BETWEEN : PERDAMAN CHEMICALS & FERTILISERS PTY LTD

Practice and procedure - Freezing orders - Application for freezing order or ancillary order restraining execution of specified species of charge or security without notice to plaintiff - Whether plaintiff has good arguable case - Whether there is a danger of execution of a relevant charge or security - Whether that would lead to a danger of an unsatisfied judgment - Whether discretion should be exercised to grant the injunction - No new principles

First Defendant : Mr J H Karkar QC & Mr B D Luscombe

Second Defendant : Mr J H Karkar QC & Mr B D Luscombe

Third Defendant : Mr J H Karkar QC & Mr B D Luscombe

Fourth Defendant : Mr J H Karkar QC & Mr B D Luscombe

Fifth Defendant : Mr J H Karkar QC & Mr B D Luscombe

Australian Broadcasting Corporation v O'Neill [2006] HCA 46; (2006) 227 CLR 57

BGC Contracting Pty Ltd v WA Construction Hire Pty Ltd [2010] WASC 25

Cardile v LED Builders Pty Ltd [1999] HCA 18; (1999) 198 CLR 380

Errigal Ltd v Equatorial Mining Ltd [2006] NSWSC 953

Glenwood Management Group Pty Ltd v Mayo [1991] VicRp 45; [1991] 2 VR 49

Jackson v Sterling Industries Ltd [1987] HCA 23; (1987) 162 CLR 612

KGL Health Pty Ltd v Mechtler [2007] FCA 1410

Ninemia Maritime Corp v Trave Schiffahrtsgesellschaft mbH & Co KG [1984] 1 All ER 398

Patrick Stevedores Operations No 2 Pty Ltd v Maritime Union of Australia [1998] HCA 30; (1998) 195 CLR 1

Perth Mint v Mickelberg (No 2) [1985] WAR 117

Plaintiff M168/10 v The Commonwealth [2011] HCA 25

Twinside Pty Ltd v Venetian Nominees Pty Ltd [2008] WASC 110

1 The plaintiff (Perdaman) applies for a freezing order or interlocutory injunction against the first defendant (Griffin). In substance, Perdaman seeks an order restraining Griffin from entering into a charge that secures obligations:

(a) under a facility agreement for US$800 million made between Griffin's sole shareholder and that company's sole shareholder, as borrowers, and their financiers; or

(b) under a negative pledge deed entered into by Griffin pursuant to the facility agreement, by which Griffin guaranteed the obligations of the borrowers under the facility agreement;

without first giving ten prior business days' written notice to Perdaman.

2 The funds advanced under the facility agreement were used primarily to fund the acquisition of the shares in Griffin.

3 Perdaman contends that if Griffin enters into any such charge or security there will be a danger that Griffin would have no or insufficient assets to satisfy a judgment in favour of Perdaman for a significant sum that might be given in this action if Perdaman is successful. Perdaman also contends that the grant of such security would be a breach of its rights under an agreement between it and Griffin.

4 The action is founded on a coal supply agreement dated 21 December 2010 between Perdaman as buyer and Griffin as seller. It is convenient to begin by summarising the relevant provisions of that agreement, before outlining the evidence. Next, I will state the legal principles relevant to an application for a freezing order. Those principles reveal that the major issues in this application are:

(2) Is there a danger that a prospective judgment in favour of Perdaman will be wholly or partly unsatisfied because Griffin's assets are disposed of or dealt with by the grant of a charge of the kind already referred to?

(3) What adverse consequences for Griffin will be caused by the grant of the injunction?

(4) What other matters are relevant to the exercise of the court's discretion whether to grant the injunction?

5 For the reasons that follow, I would not grant the injunction sought by Perdaman.

6 By cl 1.1, the Coal Supply Agreement (CSA) has a term of 25 years, or as extended.

7 By cl 2.1(a), the parties agree to cooperate and work together in order to meet their specific obligations, and to use reasonable endeavours to keep each other informed of all relevant issues associated with performance of their respective obligations.

8 By cl 16.6, in certain circumstances and in the event of breaches by Griffin of a stipulated character, Perdaman is given the right to step in to Griffin's operations to take over management and control so that delivery of coal to Perdaman can be restored and maintained. See cl 16.6(d)(ii), cl 16.6(e)(ii) and cl 16.6(f) (the step-in provisions). Clause 16.6(f) provides that the parties agree to use reasonable endeavours to give effect to Perdaman's step-in right, including in negotiations and documentation with financiers, Perdaman acknowledging that its interests and rights in this regard will rank after those of Griffin's financiers. (There maybe a question of construction about how this sits with cl 3.2 and cl 3.3 of the intercreditor deed. It is not necessary or appropriate to resolve that on this application.)

9 Clause 18 provides that, subject to par (b), each party will only be liable for direct and foreseeable loss incurred by any other party as a result of its default under the agreement. It further provides that in no event will any party have any liability for any Consequential Loss (as defined) suffered by the other party.

10 Clause 20.4(a) affects the rights of a party to mortgage or charge its interest under the CSA. It provides that that may occur without the other party's consent only if:

(i) the mortgage or charge is created solely with respect to the borrowing party's financing arrangements for the Project (for Perdaman) or the Griffin Mine (for Griffin); and

(ii) if Griffin mortgages or charges its interest, the mortgagee/chargee, Griffin and Perdaman execute an intercreditor deed, substantially in the form in sch 6.

11 By cl 20.4(b), each party agreed to negotiate an intercreditor deed under cl 20.4(a)(ii) in a timely manner when requested to do so by the other party.

12 Clause 24 is central to the dispute in this action. It provides for conditions for the agreement.

13 By cl 24.1(a), the CSA (with specified exceptions) is conditional on:

(ii) execution of an intercreditor deed in the form of sch 6, a deed of charge in the form of sch 7 and a mortgage of mining licence in the form of sch 8,

occurring on or before the Condition Precedent Date. The 'Condition Precedent Date' is defined to mean 30 June 2011, unless extended in accordance with cl 24.1(b).

14 Clause 24.1(b) records that Perdaman requires six months from when Griffin exits administration to allow Perdaman to achieve Financial Close. Because Griffin's administration ended on 28 February 2011, cl 24.1(b) operates to mean the Condition Precedent Date is 28 August 2011.

15 'Financial Close' is defined to mean the date at which project financing of the funding required for the Project has been provided on terms acceptable to Perdaman, and all conditions precedent to such funding have been satisfied and initial funds have been drawn down by Perdaman.

16 'Project' means the plant and related infrastructure and activities by Perdaman on its site (124 ha, to be located within the Shotts Industrial Park in Collie) related to the production of urea and downstream processing of coal or by-products obtained from coal, including, but not limited to, carbon dioxide.

17 Clause 24.1(a)(ii) refers to the intercreditor deed in sch 6, the deed of charge in sch 7 and the mortgage of mining tenement in sch 8.

18 The intercreditor deed in sch 6 is between Griffin, Perdaman and the trustee (the Security Trustee) of the security held by Griffin's financier. The deed regulates priorities between Perdaman's security under the CSA (created by the deed of charge in sch 7 and mortgage in sch 8) and the Security Trustee's security. In broad terms, the effect is to give priority to Perdaman's step-in rights under cl 16 of the CSA, and otherwise to give priority to the Security Trustee's rights; see cl 3.2 and cl 3.3 of the intercreditor deed.

19 By the deed of charge in sch 7, Griffin would charge its present and future property in favour of Perdaman to secure Griffin's performance of obligations under the step-in provisions of the CSA.

20 Clause 2.2 of the deed of charge sets out the parties' intentions about the priority of the charge. It provides that in respect of Griffin's undertaking, assets and rights relating to the operation of the Griffin mine necessary to meet Griffin's coal delivery obligations under the CSA, the charge takes priority over all other encumbrances of Griffin other than a Finance Security (as defined) or other encumbrances mandatorily preferred by law. 'Finance Security' is defined to have the meaning given to that term in the intercreditor deed. In that latter deed, Finance Security is defined to mean the security interests (of the Security Trustee) described in sch 1. Schedule 1 appears as follows:

1. [Registered Fixed and Floating Charge in favour of [insert] over all the assets and undertaking of Griffin.
2. Registered Mortgage of land granted by Griffin in favour of [insert].
3. [insert].] (original emphasis)

21 By the mortgage of mining licences in sch 8, Griffin would mortgage various mining tenements in favour of Perdaman to secure Griffin's obligations under the step-in provisions of the CSA. The mortgage is collateral to the deed of charge: cl 2.2.

22 I will refer to the deed of charge and the mortgage of mining licences as the CSA Securities.

(i) use reasonable endeavours to satisfy the condition precedent set out in cl 24.1(a)(i) by the Condition Precedent Date; and

(ii) report to Griffin in a specified manner after events material to satisfying the condition precedent;

(b) Griffin must cooperate and use all reasonable endeavours to assist Perdaman with any due diligence obligations relating to achieving Financial Close; and

(c) the parties must use reasonable endeavours to satisfy the condition precedent in cl 24.1(a)(ii) by the Condition Precedent Date.

24 The nub of Perdaman's contract claim in this action is that Griffin has breached cl 24.2(b) and cl 24.2(c).

25 Clause 24.3 provides that if the condition precedent in cl 24.1 has not been waived or satisfied by the Condition Precedent Date, then either party may, while the condition precedent remains unsatisfied and not waived, terminate the agreement immediately.

(a) If an event occurs which indicates or is likely to indicate that [Perdaman] will be unable to reach Financial Close by the Condition Precedent Date, [Perdaman] must inform [Griffin], within 1 week of such event occurring, of the details and likely impact of such event on [Perdaman] reaching Financial Close.

(b) As soon as reasonably practicable and in any event by no later than 2 weeks after [Griffin] is informed of an event referred to in paragraph (a), [Perdaman] and [Griffin] must meet to discuss such event and the possible steps and actions which can be taken by [Perdaman] and [Griffin] to mitigate the effect of such event on [Perdaman] reaching Financial Close.

24.6 Financing for the Seller

To the extent requested by [Griffin], [Perdaman] agrees to use reasonable endeavours to assist [Griffin] in obtaining finance necessary to fund the expenditure required by [Griffin] to enable it to meet its delivery obligations under this Agreement. However, nothing in this clause will oblige [Perdaman] to expend any sum of money to assist [Griffin] to obtain the necessary finance.

24.7 Financing

(a) The Parties acknowledge that the Plant and the Griffin Mine will be funded by project finance from [Perdaman's] Financiers (in the case of the Plant) and [Griffin's] financiers (in the case of the Griffin Mine). Each Party will co-operate to satisfy all reasonable requirements of the financiers of either Party. Each Party acknowledges and agrees that either Party, and their Affiliates, may finance all or part of their interest in the Griffin Mine (in the case of [Griffin]) or the Plant (in the case of [Perdaman]) and agrees that either Party may finance all or part of their interest in the Griffin Mine (in the case of [Griffin]) or the Plant (in the case of [Perdaman]) on a limited recourse or non-recourse basis.

(b) The Parties also acknowledge that where all or part of the Plant or Griffin Mine is financed, then the Parties will enter into a tripartite deed which will:

(i) in the case of the Plant, be in the form attached at Schedule 5 to this Agreement; and

(ii) in the case of the Griffin Mine, in a form reasonably required by [Griffin's] financiers.

28 The second defendant, Lanco Infratech Limited (Lanco India), is a major infrastructure developer in India. The fifth defendant, Mr Agarwal, is the chief operating officer (business development) of Lanco India. He is also a director of Griffin.

29 The third defendant, Lanco Resources Australia Pty Ltd (Lanco Australia), was incorporated on 13 December 2010. Mr Agarwal is a director of Lanco Australia.

30 Since 28 February 2011, Lanco Australia has been the sole shareholder of Griffin.

31 All the shares in Lanco Australia are owned by Lanco Resources International Pte Ltd (Lanco Singapore). The shares in Lanco Singapore are owned by Lanco India. For brevity, I will refer to these companies as 'Lanco', unless there is a need to be more specific.

32 The fourth defendant, Mr Conley, is chief executive officer of Griffin.

33 The parties filed and relied upon a substantial body of evidence on this application. Mr Walewski is a director of Perdaman. He has sworn eight affidavits, seven of which are relied upon in this application. The last of those was sworn after my decision was reserved. Perdaman seeks leave to rely on it in answer to objections made by the defendants. I deal with that question in sch A to these reasons. The parties used the shorthand 'Walewski 2' to refer to the second affidavit sworn by him and so on. I will do the same. Perdaman also relies on four affidavits of Mr Dalitso Banda, a solicitor acting for Perdaman. Again, the last of these was sworn after the hearing and leave is sought to rely on it in response to an evidentiary objection.

34 Mr Amarendran is an officer of Lanco India. He has sworn three affidavits on which the defendants rely. The defendants also rely on three affidavits of Mr Nathan Landis, one of their solicitors.

35 The defendants handed up a schedule of paragraphs of affidavits relied on by Perdaman to which they took objection. Regrettably, there was no conferral prior to the hearing of the application. Senior counsel agreed that the objections should be the subject of conferral during the lunch break. At the conclusion of the hearing, counsel proposed that written submissions be exchanged in relation to the objections after I reserved my decision. I resolve the objections in the manner and for the reasons in sch A to these reasons.

36 What follows is an outline of what is revealed by the affidavits. Naturally, it does not involve any final findings of fact. Further, an application of this nature is not an occasion to resolve any disputes about the facts.

37 On 15 December 2010, Lanco India issued a press release announcing that through its subsidiary, Lanco Australia, it had agreed to acquire 100% of the shares in Griffin: Walewski 1 (202).

38 There is evidence that, before the acquisition of the shares in Griffin, the Lanco group conducted an extensive due diligence of about two years duration: Banda 2, ann DB 10. There is also evidence that, by the time the Lanco group had agreed to acquire the shares in Griffin, it was aware of the terms of the CSA: Banda 2, ann DB 9 and DB 12.

39 On 21 December 2010, Perdaman and Griffin entered into the CSA.

40 On 9 February 2011, Lanco Australia and Lanco Singapore entered into a Syndicated Facility Agreement (Facility Agreement). The Lanco entities were the borrowers under the Facility Agreement. The agreement was entered into with ICICI Bank Limited, Singapore branch (ICICI) in various capacities including original lender, mandated lead arranger, and agent; and with the Bank of New York Mellon, London branch as security agent for the lenders. In substance, the primary purpose of the Facility Agreement was to provide funds to Lanco Australia for it to acquire the shares in Griffin and another company, Carpenter Mine Management Pty Ltd (CMM). In the Facility Agreement, those two companies are referred to as 'the Targets'.

41 By cl 3.1, funds borrowed under the facility were to be applied only towards Lanco Australia's acquisition of the shares in Griffin and CMM, the ancillary costs of that acquisition, and

equity infusion (whether direct or indirect) in [Griffin and CMM] to be utilised by [Griffin and CMM] towards: (a) meeting their working capital requirements, (b) meeting their capital expenditure requirements, or (c) scheduled repayment of their existing indebtedness. (cl 3.1(b) of the Facility Agreement, confidential annexure A to Amarendran 1)

42 Perdaman's submissions emphasised that loan funds to be provided by the Lanco entities to Griffin were by way of equity infusion, not loan to Griffin. Further, Perdaman emphasised that the substantial bulk of the loan funds were required for the costs of the acquisition itself.

43 The defendants submit that Griffin benefits, in a commercial sense, from the Facility Agreement in that the funds were obtained to meet its working capital and capital expenditure requirements. The defendants also refer to the evidence of Mr Amarendran (Amarendran 1 [22]), that substantial funds had been advanced to meet the working capital and capital expenditure needs of Griffin.

44 The conditions precedent included execution of various security instruments: see cl 4(d) of pt I of sch 2. None of these required security from Griffin (although one involved security over the shares in Griffin).

45 By cl 23.16, each borrower was required to ensure that the conditions subsequent listed in pt III of sch 2 were satisfied within the specified time limit. Condition 2(g) in pt III is that no later than 90 days from the first utilisation of the facility, a negative lien of each of Griffin and CMM in favour of the security agent in a form and substance satisfactory to ICICI and the security agent be executed, delivered and perfected, including evidence of shareholder approval and lodgement of documents as required under s 260B of the Corporations Act 2001 (Cth). By cl 24.2(a), a breach of any term of cl 23, thus including cl 23.16, is an event of default.

46 A number of the undertakings by the Borrowers in the Facility Agreement required them to procure that Griffin and CMM not engage in particular conduct or ensure certain outcomes: see, for example, cl 23.5, cl 23.6, cl 23.7, cl 23.10 and cl 23.12.

47 Also on 9 February 2011, Lanco Australia granted a charge over all of its present and future assets to a maximum prospective liability of $2.4 billion in favour of the Bank of New York Mellon, London branch. That charge was granted to secure the obligations of Lanco Australia under the Facility Agreement.

28 February 2011: Lanco's acquisition of Griffin

48 On 28 February 2011, Lanco Australia acquired the shares in Griffin. There were a number of steps involved in that process. In summary, Griffin's administration ended; a deed of company arrangement was entered and finalised; and the shares in Griffin were acquired.

49 By letter of 28 February 2011, Lanco Australia wrote to Griffin and to CMM (annexure D to Landis 2). The letter referred to the acquisition of shares on that day and stated that Lanco Australia, Lanco Singapore and Lanco India had arranged for funding from ICICI as lead syndicate arranger, and had executed the Facility Agreement on 9 February 2011. The letter attached a copy of the Facility Agreement, with what was described as 'a notice to [Griffin and CMM] to adhere by all the Covenants/Undertakings/Representations and Warranties and other obligations whatever' agreed by Lanco Australia and Lanco Singapore on their own behalf and on behalf of Griffin and CMM. The letter requested that a copy be signed and acknowledged. Griffin signed to acknowledge receipt of the letter.

50 Perdaman submits that the signing of this letter by Griffin is indicative of a tendency, on Griffin's part, to act at the behest and direction of its Lanco parents. I will say more about that when I discuss the question of the danger of an unsatisfied judgment. Further, Perdaman submits that the signing of this letter did not create any legal obligations on the part of Griffin. Griffin did not suggest in submissions that the signing of the letter imposed obligations on Griffin in favour of ICICI.

Communications before Lanco's acquisition of Griffin

51 As the defendants emphasised in their submissions, even before Lanco Australia's acquisition of Griffin, there was email correspondence between Perdaman, Lanco India and Societe Generale (Soc-Gen). Soc-Gen was Perdaman's financial advisor for the Project and was proposed to be one of the lead lenders to the project.

52 In December 2010 and January 2011, Perdaman passed on to Griffin questions from Perdaman's proposed financier's coal consultant, Behre Dolbear Australia (BDA), about what was proposed for the Griffin coal mine: Amarendran 2 (25 - 28).

53 By email of 11 February 2011, Mr Krust of Soc-Gen asked Mr Vikas Rambal, a director of Perdaman, to ask Lanco what he described as 'a few quite important questions' coming from the proposed lenders and from the coal consultant (BDA). The questions related to how Lanco proposed to manage the mines, whether there were plans to improve mine management and productivity, and how developed their plans were about those matters. The email suggested that the lenders and their consultants believed there was considerable scope for improving the productivity of the mines and wanted the comfort of knowing about Lanco's plans to capture that potential. The email foreshadowed that BDA would want to talk to Lanco.

54 The same day, Mr Rambal forwarded Mr Krust's email to Mr Agarwal at Lanco, saying that it had become urgent for Perdaman's lenders to know the Lanco view rather than the Griffin view.

55 Mr Agarwal caused an information pack on Lanco to be sent to Mr Rambal on 16 February 2011. After that, Mr Rambal reiterated the questions, saying that the information requested did not appear to have been in the information pack. In response, Mr Agarwal said that after completion of the acquisition of Griffin, Lanco would put together a 100 day transitional plan, suggesting that information relevant to the questions would only take shape during that process. Accordingly, he said that he would not be in a position to comment in the meantime: Amarendran 2 (29 - 39).

March 2011: Lanco provides information to be sent to Soc-Gen

56 By letter of 8 March 2011, Mr Krust of Soc-Gen wrote to Mr Rambal of Perdaman. The letter set out information that the proposed financiers and BDA required. Questions included what coal consultants had been involved in Lanco's acquisition of Griffin, Lanco's plans for the management of Griffin, what management would be used, and the operational plan for the mines. The letter stated that the proposed financiers had advised Soc-Gen that improvement to production costs was critical given that the mine had previously gone into administration. The letter stated that these matters were 'on the critical path for the financing' and that the financiers may not allow Perdaman to complete its financing unless Lanco agreed to discuss that information with BDA. The letter requested that Mr Rambal take up the matter with Lanco as a matter or urgency.

57 The same day, Mr Rambal sent an email to Mr Rao, chairman of Lanco India, attaching Soc-Gen's letter and asking that Mr Rao direct the questions appropriately: Amarendran 2 (42 - 45).

58 By email of 12 March 2011 to Mr Rambal, Mr Agarwal responded to the questions in Soc-Gen's letter. Mr Agarwal's response did not identify any radical or fundamental change that was proposed to the operations of the mine. It said that Lanco's long-term business view was that Griffin's basic structure was more than adequate. The day-to-day management would be undertaken by the current management team at Griffin. The email stated that existing plans and expansion programmes already shown to the due diligence team by existing management would not change substantially: Banda 2, ann DB 10.

59 The defendants emphasise that, in this chain of communication, Perdaman sought information from Lanco expressly on the basis that the information was required by Soc-Gen on behalf of the proposed financiers. As will be seen, Perdaman complains that in May 2011, Griffin's communications with the proposed financiers disrupted the due diligence process and were a breach of cl 24.2(b) of the CSA. Griffin denies this, and says that its communication with financiers in May 2011 must be viewed in the context of this earlier chain of communication.

60 In early April 2011, Perdaman and Griffin cooperated to arrange a visit by some of Perdaman's proposed financiers to the Griffin mine site. After the visit, Mr Watson from Perdaman wrote to Mr Conley of Griffin, thanking him and his teams for their assistance with the site visit. The email stated that it was important to demonstrate to the financiers the capacity of the Griffin mining operation in terms of both scale and expertise, and that this had been done very effectively. The email also foreshadowed a visit from the six banks that form the core commercial lending group for the other half of the proposed finance for Perdaman. That meeting was proposed for May 2011: Landis 2 (45).

61 On 18 April 2011, Griffin wrote to ICICI: Landis 2 (46). The letter, signed by Mr Agarwal:

(a) stated that under the terms of the Facility Agreement it was 'envisaged' that Griffin and CMM would not create any security or charge over its assets without ICICI's prior consent, and that those companies were required to furnish an undertaking to that effect;

(b) stated that under the CSA it was intended that Griffin would execute the CSA Securities and the intercreditor deed in sch 6 of the CSA;

(c) enclosed what was said to be the 'executed' draft CSA Securities;

(d) outlined the assets secured by the deed of charge and the mortgage;

(e) stated that execution of the deeds was a condition precedent of the CSA required to be complied with by 28 August 2011; and

(f) requested ICICI to issue 'no - objection' to execution of the deeds.

62 Perdaman submits that, as at 18 April 2011, Griffin was not obliged to seek ICICI's consent to execution of the CSA Securities, since Griffin was not a party to the Facility Agreement. I will outline Griffin's submissions in response when I deal with whether Perdaman has a good arguable case.

63 On 20 April 2011, ICICI rejected the request, saying, in effect, that execution of the CSA Securities would be prejudicial and would dilute the interest of the lenders under the Facility Agreement.

64 Perdaman submits that the speed of this response from ICICI suggests that these letters were a façade to create an appearance of compliance with cl 24 of the CSA. I do not accept that submission in the context of the present application. I am not persuaded that the timing of the response, viewed in the circumstances revealed by the evidence before me, provides any foundation for drawing the inference invited by Perdaman.

Early May 2011: events before the second due diligence inspection

65 In early May 2011, Mr Watson of Perdaman contacted Mr Conley of Griffin by email, requesting to arrange a tour for the commercial banks who were part of Perdaman's proposed financiers.

66 So far as the material before me reveals, there were no issues between Perdaman and Griffin about the CSA up to the beginning of May. On Perdaman's case, that changed dramatically with Griffin's letter of 5 May 2011, signed by Mr Agarwal (Landis 2 (51)). Because that letter is of central significance to Perdaman's case, I will set out its content in full.

Dear Sirs,

Coal Supply Agreement dated 21 December 2010 between Perdaman Chemicals and Fertilizers Pty Ltd and Griffin Coal (Administrators Appointed) (the 'CSA')

As you know, Griffin Coal was acquired by Lanco Resources Australia Pty Ltd from the administrators of Griffin group companies on 28 February 2011.

We wish to raise two matters with you concerning the CSA. We feel it is important to raise them with you now so that you (and your stakeholders) remain fully informed.

The first concerns the requirement that parties use reasonable endeavours to achieve execution on or prior to the CSA's 'Condition Precedent Date' of an intercreditor deed, a Deed of Charge, and a Mortgage of Mining Licence as contemplated in the CSA. The acquisition of Griffin Coal was agreed on terms prior to Lanco being provided with a copy of the final CSA (including the final terms of those three security documents). The acquisition was financed by ICICI Bank Limited, under the financing terms ICICI has certain rights as regards securities over Griffin Coal. Pursuant to our obligations under the CSA we have attempted to procure ICICI's consent to the grant of securities by Griffin Coal for the purposes of the CSA. ICICI has so far refused to grant that consent. We will however continue to endeavour to procure its consent and to bring about the execution of the CSA securities.

The second matter is that since completion of the acquisition, we have commenced a review of our operations and customer arrangements. The review so far has raised serious concerns that our operations may not be financially sustainable in their present form. We may need to make changes to the business of Griffin Coal and its operations in order to make its operations sustainable. We believe it is not in either party's interest that there be a recurrence of the recent financial difficulties. In light of the close business relationship between us, we would like to give you more information about our operations and to discuss our future business plans.

We would like to meet with you to discuss these matters further.

Yours faithfully

[Signed]

For and on behalf of

The Griffin Coal Mining Company Pty Ltd

67 By letter of 9 May 2011 from Mr Walewski, Perdaman:

(b) said that the financiers inspection had been rearranged, at Griffin's request, from 11 May 2011 to 10 May 2011;

(c) asserted that at a meeting on 9 May 2011 in the Office of the Department of State Development, Mr Agarwal on behalf of Griffin had indicated to Mr Rambal of Perdaman that Griffin was only conditionally prepared to cooperate with the financiers inspection;

(d) stated that Perdaman required Griffin's cooperation with the inspection pursuant to cl 24.2(b), asserting that any failure by Griffin to allow the inspection to proceed or to attempt to impose a condition or otherwise disrupt the inspection would be a beach of that covenant; and

(e) stated that if it was Griffin's intention not to use all reasonable endeavours to assist Perdaman, a response to that effect should be given in writing by the following morning.

68 By letter of 10 May 2011, Mr Conley of Griffin responded to Perdaman's letter of 9 May 2011. In its letter, Griffin:

(a) asserted that it had cooperated and used all reasonable endeavours to assist Perdaman with due diligence required by the Perdaman's financiers for achieving Financial Close;

(b) referred to the meeting between Mr Agarwal and Mr Rambal at the Office of the Department of State Development, saying that at that meeting it had been agreed that:

(ii) Mr Rambal would brief the bankers on the contents of Griffin's letter of 5 May 2011, and send confirmation of that to Griffin by 9 May;

(iii) if no such written confirmation was received, Griffin would brief the bankers at the time of the mine visit; and

(iv) the parties would meet for further discussions in New Delhi on 14 May;

(c) asserted that after that meeting, Mr Rambal called Mr Agarwal at 5.00 pm on 9 May 2011 to say that the financiers visit was cancelled;

(d) stated that after that, at about 7.15 pm, Griffin received Perdaman's letter of 9 May 2011;

(e) stated that in line with Griffin's 'commitment to the relationship, sincere willingness and effort to extend our cooperation and doing [all reasonable endeavours] to assist Perdaman with respect to any due diligence', Griffin was prepared to facilitate the mine visit for the financiers without any condition; and

(f) said that Griffin assumed that Perdaman would already have briefed its financiers with respect to the letter of 5 May 2011 and sought confirmation of that.

69 Senior counsel for the defendants submits that the description in this letter of what occurred on 9 May 2011 is not contradicted in subsequent correspondence from Perdaman. That may be so, but there is no affidavit evidence about what occurred. The question of what occurred on 9 May 2011 is a matter for trial, not resolution on this application.

The second due diligence mine site inspection

70 On 10 May 2011, the second due diligence mine site inspection occurred. A number of people attended on behalf of Perdaman's proposed financiers.

71 What occurred on 10 May 2011 is the cornerstone of Perdaman's case that Griffin has breached cl 24.2(b) of the CSA: the obligation to use all reasonable endeavours to assist Perdaman with any due diligence obligations relating to achieving Financial Close.

72 The only affidavit evidence about what occurred at the mine site inspection is in Walewski 1 [18]. In his affidavit, Mr Walewski says that:

(a) at the financial inspection, Mr Amarendran, a representative of the Lanco group, addressed some of the proposed financiers, contrary to Mr Walewski's protest and warning;

(b) following protests from Mr Walewski, Mr Amarendran said that he would telephone his superiors; and

(c) shortly after that, Mr Amarendran spoke to some of the bankers and said 'words to the effect that there was issues with the mining operations that would create difficulties with supply under the [CSA]' and indicated that this would have a negative effect on supply.

73 In his affidavit of 11 July 2011, Mr Amarendran says that he does not accept Mr Walewski's account of these events as accurate: Amarendran 1 [33]. Mr Amarendran does not identify, in his affidavit, what is inaccurate or misleading in Mr Walewski's account, or put a different account of the events.

74 The defendants point to what is said in Perdaman's letter of 11 May 2011, signed by Mr Walewski, about what occurred at the mine site inspection. The letter states that Mr Amarendran had said 'words to the [effect] that [ICICI] had concerns about the grant of security documents and further that Griffin was reviewing its operations and customer arrangements': Landis 2 (61). As the defendants point out, what is said in the letter does not refer to the topic of supply under the CSA, as mentioned in Walewski 1 [18].

75 Senior counsel for the defendants invites the conclusion that what is in the letter of 11 May 2011 reflects what was said at the mine site inspection, and that Mr Walewski's evidence in Walewski 1 [18] is 'a lie': ts 109. I do not accept those submissions. In my view, an application of this character is not an occasion for resolution of an apparent inconsistency between what is said in an affidavit and what was said by the deponent in a letter close in time to the events in question. Still less is it an occasion for concluding that evidence given on oath is deliberately false.

76 On 11 May 2011, Mr Walewski wrote on behalf of Perdaman to Mr Conley on behalf of Griffin: Landis 2 (59 - 61). The letter referred to the meeting between Mr Agarwal and Mr Rambal at the Department of State Development on 9 May 2011, asserting that that meeting did not give rise to any modification or variation to the contractual arrangement between Perdaman and Griffin. The letter:

(a) acknowledged that Mr Agarwal had sought to stipulate that his letter of 5 May 2011 should be disclosed to the Perdaman financier inspection team;

(b) stated that Perdaman had determined that the letter had no contractual significance and, because its contents might adversely affect Perdaman achieving Financial Close, had resolved not to proceed as suggested by Mr Agarwal;

(c) stated that, consequently, Perdaman had written on 9 May 2011 requiring an assurance that inspection would occur without condition, which had been confirmed by Griffin's letter of 10 May 2011;

(d) stated that Griffin's conduct on 10 May during the second due diligence inspection was contrary to that undertaking and was a serious breach of cl 24.2(b) of the CSA;

(e) asserted that dealings between Perdaman and its bankers and financial advisers were matters for Perdaman, and that Griffin had no right to interfere in those dealings;

(f) asserted that in a telephone conversation before the inspection team arrived at the site, Mr Conley had confirmed to Mr Walewski that the inspection would proceed without condition, after having been told that Perdaman had not disclosed the letter of 5 May 2011; and

(g) asserted that it was the deliberate intention of Griffin and Lanco to disrupt the mine site inspection, and that they must have known that it would have potentially significant adverse effect on Perdaman achieving Financial Close.

77 On 16 May 2011, Mr Conley, for Griffin, responded to Mr Walewski's letters of 9 May and 11 May 2011: Landis 2 (62 - 63). Griffin's letter:

(a) asserted compliance, and an intention to continue to comply, with the obligations under cl 24.2(b);

(b) asserted cooperation in permitting mine site visits, including on 10 May 2011;

(c) stated that it was clear from the communications between the parties that the lack of condition of the visit was based on an assumption that the project finance team would be briefed on 'the situation between us';

(d) stated that Griffin was concerned to ensure that due diligence conducted on its premises be based on information that is accurate and not materially misleading; and

(e) stated that Griffin remained prepared to meet with and answer questions from Perdaman's financiers to assist their conduct of their due diligence.

78 By letter of 19 May 2011 (Landis 2 (64 - 65)), Perdaman:

(a) expressed concern about Griffin's conduct on 10 May 2011;

(b) asserted that that had had a significant and negative impact on the financier's due diligence;

(c) stated that Perdaman's financiers were concerned that Griffin does not intend to execute the CSA Securities;

(d) stated that Perdaman's financiers were intending to go to their credit committees for credit approval on 23 May 2011; and

(e) 'required' Griffin to execute the CSA Securities within 48 hours.

79 By letter dated 20 May 2011 (Landis 2 (66 - 67)), Perdaman responded to Griffin's letter of 16 May 2011. The letter:

(a) asserted that Griffin's conduct at the mine site inspection was inconsistent with its undertakings to facilitate the inspection without condition;

(b) asserted that, on 16 May 2011, Mr Conley had briefed Griffin's workers, saying that it was Griffin's and Lanco's intention to renegotiate the coal supply price and escalation terms in the CSA; and

(c) asserted that the letter of 5 May 2011 did not convey information, and requested an explicit statement of what was the information regarded by Griffin as material to Perdaman achieving Financial Close.

80 Perdaman submits that this request, which was repeated shortly thereafter by Perdaman, was never responded to by Griffin. The evidence before me sustains that submission.

81 By letter of 21 May 2011, Mr Agarwal, for and on behalf of Lanco Australia, referred to discussions that had occurred at the offices of ICICI on 18 and 19 May 2011, and requested ICICI to reconsider the request to issue a 'no - objection' to execution of the CSA Security documents.

82 By letter of 22 May 2011 (Landis 2 (69 - 70)), Mr Conley of Griffin replied to Perdaman's letters of 19 and 20 May. The letter:

(a) referred to the condition precedent in cl 24.1(a)(ii), the tripartite deed in sch 5 and the obligation to agree a further deed in cl 24.7(b);

(b) asserted a continuing intention to use all reasonable endeavours to assist Perdaman with its due diligence obligations relating to achieving Financial Close;

(c) said that Griffin and its parent were in communication with 'the financier of the Griffin Mine' in relation to fulfilling the obligation in cl 24.2(c);

(d) said that the financier had so far refused to consent to Griffin executing the documents;

(e) invited Perdaman and its bankers to meet 'our bankers' in Mumbai; and

(f) said that Perdaman's assertions about Mr Conley's statement to workers on 16 May 2011 were incorrect.

83 By letter of 23 May 2011 (Landis 2 (73 - 74)), Mr Walewski of Perdaman responded to that letter. By its letter, Perdaman:

(a) said that Griffin's letter of 22 May 2011 had failed to respond to Perdaman's request by letter of 20 May 2011 for identification of the 'information' regarded by Griffin as material to Perdaman achieving Financial Close, and sought a reply to that request by return;

(b) asserted that as a consequence of Griffin's and Lanco's 'intended' disruption of the mine site inspection, Perdaman's financiers were 'alarmed' that Lanco and Griffin intended not to honour the terms of the CSA;

(c) asked whether it was the intention of Lanco India and Griffin to comply with and give effect in all respects to the CSA;

(d) stated that that required, among other things, Griffin to execute the CSA Securities forwarded on 19 May 2011;

(e) referring to Griffin's letter of 22 May 2011, said that Perdaman did not know of any financiers to the Griffin mine, but only of a financier for Lanco India; and

(f) sought confirmation that no agreement had been made between Lanco India and Griffin that Griffin not execute the CSA Securities, and sought an undertaking that no such agreement would be made.

84 Griffin responded by letter of 24 May 2011: Walewski 2 (145 - 146). In this letter, Griffin:

(a) rejected Perdaman's assertions about the site visit and related matters;

(b) reasserted Griffin's intention to perform its obligations under cl 24.2(b) and cl 24.2(c) of the CSA;

(c) stated that Griffin's obligations under those clauses did not require it then to execute two of the five documents contemplated by cl 24 of the CSA;

(d) said that Perdaman was not entitled to require the undertaking sought in its letter of 23 May 2011 and declined to give the undertaking;

(e) noted that no Buyer Milestone report under cl 24 had been received;

(f) asserted that, to date, 'the relevant financier' had so far refused to consent to execution of the CSA Securities, and that Griffin was attending to steps required under cl 24.2(b) and cl 24.2(c), including meeting with its financiers; and

(g) reiterated the invitation in Griffin's letter of 22 May 2011 for Perdaman and its bankers to meet with 'our financiers' in Mumbai.

24 - 28 May 2011: Griffin seeks and obtains shareholder approval under s 260B

85 On 24 May 2011, ICICI wrote to Lanco Singapore: Landis 2 (75). The letter referred to the condition in the Facility Agreement requiring the creation of a negative lien, saying that that was required by that date. The letter also requested information as to the current operational and financial performance of the Griffin mines to enable ICICI to evaluate that against the base case business plan.

86 The same day, on 24 May 2011, Griffin issued a statement of material information in connection with a Notice of Meeting of its sole shareholder, Lanco Australia, to give approval under s 260B of the Corporations Act for Griffin to enter a Negative Pledge Deed incorporating a guarantee and indemnity (in favour of ICICI). Perdaman became aware of this in late June 2011, following company searches.

87 Material of that kind was lodged at ASIC in respect of both Lanco Australia and Griffin: Walewski 2 (159 - 174), (175 - 187).

88 The material reveals that Griffin sought a resolution of its sole member, Lanco Australia, to approve the giving of any financial assistance by Griffin in connection with the acquisition by Lanco Australia of the shares in Griffin, including by the entry into and performance of Griffin's obligations under a negative pledge deed incorporating a guarantee and indemnity.

89 Correspondingly, Lanco Australia sought the approval of its sole shareholder, Lanco Singapore, for the giving of any financial assistance by Griffin and CMM in connection with the acquisition by Lanco Australia of all the shares in Griffin and CMM, including the entry into and performance of obligations under the negative pledge deed incorporating a guarantee and indemnity.

90 Each notice of meeting was accompanied by a statement of material information. The statement of material information in relation to Griffin's request for a resolution by Lanco Australia included the following:

(a) on 28 February 2011, Lanco Australia acquired all the issued shares in Griffin [2.1];

(b) on 9 February 2011, Lanco Australia and Lanco Singapore entered into an agreement with ICICI, under which ICICI agreed to provide Lanco Australia and Lanco Singapore with financial facilities [3.1];

(c) Lanco Australia funded the acquisition of the shares in Griffin by using funds extended under the ICICI facility [3.5];

(d) to better secure Lanco Australia's and Lanco Singapore's obligations under the ICICI facility, parties to the Facility Agreement are required to provide security to ICICI [4.1];

(e) because Griffin became a subsidiary of Lanco Australia on 28 February 2011, it is therefore required to, and intends to, become an Additional Guarantor under the Facility Agreement, by executing a negative pledge to ICICI incorporating a guarantee and indemnity (this is defined as the Negative Pledge Deed) [3.2], [3.6];

(f) pursuant to the terms and conditions of the Negative Pledge Deed, Griffin must ensure that at all times certain unsecured and unsubordinated claims of ICICI against it under the Facility Agreement must rank at least pari passu with the claims of all of Griffin's other unsubordinated creditors [3.3];

(g) to comply with that obligation under the Negative Pledge Deed, further security may need to be provided by Griffin and related companies, and associated intercreditor agreements entered into in the future [4.2];

(h) Griffin is requested to provide a negative pledge and guarantee and indemnity to ICICI, by executing the Negative Pledge Deed, and will be required to provide security in future in favour of ICICI, among others, in the event that Lanco Singapore, Lanco Australia, Griffin or their related bodies corporate raise project finance or in the event that such security is required to ensure the successful syndication of the ICICI facility [4.3].

(i) The obligations of Griffin under the Facility Agreement are significant and could include:

(i) guaranteeing the performance of obligations, including payment obligations, of the Obligors under the ICICI facility (Lanco Australia, Lanco Singapore, Lanco India, Griffin and CMM);

(ii) indemnifying ICICI against all liabilities in connection with the ICICI facility;

(iii) giving security interests over its assets to secure those obligations;

(iv) providing additional security and other documents as required by ICICI;

(v) adding or removing as obligors associates of Griffin, Lanco Australia, Lanco Singapore or any of the guarantors;

(vi) signing and complying with the obligations under the Negative Pledge Deed; and

(vii) signing and complying with the obligations under an intercreditor agreement in relation to the security [7.2];

(j) if the ICICI facility is amended, replaced or refinanced or is reviewed or is in default, Griffin may be required to consent to amendments or provide additional support including incurring additional obligations, providing additional guarantees and security, including fixed and floating charges over assets, mortgages over real property or share mortgages [7.4];

(k) approval of the resolution by Lanco Australia will approve amending, replacing, refinancing and additional obligations and providing by Griffin of additional securities and guarantees in the future [7.6];

(l) the grounds for approving the proposed financial assistance include:

(i) that the ICICI facility would not be granted or maintained without Griffin becoming an Additional Guarantor, entering into the Negative Pledge Deed and agreeing to provide the future security and enter into an intercreditor agreement; and

(ii) the money drawn down under the ICICI facility has been used to finance the acquisition and will be used to provide ongoing funding, including equity infusion into Griffin to be utilised towards working capital and capital expenditure requirements or repayments of existing indebtedness [7.8]; and

(m) Griffin is liable for the obligations of all the obligors under the Facility Agreement. If there is a default under the Facility Agreement, ICICI may demand repayment of the ICICI facility by one or more of the obligors and/or enforce the security and all other securities provided by the obligors. On enforcement, among other rights, ICICI may become entitled to procure the sale of the assets of Griffin [8.2].

91 On 28 May 2011, Lanco Australia passed the resolution as shareholder of Griffin. A similar resolution was passed by Lanco Australia's shareholder, Lanco Singapore, after similar notice of meeting.

Late May to mid-June 2011: further correspondence and the action is commenced

92 By letter of 25 May 2011, Perdaman provided a Buyer Milestone report under cl 24 of the CSA. The letter asserted that two events had occurred:

(a) the mine site inspection on 10 May 2011 was disrupted by conduct of Griffin and Lanco India; and

(b) Griffin had refused to execute the CSA Securities.

93 The letter stated that the likely impact of each of the two events was that Perdaman's financiers were likely to withdraw from project financing because they were not satisfied with Lanco's and Griffin's commitment to the CSA.

94 Mr Walewski says, in his first affidavit, that he and Mr Rambal of Perdaman met with Mr Agarwal and other representatives of Lanco India on 25 and 26 May 2011. Mr Walewski's evidence is to the following effect. On 26 May, Mr Agarwal said that the issues needing to be resolved were base price, escalation formula and security for the step-in rights to be granted to Perdaman's financiers. Mr Agarwal said, in effect, that Lanco India required Perdaman to pay higher prices than specified in the CSA and to submit to an escalation formula that is different from the provisions of the CSA. Mr Walewski says that would be significantly to the commercial disadvantage to Perdaman over the life of the project. He says these matters disrupt the Perdaman financial arrangements and the due diligence of Perdaman's proposed financiers. He says that at the price required by Lanco, he thinks Perdaman would be unlikely to be able to obtain finance sufficient to build its project: Walewski 1 [22] - [25].

96 Upon receiving the writ, the defendants' solicitors wrote to the plaintiffs' solicitors. By letter dated 2 June 2011, the defendants' solicitors sought clarification of whether Perdaman considered the CSA terminated and whether it considered that the conditions precedent in cl 24.1(a) of the CSA could not be achieved.

97 By letter of 7 June 2011, Perdaman's solicitors stated that it considered the CSA remained on foot. The letter did not respond to the question about the conditions precedent, stating that it was not intended to explicate the basis of Perdaman's claim. That would be done by the statement of claim.

98 By letter dated 2 June 2011 to Griffin, Perdaman enclosed Mr Krust's letter on behalf of Soc-Gen: Landis 2 (82 - 83). Perdaman stated that this indicated that the conclusions reached by Soc-Gen, as expressed in its letter, indicated that Perdaman would be unable to reach Financial Close by the Condition Precedent Date.

(a) stated that the project financing due diligence was then effectively finalised, and that the proposed financiers were due to prepare their credit proposals and submit them to credit committees;

(b) asserted that the conduct of Lanco and Griffin on 10 May 2011 at the mine site inspection and subsequently had directly affected the confidence of the lenders, suggesting that Lanco was not committed to complying with the CSA; and

(c) asserted that Lanco's attitude would prevent Financial Close being achieved by Perdaman as scheduled, saying that there was a high likelihood that the lender group would withdraw from the project financing, thereby creating major delays with the implementation of the project itself.

100 By a further letter dated 7 June 2011, Perdaman's solicitors wrote to the defendants' solicitors. The letter sought an undertaking that Griffin would not enter a mortgage or charge without 10 business days' notice to Perdaman. That was said to be based on a concern that Lanco India would procure Griffin to grant securities over its assets, with the consequence that there would be no unsecured assets against which to execute judgment in this action.

101 The defendants' solicitors' response by letter of 9 June 2011:

(a) requested the statement of claim in the action; and

(b) stated that Griffin did not accept there was a good arguable case against it, or that any damages at all could be awarded in respect of the claims in the writ, particularly given Perdaman's assertion that the CSA was sill on foot.

102 By a further letter of 9 June 2011, Griffin's solicitors reiterated the invitation for Perdaman's bankers to meet with 'my client's', namely Griffin's, bankers in Mumbai.

103 By letter of 10 June 2011, Perdaman's solicitors requested the defendants' solicitors to explain the statement in the defendants' solicitor's letter of 9 June 2011 that Griffin has bankers in Mumbai. Perdaman's solicitor's letter stated that as far as they were aware, ICICI was banker for Lanco India and sought urgent confirmation whether Griffin had entered into any, and if so what, security arrangements with ICICI.

104 By letter of 13 June 2011, the defendants' solicitors:

(a) stated that Griffin was now part of the Lanco group of companies;

(b) said that the bankers to the Lanco group were in Mumbai;

(c) said that Griffin had attempted to procure ICICI's consent to the grant by Griffin of the CSA Securities but that ICICI had so far refused to grant that consent; and

(d) enquired whether Perdaman was not interested in having its bankers meet the bankers to the Lanco group to advance that issue.

105 That letter did not respond to the specific request, in Perdaman's solicitor's letter of 10 June 2011, to confirm whether Griffin had entered into any security arrangements with ICICI.

106 There was further correspondence between the solicitors on 15 - 17 June 2011. By letter of 17 June 2011, Perdaman's solicitors said that the defendants' solicitor's letter of that date did not answer the question raised of whether Griffin had a banking relationship with ICICI.

107 On a date that is not entirely clear, Griffin entered into a Negative Pledge Deed with ICICI. The instrument was confidential annexure B to Amarendran 1. Confidentiality orders about the instrument (and the Facility Agreement) were made by consent on 13 July 2011, but were discharged by consent following the hearing on 27 July.

108 The Negative Pledge Deed is undated. Mr Amarendran's evidence is that the Negative Pledge Deed was executed 'after 14 days had elapsed following' the meeting of Griffin's shareholder under Corporations Act s 260B: Amarendran 1 [24]. The meeting occurred on 28 May 2011. The effect of Mr Amarendran's evidence is that the document was executed by Griffin some time after 11 June 2011. The instrument bears a notation on its face which suggests that it was stamped on 21 June 2011. Thus, the evidence suggests the instrument was executed by Griffin some time between 12 and 21 June 2011.

109 The Negative Pledge Deed recites that Lanco Australia had entered into the Facility Agreement and that it was a requirement of the Facility Agreement that Griffin and CMM enter into the Negative Pledge Deed with ICICI.

110 By cl 2.1 of the Negative Pledge Deed, Griffin is required to ensure that any unsecured and unsubordinated claim of a Finance Party under a Finance Document ranks at least pari passu with the claims of all its other unsubordinated creditors, other than claims to the extent secured by Permitted Security, and other than creditors whose claims are mandatorily preferred by laws of general application to companies. A 'Finance Party' refers to the lenders, security agent, arranger and other agents as defined in the Facility Agreement. 'Finance Document' is defined to include the Negative Pledge Deed, the Facility Agreement, and a number of other documents.

111 By cl 2.2.1, with stipulated exceptions, no Obligor shall create or permit to subsist any security over any of its assets. The Obligors include Griffin and CMM.

Each Obligor shall (and each Obligor shall ensure that each member of the Group will) grant equal ranking Security for the benefit of the Finance Parties as security for all amounts outstanding under the Finance Documents on substantially the same terms and in all respects in form and substance acceptable to the Agent (in its discretion) as any Security (Proposed Security) granted in connection with any Financial Indebtedness provided to or for the benefit of any Obligor or member of the Group (Proposed Financing) and be subject to an Intercreditor Agreement in form and substance acceptable to the Agent (in its discretion). For the avoidance of doubt, all such Security must rank equally in terms of priority and payment. (original emphasis)

(a) it is contemplated that Griffin may raise further finance, from other parties, for which security would be expected to be required;

(b) in that event, each Obligor, including Griffin, is required to grant security to ICICI, to secure the Obligor's obligations under the Finance Agreement; and

(c) ICICI's security is to rank equally with the security granted for the further finance.

114 Clause 2.16 is headed 'Further assurance'. I will set it out in dealing with the question of the danger or threat of execution of a charge in favour of ICICI.

115 By cl 3 of the Negative Pledge Deed, each Obligor, including Griffin, gives a guarantee and indemnity in respect of Lanco Australia's and Lanco Singapore's obligations under the Facility Agreement.

Late June to late July: further correspondence and this application is commenced

116 On 29 June 2011, Perdaman's solicitors wrote to the defendants' solicitors. The letter:

(a) referred to company searches revealing the notice of resolutions and passing of resolutions under Corporations Act s 260B;

(b) stated that, before 19 May 2011, when Perdaman asked Griffin to execute the CSA Securities, Griffin and ICICI were not in a banking relationship;

(c) referred to parts of the statement of material information recording that Griffin will be required to give security in favour of ICICI in various circumstances;

(d) asserted that Griffin's conduct was in breach of the CSA;

(e) asserted that the threat to grant further security had the potential to frustrate the successful execution of judgment in the action;

(f) stated that Perdaman would be applying for urgent relief restraining the grant of further security; and

117 On 29 June 2011, Perdaman made this application for an interlocutory injunction. The application was made returnable on 30 June 2011.

118 On 30 June 2011, the defendants' solicitors wrote in response to the application. The letter:

(a) denied that Perdaman was entitled to any of the relief claimed in this action; but

(b) undertook not to enter any charge etc, in the terms of Perdaman's chamber summons.

119 On 30 June 2011 by its solicitors, Griffin gave an interim undertaking to the court in terms of par 1 of the chamber summons pending the hearing of Perdaman's application for an interlocutory injunction. That was extended, in modified form, on 13 July 2011. By counsel, at the hearing on 27 July 2011, Griffin extended its undertaking pending my decision on this application.

120 By letter of 6 July 2011, Perdaman's solicitors:

(a) referred to Perdaman's letter of 25 May 2011 giving notice of an event for the purposes of cl 24.4(a) of the CSA;

(b) referred to Griffin's obligations under cl 24.4(b) to meet to discuss the events referred to in the milestone report and other steps which can be taken to mitigate the effect of the events on Perdaman reaching Financial Close;

(c) stated that Griffin had taken no steps to meet with Perdaman or to mitigate the effect of its conduct on Perdaman's ability to achieve Financial Close;

(d) stated that Perdaman now apprehended from ASIC searches that Griffin has or may have entered into contractual obligations inconsistent with the terms of the CSA; and

(e) asserted that accordingly it was not open for Griffin to rely on cl 24.4(c) and that it would be unconscionable for Griffin to rely on its own breach of cl 24.2(b) and cl 24.2(c) to justify terminating the CSA.

121 By letter of 7 July 2011, Perdaman wrote to Lanco Australia and Griffin. The letter was described as a report pursuant to cl 24.2(a)(ii) of the CSA. The letter:

(a) stated that Perdaman's financial advisors, Soc-Gen, have informed Perdaman that Perdaman's proposed financiers continue to remain unsatisfied with the commitment of Lanco and Griffin to adhere to the CSA, and questioned the willingness of Griffin to perform under that contract;

(b) stated that Perdaman remained of the view that the conduct of Griffin and Lanco on 10 May 2011 and subsequently has had or was likely to have the effect that Perdaman will be unable to achieve Financial Close by the Condition Precedent Date; and

(c) stated that Perdaman was not aware of any other reason which would preclude it reaching Financial Close by the Condition Precedent Date.

122 By letter dated 7 July 2011, Griffin sought the consent of the Minister for Mines and Petroleum and the Minister for State Development to the execution by Griffin of the CSA Securities: Landis 2 (109 - 113). Griffin points to this as evidence of its reasonable endeavours to achieve execution of the CSA Securities.

123 By letter of 11 July 2011, Griffin wrote to ICICI. The letter referred to the Facility Agreement and to Griffin's Negative Pledge Deed (described as a Targets' Negative Lien). The letter sought ICICI's consent to Griffin entering into the CSA Securities, so that the CSA could become effective. The letter stated that the CSA Securities do not secure the payment of money, but rather secure Perdaman's step-in rights under cl 16.6 of the CSA. The letter also sought ICICI's consent for Griffin to enter into a tripartite deed between Griffin, Perdaman and ICICI and the finance parties to the Facility Agreement, to regulate Perdaman's step-in rights. The letter sought ICICI's comments on the proposal as soon as possible so that Perdaman could be involved in the process of negotiating the terms of the tripartite deed: Landis 2 (114 - 115).

124 Mr Amarendran says, in his affidavit, that on 11 July 2011, representatives of Griffin met in India with ICICI to seek its approval for Griffin to execute the CSA Securities and to discuss the terms of a tripartite deed as contemplated by cl 24.7 of the CSA: Amarendran 1 [32].

125 Griffin points to this letter and the meeting as further evidence of reasonable endeavours by Griffin to achieve execution of the CSA Securities.

126 On 19 July 2011, ICICI responded to Griffin's letter of 11 July 2011. The letter referred to a meeting on 11 July 2011 in which Griffin had explained the situation and requirements of Perdaman. The letter stated that the lenders were concerned about the recent adverse media reports and were not pleased with the present litigation situation with Perdaman. The letter referred to the earlier statement that the creation of a charge over assets of Griffin was considered prejudicial to the interests of the lenders. However, the letter stated that in light of the recent request, ICICI would review the request and after discussion with consortium members respond to it. The letter also requested a copy of the draft tripartite deed.

127 On 25 July 2011, Griffin wrote to ICICI, copied to Perdaman, enclosing a draft tripartite deed between Griffin, Perdaman and ICICI: Amarendran 2, ann SA14. The letter sought comments on the draft.

128 I will say something about the terms of the draft tripartite deed enclosed with that letter later in these reasons.

129 Perdaman's application is founded on Rules of the Supreme Court 1971 (WA) O 52A.

130 Order 52A r 2, r 3, r 4 and r 5 are in the following terms:

(1) The Court may make an order (a freezing order), upon or without notice to the respondent, for the purpose of preventing the frustration or inhibition of the Court's process by seeking to meet a danger that a judgment or prospective judgment of the Court will be wholly or partly unsatisfied.

(2) A freezing order may be an order restraining a respondent from removing any assets located in or outside Australia or from disposing of, dealing with, or diminishing the value of, those assets.

(1) The Court may make an order (an ancillary order) ancillary to a freezing order or prospective freezing order as the Court considers appropriate.

(2) Without limiting the generality of subrule (1), an ancillary order may be made for either or both of the following purposes -

(a) eliciting information relating to assets relevant to the freezing order or prospective freezing order;

(b) determining whether the freezing order should be made.

The Court may make a freezing order or an ancillary order against a respondent even if the respondent is not a party to a proceeding in which substantive relief is sought against the respondent.

1. Order against judgment debtor, prospective judgment debtor or third party

(a) judgment has been given in favour of an applicant by -

(i) the Court; or

(ii) in the case of a judgment to which subrule (2) applies - another court;

or

(b) an applicant has a good arguable case on an accrued or prospective cause of action that is justiciable in -

(i) the Court; or

(ii) in the case of a cause of action to which subrule (3) applies - another court.

(2) This subrule applies to a judgment if there is a sufficient prospect that the judgment will be registered in or enforced by the Court.

(3) This subrule applies to a cause of action if -

(a) there is a sufficient prospect that the other court will give judgment in favour of the applicant; and

(b) there is a sufficient prospect that the judgment will be registered in or enforced by the Court.

(4) The Court may make a freezing order or an ancillary order or both against a judgment debtor or prospective judgment debtor if the Court is satisfied, having regard to all the circumstances, that there is a danger that a judgment or prospective judgment will be wholly or partly unsatisfied because any of the following might occur -

(a) the judgment debtor, prospective judgment debtor or another person absconds; or

(b) the assets of the judgment debtor, prospective judgment debtor or another person are -

(i) removed from Australia or from a place inside or outside Australia; or

(ii) disposed of, dealt with or diminished in value.

(5) The Court may make a freezing order or an ancillary order or both against a person other than a judgment debtor or prospective judgment debtor (a third party) if the Court is satisfied, having regard to all the circumstances, that -

(a) there is a danger that a judgment or prospective judgment will be wholly or partly unsatisfied because -

(i) the third party holds or is using, or has exercised or is exercising, a power of disposition over assets (including claims and expectancies) of the judgment debtor or prospective judgment debtor; or

(ii) the third party is in possession of, or in a position of control or influence concerning, assets (including claims and expectancies) of the judgment debtor or prospective judgment debtor;

or

(b) a process in the Court is or may ultimately be available to the applicant as a result of a judgment or prospective judgment, under which process the third party may be obliged to disgorge assets or contribute toward satisfying the judgment or prospective judgment.

(6) Nothing in this rule affects the power of the Court to make a freezing order or ancillary order if the Court considers it is in the interests of justice to do so.

131 By r 2, the purpose of a freezing order is to prevent the frustration or inhibition of the court's process by seeking to meet a danger that a judgment or, relevantly, a prospective judgment, will be wholly or partly unsatisfied. A freezing order may be an order restraining a respondent from disposing of or dealing with its assets.

132 The power to make ancillary orders under O 52 r 3(1) is broad in its terms. It is a power to make such orders as the court considers appropriate. Such orders must be ancillary to a freezing order or prospective order. Among the purposes of an ancillary order may be to elicit information relating to assets relevant to the prospective freezing order or determining whether the freezing order should be made. Those are not necessarily the only purposes of an ancillary order.

133 Order 52A is part of the substantially uniform set of federal and state rules governing what were known as Mareva orders. Mareva orders and freezing orders have the same objects and, subject to the specific provisions in the rules, the same governing principles under O 52A. In my view, the following general law principles apply to an application for a freezing order.

134 The purpose of a Mareva order is to preserve the efficacy of the execution which would lie against an actual or prospective judgment debtor: Jackson v Sterling Industries Ltd [1987] HCA 23; (1987) 162 CLR 612, 623; Cardile v LED Builders Pty Ltd [1999] HCA 18; (1999) 198 CLR 380 [25]. Thus the object is to protect the integrity of the court's processes once they are set in motion: Cardile [25], [40].

135 The object is to prevent the abuse or frustration of court processes. That does not necessarily involve an intention to produce those results: Cardile [26].

136 The object of a Mareva order is not to provide security to a plaintiff: Jackson v Sterling Industries Ltd (619, 625 - 626); Cardile [43].

137 A Mareva order serves a different purpose from an interlocutory injunction, and Mareva orders are not moulded by reference to the principles applying to interlocutory injunctions: Cardile [25] - [43].

138 The moulding of appropriate relief depends upon the circumstances of the case. The general principle which informs the exercise of the power is that the court may make such orders as are needed to ensure the effective exercise of the jurisdiction invoked: Patrick Stevedores Operations No 2 Pty Ltd v Maritime Union of Australia [1998] HCA 30; (1998) 195 CLR 1, 32; Cardile [41] - [42].

139 In Cardile, the court identified a number of reasons why a Mareva order should be granted only with a high degree of caution. As a matter of practical reality, it operates as a tight 'negative pledge' species of security over property. The contempt sanction is attached to it. It is granted at the suit of a plaintiff whose status as a creditor is in dispute: Cardile [50] - [51]. Thus, a Mareva order is a drastic remedy which should not be granted lightly.

140 Further, in many cases there may be difficulties associated with the quantification and recovery of damages pursuant to the undertaking if it were to turn out that the order should not have been granted: Cardile [52].

141 Further, attention should be given, before an order is made, to the identification of the events to trigger the dissolution of the undertaking or to an entitlement to damages: Cardile [52].

142 The strength of the plaintiff's case, the danger of frustration of a prospective judgment, the balance of convenience and any other relevant discretionary factors are all considered together in the exercise of the discretion whether to grant Mareva orders: Perth Mint v Mickelberg (No 2) [1985] WAR 117, 119; Glenwood Management Group Pty Ltd v Mayo [1991] VicRp 45; [1991] 2 VR 49, 54 - 55.

143 In order that a freezing order be made, a plaintiff must show, relevantly, a good arguable case that it has an accrued or prospective cause of action justiciable in the court: O 52 r 5(1)(b)(i). Before O 52A came into operation, the authorities revealed various formulations about the extent of the requisite strength of the plaintiff's claim. See Ninemia Maritime Corp v Trave Schiffahrtsgesellschaft mbH & Co KG [1984] 1 All ER 398; Perth Mint v Mickelberg (No 2). The expression 'good arguable case' has its provenance in the judgment of Mustill J in Ninemia (404), approved in the Court of Appeal (415): Errigal Ltd v Equatorial Mining Ltd [2006] NSWSC 953 [26]. See also LexisNexis Australia, Richie's Uniform Civil Procedure NSW (at 1 August 2011) [25.14.5]. Mustill J expressed the test as being a good arguable case 'in the sense of a case which is more than barely capable of serious argument, and yet not necessarily one which the judge believes to have a better than 50% chance of success' (404).

144 In BGC Contracting Pty Ltd v WA Construction Hire Pty Ltd [2010] WASC 25 [5], Le Miere J treated the requirement of a 'good arguable case' as equivalent to the general law requirement stated in Cardile [68] that the plaintiff must establish that it has a reasonably arguable case on legal and factual matters.

145 The injunction sought by Perdaman is in the following terms:

[Griffin] be restrained and an injunction be granted restraining [Griffin] from entering into any charge, pledge or other security other than as stipulated below as required by [Lanco Australia] or by [ICICI] or other Finance Party (as defined in the Negative Pledge Deed ...) to secure obligations under the Facility Agreement ... or the Negative Pledge Deed without first giving 10 prior business days written notice to [Perdaman] care of its solicitors Bennett + Co.

146 The reference to what is 'stipulated below' is to par 2 of the minute, which expressly excludes certain security in relation to goods supplied to Griffin.

147 It is notable that what Perdaman seeks is not to restrain the execution of relevant security absolutely, but rather to restrain execution without first giving Perdaman notice. That lesser form of restraint seems to me to be within the ambit of O 52A, either because it is within the power to grant a freezing order, or because it is an ancillary order under O 52A r 3.

148 For ease of reference, I will refer to a charge or other security within the scope of par 1 of the chamber summons, by the shorthand of 'an ICICI Charge'.

149 At least insofar as Perdaman seeks a freezing order, Perdaman must show the following:

(1) It has a good arguable case on an accrued or prospective cause of action justiciable in the court;

(2) There is a danger that a prospective judgment in its favour will be unsatisfied because Griffin disposes of or deals with its assets by executing an ICICI Charge; and

(3) As a matter of discretion, the court is persuaded to make the freezing order.

150 Alternatively, a court may make a freezing order because it is in the interests of justice to do so.

151 The order sought by Perdaman might be characterised as an ancillary order to preserve the position to enable Perdaman to apply for a freezing order, if so advised, following receipt of notice from Griffin pursuant to the injunction. Insofar as it is characterised in this way, it will be relevant to assess, in this application, the prospects of Perdaman obtaining a freezing order at that later time, to take into account whether those prospects are sufficient to warrant the imposition of the notice requirement on Griffin. I will return to this point.

152 As I have said, Perdaman also relies on conventional interlocutory injunction principles to sustain the injunction it seeks. I will deal with the O 52A basis first.

153 Perdaman has filed a lengthy statement of claim in the action. It pleads a number of breaches of the CSA by Griffin. It also pleads a claim of unconscionable conduct under the Australian Consumer Law against Griffin and the other defendants.

154 The statement of claim pleads many matters that are not the subject of evidence on this application. While regard is to be had to the statement of claim, in determining this application the primary focus is on the evidence. It is not sufficient, to establish a good arguable case, that a claim be asserted in a pleading: KGL Health Pty Ltd v Mechtler [2007] FCA 1410 [9] - [12].

155 The oral submissions of senior counsel for Perdaman concentrated on two main alleged breaches, or groups of breaches, of the CSA:

(1) a breach of cl 24.2(c) by failing to use reasonable endeavours to satisfy the condition precedent in cl 24.1(a)(2), namely execution of the intercreditor deed in sch 6 and the CSA Securities; and

(2) breach of cl 24.2(b) by interfering with the process of Perdaman's financier's due diligence, by Griffin's conduct on 10 May 2011 at the second due diligence mine site inspection, and thereafter.

156 I will refer to the first as the 'CSA Securities Breach', and the second as the 'Due Diligence Breach'. In using this shorthand I do not overlook that Griffin's obligations are relevantly to use reasonable endeavours.

157 I will give more detail about Perdaman's case in these respects in the following section of these reasons, dealing with whether Perdaman has a good arguable case within the meaning of O 52A.

158 I will deal with each of the two alleged breaches of the CSA just identified, before turning to the question of loss and damage.

159 Paragraph 32 of the statement of claim pleads that it was a term of the CSA, on a proper construction of the CSA, or as a term implied in law, that Griffin was obliged to execute the CSA Securities when reasonably required by Perdaman to do so. On the face of it, that claim faces very substantial obstacles. The language of the clause is expressed in terms of the use of reasonable endeavours. Further, there is considerable force in the defendants' submission that, in the circumstances of the CSA, it was contemplated that consent to the execution of the CSA Securities might be required from relevant ministers and from a relevant financier. (I will say more about what it is contemplated is financed by the financier later in these reasons.)

160 The term pleaded in par 32 of the statement of claim was not relied upon by Perdaman in its submissions on this application. Rather, for the purposes of this application, Perdaman rested its complaint about the non-execution of the CSA Securities on its allegation that Griffin failed to use reasonable endeavours to satisfy the condition precedent in cl 24.1(a)(ii).

161 In my view, the following propositions, relevant to Perdaman's CSA Securities Breach claim, are reasonably arguable.

162 First, prior to the execution by Griffin of the Negative Pledge Deed:

(a) Griffin was under no legal obligation to seek the consent of ICICI to the execution of the CSA Securities; and

(b) there was no 'financier of the Griffin Mine' in the sense that term is used in the CSA; see, for example, cl 20.4 and cl 24.7.

163 Secondly, obligations owed by Lanco Australia and Lanco Singapore to ICICI under the Facility Agreement did not affect Griffin's contractual obligations to Perdaman under the CSA.

164 Thirdly, by its letter of 18 April 2011, Griffin sought the consent of ICICI to the execution of the CSA Securities in circumstances when Griffin was not obliged to seek that consent. That conduct, and Griffin's subsequent refusal to execute the CSA Securities without that consent, was arguably inconsistent with Griffin's reasonable endeavours obligation under cl 24.2(c).

165 Fourthly, in correspondence with Perdaman, Griffin put forward the need for consent from a financier as the reason for non-execution of the CSA Securities, in circumstances when no such consent was required. In its letter of 5 May 2011, Griffin stated that 'ICICI has certain rights as regards securities over Griffin'. A reasonable reader of this letter from Griffin might have taken that as a statement that ICICI had rights against Griffin, but that would not have reflected the position. In its letter of 22 May 2011, Griffin referred to the refusal of 'the financier of the Griffin Mine' to execute the CSA Securities. That characterisation of ICICI's status at that time was arguably inaccurate and misleading. In submissions, senior counsel for the defendants accepted that there might not have been 'an actual financier of the Griffin mine', but submitted that there was at that time 'a potential financier' (ts 114). In its letter of 24 May 2011, Griffin referred to 'the relevant financier', and to 'our financiers'. In context, those references seem to be to Griffin's financier, at a time when Griffin did not have a financier.

166 Fifthly, when Perdaman or its solicitors made enquiries about the questions of whether there was a financier to the Griffin mine and about ICICI's relationship with Griffin, Griffin's responses may be said to have been less than forthcoming. By letter of 23 May 2011, Perdaman responded to the reference in Griffin's letter of 22 May 2011 to the 'financier of the Griffin mine'. Perdaman's letter of 23 May 2011 said that, to its knowledge, there were no financiers to the Griffin mine although there were financiers to Lanco India. Nothing was said to clarify the position in that regard in Griffin's letter of 24 May 2011 to which I have just referred. By letter of 10 June 2011, Perdaman's solicitors sought confirmation from Griffin's solicitors whether Griffin had entered into any security arrangements with ICICI. The response of 13 June 2011 simply stated that Griffin was now part of the Lanco group and the bankers to the Lanco group are in Mumbai. By letters of 15 and 17 June 2011, Perdaman's solicitors asked whether Griffin had entered into banking arrangements with ICICI. There appears not to have been any direct response to that question.

167 The communications to which I have just referred occurred during the period in which Griffin and Lanco Australia took steps, including convening meetings under Corporations Act s 260B, to enable Griffin to execute the Negative Pledge Deed in favour of ICICI, and its subsequent execution some time between 12 and 21 June 2011.

168 All of these matters are reasonably arguable and, together, sustain the conclusion that Perdaman has a 'good arguable case' on its CSA Securities Breach case.

169 Senior counsel for the defendants submitted that although Griffin sought consent before it 'strictly had to seek it' (ts 132), it sought that consent in contemplation of a negative pledge having to be given. That, it was submitted, is the conduct of 'decent commercial people' and is consistent with the exercise of reasonable endeavours (ts 132 - 134). That view of things might ultimately prevail at trial. However, on the material before me, it is not the only available view. Perdaman's contentions in this respect, outlined above, are reasonably arguable.

170 In my view, the same conclusion applies to the following submissions of the defendants about the Facility Agreement. The defendants contend that Griffin benefited in a commercial sense from the Facility Agreement, given that one of the purposes of the facility was to allow equity infusion to provide working capital and to meet Griffin's capital expenditure requirements. Griffin also submits that the obligations assumed under the Facility Agreement by the Lanco companies had the potential to impact on Griffin, so that Griffin indirectly had an obligation (ts 114).

171 Further, the defendants submit that the exercise by Griffin of reasonable endeavours in relation to the CSA Securities is demonstrated by Griffin's conduct over the period, including:

(a) the letter of 21 May 2011 (written by Lanco Australia) and the preceding meeting with representatives of ICICI on 19 and 20 May 2011;

(c) Griffin's letter of 11 July 2011, explaining the need for execution of the CSA Securities and seeking to persuade ICICI and the lenders to give that consent;

(d) Griffin's letter of 25 July 2011 to ICICI, copied to Perdaman, enclosing a draft tripartite deed; and

(e) Griffin's letter of 7 July 2011, seeking the consent of the relevant ministers to Griffin's execution of the CSA Securities.

172 At trial, all of the circumstances will be considered in determining whether Griffin performed its reasonable endeavours obligation. The matters set out above, emphasised by Griffin, are part of Griffin's reasonably arguable case that it performed that obligation of reasonable endeavours. However, it is not appropriate on the material before me, in an application of this character, to attempt to resolve the competing cases on this point. In my view, both parties have good arguable cases in relation to the alleged CSA Securities Breach.

173 For these reasons, I find that Perdaman has a good arguable case respecting the alleged CSA Securities Breach.

174 The defendants submit that what Griffin and Lanco did in May 2011 must be seen against the background and in the context of the earlier communications, particularly from December 2010 to March 2011, to which I have already referred. I accept that proposition.

175 The defendants' submissions emphasise that the first due diligence tour in April 2011 went well, and that Griffin plainly discharged its reasonable endeavours obligation under cl 24.2(b). I accept that proposition. Perdaman did not argue to the contrary. As I have said, Perdaman's Due Diligence Breach claim is based on what happened at the second due diligence mine site inspection on 10 May 2011, and thereafter.

(1) as foreshadowed in February 2011, Griffin/Lanco did a substantial review of Griffin's operations after Lanco's acquisition of Griffin;

(2) the result of that review was to raise 'serious concerns that Griffin's operations may not be financially sustainable in their present form' (ts 105; see also written submissions [23]); and

(3) there is no evidence to show that this is not true (ts 105).

177 These submissions reflect the position stated in Griffin's letter of 5 May 2011, and in correspondence thereafter. There is no affidavit evidence on behalf of Griffin relating to the conduct of the review referred to in the letter of 5 May 2011, or about any conclusions that were drawn by Griffin or the Lanco companies during or as a result of the review. In those circumstances, in my opinion, this application is not to be determined by treating the assertions of fact by Griffin in a letter as established or incontrovertible facts that (on Griffin's contentions) mean Perdaman has no good arguable case.

178 I find that, taking into account the following matters, Perdaman has a good arguable case that Griffin breached its reasonable endeavours obligation under cl 24.2(b).

179 First, Perdaman points to several elements of what is said in Griffin's letter of 5 May 2011. That letter states that the acquisition of Griffin was agreed on terms prior to Lanco being provided with a copy of the final CSA. There is evidence that, by the time the Lanco group had agreed to acquire the shares in Griffin, it was aware of the terms of the CSA: Banda 2, ann DB 9 and DB 12. Next, the statement in the letter, that since completion of the acquisition, Griffin had 'commenced' a review, must be seen against the substantial two year due diligence conducted by Lanco before it acquired Griffin. Finally, the letter of 5 May 2011 concluded with the statement that Griffin would like to provide Perdaman with more information about its operations. Griffin's letter of 16 May 2011 emphasised the need for information provided to Perdaman's financiers to be accurate and not misleading. By letter of 20 May 2011, Perdaman sought an explicit statement of the 'information' regarded by Griffin as material that Griffin intended to convey to the financial inspection team on 10 May 2011. That question was not addressed in Griffin's letter of 22 May 2011. Nor was there a response to that specific question when it was reiterated in Perdaman's letter of 23 May 2011.

180 Secondly, another element of Perdaman's case is that, prior to the due diligence mine site inspection on 10 May 2011, Griffin, in effect, undertook not to reveal its letter of 5 May 2011 to the financiers and acted contrary to that undertaking. On Perdaman's case, the undertaking was given by Griffin's letter of 10 May 2011 and in conversations, including between Mr Walewski and Mr Conley earlier on 10 May 2011. The defendants contend that no such undertaking was ever given. They submit that Griffin's agreement to allow the 10 May 2011 mine site inspection to proceed without condition was always based on Perdaman having disclosed Griffin's letter of 5 May 2011 to its financiers. I do not think the parties' competing contentions in this respect should be resolved on this application. Both parties' cases are arguable.

181 Thirdly, as I said in outlining the evidence, I do not accept the defendants' submission that I should determine the application on the basis that Perdaman's letter of 11 May 2011 sets out what Mr Amarendran said to the financiers, in preference to what is in Mr Walewski's affidavit (Walewski 1 [18]).

182 Fourthly, there is also evidence that on 24 and 25 May 2011, representatives of the Lanco companies told Perdaman that Perdaman would need to pay more for coal than the price agreed under the CSA. That is consistent with Griffin's case that it had conducted a review revealing questions about sustainability. However, it is also consistent with Perdaman's case that the purpose of Lanco/Griffin in May was to extract a better commercial return for its coal than was provided for in the CSA.

183 The central thrust of Griffin's position, reflected in its submissions and in its letter of 16 May 2011, is that given the earlier communications, Griffin was obliged to ensure that the financiers were not given a misleading impression. In my opinion, whether that was the purpose and effect of what Mr Agarwal, on behalf of Griffin and Lanco, did on 10 May 2011, must be resolved at trial when all the circumstances are known. Among the circumstances that will be subject of evidence at trial are the results of any review, underway in this period, of Griffin's operation, and any review of the effect of the CSA on those operations. Whether Griffin was entitled or obliged to disclose the contents of its letter of 5 May 2011 to the financiers is a matter for trial.

184 Griffin also points to its repeated assurances in correspondence that it was using and would continue to use reasonable endeavours in relation to the financier's due diligence. See, for example, its letters of 16 May and 22 May 2011. While these letters are part of the circumstances to be taken into account at trial they do not, alone or in combination with the other material before me, seem to me to establish that Perdaman has no arguable case.

185 For these reasons, I find that Perdaman has a good arguable case on its Due Diligence Breach claim.

186 Paragraph 134 of the statement of claim pleads that by reason of, among other things, Griffin's breaches of the CSA, Perdaman has suffered loss and damage. No material facts are pleaded in support of that allegation. The particulars of loss express alternative bases for the assessment of the alleged loss and damage. One alternative is what is said to be the lost project costs, another is the loss of the value of the Project in the hands of Perdaman, and the third is the loss of the Project assessed as the hypothetical loss of the saleable assets in the hands of Perdaman at the date of the writ.

187 Thus, all of the forms of loss as particularised are founded on the proposition that the Project has been lost. That allegation is not pleaded. Nor is there evidence to sustain it before me on this application. The evidence of Mr Walewski is that he was told by three identified members of the financial inspection team that the information given to them by Mr Amarendran on 10 May was such as to cause each of them to recommend against the approval of finance to the relevant credit committees: Walewski 1 [20]; Walewski 8 [1]. There is also Mr Krust's letter of 26 May 2011 to which I have already referred.

188 On the evidence, the CSA remains on foot. The Condition Precedent Date is 28 August 2011. Whether the Project is lost remains to be seen.

189 The evidence falls well short of revealing a good arguable case that the Project has been lost. Still less is there demonstrated a good arguable case that the Project has been lost as a consequence of any conduct of Griffin.

(1) a cause of action for breach of contract is complete when a breach is shown, loss is not necessary; and

(2) accordingly, Perdaman demonstrates a good arguable case on a cause of action, within the meaning of O 52A, without needing to demonstrate a good arguable case on damage.

191 The first proposition is not controversial. However, the position respecting the second proposition is less clear. The object of a freezing order is to prevent the frustration of the court's process arising from a judgment not being satisfied. A cause of action that does not involve substantial damages would not appear to give rise to that danger. Consequently, it seems to me to be at least arguable that a good arguable case on a cause of action in O 52A r 5 is a reference to a cause of action for substantial damages or other money sum, or for relief the efficacy of which calls for some protection. However, it is enough to engage O 52A r 5(1)(b), that an applicant has a good arguable case on a prospective cause of action. There seems to me to be sufficient prospect that Perdaman may lose the Project to mean that it has a good arguable case on the prospective cause of action for substantial damages. Further or alternatively, the court has power, in the interests of justice, to preserve the position, by giving an injunction of the kind sought by Perdaman in this case, against the prospect that Perdaman will suffer substantial loss and damage as a result of Griffin's alleged breaches.

Is there a danger of an unsatisfied judgment?

192 Application of the requirements of O 52A r 5(4)(b) to this application invites attention to whether Perdaman has satisfied me that there is a danger that a prospective judgment in its favour will be unsatisfied because of the execution by Griffin of an ICICI Charge.

193 In my view, for the reasons that follow, in the circumstances of this case, cl 2.3 of the Negative Pledge Deed gives rise to a danger that Griffin will execute an ICICI Charge, thereby creating a danger that a prospective judgment in favour of Perdaman will be unsatisfied. The effect of the evidence of Mr Amarendran (Amarendran 2 [3] - [6]; Amarendran 3 [4] - [5]) is that:

(a) the financial viability of the Griffin mine depends on the expansion and development of the mine;

(b) that further expansion and development will require considerable funds, possibly around $1 billion, over the next three years;

(c) substantial loan funds will be required to meet the working capital requirements and development costs of the mine; and

(d) to obtain those loan funds it may be necessary for Griffin to provide charges or other securities to the new financiers, thereby triggering cl 2.3 of the Negative Pledge Deed.

The effect of cl 2.3 is that if Griffin proposes to grant security to a new financier for additional lending, Griffin will be required to grant equal ranking security to ICICI (and the finance parties under the Facility Agreement). That prospect was recognised in the statement of material information that Griffin sent to Lanco Australia seeking shareholder approval of financial assistance under Corporations Act s 260B: see [4.2], [4.3], [7.2], [7.6], [8.2] of the statement of material information. The execution of an ICICI Charge in such circumstances was part of what the statement of material information said would be approved by the grant of approval under s 260B.

194 The parties are at issue over whether and to what extent the evidence establishes a danger or threat that, outside of cl 2.3, Griffin may execute an ICICI Charge.

195 The defendants submit that, outside the sphere of cl 2.3:

(a) the proper conclusion on the evidence is that neither Griffin nor any of the Lanco companies owes an obligation to ICICI or any other party for Griffin to execute an ICICI Charge;

(b) on the evidence, there is no commercial reason for Griffin to execute such a charge; and

(c) there is no evidence that Griffin intends to do so.

196 Perdaman points to several matters as supporting a conclusion that there is a danger that, apart from cl 2.3, Griffin may execute an ICICI Charge.

197 First, Perdaman points to Griffin's conduct in signing the letter of 28 February 2011 and in executing the Negative Pledge Deed. That conduct is said to demonstrate or illustrate a general tendency on the part of Griffin to act at the direction of its parent company and to utilise its assets to secure the borrowings of Lanco Australia and Lanco Singapore in acquiring the shares in Griffin. I think that submission overstates what may be taken from Griffin's conduct in signing the letter of 28 February 2011. To my mind, that conduct suggests a preparedness on the part of Griffin to conduct itself, including by entering into instruments creating substantive obligations, to ensure compliance by Lanco Australia and Lanco Singapore with the obligations those companies undertook in the acquisition of Griffin. I do not think the signing of the letter or execution of the Negative Pledge Deed suggest a preparedness on Griffin's part to do more than is necessary to ensure that Lanco Australia and Lanco Singapore comply with their obligations to their financiers. That invites attention to whether there is any obligation on Lanco Australia or Lanco Singapore, under the Facility Agreement, to procure the grant of security by Griffin beyond what is provided in and required by the Negative Pledge Deed. Perdaman did not submit that the Facility Agreement required any more in this respect than what was contained in and required by the Negative Pledge Deed. On my reading of the Facility Agreement, that instrument does not require any more of the Lanco companies in this respect than the execution and performance of the Negative Pledge Deed.

198 Secondly, Perdaman points to the draft tripartite deed dated 25 July 2011 that was sent by Griffin to ICICI and Perdaman on that date. Perdaman submits that that draft deed evidently assumes or contemplates that the moneys due under the Facility Agreement are secured against Griffin's assets (ts 82 - 83, 150 - 151). Perdaman points to the numerous references in the draft tripartite deed to the Facility Agreement and the security under it. See, for example, the recitals and cl 1.5 and many of the definitions. Perdaman submits that:

(1) the substance of the deed is to regulate the exercise of Perdaman's step-in rights under the CSA as between Perdaman and the Security Agent under the Facility Agreement (and Griffin); and

(2) that is because it is contemplated that the Security Agent has or would have a charge over Griffin's assets.

199 I accept the first proposition, but not the second. In my view, the scheme of the draft tripartite deed is to regulate the exercise of Perdaman's step-in rights, not because the Security Agent has a charge over Griffin's assets, but because the Security Agent has a charge over the shares in Griffin: see recital B.

200 Thirdly, Perdaman points to cl 2.16 of the Negative Pledge Deed. Clause 2.16 is in the following terms:

2.16.1 Each Obligor shall (and each Obligor shall ensure that each member of the Group will) promptly do all such acts or execute all such documents (including assignments, transfers, mortgages, charges, notices and instructions) as the Security Agent may reasonably specify (and in such form as the Security Agent may reasonably require in favour of the Security Agent or its nominee(s)):

(a) to perfect the Security created or intended to be created under or evidenced by the Security Documents (which may include the execution of a mortgage, charge, assignment or other Security over all or any of the assets which are, or are intended to be, the subject of the Transaction Security) or for the exercise of any rights, powers and remedies of the Security Agent or the Finance Parties provided by or pursuant to the Finance Documents or by law;

(b) to confer on the Security Agent or the Finance Parties Security over any property and assets of that Obligor located in any jurisdiction equivalent or similar to the Security intended to be conferred by or pursuant to the Security Documents; and/or

(c) to facilitate the realisation of the assets which are, or are intended to be, the subject of the Transaction Security.

2.16.2 Each Obligor shall (and each Obligor shall ensure that each member of the Group shall) take all such action as is available to it (including making all filings and registrations) as may be necessary for the purpose of the creation, perfection, protection or maintenance of any Security conferred or intended to be conferred on the Security Agent or the Finance Parties by or pursuant to the Finance Documents.

201 I am not persuaded that it is reasonably arguable that any part of cl 2.16 obliges Griffin to execute an ICICI Charge outside the operation of cl 2.3 of the Negative Pledge Deed.

202 For these reasons, I am not satisfied that there is any cogent evidence of any real threat or danger that, outside of cl 2.3, Griffin might execute an ICICI Charge.

203 That brings me to matters relevant to the discretion whether or not to grant the injunction sought.

Prejudice and other matters relied on by the defendants

204 The defendants submit that the effect of the injunction sought would be to prevent Griffin from raising the funds which it needs to develop and expand the mine (ts 124, 139). That would be the effect of an injunction restraining the execution of an ICICI Charge pursuant to cl 2.3 of the Negative Pledge Deed. However, the injunction sought by Perdaman, at this stage, restrains execution without notice; it does not restrain execution. Perdaman's purpose in seeking the injunction the subject of this application is to enable it, if it so determines after receiving notice from Griffin following the grant of this injunction, to seek a substantive freezing order in the form of an injunction restraining Griffin from executing an ICICI Charge. An injunction granted at that next stage would have the effect contended by the defendants.

205 Thus, the injunction sought in this application would have a much more limited effect on Griffin.

206 An intended consequence of the grant of this application is the likely prospect of Griffin having to face a further injunction application at the second stage. At least in the scenario when that second stage application is unsuccessful, that prospect may be seen as itself a form of prejudice to Griffin in this present application. As I explain in the following section of these reasons, I think a second stage application would be unsuccessful. If the present application is not granted, Griffin is, at the least, less likely to face a second injunction application when (and if) it is raising further funds to develop the mine, on a secured basis, and is thus obliged under cl 2.3 of the Negative Pledge Deed to provide equal ranking security to ICICI and the Finance Parties. The prejudice of the second application would not be removed by an order for costs in favour of Griffin on the second application.

207 Further, the injunction sought is likely to have other negative impact for Griffin. Generally, commercial parties do not share, with unrelated parties with whom they are in contractual or other commercial relationships, information about their planned financing or refinancing or plans to develop their business. The grant of the injunction sought by Perdaman on this application would require Griffin to give notice to Perdaman that Griffin was proposing to execute an ICICI Charge in consequence of raising new finance. As a matter of practical reality, that is likely to lead to a need for Griffin to reveal significant and otherwise confidential commercial information about the financial performance of the mine and the need for further funding, either in correspondence with Perdaman or in evidence in opposition to an injunction application.

208 It is possible to imagine that the existence of an injunction restraining execution without notice of an ICICI Charge pursuant to cl 2.3, and the consequent prospect of a further injunction application by Perdaman, might have an effect on prospective new lenders. However, there was no evidence or submissions on the topic. In those circumstances, I draw no inferences or conclusions about it.

209 Griffin submits that there is, at the least, significant doubt as to whether Perdaman has the means to satisfy an obligation to pay substantial damages pursuant to the undertaking as to damages. Questions of difficulty of the assessment of damages under the undertaking, and recoverability of those damages, are important considerations in the discretion whether or not to grant a Mareva order: Cardile [52]. Those matters would require close attention if and when Perdaman applied for an injunction after receiving notice in accordance with the injunction sought in this application. Given the more confined injunction sought on the present application, and consequently much more confined prejudice to Griffin from the injunction, they loom considerably less large on the present application. In the circumstances of this application, they do not influence my exercise of discretion in any significant way.

210 I have found that, apart from under cl 2.3 of the Negative Pledge Deed, the evidence does not establish a real threat or danger of execution by Griffin of an ICICI Charge. The only threat or danger of execution of an ICICI Charge is under cl 2.3.

211 I have identified the likely prejudice to Griffin by the grant of an injunction restraining the execution of an ICICI Charge under cl 2.3 without notice to Perdaman.

212 The injunction sought restrains execution of a charge (of a particular kind) without notice. The purpose of requiring notice before execution is to enable Perdaman to apply for a substantive freezing order in the form of an injunction restraining the execution of an ICICI Charge. The question arises whether, on the evidence before me, there is sufficient prospect of a substantive freezing order being made at the second stage (after notice to Perdaman pursuant to the injunction sought in this application), restraining execution by Griffin of an ICICI Charge pursuant to cl 2.3, to justify the imposition of the notice requirement on Griffin.

213 Perdaman submits that the question of whether such an injunction might be granted at the second stage should be left to be assessed at the time of any application, on the basis of all the facts and circumstances then revealed. There is some force in this argument. However, on balance, I am not persuaded by it. In my view, there must be a sufficient foundation for the prospect of a substantive freezing order at the second stage to justify the imposition of the injunction to restrain execution without notice. In the circumstances of this case, unless there is some reasonable prospect of a substantive freezing order being made at the second stage, I think it would be inappropriate to require notice before execution of a relevant charge. What is a sufficient foundation, and what is a reasonable prospect, must take into account the limited extent of the prejudice to Griffin that I have found in the preceding section of these reasons. All the circumstances are to be weighed in the exercise of the discretion.

214 For the reasons that follow, subject to one qualification, I am unable to identify circumstances in which there is any sufficient or reasonable prospect that I would, at the second stage, restrain execution, pursuant to cl 2.3, of an ICICI Charge.

215 Clause 2.3 is engaged in circumstances when Griffin is raising new funds to develop and fund the mine, and the new financier requires security for the proposed loan. When cl 2.3 is engaged, the Negative Pledge Deed entitles ICICI to require Griffin to provide to it (and the Finance Parties) security ranking equally with the security proposed to be given to the new financiers. An injunction restraining execution of an ICICI Charge pursuant to cl 2.3 would require Griffin either to not provide security to the proposed new financier, or to breach its obligations to ICICI. Such a breach would be an event of default under the Facility Agreement, entitling ICICI and the Finance Parties to call up the loan. Griffin is a guarantor of the loan.

216 It can thus be confidently inferred that a grant of an injunction to restrain execution of an ICICI Charge under cl 2.3 would, at the least, be very likely to adversely affect, to a substantial degree, the prospect of Griffin obtaining funds from any new financier.

217 Such an injunction would prevent or substantially inhibit Griffin from conducting its business and undertaking necessary expansion and development.

218 To my mind, these considerations would overwhelm any matters mitigating in favour of making substantive freezing orders restraining execution under cl 2.3 of an ICICI Charge, including the consequential danger of a prospective judgment in favour of Perdaman being unsatisfied. I cannot see any reasonable or sufficient prospect of a substantive freezing order being made if Perdaman sought that order after notice was given pursuant to the injunction sought in this application.

219 The qualification mentioned earlier is the assumption that cl 2.3 is genuinely engaged, and not used in a colourable way. However, that qualification does not support the grant of the injunction presently sought. There is no basis in the evidence to anticipate that Griffin would use cl 2.3 in a colourable way, as a device to contrive a reason to give a charge to ICICI and the Finance Parties. Apart from anything else, there is no evidence that Griffin or the Lanco companies want or intend to give ICICI and the Finance Parties more than the security to which they are entitled.

220 For these reasons, I would not grant the injunction sought under O 52A.

221 That brings me to the question of whether the injunction should be granted as a conventional interlocutory injunction.

Does the balance of the risk of injustice favour the grant of the injunction?

222 The principles relevant to the grant of an interlocutory injunction are explained in Australian Broadcasting Corporation v O'Neill [2006] HCA 46; (2006) 227 CLR 57 [65] - [71]; see the summary in Twinside Pty Ltd v Venetian Nominees Pty Ltd [2008] WASC 110 [7] - [11].

(1) Whether the plaintiff demonstrates a serious question to be tried in respect of a claim calling for protection by interlocutory injunction;

(2) Whether damages would be an adequate remedy; and

(3) The balance of convenience or, as it may better be expressed, the balance of the risk of injustice.

These matters must be considered together; see ABC v O'Neill. See also Plaintiff M168/10 v The Commonwealth [2011] HCA 25 [15] - [19].

224 I am satisfied that there is a serious question to be tried whether the grant of security by Griffin pursuant to cl 2.3 of the Negative Pledge Deed is not within the contemplation of the CSA. Griffin submits that the CSA contemplated that Griffin would be financed with security, referring to clauses 20.4, 24.6 and 24.7 (ts 115 - 124). Clause 20.4 refers to (secured) financing for the Griffin mine. Clause 24.6 refers to (secured) finance necessary to fund the expenditure required by Griffin to enable it to meet its delivery obligations under the CSA. Clause 24.7 refers to the Griffin mine being funded by secured project finance. On the face of it, none of those extend to secured funding for Griffin to fund the acquisition of the shares in Griffin. It is at the least arguable that the CSA does not contemplate Griffin giving security to secure the price paid for the shares in Griffin itself.

225 Further, I am satisfied that there is a serious question to be tried whether the execution by Griffin of an ICICI Charge pursuant to cl 2.3 of the Negative Pledge Deed would be a breach of the reasonable endeavours obligation in cl 24.2(c).

226 In my view, the findings I have made in the three preceding sections of these reasons lead to a refusal to grant the injunction sought based on conventional interlocutory injunction principles.

227 I have found that there is a threat of execution of an ICICI Charge in the context of cl 2.3 of the Negative Pledge Deed, and not otherwise. I have identified the nature and extent of the likely prejudice to Griffin from the grant of the injunction now sought.

228 Again, to my mind, the question arises whether the prospects of the grant of an injunction restraining execution pursuant to cl 2.3, at the second stage, after notice is given under the injunction the subject of this application, are sufficient to justify imposing the notice requirement by the injunction now sought. For the reasons given in [212] - [219], I would answer that question in the negative. Viewed in the framework of the balance of the risk of injustice (in the context of an application for an interlocutory injunction), it seems to me that the balance would lie overwhelmingly against the grant of an injunction at the second stage restraining execution under cl 2.3 of an ICICI Charge. That is because the result of the injunction (at the second stage) would to prevent or substantially inhibit Griffin from raising additional funds necessary to develop and expand its mine.

229 Consequently, in my opinion, the injunction sought by Perdaman cannot be sustained by conventional interlocutory injunction principles.

230 For the reasons given, I would dismiss the application.

231 I will hear from the parties on the question of costs.

I resolve the defendants' objections to parts of the plaintiff's affidavits as follows.

The defendants object to Walewski 1 [20] on grounds of hearsay. The affidavit is in the impermissible form 'I am informed by members of the financial inspection team and verily believe...'. That form renders the evidence inadmissible. Perdaman does not contend otherwise. However Perdaman seeks leave to rely on a supplementary affidavit, Walewski 8 [1], which names the persons referred to. The defendants object to the late receipt of this affidavit. The defendants could and should have given prior notice of their objection to Walewski 1 [20]. In that event, Perdaman would have had the opportunity to remedy the defect in the form of the affidavit. Consequently, I grant leave to Perdaman to rely on Walewski 8 [1].

The defendants also object to Walewski 1 [21] on hearsay grounds. However, unlike in respect of [20], objection to this paragraph was taken at an earlier hearing on 13 July 2011 (ts 31). Perdaman has had ample opportunity to put in supplementary evidence. It filed substantial further evidence after 13 July, but has not addressed this objection. Consequently, I refuse Perdaman's application for leave to rely on Walewski 8 [2] - [3] to supplement this evidence. The objection is upheld.

The defendants object to Walewski 1 [26] - [27]. Walewski 1 was sworn in support of Perdaman's application for leave to issue and serve a writ out of the jurisdiction. That affidavit was also relied upon in the present application. These assertive paragraphs are not admissible or relevant for the purposes of the present application. I uphold the objection.

The defendants object to Walewski 2 [9]. In that paragraph, Mr Walewski says that Perdaman is concerned that the terms in the Negative Pledge Deed may be contrary to the Collie Coal (Griffin) Agreement Act 1979 (WA). The defendants contend that the paragraph is irrelevant. Perdaman submits that the paragraph is relevant because it expresses Perdaman's concerns that are relevant to the grant of injunctive relief.

On the face of it, it appears surprising that the parties require a ruling in relation to this paragraph. The evidence was given at a time before the Negative Pledge Deed was available to Perdaman. Since the Negative Pledge Deed was produced, Perdaman has not submitted that it involved any breach of the Act in question.

I rule the paragraph to be irrelevant and so inadmissible.

The defendants object to Walewski 5 [7] - [10], [12] - [19], and the attachments referred to in those paragraphs, on grounds of relevance and hearsay.

These paragraphs were evidently intended to deal with the issue which then existed about confidentiality of the Facility Agreement and the Negative Pledge Deed. In that context, Griffin had asserted that Perdaman had acted improperly by disclosing confidential information to third parties including the media. These paragraphs responded to that, and dealt with the need for some public statements relating to the litigation (arising from the listing rules of the Bombay Stock Exchange). In my view, none of the paragraphs or attachments objected to are relevant to the application now before me. Consequently I uphold the objection. I have read the attachments as well as the paragraphs of the affidavit objected to. If I were wrong in my view that this material is irrelevant, it is not sufficiently cogent or material to influence my reasoning process on the present application.

The defendants object to Walewski 7 [8]. In that paragraph, Mr Walewski says that based on the information available to Perdaman and on his perusal of the statement of claim, he believes that Perdaman has evidence in its possession, or by trial is likely to have evidence in its possession, capable of supporting each of the factual allegations contained in the statement of claim. In the second and third sentences he refers to media reports.

The defendants contend that the paragraph is irrelevant. I am not persuaded to exclude the paragraph on that ground. I think it should be admitted, for what it is worth. As can be seen from my reasons for decision, it does not assist me in reaching my decision.

The defendants object to Walewski 7 [9]. I overrule the objection. The paragraph does no more than express a concern about the consequences of the grant of further securities by Griffin or Lanco Australia. Such evidence is conventionally admitted in the context of an interlocutory injunction application. It does not prove an immediate and real threat. It expresses the concern animating the application for the grant of an injunction.

The same is true of Walewski 7 [11]. I overrule the objection to that paragraph for corresponding reasons.

The defendants also object to Walewski 7 [10]. I uphold the objection. The paragraph asserts, in an impermissible hearsay form, what is anyway a proposition of law. The objection should have been conceded.

Finally, the defendants object to Banda 2 [4] - [7] on grounds of relevance and hearsay. The attachments referred to in the paragraphs are relevant to Perdaman's case about the purpose and intent of Griffin and the Lanco Companies. The hearsay objection could and should have been made at an earlier stage. That would have given Perdaman the opportunity to rectify the defect in the form of the affidavit. Perdaman seeks leave to do so by Banda 4. For the reasons given, I grant that leave and overrule the objection.