Forest Marsh Pty Ltd v Pleash (No 2)

Case [2011] FCA 570

FEDERAL COURT OF AUSTRALIA

Forest Marsh Pty Ltd v Pleash (No 2) [2011] FCA 570

Citation: Forest Marsh Pty Ltd v Pleash (No 2) [2011] FCA 570
Appeal from: Forest Marsh Pty Ltd v Pleash [2011] FCA 134
Parties: FOREST MARSH PTY LTD (ACN 009 545 733) and STEPHEN MICHAEL POWELL v BLAIR PLEASH and BIBBY FINANCIAL SERVICES AUSTRALIA PTY LIMITED (ACN 101 657 041)
File number: NSD 292 of 2011
Judge: NICHOLAS J
Date of judgment: 31 May 2011
Catchwords:

PRACTICE AND PROCEDURE – interlocutory injunction pending determination of appeal – need to show arguable grounds of appeal – interlocutory injunction refused

PRACTICE AND PROCEDURE – notice of appeal – grounds of appeal should identify error in relation to ultimate issues – appellant ordered to file amended notice of appeal  
Legislation: Federal Court Rules O 52, r 13(2)(b)  
Cases cited: Stirling Harbour Services Pty Ltd v Bunbury Port Authority (No 2) [2000] FCA 87
Sydneywide Distributors Pty Ltd v Red Bull Australia Pty Ltd (2002) 55 IPR 354
Date of hearing: 3 May 2011
Place: Sydney
Division: GENERAL DIVISION
Category: Catchwords
Number of paragraphs: 60
Solicitor for the Appellants: Mr J Saric of Bradfields Barristers and Solicitors
Counsel for the Respondents: Mr R Glasson
Solicitor for the Respondents: ERA Legal

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY

GENERAL DIVISION

NSD 292 of 2011
ON APPEAL FROM THE FEDERAL COURT OF AUSTRALIA
BETWEEN:

FOREST MARSH PTY LTD
(ACN 009 545 733)
First Appellant

STEPHEN MICHAEL POWELL
Second Appellant
AND:

BLAIR PLEASH
First Respondent

BIBBY FINANCIAL SERVICES AUSTRALIA PTY LIMITED (ACN 101 657 041)
Second Respondent

JUDGE:

NICHOLAS J

DATE OF ORDER:

31 MAY 2011

WHERE MADE:

SYDNEY

THE COURT ORDERS THAT:

1.The appellants’ notice of motion be dismissed.

2.The appellants file and serve an amended notice of appeal within 7 days of today.

3.The appellants file and serve a draft index to Part A and Part B of the appeal books within 14 days of today.

4.The respondents’ notice of motion be otherwise dismissed.

5.The appellants pay the respondents’ costs of both notices of motion.  

Note:Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
The text of entered orders can be located using Federal Law Search on the Court’s website.


IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY

GENERAL DIVISION

NSD 292 of 2011
ON APPEAL FROM THE FEDERAL COURT OF AUSTRALIA
BETWEEN:

FOREST MARSH PTY LTD
(ACN 009 545 733)
First Appellant

STEPHEN MICHAEL POWELL
Second Appellant
AND:

BLAIR PLEASH
First Respondent

BIBBY FINANCIAL SERVICES AUSTRALIA PTY LIMITED (ACN 101 657 041)
Second Respondent

JUDGE:

NICHOLAS J

DATE:

31 MAY 2011

PLACE:

SYDNEY

REASONS FOR JUDGMENT

  1. There are two notices of motion before me.  First, the appellants seek an interlocutory injunction preventing the respondents from selling a property in Tasmania known as “Forest Marsh” (the property) until their appeal against the judgment of the trial judge (Yates J) in Forest Marsh Pty Ltd…

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Details
AGLC
Forest Marsh Pty Ltd v Pleash (No 2) [2011] FCA 570
Case
[2011] FCA 570
Decision Date

CaseChat Overview and Summary

Forest Marsh Pty Ltd and others sought an interlocutory injunction to prevent the respondents from disposing of property owned by Forest Marsh until the determination of their appeal against the trial judge’s orders. The dispute arose from a factoring agreement entered into in 2007, which involved the provision of collateral securities, including a fixed and floating charge over Forest Marsh’s assets, to Bibby. Subsequently, Bibby appointed Mr Pleash as a receiver and manager of Forest Marsh, who attempted to sell the property to satisfy Forest Marsh’s indebtedness to Bibby. The appellants argued that the receiver wrongfully continued with the receivership after certain payments were made, and they sought to prevent the respondents from dealing with the property during the appeal. The primary judge had found that the payment made by the appellants was insufficient to discharge Forest Marsh’s obligations to Bibby, and that the continuation of the receivership was lawful. The appellants’ appeal against this judgment was pending.

The court had to decide whether to grant an interlocutory injunction pending the appeal, and whether the appellants’ notice of appeal was sufficient. The court also needed to determine the balance of convenience in favour of granting the injunction. The appellants were required to show that there were arguable grounds of appeal that, if upheld, would lead to a material variation of the trial judge’s orders. The court considered whether the appellants' arguments challenging the validity of the charge, the appointment of the receiver, and the continuation of the receivership had any reasonable prospect of success. The court also evaluated the appellants' arguments concerning the balance of convenience.

The court held that the appellants’ application for an interlocutory injunction should be refused. The court found that none of the appellants’ grounds of appeal had any reasonable prospect of success, as they did not challenge the validity of the charge or the appointment of the receiver, and the primary judge’s findings were supported by evidence. The court also found that the appellants’ arguments in relation to the balance of convenience were based on misconceptions. The court further held that the appellants' notice of appeal did not adequately identify the errors in relation to the ultimate issues, and ordered the appellants to file an amended notice of appeal. The court dismissed the appellants’ notice of motion and ordered them to pay the respondents’ costs of both notices of motion.

The court made the following orders: (1) the appellants’ notice of motion be dismissed; (2) the appellants file and serve an amended notice of appeal within 7 days; (3) the appellants file and serve a draft index to Part A and Part B of the appeal books within 14 days; (4) the respondents’ notice of motion be otherwise dismissed; and (5) the appellants pay the respondents’ costs of both notices of motion.

Orders

Orders of the court

1. The appellants’ notice of motion be dismissed.

2. The appellants file and serve an amended notice of appeal within 7 days of today.

3. The appellants file and serve a draft index to Part A and Part B of the appeal books within 14 days of today.

4. The respondents’ notice of motion be otherwise dismissed.

5. The appellants pay the respondents’ costs of both notices of motion.

Note:

Background

Background to the litigation

On 25 March 2011 the appellants filed their notice of motion seeking an interlocutory injunction preventing the respondents from disposing of, selling or attempting to sell or otherwise dealing with the property until the determination of their appeal against the trial judge’s orders. FACTS On 21 December 2007, the appellants (and two other companies controlled by Mr Powell) entered into a factoring agreement with Bibby. At the time the factoring agreement was executed, Forest Marsh provided collateral securities to Bibby including a fixed and floating charge (the charge) over its assets as well as a second mortgage over the property. The property was, and still is, the subject of a first mortgage to the National Australia Bank (NAB) which takes priority over the mortgage to Bibby. The amount presently owing to the NAB under that mortgage is said to be approximately $240,000. Forest Marsh also granted a third mortgage over the property to a company called Business Expansion Capital Pty Ltd (BE Capital) which ranks behind those given to NAB and Bibby. The amount presently owing to BE Capital is the subject of dispute, though the appellants’ solicitor indicated at the hearing before me that the debt claimed by BE Capital was in the order of $2 million. On 4 April 2008 Bibby, acting under the charge, appointed Mr Pleash as receiver and manager of Forest Marsh. Various attempts were made by Mr Pleash to sell the property in order to satisfy Forest Marsh’s indebtedness to Bibby. Such attempts have failed for various reasons: see paras [12] to [25] of the trial judge’s reasons. At trial, the appellants alleged that following payment of the amount of $309,423.26 by Forest Marsh into Bibby’s solicitors’ trust account on 10 October 2008, Mr Pleash was legally obliged to terminate the receivership and retire. Instead, so the appellants alleged, the receiver, in breach of duties owed to Forest Marsh, continued with the receivership and wrongly incurred additional fees and expenses. It was central to the appellants’ case that the receiver was not entitled to continue with the receivership once the $309,423.26 was paid. This was because, at least in so far as the case was argued before the primary judge, the receiver’s solicitors had sent to the appellants’ solicitors a letter on 7 October 2008 which represented that the amount required to discharge the debt due to Bibby was $309,423.26 including $286,000 which was shown in a spreadsheet accompanying the letter as representing the debt owing by Forest Marsh to Bibby as at 30 September 2008. His Honour went on to find that, as at 10 October 2008, the sum of $309,423.26 was not sufficient to discharge Forest Marsh’s indebtedness to Bibby because by that time further interest had accrued and further fees and expenses were incurred. The primary judge rejected the proposition that the receiver was obliged to retire upon payment of the $309,423.26 on 10 October 2008. His Honour made various findings in support of his conclusion that the letter of 7 October 2008 could not be reasonably understood as anything other than indicative of the amount that would be required to be paid at any future settlement.

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

Given the interplay between the strength of any proposed appeal and the balance of convenience, it is not possible to say how strong a ground of appeal must appear to be before an interlocutory injunction may be given in aid of an appeal against a judgment given after a trial. At the very least the appeal must be arguable since there could be no injustice in refusing an interlocutory injunction that was sought in aid of an appeal which was bound to fail. Thus, it will usually be necessary for the applicant for such an interlocutory injunction to show that there are arguable grounds of appeal which, if upheld, are likely to lead to some material variation of the orders of the trial judge. Often the strength of the proposed appeal and the fact that it is reasonably arguable will be readily apparent from the grounds of appeal and the trial judge’s reasons for judgment. CONSIDERATION In the present case I am of the opinion that the appellants’ application for an interlocutory injunction should be refused. The considerations that lead me to this conclusion are as follows. To begin with, I am not satisfied that any of the appellants’ grounds of appeal against the primary judge’s judgment have any reasonable prospect of success. I shall explain why. First, it is clear from the reasons of the primary judge and the appellants’ notice of appeal that the appellants do not challenge the proposition that the charge given by Forest Marsh to Bibby is valid and enforceable. Nor do the appellants challenge the validity of Mr Pleash’s appointment as receiver. Secondly, as is apparent from the primary judge’s reasons, the payment of $309,423.26 was insufficient to discharge Forest Marsh’s obligations to Bibby under the charge. So much appears to be accepted by the appellants’ grounds of appeal. Hence, there is no reason to doubt the correctness of the primary judge’s finding that Mr Pleash was not obliged to retire as a consequence of the 10 October 2008 payment. The proposition that the continuation of the receivership after that date was “wrongful” does not seem to me to be seriously arguable. Thirdly, the appellants’ arguments that the quantum of fees charged by the receiver on and after 10 October 2008 was excessive or unreasonable or was evidence of any breach of duty by the receiver are also not seriously arguable in the absence of any direct challenge to his Honour’s evaluation of the evidence as set out in para [102] of his Honour’s reasons. I turn to the appellants’ arguments in relation to the balance of convenience. These arguments appear to be flimsy and based upon various misconceptions. First, there is no evidence to suggest that the receiver is proposing to sell the property under value. It is not to be assumed against the receiver that he will act in breach of his duties in this or any other way. Should the receiver act in breach of any duty, or threaten to do so, then the usual remedies will be available to Forest Marsh.