Australian Liquor Marketers v Sirapot & Ors [2005] QDC 308

DISTRICT COURT OF QUEENSLAND CITATION: Australian Liquor Marketers v Sirapot & Ors [2005] QDC 308 PARTIES: AUSTRALIAN LIQUOR MARKETERS (QLD) PTY LTD Plaintiff v SIRAPOT PTY LTD First Defendant and CLIFFORD JOHN TUCKER Second Defendant and ROZMAC PTY LTD Third Defendant FILE NO/S: 518/2004 DIVISION: Civil PROCEEDING: Application ORIGINATING COURT: Southport DELIVERED ON: 21 October 2005 DELIVERED AT: Southport HEARING DATE: 18 July 2005 JUDGE: Rackemann DCJ ORDER: CATCHWORDS: Cases cited: Chen v ANZ Banking Group [2001] QSC 43 Edison Limited v Bullock (1912) 15 CLR 679 Gerrard v Email Furniture Pty Ltd (1993) 32 NSWLR 662 Gold Ribbon Accountants Pty Ltd (in liquidation) v Shears (2003) 1 Qd R 683 Southbound Packers Pty Ltd (1984) 2 Qd R 559 -- 1 of 16 -- 2 COUNSEL: Mr G Radcliff for the Plaintiff Mr J Dearn for the 3rd Defendant and Mr Wilson Solicitors for Mr Delaney SOLICITORS: Corporate & Property Lawyers for the Plaintiff Crawford Law for the 3rd Defendant and Mr Wilson Mr Peter Crawford for Mr Delaney Introduction [1] These proceedings concern a quantity of liquor supplied by the plaintiff (“ALM”) to the first defendant (“Sirapot”) on credit, pursuant to terms agreed between ALM and Sirapot. The second defendant (“Tucker”) was a guarantor of Sirapot’s obligations. [2] The agreement between ALM and Sirapot provided that, for so long as the account remained in debit, the liquor supplied by ALM remained ALM’s property and that Sirapot, as bailee, had an obligation to store it in a separate area, so that it remained clearly identifiable. In certain specified events, including non-payment, ALM had the right, at its election, to enter the premises and take possession of its goods. [3] In April 2004, the third defendant (“Rozmac”) decided to exercise its rights under a fixed and floating charge, by entering into possession of Sirapot’s tavern. On 7 April 2004 Rozmac’s accountant, Mr Delaney, was authorised to act on behalf of Rozmac for that purpose. On 8 April 2004 Mr Delaney, in concert with a Mr Wilson of Rozmac, took possession of the tavern on behalf of Rozmac. At that time there was a substantial amount of liquor at the tavern, some of which had been supplied by ALM. -- 2 of 16 -- 3 [4] On 30 August 2004 the solicitor for ALM made written demand on Rozmac for the return of its liquor by 4 pm that day. On 1 September 2004, ALM commenced this action in which it sought, as against Rozmac, the return of stock to the value of $144,983.61 or, alternatively, damages for conversion and/or detinue in the same amount. The statement of claim pleaded, amongst other things, that Rozmac had, despite demand, failed, refused or neglected to return the plaintiff’s goods. [5] On 24 September 2004 it came to ALM’s attention that the tavern was to be sold, with settlement to take place on 27 September. On 27 September ALM applied and obtained, ex parte, a Mareva order restraining Mr Delaney, Sirapot and Rozmac, whether by themselves, their servants or agents, from disposing of the proceeds of sale to the extent of $150,000 and ordering that they pay that sum forthwith into Court, to abide the outcome of the proceedings. [6] The amount of $150,000 was not retained or paid into Court. ALM subsequently sought orders from this Court for disclosure in aid of enforcement of the Mareva order. Mr Delaney, Mr Wilson and Rozmac were each concerned in that application, which resulted in a number of appearances. Ultimately an amount of $150,000 has been identified and, I was informed, secured by undertakings which are satisfactory to ALM. [7] Mr Delaney, Mr Wilson and Rozmac sought to have the Mareva orders set aside. On 23 May 2005 an order was made, by consent, that the order be discharged insofar as it related to Mr Delaney. By application filed on 20 June 2005, Rozmac applied for orders that the plaintiff’s claim, against it, be dismissed, with costs on an indemnity basis. -- 3 of 16 -- 4 [8] The matters which now fall for determination are as follows: 1. Whether the third defendant ought have summary judgment. 2. If not, whether the Mareva order should be set aside on the basis of material non-disclosure. 3. If the action remains on foot, but the Mareva order is set aside, whether a further Mareva order should now be made. 4. Costs. Summary Judgment [9] Rozmac seeks summary judgment, pursuant to r 293, on the basis that the plaintiff has no real prospect of succeeding on its claim and there is no need for a trial. [10] Counsel for Rozmac submitted that there was nothing which his client had done which could found the action in conversion or detinue. [11] Counsel for ALM relied, in support of the claim as pleaded, on his client’s right to possession of the liquor, pursuant to the terms upon which it was supplied, together with the demand which had been made on Rozmac for its return. [12] There is no suggestion that there was anything unlawful about the way Rozmac came into possession of the tavern and the liquor stored on those premises. What appears to be alleged against Rozmac is that it unlawfully withheld possession, despite demand. [13] Merely being in possession of another’s goods without authority is not, of itself, a tort. As is said in Flemming: The Law of Torts1: 1 9th edition at pp 64-65 -- 4 of 16 -- 5 “To establish that the detention had become adverse and in defiance of his rights, the claimant must prove that he demanded return of the chattel and that the defendant refused to comply…but such refusal must be categorical; if qualified for a reasonable and legitimate purpose, without expressing or implying an assertion of dominion inconsistent with the plaintiff’s rights, it amounts to neither detinue nor conversion. One does not always act unreasonably in refusing to deliver up property immediately on demand but may enquire first into the rights of the claimant. Moreover, a mere omission to reply to a letter of demand cannot of itself be construed as a refusal; and it seems clear that, save by contract, the defendant cannot ordinarily be expected to do more than simply permit the owner to come and get the goods.” [14] ALM contends that it did no more than preserve the property which might have been that of ALM and to make it available to ALM upon proof of ownership. [15] Mr Wilson deposes that, on or about 8 April 2004, a Mr Johnson, from ALM’s solicitors, attended the tavern premises, on behalf of ALM, and informed Mr Wilson that, in his belief, some of the stock on the premises was the subject of a retention clause in an agreement between ALM and Sirapot. Mr Johnson was allowed to take photographs of the stock then on the premises. Mr Wilson enquired as to which part of the stock was subject to the claim, but was told that Mr Johnson did not know. [16] Mr Wilson also deposes that, upon request, Mr Wilson supplied Mr Johnson with a computer printout of stock held as at 8 April 2004, but advised that he could not guarantee its accuracy. Mr Wilson asked Mr Johnson to have his client identify the stock the subject of the claim and advised that it would be necessary for his client to provide proof that the stock had not already been paid for. He further informed Mr Johnson that, once that was done, Rozmac may be interested in purchasing some of the stock, but that the balance would have to be taken back by ALM. Mr Johnson telephoned his client to obtain instructions -- 5 of 16 -- 6 and agreed to the suggested process. Subsequently, ALM established a “cash prior to delivery” trading account with Rozmac. [17] Mr Wilson further deposes that, despite those arrangements, nothing further happened until in or about August 2004, when Mr Johnson again visited the tavern. On that occasion Mr Wilson informed Mr Johnson that he had not heard further from ALM in relation to the process of identifying or dealing with the stock to which it claimed title. Mr Wilson proceeded to show Mr Johnson stock which he had “quarantined” at the rear of the premises and which he thought it was reasonable to assume could belong to ALM. Mr Wilson says that he told Mr Johnson that his client should attend the premises identify and take its stock. He did, however, describe an account sent to Rozmac by ALM for approximately $145,000 as “ludicrous.” Mr Wilson had no further discussion with Mr Johnson prior to the commencement of proceedings. [18] The evidence of Mr Wilson with respect to his meetings with Mr Johnson is not contradicted in any affidavit material relied upon by the plaintiff. [19] ALM did not, prior to the commencement of proceedings, attend the site to identify and take possession of its stock. There is still a level of imprecision about identification. Most recently, in affidavits by Mr Tucker and his assistant, filed by leave on the hearing, it is said that, of the approximately $300,000 in stock on site as at 8 April 2004, something in excess of $140,000 belonged to the plaintiff. That is said to be identifiable by reference to the type of stock which ALM supplied, compared with other suppliers. Mr Tucker’s assistant, Mr McFie, deposes that “I am of utmost certainty that at least 95 per cent of the wine, spirits and RTD drinks on the list of stockholdings dated -- 6 of 16 -- 7 8 April 2004 were supplied by the plaintiff and were the plaintiff’s property.” He states his belief that Mr Wilson, of Rozmac, would have been able to distinguish between the products purchased from the plaintiff and other respective suppliers. He says that he has possession of the original invoices. [20] Counsel for the plaintiff says that a precise identification will simply involve a checking of the invoices against the list of stock held as at 8 April. [21] It appears from the material that prior to the demand for the return of its goods and the institution of proceedings, no servant or agent of ALM attended the site to identify and take possession of its goods. It also appears that, as at that time, Rozmac had not prevented ALM from doing so. [22] In the circumstances it is difficult to see the basis for a cause of action against Rozmac, based on an unlawful withholding of possession, as at the date proceedings were commenced. The material suggests that Rozmac had invited ALM to attend the premises, identify and take possession of it’s stock. ALM did not do so. In the circumstances, Rozmac’s failure, as at the commencement of proceedings on 1 September 2004, to have responded to the demand of 30 August 2004, could not reasonably be construed as a refusal to allow ALM to take possession of its goods. When the demand was responded to, on 2 September 2004, it was in terms which asked for details of the outstanding accounts so that the stock, relevant to ALM’s claim, could be identified. [23] On the hearing of the application however, counsel for ALM indicated that he wished to place reliance on matters which occurred subsequent to the filing of the claim and statement of claim. Those facts have yet to be pleaded, but I took counsel for ALM to be indicating an intention to amend the pleading in that -- 7 of 16 -- 8 regard. I would not grant summary judgment where the plaintiff’s position could be improved by amendment2. [24] On 27 September 2004 the sale of the tavern to a third party was settled and, thereafter, that party took possession of the tavern within which liquor was stored. Unauthorised transfer or disposal of goods can found a cause of action in conversion. [25] The material does not disclose the terms of the sale. It is unclear, at this time, whether any liquor, to which ALM laid claim, was sold to the new owner. The material does suggest that at least the liquor which had been “quarantined” at an earlier time was kept to one side by the new owner, on the basis that it was awaiting possible collection by ALM (and Carlton United Breweries) pursuant to a stock retention clause. The new owner was asked by Rozmac to make access available for collection of the stock, upon notice by Rozmac. It would seem that it was Rozmac which was giving instructions as to whether access should be made available for the collection of the stock. Ultimately however, the “quarantined” stock was disposed of. [26] On 12 October 2004 the solicitors for the new owners wrote to the solicitors for ALM requesting that ALM make arrangements for collection of the stock no later than 29 October 2004. On the same day the solicitors for Rozmac wrote to the solicitors for ALM stating that Rozmac “remains prepared to allow your client to retake possession of the stock that is validly the subject of the retention clause” and stating that “once those goods have been properly identified, our client is willing to permit your client to collect the stock that relates to those 2 See Chen v ANZ Banking Group [2001] QSC43 at [1] -- 8 of 16 -- 9 invoices under our client’s control.” The solicitors for Rozmac renewed requests for copies of invoices or, at the least, a list of goods supplied to which its claim related. The letter advised of their client’s offer, upon receipt of the information, “to meet with a representative of your client where the goods have been set aside and hand over the goods that you client is entitled to.” The letter went on to state that, “subject to acceptance of that offer” their client was then prepared to consent to a discontinuance of the current proceedings on the basis of the parties bearing their own costs and on the basis of mutual releases. [27] On 13 October 2004 a further letter was sent from the solicitors for Rozmac to the solicitors for ALM. The letter stated that they had been informed, by the new owners, that ALM intended to collect stock that day. The letter went on to assert that Rozmac was entitled to possession of that stock, “until such time as your client properly establishes its title to each and every item of stock set aside.” The solicitors for ALM were put on notice that Rozmac did not consent to any of the set aside stock being released to ALM at that time. [28] On 19 November 2004, the solicitors for Rozmac made a proposal to reach a commercial resolution of the proceedings on the basis that it would release the majority of the “quarantined” stock to ALM for its collection in full and final settlement of all claims. The letter stated that if ALM did not accept the offer by noon on 24 November 2004 “our client will deal with the set aside stock as it sees fit.” A list of the stock which was being offered, on that conditional basis, was provided by letter dated 23 November 2004. That letter extended the time for acceptance to 26 November 2004. The offer was declined on 25 November 2004. -- 9 of 16 -- 10 [29] By letter dated 25 November 2004, the solicitors for Rozmac renewed the offer and stated that the new owners were proposing to have steps taken to have the stock removed after 26 November. [30] Counsel for ALM pointed to the affidavit of Mr McFie and contended that it would be established that the stock belonging to ALM was, at all times, reasonably identifiable by Rozmac. He submitted that Rozmac’s refusal to release stock for collection by ALM, save on a conditional basis, was wrongful. [31] Rozmac contends that the property of ALM had never been properly ascertained. No doubt it would contend that its letters did not constitute a refusal to provide unconditional access to goods to which ALM had established its rights, but rather put conditions upon its preparedness to release to ALM, property to which it had not established its claim. [32] I am satisfied however, that summary judgment should not be granted, particularly in light of the subsequent facts. [33] There appears to be a dispute as to the quantity of ALM’s liquor which passed into Rozmac’s possession. ALM claims that it was in excess of $140,000 worth. The material relied upon by Rozmac contends that it was highly unlikely that there would have been large quantities of unsold stock, which had not been paid for, on the premises when Rozmac entered into possession. By letter dated 19 November 2004, Rozmac’s solicitors advised that, as at 19 November 2004, Rozmac had “identified that a small proportion of the stock set aside appears to have been supplied by your client…the vast majority of the set aside stock does not appear in your client’s invoices.” -- 10 of 16 -- 11 [34] While there was a deal of reference to the stock which was “quarantined” by Rozmac upon its entry into possession and, in turn, kept to one side, at least for a time, after the sale of the tavern, it is unclear whether that stock represented the whole of the liquor to which ALM claims ownership or whether there was relevant stock which was otherwise dealt with. [35] The terms of the subsequent sale to the new owner, including what passed to that party (including any relevant liquor which was not quarantined) and the terms relating to possession of the quarantined stock, are also somewhat unclear. [36] There is a dispute as to whether the property of ALM was reasonably ascertainable or ascertained by Rozmac. [37] There is an issue as to whether Rozmac’s conditional offers to allow ALM to collect the stock amounted to a wrongful withholding of possession in the circumstances and a potential issue as to whether Rozmac wrongly transferred possession. [38] The facts have been emerging. The circumstances warrant further investigation. [39] My conclusion is that it should not be concluded, at least at this stage, that the plaintiff has no real prospects of success or that there is no need for a trial. The application for summary judgment will be dismissed and directions will be made concerning the delivery of an amended statement of claim. -- 11 of 16 -- 12 The Mareva Order [40] The third defendant and Mr Wilson seek to have the Mareva order set aside on the basis that there was material non-disclosure, on the part of the plaintiff, when obtaining the order ex parte. [41] It is settled law that those who seek relief ex parte are under a duty to make full and frank disclosure of all material facts, including those which the party, in whose absence the application is being heard, would presumably have brought forward in defence of the application. Unless that is done, the implied condition upon which the Court acts in forming its judgment is unfulfilled and the order so obtained is subject to being set aside3. The Court retains a discretion to continue or to grant interlocutory relief notwithstanding non- disclosure. [42] The application for the Mareva order was supported by an affidavit from the plaintiff’s solicitor. That affidavit deposed to the terms upon which liquor was supplied, Rozmac’s subsequent entry into possession, the demand for delivery on 30 August 2004 and subsequent correspondence concerning that demand4. The affidavit also deposed to the receipt, on 24 September, of a facsimile advising that Rozmac would defend the claim5. It also deposed to the receipt of information, on 24 September 2004, as to the imminent settlement of the sale of 3 See Edison Limited v Bullock (1912) 15 CLR 679 at 681-682, Gerrard v Email Furniture Pty Ltd (1993) 32 NSWLR 662 per Mahony AP at 676-7, Southbound Packers Pty Ltd (1984) 2 Qd R 559 at 565-6, Gold Ribbon Accountants Pty Ltd (in liquidation) v Shears (2003) 1 Qd R 683 at 694-5 4 The subsequent correspondence consisted of two facsimile messages from Mr Delaney requesting further information and a response from ALM’s solicitor referring to the stock list, asserting that Rozmac should be in possession of the invoices and a request that they advised that that was not the case. 5 Principally on the basis that it had not been a party to the supply agreement between ALM and Sirapot -- 12 of 16 -- 13 the tavern and to attempts which were made to give notice of the intention to apply for a Mareva order. [43] It was not disclosed to the Court that there had been meetings between Mr Johnson and Mr Wilson in which Mr Wilson, on behalf of Rozmac, had permitted Mr Johnson to take photographs of the stock, provided him with a computer printout of stock held as at 8 April 2004, invited him to have his client identify the stock the subject of its claim, subsequently pointed out the “quarantined” stock and again invited Mr Johnson to have his client attend the premises, identify the stock and take possession of it. No material was filed to explain the non-disclosure. Those facts were facts which were material, particularly on the basis of the action as then formulated. They are facts which the respondents, had they been present, would not doubt have put forward as material. I am satisfied that the order should be set aside. I am not prepared to exercise a discretion to allow the order to continue. A New Mareva Order [44] Counsel for the applicant made an application, instanta, for a new Mareva order. In that regard, he relied upon the changed circumstances. I have already discussed the relevance of subsequent facts to the action. What Counsel for ALM points to, as justifying a fresh Mareva order, is the fact that there is no longer a stock of goods set aside and preserved for possible collection. The goods have now been disposed of and all that remains is a $150,000 fund which is currently secured pursuant to undertakings. -- 13 of 16 -- 14 [45] In opposing the making of a new Mareva order, counsel for Rozmac and Mr Wilson pointed to the relative weakness of the plaintiff’s case and the delay on ALM’s part, not only in identifying and collecting its goods from the start, but in the progress of the current action. It should be recognised however, that the plaintiff’s energies have, for some time, been put into investigating the fate of the proceeds of sale of the tavern and in securing the $150,000, without which the action might not be worthwhile. That is an understandable and reasonable explanation for the delay in the progress of the action. Directions can be made to expedite the matter from this point. [46] Counsel for Rozmac and Mr Wilson also pointed to evidence that the $150,000, currently secured by undertakings, is otherwise intended to be made available to Rozmac to allow it to purchase an income-producing asset which would allow it to meet its debts and ensure its financial survival. Counsel suggested an arrangement for the moneys to be used for such a purpose, subject to a charge being given. Counsel for ALM indicated a preparedness to consider any request for the Mareva order to be moulded accordingly. [47] In the circumstances, I am prepared to grant a further Mareva order, subject to the usual undertaking. I will give the parties an opportunity to consider the appropriate terms of that order. Costs [48] Rozmac has been unsuccessful in its summary judgment application. Costs would ordinarily follow the event. In this case however, in successfully -- 14 of 16 -- 15 resisting the application, the plaintiff placed significant reliance on facts not yet pleaded. In the circumstances there should be no order as to costs of the summary judgment application. [49] Counsel for Rozmac and Mr Wilson contended that, in the event that the Mareva order was set aside for material non-disclosure, his client ought not suffer an adverse costs order in respect of the Mareva order and related applications. He did not seek an order for costs in that regard. That is an appropriate outcome and I will so order. [50] Mr Delaney seeks an order that ALM pay his costs, on an indemnity basis. There is no suggestion that Mr Delaney was in breach of the Mareva order. Indeed, he was not someone who received, or was to receive, the proceeds of the sale of the tavern. Upon commencement of the application for disclosure in aid of enforcement, he cooperated in providing material and information. There is no suggestion that the application for disclosure was brought in the face of a prior refusal by him to provide information otherwise. As noted earlier, the plaintiff consented to an order discharging him from the order. He seems to be, in substance, an innocent party insofar as the Mareva order and associated applications are concerned. Counsel for ALM pointed to the fact that he did not volunteer information at an earlier stage, but he was under no obligation to do so. In the circumstances, the plaintiff should pay his costs on an indemnity basis. -- 15 of 16 -- 16 Directions [51] I have already indicated that there will be a direction in relation to the delivery of an amended statement of claim. I also propose to make further directions for the completion of interlocutory steps and for the matter to be placed on the call- over list. I will hear the parties with respect to the content of those directions. - - - - - -- 16 of 16 --