Gardiner, R.J. v Elders Rural Finance Limited

[1993] FCA 97

IN THE FEDERAL COURT OF AUSTRALIA	)
NEW SOUTH WALES DISTRICT REGISTRY	) NO. NG503 of 1991 ~ - 1.
GENERAL DIVISION	)

BETWEEN: RODNEY JAMES GARDINER

First Applicant

VALERIE JEAN GARDINER

Second Appli

AND : ELDERS RURAL FINANCE LIMITED

RECEIVED

MINUTES OF ORDER FE,

REC

Spender J.
22 February 1993

Brisbane

THE COURT ORDERS THAT:

1.    The applicants deliver possession of all of the land known as 'Belmore' and more particularly described as lot no. 4 on plan BLM336 and being all of the land contained in grazing homestead freeholding lease 39/3480 within forty-two days.

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2.	The first and second applicants be restrained until the	!
trial of these proceedings, whether by themselves, their	1 < < ,
agents, employees or howsoever otherwise from preventing,	I
obstructing or otherwise hindering the exercise by the
respondent of its rights pursuant to a mortgage granted
by the first and second applicants in favour of the	I
respondent dated 31 October 1988 and registered on the
6th day of January 1989 pursuant to the Queensland Land	I I
Act 1962-1988 at the office of the Registrar of Dealings of the Department of Lands at Brisbane in the State of	L
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Queensland.	i
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3.	The applicants in the principal proceedings pay any costs
of the respondent in the principal proceedings thrown	i !
away by the necessity to re-plead to the amended
statement of claim.	!.,
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4.	Otherwise, the costs of the notice of motion filed on 23 December 1992 to be the respondent in the principal proceeding's costs in the principal proceedings.
5.	The foreshadowed appeal or application for leave to appeal be expedited.
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NOTE:	Settlement and entry of orders is dealt with in	.	.,
E 1
Order 36 of the Federal Court Rules.	.

IN THE FEDERAL COURT OF AUSTRALIA	)
NEW SOUTH WALES DISTRICT REGISTRY	1 No. NG503 of 1991
GENERALS DIVISION	1

BETWEEN: RODNEY JAMES GARDINER

First Applicant

VALERIE JEAN GARDINER

Second Applicant

AND: ELDERS RURAL FINANCE LIMITED

Respondent

CORAM:	Spender J.
DATE :	22 February 1993
PLACE :	Brisbane

REASONS FOR JUDGMENT

This is a notice of motion filed on 23 December 1992 which seeks, inter alia, orders that Elders Rural Finance Limited ('Elders') recover possession from Rodney James Gardiner and Valerie Jean Gardiner, the applicants in proceedings G503 of 1991 ('the Gardiners') all of that land known as 'Belmore' and more

particularly described as lot number 4 on plan BLM336 and being	all of the land contained in grazing homestead freeholding lease
39/3480 and that the Gardiners be restrained until the trial of these proceedings whether by themselves, their agents, their employees or howsoever otherwise from preventing, obstructing or otherwise hindering the exercise by Elders of its rights pursuant to a mortgage granted by the Gardiners in favour of Elders dated 31 October 1988 and registered on 6 January 1989 pursuantto the

Land Act 1962-08 (Qld) the office of the Registrar of Dealings, the Department of Lands at Brisbane in the State of Queensland.

The notice of motion also seeks an order concerning the amended statement of claim which was filed on 13 May 1992. i ,

That	.
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aspect of the motion was the subject of orders made on 10	!
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February 1993 and subject to the question of costs it need not	, ,
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be further considered.
Mr and Mrs Gardiner filed an application on 4 September 1991, The amended statement of claim filed on 13 May 1992 sought orders that the loan agreement between them and Elders made on 25 October 1988 be declared void; that the loan agreement be rewritten so that their obligations pursuant to that loan agreement be determined on the basis that the floor price of wool at or about the month of June 1988 remained current to the present time and that interest rates remain at the rate of 16.75 per cent to the present time and that two bills of mortgage granted by the Gardiners to Elders over a grazing homestead freeholding lease 39/3480 pursuant to the Land Act (the mortgage
Title Volume 7150 Folio 210 described as lot 6 on plan MAR 55,	over 'Belmore*) and the property contained in Certificate of
(the mortgage over 'Kiama') respectively be declared void and that a stock mortgage granted by the Gardiners in favour of Elders dated 31 October 1988 be declared void.
On 16 August 1991, a notice of demand by Elders was forwarded to Mr and Mrs Gardiner. That notice, which appears as RMD3 to the affidavit of Rodney Michael Dann filed on 23 December 1992, recited a default in both interest and principal and demanded the payment of $1,036,484.15, made up of $604,931.50 in respect of the term loan facility and $431,552.65 in respect of the pastoral season facility. The notice further declared on the part of Elders that the security as defined in the loan agreement and any security collateral thereto be immediately enforceable.
By notices of exercise of power of sale dated 21 August 1991 and addressed to Mr and Mrs Gardiner at 'Kiama' Station, Via St George, Elders purported to give notice of exercise of power of sale in Form 7 pursuant to S. 84 of the Propertv Law Act 1974- 1989. That notice of exercise of power of sale, in the form appropriate to the Propertv Law Act, gave notice that Elders required payment of the amount of $1,036,484.15 and gave further notice that:

"

Unless wi thin 30 days o f service upon you o f t h i s Notice t h e s a i d d e f a u l t i s remedied, Elders may proceed t o sell the Mortgaged Property and exerc i se a l l o f ( s i c ) any o f the o ther Dowers

conferred by the ' ~ o r t g a g ; and t h e ~ r o ~ e r z v Law

Act 1974-1989.

The relevance of that notice will be considered later. :. .

A similar notice was sent in respect of the property 'Kiamafr the notice also being dated 21 August 1991 and the	I .
document, mutatis mutandis, being the same as the notice in	I:
respect of the 'Belmore' grazing homestead freeholding lease.

By a notice dated 8 April 1992, again addressed to Mr

:

and Mrs Gardiner at 'Kiama' Station, Elders recited the notice

of demand and the notices pursuant to S. 84 of the Propertv Law
served on 22 August 1991 and the failure to pay the moneys

demanded and claimed by Elders. The notice demandedthe vacation

and delivery up of possession of both 'Belmore' and 'Kiama'.

By facsimile dated 8 April 1992 to the present solicitors for M r and Mrs Gardiner, the solicitors for Elders said inter alia:

"

Please adv i se a s a matter o f urgency whether or not your c l i e n t s w i l l d e l i v e r up

possession. "

On 14 April 1992 Mr and Mrs Gardiner replied saying:

"	Take n o t i c e we the above have no in ten t ion o f vacat ing possession o f e i t h e r of our
proper t i e s a t any time..."

Settlement negotiations between the parties took place between May and October 1992 but were unsuccessful.

The amended statement of claim, as indicated earlier,

was filed on 13 May 1992 and an amended defence and cross claim

was filed on 3 June 1992. On 28 October 1992 the solicitors for	Elders sought an undertaking from the Gardiners to deliver up
possession of 'Belmore' and that they would not interfere, hinder or obstruct Eldersr exercise of the power of sale. On the following day solicitors for Mr and Mrs Gardiner advised that the Gardiners declined to give those undertakings and that " [ a l n y
appl icat ions t o the Court w i l l be v igorously r e s i s t e d " .

An affidavit of Peter John Queitzsch, the Regional Finance Manager of Elders, was filed on 23 December 1992, in which Mr Queitzsch asserts that Elders advanced the sum of $600,000.00 on or about 7 July 1988 and has advanced further sums to the Gardiners from time to time in respect of the pastoral seasonal facility. As indicated, repayments of moneys advanced and interest thereon was secured by the granting of a stock mortgage and real property mortgages over 'Belmore' and 'Kiama'.

M r Queitzsch says that until November 1991 Elders

debited interest accruing on the fixed term loan account to the seasonal account. He says that as at 16 August 1991the amounts of $604,931.50 in respect of the term loan facility and $431,552.65 in respect of the pastoral seasonal facilitywere due and owing.

Importantly, he says that the Gardiners have not paid any moneys in reduction of the amounts due and owing under the facilities to Elders since the notice of demand was forwarded on 16 August 1991.

Mr Queitzsch states that as at 21 December 1992 the amount due and owing and payable by the Gardiners to Elders under the term loan facility was $723,047.00 and under the pastoral seasonal facility was $594,358.00. In paragraph 10 of his affidavit he swears:

"

The amount due and owing by the appl icants to the respondent far exceeds the value of

s e c u r i t y he ld by the respondent. "

He says that Elders has exercised i t s rights pursuant

t o the stock mortgage granted by the Gardiners.

There i s exhibited t o h i s a f f i d a v i t a l e t t e r from the

solicitors for Mr and Mzs Gardiner t o the sol ici tors for Elders

notifying that 'Kiama' was the subject o f a contract for sale at

a sale price o f $270,000.00. The l e t t e r states:

"	Your c l i en t may also be aware that the debt t o the F i r s t Mortgagee i s that much or more. Thus i f the sale i s t o proceed your c l i en t m u s t agree t o release i t s mortgage without receiving any payment i n return. Our c l i en t s
hope that your c l ient w i l l co-operate t o that
extent. The price obtained on the sale i s the
best available a s f a r a s our c l i en t s are
concerned and t o reject or t o default i s only l i k e l y t o occasion default action b y the F i r s t Mortgagee which could well resul t i n a sale for a lower price. "

The Commonwealth Bankof Australia andthe Commonwealth Development Bank are mortgagees o f 'Kiama' ranking i n priority t o Elders. There i s further material indicating the t o ta l debt due t o the Commonwealth Bank and the Commonwealth Development Bank i s $280,122.25 which i s i n excess o f the contract price i n

the contract o f sale referred t o i n that correspondence. That

evidence suggests tha t there i s no prospect o f any contribution from 'Kiama' t o any debt found t o be owing by t he Gardiners t o Elders.

On 18 October 1 9 9 1 I gave reasons for judgment on two

notices o f motion i n these proceedings. The f i r s t was a notice

o f motion f i l ed by t he Gardiners seeking that :

" The r e sponden t by i t s s e r v a n t s or a g e n t s be

r e s t r a i n e d from approaching, e n t e r i n g o n t o ,

d e a l i n g w i t h , or i n a n y way i n t e r f e r i n g w i t h

the p r o p e r t i e s known a s 'Kiama ' and 'Belmore '

o f the A p p l i c a n t s pend ing f i n a l d e t e r m i n a t i o n

o f these proceed ings o r f u r t h e r o r d e r o f the

Cour t . "

The notice of motion by Elders sought that:

" The first and second a p p l i c a n t s be r e s t r a i n e d

whe ther by t h e m s e l v e s their a g e n t s employees or

howsoever otherwise from p r e v e n t i n g o b s t r u c t i n g

or otherwise h i n d e r i n g the exercise by the

re sponden t	o f	i t s r i g h t s pursuant	t o a	stock
mortgage"

and also sought an order that the first and second applicants deliver up the wool clip in respect of the shearing of sheep on both 'Belmore' and 'Kiama'.

As those reasons make plain, I was and am fully
conscious of the terrible position in which the Gardiners find

themselves in respect of both physical and financial conditions.

The facts I set out in those reasons for judgment and the legal principles to which I there referred have a direct	relevance to those parts of the present motion I am now
considering. I incorporate those reasons without duplicating them further.
The position apparently is still heartbreaking. As to the applicants' claim, it has to be said at the outset that the allegations in the amended statement of claim are still not supported by evidence and, having regard to the nature of the representations relied on and the conduct sought to be impugned, my view is still that the prospects of success of the applicants can be put no higher than modest, but it is not possible to say that there is no chance of success in the claims that they advance.
When the matter was before me on the previous occasion there was no evidence as to the net worth of the properties. The position now is that there is some evidence, to which I have already referred, which suggests that the value of 'Belmore' is quite inadequate to pay the amount claimed by the mortgagee if that claim should be successful. The position still is that, regrettably, any undertaking as to damages offered by the applicants would have to be regarded as of no worth.
It is asserted that because there is a challenge to the validity of the securities, the applicants should remain in occupation without making any offer in respect of arrears of interest or of capital or offering to service interest in the future or without any requirement as to the payment in of any
exercising any rights they have pursuant to the securities until amount at all and that the respondents should be prevented from
the determination of the proceedings.
I referred in the earlier reasons for judgment to the applicable principles and in particular to the observations of Pincus J. in Mainbanner Ptv Ltd v. Dadincroft Ptv Ltd (1988) ATPR 40-896. I refer further to what was said in Town & Country Sports Resorts (Holdinas) Ptv Ltd v. partners hi^ Pacific Limited
(1988) 20 FCR 540 at 545, in particular the obscrvations that any
relaxation of the rule in Inalis v. Commonwealth Tradina Bank

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(1972) 126 C.L.R. 161 should be "restricted to cases where the	I
allegations which ground the plea for the use of the Court's	, .
powers under s. 87 are clearly arguable and not merely colourable	!
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and to cases which show an obvious nexus between the allegations	L
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of misleading and deceptive conduct in contravention of S. 52 of	:
the Act and the formation of the security documents sought to be
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varied or rendered unenforceable by the exercise of those powers."
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The position on this aspect of the matter is as it was ;

earlier.	There is nothing that can be done to give adequate	I
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protection to the mortgagee.	An undertaking as to damages would
be futile; there is no capacity to service interest in the future	L
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or service any part of the arrears of capital nor any capacity	i

to meet arrears of interest . It is clear that adequate I .

protection to the mortgagee in the moulding of any order that the

Court might make is just not possible.

Mr Crowley Q.C., who appeared with MS Skennar for the the mortgagee of its powers under the security documents should	applicants, made submissions concerning whether the exercise by
be postponed until after the trial similar to those which
previously were advanced. In short, it was submitted by him that
in the circumstances, for the respondent to enforce its rights
pursuant to the mortgage would be to circumvent the application,
and reliance was place on the judgment of the Full Court in i

..

Eltran Ptv Ltd v West~ac	Bankino Corporation (1990) 25 F.C.R.	. ,
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322; 98 A.L.R. 141.	L .

It was said for the Gardiners that given that the action was commenced on 2 September 1991 and has proceeded from that time in accordance with the Court's usual practice, it would be an injustice to now prevent the applicants from proceeding to trial.

It is true that the risk of irreparable harm is considered as part of the balance of convenience in cases where the grant or refusal of an interlocutory injunction would in effect dispose of the action finally in favour of whichever party was successful in the application. In my view, it has not been shown that to grant the relief claimed in the notice of motion by Elders would lead to irreparable harm, as that phrase has to be understood legally, nor would it effectively dispose of the litigation. Deeply conscious as I am of the attachment the Gardiners have to their properties, the exercise of Elders' rights does not fatally frustrate the litigation. It is not suggested that should the Gardiners be successful in the principal proceedings, Elders would not be able to meet any order the Court might make, subject of course to the consequence that

the restoration of the property in specie might not be possible. For the reasons I have referred to on the earlier occasion and today, this is not a case where I, on the consideration of those submissions on behalf of M r and Mrs Gardiner, could make orders having the effect of denying Elders their rights to exercise the powers given by the security documents.

However, there are further matters urged by Mr Crowley in resistance to the making of the orders sought in the notice of motion. The first of those was disqualifying laches; the second was the absence of clean hands; and the third claimed a defect in the notice of default.

It was said, on behalf of Mr and Mrs Gardiner, that subsequent to the service of the notice of demand dated 21 August 1991 and the demand for possession made on 14 April 1992, there has been no urgency in recovering possession of the land or any promptness by Elders in enforcing what rights it may have under the mortgage. This aspect of the matter raises the question of what is the position of a mortgagee as to the timing of a power of sale conferred by a mortgage.

It was submitted on behalf of the Gardiners that the

Pro~ertv Law Act imposes on a mortgagee a duty " t o t a k e

r easonab l e c a r e t o e n s u r e t h a t the p r o p e r t y i s s o l d a t marke t

value ." The observations of Lord Salmon in the Court of Appeal in Cuclanere Brick CO Ltd v. Mutual Finance Ltd (1971) 1 Ch. 949

at 966 were referred to, where his Lordship said:

" The mor tgagor i s v i t a l l y a f f e c t e d by the

r e s u l t o f the s a l e b u t i t s p r e p a r a t i o n and

conduc t i s l e f t e n t i r e l y i n the hands o f the

mortgagee . The p r o x i m i t y be tween them c o u l d

s c a r c e l y be closer. S u r e l y they a r e

for the benefit o f the mortgagee and t h a t he	"ne ighbour s . " Given t h a t the power o f s a l e i s
i s e n t i t l e d t o choose the moment t o sell which
s u i t s him, it would be s t r a n g e i ndeed i f he
were under n o l e g a l o b l i g a t i o n t o t a k e
r e a s o n a b l e c a r e t o o b t a i n what I c a l l the t r u e
marke t v a l u e a t the d a t e o f the s a l e . "

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Far from this passage suggesting that a mortgagee is obliged to act expeditiously, in terms it says that the mortgagee	f ~	C
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is	" e n t i t l e d t o choose the moment	t o sell	which s u i t s him".	l
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There is no doubt that the Propertv Law Act imposes a duty on the mortgagee to take reasonable care to ensure that the

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property is sold at market value, but that duty, in my opinion,

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is not connected with the question of when, if at all, the mortgagee is obliged to exercise any power of sale that the mortgagee may have.

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The timing of the exercise of power of sale given to

a mortgagee is discussed by Duncan and Vann in Prouertv Law and
Practice at paragraph 85.4 where the authors say:

I

" The mortgagee i s e n t i t l e d once d e f a u l t h a s

occurred t o t a k e the a p p r o p r i a t e s t e p s (e .g .

n o t i c e under s 84 , c o n t r a c t o f s a l e ) t o

exercise h is power o f s a l e a t a n y time; he i s

n o t	o b l i g e d	t o "nur se"	the p r o p e r t y	and	wa i t
u n t i l marke t	c o n d i t i o n s	a r e	favourab le	f o r	a

s a l e . T h i s i s one r e s p e c t i n which a

mortgagee, n o t w i t h s t a n d i n g the enactment o f

s 8 5 ( 1 ) , s t i l l d i f f e r s from a t r u s t e e f o r

s a l e , and need not a c t a s would a prudent

person i n r e l a t i o n t o his own proper t y . "

The authors continue:

" Moreover when t h e power o f s a l e h a s become

e x e r c i s a b l e a f t e r d e f a u l t , service of n o t i c e

under S 84 and c o n t i n u a t i o n o f d e f a u l t f o r 30

days a f t e r service o f n o t i c e , there i s no

requ i rement t h a t the mortgagee sell w i t h i n a

reasonable time; the mortgagee i s n o t

answerable f o r d e l a y i n e x e r c i s i n g his power

o f s a l e , n o t w i t h s t a n d i n g t h a t market

c o n d i t i o n s d e t e r i o r a t e i n the meantime. "

For the last proposition the authors cite two unreported judgments of Connolly J.; Jones v. Bank of New South Wales No. 1094 of 1978 and Nixon v. Commercial and General Acceptance Ltd, unreported at first instance, No. 343 of 1978. The question of timing of the sale by a mortgagee was not discussed at the appellate levels in the litigation of Nixon v. Commercial and General Acceptance Ltd.

The principle that a creditor is not under a duty to exercise his power of sale over mortgage securities at any particular time, or at all, appears in the Privy Council decision of China and South Sea Bank Limited v. Tan [l9891 3 All E.R. 839 where Lord Templeman, giving a judgment of the Board, said at 842 :

" The c r e d i t o r was not under a duty t o exercise

h i s power o f s a l e over the mortgaged s e c u r i t i e s

"

a t any par t i cu lar time o r a t a l l .

In Countrv Wide Bankina Corporation v. Robinson [l9911

1 N.Z.L.R. 75 the Court of Appeal heard an appeal from a refusal not shown that it did not delay the sale of the property unduly	by a Master to enter summary judgment because the plaintiff had	and that, as a consequence, it did not obtain the best price reasonably obtainable for it.
The judgment of the Court was given by the President, Sir Robin Cooke, and he said at 77:

" The law on tha t point	i s c l e a r and appears for
instance i n the judgments	o f the P r i v y Council

i n Tse Kwonq Lam v W o n q C h i t Sen [ l 9831 3 A l l

E.R. 54 and China and Sou th Sea Bank L t d v

r1989 7 3 A l l E.R. 839. E a r l i e r the main modern

L-- - - .8	- - - - -
a u t h o r i t y i n England	had been Cuclonere B r i c k CO
L td v Mutual Finance L t d 139711 2 A l l E.R.	633,

and th is Cour t had assumed t h a t C u c h e r e B r i c k

correctly s t a t e d the l a w i n Alexandre v &w

Zealand Brewer ies L t d [ l 9741 1 NZLR 497.

The impor tan t p o i n t i s t h a t it i s for a

mortgagee c o n t e m p l a t i n g s e l l i n g i n the exercise

o f a power of s a l e t o d e c i d e i f and when he w i l l

sell. In the event of his e l e c t i n g t o sell, he

does owe a	d u t y t o the mortgagor	t o t a k e
r easonab l e	c a r e a t t h a t t i m e t o o b t a i n	the best

p r i c e . "

The position, in my opinion, is that S. 85 of the Pro~ertv Law Act does not impose upon a mortgagee an obligation to exercise its power of sale at any particular time after default has occurred under the mortgage. Under the general law there is no obligation on the mortgagor to whom a power of sale is conferred to exercise it forthwith or at any particular time. In particular, I reject that any such obligation is implied by the statutory duty contained in S. 84 of the Prouertv Law Act.

Any allegation of delay is not relevant in the present mortgagee unreasonably standing by is a live one. I am satisfied context even if, contrary to my view, the question of the

that there has been no unreasonable delay by the mortgagee in the
circumstances disclosed by the evidence here.

The second matter is that of unclean hands. What is said in this respect is that where Elders has been granted an injunction to protect its rights it has done so at the expense of the Gardiners and without regard to any of their rights. This

s p e c i f i c a l l y refers t o what E l d e r s h a s done pursuant t o the

o r d e r s made concerning the s t o c k mortgage o n 1 8 October 1 9 9 1 .

Those o r d e r s a r e r e f e r r e d t o i n a n a f f i d a v i t o f Mr

Gard iner f i l e d o n 10 February 1993. The a f f i d a v i t a l s o refers

t o some e v i d e n c e f i l e d by E l d e r s on t h a t e a r l i e r a p p l i c a t i o n t o

the e f f e c t t h a t the sheep on	'Belmore'	were i n poor	o r very poor
c o n d i t i o n .	Amongst	o t h e r paragraphs	o f a n a f f i d a v i t o f A lan John

R e i d ( the manager o f the S t . George b ranch o f E l d e r s ) , Mr

Gard iner refers t o paragraph 39 , where M r Reid deposes :

" ... i n v i e w o f the drought s i t u a t i o n I believe

t h a t u n l e s s immedia te s t e p s a r e t a k e n t o reduce the s t o c k levels on the p r o p e r t i e s t h a n (s ic)

the c o n d i t i o n o f the ewes w i l l d e t e r i o r a t e and

I f u r t h e r believe t h a t the w e l l b e i n g o f the

new born lambs w i l l be s e r i o u s l y p re jud i ced . "

M r Gardiner refers a l s o t o a number o f paragraphs i n an a f f i d a v i t

sworn i n the e a r l i e r proceed ings by Kevin Prow and, i n

p a r t i c u l a r , paragraphs 26 , 27 and 28 i n these t e r m s :

"

26. A c c o r d i n g l y I believe t h a t the c o n d i t i o n o f

the s t o c k on the s a i d p r o p e r t i e s w i l l

d e t e r i o r a t e u n l e s s the s a l e a b l e s t o c k i s s o l d

i n the n e a r f u t u r e .

27. Fur the r I believe from m y i n s p e c t i o n o f

Belmore t h a t the p r o p e r t y i s s t o c k e d w i t h

s e v e r a l	thousand ewes some o f which had lambed
i n Ju ly /Augus t	1991.

28. A c c o r d i n g l y i n v i e w o f the c o n d i t i o n o f the

p r o p e r t y a s a r e s u l t o f the drough t c o n d i t i o n

I believe t h a t u n l e s s the s t o c k numbers on

Belmore a r e s u b s t a n t i a l l y r educed the c o n d i t i o n

o f the ewes and i n p a r t i c u l a r the w e l f a r e o f

the newborn lambs w i l l be a t risk. "

M r Gardiner says that in October 1991 there were

approximately 6000 grown sheep on 'Belmore', of which 4500 were ewes that had recently lambed. There were 3500 grown wethers and grown ewes which had been culled on 'Kiama' . There were also 55 head of cattle on 'Belmore'. He says that as a result of the order made on 18 October 1991 on 28 October 1991 1887 sheep were trucked out of 'Kiama' which the material suggests were sold for the sum of $3565.67, an average sale price of $1.88 per head.

Mr Gardiner claims that the sheep were worth, on average, between

$6 and $12 per head. He says that the residual number of sheep

left on 'Kiama' were approximately 1100.

Mr Gardiner says that on or about 6 November 1991 Mr

Prow attended 'Belmore' and commenced to muster all stock into the sheep yards. He mustered approximately 1800 ewes, 3500 lambs and 67 rams in the 'middle paddock', 2000 weaners were placed in the paddock known as the 'lake paddock' and approximately 2000 remaining ewes placed in a paddock known as the 'red tank paddock'. Mr Gardiner says that on or about 2 January 1992 the 'middle paddock' was again mustered and 835 ewes were trucked out

and, the material suggests, were disposed of at a debit amount	of $3.28.
The remaining sheep in the 'middle paddock' at the time were 150 lambs and 24 rams, says Mr Gardiner. The rest of the sheep had perished from starvation. Mr Gardiner asserts that the number of sheep placed in the 'middle paddock' from the November muster was approximately three times the number that the paddock usually carries. He says that on or about 26 March 1992 Mr Prow

attended 'Belmore' and proceeded to muster the 'red tank paddock', and on 28 March 1992 eight semi-trailer trucks of sheep were trucked out, approximately 850 sheep. Those sheep on an information and belief basis Mr Gardiner says were taken to 'Kiama' .

Mr Gardiner says that:

" On or about the 9th April 1992 Kevin Prow again

attended 'Belmore' and proceeded to muster the lake paddock. On the 4th of April 8 decks were trucked out equating to approximately 850 sheep. "

That cannot, in fact, be right as to times, but I take it that after the muster in early April 1992 a first shipment of approximately 850 sheep was made. On or about 11 April 1992 six decks were trucked out equating to approximately 650 sheep. Those two lots were taken to St Geoxge again to 'Kiama'. Mr Gardiner says:

" There were no sheep left in the lake paddock

and therefore approximately 500 sheep had

perished. "

On 19 April 1992 Mr Gardiner went to 'Kiama' and noticed that all the sheep thereon had been shorn. The credit for that shearing, $18,494.10, was credited to the account of the Gardiners for the sale of 39 bales of wool.

Mr Gardiner says that:

" On or about t h e 16th of October 1992 t h e

remaining sheep on 'Kiama' were mustered and
shortly thereafter trucked out. "

A December statement of the pastoral facility account notes the sale of 1752 sheep for $11,388.00, at an average price of $6.50 a head.

On 25 November 1992, Mr Gardiner, on an inspection of 'Xiama', noticed the bones of approximately 1100 sheep near the northern boundary of 'Kiamaf. Those sheep had been shot. He took photographs of the site and notes that the pastoral facility statement for December includes an item of $80 for bullets, and there is also an invoice dated 20 December 1991 for the purchase of bullets. Mr Gardiner apparently took wool samples from the bones of those sheep. While the material is not extensive in this regard, there is a suggestion in a letter by Mrs Gardiner to a Mike Bowden that the fleeces would weigh between 2% kilograms to 4 kilograms, but whether that applies to all or what proportion of the 1100 sheep is not clear from the evidence.

The material suggests that the value of the wool

samples ranged from 270 to 320 cents per kilogram as at November

1991. I understand that this evidence is directed at suggesting that shooting the 1100 sheep on 'Kiama' showed a reckless lack of concern by Elders for the interests of the applicants. I have to say that if any other course were sensibly open to Elders it also shows a reckless indifference by it to its own interest.

The allegations by Mr Gardiner have been mct on an information and belief basis by Mr Dann who relates statements by Mr Reid.

As to stock numbers, Mr Reid says that the only way that sheep can be counted is to muster them, and he says that on 11 November 1991 when Elders mustered the sheep on 'Belmore' the numbers totalled 4720 sheep, and he gives a break down of that number.

M r Reid says as to the complaint by M r Gardiner that

the sheep were worth substantially more than the price obtained by Elders, that the price obtained for the sale of those sheep was the best obtainable. M r Reid says that the sale was in the middle of a drought and the sheep were in very poor condition, and the sheep were sold on the basis of paddock inspection. Mr Reid claims that 'Kiama' could not sustain the sheep at that time and that Elders sold those sheep which were commercially saleable.

As to the sheep that were sold as a result of the

trucking out of the 835 ewes in the early part of January 1992,

Mr Reid says that those sheep were sold to the meatworks, being

in such condition that they were otherwise unsaleable, and that the only other humane option would have been to shoot them. The sheep were sold to the meatworks on the basis that Elders recoup mustering costs and did not incur transport costs. The sheep were moved into paddocks for the purpose of ascertaining the numbers of sheep, different types of sheep, and the condition of

t h e sheep with a view t o determining how commercially and
humanely t o deal with them.

I . 1 :

In response t o t h e matters t o which Mr	Gardiner re fe rs ,	, ,
i

namely the mustering of t he 26 March 1992 , and the trucking out	!
1 I
on 28 March 1992 , and t h e two truckings out i n the middle of
, .

Apri l 1992 ,	M r Reid says t h a t a t t h a t time there was more	feed	I .
I '

f o r t h e sheep on 'Kiama' than a t 'Belmore' and it was b e t t e r able

I /

t o sus ta in the sheep than 'Belmore'	.	M r Reid says t h a t a number	I
ii

of sheep had died since Elders f i r s t began handling the sheep	)
because of the drought conditions and the condition and age of	I.

t he sheep. Mr Reid claims t h a t t h e losses of stock sustained on

other	propert ies	i n the	area	w e r e	s imi la r	o r worse	than	i	i
!

experienced i n respect of t h e sheep belonging t o the Gardiners.

A s t o the shooting of t h e sheep on the northern

boundary a t 'Kiama',	Mr Reid says t h a t a number of sheep were
shot by Elders on humane grounds.	The property could not susta in

t h e sheep a t t h a t time,	t h e sheep w e r e dying,	and w e r e unsaleable
i n t h a t condition.	The cos t of	attempting t o move the sheep and

feed them, and render them i n a sa leab le condition would not have

been commercially viable .

Whether a s a matter of p r a c t i c a l i t y the sheep could

have been shorn before being shot is a matter t h a t i s l e f t

unresolved among the mater ia l before m e .

In summary, whether t h e r e has been any defaul t by

Elders i n the exercise of i t s power of s a l e under the stock

2 1

mortgage is the subject of disputed questions of fact. It is a factor that I have seriously considered. It is not possible, however, to conclude that there has been any absence of clean hands.

The final matter concerns the notice of default. The land is held pursuant to a grazing homestead freeholding lease under the Land Act. It is clear that the Gardiners granted a mortgage to Elders under S. 275 of the Land Act.

It seems clear that the provisions of S. 84 of the Propertv Law Act have no application to the Gardiner's leasehold land. The notice under S. 84 of the ProDertv Law Act, therefore, has no application and is an irrelevance. The position at law is that the rights of Elders are regulated by S. 279 of the Land

- Act and those requirements are mandatory.

The position of Elders under the Land Act is governed

in the present circumstances by S. 279(1)(a) which provides:

" I f d e f a u l t i s made i n the payment o f the money

secured by memorandum o f mortgage, o r upon the

happening o f a n y event which , accord ing t o t h e

t e rms o f the memorandum,	en t i t les the mortgagee
so t o do,	the mortgagee may -
( a )	e n t e r upon and

t a k e and r e t a i n p o s s e s s i o n

o f the h o l d i n g , g i v i n g n o t i c e o f such

entry to the Minister w i t h i n 30 days

t h e r e a f t e r . "

No entry upon, no taking and retention of possession
of the holding having taken place, the obligation to give notice

to the Minister has not arisen. Elders' powers spring into

existence:

" If default is made in the payment of the money

secured by memorandum of mortgage, or upon the happening of any event which, according to the terms of the memorandum, entitles the mortgagee so to do. "

Mr Queitzsch's affidavit demonstrates that there has been default in the payment of the moneys secured by the memorandum of mortgage and that is not contradicted. The default is consistent with the terms of the notice issued in purported but mistaken compliance with the obligations of S. 84 of the Propertv Law Act.

Clause 10.4.1 of the mortgage empowers the mortgagee after the occurrence of default to enter upon and take possession

of the mortgaged property without giving any notice to the

mortgagor. In the event therefore, nothing turns upon the fact

that Elders did give notice of its intention to exercise power

of sale wrongly believing it was obliged to do pursuant to the	, .
Property Law Act.

I propose to make the orders sought in the notice of motion filed on 23 December 1992.

I

I order that the applicants deliver possession of all of the land known as 'Belmore' and more particularly described

i

l

i

as lot no. 4 on plan BLM336 and being all of the land contained

!

I	-
,	.

i

in grazing homestead freeholding lease 39/3480 within forty-two
days.

I order that the first and second applicants be restrained until the trial of these proceedings, whether by themselves, their agents, employees or howsoever otherwise from preventing, obstructing or otherwise hindering the exercise by the respondent of its rights pursuant to a mortgage granted by the first and second applicants in favour of the respondent dated 31 October 1988 and registered on 6 January 1989 pursuant to the Queensland Land Act 1962-1988 at the office of the Registrar of Dealings of the Department of Lands at Brisbane in the State of Queensland.

I order that the applicants in the principal proceedings pay any costs thrown away by the necessity to re- plead as a consequence of the orders made concerning the amended statement of claim; otherwise the costs of the motion be Elders' costs in the principal proceedings.

[There were further submissions.]

I order that the foreshadowed appeal or application for

leave to appeal from the orders that I have today made be
expedited.

I cer t i fy t h a t th is and the 1:

preced ing twen ty-three (23) pages

a r e a t r u e c o p y o f the r e a s o n s j .

f o r judgment herein o f the

Honourable Mr Just . ice Sp.ender. 1

s s o c i a t e

Date:  February 1993

Counsel f o r the a p p l i c a n t s : Mr J . G. Crowley Q.C. w i t h

MS D . Skennar

i n s t r u c t e d by : Crowley & Greenhalgh

Counsel for the re sponden t	:	M r P . App leqar th
i n s t r u c t e d by	:	Corrs Chambers Wes tgar th

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Date o f Hearing : 10 February 1993 I !