Trade Practices Act 1974 (Cth), ss 52, 82, 87.

Castlemaine Tooheys Ltd v. State of South Australia [1986] HCA 58; (1986) 161 CLR 148 at 153

Corpers (No.664) Pty Ltd v. N.Z.I. Securities Australia Ltd (1989) ASC 55,714 at 58,418

Creative's Landscape Design Centre Pty Ltd v. Platz (1989) ATPR 40-980 Wardley Australia Ltd v. Western Australia [1992] HCA 55; (1992) 175 CLR 514 Nicholas John Holdings Pty Ltd v. ANZ Banking Group [1992] VicRp 97; (1992) 2 VR 706 Contractor Services Pty Ltd v. Esanda Finance Corporation Ltd (1990) ATPR 41-020 at 51,355

Graham v. Commonwealth Bank of Australia (1988) ATPR 40-908

Solicitors for the Applicants: Minter Ellison Morris

Fletcher

Counsel for the Respondent: Mr J Karkar QC

Solicitors for the Respondents: Mallesons Stephen

Jaques

BRANSON J The applicants claim interlocutory relief pending the final hearing of the principal proceedings in which the applicants seek orders, principally, it may be assumed, pursuant to sections 82 or 87, or both, of the Trade Practices Act 1974 on the basis of alleged breaches by the respondent of section 52 of that Act.

2. The applicants are Andreas Angelatos, Sue Veronica Angelatos and eleven companies together comprising the Angelatos Group. In these reasons, where it is appropriate to do so, Andreas Angelatos is referred to as "Mr Angelatos". I have not found it necessary otherwise to distinguish between the applicants who are throughout these reasons individually and as a group referred to as "the applicants".

3. The respondent asserts that the applicants are obliged on 31st July 1994 (or the last day on which banks are open for business prior to that day) to pay to the respondent certain sums alleged by the respondent to be due and payable by the applicants to the respondent on that day. The sums are:-

(a) the aggregate amount of four foreign currency

borrowings, being the overseas equivalent of

A$7,700,000;

(b) the amounts required to complete certain forward

exchange contracts due to mature on 31 July

1994, which contracts were entered into by the

applicants as a protection against currency

fluctuations with respect to the foreign

currency facilities.

4. The applicants assert that by reason of an agreement, partly oral, partly in writing and partly to be implied, allegedly made between the applicants and the respondent in about July 1989 the respondent is not entitled to require repayment of the foreign currency facilities on 31 July 1994. Indeed, as I understand it, the case of the applicants is that the respondent is not entitled, absent any default or breach by the applicants, to require repayment of the foreign currency facility at any time earlier than the redemption date of zero coupon bonds ("ZCB") which the respondent undertook to acquire on behalf of the applicants as a hedging instrument against currency fluctuations. The respondent has not acquired such ZCB. The applicants in their claim for principal relief seek an order requiring the respondent to acquire such ZCB.

5. The applicants apprehend that upon their failure to repay the foreign currency loans on 29 July 1994 the respondent may exercise its rights and powers under the securities which it holds in respect of the foreign currency facilities, including the power to appoint receivers to all or some of the Angelatos Group. This the applicants contend would cause them irreparable harm, in part because such appointments would constitute default under securities held by other lenders to the Angelatos Group, including the Angelatos Group's now principle banker, the Commonwealth Bank of Australia.

6. The respondent by Mr Timothy Piper, its current Head of State Credit Bureau, South Australia and Northern Territory, but previously the officer responsible for managing the accounts of the applicants, confirms that if the applicants fail to make the payments to the respondent which the respondent asserts are due and payable by the end of this month, the respondent will embark on the process of realising its securities. Mr Piper's evidence is that this would entail the respondent entering into possession of the secured properties and the realisation of those properties in the exercise of the respondent's rights as mortgagee.

7. In the principal proceedings the applicants claim:-

"1. An order that the respondent do all things

necessary to acquire or facilitate the

acquisition of Zero Coupon Bonds of a kind which

would have been acquired in or about September

1989 had the respondent performed its

obligations under the agreement referred to in

paragraph 5 of the said Statement of Claim.

2. An injunction restraining the respondent whether

by itself, its servants or agents or howsoever

otherwise from:

(a) taking any steps to require the

applicants to repay the borrowings

referred to in paragraph 7 of the

said Statement of Claim or any part

thereof on 31 July 1994 or at any

other time prior to the redemption

date of the said Zero Coupon Bonds;

(b) enforcing the said security referred

to in paragraph 7 of the said

Statement of Claim.

3. A declaration that the respondent engaged in

conduct that was misleading or deceptive or

likely to mislead or deceive contrary to s.52 of

the Trade Practices Act 1974.

4. Damages.

5. Such further or other order as this Honourable

Court deems fit.

6. Costs."

8. By way of interlocutory relief the applicants seek an interlocutory injunction in terms of paragraph 2 above.

9. The case pleaded by the applicant in their statement of claim is put, in essence, in four ways. First it is alleged that by an agreement partly oral, partly in writing and partly to be implied, made between the applicants and the respondent in or about July 1989 the respondent agreed to provide to the applicants foreign currency facilities totalling A$7,700,000 and further to provide to the applicants a facility in the sum of A$1,600,000 for the acquisition of ZCB to constitute a foreign currency hedge in respect of borrowings drawn down by the applicants under the foreign currency facility.

10. It is further pleaded that terms of the agreement included that:-

(a) the foreign currency facility would be in the

same currency as the ZCB;

(b) the duration of the foreign currency facility

would be co-extensive with the life of the ZCB

which were expected to mature in or about the

year 2009;

(c) in the event that the foreign currency facility

fell due to be repaid prior to the redemption

date of the ZCB the respondent would renew the

foreign currency facility as may be required

until such redemption date; and

(d) the applicants would provide appropriate

security in respect of the foreign currency

facility and the ZCB facility.

11. The statement of claim goes on to allege that pursuant to the above agreement the applicants drew down fully the foreign currency facility and provided the security to the respondents, but that the respondent has not met its obligations in respect of the ZCB.

12. It is pleaded that further, or in the alternative, the applicants were induced to enter into the foreign currency facility and to draw down such facility and provide the security to the respondent by representations made to it by the applicant that:-

(a) it intended to provide and would provide to the

applicants the ZCB facility;

(b) it intended to do and would do all things

necessary to acquire or facilitate the

acquisition of the ZCB; and

(c) it intended to renew and would renew until the

redemption date of the ZCB the foreign currency

facility in the event that it fell due to be

repaid prior to such redemption date.

13. Further, or in the further alternative, it is pleaded that the respondent warranted to the applicants to the effect of the alleged representations set out above. The representations are pleaded to have been false and untrue and the warranty to have been breached in circumstances which constituted such representations and warranties misleading or deceptive or likely to mislead or deceive contrary to section 52 of the Trade Practices Act.

14. Further on in the further alternative the pleaded conduct of the respondent is alleged to have been in breach of a duty of care owed by the respondent to the applicants.

15. In the premises the applicants plead that by reason of the alleged agreement the respondent:-

(a) is not entitled to require the applicant to

repay the foreign currency loan on 31 July 1994

or at any time prior to the redemption date of

the ZCB;

(b) is liable to renew the foreign currency facility

and/or the borrowing thereunder until such

redemption date; and

(c) is not entitled to enforce the securities.

16. The applicants further plead that the respondent is in the circumstances set out in the statement of claim estopped from requiring the applicants to repay the foreign currency loan at any time prior to the redemption date of the ZCB. The applicants plead that they have suffered and will continue to suffer loss and damage.

17. By an affidavit dated 14 July 1994 sworn in support of the claim for interlocutory relief Mr Angelatos deposes to the factual circumstances upon which the claim is based. The following is a summary of the matters of fact set out in his affidavit.

18. In March 1989 the applicants were considering the purchase of two properties. Mr Angelatos discussed the funding of the purchases with the applicants' banker, the respondent. Off-shore borrowings were considered as they were cheaper than local funding but Mr Angelatos was concerned that foreign exchange losses might arise by reason of currency fluctuations. Mr Angelatos undertook to investigate whether there was a hedging mechanism available which would eliminate the risk of adverse currency movement and yet be economical.

19. In April 1989 Mr Angelatos learned that the purchase of appropriate zero coupon bonds ("ZCB") was a way of eliminating the risk of adverse currency fluctuations in off-shore funding provided:-

(a) the ZCB and the off-shore funding were in the same currency;

(b) the maturity date of the ZCB was the same as the repayment

date of the off-shore funding; and

(c) the funds released upon maturity of the ZCB were equal to

the principal required to be repaid in foreign currency.

20. Officers of the respondent indicated to Mr Angelatos an interest in the ZCB concept and in advancing funds to the applicants for the purchase of appropriate ZCB. Such officers thereafter attended a meeting with Mr Angelatos and his legal and financial advisers during which the necessary conditions for the use of ZCB as a hedging mechanism for foreign currency borrowings were made plain.

21. The respondent subsequently made an offer to the applicants of a financial facility to fund the purchase of ZCB.

22. On 30 June and 19 July the applicants settled on the purchase of the two properties referred to earlier, utilising for the purpose existing overdraft facilities with the respondents. The decision to utilise the more expensive overdraft facilities in preference to the foreign currency facility was made because the ZCB were not in place.

23. In August 1989 Mr Angelatos advised the respondent that he wished to withdraw his request to the respondent to purchase foreign currency. He did so because no ZCB were in place. Thereafter officers of the respondent were in frequent contact with him and assured him that the respondent was doing all that it could to acquire appropriate ZCB.

24. In September 1989 Mr Angelatos agreed to the draw-down of the foreign currency facility without ZCB in place. He did so on the late night advice of an officer of the respondent that the time was attractive to do so and on the assurance of that officer that the respondent was committed to the purchase of the ZCB and would do so within a couple of months.

25. The respondent did take steps towards the purchase of ZCB. In October 1989 there were negotiations between the parties concerning the purchase of particular ZCB which the applicants' advisers regarded as unsuitable. Such ZCB were not acquired.

26. On 20 November 1989 a meeting was held at offices of Mr Angelatos. An officer of the respondent, a Mr Manwaring, advised Mr Angelatos at this meeting that the respondent had decided to withdraw the facility earlier proposed to fund the purchase of ZCB and would take no further steps to acquire the ZCB.

27. Mr Angelatos has been unable himself to acquire appropriate ZCB to hedge the applicants foreign currency borrowings. As a consequence the applicants have entered into forward exchange contracts to obtain protection against adverse currency fluctuations affecting their foreign currency borrowings.

28. The story told by Mr Angelatos in his affidavit is in part supported by affidavits sworn by certain of his advisers. In particular such affidavits confirm Mr Angelatos' interest in 1989 in financing the two properties above referred to by a foreign currency loan, his advice to the respondent in or about May 1989 that he would only borrow in foreign currency if ZCB would be purchased which would mature on the repayment date of the loan, discussions in May 1989 to which the respondent was a party to the effect that appropriate ZCB would have a maturity date sometime between 10 and 20 years in the future and comments by officers of the respondent on the same occasion to the effect that the respondent would roll-over commercial facilities where there was no breach or default. I interpolate that in his affidavit Mr Angelatos deposes to an officer of the respondent reminding him in May 1989 "that all facilities provided to the Angelatos Group by NAB during the last 15 years had always been renewed".

29. In response to the affidavits filed on behalf of the applicants the respondent filed five affidavits. Only one such affidavit is sworn by an officer of the respondent able to depose to dealings between the applicants and the respondent in 1989. The officer, Mr Young, confirms the respondent's knowledge of the applicants' desire to purchase the two properties, the discussions concerning the borrowing of foreign currency and the use of ZCB as a hedging instrument and the holding of the May meeting between officers of the respondent and Mr Angelatos and his advisers. However, the officer denies that any assurance was given to Mr Angelatos that the foreign currency facilities would be rolled-over or that the respondent would renew such facilities until the maturity date of ZCB.

30. Mr Manwaring has sworn an affidavit concerning the meeting of 20 November 1989. He deposes to the purpose of the meeting being to reinforce the Bank's requirement that the ZCB acquired be a U.S. Treasury backed bond. He says that as at the date of the meeting the respondent had not made a decision to withdraw the facility to purchase ZCB or to take no further steps to acquire ZCB. His belief is that the ZCB facility was not cancelled until April 1991. I note that neither Mr Manwaring nor any other deponent to an affidavit filed on behalf of the respondent speaks of efforts by the respondent later than November 1989 to acquire ZCB or alternatively explains the failure to make such efforts. Mr Manwaring does agree that he may have told Mr Angelatos at the 20 November 1989 meeting that the respondent would not guarantee the renewal of the foreign currency facility beyond the critical five year term.

31. In order to secure the injunction which they seek the applicants must show:-

(a) that there is a serious question to be tried;

(b) that they will suffer irreparable injury for

which damages will not be an adequate

compensation unless an injunction is granted;

and

(c) that the balance of convenience favours the

granting of an injunction

(per Mason ACJ in Castlemaine Tooheys Ltd v State of South

Australia [1986] HCA 58; (1986) 161 CLR 148 at 153).

32. Mr Chevnov QC, senior counsel for the applicants, submitted that the serious issue to be tried is the entitlement of the respondent to enforce its securities upon the failure of the applicant to repay to it on 29 July 1994 the foreign currency borrowings. He further submits that in the circumstances of the applicants' business as landlords to high quality tenants and their financial arrangements with other lenders, damages would not adequately compensate them for the irreparable injury which they will suffer should the respondent assume possession of the secured properties and commence the realisation of those properties. As to the balance of convenience he points to the serious consequences to the applicants of the course of action proposed by the respondent and the desirability of maintaining the status quo pending the determination of the claim for principal relief.

33. Mr Karkar QC, senior counsel fo the respondent, submitted that as a matter of law the injunction sought could not be granted. He contended first that the injunction claimed was sought to preserve an asserted right to specific performance of a contract to lend money, and that specific performance of such a contract would never be ordered. He referred to Western Wagon and Property Co. v. West (1892) 1 Ch 271 and The South African Territories Ltd v Wallington (1898) AC 309.

34. In Corpers (No. 664) Pty Ltd v N.Z.1 Securities Australia Ltd (1989) ASC 55,714 at 58,418 Young J of the New South Wales Supreme Court said:-

"It seems to me that the rule is that ordinarily specific

performance will not be granted (when the contract is one to

lend money), but there may be special factors which will

take a case out of the ordinary situation and where those

special factors exist equity will grant specific

performance."

35. See also Meagher, Gummow and Lehame JJ 3rd Edition at paras 2010 and 2033.

36. In my view it is the more plain that the rule is not immutable where what is sought to be invoked is not equitable relief but the wide statutory powers of the court under section 87 of the Trade Practices Act. (See Creative's Landscape Design Centre Pty. Ltd. v Platz (1989) ATPR 40-980; Benlist Pty Ltd v Olivetti Australia Pty. Ltd. (1990) ATPR 41-043).

37. In my view the rule that ordinarily specific performance will not be granted when the contract is one to lend money does not necessarily restrict the powers of a court under section 87 to frame such order or orders as the section envisages. However, in determining whether or not to make such order or orders, the court will no doubt take into account those principles which lie behind the ordinary rule. I consider it appropriate in the circumstances of this case, provided I am satisfied that other considerations indicate that the grant of this interlocutory injunction is warranted, to grant such injunction and leave to the trial judge the question of the appropriate form of final relief.

38. Secondly Mr Karkar submitted that on the uncontroverted facts before the Court the contract alleged in the Statement of Claim of the applicants was superseded by another contract in different terms in August 1991. As a consequence he submitted that no serious issue arises to be tried. In my view the matter is not as plain as Mr Karkar suggests. The applicants have pleaded a contract partly in writing, partly oral and partly to be implied entered into by the parties in about July 1989. I do not consider it to be a necessary conclusion from the later dealings between the parties as revealed by the evidence that such alleged contract has been wholly superseded. It may well be that the later dealings undermine the strength of the applicants' case. However I am not persuaded that they do so to the extent that there is no serious issue to be tried between the parties. Perhaps more importantly the applicants plead that they were induced to enter into the foreign currency facilities and to draw down such facilities and provide security to the respondents by certain representations made to them by the respondents as to its intentions with respect to ZCB. If the applicants can substantiate these pleas and can show that their later conduct was consequential upon the earlier dealings between the parties, the alleged significance of the later dealings may be significantly diminished. I find that there is a serious issue to be tried as to the entitlement of the respondent in all of the circumstances to enforce its securities upon the failure of the applicants to repay to it at the end of this month the foreign currency borrowings.

39. Thirdly, Mr Karkar submitted that the respondent could not be sued by the applicants on the causes of action pleaded as such causes of action are time barred. He did not elaborate on this submission and I assume that it is not intended to be pressed. In any event I do not consider that in the circumstances of this case such submission can be maintained - at least at this stage of the proceedings (see Wardley Australia Ltd v Western Australia [1992] HCA 55; (1992) 175 CLR 514).

40. Fourthly it was submitted that damages will be an adequate remedy in the circumstances of this case and that such damages are susceptible of ready calculation. In my view commercial reality dictates that the Angelatos Group would be seriously damaged by the appointment of a receiver or receivers and endeavours to realise properties held by it. Such actions during the time that will pass until a final determination of this matter would be likely, in my view, to cause the Group to suffer irreparable injury in the sense that that expression is used by Mason ACJ in Castlemaine Tooheys Ltd v State of South Australia (above). Moreover aspects of such damage would be difficult to quantify. I am satisfied that damages would not be an adequate remedy should the applicants succeed at the final hearing of this matter.

41. Finally on the issue of whether as a matter of law an injunction can be granted, it was submitted on behalf of the respondent that an injunction in the terms sought could only be granted on terms that the amount of the debt secured by the relevant securities be paid into court. Reliance was placed on Inglis v Commonwealth Trading Bank of Australia [1972] HCA 74; (1972) 126 CLR 161.

42. As Hedigan J stated in Nicholas John Holdings Pty Ltd v ANZ Banking Group [1992] VicRp 97; (1992) 2 VR 706 the principle referred to in Inglis' Case "has caused judicial uneasiness from time to time." In Contractor Services Pty Ltd v Esanda Finance Corporation Ltd (1990) ATPR 41-020 at p.51,355 French J stated:-

"The full impact of the (Inglis) condition has been

mitigated in cases where the claim is said to go to the root

of the mortgagee's title, including the case in which relief

is sought under s.87 of the Trade Practices Act 1974 to vary

or set aside the mortgage."

43. See also Graham v Commonwealth Bank of Australia (1988) ATPR 40-908; Glandore v Elders Finance and Investment Co. Ltd. [1984] FCA 407; (1984) 4 FCR 130 and Harvey v McWalters [1948] NSWStRp 58; (1948) 49 SR(NSW) 173.

44. I accept the submission made on behalf of the applicants that I have a discretion in the circumstances of this case not to insist upon payment of the amount of the alleged debt into court as a condition of any grant of any injunction in the terms sought. In my view the circumstances of the case render it appropriate for such payment not to be insisted upon. The amount of the debt is large but the respondent holds security not suggested to be inadequate for its payment. So far as the applicants are concerned, their case is that they may not be called upon to pay the debt until some time early next century. They invoke the jurisdiction of the Court to make orders to prevent or reduce the loss or damage suffered or likely to be suffered by them by the conduct of the respondent which they seek to characterise as misleading or deceptive. The capacity of the Court to do so should they make out the case pleaded by them is likely to be hampered should their circumstances have been significantly altered in the meantime as a consequence of the need to raise A$7,700,000 for payment into court.

45. It follows that I do not accept the submission that as a matter of law I am unable to grant the interlocutory relief claimed in this matter. I turn to consider the two submissions advanced on behalf of the respondent that in the exercise of my discretion I should refuse the relief sought.

46. The first such submission is that there has been delay by the applicants in instituting these proceedings, which delay has been inordinate and inexplicable. Plainly the applicants could have instituted proceedings of some sort against the respondent earlier. On the evidence put forward by the applicants it seems that they could have done so as early as November 1989: on the evidence of the respondent perhaps not until April 1991. However section 82 of the Trade Practices Act creates a course of action which does not accrue until actual damage is suffered as a result of conduct of another done in contravention of a provision of Part IV or V of the Act. The applicants plead their alleged loss and damage in paragraph 19 of the statement of claim. Paragraph 19 does not make it plain when it is alleged that such damage was first sustained. Full details of the damages allegedly sustained and the circumstances in which it was sustained will only become clear at trial. Similarly, the time at which it first became "likely" that the applicants would suffer loss and damage within the meaning of section 87 of the Trade Practices Act will only become clear at trial. No deponent to any of the affidavits filed on behalf of the respondent has given evidence of any prejudice suffered by the respondent by reason of delay. I am not prepared to rule that the applicants' delay has been sufficient to disentitle them to interlocutory relief.

47. Secondly it was submitted that no irreparable harm to the applicants should the securities be enforced has been demonstrated on the affidavits filed. It is true that the relevant material in the affidavits is limited. However, in my view having regard to the amount of the money involved, the nature of the applicants' business and the terms upon which finance has been provided to them by other financiers, commercial reality dictates that they will suffer irreparable harm.

48. In my view an evaluation of the balance of convenience leads to the conclusion that it is desirable to grant an interlocutory injunction in this matter.

49. Upon the applicants and each of them giving the usual undertakings as to damages and on the conditions set out below, I propose to order that the respondent be restrained until the final hearing and determination of this matter from:-

(a) taking steps to require the applicants to repay

the borrowings referred to in paragraph 7 of the

statement of claim in this matter; and

(b) enforcing the security referred to in paragraph

7 of such statement of claim.

50. The order will be conditional upon the applicants:-

(a) continuing to meet all interest obligations with

respect to such borrowings; and

(b) meeting all obligations to the respondent

pursuant to forward exchange contracts between

the applicants and the respondent.

51. All parties are to have liberty to apply on five days' notice.

52. The costs of this application for interlocutory relief are reserved to the trial judge.