Big Top Hereford Pty Ltd v Gavin Thomas as Trustee of the Bankrupt Estate of Douglas Keith Tyler

[2006] NSWSC 1470

CITATION:	Big Top Hereford Pty Ltd v Gavin Thomas as Trustee of the Bankrupt Estate of Douglas Keith Tyler [2006] NSWSC 1470
HEARING DATE(S):	27 September 2006
JURISDICTION:	Equity Division
JUDGMENT OF:	Brereton J
EX TEMPORE JUDGMENT DATE:	09/27/2006
DECISION:	Interlocutory injunction granted.
CATCHWORDS:	INJUNCTIONS – Interlocutory injunction – ex parte injunction – duty of disclosure – balance of convenience.
CASES CITED:	Elton v Cavill (1994) 34 NSWLR 289 Mutch v English [2006] NSWSC 946 Thomas A Edison Limited v Bullock (1912) 15 CLR 679 Town & Country Sport Resorts (Holdings) Pty Ltd v Partnership Pacific Ltd (1988) 20 FCR 540
PARTIES:	Big Top Hereford Pty Ltd (plaintiff) Gavin Thomas as Trustee for the Bankrupt Estate of Douglas Keith Tyler (defendant)
FILE NUMBER(S):	SC 4904/06
COUNSEL:	Ms M Dulhunty (plaintiff) Mr S Golledge (defendant)
SOLICITORS:	Savage & Love Solicitors (plaintiff) The Argyle Partnership (defendant)

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

BRERETON J

Wednesday 27 September 2006

4904/06 Big Top Hereford Pty Limited v Gavin Frederick Crichton Thomas

JUDGMENT (ex tempore)

1 HIS HONOUR: The plaintiff Big Top Hereford Pty Limited, of which Peter William Jupp is apparently the sole director, claims to be the owner of a herd of Hereford cattle formerly located at a property called Big Top at Tyringham on the mid-North Coast of New South Wales.

2 The defendant Gavin Frederick Crichton Thomas is a registered bankruptcy trustee, and in particular is the trustee of the bankrupt estate of Douglas Keith Tyler, whose estate was sequestrated by order of the Federal Court of Australia on 14 February 2003. Mr Tyler has since been discharged, but the property which constituted his assets when the sequestration order was made, or on the date to which it related back, remained vested in his trustee.

3 Prior to the sequestration order, Mr Tyler had been the registered proprietor of the property Big Top and all cattle which grazed on that property, including, it would seem, some of the cattle which the plaintiff now claims, or at least their ancestors. Also prior to the sequestration order Mr Tyler transferred to his brother Michael Tyler the real property Big Top. Until relatively recently, Mr Michael Tyler remained in occupation of Big Top, but the transfer to him was set aside as void against the trustee in bankruptcy by order of the Federal Magistrate’s Court on 12 April 2005, an order which since has been upheld on appeal.

4 The stock on Big Top were subject to a stock mortgage to Landmark. Landmark apparently mustered the property and sold the stock mustered and applied the proceeds to discharge of the stock mortgage. Since then, while the property was registered in the name of Mr Michael Tyler, and while, as I understand it, Mr Doug Tyler continued to reside on it, cattle other than those sold by Landmark have been on the property.

5 At the heart of this dispute is the circumstance by which those cattle come to be on the property. The trustee’s case is that the original musters were incomplete, in the sense that it was not possible to muster all the cattle, so that some cattle, originally the property of Mr Doug Tyler, and as a result of the bankruptcy now vested in the trustee, remained on the property. The plaintiff’s case is that it purchased the cattle which had been sold by Landmark to a third party - in particular, a Mr Cromie, but there may be others - and returned those cattle to the property.

6 On 15 and 18 September 2006 the trustee caused the property to be mustered and the cattle to be removed ultimately to Grafton for sale.

7 By way of final relief, the plaintiff claims declarations that it is entitled to those cattle, or some of them, and it applies for an interlocutory injunction restraining the defendant from selling them in the meantime. An application was first made by telephone late on the evening of Monday 18 September 2006, when an ex parte injunction was granted. That injunction was continued on 19 September until today.

8 On an application such as the present for an interlocutory injunction, the question is whether the plaintiff has established a sufficiently serious arguable case for final relief to justify the grant of interlocutory relief, having regard to the balance of convenience. So stating the test emphasises three matters:

(1) that the plaintiff bears the onus of making out a case for interlocutory relief;
(2) that before one comes to the balance of convenience there must be a serious question to be tried; and
(3) that the strength of the serious question to be tried may be relevant to what is required to tip the balance of convenience one way or the other.

9 Mr Golledge, who appears for the defendant trustee, concedes, and properly so, that there is a serious question to be tried as to the title to the subject cattle. But, he submits that an interlocutory injunction should be refused for these reasons:

(1) that there was a non disclosure of relevant material when the ex parte application was made;
(2) that having regard to discretionary considerations, and in particular the delay in making the application and the sufficiency of damages as a remedy, an interlocutory injunction is not appropriate; and
(3) that on the balance of convenience there is less risk of ultimate injustice if an injunction is declined than if one is granted.

10 I will deal first with the question of disclosure on the ex parte application. It is not in doubt that an applicant for ex parte relief on an urgent basis is obliged to make full disclosure of all relevant matters to the Court, and in particular, all those matters within its knowledge which might deter the Court from granting relief than would have been raised by the respondent if present [Thomas A Edison Limited v Bullock (1912) 15 CLR 679; Town & Country Sport Resorts (Holdings) Pty Ltd v Partnership Pacific Ltd (1988) 20 FCR 540 at 543; Elton v Cavill (1994) 34 NSWLR 289]. The trustee contends that matters that were relevant and might have deterred the Court from granting relief were not disclosed to it on the application. In particular, reference is made first to the circumstance that there had been some months of correspondence between the trustee, Mr Jupp and Big Top’s solicitors, in the course of which the trustee invited Big Top to provide documentary evidence in support of its claim to title to the cattle; secondly, to the circumstance that Mr Doug Tyler, who was apparently the immediate source of instructions to the solicitors when the ex parte application was made, was present at Dorrigo saleyards on 13 September 2006, when the trustee sold 49 cattle from Big Top; thirdly, that to the knowledge of at least Mr Doug Tyler, and presumably Mr Jupp, the trustee had asserted title to at least some, if not all, of the cattle that remained on the property, maintaining that the musters in 2003 did not muster and remove all of the bankrupt’s cattle; and fourthly, that Big Top had itself sold some of the cattle from the property since 2003; and finally, that the financial position of Big Top was such that its undertaking as to damages was of little or no value.

11 Like Palmer J in Mutch v English [2006] NSWSC 946, [12], I would not wish to derogate in the slightest from the principle that a party applying ex parte to the Court for urgent relief bears a heavy onus of frankness and candour in placing before the judge the material in connection with the claim for relief. At the same time, it has to be recognised that such applications are sometimes made in circumstances in which not all relevant material would have been assembled, or will be available in a way in which it can sensibly be put before the Court.

12 Dealing, albeit shortly, with the five matters which the trustee raised in this respect, it seems to me that the history of some months of correspondence would not have made a significant difference on the application for ex parte relief. The application was made to me late in the evening. I did ask for an explanation as to why it came at so late a time, not just in the day, but very late in the evening before a sale was to take place, and the explanation I was then given was that, as I understand it, Mr Tyler had only become aware of the proposed sale on 19 September in the last day or so.

13 It is true, as Mr Golledge pointed out, that there had been correspondence over a period of months in which the issue of title to these cattle had been agitated, and it is true that as long ago as 26 May 2006 the trustee had requested submission of material supporting Big Top’s claim of title, and in a letter to Big Top’s solicitors on 20 July 2006, indicated that he had commenced to muster all the various cattle on the property and will ultimately be shortly looking to sell those items that belonged to the bankrupt and which have now vested in him as trustee. On the preceding day, however, the same solicitors for the trustee had written to the solicitors who acted for Big Top and other claimants to stock on the property, saying:

Although we have not been able to speak to the trustee in bankruptcy, we have been advised through his office that he has no intention of disposing of any of the stock being mustered on the property.

14 It may be, as Mr Golledge submitted, that that was written in response to a letter from Savage & Love on behalf of other clients, M & J Sheather, but the terms in which it was expressed would reasonably have conveyed no intention to dispose of the stock mustered, at least without further notice, and I do not think the letter of 20 July is contrary to that. I refer to these matters because I think it illustrates that the circumstances in which this application arose cut a little both ways on the question of disclosure. Had that material been in the hands of counsel when the ex parte application was made, the application may have been made stronger by pointing to an apparent assertion that the stock would not be sold, just as it might have been made weaker by pointing to the circumstance that the dispute had been on foot for some time. That illustrates, I think, there was not a lack of frankness or candour in the way the matter was put before me on the ex parte application, although, in the circumstance in which it arose, the material might certainly be described as incomplete.

15 So far as Mr Doug Tyler’s presence at Dorrigo on 13 September 2006 is concerned, the evidence indicates that the sale on that occasion was of some “cull” cattle, and in any event, I think it is fair to say that Mr Golledge accepted that the difference between 13 and 18 September was not such that it would likely have made a difference on the ex parte application. Whether or not Mr Golledge accepted that was the case, it is, in my view, certainly the position that the difference of, in effect, three working days between 13 September and 18 September, would not have been of significance in considering the ex parte application.

16 Coming to the third point, namely, that it was within the knowledge of Big Top that the trustee’s view was the 2003 musters had not removed all the bankrupt’s cattle, I have to say that in considering an application of the type which was made on 18 September, the Court does not proceed on the basis that the plaintiff’s version is uncontested. The Court certainly does not assume that a registered bankruptcy trustee would sell property without believing that he had a bona fide claim to it. I certainly did not assume on 18 September that the contention that these were Big Top’s cattle was uncontested; rather, I proceeded on the basis that I assumed it would be contested, and assuming it was contested, the evidence before me raised a serious question to be tried as to the title to the cattle. This approach, I think, is also consistent with the approach that Palmer J took in Mutch v English. His Honour said at [13]:

However, in this case I do not think that the failure on the part of the plaintiff’s solicitors to inform the Court that the evidence of the plaintiff’s solicitor as to this conversation was disputed, was a relevant material fact requiring disclosure. After all, the very fact that the matter had come to the point of litigation, demonstrated that there was a dispute between the parties as to their respective rights and entitlements, and the Court proceeds on the basis that a great deal of the evidence adduced by the plaintiff in support of both interlocutory and final relief is going to be disputed by the defendant.

17 As to the fact that the plaintiff had itself sold some of the cattle which it claimed to have brought onto the property, I do not see any significance from the perspective of the ex parte application in that. As I understand the point, it was suggested that disclosing that some stock had been sold would be inconsistent with the basis on which the plaintiff asserted that damages were not an adequate remedy, namely, it was important for breeding and historic reasons to preserve this particular herd. As the evidence emerged today, it seems that steers, some underperforming females and some calves were sold. Had that material been disclosed on the ex parte application, it would not have made the slightest difference, and I do not think it ought reasonably to have been thought it might make a difference. The sale of steers, underperforming females and calves, in my mind, does not cut down the prima facie case that the plaintiff makes.

18 Finally, as to the financial position of the plaintiff and its apparent inability to satisfy an undertaking as to damages, while that is a matter which might well have been disclosed, I have to say that in my experience, such as it is, the financial position of an applicant for interlocutory relief is rarely voluntarily disclosed, and usually arises only when it is put in issue by the defendant. These were circumstances in which an injunction was to be granted only for a short time in the first instance, that is to say, until 2:00 pm the following day, and in those circumstances I do not think it was incumbent to disclose the plaintiff’s financial position.

19 I have, accordingly, come to the conclusion that there was not such a want of frankness or candour in the making of the ex parte application to require that the injunction then granted be discharged.

20 The next issue is discretionary considerations. As to the sufficiency of damages as a remedy, and notwithstanding that on the evidence presently before me the defendant has a seriously arguable case that there is no utility in preservation of the particular line of animals in question, at least from a commercial perspective, nevertheless the contrary case of the plaintiff is also seriously arguable. The plaintiff, as I understand its case, wishes to preserve this particular line of Herefords of English descent, and its wish to do so would not adequately be compensated by damages if a sale goes ahead, the animals are sold and the herd dispersed.

21 As to delay, what I have said in respect of the history of the matter and the correspondence of 18 and 20 July is relevant to this issue also. In particular, in light of the correspondence of 19 and 20 July, it seems to me it was not incumbent on the plaintiff to approach the Court until it became evident, not only that the property was being mustered, but that cattle were being removed from the property for sale. Even the sale of culled cattle at Dorrigo on 13 September did not necessarily mandate that an application be made then, since it might be that the plaintiff was prepared to suffer the sale of culled cattle. I do not think there was such delay as to disqualify the plaintiff from interlocutory relief.

22 That brings me to the balance of convenience. Essentially, an evaluation of the balance of convenience involves weighing where the greatest risk of injustice lies if an interlocutory injunction is wrongly granted or declined. If I wrongly granted an injunction, that is to say, if I granted an interlocutory injunction, but at the final hearing the defendant succeeds, the defendant will be put to the cost of maintaining the cattle, rather than of selling them for the period of that injunction, and potentially for some further period after the injunction is resolved. Possibly, the defendant might suffer further detriment if the price of beef in the market falls. Against that, it must be said that the defendant might benefit if the price of beef in the market rises.

23 As to those costs and expenses, the undertaking as to damages would normally be a complete answer. However, in this case it is evident that the plaintiff cannot satisfy an undertaking as to damages. Its only assets are the cattle in question themselves. If the defendant succeeds at the hearing and it is determined that the cattle belong to the defendant, then the plaintiff will have no assets at all from which an undertaking as to damages can be satisfied.

24 I have indicated to the parties, particularly in view of the evidence adduced in the defendant’s case, that the present arrangements for agistment of the cattle will be adequate for a period of about two weeks until the Court can hear the case on a final basis within that time, and I propose to set the matter down for final hearing commencing Tuesday 10 October 2006.

25 We are therefore dealing only with a relatively short period, and on the evidence presently before the Court, the costs of agistment for a fortnight would be $1,265 and molasses, $3,080, a total of $4,345. The plaintiff has now proffered an undertaking to pay into Court effectively forthwith the sum of $4,500 as security for the costs of maintaining the cattle in the interim. In my view, that undertaking goes a significant way to answering the insufficiency of the undertaking as to damages, bearing in mind that the risk of the price of beef going down is, to some extent, offset by the possibility that it might go up.

26 Also in the plaintiff’s favour on this issue is the plaintiff’s offer that if the defendant does not wish to continue to look after the cattle itself, the plaintiff will look after them at its own expense on another property near Grafton. The defendant is not to be criticised for not accepting that offer, but the fact that the plaintiff has made it and the defendant does not wish to accept it, also weighs to some extent in the plaintiff’s favour on the sufficiency of the undertaking as to damages and the balance of convenience generally.

27 On the other hand, if I were wrongly to decline an injunction, that is to say, if I were not to grant an interlocutory injunction, but the plaintiff were to succeed at the final hearing, the whole purpose of the litigation and the plaintiff achieving the preservation of the breeding herd, would be defeated.

28 On balance, therefore, I think that the balance of convenience favours the granting, rather than withholding of interlocutory relief. That is with one exception, and that relates to the steers, which form part of the herd. The steers are, it goes without saying, not breeding cattle. It was for a time suggested that the steers should be preserved so as to facilitate identification of, or proof of whether they are Big Top cattle, or whether they are the trustee’s cattle, but no basis on which their preservation would facilitate resolution of that question has become apparent.

29 It has been submitted the steers should not be exempted from the injunction, because it was possible that bulls in the herd might be castrated in the meantime. I am not prepared to assume that a registered bankruptcy trustee would, in order to defeat an injunction, engage in a contempt of Court by castrating bulls to sell them as steers.

30 Upon the plaintiff, by its counsel, giving to the Court the usual undertaking as to damages, and upon the plaintiff by its counsel undertaking to the Court that it will by close of business on 29 September 2006 pay into Court to the credit of these proceedings, the sum of $4,500, such sum to be security for such undertaking as to damages, I order that until the hearing or earlier further order, the defendant be restrained from, by himself, his servants or agents, selling or offering for sale or otherwise alienating or encumbering any of the Hereford cattle removed from the property Big Top, and now located at the property Seelands near Grafton, other than such of those cattle as were at the time of their removal from Big Top, steers.

31 Costs of this application will be costs in the cause.

32 I direct that the plaintiff serve any further affidavit evidence by 12 noon on Tuesday 3 October 2006. I direct that the defendant file and serve any further affidavit evidence by close of business on Friday 6 October 2006. Liberty to apply to my Associate in the meantime in the event of difficulty arising from preparation of the matter for hearing.

33 I direct each party serve on the other and lodge with my Associate by close of business on 9 October 2006 a document incorporating:

(a) a list of pleadings and affidavits proposed to be relied on by that party;
(b) a chronology, including the essential facts for which that party contends and references to the affidavit evidence;
(c) a skeleton argument;
(d) a list of authorities;
(e) notice of objections proposed to be taken to any affidavit by any other party stating the ground of each objection.

34 I direct by close of business on 9 October 2006 the parties lodge with my Associate a working bundle of the pleadings and affidavits to be relied on at the trial.

35 Subpoenas may be made returnable before the Registrar at 9:00 am on Friday 6 October 2006.

36 I direct that in the event that either party proposes to adduce evidence from a witness who will not provide an affidavit, that party serve a notice on the other in lieu of an affidavit setting out the topics which it is proposed that witness’ evidence will cover, together with a certificate by that party’s solicitor that all reasonable attempts have been made to obtain an affidavit from the witness in question without success.

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