FEDERAL COURT OF AUSTRALIA

Lamond [2017] FCA 180

ORDERS

THE COURT ORDERS THAT:

1.    Owen Robert Pettingill be restrained until further order from being in any way engaged or involved in or concerned with, directly or indirectly, any business, activities or affairs of Green Triangle Livestock & Real Estate Pty Ltd ACN 600 378 489.

2.    The application insofar as it seeks the orders in paragraphs 11 and 12 be dismissed.

3.    Owen Robert Pettingill within seven business days do all such things necessary to cause the mobile telephone number 0428 842 330 to be transferred into the name of P & L Livestock Pty Ltd.

4.    The directions hearing be adjourned to Friday, 10 March 2017 at 9.15am.

5.    Paragraphs 3 to 10 in the application are adjourned to the directions hearing on Friday, 10 March 2017 at 9.15am.

6.    Costs reserved.

THE COURT NOTES the undertaking given by Green Triangle Livestock & Real Estate Pty Ltd, Christopher John Manser and Garth John Manser to maintain all telephone records in respect of mobile telephone numbers 0417 414 127 and 0417 071 180 from 24 June 2015 until further order and to submit to any such order (if any) made by the Court in respect of production of such telephone records.

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

REASONS FOR JUDGMENT

BESANKO J:

1    This is an “Urgent application before start of a proceeding” brought under r 7.01 of the Federal Court Rules 2011 (Cth) (“the Rules”). The matter involves a proposed proceeding by Mr Peter Lamond against Green Triangle Livestock and Real Estate Pty Ltd and a number of other proposed respondents. For present purposes, the other proposed respondents who are relevant are Mr Owen Pettingill, Mr Christopher Manser and Mr Garth Manser. Where appropriate, I will refer to Mr Christopher Manser and Mr Garth Manser as “the Mansers”.

2    In his Further Amended Urgent application before start of a proceeding, Mr Lamond seeks 13 orders. The search orders sought in paragraph 1 were made on 9 December 2016. Mr Lamond sought orders in terms of paragraphs 2, 11, 12 and 13 and the adjournment of the other paragraphs in the application (i.e., paragraphs 3 to 10 inclusive). The basis upon which he sought the adjournment of certain paragraphs in the application is set out in a letter from his solicitors to the respective solicitors for the prospective respondents dated 20 January 2017. The Mansers opposed the application to adjourn various paragraphs in the application. I am satisfied, having regard to the explanation and the apparent lack of prejudice to the Mansers, that at this stage it is appropriate to adjourn consideration of paragraphs 3 to 10 inclusive.

3    The background to the matter is as follows. In 2004, a company called P & L Livestock Pty Ltd (“P & L Livestock”) commenced carrying on a business providing services in livestock sales. In 2005, P & L Livestock commenced carrying on an additional business as a real estate agent. The company has traded profitably throughout the years. Mr Lamond and Mr Pettingill have been and are the directors and shareholders of the company. Both worked in the business until 2008. At that time, Mr Lamond ceased working in the business due to illness. Mr Pettingill has and continues to manage the day-to-day operations of the company.

4    Mr Garth Manser worked for P & L Livestock as a livestock salesperson or stock agent from 2009 to November 2016. Mr Christopher Manser worked for P & L Livestock in a similar position from 2012 or 2013 (the difference in dates is not material for present purposes) to November 2016. In November 2016, the Mansers became involved in the business of Green Triangle which company acts as a competitor and rival to the business conducted by P & L Livestock.

5    In April 2015, Mr Christopher Manser and Mr Lamond were negotiating an agreement whereby Mr Christopher Manser would purchase Mr Lamond’s shares in P & L Livestock, but only relating to that aspect of the business which concerned the provision of livestock services. Mr Terry Allen, who has since died, was an accountant and he acted for Mr Lamond and for P & L Livestock. He sent a message to Mr Lamond on 1 April 2015 (“Mr Allen’s message”) in which he advised of a discussion he had had with Mr Pettingill that day. He said the following in his message:

Peter this is what is proposed. Owen was resolute that if this deal is not acceptable he and Chris Manser will stop trading in P & L Livestock Pty Ltd and start a new company trading as at 1st July 2015.

I will refer to this as Mr Pettingill’s statement.

6    The negotiations were not successful. Mr Pettingill did not leave the company. Mr Christopher Manser did, but that did not occur until some 18 months later in November 2016.

7    On 24 June 2015, Mr Pettingill caused P & L Livestock to transfer the mobile telephone numbers of the mobile telephones of himself, Mr Christopher Manser and Mr Garth Manser to each of those persons.

8    Mr Pettingill admits that he has caused P & L Livestock to enter into joint agencies with Green Triangle for the sale of livestock, involving the sharing of sales commissions with Green Triangle.

9    One of the important allegations that Mr Lamond makes against Mr Pettingill is that he has acted in concert with the Mansers in relation to the establishment of Green Triangle’s business and that he has misappropriated monies of P & L Livestock for his personal benefit.

10    Mr Lamond has caused P & L Livestock to cease making payment of wages and management fees to Mr Pettingill. On 15 December 2016, Mr Lamond’s solicitors wrote to Mr Pettingill’s solicitors offering to cause P & L Livestock to resume payments to Mr Pettingill, subject to Mr Pettingill providing certain undertakings and complying with certain conditions. They are as follows:

Notwithstanding the above, in an attempt to avoid yet further damage to P & L, if your client consents or does not object to the injunctions contained in paragraphs 2 to 4 of our client’s Application being made at the hearing on Monday 19 December 2016 and promptly provides a written and signed undertaking to the effect that:

1.    he will forthwith resume to actively and appropriately perform his duties and comply with his obligations as an employee of P & L, including, without limitation, seeking to generate business from clients of P & L for the sole purpose of the business of P & L; and

2.    he will forthwith commence to act as an auctioneer for P & L in relation to the sale of livestock for P & L at the saleyards,

then our client is willing to agree to the resumption of the payment of your client’s normal wages, subject to:

•    your client complying with the above undertaking, his duties and obligations as an employee and the injunctions on an ongoing basis; and

•    our client approving each payment of wages before it is made to your client.

For the avoidance of any doubt, in the circumstances our client continues, and will continue notwithstanding any provision by your client of the above undertakings, to require that all payments to be made by P & L be approved by him in advance of the payments being made by P & L. In the circumstances this is in the best interest of P & L as a whole and necessary as a result of our client’s obligations as a director of P & L.

11    As I understand it, material seized pursuant to the search order has not yet been examined, or at least it is in the process of being examined by the parties.

12    At this stage, Mr Lamond seeks the following orders:

…

2.    An order that Owen Robert Pettingill be restrained until further order from being in any way engaged or involved in or concerned with, directly or indirectly, any business, activities or affairs of Green Triangle Livestock & Real Estate Pty Ltd ACN 600 378 489.

…

11.    An order that Christopher John Manser and Garth John Manser within 3 business days do all such things necessary to cause the mobile telephone numbers 0417 414 127 and 0417 071 180 to be transferred into the name of P & L Livestock Pty Ltd.

12.    An order that Christopher John Manser and Garth John Manser permanently cease to use mobile telephone numbers 0417 414 127 and 0417 071 180.

13.    An order that Owen Robert Pettingill within 3 business days do all such things necessary to cause the mobile telephone number 0428 842 330 to be transferred into the name of P & L Livestock Pty Ltd.

13    The orders sought in paragraphs 2 and 13 concern Mr Pettingill, and the orders sought in paragraphs 11 and 12 concern the Mansers. Mr Lamond submitted that the orders sought in paragraphs 11 and 12 were in the nature of permanent mandatory injunctions and that I had the power to make such orders under r 7 of the Rules. I do not need to decide the question of power because I have decided that the orders should be refused on other grounds. During the course of submissions, I suggested a form of interlocutory order, but on reflection, I do not think it is appropriate to make an interlocutory order. In the circumstances, an interlocutory order would have the practical effect of a final order.

14    Mr Pettingill does not oppose the orders sought in paragraphs 2 and 13, but submits that they should only be made on terms that his outstanding wages and management fees be paid and that Mr Lamond undertake that he will authorise payment by P & L Livestock of his wages and management fees as and when they become due, owing and payable in the future. He submits that he should not have to give the undertaking sought by Mr Lamond’s solicitors.

15    There is a good deal of force in Mr Pettingill’s submissions. Although I am not in a position at this stage to assess the rights or wrongs of the past refusal to pay wages and management fees, it is difficult to see any justification for a refusal to pay wages and management fees in the future where Mr Pettingill carries out duties for the company and performs services for it. I should say that it is possible that Mr Lamond’s conduct in the past and his conduct in the future concerning Mr Pettingill’s wages and management fees will become the subject of a claim or an allegation in this proceeding, or a claim or allegation in the proceeding in which an order is sought for the winding up of P & L Livestock. Having said that, I do not think I should make an order linking the injunction sought and the payment of Mr Pettingill’s wages and management fees. It seems to me that they are separate matters and I cannot see that they are in any way contingent on each other. I will make the orders sought in paragraphs 2 and 13.

16    The Mansers oppose the orders sought in paragraphs 11 and 12. The basis upon which Mr Lamond seeks the orders (broadly expressed) is that Mr Pettingill’s conduct in arranging for the transfer of the mobile telephone numbers was in breach of various duties he owed as a director of P & L Livestock and that the Mansers were knowingly involved in the breaches. The Mansers submitted that Mr Lamond did not have standing to bring proceedings for alleged breaches of duties which Mr Pettingill owed to P & L Livestock. Mr Lamond then refined his argument so that he relied on s 1324 of the Corporations Act 2001 (Cth). He contended that Mr Pettingill engaged in conduct that contravened the Act and that the Mansers were “directly or indirectly, knowingly concerned in, or party to, the contravention by a person of this Act”. Mr Lamond contends that he has standing because he is a person whose interests have been, are or would be affected by the refusal or failure by the relevant conduct. I am prepared to assume that for the purposes of this application.

17    Mr Lamond relies on the following matters:

(1)    There were negotiations between him and the Mansers concerning a proposal whereby Mr Christopher Manser would buy into P & L Livestock. Those negotiations commenced in the middle of 2014 and were being actively pursued in April 2015. This matter is not in dispute.

(2)    Mr Pettingill’s statement in Mr Allen’s message is to the effect that if the negotiations were not successful, Mr Pettingill and Mr Christopher Manser would leave P & L Livestock and would establish their own company and commence trading through that company. This is disputed by the Mansers. The Mansers submit that as far as they are concerned, Mr Pettingill’s statement is hearsay. They submit that even if Mr Allen’s message is received as a business record, the statement should be accorded little weight as far as they are concerned. I did not hear extended argument on this point. I am disposed to think that as far as the Mansers are concerned, Mr Allen’s statement is either not admissible or if this is wrong, should be accorded very little weight. That position may change if there is further evidence of an agreement or understanding between Mr Pettingill and the Mansers in the period from April to June 2015.

(3)    The telephone numbers were transferred on or about 24 June 2015. This is not in dispute.

(4)    The Mansers left P & L Livestock and started operating the business of Green Triangle in November 2016. This is not in dispute.

(5)    The Mansers have provided no explanation as to why the telephone numbers were transferred to them on or about 24 June 2015.

18    Mr Pettingill states that he did not have any input into Mr Allen’s message and he did not instruct Mr Allen to give the ultimatum contained in the message. He does not address in his affidavit evidence the reasons for the transfer of the telephone numbers. Mr Christopher Manser says that he never discussed or agreed with Mr Pettingill that if an agreement could not be reached, they would go out together in business. He does not address in his affidavit evidence the particular circumstances surrounding the transfer of the telephone numbers.

19    There is no doubt a case that Mr Pettingill transferred the telephone numbers in breach of duty and that the Mansers were involved in the breach. However, as far as the Mansers are concerned, I put little weight on Mr Allen’s message and there was a period of approximately 18 months between the transfer and the date the Mansers left P & L Livestock. In the circumstances, I am not satisfied that Mr Lamond has established a case for final relief. In short, I am not satisfied that I should draw the inference that the Mansers were knowingly involved. I refuse to make the orders sought in paragraphs 11 and 12.

Associate:    

Dated:    1 March 2017

SCHEDULE OF PARTIES