Chong & Neale v CC Containers Pty Ltd & Ors [2015] VSCA 137

Chong & Neale v CC Containers Pty Ltd & Ors [2015] VSCA 137 - VSCA 2015 case summary — Zoe

[30]

In the case of CCC customers, when a ship arrives in Melbourne, the containers are usually collected by the shipper or their agent and taken to their premises to unpack them. Once a container is emptied it is then sent to the CCC container depot. When it comes to the container depot, a container controller records the number of the shipping container and the registration number of the truck that has brought the container to the yard. Each container is surveyed to see if it requires maintenance or repair. If it does, then a quote for the cost of that work is completed and the quote is entered into CCC's computer system. Containers that require maintenance or repairs are then sent to the repair area of the yard and the repairs are approved by the shipping line which owns the container. There is an automatic approval amount set for most shipping lines so that repairs under that limit are carried out without any other authorisation by the shipping line and without inspection of the container. If the repair cost is above the automatic approval limit, then the shipping line must give specific instructions for the repair work to be undertaken. In addition to maintenance and repairs, work is carried out on some containers to upgrade them from general to food standard so that food may be transported in them.

Once the containers have been repaired or upgraded, the repair quote is marked in the CCC computer system as complete. Invoices are generated periodically in accordance with the arrangements for the particular shipping line. In addition to any repair or maintenance fees, most of the shipping lines are charged an entry fee (when the container comes into the yard), storage fees (for the time that the container is in the yard) and an exit fee (when the container leaves the yard). There are two shipping lines that are not charged in this way. Instead they are billed on a package rate. MSCA is charged a fee when one of their shipping containers leaves the depot. APL[5] is charged a fee when one of their shipping containers enters the depot. In addition, both MSCA and APL are charged for repairs. Once the containers have been repaired or upgraded, they are stored at the depot until they are needed. They may be released to an exporter, or, if there is a shortage of containers in another port, containers may be moved to those other ports.[6]

[53]

[T]there being no other plausible explanation provided, and bearing in mind the seriousness of the allegations made, it seems to me probable and proper to infer that Kevin, Kain, Mr Lee and Mr Neale conspired to defraud MSCA. In particular, I would infer that they had an agreement to overcharge MSCA by issuing inflated invoices for repairs (including by the duplication of invoices for work previously performed) and then to share at least part of the proceeds between CCC Old Co, Kain and Mr Neale. In this regard, Kevin and Mr Lee issued (or caused to be issued) false invoices and Kain and Mr Neale received at least part of the proceeds thereby obtaining a financial advantage by deception. The conspirators falsified documents in the course of the fraud (the invoices issued to MSCA (by CCC Old), to CCC Old (by Ackland Forge) and to Ackland Forge (by Dawn Trading)). I also infer that Kevin, Kain, Mr Lee and Mr Neale conspired with the intention of injuring MSCA. The fraud in respect of the false invoices addressed to MSC and MSCA was aimed at them alone. They were the only entities that would be the subject of harm as a result of the fraud directed to them. In my view, these are the only probable inferences to be drawn. Whilst there are other possibilities, such as that contended for by Kain, they are not probable. In particular, the timing of the payments to Ackland Forge and Dawn Trading after MSCA remittances, the link between Kain and Mr Neale and the fact that Mr Neale was an employee and director of the main target of the fraud, makes it inherently unlikely to my mind that there is no connection between them and the fraud and their coconspirators in perpetrating that fraud, or that they did not know about and participate in that fraud. It is not a case where there are unconnected steps taken by individuals in isolation from one another. In the circumstances of this case, that would be an unlikely coincidence of events. Rather, it is probable that the participants acted in concert with a specific plan to effect the fraud and share the proceeds of it. In this regard, it seems likely that Kain acted as the conduit between his son and Mr Lee on the one hand and Mr Neale on the other in arriving at the agreed plan.[10]

[84]

51 In Young Investments Group Pty Ltd v Stripe Capital Pty Ltd,[50] the directors of the respondent applied to strike out pleadings alleging that they had been involved in misleading and deceptive conduct by the company in breach of s 1041H of the Corporations Act 2001 (Cth) and, under the second limb in Barnes v Addy,[51] had been knowingly concerned in its alleged breach of fiduciary duty. The Stripe directors complained that the pleadings did not disclose a reasonable cause of action. They contended that the applicants were obliged to plead the basis upon which they were aware of the essential facts or matters which must be proved to establish their liability, citing Yorke v Lucas.[52] Gilmour J stated that Yorke v Lucas informs the question of how the necessary knowledge may be established. His Honour observed that that case concerned alleged involvement in misleading and deceptive conduct by virtue of s 75B of the then Trade Practices Act 1974 (Cth) and an analogous provision substantially in the same terms as s 79 of the Corporations Act upon which the applicants relied. After referring to a number of passages from Yorke v Lucas, his Honour referred to a passage from Compaq Computer Australia Pty Ltd v Merry[53] where Finkelstein J observed that, in cases where a person is sought to be made liable as an accessory to a contravention of s 52 of the Trade Practices Act, it was necessary to establish that the person had intentionally participated in that contravention and that necessitated proof of knowledge of the essential matters that made up a contravention. Finkelstein J referred to Yorke v Lucas and further to Pereira v Director of Public Prosecutions[54] as authority that knowledge of relevant essential matters may in particular circumstances be inferred. Gilmour J went on to refer to the case pleaded against the Stripe directors including their knowledge that Stripe had made certain representations and the directors' duties to take reasonable care in a number of pleaded respects.[55] His Honour then said:

[317]

If this had been a criminal trial, then in my opinion what the High Court said in Azzopardi would have meant that a jury could have been told that inferences from proved facts could more safely be drawn because the opponent elected not to give any explanation in terms of additional facts peculiarly within his knowledge or any evidence of such facts. In my opinion, if such Jones v Dunkel reasoning is available to a jury in a criminal trial, it must a fortiori be available to a court in civil proceedings such as the present. That would be so, even if these civil proceedings are regarded as proceedings for a civil penalty. I note that a similar view was expressed by Hill J in Australian Competition and Consumer Commission v Universal Music Australia Pty Ltd at [33].

It could be argued that this approach only deals with the right to silence in relation to proceedings actually under way, and that the opponent had another right against self-incrimination in respect of any additional offence with which he might be charged; and since his failure to give evidence was supported by that right, it could not be relied on to assist any inference against him.

However, that topic is dealt with by s 128 of the Evidence Act 1995 ...

In my opinion, the opponent cannot be in any better position, as regards a privilege against self-incrimination in other proceedings (or any inference that might be drawn from reliance on that privilege), than if he had given evidence before this Court and claimed the privilege as a basis for not answering particular questions; and in my opinion the content of s 128 (providing for the protection of a certificate with the effect stated in s 128(7)) is inconsistent with a view that a person not giving evidence because of a concern about self-incrimination in respect of another matter is in any better position, as regards inferences that may be drawn from failure to give evidence, than an accused not giving evidence at a trial, as discussed in Azzopardi.[191]

At a glance

Court

Decision date

Source

Judgment (517 paragraphs)

Parties

Legislation Cited (4)

Cases Cited (72)