SST Consulting Services Pty Limited v Riesen & anor [2001] NSWSC 804

New South Wales Supreme Court

CITATION : SST Consulting Services Pty Limited v Riesen & anor [2001] NSWSC 804 FILE NUMBER(S) : SC 10938/01 HEARING DATE(S) : 4 September 2001 JUDGMENT DATE : 13 September 2001

PARTIES : SST Consulting Services Pty Limited Steven Charles Riesen & anor. JUDGMENT OF : Sully J at 1

COUNSEL : J. C. Thompson - Plaintiff R. Lilley - Defendants SOLICITORS : Mansfield Switzer - Plaintiff Deacons - Defendants LEGISLATION CITED : Trade Practices Act 1974 (C'th) CASES CITED : Pont Data Australia Pty Limited v ASX Operations Pty Limited & anor. [1989] 21 FCR 385 at 425, 426 Yango Pastoral Company Pty Limited & ors. v. First Chicago Australia Limited & ors [1978] 139 CLR 4104 DECISION : (1) that paragraphs 5, 6, 7 and 8 of the Further Amended Defence and the whole of the defendants' cross- claim be struck out; (2) that the defendants pay the plaintiff's costs of the plaintiff's Notice of Motion filed on 24 Augusut 2001 as amended on 4 September 2001; (3) that the Notice of Motion of the defendants filed on 17 August 2001 be dismissed with costs; (4) that the plaintiff and the defendants pay respectively its and their costs of the defendants' Notice of Motion filed in Court on 4 September 2001

IN THE SUPREME COURT OF NEW SOUTH WALES COMMON LAW DIVISION 10938/01 SULLY J

Thursday 13 September 2001 SST CONSULTING SERVICES PTY LIMITED v Steven Charles RIESEN & anor. JUDGMENT 1 HIS HONOUR: There are current in the Court principal proceedings that were commenced by the filing on 2 April 2001 of a Statement of Liquidated Claim in which SST Consulting Services Pty Limited, ["SST"], as plaintiff sues Mr. Steven Charles Riesen as first defendant and Mr. Scott Murray Bell as second defendant for the payment of almost $800,000, together with accruing interest. SST alleges that Mr. Riesen and Mr. Bell are liable as guarantors of loans made by SST to A.F.S. Freight Management (USA) Inc. ["AFS"], a company incorporated in the State of California in the United States of America. 2 On 7 May 2001 the two defendants filed a joint defence. No more need be said about it than that it does not plead any defence or cross-claim based upon the provisions of the Trade Practices Act 1974 (C'th). 3 On 29 June 2001 both defendants filed an amended defence. That amended defence pleads, relevantly: "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 the 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 s.47(6) of the TPA ("third line forcing") proscribed by s.47(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 On 17 August 2001 the two defendants filed a Notice of Motion claiming the following relief: "1. That these proceedings be transferred to the Federal Court of Australia at Sydney for further hearing and determination pursuant to section 6(1) of the Jurisdiction of Court (Cross Vesting) Act 1987 (Cth). 2. That the costs of these proceedings and all interlocutory steps taken in the Supreme Court of New South Wales be reserved to the Federal Court of Australia. 3. That the costs of and incidental to this application be costs in these proceedings. 4. Such further or other order as the Court my deem fit." 5 On 24 August 2001 SST filed a Notice of Motion claiming the following relief: "1. Pursuant to SCR Part 15 r 26(a) (sic), an order that paragraphs 5, 6, 7.2 and 8 of the Amended Defence be struck out. 2. An order that the defendants pay the costs of and incidental to this motion. 3. Such further or other orders as the court deems appropriate." 6 Both of these Notices of Motion were listed for hearing on Tuesday last 4 September 2001. At the commencement of that hearing, learned counsel appearing for the two defendants filed in Court, by leave, a further Notice of Motion claiming the following relief: "1. that leave be granted to the applicants to further amend the Defence as set out in annexure B to the affidavit of Gregory John Litster sworn herein 3 September 2001. 2 that leave be granted to the applicants to make a cross claim in the proceedings as set out in annexure B to the affidavit of Gregory John Litster sworn herein 3 September 2001. 3. such further or other order as the Court may deem fit." 7 The proposed further amended defence did not foreshadow changes to paragraphs 5, 6 and 8 of the amended defence previously filed on 29 June 2001. The proposed further amended defence did foreshadow, however, amendments to paragraph 7, such that paragraph 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 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 The proposed further Amended Statement of Claim foreshadowed, also, a cross- claim pleaded as follows: "1. The plaintiffs by cross-claim repeat and rely upon the matters pleaded in paragraphs 3, 4, 5, 6 and 7 of the defence. 2. In the premises the guarantee: 1.1 was required by the cross-defendant in furtherance of the purpose of the third line forcing 1.2 in contravention of s 47 of the TPA specified that an event of default pursuant to which liability would arise under the guarantee was that AFSL and AFSUS failed to comply with the requirement of the loan agreement to acquire the services of pack and unpack freight at Brisbane, Sydney and Melbourne from a person or corporation other than the cross-defendant. 3 The provisions of the loan agreement and the guarantee were not the subject of a notification to the Australian Competition and Consumer Commission (ACCC) pursuant to s.93A of the TPA. 4. The provisions of the loan agreement and the guarantee were not authorised by the ACCC pursuant to s.88(8) of the TPA. The cross claimants Steven Charles Riesen and Scott Murray Bell claim: (1) A declaration pursuant to s.87 of the TPA that the guarantee is void and/or unenforceable. (2) An order refusing to enforce the provisions of the guarantee." 9 The Court, having discussed with counsel for SST and for the two defendants the most practical way of dealing with the three Notices of Motion then on foot, proceeded as follows: