The Cheese is Shipped to the United States
25 On 9 November 2003 Probiotec advised MCT of the shipping arrangements for a number of cargoes, including those for the cheese labelled "Australian Cheedam". Probiotec's email said that that cargo was to be shipped to Los Angeles in two stages. The first stage was to be carried in two 20 ft containers with an estimated arrival time of 5 December, with the remaining three containers due to arrive there on 12 December.
26 The initial two 20 ft containers were shipped on board the M/V Direct Tui at Sydney on 12 November 2003. This cargo arrived in Los Angeles on 5 December 2003. The bill of lading was claused freight prepaid, containing 1,996 x 20 kg cartons of Australian Cheedam based on shipper's load, and count and it stated:
"Cargo is stowed in a refrigerated container having been set by the shipper/packer at a carrying temperature of -16 degrees Celsius."
27 The second cargo was carried on board the M/V PONL San Francisco from Sydney. A shipped on board, freight prepaid, bill of lading for 2,936 x 20 kg cartons of Australian Cheedam in three 20 ft containers was issued on 22 November 2003. This cargo arrived in Los Angeles on 12 December 2003. The second bill of lading contained the same notation as the first about the carrying temperature.
28 Probiotec issued a commercial invoice, export packing list and a certificate of Australian origin for each of the two cargoes. These described the cargo as "Australian Cheedam". The first cargo was invoiced at USD49,900 CNF LA and the second at USD70,943.75 CNF LA. These two invoices were paid in full by the two contractual instalments. But, MCT later withheld other payments of balances due on other cargoes to Probiotec and the withheld money is the basis for its cross-claim.
29 The cargoes were accompanied by health certificates that stated on their face that they had been issued by the Department of Agriculture, Fisheries and Forestry of the Commonwealth certifying that raw milk contained in the product had been processed in Australia and that the goods were: (1) in sound condition; (2) fit for human consumption and (3) of Australian origin. However, in substance those certificates had been issued by Probiotec, under the authority of the Department given by an officer of the Australian Quarantine and Inspection Service (AQIS).
30 This occurred as part of a process in which Probiotec applied to AQIS for authority to export the particular cheese to be included in a certificate under the Export Control Act 1982 (Cth). That Act prohibited a person from exporting any prescribed goods to which a false trade description was attached (s 15(1)(b)).
31 When Probiotec sent its application for approval to AQIS, it described the "cut type" as "Cheedam cheese" but identified that product as a hard cheese and used a code for cheddar cheese. An AQIS officer emailed Probiotec's export manager advising her that he had changed the product type to "semi hard cheese" and given it a new code. Immediately before this in mid October 2003, Probiotec had obtained from Silliker Microtech, a microbiological testing laboratory, four certificates of analysis relating to two, unspecified, samples of the cheese in the "Cheedam" shipment. I infer that these reported the results of tests on two random samples of that cheese obtained in connection with the export of the cargoes. However, other than those certificates noting that no trace of certain substances or microbes was recorded in the tests, there is no direct evidence as to the meaning of the test results overall or how they were used by Probiotec. Nonetheless, I infer that these were obtained and kept by Probiotec as part of its procedures, first, to obtain approval to issue health certificates and, secondly, to ensure that the cargo, so far as such a limited random sampling would reveal, was in a fit condition to be sold by it.
32 Probiotec was subject to random audits by AQIS so as to ensure that it could be relied on by the Australian Government to use its authority to issue health certificates in its name. I accept Mr Stringer's and Mr Ganter's evidence that Probiotec's ordinary procedures for inspecting, testing and certifying the characteristics and qualities of cheeses and cheese products it was preparing to export would have detected any apparent mould or dirt in the products intended to be shipped to MCT. I am satisfied that Probiotec's procedures for the issue of the health certificates and ensuring that the "Cheedam" labelled cargoes were of the standard described in those certificates, were regular and appropriate. I am also satisfied that Probiotec's procedures would have ensured that the cheese labelled "Cheedam" conformed to the contractual description.
33 MCT carried the onus of proof. By 2005 MCT had begun proceedings against Probiotec in the Superior Court of New Jersey claiming, falsely, that none of the products sold were suitable for processing and that after an attempt to resell a portion of it it was destroyed by MCT's customer or resold as animal feed. Although Mr Meyers sought to distance himself from the exaggerated claim made in those proceedings that none of the cheese was fit, I am satisfied that those claims had been made on his instructions. The claims as put had no regard to the fact that Chateaux had been able to use and had paid MCT for a substantial amount of that cheese.
34 MCT asserted that Probiotec did not produce all of the documents possibly relevant to the purchase of the cheese by it that it repackaged and sent to the United States. MCT argued that Probiotec had destroyed these records when it was on notice that MCT intended to bring these proceedings following the dismissal of the New Jersey proceedings in July 2006. MCT's New Jersey attorney, Robert Corcoran, told his Probiotec counterpart that MCT would be "refiling the matter in Australia and that Probiotec should expect to receive notice from Australian counsel shortly". But, these proceedings only began over 16 months later in November 2007.
35 Probiotec had a document destruction policy that caused documents in the manufacturing plant to be destroyed after three years. However, the documents relating to the purchase of the cheese for the on-sale to MCT would have been relevant for discovery and use in the New Jersey proceedings. Those documents are likely to have been collected and set aside for that purpose. Mr Stringer was not aware of when those documents were destroyed.
36 Where a person deliberately destroys a document that, depending on what its contents may have been, would have told strongly either for or against the person, the strongest possible presumption arises that, if it had been produced, the document would have told against the person. This is so even if there was no intention to destroy evidence. In the latter case, the principle is that the person is in the position that they would have been in without the corroboration which might otherwise have been expected: Allen v Tobias (1958) 98 CLR 367 at 375 per Dixon CJ, McTiernan and Williams JJ, applying The Ophelia [1916] 2 AC 206 at 229-230.
37 On the penultimate day of hearing MCT contended and put to Mr Stringer that the cheese had been purchased by Probiotec at a price similar to that for "stockfeed". He denied that Probiotec had purchased the "Cheedam" cheese as stockfeed and I believe him. MCT had not pleaded that such a case was to be made by it. In those circumstances I am not prepared to infer that the missing documents would have supported an assertion that Probiotec had purchased cheese that it knew was not fit for human consumption. I do not accept MCT's argument that Probiotec deliberately destroyed the purchase documents to suppress them from discovery or evidence in either proceeding. While the absence of those documents does not assist Probiotec's case, and means it lacks any corroboration they may have given it, I must decide the issues on all of the evidence with that situation in mind.
38 The absence of the purchase documents means that Probiotec cannot use them to corroborate its position that the cheese it purchased for the sale to MCT of "Cheedam" labelled cheese was of any particular quality. However, I have arrived at a firm satisfaction, conscious of the absence of the corroboration that the purchase documents may have provided for Probiotec's case, that, the cheese it purchased was not stockfeed or such as did not comply with its contract with MCT. It is inherently unlikely that Probiotec would have allowed cheese of the poor quality alleged by MCT, as described below, to be shipped. First, Mr Stringer was trying to establish, not to destroy, a long term business relationship with MCT. Secondly, the risk to Probiotec in using its authority to certify, on behalf of AQIS, the fitness of cheese of that deficient character was significant. If AQIS discovered such a misuse, the consequences for Probiotec's business were severe. Thirdly, there is no commercial, or common, sense in MCT's allegation that Mr Stringer was selling product that was not fit for human consumption and was "stockfeed".