Warren McDonald French & Harrison Counsel for the Respondents and Cross Applicant: Mr S. Penglis Solicitors for the Respondents and Cross Applicant: Freehill Hollingdale & Page Date of Hearing: 27 October 1987 Date of Judgment: 28 October 1987 weae ae ORE a te nr epee ee SO ey ey ' a bE ST . tos hs t