Uni-Span Height Safety Pty Ltd v Gold Coat Guardrail Pty Ltd - [2009] FCA 819

FEDERAL COURT OF AUSTRALIA
Uni-Span Height Safety Pty Ltd v Gold Coat Guardrail Pty Ltd [2009] FCA 819
PRACTICE AND PROCEDURE – pre-action discovery of documents – Order 15A rule 6 of the Federal Court Rules – alleged misrepresentation of past turnover, predicted turnover and value of the business prior to sale of business – principles to be followed when granting a pre-action discovery order – whether there is reasonable cause to believe the applicant has or may have the right to obtain relief – misunderstanding of financial evidence by the applicant – provision of evidence to the applicant by fifth respondent – investigations of director of applicant not “evidence” – whether applicant made all reasonable inquiries before applying under Order 15A rule 6(b) – no evidence that 4 of the 5 respondents were asked for the evidence sought
PRACTICE AND PROCEDURE – freezing order sought against properties of fourth respondent – Order 25A rule 2 of the Federal Court Rules – principles to be followed when granting a freezing order – whether there was a risk of dissipation of assets of the fourth respondent
Held: application dismissed with costs – applicant did not satisfy the requirements of Order 15A rule 6 for pre-action discovery – the applicant failed to make all reasonable inquiries before applying for pre-action discover under Order 15A rule 6 – no reasonable cause to believe on the material that there was a cause of action – applicant did not satisfy the requirements of Order 25A rule 2 for freezing order – no prima facie case established to support freezing order – no evidence of risk of frustration or inhibition of Court’s process by fourth respondent if freezing order not made
Federal Court Rules O 15A r 6, O 25A r 2
Alphapharm Pty Ltd v Eli Lilly Australia Pty Ltd [1996] FCA 1500 cited
Apache Northwest Pty Ltd v Newcrest Mining Ltd [2009] FCAFC 39 followed
CGU Insurance Ltd v Malaysia International Shipping Corporation Berhad (2001) 187 ALR 279 cited
Echo Tasmania Pty Ltd v Imperial Chemical Industries PLC [2008] FCAFC 58 followed
KGL Health Pty Ltd v Mechtler [2007] FCA 1410 cited
Patterson v BTR Engineering (Aust) Limited (1989) 18 NSWLR 319 cited
Paxus Services Ltd v People Bank Pty Ltd (1990) 99 ALR 728 cited
St George Bank Ltd v Rabo Australia Ltd (2004) 211 ALR 147 followed
UNI-SPAN HEIGHT SAFETY PTY LTD (ACN 122 411 198) v GOLD COAST GUARDRAIL PTY LTD (ACN 086 267 441), MCJC PTY LTD (ACN 122 955 186) AS TRUSTEE FOR CARTAN INVESTMENT TRUST, MICHAEL LEIGH CARTAN, JENNIFER ELIZABETH COOLEY and JOE WALSH & ASSOCIATES (A FIRM)
QUD 164 of 2009
COLLIER J
5 AUGUST 2009
BRISBANE

IN THE FEDERAL COURT OF AUSTRALIA

QUEENSLAND DISTRICT REGISTRY

GENERAL DIVISION

QUD 164 of 2009

BETWEEN:
UNI-SPAN HEIGHT SAFETY PTY LTD (ACN 122 411 198)
Applicant

AND:
GOLD COAST GUARDRAIL PTY LTD (ACN 086 267 441)
First Respondent

MCJC PTY LTD (ACN 122 955 186) AS TRUSTEE FOR CARTAN…

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.

Continue reading Uni-Span Height Safety Pty Ltd v Gold Coat Guardrail Pty Ltd

Details

AGLC: Uni-Span Height Safety Pty Ltd v Gold Coat Guardrail Pty Ltd [2009] FCA 819
Case: [2009] FCA 819
Decision Date: 5 August 2009

CaseChat Overview and Summary

Uni-Span Height Safety Pty Ltd initiated proceedings against Gold Coat Guardrail Pty Ltd and others, seeking a freezing order to prevent the dissipation of assets. The dispute arose from allegations of fraudulent misrepresentation and misleading or deceptive conduct in the sale of a business. The case was heard and determined by the court, which had to decide whether the applicant was entitled to the sought freezing order. The legal issues included whether the applicant had established a prima facie case of fraud or misleading conduct, and whether the applicant was likely to succeed at a trial.

The court considered the evidence and submissions from both parties, including the affidavits of Mr Carl Roetger and Ms Jennifer Elizabeth Cooley. Mr Roetger, a director of the applicant, alleged that misrepresentations were made by the respondents regarding the financial performance of the business, leading to significant financial losses for the applicant. Ms Cooley, one of the respondents, refuted these claims and provided her perspective on the financial records. The court evaluated the credibility of the evidence and the likelihood of the applicant succeeding in a trial.

Upon reviewing the evidence, the court determined that the applicant had not established a prima facie case of fraud or misleading conduct. The court found that the applicant's claims were speculative and not supported by concrete evidence. Consequently, the court dismissed the application and ordered the applicant to pay costs to the respondents. The court held that the applicant had not demonstrated a sufficient basis to warrant the imposition of a freezing order.

Orders

Orders of the court

The application filed 3 July 2009 be dismissed with costs.

Note:

Background

Background to the litigation

Submissions were made on behalf of both the applicant and the respondents at the hearing in relation to these claims. However it also became clear that the terms of the freezing order sought by the applicant required amendment because of contractual and property information pertaining to the fourth respondent which came to light during the course of the hearing. Accordingly, I made orders that the applicant file and serve a revised draft freezing order with supporting submissions, and that the respondents should have an opportunity to respond in writing. That material has now been filed and served, and I take it into consideration for the purposes of this decision.Background The summary of background facts relating to this application are taken primarily from the affidavit of Mr Carl Roetger, a director of the applicant, sworn 2 July 2009. The applicant was incorporated in late 2006 following discussions between Mr Roetger, Mr Cartan (the third respondent), and Mr Wayne Bibby, all of whom became directors of the applicant with Mr Cartan assuming the role of company secretary. The shareholders of the applicant were the second respondent, and two trustee companies representing the family interests of Mr Roetger and Mr Bibby. Mr Cartan and Ms Cooley (the fourth respondent) ceased any involvement with the applicant in December 2007. By a contract dated 20 February 2007 the applicant acquired from the first respondent the business of “Brisbane Guardrail”, a scaffold and guardrail supply business. Mr Cartan and Ms Cooley were shareholders of the first respondent, with Ms Cooley being the majority shareholder. Mr Cartan was the sole director of the first respondent, and in a de facto relationship with Ms Cooley. In Mr Roetger’s affidavit, he deposes (in summary) as follows:·Mr Cartan and Ms Cooley, for themselves and on behalf of the first and second respondents, made representations to Mr Roetger and Mr Bibby during the period September 2006 to January 2007 with a view to inducing them to enter into an alliance and to inject funds into the applicant to acquire the business of the first respondent.·He believes that the 2006 financial records as provided to him and upon which he relied in causing the applicant to enter into a series of transactions were incorrect, based upon the fact that the business returned a gross income of only $818,986 for the 2007 year, resulting in a $386,360 trading loss.·He believes that a clear case is demonstrated against the first respondent, based particularly on the fact that the predicted gross revenue of $3 million for the 2007 year did not eventuate.·Mr Cartan and Ms Cooley were solely responsible for the production of the accounts of the first respondent and the strategic alliance proposal.·More information in the form of the underlying documents is required before he can make a decision to commence proceedings. Those documents are the standard documents, books and records necessary to run any business. Ms Cooley swore an affidavit (affidavit of Jennifer Elizabeth Cooley sworn 23 July 2009) in which she addressed Mr Roetger’s statements.

Evidence

Evidence Before The Court

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Decision

Reasons for decision

COLLIER J

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Ratio Decidendi

Legal Principle Established

Established by: COLLIER J

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IN THE FEDERAL COURT OF AUSTRALIA
QUEENSLAND DISTRICT REGISTRY
GENERAL DIVISION	QUD 164 of 2009