CE McDonald (Aust) Pty Limited v McGrath [2001] FCA 543

FEDERAL COURT OF AUSTRALIA

CE McDonald (Aust) Pty Limited v McGrath [2001] FCA 543

Trade Practices Act 1974 (Cth) ss 52, 75B(1), 82, 79 Fair Trading Act 1992 (ACT) ss 11, 12, 46 Fair Trading Act 1987 (NSW) ss 41, 42, 68 Federal Court Rules O 11 r 10, O 32 r 2(1)(d) CE McDONALD (AUST) PTY LIMITED (ACN 001 584 603), AUSTRALIAN CANOPIES (MOTOR TRADE) PTY LIMITED (ACN 001 789 644), TOM KOKSAL and GARRY MORTON v COLIN McGRATH ACT G29 of 1997 BRANSON J SYDNEY 11 MAY 2001

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY ACT G29 of 1997

BETWEEN: CE McDONALD (AUST) PTY LIMITED (ACN 001 584 603)

FIRST CROSS-CLAIMANT

AUSTRALIAN CANOPIES (MOTOR TRADE) PTY LIMITED

(ACN 001 789 644)

SECOND CROSS-CLAIMANT

TOM KOKSAL

THIRD CROSS-CLAIMANT

GARRY MORTON

FOURTH CROSS-CLAIMANT

AND: COLIN McGRATH

CROSS-RESPONDENT

JUDGE: BRANSON J

DATE OF ORDER: 11 MAY 2001

WHERE MADE: SYDNEY

THE COURT ORDERS THAT: 1. The making of orders on the cross-claim be stood over for fourteen (14) days. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY ACT G29 OF 1997

BETWEEN: CE McDONALD (AUST) PTY LIMITED (ACN 001 584 603)

FIRST CROSS-CLAIMANT

AUSTRALIAN CANOPIES (MOTOR TRADE) PTY LIMITED

(ACN 001 789 644)

SECOND CROSS-CLAIMANT

TOM KOKSAL

THIRD CROSS-CLAIMANT

GARRY MORTON

FOURTH CROSS-CLAIMANT

AND: COLIN McGRATH

CROSS-RESPONDENT

JUDGE: BRANSON J

DATE: 11 MAY 2001

PLACE: SYDNEY

REASONS FOR JUDGMENT

Background 1 This proceeding has had a complex history. 2 On 22 April 1997 Spyglass Pty Limited ("Spyglass"), a dealer in motor cars, instituted a proceeding against CE McDonald Pty Limited ("McDonald"), Soothcast Pty Limited ("Soothcast"), Australian Canopies (Motor Trade) Pty Limited ("Australian Canopies"), Tom Koksal ("Mr Koksal"), Colin McGrath ("Mr McGrath") and Garry Morton ("Mr Morton") claiming relief under the Trade Practices Act 1974 (Cth) ("the TPA") and the Fair Trading Act 1992 (ACT) ("the FTA (ACT)"). Spyglass alleged that, in reliance on various representations made to it by the corporate respondents, it had entered into a contract with Soothcast, or alternatively Soothcast and Australian Canopies, for the supply and installation of hail canopies. Spyglass asserted that the individual respondents were knowingly concerned in the making by the corporate respondents of the various representations and that the representations were misleading and deceptive within the meaning of s 52 of the TPA. Spyglass further alleged that, in breach of the terms and conditions of the contract, the hail canopies that were supplied and installed were not in conformity with the plans, specifications and drawings submitted to it, were not suitable for their purpose and were not of merchantable quality. 3 On 4 December 1997, McDonald, Australian Canopies, Mr Koksal and Mr Morton filed a cross-claim against Soothcast and Mr McGrath. The cross-claimants alleged that McDonald, Australian Canopies and Soothcast had entered into a joint venture agreement pursuant to which: (a) McDonald would provide marketing services and promote the sale of hail canopies by Australian Canopies to the car trade; (b) Australian Canopies would sell hail canopies made by Soothcast; and (c) Soothcast would manufacture and install hail canopies, as ordered by Australian Canopies. The cross-claimants further alleged that these were terms of the joint venture agreement that the hail canopies to be supplied and installed by Soothcast would be reasonably fit for their purpose, of merchantable quality and manufactured and installed in a good and tradesmanlike manner using good and proper materials and in accordance with any plans, specifications and drawings. The cross-claim also claimed relief against the cross respondents under the TPA, and the FTA (ACT) or the Fair Trading Act 1987 (NSW) ("the FTA (NSW)"). The cross-claimants claimed, in effect, that they be indemnified by the cross-respondents in respect of any amounts found to be payable by them to Spyglass. The cross-claim was amended on 16 February 1998. 4 On 6 December 1999 the following orders were made in the proceeding: "By consent and without admissions, the court orders that: 1. There be verdict and Judgment against the First Respondent in the sum of $85,500.00. 2. The First Respondent pay 90% of the Applicant's costs (which costs are agreed in the sum of $180,000.00); ie $162,000.00. 3. The Applicant is not to enforce Orders 1 and 2 above, provided that: (a) the First Respondent pays $90,000.00 on or before 6 December 1999; (b) the First Respondent pays $90.000.00 on or before 31 July 2000; and (c) the First Respondent pays $67,500.00 on or before 31 July 2001. 4. [There be] verdict and Judgment against the Sixth Respondent in the sum of $9,500.00. 5. The Sixth Respondent pay 10% of the Applicant's costs (which costs are agreed in the sum of $180,000.00); ie $18,000.00. 6. The Applicant is not to enforce Orders 4 and 5 provided that: (a) the Sixth Respondent pays $10,000.00 on or before 6 December 1999; (b) the Sixth Respondent pays $10,000.00 on or before 31 July 2000; (c) the Sixth Respondent pays $7,500.00 on or before 31 July 2001. 7. The Applicant have leave to discontinue the proceedings pursuant to Order 22 Rule 2 as against the Third and Fourth Respondents with no order as to costs. 8. The proceedings against the Second and Fifth Respondents [be] stood over to 10 March 2000 in Canberra at 9:30am." 5 By order dated 3 April 2000, which took effect on 17 April 2000, the principal proceeding was discontinued as against the second and the fifth respondents. At the same time a cross-claim that had been filed by Soothcast against Spyglass seeking, in effect, payment for the hail canopies, was dismissed with no order as to costs. As a result of the orders of 6 December 1999 and 3 April 2000, only the cross-claim of McDonald, Australian Canopies, Mr Koksal and Mr Morton against Soothcast and Mr McGrath remained on foot. 6 In or about June 2000 a liquidator was appointed to Soothcast. No applicant has been made by the cross-claimant for leave to proceed against Soothcast (In Liquidation). The cross-claim has been maintained only against Mr McGrath. 7 On 4 July 2000 the matter came before me for the first time when it was listed for direction on the outstanding cross-claim. I made certain orders for the preparation of the cross-claim for hearing and authorised the cross-claim to be listed for hearing. 8 On 26 July 2000 the solicitor who had been representing both Soothcast and Mr McGrath filed a notice that he had ceased to act for them. He advised that the last address of his former clients known to him was "210 Thomsons Road, Kingsholme QLD 4208". No solicitor has subsequently notified the Court that he or she is acting on behalf of Mr McGrath and Mr McGrath has not himself attended any Court hearings since his previous solicitor ceased to act for him. 9 When the cross-claim was called for hearing on 5 October 2000 there was no appearance by or on behalf of Mr McGrath. The legal representative for the cross-claimants advised the Court that his clients wished to file further affidavit evidence and also amend their cross-claim. I granted the cross-claimants leave to file further affidavits and to amend the cross-claim but on the basis that the hearing would be adjourned to allow service of the affidavits and the amended cross-claim on Mr McGrath "by personal service or by posting the documents to him at his last known residential address by a form of post which will result in evidence of delivery becoming available to the cross-claimants". 10 The cross-claim was again listed for hearing on 8 December 2000. There was no appearance by or on behalf of Mr McGrath. Again, for reasons, which it is unnecessary to set out, it was necessary to adjourn the hearing. Certain orders and directions were made on that day including an order that the cross-claim be listed for hearing on 18 April 2001. 11 On 18 April 2001 the cross-claim was heard in the following circumstances. Again there was no appearance by or on behalf of Mr McGrath. Evidence was placed before the Court that a letter dated 11 December 2000, sent by registered post by the cross-claimants' solicitor to Mr McGrath at his last known residential address, advising Mr McGrath of the orders and directions made on the cross-claim on 8 December, had been returned as unclaimed. Evidence was also placed before the Court that a further letter was sent by ordinary mail by the cross-claimants' solicitor to Mr McGrath which included, among other things, a copy of the letter of 11 December 2000. That letter was not returned to the cross-claimants' solicitor. 12 While I could not be positively satisfied that Mr McGrath was aware that the cross-claim was listed for hearing on 18 April 2001, I was satisfied that the cross-claimants had taken reasonable steps in the circumstances to advise him of the date and time of the hearing. The solicitor for the cross-claimants had sent letters to him, by both registered and ordinary mail, at the address of which his former solicitor had given notice. I was satisfied that neither the cross-claimants nor the Court was aware of any other address at which Mr McGrath could be contacted. I also regarded it as significant that an order had been made authorising the cross-claim to be listed for hearing at a time when Mr McGrath still had the benefit of legal representation. I considered it likely that Mr McGrath had been advised of the making of that order. Nonetheless, when his solicitor had ceased to act for him, Mr McGrath had not caused the Court or the cross-claimants to be advised of any address, other than that of which his former solicitor had given notice, at which he could be contacted. Nor did the Court's file suggest that he had contacted the Court seeking information as to the listing of the cross-claim or at all. For the above reasons I gave the cross-claimants leave, pursuant to O 32 r 2(1)(d) of the Federal Court Rules, to proceed on the cross-claim in Mr McGrath's absence.