De Lage Landen Pty Limited v Riry Pty Limited
[2018] VSC 319
•6 June 2018 ex tempore (revised 7 June 2018)
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMERCIAL COURT
S CI 2018 02114
| DE LAGE LANDEN PTY LIMITED ABN 20 101 692 040 (t/a JCB CE Australia Financial Services) | Plaintiff |
| v | |
| RIRY PTY LIMITED ABN 32 602 026 291 (t/a Wescott Roth & Associates) | First Defendant |
| KOSTA CIVOF | Second Defendant |
JUDGE: | CONNOCK J |
WHERE HELD: | Melbourne |
DATE OF HEARING: | 5 and 6 June 2018 |
DATE OF RULING: | 6 June 2018 ex tempore (revised 7 June 2018) |
CASE MAY BE CITED AS: | De Lage Landen Pty Limited v Riry Pty Limited & Anor |
MEDIUM NEUTRAL CITATION: | [2018] VSC 319 |
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PRACTICE AND PROCEDURE – Interim injunction – Ex parte application – Balance of convenience – Inadequacy of damages – Personal Property and Securities Act 2009 (Cth) – Risk of sale or other disposal of personal property.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Dr P Vout | Gadens Lawyers |
HIS HONOUR:
Introduction
By summons and originating process the plaintiff seeks urgent ex parte orders against the defendants to the following substantive effect:
(a) requiring the first and second defendant to deliver up to the plaintiff certain equipment comprising:
(i) two JCB telescopic handlers model number 535-95C PB 5978;
(ii) one JCB telescopic handler model number 525-60C PB 6007,
(JCB Equipment);
(iii) one 2017 Hamelex semi-tipping trailer (Trailer),
(collectively, Equipment);
(b) if some or all of the Equipment is not in the possession of the defendants, requiring the defendants to divulge information regarding its whereabouts to enable the plaintiff to take possession of the Equipment;
(c) authorising the plaintiff or its agents to enter the defendants’ premises or any other premises anywhere within the State of Victoria at which all or some of the Equipment is located for the purpose of taking possession, and authorising the plaintiff to take any reasonable action to facilitate the removal of the Equipment from such premises; and
(d) further or alternatively, an interlocutory injunction until the hearing or further order restraining the defendants and their officers, servants or agents from disposing of or otherwise dealing with the Equipment.
It may be observed that the substantive orders sought in the summons, and pressed for in the ex parte application, correspond with the final relief sought in the originating process.
The plaintiff relies on an affidavit of Mr Peter Piccoli sworn 5 June 2018 (Piccoli Affidavit) together with an outline of submissions, and a further affidavit of Mr Hinton sworn 6 June 2018 (Hinton Affidavit).
For the reasons that follow the relief sought in the form that it is sought is refused. Having heard further from the plaintiff a more limited interim injunction is to be granted together with an order requiring an affidavit to be filed and served by each of the defendants regarding the location of the Equipment.
Background
The only evidence regarding the background is that which is set out in the Piccoli Affidavit and the Hinton Affidavit.
The matters to which Mr Piccoli deposes include the following.
On about 17 December 2017 the first defendant (Company) and the plaintiff entered into a loan agreement and chattel mortgage in respect of the JCB Equipment (First Agreement). The loan amount was $314,720 and was advanced to enable the Company to purchase the JCB Equipment. The loan was to be repaid by 80 monthly instalments each of $6,118.95, with the first instalment due on 17 April 2018.
On about 8 January 2018 the Company and the plaintiff entered into a loan agreement and chattel mortgage in respect of the Trailer (Second Agreement). The loan amount was $113,058 and was advanced to enable the Company to purchase the Trailer. The loan was to be repaid by 60 monthly instalments of varying amounts, with the first instalment of $1,992.30 due on 8 February 2018.
The First Agreement and the Second Agreement (Agreements) record the Company’s sole director, Mr Saad, and its former shareholder and director, Mr Yassin, as guarantors. The company search comprising Exhibit PP-3 records Mr Yassin as having been a director from 13 September 2015 to 1 November 2017 and also between 13 September 2017 and 14 September 2017. It also records paid-up capital of $12 with the entirety of the 12 $1 shares owned by its sole director, Mr Saad.
The terms of each of the Agreements were relevantly the same and some were expressed to be ‘fundamental’. They included terms requiring the Company to:
(a) pay all moneys owing on time;
(b) keep the Equipment in its possession at all times;
(c) inform the plaintiff if the place where the Equipment is used or kept differs from the address on the tax invoice (being 50B Kyabram Street, Coolaroo);
(d) deliver the Equipment to the plaintiff if the plaintiff is entitled to take possession of it;
(e) obtain the plaintiff’s written consent before parting with possession of the Equipment; and
(f) pay interest on moneys outstanding.
The default provisions are set out in clause 17 of the Agreements and make provision for giving notice of default in the circumstances there specified. These circumstances include, briefly, where the plaintiff believes fraud may have been involved, believes on reasonable grounds that urgent action is necessary to protect the Equipment, and where the Company has disposed of or intends to dispose of the Equipment without the plaintiff’s consent.
Where a default notice is given and the Company does not rectify the default within the period specified in the notice, the terms state that the plaintiff has various rights, including the following:
(a) suing for the balance owing;
(b) taking possession of the Equipment;
(c) doing anything an owner of the Equipment could do including selling or leasing the Equipment;
(d) enforcing security; and
(e) entering any place the plaintiff believes the Equipment is held in order to take possession of it.
The plaintiff submits that it has a ‘security interest’ in the Equipment within the meaning of the Personal Property and Securities Act 2009 (Cth) (PPSA) and that this interest has been ‘perfected’. Exhibit PP-4 comprises copy extracts of the Personal Property Securities Register said to record the registration of the Equipment. Consequently it is submitted that pursuant to s 123 of the PPSA the plaintiff is entitled to seize the Equipment by any method permitted by law.
A notice of default dated 14 May 2018 was sent to the Company stating that unless monetary defaults were rectified within 14 days the plaintiff reserved its rights. The rights expressly reserved included requiring delivery up of the Equipment and taking steps to recover possession of the Equipment.
Notwithstanding that the evidence suggests that no instalments were ever paid, it can be observed that the default notice was sent more than three months after default in respect of the first payment due on the Trailer and nearly a month after default in respect of the first payment due on the JCB Equipment. The notice also allowed a further 14-day period to rectify the defaults.
Shortly after sending the notice of default the plaintiff engaged a mercantile agent to locate the Equipment. Paragraphs 14 to 16 of the Piccoli Affidavit record the steps taken to locate and recover the Equipment and the result of those efforts.
Briefly, and among other things, that evidence records that:
(a) the Equipment was not seen at the business address specified in the Agreements and that this address appeared to have new business occupants who had been there for only a limited time;
(b) the second defendant was known to be the contact for the Company and that when the Agreements were entered into he had advised the plaintiff that he was the general manager of the Company;
(c) the JCB Equipment was originally delivered to 13 Apex Street, Thomastown (Thomastown Address) and not the address specified in the Agreements, and this was done at the direction of the second defendant;
(d) through a GPS tracking device it appears that at least one item of the JCB Equipment has moved address without notification;
(e) the agent has received verbal and text message threats from at least Mr Yassin in connection with the search for the Equipment;
(f) on 28 May 2018 at least two pieces of the JCB Equipment were seen at the Thomastown Address but each was driven off in different directions and the agent did not consider it prudent to approach either of the vehicle drivers at the time;
(g) the matter has been reported to the police;
(h) the agent has had challenges getting people to speak frankly with him regarding the Equipment;
(i) on 29 May 2018 the second defendant telephoned the agent and asked that no further visits be made to the various addresses and said that he wanted pay out figures because his main objective was to pay out the JCB Equipment. He refused to leave contact details and did not contact the agent again;
(j) the tracking device records the location of at least one piece of the JCB Equipment as being located at O’Grady Road in Kilmore East and that address is not noted in the Agreements;
(k) the agent was not able to gain access to the O’Grady Road Kilmore East address and there were three men and dogs present at the property;
(l) on 31 May 2018 the agent received a telephone call from a person he understands to be Mr Yassin, and that during that conversation Mr Yassin said that he had no knowledge of the loan, that it is a fraudulent matter, that it has been reported to the police, that he has no idea how they got his identity, and that fraud is involved. Mr Yassin also said he has only known the Company’s sole director, Mr Saad, through a friend and had met him only once. It can be noted that this may appear to be in tension with aspects of the company search which records Mr Yassin as a former director and shareholder for extended periods, and also may be in tension with the Agreements which, on their face, appear to carry Mr Yassin’s signature; and
(m) that Mr Saad had gone to Lebanon (although that is all the evidence reveals regarding Mr Saad’s whereabouts).
Mr Piccoli also deposes that he believes the JCB Equipment is for sale on the internet and advertised in a way that risks not only a sale but an overseas sale. The advertisement is exhibited and the belief regarding risk of sale is in part based upon the fact that the address referred to in the advertisement is the Thomastown Address and the JCB Equipment was delivered to that address when first purchased.
Finally, Mr Piccoli deposes to his belief that if fraud is involved damages may not be an adequate remedy and that there is a need to protect the subject matter of the claimed security interest.
The Hinton Affidavit exhibits an extract from ‘Gumtree’ revealing three JCB telescopic machines listed for hire with a reference to the person to be contacted as being ‘Kosta’. Kosta is believed to be the second defendant.
During the course of submissions counsel for the plaintiff properly informed the court that the whereabouts of the Equipment is not currently known but that it is believed that one item of the JCB Equipment is at the O’Grady Road Kilmore East address, and that the other two items of the JCB Equipment were last seen driving from the Thomastown Address. There is no evidence regarding the whereabouts of the Trailer.
Consideration
Granting interlocutory relief is a discretionary matter and the principles are well known. The court must be satisfied that there is a serious question to be tried in the sense of showing that there is a sufficient likelihood of success to justify preservation of the status quo pending trial and that the balance of convenience favours granting the injunction. Those issues are to be examined together.
The court is also to bear in mind that it should take the course carrying the lower risk of injustice should it turn out to have been wrong, in the sense of granting relief to a party who fails to establish rights at trial or in failing to grant an injunction to a party who succeeds at trial.
Further, injunctions will not generally lie where damages would be an adequate remedy and other factors are relevant to the discretion. As observed by the Court of Appeal in Bradto,[1] no special test exists for mandatory injunctions.
[1]Bradto Pty Ltd v State of Victoria (2006) 15 VR 65, 73 [33]-[35] (Maxwell P and Charles JA).
Where an ex parte interim injunction is considered for a shorter period the results may be different when addressing balance of convenience, and questions of fact and degree will be involved. All cases depend upon their own facts and circumstances. Where ex parte applications are concerned full disclosure is required and the party seeking relief must bring forward any matters that might be favourable to the defendants.
On the evidence currently before the court I am satisfied there is a serious question to be tried regarding the alleged breaches of the Agreements and the claimed rights to seek possession of the JCB Equipment and the Trailer. The evidence regarding non-payment alone is sufficient to satisfy the serious question to be tried requirement.
That being so, and keeping in mind the ex parte nature of the application, it is neither necessary nor appropriate to say more on the topic at this point. Further, it would not be possible or appropriate to seek to reach any conclusions, be they preliminary or otherwise, regarding the assertions of fraud.
Notwithstanding that the plaintiff’s claim relates to what is alleged to be a secured debt and that notice of default was not sent until some time after non-payment, it is submitted that the matter is urgent and that the court cannot be satisfied that damages will be an adequate remedy. To this end, it is contended that given the inability to find, protect or recover the Equipment to date and the allegations of fraud by Mr Yassin, a guarantor and former director, the court can be satisfied that the Equipment is at risk and that damages will not be an adequate remedy.
It is further submitted that if the Equipment is in the possession of the second defendant but is not held by him in his capacity as an employee or agent of the Company, then there is a serious question to be tried regarding the second defendant’s liability in conversion or detinue. Based on the evidence referred to above, I accept this submission and that damages may not be an adequate remedy.
I turn to the balance of convenience.
Having regard to the circumstances of this case, on this ex parte application the balance of convenience does not weigh in favour of the grant of relief in the form that it is sought.
It is evident that the plaintiff has concerns about its ability to locate, protect and recover the Equipment and that it has concerns that it may be sold or otherwise disposed of resulting in the subject matter of its security being lost. This lies at the heart of why it is said that the balance of convenience favours the grant of the relief sought.
On the current evidence there is some force to this submission. Further, it is made in a context where there appears to be at least a prima facie case regarding a breach of the Agreements with respect to non-payment and, potentially, by seeking to sell or lease the Equipment without notification or consent. However, it must be emphasised that this is based only on the evidence before the court, which has necessarily been considered without the benefit of argument.
However, other factors must be weighed in the balance. First, the relief being pressed for in this ex parte application amounts to final relief, being the same as the final relief sought in the originating process, and including delivery up and orders facilitating recovery of the Equipment. This is in the absence of, and without notice to, the defendants or any other party who may be affected.
Second, I do not accept the submission that ordering delivery up is maintaining the status quo. The plaintiff does not currently have the Equipment in its possession and is making a claim for possession. Were the Equipment to be delivered up at this stage it would be a change to the status quo.
Third, on the evidence I cannot be satisfied that the defendants have possession of the JCB Equipment or the Trailer, a point properly acknowledged by the plaintiff and reinforced by the terms of aspects of the relief sought, which expressly contemplate the defendants not being in possession of the Equipment.
Fourth, the grant of orders of the kind sought may (or will) impact on the interests of third parties who are not parties to the proceeding, have not been identified, and have no notice of the application. This is because orders are sought permitting the plaintiff to access the defendants’ premises or any other premises anywhere in Victoria where the Equipment is located, and to take reasonable action to remove the Equipment. It is also possible that if the Equipment is in the possession of others there may be claims competing with those of the plaintiff.
It was submitted that there had been an order of a similar kind made by the Queensland Magistrates’ Court which had permitted a plaintiff to access any premises in the Commonwealth where the property in that case was found to be located. However, this case must be decided on its own facts and I am not persuaded that what may have occurred in different circumstances in the Queensland Magistrates’ Court is relevantly germane. In any event, it does not change the position in this case.
Fifth, I do not accept the submission that, on the evidence to date, the court should be satisfied that if a more limited injunction is granted the defendant will not comply with its terms. The order is being sought ex parte because of a concern about sale or disposal, but on the evidence I am not satisfied that the court should proceed on the basis that the defendants will not comply with a court order. Further, even if that were assumed to be so, as a matter of logic it seems that the same position would follow if the requested delivery up order were made.
Sixth, I do not accept the submission that the fact that the plaintiff’s self-help measures have not yet achieved their aim changes the position. Different considerations necessarily arise when the court is asked to make mandatory or other orders, and all the more so in the absence of parties where no notice of the application has been provided.
Conclusion
Having regard to the above considerations it is concluded that the balance of convenience favours refusing the ex parte application for relief in the form that it is sought.
Although relief of the kind sought is refused, having heard further from the plaintiff it is appropriate to grant a limited interim injunction for a short period that restrains the defendants, whether by their servants or agents, from selling, transferring or otherwise dealing with the Equipment. An order will also be made requiring the defendants to file and serve an affidavit regarding the current location of the Equipment.
Further submissions will be heard regarding the precise form of the orders.
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