Unilever Australia Limited v Rosella Foods Pty Limited

Equitable set-off 6I was referred to the decision of the New South Wales Court of Appeal in Product Development Solutions Australia Pty Ltd v Parametric Technology Corporation [2012] NSWCA 211 at [5]. There the Court referred to the need to show "a sufficient nexus or connection between the claim for goods sold and delivered and the cross-claim such that the cross-claim could be said to 'impeach' the claim." It was not enough that the "only connection between the respondent's claim and the alleged conduct is that the supply and conduct took place in the context of a relationship which included the...agreement" (at [14]). 7The Court of Appeal found (at [16]) that: The applicant did not identify before the primary judge or this Court any connection between the conduct complained of and the respondent's claim which might arguably impeach or go to the root of the respondent's claim so as to justify an equitable set-off. 8I was also referred to the decision of Forsyth & Anor (as trustees for the C&S Forsyth Superannuation Fund) v Gibbs [2008] QCA 103 at [7] where Keane JA, as his Honour then was, noted the findings of the trial judge and continued (at [9]): Consistently with the technique of equity, which does not seek to define what an elephant is but knows one when it sees one, the principles governing the availability of equitable set-off of cross-claims are couched in open textured terms, such as "sufficient connection" and "unfairness". Keane JA (at [11]) indicated that "...the claim to set-off must 'impeach' or go to 'the root of' the plaintiff's claim" and held that there was: ...no sufficient connection between the parties' claims to regard the respondent's claims as impeaching the appellants' claim to recover the debt undoubtedly owed them by the respondent. 9In Lord v Direct Acceptance Corporation Ltd (Receiver and Manager Appointed) (in liq) (1993) 32 NSWLR 362 Sheller JA, with whom Kirby P and Meagher JA agreed, referred to Meagher, Gummow and Lehane, Equity, Doctrines and Remedies, 3rd ed (1992), where it is stated to be "an indispensable requirement of equitable set-off that the set-off actually go to the root of, be essentially bound up with, 'impeach' the title of the plaintiff". 10In Just Juice Corp Pty Ltd, Re; James v Commonwealth Bank of Australia (1992) 8 ACSR 444 Gummow J (at 457) considered a submission: ...that for there to be an equitable set-off, the set-off must essentially be bound up with and go to the root of, challenge, call in question, or "impeach" the "title" of the applicant [and that]...it is not sufficient that there be merely countervailing claims which are mutual and which arose out of the same transaction. His Honour referred to a number of cases which demonstrated "that the requirement of 'impeachment' and the phrase 'title to the legal demand' have not been narrowly construed" (at 458) and doubted that there was any changed doctrine of equitable set-off which was based upon some notion of manifest injustice or close connection without requiring an impeachment of the plaintiff's claim. 11I was also referred to a decision of Roadshow Entertainment Pty Ltd v (ACN 053 006 269) Pty Ltd Receiver & Manager Appointed (formerly Cel Home Video Pty Ltd) (1997) 42 NSWLR 462. That decision at 489D recognized that equitable set-offs may be available for unliquidated cross-demands, but did not purport to set out the circumstances in which such unliquidated cross-demands might constitute a set-off, at least in circumstances that could govern the present case. 12It follows that proof of an unliquidated cross-claim related to the primary claim is insufficient to establish an equitable set-off. The weight of authority indicates that the cross-claim must impeach the title to the primary claim, which I take to mean that it must challenge or call into question the basis of the primary claim. This may be something less than invalidating the primary claim. A determination of whether the cross-claim has the effect of impeaching the primary claim will necessarily involve a consideration of whether there is a sufficient connection between the two claims, and the nature of that connection. 13In my view, the claim by Rosella of a breach of the contract to supply - that certain products were ordered but only some of those products were supplied - is likely to be bound up with any claim for payment in respect of those products actually supplied. That part of the pleaded cross-claim has the capacity to call into question the claim, founding an allegation that Unilever has not supplied the goods in accordance with the contract, but has only supplied some of them. I do not see any reason why the damages caused by a failure to supply goods in accordance with the contract could not properly bear upon an entitlement to recover payment for those goods actually supplied. 14It is not so clear whether this principle would enable Rosella to rely on damages resulting from goods allegedly not supplied in the period December 2010 to May 2011 (the period when most of the damage resulting from non-supply was allegedly suffered by Rosella) to answer Unilever's claim for payment for goods supplied in November and December 2011. Whether a failure to supply in December 2010 could impeach the claim for payment of goods delivered in December 2011 may be doubted, but in my view the matter is not so clear that I should summarily reject it. 15Accordingly, I do not accept Unilever's primary argument that the non-supply of product alleged in the cross-claim (if otherwise amounting to a cross-claim of substance) could not constitute an equitable set-off. The point is reasonably arguable. This is sufficient to reject this ground as a basis for summary judgment in accordance with General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125, 128-130; [1964] HCA 69 at [8]-[10]. 16However, during argument, in response to questions asked by the Court, Unilever also submitted that the cross-claim had no substance and therefore could not constitute a proper defence to Unilever's claim.

Cross-claim of no substance 17In paragraph 3 of the cross-claim, Rosella alleges an agreement from about 2007 with Unilever in the following terms: 3 From about 2007 Unilever agreed to manufacture, package and deliver to Rosella (the Manufacturing Agreement) quantities of the following products (Products): (a) Rosella Tomato Sauce, 600ml (Tomato Sauce); (b) Rosella "No Added Salt" Tomato Sauce, 600ml (NAS Tomato Sauce) (c) Rosella Tomato Soup, 500ml (Tomato Soup) Particulars The agreement was partly in writing and partly implied. To the extent that it was in writing, it was contained in an unsigned document entitled "Manufacturing Agreement" between Rosella and Unilever, dated 2009, a copy of which can be provided on request. To the extent that it was implied, it was implied from the parties' conduct, including the conduct of Rosella in submitting forecasts and orders and making payment for the Products, and the conduct of Unilever in manufacturing, packaging and delivering Products to Rosella in accordance with those orders and forecasts, between January 2008 and November 2010. 18It can be seen that the term "Manufacturing Agreement" as used in the cross-claim refers to both the agreement between Unilever and Rosella and the document which was alleged to be part of the agreement. In both paragraphs 3 and 4 the first use of the term seems to refer to the agreement between the parties whereas the second use in the particulars refers to the document. This conflation of the legal agreement between the parties and the document tends to obscure rather than clarify the cross-claimant's allegations. In these reasons I propose to use the term "the agreement document" to refer to the document titled "Manufacturing Agreement", and to use the term "the agreement" in referring to the contractual relationship between the parties asserted by the cross-claimant. 19Although the particulars in the cross-claim suggest that some part of the agreement was implied, the relevant terms of the agreement pleaded by the cross-claimant in paragraphs 4 to 7 of the cross-claim, and the relevant breaches of the agreement pleaded in paragraphs 8 to 11 and 13 of the cross-claim, identify particular terms of the agreement document. No breach of any implied part of the agreement is alleged. Further, the damages claimed are alleged to have been incurred as a consequence of the specified breaches. 20The agreement was pleaded to have been made "from about 2007", yet it is said to comprise the agreement document dated 2009 and implications from conduct in 2008 to 2010. The basis of any agreement in 2007 is not revealed. If the pleading is correct as to the agreement being in 2007, the particulars which identify post-contractual conduct are not admissible to identify the content of the contract, only its existence: Brambles Holdings Ltd v Bathurst City Council (2001) 53 NSWLR 153, 164 at [26]. 21Even if the reference to 2007 is mistaken, there are significant limitations on the use to which conduct can impact on the content and construction of the contract: Brambles at [24] to [28]. 22For these reasons, the agreement document is the relevant part of the agreement, and the substance or reasonableness of the cross-claim must depend on the contents of the agreement document.

(a) Existence of agreement in terms of the agreement document 23The first problem faced by the cross-claim is that the agreement document does not bear any indicia that an agreement was reached. 24As the particulars to paragraph 3 of the cross-claim record, the agreement document was not signed. It bears the form of a draft and, indeed, not even a final draft. It has markup notations in the right-hand margin indicating amendments that have been made and where deletions have occurred. There is no indication on the agreement document itself whether the deletion or amendment by one party has been accepted by the other. 25In some respects, the amendments have resulted in clauses becoming ungrammatical and uncertain in meaning, e.g. clause 6.1. Amendments contain obvious spelling errors, e.g. "pout of recipet" (presumably "point of receipt") in clause 5.1. And there are several occasions where the agreement document is obviously incomplete and preliminary, for example clause 4.5 refers to a "rolling forecast" covering a 12-month period but with the words "(or six month???)" following, indicating that the period of the rolling forecast was still to be agreed. Another example is in clause 4.1 which refers to the buyer placing orders "in accordance with schedule 5 of Annexure A", but there is no schedule 5 of Annexure A to the document. The last page of Annexure A is schedule 3 which states "Finished Product Specification To be agreed by parties prior to execution of this contract", indicating the need for execution of the agreement document before an agreement is created. 26As to the subject of price, clause 8.1 of the document states "with price levels and charges in accordance with Schedule 4 of Annexure A", and clause 8.3 refers to a six monthly review of prices "in accordance with the formula set out in Schedule 4 of Annexure A." There is no Schedule 4 of Annexure A. 27These features of the agreement document plainly indicate that the agreement document of itself is not an agreement reached between the parties. Of course, it is possible that an agreement could be reached between parties in the terms of the agreement document by means of an oral agreement to that effect. But the cross-claim alleges no oral component to the agreement. 28Nor can the Court imply an agreement in the terms of the agreement document when such an implication would be inconsistent with the terms of the agreement document itself (such as Schedule 3). To do so would infringe the well-known requirement that any implication must be consistent with the express terms, see BP Refinery (Westernport) Pty Ltd v Hastings Shire Council (1977) 180 CLR 266 at 283 adopted in Codelfa Construction Pty Ltd v State Rail Authority (NSW) (1982) 149 CLR 337, 347. Yet this is what is sought by the cross-claimant: to have the Court infer the existence of an agreement when the terms of the agreement document deny an agreement prior to execution. 29Can implications derived from the particularised conduct overcome the problems apparent in the agreement document? The cross-claimant must do more than establish that the particularised conduct establishes that there was an agreement. In order to succeed on the cross-claim as pleaded, the conduct must establish that there was an agreement in the terms of the document. 30Without any oral component to the agreement, it is impossible for conduct alone to establish such an agreement. Even if the alleged conduct was at all times consistent with the terms of the agreement document (and the alleged conduct did not bear this quality, as considered below), this could not of itself establish agreement on those terms of the agreement document which were never (and were never going to be) reflected in the parties' conduct. This would include most of the terms of the agreement document. In respect of those terms, there is no form of offer and acceptance capable of being found. 31There was in evidence more detailed particulars of the agreement alleged in paragraph 3 of the cross-claim. A letter from the cross-claimant's solicitor dated 6 July 2012 stated: Paragraph 3 1 We attach a copy of the unsigned document entitled, "Manufacturing Agreement". 2 To the extent that the agreement was implied, the implication arose from the following course of conduct, between January 2008 and November 2010: (a) Rosella periodically submitted forecasts to Unilever which were treated by both parties as production orders for quantities of manufactured products; (b) The forecasts were often submitted on a monthly basis, but sometimes provided on a less regular basis; (c) When Unilever received a forecast from Rosella, it ensured that it had stock on hand to manufacture the quantities forecast; (d) Unilever advised Rosella, usually monthly, when the requested products had been manufactured, and requested that Rosella submit purchase orders for those products; (e) Rosella submitted to Unilever the requested purchase orders for the products that had been manufactured, and arranged for the products to be collected from Unilever's warehouse; (f) Payment was made to Unilever, usually 30 days after the end of the month. 32This conduct is related to matters dealt with in clauses 4, 6 and 8 of the agreement document. Even if established it says nothing about the other obligations contained in the agreement 33Further, the conduct alleged is inconsistent with the agreement document, in several respects. Adopting the numbering in the particulars letter: (a) speaks of forecasts being treated as "production orders", whereas clause 4.5 of the agreement document calls them "Production Estimates", namely "Buyer's estimated production requirements"; (b) states that forecasts were submitted "sometimes...on a less regular basis" than monthly, whereas clause 4.5 of the agreement document requires Rosella to provide forecasts "every calendar month"; (c) states that Unilever "ensured that it had stock on hand to manufacture the quantities forecast", whereas clause 4.3 of the agreement document required "adequate suppliers [sic] of raw materials and packaging are held"; (d) states that prior to order, Unilever provided advice and requests to Rosella, but no obligation to this effect is found in the agreement document; (e) states that Rosella would collect orders from Unilever, whereas clause 6.1 of the agreement document contemplates that Unilever would, at its cost, deliver the products; and (f) states that payment was made (usually) 30 days after the end of the month of collection, whereas clause 8.2 of the agreement document contemplates payment 30 days from the end of the month of invoice. 34Accordingly, the particularised conduct alleged differs from the terms of clauses 4 to 8 of the agreement document and provides no assistance as to whether the other terms of the agreement document were agreed. 35Similar inconsistencies are apparent when the evidence of the conduct is compared to the agreement document. The forecasts were not rolling monthly forecasts; they were only supplied on six occasions although the agreement alleged purports to require forecasts for each month from 2007 until 2011 inclusive, potentially 60 months. Further, each was supposed to cover a "12 month period (or six month???)" whereas the forecasts respectively cover 14 months, three months, five months, four months, three months and six months within the period from September 2010 to December 2011. No forecast concerned the period before September 2010. 36According to clauses 4.1 and 4.5 of the agreement document, Rosella was obliged to ensure consistency between its subsequent order and the figures indicated in the first three months of each forecast. In particular, clause 4.5 purports to oblige Rosella to order precisely in accordance with that forecast for the first month and to limit any variations in the subsequent two months to a maximum of 10%. But the forecasts (if they were orders) did not comply with this alleged obligation. As an example (as the table in [8] of the cross-claim indicates) on 16 February 2011 Rosella forecast 14,000 cartons of tomato sauce for March 2011. Yet in the table in paragraph 9 Rosella asserts the "Ordered Quantities" for March 2011 (based on a subsequent forecast) was zero cartons of tomato sauce, a 100% reduction. 37In these circumstances, the conduct particularised and evidenced is inconsistent with and cannot support a contract in the terms of the agreement document. It therefore cannot support the agreement pleaded in the cross-claim.

(b) Terms and Breach 38Another problem that arises in respect of the cross-claim concerns the breaches that are alleged. The terms of the agreement document do not support the terms, or the breaches of those terms, alleged by Rosella. 39In particular, the agreement document distinguishes "forecasts" and "orders". The forecasts in evidence support this distinction. But the particulars in the 6 July 2012 letter elide this distinction and the cross-claim assumes that it does not exist. 40Clause 4 of the agreement document headed "Estimates and Orders" states: 4.1 The Buyer shall, from time to time place orders with Unilever for the manufacture and packaging of Products in accordance with schedule 5 of Annexure A. 4.2 Subject, in the case of the first order for any Products only, to the availability of packaging, Unilever agrees to supply Products in accordance with the schedule requested by the Buyer. 4.3 Unilever shall ensure that adequate suppliers of raw and packaging materials are held. 4.4 If at any time Unilever considers that it will be unable to meet the Buyer's order requirements it will within a reasonable period of time notify the Buyer of such inability and provide the reasons for it, and the Parties agree to meet together in good faith as soon as practicable thereafter and to seek to agree on alternative solution. Nothing in this clause 4.4: (a) shall relieve Unilever of its obligations under clauses 4.2 and 4.3; or (b) shall require the buyer to agree on an alternative solution. 4.5 every calendar month during the Term, the Buyer will provide to Unilever a rolling forecast for each of the Products for the 12 month period (or six month???) commencing the following month in the form of the Production Estimate. The first month of the Production Estimate shall be fixed, the second and the third months of the Production Estimate maybe varied up to 10% of volume for each Product. Any variations greater than 10% will be considered by Unilever and Unilever shall use reasonable endeavours to meet this changed demand. 41The products "requested" in clause 4.2 are clearly the "orders" in clause 4.1. This construction is confirmed by the reference in clause 4.2 to the "first order" and is supported by the reference to "order" in clause 4.4. 42The agreement document in clause 4.2 purports to oblige Unilever to supply "order[s]" or "Products...requested". No such obligation arises in respect of "forecast[s]" in clause 4.5 which are termed "Production Estimates" and are defined in clause 1.1 to be Rosella's "estimated production requirements". 43Thus, orders and requests are distinguished from forecasts in clause 4 of the agreement document. 44Further, the forecasts supplied by Rosella are in a form which indicates that they were not orders or requests for products. The forecasts do not indicate the prices of products, they are labeled forecasts and neither the word "order" nor "request" appear in them. 45But the 6 July 2012 letter of particulars conflates "orders", "requests" and "forecasts". Paragraph 2(a) treats "forecasts" as "production orders"; "forecasts" in 2(b) and (c) become "requested products" in paragraph 2(d); which leads to the "requested" purchase orders in paragraph 2(e). 46A similar approach of incremental change from "forecast" to an "order" appears in the cross-claim. Paragraph 4 provides as follows: 4 It was a term of the Manufacturing Agreement that Rosella would submit to Unilever rolling monthly forecasts of its requirements for the Products, in which the volume of Products shown in the first month of the forecast would be fixed and in the second and third months could be varied by up to 10% for each product. Particulars Clauses 4.1 and 4.5 of the Manufacturing Agreement 47It is plain that the term alleged in paragraph 4 of the cross-claim is derived wholly from clause 4.5 of the agreement document and not at all from clause 4.1. It is concerned with forecasts, not orders. 48Yet in paragraph 5 of the cross-claim Rosella alleges that it was a term of the agreement (clause 4.2 of the agreement document) that Unilever would supply the products "requested" by Rosella. Although paragraph 5 does not replicate the identical wording of the term, for the purposes of this application I am prepared to accept that clause 4.2 creates this obligation. But its content must be viewed in the context of clause 4.1, and for the reasons given above what is "requested" is that which is the subject of "order" in clause 4.1, not the "forecast" in clause 4.5. 49Paragraphs 8 and 9 of the cross-claim allege: 8 Pursuant to clauses 4.1 and 4.5 of the Manufacturing Agreement, Rosella supplied to Unilever rolling forecasts on the dates, and requesting [sic] the Products, set out in the following table (the Forecasts)... 9 Pursuant to clauses 4.2 and 4.5, as a consequence of the receipt of the Forecasts, Unilever was obliged to supply the following quantities of the Products between December 2010 and December 2011 (the Ordered Quantities)... 50The distinction between forecasts and orders (or requests) is overlooked in clause 8 of the cross-claim. Forecasts and requests are conflated, resulting in an allegation that the forecasts comprise requests. This is a fundamental error in the cross-claim. It is an allegation unavailable on the terms of the agreement document. 51The same error is perpetuated in paragraph 9. The draftsperson elides the distinction between orders and forecasts by defining the amounts in the forecasts as the "Ordered Quantities". The breach alleged in paragraph 10 of the cross-claim is the failure to deliver the "Ordered Quantities". In truth, the allegation could only be of Unilever failing to deliver the forecasted quantities, of itself a matter of no contractual significance. 52This error of failing to preserve the distinction between forecasts and orders infects the whole of the cross-claim and leaves it without substance. If there is no allegation of an unfulfilled order, there can be no breach by Unilever entitling damages.

(c) Damages 53A third problem appears from the manner in which the cross-claim alleges damages. 54In paragraph 12 Rosella alleges that it was unable to supply its customers with certain quantities of product. On this application this alleged inability must be accepted. However, the pleaded cross-claim demonstrates no connection between this inability in Rosella and the failure of Unilever to supply ordered quantities. Rosella's claim is inconsistent with such a finding. 55One can take December 2010 as an example. Rosella alleges that Unilever was obliged to supply 7,000 cartons of tomato soup in December 2010 but Unilever instead delivered 12,320 cartons, an oversupply of 5,320 cartons (see cross-claim [9] and [10]). Rosella says that by reason of Unilever supplying those 12,320 cartons (rather than 7,000 cartons) Rosella was unable to supply its customers 4,155 cartons. This cannot be correct. 56A similar problem exists with the forecast for tomato sauce. The cross-claim alleges that 12,000 cartons in December 2010 were forecast by Rosella, 15,035 were supplied by Unilever but this was said to produce a deficiency to customers of 484 cartons. 57As for November and December 2011, the particular months the subject of Unilever's claim for unpaid orders, Rosella in its cross-claim (at [9]) says that 20,000 cartons of tomato sauce were forecast and "only" 21,759 cartons were delivered (at [10]). How this could possibly constitute an undersupply is unexplained. Rosella's admission in paragraph 3 of the defence that 25,111 cartons of tomato sauce it had ordered were collected by it during these two months only exacerbates the error. 58Similarly, again in November and December 2011, Rosella alleges that Unilever was obliged to supply 22,000 cartons of tomato soup. Paragraph 3 in the defence contains an admission by Rosella that it ordered and was supplied with approximately 21,000 cartons. The figures in paragraph 10 of the cross-claim is consistent with this admission. There can be no basis to suggest that the failure by Unilever to supply the additional 1,000 cartons of tomato soup forecasted (but not ordered) could have caused the shortfall of about 10,000 cartons in this two-month period, as alleged in paragraph 12 of the cross-claim. 59Rosella also alleges that in breach of clause 4.2 of the agreement document Unilever refused to supply products to Rosella after December 2011. There are no particulars of this refusal. The evidence establishes that there was no forecast for this period. Indeed, there is no allegation of any forecast by Rosella extending into 2012 (let alone an allegation of any order). Clause 4.2 is not breached by the mere failure to supply products to Rosella, so an allegation of non-supply can have no contractual significance. 60In my view, the pleading of damages being caused by the undersupply is defective and is an additional reason why the cross-claim is not a reasonable cause of action and therefore cannot be a defence to the plaintiff's claim.

(d) Other matters 61Rosella raised one other argument, namely that Unilever by its solicitors admitted that the parties disagreed as to the terms of their agreement. The fact that the parties disagree as to the terms of the agreement does not constitute evidence that either party's position in relation to the agreement is soundly based, nor does it establish that a party's position is an arguable defence to a valid claim. 62Finally, paragraph 11 of the cross-claim alleges that Unilever failed to ensure that it had adequate supplies of ingredients and packaging. Unilever sought particulars of this failure, and Rosella identified (in its 6 July 2012 letter) three dates in February 2011 when one or more of labels, cartons and tomato paste was said to be lacking in Unilever's supplies. No particulars are supplied of the quantity of these products held by Unilever which were said to be lacking or inadequate. 63It seems to me (and the cross-claimant did not submit otherwise) that the failure by Unilever to have sufficient product and raw material is only productive of a loss in Rosella if Unilever fails to supply orders made by Rosella. The effect of clauses 4.3 and 7.1 in the agreement document (assuming an agreement as alleged) is that any failure by Unilever to have sufficient product or packaging is not excuse for a failure by Unilever to supply orders. But if orders are met no alternative basis for Rosella to make a claim for damages is created by clauses 4.3 and 7.1.

(e) Conclusion 64For these reasons, there is no substance to the cross-claim by Rosella. 65The cross-claim is not a reasonable cause of action as it is currently pleaded and is liable to be summarily dismissed under rule 13.4(1)(b) of the Uniform Civil Procedure Rules 2005. It provides no reason why judgment should not be granted in favour of Unilever on its claim. Rosella's admission in its defence of the orders for the products, the supply of the products in the orders at prices agreed, the requirement for payment within 30 days and the absence of payment creates an entitlement in the plaintiff to summary judgment in accordance with rule 13.1 of the Uniform Civil Procedure Rules 2005. The requirement of evidence of a belief of the absence of a defence is satisfied by the affidavit of Graeme Rayner dated 31 August 2012. 66Unilever has sought no orders in respect of the cross-claim. Although I have concluded that the cross-claim is defective, I do not propose to make orders in respect of the cross-claim when none are sought by Unilever.

Proposed orders 67Accordingly, I propose to make orders substantially in accordance with orders 1 and 2 of the notice of motion filed by the plaintiff. The plaintiff is entitled to judgment in accordance with orders 1, 2, 3 and 4 of the statement of claim and costs with interest to run in accordance with section 100 of the Civil Procedure Act 2005 at the Reserve Bank of Australia cash rate plus 4% per annum. The cross-claim shall remain extant, pending any application for amendment or summary disposal.

Post script 68Shortly before this judgment was to be delivered, the parties informed me that administrators had been appointed to the defendant, Rosella. This event raised a question as to whether section 440D of the Corporations Act 2001 has application. Section 440D provides: 440D Stay of proceedings (1) During the administration of a company, a proceeding in a court against the company or in relation to any of its property cannot be begun or proceeded with, except: (a) with the administrator's written consent; or (b) with the leave of the Court and in accordance with such terms (if any) as the Court imposes. (2) Subsection (1) does not apply to: (a) a criminal proceeding; or (b) a prescribed proceeding. 69As this court is not within the meaning of "the Court" as defined in section 58AA, and as the administrators have not provided written consent under section 440D(1)(a), a question arises as to whether the giving of a reserved judgment offends the direction in section 440D that "a proceeding in a court...cannot be...proceeded with". 70The plaintiff, Unilever, in a brief written submission directed my attention to Botany Bay City Council v Saab Corp Pty Ltd [2011] NSWCA 308, where Basten JA, agreed to by Macfarlan JA (at [25]) and, semble, Tobias JA (at [193]) stated at [21]: ...the Court should not make an order against the company, which went into voluntary liquidation whilst judgment was reserved, without allowing the liquidator and the appellant an opportunity to be heard. 71In reliance upon this authority Unilever submitted that I should proceed to give judgment. 72In The Owners Strata Plan No. 64970 v Austruc Constructions Limited & Anor (No 3) [2010] NSWSC 60 Bergin CJ in Eq wrote: 7 After judgment was reserved the parties requested that the matter be re-listed. On 2 February 2010 the Court was advised that Austruc had been placed into voluntary administration on 22 January 2010. The only application by consent of all parties was to have the matter adjourned to 2 March 2010 to allow the Administrator to consider Austruc's position. The proceedings against Austruc are presently stayed: s 440D(1) Corporations Act 2001. The Administrator has not provided his written consent to the proceedings continuing against Austruc and there has been no application for leave to proceed. 8 The applications as between the Corporation and CSA are not affected by the present status of Austruc. The parties were notified that it was intended to deliver judgment in relation to those applications unless the parties sought deferment of the delivery of judgment. No application has been made in this regard and this judgment deals only with the Corporation's claims against CSA and CSA's limitation defence. 73In my view, neither of these decisions determine the question before me as to whether I can proceed to deliver judgment, although they may indicate a need to allow further submissions by the parties, including the administrators, before any orders are made. This opportunity has been granted to Unilever, to the previous representatives of Rosella, and to the administrators' legal representatives. 74A letter from Clayton Utz dated 12 December 2012 was received by my Associate. It states: We refer to the Proceeding and advise that we act for the voluntary administrators of Rosella Foods Pty Ltd (Administrators Appointed) (Receivers and Managers Appointed) (Rosella Foods). We have today filed and served a Notice of Change of Solicitor. We note your email to the parties dated 7 December 2012, and understand that his Honour has been made aware that voluntary administrators were appointed to Rosella Foods on 30 November 2012. As his Honour noted on the last occasion that the Proceeding was before him, by operation of section 440D of the Corporations Act 2001 (Act) no proceeding against Rosella Foods can proceed during the administration period without the administrator's written consent or the leave of the Court. In our view, his Honour delivering judgment on the plaintiff's notice of motion dated 29 August 2012 (Notice of Motion) would be a step in the proceeding and it would be caught by the moratorium imposed by section 440D of the Act: we refer to Arpic Pty Ltd v Austin Australia Pty Ltd [2004] NSWSC 83 at 17 which confirms that any step progressing a proceeding is caught by section 440D of the Act. With respect, we do not consider that the authority cited by the plaintiff in its letter of today is of any relevance as it deals with a consent application and, thus, the relevant issue was not before the Court for determination. We have been instructed that the voluntary administrators do not consent to any step in the Proceeding being taken during the period of the voluntary administration, including any step by his Honour to deliver judgment on the Notice of Motion. Further, the plaintiff has not sought the leave of the Court for the Proceeding to proceed during the voluntary administration period, although it is open for the plaintiff to do so. We have been instructed to oppose any such application if it is made. In the circumstances, it is unnecessary for his Honour to relist the Proceeding and the voluntary administrators are content for his Honour to accede to the plaintiffs request to determine this matter in chambers, unless his Honour would prefer otherwise. If his Honour is minded, despite our submissions to the contrary, to list the Proceeding and proceed to deliver judgment on the Notice of Motion, the only further submission that the voluntary administrators make is that the execution of any judgment that is entered against the defendant should be stayed pending the hearing and determination of the cross-claim. 75I take the reference in paragraph 4 to the voluntary administrators being "content for his Honour to accede to the plaintiffs request to determine this matter in chambers", as a reference to the matter whether judgment should be delivered, rather than the matter the subject of the judgment. 76Barrett J in Arpic Pty Ltd v Austin Australia Pty Ltd [2004] NSWSC 83 at [17] stated: [17] The Corporations Act employs several different verbal formulations to convey messages generally equivalent with that in s 440D. While that section says that a relevant proceeding "cannot be begun or proceeded with", ss 444E(3) and 471B prefer to impose a disability on a "person" (a person "cannot begin or proceed with ... a proceeding") while the words in s 500(2) are "no ... proceeding shall be proceeded with or commenced". So far as these operative words are concerned, I do not think there is any difference in meaning between the several provisions. There is, in each case, a prohibition that precludes any step properly characterised as commencing (or beginning) or "proceeding with" a "proceeding" of the relevant kind. In the case of s 440D as it applies to the present circumstances, the prohibition is upon any step properly regarded as "proceeding with" the "proceedings" commenced by the summons filed on 18 December 2003, they being "proceedings in a court against the company or in relation to any of its property". 77If there is no difference in meaning between the various provisions Barret J refers to, as his Honour concludes, then sections 444E(3) and 471B indicate that the disability is imposed on "a person". 78A "person" in section 2C of the Acts Interpretation Act 1901 (Cth) is defined to include "a body politic or corporate as well as an individual". The note at the end of the definition of "person" in section 107 of the Export Market Development Grants Act 1997 might, however, indicate that the definition is not so wide as may be supposed. It provides: "person" includes a partnership and an approved joint venture. Note: This definition widens the ordinary meaning of person which, under subsection 2C(1) of the Acts Interpretation Act 1901, includes a body politic or corporate as well as an individual. The note indicates that a partnership or joint venture is not within the section 2C(1) definition of "person". 79The question whether a court is a person in the Telecommunications (Interception) Act 1979 (Cth) was considered by the Full Court of the Federal Court in Kizon v Palmer (1997) 72 FCR 409, 430-431. Lindgren J, with whom Jenkinson and Kiefel JJ agreed, referred to the predecessor of section 2C(1) of the Acts Interpretation Act 1901 (Cth) in the following terms: By the operation of s 22(1)(a) of the Acts Interpretation Act 1901 (Cth), unless a contrary intention appears, the word "person" includes "a body politic or corporate as well as an individual". The word "person" does not, in ordinary English usage, refer to a court. A court is not an individual. A court is not a body politic. The Australian Constitution does not make the High Court of Australia a body corporate and the Federal Court of Australia Act 1976 does not make this court a body corporate. The Third Charter of Justice for New South Wales and the Act 4 Geo IV c 96 did not make the Supreme Court of New South Wales, which is continued in existence by s 22 of the Supreme Court Act 1970 (NSW), a body corporate. In my view, no intention appears in the TI Act that the word "person" is to import a reference to a court. The terms of s 63 itself display an intention that the word "person" is not to refer to a court. Both s 63(1)(a) and 63(2)(a) prohibit communication of information of the kinds with which they are respectively concerned "to another person". If the expression "another person" was intended to encompass a reference to a court, the express prohibitions in s 63(1)(b) and 63(2)(d) against giving the same information in evidence in a proceeding would have been unnecessary. Authority also favours the view that the word "person" does not encompass a reference to a court. In Canadian Pacific Tobacco Co Ltd v Stapleton (1952) 86 CLR 1, Dixon CJ said, with respect to the prohibition in s 16(2) of the Income Tax and Social Services Contribution Assessment Act 1936 (Cth) against officers' divulging or communicating certain information "to any person", that courts "would hardly be called persons" (at 6). This view was followed by single judges in Queensland in Stapleton v Wilson [1956] QWN 48 and Geraghty v Woodforth [1957] QWN 41, and in Victoria in Cowan v Stanhill Estates Pty Ltd [1966] VR 604. In Miller v Miller (1978) 141 CLR 269 in the context of the prohibition in s 5(3) of the Telephonic Communications (Interception) Act 1960 against divulging or communicating to another person, or making use of or recording, any information obtained by intercepting a conversation passing over the telephone system, Gibbs J (at 277) expressed doubt whether a court was "another person" for the purpose of the subsection. However, Jacobs J (at CLR 279) said that "[t]he divulging or communicating by the person as a witness" would be contrary to the prohibition. It may be that his Honour had in mind a voluntary divulging or communicating as a witness, not to the court, but to others such as members of the public present at the hearing (but see the next paragraph). In R v Padman 1979 Tas R 37, Crawford J held that the same prohibition did not prohibit divulging or communicating information to a court. His Honour expressly did not distinguish between divulging the information to a judge and jury on the one hand and to "any public who are present in the court" (at 41) on the other. His Honour did not, however, refer to the passage from the judgment of Jacobs J in Miller v Miller referred to above. In Hilton v Wells (1985) 157 CLR 57 the majority (Gibbs CJ, Wilson and Dawson JJ, at 67) and the minority (Mason, Deane JJ, at 87) thought that the similar prohibition in the then s 7(4) of the Telecommunications (Interception) Act 1979 against divulging or communicating "to another person" did not catch the giving of the information in question in evidence to a court. The majority noted the "doubt" which had been expressed by Gibbs J in Miller v Miller, that a court fell within the expression "another person" in the prohibition, and the adoption and application by Crawford J in R v Padman, of what their Honours referred to as Gibbs J's "view". The minority also cited the passage from the judgment of Gibbs J. However, like Padman J, neither the majority nor the minority referred to the passage from the judgment of Jacobs J referred to above. The construction favoured by the High Court in Hilton v Wells was subsequently followed by Wilcox J in Duff v McCulloch (1985) 11 FCR 237 at 241, by Davies J in Brown v Commissioner, Australian Federal Police (1988) 83 ALR 477 at 480, and by Kirby P, with whom Gleeson CJ agreed on the point, in John Fairfax Publications Pty Ltd v Doe (1995) 37 NSWLR 81 (Fairfax v Doe) at 111C. In Green v R (1996) 135 ALR 181 it was conceded, on the authority of Hilton v Wells, that a court was not a "person" within the meaning of ss 5A and 63 of the TI Act. Importantly, a Full Court of this court held in Commissioner of Taxation v Nestle Australia Ltd (1986) 12 FCR 257, after referring to earlier single judge decisions to the same effect, that the similar prohibition in s 16(2) of the Income Tax Assessment Act 1936 (Cth) against divulging or communicating information "to any person" "plainly could not apply to a court" (at 262). But for the possible exception of the obiter dictum of Jacobs J in Miller v Miller, the authorities to which I have referred all favour the view that at least in contexts such as the present one, a court is not a "person". 80It seems to me that Kizon v Palmer supports the conclusion that action by the court alone, not involving the parties, is not within the ambit of sections 444E(3) and 471B, as it is not relevantly a "person". On the authority of Arpic, the same rule applies to section 440D. 81There is another reason that supports the entitlement of the court to deliver judgment. 82Rule 36.3 of the Uniform Civil Procedure Rules 2005 provides: 36.3 Reserved decision (1) If in any proceedings a judicial officer reserves his or her judgment or decision on any question, he or she: (a) may give the judgment or decision, either in open court or in the absence of the public: (i) at the venue for those proceedings, or (ii) at any other place at which he or she is authorised to hear or dispose of those proceedings, or (b) may reduce the judgment or decision to writing, sign it and forward it to the registrar at the venue for the proceedings. (2) If a registrar receives a judgment or decision forwarded under subrule (1) (b): (a) the registrar must appoint a time for the judgment or decision to be read, and (b) the registrar must give at least 24 hours' notice to the parties, in writing or otherwise, of the appointed time, and (c) at the appointed time, the judgment or decision must be read by another judicial officer of the court, or by the registrar, whether or not the court is sitting at that time. (3) A judgment or decision given under subrule (1) (a) or read under subrule (2) (c) takes effect on the day on which it is so given or read and is as valid as if given by the judicial officer at the hearing of the proceedings to which the judgment or decision relates. (4) Rule 36.2 applies to a judgment or decision referred to in this rule in the same way as it applies to a judgment or decision referred to in that rule. 83The effect of subrule (3) ensures that a reserved decision given today is as valid as it would be if given on the day of the hearing on 19 October 2012. On that date, no administrator had been appointed and section 440D was inapplicable. This supports my view that the delivery of a reserved judgment alone is relevantly not "proceeding with the proceedings". 84If there were a contest between the application of rule 36.3(3) and section 440D, the latter would of course prevail pursuant to section 109 of the Constitution. But I do not think section 440D has a meaning inconsistent with rule 36.3(3) for the reasons given. 85Nor do the principal policy reasons behind section 440D suggest that a reserved judgment should not be delivered. Those reasons include not permitting a creditor to advance its interest above other creditors, not distracting the administrators from their statutory duties and not causing unnecessary legal costs, see Pioneer Water Tanks (Australia 94) Pty Ltd v Delat Pty Ltd (1997) 25 ACSR 757, 759-760 and Slater v Global Finance Group Pty Ltd (1999) 30 ACSR 519, 522-523. The giving of a reserve judgment would have none of these effects; it may on the other hand, have the benefit of relieving the administrators of the detailed consideration otherwise necessary to determine the status of Unilever's claimed debt. 86Accordingly, I have not refrained from giving judgment in this matter. 87Section 440D will, however, preclude any further action by Unilever to enforce the judgment or assess the costs ordered. The administrators' letter is unclear as to whether it seeks that a stay be ordered. If I proposed to make such an order I would need to hear further submissions from Unilever. But it seems to me that such an order is unnecessary given the plain effect of section 440D. If Unilever attempted to take further steps contrary to section 440D then a stay order may well be appropriate. 88In the circumstances of the administration, I do however propose to limit the interest that is payable to the date of the hearing on 19 October 2012. The amount of interest includes: (a) $10,292.81 being 8.25% per annum on the amount of $250,208.15 from 31 December 2011 until 30 June 2012; (b) $13,503.73 being 8.25% per annum on the amount of $328,262.46 from 31 December 2011 until 30 June 2012 (c) $13,193.88 being 7.5% per annum on the amount of $578,470.61 from 30 June 2012 until 19 October 2012, a total of $36,990.42 which together with the principal sum of $578,470.61 produces a judgment sum of $615,461.03. 89I have also considered whether the judgment should be made nunc pro tunc, ante-dated to 19 October 2012, pursuant to subrule 36.4(3), but in circumstances where such an order has neither been sought nor been the subject of submissions, and by reason of my own doubts as to its appropriateness in view of the decisions in Hartley Poynton Ltd v Ali [2005] VSCA 53, 11 VR 568; Castle Constructions Pty Ltd v North Sydney Council [2007] NSWCA 164 at [95]-[97] and Emanuele v Australian Securities Commission [1997] HCA 20, and because such an order is unnecessary in view of the conclusions I have reached as to the effect of section 440D, and rule 36.3(3), I do not propose to exercise any power under rule 36.4(3). 90Finally, I note that the cross-claim remains listed for mention on 15 February 2013. It is unaffected by the terms of section 440D since it is not a proceeding "against" Rosella. I do not propose to make any order varying that listing date. 91The orders of the Court are:

1. Judgment for the plaintiff in the sum of $615,461.03 inclusive of interest.
2. The defendant to pay the plaintiff's costs of the proceedings up to and including 19 October 2012.

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 19 December 2012