WA Pines Pty Ltd v Bannerman [1980] FCA 2; (1980) 41 FLR 169 (25 January 1980)

FEDERAL COURT OF AUSTRALIA

W.A. PINES PTY. LTD. v. BANNERMAN [1980] FCA 2; (1980) 41 FLR 169
Practice

COURT

FEDERAL COURT OF AUSTRALIA
GENERAL DIVISION
Toohey J.(1)

CATCHWORDS

Practice - Pleadings - Statement of claim - Striking out - Trade Practices Act 1974 (Cth.), s. 155.

Practice - Discovery - Interrogatories - Discretion - Federal Court of Australia Rules, O. 15, r. 3 (2), (3). The applicant sought a declaration that a notice purporting to have been issued by the respondent Chairman of the Trade Practices Commission pursuant to s. 155 of the Trade Practices Act 1974 (Cth.) was void and without legal effect. Section 155 provides that where, inter alia, the Chairman, "has reason to believe that a person is capable of furnishing information, producing documents or giving evidence relating to a matter that constitutes, or may constitute, a contravention of this Act", a notice in writing may be served requiring the production of such documents, information or evidence.

By par. 5 of its statement of claim the applicant alleged: "The lack of definition of the respondent's state of belief concerning the matters referred to in the notice . . . is inconsistent with the state of belief required to attract the operation of s. 155 of the Trade Practices Act." By par. 6 of the statement of claim the applicant alleged: "Alternatively the notice was issued without the Trade Practices Commission, the respondent or the Deputy Chairman having reason (or alternatively any legally sufficient reason) to believe any of the matters set out in s. 155 (1) of the said Act."

The respondent applied by motion to the court to strike out pars. 5 and 6 of the statement of claim as failing to disclose a reasonable cause of action. At the same time the applicant applied, on a summons for directions, for discovery and leave to interrogate the respondent.

Held: (1) On the notice of motion: (a) par. 5 of the statement of claim should be struck out as disclosing no reasonable cause of action. The use of the terminology of s. 155, as part of the administrative act of issuing a notice pursuant thereto, is not contrary to the statute merely because alternative grounds are set out. Melbourne Home of Ford Pty. Ltd. v. Trade Practices Commission and Bannerman [1979] FCA 15; (1979), 36 FLR 450, and [1979] FCA 64; (1979), 40 FLR 428, referred to. (b) par. 6 of the statement of claim should not be struck out. On its face as a pleading it is unobjectionable and appears to disclose a cause of action.

(2) On the summons for directions no order should be made for discovery or interrogatories. It is not enough for the applicant to allege a "lack of reason to believe" on the part of the respondent and then seek, by discovery and interrogatories to support that allegation. Without some factual foundation for the allegation, discovery and interrogatories are "fishing" and should not be ordered.

Rofe v. Kevorkian, (1936) 2 All ER 1334; Melbourne Home of Ford Pty. Ltd. v. Trade Practices Commission and Bannerman [1979] FCA 15; (1979), 36 FLR 450 and [1979] FCA 64; (1979), 40 FLR 428, referred to.

HEARING

PERTH, 1979, November 13; 1980, January 22, 25. 25:1:1980
NOTICE OF MOTION.

SUMMONS FOR DIRECTIONS.

Notice of motion by the respondent seeking to have a substantial part of the

applicant's claim stayed or dismissed and in consequence thereof the striking out of two paragraphs of the statement of claim, and a summons for directions in the action.

R. S. French, for the applicant.

C. J. Carr, for the respondent.
Cur. adv. vult.

Solicitors for the applicants in the motion: Ridgeway Pearce & Freadman.

Solicitors for the respondent to the motion: Phillips Fox & Masel.
T.J. GINNANE

Solicitors for the applicant: Warren McDonald French & Harrison.

Solicitor for the respondent: B.J. O'Donovan (Acting Commonwealth Crown

Solicitor).
D. LEVIN

DECISION

JANUARY 25.

TOOHEY J. delivered the following written judgment.
The applicant seeks a declaration that a notice issued by the respondent,

the Chairman of the Trade Practices Commission, on 10th August, 1979, pursuant to s. 155 of the Trade Practices Act 1974 does not oblige the applicant to comply with the requirements of that notice and is void and without legal effect. (at p170)

2. On 13th November, 1979, Fisher J. gave directions for the hearing of the application, including interlocutory steps to be taken. In the main, and to the extent that they are no longer prospective, those directions have been complied with. (at p170)

3. What is still outstanding is the matter of interrogatories and discovery, and also one aspect of the particulars sought by the applicant of the respondent's defence. (at p170)

4. The directions hearing was adjourned until 22nd January, 1980. Shortly before that date the respondent filed notice of motion seeking to have a substantial part of the applicant's claim stayed or dismissed and in consequence thereof the striking out of two paragraphs of the statement of claim. (at p171)

5. The balance of the directions hearing and the notice of motion were heard together. To some extent they overlap and bear upon each other. To determine these matters it is necessary to look first at what is alleged against the respondent. In essence, the applicant contends that the notice calling upon it to furnish information and to produce documents is ineffective because it fails to meet the requirement of s. 155 that the person giving the notice "has reason to believe that a person is capable of furnishing information, producing documents or giving evidence relating to a matter that constitutes, or may constitute, a contravention of this Act". (at p171)

6. Counsel for the applicant submitted that although s. 155 does not oblige the Chairman to disclose the basis of his reason for belief, a notice may in its terms purport to do so. In so doing it may provide material for an assertion that the author did not have the state of belief required by the Act. Counsel amplified this submission by drawing attention to the language of the notice which speaks of the Chairman having reason to believe that the applicant is capable of furnishing information and producing documents relating to matters that constitute or may constitute contraventions of the Act. (at p171)

7. In particularizing those contraventions the notice speaks further of the applicant engaging in conduct that is misleading or deceptive or is likely to mislead or deceive. By this use of what counsel described as "disjunctive language" it was said that the respondent had failed to define his reason for belief in the terms required by s. 155. (at p171)

8. I shall deal with this argument later but for the moment continue to describe the issues between the parties. Paragraph 6 of the statement of claim pleads by way of alternative that the notice was issued without the respondent having reason or any legally sufficient reason to believe any of the matters set out in s. 155. Asked to particularize this allegation the applicant answered that it involved matters of evidence and law, not matters of pleading, and that the applicant was not required to give particulars. There the matter rests. (at p171)

9. For completeness I mention the remaining paragraphs in the statement of claim. Paragraph 7 attacks the notice upon a range of grounds, asserting that it is vexatious, fishing, too wide, oppressive, unreasonable, too remote, uncertain, unclear and inquires into matters of law or requires the making of judgments on questions of law. Paragraph 8 pleads that the requirements of the notice or some of them exceed the ambit of and power conferred by s. 155. (at p172)

10. Counsel agreed that the matters raised by pars. 7 and 8 of the statement of claim were essentially matters of law to be determined by reference to the motice itself and not to other evidentiary material. Counsel for the applicant submitted that the respondent's motion to strike out pars. 6 and 7 of the statement of claim should not be disposed of until the outcome of the application for discovery and interrogatories was known. Only then, it was said, would the court have the whole of the evidence before it, the evidence otherwise having been presented in affidavits already filed. (at p172)

11. It may well be true that at this stage the court has not the whole of the evidence before it, but it does not follow that the motion is premature. An application based upon failure to disclose a reasonable cause of action is an application relating to the pleadings: "The question is thus different from that which arises under the modern system of pleading in England upon an application to strike out a statement of claim as disclosing no reasonable cause of action. There the question is whether it would be open to the plaintiffs upon the pleadings to prove facts at the trial which would constitute a cause of action" (Mutual Life and Citizens' Assurance Co. Ltd. v. Evatt [1970] UKPC 1; (1971) AC 793, at p 801 ). (at p172)

12. In my view it is desirable to deal first with the respondent's motion. The issues properly joined between the parties will then be known and the matter of discovery and interrogatories more readily considered. (at p172)

13. I refer again to the two causes of action emerging from pars. 5 and 6 of the statement of claim. As already mentioned par. 5 pleads a lack of definition in the notice, inconsistent with the state of belief required to attract the operation of s. 155 of the Trade Practices Act. It is a submission which turns upon the language of the section and upon the terms of the notice itself. As is well understood, "the jurisdiction summarily to terminate an action is to be sparingly employed and is not to be used except in a clear case where the Court is satisfied that it has the requisite material and the necessary assistance from the parties to reach a definite and certain conclusion" (General Steel Industries Inc. v. Commissioner for Railways (N.S.W.) [1964] HCA 69; (1964) 112 CLR 125, at pp 128-129 ). But as the Chief Justice pointed out: "I do not think that the exercise of the jurisdiction should be reserved for those cases where argument is unnecessary to evoke the futility of the plaintiff's claim. Argument, perhaps even of an extensive kind, may be necessary to demonstrate that the case of the plaintiff is so clearly untenable that it cannot possibly succeed" (1964) 112 CLR, at p 130. (at p172)

14. The issue with regard to par. 5 of the statement of claim is a narrow one. It has been argued by counsel and it is appropriate to deal with the application so far as it relates to that paragraph. In my view, the applicant's disjunctive argument cannot succeed for it puts too narrow and artificial a construction upon the language of s. 155. The powers conferred by that section are given for the purpose of enabling the Commission to perform its functions under the Act, the range of which was described by Bowen C.J. in Riley McKay Pty. Ltd. v. Bannerman [1977] FCA 7; (1977) 31 FLR 129, at pp 133-134. (at p173)

15. In my opinion it is not apt to describe the notice as "disjunctive", a term which implies alternatives - the making of a choice between things. Section 155 does not require the Chairman to choose. All it requires is that he has reason to believe that something has happened which constitutes or may constitute a contravention of the Act. Likewise the reference to "conduct that is misleading or deceptive or is likely to mislead or deceive" is no more than the terminology of s. 52 of the Act. But here it has not been employed as the language of a charge against the applicant. It is part of a notice which itself is an administrative act, not part of a judicial or quasi-judicial function. For the purpose of requiring the production of information and documents I see no reason why the respondent should not have used the language he did, rather than select only one aspect of the section. (at p173)

16. Although many issues surrounding that section were canvassed in Melbourne Home of Ford Pty. Ltd. v. Trade Practices Commission and Bannerman [1979] FCA 15; (1979) 36 FLR 450 and again [1979] FCA 64; (1979) 40 FLR 428 , similar language used in the notice with which those hearings were concerned was apparently not thought objectionable; at any rate no one suggested it was. (at p173)

17. I therefore accede to the application in so far as it seeks to strike out par. 5 of the statement of claim as disclosing no reasonable cause of action. However, with some hesitation, I do not accede to it with regard to par. 6. My reason is that as a pleading it is unobjectionable and on its face it discloses a cause of action. As mentioned earlier, the applicant has declined to give particulars of the pleading in that paragraph and the respondent has not pressed the matter. I was told by counsel for the applicant that the affidavit of Mr. French sworn 11th January, 1980, was the principal evidence to be led by the applicant, but that was not intended to be a definitive statement and I am not satisfied that this an appropriate case in which to shut out the applicant from pursuing a claim it may have based on the allegations in par. 6. (at p173)

18. I return now to the matter of interrogatories and discovery. Order 15, r. 3(2), and O. 15, r. 3(3)(interrogatories) of the Federal Court of Australia Rules empower the court to prevent unnecessary discovery and interrogatories. The Melbourne Home of Ford case itself proceeded on the basis that wide considerations may determine whether discovery and interrogatories shall be allowed. (at p174)

19. I do not suggest that the reason for belief of the respondent is not a justiciable issue but I think that first there must be some basis for a contention that the respondent did not have reason to believe the matters referred to in a notice under s. 155, and I refer again to the Melbourne Home of Ford case [1979] FCA 15; (1979) 36 FLR 450 and [1979] FCA 64; (1979) 40 FLR 428. (at p174)

20. It is not enough for an applicant merely to assert lack of reason to believe and then seek, as undoubtedly the applicant seeks in the present case, to find some support for that contention through the procedures of discovery and interrogatories. There is in the material before the court an affidavit sworn by the respondent on 17th January, 1980, that when he signed the notice he had reason to believe and did in fact believe that the matters referred to in the notice may constitute contraventions of the Act. I do not regard that as inconsistent with the recitals in the notice of 10th August, 1979. (at p174)

21. In the absence of some disclosed factual foundation for the allegation that the respondent did not have reason to believe any of the matters set out in s. 155 when he issued the notice in question, neither discovery nor interrogatories is necessary for fairly disposing of the matters in issue. They are an attempt to make a case in a situation which can truly be described as fishing: Rofe v. Kevorkian (1936) 2 All ER 1334, at pp 1337-1338. (at p174)

22. I had some reservations whether I should decline to make any order at all for discovery or interrogatories having regard to the causes of action pleaded in pars. 7 and 8 of the statement of claim. However, with the assurance from counsel that those paragraphs raise no evidentiary matters, I feel justified in doing so. (at p174)

23. I shall hear counsel on the precise form of the orders that should be made, but in summary: 1. Paragraph 5 of the statement of claim is struck out as disclosing no reasonable cause of action. 2. I decline to make any order for discovery or interrogatories. (at p174)