Australian Securities and Investments Commission v Flugge & Geary (Ruling No 8)

[2015] VSC 660

IN THE SUPREME COURT OF VICTORIA Not Restricted

AT MELBOURNE
COMMERCIAL COURT
CORPORATIONS LIST

S CI 2007 10077

IN THE MATTER OF AWB LIMITED (ACN 081 890 459)

BETWEEN:

AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION	Plaintiff
v
TREVOR JAMES FLUGGE	Defendant

- AND -

S CI 2007 10081

IN THE MATTER OF AWB LIMITED (ACN 081 890 459)

BETWEEN:

AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION	Plaintiff
v
PETER ANTHONY GEARY	Defendant

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JUDGE:	ROBSON J
WHERE HELD:	Melbourne
DATE OF HEARING:	19 November 2015
DATE OF RULING:	19 November 2015
CASE MAY BE CITED AS:	ASIC v Flugge & Geary (Ruling No 8)
MEDIUM NEUTRAL CITATION:	[2015] VSC 660

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EVIDENCE —Admissibility and relevance of expert evidence and report under s 55 Evidence Act 2008 (Vic)— Objections based on relevance and expertise — Test of relevance — Expert evidence to be confined to the issue pleaded.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr N J O’Bryan AM SC with Mr J P Moore QC, Mr C H Truong and Ms C E Klemis	Australian Securities and Investments Commission
For the Defendant in S CI 2007 10077	Mr S K Dharmananda SC, with Mr R F R Pintos-Lopez	Corrs Chambers Westgarth
For the Defendant in S CI 2007 10081	Mr I D Hill QC with Mr A Tragardh	Galbally Rolfe

HIS HONOUR:

1. ASIC proposes to call evidence from Professor Waincymer, who is purportedly an expert in international trade and the terms used in international trade.  He is a professor of law from Monash University.  Objections have been made to the calling of the professor on the grounds of relevance.

1. Pursuant to s 55 of the Evidence Act 2008 (Vic), the evidence that is relevant in a proceeding is ‘evidence that, if it were accepted, could rationally affect (directly or indirectly) the assessment of the probability of the existence of a fact in issue in the proceeding.’

1. The professor proposes to give evidence which suggests that the terms used in the inland trucking clause contained inconsistent expressions and also evidence of more suitable language that could have been used in international trade to achieve what he understood to be the contractual obligation.

1. The relevance of his evidence was said to be to assist and/or establish the pleas which appear in paragraphs 25 and 26 of the claim against Mr Geary and the claims in paragraphs 24 and 25 against Mr Flugge. 

1. Paragraph 25 of the plea against Mr Geary says as follows:

The written terms of each contract for the sale of wheat entered into between AWB and the IGB in the period between June 1999 and March 2003 under Phases VI to XIII of the Oil for Food Program (the OFFP Contracts) used expressions which suggested that AWB had an obligation to deliver or transport wheat to all silos within all Governorates of Iraq.

1. That is defined as the ‘purported inland transport obligation’.  The particulars are that:

The purported inland transport obligation was implied by the use of various terms in the OFFP contracts such as ‘FIT’, ‘FOT’, ‘Free into Truck’, ‘Free onto Truck’, ‘Free into Truck to all silos within all governorates of Iraq’ and the imposition of the purported inland transportation fee by the means alleged at paragraph 23 above and the particulars thereto.

Each of the OFFP Contracts was in writing comprising an AWB created ‘short-form’ contract and an IGB-created ‘long-form contract’.  The dates and material terms of each of the OFFP contracts are alleged in Schedule D.  Copies of the contracts are available for inspection upon reasonable notice.

1. Paragraph 24 of the claim against Mr Flugge is in relevantly the same terms. 

1. The defendants plead in answer to the paragraphs set out above, in the limited form that they have been obliged to plead at this stage (they have not yet been obliged to set out their positive defence).  Mr Geary has not admitted paragraph 25.  Mr Flugge has denied paragraph 24. 

1. The other relevant paragraphs are paragraph 26 of the claim against Mr Geary and paragraph 25 of the claim against Mr Flugge.  Both parties deny the respective pleas.

1. Paragraph 26 in the statement of claim against Mr Geary is that:

The purported inland transport obligation was a sham in that contrary to the written terms of the OFFP Contracts neither AWB nor the IGB intended that AWB would deliver or transport or arrange to deliver or transport wheat within Iraq.

1. Paragraph 25 in the statement of claim against Mr Flugge says that neither AWB nor the IGB ever ‘intended or expected’ that AWB would undertake or arrange for delivery or transport. 

1. The particulars of paragraph 26 is as follows:

The absence of an intention on the part of AWB and the IGB that AWB would deliver or transport wheat within Iraq is to be inferred from the fact that at no time in the period between June 1999 and March 2003 did AWB deliver, transport or arrange to deliver or transport any wheat to any silo within any Governorate of Iraq.

1. The particulars of paragraph 25 in relation to Mr Flugge is of similar effect save that the time period referred to is ‘prior to July 2003.’

1. Mr Moore QC, on behalf of ASIC, has relied upon the decision of Idoport Pty Ltd v National Australia Bank Limited,[1] a judgment of Einstein J, in which the learned judge held that an expert could give evidence on foreign law and could also give evidence on the application of foreign law, save for purporting to apply that law to determine the rights and obligations between the relevant parties.

   [1](2000) 50 NSWLR 640.

1. In view of Mr Geary not admitting paragraph 25, and Mr Flugge denying paragraph 24, it has been urged upon me that I would be assisted by evidence from an expert to establish that the contracts used expressions which suggested that AWB had an obligation to deliver or transport wheat to all silos within all Governorates of Iraq.  On balance, I am prepared to accept that proposition.  I consider that an expert in international law may assist me in that task.

1. On the other hand, it has been suggested that the professor might also give evidence which would tend to show that the contracts were a sham; namely, evidence that other language could have been used that was much more precise and accepted in international commerce, and that the failure to use such language would tend to show that the parties had no intention that AWB would deliver or transport or arrange to deliver or transport wheat within Iraq.

1. In my view, ASIC’s case has been defined by the particulars they have given.  In my opinion, it is not open to bring within the particulars which have been given, the particular or the ground that the sham can be found by reason that the language used in the contracts was poor or imprecise, or that it does not comply with normal international trade.  The particulars are quite clear that the absence of the intention of AWB and IGB that AWB would deliver or transport, or arrange to deliver or transport, wheat within Iraq is to be inferred from only one pleaded fact — that at no time in the relevant period did AWB deliver, transport or arrange to deliver or transport wheat to any silo within any Governorate of Iraq.

1. In my view, on the present pleadings, the proposed evidence of the professor on this issue would be irrelevant.

1. Therefore, I am prepared to permit the professor to give evidence on the issue of whether the contracts use expressions which suggested that AWB had an obligation to deliver or transport wheat to all silos within all governorates of Iraq.  That is the only issue he may address.  He may not address the issue of what other words could have been used to give a more precise meaning in the contract.  He may not give any evidence to suggest that the contract was void, or uncertain, or on any other aspect of the contract.  He is solely limited to the issue pleaded in paragraph 25 of the claim against Mr Geary and paragraph 24 of the claim against Mr Flugge.

1. I acknowledge that I have not ruled on the other objections that the defendants have raised to the professor’s proposed evidence.