Lampson (Australia) Pty Ltd v Australian Crane & Machinery Pty Ltd [2008] FCA 400

FEDERAL COURT OF AUSTRALIA

Lampson (Australia) Pty Ltd v Australian Crane & Machinery Pty Ltd [2008] FCA 400

LAMPSON (AUSTRALIA) PTY LIMITED (ACN 003 919 051) v AUSTRALIAN CRANE & MACHINERY PTY LIMITED (ACN 111 382 784) NSD 1297 OF 2007

RARES J

6 MARCH 2008

SYDNEY IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY NSD 1297 OF 2007

BETWEEN: LAMPSON (AUSTRALIA) PTY LIMITED (ACN 003 919 051)

Plaintiff

AND: AUSTRALIAN CRANE & MACHINERY PTY LIMITED (ACN 111 382 784)

Defendant

JUDGE: RARES J DATE OF ORDER: 6 MARCH 2008

WHERE MADE: SYDNEY

THE COURT ORDERS THAT:

1. Pursuant to s 31A(1) of the Federal Court of Australia Act 1976 (Cth), there be judgment for the plaintiff in the sum of $384,393.44 (being the balance of $360,000 owed by the defendant together with interest at the rate of 10% per annum from 2 July 2007 to date). 2. The defendant cause the whole of the sum of $360,000 together with all accrued interest in the interest bearing account in the names of the parties' solicitors to be paid to the plaintiff in part satisfaction of the judgment debt in Order 1 above. 3. The defendant pay the plaintiff's costs of the proceedings. 4. No order be made as to the costs of relisting the matter today. 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 1297 OF 2007

BETWEEN: LAMPSON (AUSTRALIA) PTY LIMITED (ACN 003 919 051)

Plaintiff

AND: AUSTRALIAN CRANE & MACHINERY PTY LIMITED (ACN 111 382 784)

Defendant

JUDGE: RARES J

DATE: 29 FEBRUARY 2008, 6 MARCH 2008

PLACE: SYDNEY

REASONS FOR JUDGMENT (REVISED FROM THE TRANSCRIPT) 1 This is an application for summary judgment under s 31A(1) of the Federal Court of Australia Act 1976 (Cth). It arises out of proceedings brought by Lampson (Australia) Pty Limited against Australian Crane and Machinery Pty Limited in July last year. The proceedings were commenced on an urgent basis because Lampson had sold cranes and other goods said to be worth over $3 million and received no payment. The matter came before Allsop J on 9 July 2007 and his Honour, in reasons which he delivered on that day, gave an outline of the dispute as it was at that stage: Lampson (Australia) Pty Limited v Australian Crane and Machinery Pty Limited [2007] FCA 1043. 2 Since then the matter has had a number of directions hearings before his Honour. An interlocutory regime was established, pursuant to which Lampson was paid all but $360,000 of the amounts of $1,034,000 and $2,277,000 the subject of its invoices dated 1 April 2007 addressed to Australian Crane and Machinery. During the interlocutory hearings before Allsop J, Australian Crane and Machinery asserted that there had been a failure to join the true defendant to the proceedings, namely a company called Balaji Cranes Limited. That company was incorporated in the United Kingdom but operated principally in India. Additionally, it was asserted that Balaji wished to sue Lampson for damages for breach of contract in respect of the alleged short shipment or deficiencies in the cranes and other goods which were received in India. 3 Ultimately his Honour made orders late last year providing for Lampson to amend its application and to proceed upon an amended notice of motion, seeking, among other things, judgment under section 31A of the Act. The amended application now claims only the sum of $360,000 outstanding on the invoices for the sums which I have described. Those invoices were amended from an earlier lump sum invoice for $3,311,000 which Lampson had issued on 14 March 2007 for all of the cranes. A number of the cranes were shipped from the Eastern seaboard of Australia earlier than a later shipment from Dampier in Western Australia. The alleged short shipment or deficiency in the cranes and other goods was based on the shipment from Dampier. 4 When Lampson commenced proceedings, it relied on an affidavit of John Lee sworn on 6 July 2007 which set out much of the commercial history between the parties. His evidence included an account, based on information and belief, of a discussion which the managing director of Lampson, Philip Lunn, had had with David Potter, the managing director of Australian Crane and Machinery and Ajay Vijan, the principal of Balaji, together with a Mr Chadwick, another officer of Australian Crane and Machinery. Mr Lunn said that had occurred in about late February or early March 2007. Mr Potter, in an affidavit recently sworn, suggests that the discussion occurred earlier in 2007, and that Mr Chadwick was not present. No affidavit by Mr Lunn, Mr Chadwick or Mr Vijan was read before me. 5 On 12 March 2007, Lampson sent Mr Potter a facsimile with the serial numbers, locations and prices of nine cranes. Two days later Mr Lunn sent Mr Potter a facsimile attaching an invoice '… for the sale of the equipment as discussed together with our Terms and Conditions of Sale'. That invoice was for $3,311,000. The terms and conditions of sale stated that as previously agreed between the two parties the equipment would be delivered to the ports of Newcastle, Mackay and Dampier. They provided that the equipment should not leave the borders of Australia until ownership had passed to Australian Crane and Machinery, and made arrangements for the payment for the goods. 6 In early April 2007 Mr Lunn and Mr Potter discussed the need to break the cranes down for shipment and Mr Potter's requirement that counterweights be provided for one of the cranes which was missing from the shipment to be made from Toronto in New South Wales. Mr Lunn said that the counterweights would be shipped with the cranes out of Karratha (or Dampier). Following that discussion, on 1 April 2007 Lampson sent Mr Potter two replacement invoices, the first for $2,277,000 in respect of the shipment from Toronto in New South Wales, and the second for $1,034,000 in respect of the shipment from Dampier. 7 On 12 April 2007, Australian Crane and Machinery had an exchange of emails with its shipping agent, International Export Group Pty Limited, some of which were copied to Mr Lee and Mr Lunn. Next, Australian Crane and Machinery arranged for the Australia and New Zealand Banking Group Limited to provide irrevocable documentary credits in favour of Lampson as beneficiary. The irrevocable documentary credits named Australian Crane and Machinery as the applicant for the two shipments. 8 Matters appear to have proceeded smoothly with the first shipment. In May and June 2007 the parties discussed the arrangements which needed to be put in place to ensure that the shipment from Dampier contained all of the goods, including any outstanding goods from the first shipment, which the contract required to be shipped. 9 On 22 May 2007 Mr Potter sent to Mr Lee and Mr Lunn an email which referred to the boom specifications for the cranes. Mr Potter's email said, among other things: 'The sales agreement calls for 150 feet per unit, can you please advise where the balance of the boom inserts are. We are also still short 3 boom inserts, from the units loaded in Newcastle and Mackay to make up the required amount of boom. Which you indicated would be available in Dampier. Can you please arrange to have these units together with all of the other attachments available in Dampier by the 30th of May as the vessel on charter will be available for loading on the 31st of may, providing there is no backlog.' [sic] 10 Some attention appears to have been paid to this request, and on 14 June Mr Potter wrote to Inchcape Shipping Services Pty Limited in Dampier with a copy to Mr Lee. He referred to the requirement for a minimum 150 feet length for the boom. He also said in the email: 'When the cranes were loaded in Newcastle and Mackay, Lampsons did not supply the total length of boom which we have paid for. Therefore, Lampsons have agreed to make up the difference with boom sections in Dampier. So we need an additional 3 boom inserts with a minimum length of 9 metre per boom insert, to be shipped on this vessel. I have inspect[ed] these additional sections in Lampsons yard, so your people only have to ensure that they get on the ship with all of the other accessories.' [sic] (emphasis added) 11 On 15 June, Mr Potter wrote to Ms Godwin, an accountant at Lampson, saying: 'Our letter of credit is depending on the equipment purchased being supplied underhook at the ship. As your people are well aware, the units loaded in Newcastle and Mackay were short shipped. Therefore until we have the total amount of the purchase on board a vessel we are unable to supply the documentation you require. It has been agreed with Phil Lunn that the short shipped items will be loaded in Dampier with the balance of the machines purchased from Lampsons. Then and only then can we get the shipping company to issue all parties with the documentation we all need.' (emphasis added) 12 Finally, on 18 June, Mr Potter wrote an email to Ms Godwin saying: 'Yes I have seen the equipment in the Lampsons yard in Karratha. I have now returned to Melbourne, and have engaged a tally person in Dampier to check that these items are delivered to the wharf. Once every thing is in place and the shipping company confirm they are under hook then I will insist that they release the shipping documents that we are all waiting for.' [sic] 13 By 2 July 2007 the equipment had been loaded and the vessel had left Dampier port, but no payment had been received by Lampson. Shortly afterwards, on 6 July, Lampson commenced the proceedings. 14 On 7 December 2007, Allsop J ordered that the amended notice of motion for summary judgment be returned before me on 8 February 2008 for directions. On that day I ordered the parties to prepare a timetable for the filing of evidence and provision of written submissions which were to be filed no later than 5 pm on 28 February 2008. The parties have informed me that they thought this was not an order of the court and have thus not complied with it. 15 At the hearing today, Lampson proceeded on Mr Lee's affidavit, together with an affidavit of one of its solicitors, Mr Nolan, sworn on 5 December 2007. Mr Nolan traversed the history of the proceedings before the court and noted that no defence or cross-claim had been filed in the proceedings. The omission of a defence is unsurprising since pleadings had not been ordered by Allsop J. Australian Crane and Machinery relied on one affidavit it had filed, and three others which it was granted leave to file and read. Three of those affidavits were by its solicitor, Graeme Efron. Each of those affidavits was in large part inadmissible, even on an interlocutory basis on information and belief, because they did not set out the facts. 16 It is regrettable that legal practitioners do not follow the rules of evidence in preparing evidence in a matter of serious contest before the Court. Some of the difficulty in the hearing today has been caused by Australian Crane and Machinery's evidence being inadmissible. Ironically, Mr Efron complained in one of his affidavits, that some of the material in Lampson's affidavits was hearsay. I have referred to this because Australian Crane and Machinery sought (unsuccessfully) an adjournment of this hearing on the ground that much of the evidence it sought to read earlier today was rejected as being inadmissible because it was in a lamentably bad form. 17 Mr Potter swore an affidavit on 25 January 2008. He deposed that Australian Crane and Machinery had been engaged by Balaji to act as its agent to procure a number of cranes from Lampson. He said that at the meeting he had with Mr Lunn and Mr Vijan on 9 January 2007, Mr Vijan and he explained that Balaji were a major dealer in cranes in India and elsewhere, and that Mr Potter was present on that occasion on behalf of Australian Crane and Machinery purely as the agent of Balaji. At the meeting Mr Vijan and Mr Lunn initialled a document. It identified a number of cranes and their prices which Balaji was interested to purchase. There is no dispute between the parties that the cranes identified on the document were the ones which ultimately became the subject of Lampson's invoices to which I have referred. 18 Earlier this year, Balaji commenced proceedings in this Court against Lampson claiming damages for breach of contract and for contraventions of s 52 of the Trade Practices Act 1974 (Cth) in respect of the cranes and goods the subject, also, of these proceedings. There is no evidence before me to support any assertion of short delivery of the cranes. To date Balaji has provided no particulars of its claim, nor has Australian Crane and Machinery provided any detail of the alleged short delivery or its value. 19 The question on the present motion is whether I can be satisfied that there is a reasonable prospect of a successful defence of Lampson's claim by Australian Crane and Machinery. The documentary material provided by Mr Lee in his affidavit, to which I have referred above, stands uncontradicted by any material in evidence which would show that there is any reasonable basis to find that after Mr Potter had inspected the cranes and other equipment at Dampier (with which his email of 18 June 2007 appeared to express satisfaction) there was any problem in those goods being delivered to the ship in Dampier in satisfaction of Lampson's obligations. 20 I am comfortably satisfied by the evidence that Australian Crane and Machinery has no reasonable prospect of successfully defending the proceedings on the basis that there was a failure to ship what was contracted for or a short shipment. Mr Potter's own documents, contemporaneous with the shipments, demonstrate that he was satisfied that all that was required to be shipped was at Dampier. He arranged for a tally person to check those cranes and other goods to permit the ship to be loaded. Once loaded, they would be sent from the jurisdiction. Lampson's terms and conditions, which it sent on 14 March 2007 with the initial invoice, provided that the equipment was not to leave the borders of Australia until ownership had passed to Australian Crane and Machinery. 21 Despite the wealth of documentary material indicating a contract between Lampson and Australian Crane and Machinery, the latter has not pointed to any document to suggest that it was not a party to the contract ultimately made with Lampson upon which the goods were shipped. Mr Potter's own emails as late as 14 June 2007 emphasised that Australian Crane and Machinery had paid for the goods loaded at Newcastle and Mackay and complained that there had been the short shipment there, to be made up in the Dampier shipment. 22 Australian Crane and Machinery also argued that there is a reasonable prospect that it could establish a defence on the basis that it was not a contracting party. It contended that it was clear that it attended the meeting earlier in 2007 at which Mr Vijan was present, simply in the capacity of agent for Balaji. There is evidence to support its assertion in this regard about that meeting. While that evidence may or may not be correct, the question is an objective one as to who were intended to be the parties to the contract, when it was made, under which the cranes and other equipment were supplied by Lampson. That involves the court putting itself in the position of an objective observer in assessing, by reference to what the parties said or did, what were the terms and who were the parties to the contract when it was made. 23 Similar principles were considered by Finn and Besanko JJ and myself in Carminco Gold & Resources Limited v Findlay & Co Stockbrokers (Underwriters) Pty Ltd [2007] FCAFC 194 at [22]-[29]. We referred to and set out what Brandon J had said in The 'Swan' [1968] 1 Lloyd's Rep 5 at 12 of a situation where A contracted with B on behalf of the disclosed principal C. He said: '… the question whether both A and C are liable on the contract or only C depends on the intention of the parties. That intention is to be gathered from (1) the nature of the contract, (2) its term and (3) the surrounding circumstances: …' (citations omitted) We continued: 'It should be added that a like inquiry is required when the question is whether the contract is one to which the agent alone is a party, notwithstanding the agent is known by the other contracting parties to be acting as an agent for the disclosed but unidentified principals: …' (citations omitted) 24 And, we cited a number of other authorities bearing on this issue (Carminco Gold [2007] FCAFC 194 at [29]). In Black v Smallwood (1966) 117 CLR 52 at 56, Barwick CJ, Kitto, Taylor and Owen JJ approved what Fullagar J had said in Summergreene v Parker (1950) 80 CLR 304 at 323, namely: '… the fundamental question in every case must be what the parties intended or must be fairly understood to have intended. If they have expressed themselves in writing, the writing must be construed by the court. If they have expressed themselves orally, the effect of what they said is a question of fact …' 25 The test to be applied on an application under s 31A has been considered in a number of authorities. The test which I applied in Boston Commercial Services Pty Limited v GE Capital Finance Australasia Pty Limited (2006) 236 ALR 720 at 731 [45] required the court to be very cautious not to do a party injustice by summarily dismissing proceedings where, in accordance with the principles in Hocking v Bell (1945) 71 CLR 430 at 441-442 per Latham CJ (approved in Hocking v Bell (1947) 75 CLR 125 at 130-131), contested evidence might reasonably be believed one way or another so as to enable one side or the other to succeed. I held that unless only one conclusion could be said to be reasonable, the moving party would not have discharged its onus to enliven the discretion to authorise a summary termination of the proceedings envisaged by s 31A. 26 Australian Crane and Machinery sought an adjournment of the proceedings today on the basis that there was a possibility for it to be able to file evidence in an admissible form so as to demonstrate an ability to resist a conclusion which the evidence currently before me commands, namely that there is no reasonable prospect of it successfully defending the proceedings. I am mindful that a considerable portion of the affidavit material sought to be read by Australian Crane and Machinery was struck out as inadmissible. None of that material provided documentary or other evidence objectively capable of showing a reasonable prospect that the material to which I have referred above would not be accepted as correct on a final hearing. 27 These proceedings have been on foot for almost eight months. Mr Potter was aware that the goods provided for his inspection at Dampier comprised the entirety of what was contracted to be shipped. In those circumstances, Australian Crane and Machinery could be expected to have evidence from its agents at the time of shipment if there were, in fact, a deficiency in goods shipped from Dampier because of a failure to deliver some or all of what Lampson had contracted to supply. If such evidence existed, it would have been provided, but that has not occurred. I am satisfied that there is no reasonable prospect of Australian Crane and Machinery establishing that it was not a, if not the, contracting party. So long as it was a contracting party with Lampson, that is sufficient to warrant it being sued and held liable. In my opinion, the evidence in the documents establishes that Australian Crane and Machinery was the only contracting party with Lampson for the supply of the cranes and goods shipped. 28 Even if I am wrong in that conclusion, I am comfortably satisfied that Australian Crane and Machinery has no reasonable prospect of establishing that it was not one of the contracting parties for the purchase of the cranes and other machinery. 29 For those reasons, I am of opinion that I should order that there be judgment for the plaintiff against the defendant in the sum claimed, together with interest and costs. No useful purpose would have been served by adjourning the proceedings.