Fleet Trans Pty Ltd v Gulf Transport Co. Pty Ltd
[2017] WADC 87
•21 JUNE 2017
JURISDICTION : DISTRICT COURT OF WESTERN AUSTRALIA
IN CHAMBERS
LOCATION: PERTH
CITATION: FLEET TRANS PTY LTD -v- GULF TRANSPORT CO. PTY LTD [2017] WADC 87
CORAM: DERRICK DCJ
HEARD: 21 JUNE 2017
DELIVERED : 21 JUNE 2017
FILE NO/S: CIV 2148 of 2017
BETWEEN: FLEET TRANS PTY LTD
Plaintiff
AND
GULF TRANSPORT CO. PTY LTD
First DefendantSTRATHAVEN (NT) PTY LTD
Second Defendant
Catchwords:
Landlord and tenant - Alleged failure to return bank guarantee - Application for interim interlocutory injunction
Legislation:
Nil
Result:
Application for interim interlocutory injunction allowed
Representation:
Counsel:
Plaintiff: Mr K de Kerloy
First Defendant : No appearance
Second Defendant : No appearance
Solicitors:
Plaintiff: Herbert Smith Freehills
First Defendant : Not applicable
Second Defendant : Not applicable
Case(s) referred to in judgment(s):
Australian Blue Metal Ltd v Hughes (1962) 79 WN (NSW) 498
City Bank of Sydney v McLaughlin (1909) 9 CLR 615
Jones v Peters [1948] VLR 331
Klement v Pencoal Ltd [1999] QSC 90
Okewood Pty Ltd t/as Perth Glory v Football Federation Australia Ltd [2015] WASC 127
Twinside Pty Ltd v Venetian Nominees Pty Ltd [2008] WASC 110
Union Bank of Australia v Rudder (1911) 13 CLR 152
DERRICK DCJ:
Introduction
The plaintiff makes an ex parte application for an interim interlocutory injunction restraining the defendants from making demand for payment on a bank guarantee number DG459163095 in the amount of $151,250 dated 5 February 2016 issued by the Australia and New Zealand Banking Group Limited (the Bank Guarantee). The Bank Guarantee relates to obligations under an extension and variation of a lease.
The application is supported by an affidavit sworn by Mr Graeme Brentson on 20 June 2017. Mr Brentson is a corporate counsel employed by the plaintiff.
Background facts
The plaintiff is the wholly owned subsidiary of Bis Industries Limited.
The defendants are the registered proprietors of 102 Kurnall Road in Welshpool (the Premises).
In or about 2010 the defendants (as landlord) entered into a lease with a company called Gulf Transport Co Pty Ltd (GT Pty Ltd) (as tenant) in respect of the Premises (the Lease).
On or about 16 December 2010 the plaintiff entered into a deed with the defendants and GT Pty Ltd for the assignment and variation of the Lease (the Varied Lease).
On or about 18 December 2015 the plaintiff entered into an agreement with the defendants to further extend and vary the Varied Lease for a term of two years due to expire on 31 August 2017 (the Second Varied Lease).
Schedule 1, Item 5(1) of the Second Varied Lease provided as follows:
The parties acknowledge and agree that effective from the date of this Deed, the Lease shall be varied by:
(1)Inserting the following new clause 1 in Item 10 of the Schedule to the Lease:
1.Bank Guarantee
(1)Tenant to provide bank guarantee
The Tenant must arrange for the immediate issue, by an Australian Bank of an unconditional and irrevocable bank guarantee in favour of the Landlord for an amount equal to the amount of $137,500 (equivalent to three months' Rent) plus GST containing terms and conditions acceptable to the Landlord and deliver the bank guarantee (bearing the applicable stamp duty impost) to the Landlord.
Schedule 1, Item 5(9) of the Second Varied Lease provided, in substance, that within one month after the termination of the Lease and vacation of the Premises by the Tenant in accordance with the Lease, and provided that the Tenant was not then in default under the Lease, the Landlord was to release and return the bank guarantee to the Tenant.
On or about 22 February 2016 the plaintiff, in compliance with its obligation under Schedule 1, Item 5(1), obtained and provided to the defendants the Bank Guarantee.
On 20 May 2016 the plaintiff sent a letter to the defendants terminating the Second Varied Lease with an effective termination date of 17 August 2016. The plaintiff vacated the Premises on that date.
During the period between 20 July 2016 and 5 October 2016 a dispute arose between the plaintiff and the defendants in relation to the need for the plaintiff to undertake 'make good' works to the Premises (the 'make good' works).
On or about 13 September 2016 Mr Michael Le Grange of Colliers International WA (Colliers), which was the agent appointed by the defendants to manage all dealings with the plaintiff under the Lease, sent an email to Mr Nino Fasolo of the plaintiff regarding settling the dispute that had arisen in relation to the need for the plaintiff to undertake the make good works. In the email Mr Le Grange relevantly said the following:
Following our meeting held at 102 Kurnall Road, on the 29th August, all attendees confirmed that pricing for the items listed in the schedule below would be obtained by the 8th September to enable a satisfactory conclusion to be obtained for the make good of the entire premises, including offices, spray booth, wash bay workshop.
A meeting was held at Colliers office with the following attendees (Michael Le Grange, Colliers International WA and Bruno Pelle, Bis Industries) to review the quotations and compromise on issues to enable the best solution to be presented to the Landlord and Tenant. The list below provides costings and an amount that was considered favourable to make good the premises. The considered amount $143,461.00 [sic].
Upon arriving at the sum indicated above the amount was disclosed to the Landlord, who after some consideration agreed that he would accept the said amount of $143,461.00, as full and final settlement on the make good of the premises…We look forward to your acceptance of the make good amount indicated.'
The items listed in the schedule which formed part of Mr Le Grange's email did not include any reference to cranes situated at the Premises.
The plaintiff accepted the proposal set out in Mr Le Grange's email but wanted the agreement to be formalised in a deed. Accordingly on or about 6 October 2016 the plaintiff sent a Deed of Settlement and Release (the Deed) to the defendants for execution. Clause 1 of the Deed provided, in effect, that the defendants, in consideration of the terms of the Deed and in particular the payment of the 'Settlement Sum' in the amount of $167,563.54, waived:
all actions, suits, claims, demands and causes of action and the costs thereof that it has or may, but for entering into [the Deed] have had against [the plaintiff] and releases and discharges [the plaintiff] from all or any claims or liabilities arising directly or indirectly out or in connection with [the Lease].
On or about 6 October 2016 the Deed was purportedly executed on behalf of the defendants by Mr James Cooper (Snr). Mr Cooper (Snr) was a director of, and the sole shareholder in, the second defendant as well as the owner of half of the shares in the first defendant, the other shareholder in the first defendant being Mr Cooper's son, Mr James Cooper (Jnr).
When Mr Cooper (Snr) purported to execute the Deed he, mistakenly it would seem, signed the signatory block in the Deed relating to the plaintiff. Accordingly, on 7 October 2016 Ms Mollie Hartley of the plaintiff sent an email to Mr Le Grange requesting the Deed be re‑executed by the defendants in proper form.
On 12 October 2016 Mr Brentson sent an email to Mr Le Grange in the following terms:
Michael
As per our conversation last week, Jamie Cooper and Nino Fasolo agreed that a Deed of Settlement and Release would be executed by the parties as can be seen from the attached. Colliers were not a party to the discussion between Jamie and Nino. Unfortunately the Fleet Trans signatory block in the Deed has also been signed by Mr James Cooper. You have advised that Mr James Cooper is overseas and is unable to be contacted to re‑execute the Deed of Settlement and Release.
As requested during our conversation, please confirm that Colliers through yourself act as agent for Gulf Transport Co Pty Ltd formally [sic] known as Maxwellton (N.T.) Pty Ltd and Strathaven (NT) Pty Ltd.
The settlement amount will be paid on the basis, that as agent you confirm the Deed of Settlement and Release will be re-executed by the appropriate officers of Gulf Transport Co Pty Ltd formally [sic] known as Maxwellton (N.T.) Pty Ltd and Strathaven (NT) Pty Ltd.
I look forward to your confirmation of the above today so your request for payment this Friday can be made. Please direct your correspondence to myself.
The reference in Mr Brentson's email to 'Jamie Cooper' was a reference to Mr Cooper (Jnr).
Later on 12 October 2016 Mr Le Grange sent to Mr Brentson an email, copied to Mr Cooper (Jnr), in the following terms:
Graeme,
Following your email, and as earlier discussed, the Fleet Trans signatory block was signed in error by Mr James Cooper, and I confirm that Mr Cooper is overseas at present and not available for the document to be corrected.
I also confirm that the Landlord being Mr James Cooper has appointed Colliers International (WA) as the agent, to act in this matter on their behalf being Gulf Transport Co Pty Ltd formally [sic] known as Maxwellton (N.T.) Pty Ltd and Strathaven (NT) Pty Ltd.
As the agent I confirm the Deed of Settlement and Release will be re‑executed by the appropriate officers of Gulf Transport Co Pty Ltd formally [sic] known as Maxwellton (N.T.) Pty Ltd and Strathaven (NT) Pty Ltd, without any admission of liability on behalf of Fleet Trans on the settlement terms as agreed by all parties, on condition the payment of settlement as detailed below is received by CBO on 14th October 2016.
Fleet Trans shall pay the Settlement Sum to the Nominated Account in one (1) instalment of $167,563.54 consisting of …
Hope the above email confirmation aligns to your request. Should you require any further information, or clarification please don't hesitate to contact the undersigned.
Kindest Regards
Michael Le Grange
The reference by Mr Le Grange in his email to Mr James Cooper was a reference to Mr Cooper (Snr).
On 14 October 2016 the plaintiff paid the defendants the sum of $167,563.54 (the settlement sum). The settlement sum was accepted and has been retained by the defendants.
On or about 30 March 2017 the plaintiff sent a letter to Colliers requesting the return of the Bank Guarantee.
On or about 4 April 2017 Mr Le Grange, in response to the plaintiff's request for the return of the Bank Guarantee, sent an email to the plaintiff alleging that cranes at the Premises had not been maintained or inspected. Mr Le Grange attached to his email a quote for the inspection and repair of the cranes and asserted, in effect, that the cost of repairing the cranes would be invoiced to, and was payable by, the plaintiff.
During the period between 5 April 2017 and 31 May 2017 the plaintiff sent letters to Colliers, Mr Cooper (Snr), and the defendants' solicitors disputing that it was liable for the cost of any repairs to the cranes at the Premises and demanding the release and return of the Bank Guarantee.
On or about 16 June 2017 the defendants' solicitors sent a letter to the plaintiff regarding the Premises and the Bank Guarantee in which they in substance disputed the plaintiff's previously made assertions that the plaintiff was not, by reason of the payment of the settlement sum, liable to pay for repair work to the cranes. The defendant's solicitors concluded their letter in the following terms:
The Tenant has previously been notified and is hereby again notified that it is in default of its obligations under clauses 6.1 and 6.2 of the Lease to regularly service and maintain the overhead cranes and roller doors in good repair and condition, and to repair any damage caused by its act, neglect, default or omission.
The Landlord requires that the Tenant remedy such default by making payment in the amount of $109,314 to cover the work necessary to rectify the Tenant's default. The amount is now overdue.
If the amount is not received by 23 June 2017, our client will consider all available measures to pursue their rights and to protect their interests which may including [sic] drawing on Bank Guarantee number DG459163095 in accordance with the terms of the Lease.
Our client reserves all of its rights.
The plaintiff asserts that it did, on taking possession of the Premises, maintain and service the cranes on the Premises.
The plaintiff's claim
On 20 June 2017 the plaintiff filed its Writ of Summons. The Writ is yet to be served on the defendants.
By the indorsement of claim the plaintiff alleges that by an agreement made on or about 12 October 2016 between the plaintiff and the defendants the defendants, in consideration of the payment of $167,563.54, waived all actions, suits, claims and causes of action and the costs thereof that they had or may have had against the plaintiff and released and discharged the plaintiff from all claims or liabilities arising directly or indirectly out of or in connection with the Second Varied Lease. By the indorsement the plaintiff seeks an order that the defendants return the Bank Guarantee to the plaintiff forthwith.
Reasons for the application being made ex parte
As I have already stated, the application is made on an ex parte basis. In this context I bear in mind that the general rule is that an order for an interlocutory injunction should not be made ex parte. An order for an interlocutory injunction should only be made on an ex parte basis in a case of real urgency. Clearly, any injunction which I would grant ex parte would only be granted for a short period of time until an opportunity could be given to the defendants to be heard in relation to the matter.
The application is made on an ex parte basis in light of the belief, expressed by Mr Brentson in par 39 of his affidavit, that if the application is served on the defendants there would be a risk that the defendants would call on the Bank Guarantee before the application is heard. Mr Brentson bases his belief in this regard on the course of events that have transpired since 30 March 2017 and the terms of the above cited penultimate paragraph of the defendants' solicitors' letter dated 16 June 2017.
General principles
As Mitchell J said in Okewood Pty Ltd t/as Perth Glory v Football Federation Australia Ltd [2015] WASC 127 [5], referring to Beech J's judgment in Twinside Pty Ltd v Venetian Nominees Pty Ltd [2008] WASC 110, the principles governing the grant of an interim or interlocutory injunction are well known. The three primary interrelated considerations are whether there is a serious question to be tried or the plaintiff has made out a prima facie case, whether the plaintiff will suffer irreparable injury for which damages will not be adequate compensation unless an injunction is granted and whether the balance of convenience favours the granting of an injunction.
In Twinside Pty Ltd v Venetian Nominees Pty Ltd Beech J, in relation to the prima facie case requirement, said the following [9], [11] (citations omitted):
9.… The phrase 'prima facie case' does not mean that the plaintiff must show that it is more probable than not that at trial the plaintiff will succeed. It is sufficient that the plaintiff show a sufficient likelihood of success to justify, in the circumstances, the preservation of the status quo pending the trial. How strong the probability needs to be depends upon the nature of the rights the plaintiff asserts and the practical consequences likely to flow from the orders the plaintiff seeks.
…
11.As the apparent strength of the applicant's case diminishes, the balance of convenience moves against the making of an order … The grant of an injunction involves balancing the injustice which might be suffered by the defendant if the injunction is granted and the plaintiff later fails at trial, against the injustice which might be suffered by the plaintiff if the injunction is not granted and the plaintiff later succeeds at trial.
Serious question to be tried
The plaintiff's case is, in essence, that on 12 October 2016, and as a result of the exchange of the above referred to emails between Mr Brentson and Mr Le Grange, the plaintiff and the defendants entered into an agreement the terms of which were those set out in the Deed. In particular, the plaintiff's case is that by the agreement the defendants, in consideration of receiving the settlement sum, waived all actions, suits, claims, demands and causes of action and the costs thereof that they had or may have had against the plaintiff, and released and discharged the plaintiff from all claims or liabilities arising directly or indirectly out of or in connection with the Lease. Therefore, the plaintiff contends, it has no liability to pay any amount in respect of the cranes on the Premises and consequently has a right to the return of the Bank Guarantee.
It is apparent from the above referred to letter from the defendants' solicitors to the plaintiff dated 16 June 2017 that the defendants' argument in opposition to the plaintiff's claim is that no agreement as alleged was arrived at because:
1.The Deed was not properly executed by the defendants;
2.Mr Le Grange did not have authority to bind the defendants to the agreement; and
3.The terms of the Deed were never explained to Mr Cooper (Snr).
In response to these assertions the plaintiff makes, in essence, the following submissions.
First it is inherently implausible that Mr Cooper (Snr), who was an experienced businessman, did not understand the terms of the Deed even if it is assumed it was not explained to him.
Second it is clear that Mr Cooper (Snr) and Mr Cooper (Jnr) both agreed to the dispute over the make good works being settled in accordance with the terms of the Deed. Their agreement in this regard is reflected by the fact that Mr Cooper (Snr) purported to execute the Deed and that Mr Cooper (Jnr) was copied in on Mr Le Grange's above referred to email dated 12 October 2016.
Third, Mr Le Grange had actual authority to agree to the settlement of the dispute over the make good works by reason of cl 15.8 and cl 15.11 of the Lease. Clause 15.8 provided:
Effect of Waiver
No consent or waiver expressed or implied by the Landlord to or of any breach of any terms covenants conditions or stipulations of the Tenant, will be construed as a consent or waiver to or of any other breach of the same or any other terms covenants conditions or stipulations contained or implied in this lease.
Clause 15.11 provided:
Landlord may Act by Agent
All acts and things that the Landlord is required or empowered to do under this lease, may be done by the Landlord or any solicitor, agent, contractor or employee of the Landlord.
Thus, the plaintiff submits, by necessary implication cl 15.8 empowered the Landlord to consent to or waive any breach of any 'terms, covenants, conditions or stipulations of the Tenant', with the consequence that by reason of cl 15.11 Mr Le Grange was also empowered to do so.
Fourth, even if contrary to the plaintiff's above stated position Mr Le Grange did not have actual authority as agent to agree to the settlement of the dispute over the make good works on behalf of the defendants, the defendants subsequently ratified the conduct of Mr Le Grange in agreeing to the settlement with the result that they were bound by the agreement: Jones v Peters [1948] VLR 331, 335; Australian Blue Metal Ltd v Hughes (1962) 79 WN (NSW) 498, 515. The defendants ratified the conduct of Mr Le Grange by knowingly accepting the benefit which flowed from the allegedly unauthorised conduct of Mr Le Grange, namely the receipt and acceptance of the settlement sum, without taking any steps for a significant period of time (approximately six months) to assert that Mr Le Grange's conduct in expressing agreement to the settlement of the dispute was done without their authority: Dal Pont, Halsbury's Laws of Australia, [15-155]; Dal Pont, Law of Agency, 3rd ed, [5.28] – [5.32]; City Bank of Sydney v McLaughlin (1909) 9 CLR 615, 625 – 626, 629, 633; Union Bank of Australia v Rudder (1911) 13 CLR 152, 163; Australian Blue Metal Pty Ltd v Hughes (515); Klement v Pencoal Ltd [1999] QSC 90 [53].
Obviously I have not heard submissions made by the defendants in supplementation of the arguments put forward by their solicitors in their letter to the plaintiff dated 16 June 2017. Nonetheless, it does seem to me that the above referred to submissions made by the plaintiff have merit. I am satisfied for the reasons encapsulated in the plaintiff's submissions that the plaintiff's claim does give rise to a serious question to be tried. Indeed, I am persuaded, even in the absence of hearing from the defendants, that the plaintiff's claim is a reasonably strong one.
Adequacy of damages
I turn to the question whether the plaintiff will suffer irreparable injury for which damages will not be adequate compensation if the interim injunction is not granted.
The plaintiff submits that it has a right under the Second Varied Lease to the return of the Bank Guarantee and that if the injunction is not granted and the Bank Guarantee is drawn upon by the defendants, the right to the return of the Bank Guarantee will be defeated or rendered nugatory. The plaintiff submits that for this reason it will suffer irreparable injury for which damages will not be an adequate remedy if the injunction is not granted.
I accept the plaintiff's submissions in this regard. If the injunction is not granted and the defendants draw on the Bank Guarantee, the plaintiff's asserted right to the return of the Bank Guarantee will be rendered nugatory. Damages will not adequately compensate the plaintiff for the loss of this claimed contractual right.
Balance of convenience
The plaintiff has filed in support of the application an undertaking as to damages.
The plaintiff submits that the balance of convenience favours the granting of the injunction sought because the merits of the case 'overwhelmingly favour' it, and because it should not be put in the position, which will result from any drawing on the Bank Guarantee by the defendants, of having to litigate to recover funds that it clearly has no obligation to pay. The plaintiff submits that the defendants should be prevented from using the guarantee to leverage funds from the plaintiff.
While I would at this early stage refrain from describing the merits of the case as being 'overwhelmingly' in favour of the plaintiff, it does seem to me, as I have already indicated, that the plaintiff's case is a reasonably strong one. Further, if the injunction is not granted and the plaintiff does draw on the Bank Guarantee, which would appear from the defendants' solicitors' letter dated 16 June 2017 to be a significant possibility, the plaintiff will in effect be forced to refund the bank the amount paid out by the bank under the Bank Guarantee and to then commence proceedings against the defendants to recover that amount from the defendants. In all these circumstances I am satisfied that the balance of convenience lies well in favour of the granting of the sought interim injunction for a short period of time.
Conclusion
For the reasons I have stated I will allow the application.
I will hear from the plaintiff's counsel as to the appropriate form of orders to give effect to my decision.
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