FEDERAL COURT OF AUSTRALIA

PRACTICE AND PROCEDURE Ð application by respondent (ÒACCCÓ) for summary dismissal or striking out of pleadings Ð whether pleadings disclose a reasonable cause of action arising out of earlier proceeding by ACCC against company Ð defamation of company by ACCC Ð whether pleaded defamatory imputations capable of being conveyed by information issued by ACCC about its earlier proceeding Ð whether appropriate to determine capacity when dispute as to nature and extent of publication of matter complained of Ð whether aggravated and exemplary damages properly pleaded and particularised Ð injurious falsehood Ð whether elements of tort properly pleaded Ð abuse of process Ð whether elements of tort properly pleaded Ð misleading and deceptive conduct Ð whether acts complained of Òin trade or commerceÓ Ð misuse of market power Ð whether properly pleaded that respondent Òtook advantage ofÓ alleged market power Ð misfeasance in public office Ð whether elements of tort properly pleaded Ð intentional infliction of economic harm and interference with contractual relations Ð whether elements of torts properly pleaded Ð judicial review Ð whether decisions of ACCC to commence earlier proceeding and to issue information about it Òdecisions made under an enactmentÓ within the meaning of s 3 (1) of the Administrative Decisions (Judicial Review) Act 1977 (Cth) Ð whether proceeding should continue under Part IVA of Federal Court of Australia Act 1976 (Cth) Ð whether causes of action pleaded on behalf of group members.

WORDS AND PHRASES Ð Òunder an enactmentÓ

Federal Court of Australia Act 1976 (Cth), s 33N

Defamation Act 1974 (NSW), s 46.

Administrative Decisions (Judicial Review) Act 1977 (Cth), s 3 (1)

Trade Practices Act 1974 (Cth)

 

 

 

National Mutual Property Services (Australia) Pty Ltd v Citibank Savings Ltd (1995) 132 ALR 514, referred to

Australian Building Industries Pty Ltd v Stramit Corporation Ltd, unreported, FCA/FC, 1 December 1997, referred to

Sims v Wran [1984] 1 NSWLR 317, considered

McNicol v ACT Health Authority unreported, SC/ACT, referred to

Lazarus v Deutsche Lufthansa AG (1985) 1 NSWLR 188, referred to

Love v Mirror Newspapers Ltd [1980] 2 NSWLR, considered

Monte v Mirror Newspapers Ltd [1979] 2 NSWLR, referred to

Capital and Counties Bank Ltd v George Henty and Sons (1882) 7 App Cas 741, considered

Mirror Newspapers Ltd v Harrison (1982) 149 CLR 293, considered

Rigby v John Fairfax Group Pty Ltd unreported, CA (NSW), 1 February 1996, referred to

Jones v TCN Channel Nine Pty Ltd, unreported, SC (NSW)/Hunt CJ at CL, 7 April 1992, considered

P J Holdings Australia Pty Ltd v Hughes (1979) 25 ALR 538, considered

Watt v General Television Corp Pty Ltd [1998] 3 VR 501, referred to

Swimsure (Laboratories) Pty Ltd v McDonald [1979] 2 NSWLR 796, considered

White Industries (Qld) Pty Ltd v Flower & Hart (a firm) (1998) 156 ALR 169, considered

Hanrahan v Ainsworth (1990) 22 NSWLR 73, referred to

Concrete Constructions (NSW) Pty Ltd v Nelson (1990) 169 CLR 594, considered

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

Sanders v Snell (1998) 157 ALR 491, considered

Northern Territory v Mengel (1995) 185 CLR 307, considered

Allen v Flood [1898] AC 1, referred to

McKernan v Fraser (1931) 46 CLR 343, referred to

General Newspapers Pty Ltd v Telstra Corp (1993) 45 FCR 164, applied

Strictly Stainless Pty Ltd v Deputy Commissioner of Taxation, unreported, FCA/Davies J, 7 November 1993, referred to

Ruddy v Deputy Commissioner of Taxation, unreported, FCA/Kiefel J, 2 April 1998, referred to

Salerno v National Crime Authority (1997) 144 ALR 709, referred to

GIRAFFE WORLD AUSTRALIA PTY LIMITED (ACN 078 012 521) V AUSTRALIAN COMPETITION AND CONSUMER COMMISSION

NG 711 of 1998

JUDGE:          LINDGREN J

DATE:            4 DECEMBER 1998

PLACE:          SYDNEY

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	NG 711 of 1998

 

BETWEEN:	GIRAFFE WORLD AUSTRALIA PTY LIMITED (ACN 078 012 521) Applicant
AND:	AUSTRALIAN COMPETITION AND CONSUMER COMMISSION Respondent
JUDGE:		LINDGREN J
DATE OF ORDER:		4 DECEMBER 1998
WHERE MADE:		SYDNEY

 

THE COURT ORDERS THAT:

 

1.              The proceeding be dismissed in relation to the claims for relief in pars 4 (a) (viii), (c) and (d) and 5 of the application filed on 14 July 1998;

2.              The following paragraphs of the statement of claim filed on 14 July 1998 be struck out: 3 and 4, 8-10, 29-33, 34-36, 37-39, 40 and 41, 42 and 43, 44 and 45, and 46-49;

3.              The proceeding no longer continue under Part IVA of the Federal Court of Australia Act 1976 (Cth);

4.              The proceeding be listed at 4.15 pm on 8 December 1998 for the purpose of the making of further orders and directions, including an order as to the costs of the respondentÕs motion.

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

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	NG 711 of 1998

 

BETWEEN:	GIRAFFE WORLD AUSTRALIA PTY LIMITED (ACN 078 012 521) Applicant
AND:	AUSTRALIAN COMPETITION AND CONSUMER COMMISSION Respondent

 

JUDGE:	LINDGREN J
DATE:	4 DECEMBER 1998
PLACE:	SYDNEY

REASONS FOR JUDGMENT

INTRODUCTION

The respondent (Òthe ACCCÓ) moves by an amended notice of motion filed on 30 October 1998 for an order that the proceeding be dismissed either in whole or in part pursuant to O 20 r 2 of the Federal Court Rules, or, in the alternative, an order that the application and statement of claim be struck out in whole or in part pursuant to O 11 r 16. In addition, it moves for an order pursuant to s 33N of the Federal Court of Australia Act 1976 (Cth) (Òthe FCA ActÓ) that the proceeding no longer continue under Part IVA of that Act.

 

The motion is misconceived in so far as it seeks an order striking out the application pursuant to O 11 r 16. That rule deals only with pleadings. Pleadings are defined in O1 r 4 to include a statement of claim but not an application.

 

In the alternative to a striking out of that part of the statement of claim relating to defamation, the ACCC seeks to Òraise the following point of lawÓ, purportedly pursuant to O 11 r 9:

Òthat the matters complained of are not capable of bearing any one or more of the imputations pleaded in paragraph 23 of the Statement of Claim, and thus defaming the Plaintiff [sic - applicant] or any of the other Group Members.Ó

 

Order 20 r 2 provides, relevantly,

Ò(1) Where in any proceeding it appears to the Court that in relation to the proceeding generally or in relation to any claim for relief in the proceeding -

(a)           no reasonable cause of action is disclosed;

(b)           É; or

(c)           É;

the Court may order that the proceeding be stayed or dismissed generally or in relation to any claim for relief in the proceedingÓ.

Order 11 r 16 provides, relevantly,

ÒWhere a pleading Ð

(a) discloses no reasonable cause of action É

(b) É; or

(c) É;

the Court may at any stage of the proceeding order that the whole or any part of the pleading be struck outÓ.

Order 11 r 9 provides, relevantly,

ÒA party may by his pleading raise any point of lawÓ.

But a notice of motion is not a pleading. Order 11 r 9 is apt to have permitted the ACCC to raise, in its defence, the point of law that the matters complained of were not capable of giving rise to the imputations pleaded. The ACCC should have moved pursuant to O 29 r 2 for an order that this question of law be decided separately from any other question in the proceeding and before any trial. The parties have made submissions on the question mentioned and the procedural irregularity has not proved an obstacle to my dealing with it.

The principles and authorities relating to applications for summary dismissal and for a striking out represent well trodden territory. For recent reviews of them, see National Mutual Property Services (Australia) Pty Ltd v Citibank Savings Ltd (1995) 132 ALR 514 at 528-529 and Australian Building Industries Pty Ltd v Stramit Corporation Ltd (unreported, FCA/FC, 1 December 1997) at 24-27. In the present case, the applicant (ÒGiraffe WorldÓ) has pleaded numerous causes of action. A decision that some or all of them should be struck out has the potential to reduce substantially the burden of preparing for trial and the burden of the trial itself. Therefore there is merit in pursuing the present inquiry. Even if Giraffe World should be given leave to re-plead a cause of action struck out, its better articulation may narrow the issues to be litigated on the final hearing and result in a substantial saving of time.

 

BACKGROUND

The proceeding was commenced on 14 July 1998. It is related to proceeding NG 421 of 1998, commenced on 6 May 1998, in which the ACCC is applicant and Giraffe World is first respondent. In that proceeding, the ACCC alleges that Giraffe World engaged and is engaging in conduct that contravenes ss 52 (misleading or deceptive conduct), 57 (pyramid selling) and 61 (referral selling) of the Trade Practices Act 1974 (Cth) (Òthe TP ActÓ). On 6 May, interlocutory orders were made ex parte with effect until the return date of Friday 8 May, some of which, in effect, restrained Giraffe World from carrying on its business (that business was described in an interlocutory judgment in that proceeding, reported at (1998) 156 ALR 273). On 8 May, those orders were extended until 5 pm on Monday 11 May. However, they were not continued beyond that date and Giraffe World has been able to carry on its business, although ÒMareva injunctionsÓ have been in place against it.

 

The present proceeding arises out of two complaints by Giraffe World about certain conduct of the ACCC relating to proceeding NG 421 of 1998. First, Giraffe World complains that the ACCCÕs act in commencing that proceeding, and particularly in seeking ex parte interlocutory orders, in effect shutting down Giraffe WorldÕs business, was precipitous, particularly in light of the fact that the parties were at the time in communication about the question whether any aspect of that business contravened the TP Act. Second, Giraffe World complains about a media release issued by the ACCC on Thursday 7 May relating to proceeding NG 421 of 1998 and the ex parte relief granted the preceding day (a copy is Schedule A to the application) and a Department of Fair Trading memorandum on the same subject distributed, apparently among members of that Department, on 19 May (a copy is Schedule B to the application).

 

Schedule A is as follows:

ÒEx parte injunctions against pyramid selling scheme

Ex parte injunctions have been granted against Giraffe World Australia, its directors and other individuals over an alleged pyramid selling scheme after Australian Competition and Consumer Commission Federal Court action.

The ACCC alleged that Giraffe WorldÕs conduct contravened the referral selling and pyramid provisions of the Trade Practices Act 1974. The ACCC also alleged Giraffe World made false representations about its negative ion mats.

ÔThe ACCC sought the interlocutory orders after a number of complaints from consumers about the scheme,Õ ACCC Chairman, Professor Allan Fels, said today. ÔIt is understood more than 5,000 consumers were recruited, with more expected as Giraffe World opened Melbourne and Brisbane premises.

ÔThe scheme is believed to have been operating since July 1997. It involves purchasing a device, an Ôion-matÕ for $2,900. For an additional $350 consumers can join a Grow Rich scheme where they get a commission for recruiting new members. The commission increases according to the customers introduced.

ÔThe ACCC plans representative proceedings on behalf of consumers who suffered loss after taking part in the Giraffe World scheme.Õ

In the Federal Court, Sydney yesterday Justice Kevin Lindgren ordered:

á      that the other respondents be restrained from inducing any persons to participate in the Giraffe World Grow Rich scheme or any similar scheme;

á      that the respondents be restrained from promoting, advertising, holding out or participating in the Giraffe World Grow Rich scheme or any similar scheme; and

á      that the respondents be restrained from removing from the jurisdiction disposing of, mortgaging, assigning, charging or otherwise dealing with their assets other than for specific living business and legal expenses.

A directions hearing will be held at the Federal Court, Sydney on 8 May at 9.30 am.

For further information about this media release:

Professor Allan Fels, Chairman, É

Ms Lin Enright, Director, Public Relations É

MR 83/98

7 May 1998Ó.

There is no evidence of the extent to which the Schedule A news release was exposed in the media. However, there is evidence that it was posted on the Internet. There is also in evidence a computer print-out from the Internet dated 29 October 1998, showing that Schedule A was still accessible on the Internet as at that date, albeit with the following addition at the foot of the page:

Ò* The ex parte injunctions have been lifted. Giraffe World is continuing to carry on business. The case is proceeding on an injunction basis and no longer as a representative action. The next directions hearing is set down for 13 October 1998.Ó

The evidence does not reveal when this footnote was added.

Schedule B is as follows:

ÒCSD CONSUMER/MARKET PLACE CIRCULAR Ð MC 98/0/039

SUBJECT Ð GIRAFFE WORLD AUSTRALIA

Recently the Australian Competition and Consumer Commission (ACCC) was successful in gaining an ex parte injunction in the Federal Court against Giraffe World Australia, its directors and other individuals. Among other things, the injunction restrained the respondents from promoting the scheme or similar schemes and effectively froze the companyÕs assets.

The ACCC alleged that Giraffe WorldÕs conduct contravened the referral selling and pyramid selling provisions of the Trade Practices Act 1974. The ACCC also alleged that Giraffe World made false representations about its negative ion mats that are sold as part of the scheme.

The scheme involved purchasing the negative ion mats for $2,900. For an extra $350 consumers can join a Grow Rich scheme where they get a commission for recruiting new members. The latter aspect identifies the scheme as an illegal pyramid scheme.

The matter returned to the Federal Court on 8 May 1998 and the respondents were successful in having the injunction É [according to evidence led by the ACCC the word ÒliftedÓ appears here in the original] upon giving undertakings to quarantine all monies taken by the business during the Court process. The respondents have also lodged proceedings with the Court, on technical grounds, against ACCCÕs action.

INSTRUCTIONS

At the ACCCÕs request, all consumer complaints and enquiries relating to Giraffe World are to be forwarded immediately to Shane Adams on 9230 9120 or Geoff Williams on 9239 9128 of the ACCC.

ACCC fax number for urgent referral is 9223 1092.

Saroj Chand

Communications Unit

For further information regarding this circular please contact Bob Laughton, Fair Trading Investigations on telephone: É

This information will be available in CAS.Ó

I refer to the provenance and exposure of Schedule B immediately below.

 

REASONING

 

Publication of the words in Schedule B

The ACCC submits that it did not publish Schedule B and that in those circumstances no cause of action is maintainable against the ACCC in respect of it. Paragraphs 21 and 25 of the statement of claim plead simply that:

Ò21     On 19 May 1998, the Respondent published of, and concerning the Applicant, the words set out in Schedule ÔBÕ hereto.

....

25        On 19 May 1998, the Respondent published of, and concerning the Applicant, the words set out in Schedule ÔBÕ hereto.Ó

 

The evidence of Geoffrey Williams, the officer of the ACCC with responsibility for the conduct of the investigation into Giraffe World and for proceeding NG 421 of 1998, is that Schedule B was not published by the ACCC and that he had not seen the document until he read a copy annexed to an affidavit of Robin Han, a director of Giraffe World, sworn on 21 May 1998. He states that no document similar to Schedule B was forwarded by the ACCC to the Department of Fair Trading.

 

Malcolm Finger, an officer of the Department of Fair Trading, states that after he had a telephone conversation with Mr Williams in mid-May 1998, he caused information about proceeding NG 421 of 1998 to be given to his DepartmentÕs Customer Service and Community Education Division, which sent Schedule B by electronic mail to Departmental staff in New South Wales. Apparently, the purpose of this dissemination was to assist staff in Òanswering telephone and counter enquiriesÓ from the public. However, Mr Finger states that Schedule B has not been provided to persons outside the Department and, in particular, that it has not been made available on the Internet. This conflicts with the evidence given by Mr Han in his affidavit that the copy of Schedule B annexed to his affidavit is Òa copy of [a] printout from the InternetÓ. Giraffe World has not adduced further evidence establishing how Schedule B came into the possession of Mr Han.

 

The present evidence is clearly to the effect that the words in Schedule B were composed and published by officers of the Department of Fair Trading and not by officers of the ACCC. It therefore seems clear that Giraffe World will not be able to support par 21 or par 25 of its statement of claim on the final hearing. However, it appears from the evidence of Mr Finger that Schedule B was based on information provided to him over the telephone by Mr Williams of the ACCC. Perhaps Giraffe World will wish to amend to plead publication and republication.

 

Giraffe World submits that it is premature for the issue of publication to be decided finally at this stage and that it should have the opportunity of proving publication by the ACCC at trial after the ACCC has given discovery and answered any interrogatories to be administered.

 

I agree that the issue of the ACCCÕs responsibility for publication and republication of Òthe words set out in Schedule BÓ and therefore of any defamatory imputations arising from them, should not be determined finally on the present motion. It may emerge on the final hearing that Mr Williams provided the substance of the information contained in Schedule B to Mr Finger knowing that the natural and probable result would be its republication. If so it would be at least arguable that the ACCC, through Mr Williams, was responsible for their publication: see, for example, Sims v Wran [1984] 1 NSWLR 317 at 320 (politician making statement at press conference responsible for republication by press). Of course the fact, if established, that the document was distributed only to Departmental staff would not mean that there was no publication at all (see McNicol v ACT Health Authority (unreported, SC/ACT, Kelly J, 23 September 1988)) and would only have only an impact on damages and, possibly, the availability of certain defences, such as qualified privilege. It may also emerge that even if the words in Schedule B themselves were not republished to members of the public, the information conveyed by them was given orally by Departmental staff in response to inquiries from the public and, again, that the ACCC ought to have foreseen republication of that kind.

 

It follows that causes of action based on responsibility of the ACCC for publication and republication of the words in Schedule B are not so obviously untenable that they cannot possibly succeed. However, the present pars 21 and 25 of the statement of claim are quite inadequate to inform the ACCC of the publication and republications for which it is sought to be made liable: cf Lazarus v Deutsche Lufthansa AG (1985) 1 NSWLR 188 (Hunt J) at 193; Sims v Wran, above, at 320. Those advising Giraffe World should pay particular attention to s 9 of the Defamation Act 1974 (NSW). If the parties cannot agree on a form of direction to be made for a time for amendment of the existing pleading in the present respect or supply of particulars or both, I will formulate a direction.

 

I turn now to the causes of action pleaded by Giraffe World.

Defamation

 

In relation to the publication of Schedule ÒAÓ, Giraffe World pleads simply as follows:

Ò17.    On 7 May 1998 the Respondent published of, and concerning the Applicant, a Media Release, as set out in Schedule ÔAÕ hereto.

....

22.       On 7 May 1998 the Respondent published of, and concerning the Applicant, the words set out in Schedule ÔAÕ hereto.

....

24.       The words set out in Schedule ÔAÕ were issued in the form of a Media Release published throughout the States the [sic] Territories of Australia and intended for republication by the media generally.Ó

The statement of claim identifies ten imputations defamatory of Giraffe World said to arise from Schedule A. On the hearing of the ACCCÕs motion, Giraffe World identified a further seven defamatory imputations which it would seek to include in a foreshadowed amended statement of claim. Argument on the motion has proceeded with reference to all seventeen imputations, which are as follows:

Ò(i)      the Applicant had engaged in a pyramid selling scheme contrary to the Trade Practices Act.

(ii)           the Applicant was reasonably suspected of having engaged in a pyramid selling scheme contrary to the provisions of the Trade Practices Act.

(iii)          the conduct of the Applicant was such as to warrant proceedings being brought against it for having engaged in a pyramid selling scheme contrary to the provisions of the Trade Practices Act.

(iv)          the Applicant had engaged in a referral selling scheme contrary to the Trade Practices Act.

(v)           the Applicant was reasonably suspected of having engaged in a referral selling scheme contrary to the provisions of the Trade Practices Act.

(vi)          the conduct of the Applicant was such as to warrant proceedings being brought against it for having engaged in a referral selling scheme contrary to the provisions of the Trade Practices Act.

(vii)        the Applicant made false representations about its negative ion mats.

(viii)       the Applicant had induced persons to pay money for a worthless ion mat.

(ix)          the Applicant had induced persons to their financial detriment to participate in the Giraffe World Grow Rich Scheme.

(x)            the Applicant by obtaining moneys from more than 5,000 consumers had thereby cheated the Australian public of approximately 15 million dollars.

(xi)          the Applicant had been found by the Federal Court to have engaged in a pyramid selling scheme contrary to the provisions of the Trade Practices Act.

(xii)         the Applicant had been found by the Federal Court to have engaged in a referral selling scheme contrary to the provisions of the Trade Practices Act.

(xiii)       the Applicant had been found by the Federal Court to have made false representations about its negative ion mats.

(xiv)       the Applicant had been found by the Federal Court to have induced persons to pay money for a worthless ion mat.

(xv)         the Applicant had been found by the Federal Court to have induced persons to their financial detriment to participate in the Giraffe World Grow Rich Scheme.

(xvi)       the Applicant had been found by the Federal Court to have obtained moneys from more than 5,000 consumers and thereby cheated the Australian public of approximately 15 million dollars.

(xvii)      the Applicant had been found by the Federal Court to have disposed of or been in the process of disposing of proceeds of monies obtained pursuant to its business scheme and false representations.Ó

 

Giraffe WorldÕs pleaded publication of the words in Schedule B was set out earlier. The statement of claim identifies nine imputations defamatory of Giraffe World said to arise from those words. They are the same as the first nine imputations set out above which are said to arise from Schedule A.

 

Giraffe World claims that, by reason of the publication of Schedules A and B, it Òhas been greatly injured in its credit and reputationÓ. It claims damages including exemplary and aggravated damages.

 

The ACCCÕs principal submission in relation to the causes of action in defamation is that the imputations pleaded are not capable of being borne by the matter complained of (the words of Schedules A and B). It submits that the procedure properly to be adopted on its motion is one analogous to that followed in defamation proceedings by the Supreme Court of New South Wales where a separate hearing is sometimes held on the questions of law whether the matter complained of is capable of giving rise to the imputations pleaded and whether the imputations pleaded are capable of defaming the plaintiff: see Love v Mirror Newspapers Ltd [1980] 2 NSWLR 112 at 122-123; Monte v Mirror Newspapers Ltd [1979] 2 NSWLR 663 at 668; and RitchieÕs Supreme Court Procedure New South Wales at par [67.11.3].

 

There is difficulty in dealing at this stage with the question whether the words in Schedule B, in particular, were capable of conveying the imputations pleaded: the nature and extent of publication is not clear. In Love v Mirror Newspapers Ltd, Hunt J considered whether a question of the present kind should be determined prior to the hearing. His Honour said (at 123-124):

ÒAn order [that the question whether the matter complained of was capable of conveying the imputations pleaded be separately determined] would probably not be made where evidence other than the matter complained of itself was relevant to that decision, for example, where proof of extrinsic facts was required either to identify the plaintiff: Consolidated Trust Co Ltd v Browne (1948) 49 SR (NSW) 86; 66 WN 7; or to give the matter complained of a secondary or extended meaning: Grubb v Bristol United Press Ltd [1963] 1 QB 309 at pp 326, 328, 329; cf Searle v Mirror Newspapers Ltd [1974] 1 NSWLR 180; or where, for any reason, facts had to be assumed for the purpose of deciding the question of law: World Hosts Pty Ltd v Mirror Newspapers Ltd [1975] 2 NSWLR 16; reversed at pp 717, 718, 722; Tilling v Whiteman [1980] AC 1 at p 17. This is because there may be, and sometimes is a world of difference between the extrinsic facts of which particulars have been supplied and the extrinsic facts themselves as revealed by the evidence which is given at the hearing: Vlasic v Federal Capital Press of Australia Pty Ltd (1976) 9 ACTR 1 at pp 5, 6.

The procedure provided by Pt 31 [of the Supreme Court Rules (NSW); cf O 29 of the Federal Court Rules] can be used only where the judge has before him the same material as would the trial judge in the ordinary defamation trial: cf Blair v Mirror Newspapers Ltd [1970] 2 NSWLR 604 at p 605, that is to say, it is appropriate only where the evidence consists of the matter complained of itself and where there is no dispute as to the manner and the occasion of publication: Capital and Counties Bank Ltd v George Henty and Sons (1882) 7 App Cas 741 at pp 744, 771; English and Scottish Co-operative Properties Mortgage and Investment Society Ltd v Odhams Press Ltd [1940] 1 KB 440 at pp 452, 453.Ó (emphasis supplied)

 

As Lord Blackburn said in the Capital and Counties Bank case referred to by Hunt J,

Òthe manner of the publication, and the things relative to which the words are published, and which the person publishing knew, or ought to have known, would influence those to whom it was published in putting a meaning on the words, are all material in determining whether the writing is calculated to convey a libellous imputation. There are no words so plain that they may not be published with reference to such circumstances, and to such persons knowing these circumstances, as to convey a meaning very different from that which would be understood from the same words used under different circumstancesÓ. (at 771)

In the present case, the meaning which might reasonably have been attributed to the words in Schedule B by an officer of the Department of Fair Trading may differ from the meaning which might reasonably have been attributed to them by a member of the public who inquired of the Department about Giraffe World. Moreover, although there is no doubt that the words in Schedule A were published by the ACCC, it is not clear at this stage whether it was published only to media organisations and to the public via the Internet, or whether some or all of those words were republished by the media organisations. Again, the manner and extent of publication will have a bearing on the imputations which the words of Schedule A might reasonably be said to have been capable of conveying.

 

These concerns are amplified when one examines the ACCCÕs principal submission in support of its claim that the imputations should be struck out. That submission is that the words refer to a grant of ex parte interlocutory injunctions after allegations were made by the ACCC about Giraffe WorldÕs business. The ACCC seeks to call in aid cases such as Mirror Newspapers Ltd v Harrison (1982) 149 CLR 293, where it was held that a report stating simply that a person has been arrested and charged with an offence is not capable of bearing an imputation that the person has in fact committed the offence. But in the present case, the references to the granting of an injunction take the report beyond a mere statement that a proceeding has been commenced. As Giraffe World points out, the words of Schedules A and B are capable of being read by non-lawyers (as to which see Farquhar v Bottom [1980] 2 NSWLR 380 at 386 and the cases there cited) as suggesting that the ACCCÕs allegations were accepted by the Court as having been made out (cf the use of the past tense, ÒallegedÓ) since they had led to the making of orders restraining Giraffe World from carrying on business. Although a lawyer would understand the reference to injunctions which were both Òex parteÓ and ÒinterlocutoryÓ as meaning that the ACCC had shown, in the absence of evidence or submissions from Giraffe World, nothing more than a serious question to be tried warranting injunctive relief for a day or two, in effect to safeguard the short period between Giraffe WorldÕs becoming aware of the proceeding and its coming before the Court, a non-lawyer might not have had this understanding. In those circumstances, it is crucial to know the nature and extent of publication before a decision can be made whether the pleaded imputations were capable of being conveyed.

 

At this stage, therefore, I do not think that the imputations should be struck out. They are not so hopeless that they could not possibly be conveyed, at least to a member of the public to whom the words of Schedule A or B were communicated, or who was given the information in Schedule B orally or in writing in response to an inquiry directed to the Department of Fair Trading. (See, for example, Rigby v John Fairfax Group Pty Ltd (unreported, CA(NSW), 1 February 1996) where it was held that a report which goes beyond a mere statement that an accused has been arrested and charged with an offence may carry the imputation that the accused is guilty, depending upon the words used and the nature of the publication.)

 

The ACCC also complains of the pleading that Giraffe World claims Òdamages including exemplary and aggravated damagesÓ. It submits, first, that no basis for such damages has been pleaded, and, second, that exemplary damages are not available for defamation under the law of New South Wales: see Defamation Act 1974 (NSW) s 46 (3) (a).

 

In Jones v TCN Channel Nine Pty Ltd (unreported, SC(NSW), 7 April 1992), Hunt CJ at CL held that that s 46 (3) of the Defamation Act 1974 (NSW) has the effect that a plaintiff may not, in an action commenced in New South Wales, claim exemplary damages in respect of publication within or outsideNew South Wales. Pursuant to ss 79 and 80 of the Judiciary Act 1903 (Cth), to the extent that the laws of the Commonwealth are, inter alia, insufficient to provide adequate remedies, this Court is to apply Òthe common law in Australia as modified by the Constitution and by the statute law in force in the State or Territory in which the Court in which the jurisdiction is exercised is heldÓ. However, since no submissions were addressed to the question whether exemplary damages are not available in this case, both in respect of publication inside and outside New South Wales, I need not consider this matter further.

 

There are no rules of this Court equivalent to Pt 16 rr 5A and 5B of the Rules of the Supreme Court of New South Wales, which provide that particulars must be given of the facts and matters relied upon in support of a claim for, respectively, exemplary damages and aggravated compensatory damages. It has been said that Ò[o]n occasions, to plead the constitutive facts which give rise to the cause of action (eg in a case of trespass to land or person, or a case of defamation) will suffice to indicate that, if those facts are proved, an award of aggravated or exemplary damages will be appropriateÓ: P J Holdings Australia Pty Ltd v Hughes (1979) 25 ALR 538 (QLD/Dunn J) at 541-2. In this case, for example, the pleading in par 20 of the statement of claim that Ò[a]s of 13 May 1998 [the ACCC] was still distributing and publishingÓ Schedule A, that is, after the interlocutory injunction was lifted, might be relied upon to support the claim for aggravated or exemplary damages. But if other matters are to be relied upon, such as a failure to apologise when requested to do so, they must be particularised sufficiently to ensure that the ACCC is not taken by surprise at the hearing: P J Holdings Australia Pty Ltd v Hughes at 540-541; see also Watt v General Television Corp Pty Ltd [1998] 3 VR 501 (Hedigan J) at 506.

 

For the above reasons, I decline to dismiss Giraffe WorldÕs claim for relief based on the cause of action in defamation and I decline to strike out the paragraphs of the statement of claim which plead that cause of action. The parties should attempt to agree on any direction to be made in relation to a time for amendment of the statement of claim or the supply of particulars or both.

 

Injurious falsehood

Giraffe World pleads a case of injurious falsehood based on the imputations set out above which are said to arise from the words of Schedules A and B. Those imputations are said to have been false and to have been calculated to harm Giraffe WorldÕs business and to disparage its product, the ion mat, in the eyes of Òconsumers and the public generallyÓ. The publication of the words in question is alleged to have been malicious in that, Òinter aliaÓ the manner and extent of publication was excessive, the ACCC knew or ought to have known that the imputations were false and the publications were Òa form of grandstandingÓ by the ACCC motivated by Òa desire to obtain publicity and agrandisement [sic].Ó It is then pleaded that Giraffe World has been greatly injured in its credit and reputation by reason of the injurious falsehood. Giraffe World claims damages including exemplary and aggravated damages.

 

Contrary to the ACCCÕs submission, it is clear that Giraffe World pleads damage to its business reputation generally (presumably including the Grow Rich Scheme described at (1998) 156 ALR at 276-277) as well as to the repute of its product, the ion mat.

 

The elements of injurious falsehood, set out in cases such as Swimsure (Laboratories) Pty Ltd v McDonald [1979] 2 NSWLR 796 at 799 (Hunt J), are:

a)     that a statement was made of and concerning the plaintiffÕs goods or business;

b)    that the statement was false;

c)     that the defendant published the statement to a third person;

d)    that the publication of the statement was malicious (i.e. mala fide or with lack of good faith); and

e)     that the publication caused the plaintiff particular and identifiable loss or damage.

The ACCC submits that the tort of injurious falsehood is concerned with the Òcasting of false aspersions on the quality of merchandiseÓ and that this concept is distinct from that of a false allegation that a person has misrepresented the qualities of his or her product. With respect, it is hard to grasp this distinction. A statement that a tablet held out by its manufacturer as a Òheadache tabletÓ does not cure headaches is not different in substance from a statement that the manufacturer has falsely represented that its tablet does cure headaches.

According to the late Professor Fleming, the tort of injurious falsehood Òprotects an interest in the disposability of oneÕs property, products or businessÓ: The Law of Torts (9^th ed, 1998), p 778. A statement that false representations have been made about a product by its manufacturer or distributor will reflect upon the reputed quality of the product and may tend to affect its disposability. Similarly, an allegation that a business has been carried on in contravention of the TP Act involves an adverse reflection on that business that might well affect its profitability and hence its disposability.

The ACCC also complains about the importation into the pleading of injurious falsehood of the pleaded defamatory imputations. It points out that the latter relate to Giraffe WorldÕs reputation, whereas the proper question in injurious falsehood is one of reputation, not of a person, but of goods or of a business. The ACCC also submits that the statement of claim does not make clear which imputations relate to the ion mat and which to the business. While it would no doubt be possible for the ACCC to understand in general terms the case which is made against it in this respect, Giraffe World must plead distinctly those imputations it says reflect adversely upon the quality of the ion mat and, separately, those which it says reflect adversely upon Giraffe WorldÕs business.

Finally, the ACCC submits that the pleading is deficient in that no loss or damage is pleaded. I agree. The suffering of particular identifiable loss or damage is, as noted above, an essential element of the tort of injurious falsehood. Giraffe World must plead such loss or damage and, as with the cause of action in defamation, the basis upon which aggravated and exemplary damages are claimed.

Paragraphs 29 to 33 of the statement of claim which plead the cause of action in injurious falsehood do not disclose a reasonable cause of action and will be struck out.

Abuse of process

Giraffe World pleads in par 34 of its statement of claim, under the heading ÒClaim of Abuse of ProcessÓ, that the ACCC commenced proceeding NG 421 of 1998 seeking, with other relief, the ex parte injunctions, without notice to Giraffe World despite the fact that ÒnegotiationsÓ were taking place between the parties regarding the subject matter of that proceeding. Giraffe World also complains that the ex parte injunctions were sought without full disclosure to the Court of those negotiations or of the ÒcauseÓ of the negotiations and without reasonable cause for urgency. It pleads that the ACCC Òthereby abused legal process, including the process of this Honourable Court to the detriment of the RespondentÓ. Giraffe World claim damages, including exemplary and aggravated damages, for that abuse of process.

 

The leading authorities on the tort of collateral abuse of process were reviewed recently by Goldberg J in White Industries (Qld) Pty Ltd v Flower & Hart (a firm) (1998) 156 ALR 169 at 239-240 in the following terms:

 

ÒThe concept of Ôabuse of processÕ in this context involves a party using court proceedings and procedures for a purpose unrelated to the objectives which the Court process is designed to achieve. The concept of Ôabuse of processÕ was considered extensively by the High Court in Williams v Spautz (1992) 174 CLR 509. The decision (per Mason CJ, Dawson, Toohey and McHugh JJ at 523) makes it clear that:

Ôcentral to the tort of abuse of process is the requirement that the party who has instituted the proceeding has done so for a purpose or to effect an object beyond that which the legal process offers.Õ

It is the predominant purpose of the litigation which is the relevant criterion and it is not necessary for the improper purpose to be the sole purpose of the litigation before abuse of process can be established: Metall & Rohstoff v Donaldson Inc [1990] 1QB 391 at 469; Williams v Spautz at 529. It is important to distinguish between the motive for a proceeding and the purpose of the proceeding because it is the purpose of the proceeding rather than the motivation for it which establishes the abuse where that purpose is to obtain relief not within the scope of the remedy available within the proceedings: Williams v Spautz at 529, 534Ð5.

The essence of the tort of abuse of process being the use of legal process in order to accomplish an extraneous purpose was recently restated by the Full Court of the Federal Court in Emanuele v Hedley (Fed C of A, Wilcox, Miles and RD Nicholson JJ, 19 June 1998, unreported) at 16.

A similar approach has been taken in the United Kingdom. In Goldsmith v Sperrings Ltd [1977] 1 WLR 478 the majority of the Court of Appeal held that the plaintiffÕs purpose in pursuing actions against a number of secondary distributors of the ÔPrivate EyeÕ magazine was to vindicate and to protect his reputation by the use of all remedies afforded him by the law which purpose could not be an abuse of the CourtÕs process. The Court relied upon the following passage from the judgment of Lord Evershed MR in Re Majory [1955] Ch 600 at 623:

ÔÉ court proceedings may not be used or threatened for the purpose of obtaining for the person so using or threatening them some collateral advantage to himself, and not for the purpose for which such proceedings are properly designed and exist ÉÕ

Bridge LJ understood Ôcollateral advantageÕ as follows (at 503):

ÔThe phrase manifestly cannot embrace every advantage sought or obtained by a litigant which it is beyond the courtÕs power to grant him. Actions are settled quite properly every day on terms which a court could not itself impose upon an unwilling defendant. An apology in libel, an agreement to adhere to a contract of which the court could not order specific performance, an agreement after obstruction of an existing right of way to grant an alternative right of way over the defendantÕs land - these are a few obvious examples of such proper settlement. In my judgment, one can certainly go so far as to say that when a litigant sues to redress a grievance no object which he may seek to obtain can be condemned as a collateral advantage if it is reasonably related to the provision of some form of redress for that grievance. On the other hand, if it can be shown that a litigant is pursuing an ulterior purpose unrelated to the subject matter of the litigation and that, but for his ulterior purpose, he would not have commenced proceedings at all, that is an abuse of process.ÕÓ

 

Goldberg J held (at 240) that there was an abuse of process in

Òinstituting a proceeding not for the purpose of vindicating a right but for the purpose of delaying or deferring the time for payment of an obligation where the proceeding has no or little prospect of successÓ.

On the other hand, his Honour noted that it was legitimate to commence a proceeding to Òvindicate a right but with the aim of settling or compromising the claim before the trialÓ (at 240). See also Hanrahan v Ainsworth (1990) 22 NSWLR 73 at 96A (Kirby P), 99A-B (Mahoney JA) and 120C-G (Clarke JA).

In this case, Giraffe World has not pleaded any improper purpose of the ACCC in commencing proceeding NG 421 of 1998. Although the ACCCÕs conduct described in par 34 of the statement of claim could perhaps be relevant to proof of such a purpose, in the absence of a distinct identification of a purpose which is ÒimproperÓ for present purposes, the statement of claims fails to plead an essential element of the cause of action.

Giraffe World submits that Ò[t]here is more than enough material to raise an inference that the proceedings were commenced for the ulterior purpose of shutting down the negotiations, grandstanding, and obtaining initial orders prejudicial to Giraffe WorldÓ. The first of these suggested purposes, Òshutting down negotiationsÓ, is not the kind of purpose contemplated by the authorities. It may have been a by-product of the commencement of the proceeding but the ACCC did not need to commence the proceeding in order to Òshut downÓ the negotiations and was entitled to do so without first seeking comment from Giraffe World in relation to the issue of the legality of its conduct. Premature and unreasonably sudden commencement of litigation can be accommodated by special orders for costs. The second suggested purpose, ÒgrandstandingÓ, is, without more, meaningless. The third suggested purpose, Òobtaining initial orders prejudicial to Giraffe WorldÓ, is again not the kind of improper purpose which will support a claim of abuse of process. On the contrary, the obtaining of orders, interlocutory or final, is a proper purpose for commencing proceedings.

Giraffe World must plead that the ACCC commenced proceeding NG 421 of 1998 for Òan ulterior purpose unrelated to the subject matter of the litigationÓ.

Paragraphs 34 to 36 of the statement of claim do not disclose a reasonable cause of action and will be struck out.

Misleading and deceptive conduct (TP Act s 52)

Giraffe World pleads that the ACCC contravened s 52 of the TP Act by publishing the words set out in Schedules A and B in trade or commerce:

 

Òin that the imputations contained [in Schedules A and B] and the facts giving rise to the said imputations were untrue and/or misleading or deceptive and/or likely to mislead or deceive.Ó

 

The ACCC submits that the publication of Schedules A and B was not in trade or commerce.

 

There is affidavit evidence of Michael Gottaas, the ACCCÕs Finance Manager, to the effect that the ACCCÕs revenue falls into two categories. First, there are fines and costs imposed for breaches of the TP Act and miscellaneous fees (such as fees for responding to applications pursuant to the Freedom of Information Act 1982 (Cth)), all of which are paid into the Consolidated Revenue Fund of the Commonwealth and over which the ACCC has no further control. Second, there are the proceeds of publication and subscription sales, seminar registration fees and speakersÕ fees, all of which are also paid into that Fund but which may be drawn on by the ACCC to meet its annual expenses. This second source of revenue is provided for by s 171A (1) of the TP Act which provides:

 

ÒThe Commission may make a charge of an amount, or at a rate, determined by the Commission for:

(a)       supplying a person with material published by the Commission in the course of carrying out its functions or exercising its powers; or

(b)       permitting a person to attend or take part in a prescribed activity arranged by or on behalf of the Commission for the purpose of carrying out any of its functions.Ó

 

I do not decide whether the ACCC engages in some respects Òin trade or commerceÓ. Nonetheless, the expression Òin trade or commerceÓ poses difficulty for Giraffe WorldÕs claim, because, so far as the pleading reveals, the ACCC did not publish the words in Schedules A and B Òin trade or commerceÓ. In Concrete Constructions (NSW) Pty Ltd v Nelson (1990) 169 CLR 594, the majority of Mason CJ, Deane, Dawson and Gaudron JJ said (at 603-604):

 

Òit is plain that s 52 was not intended to extend to all conduct, regardless of its nature, in which a corporation might engage in the course of, or for the purposes of, its overall trading or commercial business. . . . What the section is concerned with is the conduct of a corporation towards persons, be they consumers or not, with whom it (or those whose interests it represents or is seeking to promote) has or may have dealings in the course of those activities or transactions which, of their nature, bear a trading or commercial character. Such conduct includes, of course, promotional activities in relation to, or for the purposes of, the supply of goods or services to actual or potential consumers, be they identified persons or merely an unidentifiable section of the public. In some areas, the dividing line between what is and what is not conduct "in trade or commerce" may be less clear and may require the identification of what imports a trading or commercial character to an activity which is not, without more, of that character.Ó

 

Even if there should be some respect in which the ACCC engages in trade or commerce, it is inadequate for Giraffe World simply to plead that the ACCC published the words in Schedules A and B Òin trade or commerceÓ. It must identify the Òmaterial factsÓ constituting the particular trade or commerce in question and the connection (said to satisfy the word ÒinÓ) between the publishing of the words in Schedules A and B and that trade or commerce (see O 11 r 2).

 

If this cause of action is to be pressed, Giraffe World would also need to particularise the statements which it alleges are misleading and deceptive and the respects in which they are so. Finally, it would be necessary for Giraffe World to plead and particularise loss or damage caused by the allegedly misleading or deceptive conduct. The current pleading is wholly inadequate to put the ACCC on notice of the case which Giraffe World seeks to make.

 

Paragraphs 37 to 39 of the statement of claim do not disclose a reasonable cause of action and will be struck out.

 

Misuse of market power (TP Act s 46)

Giraffe World pleads in par 40 that the ACCC is Òa corporation with a substantial degree of power in the Australian market for goods or servicesÓ. It then pleads that by virtue of the words set out in Schedules A and B and the conduct referred to under the heading ÒClaim of Abuse of ProcessÓ:

Òthe Applicant [sic Ð Respondent] took advantage of its power for the purpose of preventing the entry of persons [presumably Giraffe World] into the health products market and/or deterring or preventing persons from engaging in competitive conduct in that market.Ó

The ACCC submits that it does not participate in any market for goods or services, does not exercise power in any such market, and in any event does not participate in any market in which Giraffe World is engaged. These, however, are matters of evidence.

But this is not to say that the pleading is adequate. There is no explanation of how it is said that the ACCC possesses Òa substantial degree of power in the Australian market for goods and servicesÓ. The ACCC regulatory and enforcement function in the public interest under the TP Act is not power Òin a marketÓ. Paragraph 40 of the statement of claim does not adequately identify the ÒmarketÓ in which it is said the ACCC has a substantial degree of power. Ò[T]he Australian market for goods and servicesÓ is far too broad and does not accommodate the notion of substitutability associated with the notion of a market: see s 4E of the TP Act and, for example, Queensland Wire Industries Pty Ltd v Broken Hill Proprietary Co Ltd (1989) 167 CLR 177 at 188 (Mason CJ and Wilson J), 195 (Deane J), 199 (Dawson J), 210 (Toohey J).

There is also a fundamental difficulty with the proposition that the ACCC, assuming it to have had the requisite market power, Ò[took] advantage ofÓ that power in publishing the words in Schedules A and B and in engaging in the conduct described under the heading ÒAbuse of ProcessÓ. The pleading does not reveal any connection between the ACCCÕs supposed market power and the act of publication: it would have been open to anyone, including a competitor of Giraffe World, to commence an action such as proceeding NG 421 of 1998 or publish the words in Schedules A and B. Any nexus between market power and the conduct complained of required by the words Òtake advantage ofÓ is lacking.

If this cause of action is to be pressed, it needs to be completely re-pleaded in order to put the ACCC on notice of the case it is to meet at trial.

Paragraphs 40 and 41 of the statement of claim do not disclose a reasonable cause of action and will be struck out.

Abuse of statutory power

Giraffe World pleads in par 43 that by publishing the words in Schedules A and B and by engaging in the conduct described under the heading ÒClaim of Abuse of ProcessÓ, ÒMisleading and Deceptive ConductÓ and ÒMisuse of Market PowerÓ the ACCC Òabused its statutory powers and/or acted contrary to its statutory powers and duties to the detriment of the ApplicantÓ.

I am not aware of a tort described as Òabuse of statutory powerÓ. Giraffe World points to no authority for the existence of a cause of action so described. Perhaps it seeks to make out a case of Òmisfeasance in public officeÓ. Although the elements of this tort are not completely settled (see Sanders v Snell (1998) 157 ALR 491 at 504), Giraffe World will establish liability if it can show that the ACCC is a Òpublic officerÓ for the purpose of the tort; that the act complained of was an invalid or unauthorised act; that the ACCC acted maliciously in the sense that it intended to cause Giraffe World harm or knew that the act was invalid or unauthorised; that the act complained of was done in the purported discharge of the ACCCÕs public duties; and that the act caused Giraffe World to suffer loss and damage: see Northern Territory v Mengel (1995) 185 CLR 307 at 345-348 (Mason CJ, Dawson, Toohey, Gaudron, McHugh JJ), 355-360 (Brennan J), 370-371 (Deane J). The statement of claim does not come close to pleading such a case.

Paragraphs 42 and 43 of the statement of claim do not disclose a reasonable cause of action and will be struck out.

 

Intentional infliction of economic harm/intentional interference with contractual relations

Giraffe World pleads in pars 44 and 45 of the statement of claim that by publishing the words in Schedules A and B and Òby reason of the matters set out aboveÓ, the ACCC Òintentionally inflicted economic harm on the ApplicantÓ and Òintentionally interfered with the contractual relations between the Applicant and consumers and/or potential consumers or members to the detriment of the ApplicantÓ.

There is no cause of action of Òintentional infliction of economic harmÓ. As the High Court has recently said in Sanders v Snell (1998) 157 ALR 491 (at 500):

ÒThe tort that is emerging, or has emerged in the United Kingdom, is a tort of interference with trade or business interests by an unlawful act directed at the persons injured. The element of unlawfulness is essential to the definition of the tort. Otherwise, conduct of the most unremarkable kind would be tortious. Any person engaged in trade or commerce will daily act deliberately to further that traderÕs economic interests by obtaining business that otherwise would go to a trade rival. The whole focus of the business of many, if not all, traders is to compete with trade rivals and by advancing their own economic interests, inevitably harm the economic interests of their rivals. In many cases the traderÕs conduct will be directed specifically at a particular rival. But, if the means of competition employed are lawful, and those means cause no breach of obligation, there is no warrant for holding the trader liable to the rival for the economic consequences of that competitive conduct. The fact that the conduct is engaged in deliberately or is directed specifically at the person who suffers economic detriment is not enough to make the conduct tortious. It may or may not, in given circumstances, give rise to statutory remedies.Ó (emphasis in original)

 

The statement of claim does not plead, let alone particularise, an allegation that the ACCC acted unlawfully.

 

The failure to plead unlawfulness also disposes of Giraffe WorldÕs claim that the ACCC interfered with Giraffe WorldÕs contractual relations with potential customers. As the late Professor Fleming stated in The Law of Torts (9^th ed, 1998):

ÒÉ in the absence of unlawful means, it is not actionable to dissuade anyone from entering into, or renewing a contract with the plaintiff: while contractual rights are protected, mere expectancies are not.Ó (at 757)

 

See also Allen v Flood [1898] AC 1 at 126-127 (Lord Herschell), 172 (Lord Davey); McKernan v Fraser (1931) 46 CLR 343 at 358-359 (Dixon J), 369-370 (Evatt J).

 

In so far as Giraffe World pleads that the ACCC interfered with Giraffe WorldÕs existing contractual relations, the problem is that it has not identified the contractual relations in question or how the ACCC is said to have interfered with them. The contracts in issue in proceeding NG 421 of 1998 are contracts by which Giraffe World sells the Òion matÓ and a contract whereby Giraffe World pays commission to members of the Grow Rich Club upon their introducing new members. Since the contracts of sale are, on their face, fully executed, they cannot represent the contractual relations with which the ACCC has interfered. In relation to the second group of contracts mentioned, the members have paid their membership fees and have not promised Giraffe World to do anything further. The contract is, however, contingently executory on Giraffe WorldÕs side, in that if a member of the Grow Rich Club chooses to introduce a new member, Giraffe World will become obliged to pay a commission to the introducing member.

 

It is hard to see how publication of the words in Schedules A and B can be said to have caused Giraffe World not to discharge this contingent executory obligation. An injunction restraining it from carrying on its business might have prevented it from performing such an obligation to members, but the injunction would be an order of the Court, not an act of the ACCC and, in any event, an order relieving Giraffe World from an obligation is not obviously something by which it, as distinct from the introducing member, would be aggrieved.

 

Giraffe WorldÕs complaint in respect of the existing Grow Rich Club contracts with members may be that the ACCC has dissuaded members from exercising their contractual right to introduce new members for commission, with the result that Giraffe WorldÕs business has not enjoyed expansion which would otherwise have occurred. It suffices to say that such a novel cause of action is not pleaded.

 

Paragraphs 44 and 45 of the statement of claim do not disclose a reasonable cause of action and will be struck out.

 

Judicial review of administrative decisions under an enactment

Giraffe World complains about the ACCCÕs decisions to seek ex parte injunctions and to publish the words in schedules A and B. It seeks orders pursuant to s 16 of the Administrative Decisions (Judicial Review) Act 1977 (Cth) (Òthe AD(JR) ActÓ) that those decisions be set aside, Òan order declaring [its] rights in respect of the decisionsÓ, and an order that the ACCC publish appropriate apologies or retractions.

 

The ACCC submits that proper grounds of review are not set out and that the decision to seek ex parte injunctions, at least, is spent, with the result that the Court should not, as a matter of discretion, entertain the application in so far as it relates to that decision.

 

It seems to me that there is a more fundamental difficulty with the application under the AD(JR) Act. This is that neither decision impugned is a Òdecision to which [the AD(JR) Act] appliesÓ as defined in s 3 (1) of that Act, which states:

 

Òdecision to which this Act applies means a decision of an administrative character made, proposed to be made, or required to be made, as the case may be (whether in the exercise of a discretion or not) under an enactmentÉÓ.

In relation to the decision to publish the words in Schedules A and B, it is clear, leaving aside the question whether there was a ÒdecisionÓ for the purposes of the AD(JR) Act, that that decision was not made Òunder an enactmentÓ. Giraffe World points to s 28 (1) of the TP Act which provides:

ÒIn addition to any other functions conferred on the Commission, the Commission has the following functions:

(a)       to make available to persons engaged in trade or commerce and other interested persons general information for their guidance with respect to the carrying out of the functions, or the exercise of the powers, of the Commission under this Act;

(b)       to examine critically, and report to the Minister on, the laws in force in Australia relating to the protection of consumers in respect of matters referred to the Commission by the Minister, being matters with respect to which the Parliament has power to make laws;

(c)        to conduct research in relation to matters affecting the interests of consumers, being matters with respect to which the Parliament has power to make laws;

(ca)      to conduct research and undertake studies on matters that are referred to the Commission by the Council and that relate to the CommissionÕs other functions;

(d)        to make available to the public general information in relation to matters affecting the interests of consumers, being matters with respect to which the Parliament has power to make laws; and

(e)           to make known for the guidance of consumers the rights and obligations of persons under provisions of laws in force in Australia that are designed to protect the interests of consumers.Ó

The publishing of the words in Schedules A and B (I assume for the moment in Giraffe WorldÕs favour, that the words in Schedule B as well as those in Schedule A were published by the ACCC to the public) may be said to come within s 28 (1) (a), (d) or (e). However, in my view, that does not lead to the conclusion that the decision to publish was made ÒunderÓ such a provision. In General Newspapers Pty Ltd v Telstra Corp (1993) 45 FCR 164 at 172, Davies and Einfeld JJ held that the AD(JR) Act is Òconcerned with decisions which, being authorised or required by an enactment, are given force or effect by the enactment or by a principle of law applicable to the enactmentÓ (emphasis supplied). The decision to publish the words in Schedules A and B was not Ògiven force or effectÓ by s 28 (1). Section 28 (1) describes in general terms certain functions which the Parliament has given to the ACCC for it to perform by such means as may be lawfully open to it. The particular decisions to issue the media release (Schedule A) or to provide the information to the Department of Fair Trading (said to have given rise to Schedule B) are not provided for at all in s 28(1) but are decisions taken in the exercise of an aspect of the ACCCÕs capacity as a legal person in the course of the performance of its functions.

 

Similarly, I find it hard to see how it can be said that the decision to seek ex parte interlocutory injunctions (again I assume in Giraffe WorldÕs favour this ÒdecisionÓ within the meaning of the AD(JR) Act: cf Strictly Stainless Pty Ltd v Deputy Commissioner of Taxation (unreported, FCA/Davies J, 5 November 1993); Ruddy v Deputy Commissioner of Taxation (unreported, FCA/Kiefel J, 2 April 1998)), was a decision Òmade under an enactmentÓ. Any ÒpersonÓ may seek an injunction, including an interlocutory injunction, pursuant to s 80 of the TP Act. Although s 80 provides that Òthe Commission [the ACCC] or any other personÓ may apply for injunctive relief, the ACCC, being a body corporate entitled to sue in its own name (see s 6A (2) (a) and (d) of the TPA) is a person (see s 22 (1) (a) of the Acts Interpretation Act 1901 (Cth)) and, as such, would have been entitled to apply for the injunction even had it not been not specifically named in s 80. Just as a decision by a statutory authority to enter into a contract is not a decision made Òunder an enactmentÓ even though the legal personality which gives it the capacity to do so is derived from a statute (see General Newspapers Pty Ltd v Telstra Corp (1993) 45 FCR 164 (FC) at 173 (Davies and Einfeld JJ)), so the decision to commence a proceeding which may be commenced by any person is not a decision made under an enactment: see also Salerno v National Crime Authority (1997) 144 ALR 709 (FCA/FC) (decision to raid applicantÕs home pursuant to search warrant).

 

For the above reasons, the application, in so far as it seeks relief pursuant to the AD(JR) Act, will be dismissed and paragraphs 46 to 49 of the statement of claim will be struck out.

 

Representative proceedings

As noted earlier, the ACCC seeks an order under s 33N (1) of the FCA Act that the proceeding no longer continue under Part IVA of that Act. That subsection provides as follows:

ÒThe Court may, on application by the respondent or of its own motion, order that a proceeding no longer continue under this Part where it is satisfied that it is in the interests of justice to do so because:

            (a)       the costs that would be incurred if the proceeding were to continue as a representative proceeding are likely to exceed the costs that would be incurred if each group member conducted a separate proceeding; or

            (b)       all the relief sought can be obtained by means of a proceeding other than a representative proceeding under this Part; or

            (c)        the representative proceeding will not provide an efficient and effective means of dealing with the claims of group members; or

            (d)       it is otherwise inappropriate that the claims be pursued by means of a representative proceeding.Ó

 

Section 33C of the FCA Act provides as follows:

Ò(1) Subject to this Part, where:

(a)  7 or more persons have claims against the same person; and

(b)  the claims of all those persons are in respect of, or arise out of, the same, similar or related circumstances; and

(c)   the claims of all those persons give rise to a substantial common issue of law or fact;

a proceeding may be commenced by one or more of those persons as representing some or all of them.

(2) A representative proceeding may be commenced:

(a)  whether or not the relief sought:

            (i)        is, or includes, equitable relief; or

            (ii)       consists of, or includes, damages; or

            (iii)      includes claims for damages that would require individual assessment; or

            (iv)      is the same for each person represented; and

(b) whether or not the proceeding:

            (i)        is concerned with separate contracts or transactions between the respondent in the proceeding and individual group members; or

            (ii)       involves separate acts or omissions of the respondent done or omitted to be done in relation to individual group members.Ó

According to the application filed on 14 July 1998, Giraffe World commenced the proceeding on behalf of itself and as a representative party. The application identified the Ògroup membersÓ on whose behalf the proceeding was brought as Giraffe World and seven individuals named in Schedule A to the application. These were seven individuals associated with Giraffe World in various ways who, with Giraffe World itself were respondents to proceeding NG 421 of 1998. So far as the statement of claim reveals, none of the individuals has a claim against the ACCC and the proceeding was always incompetent as a proceeding under Part IVA of the FC Act. The position is not saved by pars 8-10 of the statement of claim which identify the seven group members as Òa director and chairmanÓ of Giraffe World, Òa shareholder in and President ofÓ Giraffe World, and five individuals who were Òpurchasers of ion mats É and É involved in the direct selling operationsÉÓ. These bare facts do not complete a pleading of claims of the seven individuals.

Giraffe WorldÕs submissions in the present respect are relevantly as follows:

ÒThe relevant group are principally those who were initially attacked by the ACCC and put to substantial distress. The ACCC alleged a commonality which it now seeks to deny.

It will be a matter for trial for the Applicants to prove they were identified as persons defamed. Part of the identification material would include that upon which the ACCC seeks to rely on in its case.

With the possible exception of the judicial review matter the natural persons have all suffered from the actions of the ACCC. There [sic] claims should be recognised and heard by the Court.

It is submitted that this is a thoroughly inappropriate strike out application which should be dismissed with indemnity costs.Ó

 

These submissions make it clear that, with the possible exception of the cause of action for defamation, reliance is placed on nothing more than the ÒpositionsÓ of the seven individuals described earlier. At present there is no pleading of defamation of the individuals. A pleading of defamation of the individuals would involve different allegations (a pleading of different imputations, for example) from those in the existing statement of claim, although there would be some overlap. I will not have time prior to the final hearing (see below) to entertain a further motion relating to the state of the pleadings. The existing statement of claim does not even attempt to satisfy s 33C of the FCA Act.

For the above reasons, it is ÒinappropriateÓ that the claims be pursued by means of a representative proceeding. Accordingly, an order will be made under s 33N, the application, in so far as it seeks relief on behalf of the group members, will be dismissed and paragraphs 3 and 4 and 8 to 10 of the statement of claim will be struck out.

CONCLUSION

For the above reasons, the Court orders that:

1.         The proceeding be dismissed in relation to the claims for relief in pars 4 (a) (viii), (c) and (d) and 5 of the application filed on 14 July 1998;

2.         The following paragraphs of the statement of claim filed on 14 July 1998 be struck out: 3 and 4, 8-10, 29-33, 34-36, 37-39, 40 and 41, 42 and 43, 44 and 45, and 46-49;

3.         The proceeding no longer continue under Part IVA of the Federal Court of Australia Act 1976 (Cth);

4.         The proceeding be listed at 4.15 pm on 8 December 1998 for the purpose of the making of further orders and directions, including an order as to the costs of the respondentÕs motion.

Giraffe World should give serious consideration to its prospects of success in relation to the causes of action the subject of the paragraphs struck out, and the costs that may be incurred if they are repleaded and are unsuccessfully pressed at trial. Proceeding NG 421 of 1998 is fixed for hearing from 12 to 23 April 1999 and I have previously indicated that it is my intention, but this is always subject to review, that the present proceeding be heard simultaneously with that proceeding. Given this time constraint, it will not be possible for the ACCC to bring and have heard and determined by me, a further motion for summary dismissal or striking out in relation to any amended application or statement of claim. In those circumstances, if Giraffe World defectively re-pleads a cause of action, or re-pleads it satisfactorily but it transpires that the claim for relief based upon it was unreasonably pressed, it may be appropriate that a special costs order be made against Giraffe World.

 

I will hear the parties on any further orders now to be made, including any order as to costs of the ACCCÕs motion.

 

I certify that this and the preceding twenty eight (28) pages are a true copy of the Reasons for Judgment herein of the Honourable Justice Lindgren.

Associate:

Dated:             4 December 1998

Counsel for the Applicant:	Mr M J Neil QC with Mr N F Francey
Solicitor for the Applicant:	Blessington Judd
Counsel for the Respondent:	Mr R A Conti QC with Mr S White
Solicitor for the Respondent:	Australian Government Solicitor
Date of Hearing:	3, 4 November 1998
Date of Judgment:	4 December 1998