Jiona Investments Pty Ltd (as trustee of the Feros Investment Trust) v Tricontinental Corporation Ltd

[1987] FCA 617

Not ror dlstrlbutlon

1s appears from the affidavit, of Mr. Craiq k-~drrv

J e n s e n , t h e s o l i c i t o r f o r , t h e a p p l i c a n t , J i o n a Investments

Pty.Ltd. ("Jiona Investments"! is the reqlstered proprletor of

certaln land in Bell Street, Toowoomba. That property was

purchased orlqinally with a view to the construct~on of an offlce

tower and commercial centre. In order to finance development the

appllcsnt obtamed a cnmmerclal blll facility from t h e flrst

respondent in the sum of 97.875m. As part nf lts seclurlty I n

respect of that facility, Tricontlnental Corporstlon Llmlted

!"Tricontinental Corporstion"! obtained a first reqi3tered 5lil

cf encnnbrance over the property 35 well a3 sdditlcnal Z ~ C ' J C L ~ I P S

and quarsntees from	a	larqe number of	cn rpc ra te entitles	m d
rnd~oidt.~als.

Mrs. Judith Fa:? Ferns says that, before defalult hat

occurred she had 3. meeting vlth a person she describes I n her

sffldavlt as the person she believed to be the gueenslmr? T c a n z

Manager for Trlcontlnental Corporatlon, a H r . Court. Yr. 13zl~rr

informed her, so she says, and she deposed to such a belief, that

once the default notices were,issued, then legally the spplicsnt

3.

~~ould have 30 days in which to remedy the situation. She

continues:-

"He further Informed me that even at the crplry of

the 30 day period after the notices of default

were lssued then Tricontinental Corporation

Llmited would still have to assess the sltuat~on

snd decide what course 3f actlon to be adopted.

He informed me and I v e r l l y believed chat

Trlcontlnental Corporstlon ilmlted would at that

stage have to consider the question of a Sale by

public auctlon, or other means of sale of Eke

property If the default had not been remedied."

".\S a result of the matters stated to me by Mr.

Court I believed that Trlcontinental Corporation

Llmited would not take any steps whatsoever In

relatlon to s sale of the property luntll st least

the 30 days after notices of default were lssued

pursuant to the sec'urlt1es that had been Trsnted

ln Lts favour. ' I

'3n ?l , Ju ly 1987, and 3?aln on 1 ?.u?1~st 1397, .in

sdvertlsement sppeared In the "Sourler Mall" ner..fsF3-?.pr. ?.at

plctorlal sdvcrtisement occupled spproxlmatelg four Ln,:tles by t e n

lnches and contained a photograph of the Bell ~Ce?t re 3:

Toowcomba. It was rnserted by Jones Lang Wootton, the zecove

respondent, and amongst other things said:-

MORTGAGEE EXERCISING e r ) m CIF SFLE

. \ RETAIL AND COMMERCIAL INVESTKENT OPPORTUNITY

IN THE M T OF

QUEENSLAND'S GARDEN CITY

It descrlbed Toowoomba and the centre itself, and then said:-

t

4.

FOR SALE BY AUCTION

at 11 a .m. Thursday 3rd Sept., 1987

Venue: Sheraton Hotel, Turbot Street, Brisbane"

After undertakings had been sought on behalf of the

spplicsnt frnm Jones Lanq Wootton and not supplied, sn

application was souuht	for	the relief with vhich I am presently
concerned.

Sectlon 84 of the Propertyr L a w Act provides:-

" A mortgagee shall not exerclse the power of sale

conferred by this Act	or otherwise unless snd
untll -

(a\ default has been made in payment gf the

prlnclpal money or interest, o r any ~3 t - t

thereof seclured b:I the lnstrtment .f

nortgage. and notice requlrlnq payment Cf

the xn@C(nt the f a l l u r e to pay vhlrh

constltuted the f ault $Ander such Instrlument of mort7aqe nas beer SP~VIO(! 3n the mortgagor and such default has contlnlued

for 3. space of thlrty	days from service of
the notice:"

In my view, the conduct of the respondents m lnsertlng

sdvertisements on 31 J u l y 1987 And 1 .?.u3ust 1987 , st least f2r

the purpose of interlocutory relief, constitutes such 3 Sresch cf

5 . 5 2 ?f the Trade Practices Act 1974 as would call f 2r t?-e

Intervention of the Court by way of interlocutory ln~unctlon.

The 3dVertlSement has the capacity to rnlslead snd I s

llkely to mlslead 3. person to whom it is directed inta Sel1ev:r.q

that there was in the mortgagee a then present and unconditional

power to convey that property by auction as indicated in t h e

5.

advertisement.

There 1s nothmg to suggest hat m y power was

condltlonal on default continulng, pursuant to the notlce of

default gi~en on 1 5 July 1987, and It would have been competent

for the Court to restram advertising of thst kind cmta1r.ir.g

those representations.

A t the spplication for interlocutory relief, c rh?

flrst respondent, Trlcontlnental Corporatlon, obtalned leave to

file and read m affidavit of M r . Christopher P.ex Anderson, t h e

Assistant Lending Manager for Gueensland crf Tricontinental

Corporation Llmlted. In that affidavit he stated that the first

respondent does not prcrpose to further s&vertlse in -.ne f q r m

whlch had previously been the form ,2f ~ d v e r t ~ s l n g . HP

c ~ n t l n ~ ~ e d : -

"The F ~ r s t Respondent does propose, unless

restrslned, to sdvertise l n the fcrm sppearlng In

Eshiblt 'C' to the Affidavlt of c'PAIG >NNDPEW

JEMSEN sub~ect to the	amendments	set	out
hereunder:

la) by exclslng the words 'mortqaqee exerclsln3

power of sale' from the tcp of e . ' !

advertisement;

' b ) by inserting in 1le IJ of the words e x c ~ s e d ,

the words 'the mortgagee wlll exercise Its

pcwer qf sale with respect to the f q l l m i r ! ?

property subject to the mortgagor contxmng

in default until after 14th August, 1 9 8 7 ' ;

(c) by inserting after the words 'for sale 39

auction on 11.00 am 3rd September 1987' che words '3ubject to the mortgagor cmtlnuln?

in default until after 14th August, 1 3 8 7 ' : "

It was argued that advertising, as so corrected, would

not involve any question of misleading or deceptive conduct an&,

6.

in those circumstances, an injunction ought not issue. That

conduct, in breach of s . 5 2 of the Trade Practices Act 1974, must involve such an imputation is clear from a number of cases which

include, Parkdale Custom Built Furniture Ptv.Ltd. v . puxU

Pty.Ltd. (1982) 149 C.L.R. 191 and Hornsbv Bulldinq Inforsatlon

Centre Pt7.Ltd. v. Sydney Buildinq Informatlon Centre Pt.7.Lt-d.

!1978) 140 C.L.R. 216.

It was submltted by the respondents, snd I sm saclsflec?

correctly so, that it was competent and is competent f3r 3

mortgagee to negotiate the sale of property notwithstanding the

period in whlch default may be rectified has not yet explr2d.

In v. W & 57 E.R. l246 ( 5 Hare 5 ? 9 \ , :ke

Vice-Chancellor, S l r James Wigram, was deallng wlth such 3 r q c e .

9 t p 1751 ,+#>4! he says:-

‘ “ F E next ground of objection %as that he

Igreement for sale, being before the explrstion 2f

the perlod fixed by the notice, the sale was vo1.l.

I do not give any opinion how it would be, 15 an

undervalue or any speclal circumstance were

suggested, calculated to impeach the sale. But here the questlon 1s Fut In the abstract, t’r3.t a mortgagee vlth ?L power of sale sag not, 3 .lay

before the power cf sale 1s to arlse, make a

condltlonal agreement with a purchaser that he

shall have the estate at an greed prlce, If tne

mortgagor do not redeem It. I cannot go the

length of Saying such an agreement 13, I p s o facto,

vold.

That CISP was followed in Farrar v. Fsrrars Limited Ilaesl! 40

Ch.D. 395 at 4 1 2 , where Lord Justice Lindley said:-

“At this time. the six months’ notice whlch the

mortgagees had to give and had given of thelr

intention to sell ,had not expired, but lt was

understood between Farrar and Taylor that no sale

7 .

would be made until the power could be properly

exerclsed.

We pause here to conslder whether I n thus actlng

Mr. Farrar was gullty of any breach of duty to hls

mortgagors. We cannot see any improprlety in hls

conduct, unless it be that he ought not to have

agreed in November to sell at s future time for

7700. This, however, does not without more

invalidate the zale: see - M v . Ward 5 Hare.

598. If when the time came for completion that

price had become inadequate, he mlght perhaps have

been chargeable wlth wilful default, and perhaps,

having regard to his peculiar position at the tlme

of sale, the sale itself might have been set

sside. But there was no undervalue either -;her!

the agreement was made or when It was carrled out.

The learned Judge distinctly found thls as 2 fact,

he has stated that in his oplnion, the witnesses

for the Defendants on the question of value are to

be preferred to those of the other side."

I m nnt here concerned %nth xhethet- there 1 s %g

question gf defmation involved I n the earllet- Tt- the proposed

publlcatlqn, n z r .;hether the clrcumstancez .nl?hc lead c r ~?~,-?l~ip

3. breach of 5 . 8 5 of the Proper tv Law Sct uhlch Imposes on tke

mortgagee a duty, when exerclsing the power of sale conferrec! by

the Act, to take reasonable care to ensure	that t h e property	1 s
sold at the market value.

By way of exqmple, I can see nothin? wron? viCh 3.

mortga3ee, before the tlne f o r remedglng r?efalllt h: tke

notlce has explred, negotiating a price at conslderablg absve t h e

market value of the property with 3 person vho IS very anxlcsus to

obtaln that property, that proposed sale belng CoFdlt-Jnai	ILFcn
the default contmuing for the statutory perlod.

If it be that advertising of any k m d is to be

R .

prohibited during the perlod of the notice of default it Tdould

mean that a mortgagee could not engage in negotiations of

whatever kind durmg that period, independently of the question

of the value of the proposed sale or the conditions whlch	have
been made Ln respect of that proposed sale.

The submission of the appllcant 1 s that the effect of

s.84 of the Propertv Law Act is to preclude the respondents frcm sdvertlsmg the property until after the perlod of default hss explred. For the rpasons that I have shortly lndlcsted, I do not think that that is right, nor do I think that sny comfort is galned from the terms of s . 8 5 of the Act. R a t negotlatlons or

sdvertlsing are engaged in, ln the period during whlch the

default mav be remedied is not to the point, slthouuh, ~t may

have evidentiary signlficance on the quesclon Qf x h e t . e r there

has been m y Sreach of the obllqatlcns Inposed b:r s.85. SU!

19 no varrant for inferring that a mcrtgaqee mlght not negotiate

nor advertise	in a way which	1 s not misle3ding	during rhst
perlod.

It would follow then that, but f o r the advertlseme?ts Q C

31 July 1987 and 1 August 1387, I xould not be rnclmed to make

m y order by ua7 of interlocutory Injunction. !-lowever, " n e twcl

advertisements were, ln my vlew, clearly misleading, and 1 am

concerned as to how best o meet he posslbillty that

advertlsements in the modified form proposed by Mr. hderzcr.

mlght not yet still be tainted by the mlsrepreseptatlons

contained in the substantially sirnllar early advertlsements.

9.

In Janssen Pharmaceutical Ptv.Ltd. v. Pfizer Ptv.Ltd.

(1986) ATPR 40-654, Burchett J. held that the court had power,

pursuant to 5.80 of the Trade Practices Act 1974, in addition to restraining the continuance of the conduct and the making of the offending statements, to make a mandatory order requlrlng the

publication of corrective advertisements. The terms of the

orders which he made by way of mandatory advertisements appear in

Order No.6, whlch appears at p.47-296.

I do not propose to require by way of mandatory order

that there be published any corrective material, but, in my view.

any further advertising in the form prqposed in par3grsph 3 of

Mr. .Anderson's affidavlt does not go far enough in the light of

+he earlier publicstmns of the precise prgperty and the

substantlal slm~larlty between the two advertlsemeqts.

What I propose to d9 1s to make an order or sccept undertakings along these lines: that until after 14 August 1987,

the respondents by their servants and/or agents be restrsineci

untll further Order from advertlsing f o r sale or In any manner

whatsoever suggesting that the mortgagee has a pcwer to enter

lnto sn uncondltional contract gf sale with respect to the Bell

Centre, Toowoomba, and further dlrectlng that any advertlslqg m

respect of a proposed sale of that property prior to 14 August

1987 contain words to the effect that the mortgagee will exercise

its power of sale with respect to the following property, sublect

to the mortgagor continuing in default until after 14 August 1987

and after the notification of the time and place f o r sale, Sy

inserting the words, "Sub~ect to the mortgagor contlnulng in

\ 10.

default until after 14 August 1987". In sdditlon. any such

advertising is to Include a statement to thls effect:-

"The mortgagee does not have and has never had a

power to enter into an unconditional contract of

sale wlth respect to the said property or with

respect to the Bell Centre snd sny suggestion to

that effect contained in earlier	advertising by
the nortgagee 1s wrong."

I think in all the circumstances the prgper order to

make is that the first respondent pay the costs of the applicant

to be taxed and that as between the applicant and the second

respondent, there be no order as to costs.

I m11 adjourn the applicatlon to the reqlstrj. x t h

lrbertg Tranted t o all partles to apply to b r x q :he matter 3n

n t h notlce m wrltmq to the other slde.

I cer t , f / :hat !?!S 2nd :!-e '1 precedlr.:

~2;os ,:re a :rue copy of the reasons for

Dated