RIESEN & ANOR v SST CONSULTING SERVICES PTY LTD [2002] NSWCA 163

New South Wales Court of Appeal

CITATION : RIESEN & ANOR v SST CONSULTING SERVICES PTY LTD [2002] NSWCA 163 FILE NUMBER(S) : CA 40806/01 HEARING DATE(S) : 12 April 2002 JUDGMENT DATE : 12 April 2002

PARTIES : STEVEN CHARLES RIESEN & ANOR v SST CONSULTING SERVICES PTY LTD JUDGMENT OF : Mason P at 1; Meagher JA at 27; Davies AJA at 28

LOWER COURT JURISDICTION : Supreme Court - Common Law Division LOWER COURT SC 10938/01 FILE NUMBER(S) : LOWER COURT Sully J JUDICIAL OFFICER :

COUNSEL : Appellants: R I M Lilly Respondent: D H Murr SC/ J C Thompson SOLICITORS : Appellants: Deacons Respondent: Mansfield Switzer

DECISION : See par 26

IN THE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL CA 40806/01

MASON P MEAGHER JA DAVIES AJA

Friday 12 April 2002

Steven Charles RIESEN & ANOR v SST CONSULTING SERVICES PTY LTD JUDGMENT 1 MASON P: In my view this application raises issues suitable for the grant of leave subject to the filing of a notice of appeal. 2 The respondent (hereafter the plaintiff) sued the appellants (hereafter the defendants) in the Common Law Division by statement of liquidated claim. The claim relates to moneys lent by the plaintiff to AFS Freight Management (USA) Inc (AFS), a corporation incorporated in California of which the defendants were the directors. As pleaded, the plaintiff's claim is based upon a written guarantee whereby the defendants jointly and severally guaranteed the repayment of the loan with interest. The particulars refer to a letter dated 10 September 1999 from Mansfield Switzer to AFS and a deed of guarantee dated 23 December 1999 between the plaintiff as lender and the defendants as guarantors. The sum sued for is $797,263 plus interest at twenty per cent per annum from 19 March 2001. 3 On 29 June 2001 the defendants filed an amended defence which relevantly pleaded: 5. At all times material to this action: 5.1 The lender in the loan agreement who was undisclosed but is now asserted to be the plaintiff was a trading corporation within the meaning of the Trade Practices Act 1974 ("the TPA"). 5.2 The lending of money pursuant to the loan agreement was a service within the meaning of that term in the TPA. 5.3 The requirements pleaded in subparagraphs 4.4 and 4.5 were requirements whereby AFSL and AFSUS was required to acquire services (within the meaning of TPA) from those persons or corporations who provided those services at the Port Botany/MPG and Pitkin facilities in Sydney, Melbourne and Brisbane. 5.4 AFSUS and AFSL were related body corporates within the meaning of that term in the TPA. 6. In the premises, the loan agreement was: 6.1 An agreement to effect the illegal purpose of exclusive dealing as defined in s47(6) of the TPA ("third line forcing") proscribed by s47(1) of the TPA. 6.2 Void and unenforceable. 7. If, which is denied, the first and second defendants entered into any guarantee in favour of the plaintiff: 7.1 Such guarantee was provided as required by the terms of the loan agreement pleaded in subparagraph 4.3. 7.2 It was an event of default under the loan agreement giving rise to liability pursuant to the guarantee if the third line forcing was not maintained. 8. In the premises, the guarantee is void and unenforceable having been given to effect and maintain the illegal purpose of third line forcing. 4 In essence the defendants pleaded that the guarantee was unenforceable because the loan agreement to which it was pertinent had been entered into to effect the illegal purpose of third line forcing, which is a form of exclusive dealing proscribed by s47(1) and (6) of the Trade Practices Act. 5 Three notices of motion were heard by Sully J on 4 September 2001. In the first, the defendants applied to transfer the proceeding to the Federal Court of Australia pursuant to s6(1) of the Jurisdiction of Courts (Cross Vesting) Act 1987 (C'th) on the basis that the proceedings had become a special Federal matter. 6 In the second, the plaintiff applied to strike out the paragraphs of the defence invoking the defence based upon third line forcing. 7 In the third, the defendant sought leave to amend the relevant part of the defence so that para 7 would read: 7. If, which is denied, the first and second defendants entered into any guarantee in favour of the plaintiff 7.1 Such guarantee was provided as required by the terms of the loan agreement pleaded in subparagaraph 4.3 7.2 It was an event of default under the loan agreement giving rise to liability pursuant to the guarantee if the third line forcing was not maintained.