Capital Foods Pty Ltd (ACN 008 107 382) and Anor v Gourmet Imports Australia Pty Ltd (ACN 060 783 315) and Anor [1996] FCA 979

IN THE FEDERAL COURT OF AUSTRALIA) ) SOUTH AUSTRALIA DISTRICT REGISTRY) No SG 60 of 1996 ) GENERAL DIVISION ) BETWEEN: CAPITAL FOODS PTY LTD (ACN 008 107 382) First Applicant and BRANDS PTY LTD (ACN 060 783 315) Second Applicant - AND - GOURMET IMPORTS AUSTRALIA PTY LTD (ACN 072 232 476) First Respondent and First Cross Applicant and CANNAMELA SRL Second Respondent and Second Cross Applicant and CAPITAL FOODS PTY LTD (ACN 008 107 382) First Cross Respondent to Second Cross Application and BRANDS PTY LTD (ACN 060 783 315) Second Cross Respondent to Second Cross Application EX TEMPORE REASONS FOR JUDGMENT CORAM: Mansfield J PLACE: Adelaide DATE: 1 November 1996 This matter commenced by application of the two applicants on 11 July 1996. At the time the action was commenced it was against the first respondent, Gourmet Imports Australia Pty Ltd only. On 9 September 1996 the Court entertained applications for interlocutory relief, firstly by the applicants against the first respondent and, secondly, by the first respondent against the applicants in relation to matters raised by a cross-claim by the first respondent. The Court, having heard those applications, made certain orders. On that occasion, counsel appeared for Cannamela SRL on instructions of solicitors for that company and sought and obtained two orders, the first being that Cannamela SRL be joined as a second respondent to the application and the second being, that as second respondent it be given leave to file a second cross-claim in terms of a document then handed to the court and upon an undertaking of solicitors for the second respondent through its counsel to pay the appropriate Court filing fees forthwith. Counsel for the second respondent made submissions in the applications for interlocutory relief by the applicants against the first respondent and by the first respondent against the applicants. On the same occasion the Court, having dealt with the claims for interlocutory relief and the second respondent's applications, then fixed a time for the hearing of the proceeding generally and gave directions as to how the application, the first cross-claim, and the second cross-claim should be heard. Those claims were to commence on 28 October 1996. As the second respondent as second cross-claimant was seeking expungement of a mark registered by the applicants, those directions included that the second cross-claimant should be dux litis in the proceeding generally. On 4 October 1996 the applicants as cross respondents to the cross-claim by the second respondent, sought an order for security for costs in respect of that cross-claim and were granted that order. The order fixed Friday, 18 October 1996 as the time by which the second respondent as the second cross-claimant should pay into Court or make some other arrangement for the payment of the amount fixed for security in relation to its cross-claim. That payment has not been made. In early October 1996 solicitors for the second respondent and the second cross-claimant adopted the procedures prescribed by the Federal Court Rules to cease to act as solicitors for that party, and have since ceased to act as solicitors for that party in accordance with the Rules. On material filed before the Court I am satisfied that, by reason of communications between those solicitors and the second respondent up to the time they ceased to act and subsequently by reason of communications between the solicitors for the applicants and the manager of the applicants on the one hand and the second respondent directly on the other, the second respondent is aware of the hearing date for this matter fixed as 28 October 1996, and of the fact that the issues between the applicants and the first respondent both in relation to the application and the first respondent's cross-claim have resolved, and of the fact that the matter was adjourned to today to further consider the fate of the applicant's claim against the second respondent and the second respondent's cross-claim against the applicants. The second respondent and second cross-claimant has not appeared at the hearing. Communications in evidence before the Court indicate that that is a conscious decision on its part rather than any lack of awareness on its part of the hearing, not simply by virtue of the notice which has been given both at the time of the interlocutory applications and subsequently, but by virtue of the terms of certain communications between the applicants and their legal advisers and the second respondent. Consequently, the position in respect of its cross-claim is simply that it has apparently, for reasons which the Court need not inquire into, elected not to appear and to press that cross-claim. It is the view of the Court in those circumstances that it is appropriate to exercise the powers of the Court under O32 r2(1)(c) of the Rules to dismiss the second cross-claimants' cross-claim. I order accordingly. I also order that the second cross-claimant pay to the applicants, being the cross respondents to that cross-claim, their costs on the cross-claim. I note that it is also sought to have that cross-claim dismissed pursuant to O28 r5(1)(b) of the Rules for the failure to comply with the order to provide security for costs. Had I not made the order which I have made in relation to that cross-claim I would have stayed the cross-claim indefinitely rather than have dismissed it on that ground. I doubt that I would, in the circumstances, have been prepared simply to dismiss the cross-claim solely on that ground but the issue does not arise. Following the joinder of the second respondent on its own application to be joined as a second respondent, the applicants were given leave to amend their application in the matter and it did so by a document dated 23 September 1996 filed on 24 September 1996. In the amended application they seek damages against the second respondent effectively for breach of contract, being the contract by which the second respondent is alleged to have appointed the first applicant as its exclusive distributor within Australia for the distribution of its products. In support of that claim counsel for the applicants formally tendered and relied upon the affidavit of Peter Paphitis sworn on 8 July 1996, which affidavit was also relied upon on the application for interlocutory relief, and the further affidavit of Peter Paphitis sworn in this matter on 24 September 1996. On the basis of that affidavit material I am satisfied that it is established that there was a contractual arrangement between the first applicant and the second respondent under which the first applicant was appointed by the second respondent as the exclusive distributor of its products for Australia for a time to 31 December 1996. I am also satisfied that that contract has been breached. Accordingly, on the material before the Court, I find that the first applicant on the application has established that it is entitled to damages against the second respondent for breach of the contract by which the first applicant was appointed by the second respondent as its exclusive distributor for Australia up to 31 December 1996 of its Cannamela labelled products, more particularly specified in the points of claim, and I so determine. There is accordingly judgment for the first applicant against the second respondent in respect of that breach of contract for damages. The first applicant has not, at this hearing, sought to prove the amount of those damages but asked that the Court refer the assessment of those damages to the Registrar pursuant to O38 of the Rules. I so order. Given the terms of settlement between the applicants on the one hand and the first respondent on the other both in relation to the applicants' claim and the first respondent's cross-claim, it is not clear that beyond the terms of that settlement and beyond the orders which I have made in relation to the second cross-claim, the amount of damages will be significant, if any. I direct, therefore, that if the first applicant seeks to have those damages quantified by the Registrar any documents in support of that application be filed by 29 November 1996 to the intent that the Registrar will then fix a time and give further directions with respect to the method of quantifying those damages. I also direct that any material so filed be forwarded by pre-paid mail or such other means as appropriate to the second respondent at its address in Italy, that is the address at which communications with the second respondent to date have obviously been effective, together with notice of the amount of any claim for damages which is pursued and the means by which that amount is quantified.