Not ror distribution IN THE FEDEPSL COuUPT OF AUSTPSETS QUEENSLAND DISTRICT PEGISTRY GENERAL DIVISTON OLD. G123 oO f 1987 -~ we wee BETWEEN : JTONA_ INVESTMENTS PTY. LTD. AS TRUSTER or THE FEROS INVESTMENT TRUST Applicant AND: TPICONTINENTAL CORPORATION LIMITED First Respondent AND: JONES LANG WOOTTON second Pespondent vey ma, ry as \ SPENTEP J. A SELSEAE '€NOVI987 =| £2! COURT OF A A 19 SUGUST, 1987. PESSONS FOP JUDGMENT LIN a In this matter the applicant sseks an interlccutor injunction. Trt seek3 an order against 'the respondents restraining them by their servants and/or agents until further order from advertising for sale in any manner whatscever tne premises known as the Bell Centre, Toowoomba, in the State 2f Queensland. As appears from the affidavit of Mr. Craig Andrew Jensen, the solicitor for -the applicant, Jiona Investments Pty.Ltd. ("Jiona Investments") is the registered proprietor of certain land in Bell Street, Toowoomba. That property was purchased originally with a view to the construction of an office tower and commercial centre. In order to finance development the applicant obtained a commercial bill facility from the first cespondent in the sum of $7.875m. As part of its securit:7 in cespect of that facility, Tricontinental Corporation Simited ("Tricontinental Corporation") obtained a first registered biil of encumbrance over the property as well as additional securities and guarantees from a large number of corporate enrities and individuals. It appears that an interest payment pursuant to 'tnat facility was due by the arplicant to Tricontinental on? Jul: 1987 and chat payment of $150,900 was not made on that aate. on 1S Jule i987, a notice of default soursuant to 3.344 of che Property Law Act was delivered to Jiona Investments. Smongst other things 1t gave notice that:- "Unless within thirty days of service upon you this Notice the said default 1s remedied AND ADDITION, further interest accruing to the date payment 13 paid the Mortgagee may proceed to the land and exercise all or any of the o powers conferred by the Mortgage and the Prop Law Act 1974-1985 (as amended)." 37D wb ofr ® Som aa Dict " Mrs. Judith Fay Feros says that before default had occurred she had a meeting with a person she describes :n her affidavit as the person she believed to be the Queensland "cans Manager for Tricontinental Corporation, a Mr. Court. Mr. Court informed her, so she says, and she deposed to such a belief, that once the default notices were, issued, then legally the applicant would have 30 days in which to remedy the situation. She continues:- "He further informed me that even at the expiry of the 30 day period after the notices of default were issued then Tricontinental Corporation Limited would still have to assess the situation and decide what course of action to be adopted. He informed me and I verily believed that Tricontinental Corporation Limited would at that stage have to consider the question of a sale by public auction, or other means of sale of the property 1f the default had not been remedied." She says:- "Ag a result of the matters stated to me by Mr. Court I believed that Tricontinental Corporation Limited would not take any steps whatsoever in relation to a sale of the property until at least the 30 days after notices of default were i3sued pursuant to the securities that had been granted in its favour." There 13 no affidavit material filed on behalf of ary 3f the respondents in respect of the marters deposed to by Mrs. Feros Qn 21 July 1987, and again on 1 August 1297, an advertisement appeared in the "Courier Mall" newseanrer. Thar pictorial advertisement occupied approximately four incnes by ten inches and contained 32 photograph of the Bell Centre at Toowoomba. It was inserted by Jones Lang Wootton, the second cespondent, and amongst other things said:- . MORTGAGEE EXERCISING POWER OF SALE A RETAIL AND COMMERCIAL INVESTMENT OPPORTUNITY IN THE HEART OF QUEENSLAND'S GARDEN CITY " It described Toowoomba and the centre itself, and then said:- FOR SALE BY AUCTION at ll a.m. Thursday 3rd Sept., 1987 Venue: Sheraton Hotel, Turbot Street, Brisbane" After undertakings had been sought on behalf of the applicant from Jones Lang Wootton and not supplied, an application was sought for the relief with which I am presently concerned. Section 84 of the Property Law Act provides:- "A mortgagee shall not exercise the power of sale conferred by this Act or otherwise unless and until - (a' default has been made in payment of the Principal money or interest, or any fart whereof secured by the instrument af mortgage, and notice requiring payment of the amount the fairlure to pay which constituted the default under such instrument of mortgage nas been served on the mortgagor and such default has continued for a space of thirty days from service the notice;" In my view, the conduct of the respondents in inserting wa wT t) advertisements on 31 July 1987 and 1 August 1987, at 1 e o a the purpose of interlocutory relief, constitutes such a breach o i Dp $.52 2f the Trade Practices Act 1974 as would call far th intervention of the Court by way of interlocutory injunction. The advertisement has the capacity to mislead and is likely to mislead 2 person to whom it 13 directed into believing that there was in the mortgagee a then present and unconditional power to convey that property by auction as indicated in the advertisement. There 1s nothing to suggest that any power wag conditional on default continuing, pursuant to the notice of default given on 15 July 1987, and it would have been competent for the Court to restrain advertising of that kind containing those representations. At the application for interlocutory relief, che first respondent, Tricontinental Corporation, obtained leave to file and read an affidavit of Mr. Christopher Rex Anderson, the Assistant Lending Manager for Queensland of Tricontinental Corporation Limited. In that affidavit he stated that the first cespondent does not propose to further advertise in tne form which had previously been the forn of advertising. Ke continued: - "The First Respondent does propose, unless restrained, to advertise in the form appearing in Exhibit ''C'' to the Affidavit of CPAIG ANDPEW JENSEN subject to the amendments set out hereunder: 'a) by excising the words 'mortgagee exercising power of sale' from the tep of the advertisement; xeuised, 'b) by inserting in lieu of the words exec the words 'the mortgagee will exercise its power of sale with respect to the follewing property subject to the mortgagor continuing in default until after 14th August, 1987'; (c) by inserting after the words 'for sale hy auction on 11.00 am 3rd September 1987' the words 'subject to the mortgagor continuing in default until after 14th August, 1987';" It was argued that advertising, as so corrected, would not involve any question of misleading or deceptive conduct and, in those circumstances, an injunction ought not issue. That conduct, in breach of s.52 of the Trade Practices Act 1974, must involve such an imputation is clear from a number of cases which include, Parkdale Custom Built Furniture Pty.Ltd. v. Puxu Pty.Ltd. (1982! 149 C.L.R. 191 and Hornsby Building Information Centre Pty.Ltd. v. Sydney Building Information Centre Pty.Ltd. (1978) 140 C.L.R. 216. It was submitted by the respondents, and I am satisfied correctly so, that it was competent and is competent for a mortgagee to negotiate the sale of property notwithstanding the period in which default may be rectified has not yet expired. In Major v. Ward 67 E.R. 1946 (S Hare $98), che Vice-Chancellor, Sir James Wigram, was dealing with such a case. At p 1251 :294) he says:- "The next ground of objection was that the agreement for sale, being before the expiration of the period fixed by the notice, the sale was void. I do not give any opinion how it would be, 1£ an undervalue or any special circumstance were suggested, calculated to impeach the sale. But here the question 1s put in the abstract, that a mortgagee with a power of sale may not, a day before the power of sale is to arise, make a conditional agreement with a purchaser 'hat he shall have the estate at an agreed price, if tne mortgagor do not redeem it. I cannot go the length of saying such an agreement 1s, ipso facto, void." That case wag followed in Farrar v. Farrars Limited '1889) 40 Ch.D. 395 at 412, where Lord Justice Lindley said:- "At this time, the six months' notice which the mortgagees had to give and had given of their intention to sell ,had not expired, but 1t was understood between Farrar and Taylor that no sale 7. would be made until the power could be properly exercised. We pause here to consider whether in thus acting Mr. Farrar was guilty of any breach of duty to his mortgagors. We cannot see any impropriety in his conduct, unless it be that he ought not to have agreed in November to sell at a future time for 7700. This, however, does not without more invalidate the sale: see Major v. Ward 5 Hare. 598. If when the time came for completion that price had become inadequate, he might perhaps have been chargeable with wilful default, and perhaps, having regard to his peculiar position at the time of sale, the sale itself might have been set aside. But there was no undervalue either when the agreement was made or when 1t was carried out. The learned Judge distinctly found this as a fact, he has stated that in his opinion, the witnesses for the Defendants on the question of value are to be preferred to those of the other side." Iam not here concerned with whether there 15 any question of defamation involved in the earlier cr the prososed publication, nor whether the circumstances might iead or involve a breach of s.85 of the Property Law Act which imposes on the mortgagee a duty, when exercising the power of saie conferred bv the Act, to take reasonable care to ensure that the property 1s sold at the market value. By way of example, I can see nothing wrong vith a mortgagee, before the time for remedying default giver by the notice has expired, negotiating a price at considerably above the market value of the property with a person who 1s very anxious to obtain that property, that proposed sale being corditional wupen the default continuing for the statutory period. If it be that advertising of any kind is to be prohibited during the period of the notice of default it would mean that a mortgagee could not engage in negotiations of whatever kind during that period, independently of the question of the value of the proposed sale or the conditions which have been made in respect of that proposed sale. The submission of the applicant 13 that the effect of s.B84 of the Property Law Act is to preclude the respondents from advertising the property until after the period of default has expired. For the reasons that I have shortly indicated, I do not think that that is right, nor do I think that any comfort is gained from the terms of s.85 of the Act. That negotiations or advertising are engaged in, in the period during which the default may be remedied is not to the point, although, 1 may have evidentiary significance on the question of whetner thera has been any breach of the obligations imposed by s.85, but there 1a no warrant for inferring that a mortgagee might not negotiate nor advertise in a way which 1s not misleading during that period. It would follow then that, but for the advertisements of 31 July 1987 and 1 August 1987, I would not be inclined to make any order by way of interlocutory injunction. However, the two advertisements were, in my view, clearly misleading, and I am concerned as to how best to meet the possibility that advertisements in the modified form proposed by Mr. Anderson might not yet still be tainted by the misrepresertations contained in the substantially similar early advertisements. In Janssen. Pharmaceutical Pty.Ltd. v. Pfizer Pty.Ltd. (1986) ATPR 40-654, Burchett J. held that the court had power, pursuant to 3.80 of the Trade Practices Act 1974, in addition to restraining the continuance of the conduct and the making of the offending statements, to make a mandatory order requiring the publication of corrective advertisements. The terms of the orders which he made by way of mandatory advertisements appear in Order No.6, which appears at p.47-296. Ido not propose to require by way of mandatory order that there be published any corrective material, but, in my view, any further advertising in the form proposed in paragraph 3 of Mr. Anderson's affidavit does not go far enough in the light of the earlier publications of the precise property and the substantial gimilarity between the two advertisements. What I propose to do1us to make an order or accept undertakings along these lines: that until after 14 August 1987, the respondents by their servants and/or agents be restrained until further order from advertising for sale or itn any manner whatsoever suggesting that the mortgagee has a power to enter unto an unconditional contract of sale with respect to the Bell Centre, Toowoomba, and further directing that any advertising in respect of a proposed sale of that property prior to 14 August 1987 contain words to the effect that the mortgagee will exercise its power of sale with respect to the following property, subject to the mortgagor continuing in default until after 14 August 1987 and after the notification of the time and place for sale, hy inserting the words, "Subject to the mortgagor continuing in 10. default until after 14 August 1987". In addition, any such advertising is to include a statement to this effect:- "The mortgagee does not have and has never had a power to enter into an unconditional contract of sale with respect to the said property or with respect to the Bell Centre and any suggestion to that effect contained in earlier advertising by the mortgagee 13 wrong." I think in all the circumstances the proper order to make is that the first respondent pay the costs of the applicant to be taxed and that as between the applicant and the second respondent, there be no order as to costs. Iwill adjourn the application to the registry with liberty granted to all parties to apply to bring she matter o2n with notice in writing to the other side. lcertfy that this andthe "| precedirs F2g9s cre a true copy of the reasons for juc.gmont rerain of His Hopeur ustian C C } ik Me Justice Spender SF MgDer-all lf91 J" Assggtate Date