Ecap Finance Pty Ltd v Ottoway Engineering Pty Ltd (No 2)

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FEDERAL COURT OF AUSTRALIA

Ecap Finance Pty Ltd v Ottoway Engineering Pty Ltd (No 2) [2017] FCA 237

Appeal from: Application for leave to appeal:  Ottoway Engineering Pty Ltd v Westpac Banking Corporation (No 2) [2017] FCA 39
File number: SAD 38 of 2017
Judge: CHARLESWORTH J
Date of judgment: 10 March 2017
Catchwords:

APPEAL AND NEW TRIAL — application for leave to appeal an interlocutory judgment — primary judge dismissed an application for the dissolution of an injunction — whether decision of primary judge attended with sufficient doubt to warrant reconsideration by a Full Court — whether non-party requires “leave upon leave” to appeal — nature and degree of substantial injustice should leave not be granted — relevance of s 37M of the Federal Court of Australia Act 1976 (Cth) on an application for leave to appeal

EQUITY — injunctions — test for sufficiency of non-party’s interest in having an interlocutory injunction dissolved — where primary judge determined non-party’s rights or liabilities to a party not directly affected — whether primary judge applied wrong test or failed to apply an alternative test

BANKING AND FINANCIAL INSTITUTIONS — bank guarantee — whether in nature of a performance bond — identification of obligation secured by guarantee — relevance of principle of autonomy

Legislation:

Australian Consumer Law (Schedule 2 to the Competition and Consumer Act 2010 (Cth))

Federal Court of Australia Act 1976 (Cth), ss 5, 24, 24(1AA), 24(1A), 37M

Federal Court Rules 2011 (Cth), rr 1.32, 9.05

Cases cited:

Adam P Brown Male Fashions Pty Ltd v Philip Morris Inc (1981) 148 CLR 170

Australian Broadcasting Corporation v O’Neill (2006) 227 CLR 57

Beecham Group Ltd v Bristol Laboratories Pty Ltd (1968) 118 CLR 618

BP Chemicals ANZ Pty Ltd v Manildra Starches Pty Ltd [1997] FCA 1189

Clough Engineering Ltd (ACN 009 093 869) v Oil and Natural Gas Corporation Ltd [2008] FCAFC 136, (2008) 249 ALR 458

Commonwealth v Construction, Forestry, Mining and Energy Union (2000) 98 FCR 31

Cretanor Maritime Co Ltd v Irish Marine Management Ltd [1978] 1 WLR 966

Cuthbertson v Hobart Corporation (1921) 30 CLR 16

Décor Corporation Pty Ltd v Dart Industries Inc (1991) 33 FCR 397

Ecap Finance Pty Ltd v Ottoway Engineering Pty Ltd [2017] FCA 200

Ferdinands v The State of South Australia [2017] FCA 32

Fortress Credit Corporation (Australia) II Pty Ltd (ACN 114 624 958) v Fletcher [2011] FCAFC 89, (2011) 281 ALR 38

House v The King (1936) 55 CLR 499

In re the Will of F.B. Gilbert (dec.) (1946) 46 SR (NSW) 318

Irwin v Irwin [2016] FCA 1565

John Alexander’s Clubs Pty Ltd v White City Tennis Club Ltd (2010) 241 CLR 1

Kadam v MiiResorts Group 1 Pty Ltd [2016] FCA 1205

McAlister v New South Wales (2014) 223 FCR 1

Michael Wilson and Partners Ltd v Nicholls (2011) 244 CLR 427

Mobileworld Operating Pty Ltd v Telstra Corporation Limited [2005] FCA 1365

News Ltd v Australian Rugby Football League Ltd (1996) 64…

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Details
Case
[2017] FCA 237
Decision Date

CaseChat Overview and Summary

In the matter of Ecap Finance Pty Ltd v Ottoway Engineering Pty Ltd (No 2), the applicants sought leave to appeal against an interlocutory judgment concerning the dissolution of an injunction. The case was heard by the Full Court of the Federal Court of Australia. The central dispute involved the interpretation of a bank guarantee, with Ecap Finance seeking the dissolution of an injunction imposed against Ottoway Engineering. Ottoway Engineering, in turn, argued that the injunction should remain in place to protect its interests pending the resolution of a broader construction dispute with Westpac.

The primary legal issues before the court were whether the primary judge's decision to dismiss the application for the dissolution of the injunction was attended with sufficient doubt to warrant reconsideration by the Full Court, and if the non-party, Ecap Finance, required leave to appeal. The court also needed to consider the nature and degree of substantial injustice that might arise should leave not be granted, as well as the relevance of section 37M of the Federal Court of Australia Act 1976 (Cth) on an application for leave to appeal.

The Full Court concluded that while there might be doubt as to the assessment of certain claims by the primary judge, this doubt did not cast sufficient doubt on the correctness of the outcome to warrant reconsideration by the Full Court. The court emphasised that the primary focus should always be on the proper construction of the contract. Additionally, the court held that the overarching purpose of civil practice and procedure provisions, as outlined in section 37M of the Federal Court of Australia Act, was to facilitate the just resolution of disputes according to law and in a timely manner. Based on these considerations, the Full Court dismissed the application for leave to appeal and ordered the applicants to pay the respondents’ costs.

Orders

Orders of the court

1. Leave be granted to the applicants to make the application for leave to appeal filed in this proceeding on 13 February 2017.

2. The application for leave to appeal is dismissed.

3. The applicants are to pay the respondents’ costs.

Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

Background

Background to the litigation

Full text does not contain this section.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

Full text does not contain this section.

Ratio Decidendi

Legal Principle Established

I have not overlooked that the exercise of his Honour’s discretion to grant (and refuse to dissolve) the injunction involved a balancing of related factors, such that if there be error concerning the existence or strength of one aspect of Ottoway’s claims, the error might conceivably have affected his Honour’s assessment of where the balance of convenience ultimately lay having regard to the authorities I have cited at [15] above. However, even assuming there is doubt as to his Honour’s assessment of the strength or availability of Ottoway’s fraud and like claims, the doubt must be shown to be sufficient to justify reconsideration of the judgment on appeal. I do not consider that any error in the assessment of the prima facie merits of the ACL and fraud claims would have materially affected his Honour’s identification of the central construction dispute between Ottoway and Westpac. The existence of that real dispute was a clear and independent basis for maintaining the status quo pending judgment so that any error concerning the other aspects of Ottoway’s case would not cast sufficient doubt as to the correctness of the outcome to warrant reconsideration by a Full Court.It may be preferable not to describe this as an exception but rather as an over-riding rule because it emphasises that the ‘primary focus’ will always be the proper construction of the contract: Bateman Project Engineering Pty Ltd v Resolute Ltd (2000) 23 WAR 493; [2000] WASC 284 per Owen J at [30]. Stephen J recognised this in Wood Hall at CLR 459; ALR 398–9 by observing that the provisions of the contract may qualify the right to call on the undertaking contained in a performance guarantee.SUBSTANTIAL INJUSTICE AND DISCRETIONARY CONSIDERATIONS Section 24(1A) of the FCA Act is a civil practice and procedure provision for the purposes of s 37M of the FCA Act. It provides:37M The overarching purpose of civil practice and procedure provisions(1)The overarching purpose of the civil practice and procedure provisions is to facilitate the just resolution of disputes:(a) according to law; and(b) as quickly, inexpensively and efficiently as possible.(2)Without limiting the generality of subsection (1), the overarching purpose includes the following objectives:(a)the just determination of all proceedings before the Court;(b)the efficient use of the judicial and administrative resources available for the purposes of the Court;(c)the efficient disposal of the Court’s overall caseload;(d)the disposal of all proceedings in a timely manner;(e)the resolution of disputes at a cost that is proportionate to the importance and complexity of the matters in dispute.(3)The civil practice and procedure provisions must be interpreted and applied, and any power conferred or duty imposed by them (including the power to make Rules of Court) must be exercised or carried out, in the way that best promotes the overarching purpose.(4)The civil practice and procedure provisions are the following, so far as they apply in relation to civil proceedings:(a)the Rules of Court made under this Act;(b)any other provision made by or under this Act or any other Act with respect to the practice and procedure of the Court.