Re International Computers (Australia) Pty Limited v Ernest William Bate [1985] FCA 42 (22 February 1985)

FEDERAL COURT OF AUSTRALIA

Re: INTERNATIONAL COMPUTERS (AUSTRALIA) PTY LIMITED
And: ERNEST WILLIAM BATE
No. VG.237 of 1984
Practice and procedure

COURT

IN THE FEDERAL COURT OF AUSTRALIA
VICTORIAN DISTRICT REGISTRY
GENERAL DIVISION
Northrop J.
Davies J.
Beaumont J.

CATCHWORDS

Practice and procedure - application to amend statement of claim - statement of claim alleging contraventions of, inter alia, s.52 Trade Practices Act, 1974 ("the Act") - proposed amendments relating to, inter alia, relief sought under ss.82(1) and 87(1A) of the Act - whether new relief sought statute-barred - operation of ss.82(2) and 87(1A).

Trade Practice Act, 1974 ss 82, 87.

French v. Sterling, Full Federal Court, unreported, 29 October 1984 - con.

HEARING

MELBOURNE
22:2:1985

ORDER

1. That the appeal be allowed.

2. That the orders 1 and 2 made by a single judge of the Court on 3 August 1984 be set aside.

3. That the matter be remitted to the Court constituted by a single judge to be dealt with in accordance with these reasons and in the light of the further amendments now sought to be made to the statement of claim.

4. That there be no order for the costs of the motion before the single judge or of this appeal.

DECISION

I would dismiss the appeal for the reasons given by Beaumont J.

I have had the opportunity of reading the reasons prepared by Mr Justice Beaumont. I agree with them and with the orders proposed.

This is an appeal from an order of a single judge of the Court granting leave to the respondent (the plaintiff below), to amend his statement of claim (which alleged contraventions of, inter alia, s.52 of the Trade Practices Act, 1974 ("the Act") and claimed damages and other consequential relief), by making additional allegations and by claiming additional relief under the Act against the appellant (the defendant below). Since the opposition to the amendments is grounded on the lateness and scope of the application to amend, it will be necessary to refer to the history of the matter in some detail.

2. By his statement of claim delivered with the writ of summons issued on 21 September 1978, the plaintiff alleged that he was a pathologist; that the defendant carried on the business of supplying computer goods and services to the public; that between 14 May 1974 and 16 September 1977, the plaintiff and the defendant entered into a series of written agreements "for the supply and/or hire and/or service and/or licence of and/or relating to certain computer equipment" (therein referred to as "the computer Agreements", particulars whereof were specified); that in the negotiations for the computer agreements, the defendant engaged in conduct that was misleading or deceptive or likely to be so; that, in the negotiations, the defendant represented to the plaintiff that parts of the computer equipment and of the services had performance, characteristics, uses or benefits which they did not have (particulars whereof were given); that the statements and the presentations so particularised, especially statements made in the defendant's "Management Summary" in respect of its I.C.L. 2903 computer system, were untrue, misleading or deceptive or likely to be so in the particular respects then specified; that the said conduct was engaged in and repeated by the defendant from time to time between the months of August 1973 and June 1977; that in reliance on the conduct, representations and statements alleged, the plaintiff entered into the agreements referred to; that the defendant, in purported compliance with the agreements, supplied goods and services to the plaintiff between September 1975 and June 1977; that the defendant has threatened to take possession of the computer equipment; and that as a result of the foregoing, the plaintiff has suffered loss and damage for which the defendant is liable "pursuant to the provisions of the (Act)".

3. The particulars of damage were that the plaintiff's practice had sustained a substantial and continuing loss of goodwill and a loss of profits. The following relief was claimed: a refund of monies paid by the plaintiff under the agreements; damages; relief from liability to pay any further sums due under the agreements, pending payment of such damages; an injunction restraining the defendant from seizing the computer and associated equipment; orders for the re-writing of the agreements insofar as their terms are inconsistent with the orders sought; and such further orders, declarations or relief as the Court shall deem just. It seems that the relief was sought pursuant to both ss.82(1) and 87(1A) of the Act.

4. The defendant delivered its defence on 21 May 1979. Although certain contracts were admitted, the defence substantially denied the allegations in the statement of claim. In addition, the defendant claimed that the plaintiff had failed to mitigate any loss. The defendant also raised a number of pleading points and pleaded a discretionary defence of laches, acquiescence and delay.

5. By request dated 26 October 1979, the defendant requested further particulars of the statement of claim. On 3 November 1983, the defendant's solicitors wrote to the plaintiff's solicitors referring to the proceedings and to the plaintiff's failure to supply the further particulars sought. An application to have the proceeedings disposed of was foreshadowed. Mention was also made of a writ issued by the defendant against the plaintiff in the Supreme Court of Victoria. No service of the writ had been attempted, although it had issued on 17 March 1983. The claim endorsed on the writ was that pursuant to many agreements for hire and service between the present parties, the present plaintiff (as defendant in the Supreme Court) hired 2903 computer material and obtained service from the present defendant (the plaintiff in the Supreme Court). It was further alleged that pursuant to an agreement for sale and maintenance made between the parties, the present plaintiff purchased computer equipment and agreed to take maintenance service from the present defendant and agreed to pay the present defendant for the same. It was further alleged that the present plaintiff had broken the agreements. Damages were claimed.

6. The defendant's solicitors' letter dated 3 November 1983 further explained that the Supreme Court proceedings had been instituted because of doubts that this Court had jurisdiction to entertain their client's claim. It was suggested that, (perhaps) after delivery of the defence in the Supreme Court, those proceedings should remain in abeyance pending the determination by this Court of its jurisdiction to entertain a claim of the kind made in the Supreme Court. The plaintiff's solicitors did not respond until, by letter dated 23 March 1984, they sought clarification of the position and noted that no statement of claim had been delivered.

7. On 26 March 1984, the statement of claim in the Supreme Court action was delivered. The present defendant sued the present plaintiff on a number of agreements dated respectively 18 March 1977 (in two cases) and 30 June 1977 (in three cases) providing for the hire of computer equipment, for the provision of services, for the use of computer programs and for the sale of goods. It was alleged that on or about 6 October 1977, before the installation of any of the computer equipment, the present plaintiff wrongfully repudiated the agreements. It was further alleged that by letter dated 4 April 1978, the present defendant accepted the repudiation. Loss of profits was claimed. The present defendant further sued for monthly hiring, maintenance and service charges alleged to be due under a number of agreements bearing various dates between 8 May 1975 and 29 April 1977.

8. On 3 November 1983, the defendant purported to file a cross-claim in this Court, although out of time. The cross-claim was in substantially the same terms as the statement of claim filed in the Supreme Court action. By notice of motion filed on 17 February 1984, the defendant sought the dismissal of the plaintiff's statement of claim for want of prosecution. Alternatively, the defendant sought leave to deliver an amended defence and counterclaim and an order that the plaintiff supply the further particulars of his statement of claim as requested on 26 October 1978. Orders for the delivery of interrogatories and for the fixing of a hearing date were also sought. On 22 February 1984, the hearing of the notice of motion was adjourned to 5 April 1984. On that date, a single judge of the Court refused the application to strike out the statement of claim and gave leave retrospectively (and without objection) for the filing of the cross-claim. The plaintiff having then foreshadowed an application for leave to amend his statement of claim, the further hearing of the notice of motion was adjourned to allow the plaintiff to frame the amendments proposed.

9. By an amended statement of claim dated 27 April 1984, the plaintiff sought to make a number of amendments, some of them significant. Ignoring for the moment amendments of a cosmetic or merely drafting character, the plaintiff sought leave to make a number of fresh allegations as part of its general case that the defendant engaged in conduct which was misleading or deceptive or likely to be so within the meaning of s.52 of the Act.

10. In the first place, the plaintiff now alleges that, in addition to the contracts of hire, service and program licensing already pleaded, the plaintiff and the defendant, between 21 September 1976 and 30 June 1977, entered into further contracts, 12 in number, of that kind. Conduct similar to that already alleged is sought to be pleaded in respect of the negotiation of these contracts.

11. The plaintiff now also alleges further conduct said to be of a misleading or deceptive character in relation to the contracts or at least some of the contracts pleaded in the original statement of claim. On the available material, it is not clear whether these allegations fall within the general scope of the existing allegations or travel beyond them, but, for reasons to be given, the point need not be pursued.

12. The plaintiff also makes further allegations of a miscellaneous kind. For instance, cancellation of certain agreements by mutual agreement is pleaded. Further, a number of specific allegations are raised with respect to a computer system known as "2960". Again, on the limited information available, it is not clear how far, if at all, this is fresh material or merely matters put in explication of existing allegations. For reasons which will be given, it is also unnecessary to pursue this question.

13. The relief now sought is different. It is now in these terms (the amendments are underlined):

"A. A declaration that the Defendant has

contravened the provisions of
Sections 52 and 53 of the Trade
Practices Act 1974.

B. An order that the Defendant refund to
the Plaintiff moneys paid by the
Plaintiff by way of rent, hire, and
other considerations pursuant to the
Computer Agreements.

C. Damages.

D. A declaration that each of the
Computer Agreements in Series 17, 19
and 20 was void ab initio or
alternatively, rescinded by the
Plaintiff as from December 1977 or
such other date as to the Court shall
seem proper.

E. An order that the Computer Agreements
comprised in Series 2 to 20 inclusive
(the 2903 and 2960 contracts) be
varied in such manner as shall to the
Court seem proper.

F. Such further orders, declarations, or
relief as the Court shall deem just."

14. (Again, it would seem that the relief is sought pursuant to both ss.82(1) and 87(1A) of the Act.)

15. At the hearing of the application for leave to amend, the defendant objected to the making of the amendments sought upon the ground that they raised fresh claims which were then statute-barred (see Weldon v. Neal (1887) 19 QBD 394; Renowden v. McMullin [1970] HCA 24; (1970) 123 CLR 584). The learned judge was of the view that two limitation periods were applicable to the litigation. First, so far as claims were made pursuant to s.82 and s.87 of the Act, a three year limit applied by virtue of s.82(2). The learned judge followed the decision on the point at first instance in Fenech v. Sterling (1983) 51 ALR 205. Secondly, so far as the Court was exercising its accrued or attached jurisdiction in entertaining either the claim or the cross-claim, a six year limit applied by virtue of the Limitation of Actions Act, 1958 (Vic.) as picked up by ss.79 and 80 of the Judiciary Act, 1903 (see John Robertson & Co. Limited v. Ferguson Transformers Pty. Limited [1973] HCA 21; (1973) 129 CLR 65).

16. It was common ground before the learned judge that the 2903 computer was delivered to the plaintiff and used by him but that the 2960 computer had not been delivered to the plaintiff at the time he repudiated any liability under the agreements relating to it. It was also common ground that the 2960 contract was not raised in the proceedings until the defendant filed its cross-claim. His Honour thought that the plaintiff's failure to rely upon the 2960 contract to that point indicated his intention to abandon any claim on that account. But the learned judge did not regard this circumstance as determinative of the application because, in his view, the fact that, in its cross-claim, the defendant sought damages for breach of, inter alia, the 2960 computer agreements, was of itself decisive in the plaintiff's favour. In short, applying the decision and reasoning of Menhennitt, J. in Aurel Forras Pty. Limited v. Graham Karp Developments Pty. Limited (1975) VR 202 at p 220), the learned judge was of the opinion that, within the meaning of s.30 of the Limitation of Actions Act, the plaintiff was then seeking to counter-claim in respect of the 2960 computer. By that provision, a counter-claim is deemed to have been commenced on the same date as the action in which it is pleaded. Because the events in question relate to a period before the commencement of the action, the appropriate course for the plaintiff was to apply to amend the statement of claim rather than file a counter-claim or a reply.

17. Since the decision of the learned judge was given, a Full Court has allowed an appeal from the decision at first instance in Fenech v. Sterling (see Fenech v. Sterling, Full Federal Court, unreported, 29 October 1984). It was decided on appeal that, in an application under s.87(1A), although delay may be a relevant consideration in the exercise of the Court's discretion to refuse relief, there is no period of limitation applicable: the period prescribed by s.82(2) applies only to actions brought under s.82(1). Further, although the matter was not argued below, it is common ground betweeen the parties that s.30 of the Limitation of Actions Act has no relevant application here. Another complication which has arisen since this appeal was instituted is that, during the hearing of the appeal, the plaintiff indicated his wish to amend his statement of claim further by making it clear that the claims now sought to be made by him in respect of the 2960 computer are made under s.87(lA) of the Act only. In this way, the plaintiff hopes to avoid the time limit imposed by s.82(2). It is true that, in a written submission, the defendant has now argued that s.87(lA) does not authorise the commencement of an independent proceeding in the Court claiming relief of the kind specified in s.87(2). Unfortunately, however, until the further amendments to the statement of claim are drafted, the Court is without material upon which it can adjudicate upon the issues now sought to be argued. Indeed, depending upon the terms of the fresh amendments, much of the argument before the learned judge and before us could well be academic. It is undesirable that the Court express any view on these matters, some of which could raise important questions of principle, until the plaintiff's pleading has reached its final form.

18. In the circumstances, in my opinion, the appropriate course is to allow the appeal and to remit the matter to a single judge of the Court to enable him to consider any objections which may be raised by the defendant to the amendments now foreshadowed to the statement of claim once those further amendments have been framed. The learned judge will then also be able to rule on the submission put on behalf of the defendant that the plaintiff has abandoned the claims now sought to be raised (see Wentworth v. Woollahra Municipal Council, Full High Court, unreported, 13 November 1984). Until the plaintiff has finally committed himself to the formulation of the amendments now indicated, it is inappropriate that any comment be made on this matter also.

19. In the circumstances, there should be no order for costs of these proceedings before the learned judge or on this appeal.

20. I would propose the following orders:

1. That the appeal be allowed.
2. That the orders 1 and 2 made by a single judge of the Court on 3 August 1984 be set aside.
3. That the matter be remitted to the Court constituted by a single judge to be dealt with in accordance with these reasons and in the light of the further amendments now sought to be made to the statement of claim.
4. That there be no order for the costs of the motion before the single judge or of this appeal.