Commonwealth Bank of Australia v Ridout Nominees Pty Ltd - [2003] WASC 215

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS

CITATION: COMMONWEALTH BANK OF AUSTRALIA -v- RIDOUT NOMINEES PTY LTD & ORS [2003] WASC 215

CORAM: EM HEENAN J

HEARD: 28 OCTOBER 2003

DELIVERED : 28 OCTOBER 2003

FILE NO/S: CIV 1456 of 1995

BETWEEN: COMMONWEALTH BANK OF AUSTRALIA
Plaintiff
AND
RIDOUT NOMINEES PTY LTD
First Defendant
CLOVERDALE PTY LTD
Second Defendant
RANLEIGH WARE PTY LTD
Third Defendant
PETER ALLAN RIDOUT as Executor of the Will of GEORGE EDWARD RIDOUT
CHRISTOPHER JOHN RIDOUT as Executor of the Will of GEORGE EDWARD RIDOUT
Fourth Defendants
DOROTHY ELMA RIDOUT
Fifth Defendant
PETER ALLAN RIDOUT
CHRISTOPHER JOHN RIDOUT
Sixth Defendants
JILLIAN RIDOUT
Seventh Defendant
LYNETTE RIDOUT
Eighth Defendant
VINERS SILVERWARE PTY LTD
ESTELLE GIFTS PTY LTD
WANATA HOLDINGS PTY LTD
KAMBEROO PTY LTD
KACANA PTY LTD
FERGAL PTY LTD
Ninth Defendants

Catchwords:

Judgment - No appeal pending - Enforcement - Judgment creditor in possession of farming land pursuant to order of court for possession to enforce secured liabilities - Growing crops ready for harvest - Fire hazard of approaching summer - Opportunity to harvest and eliminate fire hazard rests on judgment creditor in possession - Application by judgment debtors to be restored to possession dismissed

Legislation:

Nil

Result:

Application for interlocutory injunction dismissed

Category: B

Representation:

Counsel:

Plaintiff:     Mr A McLean
First Defendant             :     No appearance
Second Defendant         :     No appearance
Third Defendant           :     No appearance
Fourth Defendants        :     Mr B Shaw (given leave to appear as spokesperson)
Fifth Defendant            :     Mr B Shaw (given leave to appear as spokesperson)
Sixth Defendants          :     Mr B Shaw (given leave to appear as spokesperson)
Seventh Defendant        :     Mr B Shaw (given leave to appear as spokesperson)
Eighth Defendant          :     Mr B Shaw (given leave to appear as spokesperson)
Ninth Defendants          :     No appearance

Solicitors:

Plaintiff:     Corrs Chambers Westgarth
First Defendant             :     No appearance
Second Defendant         :     No appearance
Third Defendant           :     No appearance
Fourth Defendants        :     In person
Fifth Defendant            :     In person
Sixth Defendants          :     In person
Seventh Defendant        :     In person
Eighth Defendant          :     In person
Ninth Defendants          :     No appearance

Case(s) referred to in judgment(s):

Nil

Case(s) also cited:

Nil

EM HEENAN J: This is an application for an interlocutory injunction by the first to ninth defendants in action number 1456 of 1995. Those defendants include several corporations and different members of the Ridout family, including the executors of the estate of George Edward Ridout.
None of the defendants was represented or appeared by a solicitor on this application and in view of the Rules of Court and the provisions of the Corporations Act which require that a corporation can only appear by a solicitor, I declined to hear submissions on behalf of the corporations in the absence of legal representation. Nevertheless, I allowed Mr Shaw, an adviser, supporter and spokesman for the members of the Ridout family to address the court on behalf of the individual members of the family and the executors. Mr Shaw is not legally trained and no doubt was under a considerable handicap in trying to discharge the important and onerous obligations which he has accepted in the endeavour to assist his colleagues. While I am satisfied that a number of misunderstandings and mistakes about legal doctrine and procedure are evident in the submissions which he has made - and I say that without intending the least criticism of him - they are to be expected. Nevertheless, the substance of the submissions which the Ridout family wishes the court to consider appear to be relatively clear and I shall endeavour as best I can to address them.
This situation has its origin in litigation going back to 1995, which led the Commonwealth Bank of Australia to bring proceedings against the Ridout companies and the individual members of the Ridout family for liabilities said to arise under securities over various farming lands operated by the families and their companies in the Boyup Brook area of this State. That led to a lengthy trial before Wheeler J in 1999 and a judgment which was given by her Honour on 28 February 2000 which upheld the claims being made by the bank and rejected a series of defences which had been put forward on behalf of the farming family and their companies.
As a result of the decision of which Wheeler J reached, formal judgment was entered on 24 March 2000 declaring, firstly, that the first, second, third, fourth and the first and second ninth defendants do pay the bank an amount of $4,041,822.25, together with interest from 1 September 1999 accruing at the rate of $1378.64 per day. Secondly, as against the first defendant, that is, Ridout Nominees Pty Ltd, it was ordered that the bank was entitled to hold certain properties (there are listed some nine separate titles comprising a property referred to as "Brantwood") as security for the full amount of the principal and interest due under the judgment. Thirdly, it was ordered that the second, third, fourth and the first and second ninth defendants do pay the bank the sum of $2,148,136, together with interest from 1 September 1999 accruing at various rates which are tabulated in the judgment and which I will not detail. As against the second defendant, that is, Cloverdale Pty Ltd, it was adjudged that the bank was entitled to hold certain properties (and there follows a larger number of titles comprising properties known as "Cambalan" and "Marshalls") as security for the amount of the principal and interest under those securities.
It was then ordered that the first defendant, Ridout Nominees Pty Ltd, the first‑named sixth defendant, Mr Peter Ridout, and the eighth defendant, Lynette Ridout, deliver up vacant possession of "Brantwood" as from 1 December 2000. It was also ordered that the second defendant, the fifth defendant and the second‑named sixth defendant and the seventh defendant do not later than 1 May 2000 deliver up vacant possession of "Cambalan" and "Marshalls".
There was then an order made declaring that certain guarantees were enforceable as against the fourth defendant but not against the fifth and sixth defendant and that the plaintiff's claims against the fifth and sixth defendants in that regard (that is on the guarantees) be dismissed. There were then some orders made in relation to other guarantees and it was declared that they were enforceable against certain defendants and not against others.
The result, in practical terms, was that the bank was entitled to possession of the major farming properties in order to enforce its security under a variety of financial arrangements which had been agreed with the various defendants.
The defendants who were aggrieved by the decision of Wheeler J exercised their rights of appeal to the Full Court of the Supreme Court of Western Australia and brought on an appeal for hearing. In the course of that appeal, according to information provided to me on behalf of the defendants today, the defendants sought to introduce additional amended grounds of appeal relating to issues which had not been raised at the trial going to the enforcibility of some of the security documents upon which the bank relied for the loans. For reasons which have not been addressed today, the Full Court refused leave for the appeal to be amended as sought and proceeded to deal with the appeal on the original grounds and, after hearing argument from the parties, eventually dismissed the appeal.
The defendants, the unsuccessful appellants, are aggrieved by that decision of the Full Court, but have not resorted to the usual avenue of redress, or potential redress, in such a situation, namely an application to the High Court of Australia for special leave to appeal. From what I have been informed it seems the defendants are attempting to keep open the possibility of applying for special leave to appeal to the High Court of Australia, although in that regard I infer that the time for bringing such an application has long expired and there will, no doubt, be difficulty in seeking or obtaining an extension of time for making such an application, even if that were now done promptly. However, the fact remains that this has not been done and that there is not now any pending application for special leave to appeal. Accordingly, the judgment of the Full Court remains a final judgment dismissing the appeal.
That point is not accepted by the defendants and I will return to their reasons for that view of the situation in a moment. Rather than institute an application for special leave to appeal to the High Court of Australia from the decision of the Full Court, the defendants have sought to obtain a writ of prohibition or other relief under the provisions of the Commonwealth Constitution s 75(5) to quash the decision of the Full Court and have applied to issue that process out of the High Court of Australia. When that relief was sought by initiating process in the High Court a direction was given to the Registrar to refuse to issue the process without the leave of a Justice, first had and obtained, by an order made by the Hon the Chief Justice of the High Court of Australia under O 58 r 4(3) of the High Court Rules.
Since then, the Ridout companies and the members of the Ridout family have sought to obtain leave to issue proceedings for prohibition and other relief, and are awaiting an opportunity for that application to be dealt with in the High Court. They consider, as emerged from the submissions made by Mr Shaw today, that the application for prohibition or other constitutional writs is an alternative to an appeal by special leave and that, while this application to issue process in the High Court is pending the judgment of the Full Court is not final, being subject to what they call this "appellate process".
I can only say, with respect to Mr Shaw and the members of the Ridout family, that this approach appears to be a fundamental mistake and a misappreciation of the real legal position. A judgment of this Court and of any Supreme Court of a State or Territory of Australia is final and conclusive unless varied or overturned on an appeal.
I am not aware of the availability of a writ of prohibition or constitutional writ which could, in any way, issue to this Court in the circumstances of this case. I can only say, with respect to the views which have been taken by the Ridout family and their companies, that this proposed form of procedure appears to be completely unorthodox and mistaken and very likely to end in rejection. That does not, however, mean that if an application for special leave to appeal from the decision of the Full Court were sought, together with an application for an extension of time to bring that application, it would be impossible to review the decision of the Full Court. Rather, the position is that only the special leave process offers any opportunity for any review of the decision of the Full Court and no such steps have been initiated.
Consequently, I have no alternative but to treat as final and binding, and as not subject to any process of appeal or challenge, the decision of the Full Court which has dismissed the appeal from the judgment of Wheeler J. There is simply no other basis upon which I can view the position, notwithstanding the firm convictions to the contrary implicit in the position of the Ridout family as represented by Mr Shaw today. All I can say is that a more realistic appreciation of their strict legal rights may be more conducive to the Ridouts effectively dealing with the problems which have arisen, but that is a matter for them.
That brings me to the task of dealing with the application for the injunction presently before the court which, in effect, seeks orders and injunctions which would put the Ridout family and the corporations back into de facto possession of the farming properties at Boyup Brook in order to carry out a number of important functions which they contend need to be performed urgently. The first, is to manage and harvest existing crops growing on the land covering about 3000 acres. The second is to deal with an ever-increasing fire hazard due to the growth of crops and other vegetation at the margins of the property at a time when the onset of summer and the associated fire hazard is fast approaching.
It cannot be doubted that almost every prudent and practical consideration points to the desirability of the impending fire hazard being dealt with promptly and adequately, for the crop to be harvested efficiently, and for the proceeds of the harvest to be put to the credit of the Ridouts in reduction of the liability which they owe to the bank and to others. That is simply so obvious that it cannot, in my view, be doubted or in any way contradicted, but the facts of the position are that it is the bank which is in lawful possession and it has been declared to be entitled to remain in possession under its securities. Consequently, the responsibility for the daily management of the property, the preservation of the assets, the gathering of the harvest and the revenues which will come from the gathering of the harvest, rest primarily upon the bank as mortgagee in possession.
This gives rise to the obvious question of what practical measures are being taken or are intended by the bank to deal with these important responsibilities. No information was provided in response to this application on behalf of the bank about its intentions or the state of its preparations in this regard. Rather, counsel for the bank put his client's position on the basis that the bank does not owe a duty to provide information or explanation to the Ridouts or to the companies and is fully entitled to exercise its own judgment about how, when and what is done in relation to the possession of the property. This is so up to a point.
It was also submitted on behalf of the bank that any remedies available to the Ridouts and to their corporations would arise only in the event that the bank failed to take necessary steps to harvest the crop and reduce the fire hazard. If it failed to take action then, later, if damage resulted, an action for damages might be brought by the Ridouts or their companies against the bank. No doubt such an action could then be brought, but for that to be suggested as an adequate response to the present situation seems to me, with all respect, to be short of reality.
So great is the risk of fire and consequent damage to community interests in rural Australia that any developing fire hazard appears to me to be a matter of overwhelming importance. Similarly, it is hardly to be doubted that a mortgagee in possession should, practical circumstances permitting, take off a crop which is growing where the value of the crop is significant and could reduce the debtors' liability. Nevertheless, as I have already indicated, the prime responsibility and the initiative for these steps rests with the bank.
The bank can only act through its agents, although I am told the bank is seeking receivers or managers or employees to attend to these responsibilities. Again, no details of exactly what is proposed have been put forward by the bank and one alarming feature of this is that the harvest period is so imminent. Nevertheless, I do not consider that in the present circumstances there is any basis upon which the Ridouts or their companies can make out a claim to be put back into possession, or to be permitted to carry out the tasks of harvesting the crop or dealing with the fire hazard or carrying out necessary husbandry on the property without the approval of the bank.
It was submitted on behalf of the Ridouts by Mr Shaw that the members of the Ridout family, by virtue of their knowledge and experience and special interest in this land and their access to the necessary machinery, would be by far the best persons to take in the harvest and deal with the fire hazard. That may or may not be so. No doubt it is a task which they have performed on many occasions in the past, but if any arrangements in that regard are to be made they could only occur with the approval and the consent of the bank and, in effect, as agents or employees of the bank which would continue to be the mortgagee in possession and which would receive the payments for the proceeds of the crop.
I do not exclude the possibility that some practical arrangement along these lines might be reached by agreement between the Ridout family and the bank or its representatives, but it is by no means obligatory and it is a matter which the bank is free to accept or reject itself. It may be that the bank already has plans afoot to deal with the harvest and the fire hazard and that steps are imminent to deal with these responsibilities. If so, it will be for the bank to decide how, when and by whom those functions are performed.
Nevertheless, I do not consider that the situation is one in which no redress of any kind would be available to the Ridouts or to their corporations if the bank failed to take any steps to deal with the fire hazard or the harvest. Were evidence to be presented to the court on another application by the Ridouts or their corporations that no practical measures were being taken to deal with these responsibilities and that the crops were in jeopardy of going unharvested or that a severe fire hazard was likely to endure into the dangerous months of summer, there may well be a basis upon which they might succeed in obtaining special orders from this Court appointing another receiver to take these steps in order to preserve property which is at imminent hazard.
But that is not what the present application seeks to do, and no evidence has been presented to the court that there will be an absence of activity by the bank in the coming weeks and months. I simply mention that possibility as one avenue to deal with what would seem to be a very great emergency if the bank were not to act to take in the harvest and deal with the fire hazard. That being the case, there is really no basis to grant any of the relief sought by the Ridout family members or their corporations on the present application.
Another obstacle is that the Ridouts offer no financial guarantee by way of an undertaking as to damages to support the injunction which they seek. This Court will not grant injunctions which are not supported by viable financial undertakings to meet any consequent damage if it should turn out that any has been caused by the grant of the injunction. This is another reason to refuse the relief.
In the course of submissions, Mr Shaw adverted to a number of criticisms which the members of the Ridout family and their companies conscientiously wish to advance about the judgment which had been entered in these proceedings following the trial by Wheeler J and about the judgment on the appeal by the Full Court. These related to various issues, and I am not sure that I have noted them all. But they included an allegation that one of the security documents was stamped to secure a certain amount of money, whereas the plaintiff's case was that a much greater amount was due. Secondly, it was submitted that there were allegations of fraud and perjury which could be advanced and which had not previously been advanced. Thirdly, it was submitted that the Ridouts and their companies were wrongfully excluded from raising, during the course of the appeal, proposed additional grounds of appeal by way of amendment. There may be one or two other grounds referred to by Mr Shaw, all of which go to the merits of the case against the Ridouts and their companies by the bank and pose potential grounds of defence to the causes of action which were adjudicated.

As to these submissions I can only say that objections on those grounds and defences of that kind should be made at the trial of the action. Except on the rare occasions when material evidence was not available but has been discovered only after the determination of the proceedings which is of a nature which could not have been discovered by the exercise of due diligence before, it is too late to raise such issues after the trial of the action. In some rare circumstances there may be a basis to seek a new trial on the grounds of fresh evidence, but again those are matters which can only be dealt with by an Appeal Court exercising a statutory right of appeal.
The existence of such grounds for appeal or retrial, even if it be accepted as Mr Shaw submits that this is arguable in the present case, is not a justification to grant an injunction in the absence of an appeal or an application to set aside the judgment on the grounds of fraud. It simply does not provide any basis for going behind the finality of the judgment which has been entered and which is binding on the parties.
In making these observations I do not imply or suggest that there is merit for or against the propositions that have been argued by Mr Shaw. I simply make the point that they cannot be entertained on the present application or in the absence of an appeal. Despite the apprehension by the Ridout family that a writ of prohibition is an alternative or an equivalent to an appeal, I can only repeat my view that they appear to be making a fundamental and misleading mistake. In the circumstances I consider that I have no alternative but to refuse the application for the interlocutory injunction and to dismiss the application which has been brought before me.
That is the order which I will make but I cannot leave the situation without expressing the view that it seems most desirable that practical arrangements be made to get in this harvest and to deal with the fire hazard. If that can be achieved by cooperative measures between the Ridouts and their companies and the banks, so much the better, but otherwise it is a responsibility which appears to rest on the bank alone.
If there were evidence on subsequent proceedings to indicate that the bank was unwilling or unprepared to discharge those obligations, there may be relief of a different kind which the court could order, but there are no grounds to consider that today. The order therefore will be that this application is dismissed.