It was pointed out that, from the time of the agreement of 4 July 1990, the relationship of Parkanson to this stock was that of an agent owing, as such, fiduciary duties to Altendorf Australia.
I have come to the conclusion that I should reject the wider claim. I do not think it is necessary to analyse the many authorities which were cited on the issue of fiduciary duty. That is because I do not think the relationship created by the original agreement between Altendorf Germany and H.P. Schwager, which was assigned to Parkanson, gave rise to any relevant fiduciary duty. The question, of course, is not whether it gave rise to any fiduciary duty; it is whether it gave rise to a duty of that kind which could impinge upon the question whether Parkanson would be entitled to the benefit of the duty refund. The relationship of exporter and sole distributor does not, in itself, give rise to the kind of fiduciary duty asserted on behalf of the applicant: Hospital Products Ltd v. United States Surgical Corporation (1984) 156 CLR 41. So far as each transaction of importation was concerned, it was an ordinary commercial transaction by which Altendorf Germany sold goods to H.P. Schwager of Switzerland, which then sold them to Parkanson for resale in Australia. When, subsequently, it turned out that Parkanson was able to obtain a refund of certain duties paid by it in relation to
the importations involved, I can see nothing in the transaction to impose upon it fiduciary obligations in respect of the moneys received: cf. Keith Henry and Company Proprietary Limited v. Stuart Walker and Company Proprietary Limited (1958) 100 CLR 342 at 350-351. The back dated benefit was certainly a windfall, but there seems no reason why it should be received by the middle man H.P. Schwager or the manufacturer Altendorf Germany, each of which received its price, rather than by the importer which paid the duty the subject of the refund. Of course, in a sense it is an undeserved windfall, since the legislative intention, in providing for the concessional tariff, seems to have been to benefit, neither the exporter nor the importer, but the recipient within Australia who had to acquire an imported product because no Australian equivalent was available.
The alternative ground is the alleged assignment in November. The agreement then arrived at was, of course, concluded orally, although its principal terms were reduced to writing by Messrs Elsworth and Hanley. They employed the words: "We agree to transfer all matters relating to Altendorf Australia, i.e. stock, communications and technical information to the new office in an organised manner." They also headed their notes of the agreement: "TRANSFER OF BUSINESS TO ALTENDORF SYDNEY NOVEMBER 22, 1990". The question is whether there was a complete transfer of all rights appertaining to the business, or whether Parkanson retained its right to receive the duty refund in respect of otherwise concluded transactions. The problem of construction of the agreement is made the more difficult by the fact that Messrs Schwager and Altendorf knew nothing of the Commercial Tariff Concession Order, while I have concluded on the probabilities that Messrs Elsworth and Hanley, though informed of it, were oblivious of the fact that it might be applicable. The parties before me took opposite extreme positions. On the one hand, the applicant argued that the agreement should be construed as covering all rights of Parkanson in respect of its distributorship and agency back to the beginning, and therefore back to the earliest refund date, 29 February 1988. On the other hand, the respondents claimed that the document drawn up by Messrs Elsworth and Hanley should be construed, in the light of the restriction of the expression "all matters relating to Altendorf Australia" by the following expression "i.e.", so as to limit the transfer to stock, communications and technical information, and so as to eliminate any further assignment whatever, notwithstanding the heading "transfer of business ... ".
In my opinion, neither of the extreme positions taken up by the parties can be sustained. In the first place, it is common ground that the document drawn up by Messrs Elsworth and Hanley does not constitute the whole of the agreement reached orally. In the next place, the suggested limitation by reference to the Latin abbreviation "i.e." does not stand well with the heading, which is eloquent of an intention that an entire business was to be transferred. The allowance of the sum of $70,000, on top of the various specific sums, so as to make up a total of about $200,000 seems to me to be consistent with the heading. To the extent that there is doubt about the meaning of the writing, it should be understood contra proferentes, rather than otherwise.
In his evidence, Mr Schwager accepted that the document drawn up by Messrs Elsworth and Hanley "summarized" the terms of the arrangement. Apart from this, and the general probabilities of the situation, there is little to go on in reaching a conclusion as to any precise terms. For Mr Schwager gave only very general evidence about it, and I did not find the evidence of Messrs Elsworth and Hanley acceptable. Mr Schwager did make it clear that Mr Elsworth was offering the business known as Altendorf Australia, which had been conducted by Parkanson and was distinct from the company Altendorf Australia. Mr Schwager regarded that as a business which was not Parkanson's to sell, and his attitude was that what was being acquired was Parkanson's assets, that is, as I understood him, its assets of its business as agent in respect of Altendorf products. He did say that these assets were listed in the document drawn up. In his affidavit he stated that Mr Elsworth said: "You may as well buy my company", and that he replied: "We will negotiate an amount to pay you for your company structure. What will it include?" Mr Elsworth's reply contained the general expression "and other items".
In my opinion, it was not the intention of the parties that the "TRANSFER OF BUSINESS TO ALTENDORF SYDNEY", by which was meant a transfer to Altendorf Australia, was to include rights of Parkanson, if any, appertaining to that business conducted by it prior to the agreement negotiated in June 1990. I think the parties would have regarded anything to do with transactions prior to June as irrelevant to the transaction they were negotiating in November. It is arguable that the June agreement may have operated as a novation, allowing the earlier distributorship agreement to continue in a varied form, that is, the June agreement may not have terminated it altogether. However, this is somewhat doubtful. But whatever the strict legal position about that, I do not think the parties in November were negotiating for a transfer of any residual assets which may have existed as a result of the earlier transactions, when the contract was of a very different nature and bound different parties. They were negotiating to enable Altendorf Australia to take over the agency business in the new form, as a commission agency, which had been established by the agreements negotiated in June. Although the possibility of duty refunds in relation to that business was not present to their minds, I consider, despite some concessions wrung from Mr Schwager in cross-examination, that the heading to the document drawn up by Messrs Elsworth and Hanley should be accepted as showing an intention to transfer the whole of the business operations, including any rights appertaining to them, in relation to this agency business. The general probabilities of the situation support that view. It is not to be thought that, if some transaction were, at the date of the change over, to be incomplete, the rights of Altendorf Australia would be in doubt, as between it and Parkanson. A clean break with a new start was intended. It was for that that Parkanson was to receive the $70,000 and to be paid the cost price of used equipment. In effect, I accept the applicant's submissions as to the width of the assignment, but subject to my conclusion that it was not intended to extend back into the transactions undertaken by Parkanson as an importer, purchasing on its own account and not as commission agent. However, it was intended to include all matters taken over on 4 July 1990 so as to become part of the agency business thereafter carried on.
This conclusion makes it strictly unnecessary to consider whether, in any event, Parkanson would have been obliged to hold on behalf of Altendorf Australia any amount of duty refund received in respect of goods in relation to which it had been fully reimbursed the duties paid by it, pursuant to the July agreement. However, in my opinion the narrower duty refund claim should also be upheld on this basis. The agreement reached in June was that, as between Altendorf Australia and Parkanson, Altendorf Australia was to take over Parkanson's position as the importer, reimbursing it fully for its expenses, and I think it was implicit in this transaction that Altendorf Australia acquired all Parkanson's rights in respect of the importation of the goods. The duty refund was not known about, but the unhesitating acceptance of the rights of Altendorf Australia in respect of the other refund, the drawback, which was known about, is clear evidence to support my conclusion. Upon receipt of the refund in respect of these goods, Parkanson became a constructive trustee for Altendorf Australia.
In the course of the evidence, it emerged that special considerations may apply to so much of the duty refund entitlement as relates to the two shipments which were on the high seas at the time of the negotiation of the June agreement. It appears that the duty in respect of these shipments was provided by Altendorf Australia, although the invoice was made out to Parkanson, which was placed in funds by Altendorf Australia to effect the payment, since the shipping documents, pursuant to the arrangements in existence at the time they were drawn up, named Parkanson as the importer. The case of these two shipments is, of course, a fortiori in relation to the finding I have just made. But no claim was made for the refund by Parkanson because, in their case, it recognized that it would not be entitled to any moneys paid by Customs. At the same time, and despite repeated requests from Mr Burdette, Parkanson wrongfully retained the documents which were needed to enable a claim for a refund to be lodged. The refund, as a result, became unobtainable within a few months by reason of lapse of time: see reg. 128A(4). I think Parkanson held those documents as a fiduciary, and is liable to Altendorf Australia in the amount of the refund that would have been obtained had it acted responsibly and with proper care and diligence as a fiduciary agent: see Commonwealth Bank of Australia v. Smith (1991) 42 FCR 390 at 395, cited by Sir Anthony Mason in his article The Place of Equity and Equitable Remedies in the Contemporary Common Law World (1994) 110 LQR 238 at 243-245; Bailey v. Namol Pty Limited (1994) 53 FCR 102 at 109; Wan v. McDonald (1992) 33 FCR 491 at 520-521; Bennett v. Minister of Community Welfare (1992) 176 CLR 408 at 426-427, per McHugh J.; and see the note on Causal Relationships between a Fiduciary's Default and the Principal's Loss by J.D. Heydon Q.C. in (1994) 110 L.Q.R. 328 at 333-335.
The applicant Altendorf Australia also makes a number of claims, arising out of the November agreement, on the basis that the fork-lift and vans required repairs (amounting in all to $1,880.81), there were missing items from the computer (valued at $1,164), the cost price of the computer had been misstated to the extent of $18,712.32, and certain of the stock handed over had been used or was damaged, with a consequential reduction in its value of some $14,521.79. It was conceded that $2,518.11 of the amount of $7,000 retained would need to be deducted from anything awarded on this basis.
In my opinion, the agreement to pay cost price, in itself, indicates that what was being paid did not have a necessary relation to the value of items such as the fork-lift and vans. They were being taken over in the condition in which they then were. I can understand Mr Burdette's annoyance when the fork-lift was found to be inoperable and the van unroadworthy. It may be there was some misrepresentation, for it is hard to believe that Messrs Schwager and Altendorf knowingly accepted these items in that condition, but I do not think the applicant has discharged the onus of proof in this regard. Not without some hesitation, I reject the claim relating to the fork-lift and van.
The missing items of the computer are in a different category because of the evidence, to which I have already referred, strongly suggesting that Mr Elsworth and Mr Hanley quite well recognized there had been a breach of the November agreement in this respect. Indeed, I conclude they showed a contemptuous disregard of their obligations. The amount is small, but I think the applicant is entitled to recover it.
However, the further claim that the cost price of the computer was misstated should be rejected. In the context of the November agreement, it does not seem to me to have been incorrect to attribute to the computer a cost on the basis of the cost price shown in lease financing documents. Liability for that amount had been incurred. I can see no reason why a pay-out figure, the amount of which was a pure matter of chance depending on the extent to which the goods had actually been paid for, should be substituted.
As regards the used and damaged stock, I think a distinction should be drawn. Some of this stock consisted of Sudhoff machines. Having regard to the history of problems with those machines, I am not satisfied, on the balance of probabilities, that the parties would have assumed that these items were in good condition. The machines had been roundly condemned on more than one occasion, and it was known that machines had been substituted because of the difficulties encountered in maintaining those that had been sold, particularly where they had been taken to remote areas. On the other hand, I think the claim in respect of a damaged table, being a part for an Altendorf saw, should be allowed at $4,393, arrived at by deducting $100 for its scrap value from the list price of this item. As is conceded, a deduction of $2,518.11 should be made, since this amount was retained from the payment made under the November agreement, and exceeds the amount of the over payment in respect of parts which was also made under that agreement.
The written submissions lodged by the parties do not mention the matter of interest, but it is claimed in the Amended Application under s. 51A of the Federal Court of Australia Act 1976 and otherwise. Subject to anything which may be said upon the bringing in of short minutes, I think it is a matter in which interest should be allowed under s. 51A: Smallacombe v. Lockyer Investment Co Pty Ltd (1993) 114 ALR 568 at 574; Australian Guarantee Corporation Limited v. Border Printing Services Pty Ltd (unreported, Lockhart, Spender and Hill JJ., 21 April 1989). In the latter case, their Honours said that "the award of interest is mandatory unless good cause is shown". As for the rate or rates, see Namol Pty Ltd v. A W Baulderstone Pty Ltd (1993) 119 ALR 187 at 188, where Davies J. adopted the same rates as would be applicable in the Supreme Court of New South Wales, when sitting in this State.
The remaining claims against Parkanson under the Trade Practices Act, the remaining claims against Messrs Elsworth and Hanley under the Fair Trading Act, and the remaining derivative claims against them under the Trade Practices Act do not seem to me to lie in the circumstances, and would in any case duplicate the relief pursuant to claims which I have allowed.
I direct the applicant to bring in, on a date to be fixed, short minutes of orders to reflect the reasons of the court. I shall then hear any arguments as to interest and costs.