IN THE FEDERAL COURT OF AUSTRALIA ) ) SQUTH AUSTRALIA DISTRICT REGISTRY ) No.G50 of 1981 ) ) GENERAL DIVISTON BETWEEN: RALKON AGRICULTURAL COMPANY PIY. LIMITED Applicant - and - ABORIGINAL DEVELOPMENT COMMISSION and POINT McLEAY COMMUNITY COUNCIL INC. Respondents MINUTE OF ORDER JUDGE MAKING ORDER 2 FISHER J. WHERE MADE 3 ADELAIDE DATE OF ORDER 7 MARCH 1986 THE COURT ORDERS THAT: 1. The application by the Aboriginal Development Commission, by notice of motion filed on 22 February 1985, be dismissed. The Aboriginal Development Commission pay to Ralkon Agricultural Company Pty. Limited its costs of this application the same to be taxed if not agreed. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. IN THE FEDERAL COURT OF AUSTRALIA ) ) SOUTH AUSTRALIA DISTRICT REGISTRY ) ) No. G50 of 1981 ) GENERAL DIVISION BETWEEN: RALKON AGRICULTURAL COMPANY Pry. LIMITED Applicant - and - ABORIGINAL DEVELOPMENT COMMISSION and POINT McLEAY COMMUNITY COUNCIL INC. Respondents 7 March 1986 REASONS FOR JUDGMENT FISHER J.: This is a further chapter in the long running and bitter conflict between the applicant Ralkon Agricultural Company Pty. Limited ("Ralkon") and the respondent Aboriginal Development Commission ("the Commission"). The particular matter before me at this time arises out of a Notice of Motion filed by the Commission on 22 February 1985. The Commission and the Point McLeay Community Council Inc. ("the Community Council") each sought by separate Notices of Motion to restrain Ralkon in effect from dealing in any way with its assets pending determination and satisfaction by Ralkon of its obligation to pay the costs of earlier proceedings. It is necessary to recapitulate some of the history of these proceedings. On 29 February 1984 I dismissed Ralkon's application made pursuant to the Administrative Decisions Judicial Review Act 1977 for a judicial review of the decision of the Commission pursuant to s.28 of the Aboriqinal Land Commission Act 1980 to grant a lease of certain land to the Community Council. Ralkon was and had been for some time farming this land and it sought that the lease be granted to it. The validity of the decision to grant in the circumstances the lease to the Community Council was central to the proceedings. Ralkon appealed against my decision which appeal was on 14 December 1984 dismissed by a Full Court of this Court. Ralkon was on each occasion directed to pay the costs of the respondents. The proceedings at first instance are reported in (€1984] 1 F.C.R. 210 and on appeal in (1985) 57 A.L.R. 143. On 21 February 1985 the Commission and the Community Council each commenced proceedings against Ralkon in the Supreme Court seeking restraining orders similar in form to those previously mentioned as sought by the notice of motion filed in this Court. Affidavits filed in support referred to the fact that each of the respondents had lodged or were about to lodge in this Court bills of costs for taxation wherein very substantial sums were claimed. On 22 February 1985 Mohr J. made orders discharging interim ex parte orders made on the previous day and made further orders in the following terms: 3. "1. Discharge the Order of 21st February, 1985. 2. Mareva injunction granted to the plaintiff in respect of $91,859.51 together with accumulated interest standing to the credit of the defendant with the Commonwealth Bank Finance Corporation as evidenced by exhibit 'IMH2' to the affidavit of Ian Mackintosh Hillock filed on 22nd February 1985; 3. Further consideration adjourned." Ralkon opposed the making of these orders. On 6 March 1985 I made an order on the notice of motion which is presently before me to the effect that Ralkon be restrained from paying any sum of money by way of dividend to its shareholders and in particular to the holders of residents' preference shares. Ralkon did not oppose the making of this order. I refrained from making the other restraining orders sought by the Commission and also by the Community Council. In his affidavit filed on 26 February 1985 in opposition to the notice of motion Ian Mackintosh Hillock ("Mr. Hillock"), the manager of Ralkon, deposed to the facts that Raikon had deposited the sum of $91,859.51 at call with the Commonwealth Bank Finance Corporation to cover its contingent liability relating to the costs of the respondents. This sum was the subject of the Mareva injunction made on 22 February 1985 by Mohr J. in the Supreme Court. On 4 July 1985 the Commission instituted proceedings in the Supreme Court seeking to evict Ralkon from portion of the 4. land which it was farming. On 4 December 1985 these proceedings were dismissed and the Commission was ordered to pay Ralkon's costs. On 11 December 1985 Ralkon applied to the Supreme Court to discharge the Mareva injunction made on 22 February 1985 by Mohr J. On 15 January 1986 Bollen J. discharged the anjunction, which discharge was opposed by the Commission. The affidavits filed by both parties to this application were exhibited to further affidavits filed in relation to the aspects of the matter now before me. In his reasons for judgment Bollen J. stated that he recognized that Ralkon had "put aside monies against its expected costs in the Federal Court proceedings but despite the emphasis which Mr. Debelle, counsel for the Commission, gives to that I cannot regard that that money is that which 1s pratected by the injunction as relevant". The taxation of the Commission's costs in the proceedings in this Court commenced on 18 July 1984 and was heard on a number of occasions during the balance of that year and during 1985. The taxation concluded on 10 January 1986 and the Commission's bill was cast at $103,323.75. However no certificate of taxation has been issued as Ralkon has applied to the taxing officer pursuant to Order 62 Rule 42 of the Rules of this Court to reconsider his decision in respect of a substantial number of items in the Commission's bill of costs. Reasons for his decision on the reconsideration were sought from that officer Pursuant to Order 62 Rule 43(b). Prior to the notice of motion coming on again before me on 17 January 1986 certain correspondence passed between Ralkon and the Commission. On 8 January 1986 the solicitors to the Commission wrote a letter in the following terms to Ralkon's solicitors. "HAND DELIVERY WME: 267724:S5G Messrs. Daenke O'Donovan, 8th January, 1986 33 Franklin Street, ADELAIDE S.A. 5000 Att: Mr. Daenke Dear Sirs, Ralkon Agricultural Co. Pty. Ltd. Supreme Court Action No. 569 of 1985 We refer to previous Court hearings in this matter. We are of the view that since your client seeks to be relieved of the order made by Mr. Justice Mohr on 22nd February 1985, it is appropriate that our clients have the opportunity to inspect your clients cattle. Accordingly we ask whether your client is prepared to allow an inspection of the cattle on the lands currently occupied by Ralkon on 48 hours notice. We cannot be more specific as to the date until we have been able to arrange for an agricultural consultant to conduct the inspection. We would be obliged if you could respond to this letter by 4 p.m. on Friday 10th January 1986. Yours faithfully," Finlaysons. On 14 January the solicitors to the Commission wrote to Ralkon the following further letter ~- "Messrs Daenke O'Donovan, 33 Franklin Street, Adelaide, S.A. 5000 14th January, 1986 Dear Sirs, Ralkon Agricultural Company Pty. Ltd: Federal Court Costs We refer to previous communications in this matter. We would be obliged 1f your client would answer the following questions concerning this matter by 4.00 p.m. on Wednesday 15th January 1985. 1. How does your client intend to pay the costs awarded against it in Federal Court Actions No. G5Q of 1981 and G9 of 1984? 2. What does your client intend to do with the $91,159.51 on deposit with the Commonwealth Bank Finance Corporation Limited now that the Supreme Court Injunction restraining any dealings with the same has been discharged. In addition, we would be obliged if your client could provide us with a copy of the document creating the charge over Ralkon's stock referred to in the affidavit of Mr. W.M. Ericson sworn 18th December 1985 and filed in Supreme Court action No. 569 of 1985. Yours faithfully, (Signed Finlaysons)" Ralkon's solicitors replied on 15 January in the following terms - "15th January, 1986 JAD:5B Yr.Ref: WME 267724 SG Finlaysons, Barristers & Solicitors, DX 152. ADELAIDE. Dear Sir, 7. RE: ABORIGINAL DEVELOPMENT COMMISSION RALKON AGRICULTURAL COMPANY PTY. LTD. FEDERAL COURT ACTION NO. G50 of 1981. (Costs) We refer to your letter to us of 14th January, 1986 which was delivered about 10.00 am. on i5th January, 1986 and seeks a reply by 4.00 pm. on that day. Qur instructions are that our client will be ina position to meet its obligations for costs as and when they fall due. It is of no concern to your client how our client intends to meet those costs or what our client does with any specific funds. Your client is a creditor for an as yet undetermined sum and when the amount is determined by the granting of the appropriate eertificate, our instructions, are that the liability will be met. The incessant demand, for information on our client's affairs shows in the writer's view, a paranoia about Ralkon which is not seen in the ordinary creditor/debtor relationship even, from the writer's experience, those which go to Court. In his reasons for judgment on FRalkon''s application to discharge the Mareva injunction in the Supreme Court Mr. Justice Bollen said: f ».. 1t¢ seems to me that a proper understanding of them (Ralkon's financial statements) would lead one to say that the defendant would be able to continue trading and meet the costs'. Your client's further demands for information is a waste of time and costs for ali parties. We have received your subsequent letter dated the 15th January, 1986 advising that your client's notice of motion is to be relisted in the Federal Court on Friday, 17th January, 1986. All senior counsel engaged at various times by Ralkon who have an understanding of the complex background of the matter are at present on leave. Mr. Mansfield Q.C. will be available on Wednesday 22nd January, 1986. It seems a waste of time and costs to brief new counsel in the matter. Please advise if your client will agree to the matter being taken from the list of 17 January, 1986 and relisted on 22nd January 1986 or to an adjournment until that date. Would you aiso please advise what specific orders your client seeks on its renewed application. We expect your answer to these requests by 12 noon on Thursday, 16th January, 1986. Yours faithfuily, DAENKE 0' DONOVAN J.A. DAENKE" On 16 January the Commission's solicitors delivered the following letter to Ralkon's solicitors. "Messrs. Daenke O'Donovan, WME: 267724 Barristers & Solicitors, JAD:SB 33 Franklin Street, ADELAIDE. S.A. 5000 16th January, 1986 Dear Sirs, Aboriginal Development Commission Ralkon Agricultural Company Pty. Ltd. Federal Court Action No. G50 of 1981 We acknowledge receipt of your letter dated 15th January 1986. Contrary to the opinion expressed in your letter, our client's request for information stems only from a concern that 1t will be paid the very substantial amount of costs due to it. That concern was accentuated by your client's successful application to discharge the order of Mr. Justice Mohr which prevented any disposition by your client of the sum of $91,859.51 expressly set aside by your client to meet its liability for costs. Your client's application to discharge can only cause our client to suspect that your client may dispose of the only cash asset available to meet the liability for costs. In the light of the fact that the Balance Sheet of Ralkon indicates that its current liabilities and the liability for taxed costs exceed its cash assets, your client's refusal to state what it intends to do with the sum of $91,859.51 coupled with its refusal to indicate how it will discharge the liability for costs 9. does nothing to dissipate our client's concern. In these circumstances, our client has no alternative but to proceed with the application on 17th January 1986. The orders our client seeks are referred to in Mr. Ericson's affidavit sworn on 15th January 1986. Our client is prepared to consent to an adjournment of the application until 22nd January, if you undertake on behalf of your client by 4.30 p.m. today: (a) that your client has no less than 2,093 head of cattle, (BD) that your client will not sell, encumber, dispose of or in any other way deal with its cattle until 25th January 1986, (c) that the sum of §91,859.51 remains on deposit or at call and your client will not dispose of or in any way deal with the said sum until 23rd January 1986, (d) your client will permit our client to enter land occupied by it for the purpose of counting and inspecting the cattle owned by your client. Yours faithfully," Finlaysons. The nature of the Commission's concern is readily apparent in this correspondence. When the application was renewed on 17 January 1986 counsel for Ralkon accepted my suggestion that his client file an affidavit dealing with the matters of concern to the Commission and, in particular, Raikon's dealing with the sum of $91,859.51 consequent upon the discharge of the injunction relating thereto. This affidavit was filed on 21 January 1986 and sworn by Ian 10. Mackintosh Hillock, the manager of Ralkon, who was subsequently subjected to a searching cross-examination by counsel for the Commission. He gave details of the manner in which Ralkon had dealt with the sum of $91,859.51 consequent upon its release by Bollen J., the number of cattle on hand and their value, and the number sold since 1 July 1985 and the proceeds thereof. He reiterated that Ralkon had the means and the intention to pay the legal costs when finally assessed. The balance sheet and profit and loss account and livestock account of Ralkon as at 30 June 1985 were exhibited to the affidavit of Graham Douglas Perrin, Ralkon's accountant, who deposed to the fact that there had not been any substantial change in the total asset position of Ralkon between 1 duly and 30 November 1985. Counsel for the Commission contended in the first instance that Ralkon should be restrained from dealing with its assets in any way pending final assessment and payment of the legal costs due to the Commission. However his submission ultimately was that it was appropriate that until that time the company should be restrained from dealing with its assets otherwise than in the course of its business. In so contending reliance was placed upon two authorities which not only confirmed the jurisdiction of the courts, but also indicated circumstances 1n which it was appropriate to exercise the jurisdiction. Counsel withdrew any suggestion that he was in effect seeking a Mareva order, il. contending that these two authorities sufficiently established his client's entitlement to the order he sought, which he labelled as a "Faith Panton order". The earlier authority was that of Cummins v Perkins £18991 1 Ch 16. It established, both at first instance and on appeal, that the Court had jurisdiction to protect by injunction, or by appointment of a receiver, the fund out of which costs were payable. The facts upon which the Courts relied in exercising this jurisdiction are important. The action of a married woman was dismissed, and costs were ordered to be taxed and paid out of her separate property. Her only separate property consisted of a share to which she was entitled under a will. The married woman resisted the payment of costs out of this share and in the words of Kekewich J. "snaps her fingers at the defendants, telling them to get their costs when and as they can". Kekewich J. was of opinion that she should not have her share in full whilst the costs were outstanding and appointed the defendants as receivers of her share. At the time of making this order the costs had not been taxed. The Court of Appeal dismissed the appeal, Lindley M.R. saying at page 19: "It appears to me that the order of Kekewich J. is founded upon perfectly intelligible and sound principles... The learned judge was of opinion that this fund was in danger - that is to say, that the Plaintiff was in a position to get it and would do so, and if she obtained possession of it the defendants would not get their costs. Thereupon the learned judge did that which I think he had ample jurisdiction to do 12. - he appointed a receiver to protect that share and to preserve it, in order that it may be applied in accordance with the judgment which the defendants had obtained". The other member of the Court, Chitty L.J., agreed. Faith Panton Property v Hodgetts and Anor. £19811 2 Ali E.R. 877, the other authority relied upon by counsel for the Commission, is to the same effect. The circumstances were that there was judgment for the plaintiffs with costs to be taxed. These costs had not been taxed at the date of the application for an injunction, which application was made both under the Mareva jurisdiction and the Supreme Court Act. The trial judge refused to grant the injunction but an appeal was allowed. The Appeal Court applied Cummins v Perkins supra, and made an order under the relevant section of the Supreme Court Act restraining the defendants from dealing with their assets. Again the circumstances in which the Court considered it proper to exercise its jurisdiction were important. Waller L.J. said at page 880; "The first defendant has said that he intends to go bankrupt, and has said falsely that he had an offer from a substantial company for his assets. He then said after that that he had received another offer and accepted it and that he has spent the purchase money. He has told the plaintiffs' solicitors that he intends to sell his copyright and patents to a substantial company; he also has said that moulds which are estimated to be worth One thousand pounds each are in his possession but that he had sold them in March 1979 on terms that he was ailowed to remain in possession of then. At page 882 he said: "Are the circumstances of this case such that an injunction should be granted? The defendant has shown by his behaviour that he intends to divest himself of his assets if he can. He has shown a lack of frankness 13. to the court in not disclosing to whom he has sold some of his assets when asked by this court. The hearing before Foster J. was for contempt of court and more serious consequences might have followed. In my judgment this is a case where the court should ensure so far as possible that its orders are not thwarted, and I would grant an injunction as prayed until after the costs have heen taxed and paid. I have arrived at this conclusion differing from Vinelott J. with reluctance. He accepted that where there was a substantial judgment, not finally quantified, an injunction might be granted but came to the conclusion that this was not such a case. There has, however, been fuller argument before this court and an particular we have been referred to a number of cases which were not before Vinelott J. Furthermore as I have mentioned above there has been before this court a lack of frankness." Brandon L.J. said at page 884 of the circumstances which justified the exercise of discretion: "T am further of the opinion that, having regard to the peculiar, inconsistent and ambivalent conduct of the first defendant with regard to what dispositions, 1f any, he has made of the alleged copyright, moulds and patent, the court should exercise its discretion by granting the first injunction asked for by the Piaintiffs in the present action." Counsel for Ralkon accepted these statements of the law and did not dispute the jurisdiction of the Court to make the orders which the Commission seeks. However he contends, rightly in my opinion, that in the circumstances of this matter an exercise of discretion to grant an injunction is not warranted. Put at its highest level, the case of the Commission is that the intervention of the Court is warranted because there is some doubt as to the number of cattle at present on Ralkon's property and because the values placed on its assets in its 14. balance sheet indicate that there is at least a likelihood that the costs will not be paid in full. On the matter of stock numbers Mr. Hillock gave evidence and was cross-examined. This evidence was very unsatisfactory if I was obliged to make a finding as to the number at present held. A Mr. Thomas made an independent stock count of 1,429 on 28 March 1985 but Mr. Hillock stated that there were more on the property at that date than stated in Mr. Thomas' report. The livestock account as at 30 June 1985, which formed portion of Ralkon's audited accounts, showed 2,093 on hand at that date. The manner in which Mr. Hillock arrived at that figure did not give me confidence in its correctness. However a stock mortgage was granted by Ralkon to Dalgety Farmers Limited ("Dalgety") on 22 July 1985, wherein the stock numbers were stated as 1,862. Mr. Hillock said that at that time an inspection was made by an officer of Dalgety. The security provided that Ralkon would not remove stock from its property and only sell in each instance with the consent of Daigety. In the livestock account the stock on hand at 30 June 1985 were valued at $100 each and this figure was carried to the balance sheet. However sales made by Ralkon since that date indicate that the average market value of each cattle sold would not be less than $260. It follows in my view that, despite the uncertainty concerning the number of stock presently on hand, their market value would be at least double the figure shown in the halance sheet. 15. The Commission's concern regarding the dealing by Ralkon with the sum deposited with the Commonwealth Bank Finance Company which it said was held to meet its liahility for legal costs, appeared on the evidence to be unjustified. Mr. Hillock deposed in his affidavit to the fact that it was dealt with in the following manner and this evidence was not challenged. An amount of $20,000 was placed on term deposit with the Commonwealth Bank, as an addition to $60,000 already held on deposit as security for the overdraft which on 21 January 1986 stood at approximately $15,000. An amount of $15,000 was paid to Dalgety in reduction of the amount secured by stock mortgage which after the payment stood at approximately $85,000. Finally all trade creditors were paid. Very generally the principal assets of Ralkon at the time of hearing were as follows; it had $80,000 on deposit with the Commonwealth Bank and cattle at a conservatively estimated market value of $400,000. Its principal liabilities were stated by counsel for the Commission to be $136,500 being $85,000 under the stock mortgage, $19,000 lent by the Department of Agriculture, $15,000 on bank overdraft and $7,000 being a provision in the accounts for long-service leave. On these figures the balance sheet would show a substantial excess of assets over liabilities, and considerably more than necessary to meet the liability of $100,000 or thereabouts estimated as the Commission's taxed costs. It is proper to mention at this stage that the respondent Point McLeay Community Council Inc. does not 16. propose to claim the legal costs which it is entitled to have paid by Ralkon. A number of comments can be made on these circumstances. Even accepting that stock numbers and the price which they might ultimately reach on sale are somewhat uncertain, it can not be Said, as counsel for the Commission stated, that Ralkon is insolvent and unlikely to be able to meet its obligation to pay legal costs when they are ultimately assessed. Moreover Ralkon has always acknowledged this obligation and has stated that it will meet it at the appropriate time. In no way can it be said that it has "snapped its fingers" at the Commission in respect of the payment of costs. It has merely reacted, perhaps excessively strongly, to the Commission's request for information. Furthermore its counsel was not able to point to any authority which would justify making an order such as he sought on the ground that Ralkon might be insolvent or otherwise not in a position to pay the costs at the appropriate time. The Commission was concerned that Ralkon might take some action in relation to its assets, otherwise than in the ordinary course of its business, which would or might put payment of the costs in full at risk. However 1t could not point to or indicate what action it feared might be taken in this regard. There 1s nothing to suggest that in the past year Ralkon has dealt with its assets otherwise than in the ordinary course of business and such is the continuing obligation of its directors 17. and officers. Dalgety has control of the most substantial asset under its stock mortgage and Ralkon's financial affairs are supervised by competent accountants, one of whom swore an affidavit deposing to the proper conduct of Ralkon's affairs between 1 July and 30 November 1985, It is my opinion that there 15 no evidence which would warrant the exercise of my discretion. The facts differ greatly from those in the two cases relied upon by counsel for the Commission. The most that could be said was, in his words, that the conduct of Ralkon was "ambivalent". Even if in any way it was, which I do not find, it would not justify making the order sought on this occasion. The Commission's application for an injunction restraining Ralkon from dealing with its assets otherwise than in the ordinary course of its business until the legal costs are paid must be dismissed with costs. I certify that this and the "4 preceding pages are a true copy of the Reasons for Judgment of Mr Justice Fisher. Associate WA Comrnette Dated: 7 March 1986.