CATCHWORDS Practice and procedure - interlocutory relief - previous application for interlocutory relief dismissed - change of circumstances relating to balance of convenience but net in relation to prima facie case - exercise of discreticn. SCAPEL PTY LIMI 7, CITY LOAN AND CPEDIT COPEOPATION PTY LIMITED Coram: Sheppard J. Date : 23 February 1987 Flace: Svdnev IN_ THE EPAL COURT OF ANSTPALTA NEW SOUTH WALES DISTPICT REGISTRY No. GE13 of 1986 -+- ~~ w GENERAL DIVISION BETWEEN : SCAREL PTY LIMITED Applicant =ND: CITY LOAN AND CREDIT COPPOPATION PTY LIMITED Fespondent CORAM SHEPPAPD J. PLACE SYDNEY DA' 23 FEBRUARY 1987 MINUTES OF OPDER THE COURT OPDERS THAT: - lL. The application fer an interlocutory intunction be dismissed. Z The applicant vay the resvoondent's Tasts of the NOTE: Settlement and entry of orders is dealt with in Order 25 of the Federal Court FPules. IN THE FEDERAL COURT OF AUSTPALIA a) ) NEW SONTH WALES DISTRICT REGISTRY | No. G513 of 1986 \ GENERAL DIVISTON ) BETWEEN : SCAPEL PTY LIMITED Applicant CITY LOAN AND CREDIT CORPORATION ELTY LIMITED Pespondent COPAM: SHEPPAPD J. DATE : 73 FEBRUARY 1987 PEASONS FOR TIRCMENT HIS HONOUR: This is an application for interlocutory relief. The motion seeks an order restraining the respondent from submitting for auction sale on Thursday next, 26 February, a property at Normanhurst over which the respondent holds an equitable charge. The matter was previously the subject of proceedings for interlocutory relief. These came on late in November last vear before Fox J. After a hearing which occupied be v@ application. Tt i uh more fhan two days, his Honour dismissed ¢ submitted on Sehalf of the applicant that nevertheless this avolication can succeed because of changes in the circumstance: of the varties which have come about since Fox J. decided the matter. I should say at this point that there has not been time this morning for there to be an analysis of what authorities there may be in relation to the question of whether, once interlocutecry relief has been refused after a full hearing, a further application will be entertained by another judge. No question, of course, of issue estoppel or res judicata can arise if the proceedings are not final in character, but it seems to me that there must be discretionary considerations which would militate against an applicant who has failed in obtaining interlsocutary eelief going on similar facts '2 ancther tuige and seeking the same relief from him. The position is different, un my ceinicn, from that which exists when an applicant seeks ax carte relief and may, if he wishes, seek relief from another judge if he is refused relief by the first iudge whom he approache:. T think the better view is that the matter must lie within the diccretioen of the second judge to whom the aoplicaticn temes ard that in ordinary circumstances a proper exercise of that discretien requires refusal of the application unless there are changed circumstances. I make it clear that in saying what I have, I int and I have not is) have not had the benefit of arqument on the p Oo w fi wt had time myself, because of the need ts deal with the a Tay Df) TOLLS w exoediticusly, t2 tnvestivate anv authcrities which there may be Tt is submitted oan behalf cf the apolictant that there have ton een changes ip circumstances, but - so 1t seems to me - these ao ifp) + wwy nNBy) o par 1D fo the questior, not of whether there is or vase for the c lief claimed in the porincival applicaticn, but ta the balance of convenience and matters associated therewith. In a reasoned judgment Fox J. found that there was no arguable case for relief. Counsel for the applicant has conceded - and on the face of the evidence the concession 13 rightly made - that there is no evidence of anv changed circumstance in relation to the question of whether the applicant has made out a prima facie case or, to use his Honour's expression, an arguable case. In order that the position as found by his Honour may b D a understood, I propose to refer to the relevant parts of hi judgment. His Honour said:- "The critical conversation 13 said tc have taken place in Auqust 1984. Neo document was executed and no locument has come inta existence evidencing it. What did hacpen was that the Darling Harbour mertaage WAS thereafter caranted., Tor an understanding 7f what was said and its meaning and effect it i13 necessary 'o : the ctonversatison in it context. wt 0D ct vi The context as relied uocn by the applicant is simply stated. The Normanhurst land was wocth a fraction of the amount secured cn it, the respondent was pressing for paymert and Mr. Yates had control over or a controlling interest in Yates Property Corporation which owned the Darling Harbour land. Tt was expected that the land would soon be transferred to the Government and this would realise were than enouryh to pay out the cespondent in full. Mr. Yates was offered, moe was asked fo qive, security over the Darling Harbour land and Mr. Adelstein said that if his company, the respondent. had that security if would not bother itself (ar words ro that effect) concerning the Normannurst land. Todo not know whether Mr. Adalstein was then aware of the amount secured ty the existing martaages", His Honour Fhen set cut the vealeyvant mart 3 <£ the conversation and continued: - 4. "There had just before this been discussions about the Crows Nest property. Perhaps the strongest statement supporting the intended arrangement is to be found in the evidence of Mr. Miles, a solicitor then acting for the applicant, who was sresent at a conference in September 1984 attended by Mr. Yates, Mr. Adelstein and Mr. Cornforth, leqal representative of the respondent. He says Mr. Adelstein said: 'Nur security over Scarel's Normanhurst property is virtuallv of no practical value. Tf we are qranted a collateral mortaage over Darling Harbour we'll net bother ourselves any more with the Normanhurst security'. The arrangement relied upon would mean that the resoondent would Ee paid its debt our of the eventual sale of Darling Harbour. The date of repayment, as I have said, was fixe at 21 September 1985. In many cases such a date is not of great significance, but it was purposively fixed in this case. The cantext as relied upen by the respondent beings into account as additional factors the Crows Nest caveat, the Supreme Taaet proceedings, and the documents executed on 24 September 13984, and discussions between Mr. Yates and Mr. Adelstein about substituting Darling Harbour for Crows Nest. Tek iz submitted that the intention was that security be given over Darling Harbour to compensate for the loss of recourse to Crows Nest, and not 'o replace the "ormarhurst security, This wider conspectus Feems ta me more realistic, and correct. T do RFhat the cenversatison in Auagust, 2 One cf several, renoresented a final baroain, and 16 was not in anv avent such that it sould bind the reswondent. It was but ine cf a series of matters dealt with in discussicn. It seems obvious that it was nok intended that the Darling Harbour mortgage supplant the Normanhurst mortgage. Mr. Adelstein denies that there ever was an agreement, or avon understanding to that effect. If it had been intended that the power cf 3al2 should wo, tf is reasonable to expect that mention would have been made of that asnect in the Tocuments executed in September The fact 13, as I think Mr. Yates -ronceded, thar the c intention, or the effect of what is alleqed, would not simply have been to remove the power of sale, but to totallv overcome the efficacy of the Normanhurst mortaqage. Yet it was confirmed and continued, by the variation which was formally executed. What Mr. Yates, and the applicant, sought to have happen was Khat the Crows Nest property be free to be sold and the Supreme Court proceedings discontinued. TE is also clear that Mr. Adelstein did not purport to bind his company. So far as appears he had no actual or ostensible authority to do so, but, beyond that, he several times referred to the need to qet his Board's approval, or the need to persuade his Board. The need for formal documentation was apparent, and was mentioned". His Honour referred to proceedings in the fuoreme Crurt and T should fill sut what he said about those br scaferance fo 4 judgment which was entered in the Supreme Ceurt of New South Wales on 24 September 1984. The itudgment was a cansent one and followed the terms of settlement which the parties had agreed upon. Paragraph 1 provided for judgment for the claintiff, that being the present respondent, against a number of defendants, which included the present applicant, in the sum of §1,992,525.15. Paragraph 2 orovided that:- "Execution woon the tudament referred tr in oaragraph l herea staved until 21s Teptember 1985 rtaonditional upen: - The second defendant executins a moagtaage in veqisterakle form cover all Fhose pieces of oarcels of lard mmed by it and situated in the City oat Sydney Parish cf Skt. Andrew and County 2f Cumberland and being the vhele rf the lands comprised in Certificates of Title Volume 16221 Pelio 196 and Volume FOLL Foliz 179 and unewn as 1-72 &. The mortaage was to contain a number of terms which specified the principal at the fiqure for which judgment had been entered, a date for repayment on 21st September 1985, interest at 17 1/2 per cent reducible to 14 1/2 per cent per annum and other terms and conditions which need not be referred to. It was in the context of that having occurred that his Honour said what he did in the passage already quoted from his Judgment about the context relied upon by the respondent bringing into account as additional factors, amongst other things, the Supreme Court oroceedings and the document mn executed on 24 September, 1984, one of which was apparently the charge over the land at Darling Harbour. As IT have 3aid. there was no evidence of any change in the idence in relation to the wo < circumstances of the parties or the question whether or not the applicant had demonstrated the a) mour, as T have existence of a prima facie case. His 4H mentioned, spent more than two days considering the evidence of the parties, their cross-examination and submissions. He has tiven a considered judgment. 1 have not read by ary means the his Ucnour and TI have vidence which was hefor D 1D 1D entirety of the not been able myself to give it the close ccnsideration which is '¢ wT sa obvicusly he case when one reads his judgment, All those circumstances would disincline me from taking a course which ould really be to ride rough shod over the decision which he reached. vr r iT vl fam a) Cc a ps Lom 1D i) prey) In fairness €9 counsel for the aprlican = oe that that was not really the course he asked me to take. What he submitted, as I understood it, was that because of changes that had come about in relation to the Normanhurst land itself and certain associated matters I should view the matter again. As I understood his submission it was that, if the case on balance of convenience was strona, the court would be less inclined to find difficulty in determinina whether or not there was a prima facie case. In other words, something that 1 might have reaarded in ome circumstances as not amounting to a prima facie case would ut zy ec ne if the argument on balance of convenience was strena. fe) ™ D tT think that sort of approach is. upon analysis. ine which is sometimes taken, although I do not think many svuddes, in determining whether or not to grant intelocutory relief, weigh uo a particular case with this consideration to the forefront of their minds. Be that as it may, my difficulty in giving effect to counsel's argument stems from the fact that the case which the applicant has for relief is undoubtedly weak and was found to be so by Fox J. That to my mind really concludes the matter. but I mention the principal matters upon which counsel fer the aoplicant relied. He said that before his Honour there vas no evilence ir submission which would have suggested to him fhat there was anv difficulty about selling the land; un cther words, it was an ordinary marketable parcel of land which could be expected to bring an appropriate price if auctioned, Further, he said that, although his Honour was told that a development consent which, 1f granted, would entitle the applicant to subdivide the land had A. been applied for, his Honour had not been told about a complication which made the selling of the land more difficult than His Honour had been led to believe. That complication arises because the development consent which has now been granted by the Hornsby Council is a consent to develop, not just the land which is owned by the applicant, but land which is owned by other people who are bound contractually to the applicant to sell land to it. The reason for the other two lots of land being included in the proposed subdivision 1s that they are a necessary part of tt 06o im order to provide appropriate access to the subdivision which it is desired to make, Tt is suggested that ie his Honour had kpewn 'these lifficulties his decision may have been different and, furthermore, that those circumstances 39 thanged tre nature of the case that I would now be warranted in taking a different view from the one which his Honour taok in Nevember last. Having heard evidence from a Mr. Edmonds and considered an annexure to one of the affidavits which is an estimation by Richard Stanton and Sons, it does seem to me that there are substantial difficulties about subdivision. There 1¢ a question of what it will really cost to develop the land and 1+ may he 1 would be appropriate to take the view that a better use of the land would be one which would not involve its subdivision. I do nok express any conclusion on that matter because T an unable ta da so upon the basis of the avidence which I have heard. T+ i3 2nough to say that, in the light of Mer. Edmends' evidence, I am not persuaded that there is anv sufficient chande af 9. circumstances to warrant my taking a different view from his Honour, even if I thought the decor was open enough to enable me to do so. Of course a mortaqagee owes his mortaqagor a duty nok to act negligently in relation to the sale of the mortqaged property. Other duties are owed also. This is not the time or the place to discuss the law on that vexed question because I have not had a sufficient arqument about it. But if the mortgagor has evidence - and I would not suggest that the case it has made here would be sufficient to warrant a conclusion that there was a orima facie case of a threatened breach of duty by the mortgagee - it would seem to me that the applicant's remedy 1s not to come fo this court to seek relief as an adiunct to relief under the Trade Fractices Act 1974, but to go toa Lhe Suoreme Court of New South Wales relying on a cause of action kased on the alleged threatened breach of duty which it has said there is. Tt weuld seem to me to be difficult for this court ¢9 savy wt had jurisdiction to decide such a matter cvwnder its accrued jurisdiction because 1t would be difficult to find the common substratum of fact which there must be tefora that taurisiicttis roy P] a rr a . ri)p ct wt oO % fs" iD wb tw Rp a Q & re) wT > be ie o o it a Dp estT D ns we Ww iwi Fo ct a s < ay db Wa ay ia Cc a] o If there is a prima facie case, of course, the positicn mav be quite different, but I have already indicated that [I do not think that I should take it upon myself to investigate that question, it having been investigated thoroughly by Fox J. some 10, three months ago or a little less. The respondent in this case has been owed over $1 million since September 1984. No moneys have been paid to it during that fime. It seeks to enforce its remedies. The applicant has not, in my opinion, made out any case as to why the ordinary course should not follow, namely, that a mortgagee in that position should not be permitted to exercise its power of sale. In all Ehose circumstances [I have reached the conclusion that this application must be dismissed, and that is the order I make. I order the applicant to vsay the respondent's costs" of the application. Tl direct the respondent to file a defence on or before 9 March next. The matter will be listed fer directions in the ordinary directions list on 13 March at 9.29 a.m. | certify that this and the 7 preceding pages are a true copy of the reasons for judgment herein of The Honourable Mr Justice Sheppard. / /: vdoaa~ Associata Dated 23 FEBRUARY 787 Counsel for the applicant: T.P. Hamilton, 9.C. with R.K. Eassi2 Solicitors for the applicant: Messrs. Nelgrave Mucsnik & Brien Counsel for the respondent: R. Anderson li. Solicitors for the respondent: Messrs. Lane & Lane Date of hearing: 23 February 1987