Day v Mercedes-Benz Australia Pacific Pty Ltd [2009] FCA 464

FEDERAL COURT OF AUSTRALIA

Day v Mercedes-Benz Australia Pacific Pty Ltd [2009] FCA 464

GRAEME DAY, FYSHWICK PROPERTIES PTY LTD and CANBERRA STAR MOTORS PTY LTD v MERCEDES-BENZ AUSTRALIA PACIFIC PTY LTD and MERCEDES-BENZ FINANCIAL SERVICES AUSTRALIA PTY LTD

NSD800 of 2008

STONE J

8 MAY 2009

SYDNEY

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY NSD800 of 2008

BETWEEN: GRAEME DAY

First Applicant

FYSHWICK PROPERTIES PTY LTD

Second Applicant

CANBERRA STAR MOTORS PTY LTD (IN LIQ)

Third Applicant

AND: MERCEDES-BENZ AUSTRALIA PACIFIC PTY LTD

First Respondent

MERCEDES-BENZ FINANCIAL SERVICES AUSTRALIA PTY LTD

Second Respondent

JUDGE: STONE J

DATE OF ORDER: 8 MAY 2009

WHERE MADE: SYDNEY

THE COURT ORDERS THAT:

1. The application in the Notice of Motion filed on 20 January 2009 be dismissed. 2. The costs of the Notice of Motion be reserved.

Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. The text of entered orders can be located using eSearch on the Court's website. IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY NSD800 of 2008

BETWEEN: GRAEME DAY

First Applicant

FYSHWICK PROPERTIES PTY LTD

Second Applicant

CANBERRA STAR MOTORS PTY LTD (IN LIQ)

Third Applicant

AND: MERCEDES-BENZ AUSTRALIA PACIFIC PTY LTD

First Respondent

MERCEDES-BENZ FINANCIAL SERVICES AUSTRALIA PTY LTD

Second Respondent

JUDGE: STONE J

DATE: 8 May APRIL 2009

PLACE: SYDNEY

REASONS FOR JUDGMENT 1 By notice of motion filed on 20 January 2009 the respondents in this proceeding move the Court for orders that the third applicant, Canberra Star Motors Pty Ltd (in Liq) provide security for the costs of the first and second respondents. The dispute between the parties concerns the breakdown of a car dealer agreement between the third applicant, Canberra Star Motors (CSM), and the first respondent. 2 The Statement of Claim filed on 30 May 2008 asserts causes of action arising out of breach of the dealer agreement, unconscionable conduct, misleading or deceptive conduct, misrepresentations as to taxation liability and breach of a bailment agreement. The respondents have filed a cross-claim against the applicants claiming that the first applicant breached its guarantee of the performance of CSM and CSM repudiated the dealer agreement causing loss or damage to the first respondent. 3 CSM was owned and operated by the first applicant, Mr Day. The company carried on the business of a dealer in a variety of motor cars, including Mercedes-Benz vehicles, in the Canberra area between 1994 and August 2006. In August 2006 CSM went into voluntary administration and proceeded into liquidation in November 2006. In May 2008, CSM purported to assign all causes of action against the respondents to Mr Day. The respondents challenge the efficacy of the assignment of the causes of actions, particularly those arising under the Trade Practices Act 1974 (Cth). While the first applicant contends that the assignment was effective, as I understand it, the third applicant has been joined to the proceeding as an exercise in caution. 4 In an affidavit affirmed on 20 January 2009, the solicitor for the respondents, Mr David Rydon, set out the history and structure of the proceedings so far and added: In my submission, it is likely that if this matter proceeds to trial it will involve; (a) complex questions of law; (b) complicated and extensive issues of fact which extend over a decade. I believe that it will be necessary for the Respondents to call extensive evidence from at least 12 witnesses as to matters of fact on behalf of the Respondents; (c) extensive discovery both from the parties to the proceedings and from non-parties (to be obtained by subpoena). I am informed by the general counsel for the primary Respondent, MBAP and believe that his assessment (based on the current discovery categories being pursued by the Applicants) is that discovery is most likely to be very extensive and time consuming and will most likely involve voluminous documentation, both paper and electronic. I deal briefly and separately below with the likely impact of discovery in this matter; (d) expert evidence from accountants, business valuers, property valuers and tax experts to deal with the claims by CSM. 5 Mr Rydon also estimated that extensive discovery would be sought and that it would require "significant time and effort to locate, review and then discover documents". He outlined the steps that, in his view, would be involved in preparing the proceedings for hearing and gave a breakdown of the time that would be required to be spent by counsel and others. His estimate of the total cost of preparing the matter for hearing, assuming that it were to progress efficiently and expeditiously, as being in the order of $402,500 plus GST. 6 There is considerable disagreement between the parties as to the quantum of security should the Court be minded to order that security be provided. For this reason, at the hearing of the application the parties accepted that I should hear argument on the core question of whether security would be ordered and hear argument as to quantum only if that question were decided in favour of the respondents. Since, for reasons that follow, I have decided that the application for security should be dismissed it is not necessary to say anything more in these reasons about the quantum of security.