JUDGMENT No. 155 78% eRe Hy IN THE FEDERAL COURT OF AUSTRALIA ) UBENSLAND DISTRICT REGISTRY ) QLD G192 of 1987 GENERAL DIVISION ) BETWEEN: J. C. HUTTON PROPRIETARY LIMITED Applicant AND: DARLING DOWNS CO-OPERATIVE BACON ASSOCIATION LIMITED Respondent AND: DARLING DOWNS CO-OPERATIVE BACON ASSOCIATION LIMITED Cross-Claimant AND: J.C. HUTTON PROPRIETARY LIMITED First Cross-Respondent TANCRED BROS. PTY. LIMITED Second Cross-Respondent FRED PAUL (MERRYLANDS) PTY. LTD. Third Cross-Respondent MINUTES OF ORDER JUDGE MAKING ORDER: PINCUS J. DATE OF ORDER: 24 MARCH 1988 WHERE MADE: BRISBANE THE COURT ORDERS THAT: 1. 2. the time for service of the notice of motion filed 23 March 1988 be abridged; the application made by the notice of motion be otherwise dismissed; the costs of the directions hearing other than those relating to the notice of motion be costs in the proceedings; the costs of and incidental to the notice of motion be taxed and paid by the first and second cross-respondents to the cross-claimant; the cross-respondents deliver any request for particulars of the cross-claimant's pleading on or before Wednesday, 6 April 1988; the cross-claimant respond to such request on or before Wednesday, 20 April 1988; the pleading of the cross-respondents to the cross-claim and the applicant's pleading to the defence be filed and served on or before 27 April 1988; the matter be listed for review and further directions on Wednesday, 4 May 1988, at 9.15 for one hour. Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. IN THE FEDERAL COURT OF AUSTRALIA ) 3 IcT STRY ) QLD G192 of 1987 G DIVISION ) BETWEEN: J. C. HUTTON PROPRIETARY LIMITED Applicant AND: DARLING DOWNS CO-OPERATIVE BACON ASSOCIATION LIMITED Respondent AND: DARLING DOWNS CO-OPERATIVE BACON ASSOCIATION LIMITED Cross-Claimant AND: J. C. HUTTON PROPRIETARY LIMITED First Cross-Respondent AND: TANCRED BROS. PTY. LIMITED Second Cross-Respondent AND: FRED PAUL (MERRYLANDS) PLY. LTD. Third Cross-Respondent PINCUS J. 24 MARCH 1988 EX TEMPORE REASONS FOR JUDGMENT This is a date for review and further directions, in an application which was filed on 14 October 1987. The applicant has taken the opportunity to apply by notice of motion for dismissal of the respondent's cross-claim or, alternatively, for an order that the cross-claim be heard and determined separately from the applicant's claim. The notice of motion was filed on 23 March - that is, yesterday - and an abridgement of time for service is sought. Counsel for the respondent, Mr Drummond Q.C., with whom Mr King-Scott appeared, had inadequate notice but since the matter was not complex it appeared to me that it could be adequately argued; it was. The third cross-respondent, represented by Ms. Gibney, has mentioned the possibility of making some similar application and anything which is said in respect of the application made by the applicant and second cross-respondent is, of course, without prejudice to the third cross-respondent's right to apply in respect of the cross-claim against it. In the course of argument, Mr Muir Q.C., who appeared with Mr Cooper on the notice of motion, rather broadened it to suggest that, if the cross-claim should not be dismissed for want of prosecution, it should be dismissed on the basis that it did not comply with 0.5, r.1(2) and I have given consideration to the matter on that basis. The first point taken, was that the cross-claim had been brought and pursued in a dilatory fashion and should be dismissed for that reason. That aspect of it seems to have no substance at all. The delays which have occurred are by no means sufficiently great to enable one seriously to consider striking out the cross-claim on that ground. One aspect of the delay which should particularly be mentioned is that a complaint was made of the circumstance that the pleading on behalf of the respondents did not come in until 27 January 1988. An examination of the papers shows, however, that the pleading was not really as reprehensibly late as one might think from the circumstance that it was to have been delivered in December; the orders for directions which were made in November contemplated delivery of particulars by the applicant before the defence was filed and those particulars were, themselves, late. I do not propose, however, to discuss further the suggestion that there is a ground for dismissal on the basis of want of prosecution. It is not seriously arguable. A more substantial point, in my opinion, made by Mr Muir, was that the cross-claim should not be allowed because it was not one in compliance with the rules and the allied suggestion that it is so remote from the applicant's claim that it would be incovenient to try the two together. Those points require some consideration of the pleadings. The amended statement of claim filed on 23 December 1987 sets up an agreement made between the applicant and the respondent on 1 April 1985 under which, in consideration of a certain Payment, the respondent was granted exclusive permission to use certain marks upon goods for sale in this State and in New South Wales. The statement of claim alleges that the agreement was subsequently completed and that the respondent became entitled to use the marks, but that the respondent breached the agreement in certain respects and therefore the applicant was entitled to a declaration that the agreement had been validly terminated. There were claims, connected with those just mentioned, of breaches of the Trade Practices Act 1974 and for relief under that Act. The a) cause of action is thus, putting it simply, one relating to the use of marks under an agreement of 1 April 1985. The amended defence and cross-claim filed on 24 February 1988 makes various answers to the applicant's claim but says by way of cross-claim that the agreement on which the applicant relies was connected with another one. Paragragh 17 of the cross-claim says that, at the time of making of the agreement on which the applicant relies, the applicant was manufacturing products of the kind referred to in that agreement, and its parent, the second cross-respondent, was also manufacturing such products. The cross-claim says that the applicant and the respondent entered into the agreement at the same time as another agreement was made between the applicant's parent (the second cross-respondent) and the respondent, under which the second cross-respondent undertook to comply with certain covenants in the agreement between the applicant and the respondent made on the same day. The cross-claim goes on to say that the consideration for the second cross-respondent''s promises was the making of the agreement between the applicant and the respondent. Then the pleading sets up that the second cross-respondent breached what I shall call for short the associated agreement; complaint having been made of that, and as a dodge (putting it simply) the second cross-respondent set up the third cross-respondent to do much the same thing. The cross-claim seeks damages for breach of contract against the first cross-respondent (the applicant) on the basis that it allegedly should have, but did not, keep up registration of a certain mark. It seeks damages against the second cross-respondent for breaches of the associated contract and an injunction, and also seeks similar relief against the third cross-respondent. The terms of the rule upon which Mr Muir relied in support of his submission that the cross-claim should not be allowed to proceed further are as follows: 0.5, r.1(2) says: "A respondent may cross-claim against any person whether another party ora third party for any relief which is related to or connected with the subject of the proceeding." Mr Muir contended that the relief sought against the second and third cross-respondents is not within the meaning of the rule, related to or connected with the subject of the proceeding. Our rule is in a form which is significantly different from other comparable rules. The traditional form of such rules is to give a right, not to "cross-claim" but to "counter-claim"; claims arising in the proceedings other than counter-claims are dealt with separately in such rules. Here, claims against all persons other than the applicant are lumped together in 0.5, r.1(2). Under what might be called the traditional form of rule, it was early held in Furness v. Booth (1876) 4 Ch.D. 586 and other cases that the pleading to be a ""counter-claim", must seek relief against the plaintiff. The principle applicable to such rules appears still to be alive, as is exemplified by the decision in Watkins Limited v. Plancorp No. 6 Pty. Etd. £1983] 2 Qd.R. 501, especially at p.506. That principle has no application to 0.5, r.1(2). Nevertheless, the rule in this Court follows what might be called the old plan, which goes back to the Judicature Act, of permitting claims of this sort to be made only on the condition that the relief sought is related to or connected with the subject of the proceeding. The connection between the two contracts in question here is obvious and close. The more debatable point is whether the relief sought against the second and third cross-respondents is related to or connected with the subject of the proceeding. The subject of the proceeding could be identified as being the working of the contract of 1 April between the applicant and respondent, or more broadly as being a dispute concerning the respondent's right to have the market, to a certain extent, cleared for its own operations. Whichever way the subject of the proceeding 1s defined, it seems to me that the connection is sufficiently close. Indeed, it is fairly comparable with that which was held to be sufficient in the Queensland case to which I have just referred. Although the dispute there arose in quite a different context, the situation was similar in outline in that there were two related contracts with different parties; the claim was made on one and the counter-claim made on the other. I am therefore of the opinion that the relief claimed against the second and third cross-respondents has a relation to and a connection with the subject of the proceeding, defining that as being or including the applicant's claim. The last point to be considered on the notice of motion is whether it is, as a practical matter, convenient to try the cross-claim with the applicant's claim. It is not as easy to judge that at the present stage as it is likely to be later, but it appears to me to have been a convenient course on the part of the applicant to raise the matter now, before the cross-claim goes any further, because it is, or seems likely to be, a complex matter, as is indeed the applicant's clain. It would perhaps be more convenient from the Court's point of view to separate out the claim from the cross-clain, because the case may well be an onerous one to try, but the practical or commercial connection between the issues raised 1s so close that it would be a little absurd to decline to try the collection of disputes in one hearing. Putting the matter rather too simply, what one side says is that the arrangement giving the respondent exclusivity is at an end because of the respondent's illegalities; what the other side says is that the arrangement still subsists, despite attempts, of which it complains, by the applicant's owner to subvert it. The order will therefore be, as to the notice of motion filed yesterday, that the time for service of the motion be abridged so a5 to enable application made by the no oat ERE > it to be heard today and that the tice of motion be otherwise dismissed. x » cert: fy that this and the 7 preced ceding pag Sarea ry ua c 3) ie r tr a co af the reasor 1S for judg rent herein of t lis I fonour Mr. Justice Pin " A duns Dated 24. Maven 199g Associate