ABA CATCHWORDS Practice and Procedure - joinder of parties - applicable Rules of Court - proceedings under Trade Practices Act 1974 - action partly heard - matters to be considered on application - Federal Court Rules, 0.6, R.B. Injunctions - as against parties joined - action partly heard - principles to be considered. Trade Practices Act 1974 Yorke and Anor. v. Lucas (1985) 61 A.L.R. 307 ELLEN JACKSON, PHILIP GREGORY JACKSON and JOSEPHINE " JACKSON v.MYOORA NOMINEES PTY LTD, OXFORD ESTATES PTY LTD, ROGER HAYDON and MARTIN ANTON MISCHKULNIG and MYOORA NOMINEES PTY LTD & ANOR. v. OXFORD ESTATES PTY LTD & ANOR. No. G55 of 1985 FORSTER J. ADELAIDE 31 OCTOBER 1986 yoy, ee gp oe . 7 Mee TT ~ 2st + "Tr IN THE FEDERAL COURT OF AUSTRALIA ) GENERAL DIVISION JUDGE MAKING ORDER WHERE MADE DATE OF ORDER ) SOUTH AUSTRALIA DISTRICT REGISTRY ) No. G55 of 1985 ) ) BETWEEN: GREGORY JOHN JACKSON, BARBARA JACKSON, PETER JOHN JACKSON, TRACEY ELLEN JACKSON, PHILIP GREGORY JACKSON and JOSEPHINE JACKSON Applicants - and - MYOORA NOMINEES Pry LTD, OXFORD ESTATES PTY LTD, ROGER HAYDON and MARTIN ANTON MISCHKULNIG Respondents - and - MYOQORA NOMINEES PTY LTD and MARTIN ANTON MISCHKULNIG Cross Claimants - and - OXFORD ESTATES PTY LTD and ROGER HAYDON Cross Respondents MINUTE OF ORDER 3 FORSTER J. ADELAIDE 3 31 OCTOBER 1986 ats Gere ean eos cae ore ay A. & Md. THE COURT ORDERS THAT: Musolino Pty Ltd he respondent in these proceedings. joined as Costs of these applications be reserved. the fifth Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules._ wires Peewee tere Ve Aer ws ns yoyo weet ray ee wh. ores ory ae IN THE FEDERAL COURT OF AUSTRALIA ) ) SOUTH AUSTRALIA DISTRICT REGISTRY ) No. G55 of 1985 , ) ) GENERAL DIVISION BETWEEN: GREGORY JOHN JACKSON, BARBARA JACKSON, PETER JOHN JACKSON, TRACEY ELLEN JACKSON, PHILIP GREGORY JACKSON and JOSEPHINE JACKSON Applicants - and - MYOORA NOMINEES PTY LTD, OXFORD ESTATES PTY LTD, ROGER HAYDON and MARTIN ANTON MISCHKULNIG Respondents - and - BETWEEN : MYOORA NOMINEES PTY LTD and MARTIN ANTON MISCHKULNIG Cross Claimants - and - OXFORD ESTATES PTY LTD and ROGER HAYDON Cross Respondents REASONS FOR JUDGMENT Forster d. I have before me two notices of motion, the first seeking an order that A. and M.J. Musolino Pty Ltd (Musolino) be joined as a fifth respondent in these proceedings and the second "ope ' yruqrof¢ Se . on, om oe ee 2. — seeking to restrain Musolino from dealing with the land upon which the Myoora Motel is erected other than subject to the terms of the lease made beteen the applicants as lessees and the respondent Myoora Nominees Pty Ltd (Myoora) "as varied by the order made by his Honour Mr Justice Forster on 23 December 1985 in the within action". The second notice of motion also seeks an order said to he "further or in the alternative" that Musolino be restrained from executing or registering any transfer of the land for the purpose of giving effect to any sale by Musolino as mortgagee otherwise and subject to the terms of the aforementioned lease as varied. It is necessary to set outa brief history of this matter so far in order that the notices of motion may be properly understood. At relevant times the respondent Myoora was and is the registered proprietor of land at Port Augusta upon which the Myoora motel is erected. Beneficial Finance Corporation Limited (Beneficial) was and is the mortgagee with respect to four registered memoranda of mortgage over this land and Musolino was and is the registered mortgagee with respect to a fifth mortgage. In May 1983 negotiations took place between the applicants in the principal proceedings and Myoora. These negotiations were conducted on behalf of Myoora, in part by the respondent Oxford Estates Pty Ltd and Roger Haydon its servant or agent and in part by the respondent Mischkulnig, a director of Myoora. It is wee oe Renee = en ee i ete es a Wa 3. alleged that during these negotiations representations were made as to occupancy rates and takings and other things of the Myoora motel as a result of which it is said that the applicants were induced to purchase from Myoora the motel business, take a registered lease of the land on which the motel is erected, and execute a bill of sale in favour of Myoora to secure in part the Moneys owing to Myoora with respect to the sale. In the hands of the applicants the motel business was not-as successful as had been expected and in particular the rate of takings was less than expected. On 9 September 1985 the applicants instituted the principal proceedings against Myoora, Oxford" Estates, Haydon and Mischkulnig claiming that the respondents had committed contraventions of s.52 of the Trade Practices Act (the Act) and seeking an award of consequential damages. Orders were also claimed under s.87 of the Act that each of the memorandum of agreement for sale and purchase, memorandum of lease and the bill of sale be varied from such date and in such manners "as the court deems fit". Damages were also sought from the respondents under a number of other heads not presently relevant. The memorandum of lease provided for payments of rent of $6,500 per month and contained a formula for periodic review. The applicants were in considerable financial difficulty because it was said of the poor financial results obtained from operating the motel. On 18 September 1985 I made an interlocutory mates Cotes aot Pe an re tne ee ec Roce ees a rer ee ee Lk : . 7e r i 4. injunction restraining Myoora until further order from exercising its powers as to payment of moneys under the agreement for sale and purchase, the memorandum of lease and the bill of sale. The order recited an undertaking by the applicants to pay $3,300 per month. On an application by Myoora to discharge this injunction, on 24 December 1985 I ordered that the injunction be' continued but on the basis that the applicants undertook to- pay $4,000 per month pursuant to the terms of the lease and the order went on that "if there be any default in these payments then the injunction granted be dissolved". I am informed that since 24 December 1985 these payments of $4,000 per month have been made. The principal proceedings came on for trial on 24 March 1986. The hearing proceeded with some breaks, including the Easter recess, and on 24 April at the request of counsel for ail parties, the matter was adjourned sine die to enable a settlement to be carried out, the terms of which were not disclosed to the court. All parties were given liberty to apply on forty-eight hours notice. It is pursuant to that leave that the present notices of motion are brought. I am informed that the settlement has broken down and have given a tentative date for the resumption of the hearing next year. At some time, exactly when is not proved, but probably at the end of August or the beginning of September 1986, the interest of Beneficial pursuant to its four mortgages mentioned above was transferred to Musolino and on 4 September 1986 notice ' ' ' : ? re 5. was given by Musolino to the applicants that the estate and interest of Beneficial pursuant to its four mortgages had been transferred to Musolino and that notice of intention to exercise power of sale dated 4 July 1986 with respect to its first two mortgages had been served upon Myoora. The notice went on to Bay that Myoora has "failed to comply with the provisions of the two notices". Paragraph 5 of the notice required that all rentals and other moneys due under the lease be paid to Musolino. The notice concludes with a warning that should the applicants fail to comply with the provisions of the notice Musolino will take action to recover compensation and will seek to recover possession of the premises. On 26 September the solicitor for Myoora wrote to the solicitors for the applicant asking that rent payments be paid to Musolino. In a letter dated 25 September 1986 the solicitors for Musolino claimed that Musolino was a mortgagee in possession of the land and confirmed "the advice already given that should your clients fail to comply with my client company's notice requiring payment of rent dated 4th .September 1986 my client company shall without fail apply to enter in (sic) possession of the land in accordance with the powers of the Real Property Act 1886 (as amended)". I am told from the Bar table and a draft amendment to the statement of claim which has heen tendered pleads this, that by letter dated 7 May 1986 Musolino acknowledged that it was fully aware of all essential matters relating to these proceedings including in particular the Spee cr ears Be ome wow te pee ee ao an - spr— 6. injunction restraining Myoora from exercising its power as to payment of moneys under the agreement for sale and purchase, the: memorandum of lease and the bill of sale, provided in effect, that the applicants paid $4,000 per month rent. Musolino however asserts that as mortgagee in possession it may Claim the full amount of rent due under the lease as increased: according to the formula for review set out in the lease. It is conceded by the applicants as it should be that Tf should only take the wunuSual course of adding a party in the middle of the hearing if there are compelling reasons to do so and if there is at the very least an arguable cause of action against that party. Order 6 rule 8 of the Federal Court Rules is as follows - "8. (1) Where a person who is not a party - (a) ought to have been joined as a party; or (b) is a person whose joinder as a__party is necessary to ensure that all matters in dispute in the proceeding may be effectually and completely determined and adjudicated upon, the Court, on application by him or by any party or of its own motion, may order that he be added as a party and make orders for the further conduct of the proceeding. (2) A person shall not be added as an applicant without his consent." It seems to me that provided there is an arguable cause er ouee wae tee ey oa ellieslaieadaieaineh anes tia aalicaliiceee anamakaaemmaenasaemaed a ere 7. antl ~-0£ action by the applicants against Musolino based on events which have happened since the adjournment sine die of the proceedings and provided that the resolution of this cause of action is necessary "to ensure that all matters in dispute in the proceeding may be effectually and completely determined and adjudicated upon" then an order that Musolino should be added as a respondent should be made. Whether or not an injunction similar to that affecting Myoora or some other injunction should be made against Musolino is of course another matter. I say "based on events which have happened since the adjournment sine die of the proceedings" because it seems to me that the applicants could hardly be permitted to have effective second thoughts and recast the proceedings in some respects if there were nothing to prevent them commencing the proceedings in the form they now seek at the beginning. However I do not need to decide this last point as the evidence satisfies me that the facts making it necessary or desirable to add Musolino as a respondent occurred after the adjournment. In this connection it is important to note that Musolino has given notice of sale with respect to two of the mortgages which -he purchased from Beneficial and not with respect to the fifth mortgage with respect to which it has been mortgagee since before relevant events occurred. The argument of the applicants 1s based on s.75B of the Trade Practices Act which is as follows - 8. "75B. A reference in this Part to a person involved in a contravention of a provision of Part IV or V Shall be read as a reference to a person who - (a) has aided, abetted, counselled or procured the contravention; (b) has induced, whether by threats or promises or otherwise, the contravention; (c) has been in any way, directly or indirectly, knowingly concerned in, or party to, the contravention; or (d) has conspired with others to effect the contravention." It is argued that -this section imports the requirements of the criminal law (see Yorke and Anor. v. Lucas (1985) 61 A.L.R. 307). It is further argued that s.75B(c) must emcompass the concept of the person known to the criminal law as "an accessory after the fact". If this be so it is put that there is at the least a strong arguable case that Musolino should be regarded as an accessory after the fact because by its actions and its threatened actions with knowledge of all the circumstances it has preserved and will preserve and keep harmless Myoora from some of the consequences of its contraventions of 5.52 of the Act. This last is argued upon the footing that if Musolino is now the effective lessor the applicants may not be able to obtain any modification of the lease or the agreement for sale and purchase or the bill of sale pursuant to $.87 of the Act. Still more so will this be the position if Musolino sells as mortgagee as it threatens to do and the purchaser is a stranger to the whole matter. I consider it most likely that if there has been a contravention of 5.52 of the — wos epee eee eee Snhaendllinae Guncaesensmnenietieneienat 9. Act by Myoora, Musolino may have become a person involved in such contravention. It is my opinion that as a matter of law Musolino may have become a person involved, depending on how the evidence turns out. I am also of the opinion that Musolino is "a person whose joinder as a party is necessary to ensure that all matters in dispute in the proceeding may he effectively and completely determined and adjudicated upon". I therefore order that Musolino be joined as fifth respondent. Directions will require to be given as to pleadings and the possible recall of some witnesses and other matters and I will hear the parties as'to this at the earliest convenient time. There remains the question of the injunctions sought by the applicants. It is argued that Musolino should be in no different position to Myoora since Musolino has become the effective lessor, it is also argued that the property in dispute, that is the estate of leasehold and the business and chattels that were originally sold by Myoora to the applicants, should he as far as possible preserved until the litigation is concluded and the rights of the parties determined. Should Musolino exercise its power of sale, whether under two of the mortgages purchased from Beneficial as threatened, or under its own mortgage, the property in dispute would not be preserved. Counsel for the applicants has offered the usual undertaking as to damages. Tf it were right to grant an injunction against Myoora in the first place, and I consider that it was, and there A a a re Be rene eer acca tose aaa a to- 10. has been no appeal against this, I consider that for somewhat different reasons it is right to grant an injunction against Musolino which took the steps it has taken with full knowledge of the matter in general and in particular with full knowledge of the injunction previously made. In my opinion Musolino and Myoora should both be enjoined in such a way as is necessary to preserve the-property on the same condition, that is to say, that the applicants continue to pay $4,000 per month in rent. I order that A. &.M.J. Musolino Pty Ltd be added as a respondent and I will hear counsel as to the terms of the injunction to be granted in order to preserve the interest of the applicants in the property in question. The question of costs should be reserved. Io certify that this and the 4 preceding pages are a true copy of the Reasons for Judgment of Mr Justice Forster. Associate: hh lori Dated: 2st Otcbe, 14 86 a eres a