FEDERAL COURT OF AUSTRALIA

Schutz DSL (Australia) Pty Ltd v VIP Plastic Packaging Pty Ltd (No 13) [2011] FCA 1113

THE COURT ORDERS THAT:

1.    The applicants/cross-respondents’ motion for release of the security dated 3 June 2011 be dismissed with costs.

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

REASONS FOR JUDGMENT

INTRODUCTION

1    The background to and abbreviations in these reasons are the same as those in Schutz DSL (Australia) Pty Ltd v VIP Plastic Packaging Pty Ltd (No 10) [2011] FCA 1107 (Schutz No 10).

RELEASE OF SECURITY

2    On 7 August 2009, in support of an application for an interim injunction against VIP, Schutz (more specifically the first applicant, Schutz DSL (Australia) Pty Ltd (Schutz DSL)) gave an undertaking as to damages in the following terms:

Schutz DSL (Australia) Pty Ltd, hereby undertakes to the Court, on behalf of each of the applicants, that the first applicant will pay to any party restrained, or affected by the restraints or requirements imposed by this interlocutory injunction, or any interim continuation thereof, such compensation as the Court may in its discretion consider in the circumstances to be just, such compensation to be assessed by the Court or in accordance with such directions as the Court may make and to be paid in such manner as the Court may direct.

3    A further notice of motion was filed by Schutz on 24 November 2010 for the discharge of the security for damages which had been given pursuant to the Schutz undertaking. That motion was dismissed. Schutz now pursues the same orders set out in the 24 November 2010 motion on the basis of changed circumstances.

4    The orders sought are in the following terms:

The $250,000 cash security provided by the first applicant and held in trust by Lawfirst Pty Ltd t/as Bennett + Co on behalf of the first applicant/cross-respondent for its undertaking as to damages dated 7 August 2009, pursuant to the orders made by the Honourable Justice McKerracher on 6 October 2009, be released to the first applicant/cross-respondent.

5    The original Schutz undertaking was provided in respect of the ex parte injunction granted on 7 August 2009. That injunction lapsed on 19 August 2009 at 4.00 pm. Following the lapse of that injunction, VIP were permitted, within the terms of the undertakings offered, to engage in the trade of cross-bottled IBCs for the transportation of non-dangerous goods (NDG) affixing the label annexed to the orders of 6 October 2009 and found in Schutz DSL (Australia) Pty Ltd v VIP Plastic Packaging Pty Ltd (No 9) [2011] FCA 1087 (Schutz No 9) (at [6]) and below.

6    Further, after obtaining Approval number 30746 from WorkSafe Victoria on 22 October 2009 and entering into the undertakings recorded in the orders made on 13 October 2010, VIP was able to engage in the trade of cross-bottled IBCs permitted or authorised by that approval (30746) for the transport of Dangerous Goods (DG) after affixing the label (annexed to the orders of 13 October 2010) which is set out below:

7    Evidence has been given by Mr Johnston, in the 7th Johnston affidavit, that Schutz has not received, through its ticket service, any cross-bottled IBCs sold or supplied by VIP bearing VIP UN certification markings since on or around 13 October 2010 or at any other stage in the proceedings. It follows, Schutz argues, that the Court should infer that VIP have not recommenced cross-bottling for DG use under their WorkSafe Approval number 30746 since they were released from their undertaking given on or around 13 October 2010. Accordingly, it is argued, the reason for VIP being ‘locked out’ of the DG IBC market was not on the basis of the Schutz undertaking. The period in respect of which VIP may claim damages pursuant to the Schutz undertaking, therefore, is limited only to the period in which they were initially restrained by the Court from trading in cross-bottled IBCs under the ex parte injunction granted on 7 August 2009, a period of only 12 days.

8    Schutz argues that there was no evidence that any damages that VIP may attempt to claim for this period was in the vicinity of $250,000, which is the sum held by the Court pursuant to the undertakings. On that basis, it is argued that the cash security should be released back to Schutz.

9    Further and, in any event, by reason of the financial information disclosed in confidential material made available to the Court, Schutz argues that it is clearly in a position to satisfy any award for damages made in favour of VIP in respect of the conduct restrained by their previous undertakings and the interim injunction.

CONSIDERATION

10    I do not consider that Schutz has made out a satisfactory basis for release of the security. VIP was precluded from entry into the market during the period in which the injunction was in place including following the grant of VIP’s approval number 30746 in October 2009. The injunction was discharged in October 2010. VIP contends, and it cannot be proven or disproven at this stage, that its damages in respect of that period may be in the order of $500,000 in which case the security provided would be inadequate. In the absence of additional evidence, I would not be prepared to draw the inference which Schutz invites the Court to draw. Other reasons have been given by Mr Smith in confidential paragraphs to his affidavit as to the reason for the caution exercised by VIP in re-entry into the market for DG-IBCs. Other than to note that it may be that his explanation is correct, it is unnecessary to record the explanation in these reasons.

11    Further, although one suspects that the following could be readily cured, it is doubtful whether there is presently adequate evidence of the asset position Schutz DSL. The evidence actually given by Mr Johnston appears to go to the asset position of Schutz DSL Group Pty Ltd. It is not that party but rather Schutz DSL that has offered the security. There is no direct financial evidence as to the capacity of Schutz DSL. (However, I stress that if this were the only question in issue I would not put a great deal of weight on it).

12    It may well be that there are alternative reasons for VIP’s delayed re-entry into the market. Those are not matters which can presently be determined. The price of obtaining injunctions or undertakings in lieu of injunctions is to give an undertaking as to or security for damages in respect of the restraints.

CONCLUSION

13    In my view, there is no adequate basis shown for release of the security.

14    It follows that Schutz’ motion for release of the security dated 3 June 2011 be dismissed with costs.

Associate:

Dated:    29 September 2011