BP Refinery (Western Port) Pty Ltd v Shire of Hastings

Federal Court of Australia|1996-03-07|Before: Northrop J, Young J, Staff AJ, Nicholson J

The applicant also covenanted as follows: "5.2 Hancock agrees that he will not (whether by himself, his agents or employees or otherwise howsoever): (a) contact or attempt to contact (whether in person or by letter, telephone, facsimile transmission or other telecommunications medium or by any other means) Pratt or any member of the Pratt Family; (b) make any adverse (except under compulsion of law) or defamatory or derogatory comments concerning or pertaining to the Pratt Family or Visy Board or the Visy Board Group; (c) comment on or disclose employment trade secrets or proprietary information acquired during or in the course of his employment with Visy Board."

"Pratt Family" was defined in cl1 to mean "Pratt, Mrs Jeanne Pratt, their issue and spouses of their issue, Mr Michael Napthali, his wife and their issue".

"9.3 The right to execute the judgment will lapse at midnight on 10 March 2000 or in the event that Pratt makes (except under the compulsion of law) a statement defaming Hancock in his capacity as a former employee of Visy Board."

The governing law of the Deed is expressed to be the law of Western Australia. There was also inclusion of a notice and service provision giving an address for "a notice, consent or other communication to be delivered by a party to this Deed". Injunctive relief To consider whether the applicant is entitled to injunctive restraint of the respondent in respect of the entry of judgment it is necessary to see whether the case brought by the applicant raises a serious question to be tried and whether the balance of convenience favours the grant of the injunction: Castlemaine Tooheys Limited v South Australia (1986) 161 CLR 148 at 163. Because the failure of the application will make the applicant liable to execution of judgment, this is a case where the resolution of the application for interlocutory relief will determine the substance of the matter in issue: NWL Ltd v Woods [1979] 1 WLR 1294 at 1306-7; Cayne v Global Natural Resources PLC [1984] 1 All ER 225 at 237; Kolback Securities Ltd v Epoch Mining NL (1987) 8 NSWLR 533 at 536. Whether serious question to be tried (1) Whether Pratt defamed the applicant The Beard allegations For the applicant it is contended there is a serious question to be tried whether the respondent has disentitled itself to execute the Federal Court judgment because of the provisions of cl9.3 of the Deed where it is provided that the right to execute that judgment will lapse: "in the event that Pratt makes (except under the compulsion of law) a statement defaming Hancock in his capacity as a former employee of Visy Board."

"Defame" is not a term defined in the Deed but must include words in either the spoken or written form which tend "to lower the plaintiff in the estimation of right‑thinking members of society generally"; see Gatley on Libel and Slander, 8th ed, par4, p5 citing Sim v Stretch (1936) 52 TLR 669 at 671.

The applicant bears the onus of establishing such a defamatory statement was made. The evidence upon which the applicant firstly relies in this respect is that he had been informed by Blom, a sales representative employed by the respondent, that Blom overheard Pratt say to Beard, an employee of the respondent, words to the following effect: "Hancock is a little crook, he ripped me off for $5M". The applicant's evidence was that Blom advised him of these matters on two occasions, the first in Fremantle in October 1995 and the second being around 22 March 1996. In his affidavit evidence Blom denied this. He testified to having no recollection at all of a meeting with the applicant in Fremantle in October 1995 and denied it occurred. He recalled meeting the applicant in Fremantle on 22 March 1996 and set out the circumstances that occurred and what was said in conversation between them. He denied also having spoken to Pratt or being part of a conversation with him. In a further affidavit the applicant particularised the alleged conversation he had with Blom in Fremantle in October 1995, saying that it took place at a night club. The applicant deposed Blom had said he was at a company function at the Gold Coast in Queensland and was standing near Pratt and Beard and overheard Pratt say to Beard the statement said to be defamatory. In a further affidavit Blom denied the conversation had occurred. These denials were maintained in cross‑examination. In his first affidavit Beard denied Pratt had made to him the statement attested to by the applicant, whether in the presence of Blom or otherwise. He further testified to having only very rarely spoken to Pratt and detailed the circumstances of a particular conversation. In a second affidavit Beard maintained denials of the applicant's evidence. The evidence was unaffected by his cross‑examination on the affidavit. Evidence led as to the basis on which Beard received sick leave payments did not establish any proper basis for impugning his credit, particularly in the light of subsequent evidence from Mrs Bruce in cross‑examination. The position is therefore that Blom and Beard each deny the alleged defamatory statement was made. There is no evidence Pratt made it. The weight of evidence is against the position asserted by the applicant. The case for the applicant seeks therefore to further impugn the credit of Blom and Beard by contending they both are employees of companies controlled by Pratt and that Beard showed an obvious and deep seated dislike of the applicant. However, there is also objective material supporting the conclusion that the applicant's account is not credible. In a number of facsimiles sent by the applicant after the date on which Blom is said to have first told Hancock of Pratt's statement (October 1995), no reference is made to the statement. The applicant's evidence on the matter has about it an evolving character, gathering particulars as it developed from his first affidavit. The result is that both on grounds of the weight and credibility of the evidence the applicant does not bring evidence that Pratt made a statement defaming him in his capacity as a former employee of the respondent and he could not be anticipated to be able to do so at a trial. The applicant sought to improve his position on this issue by leading evidence from Webb, State Sales Manager of the respondent. Webb testified he had been at a conference on the Gold Coast at which Blom and Beard had been present and he was embarrassed by the way the chairman of the group responded to him. That evidence does not in its terms involve Pratt at all or specifically in relation to the alleged defamatory statement. Webb also testified that last year one Wheeler had made a comment about the applicant to one Mercer at the respondent's Christmas party. Webb did not hear the comment but heard it second hand later from Mercer. Webb said all he had been told was that Wheeler had made a derogatory comment. That is not evidence of anything done by Pratt or of a defamatory statement concerning the applicant in his capacity as a former employee of the respondent. The Wade allegations The second area in which it is said defamatory statements were made by Pratt relate to matters stated by Messrs Rainsford, Napthali and Meiklejohn. Specifically reliance is placed on a statement by one Wade that Napthali had attempted to engage him in a conversation "of the shocking things [the applicant] had done to Pratt". It is sufficient to state that none of them raise matters which arguably fit in any way the requirements of the relevant portion of cl9.3 of the Deed. In particular, they do not bring evidence of a statement by Pratt or fail to evidence any statement of a defamatory character or fail to rely on a statement referring to the applicant "in his capacity as former employee" of the respondent. They raise no serious issue to be tried. The additional question raised pursuant to the leave granted by the order of 24 December 1996 is as follows. It is said there is evidence the respondent advised Amcor it did not have to purchase United Packaging International (Trade Australia Group), contrary to an understanding said to have been reached as part of the settlement process, as the respondent had "stitched Hancock up". This contention is neither an additional question nor is it arguably evidence which falls within cl9.3 of the Deed in that it is not evidence of a statement by Pratt or of a statement relating to the applicant "as a former employee of" the respondent. (2) Breach by contact with Pratt It is relevant to the question of the restraint sought by the applicant to determine whether the respondent seeks to execute the Federal Court judgment without one of the events in pars(a)-(d) of cl9.1 of the Deed having occurred. For the respondent the breach relied upon is said to be that in par(b), that is, the applicant has contacted or attempted to contact Pratt or members of the Pratt Family. The evidence in support is that the applicant sent the following facsimiles. (a) Facsimile dated 8 January 1995 (accepted as an incorrect reference to 8 January 1996) and sent 7 January 1996 by the applicant to Pratt. The applicant states he intended by this to give notice to Pratt he had breached cl5.3 of the Deed by which Pratt agreed he would not contact or attempt to contact the applicant or any member of his family or make adverse or defamatory or derogatory comments concerning or pertaining to that family. (b) Facsimile dated 22 January 1996 from the applicant to Pratt in which the applicant states he requested a stamped copy of the Deed. (c) Facsimile dated 5 February 1996 from the applicant to Pratt. The applicant states his intention in sending it was to repeat there had been breaches of the Deed and to propose a meeting to discuss them. (d) Facsimile dated 15 April 1996 from applicant to Pratt. The applicant's intention in sending it was to again request a stamped copy of the Deed and to further advise of breaches of the Deed. (e)&(f)Facsimiles of 30 and 31 July 1996 from applicant to Pratt. In respect of these the applicant claims that he was advised of matters which, if made public, would damage the respondent and Pratt. The applicant considered that pursuant to the Service Agreement and particularly cl5.1.9 which required him to protect the reputation and interest of the respondent, he had a duty to advise Pratt of these matters. The applicant therefore denies that he breached cl5.2 of the Deed in the above respects. Paragraph (a) of cl5.2 specifically prohibits facsimile transmissions both to Pratt or any member of the Pratt Family so that, on its face, the applicant has breached that paragraph and consequently cl9.1(b) is activated. The applicant was not entitled under the Deed to a stamped copy of it. It was open to him to ask the respondent, who had the obligation to stamp under the Deed, for a copy of it rather than to embark upon a course of conduct proscribed by the Deed namely, to communicate with Pratt. There is no provision in the Deed requiring the applicant to give notice to the respondent. None of the communications can have any different legal effect on that basis. Furthermore, it is patent from examination of the recitals to the Deed that cl5.2 and cl9.3 were inserted to protect Pratt and the Pratt Family from such communications. They were an important part of the settlement. They were matched by provisions protecting the applicant from similar contact.

The applicant's complete failure to accept the significance of the provisions of the Deed in this respect was evidenced on the second morning of the hearing where the respondent undertook to file and tabled in draft an affidavit of an employee of the respondent providing evidence that, following the first day of the hearing, the applicant had forwarded a facsimile to the solicitor for the respondent and faxed a copy to Pratt. A note specifically addressed to Pratt was attached to the facsimile. This occurred in the face of the applicant having heard argument on behalf of the respondent asserting breach of cl9.3 and cl5.2 and the reasons why Pratt and the Pratt Family did not consent to such contact or attempts of contact. The Deed does not require notice to be given of a breach of cl5.2 as a condition precedent to an action on the Deed breached. Furthermore, the Deed does not require notice to be given of an event occurring under cl9.3 for that clause to apply. The respondent is entitled to have the Deed performed strictly in accordance with its terms: Chitty on Contract, 27th ed, 1994 at 1023, par21-001; Cheshire and Fifoot's Law of Contract, 6th Australian ed, 1992 at 723, par1903. No case has or could be made for the implication of a term authorising the conduct of the applicant: BP Refinery (Western Port) Pty Ltd v Shire of Hastings (1977) 180 CLR 266 at 282-3. The proposition that years after termination of his service contract, the applicant remained obliged to use proper means to protect the respondent's reputation is without foundation. It is not arguable the obligation on the applicant in cl5.1.9 of the Service Agreement to "use all proper means in his power to maintain, improve and extend the Business and to protect and further its reputation and interest" was a covenant which survived the termination of his employment as the chief executive officer. (3) Estoppel or waiver The applicant deposed to a telephone conversation he had with Pratt on or about 15 or 16 April 1996. His evidence was that he called the respondent to speak to the company secretary/solicitor. He was connected to Pratt's personal secretary who advised that the person no longer worked for the respondent. He said he was then asked if he wanted to speak with Pratt to which he replied that he did not think that Pratt would want to speak with him and that he was only phoning to obtain a stamped copy of the Deed. He said he was then placed on hold and, after some minutes, Pratt came to the phone and there was a brief conversation between them. The applicant's evidence is Pratt said words to the following effect: "We have to get this one out of the hands of the lawyers. If we keep working on it we will be able to work things out between ourselves". The applicant testified he was then transferred back to Pratt's secretary and requested the stamped copy of the Deed. Pratt's secretary, Mrs Graham, gave evidence by affidavit and was cross‑examined on it. She had no recollection of any conversation with the applicant on or around 15 or 16 April 1996. She further testified that on his arrival at the office at approximately 8.00 am on 15 April 1996, Pratt went immediately into an Executive Committee Meeting. At 9.45 am he departed for Essendon Airport and was not in the office for the remainder of that day or the following day as he went to New Zealand. Mrs Graham testified the last time she spoke to the applicant by telephone was when the respondent's office was located in the Rialto Building, Melbourne. The respondent had moved to its present offices from the Rialto on 30 January 1995. Accordingly, it was prior to that date she had any telephone conversation with the applicant. This evidence was maintained by her under cross‑examination. It is apparent even if the applicant could establish a telephone conversation with Pratt on 15 or 16 April 1996, that could not amount to an estoppel or waiver in relation to facsimile messages transmitted before that date (the first four facsimiles relied upon to establish a breach). The terms of the conversation to which the applicant deposed suggest an attempt by Pratt at settlement or reconciliation. This is inconsistent with the terms of the first four facsimiles and the fifth and sixth facsimiles. The additional question raised pursuant to the order made on 24 December 1996 under cl9.1(b) is supported by reference to a letter from the solicitors for the respondent to the applicant dated 17 February 1995 which commences by stating that the solicitors are instructed the applicant recently telephoned Pratt and insisted on speaking to him. It is said that evidence is in conflict with the evidence of Mrs Graham. That is not the case because the solicitors refer to a telephone conversation with Pratt and there is no logical inference that Pratt may have only been contacted through Mrs Graham. In any event it provides no evidence capable of supporting the contention for an estoppel or waiver. (4) Duress It is apparent that although the applicant was unrepresented before the Court, his submissions on duress (as on other matters) had been prepared with assistance of a person or persons legally qualified. On his case, the contentions of duress, characterised by him as economic duress, also involve considerations of fraud, undue influence and unconscionable bargain. It is said the effect of these doctrines are the same namely, that the Deed is rendered voidable if it can be shown by the applicant that duress, fraud, undue influence or unconscionable bargain are made out in respect of the circumstances under which the applicant entered into the Deed.

The applicant's case is that it is necessary for him to show that pressure applied by the respondent induced him to enter into the Deed; that pressure went beyond what the Court is prepared to countenance as legitimate; the pressure which he will be able to establish will be illegitimate if it consists of unlawful threats or amounts to unconscionable conduct: Crescendo Management Pty Ltd v Westpac Banking Corp (1988) 19 NSW LR 40. For this purpose the applicant contends it is not necessary to show that his will was overborne or that the illegitimate pressure was the sole reason for him entering the Deed. The applicant relies upon the contention that Crescendo has been followed in a number of decisions namely: Hawker Pacific Pty Ltd v Helicopter Charter Pty Ltd (1991) 22 NSW LR 298; Equiticorp Finance Ltd (in liq) v Bank of New Zealand (1993) 32 NSW LR 50; Irons v Merchant Capital Pty Ltd (Sct NSW), (Young J, 16 October 1994, unreported); Musumieci v Winadall Pty Ltd (1994) 34 NSW LR 723; NZI Capital Corp Ltd v Ianthe Pty Ltd (Sct NSW), (Staff AJ, 31 July 1991, unreported); Dimskal Shipping Co SA v International Transport Workers Federation (the Evia Luck) [1992] 2 AC 152 at 166. It is further contended the Court should consider whether he protested; whether there was an adequate alternative; whether he sought legal advice; the relative strength of the parties; and whether there was any consideration for the bargain: Pao On v Lau Yui Long [1980] AC 614. The applicant's contentions on the relevant law are not contested for the respondent. The applicant contends duress amounting to illegitimate pressure is a serious issue to be tried because of eight considerations, which are as follows: (i) Applicant's dismissal The applicant contends his dismissal amidst false allegations that he had effectively stolen from or defrauded the respondent in the sum of $5M is an aspect of the illegitimate pressure placed on him. In support of this contention the applicant relied, in particular, upon affidavit evidence filed in the Federal Court action. I accept the objection taken on behalf of the respondent to that evidence as being evidence of belief by the applicant which is of no weight here. However, there is evidence upon which the applicant relies which makes it arguable that to some unspecified part the claim made against him in the sum of about $5M included payments lawfully made to him. While that may be arguable there is no evidence that all of the allegations upon which the applicant's dismissal was founded were false. At the highest the applicant contended that the majority of them were, but that is unsupported by evidence making the issue arguable to that extent. In the result, there is no evidence enabling the Court to conclude it is arguable the respondent was not perfectly genuine in the decision which it made to dismiss him. Furthermore, and importantly, the dismissal took effect on 30 April 1993. The Deed of Compromise was entered into on 11 March 1995. The dismissal was therefore remote in time from, and not connected with, the Deed. (ii)Complexity of proceedings Then it is contended by the applicant that the respondent commenced enormously complex proceedings making the allegations which Pratt and other senior executives of the respondent knew to be false. There is no evidence to support this limb of the duress contention other than repetition of the allegations by the applicant. Furthermore, the institution of the proceeding, as has been said, was remote in time from the Deed and was, at the time the Deed was entered into, a situation which had subsisted for nearly two years. (iii) Public communication of allegations Next it is said on behalf of the applicant the respondent communicated the allegations to the press and commenced a public campaign to have him presented as a "disgruntled employee", not an aggrieved shareholder. There is no evidence the respondent took the initiative in communicating with the press. This is an aspect upon which the applicant contends he could obtain further affidavit evidence. In my opinion that would not change the position because publicity surrounding the proceedings could not amount to illegitimate pressure of the sort upon which the applicant seeks to rely at the time of entering into the Deed. (iv)Failure to payout under Shareholders' Agreement The applicant contends the respondent failed to meet its obligations under the Shareholders' Agreement. That was an agreement entered into by the applicant with the respondent and others in which it was provided that, if the applicant ceased employment with the respondent on or after 30 June 1991, certain payments would be made to him as the purchase price for what was described as "Sale Shares", being all of the shares held by or on behalf of the applicant in the capital of the respondent. The nature of the obligations of the respondent under the Shareholders' Agreement was the subject of a set‑off and counter claim in the Supreme Court action. The fact that the respondent did not pay the applicant in those circumstances and was at odds with him as to his entitlement under that agreement, does not carry the inference that the respondent did not genuinely believe it was entitled to dispute those matters or it did so knowing its claims were false so as to produce illegitimate pressure upon the applicant. There is no evidence to support the contention of bad faith on the part of the respondent in not making a payment under that agreement or in connection with transfer of shares out of the applicant's name in accordance with the Shareholder's Agreement. (v) Failure to give discovery The applicant also contends the respondent, who had in its possession all of the significant documents relating to the litigation, failed to fully comply with its obligations of discovery yet sought to enforce strict time restraints for compliance by the applicant with directions from the Court for giving of particulars and other matters. Again the applicant states that if allowed time he could bring further evidence to sustain the arguability of this proposition. Discovery is a process regulated by the Court. The applicant's rights in relation to discovery, as well as the rights of the respondent, are regulated by rules of the Court. There can be no foundation in the contention that disputes in relation to discovery give rise to some form of economic duress. (vi) and (viii)Settlement negotiations and bankruptcy Then the applicant contends that in combination with the failure to give discovery, the manner in which the respondent conducted the settlement negotiations with him placed him under illegitimate pressure. The way this contention is advanced is to rely on evidence given by the applicant that on 10 March 1995 he met a solicitor at the office of the solicitors for the respondent who advised him the respondent's patience had run out and either the applicant would settle or the respondent would send the applicant's wife and son bankrupt. Again the applicant says that affidavits can be brought from the persons concerned to support this contention.

In Food Delivery Services Pty Ltd v ANZ Banking Group Limited (Northrop J, 7 March 1996, unreported) it was said: "The principles enunciated by the Court of Appeal [in Equiticorp (supra)] are stated, correctly, in the headnote as follows: "Where it is sought to vitiate a transaction because of economic duress the pressure inducing an apparent consent will be regarded as illegitimate for the purpose when it consists of unlawful threats or amounts to unconscionable conduct, but commercial pressure, even to the point where the party the subject of the pressure is left with little choice but to act as he did, is not of itself sufficient.""

Here the applicant's wife was a respondent to the proceedings in which claims totalling $3,880,963 were made. The applicant's son was indirectly involved in the proceedings as a director of Northern River Resources Limited, a respondent in respect of which claims totalling $299,916 were made. It follows the necessary corollary of the respondent succeeding was that it was entitled to enforce its judgment against at least the applicant and his wife and Northern Rivers Resources Limited. In the event of a judgment for the sums claimed of $5,500,000 and $3,880,000, the bankruptcy of the applicant and his wife was at least highly likely. Taking the alleged statement by the solicitor at its highest, there is no evidence it was an unlawful threat. The evidence is that the respondent had remedies open to it lawfully which it was entitled to pursue. So far as it constituted pressure it cannot amount to more than commercial pressure of the type which does not reach the level of unconscionability. (viii)Harassment The applicant contends also that the respondent engaged in a campaign of harassment, including espionage, which interfered with his ability to conduct the proceedings and his business. The only evidence upon which the applicant relies are either selfserving statements made by him or hearsay evidence from an unidentified source. There is no reliable or relevant evidence to sustain these contentions. There is no evidence to support the applicant's general contention that if each of the above considerations are taken either separately or cumulatively he has an arguable case that when he entered into the Deed he did so under duress. The matter may be tested by considering each of the factors which the applicant contends should be taken into account in determining whether there is an arguable case: cf Pan On (supra). Weighing these factors it is apparent there is no evidence the applicant protested at the time of the settlement negotiations, they appearing to have been initiated by him. He had an alternative to settlement, namely to continue the litigation but apparently did not wish to do so. He did have legal advice. If he had a case, the applicant was not in a position where he lacked strength. There was consideration in the form of the compromise. Additionally, he took no step to avoid the Deed after entering into it and indeed sued on it. Indeed, that brings me to the primary argument for the respondent on the issue of duress, namely, that the applicant affirmed the Deed so that if it was a voidable agreement he has lost the right to set it aside: North Ocean Shipping Co Ltd v Hyundai Construction Co Ltd (1979) QB 705. There is abundant evidence of his having affirmed the Deed which it is not necessary to recapitulate here. It was not until 17 December 1996 that the applicant raised the question of duress. He cannot now seek to set the Deed aside: North Ocean at 721; Hawker Pacific at 304. For these reasons I conclude the applicant fails to establish that he has a serious question to be tried. Application for dismissal The question then arises whether the respondent is entitled to have the action dismissed pursuant to FCR O20 r2(a). The question which the Court must decide is not whether the applicant would probably succeed in his action, but whether the material now before the Court is such that the action should not be permitted to go to trial in the ordinary way because it is apparent it must fail: Webster v Lampard (1993) 177 CLR 598 at 547. The power of dismissal is one the Court should exercise with "exceptional caution". The application is premature. The applicant, having failed to secure restraint from the Court, faces execution of judgment. There is a procedural requirement of notice before execution so that, failing compliance, the applicant would have an arguable case for restraint. The respondent's motion should therefore be stood over for later consideration. Interlocutory injunction The respondent's application for an injunction restraining the applicant in terms of cl5.2(a) of the Deed should be granted. There is a serious issue to be tried that the applicant does not intend to comply with the provisions of that clause and thus intends to continue to breach the Deed. The balance of convenience is to preserve the position secured between the parties by the Deed. I would therefore resolve the matters before me as follows: (1) The applicant's amended application for interlocutory relief should be refused. (2) The respondent's motion for the action to be dismissed pursuant to FCR O20 r2(2) should be stood over. (3) The respondent's motion for interlocutory relief should be granted. I certify that this and the preceding 20 pages are a true copy of the Reasons for Judgment of his Honour Justice R D Nicholson. Associate: Date: 13 February 1997

Mr Hancock appeared in person Counsel for the Respondent: Mr David Stone Solicitors for the Respondent: Williams & Hughes

Date of Hearing: 17, 18, 23 and 24 December 1996 - 4 February 1997 Date of Judgment: 13 February 1997

Pao On v Lau Yui Long [1980] AC 614 Sim v Stretch (1936) 52 TLR 669 Webster v Lampard (1993) 177 CLR 598 ALAN ROY HANCOCK v VISY BOARD PTY LTD (ACN 005 787 913) NO WAG 150 OF 1996 R D NICHOLSON J PERTH 13 FEBRUARY 1997

(1994) 34 NSW LR 723

(1991) 22 NSW LR 298

At a glance

Court

Decision date

Before

Source

Judgment (13 paragraphs)

Parties

Cases Cited (10)

Cited By (1)