Allmark v Retravision (WA) Ltd
[2012] WASC 64
•24 FEBRUARY 2012
ALLMARK -v- RETRAVISION (WA) LTD [2012] WASC 64
| SUPREME COURT OF WESTERN AUSTRALIA | Citation No: | [2012] WASC 64 | |
| Case No: | CIV:1292/2012 | 23 FEBRUARY 2012 | |
| Coram: | BEECH J | 24/02/12 | |
| 11 | Judgment Part: | 1 of 1 | |
| Result: | Application for injunction dismissed | ||
| B | |||
| PDF Version |
| Parties: | PATRICIA SYBIL ALLMARK CHRISTOPHER JAMES ALLMARK RETRAVISION (WA) LTD AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED |
Catchwords: | Equity Injunctions Interlocutory injunctions Application to restrain second mortgagee from receiving balance of proceeds of sale Turns on own facts |
Legislation: | Nil |
Case References: | Australian Broadcasting Corporation v O'Neill [2006] HCA 46; (2006) 227 CLR 57 McVeigh v National Australia Bank [2000] FCA 187; (2000) 278 ALR 429 Olympic Holdings Pty Ltd v Windslow Corporation Pty Ltd [2008] WASCA 80; (2008) 36 WAR 342 Twinside Pty Ltd v Venetian Nominees Pty Ltd [2008] WASC 110 Vincent Nominees Pty Ltd v Western Australian Planning Commission [2012] WASC 28 |
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
- IN CHAMBERS
- First Plaintiff
CHRISTOPHER JAMES ALLMARK
Second Plaintiff
AND
RETRAVISION (WA) LTD
First Defendant
AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED
Second Defendant
Catchwords:
Equity - Injunctions - Interlocutory injunctions - Application to restrain second mortgagee from receiving balance of proceeds of sale - Turns on own facts
Legislation:
Nil
(Page 2)
Result:
Application for injunction dismissed
Category: B
Representation:
Counsel:
First Plaintiff : Mr K A Dundo
Second Plaintiff : Mr K A Dundo
First Defendant : Mr G D Cobby
Second Defendant : No Appearance
Solicitors:
First Plaintiff : Q Legal
Second Plaintiff : Q Legal
First Defendant : Norton Rose Australia
Second Defendant : No appearance
Case(s) referred to in judgment(s):
Australian Broadcasting Corporation v O'Neill [2006] HCA 46; (2006) 227 CLR 57
McVeigh v National Australia Bank Ltd [2000] FCA 187; (2000) 278 ALR 429
Olympic Holdings Pty Ltd v Windslow Corporation Pty Ltd (in liq) [2008] WASCA 80; (2008) 36 WAR 342
Twinside Pty Ltd v Venetian Nominees Pty Ltd [2008] WASC 110
Vincent Nominees Pty Ltd v Western Australian Planning Commission [2012] WASC 28
(Page 3)
- BEECH J:
Introduction
1 The plaintiffs apply for an injunction relating to part of the proceeds of sale of property (the Mount Pleasant property) owned by the first plaintiff, Mrs Allmark.
2 The property is being sold by the second defendant (ANZ) which is the registered first mortgagee. There is no dispute about ANZ's entitlement to exercise its power of sale. The first defendant (Retravision) has a registered second mortgage over the Mount Pleasant property. It claims that that mortgage entitles it to the balance of proceeds of the sale of the property, after ANZ receives payment of its debt.
3 The plaintiffs deny that. In essence, that is because the plaintiffs say that:
(a) there is no debt owing by them on the transaction that is secured by the Mount Pleasant mortgage; and
(b) the debts relied on by Retravision are not secured by that mortgage.
4 They seek orders which would prevent Retravision from receiving the balance of proceeds of sale of the Mount Pleasant property.
5 It is convenient to begin by outlining some uncontroversial background explaining the transactions between the parties.
Background
6 In 1998 a company associated with the plaintiffs, Allmark Family Corporation Pty Ltd (AFC) in substance acquired a Retravision store at Mirrabooka. Under the transaction AFC was licensed to use Retravision's trademark to permit AFC to run a Retravision store at Mirrabooka. Conditions precedent to the trademark licence included execution by the parties of various agreements. These included:
(a) a charge by AFC to Retravision;
(b) guarantees by Mr and Mrs Allmark to Retravision;
(c) an unregistered mortgage by Mr and Mrs Allmark of their property at Willetton to Retravision.
(Page 4)
7 Later, Mrs Allmark acquired the property at Mount Pleasant the subject of this application. Pursuant to her obligations in respect of Retravision Mirrabooka, Mrs Allmark executed a registered second mortgage (the Mount Pleasant mortgage) to Retravision of that property.
8 The Mount Pleasant mortgage contains an all-moneys clause in the definition of Secured Money. I will return to this.
9 Mirrabooka Retravision was closed in October 2009. Mrs Allmark says, and it is not challenged, that AFC does not owe Retravision anything in respect of Mirrabooka Retravision.
10 In 2007, AFC became the operator of Retravision Cannington. The transactions governing the operation of this store are structured in a different way from Mirrabooka. AFC entered into a Franchise Agreement with Retravision and Electcom Limited. Under that agreement, Retravision appointed AFC as a franchisee for the Cannington store, and Electcom leased some equipment to AFC to enable it to operate the store. Under cl 24 of the Franchise Agreement, each of Mr and Mrs Allmark and their two children guaranteed AFC's obligations under the Franchise Agreement.
11 As part of the same transaction, AFC granted a further fixed and floating charge (the 2007 Charge) to Retravision and Electcom. AFC charged all its assets to secure its obligations under the Franchise Agreement. By cl 49, 'the Guarantor' guaranteed AFC's obligations. The Guarantor was Mr and Mrs Allmark and their two children. By cl 1.3(1), where a party consists of more than one person, the instrument binds each of them separately and any two or more of them jointly.
12 Clause 59.1 of the charge provides as follows:
Every security (including any mortgage) already given by the Guarantor to the Mortgagee is security for the payment of all money payable by the Guarantor to the Mortgagee under this Security, despite any contrary provision (including a limitation in the sum secured) in any security already given.
13 The proper construction of that clause is a central issue in this application.
14 In January 2010, Retravision provided a credit statement showing an outstanding balance in excess of $3.275 million. By March 2010, the amount owing in respect of Retravision Cannington was said to be something in excess of $2 million.
(Page 5)
15 In March 2010, Retravision appointed a receiver and manager to AFC, pursuant to its rights under the 2007 Charge.
16 The Mount Pleasant property has been sold. There will be an amount less than $350,000 left after ANZ's debt is discharged. Settlement is due on Monday 27 February 2012.
17 The application has been brought on for urgent hearing because the plaintiffs wish to prevent Retravision from receiving the balance of the proceeds of sale at settlement.
Legal principles
18 I refer to the outline of principles about interlocutory injunctions in Twinside Pty Ltd v Venetian Nominees Pty Ltd [2008] WASC 110 [7] - [12].
19 In summary, it is relevant to consider:
(a) whether the plaintiffs have established a serious question to be tried;
(b) whether the plaintiffs will suffer irreparable injury for which damages will not be an adequate remedy;
(c) whether the balance of convenience favours the granting of an injunction.
20 As is explained in Australian Broadcasting Corporation v O'Neill [2006] HCA 46; (2006) 227 CLR 57, these considerations must be considered together, not in isolation from each other.
21 It is convenient to begin with the merits of the plaintiffs' substantive contention.
Is there a serious question to be tried?
22 The plaintiffs contend that the Mount Pleasant mortgage does not secure debts that they owe in relation to Retravision Cannington. They contend that on a proper construction, the Mount Pleasant mortgage secures only debts relating to Retravision Mirrabooka.
23 In response, Retravision contends that, for two distinct reasons, the Mount Pleasant mortgage secures debts owed in respect of Retravision Cannington. First, Retravision relies on cl 59.1 of the 2007 Charge.
(Page 6)
- Secondly, Retravision relies upon the all-moneys clause in the Mount Pleasant mortgage.
24 Both of these issues relate to questions of construction. The principles of construction of an instrument are well known. For a recent summary, see Vincent Nominees Pty Ltd v Western Australian Planning Commission [2012] WASC 28 [51] - [56].
25 I begin with cl 59.1 of the 2007 Charge.
Clause 59.1
26 Clause 59.1 makes certain classes of security already in existence security for certain obligations. The obligations so secured are 'the payment of all money payable by the Guarantor to the Mortgagee under this Security'. The class of pre-existing security given additional force by cl 59.1 is those securities 'already given by the Guarantor to the Mortgagee'.
27 The Guarantor is defined to mean the guarantor named in item 3 of the particulars: cl 1.1(17). Item 3 of the particulars named Mr Allmark, Mrs Allmark, and their two children. The Mortgagee is defined to mean the person named in item 1 of the particulars: cl 1.1(24). In item 1 of the particulars, Retravision and Electcom are named.
28 The plaintiffs submit that cl 59.1 should be read as referring to securities given by all of the guarantors to both of the mortgagees (ts 32). Thus the Mount Pleasant mortgage is not within the ambit of cl 59.1, because it is a mortgage between Mrs Allmark (not all of the guarantors) and Retravision (not both of the mortgagees).
29 On the face of it, cl 1.2(1)(m) provides a very substantive obstacle to the plaintiffs' submission. That clause provides that reference to a group of persons includes any one or more of the group. To my mind, the natural reading of cl 59.1, read with cl 1.2(1)(m), is that every security already given by any one or more of the guarantors to either or both of the mortgagees, is security for payment of money payable by any one or more of the guarantors to either or both of the mortgagees under the instrument. Read in this way, the Mount Pleasant mortgage between Mrs Allmark and Retravision is within the ambit of cl 59.1.
30 In my view, there is nothing in the evident purpose or object of the 2007 Charge (individually, or when read with the Franchise Agreement) to warrant departure from the ordinary meaning of the language of cl 59.1
(Page 7)
- and cl 1.2(1)(m). To the contrary, in my view the reading of cl 59.1 invited by the plaintiffs would not make commercial sense. That is because there are four guarantors, each with several obligations. In those circumstances it would seem surprising that only securities provided by all four guarantors would be caught by cl 59.1.
31 By cl 49, read with cl 1.3(1), each of the guarantors is severally liable to guarantee AFC's obligations under the Franchise Agreement. In that context, the distributive reading of cl 59.1 effected by the application of cl 1.2(1)(m) to cl 59.1, to apply to any security given by any of the guarantors to either of the mortgagees, makes commercial sense.
32 The terms Guarantor and Mortgagee are used in many clauses in the instrument. To my mind, in many of those other clauses it is plainly intended that those terms are to be read to mean any one or more guarantor or mortgagee, and not to mean only all of them. See, for example, cl 49, cl 52 and cl 60. In other words, throughout the instrument, I think the terms Guarantor and Mortgagee are to be read in accordance with cl 1.2(1)(m). There is no reason to take a different approach in the context of cl 59.1.
33 Counsel for the plaintiffs accepted that his construction of cl 59.1 was in conflict with cl 1.2(1)(m) (ts 32).
34 The plaintiffs emphasise that the Mount Pleasant mortgage was given for a purpose quite distinct from the Cannington Franchise Agreement, namely the Mirrabooka Retravision. I accept that that is so. However, I do not think the language of cl 59.1, read with cl 1.2(1)(m), makes that of any significance. The purpose of an earlier security does not matter. Clause 59.1 operates on '[e]very security' already given.
35 Counsel for the plaintiffs emphasised that this clause was to be found on page 60 of a 65-page document. He said that the definitions of Securities and Collateral Securities, appearing early in the document, did not include reference to the Mount Pleasant mortgage.
36 I am not persuaded that there is any force in these submissions. I do not think the location of cl 59.1 within the document bears in any significant way on its proper construction. I do not think it is useful to read the definitions in isolation. Rather, they assist in construing those provisions in which the defined terms appear.
37 The plaintiffs also appeared to try to make something of the reference to 'this Security' in the third line of cl 59.1, together with the
(Page 8)
- absence of reference to the Mount Pleasant mortgage in the definition of this Security. This does not assist the plaintiffs' construction of cl 59.1. The third line of cl 59.1 is concerned with identifying the liability secured. In essence, it is the liability under that instrument, the 2007 Charge. It is not concerned with delineating which pre-existing securities are given additional force by the operation of the clause.
38 In my view, the absence of reference to Collateral Securities in cl 59.1 does not bear in any significant way on the construction question with which I am concerned.
39 For these reasons I am not persuaded that there is any force in the plaintiffs' construction of cl 59.1. I do not think the plaintiffs have established a serious question to be tried.
The all-moneys clause
40 I turn to the all-moneys clause. The plaintiffs relied heavily on the approach to construction of all-moneys clauses taken by Finkelstein J in McVeigh v National Australia Bank Ltd [2000] FCA 187; (2000) 278 ALR 429. In that case, his Honour was in dissent. In any event, the approach to the construction of all-moneys clauses in security instruments has been authoritatively stated by Buss JA (Steytler P agreeing) in Olympic Holdings Pty Ltd v Windslow Corporation Pty Ltd(in liq) [2008] WASCA 80; (2008) 36 WAR 342 [41] - [44]. In short, ordinary principles of contractual construction should be applied to an all-moneys clause. The task should not be approached with a predisposition about its intended ambit. The scope of an all-moneys clause depends on its language, construed in the context of the instrument of security as a whole, any admissible evidence as to the surrounding circumstances and the apparent purpose and object of the transaction.
41 Secured Money is defined in the Mount Pleasant mortgage to mean money secured by that mortgage and each other Security Document and to include any amount falling within any of a number of categories including:
(a) all money now or in the future owing or payable to the Franchisor or any Related Entity of the Franchisor by the Mortgagor or the Franchisee, either alone or on joint or partnership account and whether as principal debtor, guarantor or indemnifier under any of the Security Documents;
(b) all money now or in the future owing, contingently or otherwise, by the Mortgagor or the Franchisee to the Franchisor or any Related
- Entity of the Franchisor under any guarantee given by the Mortgagor or the Franchisee alone or with another person which secures the obligations of any person to the Franchisor or any Related Entity of the Franchisor regardless of whether the guarantee, if given by more than one person, has been jointly, severally or jointly and separately.
42 Under par (a), any money in the future owing or payable to Retravision by Mrs Allmark or by AFC, alone or on joint or partnership account and whether as principle debtor, guarantor or indemnifier, was secured money. Under par (b), any money in the future owing by Mrs Allmark or AFC to Retravision under any guarantee given by Mrs Allmark alone or with any person securing the obligations of any person to Retravision, regardless of whether the guarantee had been given jointly, severally or jointly and separately, was also caught.
43 Security Documents are defined to include every other future agreement, document or deed made between Mrs Allmark or AFC and Retravision, whether or not any other person is a party to it.
44 To my mind, on the face of it, both these clauses appear to apply to moneys owing by Mrs Allmark to Retravision under the Franchise Agreement and the 2007 Charge.
45 The plaintiffs emphasise the fundamentally different character of debts in relation to the Cannington Franchise Agreement, as against the Mirrabooka Retravision arrangements. Applying the approach stated in Olympic Holdings, given the language of pars (a) and (b) of the definition of Secured Money, it is difficult to deny that Mrs Allmark's liability is within the ambit of the Secured Money clause.
46 For these reasons, I am not persuaded of the force of the plaintiffs' contentions on either of these two points. It is to be remembered that the plaintiffs would need to succeed in relation to the construction of both cl 59.1 and the all-moneys clause.
47 My conclusion that there is no serious question to be tried in relation to cl 59.1 is itself a ground to refuse an injunction. That conclusion is reinforced by consideration of the other relevant factors. I turn to the question of the adequacy of damages.
The adequacy of damages
48 It is an accepted fact that AFC owes Retravision more than $350,000 in respect of Retravision Cannington (ts 46).
(Page 10)
49 Under the 2007 Charge, Mrs Allmark is liable for that debt (see cl 49). No demand is necessary: cl 49.2.
50 Counsel for the plaintiffs said that the question of the liability of the plaintiffs under the guarantee had not yet arisen. That was on the basis that liability under the guarantee would not crystallise until Retravision took some positive step to enforce the guarantee (ts 23). He foreshadowed that the plaintiffs would or might deny their liability (ts 19, 24). However, there is nothing in the evidence filed in support of this application to support that assertion. Still less is there any evidence capable of giving rise to a ground to deny that liability.
51 In those circumstances, there is force in the submission for Retravision that it is difficult to see prejudice to the plaintiffs, even if their case on the merits is made out. One the face of it, use of Mrs Allmark's money to pay a debt she owes to Retravision would not seem to give rise to any significant prejudice to her. In response to this, counsel for the plaintiffs contended, in effect, that the self help advantages to Retravision of it receiving the proceeds of sale would deprive Mrs Allmark of her ability to dispute her liability under the guarantee. Absent the Mount Pleasant mortgage, Retravision will need to sue Mrs Allmark to enforce the guarantee, and she can then deny liability.
52 So far as they go, these propositions may be accepted. However, the weight to be given to that consideration must take account of the absence of any evidence that liability is denied and, especially, the absence of any evidence to support any ground to deny the liability that appears to be created under the 2007 Charge.
53 For these reasons, it is difficult to see what damage would be suffered by the plaintiffs if the injunction is not granted, but it is ultimately found at trial that the mortgage does not apply to the Retravision Cannington debts.
54 Moreover, by definition, any damage could not exceed the amount of the funds the subject of this application. The plaintiffs contend, based on statements and letters written by Retravision annexed to Mr Allmark's affidavit of 23 February 2012, that there is reason to doubt whether Retravision will be in a position to pay any damages. I think there is limited force in this submission. The fact that it is planned that Retravision merge, most likely with Retravision entities in other parts of Australia, does not seem to me to give rise to a significant prospect that a
(Page 11)
- debt arising from damages awarded against Retravision in a sum not exceeding $350,000 would be unpaid.
The balance of convenience
55 The balance of convenience involves weighing the risk of injustice to the plaintiffs if the injunction is not granted and they ultimately succeed at trial, against the risk of injustice to Retravision if the injunction is granted but the plaintiffs fail at trial.
56 The matters I have discussed in relation to adequacy of damages apply to the assessment of the balance of convenience. For the reason already given, any prejudice to the plaintiffs if the injunction is not granted is very limited in nature and extent.
57 That is reinforced by the fact that even if the injunction is granted, the plaintiffs will not get the use of the funds in question. Rather they will be in a trust account. So the only benefit to the plaintiffs are those I have outlined in relation to the adequacy of damages.
58 The plaintiffs emphasise that in the two years since a receiver was appointed to AFC, Retravision has not taken steps to enforce the Mount Pleasant mortgage. That is true, but it must be seen in the context that the first mortgagee, the ANZ, has taken steps to sell the land. Moreover, it may be noticed that the plaintiffs have not taken steps to seek a discharge of the Mount Pleasant mortgage, notwithstanding that since early 2010 they have not owed Retravision anything in respect of Retravision Mirrabooka.
Conclusion
59 Taking into account my views about the weakness of the plaintiffs' arguments on the merits, and what I have said about the adequacy of damages and the balance of convenience, I am not persuaded that an interlocutory injunction should be granted.
60 For these reasons I would dismiss the application.
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