BJ International Limited v Asghar

REASONS FOR JUDGMENT 1 The Applicant, BJ International Limited ("BJ International"), is a company registered in Japan. One of its business activities involves the purchase of second-hand motor vehicles in Japan for shipment to Australia for the purposes of resale. 2 BJ International maintains that it has been selling motor vehicles and associated spare parts to either the Respondent or a company known as Ginza Importers Pty Ltd ("Ginza Importers") from November 2004 to February 2011. 3 The Statement of Claim filed in this Court on 28 May 2012 relies upon two causes of action as against the Respondent, namely: (a) a claim that "[o]n a date prior to November 2004, the applicant and the respondent and/or [Ginza Importers] entered into an agreement … whereby the applicant would supply the respondent and/or [Ginza Importers] with second hand motor vehicles and associated car parts for the respondent's business, Ginza Importers"; and (b) a claim that the Respondent "[o]n 21 January 2011 … represented to the applicant that [Ginza Importers] acknowledged a debt to the applicant of ¥69,041,659". It is further claimed that in providing that acknowledgment the Respondent thereby "engaged in misleading or deceptive conduct, or in conduct that was likely to mislead or deceive, within the meaning of section 18 of the Australian Consumer Law … or the Trade Practices Act…". The acknowledgment of the debt provided on 21 January 2011 was expressed to be an "Account between BJ Japan and Ginza Importers Australia" and was signed by the Respondent. Ginza Importers is not named as a Respondent in the Statement of Claim. The Respondent maintains that as from June 2001 motor vehicles have only been supplied to Ginza Importers and that motor vehicle parts have not been supplied for a period of approximately 10 years. 4 At the time of signing the acknowledgment of debt, the Respondent is alleged to have said to the Managing Director of BJ International, Mr Sakura: I will continue to pay off what I owe, but I need more cars. Please ship me more cars, and you will see that I will pay what I owe. The Respondent maintains that he only signed the acknowledgment because Mr Sakura had said: I need the letter so that I can get further time from BJ's bank for payments of outstanding loans. The document as signed, the Respondent maintains, "does not truly set out the position between Ginza and the applicant". However that factual issue may be resolved, a further 12 motor vehicles were shipped in late January 2011. 5 In November 2011 there was a further discussion between Mr Sakura and the Respondent. The Respondent apparently assured Mr Sakura that "he would pay [the] outstanding monies …". Mr Sakura returned to Japan. In "about early 2012" and after Mr Sakura returned to Japan, the Respondent is alleged to have said in a telephone conversation with Mr Sakura words to the following effect: You didn't sell me the cars at the right price. Don't put pressure on me to pay. If you put pressure on me, I will move my assets to my relatives' names and the cars will disappear. You will get nothing. The Respondent denies that the conversation was to this effect. The Respondent maintains that he said: I have found out that you have been over-invoicing me and cheating me and that you have been betraying my trust. I want to see the original invoices. I have paid you everything. I don't owe you any more money. Mr Sakura is then said to have hung up the telephone. 6 It should be noted that in order to carry on the business of selling cars in New South Wales a licence is required pursuant to the Motor Dealers Act 1974 (NSW). Section 9 of that Act makes it an offence for any person, other than an "exempted person", to carry on the business of a dealer unless licensed. It would appear that the sale in New South Wales of the motor vehicles supplied by BJ International was carried on using Motor Dealer's licence number 18117. Inquiries made of the Department of Fair Trading in New South Wales revealed that that licence had been issued to Ginza Importers. But Ginza Importers has been deregistered since November 2010. 7 Between February and August 2012 an inspection of the motor vehicles for sale at the premises occupied by the Respondent revealed 72 vehicles being available for sale in February; 56 vehicles being available in July; and 49 vehicles being available in August. Some explanation is provided by the Respondent as to the dwindling number of motor vehicles available for sale. He maintains that "sales have been slow" and that he does "not want more stock than [he] need[s] and [he had] been carrying more comfortable levels of stock". 8 As at 10 September 2012 a search of a website then operated by Ginza Importers disclosed that there were 19 vehicles which had been supplied by BJ International which were being advertised as "stock" available for sale. The Respondent maintains the "Ginza website" is not regularly updated but admits that "there are cars which have been provided to Ginza by the applicant which still appear on the Ginza website" and further admits that "there are only nine … cars still in the car yard, which have not been sold". A more recent search carried out yesterday reveals that the website previously operated by Ginza Importers has been "suspended". 9 Now before the Court is the hearing of an interlocutory application. 10 An Interlocutory Application filed on 11 September 2012 sought to restrain the Respondent from carrying on the business of buying, selling or exchanging motor vehicles until licensed to do so pursuant to the provisions of the Motor Dealers Act 1974 (NSW). An order was also then sought (until further order) that the Respondent not sell or otherwise deal with the motor vehicles identified in an affidavit filed on behalf of the Applicant or that the gross proceeds of sale be deposited to a controlled monies account in the name of the Applicant's solicitor. 11 At the outset of the hearing of the Interlocutory Application this morning the Applicant sought to file an Amended Interlocutory Application abandoning the relief previously sought and in lieu sought an order in the following terms: Until further order, the Respondent is to notify the applicant's solicitor Andrew Luong if any motor vehicle in his possession, custody or control is sold whether located on premises known as 416 Parramatta Road, Burwood, in the State of New South Wales, or elsewhere and to pay the proceeds of such sale into a controlled monies account in the name of the Applicant's solicitor Andrew Luong, on condition such monies are retained by the said solicitor and not dispersed. Counsel for the Respondent was content to have the amended application resolved without the need for an adjournment. 12 The principles to be applied when a party seeks interlocutory relief are well-settled: eg. Community and Public Sector Union v Commonwealth of Australia [2006] FCAFC 176 at [15]-[17], 157 IR 470 at 474-474. 13 BJ International confronted at the outset a difficulty in relying upon any "serious question" in respect to the claim advanced in contract. The difficulty was that there was no evidence (or no satisfactory evidence) of any contract as between BJ International and the Respondent. Any contract, on the materials presently available, would appear to be a contract as between BJ International and Ginza Importers. All invoices, for example, in respect to the supply of motor vehicles during the period from 2004 to 2011 are on the letterhead of BJ International and addressed to Ginza Importers. A payment of ¥ 2,998,500 made on 28 January 2011 was made by Ginza Importers. Some evidence suggesting a contrary conclusion may perhaps be found in payments made by the Respondent during the period from November 2007 to January 2008. His Defence to the Statement of Claim maintains, however, that he "denies making payments on his own behalf". Moreover, the Statement of Claim itself also seems to proceed on the assumption that the acknowledgment signed in January 2011 was an acknowledgment that it was Ginza Importers that had incurred the debt in respect to the motor vehicles that had been supplied up to that point of time. Whatever "serious question" may have arisen had Ginza Importers been named as a Second Respondent may be left to one side. That company, for whatever reason, was not joined as a party to the present proceeding. 14 Whoever may have made the payments, no payment has been made to BJ International after 28 January 2011. 15 BJ International confronted a different difficulty in seeking to place reliance upon its claim as to the various misrepresentations said to have been made by the Respondent. The misrepresentations were pleaded in the Statement of Claim in a variety of different ways. But, in essence, the misrepresentation was said to be the failure on the part of the Respondent when signing the acknowledgment to disclose that Ginza Importers had been deregistered in November 2010. There was said to be no disclosure of the fact that the Respondent had "caused or allowed the Company to become deregistered". 16 For present purposes it may be accepted that BJ International has in this respect made out a "serious question" to be tried. It may further be accepted that any balance of convenience falls to be resolved in favour of BJ International. If the account of the conversation between Mr Sakura and the Respondent advanced on behalf of BJ International is accepted, it would appear that the Respondent may well embark upon - or further pursue - a course of frustrating any attempt to secure an effective remedy against him. Indeed, the suspension of the previously existing website and the ever diminishing number of motor vehicles available for sale may only further reinforce such a concern. The fact that the Respondent may also be engaged in selling motor vehicles contrary to the provisions of the Motor Dealers Act only provides further factual support for a conclusion that the Respondent may be prepared to engage in any conduct for his own advantage. 17 The difficulty for BJ International in placing reliance upon the alternative cause of action of misrepresentation, however, is that any relief would normally be confined to such damages as flow from reliance being placed upon the misrepresentation. Reliance, it may be accepted, was placed upon the Respondent signing the acknowledgment in January 2011. Further motor vehicles were supplied. The value of those motor vehicles is said in the Statement of Claim to be ¥7,225,100 (ie. approximately $90,000). But those particular motor vehicles have been sold. 18 The order as sought in the Amended Interlocutory Application, it is concluded, should be refused because: (i) the relief as claimed is in no way confined to the only serious question which may arise for determination, namely the relief flowing from the misrepresentation made in January 2011; (ii) even if any question as to the nature of the "serious question" to be tried is left to one side, it is unlikely that relief in such wide-ranging terms would have been granted; and (iii) the application is, in substance, an application that the Respondent now provide security for the damages that may ultimately be found to have been suffered by BJ International. Had a serious question been made out in respect to the total liability acknowledged to have been owed by Ginza Importers in January 2011, a more confined form of order as sought in the Amended Interlocutory Application may have been appropriate. 19 Although Counsel on behalf of the Respondent maintained that no interlocutory relief should be granted if it were to be concluded that the misrepresentation was the only serious question to be tried, the power of the Court to grant some form of relief was not understood to be disputed. The refusal of any interlocutory relief confined to protecting the position of BJ International in respect to those motor vehicles supplied after January 2011 is refused in the exercise of the Court's discretion. Even though the Respondent may well be presently engaged in a process of attempting to frustrate any success that BJ International may ultimately achieve, there is a significant difference between seeking to preserve assets to satisfy a liability of ¥69,041,659 as opposed to a potential liability of ¥7,225,100. BJ International, moreover, has been aware since "about early 2012" of the threat it asserts was then made by the Respondent. Although it may have drawn some comfort from the acknowledgement of liability previously signed in January 2011, the delay between either "about early 2012" or May 2012 to the present remained unexplained. What consequences may follow from any finding that may ultimately be made as to any steps that may be undertaken by the Respondent between now and any final hearing, is a matter which can be addressed if and when the need arises. 20 An order sought in the Interlocutory Application filed in September 2012 for an expedited hearing, it is noted, was not pursued in the Amended Interlocutory Application. 21 The Amended Interlocutory Application as filed this morning is dismissed. Although Counsel for the Respondent sought an order for the costs thrown away by the amendments made, it is sufficient to question whether there were any such costs. The facts relied upon remained much the same. Costs should be reserved.