Riverina Oils and Bio Energy Pty Ltd v Thermal Innovations Pty Ltd
[2012] VSC 581
•30 November 2012
| IN THE SUPREME COURT OF VICTORIA | Not Restricted | |
AT MELBOURNE
PRACTICE COURT
S CI 2011 06594
| RIVERINA OILS & BIO ENERGY PTY LTD (ACN 103 697 703) | Plaintiff |
| v | |
| THERMAL INNOVATIONS PTY LTD (ADMINISTRATOR APPOINTED) (ACN 141 703 808) | First Defendant |
| and | |
| THERMAL & PRESSURE ENGINEERING PTY LTD (ACN 141 703 808) | Second Defendant |
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JUDGE: | ALMOND J | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 1 November 2012 | |
DATE OF JUDGMENT: | 30 November 2012 | |
CASE MAY BE CITED AS: | Riverina Oils & Bio Energy Pty Ltd v Thermal Innovations Pty Ltd | |
MEDIUM NEUTRAL CITATION: | [2012] VSC 581 | |
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INTERLOCUTORY INJUNCTION – Application for the release of funds held on trust pursuant to interlocutory orders – Retention of title to goods – Balance of convenience – Obstruction and inaction by the plaintiff – Application granted.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr D C Harrison | Russell Kennedy |
| For the First Defendant | Mr S Minahan | Logie Smith Lawyers |
| For the Second Defendant | Mr M A Robins | Pointon Partners |
HIS HONOUR:
By a generally endorsed writ filed on 5 December 2011, the plaintiff, Riverina Oils & Bio Energy Pty Ltd (“Riverina”), sought orders against the first defendant Thermal Innovations Pty Ltd (Administrator Appointed) (“Thermal Innovations”), including interlocutory and final injunctions relating to the delivery up of 21 specified items of equipment, alternatively damages for detention or conversion of the items.
On 12 December 2011 the plaintiff applied for an interlocutory injunction against the first defendant before the Honourable Justice Kaye seeking orders to compel the first defendant to make the relevant items available for collection by the plaintiff. At the hearing, a third party Thermal & Pressure Engineering Pty Ltd (“TPE”) intervened and asserted ownership of certain of those items pursuant to a retention of title clause in its contract for the sale of those items to the first defendant.
Relevantly Kaye J ordered that:
· TPE be joined to the proceeding as second defendant;
· Conditional upon the plaintiff paying $236,009.01 into the trust account of the first defendant’s solicitors the first defendant make the items available for collection by the plaintiff (the amount of $236,009.01 included the amount of $102,186.01 claimed by the second defendant);[1] and
· The money held pursuant to the orders shall not be distributed without the consent of the parties or until further order.
[1]See Recital C to the Order of the Honourable Justice Kaye made 12 December 2011.
By summons dated 13 October 2012, TPE seeks an order that $102,186.01 of the monies held on trust by the first defendant’s solicitors pursuant to the orders made by Kaye J on 12 December 2011 be released to TPE together with any accrued interest.
In support of its application, TPE relies upon the affidavits of Mr Jeff Smith, a director of TPE, sworn 11 December 2011 and 16 October 2012 and the affidavit of Mr Aaron Zoanetti, solicitor for TPE, sworn 23 October 2012.
By letter dated 2 February 2012, the solicitors for Thermal Innovations advised the solicitors for the plaintiff that Thermal Innovations would accede to the request for the amount of $102,186.01 to be paid to TPE and requested confirmation that the plaintiff would consent to release of that amount from the funds held in trust to TPE.[2]
[2]Affidavit of Mr Aaron Zoanetti sworn 23 October 2012 and “Exhibit AZ2” thereto.
By letter dated 23 March 2012, the solicitors for TPE made a like request to the solicitors for the plaintiff for consent to the release of the amount of $102,186.01 from the trust account advising that Thermal had agreed that it owed TPE $102,186.01 and that the retention of title claim was sound.[3]
[3]Affidavit of Mr Aaron Zoanetti sworn 23 October 2012 and “Exhibit AZ3” thereto.
By letter dated 4 April 2012, the solicitors for the plaintiff, sought evidence that a copy of the terms and conditions were given to the first defendant that any goods would be supplied in accordance with those terms and conditions together with any alleged notification. The solicitors for the plaintiff asserted it was not for the plaintiff to merely consent to the release of the money held on trust absent the second defendant providing evidence of a valid and operative retention of title clause.[4]
[4]Affidavit of Mr Aaron Zoanetti sworn 23 October 2012 and “Exhibit AZ4” thereto.
In response to the request, the second defendant provided copies of emails showing that the second defendant’s terms and conditions of sale were sent to the first defendant on 31 May 2010. At the insistence of the solicitors for the plaintiff, subsequent screen prints of the sent emails were provided in “.msg” format. Extensive correspondence passed between the parties with the plaintiff refusing to recognise the retention of title claim based variously on the asserted inadequacy of the proofs, construction of the retention of the title clause and the assertion that the plaintiff was a bona fide purchaser for the value without notice of the client’s retention of title clause. At the hearing of this application, the plaintiff abandoned the latter argument.
In support of the application for release of the funds, counsel for the second defendant submitted there was no doubt that the terms of the contract are as the second defendant deposes; the retention of title clause applies; the second defendant has always been the true owner of the goods; comprehensive evidentiary material had been provided to the plaintiff by 21 June 2012; the plaintiff has made no claim against the second defendant and claims only against the first defendant in its proceeding; the plaintiff has sat on its hands in the proceeding and since at least 21 June 2012, has unreasonably withheld its consent to release of the funds to the second defendant.
In opposition to the application, the plaintiff raises three principal questions:
· Is there a valid and operative retention of title clause?
· Is the amount claimed by TPE for fees and charges excessive?
· Does the retention of title clause properly construed relate only to the price of the goods plus GST?
This application is intrinsically interlocutory and involves considering whether an order which operates as an interlocutory injunction should be varied. In the circumstances, I propose to deal with the questions raised by determining whether there is a serious question to be tried and whether the balance of convenience favours maintenance or variation of the order of Kaye J.
Is there a valid and operative retention of title clause?
Counsel for the plaintiff submitted that TPE had failed to make out its claim to the funds on the basis that TPE’s Terms and Conditions of Sale (“terms and conditions”) do not apply to this contract.
The initial quotation dated 31 May 2010 for a deaerator vessel was for approximately $60,000 excluding GST with freight and customs duty to be charged at cost. The quotation was accompanied by the terms and conditions. This quotation was identified by the reference TPE1031-P10.[5]
[5]Affidavit of Mr Jeff Smith sworn 16 October 2012 and “Exhibit JS2” thereto.
After discussions with Mr Paul Hoffman of the first defendant, the wording of the quote was varied slightly so that it could be shown to third parties. The varied quote was again accompanied by the terms and conditions.[6]
[6]Affidavit of Mr Jeff Smith sworn 16 October 2012, [5] and “Exhibit JS4” thereto.
Following further discussions, the second defendant was asked to quote for additional goods (a blowdown tank). In accordance with the request, a revised quote dated 2 June 2010 was sent (for approximately $74,000 excluding GST with freight and customs duties to be charged at cost). The revised quote had the identical prefix TPE1031-P10 but with a suffix “revB”. When the revised quote was sent it was not accompanied by the terms and conditions. It was submitted that in the absence of express reference to the terms and conditions in the revised quote, and as the terms and conditions were not sent with the revised quote, the terms and conditions did not form part of the bargain subsequently made between the parties.[7]
[7]Affidavit of Mr Jeff Smith sworn 16 October 2012 and “Exhibit JS6” thereto.
It is clear from the evidence that the parties were engaged in a course of dealing. At the outset, the second defendant drew to the attention of the first defendant to the terms and conditions. That set the parameters of their dealing during the period from 31 May 2010 to 2 June 2010. I consider it is fatuous to contend that the terms and conditions were not sufficiently drawn to the first defendant’s attention. The transaction in which they were engaged cannot be artificially divided into discrete, unconnected interactions. Significantly, the first defendant does not dispute that the terms and conditions were brought to its attention and does not dispute that they apply.[8] In my view, there is no serious question to be tried on this issue.
[8]Goods Act 1958 (Vic) s 22.
Is the amount claimed by TPE for fees and charges excessive?
Counsel for the plaintiff submitted that the monetary amounts claimed by the second defendant are excessive; that the contract price for the goods was approximately $74,000 plus extra transport fees which the parties agreed were, so it was argued, $5,366. The amount of $5,366 was later credited to the first defendant. Counsel for the plaintiff submitted, that it followed that the second defendant was entitled to approximately $74,000 plus GST but no more.
Counsel for the applicant submitted that the revised invoice, TPE1031-P10revB, specified the purchase price of the goods at $74,030 excluding GST and included in that price a component for fees and charges. This component was expressly stated to be an estimate and there was a special note on the invoice to the effect that these items would be charged at cost. Subsequently, expense items such as import duty, port charges, transport services and cranage were invoiced to the first defendant. To avoid duplication of these disbursements with the estimated allowance of $5,633, TPE credited $5,633 to the first defendant by way of an accounting adjustment.
After examining the invoices, and after considering the affidavit material relied upon by TPE, it appears that some of the fees and charges relate to the deaerator and the blowdown tank and other fees and charges relate to a boiler previously supplied to the plaintiff.[9] However there does not appear to be even a prima facie case of overcharging. In this regard, I note that the first defendant is under administration. The administrators, who might be expected to take an objective view, through counsel, offer no support to the plaintiff’s contention that there has been overcharging. Contemporaneous documents suggest that the parties agreed, at least with respect to the deaerator and blowdown tank, that such expenses would be charged at cost. The submission that the bargain for fees and charges was fixed at $5,366 is at odds with the documentation. In my view, there is no serious question to be tried on this issue.
Does the retention of title clause properly construed relate only to the price of the goods plus GST?
[9]Affidavit of Mr Jeff Smith sworn 16 October 2012, [11].
Counsel for the plaintiff submitted that the terms and conditions were poorly drafted, and, if capable of being given effect, relate only to the goods plus the GST on those goods and therefore the only amount which is required to be paid is $11,500 plus GST for the blowdown tank and $57,164 plus GST for the deaerator.
The terms and conditions relevantly provide:
1. DEFINITIONS
“Goods” means the order placed by the purchaser for the supply for goods.
6. PAYMENT
Unless otherwise agreed in writing, each and every invoice delivered to the Purchaser shall be paid in full [by] the Purchaser by the end of the month following the month of the date written on the invoice. Should defaults be made by the Purchaser in paying any amount due under any invoice as and when the payment becomes due the Vendor shall have the right to suspend the delivery or collection of any further goods to or by the Purchaser until the default be made good and/or to cancel the contract so far as any goods remain to be supplied thereunder without prejudice to any action the Vendor may wish to being [sic] for breach of contract. The Vendor also reserves the right in the event of such default to withdraw without notice the facilities of any credit account which have been allowed to the Purchaser. All invoices then owing by the customer shall thereupon become payable.
7. OWNERSHIP
Unless otherwise expressly agreed in writing, the property in the goods shall not pass to the Purchaser until recept by the Vendor from the Purchaser of payment in full in accordance with Clause 6 above.
The plaintiff submitted that the definition of “goods” does not define goods sufficiently to enable clauses (6) and (7) to engage. I accept there is some inelegance of expression. Without determining the question, it seems to me likely that a pragmatic view of construction would enable the clause to be given commercial operation. Nevertheless, there is a serious question to be tried as to the proper construction and scope of the retention of title clause.
Balance of convenience
In this case, there are powerful balance of convenience considerations. The plaintiff has possession of the goods in question and has now paid the amount for those goods into the trust account of the solicitors for the first defendant. The first defendant does not dispute that the sum of $102,186.01 is due to TPE. The plaintiff has made no claim against TPE. The plaintiff has had nearly 11 months to plead a case against TPE or to bring the matter on for directions if it wished to prosecute a case against TPE. As it stands, TPE is the only entity which has made out a claim for the amount held in trust.
The applicant submits that TPE has supplemented the evidence that was before the Court on 12 December 2011; that Riverina has not sought to answer that evidence in a substantive way; that Riverina is not entitled to use the orders of 12 December 2011 as de facto security for damages absent proper grounds for Mareva-type relief; and that an interlocutory injunction should not be continued in the absence of an identified cause of action. I accept these submissions. No cause of action is pleaded or foreshadowed by the plaintiff against TPE.[10] Even if the plaintiff were to plead a case against TPE reflecting the questions it raises in response to the application, the balance of convenience strongly favours release of the amount of $102,186.01 held on trust.
[10]Australian Broadcasting Corp v Lenah Game & Meats Pty Ltd (2001) 208 CLR 199, 231-232, [59]-[60] 248, [105], 268, [160].
I accept that comprehensive evidentiary material had been provided to the plaintiff by 21 June 2012. It appears to me that the plaintiff has stonewalled since that time. The Court will not countenance obstruction by the mechanisms of delay and inaction. The plaintiff is not precluded from bringing a claim in an appropriate court against TPE should it see fit to do so. In my view, releasing the funds to TPE carries a lower risk of injustice than requiring the funds to be maintained in the solicitor’s trust account.[11] I propose to order that $102,186.01 of the amount held on trust be released to TPE, together with any accrued interest.
[11]Bradto Pty Ltd v Victoria (2006) 15 VR 65, 73 [35].
In relation to the issues raised on the principal claim, the administrators seek an order requiring the plaintiff to mediate outstanding issues in dispute between the plaintiff and the first defendant. Counsel for the plaintiff agrees that mediation is appropriate. I propose to make an order requiring mediation of the proceeding.
Accordingly, I order that:
1.The sum of $102,186.01 be paid to the second defendant from the moneys held on trust by the first defendant’s solicitors pursuant to the orders made by the Honourable Justice Kaye on 12 December 2011.
2.Interest which has accrued on the sum of $102,186.01 be paid to the second defendant.
3.The proceeding be referred to a mediator to be agreed between the parties or in default of agreement to be appointed by the Court. Such mediation is to take place by 28 February 2013.
4.The plaintiff pay the costs of the first defendant of 1 November 2012 and of this day.
5.The plaintiff pay the costs of the second defendant of and incidental to the second defendant’s summons dated 13 October 2012 on a party and party basis.
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