"377 CATCHWORDS Application under Trade Practices Act 1974, s.52 - Interlocutory injunction to restrain mortgagee from enforcing a claim to possession or exercising power of sale - The "ordinary rule" referred to in Inglis v. Commonwealth Trading Bank of Australia not applicable - Mortgagee sufficiently protected by direction securing early hearing and condition in respect of interest ~- No part of principal required to be paid into Court. Trade Practices Act 1974, ss.52, 87 Inglis v. Commonwealth Trading Bank of Australia (1972) 126 C.LeR. 161 Harvey v. McWatters (1948) 49 S.R.(NSW) 173 -Zeutmint. Pty Ltd v. Scottish Amicable Life Assurance Society [1984] 3 N.S.W.L.R. 293 Glandore Pty Ltd v. Elders Finance & Investment Co. Ltd. (1984) 4 F.C.R. 130 BATEMANS BAY HOLDINGS PTY LIMITED & ORS. -V- ELDERS FINANCE & INVESTMENT CO. LIMITED & ORS. NSW G.288 of 1986 Burchett J. Sydney 5 September 1986 IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY GENERAL DIVISION ~~ www ws a+ se Sse eyed funeba ene Gee eo aan AND: No. G288 of 1986 BETWEEN: BATEMANS BAY HOLDINGS PTY LIMITED First Applicant BATEMANS BAY INDUSTRIAL CENTRE PTY LIMITED .-,+-Second Applicant... RENLEE PTY LIMITED Third Applicant TOWRANG PARK PTY LIMITED Fourth Applicant ELDERS FINANCE & INVESTMENT CO LIMITED First Respondent ELDERS LENSWORTH FINANCE LIMITED Second Respondent MINUTE OF ORDERS OF THE COURT Judge Making Orders: Burchett J. Where Made: Sydney Date of Orders: 3 September 1986 THE COURT MAKES THE FOLLOWING ORDERS, GIVES THE FOLLOWING DIRECTIONS AND NOTES THE FOLLOWING MATTERS: (1) Order that until further order, the Respondents, their servants and agents be restrained from exercising their powers under the security documents given by the Applicants or any of them in respect of the sale of or the appointment of a Receiver to or the taking of possession of any of the properties the subject of such security documents or issue of Notices under the Real Property Act without the prior leave of this Court. (2) Order that the final hearing of these proceedings be fixed to commence on 22nd September, 1986 at 10.15 a.m. (3) Direct that the sum of $50,000 be paid by the Applicants to the First Respondents in respect. of interest, on or before 11th September, 1986. (4) Direct that-the First Applicant, Batemans Bay Holdings Pty Limited, and the First Respondent forthwith jointly direct the tenants of the Bridge Plaza Shopping Centre: (a) To pay all sums payable as rent (including arrears if any as at lst September 1986) due as from 4 p.m. on Ist September, 1986, if not already paid, to the First Respondent until further notice; (b) To pay all sums payable as outgoings under any lease, licence or occupation arrangement (including arrears if any as at Ist September 1986) due as and from 4 p.m. on lst September, 1986 to the First Applicant, until further notice. (5) Direct that the Second Applicant, Batemans Bay Industrial Centre Pty. Limited and the First Respondent forthwith jointly direct the tenants of the Batemans Bay Industrial Centre to pay all sums payable as rent or outgoings due, if not already paid, to the Second Applicant until further notice. (6) Direct that the Third Applicant, Renlee Pty. Limited and the First Respondent forthwith jointly direct the tenants of Renlee Pty. Limited to pay all sums payable as rent and outgoings due, if not already paid, to the Third Applicant, until further notice. (7) Note that amounts paid prior to lst September, 1986 by tenants or occupants of any of the properties the subject of the security documents referred to in Order 1 will be held by the party to whom the payment was made, without prejudice to the rights to be asserted to account therefor after judgment in the final hearing by this Court or until further Order. (8) (9) (10) (11) Direct the First Applicant to permit the First Respondent to collect the rent referred to in Order 4 and that the First Respondent permit the First Applicant to collect all the outgoings referred to in Order 5 hereof. Note that the Applicants by their Counsel undertake to the Court as and from 4 p.m. on lst September, 1986: (a) The usual undertaking as to damages. (b) That the First Applicant will apply the amounts collected by it as outgoings pursuant to Order 4(b) hereof for the purposes for which the same were payable to the First Applicant. (c) Further' that in the event of sums being received in the future by the First 'Applicant in respect of rent as_and from lst September 1986 for any period .- ° after 30th May 1986 to.remit the same forthwith to the First Respondent. (d) That subject to the right of the Applicants by way of appeal or stay, in the event of this Court in its judgment after the final hearing holding that the Applicants or any of them were or was in default entitling the Respondents or any of them to possession under any security document given to the Respondents or either of them the Applicants will not oppose orders for possession and to enforce possession being made in the Supreme Court proceedings, including costs on the Summons but not 60 as to preclude argument as to the costs of interlocutory proceedings in the Supreme Court, provided that such consent is not a bar to an application by the Applicants or any of them pursuant to the exercise of discretion by the Supreme Court of New South Wales as to the period for which writs of possession, once able to be issued, should lie in the Registry of the Supreme Court before being so issued. Note the undertaking of Christopher Lee Clarkson to the Court by his Counsel, without admission, that he will not permit the First Applicant to reduce the services to or jeopardize the continuation of the running of the Bridge Plaza Shopping Centre pending determination of the subject proceedings or until further Order. Direct that: (a) Each of the Respondents file a defence and any cross-claim on or before 5th September, 1986. (12) (13) NOTE: (b) (b1) (c) (d) Ce) (f) Each of the Applicants file any reply and any defence to cross-claim on or before 10th September, 1986. The Applicants are directed to raise, either by reply or amendment to the Statement of Claim, any defences to be relied on in respect of the First Respondent's claim to possession. Each party give discovery (with verification) and simultaneous inspection not later than 12 noon on 12th September, 1986. Subpoenas be returnable on 12th and 18th September, 1986. Motion for security for costs, if any, to be filed and sérved by 4 p.m. Friday 5th Séptember 1986 for hearing on a date to be fixed by the Registrar. wae oe. - Notices to produce be returnable 12th September, 1986. Liberty to any party to apply on 24 hours notice. Costs of the application for interlocutory relief be reserved to the hearing. Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY No. G288 of 1986 ee ewe we GENERAL DIVISION BETWEEN: BATEMANS BAY HOLDINGS PTY LIMITED First Applicant BATEMANS BAY INDUSTRIAL CENTRE PTY LIMITED ure Second Applicant RENLEE PTY LIMITED Third Applicant TOWRANG PARK PTY LIMITED Fourth Applicant ELDERS FINANCE & INVESTMENT CO LIMITED First Respondent ELDERS LENSWORTH FINANCE LIMITED Second Respondent REASONS FOR JUDGMENT BURCHETT J. Arising out of transactions in respect of a very large borrowing, and the execution of mortgage documents, there are on 2. foot, 1n this Court and in the Supreme Court of New South Wales respectively, proceedings in which the applicant seeks relief under s.52 of the Trade Practices Act 1974 and upon other causes of action, and the respondents seek an order for possession pursuant to the powers conferred by the documents. The matter came before me upon an application for interlocutory relief including orders restraining the respondents from exercising their power of sale or appointing a receiver or taking possession of the properties the subject of the mortgages given by the applicants. After the application had proceeded some distance, it was accepted by all parties that it was desirable the principal proceedings in this Court should be heard at an early date. By consent the matter was fixed for hearing commencing on 22 September 1986. Ultimately, although certain ancillary questions remained in dispute, and were settled by me when short minutes in differing forms were brought in by the applicants and the respondents, there was no dispute that a sufficient prima facie case for relief had been made out, or that the balance of convenience favoured relief upon appropriate terms. The issue on which counsel for the respondents took their stand was their assertion that the appropriate terms should include a requirement that the amount claimed under the securities be paid into Court, or at least that an amount of $1.4 million be paid. The respondents relied on Inglis v. Commonwealth Trading Bank of Australia (1972) 126 C.L.R. 161. In that case Walsh J. at p.164 said: "A general rule has long been established, in relation to applications to restrain the exercise by a mortgagee of powers given by a mortgage and in particular the exercise of a power of sale, that such an injunction (i.e. restraining the mortgagee pending the hearing of proceedings brought by the mortgagor) will not be granted unless the amount of the mortgage debt, if this be not in dispute, be paid or unless, if the amount be disputed, the amount claimed by the mortgagee be paid into Court." But in Inglis's Case there was no attack upon the validity of the mortgage transaction itself. The mortgagor sought to set off a claim for damages for breaches of contract, for defamation, for fraud, and for conspiracy. Walsh J. at 163 makes it clear that the amount of the mortgage debt was not in dispute. In Harvey v. McWatters (1948) 49 S.R.(NSW) 173 (a decision affirmed on appeal to the High Court, as appears from a note in 50 S.R.(NSW) 321) Sugerman J. at 178 said: "There is a distinction between what I have called the ordinary case (by which he meant, as is shown by an earlier passage at 174, a case where the only dispute relates to the amount due or the mode of exercise of the power) and the case in which the existence of the power of sale or the question whether it is exercisable at all is in question. The present case is of the second class. What is called the ordinary rule applies to cases of the first class, and to those cases only." He held (at 178) as regards cases of what he called the second class: "The terms may be moulded so as to require payment in of 4. so much only as suffices to give adequate protection to the mortgagee." Subsequent decisions have drawn attention to the distinction stated by Sugerman J., and I cannot believe it was overlooked by the High Court in Inglis's Case, especially as both Walsh J. and Barwick C.J. there made it clear that what they were F ~ speaking about was a "general rule" only, a designation which _in --... . —-itsel£ suggests the rule is.a rule "which may be said to._apply_ mee 'orlly in the ordinary case" (see Harvey v. McWatters, at 174). If the rule admitted of no exceptions, it could not properly be called a general rule. Both cases were referred-to in the decision of the Court of Appeal of the Supreme Court of New South Wales in Zeutmint Pty Ltd v. Scottish Amicable Life Assurance Society [1984] 3 N.S.W.LeRe 293. A number of relevant authorities (not all of which accord the general rule any automatic application) will be found listed in the headnote to the report of that case. The judgments in the Court of Appeal do not suggest that Harvey v. McWatters is not still good law. Although the general rule I am discussing was not in terms applicable, Samuels J.A. at 299-300 considered the question there before the Court in the light of it and said: "Finally, one has to look generally at the situation of the parties, bearing in mind that the Court should be hesitant to take any step which would set the security at naught. For the reasons that I have mentioned I do 5. not think that the imposition of the condition as to payment in is necessary in the circumstances of this case to protect the respondent, nor do I think that its deletion would rob the respondent of the protection which it has a right to have from its security." In this Court, Harvey v. McWatters has been followed by Morling J. in Glandore Pty Ltd v. Elders Finance & Investment Co. Ltd. (1984) :4- F.CseR. 130. Morling J. -pointed out two ~~considerations which-are also apposite -in the present case: that - there was no evidence the property the subject of the security was falling in value, seeking agreement in such manner as the Court thinks fit" included "an order varying the terms of At 135 Morling J. said: "It is clear on the authorities that if the present case be regarded as one in which the mortgagor's real claim against the mortgagee is for damages only, interlocutory relief should be granted only upon terms that the amount of the mortgage debt is paid into Court. The general rule referred to in Inglis' Case would apply in such a case. But 1f 1t be not regarded as such a case, it is open to the Court to grant the relief sought upon such terms other than payment of the full amount of the mortgage debt into Court as the Court thinks appropriate." He held the matter fell within the second class of case by Sugerman J. in Harvey v. McWatters and said at 135: "I think the proper approach is to mould an order so as to ensure adequate protection to the mortgagee and to otherwise do justice between the parties during the period pending the final hearing." and that the relief the applicant was the loan {see 135-6). discussed He did not require any part of the principal debt to be paid into Court pending the hearing, but in the circumstances of that case he required outstanding interest to be paid by a date which he fixed, being approximately a month after the date on which he delivered judgment. In my view. having regard particularly to the wide powers of the Court to grant relief under s.87 of the Trade Practices Act .1974., -which the applicants have invoked in the present case, I also am not constrained by the terms of the general rule on which the respondents rely. In all the circumstances of this case, including the absence of evidence that the security is falling in value and the close proximity of the final hearing, as well as the availability of certain rental and other payments to the respondents in or towards payment of interest outstanding or to accrue due, I consider the appropriate terms are those set out in the short minutes which I have approved. These include a term as to the payment of $50,000.00 within ten days in respect of interest. For the foregoing reasons, I granted the interlocutory injunctions which are contained in the short minutes. I certify that this and the preceding five (5) pages are a true copy of the Reasons for Judgment herein of his Honour Mr. Justice Burchett. tia ay Associate Dated: 5 September, 1986.