Estoril Investments P/L v Westpac Banking Corporation

[1993] FCA 48

JUDGMENT No. ..... W,, 4% 11193 .e ..,, ,, ,,,,,,.,,,..

IN THE FEDERAL COURT OF AUSTRALIA	)
1
NEW SOUTH WALES DISTRICT REGISTRY	) No. NG 45 of 1993
1
GENERAL DIVISION	1

BETWEEN:	ESTORIL INVESTMENTS PTY LTD
& ORS.
Applicant

AND WESTPAC BANKING CORPORATION
Respondent

CORAM :	Beaumont J.	RECEIVc i-
W :	3 February 1993

AUSTRALIA

EX TEMPORE REASONS FOR JUDGMENT PRINCIPAL REGISTRY

These proceedings were commenced by an urgent application made to me yesterday. The applicant, by notice of motion filed on that occasion, sought orders restraining the respondents from engaging in deceptive conduct, alleging that the applicants were indebted to the respondent and demanding payment of certain large sums, threatening to enter possession of certain properties held by way of security, threatening to appoint receivers to the said properties, and threatening to exercise purported power of sale over the said properties.

the footing that the applicants give the usual undertaking as	refuse the application ior interlocutory relief. I did so on
to damages, and on the basis that the matter would be returnable before the Court for the purpose of renewal of the application for interlocutory relief within 24 hours.
The matter has now been returned before me this afternoon. The respondent has appeared and resisted the grant of any further interlocutory relief, and has also foreshadowed an application that the proceedings be cross-vested to the Supreme Court of New South Wales in its Equity Division. In particular, on behalf of the respondent, reference was made and evidence given with respect to proceedings commenced this day in the Supreme Court of New South Wales in its Equity
~ivision, to which reference will be made later.
In the principal proceedings, the applicants seek several forms of relief. The main relief sought consists of orders restraining the respondent, by way of permanent injunction, from alleging that the applicants were indebted to
purporting to exercise a number of remedies in the enforcement the respondent, demanding payment of that debt, and from
of security held. In addition, a declaration is sought as to the amount of the indebtedness of the respondents to the applicants, or alternatively, a declaration is sought as to the amount owed by the applicants to the respondent. A further order is sought that the respondent discharge all the securities granted to it by the applicant.
In the proceedings commenced by the present respondent in the Supreme Court, the principal relief sought by the respondent is a declaration that the present applicants are not entitled to redeem securities granted to the respondent until certain amounts, then identified, are paid to the respondent. Judgment against the applicants is also sought in various amounts pursuant to the personal covenants given in the securities, either by way of the relationship of principal debtor and creditor, or by way of guarantor and creditor.
In their statement of claim in these proceedings, the applicants had served upon them several causes of action. The principal cause of action consists of an alleged contravention of the provisions of s.52 of the Trade Practices
Act 1974 ("the Act"). There is also a count, under the
general law, alleging common law negligence, but the general law count covers ground which is similar, at least in its
factual scope, to the allegations made under s.52 of the Act. In essence, the case sought to be made by the applicants under the Act is that the respondent has engaged in conduct which is misleading and deceptive and likely to mislead or deceive and continues to engage in such conduct. The conduct, according to the particulars given, consists, inter alia, of the making by the respondent of allegations
that a certain interest is due by the applicants to the respondent, when in truth, it is said, no such amount is due. It should be noted that the evidence before me suggests that there are some unusual features to the dealings between the present parties.
It appears that the respondent is claiming that substantial amounts are now due to it under mortgages and other securities held, which securities were granted many years ago, in connection with accounts held with the respondent as the banker of the applicants, which accounts it is said by the applicants were dormant for many years.
For present purposes, I need not express and do not express now any view on the merits or otherwise of the applicant's allegations in this connection. It will suffice for present purposes to note that the amounts involved in the present dispute are substantial. It appears that a sum of
some $1.9 million is involved, after taking into account a figure of approximately $1 million being the proceeds of sale
of a security recently realised, the proceeds of which were credited to the account of the respondent.
The allegations of a contravention of s.52 of the Act are rather unusual, by virtue of the circumstance that, as pleaded, the allegation appears to be limited to conduct which is said to have misled the applicants. I would follow the
allegations in the statement of claim, it is not said that any independent third party was misled by the claim made on behalf
of the respondent that it was entitled to interest; rather, the case is that the claim was made on an exorbitant basis, but that the claim was made only to the applicants.
On the face of things, and of course I express no view on the merits, the claim has the unusual feature that the conduct of the respondent by claiming what is said to be an excessive amount by way of interest and otherwise, and by claiming amounts that were incurred by way of costs in other proceedings and which the respondent says were secured on the mortgages granted, contrary to the assertion of the applicants is said, to have misled the applicants. On the other hand it is, and always has been, so far as appears from the evidence, the case of the applicants that they are not and never have been liable to pay the amounts claimed by the respondent and now are said to be exorbitant.
As I have already said, it is not appropriate at this interlocutory stage for me to express any view on the merit of such a claim. What does, however, emerge from the pleading in the statement of claim and from the evidence before me adduced on behalf of the parties on both sides is that there is a substantial issue between the parties, first of all as to the amount, if any, owed by the applicants to the respondents, and secondly, assuming an amount is owed, whether the whole or any part of that amount is, as a matter of
construction or perhaps also as a matter of general law, actually secured upon the mortgages granted by the applicants to the respondent.
That of course is the very matter which is sought to be ventilated in the proceedings now commenced in the Supreme Court of New South Wales. In essence, those proceedings will raise for determination a traditional issue dealt with by a court of equity, that is, the taking of accounts as between mortgagor and mortgagee, incidentally to a claim by a mortgagee that the mortgagor is not entitled to redeem the mortgage, except upon payment of the amount claimed by the mortgagee to be due to it.
I have already indicated that an application has been foreshadowed on behalf of the respondent that the proceedings be transferred to the Supreme Court of New South
Wales in its equity division, pursuant to the provisions of the cross-vesting legislation. I have heard argument on that
point, and I have come to the view that this is an appropriate matter to be dealt with under the provisions of that legislation.
Under the provisions of the Jurisdiction of Courts (Cross-Vestina) Act 1987, s.5(4), where a proceeding is pending in the Federal Court and it appears to the Federal Court that the relevant proceeding arises out of or is related to another proceeding pending in the Supreme Court and it is more appropriate that the relevant proceedings be determined by the Supreme Court, having regard to the matters specified in paragraphs (A), (B), and (C) of paragraph b(ii) of that provision, this Court has the jurisdiction and indeed the duty and obligation to transfer the relevant proceeding to that Court.
I have already expressed a view that the attempt to attract the jurisdiction of this Court to the present dispute by virtue of what is said to be a contravention of s.52 of the Act does not, in my view, reflect the real issue between these parties. As I have already indicated, that issue is, first of all, what amount, if any, is due as between the applicants and the respondent on any account and, secondly, whether the whole or any part of that amount as found to be due is, as a matter of law, secured on the mortgages granted. Those matters are
equitable jurisdiction as the equity division of the Supreme the kind traditionally dealt with by a specialist court of
Court of New South Wales is. In my opinion, it is in the interests of justice that the present proceedings be in that Court. I order that the proceedings in this matter be transferred to the Supreme Court of New South Wales.
That leaves for consideration the question whether I should, in the exercise of an emergency or other jurisdiction, grant further or other interlocutory relief in this matter. The material before me does not suggest that any attempt on the part of the respondent to realise any of its securities is now imminent. It is true, as has been pointed out on behalf of the applicants, that in a recent letter the solicitors for the respondent have indicated that in the absence of a demand for payment for the full amount said by the respondent to be due being met, the respondent will take such steps as it may be advised. But there is no other evidence of any real prospect that the respondent proposes, on any imminent and immediate basis, to exercise any of its power in purported enforcement of the security which it claims to hold.
In those circumstances I am of the view that it is preferable that the whole question of the grant of interlocutory relief be left to be dealt with by the Supreme Court in the exercise of its entire control over both sets of proceedings. Although this Court, in an appropriate case,
would have, and no doubt if proper to do so, would exercise a purely emergency jurisdiction to hold the status quo on an
urgent basis incidental to the making of an order transferring a proceedings to the Supreme Court under the cross-vesting legislation. However, the material before me does not indicate that such a state of urgency exists as to warrant the exercise of such emergency jurisdiction. I therefore decline to exercise that jurisdiction.

In a brief hearing in open court, I formed a view on a quick review of the evidence, that in the exercise of the Court's emergency jurisdiction I should restrain the respondent from appointing a receiver, but should otherwise

I will reserve costs. Each of you have liberty to

apply for costs.

I hereby certify that this and the

preceding eight (8) pages are a true copy of the Reasons for Judgment of his Honour Mr. Justice

Associate

Dated: