Boreline Pty Ltd v Romteck Australia Pty Ltd - [2021] WADC 135

JURISDICTION : DISTRICT COURT OF WESTERN AUSTRALIA
IN CIVIL

LOCATION:   PERTH
CITATION:   BORELINE PTY LTD -v- ROMTECK AUSTRALIA PTY LTD [2021] WADC 135
CORAM:   RUSSELL DCJ
HEARD:   10 & 22 DECEMBER 2021
DELIVERED          :   23 DECEMBER 2021
PUBLISHED           :   19 JANUARY 2022
FILE NO/S:   CIV 4462 of 2021
BETWEEN:   BORELINE PTY LTD
Plaintiff
AND
ROMTECK AUSTRALIA PTY LTD
Defendant
RGT HOLDINGS PTY LTD
Intervenor

Catchwords:

Civil procedure - Interlocutory injunction - Urgent interlocutory application for mandatory injunction - Claim in detinue - Delivery up of personal property - Whether intervenor has registered security interest which takes priority over any interest of plaintiff - PPS lease

Legislation:

District Court of Western Australia Act 1969 (WA), s 6, s 8, s 50, s 50(1), s 50(1)(a), s 53, s 55, s 57
Personal Property Securities Act 2009 (Cth), s 10, s 12(1), s 12(2)(h), s 12(2)(j), s 12(3(c), s 13, s 13(1), s 13(2)(b), s 267
Rules of the Supreme Court 1971 (WA), O 52 r 2

Supreme Court Act 1935 (WA), s 25

Result:

Plaintiff's application allowed in part

Representation:

Counsel:

Plaintiff	:	Mr D W Thompson
Defendant	:	Mr J P Cook
Intervenor	:	Mr T J Langdon

Solicitors:

Plaintiff	:	Results Legal
Defendant	:	Mendelawitz Morton
Intervenor	:	HWL Ebsworth

Case(s) referred to in decision(s):

Aristoc Industries Pty Ltd v R A Wenham (Builders) Pty Ltd [1965] NSWR 581
Australian Broadcasting Corporation v Lenah Game Meats [2001] HCA 53; (2001) 207 CLR 520
Australian Broadcasting Corporation v O'Neill [2006] HCA 46; (2006) 227 CLR 57
Black Diamond Group Pty Ltd v Manor of Maluka Pty Ltd (in liq) [2015] 1 Qd R 180
Bredenkamp v Gas Sensing Technology Corporation, in the matter of Welldog Pty Ltd (in liq) (Receivers and Managers Appointed) [2017] FCA 1065
Castlemaine Tooheys Ltd v The State of South Australia (1986) 161 CLR 148
Centreplex Pty Ltd v Noahs Rosehill Waters Pty Ltd [2019] WASC 252
Chianti Pty Ltd v Leume Pty Ltd [2007] WASCA 270; (2007) 25 WAR 488
Commercial Developments Pty Ltd (t/as Don Rogers Motors Pty Ltd) v Mercantile Mutual Insurance (Workers' Compensation Ltd) (1991) 5 WAR 208
Doulton Potteries Ltd v Bronotte [1971] 1 NSWLR 591
Electricity Generation Corporation t/as Verve Energy v Woodside Energy Ltd [2014] HCA 7; (2014) 251 CLR 640
Emeco International Pty Ltd v O'Shea [2012] WASC 282
Gollan v Nugent (1988) 166 CLR 18
Googe v Spoljaric [2017] WADC 99
JKC Australia LNG Pty Ltd v CH2M Hill Companies Ltd [No 2] [2020] WASCA 112
Mineralogy Pty Ltd v Sino Iron Pty Ltd [2016] WASCA 105
Morara Pty Ltd v Kingslane Property Investments Pty Ltd [2019] WASC 136
Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd [2015] HCA 37; (2015) 256 CLR 104
Pargiter v Alexander (1995) Aust Torts Reports 81-349
Patrick Stevedores Operations No 2 Pty Ltd v Maritime Union of Australia (No 3) [1998] HCA 30
Perdaman Chemicals & Fertilisers Pty Ltd v Griffin Coal Mining Co…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2021] WADC 135
Decision Date: 23 DECEMBER 2021

CaseChat Overview and Summary

Boreline Pty Ltd applied for an interlocutory injunction requiring Romteck Australia Pty Ltd to deliver up equipment (the Equipment) in its possession. The Equipment was used in the calibration of Boreline's products, the Borecam and Corecam. Romteck was in possession of the Equipment on the basis of a registered security interest over Boreline's assets. The dispute arose from an agreement between Boreline and Romteck for the development of the Borecam and Corecam. Boreline alleged that it owned the Equipment and that Romteck's retention of the Equipment amounted to detinue. Romteck contended that it had a registered security interest over Boreline's assets and that the Equipment was covered by the security interest. The court was required to determine whether the security interest took priority over Boreline's interest in the Equipment. The court examined the affidavit evidence of Mr Kleyn, the director of Boreline, which provided the background to the agreement between Boreline and Romteck. The court found that the equipment was designed specifically for the Borecam and Corecam and was useless to Romteck. The court found that Boreline had a proprietary interest in the Equipment and that it was not covered by the security interest held by Romteck. The court made the interlocutory injunction order that Romteck deliver up the Equipment to Boreline.

Orders

Orders of the court

Full text does not contain this section.

Background

Background to the litigation

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Evidence

Evidence Before The Court

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Decision

Reasons for decision

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Ratio Decidendi

Legal Principle Established

Mr Kleyn deposes in the Kleyn Affidavit, amongst the other matters stated, to the following:1.The plaintiff was incorporated on 10 September 2012 and has, since that date, traded as a supplier of down hole orientation equipment for the mining industry.2.The plaintiff has two main products that it supplies to customers. They are the Borecam, which is a survey probe or camera and the Corecam which is a geological core orientation probe. Mr Kleyn explains what each of the Borecam and Corecam are used for in his affidavit. It is not necessary for me to repeat his explanation in these reasons. In very general terms, they are used by geologists in the course of minerals exploration to, in the case of the Borecam, survey a drill hole and, in the case of the Corecam, orient the core of a hole once the core is extracted.3.The background to the plaintiff entering into the Agreement with Romteck[30] and payments made by the plaintiff to Romteck under the Agreement.[31][30] Kleyn Affidavit, par 14, 'NAK-1', pages 18 - 31.[31] Kleyn Affidavit, par 22.4.Receipt by the plaintiff of the letter from the defendant dated 15 December 2014.[32][32] Kleyn Affidavit, par 23, 'NAK-4', page 51.5.Conversations between Mr Kleyn and Mr Merralls between 15 and 23 December 2014, including that referred to in the statement of claim as set out in [40] of these reasons.[33][33] Kleyn Affidavit, par 24.6.Mr Kleyn signed the Appendix on or around 23 December 2014 a copy of which is attached to the affidavit.[34][34] Kleyn Affidavit, par 28, 'NAK-5', pages 52 - 53.7.Mr Kleyn received an email from Mr Merralls dated 24 December 2014.[35][35] Kleyn Affidavit, par 30, 'NAK-6', pages 54, 56.Amongst other things, that email refers to a 'discussion the other day regarding future collaboration between Boreline and Romteck Australia' and the defendant providing services in relation to Corecams and Borecams. Mr Merrall states in that email under the heading 'Intellectual Property':Romteck Australia Pty Ltd has acquired the Intellectual Property and Title to all assets of Romteck Pty Ltd. It is our opinion that the Intellectual Property relating to the design of the Corecam and Borecam instruments, plus the software that is installed on an iPod, is the property of Boreline. Any requirement for Boreline to pay any outstanding accounts is strictly between yourself and the Romteck Pty Ltd administrator. Romteck Australia will require approval from Boreline to use your Intellectual Property in order to manufacture Corecams and Borecams. Unless agreed otherwise, the items will be built, tested and calibrated strictly in accordance with Boreline's IP.8.Mr Kleyn also refers in the Kleyn Affidavit to his subjective understanding of the effect of the agreement between the plaintiff and defendant.[36][36] Kleyn Affidavit, par 31.A party's subjective views as to the terms or effect of any agreement do not inform and is not relevant to construction of the alleged agreement and its terms. A commercial contract is to be construed objectively based on the understanding of a reasonable businessperson by reference to the contract as a whole, to its text, context and commercial purpose or objects.[37][37] See Electricity Generation Corporation t/as Verve Energy v Woodside Energy Ltd [2014] HCA 7; (2014) 251 CLR 640 [35]; Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd [2015] HCA 37; (2015) 256 CLR 104 [46] - [53]. See also summary in JKC Australia LNG Pty Ltd v CH2M Hill Companies Ltd [No 2] [2020] WASCA 112 [67] and discussion and authorities referred to in JKC Australia LNG Pty Ltd v CH2M Hill Companies Ltd [No 2] [68] - [72].9.The defendant provided services to the plaintiff from late December 2014, which the plaintiff paid for, and the defendant continued in possession of the Equipment. Copies of invoices, purchase orders, quotes and payment advices for 2015 and 2020 ‑ 2021 and copies of emails between the plaintiff and defendant in July 2015, August 2016 and June 2019 are attached to the Kleyn Affidavit.[38][38] Kleyn Affidavit, pars 32 - 36, 'NAK-7' - 'NAK-11', pages 57 - 143.10.In about August 2021, problems arose in relation to the quality of the defendant's servicing and calibration of Borecam units. In an email exchanged between the plaintiff's administrative and accounts assistant and Mr Randall Joseph of the defendant on 22 September 2021, Mr Joseph referred to performing the calibration on Romteck calibration equipment. Mr Kleyn states, in effect, that this was the first time the defendant had suggested that the Equipment, or any part of it, was the defendant's property.[39][39] Kleyn Affidavit, pars 38 - 40, 'NAK-12', pages 144 - 146.11.By October 2021, Mr Kleyn was concerned about leaving the Equipment in the defendant's possession and had also formed the view that the defendant was not in a position to do any further development work on the Borecam and Corecam products. He says this was because key personnel of the defendant who had worked on those products, Mr Merralls and Mr Jim Gale, had left the defendant.[40][40] Kleyn Affidavit, par 41.12.Mr Kleyn refers to and attaches to his affidavit copies of:(a)the letter of demand sent to the defendant by the plaintiff's solicitors dated 23 October 2021;[41][41] Kleyn Affidavit, par 43, 'NAK-13', pages 147 - 151.(b)the defendant's response dated 2 November 2021;[42][42] Kleyn Affidavit, par 44, 'NAK-14', pages 152 - 153.(c)the further letter of demand from the plaintiff's solicitors to the defendant dated 4 November 2021;[43][43] Kleyn Affidavit, par 45, 'NAK-15', pages 154 - 155.That letter refers to a statutory declaration of Mr Stephen Merralls being attached, which the letter says evidences that the defendant made assurances, through its representatives, that the Agreement would be continued by the defendant. That statutory declaration is not attached to Mr Kleyn's affidavit and does not form part of the evidence before the court in relation to the plaintiff's application; and(d)the defendant's response dated 5 November 2021.[44][44] Kleyn Affidavit, par 46, 'NAK-16', page 156.13.Mr Kleyn says that the Borecam and Corecam were manufactured and developed using specialised parts under the Agreement and the further agreement between the plaintiff and the defendant. He says that the Equipment was designed specifically for the Borecam and Corecam and is useless to the defendant. He says, in effect, that:(a)without the Equipment, the plaintiff cannot repair or replace parts of the Borecam and Corecam, as the Equipment includes the calibration equipment that is required to calibrate the Borecam and Corecam;(b)since late 2019, the plaintiff has been working on a new version of the Borecam and Corecam units with the assistance of Mr Merralls, who he believes parted company with the defendant in 2019;(c)that project, which also involves the construction of new and different calibration equipment, effectively stopped when the COVID-19 pandemic hit, but the plaintiff has restarted it now;(d)he anticipates that the new equipment will not be ready until at least March or April 2022, by which time, he says the plaintiff would have lost many clients; and(e)the plaintiff will not be able to calibrate its existing stocks of the Borecam and Corecam without the information that forms part of the Equipment in the defendant's possession.[45]15.In relation to the loss the plaintiff claims it will suffer if the Equipment is not returned to it, Mr Kleyn states, in effect, that:(a)under informal warranties with its customers to whom it supplies the Borecam and Corecam, the plaintiff does about five repairs per month on average;(b)without the Equipment, the plaintiff cannot repair and re‑calibrate the Borecams and Corecams and will have to replace them;(c)the plaintiff has had to supply three new Borecams to replace customers' broken Borecam units which would normally be sold for US$25,000 each; and(d)the plaintiff only has four Borecams left and will, therefore, only be able to service clients for up to four broken Borecams and then will be unable to assist customers with broken Borecam units. It is likely customers will go to other suppliers who deal in similar equipment and the plaintiff will lose their business.[46][45] Kleyn Affidavit, pars 48 - 53.[46] Kleyn Affidavit, pars 54 - 56.