Seeley International Pty Ltd v Millennium Electronics Pty Ltd (in Liq) (No 4)
[2021] SASC 74
•18/06/2021
SUPREME COURT OF SOUTH AUSTRALIA
(Civil)
SEELEY INTERNATIONAL PTY LTD v MILLENNIUM ELECTRONICS PTY LTD (IN LIQ) (No 4)
[2021] SASC 74
Judgment of the Honourable Justice Livesey (ex tempore)
TRADE AND COMMERCE - COMPETITION, FAIR TRADING AND CONSUMER PROTECTION LEGISLATION
TORTS - NEGLIGENCE - GENERALLY
The applicant claimed in tort, contract and under Schedule 2 of the Competition and Consumer Act 2010 (Cth) for losses it alleged it sustained as a result of the failure by the respondent to supply it with a properly working electrical element which the respondent designed, manufactured and supplied pursuant to the Design and Development Agreement.
Before the trial commenced in November 2020, the respondent went into liquidation. In response, the applicant made an ex parte application seeking freezing orders against the respondent. The orders were made and expressed to apply until the conclusion of the trial in this proceeding.
Following an undefended trial, on 31 May 2021, reasons for judgment were handed down, awarding the applicant $13,277,000.00 in damages. Before judgment was entered and final orders were made, the parties were given an opportunity to consider ancillary issues such as interest, costs, the treatment of the respondent’s counterclaim and the continuation of the freezing orders made before the commencement of the trial.
Held, per Livesey J:
1.The applicant is awarded interest in the sum of $1,883,227.92.
2.The respondent’s counterclaim dated 7 June 2018 is dismissed.
3.The respondent is to pay the applicant’s costs of, and incidental to, this action on a party/party basis, including the costs of, and incidental to, FDNs 124, 132, 136 and 209, to be taxed if not agreed.
4.The freezing orders made against the respondent, Millennium International and Millennium Hong Kong are extended until 30 July 2021 at 4:30pm.
Supreme Court Civil Supplementary Rules 2014 (SA); Uniform Civil Rules 2020 (SA), referred to.
SEELEY INTERNATIONAL PTY LTD v MILLENNIUM ELECTRONICS PTY LTD (IN LIQ) (No 4)
[2021] SASC 74Civil: Livesey J
In this matter, reasons for judgment were handed down on 31 May 2021 and the parties were given an opportunity to consider ancillary issues such as interest, costs and the freezing orders made by the Court last year. Today I have received further evidence from the plaintiff's solicitors and heard submissions from Mr Whitington QC. The issues can be grouped into categories.
The first category concerns the orders that it is necessary to make in the primary action.
The first of these concerns Millennium's counterclaim. In so far as Millennium's counterclaim raises various claims for unpaid amounts, I have no evidence that enables me to assess the liability of Seeley or the amount of any liability in Seeley for those amounts.
A similar problem arises in relation to the insurance claim. In addition, however, that claim effectively mirrors the estoppel claim in Millennium's second defence. That is a claim which goes only to Seeley's case based on the failure to effect insurance. In circumstances where Seeley did not prosecute that claim, no basis for the insurance claim arises.
In all of these circumstances, I dismiss Millennium's counterclaim.
Second, so far as interest is concerned, I have an affidavit from Ms Allen with supporting documents and a USB stick with a large amount of information on it prepared by Mr Dobell.
Ms Allen has gone through each of the past loss components to break those down into particular periods so as to enable calculations to be made based on the Supreme Court Civil Supplementary Rules 2014 (SA) and the Uniform Civil Rules 2020 (SA).
In general terms, I have no difficultly with those calculations, save for the calculation made in respect of the past component of the claim for loss of margin. Paragraph 4 of Ms Allen's affidavit sworn 10 June 2021 makes it clear that she has based her calculation on Scenario 1. I had endeavoured to explain in my reasons between paragraphs 252 and 255 that I was basing the award on Scenario 2, but awarding 65% of that claim, not the 93.893% which is reflected in Ms Allen's calculations.
Mr Whitington QC sought a little time in which to consider his position in relation to interest. (After receiving further evidence, I awarded interest for the past component for loss of margin of $1,013,742.16 which resulted in an adjusted interest allowance of $1,883,227.92).
Mr Chenoweth, for the liquidator, asked for an opportunity to consider his position. Mr Chenoweth is concerned about whether there might be some contention that the amounts the subject of these ancillary claims might be regarded as post‑liquidation liabilities. Speaking for myself at the moment, without the benefit of any submissions from the parties, it would appear to me that these claims concern rights and liabilities which arose before the liquidation, even though the quantification of those claims has been made after the liquidation commenced. In those circumstances, I would not regard these as post-liquidation liabilities in the liquidator.
Third, and so far as costs are concerned, the proposed order addresses particular applications allowing for party/party costs of the action and I see no reason not to make that order. I would add liberty to apply.
So, in those circumstances, I would make the following orders:
1.The respondent is to pay the applicant:
a.the sum of $13,277,000.00 by way of damages for breach of contract, negligence and for the contravention of the Australian Consumer Law; and
b.interest in the sum of $1,883,227.92, as calculated in accordance with the prescribed rates.
2.The respondent's counterclaim dated 7 June 2018 is dismissed.
3.The respondent is to pay the applicant’s costs of, and incidental to, this action on a party/party basis, including the costs of, and incidental to, FDNs 124, 132, 136 and 209, to be taxed if not agreed.
4.I give the parties liberty to apply.
The next category of issues concerns the freezing orders. I made freezing orders against Millennium on 26 October last year and against Millennium International and Millennium Hong Kong on 30 October last year.[1] Those orders were expressed to apply until the conclusion of the trial of this proceeding. As that has happened today, there is a question about the continuation of freezing orders.
[1] On 23 October 2020, I made an interim freezing order against Millennium International and Millennium Hong Kong which expired on 30 October 2020 at 5pm.
The applicant is concerned to proceed ex parte because of an apprehension that, if notice is given, steps might be taken to transfer assets and put them beyond the reach of the applicant or the respondent's liquidator. Those steps might be by way of transfer or by further encumbrance of the assets.
In the circumstances, I am prepared to effectively extend the freezing orders but only for a short period.
I am advised that a meeting of creditors will be called on 29 June 2021 and there may or may not be a change in liquidator. Whilst I am prepared to extend the orders, I will require that the orders be served on the representatives of Millennium International and Millennium Hong Kong.
The liquidator for the respondent, Millennium, neither consents to nor opposes an extension along the lines proposed.
Accordingly, I order that:
1.The freezing order made against the respondent on 26 October 2020 be extended to 4:30pm on 30 July 2021.
2.The freezing order made against Millennium International on 23 October 2020 be extended to 4:30pm on 30 July 2021.
3.The interlocutory injunction made against Millennium Hong Kong on 23 October 2020 be extended to 4:30pm on 30 July 2021.
4.The applicant will have leave to serve this application and the affidavit of Mr Selley sworn 10 June 2021 on Millennium Hong Kong by emailing the relevant documents to Mr Eric Au at [email protected].
5.The parties will have liberty to apply.
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