J H Fenner & Co Ltd v Gulf Conveyor Systems Pty Ltd
[1998] FCA 914
•4 AUGUST 1998
FEDERAL COURT OF AUSTRALIA
PRACTICE AND PROCEDURE – application to set aside orders dismissing application for interlocutory injunctive relief – orders not entered – application based, in part, on joinder of party after interlocutory judgment given – attempt to relitigate issues raised at interlocutory hearing – whether material change in circumstances brought about by joinder of third applicant – whether costs should be ordered on an indemnity basis.
Federal Court Rules O35 r7(1)
Brimaud v Honeysett Instant Print Pty Ltd (unreported, Supreme Court of New South Wales, 19 September 1988)
Doherty v Allman (1878) 3 App Cas 719
Colgate Palmolive Company v Cussons Pty Ltd (1993) 46 FCR 225
J H FENNER & CO LIMITED, TURNER BELTING LIMITED v GULF CONVEYOR SYSTEMS PTY LTD, SOUTHERN CONVEYOR ALLIANCE PTY LTD, PIT TOP MINING PTY LIMITED T/AS PITTOP, COLIN WILLIAM BENJAMIN, DONNA LEE BENJAMIN, GEOFFREY EDWARD HAMMOND, RONALD PETER JAMES SLATTERY, STEPHEN O’DONNELL
NG 550 of 1998
MOORE J
4 AUGUST 1998
SYDNEY
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
NG550 of 1998
BETWEEN:
J H FENNER & CO LIMITED
FIRST APPLICANTTURNER BELTING LIMITED
SECOND APPLICANTAND:
GULF CONVEYOR SYSTEMS PTY LTD
FIRST RESPONDENTSOUTHERN CONVEYOR ALLIANCE PTY LTD
SECOND RESPONDENTPIT TOP MINING PTY LIMITED T/AS PITTOP
THIRD RESPONDENTCOLIN WILLIAM BENJAMIN
FOURTH RESPONDENTDONNA LEE BENJAMIN
FIFTH RESPONDENTGEOFFREY EDWARD HAMMOND
SIXTH RESPONDENTRONALD PETER JAMES SLATTERY
SEVENTH RESPONDENTSTEPHEN O’DONNELL
EIGHT RESPONDENTJUDGE:
MOORE J
DATE OF ORDER:
4 AUGUST 1998
WHERE MADE:
SYDNEY
THE COURT ORDERS THAT:
Leave is granted to join TBA Belting Limited as an applicant.
Leave is granted to file an amended application in the same terms as the annexure marked PLG1 to the affidavit of Peter Lawrence Le Guay sworn 2 July 1998.
2
The application of the first and second applicants and TBA Belting Limited filed on 8 July 1998 is otherwise dismissed.
The first and second applicants and TBA Belting Limited pay the respondents’ costs of the application referred to in order 3 on the basis that each respondent is completely indemnified for its or his costs.
Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
NG550 of 1998
BETWEEN:
J H FENNER & CO LIMITED
FIRST APPLICANTTURNER BELTING LIMITED
SECOND APPLICANTAND:
GULF CONVEYOR SYSTEMS PTY LTD
FIRST RESPONDENTSOUTHERN CONVEYOR ALLIANCE PTY LTD
SECOND RESPONDENTPIT TOP MINING PTY LIMITED T/AS PITTOP
THIRD RESPONDENTCOLIN WILLIAM BENJAMIN
FOURTH RESPONDENTDONNA LEE BENJAMIN
FIFTH RESPONDENTGEOFFREY EDWARD HAMMOND
SIXTH RESPONDENTRONALD PETER JAMES SLATTERY
SEVENTH RESPONDENTSTEPHEN O'DONNELL
EIGHT RESPONDENT
JUDGE:
MOORE J
DATE:
4 AUGUST 1998
PLACE:
SYDNEY
REASONS FOR JUDGMENT
On 9 June 1998 an application was filed in this Court by J H Fenner & Company Limited (“Fenner (UK)”) and a subsidiary company, Turner Belting Limited (“TBL”). In the application interlocutory relief was sought including injunctive relief restraining Gulf Conveyor Systems Pty Limited (“Gulf”) from engaging in conduct in contravention of a distribution agreement between Gulf and TBA Belting Limited (“TBA”).
The matter was first listed on 9 June 1998 and from that point counsel for Fenner (UK) and TBL (“the applicants”) asked the Court to hear the application for interlocutory relief as a matter of urgency. This occurred and after nearly four full days of hearing on 16, 17, 18 and 19 June 1998, judgment was given on 30 June 1998. The reasons for judgment of 30 June 1998 refer to a range of matters that I do not repeat in these reasons. In that judgment I concluded, except in relation to two matters, that the application for interlocutory relief would be dismissed. However the only order I made on 30 June 1998 was an order adjourning the application to 3 July 1998 to enable the parties to prepare short minutes of order to give effect to my reasons for judgment. On 3 July 1998 I was informed by counsel for the applicants, who then also appeared for TBA, that further applications were to be pursued and no orders should be made. Were I to make orders, it was then submitted, the applicants and TBA would be prejudiced.
The matter was stood over to 8 July 1998 to enable the applicants and TBA to make submissions on why orders should not be made. I was not persuaded that orders should not be made giving effect to my reasons. Orders were made on 8 July 1998 though an undertaking was given by the respondents not to enter them. The applicants and TBA then filed a notice of motion which, in its final form, sought the following orders:
1.The orders made by Moore J giving effect to his Honour’s reasons for judgment dated 30 June 1998 be set aside pursuant to order 35 Rule 7(1) FCR.
2. Leave be granted to the Applicants to adduce further evidence.
3.Leave be granted to the Applicants and to TBA Belting Limited to join TBA Belting Limited to the proceedings.
4.Leave be granted to file an Amended Application in the same terms as the annexure marked “PLG1” to the affidavit of Peter Lawrence Le Guay sworn 2 July 1998.
5.That 29 July 1998 at 10.15am be fixed for any hearing of the interlocutory orders sought in the Amended Application.
6.Such further or other directions or orders as the Court deems fit.
7. Costs reserved.
The amended application referred to in these proposed orders was, unlike the original principal application, drafted on the footing that Gulf had breached the distribution agreement it had entered with TBA and that there had been no effective assignment of that agreement to Fenner (UK).
In substance, the notice of motion filed 8 July 1998 by the applicants and TBA was, apart from an order joining TBA, an attempt to relitigate issues that had or could have been earlier litigated and dealt with in my reasons for judgment of 30 June 1998. The relevant principles governing whether this course should be followed were those identified by McLelland J in the unreported judgment of Brimaud v Honeysett Instant Print Pty Ltd, Supreme Court of New South Wales, 19 September 1988. It is a judgment that has recently been referred to with approval by a Full Court of this Court in Darling Harbourside (Sydney) Pty Ltd v Sanirise Pty Ltd (Subject to Deed of Company Arrangement), unreported, 17 May 1996. McLelland J said:
The private injustice and public undesirability of permitting the relitigation of matters already litigated once is recognised in a number of principles of law, notably the rules relating to res judicata and issue estoppel, the more flexible rules under the rubric of vexation and abuse of process illustrated in such cases as Stephenson v Garrett (1891) 1 QB 677 and Hunter v Chief Constable (1982) AC 529, and the restrictive provisions governing the adducing of further evidence on the hearing of an appeal even by way of rehearing (see eg s 75A(8) of the Supreme Court Act 1970).
Interlocutory orders, of their very nature, create no res judicata or estoppel, and the Court retains jurisdiction to set aside, vary or discharge an interlocutory order up to the time of the final disposition of the proceedings. However the general rationale of the principles last referred to applies even in the case of interlocutory orders. It would be conducive to great injustice and enormous waste of judicial time and resources if there were no limit on the power of a party to have any interlocutory application or order relitigated at will.
The over-riding principle governing the approach of the Court to interlocutory applications is that the Court should do whatever the interests of justice require in the particular circumstances of the case. In giving effect to that general principle, and in recognition of the public and private interests earlier referred to, rules of practice have been developed in accordance with which the discretionary power of the Court to set aside, vary or discharge interlocutory orders will ordinarily be exercised. Not all kinds of interlocutory orders attract the same considerations. For present purposes one may put to one side orders of a merely procedural nature (as to which see e.g. Wilkshire v Commonwealth (1976) 9 ALR 325) and injunctions (or undertakings) made or given by agreement and without contest “until further order” (as to which see e.g. Warringah Shire Council v Industrial Acceptance Corporation – McLelland J 22 November 1979 unreported).
In the present case I am dealing with an interlocutory order of a substantive nature made after a contested hearing in contemplation that it would operate until the final disposition of the proceedings. In such a case the ordinary rule of practice is that an application to set aside, vary or discharge the order must be founded on a material change of circumstances since the original application was heard, or the discovery of new material which could not reasonably have been put before the Court on the hearing of the original application (see Woods v Sheriff of Queensland (1895) 6 QLJ 163 at 164-5; Hutchinson v Nominal Defendant (1972) 1 NSWLR 443 at 447-8; Chanel v Woolworth & Co (1981) 1 WLR 485 at 492-3; Adam P Brown Male Fashions v Philip Morris 148 CLR 170 at 177-178; Butt v Butt (1987) 1 WLR 1351 at 1353; Gordano v Burgess (1988) 1 WLR 890 at 894).
The following passages illustrate the point:
The defendants are seeking a rehearing on evidence which, or much of which, so far as one can tell, they could have adduced on the earlier occasion if they had sought an adequate adjournment, which they would probably have obtained. Even in interlocutory matters a party cannot fight over again a battle which has already been fought unless there has been some significant change of circumstances, or the party has become aware of facts which he could not reasonably have known, or found out, in time for the first encounter. The fact that he capitulated at the first encounter cannot improve a party’s position.
(Chanel v Woolworth & Co at 492-3 per Buckley LJ.)
A court must remain in control of its interlocutory orders. A further order will be appropriate whenever, inter alia, new facts come into existence or are discovered which render its enforcement unjust … Of course the changed circumstances must be established by evidence …
(Adam P Brown Male Fashions at 178 per Gibbs CJ and Aickin, Wilson and Brennan JJ.)
See also: Autodesk Inc v Dyason (No 2) (1993) 176 CLR 300.
Senior counsel for the applicants and TBA accepted these as the applicable principles but submitted there had been “a change in the landscape” by the proposed involvement of TBA as an applicant in the proceedings. I will return to consider that matter in more detail shortly. However, in so far as the applicants and TBA sought to rely on additional evidence, it is evidence that does not establish a material change in circumstance nor is it new material of the type referred to by McLelland J.
The evidence dealt with two issues. The first was whether Fenner (UK) and TBL had conducted themselves in a way that did not recognize Gulf’s rights under the distribution agreement to Gulf’s detriment. That was a matter I discussed at pages 24-27 in my reasons for judgment of 30 June 1998. The second was whether Gulf was in a position to satisfy any damages that might be awarded in the final hearing and thus whether damages were an adequate remedy. That was a matter I addressed at page 28 of my reasons of 30 June 1998.
Only one point of substance was raised in relation to this evidence that might conceivably justify a reconsideration of the conclusions I earlier reached. It was that documents discovered from the applicants during the hearing in mid June 1998 formed part of the material the respondents had successfully relied on in impeaching the conduct of Fenner (UK) under the distribution agreement. It may have been difficult for those acting for the applicants to have readily obtained instructions in relation to those documents given that the documents concerned the conduct of executives of Fenner (UK) and TBL based in the United Kingdom. However the manner in which the interlocutory proceedings were conducted, that is, with comparative urgency, was the result of the approach urged upon the Court by the applicants. Moreover it would always have been open to counsel for the applicants to have sought an adjournment, which was not done, to enable the applicants to meet the evidence raised by the respondents: see Chanel v Woolworth & Co (1981) 1 WLR 485 at 492.
The proposed joinder of TBA raises slightly different issues. Steps were first taken by solicitors acting for TBA to join it as an applicant on 2 July 1998. That is, two days after my judgment of 30 June 1998. TBA first appeared on 3 July 1998. However its appearance has to be considered having regard to events leading to the commencement of the proceedings on 9 June 1998. In my reasons of 30 June 1998 I discussed the sale agreement completed on 3 December 1995 and its general effect. It denuded TBA of a capacity to manufacture conveyor belting and, I infer, left the company as essentially a corporate shell though with obligations under the sale agreement. Those obligations included:
18.4Until such consent or novation is obtained the Vendors will co-operate with the Purchaser in any reasonable arrangements desired to provide for the Purchaser the benefits under any of the Business Contracts or Minor Contracts including enforcement at the cost and for the account of the Purchaser of any and all rights of the Vendors against the other party to the Business Contract and/or Minor Contracts arising out of any cancellation by such other party or otherwise.
The distribution agreement was a Business Contract as defined. In my opinion, clause 18.4 would have enabled Fenner (UK) to secure TBA’s participation in proceedings to enforce the distribution agreement before these proceedings were commenced in the way now sought.
Indeed there is material before the Court which makes it comparatively clear that those advising Fenner (UK) were aware of potential problems concerning the standing of that company to commence the proceedings. The solicitors acting for Fenner (UK) in the United Kingdom sought the advice of Norton Smith & Co in Sydney on 16 March 1998. In a letter dated 4 April 1998 Norton Smith & Co provided advice which included the following:
One difficulty which occurs to us is that in the absence of there being a novation or assignment of the Distribution Agreement, there may be a privity of contract problem and in particular, assuming Fenner is not in a position to claim damages for breach of contract, whether Fenner could claim through TBA when TBA may not have suffered any damage by reason of it no longer being the owner of the business.
On 29 May 1998 TBA and Fenner (UK) entered a deed in which TBA assigned to Fenner (UK) the distribution agreement:
together with all rights benefits advantages claims and demands relating thereto whether already accrued or arising after the date hereof subject to the provisions hereof.
In my opinion it is relatively clear that Fenner (UK) made a forensic decision to have the distribution agreement assigned to it and then to commence proceedings in its name without joining TBA as an applicant. On the second day of the substantive hearing of the interlocutory application, that is, the afternoon of Wednesday, 17 June 1998, counsel for Gulf and others commenced to identify objections to an affidavit of Mr Wilkinson of 5 June 1998 filed by the applicants. The first paragraph he objected to was in the following terms:
On 29 May 1998 the Distribution Agreement was formally assigned by TBA to J H Fenner and on the same day Gulf was formally notified in writing of the assignment.
Counsel for Gulf said:
… insofar as that purports to state a conclusion of law, I object to it. If it is merely noting the fact that an attempt to assign was carried out then I have no objection.
In my opinion it should have been apparent that, at least from that point, one issue in the interlocutory hearing was the effect of the deed of 29 May 1998 and whether there had been an effective assignment of the distribution agreement. As the matter proceeded in the next two days, submissions were developed at length by counsel for Gulf and, in response, by counsel for the applicants concerning the issue of whether there had been an effective assignment of the distribution agreement. This issue plainly raised the question of whether TBA should have been and should then be joined as an applicant.
However what is now submitted by the applicants and TBA is that the principle emanating from the judgment of the House of Lords in Doherty v Allman (1878) 3 App Cas 719 would have a material bearing on a consideration of whether interlocutory relief should be granted. The applicants and TBA have resiled from the position that was being put on 8 July 1998 that the grant of interlocutory relief had to be determined by reference to English law having regard to the terms of the distribution agreement and that under English law an injunction to restrain the breach of a negative covenant should issue as of right. The submissions now made by the applicants and TBA on this question were summarised in their written submissions:
It is accepted that the Court is not bound to grant an injunction to restrain breach of a negative stipulation merely upon a finding of breach, or in the case of an interlocutory application, merely upon an interim finding of an arguable case of breach, as Your Honour has made (Judgment page 22). However, the present state of Australian law would appear to be to the effect that Your Honour “should lean against refusing … on discretionary grounds” an injunction to restrain breach of a negative stipulation (Equity Doctrines and Remedies (Meagher Gummow & Lehane) 3rd ed para 2138; see also Equitable Remedies by Spry (5th ed) page 587). The present state of the law in England is substantially similar: see Chitty on Contracts (General Principles) (27th ed) at para 27-040, and the Second Cumulative Supplement relating to para 27-040; see also Hanbury and Martin’s Modern Equity (15th ed) pages 763 and 783, and Shaw v Applegate (1977) 1 WLR 970 at 975 and 980. As appears from these writings (see again in particular Chitty (ibid) para 27-040), proof of damage is not in principle required in the case of breach of a negative stipulation. Moreover since adequacy of damages in such situations is not an answer to the grant of an injunction at a final hearing (see again Spry (ibid) at page 587) the same must logically be true in relation to an interlocutory hearing. Contrary to para 10 of the Gulf Submissions of 27 July 1998, the doctrine as originally espoused in Doherty v Allman (1878) 3 App Cas 719 applies equally to interlocutory injunctions to restrain negative stipulations as it does to permanent injunctions (Attorney-General v Barker (1990) 3 All ER 257 (at 282 lines f to g).
Even accepting, for present purposes, that this constitutes a correct statement of the relevant principles, it is a submission that could have been, but was not, made by the applicants during the interlocutory hearing when it was contended by them that there had been an effective assignment of the distribution agreement to Fenner (UK). I have expressed a tentative view that the assignment was not effective. Thus the strength of any argument founded on Doherty v Allman that might have been put would probably have been diminished in the absence of TBA as a party. However the fact that TBA now applies to be joined as an applicant in the context of a forensic decision having been earlier made not to join it should not, in my opinion, provide a foundation for TBA, as well as Fenner (UK) and TBL, to effectively reopen the interlocutory application. Different considerations might obtain if TBA was entitled, as of right, to an interlocutory injunction restraining a breach of the negative covenant. However that submission is not now made.
The applicants and TBA have not demonstrated a basis for setting aside the orders earlier made. Nor have they established that TBA, as a party, might now legitimately pursue interlocutory relief having regard to the principles that have developed since Doherty v Allman concerning the grant of injunctive relief to restrain a breach of a negative covenant. Nonetheless the joinder of TBA in the proceedings generally as an applicant is not opposed by the respondents and plainly TBA should be a party. Accordingly I propose to make an order dismissing the notice of motion of the applicants and TBA seeking to set aside the orders I earlier made and seeking leave to the applicants to adduce further evidence. I will order that TBA be joined as an applicant to the proceedings.
The respondents seek their costs of this application on an indemnity basis. The applicable principles were discussed by Sheppard J in Colgate Palmolive Company v Cussons Pty Ltd (1993) 46 FCR 225 and recent examples of their application in this Court are found in Yates Property Corporation Pty Ltd v Boland (1997) 147 ALR 685 and Lamesa Holdings BV v Commissioner of Taxation (1997) 74 FCR 416. I am satisfied, having regard to the principles discussed by McLelland J in Brimaud, that it would have been apparent to the applicants and TBA that there was, at best, a remote prospect that the evidence concerning the conduct of Fenner (UK) and TBL, the evidence concerning the financial position of Gulf and the possible application of what might be described as the Doherty v Allman principle would lead me to set aside the orders I earlier made and further consider the application for interlocutory relief even with the joinder of TBA. Accordingly, I am satisfied costs should be awarded on an indemnity basis. I am not, however, prepared to order that costs be taxable forthwith. Senior counsel for the applicants and TBA properly made the point that ultimately his clients may succeed and that the costs of the proceedings generally could exceed by a considerable margin the costs presently awarded to the respondents.
I certify that this and the preceding eight (8) pages are a true copy of the Reasons for Judgment herein of the Honourable Justice Moore
Associate:
Dated: 4 August 1998
Counsel for the First and Second Applicants: Ms M Clark then
Mr M Ashurst then
Mr J Trew QC then
Mr R Conti QC with Mr P BreretonSolicitors for the First and Second Applicant: Cowley Hearne Counsel for the First, Second, Fourth, Fifth and Sixth Respondents: Mr H Insall Solicitors for the First, Second, Fourth, Fifth and Sixth Respondents: Baker & McKenzie Counsel for the Third, Seventh and Eighth Respondents Mr G Segal Solicitors for the Third, Seventh and Eighth Respondents Charles G Roth & Co Date of Hearing: 29 July 1998 Date of Judgment: 4 August 1998
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