McInnes v Central Pacific Holdings Pty Ltd

[2001] VSC 446

IN THE SUPREME COURT OF VICTORIA Not Restricted

AT MELBOURNE

PRACTICE COURT

No. 8179 of 2001

JOHN McINNES AND ANOTHER	Plaintiffs
v.
CENTRAL PACIFIC HOLDINGS PTY. LTD.	Defendant

---

JUDGE:	BEACH, J.
WHERE HELD:	MELBOURNE
DATE OF HEARING:	15 NOVEMBER 2001
DATE OF JUDGMENT:	15 NOVEMBER 2001
CASE MAY BE CITED AS:	JOHN McINNES v. CENTRAL PACIFIC HOLDINGS
MEDIUM NEUTRAL CITATION:	[2001] VSC 446

---

CATCHWORDS:      Interlocutory injunction – Balance of convenience favouring grant.

---

APPEARANCES:	Counsel	Solicitors
For the Plaintiffs	Mr. G.D. Bloch	Goldhirsch & Shnider
For the Defendant	Mr. P. Nugent	Minter Ellison

HIS HONOUR:

1. In July 2000 the second plaintiff, Australian Asia Group Pty Ltd, together with a number of associated companies, entered into an agreement with the defendant, Central Pacific Holdings Pty Ltd, and a number of other parties, including the Government of the Republic of Nauru and the Nauru Superannuation Board, in relation to what the agreement refers to as the Southern Cross project.

1. The agreement itself is described as a Deed of Release and was prepared by solicitors for the parties to it. 

1. Clause 3.3(b) provides that should the Southern Cross development not proceed pursuant to the proposed joint venture with Barron Corporation Pty Ltd, then, notwithstanding anything to the contrary herein contained, AAG [the second plaintiff and the companies associated with it] shall receive an amount in the sum of $200,000 in full and final settlement of all moneys owed to it under the mandate agreement dated 22 January 1999 for outstanding fees owed to AAG prior to the date hereof.

1. Clause 3.3(c) of the Deed of Release provides that in the event that CPH [the defendant] is required to pay the $200,000 pursuant to sub-clause (b) hereof, that payment shall be effected in full out of the sale proceeds of the Southern Cross property.

1. The fact is that the Southern Cross development did not proceed pursuant to the proposed joint venture with Barron Corporation Pty Ltd and ultimately the defendant sold the Southern Cross property.  At the time of settlement of the sale the defendant did not pay from the proceeds the sum of $200,000 to the second plaintiff.

1. On 1 November 2001, John McInnes, who is the liquidator of Australian Asia Group Pty Ltd, made an application to me in the Practice Court for orders that the defendant, Central Pacific Holdings Pty Ltd, forthwith pay the sum of $200,000 to the Prothonotary of the court and an order that the defendant be restrained by injunction from appropriating any part of the proceeds of sale of the property referred to in paragraph 7 of the plaintiff's statement of claim without first paying therefrom the sum of $200,000 to the Prothonotary of the court.

1. The material before me at the time the application was made demonstrated that unless the defendant was required to bring the sum of $200,000 into court it would pay out certain creditors whose claims well exceeded the proceeds of sale of the Southern Cross property.  At that time, although the defendant was represented, counsel for the defendant had had no opportunity to consider the matter.  In that situation I granted what in fact were interim orders to the effect that the defendant pay the sum of $200,000 to the Prothonotary of the court and that it be restrained from appropriating any part of the proceeds of sale of the property without first paying that sum of $200,000 to the Prothonotary.

1. The matter then came back before McDonald, J. on 9 November and it was then adjourned to today.

1. I have considered the material filed on behalf of the parties in relation to the matter and, having done so, it is my opinion that there are two serious issues to be tried in the proceeding.

1. The first issue is whether the second plaintiff, and therefore both plaintiffs, are entitled to be paid the sum of $200,000 pursuant to the provisions of Clause 3.3 of the release. 

1. The second issue is whether the fact that the Deed of Release specifically provided that the payment of $200,000 and "shall be effected in full out of the sale proceeds of the Southern Cross property" gave the second plaintiff a form of security over that sum in priority to other secured creditors and unsecured creditors.

1. In that regard it is to be noted that the Government of the Republic of Nauru and the Nauru Superannuation Board were both parties and signatories to the Deed of Release.

1. Clearly, if the sum of $200,000 now in court pursuant to my earlier order does not remain in court pending the hearing and determination of the proceeding, it will be paid to either the Nauru Phosphate Royalties Trust and/or the Republic of Nauru Finance Corporation.  In that event, if the plaintiffs are successful so far as both issues are concerned, by reason of the payment of the proceeds of the sale to the Trust and/or the Corporation there would be little or no prospect of them recovering their judgment.  If on the other hand the defendant is ultimately successful in the proceeding, it will be adequately compensated by an appropriate award of interest on the $200,000 or an appropriate award of damages in the matter.

1. In my view, having regard to the fact that unless the $200,000 remains in court it will be lost to the plaintiffs, is sufficient justification in this case for not disturbing the order that I already have made.

1. Accordingly I order that the sum of $200,000 paid by the defendant to the Prothonotary of the court be maintained in the court until after the hearing and determination of the proceeding or further order.

1. I give leave to the plaintiff to file and serve an amended statement of claim on or before 26 November 2001.

1. I order that the defendant file and serve a defence and counterclaim, if any, by 31 December 2001.

1. I order that the plaintiffs file and serve any reply and defence to the counterclaim on or before 15 January 2002.

1. I reserve liberty to the parties to apply.

1. I reserve the costs of the present application.

1. I direct that this order be prepared by the solicitors for the plaintiff and within 48 hours be brought to me for authentication.

---