FEDERAL COURT OF AUSTRALIA

Siegwerk Australia Pty Ltd (In Liquidation) v Nuplex Industries (Aust) Pty Ltd [2013] FCAFC 159

THE COURT ORDERS THAT:

1.    The appeal be allowed.

2.    The appellant pay the respondent’s costs of the interlocutory application dated 22 July 2013 for leave to amend its notice of appeal.

3.    Subject to order 2, the respondent pay the appellant’s costs of the appeal.

4.    Orders 1, 2 and 3 made on 19 March 2013 be set aside.

5.    There be a new trial on the single issue of whether the substitution of Epikote 1009 for DER 669E caused the corrosion in the cans.

6.    The costs of the first trial abide the outcome of the second.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

THE COURT ORDERS THAT:

1.    The appeal be allowed.

2.    The declaration and orders 4, 5, 6, 7 and 8 made on 19 March 2013 be set aside and in lieu thereof it be ordered:

(i)    the cross claimant’s cross claim against the cross respondent be dismissed;

(ii)    the cross claimant pay the cross respondent’s costs of the cross claim on a party-party basis.

3.    The respondent pay the appellant’s costs of the appeal as agreed or assessed on a party-party basis.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

THE COURT

Introduction

1    On 20 November 2013 we gave judgment in these proceedings: Siegwerk Australia Pty Ltd (in liq) v Nuplex Industries (Aust) Pty Ltd [2013] FCAFC 130.

2    At that time we made orders in VID 265 of 2013, the Siegwerk appeal, that the parties bring in short minutes of order or competing written submissions on the scope of the retrial and costs within 14 days and in VID 713 of 2013, the QBE appeal, that the parties bring in short minutes of order giving effect to the Court’s conclusion that QBE’s appeal against the declaration and orders on Nuplex’s cross-claim should be allowed and dealing with the question of costs within 14 days. These reasons deal with those issues so far as they are in dispute.

The Siegwerk Appeal

3    In the Siegwerk appeal, the parties did not agree on the scope of the retrial or on the appropriate costs order.

4    Siegwerk submitted that remittal was required of the questions whether: (1) the substitution of Epikote 1009 for DER 669 caused the corrosion in the cans; (2) the respondent ought to be held legally liable to the appellant for the loss claimed in consequence of such corrosion; (3) the claim advanced by paragraphs 51A-51F of the appellant's further amended cross-claim dated 8 February 2012 is made out; and (4) the claim advanced by paragraphs 51G-51J of that cross-claim is made out.

5    As to costs, Siegwerk submitted that the appellant should pay the respondent’s costs of its interlocutory application dated 22 July 2013, the respondent should pay the appellant’s costs of the appeal, and the costs of the trial be costs in the new trial.

6    Nuplex submitted that the new trial should be confined to the issues in respect of which the trial judge had been found to have erred through his failure to give adequate reasons. Those issues were: (a) can it be concluded on the balance of probabilities that the Epikote 1009 base resin used in the manufacture of some batches of SICPA 3490 EP resin supplied by the respondent to the appellant was of a lower molecular weight than the DER 669E base resin which would have been used had the specification for the manufacture of the SICPA 3490 EP resin been followed; (b) if so, can it be concluded that the difference in the molecular weight resulted in a material increase in the brittleness of the lacquer produced using those batches of SICPA 3490 EP resin; and (c) are these factors alone sufficient to establish on the balance of probabilities that the SICPA lacquer failed as a result of the substitution of Epikote 1009 for DER 669E? In the alternative, Nuplex contended that the new trial should be on the single issue identified and agreed by the parties to be the only issue requiring determination at the outset of the hearing at first instance, namely, whether the substitution of Epikote 1009 for DER 669E in SICPA 3490 EP resin caused the corrosion of cans of tuna the subject of the claims made against the appellant.

7    Nuplex referred to s 30 of the Federal Court of Australia Act 1976 (Cth) which provides:

30 New trials

(1)     In an appeal in which the Court grants a new trial, the Court may impose such conditions on a party, and may direct such admissions to be made by a party, for the purpose of the new trial as are just.

(2)     Where the Court grants a new trial in a suit, the Court:

(a)     may grant it, either generally or on particular issues only, as it thinks just; and

(b)     may order that testimony of a witness examined at the former trial may be used in the new trial in the manner provided in the order.

8    As to costs, Nuplex submitted that the costs of the Siegwerk appeal and of the proceedings below should either be reserved pending a determination of the merits, or each party should bear its own costs below, and of the appeal.

9    In our view it would not be in the interests of justice to accede to the submissions on behalf of Siegwerk because to do so would be inconsistent with the way Siegwerk ran the trial. The facts and circumstances are set out at length in Siegwerk Australia Pty Ltd (in liq) v Nuplex Industries (Aust) Pty Ltd [2013] FCAFC 130, especially at [81]-[106] rejecting Siegwerk’s application to amend its notice of appeal. There is no sufficient reason to depart from the ordinary position that parties are bound by the way the hearing is conducted.

10    We are also of the view that the first alternative propounded on behalf of Nuplex is impractical in the sense that it may hamper the trial judge in the hearing and determination of the case by rigidly splitting the new trial into sub-issues.

11    For these reasons we consider it just that the order be that there be a new trial on the single issue of whether the substitution of Epikote 1009 for DER669E caused the corrosion in the cans.

12    As to costs, we are not persuaded that there is any reason not to award the successful appellant, Siegwerk, its costs of the appeal, leaving aside its unsuccessful application to amend its notice of appeal. As to the costs of the trial, we agree that those costs should abide the outcome of the retrial to the effect that the trial judge will exercise the discretion to award costs at that time.

The QBE appeal

13    The main issue between the parties in the QBE appeal was costs. QBE relied on a notice of offer to compromise dated 8 November 2011 pursuant to rule 25.01 of the Federal Court Rules 2011 (Cth).

14    We accept that the offer to compromise was made in accordance with the rules but we are not persuaded that Nuplex unreasonably failed to accept the offer, within r 25.14(2) of the Federal Court Rules. We accept the submissions on the part of Nuplex that the question of its entitlement to indemnity under the QBE policy was dependent upon the Court’s findings as to the basis of its liability to Siegwerk and it was not unreasonable for the claim for indemnity to be brought in advance of that determination and in the same proceedings in order to bind QBE to any relevant findings. It was not unreasonable for Nuplex to decline to discharge QBE from any liability in connection with the claim in consideration of payment of an amount of about 25% of the amount demanded at the time the offer to compromise was made. We therefore consider that the appropriate costs order is that Nuplex pay QBE’s costs of the appeal and of the trial on a party-party basis.

15    There was also a minor issue between the parties as to the form of orders made by the primary judge, in particular whether certain declarations made by the primary judge should be set aside. In our opinion, for completeness, the appropriate order is that the declaration and orders 4, 5, 6, 7 and 8 made on 19 March 2013 be set aside.

Conclusion

16    For these reasons we make the orders set out above.

Associate:

Dated:    20 December 2013