Harrem Pty Ltd v Tebb & Anor [2006] NSWSC 1415 | Case summary

1 The Plaintiff occupies industrial premises at Minto owned by the Defendants in which the Plaintiff conducts its business as a transport and storage operator. On 17 November 2006, the Plaintiff applied ex parte to Justice Barrett for an order restraining the Defendants from taking possession of the premises. 2 In support of the application, the Plaintiff relied solely upon an affidavit of its director, Mr C Howes which was sworn on 17 November 2006. A folder of correspondence between the parties and other documents was exhibited to that affidavit. His Honour granted the order up to and including 22 November 2006 and made the Plaintiff's summons returnable before the Duty Judge that day. 3 On 22 November 2006, both parties appeared by Counsel before Campbell J who was the Duty Judge. I am unable to tell from the file to what extent the Plaintiff's application was argued. His Honour made orders which do not appear to be made by consent. The Plaintiff's Summons was stood over to today and the injunction granted by Justice Barrett was extended up to today. The Plaintiff was directed to file a Statement of Claim by 5.00pm on 6 December 2006. The Defendants were directed to file and serve their affidavits by 4.00pm on 1 December and the Plaintiff was directed to file and serve its affidavits in reply by 4.00pm on 11 December. 4 The Plaintiff did not comply with the directions to file its claim by 6 December. It obtained leave to file it in Court today when the matter was called on for hearing. The Defendants did not comply with the Court direction to file and serve their affidavits by 1 December. They filed and served an affidavit on Mr Tebb on 8 December. 5 Mr Newell of Counsel, who appears for the Plaintiff, informs me from the Bar table that the director of the Plaintiff, Mr Howes, is presently in hospital and that until the luncheon adjournment today he was unable to obtain proper instructions to prepare a response to Mr Tebb's affidavit. Mr Newell seeks an adjournment of the these proceedings until at least the middle of next week in order that he may obtain detailed instructions from Mr Howes on Sunday to enable an affidavit of Mr Howes to be filed by next Wednesday. Mr Newell seeks an extension of the injunction at least until that time. 6 Mr Garnsey QC, who appears with Mr J-P. Redmond of Counsel for the Defendants, opposes any adjournment. He does not dispute that Mr Howes is in hospital and the only explanation which he can give, upon instructions, for the Defendants non-compliance with the Court's directions for the filing of the Defendants' affidavits is that there has been insufficient time for compliance. However, on 1 December, the date upon which the Defendants were to file their affidavits, the Defendants' solicitor wrote to the Plaintiff's solicitor advising that due to pressures of time the Defendants were unable to file their evidence until early the following week. They said that the agreed timetable would need to be amended "somewhat". Apparently there was no response by the Plaintiff's solicitor to that information. Certainly, as far as the file reveals, there has been no application to the Court by either party to vary the timetable which was set on 22 November. 7 When the matter was called on by me today, Mr Garnsey informed me that he would apply to have the injunction dissolved on the ground that the Plaintiff had not made full and frank disclosure to Barrett J when it obtained the injunction ex parte on 17 November. In response Mr Newell informed me he had not previously been informed of that application and that he was taken by surprise. He said that he did not know in what respects it was said the Plaintiff had failed to make full disclosure to Justice Barrett. He said further he was disadvantaged because he was unable to take instructions from Mr Howes. 8 Mr Garnsey then observed that the injunction would expire today at five o'clock unless extended. He said he would oppose extension on the basis of the evidence in Mr Tebb's affidavit. Mr Newell responded that he wished further time to file an affidavit since the Defendants had been late in filing Mr Tebb's affidavit. As I have earlier mentioned, he seeks until the middle of next week in order to do so. 9 The affidavits of both parties have been read. In my opinion, as Mr Garnsey says, there has been a considerable volume of correspondence between the parties which the Plaintiff ought to have disclosed and brought to the attention of Barrett J when making its ex parte application to him. Mr Newell complained of an absence of particularity in that complaint but the complaint has been amply demonstrated and particularised by the Defendants' exhibits which Mr Garnsey has taken me through today. There are at least, on my reckoning, fourteen letters passing between the parties between 14 October 2005 and 28 August 2006 which have not been disclosed in the application to Barrett J and which ought to have been disclosed. 10 Of particular significance in this regard are a letter of 25 May 2006 and a letter of 28 August 2006. In the letter of 25 May 2006, a letter from the Plaintiff to the Defendants, the Plaintiff makes it quite clear that it is prepared to move out of the subject premises because negotiations between the parties for an acceptable rent and acceptable space have seemingly come to nothing. In that letter, Mr Howes, having referred to the protracted negotiations between the parties since the date of what is now said to be a binding agreement for lease between them, nevertheless says that the parties have been unable to agree upon the space required and the rent to be paid and continues to offer an option on certain terms. He says that: "If you do not wish to accept this option there is no harm done and I will vacant [sic] as soon as possible, I do not wish to argue the matter or confuse the issue further and as I stated previously I appreciate yourself giving us the opportunity to move in as the alternative for us would've been much worse." 11 In the letter of 28 August 2006 from Mr Howes to Mr Tebb, Mr Howes discusses the various difficulties caused by the fact that the Council had not approved the activities being conducted by the Plaintiff in the subject premises. Mr Howes concluded: "I am quiet [sic] willing to discuss any of these matters with you or any other matters you may need to discuss at any time, and to round things out please be assured that unless something drastically changes that we will be moving as quick [sic] as a property makes its self [sic] available, neither myself or you need any further headaches." 12 These letters, particularly taken in the context of the previous correspondence commencing with the letter of 14 October to which I have earlier referred, throw a different light on the Plaintiff's assertion that in October 2005 it had reached a binding agreement for lease with the Defendants notwithstanding the absence of any formal documentation and throw a different light on the Plaintiff's assertion that the balance of convenience would necessarily favour granting an injunction. It is possible that, had those matters been disclosed, an ex parte injunction would still have been granted but, in my opinion, there is also a very strong possibility to the contrary. 13 What is important for the Court to emphasise and to maintain consistently in its practice is that a party seeking an ex parte injunction has a positive and onerous duty to make a full and frank disclosure of matters both favourable to, and adverse to, its case to the Judge to whom that application is made. 14 It is obvious that the material which was not disclosed by the Plaintiff must have been in the possession of the Plaintiff. It was correspondence between the parties. It may be that the Plaintiff itself, or its legal advisers, did not think that this correspondence was relevant or material. That is not the test. If the Plaintiff's advisers did not think this correspondence was material, they were seriously in error. The Plaintiff cannot take advantage of that error, if indeed it was an error. 15 I think that a compelling case has been made for the discharge of the injunction on the ground that the Plaintiff has failed to make full and frank disclosure to Barrett J of material which it ought to have disclosed. I do not think anything will be gained by granting an extension of time to the Plaintiff to put on evidence endeavouring to explain its non-disclosure. As I say, even if the non-disclosure was innocent and unknowing on the part of the Plaintiff, there still was non-disclosure which the Court ought not overlook. 16 I do not think that the Plaintiff should have the benefit of the continuation of an injunction which it probably would not have obtained if it had made full and frank disclosure at the time that it made its ex parte application. The consequence will be that I will discharge the injunction now. 17 That order will not affect the right of the Plaintiff, if so advised, to apply urgently to the Vacation Judge or the Duty Judge in a matter of days for a further injunction on the basis of fresh material - the sort of material, perhaps, that Mr Newell anticipates being briefed with as a result of his conference with Mr Howes next Sunday. 18 However, by reason of the non-disclosure to which I have referred, I think it is incumbent upon the Plaintiff to make out its case for an injunction afresh in a contested interlocutory hearing. Clearly, on that occasion, it will have to contend with the effect of the correspondence which has now been disclosed on the strength of its case as to whether or not there was ever a binding agreement for lease between the parties and on the strength of its case that the balance of convenience now favours the grant of an injunction pending determination of the proceedings. 19 Nothing I say today will, of course, bind or indeed influence any other Judge before whom the Plaintiff may seek a fresh injunction. If the Plaintiff so wishes, I will stand its motion over before the Vacation Judge on a certain day next week. It may be the Plaintiff wishes to take its own time to make its new application. 20 In reaching my conclusion that the injunction should be dissolved I have taken into account that the Defendants suffer prejudice by the indefinite continuation of an injunction because they have entered into a contract for sale of the subject premises under which completion is required by 18 December 2006. However, the contract does not make time of the essence in this respect. If the proceedings between the Plaintiff and Defendants are not resolved by 18 December and the Defendants are not able to complete the contract otherwise by that date, there is still a period of fourteen days' grace within because purchaser under the contract must give a 14 day notice to complete in accordance with the provisions of the contract. 21 However, as I have said, despite the fact that there is some period of grace allowed to the Defendants in completing the contract for the sale of the subject land, I do not think it proper to allow the Plaintiff to retain the benefit of an ex parte injunction which in all probability it would not have obtained had proper disclosure been made. 22 For these reasons I will discharge the injunction granted by Barrett J on 17 November this year and extended on 2 November. 23 Mr Newell has just drawn my attention to that fact that the letter of 28 August 2006 from the Plaintiff to the Defendants, to which I have referred earlier in this judgment, was included in the exhibit bundle to the affidavit of Mr Howes which was read in the ex parte application to Barrett J. However, this does not affect the conclusion to which I have come. I have picked two letters as examples, the principal letter in significance probably being that of 25 May 2006. However, without reviewing all of the fourteen letters not disclosed in detail, I can content myself with saying that the substance and tenor of those letters cast very real doubt on the Plaintiff's assertion that there was a final and binding agreement concluded between the parties, as the Plaintiff contends, either on 13 or on 31 October 2005. 24 The tenor of that correspondence as a whole shows, in my view, that there is a very strong argument that the parties were still in negotiation for a considerable period of time after the date of the alleged binding agreement and that they did not intend that there be a binding agreement unless and until formal documentation was exchanged. Therefore, despite the erroneous reference earlier in my judgment to a letter of 28 August 2006 as not having been disclosed, I do not see any reason to alter the conclusion to which I have come. 25 Mr Newell opposes any order for costs today. Basically, his complaint is that the Plaintiff was not apprised that there would be any substantial contest between the parties today. I have not been shown any correspondence or anything else emanating from the Defendants which could reasonably give the Plaintiff that belief. 26 The uniform practice of the Court is that when an ex parte injunction is obtained, the applicant must be ready to justify it, if necessary, at any time. This is because the relief was obtained in the absence of the party affected. The party who obtains the benefit of an order substantially affecting the rights of another party in the absence of that party must always be ready to justify that order, and may be called on at any time by the party affected to justify the retention of the order. 27 The injunction would have expired today unless extended. I do not see how, in accordance with the practice of the Court, the Plaintiff could legitimately expect that it would be able to obtain an extension of that injunction without contest, particularly as it had been advised by the Defendants' solicitor's letter of 1 December that evidence would be filed by the Defendants, although late. It seems to me that if the Plaintiff did not prepare itself for a contest today, then the fault lies with the Plaintiff and not with the Defendants. It seems to me that the costs of today relate to the essential question whether the injunction ought to be continued having regard to the non disclosure to which I have referred. It seems to me, therefore, that the costs of today ought to be paid by the Plaintiff. I so order.

Harrem Pty Ltd v Tebb & Anor

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