Palandri Finance Limited v Public Trustee of Queensland [2007] NSWSC 1504

New South Wales Supreme Court

CITATION : Palandri Finance Limited v Public Trustee of Queensland [2007] NSWSC 1504

HEARING DATE(S) : 13 December 2007 JUDGMENT OF : McDougall J at 1

EX TEMPORE JUDGMENT DATE : 13 December 2007

DECISION : See paragraphs [45] and [46] of the judgment

CATCHWORDS : INJUNCTIONS – interlocutory injunction – whether trustee should be restrained from exercising powers on default under trust deed – question, whether default under trust deed, determined as a matter of construction – whether interlocutory injunction should be granted when occasion for exercise of powers has not arisen and trustee undertakes to Court to consider all submissions put to it if (when) occasion for exercise of powers does arise – other discretionary factors.

Australian Broadcasting Commission v Australasian Performing Right Association Limited (1973) 129 CLR 99 CASES CITED : Kolback Securities Limited v Epoch Mining NL (1987) 8 NSWLR 533 Ward v Walton (1989) 66 NTR 20

Palandri Finance Limited (ACN 090 580 500) (First Plaintiff) PARTIES : Palandri Limited (ACN 087 787 415) (Second Plaintiff) Public Trustee of Queensland (Defendant)

FILE NUMBER(S) : SC 5960 of 2007

COUNSEL : J T Svehla / R K McPherson P Davis SC / D Quayle

SOLICITORS : Parry Carroll Lawyers (Plaintiffs) Minter Ellison Lawyers (Defendant)

IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION

McDOUGALL J

13 December 2007 (ex tempore - revised 21 January 2008)

5960/07 PALANDRI FINANCE LIMITED v PUBLIC TRUSTEE OF QUEENSLAND JUDGMENT 1 HIS HONOUR: The plaintiffs are part of a group of companies that operate managed investment schemes relating to viticulture, wine making and the sale of wine. They invite participation from members of the public. The first plaintiff (Finance) has been in effect the financier of the group's operations. To enable it to fulfil this role it has issued notes totalling in value about $12 million to investors. The defendant (the Trustee) is the trustee for those note holders pursuant to the Palandri Note Trust Deed made on 1 March 2005 (the trust deed). 2 One group of note holders, 76 or 77 in number and whose notes total a little over $3 million in value, has given or purported to give notices requiring the repayment of the amounts advanced by them. Those amounts have not been repaid. The Trustee has given a notice of default pursuant to the trust deed, in effect requiring payment of the amounts in question by about 2 January 2008. It has indicated that it proposes to take action under the trust deed, including by appointing a "Controller", if the amount in question is not repaid. It is clear that Finance cannot at present offer any meaningful prospect that the entire amount will be repaid, although it is undertaking steps to raise money both before and after 2 January 2008. 3 The plaintiffs seek interlocutory relief restraining the Trustee from proceeding to the exercise of its powers under the trust deed. They say that there are two serious questions to be tried. The first is that on the proper construction of the relevant terms of the trust deed the amounts due to the 76 or 77 note holders to whom I have referred are not yet due and payable, so that the notice of default is invalid. The second point is that the Trustee's exercise of discretion has miscarried or will miscarry, because the Trustee has failed to take into account, or (as at one stage it was put) has failed to give sufficient weight to, certain matters that the plaintiffs suggest are relevant. 4 The question of construction arises from the terms of the trust deed. By clause 2.7, each note issued by Finance "will mature on the Maturity Date in respect of that Note". By clause 2.9(a), note holders have no right to require payment before that Maturity Date. 5 The expression "Maturity Date" is defined in the Dictionary to the trust deed, set out in schedule 1, with some degree of circularity as "the date of maturity of a Note as specified in the Note Certificate". The expression "Note Certificate" is defined in the same schedule to mean "a certificate or holding statement issued by the Borrower evidencing that the person named in [it] is the holder of the principal amount of notes referred to in [it]". The definition further requires the form of the certificate to be in accordance with schedule 4 to the trust deed. 6 It is only when one goes to the pro forma note certificate in schedule 4 that one finds out what the "Maturity Date" actually is. It is expressed to be: "Two years from the Date of Issue (Initial Term), extended by a further two years unless the Noteholder advises the Borrower in writing within 90 days of the expiry of the Initial Term that they [sic] wished to be repaid at the end of the Initial Term".