as [73 Net FOR GeVRMrAn OtSTRiB UPON IN_THE FEDERAL COURT OF AUSTRALIA ) ) NEW SOUTH WALES DISTRICT REGISTRY ) No. G170 of 1986 ) ) GENERAL DIVISION BETWEEN : MORENITA PTY. LIMITED Applicant AND: AGC (ADVANCES) LIMITED First Respondent AND: PETER WALKER Second Respondent MINUTES OF ORDER Judge making order: Beaumont, J. Date order made: 8 May 1986 * Where made: Sydney THE COURT ORDERS THAT: Pa bt tJ Note that the applicant gives the usual undertaking as to damages. Note that, until further order, the applicant undertakes to the Court not to dispose of any of its assets except in the ordinary course of its ordinary business. Order that until further order, the applicant keep accounts of the payments and receipts made or received by the applicant and that such accounts be made available for inspection by the first respondent and its solicitors upon the giving of three days' notice to the applicant's solicitors, Order, until further order, that the first respondent be restrained from appointing a receiver of the assets of the applicant. fenok Fix 28, 29 and 30 May 1986 for the #srst~hearing of the application before Burchett J. Give the following directions: {a} Applicant to file and serve points of claim by 9 May 1986; Les) . 'b) respondents to file and serve points of defence by 13 May 1986; (c) applicant to file points of reply, if any, by 15 May 1986; (d) parties to file and serve verified lists of documents by 16 May 1986; (e) parties to administer interrogatories, if necessary, by 20 May 1986, answers to he filed and served by 23 May 1986. List matter for mention at 9.30 a.m. on 23 May 1986. Reserve liberty to apply on 24 hours' notice. Order that costs of the application for interim relief be costs in the proceedings. Settlement and entry of orders is dealt with by Order 36 of the Federal Court Rules. IN THE FEDERAL COURT OF AUSTRALIA ) . ) NEW SOUTH WALES DISTRICT REGISTRY ) No. G170 of 1986 ) GENERAL DIVISION ) BETWEEN : MORENITA PTY. LIMITED Applicant AND: AGC (ADVANCES) LIMITED First Respondent AND: PETER WALKER Second Respondent CORAM: Beaumont, J. DATED: 8 May 1986 REASONS FOR JUDGMENT The applicant seeks interlocutory relief to restrain the first respondent from appointing a receiver pursuant to security in the form of certain mortgages and a charge granted by the applicant to the first respondent in September 1985. The second respondent is proposed to be appointed by the first respondent as receiver of the assets concerned. The relief sought by the applicant is claimed pursuant to s.87 of the Trade Practices Act 1974, the applicant alleging damage by conduct of the first respondent un contravention of s$.52(1) of that Act. It 1S common ground that, in order to obtain interlocutory relief, the applicant must first demonstrate that a serious question arises to be tried in respect of the alleged contravention of s-52 and the consequential grant of discretionary relief pursuant to s.87; and that the balance of convenience dictates the grant of an interim injunction. In this case, an interim injunction is sought to restrain the appointment by the first respondent of a receiver of the assets the subject of the securities granted by the applicant to the first respondent. The history of the matter is as follows. The applicant ig the proprietor of the land and buildings known as "Aspen Chalet" situated at Kosciusko Road, Jindabyne, N.S.Q. "Aspen Chalet" 1s a hotel/motel located in the commercial centre of Jindabyne. In August 1985, the applicant decided to endeavour to refinance an existing loan facility provided by Australian & New Zealand Banking Group Limited. The applicant retained a finance broker, Mr. Howard, for this purpose. Mr. Howard approached the first respondent, on behalf of the applicant. The matter was discussed at a luncheon meeting held at ""Sydney's" restaurant in Sydney 1n late August 1985. Present at the meeting were Mr. N.H. Heath. a director of the applicant, Mr. Howard and Mr. M.L. Wood. a manager employed by the 3. first respondent. According to Mr. Heath, the following discussion then took place: "During the course of lunch I said to Mr. Wood in words to the followina effect:- 'I understand you're going to only lend me 4.25 million.' He said: 'Yes about that.' I said: 'That's not qoing to be enough to get me through to the start of the season when our big cash flow occurs. I will need 4.5 million. On these calcuations I'm going to be some $250,000.00 short. Would you approve a second mortgage. He said: 'If you want to get offshore; you can't have a second mortaage. ' I said: 'What about leasing the plant and equipment some of which is already leased.' He said: 'That would be the way to go about it. I am aware of your problems and if you just leave it with me I will make sure that you are covered until the season starts.' I said: 'If I can go offshore within three months of taking up the loan there should not be any problem. ' He said: 'That could be difficult. The Co. (AGC) usually likes clients to be established longer than that before letting them go offshore.' I said: 'How long would you say?' He said: 'They may even want you to wait until they have hada look at your Winter figures. The thing to do is see me in three months and we can put it up then. I will think of away to get it through. In the meantime just leave it with me and JI will get you what I can and you get your leasing organized.' I said: 'Alright, with the 4.25 million and the leasing I'lli be okay.'" On 16 September 1985, the first respondent wrote to the applicant informing it that a loan of $4,250,000.00 had been approved for the purposes of paying the ANZ Bank ($4,000,000.00) and of purchasing certain shares in the applicant ($250,000 - subject to compliance with the Companies Code). The security stipulated included a registered first mortgage over the land and buildings at Jindabyne together with a bill of sale and charge over the licence. goodwill, fixtures, fittings and stock of the "Aspen Chalet". Thereafter, the applicant proceeded to make arrangements with another finance company for the leasing of the plant and equipment, fixtures and fittings employed at "Aspen Chalet" pursuant to a sale and lease-back arrangement. According to Mr. Heath. on 25 September 1985, two days before settlement of the loan transaction between the applicant an and the first respondent, Mr. Heath telephoned Mr. Wood and said: "The leasing is not quite ready to go, but can we in any event delete reference to plant and equipment in the Bill of Sale? Mr. Wood said: 'Don't worry, we can do it after settlement as I know you are anxious todo this as soon as possible.' Mr. Heath said: *O.K,'" On 27 September 1985. settlement of the loan transaction between the applicant and the first respondent was effected. Security in the form, inter alia, of a deed of charge in favour of the first respondent was granted over the plant and equipment, fixtures and fittings at "Aspen Chalet" proposed by the applicant to be the subject of its lease-back transaction with another finance company. On 27 November 1985. Mr. Heath wrote to the first respondent as follows: "Re: MORENITA PTY LIMITED I note that your company 1s currently holding $200,000.00 on deposit pending my solicitors and accountants producing evidence satisfactory to you that the Companies (NSW) Code has been complied with in respect of the purchase of my aunt's interest in Morenita Pty. Limited. The purpose of this letter is to seek your consent to the withdrawal of an amount of $25,000.00 from the monies so held in order to enable the company to meet certain commitments not associated with the purchase of my aunt's share in the company, on the understanding that I will return the sum of $25,000.00 to you upon completion of leasing arrangements which I currently have in hand and which I expect to finalise within the next four weeks." (emphasis added) The solicitors for the first respondent, Vereker and Partners, responded by letter to Mr. Howard dated 27 November 1985 as follows: "Re: MORENITA PTY LIMITED We refer to discussions with yourself concerning the withdrawal of $25,000.00 from monies currently held by us pending compliance with the Companies (NSW) Code in respect of the purchase of Noel Heath's aunt's share in Morenita Pty. Limited. On the basis of the matters set out in a letter from Noel Heath to our client dated 27th November 1985 concerning the near completion of proposed leasing arrangements our client has consented to the payment to your client of 325,000.00 and a bank cheque for this amount is enclosed herewith." (emphasis added) In late 1985 and in early 1986, the applicant proceeded to arrange its proposed lease-back transaction with Borg-Warner Acceptance Corporation (Australia) Limited. However. in February 1986 the applicant defaulted under its security to the first respondent by failing to make an interest payment of $66,428.08 due on 1 February. A further default occurred in respect of a payment of $74,578.77 by way of interest due on 1 March 1986. At about this time. no doubt influenced by the applicant's default, the first respondent indicated that it would no longer consent to the release from 1ts charge of the plant and equipment, fixtures and fittings required for the arrangement proposed with Borg-Warner. In these circumstances, the applicant submits that the first respondent had engaged in misleading or deceptive conduct within the meaning of s.52(1) of the Trade Practices Act. In its amended application, it seeks to invoke s.87 of that Act, first, to restrain the appointment of a receiver and secondly, to vary the contract between the parties so as to include a term that the first respondent would not withhold its consent to the applicant's selling the subject plant and equipment, fixtures and fittings. In the present case, it may perhaps be said that the statements alleged to have been made by Mr. Wood were made in the context of a future event. That is to say, that the representation alleged was that the first respondent would, if requested, give its consent to a future lease back arrangement. It may be, and on this interlocutory application it 1s unnecessary to decide, that Mr. Wood's statements had a present element as well as a future one. If the matter rested purely as a statement of a future intention. the principles to be applied would be as stated by the Full Court in Global Sportsman Pty. Ltd. v. Mirror Newspapers Ltd. (1984) 55 A.L.R. 25 at p.31 as follows: "The mnon-fulfilment of a promise when the time co for performance arrives does not of itself establish that the promisor did not intend to perform it when it was made or that the promisor''s intention lacked any. or any adequate, foundation. Similarly, that a prediction proves inaccurate does not of itself establish that the maker of the prediction did not believe that it would eventuate or that the belief lacked any, or any adequate, foundation. Likewise. the incorrectness of an opinion (assuming that can be established) does not of itself establish that the opinion was not held by the person who expressed it or that it lacked any, or any adequate, foundation." There is. no doubt, room for argument as to whether Mr. Woad's statement were purely in futuro in the operation. If s0, there 1s also scope for debate as to whether, in the words of the Full Court, Mr. Wood's statements "lacked any, or any adequate foundation." However, for present purposes, it is enough for the applicant to show that a serious question arises to be tried in this respect. In my opinion, these questions are of sufficient complexity, both of fact and of law. to warrant their description as "serious". I turn to the balance of convenience. On behalf of the applicant, the obvious prejudice of appointment of a receiver was advanced as a reason for the grant of interim relief. On the other hand. the respondents point to the applicant's apparently serious financial difficulties and submit that, at the least. the payment of arrears of interest should be made a condition of relief (cf. Glandore Pty. Ltd. v. Elders Finance & Investment Co. (1984) 57 A.L.R. 186). However, ire) it would seem that the applicant would be unable to comply with such a condition, at least before the commencement of the ski season. In my opinion, the balance of convenience would be best achieved by restraining the appointment of a receiver but ordering an early final hearing of the application. In order to secure the position of the first respondent to some extent in the interim. the applicant proffered an undertaking to the Court not to dispose of its assets except in the ordinary course of its ordinary business. I propose also to order that the applicant keep proper accounts in the interim and make them available to the first respondent upon request. I propose to make the following orders in the present application: 1. Note that the applicant gives the usual undertaking as to damages. we tu Note that, until further order, the applicant undertakes to the Court not to dispose of any of its assets except in the ordinary course of its Ordinary business. 3. Order that until further order, the applicant keep accounts of the payments and receipts made or mn 10. received by the applicant and that such accounts be made avallable for inspection by the first respondent and its solicitors upon the giving of three days' notice to the applicant's solicitors. Order, until further order, that the first respondent be restrained from appointing a receiver of the assets of the applicant. ~ ene Fix 28. 29 and 30 May 1986 for the £trs¢—hearing of the application before Burchett J. Give the following directions: (a) Applicant to file and serve points of claim by 9 May 1986; (db) respondents to file and serve points of defence by 13 May 1986; (c) applicant to file points of reply, if any, by 15 May 1986; (d) parties to file and serve verified lists of documents by 16 May 1986; (e) parties to administer interrogatories, if ll. necessary. by 20 May 1986, answers to be filed and served by 23 May 1986. List matter for mention at 9.30 a.m. on 23 May 1986. Reserve liberty to apply on 24 hours' notice. Order that costs of the application for interim relief be costs in the proceedings. Tcertsry ~hct bars end the {O preccding pages are a true copy of the Reasons for Judgment herein of his Honour Mr. Justice SEAYNO ST Dated: & v. &G ,