FEDERAL COURT OF AUSTRALIA

B&K Holdings (Qld) Pty Ltd v Garmin Australasia Pty Ltd [2019] FCA 64

File number:

QUD 66 of 2018

Judge:

DERRINGTON J

Date of judgment:

7 February 2019

Catchwords:

PRACTICE AND PROCEDURE – respondent’s application for summary judgment – applicant’s application for leave to amend statement of claim – application of summary judgment principles in competition law context – whether insufficient evidence for reasonable prospects of success at trial

COMPETITION – misuse of market power – predatory pricing – exclusive dealing – restrictive contracts, arrangements or understandings – misleading or deceptive conduct – discussion of whether below variable or below avoidable cost pricing is necessary or sufficient element of a claim for misuse of market power – consideration of pleading that respondent supplied goods in retail market below the price otherwise available in wholesale market to applicant retailer

Legislation:

Competition and Consumer Act 2010 (Cth)

Evidence Act 1995 (Cth)

Federal Court of Australia Act 1976 (Cth)

Federal Court Rules 2011 (Cth)

Cases cited:

Australian Securities and Investments Commission, in the matter of Whitebox Trading Pty Ltd v Whitebox Trading Pty Ltd [2017] FCA 324

Boral Besser Masonry Ltd v Australian Competition and Consumer Commission (2003) 215 CLR 374

Brooks v Young (2018) 361 ALR 329

Fair Work Ombudsman v Austrend International Pty Ltd (2018) 273 IR 439

Gould v Vaggelas (1985) 157 CLR 215

NA & J Investments Pty Ltd v Minister Administering Water Management Act 2000 (No 4) [2012] NSWLEC 120

Queensland Wire Industries Pty Ltd v Broken Hill Proprietary Co Ltd (1989) 167 CLR 177

RB Lease Pty Ltd v Heron [2013] QCA 181

Re Queensland Co-operative Milling Association Ltd (1976) 25 FLR 169

Universal Music Australia Pty Ltd v Australian Competition and Consumer Commission (2003) 131 FCR 529

Date of hearing:

14 September 2018

Registry:

Queensland

Division:

General Division

National Practice Area:

Commercial and Corporations

Sub-area:

Economic Regulator, Competition and Access

Category:

Catchwords

Number of paragraphs:

79

Counsel for the Applicant:

Mr M Martin QC with Ms M Barnes

Solicitor for the Applicant:

Mills Oakley Lawyers

Counsel for the Respondent:

Ms R Higgins SC with Mr P Strickland

Solicitor for the Respondent:

Herbert Smith Freehills

ORDERS

QUD 66 of 2018

BETWEEN:

B&K HOLDINGS (QLD) PTY LTD ACN 092 133 858

Applicant

AND:

GARMIN AUSTRALASIA PTY LTD ACN 129 153 448

Respondent

JUDGE:

DERRINGTON J

DATE OF ORDER:

7 February 2019

THE COURT ORDERS THAT:

1.    The respondent’s application filed on 26 June 2018 and amended on 30 August 2018 is dismissed.

2.    Pursuant to s 23 of the Federal Court of Australia Act 1976 (Cth) and r 16.53 of the Federal Court Rules 2011 (Cth) the applicant has leave to amend its statement of claim in accordance with Annexure A to its interlocutory application filed on 11 September 2018.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

DERRINGTON J:

Introduction

1    In this action the respondent has made an application pursuant to s 31A(2) of the Federal Court of Australia Act 1976 (Cth) (FCA) and r 26.01(1)(a) of the Federal Court Rules 2011 (Cth) for summary judgment in respect of all or part of the applicant’s claim. Alternative relief is sought by way of an advance ruling under s 192A of the Evidence Act 1995 (Cth) as to the admissibility of certain parts of the applicant’s lay evidence which it has prepared for the purposes of trial.

2    In turn, the applicant has sought leave to amend its Statement of Claim in certain respects. Necessarily, that application and the application for summary judgment are inter-related.

Background facts

3    The applicant, B & K Holdings (Qld) Pty Ltd (B&K), and the respondent, Garmin Australasia Pty Ltd (Garmin), were previously engaged in a mutually beneficial business relationship pursuant to which B&K was the exclusive Australian distributor of certain of Garmin’s products: namely, GPS-enhanced bike computers and watches. B&K’s exclusive distributorship extended from January 2009 to June 2017. During that period it was the only authorised distributor from Garmin to supply those items to retail stores.

4    It appears that B&K’s business was successful. In the financial year ending June 2017 it had purchased up to $10.6 million worth of Garmin’s products for on-sale to retailers.

5    However, it also appears that in or around 2015 Garmin sought to require B&K to “transfer” to it B&K’s five best customers. In other words, Garmin wished to deal directly with those five leading retailers and in doing so no doubt increase its revenue on the product sold.

6    The termination of the distributorship agreement between the parties in June 2017 was not without some acrimony. It has, apparently, spawned several pieces of litigation, of which the present matter is one. There is no need to consider the other disputes for the resolution of the present application.

7    The gravamen of B&K’s allegation is that from about November 2017, Garmin put in place an arrangement whereby it reduced the prices of its GPS enhanced bike computers and watches by between 8% and 16%. It also commenced informing retailers that B&K was no longer a Garmin distributor. B&K also asserted that in March 2018, Garmin sent a memo to many of its retailers warning that B&K was not an authorised dealer and inviting them to purchase directly from Garmin. There does not appear to be any doubt that this memo was, in fact, sent.

8    B&K also alleged that Garmin has commenced distributing through a retailer trading under the name “Ozzy Gadgets”, and that Garmin and Ozzy Gadgets have entered into an agreement which prohibits the former from supplying B&K with Garmin products.

The claims

9    B&K’s claims against Garmin are articulated in its proposed Amended Statement of Claim. Of significance is its claim pursuant to s 46 of the Competition and Consumer Act 2010 (Cth) (CCA). That claim is founded upon the alleged price reductions in November 2017. The quintessential allegation is made at paragraph 18, which reads:

18.    The reduced prices pleaded in paragraphs 14 and 15 herein are less than the cost to the respondent applicant of acquiring and supplying the discounted Garmin products from suppliers of those products outside of Australia particulars of which will be provided after discovery.

10    B&K allege that, as a consequence of the matters in paragraph 18, Garmin misused its market power in contravention of s 46(1) of the CCA. That section provides:

(1)    A corporation that has a substantial degree of power in a market must not engage in conduct that has the purpose, or has or is likely to have the effect, of substantially lessening competition in:

    (a)    that market; or

(b)    any other market in which that corporation, or a body corporate that is related to that corporation:

(i)    supplies goods or services, or is likely to supply goods or services; or

(ii)    supplies goods or services, or is likely to supply goods or services, indirectly through one or more other persons; or

(c)    any other market in which that corporation, or a body corporate that is related to that corporation:

(i)    acquires goods or services, or is likely to acquire goods or services; or

(ii)    acquires goods or services, or is likely to acquire goods or services, indirectly through one or more other persons.

11    Otherwise, B&K alleged that Garmin, by agreeing and giving effect to the provision of the supply agreement with Ozzy Gadgets which prohibited that company from supplying B&K with Garmin products, contravened s 45(1) of the CCA and engaged in “exclusive dealing” in contravention of s 47 of the CCA.

12    B&K also alleged that Garmin engaged in misleading or deceptive conduct by the making of misrepresentations to B&K’s erstwhile customers that B&K was no longer able to supply Garmin products.

Garmin’s arguments on summary judgment

13    Garmin filed substantial material on the summary judgment application and, for advancing its argument, read five affidavits, the pleadings, and further, tendered eight of the respondent’s affidavits. It also filed substantial written submissions. Although the written submissions, in part, invited the Court to engage in some qualitative assessment of the veracity of the evidence which B&K advanced for the purposes of trial, during the course of the hearing it was prepared to confine its arguments to some of the more substantive points.

14    In relation to the misuse of market power allegation under s 46 of the CCA, Garmin was prepared to advance its argument on summary judgment solely on the basis that the claim could not succeed because B&K did not allege that Garmin sold its products below their “avoidable costs”. That being so, it is not necessary to deal with much of the arguments concerning the veracity of the evidence which B&K had filed for the purposes of the trial.

15    In relation to the claims under ss 45(1) and 47 of the CCA, Garmin’s substantive argument was that B&K’s claims could not succeed because the counterfactual scenario to the alleged conduct would not establish a better market outcome.

16    As to the claims for misleading and deceptive conduct, Garmin alleged that B&K had failed to establish any sufficient causal nexus between the alleged misconduct and the sustaining of any loss by it.

Summary judgment principles

17    The principles applicable to the granting of summary judgment in this Court have been assayed on a number of occasions, and there is no need for any further independent analysis. In Fair Work Ombudsman v Austrend International Pty Ltd (2018) 273 IR 439, Gilmour J identified them as follows:

Summary judgment principles

8    The respondents' application is made pursuant to s 31A(2) of the Federal Court of Australia Act 1976 (Cth) (the FCA Act), and r 26.01(1)(a) of the Federal Court Rules 2011 (Cth) (the Rules). …

9    The relevant test under both the FCA Act and the Rules, the burden of satisfying which is on the respondents, is whether the Court is satisfied that the FWO has no reasonable prospect of successfully prosecuting the proceeding or part of the proceeding.

10    Section 31A of the FCA Act relevantly provides:

(2)     The Court may give judgment for one party against another in relation to the whole or any part of a proceeding if:

(a)    the first party is defending the proceeding or that part of the proceeding; and

(b)     the Court is satisfied that the other party has no reasonable prospect of successfully prosecuting the proceeding or that part of the proceeding.

(3)     For the purposes of this section, a defence or a proceeding or part of a proceeding need not be:

(a)     hopeless; or

(b)     bound to fail;

(c)     for it to have no reasonable prospect of success.

(4)     This section does not limit any powers that the Court has apart from this section.

11    The meaning and reach of s 31A is well established. The relevant general principles are not in contest.

12    It is well accepted the power to dismiss an action summarily is not exercised lightly. In Danthanarayana v Commonwealth of Australia [2016] FCAFC 114, the Full Court said, at [4], that:

…to summarily dismiss a proceeding, and thereby preclude a person from having their case determined on its merits at a final hearing, is a serious step taken only with great care and if it is possible to conclude with confidence that there is no reasonable prospect of success; this is so despite the fact that under s 31A(2) of the Federal Court of Australia Act 1976 (Cth) … the power to summarily dismiss a proceeding is not dependent on the case being “hopeless” or “bound to fail” for it to have no reasonable prospect of success (Spencer v Commonwealth [2010] HCA 28 ; (2010) 241 CLR 118 at [17]–[26]).

13    Section 31A lowers the bar for obtaining summary judgment. The inquiry is whether there is a ‘reasonable’ prospect of prosecuting the proceeding or part of the proceeding, not whether a certain and concluded determination could be made that the proceeding or part of the proceeding would necessarily fail. Judgment may be granted even if it cannot be said the case is so clearly untenable that it could not possibly succeed: Spencer v Commonwealth of Australia (2010) 241 CLR 118 at [51]–[60] (per Hayne, Crennan, Kiefel and Bell JJ).

14    Once a moving party has established a prima facie case that the opponent has no reasonable prospect of success, the opposing party must respond by pointing to specific factual or evidentiary disputes that make a trial necessary. General or non-particularised denials will be insufficient to defeat the motion: Jefferson Ford Pty Ltd v Ford Motor Co of Australia Ltd (2008) 167 FCR 372 per Gordon J, as her Honour then was, at [127].

15    Her Honour then said:

[130] A fifth principle is that where there is a real issue of fact relevant to a pleaded cause of action, it is unlikely that that part of the proceeding has no prospect of success…So, for example, if the pleadings, affidavits, and other materials considered in connection with the summary judgment motion, reveal a factual dispute and that factual dispute must be resolved to determine whether or not the claim succeeds, it cannot be said that the claim has “no reasonable prospect of success”. . . On the other hand, if the factual contest is unnecessary to the resolution of the cause of action pleaded, then in the absence of other relevant material, there is nothing to prevent the court entering judgment on that claim.

[132] I now come to a final, sixth principle, which is that in determining whether a real issue of fact exists such as to preclude summary judgment, the court must draw all reasonable inferences - but only reasonable inferences - in favour of the non-moving party…I emphasise “reasonable” because it is on this point that the lowering of the bar effected by s 31A becomes clear. By distinguishing between “hopeless” cases and those without reasonable prospects for success, the statute makes clear that the court need not (indeed, must not) refuse summary judgment on the basis of a factual dispute said to arise only from a plausible, as opposed to a reasonable, inference.

16    In a separate joint judgment in Spencer, French CJ and Gummow J stated at [25] that:

Where there are factual issues capable of being disputed and in dispute, summary dismissal should not be awarded to the respondent simply because the Court has formed the view that the applicant is unlikely to succeed on the factual issue.

17    Their Honours added at [26] that ‘[w]here an application under s 31A requires consideration of apparently complex questions of fact, then the caution uttered by Lord Hope is relevant’. This is a reference to his Lordship's decision in Three Rivers District Council v Governor and Company of the Bank of England (No 3) [2003] 2 AC 1 at 260-261, in which he stated:

[M]ore complex cases are unlikely to be capable of being resolved [by way of summary judgment] without conducting a mini-trial on the documents without discovery and without oral evidence… that is not the object of the rule. It is designed to deal with cases that are not fit for trial at all.

18 In Jefferson Ford, Finkelstein J said at [23] that:

In other words, the section requires the judge to conduct what might loosely be described as a preliminary trial and look more closely than he would under an O 14 application to a party's assertion that there is a real question of law or fact to be decided. Such an assertion is to be examined with a critical eye. The judge is to decide whether the opposing party has evidence of sufficient quality and weight to be able to succeed at trial. There will be cases where the asserted facts appear to be so improbable that there is no point in allowing them to go to trial. There will be others where the opposing party has not been able to show that the asserted facts are likely to be established at a trial.

19    In George v Fletcher [2010] FCAFC 53, Ryan and Logan JJ said, at [75], after referring to the judgment of Lindgren J in White Industries Australia Ltd v Federal Commissioner of Taxation (2007) 160 FCR 298, at [50]–[54]:

[Section] 31A is not concerned just with pleadings but with substance, not form. The mere presence of a factual controversy, however trifling, implausible, tenuous or tangentially relevant is not a bar to the exercise of the power conferred by s 31A to grant summary judgment. That would be inconsistent with the way in which the phrase “no reasonable prospect of success” is to be read in light of s 31A(3) (and s 17A(3)).

20    Accordingly, the mere existence of a factual dispute is not necessarily a bar to a grant of summary judgment. Rather the Court is required to evaluate the quality and weight of the evidence. When this leads to a conclusion that the version of the facts asserted by the party resisting the motion is either so improbable, or fanciful, or trifling, or implausible, or tenuous then summary judgment must be granted. So understood there is, in such a case, no real issue of fact: Australian Securities and Investments Commission v Cassimatis (2013) FCR 256 at [46]-[47].

18    The above principles are equally applicable in the present case and, in particular, the observations of Lord Hope in the Three Rivers case concerning the granting of summary judgment in complex cases.

19    It is also relevant to observe, as did Doyle J in Brooks v Young (2018) 361 ALR 329 at [34], that the modern tests for summary judgment do not require a case to be hopeless or “bound to fail” before the power will be exercised. The bar is not so low. The Court only has to be satisfied that there is “no reasonable prospect of successfully prosecuting the proceeding”. Doyle J subsequently said:

[35]    The nature of the test is such that it will not ordinarily be appropriate to determine a matter summarily where the outcome is likely to turn upon contested issues of fact. Similarly, it will not ordinarily be appropriate to resolve complex or unsettled issues of law on a summary judgment application, at least not where their determination may be bound up in contested issues of fact. Trkulja is an illustration of the caution that is necessary in such cases.

[36]    However, I do not understand this need for caution to prevent a matter being determined on a summary basis if, after a careful or detailed analysis of the relevant legal issues, a clear outcome emerges. To the contrary, if such analysis leads the Court to be satisfied the claim does not have a reasonable prospect of success, then the evident intention of r 232 is to permit the Court to enter summary judgment and save the parties and the Court the time and expense of the proposed proceedings and trial.

(footnote omitted).

20    It is also pertinent to keep in mind that on a summary judgment application, the question for the Court is not, in this case, whether the respondent is liable to the applicant, but whether the applicant has reasonable prospects of establishing that liability at trial: RB Lease Pty Ltd v Heron [2013] QCA 181, [14].

21    Here, the summary judgment application has been brought subsequent to B&K filing with the Court the affidavit material on which it intends to rely at trial. Indeed, it has been required on two occasions to file such material. Garmin seizes upon this fact as enhancing its application by asking the Court to assume that the evidence filed to date will not be improved. It can be accepted that, if it were shown that there was no other evidence B&K might obtain to support some factual matter, significant weight might be placed upon the failure to file evidence in that regard at this stage of the proceedings. However, that is not an inference which can be readily drawn. The matter is not yet set down for trial, and the possibility of B&K obtaining additional evidence to support any existing perceived deficiencies cannot be discounted. Whilst in a perfect or Halcyon world all of the evidence which will be adduced at trial is identified well in advance, that is not the reality of litigation which, of itself, is necessarily dynamic and fluid. It would not be appropriate to grant summary judgment on the basis that not all of the evidence has been identified at that point in time. It is only when it can be said with a reasonable degree of confidence that, on a particular point, no other evidence would be available, that the Court can proceed on the basis that all relevant evidence is before it.

Consideration

22    It ought to be kept firmly in mind that B&K’s application to amend in relation to the s 46 claim is intimately entwined with the application for summary judgment on that claim. If summary judgment is granted on the basis of the amended form of paragraph 18, it would follow that the proposed amendment should not be allowed.

The s 46 claim

23    Garmin advanced two major arguments in relation to the s 46 claim. The first was that the amended pleading does not allege that Garmin sold its products below the “avoidable costs” of production, and without such an allegation, the claim cannot possibly succeed. The second is that the claim as formulated seeks to protect competitors not competition. In essence, it was submitted that, were B&K to obtain the relief which it seeks, prices would necessarily increase, and that is the antithesis of the intended operation of the CCA provisions.

Is selling at below cost a necessary element of s 46?

24    For the purposes of the summary judgment application only, Garmin acknowledged that the market as alleged by B&K existed, and it had “a substantial degree of power” in that market. The only question which remained was whether it had engaged in conduct that had the purpose of, or was likely to have the effect of, substantially lessening competition. Garmin submitted that, in shortened terms, the question was whether Garmin had engaged in what was referred to as “predatory conduct.

25    Ms Higgins SC for Garmin placed substantial foundation upon the decision of the High Court in Boral Besser Masonry Ltd v Australian Competition and Consumer Commission (2003) 215 CLR 374. In that matter the ACCC had alleged that Boral Besser Masonry (Boral) had reduced the price at which it supplied and sold concrete products in Melbourne to levels which were at or below its cost of manufacturing and supplying those products by increasing its production capacity at one of its plants. That conduct was identified by the ACCC as taking advantage of substantial market power for the purpose of eliminating or damaging a competitor and preventing entry into the identified market. The ACCC had submitted that Boral’s supply of its products at below “avoidable costs” established, to some degree, that Boral had taken advantage of its substantial degree of power in the market. At first instance it was determined that the selling of product by Boral at below avoidable cost was a rational business decision in the prevailing market conditions, despite the fact that it continued for a prolonged period. That being so, the pricing behaviour and expansion of production capacity was found not to amount to taking advantage of market power. Rather, it was found to be a rational response to the conditions of intense competition. That decision was overturned in the Full Court (Beaumont, Merkel and Finkelstein JJ), which found that Boral had contravened s 46.

26    The majority of the High Court upheld Boral’s appeal. The primary ground was that Boral did not have a substantial degree of power in the relevant market as the ACCC had alleged. There was strong competition in the market and low barriers to entry, which had the consequence that it did not have the power to behave independently of competition or of competitive forces.

27    Despite the first determination that Boral did not have a substantial market power, the members of the Court also considered whether the conduct amounted to a misuse of market power and, in particular, whether predatory pricing was involved.

28    Garmin’s main argument on the s 46 case was that B&K’s reformulated case could not succeed as a matter of law. B&K had abandoned its allegation that Garmin had sold its products at below cost price and adopted an allegation that Garmin had reduced its price to a level below which B&K might acquire them from suppliers outside of Australia. From that, the two main arguments emerged. The first was that the effect of B&K’s complaint was that the market was being made more competitive, and all that was occurring as a result of Garmin’s conduct was that B&K, as a competitor, was suffering even though the consumers benefited as a result. It submitted that the relief sought by B&K did not seek to protect competition, but to protect one competitor. It was also said that if this relief were allowed, it would cause prices to increase such that the conduct cannot amount to a substantial lessening of competition, as competition is, so it was submitted, a “mechanism” for discovering and enforcing the supply of goods and services in “the cheapest possible way”: Re Queensland Co-operative Milling Association Ltd (1976) 25 FLR 169, 187–188. The second argument was that “a substantial lessening of competition requires a meaningful or relevant adverse impact on the competitive process, which plainly cannot be constituted by competitive, above-cost pricing.”

29    The submission that if the effect of the cessation of the alleged contravening conduct is that prices for the commodity in question will increase then the conduct cannot be a breach of s 46 because it is the antithesis of competition cannot be accepted. Were it to be so, predatory pricing would be permissible under the CCA, and that is obviously not the case. If a business with substantial market power utilises it for the purposes of substantially lessening competition by engaging in below cost pricing, the mere fact that the cessation of that conduct will cause prices to increase does not immunise the conduct. Of course, if the analysis was between the status quo ante and the consequence of preventing a continuance of contravening conduct, different considerations would apply. That, however, is not asserted to be the case here and nor is it apparent that such would be the case.

30    It was also submitted that the relief which would be granted to B&K if it succeeded on its allegation in paragraph 18 of the proposed Amended Statement of Claim would be, “in effect, [an] order that Garmin must in the future increase its prices to at least a level of B&Ks cost of acquisition”, which would allow them to compete. It is said that this defeats the objects of the CCA because it reduces competition and causes prices to increase. It was also submitted that the relief would require Garmin to constantly inquire of B&K as to the price for which Garmin products could be acquired by it and to set its prices accordingly. That, however, is to set up something of a “straw man” of an argument. The relief sought by B&K in relation to the s 46 claim is not to require Garmin to sell at specific prices in the future. It is for damages for loss caused by contravening conduct. Even if the remediation of the alleged contravention is in practical terms similar to that identified, it may not be that the alteration to Garmin’s pricing conduct would necessarily require it to sell its products at the price at which they can be acquired from overseas suppliers. Whether a price adjustment of that nature is required, and to what extent, is not possible to determine at this point in the litigation. No doubt it might be a matter which might be properly explored at trial but, at present, it is not an issue on which any definitive determination might be made.

31    However, Garmin reverted to its principal submission that if its pricing conduct is not “below-cost pricing” then, on its face, it does nothing to offend the CCA (ts18(12-14)). It was submitted that “if you’re not pricing below your own cost, then on its face, that’s competition, unless there’s anything to suggest otherwise”. In support of this main argument, Garmin relied heavily on the decision in Boral. Special emphasis was placed upon the joint judgment of Gaudron, Gummow and Hayne JJ for the propositions (at [160]) that Part IV of the CCA was concerned with the protection of competition and not consumers; that an act by one competitor to another, even with pure malice, does not, without more, contravene its provisions; and that:

it is in the interest of competition to permit firms with substantial degrees of power in the market (or, in the United States, a dominant position) to engage in vigorous price competition and that it would be a perverse result to render illegal the cutting of prices in order to maintain or increase market share.

32    With respect to predatory pricing being generally described as the practice of supplying goods below “avoidable costs”, Garmin relied upon paragraph [162] of their Honours’ reasons to the following effect:

In the modern predatory pricing cases, reference is made by the United States Supreme Court to pricing “above predatory levels”, and to “competition on the merits”; the court has said that low prices benefit consumers and do not threaten competition “so long as they are above predatory levels”. Again, in Brooke Group, the Supreme Court stated:

As a general rule, the exclusionary effect of prices above a relevant measure of cost either reflects the lower cost structure of the alleged predator, and so represents competition on the merits, or is beyond the practical ability of a judicial tribunal to control without courting intolerable risks of chilling legitimate price cutting.

Further, in Brooke Group, it was determined that price-cutting would be “predatory” if (a) the complainant seeking recovery proved that the prices complained of were below “an appropriate measure of its rival’s costs” and (b) the competitor had a reasonable prospect (under the Robinson-Patman Act) or a dangerous probability (under the Sherman Act) of recovering the losses suffered by later monopoly profits, recoupment being the ultimate object of an unlawful predatory pricing scheme.

(footnotes omitted).

33    In reliance on that paragraph, it was submitted that as paragraph 18 of the proposed Amended Statement of Claim does not allege that Garmin made its product available at below cost price, the alleged price cutting was not predatory. Ms Higgins SC submitted:

It’s not said to be below Garmin’s own costs. It’s not predatory. There is clear High Court authority that price cutting that is not predatory is competition on the merits. It is not a misuse of market power. It is competition at work, and it is perverse to seek to utilise the Act to prevent that.

34    Ms Higgins SC also relied upon the reasons of McHugh J in Boral, and particularly at paragraphs [268] to [273] and [280]. In that part of his Honour’s reasons he considered the concept of “predatory pricing” and how it fitted within the terms of s 46. He concluded that the structure of s 46 is not well suited for dealing with claims of predatory pricing. He observed (at [270]) that:

On the other hand, on the ACCC’s arguments, pricing below marginal or average variable cost with the intention of taking business from competitors is caught by the section even though it makes economic and business sense to do so.

And later at [272] – [273]:

[272] Richard A Posner, a judge and former Chief Judge of the United States Court of Appeals for the Seventh Circuit, has said that there are two conventional approaches to the identification of “predatory pricing”, one through intent and the other through costs, neither of which is adequate. To forbid pricing targeted at weakening or destroying a competitor forbids too much. That is because even if a seller wants to remove a competitor from the market, there is no rational antitrust objection to such conduct if the seller is able to undersell by reason of its lower costs. But too little may be forbidden also because intent may be impossible to prove and inadvertent below-cost pricing may be as damaging as intentional below-cost pricing. Posner defined “predatory pricing” as “pricing at a level calculated to exclude from the market an equally or more efficient competitor”.

[273] In my view, what is required is not a bright line rule about costs but a more sophisticated analysis of the firm, its conduct, the firm’s competitors, and the structure of the market not only at the time in which the firm has engaged in conduct allegedly in breach of the Act but also before and after that conduct.

35    There is much force in the above dicta of McHugh J and his subsequent comments at [280] especially in relation to the difficulties inherent in the precise delineation of the concept of predatory pricing and its functional inconsistencies with s 46. That said, whilst it is not entirely useful in the disposition of the matter before the Court, the statements in paragraph [273] tend to suggest that the question is substantially more complex than merely identifying that a party is supplying goods at prices below their avoidable costs.

36    A significant element of Garmin’s submissions on this point was the assertion that the object of the anti-competition provisions is to protect the interests of consumers and not competitors. Reference was made to Queensland Wire Industries Pty Ltd v Broken Hill Proprietary Co Ltd (1989) 167 CLR 177, 191 where Mason CJ and Wilson J held:

But the object of s 46 is to protect the interests of consumers, the operation of the section being predicated on the assumption that competition is a means to that end. Competition by its very nature is deliberate and ruthless. Competitors jockey for sales, the more effective competitors injuring the less effective by taking sales away. Competitors almost always try to “injure” each other in this way. This competition has never been a tort (see Keeble v Hickeringill (1809) 11 East 574; 103 ER 1127) and these injuries are the inevitable consequence of the competition s 46 is designed to foster. In fact, the purpose provisions in s 46(1) are cast in such a way as to prohibit conduct designed to threaten that competition — for example, s 46(1)(c) prohibits a firm with a substantial degree of market power from using that power to deter or prevent a rival from competing in a market. The question is simply whether a firm with a substantial degree of market power has used that power for a purpose proscribed in the section, thereby undermining competition, and the addition of a hostile intent inquiry would be superfluous and confusing.

37    The following passage from the reasons of Toohey J at 213 was also relied upon:

These distinctions have been drawn because Pt IV of the Act, which is designed to promote and preserve competition, must confront the problem caused by a competitor who is so successful as to eliminate rivals and thus defeat the legislative aim of promoting competition. If success is due to no more than superior skill and efficiency, little criticism can be made of the conduct involved. Not so, if there has been unfair business practice. And so constraints have been placed on competition. The nature of those constraints has been influenced by this distinction between predatory conduct and conventional business practice.

38    From the above, it was submitted that it was quite clear that a claim based on s 46 could not be maintained because it relied upon competition on the merits rather than pricing below cost, and that was not apt to lessen competition. In this respect, Garmin was prepared to put its application for summary judgment on the s 46 case solely on the basis that the conduct alleged in paragraph 18 of the proposed Amended Statement of Claim could not disclose a cause of action under that section (ts 23(43 – 45)).

39    Mr Martin QC for B&K submitted that the decision in Boral did not support the proposition that, where price reduction activity is relied upon as the relevant contravening conduct, a contravention of s 46 can only exist if the conduct amounts to below cost pricing. In support of that, he relied upon the observations of Gleeson CJ and Callinan J in Boral at [125] – [129]. In reply, Ms Higgins SC submitted that this passage supported rather than diminished Garmin’s argument to the effect that even below cost supplying may well not amount to a contravention of s 46.

40    It is true that in their joint reasons Gleeson CJ and Callinan J accepted that Boral’s actions in keeping prices down in an attempt to “hang on” in the market in the expectation that other suppliers would exit was a rational commercial response to a severe, albeit temporary, difficulty. That, their Honours said (at [44]), was “different from forcing prices down in order to damage or eliminate some competitors”.

41    Garmin submitted that paragraphs [125] [129] of Gleeson CJ and Callinan J’s reasons support its proposition that, in order for there to be predatory pricing, the supplier must sell its products below their “avoidable cost” or “variable cost”, and that even if pricing at that level occurs, a firm may well not be engaging in “predatory pricing”. Whilst the latter proposition can be derived from the paragraphs cited, the former does not. The observations of Gleeson CJ and Callinan J in [125] – [129] occurred in the course of a discussion about the pricing behaviour of businesses in competitive markets. Their Honours recognised that price cutting will always damage competitors, and that is part of successful competition, and that whilst damaging competitors is conduct which s 46 proscribes, that prohibition is only in the context of taking advantage of a substantial market power. The expressions “predatory pricing” or “recoupment” were identified as not being terms used in s 46 and, whilst they may be useful tools in any analysis, care needs to be exercised in their importation from different legislative contexts (at [124]). In that context, it needs to be recognised that in Queensland Wire Industries Pty Ltd v Broken Hill Proprietary Co Ltd (1989) 167 CLR 177, the High Court had rejected the proposition that “the concept of ‘taking advantage’ in s 46 involves some form of predatory behaviour or abuse of power going beyond that which follows from the terms of the statute itself” (at [124]–[125]). In Boral, Gleeson CJ and Callinan J emphasised (at [128]) there was nothing in s 46 which required a distinction to be drawn between pricing below or above “variable” or “avoidable” cost. Indeed, in the case before the Court it was apparent that the below cost pricing by Boral was the consequence of strong competition in difficult economic times. That being so, the mere supply of goods at below “variable” or “avoidable” cost did not necessarily mean that the supplier was engaging in conduct in contravention of s 46 or in predatory pricing. However, their Honours did not exclude the obverse, being that it was not necessary to establish below cost pricing for conduct to fall within the scope of s 46.

42    There is force in Garmin’s submission that, where the only activity engaged in by a market participant is price discounting, the relevant conduct may not necessarily contravene s 46 unless it involved the supplying of goods at below “variable” or “avoidable” cost. There is also force in the submission that such activity alone will not constitute a contravention. However, such propositions do not clearly emerge from the decision in Boral. The circumstances in that case involved price discounting by Boral in the circumstances of a highly competitive market in an industry which was experiencing difficult economic times. The reasons for judgment of all members of the Court stressed the relevance of the economic conditions and particular circumstances in which the impugned conduct occurred in determining the propriety of the conduct. At paragraph [129], Gleeson CJ and Callinan J observed:

If one begins with the fact that a firm is a monopolist, or is in a controlling or dominant position in a market, then, by hypothesis, such a firm has an ability to raise prices without fear of losing business. If such a firm reduces its prices, especially if it reduces them below variable cost, then it may be easy to attribute to the firm an anti-competitive objective, and to characterise its behaviour as predatory. But if one finds a firm that is operating in an intensely competitive environment, and a close examination of its pricing behaviour shows that it is responding to competitive pressure, then its conduct will bear a different character. That is the present case.

43    The second sentence in that paragraph leaves open the possibility that contravening conduct might occur even when the price discounting activity does not amount to supplying products at below their variable cost. It is true that the observations in paragraphs [160] [162] of the reasons of Gaudron, Gummow, and Hayne JJ tend to suggest that predatory pricing occurs where goods are supplied below their variable cost. However, even there, the principles are not stated in a way which would exclude the possibility that price discounting in some circumstances may be predatory even though the discounting was not to below cost levels. That being so, it is not possible, on an application for summary judgment, to accept the principal submission advanced by Garmin.

44    Moreover, a significant difficulty is that, even if it is the case that, in all circumstances, in order for price discounting to amount to predatory pricing it must be below avoidable cost levels that is not conclusive of the operation of s 46. As McHugh J in Boral emphasised in his reasons, the concept of predatory pricing does not fit well within the wording of s 46. That was a view also reflected in the reasons of the other members of the Court. At [125], Gleeson CJ and Callinan J rejected the proposition that the expression “taking advantage” in s 46 involves some form of predatory behaviour or abuse of power going beyond the words used in the section. As was submitted by B&K, the terms of s 46 do not, in themselves, suggest that the section can only be contravened if the impugned pricing behaviour involves reducing prices below avoidable cost. The question to be determined is whether a business with a substantial degree of market power has used that power for a purpose proscribed in s 46.

45    That being so, even if one were to accept Garmin’s principal submission, it would be insufficient to warrant the granting of summary relief under s 31A of the FCA.

46    To some extent, Garmin’s principal submission was founded on the assumption that B&K’s case under s 46 was based only on the allegation of the price reductions which Garmin introduced in November 2017. An analysis of B&K’s submissions reveals that is not so. The plea at paragraph 32 of the Statement of Claim shows that one of the claims under s 46, in part, relied upon Garmin’s failure to enter into a further distribution agreement with B&K, its refusal to supply goods to B&K, and its determination to supply them to retailers and retail customers despite B&K having been the largest supplier of Garmin products in Australia for some time. Whilst there exists a further claim pursuant to s 46 in paragraphs 34 and 35 of the pleading which appears to be reliant on Garmin’s price discounting, those allegations need to be read in the context of the pleading as a whole, including the allegations in paragraphs 23 to 31, which raise as important issues the market conditions and particular circumstances of the parties. In his address to the Court, Mr Martin QC relied upon a number of circumstantial matters as supporting the allegation that the price discounting conduct was designed to injure B&K and substantially lessen competition in the market. He referred to the background of the erstwhile business relationship between the parties and Garmin’s attempts to require B&K to transfer customers to it, which led to earlier proceedings in this Court, a settlement and extension of the exclusive dealership, a reduction in prices by Garmin in 2017 to a deliberate amount which effectively undercut B&K’s margins, and the existence of a buoyant market for Garmin’s products in which it had overwhelming market share and no economic justification for the price reduction. Mr Martin QC emphasised that from 2014 to 2017 there had been a number of new entrants into market for GPS-enhanced watches and bike computers, and that neither the entry of each of those entities or their combined effect had caused Garmin to decrease its prices in response.

47    In the result, Garmin’s application in relation to s 46 fails. It cannot be concluded, with the confidence necessary to grant relief under s 31A of the FCA, that B&K has no reasonable prospects of succeeding at trial on this cause of action. Its action is not based solely on the price cutting activities of Garmin. It is based upon a range of conduct by Garmin, of which price cutting is a dominant integer, which support a more than arguable case that Garmin used its substantial market power for the purpose of substantially reducing competition or the use of that market power was likely to have that effect. To the extent that an alternative claim is based upon Garmin’s price cutting activities alone, it is not clear from the decision in Boral that such conduct can only contravene s 46 where the supply of goods is at a price below the supplier’s avoidable cost of production. The indication in the reasons for judgment in Boral suggests that is not the case. The mere fact that the conduct might not amount to predatory pricing is not conclusive of the absence of a failure to comply with s 46.

48    This conclusion does not necessitate any accompanying determination that B&K’s case is strong. Indeed, there is much force in the submissions advanced by Garmin that even if its conduct was entered into for the purposes of removing B&K from the market, it does not follow that any contravention of s 46 has occurred. Nevertheless, the questions of the intent and rationale for the price reduction by Garmin require the trial process to provide an answer.

49    Given the manner in which Garmin was prepared to advance its submissions in relation to the s 46 cause of action, there is no need to consider the other grounds relied upon by it in its written submissions. That said, it is appropriate to note that its invitation for the Court to determine that there was insufficient evidence to establish an effect of a substantial lessening of competition would have involved the Court in an element of speculation as to what will be the state of the evidence at trial. Whilst it can be accepted that, in accordance with the directions made in the action to date, B&K’s evidence on this matter ought to have been filed already, the possibility of supplementary affidavits cannot be discounted. Garmin’s submissions on this point were also founded upon submissions to the effect that the evidence presently filed is not admissible or not wholly admissible. Submissions of this type may advance an argument to the effect that B&K have not presently adduced sufficient evidence to establish its causes of action. However, the question on this application is whether B&K has reasonable prospects of establishing its claims at trial: RB Lease Pty Ltd v Heron [2013] QCA 181, [14].

50    Garmin submitted that the evidence of Mr Brkic, a director of B&K, to the effect that his company was the only significant competitor to Garmin, is of insufficient weight to sustain that assertion. Why that is so is not immediately apparent if, as seems to be the case, that is the only evidence which has presently been adduced on the topic. It may be relatively slight evidence, but if it is the only evidence, the Court may act on it.

51    It was also submitted that B&K had presently failed to file sufficient evidence to establish that, in the absence of the alleged contravening conduct, it would be able to secure a reliable source of Garmin products from overseas sources at prices which would permit it to compete with Garmin. In support of that submission, it relied on the current price at which Garmin sells to retailers or wholesalers and the current price at which B&K might obtain stock from overseas. It follows, so the argument goes, that B&K will not be able to establish that, absent the conduct of Garmin, it could have operated as a competitive wholesaler. At this point there appears to be a slight disconnect between the submissions made by the parties. B&K’s submissions acknowledge that it is not able to compete with Garmin by acquiring stock from overseas. Indeed, it relied upon Garmin’s present pricing regime as evidence of Garmin’s market power and of its acts designed to force B&K out of the market. B&K’s submission is that whilst the anti-competitive conduct continued it is not able to compete in the market, and will be forced out if the conduct continues.

52    It can be accepted that B&K’s evidence as to what the position would be if the allegedly contravening conduct ceased is somewhat sparse. That said, its written submissions proceed on the basis that it was able to compete prior to Garmin’s price reductions. It might be supposed, in the absence of any other evidence, that the Court will be asked to consider the matter on the basis that Garmin will return its pricing of the relevant goods to the pre-conduct levels. There is a level of complexity in this issue which perhaps renders it inappropriate for determination on a summary judgment application. Nevertheless, it does not appear clear that B&K has no reasonable prospects of establishing that the counterfactual position would be it being able to compete in the market.

53    Although it is not an issue which is necessary to decide on this application, one might question the proposition that it is essential for an applicant in the position of B&K to establish the existence of a counterfactual from which past or future damage is ascertainable. It may well be that the CCA operates in a manner that an applicant is entitled to recover damage caused by a contravention of s 46 even though, had the respondent acted differently and in compliance with the CCA, it might have legitimately inflicted the same losses on the applicant.

The claims under ss 45 and 47

54    Garmin first argued that B&K’s allegation that the alleged prohibition on the supply of goods to it by Ozzy Gadgets was an exclusionary provision within the meaning of s 4D must fail. That has been acknowledged by B&K which, in the proposed Amended Statement of Claim, has deleted that allegation to the extent to which it might apply after 6 November 2017, being the date on which s 4D of the CCA was amended.

The claim under s 45

55    The primary argument advanced by Garmin in relation to B&K’s claim founded upon s 45 of the CCA was that B&K will not be able to establish the purpose or effect of substantially lessening competition. Garmin submitted that in order to ascertain the purpose or effect of the contract or arrangement, the Court must consider the competing set of circumstances, being the counterfactual which would exist absent the conduct of which B&K complain. Relevantly, it is alleged that B&K cannot establish that it could obtain reliable competitive wholesale supply from overseas suppliers or from Ozzy Gadgets which would enable it to compete in the market. It is also submitted that B&K could not obtain stock from Ozzy Gadgets at prices less than, or equal to, the alleged reduced Garmin wholesale prices.

56    B&K submitted that in the circumstances of the case, at least on a prima facie basis, the purpose of the prohibition on supply in the agreement with Ozzy Gadgets can be inferred to be to substantially lessen competition. In that sense, it submitted that it is possible to infer this factual conclusion from the circumstances it has alleged and in respect of which it has provided evidence. That includes the price reductions in the context of the prior dealings between itself and Garmin, including the attempt to obtain a transfer of B&K’s five best clients and the contents of its letters to retailers sent on 9 March 2018. There is some force in that submission, and it is sufficient to exclude the conclusion that B&K has no reasonable prospects of establishing that purpose at trial.

57    Garmin further submitted that B&K has not filed any evidence probative of the purpose for which Garmin included the prohibition on resupply in the Ozzy Gadgets agreement. Likewise, there is force in that submission. However, Garmin strongly resisted the making of any order for discovery at the stage of the close of pleadings and no order was made. That being so, the force which might otherwise exist in the submission is lessened substantially. On the other hand, B&K have emphasised that it has, to date, not been able to obtain the benefits of discovery from Garmin although the agitation of this point indicates, perhaps, why such an order should be made. It also relies on the inference which might be drawn from the terms of the agreement itself and that is a proposition which is supported by authority: Universal Music Australia Pty Ltd v Australian Competition and Consumer Commission (2003) 131 FCR 529, 588-589 at [253]-[259].

58    It was next argued by Garmin that, on the material presently before the Court, B&K could not establish that it suffered any loss or damage consequent upon the entry into the agreement between Garmin and Ozzy Gadgets. It was submitted the evidence before the Court showed that even if one assumed the counterfactual positionnamely that the contract with Ozzy Gadgets did not contain any clause prohibiting supply to B&K B&K could not show that it would be in a better financial position. This argument was founded upon the alleged inability of B&K to establish a reliable source of Garmin stock at a price which would enable it to compete.

59    For the purposes of asserting a lack of a reliable source of supply of Garmin product, Garmin pointed to a number of advertisements which were sent by email from Ozzy Gadgets to B&K. Those advertisements included statements such as “stock is limited, delays may occur as the sale continues” and “due to high demand over the sale period, fulfilment and delivery times may be delayed”. It was said that the contents of the advertisements sent to B&K were its business records and therefore evidence of their truth. However, none of the documents would seem to fit within s 147(1) of the Evidence Act 1995 (Cth). The mere fact that the advertisements were sent to B&K via email and were kept by it, does not generate any element of reliability necessary to accept the veracity of the documents. Even if such documents were, prima facie, admissible as to their truth, they are of the most tenuous nature. The statements have the appearance of advertising puffery seeking to induce sales rather than being statements of fact on which a Court might rely as being the actual circumstances existing between B&K and Ozzy Gadgets.

60    Secondly, Garmin sought to rely upon evidence as to the difference between the price at which B&K might acquire Garmin stock from Ozzy Gadgets and the alleged reduced wholesale prices at which Garmin sells the product. The purpose of this was to establish that the prices at which Garmin presently offers its goods for wholesale are substantially less than the retail prices which would be paid by B&K were they to acquire them as an ordinary retailer from Ozzy Gadgets. Ms Higgins SC for Garmin took the Court to various documents showing the sale prices at which Ozzy Gadgets had advertised various Garmin products. That process established the sale price of those products. Those prices were then compared to the prices at which Garmin presently sells product to wholesalers. Reference is also made to the wholesale price at which Garmin supplied its product prior to the price reduction.

61    As mentioned, the conclusion of the above exercise was submitted to be that even if the clause in the Ozzy Gadgets agreement prohibiting sale to B&K were removed, it would necessarily follow that B&K would not be able to source product at a price lower than the retail price offered by Ozzy Gadgets, with the result that it could not compete. However, in his affidavit of 3 August 2018, Mr Brkic gives some evidence that B&K would be able to source Garmin stock from overseas suppliers at a competitive price. Whilst paragraph 67 of that affidavit was objected to, the objection was not fully ventilated during the course of the hearing.

62    There is force in the submission that paragraph 67 of Mr Brkic’s affidavit is somewhat conclusory as to the profitability of any future business. However, it seems to have some foundation in fact and is at least indicative of a claim that B&K would be able to source Garmin product from overseas suppliers at satisfactorily low prices. For the purposes of an application under s 31A of the FCA his evidence is sufficient, albeit only just. It raises the material to the level where it cannot be said that B&K has no reasonable prospects of establishing a claim for damages under s 45. It must be kept in mind that for the purposes of the application, the question is not whether the B&K can now establish the fact alleged, but whether it has no reasonable prospects of establishing its case at trial.

63    Despite the above, the submissions made by Garmin highlight the present paucity of B&K’s evidence in support of its claim to damages under s 45 (as well as s 47). It is apparent that B&K must undertake a not insignificant amount of work to adduce satisfactory evidence for the purpose of any trial. That is concerning in the context of this matter where orders have been previously made requiring the filing of evidence but it is not sufficient to reach the conclusion that it will not be able to establish its claim.

64    The next argument advanced by Garmin was that the cause of action under s 45 of the CCA cannot succeed because the section does not apply in the present circumstances. It relied upon s 45(6), which provides that the section does not apply to, or in relation to, the giving effect to a provision of a contract, arrangement or understanding, or in relation to engaging in a concerted practice, by way of engaging in conduct that contravenes or would, but for the operation of s 47(10), contravene s 47. Garmin submits that “s 47 is, on its face, engaged”. That is admitted on the pleadings at paragraph 40. Garmin submitted that if the Court ultimately agrees with that proposition, it would necessarily dispense with the s 45 claims because of the anti-overlap provision in s 45(5A) of the CCA (as in force from 6 November 2017) or, s 45(6) (as in force before 6 November 2017). Again, there is some force in that submission.

65    B&K submitted that no ultimate decision ought to be made as to whether the distribution agreement with Ozzy Gadgets contravened s 47 until the hearing of the trial. It says the s 45 claim is an alternative to the s 47 claim and the final determination should await the outcome of the hearing and full debate on the terms of the Ozzy Gadgets agreement. There is also force in that proposition and it seems to be tacitly accepted by Garmin in its submissions referred to above. Whether the contract or agreement does contravene s 47 is a matter which needs to be determined at trial, despite what is said by Garmin. The issue is not entirely foreclosed by the pleadings because B&K has advanced the s 45 claim as an alternative, and in that claim may contest the applicability of s 47.

The s 47 claim

66    In relation to the claim under s 47 alleging that the agreement with Ozzy Gadgets was an “exclusive dealing” the substantial issue is whether the supply prohibition clause in the agreement had the purpose or likely effect of substantially lessening competition. The evidence surrounding this issue has been considered above when considering the claim advanced under s 46. That is not an issue which can properly be dealt with on a summary judgment application for the reasons identified. In any event, B&K produced sufficient material to negate the proposition that it had no reasonable prospect of establishing a cause of action under this section at trial.

Misleading or deceptive conduct claim

67    The substance of this claim is B&K’s allegation that in November and December 2017, Garmin made misleading representations to B&K’s customers with respect to its ability to supply Garmin products. The focus of Garmin’s attack on it is that B&K will be unable to establish causation and loss. It made no substantive submission that the representations were not made. Nor did it submit they were not misleading or deceptive. It is recognised that the omission to make submissions in that respect does not mean that Garmin accepts the representations had that quality. Whether they do or not will be a matter for trial. However, drawing the appropriate inferences in favour of the applicant on an application such as this, the representations were made in the course of business and were apparently calculated to induce B&K’s customers not to enter into agreements with it for the supply of stock. In such circumstances a fair inference of fact arises that the persons to whom the representations were made were induced to act upon them: Gould v Vaggelas (1984) 157 CLR 215, 236.

68    Garmin alleged that the causal nexus is not established because B&K has not acquired statements from the retailers to whom the misrepresentations were allegedly made. It said B&K will not be able to establish that the consequence of the misrepresentations was a reduction in sales. However, the causal question is one of fact. B&K has adduced evidence of the cessation of trading activities between itself and the retailers subsequent to the making of the representations. The alteration to the erstwhile pattern of trade was dramatic. In these circumstances, B&K submitted that the evidence sufficiently supports the inference that Garmin’s alleged misrepresentations achieved their intended effect, with the consequence of B&K suffering a loss in its sales. That submission should be accepted. There is sufficient material indicating the alleged detrimental sequelae of the making of the representations for a Court to find the necessary causal link. At the very least it is not possible to say in relation to this cause of action that B&K has no reasonable prospects of succeeding at trial. This is particularly so in the circumstances which evidence that B&K had a substantial business involving the distribution of Garmin products prior to the Garmin’s alleged contravening conduct and, so it would appear, substantial goodwill in relation to those products. The dramatic decline in sales occurred shortly after the making of the alleged representations with the consequence that it cannot be said that B&K has no reasonable prospect of establishing causation and loss.

69    The remaining submission made by Garmin was that B&K had not established that it suffered any loss consequent upon the alleged representation. A major plank of that argument is the submission that the sparse evidence of loss filed to date does not satisfactorily disentangle the losses occurring consequent upon the breaches of ss 45, 46 and 47 from those which may have occurred as a result of a contravention of s 18 of the Australian Consumer Law. Again, there is some force in that submission. However, the claim advanced by B&K is that the conduct of Garmin as a whole caused the losses of which complaint is made, and the misrepresentations were a part of that. There is no reason why the claims cannot be advanced in that manner even if the quantum of the various claims needs to be ascertained by use of the trial process. It is not in any way appropriate to seek to disentangle multiple causes of loss on a summary judgment application.

70    Again, there is force in these submissions of Garmin as to the paucity of the material presently available for the purposes of establishing loss. However, as has been indicated above, there is sufficient material to enable B&K to avoid the conclusion that it has no reasonable prospects of succeeding on this claim at trial.

Conclusion on summary judgment

71    It follows that in respect of each of the identified claims, it has not been established that B&K has no reasonable prospects of succeeding at trial. The degree of confidence with which this conclusion can be reached varies across the various causes of action. However, on the material available it cannot be said that any of them warrant their summary dismissal.

72    It follows that the application in respect of summary judgment should be dismissed.

Observations with respect to the applicant’s evidence

73    Despite B&K having successfully repelled the application for summary judgment, the hearing has demonstrated the paucity of a number of aspects of the evidence which B&K has adduced to date. Whilst, at this point in time, there is no need to speculate as to whether the slim and general evidence might withstand scrutiny at trial, the lack of detailed and precise evidence from B&K is a matter of great concern.

Alternative application – s 192A of the Evidence Act

74    By Garmin’s alternative application it sought advance rulings under s 192A of the Evidence Act 1995 (Cth) for the purposes of excluding parts of B&K’s evidence. Although the parties filed written submissions in relation to this topic it was not pressed in oral submissions. Largely that was because the making of submissions on summary judgment application consumed the entirety of the day set aside for the hearing of the application.

75    It can be accepted that the making of advanced rulings as to evidence under s 192A is a discretionary power to be utilised as a case management discretion: NA & J Investments Pty Ltd v Minister Administering Water Management Act 2000 (No 4) [2012] NSWLEC 120 at [40]; and is to be used keeping in mind the overarching purpose identified in s 37M of the FCA: Australian Securities and Investments Commission, in the matter of Whitebox Trading Pty Ltd v Whitebox Trading Pty Ltd [2017] FCA 324 at [21].

76    Whilst it can be recognised that the avoidance of wasted time at hearings is an objective that ought to be pursued, presently, the circumstances of this case are not such that the power in s 192A ought be exercised at this time. Whilst full force must be given to the fact that B&K has been afforded the opportunity to put on evidence, it is apparent from the submissions made in the summary judgment application that additional evidence is probably available to it. The identification of the need for more potent evidence on particular topics is, necessarily, the risk which a party faces when bringing a summary judgment application. There exists a risk that the ultimate consequence of the application is the improvement of the other party’s case. That may be the consequence in the circumstances of this matter, although it is not relevant to the exercise of discretion. It sufficies to say that, for present purposes, the time is not quite ripe for the exercise of power under s 192A of the Evidence Act. That is not to say that the exercise of such a power in this matter ought not to be considered in the future. If after B&K’s evidence is truly and finally completed its admissibility is wanting, it would then be appropriate to make such an application.

77    At the present time, the Court’s discretion to utilise the power ought not to be exercised.

78    The application in that respect is also dismissed.

79    A necessary consequence of the above is that the applicant’s application for leave to amend its Statement of Claim should be granted.

I certify that the preceding seventy-nine (79) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Derrington.

Associate:

Dated:    7 February 2019