BWK Elders (Australia) Pty Ltd v Westgate Wool Company Pty Ltd

EX TEMPORE REASONS FOR DECISION 1 The first matter before the court today is an application by the respondents to discharge the order made on 12 July 2001 in the nature of an Anton Piller order. That order was executed on 13 July 2001 and resulted in the seizure of a number of bales of wool from the premises of the first respondent and the seizure of other items from the premises of the first respondent. 2 Because an issue arose as to whether all of the bales of wool which were then seized were properly seized in accordance with the order made on 12 July 2001, I directed the parties on 20 July 2001 not to cause to be carried out any testing of samples taken from thirty-one nominated bales of wool, with particular brands, which were said to be bales of wool which ought not to have been taken from the first respondent's premises when the Anton Piller order was executed. 3 By affidavit sworn on 26 July 2001, the solicitor for the respondents, in a relatively brief passage at the end of his affidavit (pars 21, 22 and 23) signalled the application now pursued today, in effect to discharge the Anton Piller order generally although the terms of the discharge sought were confined to discharging it in relation to the bales of wool seized (rather than in relation to all of the items taken from the first respondent's premises) and to have returned to the first respondent the samples taken from the seventy-four bales of wool seized, together with records of any tests taken from those samples. 4 The ground of that application in relation to all the seventy-four bales of wool was that the applicant, upon the application itself, had failed fully to disclose to the Court an important matter, a matter which counsel for the respondents described at one point in his submission as critical, namely that wool tested by the Australian Wool Testing Authority Ltd ("AWTA") , is tested in lots, with each lot of wool having a discrete identifiable number and comprising several or a significant number of separately numbered bales of wool. The applicant did not draw to the Court's attention in submissions on 12 July 2001 that lot numbers are an important and commonly used identifier of wool. It is contended that that lack of candour on the part of the applicant, whatever its cause, should lead to the order being discharged. 5 I agree that if lack of candour is made out, the order made on that day should be discharged. The discharge would not relate simply to the return of information concerning the bales of wool seized, which have since been returned to the first respondent, but to all the material and information seized on that occasion. 6 I have carefully considered the material referred to by the respondents' counsel in support of the claim of a lack of candour. It is apparent that, from the respondents' point of view, the identification of wool by reference to lot numbers, as well as brands and bale numbers, is a significant part of its processes. That is demonstrated, as counsel for the respondents showed, by reference to the wool test reports of AWTA and other documents which are in evidence. I do not need to refer to that material. 7 However, I am not persuaded that the failure to draw that matter to my attention by counsel for the applicant, when the order was first sought on 12 July 2001, demonstrates a lack of candour on the part of the applicant or its legal advisers at that time. That is because, as I perceive the applicant's case, it claims that wool supplied to it by the first respondent bearing a certain brand and bale number was different from the wool which it had contracted to buy from the first respondent, identified by reference to a test certificates containing a description including the lot number, the brand, and the bale numbers of the wool. Whether that be right or not remains to be determined at a later time. 8 In addition to having evidence to establish a discrepancy in the quality of the wool which it received from the first respondent compared to that which was described in the test certificates in relation to wool delivered to it by reference to a brand name and a bale number, the applicant also had available to it an affidavit from the managing director of the AWTA, which included reference to the fact that - and I read from par 73 of that affidavit: "Generally there is an annual shearing on a wool growing property where the vast majority of the sheep are shorn and the 'wool clip' produced. The bales will be numbered sequentially under the brand of the property." 9 There is other material which was presented in support of the application, which tends to point in the same direction. 10 I therefore accept the contention of counsel for the applicant that one hypothesis upon which the applicant was proceeding was that somehow the brand and bale number markings on the wool delivered to it had been placed on those bales containing wool which was different from the wool in the bales, the subject of the testing, containing the same brand name and bale numbering. It is therefore, I accept, part of the applicant's hypothesis that the first respondent somehow still had possession of wool baled with the brand name and the bale numbers which were the subject of the test certificates and which it had not delivered to the applicant when purchased by the applicant but instead had substituted different wool. Whether that proves to be the case is ultimately a matter to be tried in the hearing. Given that hypothesis on the part of the applicant, for which there was some material to support it or from which it might reasonably draw that hypothesis, as counsel has explained to me, in my view the applicant cannot be criticised for a lack of candour in not having drawn to the Court's attention the possible significance of lot numbering in sales of wool, or for having sought an order in terms of the order which was made on 12 July 2001, and in particular in procuring an order from the court authorising the seizure of bales of wool bearing a particular brand and bale number without also including reference to the lot number. 11 I accordingly do not accept the contention of the respondents that that order was procured on the part of the applicant without making full and proper disclosure to the Court. 12 There is a second aspect to the application concerning that order which needs to be addressed. As I have mentioned, the respondent promptly after the seizure of the wool claimed that twenty-seven, and then thirty-one bales of the wool so seized, was not wool which the first respondent had agreed to sell to the applicant, and was in fact wool which the first respondent had sold to other parties. It was therefore claimed that those bales of wool should not have been seized in accordance with the terms of the order. 13 The implementation of the order may have caused some slight delay in the first respondent complying with contracts to sell and supply it to third parties. The wool was seized, and held for five working days before being returned to the first respondent. I assume it has now been dispatched in accordance with those sale orders. In the meantime, the AWTA has taken samples from those thirty-one bales of wool but, because it has been claimed that those thirty-one bales of wool ought not to have been seized pursuant to the order, those samples have not yet been tested. 14 Whether the respondents' contention is correct depends upon the construction of the order which was made on 12 July 2000. The order was made upon certain undertakings which are recorded within it. Its immediately relevant terms ordered the first and third respondents to permit persons on behalf of the applicant to enter their premises and to take therefrom specified items under the supervision of a supervising solicitor. The specified items as set out in Part (B) of the Schedule to that order were in six categories. The first four categories clearly related to documents concerning the sale of wool by the first respondent to the applicant. The fifth and the sixth categories were : "5. Any stencils/brands/paints/wool packs, 6. Any bales of wool which bear the brand name and bale number which corresponds to those bales already purchased by the applicant as set out in the following table …" A table containing brandnames and bale numbers was then set out. 15 In my view it is plain that pars 5 and 6 of the specified items in schedule B to the order were not confined to items owned by the applicant or agreed to be sold by the first respondent to the applicant. The affidavit evidence before the Court indicated that the bales of wool which were sought to be seized were bales of wool which would have a brand name and bale number which corresponded to a brand name and bale number of wool already sold and delivered to the applicant. On the applicant's evidence, the wool it had so received had either been dispatched overseas or had been retained by it and had been tested elsewhere in the way described in the affidavit of Mr McLearie. It was apparent that the applicant was seeking to take possession of wool not already applied to it by the first respondent in purported compliance with sale contracts, but other wool which might have identical brand and bale markings. 16 Paragraph 6 of Part B of the Schedule to that order, in my view, states that the bales of wool which were authorised to be seized in accordance with that order, were bales which bore the brand and bale number which corresponded to bales of wool already purchased by the applicant. It was the correspondence of identifying features of brand and bale number which described what might be seized. It did not require that those particular bales of wool, of which the applicant was authorised to take possession under the order, in fact be the very bales of wool which the first respondent had agreed to sell to the applicant but had not yet been delivered to it. 17 Accordingly, in my judgment, the seizure of the seventy-four bales of wool pursuant to the order made on 12 July 2001 was authorised, including those thirty-one bales of wool which the respondents say had been sold to external entities. I therefore do not direct the return of those samples to the respondents. I also discharge par 2 of the order made on 20 July 2001 directing the applicant and the respondents to instruct the AWTA not to carry out testing of samples taken from those bales of wool. The applicant and the respondents may each now forthwith request the AWTA to carry out testing of those samples. As I understand it, the respondents have received, or are able to receive their part of the samples so taken to have them tested elsewhere if they require. 18 There remains the question of whether this proceeding should be transferred from the South Australian District Registry to the Victorian District Registry of the Court. There is no issue as to the relevant principles. They are set out in the decision of National Mutual Holdings Pty Ltd v The Sentry Corporation (1988) 19 FCR 155 in particular at 162. 19 The information upon which the application is presently made is relatively scanty. That may be simply because of the stage to which the proceedings have advanced. A statement of claim has been filed but as I understand it, the applicant may wish to amend that statement of claim. No defences have been filed. It is therefore somewhat speculative at this point in the proceeding to determine where the case can be conducted or continued most suitably in the interests of the parties, in the interests of justice in the determination of the issues between them, and in the most efficient administration of the Court. 20 It is not presently clear which of the respondents, if any, were involved in the transactions which are the subject principally of allegations against the first respondent. They may have had no involvement in the transactions at all, although I note that par 13 of the statement of claim filed on 18 July 2001, alleges that each of them aided, counselled or procured the contraventions of the Trade Practices Act (1974) (Cth) alleged and were knowingly concerned in those contraventions, and it gives reasons for that involvement. 21 As the allegations presently stand, therefore, it seems to me that each of the second, third and fourth respondents are persons against whom significant allegations are made of being knowingly concerned in misleading and deceptive conduct on the part of the first respondent, and in a context where, as the submissions of counsel for the applicant indicated on 12 and 20 July 2001, it is alleged that the first respondent engaged in that conduct not simply innocently, but in a fraudulent manner. 22 In those circumstances, it seems to me to be an important consideration, that individuals or who are said to be knowingly involved in such conduct should have the opportunity to be present during the conduct of the proceedings and if they request, and are so minded, at interlocutory stages. Given the nature of those allegations in par 13 of the statement of claim, I think I should also assume at this stage that there will be matters of fact specifically alleged against them which may require each of them to give evidence in response in the course of the hearing. 23 Beyond that I do not really have any clear picture as to who the witnesses for the respondents might be at the hearing or indeed who the witnesses for the applicant might be at the hearing. There is some evidence that a Mr Hullick and a Mr Pearson are buyers of the applicant and that they are resident in Melbourne. There is some evidence from which it might be inferred that at least on the issue of quantum a number of persons employed by the applicant may need to give evidence because they are working apparently on the material necessary to establish the losses alleged by the applicant by reason of the conduct of the respondents. Those persons may be in the applicants' offices in Adelaide. The AWTA is located in Melbourne. It has conducted extensive investigations. Whether its test certificates are to be challenged and, if so, in what way, is purely speculative at this point, although I do not think I should assume that it would not be challenged. Each of the respondents and the applicants has indicated that they propose to engage experts in other areas, or in testing of the wool, who are not resident in Melbourne and whose attendance at the trial might be needed. 24 At present I discount from the balancing exercise which I must undertake the fact that persons present as independent solicitors or representatives of the applicant or the respondents when the Anton Piller order was executed might give evidence. I do not see that there should be any real contest as to what transpired on that occasion or any need to prove the trail of evidence. I think that is a theoretical possibility. 25 It is also not precisely clear where the cause of action arose. The statement of claim does not make allegations which make that clear. I infer from the basis of the affidavit evidence before me that the cause of action arose in Victoria. 26 I accept that the proceeding was commenced in the South Australian District Registry of the Court for proper reason; that is, that it was not commenced in this Registry capriciously. There is no onus upon any party in relation to the question where the proceeding should now be conducted or continued, but I should have some sound reason to direct that it be conducted or continued in the Victorian District Registry if I am to make an order to that effect. 27 I am also mindful in deciding what to do with that application of the way in which the court can efficiently administer these proceedings. The Court as presently constituted is now, by virtue of having heard the interlocutory applications to date, generally apprised of the allegations and of the nature of the allegations. It appears to me that there will be significant pleadings issues (as they have been foreshadowed by counsel). There is some measure of efficiency in the court as presently constituted, entertaining those issues and resolving them. The disadvantage to the respondents if that were to occur will be relatively slight. There is no reason why the preparatory work required at this stage cannot be conducted by the solicitor for the respondents in Victoria or why interlocutory proceedings could now not be conducted by video link-up or by telephone or, indeed, on the basis of written submissions. Particular interlocutory issues may require some attendance and cross-examination of witnesses, but there is no reason to think that that will occur, at least for the time being. 28 Having regard to those considerations, I indicate that my present view is that at an appropriate time the Court should direct that the proceeding be conducted and continued in the Victorian District Registry of the Court. The balance of convenience, as I presently perceive it, would indicate that at some time when the pleadings are closed such an order should be made. The thing which most influences me in making that decision, or indicating that provisional view at present, is the requirement in fairness for the second to fourth respondents having the opportunity to attend the hearing for the whole of the hearing and the prospect that their absence will significantly impair the operations of the first respondent for the period of the hearing. 29 I do not see that that disadvantage is likely to be incurred if the Court were to adjourn the notice of motion seeking the transfer of the proceeding for the time, being with liberty to call it on on reasonable notice to revive the application. I am minded at present to maintain the control of the proceedings in the South Australian District Registry until at least the pleadings are closed, at which time, subject to anything further which evolves, I would be disposed to make an order in terms of par 1 of the notice of motion. 30 The order which I make at present is simply to adjourn that motion to a date to be fixed with liberty to call it on on reasonable notice. I certify that the preceding thirty (30) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Mansfield.