Supreme Court New South Wales Medium Neutral Citation: Lisec Australia Pty Ltd and Saremach Pty Ltd v Lisec Australia [2015] NSWSC 365 Hearing dates: 31 March 2015 Date of orders: 31 March 2015 Decision date: 31 March 2015 Before: Campbell J Decision: On Lisec Australia Pty Limited giving the usual undertaking as to damages, under r 25.3 Uniform Civil Procedure Rules 2005 (NSW), Saremach Pty Limited, Core Toughened Pty Limited and Feathers Glazing Systems Pty Limited by themselves or by their employees or agents or otherwise may not do any act or take any step to alter, disassemble, move or otherwise disturb or interfere with the machinery known as BAZ 1-50/25 Waterjet serial number O45-056332 located at the premises of Feather Glazing Systems Pty Limited at 75-77 Ricketts Road Mount Waverley, in the State of Victoria until 31 May 2015. Lisec Australia Pty Limited is to provide a copy of the data down-loaded from said BAZ machine to the plaintiff's solicitors no later than 20 April, 2015. Saremach Pty Limited, Core Toughened Pty Limited and Feathers Glazing Systems Pty Limited to file and serve a notice of motion supported by affidavit on or before 8 April 2015 for orders that the defendant provide verified discovery under r 21 of the Uniform Civil Procedure Rules 2005. Lisec Australia Pty Limited to file and serve any affidavit in response to the discovery motion by 24 April 2015. The discovery motion to be listed for directions before the common law case management Registrar at 9.00 am on 24 April 2015. The time for the parties to exchange lay evidence extended to 22 May 2015. The parties to serve their expert evidence in chief on or before 22 May 2015. Costs of this application is costs in the cause. The parties to have liberty to apply on three days' notice. Catchwords: PROCEDURE – civil – interim preservation order under r 25.3 UCPR that machinery belonging to plaintiff is not to be removed or dismantled from the defendant's premises – length of the order sought to ensure fairness to parties Legislation Cited: Uniform Civil Procedure Rules 2005 (NSW) Category: Consequential orders (other than Costs) Parties: Lisec Australia Pty Ltd (Plaintiff); Saremach Pty Ltd AS Trustee for the Glass Machinery Rental Trust (Defendant) Representation: Counsel: J. Knackstredt (Plaintiff) S. Ipp (Defendant) Solicitors: Schweizer Kobras Lawyers (Plaintiff); Lander & Rogers Lawyers (Defendant) File Number(s): 2014/198057; 2014/265604 EX TEMPORE Judgment (REVISED) 1. These two proceedings relate to the supply of complex machinery which I will refer to as a reconditioned, second-hand BAZ Waterjet. The vendor is Lisec and the purchasers are the companies comprising the FGS Group. The proceedings have been case managed concurrently by the common law case management Registrar but important interlocutory issues have arisen for determination by a judge. Background to the litigation 1. It is necessary to set out the background to the litigation but briefly. The contract of sale is dated 26 February 2013 for a price of $857,030 including GST. The terms provided for payment in two instalments. The first instalment of about $120,000 plus GST is to be made by 1 July 2013 with the balance to be paid by 1 July 2014. 2. The machinery was delivered, installed and commissioned on 24 April 2013. The FGS Group became dissatisfied with its performance and refused to pay the balance due on the purchase price. Lisec sued for the balance and for other amounts it says it is entitled to on default. FGS has commenced separate proceedings claiming compensation and damages for misrepresentations under statute and breach of contract under the general law. It says that "but for" the matters of which it complains, it would have purchased "alternate machinery" which would have been more efficient, performed better and returned a bigger profit. In its complaints about the BAZ Waterjet at [15] of its statement of claim it says that when supplied it was in a "dirty, un-refurbished and unmaintained state". However no further particulars of any defects in the machinery have been provided, rather the particulars state that those matters will be dealt with in an expert report to be provided prior to the trial. The present application 1. I infer from the affidavit evidence relating to the motion, that the machinery involved is large, complex and computerised. The manufacturer is Lisec's Austrian parent. The immediate application before me is for what I will refer to as an interim preservation order in respect of the machinery. Although Lisec relied upon high principle in making this application, it seems to me that the relief sought is, even if more prosaically, covered by r 25.3(1) of the Uniform Civil Procedure Rules 2005 (NSW) which provides as follows: In proceedings concerning property, or in which any question may arise as to property, the court may make orders for detention, custody or preservation of the property. 1. It seems to me that the BAZ Waterjet is property and what Lisec is seeking is essentially its preservation, at least for now, so that evidence can be gathered for it to defend the proceedings. Other issues 1. Before dealing with that particular aspect of the case I record that there are other matters in dispute. The FGS Group have maintained that this is an appropriate case for discovery prior to the completion of the exchange of the evidence, and the timetable fixed by the Registrar for the exchange of lay evidence and expert evidence has blown out. Finally, given the complexity of the machine it was agreed between the parties that Lisec's Austrian parent could remotely access its computer equipment to download data in an attempt to diagnose whether the machinery was functioning as specified or not. I note in passing that according to the terms of the contract for sale which was Exhibit A on the hearing before me, that title to the BAZ Waterjet does not pass until payment of the price. Consideration-preservation order 1. I will deal with the matter of a preservation order first. There is no doubt on the evidence before me that FGS Group is anxious to move the machinery. From the photographs attached to the first affidavit of Mr Bannister it is obviously large and takes up a great deal of space in a central position in FGS' factory. According to the affidavit evidence, it is located there to enhance its efficiency of operation because of its proximity there to ancillary machinery. 2. Given its claims about this machinery, FGS Group is anxious to move the machinery to install in its place, the alternate equipment which it has purchased. It says that this will enhance the efficiency of its operations and it estimates, as a necessarily rough figure at this stage, that the location of what it regards as a useless machine is costing it $25,000 per day. I interpolate that Lisec has offered the usual undertaking as to damages as a condition of obtaining a preservation of property order. 3. The issue about preservation of property has been a running sore in the litigation for many months and at different times FGS has threatened to dismantle and move the machinery, although preserving in one piece the central feature of the Waterjet, to another place in the factory. Indeed, it had recently engaged a firm to remove the BAZ Waterjet without notice to Lisec when the undertaking it had previously given expired today. Lisec became aware of that because the firm engaged informed it of FGS's request (Exhibit B). 4. Based on the evidence provided in the affidavit of Ms Henderson, Lisec is concerned that moving the machine, which will involve some degree of dismantling, might cause the loss of data which will make it impossible to diagnose any difficulty and, specifically, may make it impossible to obtain expert evidence to defend the case. The downloaded data 1. It is convenient at this stage to interpolate that, as I have said Lisec's Austrian parent has downloaded data already from the machine. That data has not been provided to FGS because, for reasons I must say that I cannot quite follow, Lisec, the manufacturer, have been unable to decipher the data downloaded and accordingly they say there is no point passing it on to FGS. 2. I am not so sure about that, especially given the orders that were made previously. I appreciate that the Austrian parent is not a party but the information was downloaded at their request pursuant to court orders and I would have thought, whatever the difficulty, a copy could, and should, have have been provided to the FGS Group in accordance with the court orders. I will come back to that. 3. I well understand the attitude of both parties concerning on the one hand preservation of the property, and on the other hand the desire of the FGS Group to get on with its business. Neither side have really been in a position to put cogent or compelling evidence substantiating their side of that argument given that the motion necessarily came on urgently before me yesterday, given the imminent expiration of the previous undertaking, and the information received by Lisec about FGS' intention to move the equipment. 4. I have detailed the evidence led on behalf of FGS in relation to its great inconvenience if a preservation order is made. Ms Henderson, on the basis of information and belief, swears that she has been informed by a Mr Dieter Krause that if the equipment is dismantled by FGS it will no longer be possible for Lisec, or any expert to accurately determine the causes of its current apparent inability to function. On the other hand if it is left in situ undisturbed a detailed and thorough inspection by an appropriately qualified technician is likely to reveal any (or all) of the reasons for its current inability to function. Decision 1. It seems to me that the best that I can do in terms of attempting to arrive at a just solution to the current problems which will accommodate the interests of both parties is to make an interim preservation order for a limited period of time coupled with a new timetable which will facilitate the prompt exchange of evidence. 2. Now I should record that learned counsel attempted yesterday to arrive at an agreement about these matters but were unsuccessful and it seems to me, as is made clear, that FGS on the one hand can live with an extension of its undertaking for a relatively short time and Lisec on the other is seeking preservation of the machine until the disposition of the proceedings. 3. It seems to me that what is offered by FGS, an extension of its undertaking to 20 April 2015 is unreasonably short for reasons I will shortly give and what is sought by Lisec is unreasonably long. 4. This has been going on for a long time and it is understandable that a party would want this part of the case resolved sooner rather than later. However, I bear in mind that Lisec notwithstanding the fact that it is the manufacturer has, as I have indicated, been unable to make anything of the data downloaded remotely and FGS has been so far unable to particularise what is wrong with the machine. It has engaged a reputable expert who has inspected the machine but from the affidavit of Mr Bannister I understand that he has been unable to come up with the diagnosis of any particular problem and will not be able to do so until he receives further information. 5. The fact that that is the situation affecting both sides demonstrates that the matter is of some complexity and cannot be solved overnight. I use that expression figuratively. 6. Ms Henderson tells me in her affidavit that she has arranged to go to Austria between 7-17 April to confer with witnesses and take further instructions. She assures the court in her affidavit that she has not been idle and that she has been working on the case by interviewing witnesses throughout but that the complexities are many. 7. Given where we are at, it seems to me that it is not unreasonable to allow the legal representatives of Lisec that opportunity and although the court will not organise its affairs or manage its business by reference to the convenience of legal practitioners, what is being proposed by Ms Henderson is not a mere matter of her professional convenience but an attempt to properly advance the case. 8. At the same time I acknowledge that so far neither party has been able to pin down the problems, if any, with the machine and that in a case of complex machinery the doctrine of res ipsa locitur is not available. Lisec is entitled to know what case will be made against it but I do not think it is reasonable for Lisec to be entirely reactionary to the expert evidence served by FGS. If anyone should be able to work out what is happening with the machine it should be the manufacturer. 9. I think it appropriate that Lisec take steps now to obtain its expert evidence rather than simply in response to the expert evidence served by FGS Group. If necessary, a supplementary report or a report in reply, however one wants to put it, can be obtained if something new comes up not contemplated by the expert retained. 10. I conclude that I should make an interim preservation order for a longer period than FGS can happily tolerate but not until the trial. 11. In giving these reasons I have not forgotten that, effectively, FGS applied for an adjournment of the motion so that more cogent evidence could be put on about just what its inconvenience would be in keeping the machine in place and whether there would be any real problem in moving it. 12. However it seems to me there should be concentration on dealing with the main issues rather than fighting about interim preservation and I am not prepared to adjourn the motion or make any directions about exchange of evidence in relation to it. 13. However in the light of the directions I propose to make I think an interim order under r 25.3 UCPR until 31 May 2015 will give enough time to both parties to acquire their expert and other evidence and in that regard do justice between them. I have selected that date because it will give the parties a few days after the expiration of the timetable I propose to fix to make an application should that be necessary. Given the history of these proceedings, and the fact that it is a commercial dispute which the parties would normally want to advance expeditiously, I think any application to extend any preservation order beyond that date would need to be supported by cogent and compelling evidence. I will make an order until that date. 14. Notwithstanding the difficulties perceived in Austria, Lisec ought to provide FGS with the data downloaded from the BAZ machine sooner rather than later. In truth, it should have been provided already. I am going to require it to be provided by 20 April. I am somewhat reluctant to allow Lisec that long but as Ms Henderson is travelling to Austria to obtain instructions between 7-17 April it seems to me to be unwise to forestall any event which might facilitate some real progress in these proceedings. 15. With respect to the Registrar's earlier ruling, I think this is a case where discovery should be addressed sooner rather than later in the interests of advancing the case and I propose to permit FGS, as it seeks, the opportunity to bring forward an application for discovery now. 16. Both parties agree that lay evidence should be exchanged by 22 May 2015. I also propose to order both parties to serve their expert evidence by that date which means that Lisec will have to be pro-active in obtaining a report. As I have said, if it comes out there is a good reason for obtaining another then the interim preservation order will remain until 31 May and the opportunity will still be there to deal with any new evidence and new issue arising out of FGS' evidence. 17. I propose to bring the matter back before the Registrar at 9.00 am on 24 April 2015 which is before the expiration of the timetable to allow the parties to report to her on progress and difficulties, if any, that may arise in the meantime. 18. Given the apparent complexities of the case and the history of the matter which has been, so it seems, unsatisfactory to both parties, it may be that consideration should be given tby the parties to making an application to the Registrar for referral of the matter for judicial case management. I leave that for consideration. 19. I make the following orders: 1. On Lisec Australia Pty Limited giving the usual undertaking as to damages, under r 25.3 Uniform Civil Procedure Rules 2005 (NSW), Saremach Pty Limited, Core Toughened Pty Limited and Feathers Glazing Systems Pty Limited by themselves or by their employees or agents or otherwise may not do any act or take any step to alter, disassemble, move or otherwise disturb or interfere with the machinery known as BAZ 1-50/25 Waterjet serial number O45-056332 located at the premises of Feather Glazing Systems Pty Limited at 75-77 Ricketts Road Mount Waverley, in the State of Victoria until 31 May 2015. 2. Lisec Australia Pty Limited is to provide a copy of the data down-loaded from said BAZ machine to the plaintiff's solicitors no later than 20 April, 2015. 3. Saremach Pty Limited, Core Toughened Pty Limited and Feathers Glazing Systems Pty Limited to file and serve a notice of motion supported by affidavit on or before 8 April 2015 for orders that the defendant provide verified discovery under r 21 of the Uniform Civil Procedure Rules 2005. 4. Lisec Australia Pty Limited to file and serve any affidavit in response to the discovery motion by 24 April 2015. 5. The discovery motion to be listed for directions before the common law case management Registrar at 9.00 am on 24 April 2015. 6. The time for the parties to exchange lay evidence extended to 22 May 2015. 7. The parties to serve their expert evidence in chief on or before 22 May 2015. 8. Costs of this application costs in the cause. 9. The parties to have liberty to apply on three days' notice. ********** DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 07 April 2015