Australia and New Zealand Banking Group Limited v Apollo Valley Pty Ltd

EX TEMPORE Judgment 1Australia and New Zealand Banking Group Limited (ANZ) seeks interlocutory relief in respect of its equitable interest in a water access licence granted under the provisions of the Water Management Act 2000. That water access licence, which is registered as WAL 36264, is held by Apollo Valley Pty Limited (Apollo), the first respondent. 2ANZ lodged caveat number AH782164 to protect its equitable interest in WAL 36264, that interest arising from its unregistered mortgage over the water access licence and its registered fixed and floating charge over the assets and undertaking of Apollo. 3On 8 July 2013 ANZ commenced these proceedings against Apollo seeking to extend the period of the caveat. An order for short service was made and Apollo served with the summons and two affidavits of Ian Marsden sworn 8 July 2013, in accordance with the order then made. The summons was made returnable this morning and is before me as the Duty Judge. Although it has been proved before me that service was effected in accordance with the leave given, Apollo has not appeared today. 4ANZ commenced the proceedings following receipt of a notice dated 1 July 2013 from the Registrar General, indicating that the caveat would lapse 21 days after service of that notice unless that period was extended by order of this Court. The lapsing of a caveat following notice from the Registrar General and the effect of an order by this Court extending the period of the caveat are the subject of cll 6(2) and (3) of Sch 1A to the Water Management Act. 5The lapsing notice issued by the Registrar General was given because a dealing had been lodged with the Minister that had the effect of triggering the requirement to give notice to ANZ. The giving of a lapsing notice in that circumstance is required by cl 7(1) of Sch 1A. The power of the Court to extend the period of the caveat following notice is founded in cl 8(c) of Sch 1A (see also Mueller v Austin [2010] NSWLEC 137 at [3] - [6]). 6Since commencing the proceedings, ANZ has learned that Apollo contracted to sell WAL 36264 to Budgewah Pastoral Co Pty Limited (Budgewah) and has been paid the purchase price for that licence. However, no transfer of the licence has been registered, no doubt due to the existence of the caveat. Having discovered the interest of Budgewah in the licence, ANZ seeks leave to join that company as a second respondent to the proceedings as the company is clearly affected by the relief that ANZ seeks (see Brenchley v The Minister Administering the Water Management Act [2011] NSWLEC 192 at [5]). 7In the circumstances, it is necessary that Budgewah be joined as a respondent in the proceedings (Pt 6 r 6.24 of the Uniform Civil Procedure Rules 2005). I propose to make an order to that effect. 8The application by ANZ to extend the operation of the caveat requires some brief consideration. As I have already indicated, the power of the Court to extend the operation of the caveat is found in cl 8(c) of Sch 1A to the Water Management Act. However, before making an order so to do, the Court needs to be satisfied that there is both a serious question to be tried and also that the balance of convenience favours preservation of the status quo. In that regard, the considerations to be applied when determining to extend the operation of the caveat are consonant with those very same considerations that are commonly applied by courts when considering to grant an interim or interlocutory injunction. 9On the evidence presently available to me, I am satisfied that there is a serious question to be tried. ANZ has a security interest in WAL 36264 and as a consequence had an entitlement pursuant to s 71E of the Water Management Act to have sought the recording of the caveat that it did. That security interest exists and existed at the time the caveat was recorded on the Access Register by reason of the charge and mortgage granted to it by Apollo, both of which constitute a "security interest" as defined in the Dictionary to the Water Management Act. Further, the evidence reveals that there is a substantial sum of money that remains owing to ANZ under the loan facility provided to Apollo, which sum is secured over assets of Apollo that include WAL 36264. In short, ANZ has demonstrated an arguable case for maintaining the caveat, the operation of which it seeks to extend. 10The balance of convenience favours extending the period of the present caveat. If not extended by order of this Court, the caveat will lapse on 22 July 2013. Should the caveat lapse and a transfer to Budgewah recorded, the interest that ANZ has in WAL 36264 will be destroyed. 11In the meantime, there would not appear to be any significant prejudice to Apollo or Budgewah, given that a limited extension is sought until Wednesday 24 July 2013 when the summons will again be listed before the Court. Evidence before me suggests that a substantial part of the proceeds of sale of WAL 36264 has been paid to an account held with ANZ and this would indicate that the interest of Apollo is preserved in the interim. This circumstance may also assist in resolution of the interest of Budgewah in the licence in the period before the matter next comes before the Court. 12I am informed by Mr Docker, counsel for ANZ, that there has been discussion among solicitors for all parties as to the course to be taken today. While Mr Docker informs me that the date 24 July, being the date to which ANZ applies to have the period of the caveat extended, was not specifically identified in discussion, the solicitors acting for both Apollo and Budgewah agreed that a short extension of time was appropriate so that some endeavour could be made to resolve the present controversy among the parties. 13In the circumstances that I have outlined, I am satisfied that it is appropriate to extend the operation of the caveat until 5.00pm on 24 July 2013, being the period of extension sought by ANZ. There is both a serious question to be tried and the balance of convenience favours an extension for that period. The matter will be stood over to the Duty Judge's list on that date when, if necessary, any further extension of the caveat can be debated. 14There is one procedural matter that needs to be addressed. These proceedings were commenced in Class 4 of the Court's jurisdiction. However, s 18(a3) of the Land and Environment Court Act 1979 (the Court Act) provides that proceedings brought under Sch 1A to the Water Management Act are proceedings that are assigned to Class 2 of the Court's jurisdiction. The present proceedings, having been brought under Sch 1A of the latter Act, clearly fall within s 18(a3) of the Court Act. They should therefore properly have been commenced in Class 2 of the Court's jurisdiction. 15The correct assignment of proceedings to the Class identified in the Court Act has significance beyond the assignment of a proceeding number. That significance includes the manner in which the proceedings are to be conducted and the way in which evidence may be received: s 38 of the Court Act. Of particular significance are the provisions of ss 56A and 57 of the Court Act which limit the rights of appeal from a decision made in Class 2 proceedings to a decision made on a question of law. This is to be contrasted with the position that would pertain if the proceedings were properly commenced within Class 4 of the Court's jurisdiction. Such proceedings would restrict the constitution of the Court to that of a judge. Moreover any appeal from a decision of the judge would be an all-grounds appeal to the Court of Appeal: s 58 of the Court Act. 16It therefore becomes important that matters are assigned to the correct class of jurisdiction. The fact that the proceedings have been commenced in the wrong class does not, of necessity, impact upon their competence. Rather, s 31 of the Court Act enables an order to be made requiring that the proceedings be taken to have commenced in the correct class of jurisdiction into which they appropriately fall. I propose to make such an order. 17For all these reasons, the orders that I make are as follows: A.Pursuant to s 31(2)(b) of the Land and Environment Court Act 1979, order that the proceedings be taken to have commenced in Class 2 of the Court's jurisdiction conformably with s 18(a3) of that Act. B.Upon the applicant, by its Counsel, giving the usual undertaking as to damages, the Court orders that: 1.The operation of caveat AH782164A recorded under s 71E of the Water Management Act 2000 is extended until 5.00pm on 24 July 2013. 2.Leave be granted to the applicant to join Budgewah Pastoral Co Pty Ltd ACN 000 153 882 as a second respondent to the proceedings. 3.Direct that Budgewah Pastoral Co Pty Ltd be served with a copy of the summons, showing a return date of Wednesday 24 July 2013 - (i) by email addressed to its solicitors and sent by 5.00pm today and, (ii) personally upon the company by 5.00pm on 17 July 2013. 4.Stand over the summons to the Duty Judge on Wednesday 24 July 2013 at 10.00am. 5.Direct that by 5.00pm on 17 July 2013 the applicant notify the first respondent of the adjourned hearing date of the summons. 6.Costs reserved. 7.These orders be entered forthwith.