Re Tytel Pty Limited and Ors v Australian Telecommunications Commission [1988] FCA 28 (12 February 1988)

FEDERAL COURT OF AUSTRALIA

Re: TYTEL PTY. LIMITED and ORS.
And: AUSTRALIAN TELECOMMUNICATIONS COMMISSION
No. G355 of 1985
Practice and Procedure

COURT

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION
Sheppard J.(1)

CATCHWORDS

Practice and Procedure - motion by party for order giving leave to join additional respondent - principles to be applied - consideration of complex allegations in statement of claim.

Federal Court Rules, Order 6, rule 8; Order 11, rule 16; Order 29, rule 2.

Trade Practices Act 1974, ss. 46, 52, 53, 75B and 82.

Telecommunications Act 1975, ss. 6 and 80.

HEARING

SYDNEY
12:2:1988

ORDER

The applicants' notice of motion of 22 May 1987 be dismissed.

The applicants pay to Standard Telephones and Cables Pty Limited its costs thereof.

The costs of the respondent, Australian Telecommunications Commission, be reserved.

NOTE: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

Counsel for the Applicants: Mr. F.G. Lever

Solicitors for the Applicants: Marshall Marks

Counsel for the Respondent: Dr. G. Flick

Solicitors for the Respondent: Australian Government Solicitor

Counsel for Standard Telephones: D.M. Bennett,Q.C. and Cables Pty Limited

Solicitors for Standard: Freehill Hollingdale and Page Telephones and Cables Pty Limited

DECISION

To be determined is a motion by the applicants to join as a respondent in these proceedings Standard Telephones and Cables Pty Limited. The motion claimed certain other relief but this is not now sought. The motion is made pursuant to Order 6, rule 8 of the Federal Court Rules which, so far as relevant, provides that where a person who is not a party is a person whose joinder as a party is necessary to ensure that all matters in dispute in the proceeding may be effectually and completely determined and adjudicated upon, the Court, on application by any party, may order that he be added as a party.

2. The matter has had a lengthy and complex history. Initially there was an application for interlocutory injunctive relief brought by the applicants against the existing respondent ("Telecom"). This hearing lasted some 16 days. The interlocutory relief was refused. Since then the matter has been in the list for directions on a number of occasions and the applicants' application and statement of claim have undergone substantial amendment. The motion with which I am concerned was taken out on 22 May last and was adjourned on some three occasions before eventually being heard.

3. The applicants, through their counsel, have submitted a yet further amended application and further amended statement of claim in each of which relief is sought and allegations are made not only against Telecom but also against Standard Telephones and Cables Pty Limited ("S.T.C."). It is submitted by counsel for S.T.C. that the allegations made in the further amended statement of claim do not disclose a cause of action against S.T.C. with the consequence that I should refuse the joinder which is sought. In passing I should say that I have thought it appropriate - no argument to the contrary was raised by either counsel - to apply the principles propounded in General Steel Industries Inc. v. Commissioner for Railways (N.S.W.) [1964] HCA 69; (1964) 112 CLR 125 in determining the question whether joinder should be permitted. I think that this is in accordance with ordinary practice. In the present case the applicants would be entitled as of right to sue S.T.C. in a separate proceeding. They would be entitled to maintain their action against it unless the Court decided that the statement of claim disclosed no cause of action with the result that it should be struck out; see Order 11, rule 16. It seems to me that I ought not refuse the application unless the statement of claim as it affects S.T.C. discloses no cause of action against it.

4. The causes of action upon which the applicants rely in their claims against both Telecom and S.T.C. are based upon the provisions of s. 46, s. 52 and s. 53 of the Trade Practices Act 1974 ("the Act"). Section 46 is the provision of the Act which proscribes restrictive trade practices which may be subsumed under the term monopolization. It should be observed that the provision is that which was in force before amendments to the Act were made in 1986 by the Trade Practices Revision Act 1986. Section 52 is, of course, the well-known provision in Part V of the Act which proscribes corporations from engaging in conduct that is misleading or deceptive or is likely to mislead or deceive. Section 53 contains a number of specific provisions proscribing the misdescription of goods and services in various respects.

5. The further amended application does not in terms refer to s. 52 or s. 53 but it is plain from the statement of claim and the fact that the applicants claim damages as well as injunctive relief that the two sections are relied upon.

6. The background of the matter may be shortly stated. Section 80 of the Telecommunications Act 1975 exempts Telecom from liability for customs duty. Nevertheless it is alleged by the applicants that it was at all times ministerial policy to compel Telecom in formulating its pricing structure for various articles so to price them as to equate the position of Telecom to that of private importers so that competition between Telecom and private undertakings would be on an equal footing. The provisions of the Customs Tariff were such that at all material times telephones imported from Japan carried an import duty of 30 per cent of the price or value of the telephones; telephones imported from Taiwan carried no duty. It follows that an importer selling in Australia a telephone imported from Taiwan was in a more advantageous position than an importer from Japan because of the difference in the duty which was payable. In essence the case made by the applicants is that Telecom, aided and abetted by S.T.C., represented to a number of persons, including the relevant Minister, that the telephones which S.T.C. imported for resale to Telecom were imported from Taiwan rather than Japan from which they in fact came. In broad outline it is claimed that in this way S.T.C. facilitated breaches of the Act which are pleaded against Telecom. It is also alleged that S.T.C. itself engaged in misleading and deceptive conduct in certain respects to be mentioned in detail a little later.

7. The statement of claim is lengthy and complex but it is not possible to deal adequately with the matters in contest without referring at length to its provisions. Paragraph 8 alleges that Telecom controls and at all material times controlled the system pursuant to which the Telecommunications Service is provided throughout Australia. In support of this allegation reference is made to some of the provisions of the Telecommunications Act. Paragraph 9 alleges that Telecom is and was at all material times the only person with power to authorize another person, inter alia, to operate a telecommunications installation within Australia. Again, reference is made to certain of the provisions of the Telecommunications Act. Paragraph 13 refers to s. 6 of the Telecommunications Act which provides that Telecom is bound to perform its functions in such a manner as will best meet the social, industrial and commercial needs of the Australian people for telecommunications services. Paragraph 14 is consequential upon the preceding paragraphs and alleges that Telecom is and was at all material times in a position substantially to control one or more of a number of markets in Australia. These include markets for telecommunications installations and services, premium telephones and standard telephones.

8. Paragraph 15 alleges that Telecom was and is at all material times in a position to acquire from persons within Australia telephones which were and are wholly manufactured overseas and imported into Australia or assembled in Australia from telephone components manufactured overseas and imported into Australia. This was alleged to be the case in circumstances where neither Telecom nor its suppliers were liable to pay customs duties in relation to such imports but where customs duties were otherwise payable in respect of imports by persons not connected directly or indirectly with Telecom. Reference is made to s. 80 of the Telecommunications Act which, as has been indicated, provides that Telecom is not subject to taxation under any law of the Commonwealth of Australia or of a State or Territory. Paragraph 16 alleges that the applicants and other persons were at all material times in a position to acquire from persons within or outside Australia telephones which were wholly manufactured overseas or assembled in Australia from components manufactured overseas but only in circumstances where the applicants and such other persons were liable to pay customs duties in relation to them. Paragraph 17 of the statement of claim is as follows:-

"17. Since about 1981 the first respondent

(Telecom) has from time to time determined
the prices at which it sells and offers to
sell telephones which are either:

(a) wholly manufactured overseas and
imported into Australia or

(b) assembled in Australia from components
manufactured overseas and imported into
Australia,

by adding to the price it would otherwise
have sold or offered to sell those telephones
an additional charge equal to the customs,
import and like taxes which it would have by
law been required to pay had it not been for
the exemption from liability referred to in
paragraph 15 above ('the competitive
loading')".

9. Particulars appended to para. 17 refer to a number of occasions upon which Telecom has undertaken or indicated to various organizations and groups that it would include a notional allowance for customs duties when calculating its sales prices and rental charges for various items of equipment. The particulars specifically allege communication of the practices to the applicants and to the Minister responsible for telecommunications and the Commonwealth Government. It is alleged that the practices became widely known in the telecommunications industry.

10. After para. 17 there follow a number of paragraphs alleging facts and circumstances upon which the applicants rely to establish that Telecom had taken advantage of its power substantially to control the market for the acquisition and supply of various items used in the telecommunications industry. Amongst the allegations are those contained in para. 40 which alleges that in taking advantage of its power substantially to control the market for the acquisition and control of telephones, Telecom, in breach of s. 46 of the Trade Practices Act, did so for one or more of a number of specified purposes. These are the proscribed purposes referred to in the section and include the purpose of eliminating or substantially damaging the first applicant, being a competitor or potential competitor of Telecom in the acquisition and supply of telephones, and of deterring or preventing the first applicant from engaging in competitive conduct with Telecom in respect of the supply of telephones. Paragraph 41 alleges that by reason of the conduct of Telecom the first applicant has suffered loss and damage.

11. The allegations made in the paragraphs of the further amended statement of claim from and including para. 18 down to and including para. 41 do not concern S.T.C. but it should be said in passing that submissions were made by counsel for Telecom that I should strike out those paragraphs on the ground that they disclosed no cause of action against it. The reason for this submission was that such control of the market which Telecom had stemmed from its statutory obligation to conduct its operations in such a manner as would best meet the social, industrial and commercial needs of the Australian people for telecommunications services. Telecom, so it was submitted, had two distinct functions. It was a statutory authority with a statutory duty to regulate and control telecommunications services in Australia in the best interests of the Australian people and it was also a commercial organization which carried on commercial activity in competition with other organizations in the industry whose affairs it was obliged to supervise and control because of the regulatory duties and functions which it has under the Telecommunications Act. In the submission of counsel for Telecom there was thus a potential area of conflict in the operation of the relevant provisions of the Telecommunications Act and the Trade Practices Act which could only be resolved as a matter of statutory construction. In the submission of counsel for Telecom the provisions of s. 46 of the Trade Practices Act should be read in such a way that Telecom would not be found to have control of any market simply because of the powers and duties which were conferred upon it by its own Act. Section 46 of the Trade Practices Act should therefore be read down so as to exclude from its operation a statutory authority such as Telecom provided it exercised its powers in good faith.

12. On an earlier occasion I said that I was not prepared to determine that question on an application to strike out a pleading but that I thought the point might be the subject of separate determination on a statement of agreed facts as a point of law particularly as the resolution of the point in favour of Telecom would probably put an end to the applicants' ability to rely on the provisions of s. 46. I refer generally to Order 29, rule 2 of the Court's rules.

13. Paragraph 42 of the further amended statement of claim is the first of a series of paragraphs which contain allegations which implicate both Telecom and S.T.C. Paragraph 42 alleges that early in 1985 Telecom commenced to acquire from S.T.C. telephones described as the "Versatel" which were and which Telecom well knew were wholly manufactured in Japan and imported into Australia. Paragraph 43 alleges that from about June 1985 until about August 1985 Telecom sold and offered to sell by retail Versatel telephones for the price of $299.00 for one telephone and for a price less than $299.00 for each telephone sold in quantities of two or more. Paragraph 44 alleges that from August 1985 and thereafter Telecom sold and offered to sell by retail the Versatel telephone for $349.00 for one telephone and for a price less than $349.00 where sales were made in quantities of two or more.

14. Paragraph 45 alleges that at all material times the first and third applicants and a company, Access Communications Pty Limited ("Access"), are and have been competitors of Telecom in the acquisition and supply of telephones. The statement of claim goes on to allege that since October 1982 Access sold and offered to sell by wholesale to other persons telephones described as Teleace which were wholly manufactured overseas and imported into Australia. Since November 1984 the first applicant has manufactured in Australia and sold and offered to sell by retail a telephone known as model 731. The third applicant has also manufactured and sold this telephone in that period. Paragraph 49 refers to the fact that rates of customs duties for telephones imported into Japan were 30 per cent and that there was no duty payable for telephones imported from Taiwan.

15. Paragraph 50 is as follows:-

"50. At all material times the first respondent
knowing that it was manufactured in Japan
treated the Versatel telephone for the
purposes of applying the competitive loading
as if it was manufactured in Taiwan and not
in Japan.

PARTICULARS

The first respondent did not add any amount
in respect of the competitive loading to the
price at which it sold or offered to sell
the Versatel telephone in Australia".

16. Paragraphs 52 and 53 are as follows:-

"52. As a consequence of the matters referred to
in paragraphs 50 and 51 above the first
respondent was able to sell and offer to sell
the Versatel telephone in Australia at the
prices particularised in paragraphs 43 and 44
above which were prices lower than the first
respondent would otherwise have been able to
sell or offer to sell Versatel telephones had
it applied the appropriate competitive
loading or had it priced the Versatel
telephone after taking into account its costs
of purchase and after taking into account the
appropriate competitive loading.

53. By engaging in the conduct referred to in
paragraphs 42 to 52 above the first
respondent:-

(a) took advantage of its power
substantially to control the market for
the acquisition and supply of premium
telephones and

(b) acted for purposes other than those
provided for in section 6 of the
Telecommunications Act".

17. Paragraph 54 alleges that, in taking advantage of its power substantially to control the market for the acquisition and supply of premium telephones, Telecom, in breach of s. 46 of the Act, did so for one or more of a number of purposes, including the purpose of eliminating or substantially damaging the applicants and Access being competitors of Telecom in relation to the supply of the Teleace and telephone model 731.

18. It is next necessary to consider the terms of para. 55 and the particulars appended thereto. These allege breaches by Telecom of ss. 52 and 53 of the Act. Paragraph 55 is as follows: -

"55. The first respondent (Telecom), by not
applying the competitive loading to the
Versatel telephone, represented to:

(a) the Minister for Telecommunications,
other Ministers of the Crown and the
Commonwealth Government and/or
alternatively to

(b) Australian Telecommunications
Development Association and/or
alternatively to

(c) manufacturers, importers and suppliers
of competitive telephones and/or
alternatively to

(d) the applicants.

that the Versatel telephone was manufactured
in Taiwan or in some place in respect of
which customs duty was not payable on the
importation of such telephones and was not
thereby subject to the competitive loading
and could therefore be sold at the prices at
which it was sold by the first respondent
without the addition of the competitive
loading.

PARTICULARS

(a) In memorandum CSP/865 dated 9 November
1984 the first respondent represented to
the responsible Minister that the
Versatel telephone was manufactured in
Taiwan for the purposes of application
of the competitive loading.

(b) The first respondent's public commitment
to apply the competitive loading in
appropriate circumstances was a policy
well known in the telecommunications
industry and was well known to: -

(i) the Australian Telecommunications
Development Association,

(ii) manufacturers, importers and
suppliers of telecommunications
equipment (including telephones)
and

(iii) the applicants

(c) In late 1984 Peter Eaton on behalf of
the first respondent explained the
application of the competitive loading
to Christopher Tyree on behalf of the
applicants in Melbourne.

(d) Because the applicants were familiar
with the pricing structure applicable to
premium telephones similar to the
Versatel telephone including: -

(i) the price of such telephones
could be purchased in Japan and
Taiwan and

(ii) the applicable rates of import
and customs duty,

the applicants knew and understood from
the first respondent's pricing of the
Versatel telephone that no import or
customs duty was being added to the
price at which the Versatel telephone
was being sold by the first respondent
in Australia.

(e) On 19 August 1985 in response to a
letter from the first applicant to the
Minister for Industry Technology and
Commerce dated 1 July 1985 the first
respondent advised the Minister and the
Secretary of the Department of
Communications that the first respondent
was applying the appropriate competitive
loading to the Versatel telephone".

19. The applicants contend that the allegations made by them in para. 55 disclose not only a breach of s. 52 of the Act but also a breach of s. 53 which provides, inter alia, that a corporation shall not in trade or commerce in connection with the supply of goods falsely represent that the goods had a particular history or make a false or misleading representation concerning the place of origin of goods.

20. Paragraph 60 alleges that as a consequence of Telecom's conduct referred to in paras. 42 to 59, the first applicant has been hindered in the sale of its model 731 telephone and has thereby suffered loss and damage.

21. Paragraph 61 contains the critical allegations against S.T.C. and it is again necessary to set it out in full together with the particulars which are appended to it. However, because of the length of it, I have included it as Schedule 1 to these reasons rather than set it out in the body of them.

22. Paragraph 62 alleges that by engaging in the conduct particularized in para. 61 S.T.C. aided and abetted or was directly or indirectly knowingly concerned in or a party to Telecom's contraventions of the provisions of ss. 46, 52 and 53 of the Act.

23. Paragraph 63 alleges that, by engaging in the conduct pleaded in para. 61, S.T.C., by representing that the Versatel telephone was manufactured in Taiwan has, in trade or commerce, engaged in conduct that was misleading or deceptive or was likely to mislead or deceive in contravention of s. 52 of the Act. Similarly, para. 64 alleges that S.T.C. engaged in conduct which constituted a contravention of s. 53 of the Act.

24. The concluding paragraphs of the statement of claim are paras. 65 and 66 which are as follows: -

"65. The second respondent's (S.T.C.'s) conduct
particularised in paragraph 61 above induced
the first respondent (Telecom) to treat the
Versatel telephone as if it were manufactured
in Taiwan and not to apply the competitive
loading appropriate to premium telephones
manufactured in Japan.

66. As a consequence of the second respondent's
conduct, which induced the first respondent
not to apply the appropriate competitive
loading, the first respondent was able to,
and did in fact sell and offer to sell the
Versatel telephone by retail in Australia at
the prices particularised in paragraphs 43
and 44 above thus causing the applicants to
suffer loss and damage".

25. Before proceeding I should refer to certain further provisions of the Act. Section 82 thereof provides that a person who suffers loss or damage by conduct of another person that was done in contravention of a provision of Part IV (relevantly s. 46) or Part V (relevantly ss. 52 and 53) may recover the amount of the loss or damage by action against that other person "or against any person involved in the contravention". Section 75B provides that a reference to a person involved in the contravention of a provision of Part IV or Part V shall be read as a reference, inter alia, to a person who has aided, abetted, counselled or procured the contravention, or has been in any way, directly or indirectly, knowingly concerned in, or party to, the contravention. These provisions were in part the subject of consideration by the High Court in Yorke v. Lucas [1985] HCA 65; (1985) 158 CLR 661 where the High Court held that the provisions of para. (a) - the aiding and abetting provisions - imported the requirements of the criminal law. Amongst other things, Mason A.C.J. and Wilson, Deane and Dawson JJ. said (p 669) that notwithstanding that s. 75B operated as an adjunct to the imposition of civil liability, its derivation was to be found in the criminal law and there was nothing to support the view that the concepts which it introduced should be given a new or a special meaning. Earlier they had said (p 667) that under the criminal law a person, in order to form the requisite intent, must have knowledge of the essential matters which go to make up the offence whether or not he knows that those matters amount to a crime. The High Court was not concerned with para. 75B(c) of the Act (being knowingly concerned in or party to a contravention), but the word "knowingly" imports into the provision similar considerations to those which apply to an allegation of aiding and abetting a contravention.

26. It follows that, for the applicants to succeed against S.T.C. on the grounds that it aided and abetted Telecom or was knowingly concerned in or party to Telecom's contravention, it must plead and prove facts and circumstances which will enable the Court to conclude that S.T.C. had the requisite knowledge and intent. That matter is at the heart of the submissions made by counsel for S.T.C. in the present case.

27. Ultimately the matter must be considered in the light of the allegations which appear in the further amended statement of claim. However, in support of his case, counsel for the applicants relied upon a number of documents which came into his clients' possession as a result of discovery by Telecom at a time before any question of the joinder of S.T.C. had arisen. These documents are the subject of an order restricting their publication, but it is necessary to refer to them in order to make some assessment of the nature and strength of the case which the applicants have. Because of the confidential nature of the documents, I have not included the analysis of them in these reasons but have appended it as Schedule 2. Until further order publication of the analysis contained in Schedule 2 is restricted to Telecom and S.T.C. and their legal representatives and to the legal representatives of the applicants.

28. Notwithstanding the light which this analysis throws on the problem, one must ultimately have regard only to the allegations in the further amended statement of claim. It would not be fair to either party to resolve the matter by reference only to the documents which are in evidence. It would not be fair to the applicants to take such a course because, if the matter proceeds to a hearing, the documents to which reference has been made may constitute only some of the evidence upon which the applicants will be able to rely. It would not be fair to Telecom or S.T.C. because they are entitled to have the case against them pleaded in a proper fashion and not to be referred to a collection of documents leaving it to them to divine how the case against them is to be put. Nevertheless the documents are important in my opinion because they provide a basis upon which the various allegations, particularly those contained in the particulars appended to para. 61 of the statement of claim, should be viewed. I have set out the various paragraphs of these particulars in Schedule 1 to this judgment and I do not repeat them. I make the following comments in relation to them: -

(a) There is support for this allegation in the documents

to which I have referred.

(b) & (c) There does not appear to be any support for these

allegations in the documents.

(d), (e) &

(f) These allegations are supported in the documents.

(g) I have not referred to this matter in my analysis but

there is in evidence such a letter and it supports
the allegation which is made.

(h) This allegation is supported by the documents but

does not of itself take the applicants' case very
far. It is common ground that the telephones were
manufactured in Japan but the question concerns the
place where it was intended that the telephones, the
subject of the order, were to be manufactured.

(i) This is not supported by the documents but is

probably a matter which the applicants will have
little difficulty in leading evidence about.

(j) I have not referred to this matter in the analysis,

but the allegation is supported by the documents. Of
itself, however, it does not seem to me to take the
applicants' case very far.

(k) This is supported by the documents.

(l) This is a reference to the advertising and

promotional material mentioned in paras. 4 and 5 of
Schedule 2. For reasons which will emerge, I regard
the material referred to in para. 5 as having
substantial importance.

(m) This document is amongst those analyzed and the

allegation is supported by it.

(n) This is borne out by the documents.

(o) This is also borne out by the documents and has been

referred to.

(p) The documents do not suggest that anything was done

but this does not mean that there may not have been
some other form of advice. In any event it seems
clear on the face of other documents, particularly
those referred to in paras. 4 and 5 of the analysis,
that both parties knew that by that time the
telephone was likely to be manufactured in Japan and
not Taiwan.

(q) Similar comments can be made in relation to the

documents mentioned in this paragraph.

(r) This is borne out by the documents.

(s) This is borne out by the documents except that the

outer cartons were not marked with the name of the
country of manufacture.

(t) This is not entirely borne out by the documents but

it is likely to be established by evidence led by the
applicants.

(u) This is not borne out by the documents and is a

contentious allegation. It is plainly something
which S.T.C. would deny. No particulars are given of
the facts and circumstances which would lead one to
infer that S.T.C. knew that Telecom would rely on
this information in deciding whether to apply the
competitive price loading as if the telephone were
manufactured in Japan.

(v) Obviously, if the matter proceeds, discovery will be

held and leave to administer interrogatories will
probably be granted. These are steps which must be
borne in mind, but the question now is whether the
allegations made in the statement of claim against
S.T.C. sufficiently show a cause of action against
it, whether because it aided and abetted or was
directly or indirectly knowingly concerned in or a
party to Telecom's alleged contraventions of the Act
or because it was itself a principal which engaged in
misleading or deceptive conduct in contravention of
s. 52 of the Act or other conduct in contravention of
s. 53 thereof.

29. The critical allegation against S.T.C. insofar as it is alleged to be implicated as a principal is to be found in para. 65 to which I have earlier referred. The gravamen of the allegation is that S.T.C.'s conduct as pleaded in para. 61 induced Telecom to treat the Versatel telephone as if it were manufactured in Taiwan and not in Japan.

30. Two things need to be said about this allegation. Firstly such an allegation does not to my mind sit very well with the documents referred to in paras. 4 and 5 of Schedule 2. The statements made in those documents may eventually be challenged, but the various statements which were made suggest that Telecom was not misled by what S.T.C. told it. It was as aware as S.T.C. that for whatever reasons, none of the telephones was manufactured in Taiwan and that all of the telephones were manufactured in Japan.

31. The second thing that needs to be noticed in connection with para. 65 of the further amended statement of claim is that it is Telecom which is alleged to have been misled. No argument was addressed on the significance of this allegation, but there is a real question in my mind whether the allegation is a relevant one when one takes into account the fact that Telecom itself cannot relevantly be said to be a consumer, as distinct from a distributor or retailer, of telephones. It was a supplier of them to members of the public, but it is not suggested that any member of the public was misled by what S.T.C. told Telecom. In Parkdale Custom Built Furniture Pty Limited v. Puxu Pty Limited [1982] HCA 44; (1982) 149 CLR 191 Mason J. (as he was) said (pp. 202-3):-

"Section 52(1) is expressed in terms of broad
generalities which are explicitly preserved by s.
52(2). The general words of s. 52(1) should be
widely interpreted without being read down by
reference to the heading of Pt. V 'CONSUMER
PROTECTION' or to the more specific succeeding
sections (see Hornsby Building Information Centre
Pty Limited v. Sydney Building Information Centre
Limited [1978] HCA 11; (1978) 140 CLR 216 at p 225).
Although s. 52(1) is intended to protect members
of the public in their capacity as consumers of
goods and services, competitors may seek an
injunction to restrain breaches (s. 80(1)(c); Reg.
v. Federal Court of Australia; Ex parte Pilkington
ACI. (Operations) Pty Limited [1978] HCA 60; (1978) 142 CLR
113. The remedy to prevent deception of the
public often has the incidental effect of
protecting a competing trader's goodwill which
would be also injured by that deception.

Nevertheless, it is important to recall that s.
52(1) is 'not concerned, as such, with any
unfairness of competition in trade as between two
traders' (Hornsby (1978) 140 CLR, at p 226;
cf. s. 5 of the United States Federal Trade
Commission Act 1914). It is not directed
exclusively or even primarily to situations of
passing-off; it extends to any conduct that is
likely to mislead or deceive as, for example, the
making of negligent statements and false
representations as to the quality of goods. It is
not enough that conduct damages a rival trader; it
must mislead or deceive or be likely to mislead or
deceive members of the public in their capacity as
consumers. Hornsby and McWilliam's Wines Pty
Limited v. McDonald's System of Australia Pty
Limited [1980] FCA 159; (1980) 49 FLR 455; 33 ALR 394 show
the importance of examining why the alleged
misconception arose".

32. The point may be one of some difficulty and I would not decide the matter in an application of this kind, particularly as the matter was not the subject of full argument. Nevertheless, the point needs to be noticed. In a similar category as para. 61 is para. 55 which contains the principal allegations of misleading and deceptive conduct against Telecom. The persons alleged to have been misled or deceived are the Minister for Telecommunications, other Ministers of the Crown, the Commonwealth Government, an association known as the Australian Telecommunications Development Association, manufacturers, importers and suppliers of competitive telephones and the applicants.

33. I leave those matters aside and proceed to another. It is based on a comparison between the allegations made in para. 55 against Telecom and the allegations made in para. 61 against S.T.C. This was a matter which was heavily relied upon by counsel for S.T.C. in their opposition to the motion. The essential matters relied upon in para. 61 are those alleged in sub-paras. (a) to (e) inclusive which appear prior to the particulars which are appended to the paragraph. Sub-paras. (b) and (c) allege that S.T.C. well knew and understood that the telephones were manufactured in Japan and not in Taiwan and that Telecom "would or could" apply the competitive loading as if the telephones were manufactured in Taiwan and not in Japan. Presumably this later allegation proceeds on the footing that the documents which were in existence would support the inference that Telecom, because of statements in them that the telephone came from Taiwan, would be used by Telecom to deceive others into believing that it was appropriate for it not to include any duty component in its pricing structure. I pause to say that it is one thing to allege that Telecom would apply the competitive loading policy as if the telephone were manufactured in Taiwan; it is quite another to say that it could apply it. An allegation that it could apply the policy on a wrong basis is open to the criticism that it does not allege some positive misconduct on Telecom's part but merely raises the possibility that it was in a position to misconduct itself if it chose to do so.

34. The critical allegations in para. 61 are those contained in sub-paras. (e) and (f) which when read together allege that S.T.C. well knew and understood that the documents provided by S.T.C. and which indicated the country of manufacture as Taiwan would or could be used by Telecom to represent that the telephones were manufactured in Taiwan for the purpose of avoiding "the application of the proper competitive loading to the price at which the Versatel telephone was sold or offered for sale in Australia". That, of course, is a most serious allegation. It is really an allegation that Telecom and S.T.C. were parties to a conspiracy entered into for the purpose of deceiving a number of people as to a matter critical to Telecom's pricing structure so that Telecom could offer the telephone at a substantially reduced price. But, insofar as the applicants seek to rely on causes of action against S.T.C. based on having aided and abetted Telecom or being knowingly concerned in or party to Telecom's alleged contravention of the Act the applicants have to go so far; see Yorke v. Lucas (supra). I add that I have the same difficulty with the use of the word could as I had in relation to sub-para. (c) of para. 61.

35. Sub-paragraph (f) of para. 61 does not say to whom the representations therein referred to would be made, but presumably the reader of the pleading is asked to understand that the representations refer to the representations pleaded against Telecom in para. 55. The only trouble with that conclusion is that the terms of para. 55 are such as to plead a representation, if not by silence, then by inaction, because the governing words of para. 55 are "by not applying the competitive loading to the Versatel telephone". So it is alleged against Telecom that it engaged in misleading or deceptive conduct by not applying the loading. In contrast it is alleged against S.T.C. in para. 61 that S.T.C. knew and understood that the documents relied upon would - I leave out "could" for the moment - be used by Telecom to support representations that the telephone was manufactured in Taiwan for the purpose of avoiding the application of the proper competitive loading policy to the price. Far from alleging the implication of S.T.C. in the making of a representation by some form of inaction, the allegation against S.T.C. in para. 61 alleges a positive course of conduct on the parts of both S.T.C. and Telecom in an endeavour to deceive the various persons who are mentioned in para. 55. That is not an allegation which is made against Telecom itself.

36. That circumstance was said by counsel for S.T.C. to be fatal to the causes of action against it based on s. 75B. I am not prepared to take that view in an application which is determined in accordance with principles similar to those which apply when a party seeks to strike out a pleading. S.T.C. could be sued without the joinder of Telecom and the fact that it is alleged to have been guilty of aiding and abetting or being knowingly implicated in a different form of misconduct from that alleged against Telecom, although unusual, is not in my view, fatal to the validity of the pleading. I should say, however, that if the matter were to proceed with the pleading as it is, the applicants might find themselves under a substantial tactical disadvantage. Their case would appear to have a fundamental inconsistency about it that might well affect their ability to prove any case at all.

37. I have reached the conclusion that the critical matters which will decide the fate of this application concern the conclusions which may properly be drawn as a result of a consideration of the accumulation of the various matters relied upon in the particulars appended to para. 61. Are they capable of supporting the allegations made in the various sub-paras. of para. 61 particularly those made in sub-para. (f). In my opinion they are not. The particulars go no further than to allege a chain of circumstances which show that in the way the matter developed the telephones were manufactured in Japan rather than Taiwan and that this fact was at all material times well known both to Telecom and S.T.C. Telecom was not misled by this. It knew exactly what the position was. So much is confirmed by paras. 4 and 5 of the analysis of the documents in Schedule 2. Furthermore, there is no allegation that S.T.C. took any part in the formulation of the pricing policy or in determining what price Telecom would charge for the telephones on the market. So far as the pleading discloses those were the matters which were under the control of Telecom alone. That is what one would expect to have been the case.

38. It was in those circumstances that counsel for S.T.C. submitted that this case was little different from one in which the supplier of a dangerous weapon was alleged to be implicated in a murder committed by the purchaser of the weapon or the supplier of a fast car was alleged to be implicated in a driving offence committed by the person to whom the car was supplied. These analogies may not be entirely apposite, but I think they help to underline what really is involved. The case is one where Telecom and its immediate supplier, S.T.C., knew the telephones came from Japan and not Taiwan; they knew that there were documents in existence which were incorrect but only Telecom had the function of fixing the price. Whether it fixed it as if the telephones had been imported from Taiwan or as if they had been imported from Japan was a matter solely within its control. There is no allegation that this was a matter in which S.T.C. played any part.

39. That leaves the more direct allegations made against S.T.C. in which it is sued as itself having engaged in misleading and deceptive conduct and for breaches of some of the provisions of s. 53. The two paragraphs are paras. 63 and 64. I am unable to perceive any matter particularized in the particulars under s. 61 which would justify the conclusion that S.T.C. represented to anyone other than Telecom the fact that the telephones were manufactured in Taiwan. Since Telecom was at all times aware of the true position, it could not have been misled or deceived by anything which was said by S.T.C. Furthermore, it becomes impossible in those circumstances for the applicants to claim that such conduct occasioned them any damage. If they suffered damage, it was because of Telecom's failure to include in the pricing structure a component which would reflect the amount of customs duty which would be payable by a private importer on telephones imported from Japan. That was a matter in which S.T.C. played no part whatever.

40. In the circumstances I have reached the conclusion that S.T.C. is not a party whose joinder is required with the consequence that the motion will be dismissed. I have not reached this conclusion lightly. I have endeavoured to keep in mind the principles propounded in the General Steel case earlier referred to. It is no light matter to prevent a party from pursuing a case at the threshold of the proceedings. On the other hand, if the case is clear, as I believe this one is, the Court should not hesitate to bring litigation to an end. As it is, this case will take months of preparation and many weeks of hearing. An order for costs will not provide the successful party with a complete indemnity. Solicitor and client costs usually substantially exceed party and party costs. Furthermore, the productive time of senior and other executives of both the applicants and Telecom will be affected in no small measure by the need they will have to prepare themselves to give evidence and to instruct legal representatives. If S.T.C. be added as a party, the complexity of the case will be exacerbated. This is no reason of itself to refuse the orders sought in the motion, but it is an important consideration to bear in mind when one comes to the critical question of whether there is or is not a cause of action against it disclosed in the pleadings. In cases of lesser complexity one might yield to the temptation of letting the matter run and not depriving an applicant of an opportunity of making a case at such an early stage. But the cost of litigation is so great, the burden of it on parties' time is so substantial and the lists of Courts such as this are so congested that, if the case is an appropriate case, the Court should not shrink from making the appropriate order.

41. Before concluding I should mention one matter that was put to me by counsel for Telecom. It concerns para. 13 of the statement of claim which says that Telecom is bound to perform its functions under the Telecommunications Act in accordance with the provisions of s. 6 of that Act. Counsel submitted that the allegation was of no relevance and ought to be omitted. He said that it was included in an earlier version of the statement of claim in which relief was claimed under the Administrative Decisions (Judicial Review) Act 1977 as well as under the Trade Practices Act. Because the applicants no longer seek relief under the Judicial Review Act the paragraph now has no purpose. Counsel for the applicants conceded that his client no longer sought relief under the Judicial Review Act but claimed that the paragraph still had some relevance, the nature of which would become more apparent when the applicants' reply to Telecom's defence was filed. In the circumstances I propose to do nothing about the matter except to note that no relief is claimed by the applicants pursuant to any provision of the Judicial Review Act.

42. It remains to deal with the question of costs. The applicants must pay S.T.C.'s costs of the motion. Telecom's costs of it will be reserved.