Hamilton v Mongan - [2021] WASC 408

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CIVIL

CITATION:   HAMILTON -v- MONGAN [2021] WASC 408
CORAM:   MASTER SANDERSON
HEARD:   8 NOVEMBER 2021
DELIVERED          :   23 NOVEMBER 2021
FILE NO/S:   CIV 1729 of 2021
BETWEEN:   ANTHONY ROBERT HAMILTON
First Plaintiff
MARK ANTHONY WALLACE
Second Plaintiff
AND
TRENT MONGAN
Defendant

Catchwords:

Interlocutory injunction - Alleged breach of terms of two deeds - Turns on own facts

Legislation:

Nil

Result:

Injunction discharged

Category: B

Representation:

Counsel:

First Plaintiff	:	C S Williams
Second Plaintiff	:	C S Williams
Defendant	:	C Chenu

Solicitors:

First Plaintiff	:	Solomon Brothers
Second Plaintiff	:	Solomon Brothers
Defendant	:	Murcia Pestell Hillard

Case(s) referred to in decision(s):

Nil

MASTER SANDERSON:

These reasons concern the plaintiffs' application for an interlocutory injunction. The action was commenced by writ of summons filed 27 July 2021. A statement of claim was endorsed on the writ. The plaintiff pleads that on or about 27 November 2019 the plaintiffs and the defendant each signed and delivered a deed titled 'Deed of Settlement and Release'. This deed is referred to in the pleadings (and throughout these reasons) as 'the First Deed'. The First Deed anticipated that on the listing of a company known as Georgina Energy Plc (Georgina) on the London Stock Exchange, certain payments would be made to the defendant. The plaintiff pleads certain provisions relating to releases under provisions of the First Deed and also pleads the First Deed was 'confidential to the plaintiffs and the defendant and was not to be disclosed by any of the plaintiffs or the defendant to any person without written consent of the others'. (The reference in par 2.3 of the statement of claim is to 'the Previous Deed'. The plea only makes sense if that reference is to the First Deed).
Georgina was not listed as anticipated and, in the main, the provisions of the First Deed fell away. It was however common ground between the parties that the confidentiality provision pleaded in par 2.3 of the statement of claim remained effective.
The plaintiff pleads that on or about 24 June 2020 the plaintiffs and the defendant signed and delivered a further deed titled 'Deed of Settlement and Release'. This is described as 'the Second Deed'. In par 5 of the statement of claim the plaintiffs plead certain express terms of the Second Deed. It is this plea which is central to this application. The plaintiffs have not pleaded the express terms of the Second Deed but rather plead what they say on a proper construction was the effect of certain terms. Par 5.1 of the statement of claim is in the following terms:
5.1. the defendant would not make a statement (whether written or oral, and including any form of electronic messaging) about the plaintiffs or their “Related Entities”, or the officers, servants or agents thereof, which;
5.1.1. concerned the subject matter of the Second Deed;
5.1.2. was likely to injure or in any way diminish or detrimentally affect the reputation of the plaintiffs or their “Related Entities” or the officers, servants or agents thereof; and /or
5.1.3. was intended to, or had the effect of, causing any third party to:
(a) not deal, or to reduce or limit their dealings with; and/or
(b) take any action, or refrain from taking any action, which would (or may) be prejudicial to, or to the interests of,
the plaintiffs, their Related Entities or the officers, servants or agents thereof.
By par 5.2 of the statement of claim, the plaintiffs plead the Second Deed contained certain releases in relation to the plaintiffs and their 'Related Entities'. Par 5.3 details the Related Entities. The plaintiffs then go on to plead three alleged breaches of the deeds – one breach of the First Deed and two breaches of the Second Deed.
The first of these alleged breaches, which relates to a company known as Linear Investments Limited, is pleaded in par 6 to 14 of the statement of claim. It relates to an alleged breach of the Second Deed. The plaintiffs plead that as at November 2020 each of them was a director of Precious Gem Investments Plc and Westmarket Diamonds Pty Ltd. It is said each of these two companies was a 'Related Entity' within the definition of the Second Deed. That was not in dispute between the parties. The two companies were in the process of issuing notes to be traded on the Frankfurt Stock Exchange with the intention of raising US$250 million. The program sponsor/settlement agent for the proposed listing of the Notes was Linear Investments Ltd (Linear). On or about 11 November 2020 the defendant sent an email to Linear which requested the provision of the prospectus and investment framework details for the Notes issued. None of these pleas is controversial.
By par 10 it is pleaded the defendant, in or about November 2020, contacted the Financial Conduct Authority (UK) and 'made statements to the effect that the plaintiffs had been involved in a loss making activity involving impropriety and were therefore unfit to hold office as directors' of the related entities. The plaintiffs say, as a consequence of that conduct, Linear withdrew from the listing thus occasioning the plaintiffs' loss and damage. Further, they say the conduct breached the provisions of the Second Deed and, as a consequence, the defendant is liable for damages consequent upon Linear's withdrawal from the Note issue. The defendant joins issue with the plaintiffs on the allegation that he contacted the Financial Conduct Authority. I will deal with the evidence that goes to this alleged breach and the other alleged breaches below. But first, I will set out the pleaded breaches.
The second breach relates to a person by the name of Andreas Migge. The plaintiffs plead Mr Migge had agreed to accept appointment as the chairman of Georgina. They further allege on or about 7 April 2021 the defendant telephoned and sent emails to Mr Migge and made statements to Mr Migge to the effect the plaintiffs owed him money and were being investigated in Australia. This, it is said, was a breach of the Second Deed. It is further pleaded, as a consequence of this breach, Mr Migge withdrew his agreement to be appointed as chairman of Georgina.
The third alleged breach relates to an individual known as Gerard Mizrahi. The plaintiffs allege the defendant sent Mr Mizrahi a copy of the unexecuted First Deed. The defendant admits he did so, thereby breaching the provisions of the First Deed. I will have more to say about the circumstances of this breach of the First Deed by the defendant below. But for the present it is to be noted the defendant admits he breached the First Deed.
There was no dispute between the parties as to the applicable principles on the grant of an interlocutory injunction. It is for the party seeking the injunction to satisfy the court there is a serious question to be tried and the balance of convenience favours the grant of the injunction. In this case, it was the defendant's position that there was no serious question to be tried and, even if there was, the balance of convenience did not favour the grant of the injunction. In fact, as at the date of the hearing, there was an injunction in place. The defendant entered an appearance on 5 August 2021 and on 25 August 2021 the plaintiffs filed a chamber summons seeking an interlocutory injunction. That application was supported by affidavits of the first and second plaintiffs, both affidavits sworn 24 August 2021. On 2 September 2021 I granted an injunction pending further consideration of the plaintiffs' application – at that stage, the defendant had filed no affidavit material. Relevantly, the terms of the injunction were as follows:
5. Until the determination of the application made by the plaintiffs for interlocutory injunction by way of chamber summons filed on 25 August 2021 ("the Application") or further order, the defendant be restrained from:
5.1 disclosing the deed titled "Deed of Settlement and Release" between the plaintiffs and the defendant dated October 2019 and executed on or about 27 November 2019, save for disclosures which are:
5.1.1 for the bona fide purpose of taking advice;
5.1.2 compelled by law; and
5.1.3 of information that is already in the public domain other than as a result of a breach of clause 8.1 of such deed or this order by the defendant; and
5.2 making a statement (whether written or oral and including, without limitation, any form of hard copy or electronic messaging and any form of posting or commenting on any hard copy, internet, social media or other platform or application) about ("the Benefitted Parties"):
5.2.1 the plaintiffs;
5.2.2 Georgina Energy PLC (a company incorporated in the United Kingdom, registered number 11954589), Westmarket Oil & Gas Pty Ltd A.C.N. 630 241 397, Westmarket Corporation Pty Ltd A.C.N. 615 146 819, Leaky Boat Super Pty Ltd A.C.N. 629 645 683 and Mordale Super Pty Ltd A.C.N. 629 059 847;
5.2.3 any other person or entity which is a related entity of any of the plaintiffs or of any of the parties listed in the preceding subparagraph, as that term is defined in s.9 of the Corporations Act 2001 (Cth); or
5.2.4 the officers, servants or agents thereof, which:
5.2.5 concerns the subject matter of the deed titled Deed of Settlement and Release between the plaintiffs and the defendant dated June 2020 and executed on or about 24 June 2020;
5.2.6 is likely to injure or in any way diminish or detrimentally affect the reputation of any of the Benefitted Parties; and/or
5.2.7 is intended to, or has or may have the effect of, causing any third party to:
(1)not deal, or to reduce or limit their dealings with; and/or
(2) take any action, or refrain from taking any action, which would (or may) be prejudicial to, or to the interests of, the Benefitted Parties.
By the time the application was fully argued, the defendant had filed two affidavits, one sworn 15 October 2021 and the second sworn 2 November 2021. Each of the plaintiffs had filed a further affidavit, each of these affidavits being sworn 22 October 2021. The parties filed comprehensive written submissions.
It is not in dispute that there has, over an extended period of time, been considerable ill-will between the first plaintiff and the defendant. The genesis of their strained relationship dates back to the period 2013 to 2016. The first plaintiff acted as a consultant to a company incorporated in the Seychelles named Gilmar Corp (Gilmar). The defendant entered in a loan agreement with Gilmar dated 15 April 2014. Gilmar made payments to the defendant in relation to that loan but then it failed and the defendant sustained significant loss. He clearly regarded the first plaintiff as personally responsible for the losses he suffered. In fact, Gilmar was a separate legal entity and there was never, at any time, a liability owed by the first plaintiff to the defendant. That appears not to have stopped the defendant believing the first plaintiff was responsible for the losses he suffered. The first plaintiff alleges the defendant made unfounded allegations about his conduct in relation to Gilmar. Eventually, proceedings were issued and this led to the First Deed being entered into. All of this background is set out in the first plaintiff's first affidavit. I mention it because in his submissions, counsel for the plaintiffs pointed to the defendant's behaviour in relation to Gilmar as indicating the defendant was prone to making disparaging statements about the plaintiffs. Although the second plaintiff had no involvement with Gilmar, it would seem the defendant viewed him as guilty by association. In any event, in determining this application, it must be acknowledged the defendant has, in the past, attacked the reputation of the plaintiffs, both verbally and in writing.
Turning then to the alleged breach in relation to Linear. There seems to be no doubt that someone made a report to the Financial Conduct Authority and that regulatory body contacted Linear. The evidence for that is found in attachment MAW-3 to the second plaintiff's first affidavit. The message relayed on the LinkedIn app relevantly reads as follows:
Hi Mark, sorry I haven't contacted you. This has gone really screwed up.. The FCA are all over us.. Someone complained about us to the FA, saying there was corruption case related to you guys and we have not done DD.. I am guessing it's your guy. We have had to stop….
Prior to the hearing the defendant raised an objection to the admissibility of this evidence. After hearing argument, I allowed the affidavit and the attachment into evidence. I did so on the basis that this message was sent and received by the plaintiffs. What is actually said in the message may or may not be true. But for the purposes of an interlocutory application, I was satisfied the message was admissible.
On behalf of the plaintiffs it was submitted first, the defendant had a history of making allegations about the plaintiffs. Second, the fact he approached Linear to obtain a copy of the prospectus indicated he was aware a fundraising effort was underway. Third, someone complained to the Financial Conduct Authority. Finally, it was reasonably arguable the person who made the complaint was the defendant and, in doing so, he breached the Second Deed.
On behalf of the defendant, it was said there was no evidence at all to connect any complaint made to the Financial Conduct Authority with the defendant. Furthermore, the defendant says in his first affidavit he did not contact the Financial Conduct Authority 'at any time'. The defendant's statement is short and to the point, but it is difficult to see what more he could have said.
In my view, the decisive factor in determining whether or not there is a serious question to be tried on this issue is the defendant's unequivocal statement he did not contact the Financial Conduct Authority. The plaintiffs have every right to be suspicious. But they do not have any tangible evidence it was the defendant who complained to the Financial Conduct Authority. There may have been other persons who, rightly or wrongly, doubted the probity of the plaintiffs. Nothing in the evidence indicates who that individual or individuals might be. But it is a possibility. While I would accept the plaintiffs are entitled to further investigate this issue, I am not satisfied, based on the evidence as it stands at present, there is a serious question to be tried on this issue.
In relation to Mr Migge, in his first affidavit the first plaintiff had this to say:
On or about 8 November 2019, Andreas Migge was appointed as a non‑executive director of Georgina. Annexed hereto and marked 'ARH-27' is a copy of a letter of appointment. Mr Migge also agreed to act as chairman of Georgina.
In the first plaintiff's second affidavit, he deals further with Mr Migge and his resignation as chairman of Georgina. Appearing as attachment ARH-35 to that affidavit, are copies of WhatsApp messages passing between Mr Migge and the plaintiffs. The affidavit and the attachments seek to establish two things. First, the defendant was in touch with Mr Migge and made statements in contravention of the provisions of the Second Deed. Second, Mr Migge resigned his position with Georgina consequent upon the defendant's actions. For the purposes of the injunction proceeding, it is the first of those propositions which is important – that is to say, the allegation the defendant breached the terms of the Second Deed. What flowed from that would be an issue for trial – whether or not as a consequence of the breach of the deed the plaintiffs suffered loss and damage.
In his first affidavit, the defendant denies he sent any email to, or had any telephone discussions with Mr Migge 'as pleaded in the statement of claim'. The defendant deals further with this issue in his second affidavit. Relevantly, that affidavit reads as follows
I have read the affidavits of the plaintiffs which were sworn on 22 October 2021 and the affidavit of the first plaintiff sworn on 15 October 2021.
I did not have any telephone conversation with Mr Migge in which I said that the plaintiffs were involved in impropriety and owed money in relation to a diamond mine venture (as alleged at paragraph 14 of the second plaintiff's affidavit sworn 22 October 2021 ).
I do not know why Mr Migge would have:
a) held any concerns about me making any public allegations against Mr Hamilton or Mr Wallance; or
b) said that he was concerned about me making such allegations public.
Assuming it was said, I do not know what Mr Migge meant by 'Mongan is being very active in his allegations', as deposed to by Mr Wallace in paragraph 18 of his affidavit sworn on 22 October 2021.
Appearing as attachment TKM-2 to the defendant's first affidavit is a letter from Georgina's solicitors to Mr Migge dated 29 June 2021. That letter reads in part:
Our client: Georgina Energy PLC (the 'Company')
We refer to our letter dated 27 April 2021. In that letter, we set out in detail the grounds upon which your role at the Company was terminated. Those grounds were serious ones which justified that termination with immediate effect. By way of a reminder, the key complaints against you centred around representations in an email sent by you, without knowledge of the Company, to one of the Company's investors, Mr Quast, on 10 August 2021 which:
(a)Falsely included yourself as being within a confidential shareholder list;
(b)Falsely represented that you had invested £100,000 into the Company;
(c)Falsely represented that you had the benefit of warrants worth up to 10m shares;
(d)Wrongly provided Mr Quast with confidential details of other investors and their investment (including details of which investors were considering further investment) before such details were ready for reporting to the market;
(e)Concealing from the Company the misrepresentations which you had made; and
(f)Damaging the Company's relationship generally, and specifically with a key investor.
Those allegations are serious. They caused an investor (Mr Quast) to accuse the Company of 'embezzlement' on the basis of your 'faked excel spreadsheet' which he described as 'totalling unacceptable, contradictory and fraudulent'. Mr Quast now seeks the return of his investment as a result.
For the avoidance of doubt, the Company stands by its decision to terminate your appointment in April 2021. In the months since then, this firm, the Company and its investors have received countless emails from you. Although none of them have denied the substance of the allegations which underpinned your termination, you continue to act as if termination has not taken place. That cannot continue.
The plaintiffs are directors of Georgina. Nowhere in their evidence do they mention that Georgina terminated Mr Migge's engagement. That is a serious omission. Had this injunction been granted ex parte the failure to disclose this letter or the circumstances of Mr Migge's termination would have warranted the discharge of the injunction. Counsel for the defendant correctly pointed out the present injunction was granted inter partes and therefore the strict rules in relation to full disclosure could not be said to apply. That was a proper concession. But counsel went on to say that the failure to disclose seriously undermined the plaintiffs' position. While that may be true with respect to a damages claim, it is perhaps of less impact in determining whether or not statements were made by the defendant to Mr Migge which contravened the terms of the Second Deed. Once again, the evidence of the defendant is that he did not have contact with Mr Migge. But there is equally compelling evidence in the form of the messages passing between Mr Migge and the plaintiffs that the defendant did make contact with Mr Migge.

It is difficult, as the evidence stands at the moment, not to accept the sworn evidence of the defendant that he has not had contact with Mr Migge. Once again, the plaintiffs are right to be suspicious – perhaps even more suspicious than they are in relation to Linear. But on balance, I am not satisfied at present there is a serious question to be tried on this issue.
That then leaves the contact with Mr Mizrahi. This was by way of an email, a copy of which appears as attachment ARH 29 to the first plaintiff's first affidavit. Relevantly, it reads as follows:
As you are working on fund raising with Georgina Energy, I would like to re‑engage with the listing process and execute another deed as per the attached.
The previous listing of Georgina Energy did not eventuate and the deed conditions were not satisfied.
As Mr Wallace and Mr Hamilton previously executed the attached, I propose that a new deed be executed on the same terms, prior to the fundraising process being completed and the entity listed.
I am available to discuss the matter with you at your convenience.
In his first affidavit the defendant has this explanation for his breach of the First Deed:
I sent the email to Mr Mizrahi as I wanted to enter a similar transaction on the listing of Georgina Energy PLC and I did not realise this would be a breach (or even considered a breach) of the deed entered in November 2019 as I thought it was no longer operative.
I do not intend to disclose the terms of the deed, or its subject matter, to any person except in the circumstances in the deed which I am now fully acquainted with.
This explanation has at least two curious aspects. First, the defendant did not realise that the confidentiality provisions of the First Deed continued, despite the fact Georgina did not list and no payments under the First Deed were made. The defendant is a lawyer – when he signs his name he adds the rider 'engineer and lawyer'. Even the most cursory reading of the First Deed would disclose the continuing nature of the confidentiality provisions. Second, it is difficult to see what the defendant hoped to achieve by sending the email. He had no ongoing right or entitlement which would warrant the parties entering into a further agreement mirroring the terms of the First Deed. Counsel for the plaintiffs submitted it was clear the First Deed was passed on to Mr Mazrahi solely for the purposes of damaging the plaintiffs' reputation. It must be acknowledged that position is arguable.
The position then is this. In so far as the Second Deed is concerned, I am not satisfied as the evidence stands at present there is a serious question to be tried. So in relation to the Second Deed, I would not be prepared to continue the injunction. So far as the First Deed is concerned, there has been a breach of that deed and there is clearly a serious question to be tried. Of course, the injunction in its present form is composite – that is to say it does not distinguish between the First Deed and the Second Deed. The way the matter was argued by the plaintiff was effectively to say, if there is a serious question to be tried, whether it is a breach of the First Deed or the Second Deed, the injunction should run. It was the defendant's position that although there had been a breach of the First Deed, the defendant had indicated that breach would not be repeated and therefore there was no need to continue the injunction. That really leads on to the balance of convenience.
It was the plaintiff's position that this was one of those cases where damages was not an adequate remedy and it was important the defendant be held to the terms of the bargain reflected in the First Deed and the Second Deed. Counsel made the point that in cases such as this what is of prime importance is the grant of the interlocutory injunction. If no injunction is granted, actions may be taken by the defendant which run adverse to the interests of the plaintiffs but cannot be adequately compensated in damages. Counsel drew an analogy with restraint of trade provisions. If not restrained at an early stage, a party who is acting contrary to the restraint of trade may damage a rival in a way which cannot be rectified by an award of damage. The comparison was apt. On behalf of the defendant, it was submitted the plaintiff's case was weak and given the defendant had undertaken not to breach the terms of the First Deed again, an injunction was not warranted. Furthermore, counsel submitted the terms of the present injunction were so wide they went beyond the restraints contained in both deeds. Beyond saying I am not satisfied that was the case, I will say nothing more on that issue. Had I determined the injunction should be maintained, I would have been prepared to consider reframing the terms of the injunction.
But on balance, I am not satisfied the injunction should be maintained. I am not satisfied the evidence at present discloses there is a serious question to be tried as to the alleged breach by the defendant of the Second Deed. While I am satisfied the defendant has breached the First Deed, I am also satisfied that, in giving a sworn undertaking not to further breach the terms of the First Deed, the balance of convenience has swung against the grant of the injunction. Accordingly, I am satisfied the injunction ought be discharged.
On publication of these reasons the parties should confer as to a minute of orders. It is my preliminary view costs of this application ought be reserved to the trial judge. However, any party who wishes to make submissions in relation to costs should do so within seven days of the publication of these reasons.

I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.
AH
Associate to Master Sanderson
23 NOVEMBER 2021