Tower Australia Ltd v Ambridge Investments Pty Ltd [2003] VSC 331

5. On 5 August 2003 Tower obtained interim injunctions ex parte against each of the defendants restraining them from:

"In any way dealing with the right title and interest of Ambridge Investments Pty Ltd in the joint venture developments in relation to the land situate at: * 34 Graham Street, Port Melbourne. * 12-14 Grey Street, St Kilda. * 243-247 and 37% of 249A Bridge Road, Richmond. * 176 Wellington Parade, East Melbourne."

Upon Tower by its counsel giving the usual undertaking as to damages the interim relief was granted, only until 4.00 pm on 8 August 2003, to enable the defendants to be served with notice of the proposed application for an interlocutory injunction in the same terms.

10. The application was further adjourned until 18 August 2003. In the meantime, by consent, the injunction had been discharged in relation to the fifth, sixth and seventh defendants.

14. The affidavit sworn on 5 August 2003 by Peter Robert Little of Towers's solicitors ("the Little affidavit") set out allegations as to the facts leading up to the making of the Deed dated 6 June 2003 between Tower and Ambridge.

18. The Little affidavit exhibited the Deed which was relevantly in the following terms:

"BACKGROUND A. On 12 May 2003 Tower obtained Judgment in its favour against the First Defendant and the Fourth Defendant in the Supreme Court in the Commercial and Equity Division Action No. 6549 of 2001 ("the proceeding") in the sum of five hundred and sixty thousand dollars ($560,000) together with interest and costs ("the Debt"). B. Tower wishes to pursue Ambridge in relation to funds advanced by Tower to the Defendants in the proceeding together with further funds advanced amounting to $960,000, which with interest and legal costs now comes to the agreed amount of $1,600,000 and to recover this amount in full. C. Ambridge by a letter dated 20 May 2003 has requested Tower to assign to Ambridge all of Tower's rights to the Debt on terms ("the letter of offer"). Annexed as a schedule hereto and marked with the letter "A" is a true copy of the letter from Ambridge to Tower dated 20 May 2003. D. Tower by a letter to Ambridge dated 21 May 2003 has agreed to assign to Ambridge all of Tower's rights to the debt on the terms requested by Ambridge and contained in its letter dated 20 May 2003 ("the letter of acceptance"). Annexed as a schedule hereto and marked with the letter "B" is a true copy of the letter from Tower to Ambridge dated 21 May 2003. AGREEMENT 1. Assignment Pursuant to the letter of offer in the letter of acceptance, Tower hereby assigns the debt to Ambridge on the terms set out in the Deed of Assignment of Debt annexed as a schedule hereto and marked with the letter "C". 2. Consideration In consideration of the Assignment of Debt under Clause 1 and the forbearance of Tower from pursuing Ambridge its directors and defacto director from any claims relating to the sum of $1,600,000 Ambridge hereby charges in favour of Tower: All of the right title and interest in the Joint Venture developments of Ambridge in the properties at: - 34 Graham Street, Port Melbourne. - 12 Grey Street, St Kilda. - 243 Bridge Road, Richmond. - Office Tower at 176 Wellington Parade, East Melbourne Full details of which are set out in the schedule marked "D" annexed hereto. 3. Release Pursuant to the Release annexed as a schedule hereto and marked with the letter "E" Tower releases Ambridge, its directors and any person acting at any stage as its defacto director as named therein from all claims.

5. Costs The parties hereto shall bear their own costs arising out of the preparation of this Deed except that Ambridge will bear any stamp duty chargeable on this Deed and any instruments required to be entered into pursuant to this Deed. Ambridge indemnifies Tower against liability for all stamp duty including any fines or penalties. ..."

25. The Deed of Assignment of Debt and Charge referred to in Clause 2 of the Deed was annexed and dated 6 June 2003. It purported to be made between Tower and Ambridge and set out the assignment of the Debt from Tower to Ambridge and continued:

"2. Consideration (a) In consideration of the Assignment of Debt under Clause 1 and the forbearance by Tower referred to in Clause 2 of the Deed of Agreement herein Ambridge hereby charges in favour of Tower for the sum of ONE MILLION FIVE HUNDRED AND SIXTY THOUSANND (sic) DOLLARS ($1,560,000): All Ambridge's right title and interest in its Joint Venture developments at: - 34 Graham Street, Port Melbourne. - 12 Grey Street, St Kilda. - 243 Bridge Road, Richmond. - Office Tower at 176 Wellington Parade, East Melbourne Road (b) The repayment terms of the sum of ONE MILLION FIVE HUNDRED AND SIXTY THOUSANND (sic) DOLLARS ($1,560,000) from the Joint Venture developments are as follows: (i) on the sum of FIVE HUNDRED AND SIXTY THOUSAND DOLLARS ($560,000) - 3 years from the date of this Deed, with interest running at the rate of 6% per annum payable quarterly in arrears, the first of such payments to be made three months from the date of this Deed. (ii) on the sum of ONE MILLION DOLLARS ($1,000,000) - on completion of the development of the properties referred to in Clause 2 of the Deed of Agreement herein. 3. Covenants by Ambridge Ambridge Covenants with Tower as follows: (a) That it has the right and authority under its Joint Venture Agreements to charge its interests in the various Joint Ventures set out in Clause C2(a); (b) That it will forthwith provide a copy of this Deed evidencing a Charge on its Joint Venture interest to each of its Joint Venture partners. (c) That it will procure a written acknowledgement from its various Joint Venture partners acknowledging Tower's Charge over its Joint Venture interest set out in Clause C 2(a). ..."

30. The Deed of Release referred to in Clause 3 of the Deed was also annexed and dated 6 June 2003. By its terms Tower purported to release Ambridge, Stanley, Kiene and Jacobs from all claims Tower might have against them. It contained the following:

"A. Tower has obtained Judgment Shadsoo Pty Ltd and PCCS Pty Ltd in the Supreme Court Proceeding No. 6549 of 2001 for a sum of five hundred and sixty thousand dollars ($560,000) together with interest and costs ("the Debt"). B. Tower wishes to pursue Ambridge and its Directors, Stanley and Kiene and its defacto Director Jacobs (who at all times was General Manger of Ambridge) to recover the full payment of the Debt. C. Proceedings between Tower and Ambridge and Stanley, Kiene and Jacobs have not been issued, but to avoid the expense and inconvenience of litigation Tower and Ambridge and Stanley, Kiene and Jacobs have agreed to settle any claim that Tower may have with Ambridge and Stanley, Kiene and Jacobs and to resolve the differences between them in the following manner. IT IS AGREED 1. Upon execution of the Deed of Agreement to which this Release is a schedule and the further schedule marked "A" being the Deed of Assignment Tower accepts the provision for it described therein in full and final settlement of all claims and entitlements to the judgment debt and all matters relating thereto. 2. Tower hereby releases and forever discharges Ambridge, Stanley, Kiene and Jacobs from any claims, suits, demands, courses of action, damages, costs and expenses of every description whatsoever arising out of or in relation to the claim. 3. This Deed of Release may be pleaded and tendered by the parties as an absolute bar to any legal proceedings pursuant to the releases contained herein and all claims and courses of action brought or made in breach of the terms of this Deed. 4. Each of the parties to this Deed of Release shall sign, execute and do all such further acts, matters and things that shall be necessary or desirable to give effect to the provisions of the terms of it."

34. The Deed, the Deed of Assignment of Debt and Charge and the Deed of Release each apparently bore Ambridge's company seal and the signatures of Jacobs as a Director and Stanley as Director/Secretary of Ambridge. The Deed of Release also bore extra signatures of alleged witnesses to the signatures of Stanley and Jacobs who were, with Kiene, named as parties to the Deed of Release in their own right. Kiene's signature did not appear on the Deed of Release.

37. It was common ground that Ambridge had some interests in the properties at 34 Graham Street, Port Melbourne, 12-14 Grey Street, St Kilda, 243-247 and 37% of 249A Bridge Road, Richmond and 176 Wellington Parade, East Melbourne ("the properties") under certain joint venture agreements. There were annexed to the Deed copies of joint venture agreements to which Ambridge was apparently a party in relation to the St Kilda, Richmond and East Melbourne properties. I note that no copy of any joint venture agreement in relation to the Port Melbourne property appeared to be annexed to the copy of the Deed exhibited as "PRL-6" to the Little affidavit. Nevertheless, no submissions were made to the effect that Ambridge had no involvement in a joint venture with respect to that property.

40. It was a term of each of the joint venture agreements that no charge should be given over the interests of a party under the joint venture agreement without the consent of the other party or parties having been obtained.

43. Through its agent, one Alfred Zion, and its solicitor, Little, Tower had engaged in the negotiations before and after the execution of the various Deeds. Little deposed that he had dealt exclusively with Jacobs and that he had been informed by Zion that he too had exclusively dealt with Jacobs purporting to act on behalf of Ambridge. Little had conducted an ASIC search in relation to Ambridge on 18 March 2003 which would have revealed that Stanley and Kiene were directors, but that Jacobs was not. Jacobs allegedly told Zion that he had been made a director of Ambridge on 5 June 2003. However he is reported as denying that status in the letter from his solicitors, Tress Cocks Maddox.

46. There is dispute between the parties as to Stanley's role in any negotiations relating to the agreement between the parties and the execution of various deeds. Stanley denies any knowledge or involvement in the negotiations and the making of the Deed.

49. Nevertheless it is common ground that Tower received a letter dated 23 July 2003 from the solicitors, Tress Cocks Maddox, on behalf of Jacobs, claiming that he had acted without authority from Ambridge and had signed the Deed and all the documents himself. The letter asserted that Tower had known that Jacobs was not a director of Ambridge at all relevant times. Jacobs claimed to have succumbed to pressure from Tower arising from its threatened action against him and Ambridge.

52. Stanley has deposed that neither he nor Kiene was aware of the existence of the Deed until 25 July 2003. Ambridge, Stanley, Kiene and Jacobs all deny that Ambridge has made any agreement with Tower evidenced by the Deed.

55. Senior counsel for Tower told the Court that he was instructed that, whilst caveats had been lodged to protect the interest of Tower as chargee in relation to the properties, his client had failed to register the charge before receiving the 23 July letter from Jacobs' solicitors. He said that Tower feared that it might commit an offence under s 83A(2) of the Crimes Act 1958 of using a document known to be false, by attempting to register the charge in the knowledge of Ambridge's denial of its authenticity.

58. There is insufficient evidence to satisfy me as to the reason why the charge was not registered between 6 June 2003 and the receipt of the Tress Cocks Maddox 23 July 2003 letter. It was submitted on behalf of the plaintiff that it was awaiting the payment of stamp duty (which the Court was informed was of an amount of about $6,000) payable by Ambridge under the terms of the Deed of Assignment and Charge. Senior counsel conceded that Tower could not successfully mount an argument justifying its failure to register the charge on the basis that the consent required under the various joint venture agreements to the charging of its interest had not been obtained by Ambridge. He conceded that it was arguable that once the charge had been given under the Deed of Assignment of Debt and Charge Ambridge had breached the various joint venture agreements.

62. Tower now seeks interlocutory relief against Ambridge, Stanley, Kiene and Jacobs in the following terms:

"1. Subject to paragraph 3 of this Order, the first to fourth defendants be restrained, save with the consent of the plaintiff, whether by themselves, their servants or agents until the hearing and determination of this proceeding or until further order from creating any charge having priority over any charge created by the Deed dated 6 June 2003 referred to in paragraph 12 of the Statement of Claim herein ("the Deed") over the right, title and interest of the first defendant in the Joint Venture developments relating to the properties at 34 Graham Street Port Melbourne, 12 Grey Street St Kilda, 243 Bridge Road, Richmond and 176 Wellington Parade, East Melbourne ("the joint venture developments"). 2. Subject to paragraph 3 of this Order the first to fourth defendants be restrained, save with the consent of the plaintiff, whether by themselves, their servants or agents until the hearing and determination of this proceeding or until further order from selling, assigning or otherwise disposing of the interest or any part of the interest of the first defendant in the Joint Venture developments otherwise than subject to any charge created by the Deeds. 3. Paragraph 1 of this Order does not apply to a transaction whereby the interest or part of the interest of the first defendant and the Joint Venture developments or in one or more of the Joint Venture developments is sold at market value and the proceeds of the sale are immediately paid into Court."

67. In Castlemaine Ltd v South Australia[1], Mason A-CJ said of interlocutory injunctions:

"In order to secure such an injunction the plaintiff must show (1) that there is a serious question to be tried or that the plaintiff has made out a prima facie case, in the sense that if the evidence remains as it is there is a probability that at the trial of the action the plaintiff will be held entitled to relief; (2) that he will suffer irreparable injury for which damages will not be an adequate compensation unless an injunction is granted; and (3) that the balance of convenience favours the granting of an injunction."

In ABC v Lenah Game Meats Pty Ltd[2] Gummow and Hayne JJ said:

"The basic proposition remains that where interlocutory injunctive relief is sought in a Judicature System Court, it is necessary to identify the legal (which may be statutory) or equitable rights which are to be determined at trial and in respect of which there is sought final relief which may or may not be injunctive in nature."

74. Counsel for the first to third defendants submitted that Tower had neither established that there was a serious question to be tried nor made out a prima facie case. He submitted that the Deed was patently a forgery. He argued that Tower knew from its company search of 18 March 2003 that Jacobs was not a director of Ambridge. He said that a reference to a "defacto" director in the documentation was directed at Jacobs. He also pointed to what he said was the obvious difference between the signature of Stanley on the Deed in comparison with those on the annexed Joint Venture documents.

77. Senior counsel for Tower responded that the reference to a "de facto" director was not conclusive because the documents had been forwarded for signature before 6 June 2003 and Zion claimed to have been told that Jacobs had been made a director on 5 June 2003. Tower relied upon evidence of the negotiations involving Stanley, Jacobs and Zion and the use of Ambridge's letterhead and company seal as indicative of Jacobs' authority to act on its behalf. It also relied upon what was argued to be the permissible assumption under s 129(6) of the Corporations Law that the Deed had been duly executed by the company, as it bore the seal and appeared to have been witnessed in accordance with s 127(2) of the Law.

80. Whilst Stanley at first denied "dealing or negotiating any agreement whatsoever" with Zion or Tower, he subsequently responded to Zion's later descriptions of negotiations between them on the basis that he had only dealt with Zion in respect of a separate matter. I did not find persuasive the explanation of the discrepancies in Stanley's affidavit material on the basis of the haste with which the documentation was prepared. The affidavit was presented to the Court as his sworn evidence and he should have ensured its correctness.

83. The affidavit material filed by Zion tended to suggest some interrelationship between the subject matter of his dealings with Stanley and the matters leading up to the Deed. Further, as was pointed out by senior counsel for Tower, there was no affidavit from Jacobs, the person with the greatest involvement in all matters about which there is dispute between the parties.

86. I am not persuaded by the submissions on behalf of the defendants that it was apparent from the face of the Deed that it was a forgery. There is a dispute as to whether or not Zion had been informed that Jacobs had been made a director of Ambridge before signing the documents in that capacity. Further the various signatures of Mr Stanley in documents annexed to the Deed do not make it obvious to me that he did not sign the Deed itself or those documents annexed to it.

89. Clause 4 of the Deed of Release, the terms of which are arguably incorporated into the Deed, requires by that the parties, including Jacobs, do all things necessary to give effect to its terms. Despite the alleged termination of Jacobs' association with Ambridge on 25 July 2003, it may be argued that he has continuing obligations enforceable by Tower under its claim in paragraph C of the prayer for relief in the statement of claim.

92. Having taken into account the relevant statutory provisions and all the affidavit material, as well as the submissions of counsel, I am satisfied that there is a serious question to be tried as to the validity of the Deed and in relation to the enforcement of the alleged obligations of Stanley, Kiene and Jacobs thereunder.

96. The Court must be satisfied that the plaintiff will suffer irreparable injury for which damages would not be an adequate compensation unless the injunction were granted. This requirement should be looked at in the context of the final relief sought in the proceeding and the terms of the proposed injunction.

99. If, by the Deed, Tower acquired an interest by way of the alleged charge, it would have and continue to have that interest before and after any judicial recognition of the validity of the Deed by the declaration sought.

102. No relief is sought in this proceeding in relation to the priority of the charge vis a vis any actual or potential third party interest in Ambridge's interest in the properties under the joint venture agreement. Nevertheless, the "irreparable injury" apparently sought to be avoided is the loss of priority in relation to competing subsequently created or registered charges or other interests. Tower's status as a chargee would not, of itself, entitle it to such priority. The priority of Tower's interest in relation to that of any other interest holder would always depend upon the application of relevant legal principles to their competing claims. The actions of Ambridge could not ensure that Tower's interest had priority.

105. In any event, I am not satisfied by the evidence that Ambridge, Stanley, Kiene or Jacobs has threatened to act in such a way as to affect Tower's alleged interest. I do not view either the defendants' denials of the validity of the charge or the subsequent registration of a prior interest as sufficient to satisfy me of any threatened irreparable injury. Further, as was pointed out by counsel appearing for Jacobs, it was alleged in the affidavit material before the Court that Jacobs' association with Ambridge had ceased on 25 July 2003, after Stanley allegedly became aware of the Deed.

108. In all the circumstances, I am not satisfied that Tower will sustain irreparable injury if the injunctive relief sought is refused.

112. I am not satisfied by the assertions and counter assertions in the affidavit material that Ambridge would not be able to meet any order for damages made against it. I note in this regard that there is no alternative or other claim for damages made in the Statement of claim.

116. Tower has lodged caveats claiming an interest as chargee under the Deed in relation to each of the properties the subject of the joint venture agreements. It could have registered its interest as chargee from 6 June 2003. Indeed s 263(1) of the Corporations Law requires such registration within 45 days of the creation of the charge. Although Tower is presently able to register its charge, it fears criminal liability if it does so knowing of the defendants' denials of the validity of the Deed.

119. Counsel for the first to third defendants also submitted that the terms of the proposed injunction were not the appropriate subject matter of such an order. He argued that it was axiomatic that the terms of the injunction should be clear in order that it might be enforced and to make it clear what conduct was prohibited on the part of those affected. In any event, a person will not be held guilty of contempt for breaking an injunction unless its terms are clear and unambiguous.[3]

122. In my view, in all the circumstances, the balance of convenience does not favour the granting of the injunctive relief sought, the terms of which do not make clear the ambit of the prohibitions.

125. The interim injunction should be discharged and Tower's application for interlocutory injunctions be dismissed**.**

[1] [1986] HCA 58; (1986) 161 CLR 148 at 153.

[2] (2001) 208 CLR 199 at 241.

[3] McNair Anderson Assoc. Pty Ltd v Hinch [1985] VicRp 30; [1985] VR 309 at 312 per Southwell J