Lefta Corporation Pty Limited v Kell & Rigby Holdings Pty Limited, Lindsay Bennelong Developments Pty Ltd & Peter David Campbell

Plaintiff's claim 14The plaintiff moved on a notice of motion dated 7 June 2011 seeking the following relief:

1. Order until further order that the first defendant, its servants and agents hold any money received by or for the first defendant from the second defendant or the third defendant pursuant to the Settlement Deed identified in the Amended Summons, to the extent of $1.54 million, in a separate bank account used in no other purpose the compliance with this order.
2. Order until further order that the second defendant, its servants and agents, and the third defendant retain any moneys which the first defendant may be entitled pursuant to the Settlement Deed identified in the Amended Summons, to the extent of $1.54 million. 15The plaintiff 's claim for interlocutory relief is put on the basis that the plaintiff has or will have some type of equitable interest in any funds paid by the second defendant to the first defendant pursuant to the Settlement Deed. The equitable interest is said to arise as follows: (a) by reason of an equitable charge over such funds created by cl 5 the Consultancy Agreement as agreed or on the basis of an order for rectification which is sought; or (b) on the basis that the plaintiff will automatically acquire an equitable interest in such funds akin to a solicitor's lien for unpaid costs.

Legal principles for interlocutory relief 16The plaintiff must first establish a "prima facie case", being "a sufficient likelihood of success to justify in the circumstances the preservation of the status quo pending the trial". The current statement of the requirement is that of the High Court in Australian Broadcasting Corporation v O'Neill (2006) 227 CLR 57 at 82. The relevant paragraphs are paragraphs 65, 71 and 72. which are as follows: 65. The relevant principles in Australia are those explained in Beecham Group Ltd v Bristol Laboratories Pty Ltd [fn 83]. This Court (Kitto, Taylor, Menzies and Owen JJ) said that on such applications the Court addresses itself to two main inquiries and continued: "The first is whether the plaintiff has made out a prima facie case, in the sense that if the evidence remains as it is there is a probability that at the trial of the action the plaintiff will be held entitled to relief ... The second inquiry is ... whether the inconvenience or injury which the plaintiff would be likely to suffer if an injunction were refused outweighs or is outweighed by the injury which the defendant would suffer if an injunction were granted." By using the phrase "prima facie case", their Honours did not mean that the plaintiff must show that it is more probable than not that at trial the plaintiff will succeed; it is sufficient that the plaintiff show a sufficient likelihood of success to justify in the circumstances the preservation of the status quo pending the trial. That this was the sense in which the Court was referring to the notion of a prima facie case is apparent from an observation to that effect made by Kitto J in the course of argument. With reference to the first inquiry, the Court continued, in a statement of central importance for this appeal. "How strong the probability needs to be depends, no doubt, upon the nature of the rights [the plaintiff] asserts and the practical consequences likely to flow from the order he seeks." 66. For example, special considerations apply where injunctive relief is sought to interfere with the decision of the executive branch of government to prosecute offences [fn 87]. Again, in Castlemaine Tooheys Ltd v South Australia [fn 88], Mason A-CJ, in the original jurisdiction of this Court, said that "[i]n the absence of compelling grounds" it is the duty of the judicial branch to defer to the enactment of the legislature until that enactment is adjudged ultra vires, and dismissed applications for interlocutory injunctions to restrain enforcement of the law under challenge. 67. Various views have been expressed and assumptions made [fn 89] respecting the relationship between the judgment of this Court in Beecham and the speech of Lord Diplock in the subsequent decision, American Cyanamid Co v Ethicon Ltd [fn 90]. It should be noted that both were cases of patent infringement and the outcome on each appeal was the grant of an interlocutory injunction to restrain infringement. Each of the judgments appealed from had placed too high the bar for the obtaining of interlocutory injunctive relief. 68. Lord Diplock was at pains to dispel the notion, which apparently had persuaded the Court of Appeal to refuse interlocutory relief, that to establish a prima face case of infringement it was necessary for the plaintiff to demonstrate more than a 50 per cent chance of ultimate success. Thus Lord Diplock remarked: "The purpose sought to be achieved by giving to the court discretion to grant such injunctions would be stultified if the discretion were clogged by a technical rule forbidding its exercise if upon that incomplete untested evidence the court evaluated the chances of the plaintiff's ultimate success in the action at 50 per cent or less, but permitting its exercise if the court evaluated his chances at more than 50 per cent." 69. In Beecham , the primary judge, McTiernan J, had refused interlocutory relief on the footing that, while he could not dismiss the possibility that the defendant might not fail at trial, the plaintiff had not made out a strong enough case on the question of infringement [fn 92]. Hence the statement by Kitto J in the course of argument in the Full Court that it was not necessary for the plaintiff to show that it was more probable than not that the plaintiff would succeed at trial. 70. When Beecham and American Cyanamid are read with an understanding of the issues for determination and an appreciation of the similarity in outcome, much of the assumed disparity in principle between them loses its force. There is then no objection to the use of the phrase "serious question" if it is understood as conveying the notion that the seriousness of the question, like the strength of the probability referred to in Beecham , depends upon the considerations emphasised in Beecham . 71. However, a difference between this Court in Beecham and the House of Lords in American Cyanamid lies in the apparent statement by Lord Diplock that, provided the court is satisfied that the plaintiff's claim is not frivolous or vexatious, then there will be a serious question to be tried and this will be sufficient. The critical statement by his Lordship is "[t]he court no doubt must be satisfied that the claim is not frivolous or vexatious; in other words, that there is a serious question to be tried". That was followed by a proposition which appears to reverse matters of onus : "So unless the material available to the court at the hearing of the application for an interlocutory injunction fails to disclose that the plaintiff has any real prospect of succeeding in his claim for a permanent injunction at the trial, the court should go on to consider whether the balance of convenience lies in favour of granting or refusing the interlocutory relief that is sought." (Emphasis added.) Those statements do not accord with the doctrine in this Court as established by Beecham and should not be followed. They obscure the governing consideration that the requisite strength of the probability of ultimate success depends upon the nature of the rights asserted and the practical consequences likely to flow from the interlocutory order sought. 72. The second of these matters, the reference to practical consequences, is illustrated by the particular considerations which arise where the grant or refusal of an interlocutory injunction in effect would dispose of the action finally in favour of whichever party succeeded on that application. The first consideration mentioned in Beecham , the nature of the rights asserted by the plaintiff, redirects attention to the present appeal. 17Secondly, the plaintiff must also establish that it is likely to suffer irreparable injury for which damages will not be an adequate compensation unless an injunction is granted. See ABC v O'Neill at 68 para [19]. In the circumstances of this case if an injunction is not granted then the plaintiff will not be able to maintain its alleged charge and thus looses its certainty of recovery of the funds which it alleges are due to it. 18Thirdly, the Court must consider whether the balance of convenience favours granting the injunction. That is, "whether the inconvenience or injury which the plaintiff would be likely to suffer if an injunction were refused outweighs or is outweighed by the injury which the defendant would suffer if an injunction were granted. 19The first defendant did not suggest that there were any factors under the balance of convenience which would lead the Court to refuse the interlocutory relief on this basis if the Court itself was satisfied as to the prima facie case. However, the second defendant raised matters going to the balance of convenience.

Plaintiff's claim for an equitable charge 20I have earlier set out the relevant provisions of clause 5 of the agreement. The plaintiff suggests that the context for that clause includes the balance of the agreement comprised of the letter to the defendant of 11 March 2010 and schedule 2 to the letter. The letter contains the passage, "You have asked us to provide a fee proposal that includes an incentive for a successful outcome. We have taken this into consideration and our proposed Fee and Incentive for the Services as detailed in the Consultant's Services Agreement. "It then goes on to provide that "we have provided a substantial discount to our standard hourly rate as part of the incentive arrangement." 21By clause 4 of the Consultants Services Agreement the discounted hourly rate fees were to be paid monthly whereas the incentive payment was only payable when the defendant actually received a figure over $4 million from LBD or secured such a figure by enforceable award. 22Clause 10 provides for payment in the event of termination of the agreement by the client (First Defendant). In that case the Plaintiff was to be paid the hourly fee plus an additional $70 per hour for all hours engaged because the opportunity for an incentive payment would be reduced by premature termination on 30 days notice. But if, at the time of termination, the client had submitted any claim to the principal and it subsequently recovered over $4 million the incentive payment was to be adjusted by deducting from the excess over $4 million, the costs of achieving the result; that is, fee payments and legal costs. 23In Jackson v Richards (2005) 12 BPR 23,091; [2005] NSWSC 630; BC200504860, White J said - [18] An agreement between a debtor and his creditor that the debt owing shall be paid out of a specific fund coming to the debtor will create a valid equitable charge upon the fund and operate as an equitable assignment of it. ( Rodick v Gandell (1852) 1De GM & G 763 at 777, 778; 42 ER 749 at 754). However, for this principle to apply, there must be a specific fund from which the debt owing is to be paid. In Swiss Bank Corporation v Lloyds Bank Ltd [1982] AC 584, Buckley LJ said (at 595): If the debtor undertakes to segregate a particular fund or asset and to pay the debt out of that fund or asset, the inference may be drawn, in the absence of any contra indication, that the parties' intention is that the creditor should have such a proprietary interest in the segregated fund or asset as will enable him to realise out of it the amount owed to him by the debtor . [19] For such a charge to be created by an agreement to pay a debt out of a fund to come to the debtor, the parties must have agreed that the debtor would keep the fund separate from his other assets. ( Moseley v Cressey's Co (1865) LR 1 Eq 405 at 409). [20] There was no express agreement between the parties that if the Drummoyne property were sold, the defendant would keep his share of the proceeds of sale in a separate account which would be applied to meet his debt for costs. If the parties intended or assumed that the defendant could add his share of the proceeds of sale to his other assets, by, for example, crediting them to his existing bank account, or that he could use them to reduce any overdraft to the bank, or to discharge other debts, any such intention or assumption would be inconsistent with the plaintiffs having a charge over the proceeds. Very slight differences of language could produce different legal outcomes. If the defendant said, "I will pay your costs out of the proceeds of sale", that might imply that the proceeds of sale would be kept separate and the debt would be paid from the separate fund. On the other hand, if the defendant said "I will pay your costs when I receive the proceeds of sale", no such implication could be drawn. 24In this case the plaintiff suggests that a specific quantified fund exists in the hands of the Second Defendant. It is not a case such as that referred to by Buckley LJ where "the debtor undertakes to segregate a particular fund or asset and to pay the debt out of that fund or asset". 25According to the plaintiff the difference is not important. The segregation from the First Defendant's other assets occurs before it receives the money, as soon as the triggering event occurs. Once the Deed was entered between the First Defendant and the Second Defendant there was an identifiable specific fund, a separate asset of the First Defendant charged with the debt to the Plaintiff. The position is said to be comparable to the first of the two examples posed by White J whereby agreement for payment "out of" a fund implies that the fund is to be kept separate from other funds until the Plaintiff is paid. In this context the plaintiff submits that payment of "20% of all amounts" received has the same meaning as "20% out of all amounts" received. Clearly, if the agreement had provided for payment of an amount "equal to" 20% of all amounts over $4 million or similar language the necessary intention to pay part of the fund would not be manifested. 26When considering the construction argument based upon the terms of clause 5 of the agreement it should be appreciated that the plaintiff is also seeking an order for rectification of clause 5 in the proceedings. If that claim is successful clause 5 as rectified would read as follows: " "Incentive: If the Client is awarded by any court or tribunal and/or paid by the Principal (or any related party to the Principal) in relation to the dispute the Client has with the Principal about the Project, any amount over $4 million (whether by way of cumulative awards or payment or by way of a single award or payment), then, in addition to the Fee, the Client will pay the Consultant, within 30 days of any such award or payment, 20% of all amounts over $4 million the Client will give the Consultant, within 30 days of payment to it of any such amount, 20% out of all money it receives over $4 million or which is paid by the second defendant to any third party on behalf of the first defendant." 27Of note is the reference to "out of all money" in the rectified clause 5. The conversation relied upon by the plaintiff said to have occurred on 18 December 2009 between Mr Chandler and Mr Kell was in these terms: 7.In paragraphs 7 and 8 of my First Affidavit, I referred to a conversation during a meeting which took place between James Kell and I on 18 December 2009. 8.In paragraph 8 of the First Affidavit, I refer to a meeting on 18 December 2010. That is a typographical error and should refer to the meeting on 18 December 2009. In paragraph 8 I also summarised a discussion between James Kell and I. The conversation we had at that time was to the following effect: Mr Kell: "Kell and Rigby will pay you an hourly rate but, due to the cash flow problems we are having, we want that rate to be discounted on the basis that we pay you an incentive fee." Me: "As long as the incentive fee is appropriate, that should be OK." Mr Kell: I believe an incentive is appropriate as it will help you to explore potential avenues for claims more fully than you might otherwise do. I am proposing to you that if you achieve any amount for us exceeding $4 million from LBD then you can have 20% of the money that we get from LBD above $4 million. In return for this incentive we require a discount hourly rate and extended payment terms. What hourly rate would you consider appropriate? We will require 45 day payment terms." Me:"I am uncertain of what hourly rate would be appropriate as our ordinary hourly rate is $220 plus GST and 45 days is well outside our normal payment terms." Mr Kell: " How about $100?" Mr Kell: " How about $150? Would this be satisfactory?" Me: "$150 would be suitable with 45 day payment terms and I am to be paid 20% of the monies received from the client in excess of $4 million." 9. At this time I shook hands with James Kell to confirm the agreement and I said to James Kell words to the following effect: "I will prepare an amended fee proposal and Consultants Services Agreement and forward it to you for execution." 28Mr Kell does not accept Mr Chandler's version of the conversation but for the purpose of this application I will assume that the plaintiff is successful in having the Court accept Mr Chandler's version. 29Accepting Mr Chandler's evidence at its highest it would support a claim for rectification in terms"20% of the money that we get from LBD above $4 million". 30In RHG Mortgage Securities Pty Limited & Ors v Elektra Purchase No 19 Limited [2009] NSWSC 258 at [11] Einstein J set out the following principles in respect of rectification, taken from the decision of the Court of Appeal in Ryledar Pty Ltd v Euphoric Pty Ltd [2007] NSWCA 65 at [135] and approved in the Court of Appeal's later decision in Masterton Homes Pty Limited v Palm Assets Pty Limited & Ors [2008] NSWSC 274 at [29]: "i. The common intention that is required for a grant of rectification is subjective. Proof of the subjective intention of the parties to the contract is fundamental to the grant of rectification (Campbell JA, Mason P and Tobias JA agreeing); ii. For rectification to be granted where the parties have purposely and deliberately chosen the words of their contract, there must be clear and convincing proof that the parties held a common intention which is contrary to those words and that those words were chosen by mistake. It is less likely that the parties were mistaken as to the meaning of the words where they are clear and unambiguous, or where they had a common intention which was fundamentally inconsistent with the words they had deliberately employed. iii. The Court cannot simply ignore the parties' true intention and rely solely upon the relevant common intention being established by correspondence and/or conduct. The whole of the objective and subjective evidence must be considered for the purpose of determining whether the party claiming rectification has established the actual and true common intention of the parties by clear and convincing proof." 31Given that I accept the evidence put forward by the plaintiff of what was said by Mr Kell plainly I could infer that that is what he believed was to be the agreement between them. There are other aspects of the rectification claim which will need to be considered and they are that the parties drafted the agreement and made amendments but notwithstanding this I think there is at least a prima facie case to obtain rectification to the extent which I have indicated but not to the extent claimed in the amended summons. 32Accordingly the matter should be considered on this basis. 33The defendant's principal submission was that nothing in cl 5 or any other provision of the Consultancy Agreement implies that any incentive payment paid by the first defendant to the plaintiff is to be paid out of or from funds received by the first defendant from the second defendant in settlement of the "dispute". Clause 5 merely requires the first defendant to pay the plaintiff "within 30 days" of any payment by the second defendant. It is said to be precisely the type of agreement from which White J said no implication giving rise to an equitable charge could be drawn. 34The defendant also raised a separate point that nothing in the clause as rectified suggests that any payment received by the first defendant is required to be kept separate from the first defendant's other funds which is one of the essential preconditions to the establishment of an equitable charge. 35The defendant submitted the strained interpretation that the plaintiff seeks to place on cl 5 of the Consultancy Agreement is apparent when consideration is given to how it would apply if the obligation to pay arose because of the plaintiff being "awarded by any Court or tribunal ... any amount over $4 million" rather than by reason of a payment being made by the second defendant. Plainly, in those circumstances, there would be no fund which the plaintiff could be paid from or out of . If the first defendant merely had an award or judgment in its favour, there would be no specific property to which the charge could attach, yet the first defendant's liability to pay the incentive would still arise. 36It is also suggested the 30 day payment requirement tells against the existence of a charge. If the parties intended to create a fixed charge there would have been no logic in giving the first defendant 30 days to make payment because the first defendant could not have dealt with the money during that period in any event. Was the intention to create a floating charge over the payment which crystallised after 30 days? According to the first defendant this is also implausible, because it would not have provided the plaintiff with any real security over and above a personal right to payment within 30 days. Given these difficulties, the only sensible interpretation is that there was no intention to create a charge. 37On the first aspect of the construction argument the plaintiff put the following submissions: "The preposition "of" is defined in the Shorter Oxford Dictionary (a copy of the entry is attached). The first meaning defined (highlighted in the second paragraph of the extract) equates it to "out of". That is reinforced by the note at the end of the entry (on the last page). The other uses of the word are included only for completeness and have no relevance to "of" in the present context. It follows that by definition it has the same meaning as "out of" when used as it is in clause 5. It is clear that when referring to percentages, "of" is the more common form of expression. Examples : Give me 20% of those shares, rather than 20% out of those shares. Give me 20% of the money in your savings account, rather than 20% out of the money in your savings account. Give me 20% of the proceeds of sale of your house, rather than out of the proceeds. The important point is that both forms have the same meaning in such contexts. At best "out of" is slightly more explicit, but probably less commonly used. K&R put Jackson v Richards against Lefta. However, the strength of "20% of" can be tested by using "20% of" in the two examples posed by White J. The two contrasted examples would then have been as follows. "I will pay you 20% of the proceeds of sale." That clearly identifies the fund from which he is to be paid. On the other hand, "When I receive the proceeds of sale I will pay you 20%", is to similar effect because the question arises, 20% of what? The answer is 20% of the proceeds of sale. It is clear that "20% of" something means a part of something as much as does "20% out of" something." 38There is much force in this approach and the critical part is the use of a percentage to define what is payable. That also assists in dealing with the next problem raised namely the requirement to keep the fund separate. The implication is not difficult to make. This case more resembles the description given by Lord Truro in Rodick v Gandell , 42 ER 749, at 754: An agreement between a debtor and a creditor that the debt owing shall be paid out of the specific fund coming to the debtor, ... will create a valid equitable charge upon such funds; in other words will operate as an equitable assignment of the ... fund ... 39When one considers that part of the clause, which deals with money coming to the first defendant there plainly is a specific fund coming to the debtor. However this then raises the other arguments of the first defendant concerning the other two matters that the clause deals with namely the awards. The use of the language in the clause does not fasten on a fund coming to the debtor in these circumstances. It is more a determination of when a liability in those circumstances arises. If a payment is made within 30 days of an award then presumably the clause also fastens upon the payment. The use of the expression "and/or" might also mean that it fastens upon the payment following an award when the payment is made more than 30 days after the award. 40It is possible that the clause does not have to be considered as a whole for the purpose of its construction. It may well be that if the part of the clause which deals with payment can be construed as giving rise to a charge that will be sufficient. We are not talking of the parties' subjective intention but the words used and the relevant surrounding circumstances. 41The first defendant points to the 30-day payment requirement as telling against the implication of a charge. The plaintiff's response was as follows: "The requirement for payment within 30 days is clearly in recognition of the need for Kell to get in the awarded amount when an award is made and does no harm to the concept that in the case of agreement a period may be allowed for payment of money received by Kell from LBD. Once it is inferred that the 20% was to be kept separate the 30 day time for payment is consistent with the fact that the payment is to be made out of the incoming fund. The point is that payment is to be made following receipt of the fund but to cover the likely time needed to get in the fund in the case of a court or arbitration award, 30 days is allowed. If the fund is received following agreement, 30 days is still a reasonable time within which to pay out of the fund. There is no basis for finding a different intention in the case of award on the one hand and receipt following agreement on the other" 42I do not think that this is a complete answer to the problem posed. However if one has regard to the clause as dealing with two scenarios and only one of them giving rise to a charge the difficulty is less drastic. 43The plaintiff in response also suggested that at the time the consultancy agreement was signed it was apparent that the first defendant was in financial difficulties, they did not want to pay the higher fees requested by the plaintiff and they had already been paid $2 million in advance in December 2009. There was no suggestion up until this time that the second defendant would pay the first defendant's subcontractors which is what happened after the consultancy agreement was signed. There was in fact later an agreement whereby the first defendant dropped out of the completion of the buildings and its role was taken over by the subcontractors who were then paid by the second defendant out of monies that were due as a result of the deed settling the claims by the first defendant against the second defendant. 44In Franklins Pty Ltd v Metcash Trading Ltd [2009] NSWCA 407 the Court of Appeal had this to say about the principles of construction at paragraphs 14 to 19: "The lack of need for ambiguity before resort is had to legitimate surrounding circumstances 14 The state of the law in this respect is to be ascertained from a number of High Court cases: Maggbury Pty Limited v Hafele Australia Pty Limited [2001] HCA 70; 210 CLR 181 at 188 [11]; Pacific Carriers v BNP Paribas at 461-462 [22]; Zhu v Treasurer of the State of New South Wales [2004] HCA 56; 218 CLR 530 at 559 [82]; Toll (FGCT) v Alphapharm at 179 [40] and International Air Transport Association v Ansett Australia Holdings Limited [2008] HCA 3; 234 CLR 151 at 160 [8] and 174 [53]. These cases are clear. The construction and interpretation of written contracts is to be undertaken by an examination of the text of the document in the context of the surrounding circumstances known to the parties, including the purpose and object of the transaction and by assessing how a reasonable person would have understood the language in that context. There is no place in that structure, so expressed, for a requirement to discern textual, or any other, ambiguity in the words of the document before any resort can be made to such evidence of surrounding circumstances. 15 As Campbell JA points out, the approach to construction of the documents in question by the High Court in Agricultural and Rural Finance v Gardiner at 205 [38] and in Park v Brothers [2005] HCA 73; 80 ALJR 317 at 325 [39] did not involve any consideration of ambiguity. 16 Further, intermediate appellate courts have been clear in their expression of view that these recent decisions of the High Court are to the effect that the identification of ambiguity is not a precondition to examining legitimate surrounding circumstances: Lion Nathan Australia Pty Ltd v Cooper Brewery Ltd [2006] FCAFC 144; 156 FCR 1 at 10-12 [45]-[52] (Weinberg J), 22 [100] (Kenny J) and 48 [238] (Lander J) agreeing with Finn J at first instance [2005] FCA 1812; 223 ALR 560 at 573 [78]; Ryledar Pty Ltd v Euphoric Pty Ltd [2007] NSWCA 65; 69 NSWLR 603 at 626 [107]-[109] (Tobias JA, with whom Mason P and Campbell JA agreed); Synergy Protection Agency Pty Ltd v North Sydney Leagues' Club Limited [2009] NSWCA 140 at [22] (myself, with whom Tobias JA and Basten JA agreed) and Masterton Homes Pty Ltd v Palm Assets Pty Ltd [2009] NSWCA 234; 261 ALR 382 at 384-385 [1]-[3] (myself with whom Basten JA agreed) and see also to like effect [113] (Campbell JA). 17 None of the above High Court decisions discussed what some have seen as the tension in Sir Anthony Mason's reasons in Codelfa Constructions Pty Limited v State Rail Authority of New South Wales [1982] HCA 24; 149 CLR 337 between what was written at 348-351 and the expression of the "true rule" at 352. That what was said in Codelfa at 352 can be taken to conform with the apparent width of the principle expressed at 348-351 can, if it arose for consideration, be taken from: (a) an acceptance of the views of Spigelman CJ expressed in South Sydney Council v Royal Botanic Gardens [1999] NSWCA 478; 10 BPR 18,961 at 18,966 [35] and in Gardiner v Agricultural and Rural Finance Pty Ltd [2007] NSWCA 235; (2008) Aust Contracts R 90-274 at 90,340 [7]-[13] (otherwise unaffected by the High Court decision) and extra-judicially in "From text to context: contemporary contractual interpretation" (2007) 81 Australian Law Journal 322; (b) a recognition that the phrase used by Mason J in Codelfa at 352 "if the language is ambiguous or susceptible of more than one meaning" does not mean that the susceptibility of the language to more than one meaning must be assessed without reference to the surrounding circumstances or extrinsic material; (c) a recognition of the width of the guiding authorities that Mason J discussed at 348-351, in particular Prenn v Simmonds [1971] 1 WLR 1381 at 1383-1384; Utica City National Bank v Gunn 118 NE 607 (1918); Reardon Smith Line Ltd v Hansen-Tangen [1976] 1 WLR 989 at 995-997; and DTR Nominees Pty Ltd v Mona Homes Pty Ltd [1978] HCA 12; 138 CLR 423 at 429; and (d) a recognition of the width of the approach in England even in the 1920s: Lake v Simmons [1927] AC 487 at 509 per Viscount Sumner: "commercial contracts are to be interpreted with regard to the circumstances of commerce with which they deal, the language used by those who are parties to them, and the objects with which they are intended to secure", cited by Gleeson CJ in McCann v Switzerland Insurance Australia Limited [2002] HCA 65; 203 CLR 579 at 589 [22] and IATA v Ansett at 160 [8]. 18 In any event, whether or not aspects of the reasons of Mason J require, as a matter of theory, any exegesis, the High Court has clearly stated the position conformably with the cases referred to at [17 (c)] above and discussed by Mason J in Codelfa at 348-351. This can be taken from the clarity of the expression of principle in the later High Court cases to which I have referred, as well as from the references in Pacific Carriers v BNP Paribas at 461-462 [22], Zhu at 559 [82] and IATA v Ansett at 160 [8] to Codelfa at 350 and 351, and not 352. The issue is therefore not one for resolution otherwise than by application of current High Court authority. The approach to the construction of commercial contracts 19 The essential character of the task of construction of commercial contracts can be seen in a number of authoritative decisions of the High Court, and of other courts authoritatively endorsed by the High Court. A commercial contract should be given a businesslike interpretation: McCann at 589 [22]. Thus, the nature and extent of the commercial aims and purposes of the agreement or parts thereof are part of the essential background circumstances: "the genesis of the transaction, the background, the context, the market in which the parties are operating": Codelfa at 350 quoting Reardon Smith at 995-996 cited by the Court in Zhu at 559 [82] and see Lake v Simmons at 509 cited by Gleeson CJ in McCann at 589 [22] and IATA at 160 [8]. The need for a businesslike construction not only informs the nature and extent of the extrinsic material legitimately of assistance, but it also directs the approach to be taken to the ascription of meaning to the words used by the parties. The words should be given a construction so as "to avoid ... [making] commercial nonsense or is shown to be commercially inconvenient": Hide & Skin Trading Pty Ltd v Oceanic Meat Traders Ltd (1990) 20 NSWLR 310 at 313-314 (Kirby P) cited by the Court in Zhu at 559 [82]. This is not only a reflection of the place of the informing surrounding circumstances, it is also a requirement not to approach words in a business contract pedantically or in a manner prone to defeat the evident commercial purpose. They should be read "fairly and broadly, without [the court] being too astute or subtle in finding defects": Hillas & Co Limited v Arcos Limited (1932) 147 LT 503 at 514 per Lord Wright cited in Australian Broadcasting Commission v Australasian Performing Right Association Limited [1973] HCA 36; 129 CLR 99 at 109-110. Similar expressions of the correct approach eschewing detailed semantic and syntactical analysis to lead to a construction contrary to business commonsense can be seen in what Lord Diplock said in Miramar Maritime Corporation v Holborn Oil Trading Ltd [1984] AC 676 at 682 and Antaios Compania Naviera SA v Salen Rederierna AB [1985] AC 191 at 201. As Gleeson CJ, Gummow J and Hayne J said in Maggbury at 198 [43] in the context of citing the relevant passage from Lord Diplock's speech in Antaios , what is "business commonsense" is an objectively ascertained matter and thus referable to the evidence, and a matter about which there may be dispute. (It is not to be forgotten that shipping cases such as Miramar and Antaois were dealt with by judges of great stature and experience in the context of markets and practices with which they were intimately familiar.)" 45The problem with using the surrounding circumstances which are suggested is that they only point to a suggestion that recovered monies might not be available for the benefit of the plaintiff. I do not think that the surrounding circumstances help much as it is a substantial step to move from these facts to the conclusion that the subjective intention was to grant a charge. However the other matters I have referred to do in my view lead to the conclusion that the plaintiff does have a prima facie case on this ground.

Claim of an equitable lien 46An equitable lien is normally imposed as a matter of law and it is in the nature of a charge. There are a number of varieties of equitable liens and the categories are not necessary closed. In Hewett v Court , (1983) 149 CLR 639 at 645, Deane J said: "Equitable lien does not depend either upon contract or upon possession. It arises by operation of law, under a doctrine of equity "as part of a scheme of equitable adjustment of mutual rights and obligations"; those words of Isaacs J were used in Davies v Littlejohn (1923) 34 CLR 174 at 185, in relation to the doctrine of equity's lien, but they have a general application. It would be difficult, if not impossible, to state a general principle which would cover the diversity of cases in which an equitable lien has been said to be created. A vendor's lien for unpaid purchase money has been said to be founded on the principle that "a person, having got the estate of another, shall not, as between them, keep it, and not pay the consideration": Mackreth v Symmons (1808) 15 Ves 329 at 340 ; 33 ER 778 at 782. The lien of a purchaser for the purchase money that he has paid to the vendor on a sale that has gone off through no fault of the purchaser may perhaps rest on the converse principle that he who has agreed to convey property in return for a purchase price will not be allowed to keep the price if he fails to make the conveyance. At all events, the rule has been said to be founded on "solid and substantial justice": Rose v Watson (1864) 10 HL Cas 672 at 684; 11 ER 1187 at 1192. In each of these cases the vendor or the purchaser, as the case may be, is treated as a secured creditor (cf Combe v Swaythling (Lord) [1947] Ch 625 at 628) - the lien is the security for the money which is justly due. In other circumstances an equitable lien may arise because of the relationship that exists between the parties (eg, that of partnership, or trustee and beneficiary or solicitor and client) or by reason of subrogation or estoppel. Cases of this kind, which will be found discussed in the textbooks (see Sykes: The Law of Securities , 3rd ed, at pp 164-7; Ashburner on Mortgages , 2nd ed, at pp 112-25; and Halsbury's Laws of England , 4th ed, vol 28, paras 566-73), do not closely resemble the present, but their existence shows that the rules governing the circumstances in which equity has considered that justice requires the recognition of the existence of a lien are not confined to one narrow category. Indeed, as Professor Sykes suggests (op cit, at p 164), the list may not be a closed one." 47In Porter &Anor v Bonarrigo & Anor [2009] VSC 500 Vickery J described the nature of and the categories of equitable liens in these terms: "The equitable lien differs from the equitable charge mainly in the mode of creation. It arises by implication of law in certain circumstances. Once in existence, it basically confers the same remedies, viz. the powers of sale and appointment of a receiver but only of course through the court. The equitable lien arises purely from implication of law. The equitable lien, like the equitable charge, is a pure hypothecation; it involves no transfer of actual or potential ownership, it does not depend on possession and it rests only on an equity, with the result that it is unenforceable against the bona fide purchaser for value without notice of the legal estate. Nevertheless, it is an "interest" in land; it is of a proprietary character. ... The circumstances in which an equitable lien arises have never been exhaustively classified and the list is possibly not a closed one, but the following are the main cases: (a) A vendor of land who has parted with the legal title by way of conveyance has an equitable lien over the land to the extent of purchase money unpaid, such lien being available against all save the bona fide purchaser for value of the legal estate without notice of the fact of non-payment. (b) Conversely, a purchaser of land who has paid the purchase money before conveyance has a lien in equity to the extent of the purchase money paid. When the purchaser [properly] declines to complete, he or she has a lien for the deposit and any payment the purchaser has made but not of course if the sale goes off through her or his default. (c) A trustee has a lien in equity on trust property in respect of money properly expended by her or him in due performance of her or his trustee functions. (d) A beneficiary under a trust has a lien over land which a trustee has purchased in breach of trust, though in certain circumstances, viz. when the property has been purchased entirely with trust money and the beneficiaries are all sui juris , the latter have a right tom elect to take the property purchased in substitution for the trust property. (e) Beneficiaries who have suffered from a breach of trust may impound the interest of one of their number who has been a party to it and presumably have a lien on such interest ... (f) On a dissolution of partnership by retirement, death or bankruptcy of a partner, the retiring partner or partners, continuing partner or partners, or the representatives of a deceased partner, respectively, have a lien on all assets belonging to the partnership for the satisfaction of all claims arising in respect of the joint venture before dissolution ... (g) A person who has laid out money upon a property under a mistaken belief that he or she is entitled to it or has an interest in it will have a lien for the amount thereof, provided the owner has , by her or his conduct in standing by with knowledge of such mistake, estopped her or himself from contending to the contrary. Other cases are more doubtful." 48The plaintiff also suggested that the consultancy services agreement should be treated in the same way as the law applicable to a solicitors fruits of action lien. 49The nature of such a lien was dealt with by Lehane J In Roam Au 980stralia Pty Ltd v Telstra Corp Ltd t/as Telecom Australia [1997] FCA. Lehane J said: "The solicitors' claimed equitable interest. The general principle is now well established: A solicitor has no lien for his costs over any property which has not come into his possession. If, however, as the result of legal proceedings in which the solicitor has acted for the client, the client obtains a judgment or award or compromise for the payment of money, although the solicitor acquires no common law title to his client's right to receive the money or to any part of that right, he acquires a right to have his costs paid out of the money, which is analogous to the right which would be created by an equitable assignment of a corresponding part of the money by the client to the solicitor. That is to say, the solicitor has an equitable right to be paid his costs out of the money; and if he gives notice of his right to the person who is liable to pay it, only the solicitor and not the client can give a good discharge to that person for an amount of the money equivalent to the solicitor's costs... Ex parte Patience: Makinson v The Minister (1940) 40 SR (NSW) 96 at 100 per Jordan CJ. The Full Court of this Court approved and applied Patience in Worrell v Power & Power (1993) 46 FCR 214 at 223, 224. It has been applied in several later decisions: they include Akki Pty Ltd v Martin Hall Pty Ltd (1994) 35 NSWLR 470 at 474; Kison v Papasian (1993) 61 SASR 567; Twigg v Keady (1996) FLC 92-712; Doyles Construction Lawyers v Harsands Pty Ltd , McLelland CJ in Eq, unreported 24 December 1996. Patience and the cases which have followed it make a number of things clear. First, the principle applies equally to judgments and compromises; secondly, the right does not depend upon any intervention by the Court, the assistance of which "is invoked not to create the rights but to enforce them ( Patience at 101); thirdly, the amount which a solicitor is entitled to recover out of the judgment debt or amount owing under the compromise is the amount of costs and disbursements which the solicitor is entitled to recover from the client (no doubt that entitlement may depend upon agreement, taxation or assessment) and the claim may be asserted even though the precise amount to which the solicitor is entitled has not, by the appropriate means, been ascertained: Patience at 105; Twigg at 83,552; Canatan . The right appears to be based upon the fact that the solicitor was "instrumental" in obtaining the judgment or compromise ( Patience at 103) or ( Worrell at 224) that the judgment or compromise has "come about by reason of [the solicitor's] exertions". The entitlement may, nevertheless, arise although the solicitor's exertions came to an end before the judgment was obtained or the compromise negotiated. In Twigg , the solicitors acted in property settlement proceedings under the Family Law Act 1975 for some years, but ceased to act about 13 months before judgment in the proceedings was obtained. Their claim was, nevertheless, upheld. In Doyles the solicitors acted in District Court proceedings. The proceedings were settled by an agreement negotiated directly between the parties. The solicitors were not involved. The agreement provided for payment to the solicitors' client of $40,000. Shortly after the agreement was made, but before any payment was made under it, the solicitors ceased to act. McLelland CJ in Eq (at 4) said this: "It was submitted... that there was no sufficient causal link between work that Doyles had done in relation to the proceedings and the ultimate settlement, since the March settlement agreement was negotiated directly between the parties and Doyles had ceased to act before the ultimate settlement was negotiated. In my opinion it is unnecessary for Doyles to demonstrate that the settlement came about as the result of specific efforts by them. According to the statement of principle [in Patience ]... it is sufficient to give rise to the equitable right that the settlement resulting in payment to the client came about as a result of the legal proceedings and that the solicitor had acted for the client in those proceedings, this being treated as a sufficient causal link." I do not think it follows that solicitors will always, in a case where they have acted for a party to proceedings in which ultimately a judgment is obtained, or which are compromised, obtain an equitable interest in the judgment or settlement proceeds commensurate with the amount they are owed for costs and disbursements, no matter how slight or fleeting their participation may have been or even if they acted only for a short period after the commencement of proceedings later conducted by others through interlocutory procedures and trial to judgment. In each case, in my view, it must be a question whether the requisite causal link is established, whether the judgment or compromise is, on the evidence, to be regarded as brought about (or partially brought about) by the efforts of the solicitors. In Doyles the causal link was not difficult to see: although others had acted for the plaintiffs at earlier stages in the proceedings, Doyles acted for a period of about ten months up to, and overlapping with the time when the compromise was negotiated. Though they were not involved in the negotiation, no doubt they could be seen to have carried the litigation to the point where a successful negotiation could take place. In Twigg (see the judgment of Finn J at 83,562) it was admitted on the pleadings that work had been done by the solicitors towards the attainment of the judgment. Where solicitors have been actively involved over a considerable period in acting for a party to successful litigation, the conclusion is likely to follow that the solicitors have been instrumental in obtaining the result, or that the result is (at least in part) due to the solicitors' efforts. See also Doyles Construction Lawyers v Harsands Pty Ltd (unreported, Supreme Court of New South Wales, McLelland CJ in Eq, 24 December 1996); Color Point Pty Ltd (ACN 007 199 813) v Markby's Communication Group Pty Ltd (ACN 069 962 732) & Ors [1998] FCA 1516 (27 November 1998) (Weinberg J). Although the cases of solicitor's equitable liens arise in relation to the provision of professional services, it is clear that similar liens arise in other situations that come within the general equity principles cited in Worrell ,and, in particular, within the statement of the Vice-Chancellor in Sympson v Prothero , to the effect that when the fund comes about as a result of the exertions of the solicitor "it is right that he should have his reward out of the fruits of his exertions." As Farwell J said in Re Born , "It would be monstrous if this were not so." 50An extension of the solicitors lien occurred in one case in Simpson v Rowe (nee Morganti) [2011] VSC 149 where Habersberger J found that the same type of lien was available to a barrister for his work pursuant to a direct costs agreement with the client. Apart from this case there does not appear to be any case where someone else has established a fruits of action lien. There was an attempt by a patent attorney but the case went off on another point. In these circumstances the defendant's submitted that the plaintiff is therefore asking the Court to make new law, and extend the very particular principles relating to solicitors' fees to a much broader class of persons (presumably, anyone who by their exertions in the context of a legal dispute is instrumental in obtaining for another money or property). According to the defendants the extension would be unprincipled and contrary to the policy which the Courts have said lies behind the solicitor's lien for unpaid costs. The original justification for the special treatment of solicitors' costs was concern that unless solicitors were given such protection they would not undertake work for "needy people" who were in danger of insolvency: see Ex parte Bryant (1815) 1 Madd 49 at 52; referred to with approval in H & W Wallace Ltd (in liquidation) [1994] 1 NZLR 235. It is suggested that there is no sound policy reason for extending this special protection to any person who decides to assist another in the context of a legal dispute in return for payment. 51In H & W Wallace Ltd (in liquidation) Thomas J referred to the public interest which gave rise to the solicitors particular lien in these terms: "The public interest Mr Johnson invited me to reject the solicitors' lien as archaic in today's conditions. If I thought that, I would be prepared to do so. But I consider that Mr Johnson's argument proceeded on a misapprehension as to the basis of a particular lien. Mr Johnson strongly argued that a solicitor's particular lien is inconsistent with the prevailing policy that unsecured creditors should rank pari passu . He contended that solicitors should not be treated any differently from, or enjoy any advantage not obtained by, other unsecured creditors. I agree with those sentiments but, to my mind, they miss the point. The solicitors' particular lien does not rise after the liquidation, and it is not in the nature of an arrested execution for a debt. There is, therefore, no detraction from the pari passu principle or any question of treating solicitors differently or giving them an advantage not possessed by other unsecured creditors. They possess a pre-existing equitable interest which the unsecured creditors do not possess. Not infrequently, equitable interests are recognised as being in existence as at the date of a liquidation, thus giving the claimant an interest in the property in question ahead of other creditors. The question remains, however, whether the public interest is well served by retaining the solicitors' particular lien for the protection of the legal costs and charges incurred by solicitors in connection with litigation undertaken on behalf of a client. I am not prepared to hold that the public interest which originally led the Courts to recognise this lien has waned. The original justification for the rule was the feeling that, if solicitors were not given this kind of protection, they would not undertake work for "needy people" who were in danger of insolvency. In 1815 in Ex parte Bryant at p 52 the Vice-Chancellor made the point in these terms: "I do not wish to relax the doctrine as to Lien, for it is to the advantage of Clients, as well as Solicitors; for business is often transacted by solicitors for needy clients, merely on the prospect of having their Costs under the doctrine as to Lien." Without detracting from the validity of this observation I would frame the justification for such a lien in civil proceedings in somewhat wider terms today. It turns upon two fundamental rights enjoyed by all citizens in a democracy. The first is the right of access to the Courts; the second is the right to legal representation. In the first place, it is an integral element of the rule of law that everyone in the land had the right of access to the Courts. When that right is denied, justice is denied, and the ability of society to order its affairs and resolve its differences in a regular manner is impugned. Yet it is incontrovertible that the costs of litigation are high and evidently getting higher. For many citizens, civil litigation is likely to be an avenue which is beyond their means. This is so even when they have a meritorious claim. Others suffer financial instability which may be solely or largely caused by the very actions of the party whom they wish to sue. To these and others in the community the right to have their "day in Court" is becoming an increasingly distant and unattainable right. In my view, abandoning the solicitors' particular lien could exacerbate these difficulties. Being without any protection, solicitors could well be unwilling to undertake the legal work required to pursue a claim. The conceptual basis for the second right is not difficult to apprehend. For the most part, legal representation is essential to render the citizen's right of access to the Courts effective. Without that representation our rudimentary notions of fairness are disturbed. This is especially so having regard to the adversary system which prevails in our Courts. If a party cannot effectively avail him or herself of the opportunity to present their case to the Court with legal assistance, a disparity arises between the legal system's pretension and its fulfilment. In such circumstances nothing should be done which might close the door of the Court on that person simply because of the cost of litigation and the possibility that he or she cannot obtain legal representation." 52The plaintiff submitted that it would be within the ambit of the principle to extend the solicitors lien to the circumstances of this case where the plaintiff provided its services, which it says were devoted to causing payment to the first defendant. The plaintiff pointed out the similarity between the work done by the plaintiff and that, which is often done by an experienced construction industry solicitor. In addition in this case one of the plaintiff's functions was to instruct the solicitors engaged by the first defendant and it shared in the work done to settle the disputes. 53However the considerations which lead to the creation of the solicitors fruits of action lien is not apparent in the case of someone in the role of the plaintiff. The plaintiff, as illustrated by this case, is working in the construction industry at the high end of the market presumably for substantial building and construction companies. The public interest factors which are referred to in the New Zealand case are simply not present in the case of the plaintiff. 54In addition any extension is to be considered by reference to the field of discourse to which the extension is to be applied. It is litigation in the building and construction industry. The arguments put by the plaintiff could equally apply to the expert witness who's proof is so good that it is accepted by a Court and leads to receipt of funds by the client. 55In my view it is unlikely that the Court would accept an argument based upon the extension of the solicitors lien. The plaintiff also strongly urged that on general equitable principles in respect of liens such as those in referred to by Deane J in Hewett v Court that in this case the existence of a lien should be established. However when one considers the various examples where a lien has been established there are good and solid reasons for the extension based on proprietary or other rights. In my view it is unlikely that a Court would find that there is a solid and substantial justice apparent in the case of those assisting in litigation which would require the granting of a lien. 56The defendants also submitted that if a solicitor were to structure his fees in the same way as the Consultancy Agreement they would contravene the professional regulatory rules relating to contingency fees. In particular, s 325 of the Legal Profession Act 2004 (NSW). I do not think this is a relevant consideration. 57In my view there is no prima facie case on this aspect of the claim.

Need for orders against the second defendant 58The plaintiff's claim for interlocutory relief is the same in substance in respect of the first and second defendants and the order against the second defendant was described as a "belts and braces" approach to protect the plaintiff. 59It is plain that the plaintiff is not entitled to receive payment from the second defendant and its only entitlement is to receive funds once the first defendant receives them or an award is obtained. In these circumstances, in my view, there is no utility in making order 2 in the motion if I were persuaded to make an order against the first defendant in the terms of the motion. The order against the first defendant would be a sufficient protection. If I were not to make an order against the first defendant, given that the plaintiff's rights under the consultancy agreement are against the first defendant there would be no basis for an order against the second defendant.

Balance of convenience 60Given the first defendant's approach to this plainly the balance of convenience would favour granting interlocutory relief to the plaintiff against the first defendant. As I do not propose to grant any interlocutory relief against the second defendant, the balance of convenience matters raised by them are not relevant.

Undertaking as to damages 61The plaintiff gave to usual undertaking as to damages. 62The plaintiff and its holding company are companies, which only have a paid up capital of $100. The plaintiff's tax return for the year ended 30 June 2010 indicated a loss for the year of $7,915. Turnover was then in the order of $550,000 per annum. As is apparent from this years business activity statements the plaintiff is now turning over sales of something in excess of $200,000 per quarter. A balance sheet of the plaintiff to 30 June 2010 showed total assets of $5,059 and total liabilities of $12,504. 63A question that arrises is what is the order of magnitude of any order, which may be made pursuant to the undertaking. The effect of the injunction will be to deprive the plaintiff of working capital of $1,450,000 between now and the trial. In the case of a builder such a deprivation may have a substantial effect on, for example, its ability to accept further contracts, as cash is an essential element in a successful builders business. It has to provide bank guarantees and the like. 64There is some evidence of the financial difficulties, which the first defendant has suffered in completing the subject contract. There is not enough evidence to conclude that a failure might be triggered by the deprivation of the sum. 65As the deprivation of the sum in question over a period of months may have a restrictive effect on the business of the first defendant it seems to me that at any order made pursuant to the undertaking as to damages could involve some substantial sums in excess of the interest which would not be earned on the funds in question. 66As was pointed out in Varley v Varley [2006] NSWSC 1025 at [56] The usual way a Court proceeds on an application for an interlocutory injunction, is to take account of any risk that an undertaking as to damages might be inadequate, as one factor entering into the balance of convenience. In this case the first defendant has raised separately the question of the sufficiency of the undertaking as to damages. It is apparent having regard to the correspondence between the parties prior to the hearing that this issue was to be raised as it had been advanced by the first defendant as a reason why relief should not be granted. It has tendered the evidence to which I have referred to persuade me to deal with the matter on a factual basis in this interlocutory hearing. 67In argument on this aspect after the close of evidence, I mentioned that those standing behind the plaintiff had not also offered to give the undertaking. This resulted in Mr Chandler the principal of the plaintiff making such an offer. However the evidence, naturally does not address his financial circumstances. 68Ipp J has discussed the effect this may have in Custom credit Corporation Limited v Whitehall Holdings Pty Ltd (WASC, unreported, 7 April 1992). There his honour said: "The fact that an undertaking as to damages has little or no value is not conclusive as to the result of an application for an interlocutory injunction. It is only a factor which must be borne in mind: Allen v Jambo Limited [1981] WLR 1252 at 1258 per Templeman LJ. Lord Denning MR said in that case at 1256 to 1257: 'It is said that whenever a Mareva injunction is granted the plaintiff has to give the cross-undertaking in damages. Suppose the widow should lose this case altogether? She is legally aided. Her undertaking is worth nothing. I would not assent to that argument ... I do not see why a poor plaintiff should be denied a Mareva injunction just because he is poor whereas a rich plaintiff would get it. One has to look at these matters broadly.' Shaw LJ remarked at 1257: 'Questions of financial stability ought not to affect the position in regard to what is the essential justice of the case as between the parties.' It is of course desirable for an applicant for an interlocutory injunction to provide undertakings as to damages which are of value. Nevertheless, where there is a serious issue to be tried, and when those who stand behind the applicant company have offered undertakings so that the applicant has done the best it can to provide appropriate undertakings, justice may well require the grant of an injunction even though the undertakings are of little or no value. In my view the paramount consideration is embodied in the remarks of Bowen LJ in Cowell v Taylor (1885) 31 Ch 34, where he said at 38: 'The general rule is that poverty is no bar to a litigant. That, from time immemorial, has been the rule at common law and also, I believe, in equity.' In Cayne v Global Natural Resources PLC [1984] 1 All ER 225, Eveleigh LJ said at 233: 'It seems to me that with the risk that this decision will produce an injustice on one side or the other it would be wrong to run the risk of causing an injustice to a defendant who is being denied the right to trial where the defence put forward has been substantiated by affidavits and a number of exhibits in this case.' The injustice in such a case is caused by the denial of the trial. So also it seems to me that with the risk that this decision will produce an injustice on one side or the other it would be wrong to run the risk of causing an injustice to the Whitehall companies, who have demonstrated that there are serious issues to be tried, both of law and of fact, substantiated by affidavit, and who will be denied the right to trial by reason of their financial inability to fund the litigation when that situation would be alleviated by the grant of an injunction. In Cayne v Global Natural Resources , May LJ said at 338: 'Where a plaintiff brings an action for an injunction I think that it is, in general, an injustice to grant one at an interlocutory stage if this effectively precludes a defendant from the opportunity of having his rights determined in a full trial.' So also, in my view, where a plaintiff brings an action for an injunction, it is in general an injustice to refuse one at an interlocutory stage if this effectively precludes the plaintiff from the opportunity of having his rights determined in a full trial. This is particularly the case where the plaintiff has established that there are serious issues to be tried." 69It is apparent that the situation being considered by Ipp J was one where the people who stood behind the applicant company had offered undertakings as to damages, but there were concerns about the financial adequacy of those undertakings. 70On the facts before me it is plain that the company will not able to honour any substantial order based upon the undertaking as to damages and there is no evidence of the ability Mr Chandler to meet such an order. Assuming for the time being that he has no substance then the remarks of Justice Ipp are very pertinent. The refusal of the interlocutory injunction will mean that the plaintiff is deprived of its alleged status as a secured creditor and will be at risk over the coming months of the funds being dissipated and perhaps not available at the hearing. In these circumstances I think it is appropriate to grant an interlocutory injunction against the first defendant in the terms of paragraph 1 of the notice of motion. 71I accept the undertaking as to damages given by the plaintiff and Mr Chandler and make order 1 in the notice of motion filed 7 June 2011. I will hear the parties on costs.

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