Australian Competition & Consumer Commission v Emerald Ocean Distributors Pty Ltd [2004] FCA 949 (8 April 2004)

Last Updated: 21 July 2004

FEDERAL COURT OF AUSTRALIA
Australian Competition & Consumer Commission v
Emerald Ocean Distributors Pty Ltd [2004] FCA 949

AUSTRALIAN COMPETITION AND CONSUMER COMMISSION v EMERALD OCEAN DISTRIBUTORS PTY LTD, SLENDERTONE HEALTH AND BEAUTY PTY LTD and SEAN O'DONOGHUE
W71 of 2004






CARR J
8 APRIL 2004
PERTH

IN THE FEDERAL COURT OF AUSTRALIA
WESTERN AUSTRALIA DISTRICT REGISTRY	W71 OF 2004

BETWEEN:	AUSTRALIAN COMPETITION AND CONSUMER COMMISSION APPLICANT
AND: BETWEEN: AND:	EMERALD OCEAN DISTRIBUTORS PTY LTD (ACN 074 316 304) FIRST RESPONDENT SLENDERTONE HEALTH AND BEAUTY PTY LTD (ACN 059 362 542) SECOND RESPONDENT SEAN O'DONOGHUE THIRD RESPONDENT EMERALD OCEAN DISTRIBUTORS PTY LTD (ACN 074 316 304) FIRST CROSS CLAIMANT SLENDERTONE HEALTH AND BEAUTY PTY LTD (ACN 059 362 542) SECOND CROSS CLAIMANT SEAN O'DONOGHUE THIRD CROSS CLAIMANT BIO-MEDICAL RESEARCH LIMITED CROSS RESPONDENT
JUDGE:	CARR J
DATE OF ORDER:	8 APRIL 2004
WHERE MADE:	PERTH

THE COURT ORDERS THAT:

1. The motion, notice of which was filed on 8 April 2004, be dismissed.
2. The respondents (applicants in the motion) pay the applicant’s costs of the motion.

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

IN THE FEDERAL COURT OF AUSTRALIA
WESTERN AUSTRALIA DISTRICT REGISTRY	W71 OF 2004

BETWEEN:

AUSTRALIAN COMPETITION AND CONSUMER COMMISSION APPLICANT

AND: BETWEEN: AND:

EMERALD OCEAN DISTRIBUTORS PTY LTD (ACN 074 316 304) FIRST RESPONDENT SLENDERTONE HEALTH AND BEAUTY PTY LTD (ACN 059 362 542) SECOND RESPONDENT SEAN O'DONOGHUE THIRD RESPONDENT EMERALD OCEAN DISTRIBUTORS PTY LTD (ACN 074 316 304) FIRST CROSS CLAIMANT SLENDERTONE HEALTH AND BEAUTY PTY LTD (ACN 059 362 542) SECOND CROSS CLAIMANT SEAN O'DONOGHUE THIRD CROSS CLAIMANT BIO-MEDICAL RESEARCH LIMITED CROSS RESPONDENT

JUDGE:	CARR J
DATE:	8 APRIL 2004
PLACE:	PERTH

REASONS FOR JUDGMENT

1 This is an application by the respondents for leave to appeal from an order made by RD Nicholson J on 23 March 2004 towards the end of the hearing of evidence in the principal application in this matter. The principal application has been stood over for the filing of written submissions.

2 In the principal application, filed on 19 July 2000, the applicant sought certain declarations in connection with the supply and promotion by the respondents of certain machines. The declarations sought are to the effect that the respondents engaged in misleading or deceptive conduct in contravention of s 52 of the Trade Practices Act 1974 (Cth) ("the Act") and made false representations contrary to s 53(c) of the Act.

3 In the prayer for relief in the further amended application as it stood immediately before the making of the order which the respondents wish to challenge, paragraph 9 read as follows:

‘9. An order that the Respondent refund any monies paid by members of the public to the Respondent to purchase any one or more of the Slendertone Products who:

9.1 believe that they have been misled or deceived by the Respondent in the promotion or supply of the Slendertone Products; and/or
9.2 contact either the Applicant or the Respondent in response to one or more of the corrective advertisements placed by the Respondent and request a refund of any monies paid by him or her or them to purchase one or more of the Slendertone Products from the Respondent.’

4 By the order to which I have just referred his Honour granted the applicant leave to delete paragraph 9 and to insert a new paragraph 9 reading as follows:

‘9. Findings of fact pursuant to Section 83 of the Trade Practices Act 1974 (Cth).’

5 The procedural history leading up to the application to amend is set out in his Honour’s reasons for judgment. It is not necessary for me to recite them here, save to mention that the amendment was sought apparently as a result of a decision of the Full Court of this Court in Medibank Private Ltd v Cassidy [2002] FCAFC 290; (2002) 124 FCR 40.

6 The application to amend was made on 12 March 2003, as I have mentioned, towards the end of the hearing of the evidence in the principal application. On that occasion counsel for the respondents advised his Honour that the respondents did not object to the application for leave to amend. The proposed amendments at that stage, so I was told in argument this morning, included three other paragraphs in which compensation was sought pursuant to s 87(1A) and s 87(1B) of the Act on behalf of a Mrs Cook.

7 However, the cross-respondent reserved its position and the issue of leave was held over. The applicant then closed its case, on the same date, subject to obtaining leave to amend in the terms proposed. On 17 December 2003 the applicant pressed the application for leave to amend which had been held over from 12 March 2003, but in terms of a substituted minute which confined the amendments to the deletion of paragraph 9 of the application and the substitution of the new paragraph 9. The amendments which were no longer pressed, being proposed new paragraphs 10, 11 and 12, were no longer sought because the Court has not yet made a finding of a relevant contravention. As I understand the position – see paragraph 11 of his Honour’s reasons – the motion for those amendments has not been withdrawn.

8 The respondents opposed the application for leave to amend. They argued that there was no evidence of any written consent, or any consent, of any person to take the action claiming compensation of the sort proposed to be claimed in paragraph 9 as it stood immediately prior to the order made by his Honour. His Honour accepted the applicant’s submission that it was premature for such consent to be required, given the terms of s 87(1B) in the form then applicable.

9 The respondents also argued that they would be prejudiced if the amendment were allowed. His Honour stated that as the proposed amendment bore no relation to the operation of s 87(1A) or s 87(1B) of the Act, the contentions for the respondents largely fell away. His Honour reasoned that the amendment sought did not alter the nature of the case against the respondents. The timing of the application to amend was neither belated nor prejudicial and notice had been given on 12 March 2003 with the application being made within an arguably reasonable time of the handing down of the decision of the Full Court in the Medibank Private case. His Honour noted further that the amendment had been made necessary by an unforeseen matter wholly outside the control of the applicant, namely a change of law resulting from the decision of a higher court. The amendment of itself, so his Honour stated, would not give rise to uncertainty or unlimited legal proceedings for an unlimited time because the safeguards of s 87(1B) must be observed, namely, that there must be an adverse finding of fact and the requisite consent.

10 The respondents also relied upon Henderson v Henderson [1843-60] All ER 378. His Honour rejected the application of the principles explained in that case on the basis that the appropriate time for the applicant to make an application under s 87(1B) of the Act was upon a determination being made by the Court that a respondent had contravened a relevant provision of the Act. The cause of action under that subsection did not accrue until the necessary findings of a contravention had been made.

11 His Honour rejected other submissions made on behalf of the cross-respondent in opposition to the application for leave to amend – see paragraphs 14-18 of his Honour’s reasons. I now turn to the application for leave to appeal.

12 There is a preliminary matter in relation to that application. The respondents sought a direction that the hearing of their application for leave to appeal should be deferred until judgment is given in the principal application. They said that they brought the application for leave to appeal simply to preserve their rights on a matter of procedure which they described as appearing "to be doubtful". The respondents say that if the substantive decision in the principal application is in their favour then the question of an appeal will be moot. If the substantive decision is against them, the respondents say that the question of remedies will arise and there will be various other matters to be dealt with.

13 I ruled that the motion for leave should not be deferred but should proceed today. I expressed the view that the application for leave to appeal should not be stood over in the manner proposed by the respondents. My principal reason for taking that view was that such a course would lead to unnecessary uncertainty about the content of the proceedings in the principal application.

14 The respondents have chosen to make the application for leave to appeal, both parties were in a position to argue the question of leave, and in my opinion, there was no valid argument for deferring the decision on the point.

15 There is no dispute between the parties that his Honour’s order is interlocutory. It is quite clearly an interlocutory order because it does not finally determine the rights of the parties to the proceedings: Carr v Finance Corporation of Australia Ltd (No 1) [1981] HCA 20; (1981) 147 CLR 246 at 248.

16 The respondents say that leave should be granted because the proposed appeal raises what they describe as important matters of practice and procedure which are "worthy of an Appeal Hearing". Those matters are said to be:

(a) whether the decision in Medibank Private Ltd requires all cases involving refunds to be dealt with in two stages;

(b) whether the prior written consent referred to in s 87(1B) can only be obtained after a finding of contravention of the Act has been made by a Court. The respondents contend that there now appears to be uncertainty on this point when comparing his Honour’s decision in the present matter with the decisions in Australian Competition and Consumer Commission v Shell Company of Australia Ltd (1997) 72 FCR 386 at 391-392 and Dingle v Commonwealth Development Bank of Australia (1989) FCR 61 at 64; and

(c) whether or not a decision made during a trial by the trial judge is to be considered interlocutory and be made the subject of interlocutory applications for leave, or whether it should be treated as part of a final decision from which a substantive appeal from the judgment may arise.

17 In argument this morning it emerged that the respondents had two main concerns in bringing this motion. First, to protect their position if the decision in the principal application went against them and they wanted to include this amendment decision in the subject matter of their appeal. Secondly, they did not want to face the prospect of the applicant commencing a further separate originating application to obtain relief for the respondents’ former customers under ss 87(1A) and 87(1B) of the Act.

18 The approach to be taken by a Court when considering whether leave should be granted to appeal from an interlocutory decision is well-settled. Generally such leave should not be granted unless the decision is attended with sufficient doubt to warrant it being reconsidered and that substantial injustice would result if leave were refused, on the assumption that the decision was wrong: Décor Corporation Pty Ltd v Dart Industries Inc (1991) 33 FCR 397 at 398. In some cases, as the respondents from their submissions clearly appreciate, it will be sufficient if the point sought to be raised is an important one and it would otherwise be appropriate.

19 I think that it needs to be borne in mind, even at the stage of considering whether to grant leave to appeal, that the decision sought to be challenged was the exercise of his Honour’s discretion on a point of practice or procedure. Sir Frederick Jordon’s warning in Re the Will of F B Gilbert (dec) (1946) 46 SR (NSW) 318 at p 323 was expressly endorsed by the High Court in Adam P Brown Male Fashions Pty Ltd v Philip Morris Inc [1981] HCA 39; (1981) 148 CLR 170 at p 177. The danger to the proper administration of justice in transferring all exercises of discretion in interlocutory matters from a judge in chambers to an appellate court is well recognised. Nevertheless, while a tight rein is kept on such interference, the High Court has made it clear both in the Adam P Brown Male Fashions case and in the more recent case of Queensland v J L Holdings Pty Ltd [1997] HCA 1; (1997) 189 CLR 146 that there are no rigid or exhaustive criteria operating as bars to loosening the rein on an appropriate occasion, including (as in the latter case) appeals from orders relating to pleadings.

20 However, in this case I am not persuaded that the decision is attended with sufficient doubt to warrant it being reconsidered. Nor do I think that any injustice would result if leave were refused, assuming the decision at first instance was wrong. Furthermore, I do not think that the proposed appeal raises either of the first two matters referred to by the respondents which I have summarised. In particular I do not see his Honour’s reasons as indicating any inconsistency with or raising any doubt about the decisions in the three cases mentioned. As to the third matter, in my view, if the respondents are unsuccessful in the principal application and wish to appeal, they may include if they wish as part of that appeal a ground to the effect that his Honour erred in law in granting leave to amend as part of the legal error or errors which they may assert affected the final judgment.

21 The respondents contended that they would be prejudiced by the proposed amendment because, as I understood the argument, they had prepared their case on the basis that they were to meet the claims for relief on behalf of members of the public in the application as formulated immediately before the latest amendments. In my view, the question whether the respondents would have been put to unnecessary expense in that regard is a matter which they can raise with the primary judge by way of seeking an appropriate costs order.

22 For the foregoing reasons I do not think that this is an appropriate case in which leave should be granted. In fact I think that it is a particularly inappropriate case although I fully understand the motives explained by counsel for the respondents. There is no question in my opinion, of any injustice to the respondents if leave were refused. The motion will be dismissed with costs.

I certify that the preceding twenty-two (22) numbered paragraphs are a true copy of the Reasons for Judgment herein of Justice Carr.

Associate:

Dated: 21 July 2004

Counsel for the Applicant:	Mr M J McPhee
Solicitors for the Applicant:	Messrs Michell Sillar McPhee
Counsel for the Respondent:	Mr D J Pratt
Solicitors for the Respondent:	Messrs Phillips Fox
Date of Hearing:	8 April 2004
Date of Judgment:	8 April 2004