Cadoroll Pty Ltd v Allegra Corporation Ltd

Case •

[1994] FCA 8

•

17 JANUARY 1994

No judgment structure available for this case.

CADOROLL PTY LIMITED and OTHERS v. ALLEGRA CORPORATION LIMITED and OTHERS
No. ACT G18 of 1992
FED No. 8/94
Number of pages - 5
Equity

COURT

IN THE FEDERAL COURT OF AUSTRALIA
AUSTRALIAN CAPITAL TERRITORY
DISTRICT REGISTRY
GENERAL DIVISION
NEAVES J

CATCHWORDS

Equity - Injunction - Proceedings pending in Federal Court of Australia claiming relief against a number of respondents - Proceedings pending in the Supreme Court of a State at the suit of one of those respondents - Application for injunction restraining respondent from taking any steps, including the entry of default judgment, in the proceedings pending in the State court - Whether sufficient basis shown for grant of injunction.

HEARING

CANBERRA, 7 January 1994
#DATE 17:1:1994

Counsel for the applicants: Mr B.R. McClintock


Solicitors for the applicants: Minter Ellison Morris Fletcher


Counsel for Pegasus Leasing Limited: Mr R.C. Refshauge


Solicitors for Pegasus Leasing Limited: Macphillamy Cummins and Gibson

ORDER

THE COURT ORDERS THAT:
1. The motion notice of which was filed on 4 January 1994 be dismissed.


2. The applicants pay the costs of Pegasus Leasing Limited of and incidental to the motion.
NOTE: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

JUDGE1

NEAVES J Before the Court is a motion, notice of which was filed on 4 January 1994, for an order restraining Pegasus Leasing Limited from taking any steps, including the entry of default judgment, in certain proceedings instituted at the suit of that company in the Supreme Court of South Australia, the District Court of Adelaide and the Local Court of Adelaide (now the Magistrates Court of Adelaide). The motion is made in a proceeding, numbered ACT G 18 of 1992, pending in this Court, that proceeding having been commenced by application filed on 15 May 1992.

  1. The application, as amended, in the proceeding numbered ACT G 18 of 1992 names 29 applicants, being 15 corporations and 14 individuals. On 15 December 1993, that is to say after the amendment of the application but prior to the filing of the notice of motion now before the Court, a notice of discontinuance was filed on behalf of 1 corporation and 2 individuals, namely Gostrent Pty Limited, Gary Alexander Crispe and Rosalie Crispe. The present motion is brought on behalf of the applicants named in the amended application other than the corporation and the individuals on whose behalf the notice of discontinuance has been filed. The application as amended names Allegra Corporation Limited as first respondent, Allegra Investments Limited as second respondent, Mauntill Pty Limited as third respondent, Pegasus Leasing Limited as fourth respondent and Michael George Sinclair, Maruta Pearson and Michael Marko Zivkovic trading as Farnham Sinclair and Associates as fifth respondents. The proceeding is stayed so far as Maruta Pearson is concerned by reason of her bankruptcy.

  2. As appears from the application as amended, the applicants claim the following relief:

"1. An order pursuant to section 87 of the Trade Practices Act 1974 (C'th) ('the Act') and/or section 72 of the Fair Trading Act (1987) (NSW) declaring the agreements and each of them referred to in paragraph 16 of the statement of claim void.

2. An order pursuant to section 87 of the Trade Practices Act 1974 (C'th) ('the Act') and/or section 72 of the Fair Trading Act (1987) (NSW) declaring the guarantees and each of them referred to in paragraph 17 of the statement of claim void.

3. Damages pursuant to section 82 of the Act and/or section 68 of the Fair Trading Act (1987) (NSW).

4. A declaration that the agreements and each of them referred to in paragraph 16 of the statement of claim are illegal and unenforceable being in breach of the provisions of sections 169, 170 and 171 of the Companies (NSW) Code or the equivalent provisions if (sic) the Companies Code in such other State or Territory as may be relevant.

5. A declaration that the guarantees and each of them referred to in paragraph 17 of the statement of claim are illegal and unenforceable being in breach of the provisions of sections 169, 170 and 171 of the Companies (NSW) Code or the equivalent provisions if (sic) the Companies Code in such other State or Territory as may be relevant.

6. Damages.

7. A declaration that the respondents and each of them are liable to pay equitable compensation to each of the Applicants in respect of any loss or damage suffered by them by reason of their entering into the agreements referred to in paragraph 16 of the statement of claim.

8. A declaration that the respondents and each of them are liable to pay equitable compensation to each of the Applicants in respect of any loss or damage suffered by them by reason of their entering into the guarantees referred to in paragraph 17 of the statement of claim.

9. A declaration that the agreements and each of them referred to in paragraph 16 of the statement of claim were voidable for breach of fiduciary duty and have been avoided by the Applicants by the commencement of these proceedings.

10. A declaration that the guarantees and each of them referred to in paragraph 17 of the statement of claim were voidable for breach of fiduciary duty and have been avoided by the Applicants by the commencement of these proceedings.

11. An order declaring the guarantees and each of them entered into by the personal guarantors referred to in paragraph 32 of the statement of claim void pursuant to the provisions of the Contracts Review Act (1980) (NSW).

12. Interest.

13. Costs.

14. Such further or other orders as this Honourable Court deems fit."

  1. The agreements and guarantees referred to in the claim for relief are said to be agreements and guarantees relating to a thoroughbred bloodstock breeding partnership known as the "Capricorn Park No.2 Breeding Partnership" or the "Capricorn Park No.2 Breeding Syndicate". The agreements are further identified in the amended statement of claim (par.16) filed on behalf of the applicants as follows:

(a) An agreement dated 17 May 1989 ("the Partnership and Management Agreement") entered into by those of the applicants, being 6 corporations (including Gostrent Pty Limited) and 3 individuals, identified in par.2 and Schedule B of the amended statement of claim as "the partners" whereby -

(i) each of the partners and the third respondent, Mauntill Pty Limited, agreed upon the terms and conditions of the partnership; and

(ii) each of the partners and the second respondent, Allegra Investments Limited, agreed upon the terms and conditions of the appointment of that company as manager of the partnership business;

(b) Lease Agreements entered into by the partners with the fourth respondent, Pegasus Leasing Limited ("Pegasus") and the second respondent, Allegra Investments Limited, in respect of interests in 11 broodmares identified in par.10(c)(i) and Schedule D of the amended statement of claim;

(c) Loan Agreements entered into by the partners with Pegasus in respect of advances made and to be made by Pegasus to the partners in connection with their involvement in the partnership; and

(d) Mortgages of Ownership Shares ("the Mortgages") entered into by the partners with Pegasus.

The guarantees are referred to in the amended statement of claim as having been executed by those of the applicants, being 9 corporations and 11 individuals (including Gary Alexander Crispe and Rosalie Crispe), identified in par.3 and Schedule C of the amended statement of claim and as relating to "certain of the obligations of certain of the partners" (par.17 of the amended statement of claim).

  1. Mauntill Pty Limited (the third respondent), Pegasus (the fourth respondent) and Michael George Sinclair and Michael Marko Zivkovic (the first and third named fifth respondents) have applied to the Court by motions on notice that the amended statement of claim filed on behalf of the applicants, or alternatively a number of paragraphs of that amended statement of claim, be struck out. Those motions have been heard but, at the date of hearing of the motion the subject of this judgment, judgment had not been delivered in respect of the matters raised by the earlier motions. Judgment on those motions has been delivered this day.

  2. The motion presently before the Court seeks the following orders:

"1. Order and an interlocutory order that the fourth respondent, Pegasus Leasing Limited, be restrained by itself its servants and agents from taking any steps including the entry of default judgment in proceedings referred to in the schedule hereto pending final determination of these proceedings:

2. Any further or other orders as the Court deems fit.

3. Costs.

SCHEDULE

District Court South Australia Magistrates Court of Adelaide Supreme Court of Adelaide 2390 of 1992 818 of 1992 8917 of 1992 2391 of 1992 2217 of 1992

2392 of 1992 2220 of 1992

2221 of 1992

2227 of 1992

2228 of 1992

2230 of 1992

2390 of 1992

2391 of 1992

2392 of 1992

2566 of 1992

2567 of 1992

2569 of 1992"

  1. It may be noted that, according to the affidavit of Rebecca Monica Grace Lynch, the solicitor for the applicants, sworn on 31 December 1993 and filed in support of the present motion, the proceedings instituted in the District Court of Adelaide and the Local Court of Adelaide have been transferred to the Supreme Court of South Australia.

  2. In the proceeding in the Supreme Court of South Australia numbered 818 of 1992, Pegasus, as plaintiff, sues, as defendants, each of the applicants in the proceeding in this Court numbered ACT G 18 of 1992, certain of the respondents in that proceeding and another corporation and other individuals. It seeks to recover from some of the defendants, identified as "the lessees", amounts said to be due and owing under an agreement dated 17 May 1989 whereby Pegasus agreed to lease 14 thoroughbred horses to those defendants, described as trading as Capricorn Park No.2 Breeding Partnership. It seeks to recover from other defendants, identified as "the guarantors", amounts due under further agreements dated 17 May 1989 whereby those defendants are said to have guaranteed the obligations of the lessees to Pegasus.

  3. Precise details of the other proceedings referred to in the schedule to the notice of motion are not before the Court. However, in her affidavit sworn on 31 December 1993 and filed in support of the motion, Rebecca Monica Grace Lynch describes the proceedings as proceedings in which Pegasus seeks to recover from the applicants amounts alleged to be due and owing under loan agreements made between Pegasus and certain of the applicants and under agreements between Pegasus and other of the applicants whereby those applicants guaranteed the obligations arising under the loan agreements.

  4. In none of the proceedings referred to in the schedule to the notice of motion has a defence been filed.

  5. The defendants in the proceeding in the Supreme Court of South Australia numbered 818 of 1992 and in certain other proceedings in that Court applied for an order under s.5(1) of the Jurisdiction of Courts (Cross-Vesting) Act, 1987 (S.A.) transferring those proceedings to this Court. That application was refused by Debelle J on 9 December 1993.

  6. By letter dated 15 December 1993, the solicitors for Pegasus informed the solicitors for the defendants in the proceedings in the Supreme Court of South Australia numbered 818 of 1992 that Pegasus required that a defence be filed in that and other proceedings pending in the Supreme Court within 21 days from the date of the letter, failing which Pegasus would "take steps to enter judgment" in those proceedings. In later correspondence, the period of 21 days was extended until 11 January 1994. A further extension of time has been refused by the solicitors acting for Pegasus. Whether further time should be allowed for filing a defence is, of course, a matter for the Supreme Court of South Australia. It also appears that a directions hearing in the proceedings in the Supreme Court of South Australia is to take place on 24 January 1994.

  7. In support of the present motion, the applicants rely on the amended statement of claim filed in this proceeding, on the correspondence to which I have referred and on the circumstance that there is pending in the Supreme Court of South Australia in the proceeding in that Court numbered 818 of 1992 a motion on behalf of Pegasus, notice of which was given on 9 December 1992, for an order that certain proceedings in this Court, including the proceeding numbered ACT G 18 of 1992, be stayed or, in the alternative, be stayed in so far as they raise issues concerning the claims against Pegasus. That motion has not been brought on for hearing before the Supreme Court and there is no evidence to suggest that Pegasus intends to do so. In any event, there must be a serious issue whether there is power in the Supreme Court to make an order in the terms sought in the notice of motion.

  8. It was submitted on behalf of the applicants that the conduct of the South Australian proceedings constituted a serious interference with the conduct by this Court of the proceeding numbered ACT G 18 of 1992 and that the injunction sought should be granted in order to protect the integrity of this Court's process. Reference was made to the discussion of relevant principles by Gummow J in National Mutual Holdings Pty Ltd v The Sentry Corporation (1989) 22 FCR 209 at p230-233.

  9. In my opinion, the principles discussed in that case, far from supporting the granting of the relief sought in the present motion, support the denial of that relief in the circumstances as they presently exist. In the light of the material at present before this Court, it cannot, in my view, be said that the conduct of Pegasus in instituting and proceeding with the South Australian proceedings is unconscionable or amounts to an improper exercise of its legal rights.

  10. In my opinion, the applicants have failed to establish a sufficient basis for the grant of the injunctive relief sought in the motion presently before the Court. The applicants have not filed a defence to the proceedings pending in the Supreme Court of South Australia and identified in the Schedule to the notice of motion filed on their behalf in this Court so that it is not possible, at this stage, to identify the issues that may arise in those proceedings. No evidence has been placed before this Court to show that the applicants have an arguable case against Pegasus which may be raised by way of defence or cross claim in the South Australian proceedings. The mere assertion in the amended statement of claim filed in this Court - and it is no more than an assertion - that the agreements upon which Pegasus relies in the South Australian proceedings should be declared void on the basis that those agreements were entered into as a result of false or misleading representations made by Pegasus or are otherwise void or unenforceable does not, of itself, provide a sufficient basis upon which an injunction should go. It may be added, that the amended statement of claim filed in this Court is itself deficient in that it asserts no primary facts which, if established, would support the proposition that Pegasus made the representations on which the applicants rely or is otherwise liable in respect of allegedly false or misleading representations made by others. I am unable to conclude that the existence of the South Australian proceedings in which, as I have said, no defence has been filed, involves, at this stage at least, any interference with this Court's process or its right to control the proceeding pending before it.

  11. The other matter relied on by the applicants is the motion pending in the Supreme Court of South Australia at the suit of Pegasus for an order staying the proceeding in this Court. I am unable to accept that that motion, which has been dormant for over 12 months and remains so, provides any basis for the relief now sought.

  12. The motion, notice of which was filed on 4 January 1994, is dismissed. The applicants must pay the costs of Pegasus Leasing Limited of and incidental to the motion.

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