FEDERAL COURT OF AUSTRALIA

Australian Competition and Consumer Commission v Original Mama’s Pizza and Ribs Pty Ltd (ACN 093 465 046) [2006] FCA 302

HIGH COURT AND FEDERAL COURT – Federal Court – original jurisdiction – remedies and orders – stay of proceedings sought – multiplicity of proceedings possibly involving some common questions of fact – factors to be considered before stay granted – legitimate public interest considerations as justification for rejecting application for stay

Hughes Motor Service Pty Ltd v Wang Computer Pty Ltd (1978) 35 FLR 346 applied

Sterling Pharmaceuticals Pty Ltd v The Boots Company (Australia) Pty Ltd (1992) 34 FCR 287 followed

Tamas v Silver Beach Resort Pty Ltd (unreported, NSWSC, 13 July 1994) followed

AUSTRALIAN COMPETITION AND CONSUMER COMMISSION and CHIEF EXECUTIVE OFFICER OF THE AUSTRALIAN COMPETITION AND CONSUMER COMMISSION v ORIGINAL MAMA’S PIZZA AND RIBS PTY LTD (ACN 093 465 046), GEORGE TERENCE HILDER and RICHARD SOO

NSD 2333 of 2005

MADGWICK J

21 MARCH 2006

SYDNEY

THE COURT ORDERS THAT:

1. The application for a stay of proceedings be rejected with costs.

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

REASONS FOR JUDGMENT

1                     This is an application for proceedings brought by the Australian Competition and Consumer Commission (‘ACCC’) and the Chief Executive Officer of the ACCC against a company and two individuals to be stayed. 

2                     The nature of the ACCC’s allegations is that the second respondent, Mr Hilder, used the first respondent, the Original Mama’s Pizza and Ribs Pty Ltd (‘the company’), and the services of the third respondent, Mr Soo, as a vehicle and means of selling pizza oven systems to various people who wished to use the pizza oven systems in food outlets.  The ACCC asserts that in five cases various false and misleading representations were made, a number of them being common.

3                     The system allegedly employed was to arrange the lease by food outlet operators of the oven systems, apparently for a period of 60 months.  One allegation is that it was actually represented to the operators that the terms of the lease would be six months rather than 60.  Another allegation is that it was represented to the operators that, if they were not satisfied with the purchase at the end of six or 12 months, the company would buy back or receive back the oven system.  These representations were coupled with an alleged system whereby the company would pay the first six months lease instalments.

4                     One can see that there might well be very lively issues of fact particularly about whether any supplier of any equipment would arrange a mere six months lease, pay the lease payments and undertake to receive the equipment back at the end of that six months if the party acquiring the equipment was not happy with it.  There may, I do not know, be more apparent substance in the claim that there would be an automatic right of return after six months of a 60 month lease.  At all events, the ACCC’s case is that the representations made were false and misleading. 

5                     The ACCC seeks a variety of relief, including relief of kinds not available to the individuals concerned.  Broadly expressed, injunctive relief is sought.  Non-punitive relief, directed to ensuring that all those who may have dealt with the respondents are made fully aware of their own possible remedies under the Trade Practices Act 1974 (Cth) (‘TPA’), is also sought.

6                     In three of the five cases there has been litigation involving at least the company, and in one of those cases, Mr Hilder, the second respondent, and Mr Soo, the third respondent.  In general, these cases have arisen, as I understand it, in circumstances where a finance company, as lessor of the ovens, has sought to enforce its rights under the leases and the operators have joined the respondents by way of cross-claim.  Strangely, it does not seem that any of the cases involve causes of action relying on the TPA.  The remedies the operators seek, so I am informed, are for breach of contract.

7                     It is true that there may well be some double investigation of some factual issues but, from what I have said, it seems clear that the factual scope of the inquiry necessitated by the ACCC’s action in this Court would require the investigation of a wider range of facts, and in rather different legal contexts, from those in any or all of the other litigation.  It is also clear that, at least in part, the facts sought to be agitated here as to two transactions have not been the subject of any other litigation.

8                     Important questions of ascertaining aspects of the public interest that may be engaged by what has occurred, and vindicating it if the ACCC’s contentions are made out in whole or in part, would arise here and would not arise in what I will call the private litigation. 

9                     It is not disputed that the Court has power to grant a stay, either by way of preventing an abuse of the Court’s process (which I think is not actually asserted), and also by way of ensuring that there is no procedural unfairness to the parties by way of the Court controlling its own processes so as to ensure a fair and orderly presentation of the litigation.

10                  Mr Ramrakha, solicitor for the respondents, stresses that there are live factual issues and that no assumptions should be made about the truth or otherwise of the ACCC’s assertions. Of course that is correct.  Mr Ramrakha points out that there would be some duplication with the investigation of some factual issues, as I have mentioned.  The company is no longer in business, and it has given an assurance that it is not selling pizza oven systems.  Mr Hilder is not selling pizza oven systems following an indication from the ACCC that it would maintain a very lively interest in his activities if he sought to do so. Mr Ramrakha also submitted that the events complained of occurred a long time ago, and that the applicants have delayed bringing the proceedings.  Finally, Mr Ramrakha submitted that, although the ACCC exercised its powers to interview Mr Hilder, and also had the opportunity to speak to Mr Soo, and some generalised allegations were put to them, they were not asked about the allegations in the particular cases now brought to the Court. 

11                  There was no requirement that the allegations should have been put to them before the proceedings were commenced.  Despite the long time that has occurred, the ACCC has not been shown to have sat on its hands.  The process of investigation has apparently been lengthy, even if not pursued as a matter of electric urgency, but no doubt the resources of the ACCC are not unlimited.

12                  The undertakings that have been given, and the events in relation to the company, which has gone into liquidation, fall a long way short of meeting all the requests for relief made by the ACCC in these proceedings, so that there is no element of oppression in the ACCC seeking broader relief than that degree of amelioration which, without admissions, may have voluntarily been engaged in by any of the respondents. 

13                  Further, the degree of duplication is not, in my view, such as to warrant a stay. 

14                  The relevant power of the Court to control its own proceedings has been considered in Hughes Motor Service Pty Ltd v Wang Computer Pty Ltd (1978) 35 FLR 346 (‘Wang’) at 351 to 354, and Sterling Pharmaceuticals Pty Ltd v The Boots Company (Australia) Pty Ltd (1992) 34 FCR 287 (‘Sterling Pharmaceuticals’).  As McClelland CJ in Equity said in Tamas v Silver Beach Resort Pty Ltd (unreported, NSWSC, 13 July 1994): ‘a party bringing proceedings is entitled to have them dealt with and heard in the ordinary course of the Court’s business unless some strong countervailing consideration can be demonstrated’.

15                  In Sterling Pharmaceuticals at 291, Lockhart J sought to provide something of a check-list of matters that might be considered.  These included the priority in point of time of the institution of the different proceedings; whether the termination of one proceeding was likely to have a material effect on the other; the public interest; the undesirability of waste of time and effort; and of course, costs, if substantially the same issues were to be ventilated in actions in different courts; the general policy of the law discouraging multiplicity of proceedings in relation to similar issues; and, as his Honour said, ‘[g]enerally balancing the advantages and disadvantages to each party’.

16                  In Wang, Bowen CJ stressed that, where a public regulator is seeking an injunction to restrain conduct which might mislead or deceive members of the public generally (and, I would interpolate, a relevant section or sections of the public, even if numerically small), ‘the weight of public interest in the scales in favour of rejecting an application for a stay would be very heavy.’

17                  There are legitimate public interest considerations to be ventilated, and possibly vindicated, in these proceedings and, while not overlooking the inconvenience for the respondents of having to fight on a number of fronts, and the expense and difficulty of so doing, it seems to me that the justification for a stay has not, on a balance of relevant factors, been made out. 

18                  Accordingly, I reject the application for a stay with costs.

Associate:

Dated:              29 March 2006