Magenta Nominees Pty Ltd v The National Mutual Life Association of Australasia Ltd - [2004] WASC 171

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS

CITATION: MAGENTA NOMINEES PTY LTD & ORS -v- THE NATIONAL MUTUAL LIFE ASSOCIATION OF AUSTRALASIA LTD & ANOR [2004] WASC 171

CORAM: BARKER J

HEARD: 22 & 30 JULY 2004

DELIVERED : 6 AUGUST 2004

FILE NO/S: COR 216 of 2004

BETWEEN: MAGENTA NOMINEES PTY LTD (ACN 009 340 158)
TACE PTY LTD (ACN 009 204 915)
CHEVEZ HOLDINGS PTY LTD (ACN 073 321 007)
COLLECTIVE PROPERTY INVESTMENTS PTY LTD (ACN 075 732 259)
DARLEY HOLDINGS PTY LTD (ACN 075 799 558)
WESTERN AUSTRALIAN REAL ESTATE CUSTODIAN PTY LTD (ACN 069 896 966)
Plaintiffs
AND
THE NATIONAL MUTUAL LIFE ASSOCIATION OF AUSTRALASIA LTD (ACN 004 020 437)
First Defendant
BRIAN KEITH McMASTER
Second Defendant

Catchwords:

Corporations Act 2001 (Cth) - Application concerning validity of appointment of receiver - Whether interlocutory injunction should go - Turns on own facts

Legislation:

Australian Securities and Investments Commission Act 2001 (Cth), s 12BB, s 12DA, s 12GH

Corporations Act 2001 (Cth), s 418A

Trade Practices Act 1974 (Cth), s 51A, s 52

Result:

Application refused

Category: B

Representation:

Counsel:

Plaintiffs:     Dr J O'Donovan
First Defendant             :     Mr C S Gough
Second Defendant         :     Mr C S Gough

Solicitors:

Plaintiffs:     Galic & Co
First Defendant             :     Minter Ellison
Second Defendant         :     Minter Ellison

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

Castlemaine Tooheys Ltd v The State of South Australia (1986) 161 CLR 148
McMahon v State Bank of New South Wales [1990] 8 ACLC 315
Retail Equity Pty Ltd v Custom Credit Corporation Ltd [1991] 9 ACLC 404

Case(s) also cited:

Ajayi v RT Briscoe (Nigeria) Ltd [1964] 1 WLR 1326
American Cyanamid Co v Ethicon Limited (1975) AC 396
Arbest v State Bank of New South Wales [1996] ATPR 41-481
Colonial Mutual Life Assurance Society Ltd v Producers and Citizens Coop Assurance Co of Australia Ltd (1931) 46 CLR 41
Commonwealth Development Bank of Australia Ltd v Nertec Pty Ltd [1999] WASCA 311
Duggan v Commonwealth Bank of Australia, unreported; NSWCA; 18 December 1997
Galnom (No 8) Pty Ltd v G & L Warehouse Pty Ltd (1991) 105 FLR 395
Goldcorp Pty Ltd v Schmierer and Hemglas Pty Ltd, unreported; SCt of Qld (Ryan J); 29 September 1992
Harvey v McWatters (1948) 49 SR (NSW) 173
Head v Kelk [1962]NSWR 1361
Inglis v Commonwealth Trading Bank of Australia (1972) 126 CLR 161
Lezuba Pty Ltd v Ferrier (1983) 1 ACLC 1192
McMahon v State Bank of New South Wales (1990) 8 ACLC 315
NMFM Property Pty Ltd v Citibank Ltd (2000) 107 FCR 270
Permanent Trustee Australia Ltd v Saitannis [2002] NSWSC 1209
Petera Pty Ltd v EAJ Pty Ltd (1985) 7 FCR 375
R Jaffe Ltd (In Liq) v Jaffe [1932] NZLR 195
Silovi Pty Ltd v Barbaro (1988) 13 NSWLR 466
Town & Country Bank Ltd v Inverarity, unreported; SCt of WA (Murray J); Library No 950138; 29 March 1995
Witham v Shire of Bright [1959] VR 790

BARKER J:

Introduction

Before me is the application of the plaintiffs (the companies) for an interlocutory injunction restraining the second defendant (the receiver) until further order from acting or purporting to do any act pursuant to a deed of appointment of receiver and manager by the first defendant (the Bank) as financier and the second defendant as receiver of each of the plaintiff companies.
The interlocutory injunction is sought pending the determination of an application made by the companies for orders under s 418A of the Corporations Act2001 (Cth) declaring that the purported appointment of the receiver as receiver and manager of the property held on trust by each of the companies is invalid and that such appointments be set aside.
The Bank and the receiver oppose the interlocutory relief sought by the companies and reject the allegation that the appointment of the second defendant as receiver in each case is invalid.
The companies' application for an interlocutory injunction came on for hearing before me urgently on 22 July 2004. At that point, the defendants appeared by counsel, but had only been served with the originating process and application for interlocutory relief earlier that same day. The application for interlocutory relief was then adjourned for hearing to 29 July 2004 at 2.15 pm before me on the undertaking of the second defendant as receiver not to take any steps to sell or otherwise to sell the property the subject of the receiverships and the costs of the day were reserved. As matters transpired, by consent of the parties, the application for interlocutory relief was relisted for hearing before me on Friday, 30 July 2004 at 2.15 pm. In the meantime, the parties took the opportunity to put on further affidavit evidence in relation to the application and the companies also took the opportunity to instruct independent counsel, who appeared before me.
Following argument on 30 July 2004, I reserved my decision and further adjourned the determination of the application upon the further undertaking of the receiver as then read onto the transcript effectively not to take any steps to sell or otherwise to sell the property of the receivership and other undertakings pertaining to the performance of the receivership in the meantime.

Issues to be tried: the Bank's position

Given the urgency of the application, I shall only provide an outline of the factual circumstances in which the second defendant was appointed receiver of the companies by the Bank and the issues to be tried. In doing so, I shall also refer to a related action in which the Bank is plaintiff and the companies are first defendants and John Martin Kelly and Sydney James Chesson are second defendants, namely, Supreme Court of Western Australia action CIV 1416 of 2004 (the Bank's action).
By the statement of claim in the Bank's action (writ issued on 31 March 2004), the Bank pleads that, by a facility agreement stamped 15 August 2003, the Bank and the companies agreed the terms of certain facilities provided by the Bank to the companies. It is further pleaded that, by a cross‑deed of covenant stamped 15 August 2003, the Bank and the companies agreed the terms upon which the companies would pay the whole of the moneys secured as defined in the deed and owed by the companies to the Bank. It is further pleaded that cl 1.1 of the deed of covenant defined "Moneys Secured" to be all debts and monetary liabilities of the companies to the Bank under or in relation to or contemplated by any of the collateral securities, as defined in the deed of covenant, irrespective of whether those debts or liabilities are, inter alia, present or future, actual, prospective, contingent or otherwise. Further, it is pleaded that, under cl 2 of the deed of covenant, the companies each covenanted with the Bank to pay the whole of the moneys secured to the Bank on demand in immediately available funds.
In the statement of claim, the Bank further alleges that, on 30 June 2003 and in breach of cl 7.1 of the facility agreement, the companies failed to repay the moneys owing to the Bank under the facility agreement.
It is further pleaded by the Bank that, pursuant to a letter dated 4 July 2003, the Bank agreed to forebear from exercising its rights under the facility agreement and/or the deed of covenant by reason of the event of default until 31 July 2003. The Bank says that it agreed to forebear in this respect until 31 October 2003.
In the statement of claim, the Bank further pleads that, by notices of demand dated 6 February 2004, the Bank demanded, pursuant to the deed of covenant, that each of the companies pay to it the sum of $11,513,645.71 as at 5 February 2004 and that, in breach of cl 2 of the deed of covenant, the companies have failed to pay the Bank that sum and are indebted to it in the sum of $11,837,779.30 as at 30 March 2004.
The Bank therefore seeks to recover the principal sum of $11,837,779.30 as at 30 March 2004 pursuant to the deed of covenant, together with interest thereafter at the rate specified under each facility granted at a daily and compounded monthly rate.
In the Bank's action, the Bank has applied for summary judgment. However, I was informed on the hearing of the present application that, following an initial hearing of that application (and it seems as a result of comments made by the learned Master before whom the application for summary judgment came on), the Bank has determined to withdraw its application for summary judgment.

Issues to be tried: the companies' position

The companies and the other defendants in the Bank's action have not filed a formal defence or counterclaim in the Bank's action. Instead, the companies commenced the Supreme Court proceedings under the Corporations Act that are now before me.
In both the Bank's action and in these proceedings, the companies, by their director, Mr Chesson, one of the second defendants in the Bank's action, allege that notwithstanding the contractual position pleaded by the Bank in the Bank's action and outlined in affidavits filed in opposition to the Corporations Act application and application for interlocutory relief, the Bank has, by its agent, John Harris, a director of International Financing & Investment Pty Ltd (IFI), agreed or otherwise represented that the Bank would not enforce its securities against the companies until December 2005 or until certain development approvals had been obtained, whichever should occur first.
The evidence put on by affidavit in both the Bank's action, and relied on in this application, and in these proceedings, discloses that the Bank as a financier agreed to advance funds to the companies for the purpose of refurbishing and developing shopping centres in Kelmscott, an outer suburb in the Perth metropolitan region.
The companies says that the loan facility was arranged by IFI through Mr Harris and that it is common ground that IFI was an approved broker and one of two exclusive mortgage originators for the Bank in Western Australia.
At the first hearing of the companies' application for an interlocutory injunction on 22 July 2004, I suggested to counsel then appearing for the companies that it would be sensible for the companies to file a draft defence in the Bank's action that would inform the Court on the hearing of the interlocutory injunction application in the Corporations Act proceedings exactly what causes of action the companies would rely upon in opposing the Bank's action and in seeking relief in these proceedings. A draft or foreshadowed defence and counterclaim in CIV 1416 of 2004 was accordingly provided to the Court on 30 July 2004. Counsel fashioned their submissions around this draft defence and counterclaim for the purposes of the application before me.
The companies would plead that IFI at all material times had actual, apparent or ostensible authority to act on the Bank's behalf in its dealings and in its negotiations with the companies. In argument before me, counsel for the companies did not press the question of actual authority, but submitted that the evidence was sufficient to show that IFI had apparent or ostensible authority to act on the Bank's behalf in its dealings and negotiations with Mr Chesson for the companies. The particulars of this allegation would include the factual allegation that the Bank held Mr Harris and IFI out as its agents by orally informing Mr Chesson by its officer, Mark Ashdown, in or about 1998, that Mr Harris and IFI had been appointed by the Bank as one of its exclusive agents for Western Australia, and further that an officer of the Bank, Mr Bernard Lee, in 2003 and in or about July 2003, informed Mr Chesson that Mr Harris had an exclusive agency arrangement with the Bank in Western Australia and that all communications between the companies and the Bank were to be directed through Mr Harris. The companies would also say that the Bank paid Mr Harris and IFI a fee for arranging mortgages with it and a trailing fee or commissions on the loans.
It would then be further pleaded by the companies that, by an oral agreement made in or about August 2003 between Mr Chesson, acting as agent for and on behalf of the companies and Mr Harris, acting as agent for and on behalf of the Bank, it was agreed that, in consideration of the companies executing a deed of covenant, the Bank would extend the existing facilities between them beyond 30 June 2003 and would defer enforcement of its securities until December 2005 or the date on which development approvals for the Kelmscott sites were obtained, whichever occurred first. Thus, it is said that there came into existence a binding contract by the Bank not to enforce the securities until December 2005 or until the development approvals had been obtained, whichever occurred first.
The companies would further or in the alternative plead that, by reason of the same facts said to constitute a contract between them and the Bank, representations then made by Mr Harris to Mr Chesson were misleading or deceptive or likely to mislead or deceive contrary to s 52 of the Trade Practices Act 1974 (Cth) and/or s 12DA of the Australian Securities and Investments Commission Act 2001 (Cth).
It would be further pleaded that, by virtue of the operation of s 12GH of the Australian Securities and Investments Commission Act, the Bank is deemed to be liable for any misleading or deceptive conduct engaged in on its behalf by Mr Harris as its agent within his actual or apparent authority, or by Mr Harris at the direction, or with the express or implied consent, or agreement of, officers or agents of the Bank within the scope of their actual or ostensible authority.
It would be further pleaded by the companies that the same representations alleged to have been made by Mr Harris to Mr Chesson related to future matters for the purposes of s 51A of the Trade Practices Act and/or s 12BB of the Australian Securities and Investments Commission Act, have been falsified in the circumstances pleaded and must be deemed to have constituted misleading and deceptive conduct.
Further, or in the alternative, the companies would allege that the same representations created a belief, assumption and/or expectation on their part that the Bank would not enforce the securities until December 2005 or until the development approvals had been obtained, whichever occurred first; and that, in reliance on those expectations, the companies executed the facility agreements and the deed of covenant and did not until very recently seek replacement or alternative loan finance and have suffered detriment. As a result, it would be pleaded that, in all the circumstances, it would be unconscionable if the Bank were now permitted to depart from the assumption so created that enforcement would be deferred, whereupon the companies acted to their detriment in relying on the Bank's promise to defer enforcement, by not arranging alternative finance and by executing the facility agreement and deed of covenant.
Consequently, the companies would plead that the Bank is estopped from enforcing the securities and that the second defendant's appointment as receiver and manager of each company is invalid.

Whether an interlocutory injunction should go

The circumstances in which an interlocutory injunction may be granted in circumstances such as these are well understood: see Castlemaine Tooheys Ltd v The State of South Australia (1986) 161 CLR 148 at 153 per Mason ACJ. The Court must be satisfied that there is a serious issue to be tried on the part of the party seeking the interlocutory injunction. If damages are an adequate remedy, then ordinarily an interlocutory injunction will not be granted. If the evidence shows that the party seeking the injunction will suffer irreparable damage for which damages will not be an adequate remedy unless an injunction is granted, the Court then will look at the balance of convenience to determine whether the injunction should go. In looking at the balance of convenience, the Court should consider all of the facts. If the facts are evenly balanced, it is prudent to preserve the status quo.
The companies in these Corporations Act proceedings primarily contend that each proposed cause of action foreshadowed in the proposed counterclaim in the Bank's action raises a serious issue to be tried, that damages is not a suitable remedy and that the balance of convenience is in their favour.
The affidavit evidence of Mr Chesson is referred to by counsel for the companies as providing the factual substratum to the pleadings foreshadowed in the draft defence and counterclaim in the Bank's action. The ultimate success or otherwise of the companies' counterclaim depends entirely on the acceptance of Mr Chesson's evidence that he had the discussions with Mr Harris that he alleges. Mr Harris has made an affidavit denying that he had any such conversation or made any such agreement with Mr Chesson in August 2003. In his affidavit sworn 21 July 2004 and filed in the Bank's action, Mr Harris deals with the question of "Statements with respect to terms of the Facilities" in pars 7 ‑ 15. He denies that he said to Mr Chesson words to the effect that the Bank would not call upon the loans before December 2005. In par 9, Mr Harris says that he said to Mr Chesson words to the effect that the Bank would be happy to consider extending the loans, subject to the receipt of all relevant updated financial information and valuations. He says that, at no time, was a specific five‑year term mentioned. It seems to me, although it is not entirely clear, that, in the context of pars 7 and 8 of his affidavit, Mr Harris should be taken to suggest that the words he says he spoke to Mr Chesson were spoken in about December 2000, not in August 2003.
The Bank has also put on a number of affidavits that seek to establish the documentary history of dealings between the companies, Mr Chesson and the Bank from which the Bank would have the Court draw the irresistible inference that what Mr Chesson says was agreed between him and Mr Harris in August 2003 is false or at least inherently improbable. This evidence is put forward as an additional proposition to the proposition that, at no time, were Mr Harris and IFI the agents actual or ostensible or apparent of the Bank.
So far as the agency point is concerned, the companies' evidence could not sustain an allegation of actual authority: thus, counsel contended it discloses apparent authority.
The Bank says that it is particularly telling that, on 16 February 2004, in a letter signed by Mr Chesson on behalf of AustAsia Group Ltd to Mr John Poulsen at Minter Ellison lawyers, the solicitors acting for the Bank at material times, concerning "the current position with the assets mortgaged to your client", Mr Chesson specifically addressed, at page 7 of the letter, the question of "Further time for refinancing (Pending the DA)". Under that heading, Mr Chesson, on behalf of AustAsia Group Ltd, and on behalf of the companies, advised:
"We do not intend addressing the Notice of Demand that accompanied your letter of 6 February 2004 in this correspondence, however we reserve our right to do so if necessary at a later time.
It was our understanding that the completion of the documentation for the refinancing that we signed late in 2003, which included further security by way of cross collateralization and a debenture (limited to the mortgaged real estate) on the company was in consideration of AXA agreeing not to seek repayment of its debt until after the result of the appeal to the Tribunal had been obtained and further time had been allowed for financing matters to be put in place. That course of action makes as [sic] lot of sense.
We request that you counsel your client to be patient and wait for the DA process to take its course, which should not be too much longer. If the President of the Tribunal is true to his past performance then we should have a result as you suggest by 8 March 2004. It would however make sense as a matter of convenience to all concerned for your client to agree to allow until 30 June 2004 for the refinancing matter to be resolved.
We trust that this letter has provided a satisfactory update to the situation with the matters at hand. Please do not hesitate to contact us if you require further information.
Yours sincerely,
(Sgd) Syd Chesson
encl. Copy of letter from International Financing & Investment Pty Ltd"

The enclosed letter from IFI was dated 11 February 2004 and was addressed to Mr Chesson as managing director of "Kelmscott Central Development Trust" and confirmed that "the following interested parties with respect to the refinance of Kelmscott in its current form and with the prospect of the Tribunal finality and subsequent DA". The interested parties identified were:
1.Perpetual Trustees Ltd
2.ING
3.Westpac
4.Macquarie
The letter, which was signed by Mr Harris, advised Mr Chesson that:
"The above are real opportunities given the time to pursue in an [sic] professional manner. I acknowledge that you are getting me the tenancy schedule for Kelmscott at the time of writing, however I await your instruction with respect the above."
Counsel for the companies says that the second paragraph of the portion of the letter just quoted supports Mr Chesson's affidavit evidence and the plea made in the draft defence and counterclaim that Mr Harris had, indeed, agreed with Mr Chesson that the Bank (AXA), in consideration of the companies providing further security by way of cross‑collaterisation and a debenture, had agreed not to seek repayment of its debt until the result of the appeal to the Town Planning Appeal Tribunal concerning the Kelmscott shopping centre redevelopment proposal was known and further time had been allowed for financing matters to be put in place.
However, counsel for the Bank emphasises the third paragraph of the portion of the letter just quoted which goes on to quite explicitly suggest that, as a matter of convenience for all concerned, the Bank should agree "to allow until 30 June 2004" for the refinancing matter to be resolved. He submitted that such a written representation by Mr Chesson was entirely at odds with his present claim in his affidavit that Mr Harris had agreed on behalf of the Bank to an extension until December 2005.
All parties understand that, on an application for an interlocutory injunction, the Court will be very slow to make findings of fact where the evidence is disputed. It is not possible for the Court on this application finally to draw conclusions of fact having regard to the differing accounts of what was said or not said in August 2003, if anything, between Mr Chesson and Mr Harris, without a full trial on these issues. In a case such as this, questions of credibility would at a trial also be of relevance in drawing such conclusions.
However, it may be observed, notwithstanding my comments about the difficulty of a Court on an application such as this drawing any conclusions or making any findings as to factual matters or credibility issues, that it is somewhat surprising that, in a letter of the nature of that Mr Chesson sent to Mr Poulsen dated 16 February 2004, a notice of demand having already been served on the companies by the solicitors for the Bank, Mr Chesson would not have drawn to the attention of the Bank's solicitors the terms of an agreement or representations as significant as those now the subject of Mr Chesson's affidavit opposing the summary judgment application and in support of the application for interlocutory injunction in these Corporations Act proceedings and included in the draft defence and counterclaim in the Bank's action.
Nonetheless, if, on an application such as this for an interlocutory injunction, the affidavit evidence before the Court were limited to the matters set out above, then, on balance, the Court might well conclude that there are serious issues to be tried, having regard to the evidence put forward by Mr Chesson, disputed as it is by the Bank and other witnesses it would call at a trial, notwithstanding the comments I have made concerning the documentary record in this case. The serious issues would be those foreshadowed in the draft pleading in the Bank's action. It might also be said that, in such circumstances, while the companies could obtain damages for breach of contract or under the relevant statutes or in equity, the award of damages might not be considered an adequate remedy in the face of the loss by the companies of the commercial developments they currently own or control and the redevelopment potential they have foreshadowed in those commercial properties, and so damages would not be an adequate remedy. It might also be concluded in such circumstances that the balance of convenience would favour the companies in that they have, on the evidence to this point, met their interest payment obligations under the securities to the Bank and, subject to questions I will shortly turn to, have maintained their obligations under the securities and apparently have the capacity to continue to do so. Thus, it might be concluded in such circumstances that, while the Bank and the receiver would be prevented from acting under the securities if an interlocutory injunction were granted to the Bank's detriment, the grant of an interlocutory injunction would be reasonable in circumstances where the facts are evenly balanced and it is appropriate to preserve the status quo.

Separate acts of default issue

However, there is an additional factor in this case pertaining to the appointment of the receiver to each of the plaintiff companies and that is the allegation, which is not denied, that at least one of the companies has failed to make all other relevant payments to third parties as required under the securities.
The Bank says that the Court should not grant interlocutory relief because there have been additional separate acts of default under the relevant securities which, in any event, justify the appointment by the Bank of the second defendant in the Corporations Act proceedings as receiver of each of the plaintiff companies.
In the affidavit evidence of Mr Richard Johnson put on by the Bank, it is suggested that, on 6 April 2004, the City of Armadale obtained a default judgment against Western Australian Real Estate Custodian Pty Ltd, the sixth‑named plaintiff in the Corporations Act proceedings, which, as at 22 July 2004, constituted a judgment sum of $107,440.92. This has subsequently been confirmed by the companies. The judgment was for unpaid rates and taxes in respect of land the subject of the securities and comprising land known as the Kelmscott and Summerfield shopping centres, of which the relevant company is the registered proprietor.
The Bank holds a real property mortgage over this land and, by cl 6.1(a) of the mortgage, the relevant company is obliged to pay on time all amounts payable now or in the future in connection with the secured property which, if not paid, may become a charge on the secured property. Further, by cl 6(f), the mortgage provides that the relevant company must "comply on time with all its obligations in connection with the secured property including laws and requirements and orders of authorities". Clause 13(d) of the mortgage further provides that an event of default occurs under the mortgage if, inter alia:
" … distress is levied, or a judgment, order or encumbrance is enforced, or becomes enforceable against any property of the mortgagor, or can be rendered enforceable by the giving of notice, lapse of time or fulfilment of any condition."
Clause 13(z) of the mortgage further provides that an event of default occurs under the mortgage if:
"The mortgagor does not observe any other obligation under this mortgage and, if the non‑observance can be remedied, does not remedy the non‑observance within 7 days."
There can be little doubt that the non‑payment of the City of Armadale rates by the relevant company constituted an event of default under the mortgage and by itself is sufficient to trigger the provisions of the mortgage and deed of covenant to permit the appointment of the second defendant as receiver.
When this matter was raised on 22 July, when the matter first came before me, counsel appearing for the companies sought the opportunity by way of adjournment to further investigate the allegations contained in the affidavit evidence concerning this default put on by the Bank.
In his supplementary affidavit sworn 30 July 2004, Mr Chesson refers to the default judgment against Western Australian Real Estate Custodian Pty Ltd in favour of the City of Armadale and says that the judgment has now been satisfied and the judgment debt set aside. He produces evidence to confirm that, by a minute of consent orders, the default judgment was set aside on 29 July 2004.
However, by further affidavit evidence put on by the Bank and the receiver, by affidavit of Mr Johnson, sworn 30 July 2004, it seems that the same company is also indebted to the City of Wanneroo in respect of outstanding rates and taxes imposed on 3 Wade Court, Girrawheen (being the Summerfield shopping centre of which that company is the registered proprietor) which, as at 27 July 2004, were in the sum of $172,424.65. This is not denied by the companies or counsel on their behalf.
Counsel for the Bank and the receiver contends that, whatever might be said to arise by way of serious issues to be tried in terms of the foreshadowed pleading of the companies as set out above, these further acts of default stand separate and apart from those issues and separately justify the appointment by the Bank of the receiver, and that there is no arguable defence in respect of these further acts of default.
Counsel for the companies acknowledged in his written and oral submissions that the purported appointment of a receiver can be justified on the basis of a company's failure to pay rates and taxes, even though the security holder Bank might not have been aware of that particular failure at the time of the appointment: McMahon v State Bank of New South Wales [1990] 8 ACLC 315 and Retail Equity Pty Ltd v Custom Credit Corporation Ltd [1991] 9 ACLC 404. Counsel, however, argues that this particular line of argument is untenable in the present context because the Bank is bound or estopped by its promise to defer enforcement of its securities.
In my view, it is extremely difficult for the companies to argue the position contended for by their counsel. The particular representation of Mr Harris upon which the companies rely, as set out in some detail in the foreshadowed pleadings and as noted above, is that if the companies were to execute the deed of covenant, the Bank would extend the companies' facilities beyond 30 June 2003 and would defer enforcement of the securities until December 2005 or the date on which development approvals for the Kelmscott site were obtained, whichever occurred first. In my view, it cannot seriously be contended that any such agreement, promise, representation or conduct included either an express or an implied representation that the companies' other obligations under the securities to third parties to protect the security, such as the obligation to pay rates and taxes between the time of the representations (August 2003, as alleged by Mr Chesson) and December 2005 - the latest deferral date as alleged by Mr Chesson, were also deferred. What allegedly was to be deferred, on the substance of the companies' case, was the repayment of the principal sums due under the securities. On the evidence of the companies before me, the representation that there would be no enforcement of the securities must necessarily be understood in that context. There is no evidence before me which expressly suggests or from which it can impliedly be taken that, in effect, the companies had no continuing obligation to honour the other obligations imposed on them under the respective securities in order to protect the securities. In other words, the companies were not immune from enforcement action by the Bank in the event that other acts of default specified in the securities were to occur in the meantime, at least without any further agreement or deferral assented to by the Bank.
Therefore, in my view, even accepting the foreshadowed pleading and contention of the companies and the affidavit evidence of Mr Chesson in support of it, in my view, there is not a serious issue to be tried in respect of the companies' claim that the agreement, promise, representation or other conduct of Mr Harris to Mr Chesson in August 2003 included expressly or impliedly an agreement or promise or representation not to take enforcement action on its securities should there be separate acts of default unrelated to the repayment of the principal sum due under those securities.
Nor do I consider it can be seriously argued that any right of action the companies may have under s 12GH of the Australian Securities and Investments Commission Act can have the effect that the companies are, in effect, immunised from future acts of default under the securities of the kind now in issue. Even if one were to assume that Mr Harris engaged in conduct as the apparent agent of the Bank or at the Bank's direction or with the Bank's agreement or consent, it is difficult to see how that conduct - the representation said to have been made by Mr Harris - bears any relation to the separate acts of default.
As counsel for the Bank and the receiver submits, if the position were otherwise, other acts of default specified in the securities, including the appointment of a liquidator to the companies or, putting it colloquially, other acts involving "asset stripping" which would trigger enforcement action under the security, also could not be relied upon by the Bank.
As I have suggested, it cannot realistically be suggested that the agreement, promise, representation or conduct of Mr Harris alleged by Mr Chesson on behalf of the companies that, in substance, the Bank through its agent agreed to deferral of repayment of the principal sum due under the securities until at the latest December 2005, included an agreement, promise or representation that the companies were not obliged to conform with their obligation under the securities to pay rates and taxes to municipal authorities in the meantime when they fell due.
Indeed, the companies have been at pains in the affidavit evidence they have put on and in the submissions made by counsel on their behalf to emphasise that, in all other respects, apart from the repayment of the principal due under the securities, the companies have been repaying interest and meeting their other obligations. As soon as the question of outstanding rates and taxes due to the City of Armadale was raised, the relevant company urgently took steps to pay the default judgment obtained in the District Court by the City of Armadale and to have the judgment set aside.
I should add that I do not consider that the act of setting aside by consent that default judgment can, of itself, have the effect of removing the act of default as defined in the relevant mortgage between that company and the Bank. In contractual terms, the act of default occurred, the default was outstanding for the requisite period and the Bank was entitled at the relevant time to act upon that default and appoint the receiver in respect of that company's affairs. Because of the cross‑collateralisation arrangements under the deed of covenant, that same act of default triggered the Bank's right to appoint receivers under the securities it held over the affairs of the other companies.

Conclusion

In all of these circumstances, I am not satisfied that there is a serious issue to be tried concerning the companies' claim that the Bank's appointment of the receiver is invalid in respect of these separate acts of default.
For this reason, I would refuse the companies' application for an interlocutory injunction against the Bank and the receiver in the Corporations Act proceedings.
I might add, for the sake of completeness, that, had it not been for my view that there is no serious issue to be tried in respect of these separate acts of default, I would otherwise have been satisfied that this is a case where damages would not be a suitable remedy so far as the companies are concerned, that the balance of convenience otherwise favours the companies, and that the grant of an interlocutory injunction would in the Court's discretion be appropriate.