National Australia Bank Limited v Electra Electrical Products (Aust) Pty Limited

[2007] NSWDC 3

CITATION:	National Australia Bank Limited v Electra Electrical Products (Aust) Pty Limited [2007] NSWDC 3
HEARING DATE(S):	22-23 January 2007
EX TEMPORE JUDGMENT DATE:	23 January 2007
JURISDICTION:	Civil
JUDGMENT OF:	Rolfe DCJ
DECISION:	Verdict and Judgment on the cross-claim for the cross-defendant.; Direct cross-defendant to serve its written submissions on costs on the cross-claimant and provide a copy of same to my Associate by 30/1/07.; I direct that any response be served by the cross-claimants' solicitors and provided to my Associate by 6/2/07.; Stood over for Directions before me on 8/2/07.; I direct the exhibits be retained in the Court Registry pending further order.
CATCHWORDS:	Cross-claim against Bank for disclosing Confidential Information - Claim said to be based on Letter of Credit documentation - Absence of evidence connecting Bank with release of information - Evidence to the contrary - Third Party aware of Confidential Information through its own dealing with the Cross-Claimant - No evidence of damage suffered by Cross-Claimant - Break in chain of causation in any event - Cross-claim fails
CASES CITED:	Jones v Dunkell
PARTIES:	National Australia Bank Limited (Cross-Defendant) Electra Electrical Products (Aust) Pty Limited (Cross-Claimant)
FILE NUMBER(S):	3800/05
COUNSEL:	J M White (Cross-Defendant) J Kells (Solicitor) (Cross-Claimant)

JUDGMENT

1 These proceedings were commenced by the National Australia Bank Limited (the “Bank”) in 2005 against a number of defendants. The Bank’s claim has already been determined, summary Judgment having been entered in its favour against the defendants. What is left for the Court to determine are the matters raised by the defendants, as cross-claimants, in their further amended first cross-claim headed “Statement of cross-claim number 3” which was filed on 19 October 2006. Their claim has been pleaded on a number of alternate bases but it is not necessary for me to summarise the content of this pleading because it speaks for itself.

2 The gravamen of the cross-claimants’ complaint against the Bank is that the first cross-claimant, Electra Electrical Products (Aust) Pty Limited, which I will call “Electra”, was supplied with certain goods, in this case air conditioning products, by a company in New Zealand known as Top Line Group New Zealand Limited, which I will refer to as “Top Line”. It is alleged that the Bank was aware of the identity of Top Line as Electra’s supplier, that Top Line’s contact details were confidential information, and that this confidential information was not otherwise known in the Australian marketplace. The cross-claimants allege that the Bank allowed this confidential information to be disclosed to other parties, specifically to a company known as Triple M Mechanical Services Pty Limited (“Triple M”) or at the least companies making up the Triple M group of companies. Electra had been dealing with Triple M and supplying them with air conditioning products. Triple M in turn was the project manager of a project which they were undertaking for SBS. The cross-claimants allege that the Bank, by releasing the identity and details of Top Line to Triple M, enabled Triple M to deal directly with Top Line, thereby short-circuiting Electra and causing Electra to suffer loss and damage.

3 I should say at the outset that there is absolutely no evidence before the Court that Electra has suffered any loss or damage. Assertions have been made concerning, in broad terms, the affect of Electra no longer somehow or other dealing with Top Line. Those assertions are vague at the most and difficult to understand.

4 Mr Larter is the managing director of Electra or I should say the principal director. In the middle of the year 2000, Mr Hartmann was his co-director. Mrs Larter was the company’s bookkeeper. Mr Hartmann ceased to be a director of Electra at the end of 2000.

5 Mr Larter’s evidence, in exhibit A, was that in the second quarter of 2000, Mr Shanley, who was an employee of the Marrickville branch of the Bank, told him that there had been discussions with the Silverwater branch of the Bank and that the Silverwater branch had required Triple M to put in place their own letters of credit with Top Line. Mr Larter said further in his evidence that he had been told by Triple M’s finance director that the Silverwater branch of the Bank did not want to do back to back letters of credit.

6 Mr Larter gave further evidence that in July 2000 he had a discussion at the offices of Electra at which Mr Symmons, of Triple M, was present. The purpose of the discussion was to find out from Triple M why its contract with Electra had been cancelled. In exhibit A, in elaboration of that subject matter, all Mr Larter says was that he was told:

“Our bank requires it to be done that way.”

7 Mr Larter further alleged that a Mr Haines told him something about the payment of commissions. He also said Mr Shanley of the Bank at some stage told him that the Silverwater branch wanted Triple M to set up letters of credit to deal directly with Top Line.

8 The evidence adduced by Electra does not really touch upon the matter in question; it skirts around it. Much was sought to be made by Mr Kells, solicitor, who appeared for the cross-claimants, about the draft applications for letters of credit, which form part of annexure B to exhibit B. Mr Kells said that the documents appeared to have been in the handwriting of Mr Hartmann with the exception of the writing in the block on the top right-hand section of each application, in which Top Line’s name had been inserted. Mr Kells said the Court should draw an inference that somehow or other this documentation had been fiddled with. There is no evidence whatsoever before the Court about that. In addition, Mr Kells said a number of things in his submissions that were not supported by the evidence, or his cross-examination of the Bank’s witnesses, including the lack of evidence explaining where the documents came from. The onus in that respect, in terms of the cross-claimants’ case, was on the cross-claimants. The Court does not know precisely from where in the Bank the documents came from and no adverse conclusion ought be drawn against the Bank for that reason. If the two documents, with the exception of the material I have referred to, were in Mr Hartmann’s handwriting, he ought to have been called to give evidence by the cross-claimants. He was not. The allegations made against the Bank are serious. The cross-claimants’ failure to call Mr Hartmann leads the Court to draw a Jones v Dunkell inference that his evidence would not have assisted the cross-claimants in their pursuit of their claim against the Bank. A similar inference ought be drawn in relation to the failure to call Mrs Larter, although her absence from the witness box is not of the same degree of significance as Mr Hartmann’s absence is. I should say that I had a good opportunity to consider the evidence of Mr Larter while he was giving it in the witness box. He was seeking to give evidence without the benefit of any contemporaneous notes about discussions that had taken place many years before. He was argumentative, rude and wanting to conduct his case from the witness box despite the fact that I told him on a number of occasions that he should answer the questions directly that were put to him. He gave no satisfactory explanation as to why it was that he let something like five years pass before any formal complaint about the matters at hand were made against the Bank. They were serious matters. If Electra’s business had been seriously damaged, as he sought to make out, then one would have expected, looking at it objectively, someone in his position to have done something about it straight away and for there to be in existence some form of complaint. No material has been tendered by the cross-claimants from the bank’s file suggesting that any such complaint was made. The documents that have been tendered merely indicate that Electra, prior to the events in question occurring, namely in May 2000, was in financial difficulties, at least from the point of view of the bank’s relationship with its customer.

9 Mr Shanley’s evidence was that the bank was wanting to terminate the banker customer relationship. The fact that internal documents referred to the customer as being a nuisance, whilst one might comment as being perhaps a little unprofessional, falls a long way short of supporting any sort of claim that the bank would have done something in the nature of some conspiratorial action in order to deprive a company that owed it money from making money out of contracts with a company in New Zealand. It just makes no sense.

10 The upshot of my comments is that I do not accept Mr Larter’s evidence that he had the conversations in question with either Mr Symmons or Mr Shanley. I am conscious in coming to that conclusion that neither of them, i.e. Mr Shanley or Mr Symmons, had a precise recollection of what they had discussed with Mr Larter. That is hardly surprising because they were being asked nearly six years after the event or longer, to recall very precise conversations. In the case of Mr Shanley for example, he said he dealt with hundreds of letters of credit on an annual basis. It is hardly surprising he did not remember anything precise about the particular transaction. In the case of Mr Symmons, he appears to have been mistaken with regard to an order that was initially placed by Triple M for the first air conditioning unit, insofar as another person in the Triple M organisation, Mr Willing, placed it. That, to my mind, does not discredit Mr Symmons’ evidence at all. The evidence of Mr Symmons, when taken in conjunction with exhibit 4, really tells the tale about what happened. Mr Symmons says that no one in the Bank disclosed the confidential information to him. He denies that he ever told Mr Larter that the Bank had told Triple M to deal directly with Top Line. Moreover, before any of the matters complained of by the cross-claimants occurred, particularly the Bank’s alleged refusal to issue letters of credit on Electra’s behalf in favour of Top Line, Mr Symmons knew about the existence of Top Line. Mr Symmons knew their contact details. The reason he knew about them was because he was Triple M’s project manager and, in this respect, he said in the witness box that he was responsible for dealing with the installation of the first unit that Mr Willing had ordered.

11 Mr Symmons was an impressive witness. He gave his evidence easily and he was truthful and honest. He said he dealt with people in Top Line. Mr Kells criticised him for saying in his evidence that Top Line was the manufacturer of the product. Whether or not it was is not clear on the evidence in any event but more importantly it does not matter. Mr Symmons was saying he was talking to the Top Line people in New Zealand about the product. That is the crux of his evidence. He knew all about them before the so-called release of confidential information by the Bank to Triple M. But the matter goes beyond that. It is clear from Mr Symmons’ evidence, in particular the document which is annexure A to his affidavit, being exhibit 1 and the correspondence which forms part of exhibit 4, that Electra was simply not fulfilling its contractual obligations to Triple M. It was not able to put itself in a position to satisfy Triple M that it was going to be able to deliver the air conditioning units in question and so Triple M terminated the contract.

12 If the cross-claimants had any complaint about what Triple M had done, they did not take it anywhere and as far as I can see, there is no evidence of any complaint made to Triple M at all. Not only that, there is no evidence of any action that was taken against Top Line insofar as it might have been alleged that the Bank somehow or other released confidential information in connection with these contracts. There is a break in the chain of causation in the first place because the Triple M contract had been terminated before any letters of credit could have been put in place by Electra. Also, as I said at the outset, there is no evidence on the question of damage to support a claim for equitable compensation, even if somehow or other the cross-claimants’ various causes of action could have been made out. There is no evidence to support any of those causes of action.

13 There will be a verdict and Judgment on the cross-claim for the cross-defendant. Costs should follow the event on the usual basis.

HIS HONOUR: Is there any reason why I shouldn’t make the usual order Mr White?

WHITE: There are two. It may not be appropriate to deal with both of these matters today but it is my client’s application that under s 98 costs be awarded on the indemnity basis, given what has fallen from your Honour’s reasons. I am also instructed to seek, pursuant to s 345 and or s 348 of the Legal Profession Act, an order that the costs of these proceedings be paid by the legal practitioner personally. It’s a very serious application of course and it’s one that ordinarily entitles the practitioner to notice and to prepare a response to it. We’d ask your Honour to make some directions for - well, a motion should be put on I suppose, to formally put the matter on the record and for the matter to be dealt with in an orderly fashion.

HIS HONOUR: What do you want to say about those matters Mr Kells?

KELLS: I’d like time to think about it before I respond to that.

HIS HONOUR: In relation to the claim for an order for indemnity costs.

KELLS: Upon costs being made against me personally.

HIS HONOUR: Put that to one side for the moment. What about an order - Mr White’s seeking an order as against the cross-claimants that the costs be paid on an indemnity basis. What do you want to say about that?

KELLS: I’d have to confer with my client for a few minutes.

HIS HONOUR: I’ll give you an opportunity to confer with Mr Larter. Let me know when you’re ready to proceed.

SHORT ADJOURNMENT

KELLS: My client has informed me that he will be appealing the matter and to formally ask for written reasons for Judgment.

HIS HONOUR: The procedure, as you ought be aware, is that when an ex tempore Judgment is delivered, as I’ve just done, you make an application to Reporting Services Branch for the transcript of what I said whilst delivering Judgment to be provided. On average that takes, depending upon their workload, four to six weeks.

KELLS: That’s the instructions.

HIS HONOUR: That’s not the reason I went off the bench to adjourn. Mr White is seeking an order for indemnity costs. You said you wanted to get some instructions on that issue. What do you want to say about that?

KELLS: My client just says he won’t - when I claimed what they were after, he just said you won’t have to worry about it I’m appealing it.

HIS HONOUR: It’s not as simple as that. Mr White, what I’ll do is, I think, if you’re going to seek an order for indemnity costs, you should put on some written submissions. If this matter’s going to proceed to another place, it may not be then said that it hasn’t been given careful consideration. I’ll make the following directions:

14 I direct the cross-defendant to serve its written submissions on costs on the cross-claimant and provide a copy of same to my Associate by 30 January 2007. I direct that any response be served by the cross-claimants’ solicitors and provided to my Associate by 6 February 2007. I will stand the proceedings over for directions before me on 8 February 2007.

HIS HONOUR: We should deal with these matters one at a time Mr White. I will simply look at the submissions on that aspect of the matter before I grant any leave to file any further notice of motion in relation to the other order that you indicated your client might be seeking. I think it is preferable to deal with it in that manner.

15 I direct that the exhibits be retained in the Court Registry pending further order.

ADJOURNED TO THURSDAY 8 FEBRUARY 2007

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