Uniflex (Australia) Pty Ltd v Hanneybel

[1999] WASCA 298

UNIFLEX (AUSTRALIA) PTY LTD -v- HANNEYBEL [1999] WASCA 298

Jurisdiction:	SUPREME COURT OF WESTERN AUSTRALIA	Citation No:	[1999] WASCA 298
Court:	THE FULL COURT (WA)	Published:	17/12/1999
Case No:	FUL:151/1998	Heard:	23 JULY 1999
Coram:	OWEN J STEYTLER J	Delivered:	23/07/99
No of pages:	11	Judgment Part:	1 of 1
Result:	Order dismissing application for injunctive relief set aside Orders as sought in notice of appeal
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Parties:	UNIFLEX (AUSTRALIA) PTY LTD WARREN DAVID HANNEYBEL
Catchwords:	Appeal Interlocutory injunctions Turns on own facts
Legislation:	Nil
Case References:	Nil Adam P Brown Male Fashions Pty Ltd v Philip Morris Inc (1981) 148 CLR 170 American Cyanamid Co v Ethicon Ltd [1975] AC 396 Associated Midland Corporation Ltd v Bank of New South Wales [1983] 1 NSWLR 533 Australia & New Zealand Banking Group Ltd v Hunter BNZ Finance Ltd [1991] 2 VR 407 Australian & New Zealand Banking Group Ltd v Amev Finance Ltd (1989) Aust Torts Rep 68,394 Australian Coal & Shale Employee's Federation v Commonwealth (1953) 94 CLR 621 Bute (Marquess) v Barclays Bank Ltd [1955] 1 QB 202 Caroli v Hirst (1883) 31 WR 839 Chappell v TCN Channel Nine Pty Ltd (1988) 14 NSWLR 153 Computer Edge Pty Ltd v Apple Computer Inc (1984) 54 ALR 767 F French v Sproston [1894] 1 Ch 499 Great Western Railway Co v The London & County Banking Co Ltd [1901] AC 414 H Clark (Doncaster) Ltd v Wilkinson [1965] Ch 694 Home Office v Harman [1983] AC 280 Lancashire Welders Ltd v Harland & Wolff Ltd [1950] 2 All ER 1096 Lloyds Bank Ltd v The Chartered Bank of India, Australia & China [1929] 1 KB 40 Lord Corporation Pty Ltd v Green (1991) 22 NSWLR 532 Mackellar v Hornsey (1901) 39 WR 301 McKenzie v Mergen Holdings Pty Ltd (1990) 20 NSWLR 42 Swimsure (Laboratories) Pty Ltd v Mcdonald [1979] 2 NSWLR 796 Taylor Woodrow Homes Builders Pty Ltd v Chitarra, unreported; FCt SCt of WA; Library No 940374; 20 July 1994 Technistudy Ltd v Kelland [1976] 1 WLR 1042 The Australian Electrical Electronics Foundry & Engineering Union Western Australia Branch v Davidson, unreported; FCt SCt of WA; Library No 980156; 6 April 1998 The State of Western Australia v Bond Corporation Holdings Ltd (1991) 5 WAR 40 Wing Luck Foods v Lay Choo Lim [1989] WAR 358

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA TITLE OF COURT : THE FULL COURT (WA) CITATION : UNIFLEX (AUSTRALIA) PTY LTD -v- HANNEYBEL [1999] WASCA 298 CORAM : OWEN J

STEYTLER J

HEARD : 23 JULY 1999 DELIVERED : 23 JULY 1999 PUBLISHED : 17 DECEMBER 1999 FILE NO/S : FUL 151 of 1998 BETWEEN : UNIFLEX (AUSTRALIA) PTY LTD

Appellant (Plaintiff)

AND

WARREN DAVID HANNEYBEL
Respondent (Defendant)

Catchwords:

Appeal - Interlocutory injunctions - Turns on own facts

Legislation:

Nil

Result:

Order dismissing application for injunctive relief set aside

Orders as sought in notice of appeal


(Page 2)

Representation:

Counsel:

Appellant (Plaintiff) : Mr N W McKerracher QC
Respondent (Defendant) : Mr P G Clifford

Solicitors:

Appellant (Plaintiff) : Karp & Monaghan
Respondent (Defendant) : Paiker & Overmeire

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

Nil

Case(s) also cited:

Adam P Brown Male Fashions Pty Ltd v Philip Morris Inc (1981) 148 CLR 170
American Cyanamid Co v Ethicon Ltd [1975] AC 396
Associated Midland Corporation Ltd v Bank of New South Wales [1983] 1 NSWLR 533
Australia & New Zealand Banking Group Ltd v Hunter BNZ Finance Ltd [1991] 2 VR 407
Australian & New Zealand Banking Group Ltd v Amev Finance Ltd (1989) Aust Torts Rep 68,394
Australian Coal & Shale Employee's Federation v Commonwealth (1953) 94 CLR 621
Bute (Marquess) v Barclays Bank Ltd [1955] 1 QB 202
Caroli v Hirst (1883) 31 WR 839
Chappell v TCN Channel Nine Pty Ltd (1988) 14 NSWLR 153
Computer Edge Pty Ltd v Apple Computer Inc (1984) 54 ALR 767
F French v Sproston [1894] 1 Ch 499
Great Western Railway Co v The London & County Banking Co Ltd [1901] AC 414
H Clark (Doncaster) Ltd v Wilkinson [1965] Ch 694
Home Office v Harman [1983] AC 280
Lancashire Welders Ltd v Harland & Wolff Ltd [1950] 2 All ER 1096
Lloyds Bank Ltd v The Chartered Bank of India, Australia & China [1929] 1 KB 40
Lord Corporation Pty Ltd v Green (1991) 22 NSWLR 532


(Page 3)

Mackellar v Hornsey (1901) 39 WR 301
McKenzie v Mergen Holdings Pty Ltd (1990) 20 NSWLR 42
Swimsure (Laboratories) Pty Ltd v Mcdonald [1979] 2 NSWLR 796
Taylor Woodrow Homes Builders Pty Ltd v Chitarra, unreported; FCt SCt of WA; Library No 940374; 20 July 1994
Technistudy Ltd v Kelland [1976] 1 WLR 1042
The Australian Electrical Electronics Foundry & Engineering Union Western Australia Branch v Davidson, unreported; FCt SCt of WA; Library No 980156; 6 April 1998
The State of Western Australia v Bond Corporation Holdings Ltd (1991) 5 WAR 40
Wing Luck Foods v Lay Choo Lim [1989] WAR 358

(Page 4)

1 JUDGMENT OF THE COURT: This is an appeal against the decision of a Judge of this Court whereby his Honour refused to grant to the appellant an interlocutory injunction which, if it had been granted, would have restrained the respondent from publishing or republishing specified allegations and from using documents filed in court proceedings between the parties for any collateral purpose. At the conclusion of argument we allowed the appeal and granted an injunction. These are our reasons for arriving at that conclusion.

2 The appellant is a company which manufactures and distributes air conditioning ducting and fittings. It employed the respondent as its State Manager between 1991 and March 1998. On 25 March 1998 the appellant dismissed the respondent. It alleged that he had been dishonest. In June 1998 the appellant instituted proceedings against the respondent seeking damages and equitable compensation arising out of alleged breaches of fiduciary duty by the respondent and what was said to be the conversion, by him, of a number of cheques which were the property of the appellant. In July 1998 the respondent filed a defence and counterclaim. He denied the alleged breaches of fiduciary duty and acts of conversion and sought damages for what he contended was a wrongful dismissal.

3 In August 1998 the appellant obtained a "Mareva" injunction against the respondent restraining him from removing various of his assets from the jurisdiction. The respondent had, on 10 July 1998, sworn an affidavit in opposition to the appellant's application for that injunction. In that affidavit he attacked the appellant's ability to support the undertaking as to damages which it had proffered. He did so by contending that it was likely to face "enormous damages claims" and that these would effectively render it insolvent. These, he said, arose from circumstances which he outlined in par 87 of his affidavit. He there said that during August 1992 Appendix 6 of the Building Code of Australia was in force in Western Australia. That appendix dealt with the fire rating of flexible ducting for use in air conditioning and ventilation. In order to comply with Appendix 6 flexible ducting had to satisfy certain test criteria. The inner and outer core material had, he said, to be tested to Australian Standard ("AS") 1530.3 and 1530.2 while insulation and ducting in its composite form had to be tested to AS 1530.3. In par 87(e), (f) and (g) of his affidavit he said the following:

"(e) I have been told by Paul Sterling and Michael Sterling that they have never been able to get the LP Flex material to pass the necessary test. I have also asked on several

(Page 5)

occasions for test results but have never received these. The tests carried out by a National Australia Testing Authority Registered Laboratory (the Australian Wool Testing Authority) failed each time they were attempted. To reduce supply problems and to maintain or improve profitability, approximately 5 different types of material have been used to manufacture LP Flex. To my knowledge none have passed the test and no product supplied has met the criteria of the BCA in Western Australia.

(f) When requested by contractors to supply proof of compliance, test reports relating to another product have been submitted. These test reports in no way relate to LP Flex nor are they representative of the material used in LP Flex. For each commercial application of the material, the Local Council and Fire Brigade would be furnished with the same false test reports to maintain the illusion that the LP Flex product complied with the BCA in Western Australia. From approximately August 1992 the fire rating of flexible duct has been a dominant factor in the sale of the product. It has also been a marketing factor between competing contractors as no purchaser would consider using a product that could possibly be unsafe. In all instances of sale of product from the plaintiff's Perth branch since the inception of Appendix 6 of the BCA, the sales were made entirely on being provided a complying product. The total turnover of the plaintiff's Perth branch since a non-complying product has been sold has been approximately $18million to $20million. I estimate that the flexible duct sales included in this turnover would be approximately $12 million made up of about 400,000 three metres length of duct. As none of this product complies with the fire rating it would all have to be replaced.

(g) The product has been used in schools, hospitals, nursing homes, multi-storey buildings, private residence, government housing and a wide variety of commercial properties."

(Page 6)

4 It was essentially the repetition of these allegations, or any similar allegations, which the appellant sought to restrain by way of its motion for an interlocutory injunction. That motion was filed on 25 September 1998.

5 Mrs Elizabeth Sterling, in an affidavit sworn on the same day and filed in support of the motion, referred to the allegations made in par 87 of the respondent's affidavit and denied the truth of them. She is a director of the appellant. She said that the appellant had had the inner core of its "LP Flex" ducting tested against AS 1530.3 after it had been laminated. She exhibited a test certificate obtained in respect of the test result. She also said that she had, on 25 September 1998, spoken to Mr John Vuleta, the Managing Director of a company trading under the name Airconditioning Mart. That company, she said, is the plaintiff's largest customer in Western Australia. She said, so far as is relevant, that Mr Vuleta told her that the respondent had told him, that morning, that:

"(a) Airconditioning Mart could be using duct [sic], obtained from the plaintiff, which may not have been approved to the required fire rating standard and that he should ask for a certificate;

(b) the plaintiff [appellant] may not have test reports for the product and that the plaintiff may have substituted test reports for the product obtained by Airconditioning Mart from the plaintiff; [and]

(c) the test results obtained by the plaintiff may relate to a product other than to the product which the plaintiff had been selling to Airconditioning Mart; … "

6 Mrs Sterling went on to say that the product about which the respondent had made the allegations to Mr Vuleta was the "core product" of the appellant's business.

7 The learned Judge below, when the application came on before him, gave brief ex tempore reasons for refusing the application. His Honour said that the allegations complained of were serious and remarked upon the fact that there was no affidavit from the respondent as to why he had visited Mr Vuleta. However, his Honour said, it was a "matter of concern that the evidence … [was] strictly hearsay" and that what had been said did "not appear to directly relate to the relief" which had been sought which was an injunction restraining the respondent from:

(Page 7)

"(a) publishing or republishing to any person, except his solicitors, counsel or under compulsion of law, the allegations contained in paragraph 87 of the affidavit sworn by the defendant on 10 July 1998 in Supreme Court CIV 1541 of 1998, or any similar allegations; and

(b) using any affidavit (and any documents annexed thereto) filed in these proceedings or in Supreme Court CIV 1541 of 1998 for any purpose other than use in the respective proceedings."

8 His Honour went on to say that while the matter was finely balanced the documents made available by the respondent to Mr Vuleta did not "actually attack" the appellant's business. His Honour said also that there was a common law obligation on the respondent "not to do either of the things sought to be restrained" and that that obligation should be sufficient to protect the appellant. He considered that the balance of convenience did not presently favour the making of the orders sought.

9 The grounds of appeal essentially raise three contentions. The first is that his Honour erred in attaching insufficient weight to the evidence of Mrs Sterling merely because of its hearsay nature. The second is that he erred in finding that the common law provided a sufficient protection having regard for the fact that the respondent had already breached obligations owed by him at common law. The third is that his Honour erred in determining that the balance of convenience did not favour the appellant having regard for the enormous potential for damage to its business which followed from the making of allegations of the kind complained of.

10 Additional affidavit evidence was filed for the purposes of the appeal. This included an affidavit from Mr Vuleta sworn on 6 October 1998. In that affidavit Mr Vuleta said that he was told by the respondent, on about 24 September 1998, that the appellant's product "may not pass fire rating tests" and that "some of the test reports that … [the appellant] did have may not be for the product which Airconditioning Mart purchased from it". Mr Vuleta said that he consequently made arrangements for the respondent to come and see him on 25 September 1998 because of his concern about these allegations. The respondent came to see him on that morning. In the course of the discussion which ensued the respondent told Mr Vuleta that the appellant's ducting material "may not pass the fire rating tests but maybe they would." The respondent told him that he had been trying to get test

(Page 8)

reports for that material for a couple of years but that he had been unable to do so. Mr Vuleta also said that the respondent told him that he had received a letter from Mrs Sterling "that had made him very suspicious" although he would not say what was in the letter and nor would he show Mr Vuleta a copy of it. The respondent told Mr Vuleta that he "should prepare for teams of installers to do … replacements [of ducting which had been installed] because the claims against … [the appellant] would be massive." He said that the respondent also gave him copies of test results [which copies appeared to be copies of exhibits filed in the "Mareva" injunction application proceedings] and told him that those results may not relate to the product that Airconditioning Mart had purchased from the appellant. Mr Vuleta said that the respondent told him that he was the first person that the respondent had visited but that there were other people in the same situation.

11 The respondent himself filed an affidavit in opposition to those filed on the appellant's behalf. That affidavit was filed on 8 October 1998. In it he said that his purpose, in discussing the appellant's products with Mr Vuleta, had been that of attempting to enlist his assistance in establishing whether or not the appellant's products had in truth passed the relevant fire rating tests and whether or not the test reports annexed to Mrs Sterling's affidavit related to the products sold. Consequently, he said, he had not used any documents filed in the court proceedings for any collateral purpose. He expressed the belief that the terms of the injunction sought would prevent him from carrying out investigations which, he said, were important to his defence in the principal proceedings. He said also that at no time had he repeated the allegations made in par 87 of his earlier affidavit.

12 On 12 July 1999 a further affidavit, sworn by Mrs Sterling, was filed on behalf of the appellant. Exhibited to that affidavit is a bundle of correspondence in which there are references to a number of tests performed on the appellant's products. Mrs Sterling contends, on the strength of this correspondence, that the respondent knew that the allegations made by him in relation to non-compliance of the appellant's ducting materials with Australian standards were false. She also exhibited the most recent test certificate which, she said (although the respondent disputes this), relates to the plaintiff's product "LP Flex" which, as will be apparent, is the product referred to in par 87 of the respondent's affidavit dated 10 July 1998. That certificate indicates that the samples tested complied with AS1530.2.

(Page 9)

13 Finally, so far as the affidavit material is concerned, the appellant relied upon an affidavit sworn by James Steedman, a solicitor acting on behalf of the appellant. Mr Steedman, in that affidavit, exhibited correspondence in which reference is made to a number of test certificates relating to the appellant's products. Amongst the correspondence exhibited is a letter from the appellant's solicitors to the respondent's solicitors offering to supply to the respondent's solicitors various test certificates relating to the appellant's products.

14 It seems to us, with due respect to the learned Judge who heard the application for the interlocutory injunction, that the injunction should have been granted.

15 While it is true that the evidence of Mrs Sterling, insofar as it dealt with what had been said by the respondent to Mr Vuleta, was of a hearsay nature, this is not uncommon in interlocutory proceedings of this kind. As is customary in proceedings of this nature the papers were prepared in haste and, it seems, this was the best that Mrs Sterling could do in the circumstances. Her evidence was enough, in our opinion, to raise a triable issue.

16 It seems to us, too, that Mrs Sterling's evidence sufficiently related to the relief sought. As will be apparent from what we have said above the appellant sought to restrain the respondent from publishing or republishing to anyone, other than the respondent's solicitors or counsel, the allegations contained in par 87 of his affidavit sworn on 10 July 1998 or any similar allegations and from using any of the material filed in court proceedings between the parties for any collateral purpose. What was said in par 87 of the affidavit was, in effect, that the respondent had been told by representatives of the appellant that they had never been able to get the LP Flex material to pass "the necessary test" and that, when requested by contractors to supply proof of compliance, test reports relating to another product had been supplied. What was said by the respondent to Mr Vuleta, according to Mrs Sterling (as set out in her affidavit sworn on 25 September 1998), was that Airconditioning Mart could be using ducting material, obtained from the appellant, which might not have been approved to the required fire rating standard and, in effect, that any test reports for the product with which Airconditioning Mart had been supplied (and the respondent gave to Mr Vuleta further copies of test reports) might have been reports for other products than those actually supplied. In these circumstances it seems to us that there was a sufficient connection between what had been said in the affidavits and the relief sought.

(Page 10)

17 Next, so far as the balance of convenience is concerned, we are, with respect, unable to agree with the learned Judge below that this did not favour the making of the orders sought. It will be apparent from what we have said that publication of allegations of the kind made by the respondent to Mr Vuleta had the capacity, as the respondent himself recognised, to do enormous damage to the appellant's business. Against that, it seems that the respondent could have had only two legitimate purposes in making the allegations. The first was that of establishing that the appellant did not have assets sufficient to cover its undertaking as to damages. The second (which was not advanced in argument) was that of attacking the credit of the appellant's witnesses. If, in order to achieve either of these objectives, it was necessary to demonstrate that the appellant had sold ducting material which did not comply with fire rating standards it seems to us that there were preferable ways of going about this as, for example, asking the appellant to supply to the respondent all relevant test certificates in its possession and, perhaps, arranging for further tests of the ducting material to be carried out. There is insufficient in the evidence to suggest that tests of this kind could not be carried out, with the co-operation of the appellant, in such a way as to minimise the potential for damage to its business which might otherwise be caused by unnecessary repetition of the allegations sought to be restrained. If, as we made plain during the course of argument, the requisite co-operation is not forthcoming or other problems surface during the course of any such endeavour the matter might then be revisited.

18 It is also significant, in our opinion, that at no time has the respondent offered any undertaking to the court that he will not further publish allegations of the kind sought to be restrained.

19 Moreover there is nothing in the affidavit material which has been filed since the date of the hearing before the learned Judge below which, on our reading of it, is sufficient to establish, on the evidence as it presently stands (and there appear still to be some gaps in it), that the respondent is likely to succeed in proving the truth of the allegations raised by him. Also, as will be apparent from what we have said, Mr Vuleta has, in his affidavit filed on 6 October 1998, largely confirmed the earlier hearsay evidence given by Mrs Sterling in respect of what it was that the respondent said to Mr Vuleta. We are, if it matters, prepared to give to the appellant leave to rely upon this affidavit material.

20 In all of the circumstances, we were, at the conclusion of argument on the hearing of the appeal, satisfied that the learned Judge below was in error in the approach taken by him and that the appeal should be allowed.

(Page 11)

We consequently set aside the order dismissing the application for injunctive relief and granted, in lieu thereof, orders as sought in the notice of appeal.