Ambridge Investments Pty Ltd v Baker

[2010] VSC 282

IN THE SUPREME COURT OF VICTORIA Not Restricted

AT MELBOURNE

COMMERCIAL AND EQUITY DIVISION

No. 2014 of 2005

AMBRIDGE INVESTMENTS PTY LTD (IN LIQUIDATION) (RECEIVER APPOINTED) (ACN 077 299 051)	Plaintiff
v
THEODORE BAKER & ORS	Defendants

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JUDGE:	VICKERY J
WHERE HELD:	MELBOURNE
DATE  OF HEARING:	11 JUNE 2010
DATE OF RULING:	11 JUNE 2010
CASE MAY BE CITED AS:	AMBRIDGE  INVESTMENTS PTY LTD v BAKER & ORS
MEDIUM NEUTRAL CITATION:	[2010] VSC 282

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Practice and Procedure — Applications — Interlocutory injunction – Serious question to be tried - Balance of convenience – Sufficiency of evidence

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr J W Peters SC and Mr C G Juebner	Tress Cox Lawyers
For the First to Seventh Defendants	Mr P J Bick QC, Mr E W Altergren and Mr B Gibson

HIS HONOUR:

1. In this matter, the plaintiff (“Ambridge”) sought orders that, without its prior written consent or further order, the sixth defendant (“Break Fast”) be restrained whether by itself, its agents, its servants or otherwise from making any further payment of legal costs and disbursements in respect of this proceeding, or the appeal from this proceeding, greater than one-fifth of the legal costs of the first, third, fourth, sixth and seventh defendants in the original proceeding at the counterclaim and the appeal.

1. This is an application in the nature of an interlocutory injunction which requires the Court to consider the matter applying the two usual tests.  Firstly whether there is a serious question to be tried in relation to the matter, and secondly whether the balance of convenience favours such an order being made. 

1. As to the order sought by Ambridge, although it has the advantage of considerable simplicity in that one-fifth of the total legal costs of the defendant parties are permitted to be paid, a sum which is readily calculable, in my view it is overly restrictive.  In litigation all sorts of vicissitudes can occur, which would justify costs beyond that regime.

1. If I was to have made any such order, I would have preferred to have made an order of the type ordered by Austin J in Power v Ekstein[1] which was referred to me in argument.  There his Honour considered proceedings which involved, on one view of the facts, a dispute between shareholders of various companies.  There was some evidence that the companies’ funds were being improperly used in conducting the defence of the proceedings on behalf of the shareholders.  The Court ordered, upon the plaintiff giving the usual undertaking as to damages, an interlocutory order restraining those in control of the relevant companies, from permitting those companies to take any steps in the proceedings, and from applying any funds of the companies, to the defence of the proceedings, and from applying any funds of the companies to the defence or conduct of the proceedings, except in the case of any company:

   [1][2010] NSWSC 137 at [121].

(a)to the extent that the plaintiff in the proceedings seeks [certain orders against that company];

(b)     for the purpose of complying with obligations in respect of discovery;

(c)     for any purpose agreed by the plaintiff’s solicitor in writing; or

(d)     with the prior leave of the Court.

1. On the present application, the first question is whether or not there is evidence before the Court which would justify it making an interlocutory order.  I am not satisfied that that is the case, particularly in the light of the further affidavit of Maria Nemeth, sworn 10 June 2010 on behalf of the first, third, fourth, sixth and seventh defendants.  In that affidavit the deponent swears in paragraph 8 to the amount of $1.5m incurred in relation to defending the proceeding and her reference to that figure in her earlier affidavit of 7 October 2009.

1. The plaintiff in this matter sought to justify the grant of an interlocutory injunction on the basis that only some $800,000 of that figure had been paid by one of the directors and an individual defendant in the proceeding, Mr Baker who is the first defendant, who it was said paid this sum of costs on behalf of himself and the other individual, defendants.  On the plaintiff’s case, this left an unexplained and large amount in the sum of some $700,000, which appeared on the materials to have been paid improperly by the company Break Fast, the sixth defendant, on behalf of itself and the other individual defendants, so it was contended.  I was invited to draw an inference that Break Fast was in fact paying those costs on behalf of other defendants and was not applying confining the application of its funds to costs incurred directly by it.

1. In the affidavit of Ms Nemeth to which I have referred, a further amount of some $155,000 was referred to.  The evidence was that this sum represented a contribution to legal costs of the proceeding from Mr Voukidis, who is the second defendant in the proceeding.  That, together with the sum contributed by Mr Baker, which Ms Nemeth says was in fact $775,000, amounts to some 60 per cent of the $1.5m expended on costs by all defendants, including Break Fast.  I am not in a position to determine on the material presently before me how the legal costs were broken up between Break Fast and the other defendants, so that it could be said with confidence that there were legal costs paid by Break Fast on behalf of other defendants, which ought not to be paid, or that there is any serious issue to be tried on the matter.  No break up of the $1.5m said to have been expended on costs by all defendants was provided.

1. On the material before me I am not satisfied that there is evidence that Break Fast has in fact paid the costs of other defendants which it ought not to have paid. 

1. However, I note that there was in this proceeding an undertaking given in an earlier order on behalf of the relevant defendants, that the sixth defendant Break Fast would not expend moneys otherwise than in accordance of a number of items including Item C which was legal and other costs incurred in relation to the proceeding.

1. In my opinion it is desirable to clarify that position, as indeed it has been clarified in the course of the application this morning.  I propose to direct that a copy of the transcript relating to this proceeding be provided to the directors of Break Fast which will include the following observation:  That it has been accepted by senior counsel for the sixth defendant and the first, third and fourth defendants, that the sixth defendant Break Fast Pty Ltd and its directors, are not entitled to apply any of its funds or assets to the defence or conduct of the proceeding, except for the purpose of meeting its own costs of the proceeding.  Accordingly, I direct that a copy of the transcript which includes that observation be provided to the directors of Break Fast. 

1. Save for that, on the material before me I will not grant the injunction sought. 

1. In any event, if there was a serious question to be tried, the balance of convenience in my view at this point in the proceeding, militates against the grant of any such injunction.  This is so because in its the statement of claim, the plaintiff claims damages which encompass the very allegations which are before the Court today. 

1. In these circumstances the order sought by the plaintiff should not be made, on the further ground that I am not satisfied at this point in the proceeding that a remedy in damages is not the appropriate form of relief for the plaintiff, if it is able to make out its claims at trial. 

1. Accordingly, the plaintiff, not having made out its case that there is a serious question to be tried and that the balance of convenience favours the orders being made, its application will be dismissed.  I direct that a copy of the transcript relating to this proceeding, including the observations made this morning, be provided to the directors of Break Fast.

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