Nationwide Produce Holdings Pty Ltd (In Liquidation) v Linknarf Limited (In Liquidation) [2005] FCA 10

FEDERAL COURT OF AUSTRALIA

NATIONWIDE PRODUCE HOLDINGS PTY LTD (IN LIQUIDATION) v LINKNARF LIMITED (IN LIQUIDATION) [2005] FCA 10

NATIONWIDE PRODUCE HOLDINGS PTY LTD (IN LIQUIDATION) v LINKNARF LIMITED (IN LIQUIDATION) NSD 849 of 2001 WHITLAM J 14 JANUARY 2005 SYDNEY

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY NSD 849 of 2001

BETWEEN: NATIONWIDE PRODUCE HOLDINGS PTY LTD

(IN LIQUIDATION)

APPLICANT

AND: LINKNARF LIMITED (IN LIQUIDATION)

RESPONDENT

JUDGE: WHITLAM J

DATE OF ORDER: 14 JANUARY 2005

WHERE MADE: SYDNEY

THE COURT ORDERS THAT: 1. The proceeding is dismissed with costs. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY NSD 849 of 2001

BETWEEN: NATIONWIDE PRODUCE HOLDINGS PTY LTD

(IN LIQUIDATION)

APPLICANT

AND: LINKNARF LIMITED (IN LIQUIDATION)

RESPONDENT

JUDGE: WHITLAM J

DATE: 14 JANUARY 2005

PLACE: SYDNEY

REASONS FOR JUDGMENT 1 This case concerns the relationship between two wholesalers and a retailer. The wholesalers were a company called Nationwide Produce (Australia) Pty Limited, to which I shall refer as Nationwide, and the applicant, to which I shall refer as Holdings. The retailer was the respondent. Its name during the period with which this case is concerned was Franklins Limited, and I shall refer to it as Franklins. 2 Franklins operated a string of supermarket stores. Between 1994 and the end of 1998 it purchased supplies of fresh fruit and vegetables from, first, Nationwide and, later, Holdings. Both Nationwide and Holdings were run by a man called Joe Prestia who had extensive experience in the fruit and vegetable industry. Purchases on behalf of Franklins were arranged by a business unit maintained by it at Flemington Markets called Group Produce Supplies. This unit was run by a man called Tony Cassone. 3 There is a conflict in the testimony of Mr Prestia and Mr Cassone as to what was said in various conversations between them and, even, as to whether certain discussions ever took place. The cross-examination of both men was conducted on the basis that the resolution of this conflict was critical to the way in which Holdings had pleaded several causes of action. Because Mr Prestia was a spectacularly poor historian and all the evidence-in-chief was given by affidavit, the oral testimony about relevant developments is often confusing to follow. However, there has been received in evidence a mass of documents (including some created at relevant times by disinterested parties such as banks), from which it is possible, with some effort, to unravel uncontroversially key events in a chronological fashion. 4 Nationwide was incorporated on 10 September 1993. It purchased two trading stands at Flemington Markets, from which it carried on business as a wholesale merchant of fruit and vegetables. Nationwide's trading was facilitated by an overdraft at the State Bank of New South Wales secured by third party mortgages over Mr Prestia's residence and a shopping centre that he owned with his sister. 5 In 1994 Nationwide began to supply produce to Franklins. It rented warehouse space at Lidcombe where it packed those orders. (A lease of these premises was signed on 7 April 1994 for a term expiring on 31 January 1999.) Produce was delivered by Nationwide to Franklins's distribution centre at Flemington Markets. 6 Franklins required certain produce to be packed in ice and delivered in plastic tubs. In order to fill those orders Nationwide installed coolrooms and related equipment at its Lidcombe warehouse. This equipment was supplied by a company in Melbourne called Co-Ordinated Thermal Systems Pty Ltd ('CTS'), which raised an invoice for this equipment to Nationwide dated 31 March 1995 in the sum of $224,157. 7 Around this time Mr Prestia asked Mr Cassone for a letter that he could use in support of a request for an extension of Nationwide's overdraft facility. Mr Cassone gave Mr Prestia a letter signed by him on office letterhead dated 31 March 1995. It was addressed to a manager at the State Bank and stated: 'Nationwide Produce has been dealing with Franklins Group Produce Supplies since the conception of their business.