FEDERAL COURT OF AUSTRALIA Opal Collection Pty Ltd v LMC Pacific Pty Ltd [2002] FCA 516 OPAL COLLECTION PTY LTD AND SURFERS PARADISE OPAL COLLECTION PTY LTD v LMC PACIFIC PTY LTD Q155 of 2001 KIEFEL J 24 APRIL 2002 BRISBANE IN THE FEDERAL COURT OF AUSTRALIA QUEENSLAND DISTRICT REGISTRY Q155 OF 2001 BETWEEN: OPAL COLLECTION PTY LTD FIRST APPLICANT SURFERS PARADISE OPAL COLLECTION PTY LTD SECOND APPLICANT AND: LMC PACIFIC PTY LTD RESPONDENT JUDGE: KIEFEL J DATE OF ORDER: 24 APRIL 2002 WHERE MADE: BRISBANE THE COURT ORDERS THAT: (1) leave to amend the statement of claim in terms of exhibits JG3 and JG2 to the affidavit of J.M. Geddes filed on 4 April 2002 is refused; (2) any further application for leave to amend the statement of claim and the application be made by the applicant within 30 days from the date hereof; (3) the order of 7 February 2002, that the parties provide a list of documents, is vacated; (4) the applicants pay the respondent's costs of and incidental to the hearing on 19 April 2002; (5) the question of what further costs, if any, ought to be paid by the applicants and when those costs, and the costs referred to in the preceding order, ought to be paid is reserved; (6) the respondent is to provide written submissions to the Judge's Associate on the further question of costs within seven days from the date hereof; and the applicants are to provide written submissions in response within seven days from receipt of the respondent's submissions. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. IN THE FEDERAL COURT OF AUSTRALIA QUEENSLAND DISTRICT REGISTRY Q155 OF 2001 BETWEEN: OPAL COLLECTION PTY LTD FIRST APPLICANT SURFERS PARADISE OPAL COLLECTION PTY LTD SECOND APPLICANT AND: LMC PACIFIC PTY LTD RESPONDENT JUDGE: KIEFEL J DATE: 24 APRIL 2002 PLACE: BRISBANE REASONS FOR JUDGMENT 1 On 9 July 2001, the applicants filed an application and statement of claim claiming damages in connexion with the respondent's non-delivery of watches for retail sale and its later refusal to supply them. The respondent is the exclusive distributor in Australia of Cartier watches and a distributor of Baume et Mercier watches. The first applicant was described as a wholesaler. The supply by the respondent was said to have been made to the first applicant. As between the applicants, the second applicant was identified as a retailer prior to 1 July 2000 and the first applicant after that date. The supply by the respondent was said to have been made to the first applicant. 2 The initial pleading alleged breaches of ss 46, 47 and 48, Trade Practices Act 1974 (Cth) ("TPA") and unconscionable conduct (s 51AC TPA). These contraventions were said to arise from the same factual background. On receipt of the statement of claim, the respondent's solicitors wrote to the applicants' then solicitors pointing out difficulties in the way of various of the claims. In response, the applicants amended their pleading, limiting the claims to loss and damage said to flow from conduct amounting to resale price maintenance or unconscionable conduct. The respondent's motion, for the supply of some particulars, was not pursued on 14 August 2001 when the applicants consented to an order to pay the respondent's costs thrown away by the amendment to the statement of claim. 3 The pleading, as at August 2001, continued to identify the second applicant as the retailer of the watches supplied by the respondent up to the time when supply was discontinued in 1999. It was its practice, in selling the watches at a discount, to which the respondent's later conduct was directed, although the stores from which the goods were sold were described both as the second applicant's and both applicants'. Letters concerning sale practices were said to have been sent by the respondent to the first applicant on one occasion and both applicants on another. It was, however, alleged that the respondent specified the prices below which the second applicant was not to sell and that the respondent attempted to induce the second applicant not to sell at lesser prices. It was further alleged that the respondent withheld the supply of goods to the second applicant in circumstances where the first applicant had obtained the goods directly from the respondent. The unconscionable conduct alleged relates to the respondent declining to deal with the first applicant after 22 February 1999 as an authorised dealer of the Cartier product. This was said to have resulted from the second applicant's conduct in discounting the watches. 4 Further amendments to the statement of claim were not opposed by the respondent in September 2001, on the basis that further and better particulars were to be provided. Those particulars are not identified. The only request for particulars identified to this point did not refer to any of the particulars now in question. At the same time the parties agreed to other steps, including one that they advise each other of the classes of document which they proposed to discover. The respondent's motion of 1 August 2001 was adjourned and costs reserved. 5 The respondent subsequently filed its defence on 29 October 2001. The respondent admitted to the fact of supply of watches to the first applicant and that some difficulties occurred on occasions with prompt supply and that the first applicant was terminated as a dealer with effect from 1 April 1999. It said that its dealings were with the first applicant and denied supply to the second applicant. It denied the conduct complained of. 6 The applicants provided further particulars on 18 September 2001, including some particulars of loss and damage referable to the unconscionable conduct. On 24 October 2001 the respondent sought particulars of loss and damage generally – as to the quantum of the loss claimed, the method by which it was calculated and as to how the timeframe for the calculation of loss was chosen. It threatened an application to the Court if the particulars were not supplied. 7 The applicants provided some particulars on 22 November 2001. A copy of them is not on the Court file. The respondent did not regard them as sufficient and requested particulars again on 6 December 2001. It noted that there had been an apparent double counting in the claim; that no basis was shown in the particulars provided; and there was no methodology given for the calculations set out. In the latter respect, it queried the loss said to be attributable to customers who would have purchased other goods at the same time as they purchased the respondent's brand watches. The respondent also inquired as to the position of the second applicant in the action, and how some facts were said to be referable to both applicants and others to only one of them. 8 On 21 December 2001 the applicant provided a copy of a proposed further amended statement of claim. On 7 February 2002 the applicants consented to an order (although it would appear this order has not been taken out) that they provide further particulars of loss and damage and of the position of the second applicant. They undertook to make the position of that applicant clear. They were also to provide a further proposed amended statement of claim. The parties consented to provide a list of documents in accordance with the categories which they had stipulated. 9 A further amended statement of claim and a separate document providing further and better particulars was provided by the applicants on 8 March 2002. It is those documents which are the subject of this application. The respondent submits that the question as to which applicant was supplied by the respondent remains confused and that the relationship as between the first and second applicants needs to be spelled out. It also contends that loss and damage remains unclear. It opposes the grant of leave to further amend in the form proposed. The applicants, for their part, accept that there should be a composite pleading, combining the particulars, but submit that sufficient information is provided in the two separate documents and that its case is clear enough. They contend that the respondent continues to pursue pleading issues despite being able to plead a defence and in order merely to delay discovery. 10 The respondent's view as to the party with whom it dealt is tolerably clear from its defence. Nevertheless, and putting aside the question as to whether discovery should be postponed, it is entitled to know what is the case brought against it. I do not think the applicants' case, as proposed to be further pleaded, can be said to do that. 11 In the proposed further amended statement of claim supply is alleged to have been made to both applicants and, implicitly, orders are said to have been made by or for them. It is not however suggested that they were supplied with different goods or on separate occasions. The general pleading implies that they acted together with respect to all orders. 12 The delays and refusals to supply are said to have occurred in a background of complaint by the respondents concerning the second applicant's methods of discounting; complaints by the respondent about Mr Cheung's selling practices – which might be referable to either applicant; and communications by the respondent about discounting and pricing directed to both applicants. No one of the applicants is identified as the seller or retailer, although the original allegation, that the second applicant was the retailer up to July 2000, is continued (paragraph 2). 13 The conduct alleged to amount to resale price maintenance on the part of the respondent is that defined in subss 96(3)(a), (b), (d), (e), and (f) TPA (see also ss 4 and 4C concerning the definition of "supply"). In general terms, it may be said that s 96 requires a connexion to be established between the supply of goods or the withholding of supply and the supplier's requirement, of the person selling the goods, that a minimum price be maintained. In some cases the person who is to be supplied or is refused supply, will be the seller . Where there is a refusal to supply, the person to whom the supplier's wrongful conduct is directed may be the person supplied or it may be the purchaser from the person supplied, that purchaser being a seller to consumers. 14 It is sought to be pleaded: · That the respondent made it known to the first applicant that the respondent would not supply goods to the first applicant unless the first applicant agreed not to sell those goods at a price less than the price specified by the respondent (s 96(3)(a)). Alternatively, that conduct is said to be referable to the second applicant (the plea is "Further or in the alternative"). · It is alleged that the respondent attempted to induce the first applicant not to sell at prices less than those specified by it with respect to goods supplied to that applicant by the respondent (s 96(3)(b)). Again, it is alleged in the alternative that this was the case with respect to the second applicant. · An alternative plea is also made with respect to the allegation that the respondent used, with respect to the goods supplied to ("the first and/or second applicant"), a statement of price that was likely to be understood by them as the price below which the goods were not to be sold (s 96(3)(f)). · In connexion with the withholding of supply, it is alleged that the respondent withheld supply to the first applicant for the reason that it would not agree as aforesaid, or that it was likely to sell goods supplied to it by the respondent at a lesser price (s 96(3)(d)). In the alternative, it is alleged that supply was withheld from the second applicant because it would not agree as aforesaid or because it was likely to sell, at a lesser price, goods supplied to it by the respondent "or by the first applicant (the first applicant having obtained such goods directly from the respondent )". · Lastly, it is alleged that the supply was withheld by the respondent to the first applicant for the reason that the second applicant, being a person who obtained goods from the first applicant, had not agreed as aforesaid or was likely to sell goods at a price less than that specified by the respondent (s 96(3)(e)). 15 To the extent that facts relating to supply are pleaded, the same facts are said to apply to each of the contraventions alleged. The lack of detail concerning supply by the respondent becomes more apparent when one considers the general allegation of supply to both applicants, on the one hand, and the contraventions (paras (a), (b) and (f) of s 96(3)) which are expressed in the alternative. An alternative plea necessarily implies supply to only one of the applicants. To compound matters, the conduct alleged to fall within paras (d) and (e) strongly suggest that supply was made by the respondent to the first applicant who then supplied to the second applicant which is, of course, how the case has largely been pleaded to this point. 16 The pleading does not identify the seller. There is no specific plea that the first applicant was, although it is identified in connexion with conduct to which paras (a), (b) and (f) refer, which would have it as the seller. There remain references to the second applicant as being a seller, but it is not clear whether it is said always to occupy that position, given the contraventions alleged coupled with the general allegations that the respondent was concerned about Mr Cheung's selling practices – which might be attributable to either or both of the applicants 17 Particulars as to the facts relating to the supply to the second applicant were provided. They are of some length and I will not set them out. The respondent says that they are internally inconsistent and confusing. Any reference to "supply" is avoided in the particulars and it may be that this has created something of a problem. 18 They commence with a claim that Mr Cheung acted for both of the applicants in ordering goods from the respondent. This might support a case that the applicants acted together, and in concert. The particulars go on to say, after reference to the order being on both of their accounts, that the first applicant only was provided with the goods, which I take to refer to physical delivery. This would not seem to me to prevent a conclusion being reached that the sale and supply of goods was to both of them if indeed orders were made on behalf of both of them. However, the matter becomes more unclear. There is then a reference to a sale by the first applicant to the second applicant and reliance is placed upon the respondent knowing that this would take place. This implies supply by sale to the first applicant for otherwise there could not be an on-sale to the second applicant. The notion of supply and onsale in this way is reinforced by references elsewhere and by the particulars of loss and damage. 19 The case brought by the applicants concerning supply in the context of s 96 is not at all clear. It is alleged that goods were purchased from the respondent for both of them, but then the findings sought in connexion with the contraventions relate to supply to only one of them. It is not indicated how that choice is to be made or whether it can be. At another point the applicants say that supply was never made to the second applicant, but to the first only. As pleaded it is not apparent whether a narrower or a wider notion of supply is to be contended for. Whether supply to both is a finding open on the true facts and is within the descriptions of conduct in s 96(3) is a matter for later consideration. Whether an extended definition of supply is available for all purposes under s 96(3) is no doubt a matter which will be considered should the applicants seek to re-plead their case. 20 It would seem to me to be necessary for the applicants to determine what case is to be put forward in connexion with ss 48 and 96(3). In that process they will need to spell out what they contend for in connexion with supply and to identify the applicant whose selling practices were the target of the respondent's conduct. In each respect all of the background facts should be pleaded. Needless to say, the pleading should permit the reader to determine how each part of s 96(3) relied upon is to be made out. As I have said, neither the pleading nor the particulars enable that to be understood at present. It may be, when the position of each of the applicants is clarified and the structure of the case made apparent, that consideration will be given to whether each of the paragraphs of s 96(3) presently relied upon can be pursued. Although argument has not been addressed to the case based upon unconscionable conduct, it will obviously be necessary to check whether it is consistent with the facts which are finally determined to be pleaded. 21 Particulars of the claim for loss and damage have also been provided. Each of the applicants is said to suffer loss, but it would seem to me necessary to plead, in connexion with each of the applicants, the causal connexion to the contraventions alleged. This will follow on from a determination as to which of the contraventions is open having regard to the true facts referable to supply and retail sale. 22 The correspondence also refers to the applicants having merged as at 1 July 2000. This would seem likely to have some effect upon any loss claimed. It is not presently addressed. A reference to this fact is said to be contained in the statement of claim, in paragraph 2, but I cannot see it. It would be necessary to plead how loss and damage continues to be attributable to one or other of the applicants, given the change in their business arrangements. 23 The extent to which the applicants have already explained the basis for their calculations and how their figures are derived is not apparent to me. In any event, they should be fully pleaded should the applicant seek leave to file a further amended pleading. Any additional claim to damages for orders made orally and not supplied, not previously pleaded, ought to be spelled out as far as possible, if difficulties in discovery and consequent delay are to be avoided. 24 With respect to discovery, it does not seem to me that the respondent could be said to be unable to proceed further with its discovery because of the confusion in the applicants' pleading. The case is largely one based upon documents and the respondent has shown that it has a firm view as to whom it dealt with, even if the applicants have vacillated about how their case will be presented. Nevertheless it would not seem to be appropriate to require a party to proceed further with discovery unless and until the case against it is made plain. The number of attempts made by the applicants to plead raises some concerns as to whether this case falls within s 96. 25 I propose to order that any further application for leave to amend by the applicant be made within a specified period. Thirty days would seem to me to be sufficient for that purpose. I will not make any further orders as to discovery and consider it appropriate to vacate the order of 7 February 2002 requiring further steps to be taken towards discovery. 26 So far as concerns costs, it would seem to me that the applicants ought to bear the respondent's costs of this hearing. The respondent also sought the costs of the motion which they filed in August 2001 but which was never finalised because the applicant continued to attempt to put its pleadings in order. It also sought orders that the costs in that connexion be taxed and paid forthwith. It was not entirely clear to me, upon further consideration of the respondent's submissions, just what costs they say should be included in such an order. I propose to allow the respondent to supply further submissions in writing within seven days, on the topic of costs, and the applicants seven days to respond to them. I will then advise the parties of my determination in that regard. I certify that the preceding twenty-six (26) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Kiefel. Associate: Dated: 24 April 2002 Counsel for the Applicants: Mr R Traves Solicitor for the Applicants: Pilgrim Geddes Counsel for the Respondent: Mr N O'Bryan Solicitor for the Respondent: Corrs Chambers Westgarth Date of Hearing: 19 April 2002 Date of Judgment: 24 April 2002