Morenita Pty Ltd v AGC Advances Ltd & Anor [1986] FCA 263

Federal Court of Australia|1985-07-01|Before: Jackson J, Beaumont J

) ) NEW SOUTH WALES DISTRICT REGISTRY ) No. G170 of 1986 ) )

BETWEEN: MORENITA PTY. LIMITED . Applicant AND: AGC (ADVANCES) LIMITED

Judge making order: Jackson J. Date order made: 4& gJuiy 1986

That until further order the applicant keep records of receipts and payments received or made by the applicant

Stock sheets from 1 July 1985 Wages book from 1 July 1985 Liquor Purchases Register

That an officer of-the first respondent and an accountant of the first respondent's choice have leave to inspect (and make copies) at the Aspen Chalet on each of 8 July 1986, 22 July 1986, 5 August 1986, and every second Tuesday thereafter until judgment is delivered (or otherwise on a date every two weeks agreed to by the

including those referred to in 1. above. That until 4.00 p.m. on 23rd July 1986 or further

(a) the first respondent be restrained from appointing a receiver of the assets of the applicant pursuant to the powers conferred on the first respondent by the securities given by the applicant in favour of the first respondent on

That if the applicant on or before 4.00 p.m. on 23rd July 1986 pay to the first respondent the sum of $70,000.00 on account of interest on the moneys advanced to it by the first respondent and secured by such securities, the injunctions referred to in paragraph 3 are to continue until the final hearing of the proceedings or further order.

That it is a term of the grant of the injunctions to which I have referred that the applicant, in respect of the periods after 27th June 1986, shall pay to the first respondent the instalments of interest due under the

Deed of Loan and Guarantee dated 27th September 1985 and

being Annexure "A" to the affidavit of Noel Henry Heath

That the parties shall have general liberty to apply on ' 48 hours notice in writing to each other, and in particular that the respondents shall have liberty to apply on such notice to dissolve the injunctions which I ' have granted if on any occasion a payment of interest i referred to in paragraph 5 is not made at the time and

That the injunction granted by Beaumont J. on 8th May

I DIRECT the parties to approach the Registry forthwith to obtain

I ORDER that the respondents' costs of the application be part of

Note: Settlement and entry of orders is dealt with by Order 36

NEW SOUTH WALES DISTRICT REGISTRY ) No. G170 of 1986 ) . GENERAL DIVISION ) BETWEEN ; MORENITA PTY. LIMITED Applicant AND: AGC (ADVANCES) LIMITED

CORAM: JACKSON J. DATE: 2 July 1986 . PLACE: Sydney

have varied the terms on which Beaumont J. on 8th May 1986

granted an interlocutory injunction restraining the first

respondent from appointing a receiver of the assets of the applicant. (I should mention in passing that I was informed by the parties that at the time when the injunction was granted it was the fact (though it was not drawn to His Honour's attention) that the first respondent already had appointed the second respondent as receiver but the receiver had not exercised any powers under that appointment and that the parties, sensibly, had treated His Honour's order as .- applying to restrain the exercise by the second respondent of his powers. I shall in any event alter the form of the

The applicant's case relates to the items of property which were to be the subject of securities given on 27th __ September 1985 to secure a loan of $4,250,000.00 then-Kade by the first respondent to the applicant. The securities given were a registered first mortgage over a hotel/motel, the "Aspen Chalet" at Jindabyne, registered mortgages over some real estate in Sydney and a bill of sale and charge over the

licence, goodwill, fixtures, fittings and stock of the Aspen

Chalet. The essential question in the proceedings is whether after 27th September 1985 the applicant was entitled to have the plant and equipment fittings and fixtures of the Aspen Chalet released from the security to which I have referred. The applicant's contention that it was so entitled is put on

several legal bases in the amended Points of Claim, the

jurisdiction of the Court being attracted by the fact that one

of those bases is s.52(1)- of the Trade Practices Act 1974, but the underlying factual contention is that the first respondent

had intimated, or agreed, prior to the entry of the parties into the transactions, that it was prepared to release these items from the securities in order to permit the applicant to obtain finance either by sale of them and lease back (as is alleged in the amended Points of Claim) or by way of a bill of sale over them (as was mentioned in argument). On the evidence the figure which might have been obtained from

financing in either of these ways was some $350,000.00.

I might say that if there had been a release of the

plant, equipment, fixtures and fittings from the securities, the amount of the loan by the first respondent to the

applicant would be unchanged, as would the rates of interest

When the matter came before Beaumont J., a considerable amount of interest on the $4,250,000.00 was then due and unpaid. In particular the interest payable in 1986 on 27th January, 27th February, 27th March and 27th April had not been paid in full. All that had been paid on account of interest for those periods wasasum of $40,000.00 paid in April 1986. The estimates of the- interest due and unpaid provided by the parties vary depending on the rate of interest to be applied but it is sufficient for present purposes to take the

figures used by the applicant in Exhibit 1 which (although

using as the date on which interest became payable the lst of

the month following the date on which it actually became due) shows that at the time of the grant of the interlocutory

injunction the total of interest then due was $222,219.18,

taking into account the $40,000.00 which had been paid.

His Honour was conscious of the fact that the applicant was then apparently in serious financial difficulties and he was invited to make the payment of

interest a condition of relief. He declined to do so,

On behalf of the applicant, the obvious prejudice of appointment of a receiver was advanced as a reason for the grant of interim relief. On the other hand, the respondents point to the applicant's apparently serious financial difficulties and submit that, at the least, the payment of arrears of interest should be made a condition of relief (cf£. Glandore Pty. Ltd. v. Elders Finance &

Investment Co. (1984) 57 A.L.R. 186). However, it would seem that the applicant would be unable to comply with

such a condition, at least before the commencement of the ski season.

In my opinion, the balance of convenience would be best achieved by restraining the appointment of a receiver but ordering an early final hearing of the application. In order to secure the position of the first respondent to some extent in the interim, the applicant proffered an undertaking to the Court not to dispose of its assets except in the ordinary course of its ordinary business. I propose also to order that the applicant keep proper accounts in the interim and make them available to the first respondent upon request."

The orders which he made, leaving aside directions, were

"1. Note that the applicant gives the usual undertaking as to damages.

Note that, until further order, the applicant undertakes to the Court not to dispose of any of its assets except in the ordinary course of its ordinary business.

Order that until further order, the applicant keep accounts of the payments and receipts made or received by the applicant and that such accounts be made available for inspection by the first respondent and its solicitors upon the giving of three days' notice to the applicant's solicicurs.

Order, until further order, that the first respondent be restrained from appointing a receiver of the assets of the applicant.

Fix 28, 29 and 30 May 1986 for the final hearing of the application before Burchett J."

The trial could not proceed on 28th-30th May because Mr Heath, a director of, and the person in fact controlling, the applicant was injured in a motor accident. It was suggested that the proceedings might be heard on lst-3rd July 1986 but those dates were unsuitable to the first respondent . As matters stand

the matter will be set down for hearing on a date in the near

Several matters are urged in support of 'this contention that I should impose, as a condition of the continuance of the injunction, a requirement that the applicant pay both the arrears of interest, and also the interest falling due under the

First reference was made to the fact that, for the reasons to which I have referred, the trial will occur at a later date than had been expected at the time of the hearing before Beaumont J.. Secondly there is evidence that the height of the ski season is July and August, with some tapering off in September. There is also evidence that on 17th April 1986 Mr Heath gave to Mr McDiarmid, the first respondent's State Manager, estimates showing projected operating surpluses, before interest, of $310,000, $450,000 and $170,000 for those months. Thirdly it is said, by reference to Mr Howard's affidavit, which puts in issue matters in Mr Heath's earlier affidavits, that I should regard the applicant's case with some suspicion and be less inclined to find that there is a serious question to be tried. Finally, it is said that the now discovered documents show, contrary to the evidence given by Mr Heath before Beaumont J. that the $350,000.00, if obtained from a sale of the plant and equipment, fixtures and fittings, would not have been used for the purpose of providing funds to pay the interest to the first respondent as it fell due but would have been used for a quite different purpose, namely as the source of funds which Mr Heath,

in one way or another, might use to buy out his aunt's

In relation to the third of these matters, I should say that it is not a matter which I have taken into account. If I had, I would yet have arrived at the conclusions to which I shall

refer. I also do not regard the fourth matter as being one which

The present case is unusual in that, as I have said earlier, it is clear that the interest in question ~ at the rate applicable if anterest were paid timeously and if there were no other default under the securities - was due whether the applicant's contentions are correct or not. What is said is that the applicant would have had a further $350,000 available to it which it might have used to pay the interest falling due to the

The parties are agreed that the present case is one where, to use the words of Morling J. in Glandore Pty Ltd v. Elders Finance Investment Co. Ltd. (1984) 4 F.C.R. 130 at 135, adopting the observation of Sugerman J. in Harvey v. MeWatters

"the proper approach is to mould an order so as to ensure adequate protection to the mortgagee and to otherwise do justice between the parties during the period pending

Having taken into account the matters to which I have referred, I am not satisfied that I should make any variation of the order made by Beaumont J. in respect of arrears of interest in respect of the period up to the making of his order. Nor do I think that I should require payment of the interest due on 27th May 1986. It seems to me that His Honour must have been

cognizant of the fact that it was unlikely that that would be ~

paid before trial. I see no reason, however, why with the lapse

of time which has occurred some provision should not now be made

'It is clear on any view that even if the $350,000.00 had been obtained it would not have been sufficient to pay all the interest due in the period to the present time. See for example Exhibit 2. In my view an appropriate exercise of my discretion in the events which have occurred is to make it a condition of the continuance of the injunction that interest falling due in the future be paid and that a sum roughly equivalent to the amount of interest which would have become payable as interest on 27th June 1986, namely a sum of $70,000.00 be paid on account of interest within 21 days from today's date. The interest falling due on that day could not have been paid in full if the $350,000.00 had been obtained, and I see no reason why I should in effect give credit to the applicant for the whole of the $350,000 (after making the notional adjustments referred to in

I think that justice will be done between the parties if I make the orders along the lines of those to which I have

referred. I shail hear the parties as to the form of them.

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At a glance

Court

Decision date

Before

Source

Judgment (70 paragraphs)