Berry v CCL Secure Pty Ltd

Case [2017] FCA 1546

FEDERAL COURT OF AUSTRALIA

Berry v CCL Secure Pty Ltd

[2017] FCA 1546

File number: NSD 2597 of 2013
Judge: RARES J
Date of judgment: 19 December 2017
Catchwords: TRADE PRACTICES – deceit – misleading or deceptive  conduct – agency agreement between applicants and respondent for supply of polymer product for printing banknotes to Government of Nigeria – where agency agreement gave applicants right to commission for invoice sales of polymer – whether applicants signed letter terminating agency on basis of representations by respondent that, first, a new agency agreement would be executed between the parties on existing terms and or secondly, if applicants signed a second document to develop in partnership a production facility in Nigeria it would be executed by respondent immediately – whether representations made by respondent – whether representations constituted misleading or deceptive conduct and or unconscionable conduct – whether, if applicants did not sign termination letter, respondent would have exercised powers under agreement to unilaterally terminate agency agreement without cause
Legislation:

Australian Consumer Law ss 5, 18, 20

Competition and Consumer Act 2010 (Cth) s 5, Sch 2

Evidence Act 1995 (Cth) ss 128, 136

Trade Practices Act 1974 (Cth) ss 5, 51AB, 52, 82

Prevention of Corruption Act 1906 (UK) s 1 

Cases cited:

Australian Securities and Investments Commission v Hellicar (2012) 247 CLR 345

Berry v Innovia Security Pty Ltd (No 3) [2017] FCA 244

Berry v Innovia Security Pty Ltd (No 4) [2017] FCA 811

Commercial Union Assurance Company of Australian Ltd v Ferrcom Pty Ltd (1991) 22 NSWLR 389

Farley (Aust.) Pty Ltd v JR Alexander & Sons (Queensland) Pty Ltd (1946) 75 CLR 487

Gluckstein v Barnes [1900] AC 240

Gnych v Polish Club Ltd (2015) 255 CLR 414

Goodrich Aerospace Pty Ltd v Arsic (2006) 66 NSWLR 186

Gould v Vaggelas (1985) 157 CLR 215

Jones v Dunkel (1959) 101 CLR 298

Julstar Pty Ltd v Hart Trading Pty Ltd [2014] FCAFC 151

Kuhl v ZurichFinancial Services Australia Ltd (2011) 243 CLR 361

Laws v Australian Broadcasting Tribunal (1990) 170 CLR 70

Lazarus Estates Ltd v Beasley [1956] 1 QB 702

Master v Miller (1791) 4 TR 320 [100 ER 1042]

Master v Miller (1793) 2 (H) Bl 141 [126 ER 474]

R v Ellery [2012] VSC 349

Sellars v Adelaide Petroleum NL (1994) 179 CLR 332

Simic v New South Wales Land and Housing Corp (2016) 339 ALR 200

Smith v Chadwick (1884) 9 App Cas 187

Stohl Aviation v Electrum Finance Pty Ltd (1984) 5 FCR 187

Suttor v Gundowda Pty Ltd (1950) 81 CLR 418

SZFDE v Minister for Immigration and Citizenship (2007) 232 CLR 189

Sir Thomas Bingham, “The Judge as Juror:  The Judicial Determination of Factual Issues” (1985) Current Legal Problems 1  
Date of hearing: 28-31 August 2017, 4-7 September 2017
Date of last submissions: 22 September 2017
Registry: New South Wales
Division: General Division
National Practice Area: Commercial and Corporations
Sub-area: Commercial Contracts, Banking,…

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AGLC
Berry v CCL Secure Pty Ltd [2017] FCA 1546
Case
[2017] FCA 1546
Decision Date

CaseChat Overview and Summary

In the Federal Court, Dr Berry and GSC sued CCL Secure Pty Ltd (Securency) for engaging in conduct that was misleading or deceptive or likely to mislead or deceive in contravention of section 52 of the Trade Practices Act, and unconscionable within the meaning of section 51AB. Dr Berry and GSC alleged that Securency engaged in misleading or deceptive conduct by making certain representations to Dr Berry about the renewal of an agency agreement, and the establishment of an opacification plant in Nigeria. They also alleged that Securency engaged in unconscionable conduct by inducing Dr Berry to sign a letter terminating the agency agreement on the basis of these representations.

The central issue before the Court was whether Securency made certain representations to Dr Berry that induced him to sign a letter terminating the agency agreement. If Securency did make these representations, the Court had to determine whether they constituted misleading or deceptive conduct and/or unconscionable conduct. The Court also had to consider whether Securency would have exercised its powers under the agreement to unilaterally terminate the agency agreement without cause if Dr Berry had not signed the termination letter.

The Court found that Securency did make the representations to Dr Berry that he alleged. The Court was satisfied that Mr Chapman, a Securency representative, made two representations to Dr Berry on 24 February 2008. The first was that if Dr Berry and GSC agreed to terminate the agency agreement, the existing terms would continue and the parties would make a new agreement on those terms. The second was that if Dr Berry signed a second document, being a memorandum of understanding or partnership agreement for the goal of establishing an opacification plant in Nigeria, that Securency had prepared, Mr Chapman would cause it to be sent to Securency in Australia and it would execute that document. The Court found that the evidence of Dr Berry concerning the second representation entitled him and GSC to relief, notwithstanding that it was not in exactly the same words as the pleading. The Court concluded that Dr Berry and GSC were entitled to relief.

The Court ordered that the parties file and serve agreed draft orders to give effect to these reasons on or before 29 January 2018. If the parties could not agree, they were to file written submissions in support of the orders they proposed, limited to five pages. The proceeding was listed for case management on 5 February 2018 at 9.30am.

Orders

Orders of the court

1. On or before 29 January 2018 the parties file and serve agreed draft orders to give effect to these reasons, or failing agreement, the orders each party proposes with written submissions in support limited to five pages.

2. The proceeding be listed for case management on 5 February 2018 at 9.30am.

Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

Background

Background to the litigation

Neither Mr Chapman nor Mr Brown was a party, or even a current employee of Securency, and Mr Chapman was a convicted criminal. In all of the circumstances, I consider that any failure of Securency to ask either of them questions in chief on any matters of substance, only supports an inference that his answer to such a question would not have assisted its case on the topic. Of course, I have considered the evidence of each witness as a whole in my assessment of the overall reliability of his testimony. Mr Chapman’s sense of business ethics as revealed in his paying bribes, obtaining secret commissions, creating a paper or audit trail (as I have described below) and dealings with Dr Berry, led me to the conclusion that wherever his evidence conflicts with that of Dr Berry, and unless I have made a specific contrary finding, I accept and prefer Dr Berry’s evidence as reliable and truthful: see e.g. [88], [117]-[120], [168], [218]-[219] below. I have also found Mr Brown not to be a witness on whose uncorroborated evidence I can rely, as for example I explain at [123], [156]-[160], [168], [294] below.Background Dr Berry began conducting business in Nigeria in 1978. He acquired a textile mill and was able to interest the then military president, General Obasanjo, to use his mill to produce uniforms for Nigeria’s armed forces as well as for numerous other government agencies. Dr Berry formed, and subsequently maintained, a friendship with President Obasanjo. Over the years Dr Berry, through companies that he owned or controlled, engaged in a number of commercial dealings with Nigerian Government authorities under different presidents, including in public-private partnership arrangements. His companies were the first in Africa to manufacture telephones, handsets and computers. He established his company, Contec, in 1984. In 2000, the Nigerian Government engaged Contec to operate and maintain a database scheme called Cerpac. Cerpac collected and provided the Government with immigration and other information about approximately 1.5 million foreigners who worked in Nigeria, including in oil and infrastructure projects. The data included details as to their entry into and departure from the country and their tax liabilities and other financial data. After the terrorist events in the United States on 11 September 2001, the Nigerian Government also engaged Contec to advise on and develop systems for responding to such incidents. Contec provided, on behalf of the Nigerian Ministry of Interior, secure identity (ID) cards that it issued to foreigners. Contec has continued since 2001 to operate the identity card system as part of Nigeria’s immigration controls at airports and other points of entry. Contec installed and has operated automatic gate readers for its identity cards. However, at some point, the Ministry of Interior refused or failed to pay Contec what it claimed was an entitlement to a surcharge for installing and operating the gate system. This led to the arbitration that began in November 2007 and resulted in a substantial but, as yet, unpaid award.

Evidence

Evidence Before The Court

On 17 August 2017, the Minister for Small Business gave consent under s 5(3) of the Trade Practices Act and s 5(3) of the Competition and Consumer Act 2010 (Cth) for Dr Berry and GSC to rely on Securency’s conduct that they alleged it had engaged in outside Australia, namely in the United Kingdom, in contravention of ss 51AB and 52 of the Trade Practices Act and ss 18 and 20 of the Australian Consumer Law (ACL) in Sch 2 of the Competition and Consumer Act. The conduct to which the Minister’s consent referred was Securency’s alleged making of the renewal and opacification plant representations in February 2008 and its subsequent related conduct, which Dr Berry and GSC alleged was first, conduct in trade or commerce that was misleading or deceptive or likely to mislead or deceive in contravention of s 52 of the Trade Practices Act and, secondly, unconscionable within the meaning of s 51AB. I will use the sections in the Trade Practices Act, as that Act was in force at the relevant time and governed the parties’ relationship. The provisions of the ACL are relevantly the same and require no consideration in the resolution of this proceeding.Witnesses’ credibility and the absence of evidence from others Having had the opportunity of observing Dr Berry giving evidence over the course of three days, I formed the impression that, on occasion, he was inaccurate, but that in general he was an honest witness doing his best to tell the truth about events that had occurred between 9 and 13 years earlier. However, I was concerned about his admission on the third day of the hearing that he had lied in his evidence on the day before about visiting Nigeria in the period between mid-2006 and mid-2010. That lie related to an important issue, namely Dr Berry’s capacity to conduct the obligations of an agent when he could not, and did not, visit the country with the officials of which he had to deal for Securency. Clearly enough, the reason that he said, initially, that he had visited Nigeria several times in the four year period from about mid-2006 was to create the false impression that his and Contec’s evolving commercial and legal dispute with the Nigerian Government had not created any problem for him in visiting that country and dealing there with both its officials and his own business or in performing his role as Securency’s agent. In assessing Dr Berry’s evidence and his credibility overall, I have been concerned that his preparedness to lie in the witness box on that issue could have reflected a more general tendency on Dr Berry’s part to tailor his other evidence to suit his perception of what would support his case. That concern was especially so because of the absence of contemporaneous written records that he had authored, other than a relatively few text messages. I have considered carefully all of his and the other evidence having particular regard to my concern about his lie over his travel to Nigeria. Overall, however, I found him to be credible and that the objective and other relevant evidence positively corroborated or supported his account. In particular, my generally unfavourable view of the credibility of Mr Chapman and Mr Brown has not led me unthinkingly to accept Dr Berry’s evidence where their accounts conflicted. Rather, I found myself in the position where I have been satisfied affirmatively that Dr Berry’s account was more probably than not true.

Decision

Reasons for decision

Securency argued, and I agree, that Dr Berry and GSC made an “all or nothing” case in the sense that if I accepted Dr Berry’s evidence about the 24 February 2008 meeting, he and GSC were entitled to relief, and if I did not accept him, they were not so entitled. There is no utility in considering Dr Berry’s and GSC’s claims based on Securency’s unconscionability under s 51AB of the Trade Practices Act or unconscientious conduct in the eye of equity. That is because Securency’s fraud in procuring Dr Berry’s signature on the termination letter has unravelled all.Conclusion For these reasons, Dr Berry and GSC are entitled to relief. The parties agreed that I should publish my conclusions and afford them an opportunity to make submissions as to the orders appropriate to give effect to those conclusions. I will do so.

Ratio Decidendi

Legal Principle Established

Securency’s argument that it would have terminated the agency agreement, had Dr Berry not signed the termination letter, relied, in support, on the following assertions by Mr Brown in his oral evidence. First, (as I find) Mr Brown was party with Mr Chapman to the decision to seek Dr Berry’s signature on the termination letter, because they had recommended this to “the senior management” being Messrs Curtis, Ellery and Mamo. Secondly, Mr Brown asserted in the witness box that this was because Dr Berry was:not travelling into Nigeria, as far as we were concerned, and therefore he was not carrying out his functions as agent …. He was uncontactable and also we believed that he was ill and was hospitalised in India … and most compelling of all, was that he had started proceedings against the Nigerian government … we felt that would have denigrated his ability to perform for Securency. The representations issues – consideration Based on what I have found above in considering what occurred at the 24 February 2008 meeting between Dr Berry and Mr Chapman, I am comfortably satisfied that Mr Chapman made:·first, the renewal representation, as pleaded, namely that if Dr Berry and GSC agreed to terminate the agency agreement, the existing terms would continue and the parties would make a new agreement on those terms (see [185]-[188]);·secondly, a representation to materially the same effect as the opacification plant representation, namely that if Dr Berry signed the second document (being a memorandum of understanding or partnership agreement for the goal of establishing an opacification plant in Nigeria), that Securency had prepared, Mr Chapman would cause it to be sent to Securency in Australia and it would execute that document (see [185]-[189]). I am of opinion that the evidence of Dr Berry that I have accepted concerning the representation to materially the same effect as the pleaded opacification plant representation, entitles him and GSC to relief, notwithstanding that it is not in exactly the same words as the pleading. The reason why the representation that I have found is materially similar is that Mr Chapman proffered the second document as one prepared by Securency (and thus an offer capable of acceptance by Dr Berry and GSC) which, if Dr Berry (and GSC through him) accepted it by signing it, Securency would formalise in due course – as a matter of “routine” – by executing it. This occurred in the context in which Mr Chapman also persuaded Dr Berry to sign the termination letter, namely that the two men were engaged in a bit of “routine admin”. Dr Berry had for the preceding four years been seeking, as had the Nigerian authorities from President Obasanjo down (including Governor Soludo), that Securency agree to Dr Berry (and GSC), with or without Securency itself participating, arranging the construction and operation of an opacification plant in Nigeria. Mr Brown and Dr Berry had met Governor Soludo in late November 2007, when he had insisted, forcefully, that he wanted Securency to act on the matter of the opacification plant.