Murray, L.o.a. v Macquarie Bank Ltd

[1991] FCA 928

JUDGMENT No. ........ .,....... I ........ ,, 928 91

C A T C H W O R D S

INJUNCTIONS - misleading conduct alleged - whether serious question to be tried - imposition of condition on grant of injunction - adequacy of security.

Inqlis v. C	c	(1971-1972)
126 C.L.R. 161.

LYNNE ORELLE ANGELA MURRAY V. MACOUARIE BANK LIMITED & ANOR.

No. QG 159 of 1990

PINCUS J BRISBANE 20 AUGUST 1991
IN THE FEDERAL COURT OF AUSTRALIA	)
DUEENSLAND DISTRICT REGISTRY	) No. QG159 of 1990
GENERAL DIVISION	1

BETWEEN: LYNNE ORELLE ANGELA MURRAY

Applicant

AND: THE MACOUARIE BANK LIMITED

First Respondent

AND: MYMOND WILLIAM CARLE

Second Respondent

AND BETWEEN:

THE MACOUARIE BANK LIMITED

Cross-Applicant

AND: LYNNE ORELLE ANGELA MURRAY

First Cross-Respondent

AND: JOHN ALEXANDER BAKER

Second Cross-Respondent

AND BETWEEN:

JQHN ALEXANDER BAKER

Cross-Applicant

AND: THE MACOUARIE BANK LIMITED

First Cross-Respondent

AND: WYMOND WILLIAM CARLE

Second Cross-Respondent

MINUTES OF ORDER

JUDGE MAKING ORDER:	PINCUS J
DATE OF ORDER:	21 AUGUST 1991
WHERE MADE:	BRISBANE

the applicant Lynne Orelle Angela Murray by her counsel giving to the Court:-

(a)

an undertaking to place on the market for sale the property described as Lot 59 on Registered Building Units Plan No. 5333 and subject to Bill of Mortgage J834165V ("the Unit") and to use her best endeavours to effect a prompt sale of the Unit at the market value thereof; and for that purpose:-

(i)	to list the Unit forthwith with agents, including Henzels;
(ii)	to advise and keep advised the solicitors for Macquarie Bank Limited of the agent or agents with whom the Unit is listed for sale, of the instructions given to such agents (including instructions as to sale price);
(iii)	to keep the solicitors for Macquarie Bank Limited advised of progress in the attempt to sell the unit in a weekly report in writing;

(b)

of proceeds of sale of the Unit after the deduction of

an undertaking forthwith upon sale to pay the balance

all proper agents commissions, solicitors fees, adjustments or other expenses incidental to the sale to an account with the Macquarie Bank Limited, without admission of liability by the applicant; and

(c) the usual undertaking as to damages;

THE COURT ORDERS THAT:

1.   The Macquarie Bank Limited be restrained until commencement of the trial in the proceedings or further earlier or other order from exercising or attempting to exercise its power of sale under registered bill of mortgage J834165V and from taking possession or from attempting to take or enforce any right to possession of the lands subject to the said bill of mortgage.

2.    Each party have liberty to apply on two clear days' notice in writing.

3.    The costs of the application be costs in the cause.

4. The terns of the undertaking be reviewed and the matter be listed for further mention on Wednesday 2

October 1991 at 9.45 a.m.

5 .    The parties keep the terms of this order confidential.

THE COURT DIRECTS THAT:

6.    The order be placed in a sealed envelope on the file and not opened except by leave of the judge.

IN THE FEDERAL COURT OF AUSTRALIA	1
QUEENSLAND DISTRICT REGISTRY	) No. QG159 of 1990
GENERAL DIVISION	)

BETWEEN: LYNNE ORELLE ANGELA MURRAY

Applicant

AND: THE MACOUARIE BANK LIMITED

First Respondent

AND: MYMOND WILLIAM CARLE

Second Respondent

AND BETWEEN:

THE MACOUARIE BANK LIMITED

Cross-Applicant

AND: LYNNE ORELLE ANGELA MURRAY

First Cross-Respondent

AND: JOHN ALEXANDER BAKER

Second Cross-Respondent

AND BETWEEN:

JOHN ALEXANDER BAKER

Cross-Applicant

AND: THE MACOUARIE BANK LIMITED

First Cross-Respondent

AND: RAYMOND WILLIAM CARLE

Second Cross-Respondent

m:  Pincus 3.

W: Brisbane

DATE :  20 August 1991

EX TEMPORE REASONS FOR JUDGMENT

This is an application for a n i n t e r l o c u t o r y i n j u n c t i o n .

The nature of the claims made appears from reasons I gave earlier today relating to a procedural question, namely that of severance. To recapitulate, the applicant claims to have been misled late in 1988 in relation to a then proposed application for a loan by the respondent bank, to have been badly advised

about a trip overseas in May 1989, and to have been misled as to
a guarantee in October 1989.

In these reasons I shall deal only with the first and third aspects of the case. The reason is that the allegations relating to May 1989 do not raise a matter of any strength. That case is, in any event, plainly weaker than the other two.

The First Set of Alleaations

The essence of this part of the case is that the second respondent, Mr. Carle, who was at the time an officer of the Macquarie Bank ('the bank'), misled the applicant about a then proposed loan. The applicant's case is that Carle knew that repayment of the loan would depend upon moneys which might be obtained by the applicant from a solicitors' firm of which her then fiance was a member. These moneys were to come via a service company.

There is evidence that the fin's overdraft limit in 1988 was $150,000; that on 31 October 1988 it was about $140,000

over that limit, and a month later another $90,000 over that

limit. The applicant says that " ( i ) n about November o r December 1988" she told Carle that she did not like debt and in response Carle tapped pages of a document showing " t h e f i rm's f inanc ia l

f igures" and commented that "on monthly f i g u r e s l i ke t h e s e . . . ,

the a p p l i c a n t ' s s i t u a t i o n on t h e loan was a reasonable one".

The applicant also says, rather vaguely, that Carle led

"me t o believe t h a t he was happy w i t h t h e way t h e f i r m was going

and that I could rely on the projected income of the firm in relation to the borrowing". Although this may have been intended as a statement summarising what Carle said, I am inclined to regard it as no more than an assertion of the applicant's state of mind at the time.

The case advanced by Mr Clarke in argument on behalf of the applicant is, I think, not one of misrepresentation by silence, but misrepresentation by telling part only of a truth. There is evidence suggesting that at the relevant time, Carle was concerned about the debt owing by the firm, as indeed he might have been, since it was increasing rather rapidly.

It is not clear at what precise date, in relation to the conversation with the applicant, Carle's concern came into existence, but M r Clarke points out that the loan agreement was signed only ten days before Christmas 1988. There is a letter written by Carle and an affidavit in Supreme Court proceedings both suggesting that Carle was concerned before Christmas of

1988.

I would not think the uncertainty as to the precise date upon which his concern arose or the precise extent of his concern should go against the applicant when these matters are within the knowledge of Carle and he has made no affidavit. It therefore appears to me that there is a serious question to be tried as to whether or not the applicant was misled by Carle late in 1988.

The Third Set of Alleaations

The third matter relates to a guarantee for a loan to the applicant's former fiance and now husband in October 1989. The case is, in essence, a simple one. It is that Carle gave information and advice about a purchase of a legal practice proposed by Baker which was incorrect, or insofar as it consisted of predictions, not soundly based. This, it is said, led to the applicant executing a guarantee, the amount due on which is now well over $100,000.

The respects in which the statements made by Carle were misleading are not sworn to in a very satisfactory way, but, again, the absence of an affidavit from Carle seems to me to make it difficult to hold that there is no serious question to be tried.

Mr Morris has said, and it is true, that an affidavit

by Carle might not have helped. But one does not know at present

even what Carle is prepared to swear to.

Mr Morris also argued that Carle would have been

understood by the applicant as simply passing on what the vendors of the practice had told him, and that is, I think, a sound contention in substance. Nevertheless, one would expect that in Carle's position he might well have had some significant personal knowledge of the firm's financial position. Again, I feel obliged to hold that there is a serious question to be tried on this aspect of the matter, in the absence of any evidence from Carle.

There has been no real explanation of the failure to provide an affidavit. Certainly there has been sufficient time to get one, and it seems plain that instructions have been obtained from Carle in order to draw up the pleadings.

It is my opinion that the applicant has a case of substance on the first aspect and that, subject to a matter I shall mention later, a case of rather less substance on the events of late 1989.

M r Morris argues as to the 1988 incident that damages

on the ordinary basis could not be very substantial, and I think that is right. M r Clarke says, however, that the Court would have power under the Trade Practices Act 1974 to reschedule Mrs Murray's commitments and draws attention to the fact that, under the agreement made in December 1988, the loan was to be repaid in 1998. He suggested that if the Court at the trial found a causal connection between the acceleration of the date of repayment due to default on the part o the applicant, and the

misleading conduct alleged against Carle, then it is conceivable	that such relief could be given by the Court as would defer the
date of payment of the principal.
It seems to me that at any interlocutory stage one could not deny this possibility. As to the guarantee given in 1989, I have said that on the face of it, this is a weaker case than that relating to 1988. On the other hand, a number of authorities, both old and new, show that the law can be rather hard on guarantors who have in any respect misconducted themselves in obtaining a guarantee. It is clearly easier to have a guarantee set aside than to attack other forms of obligation. Keeping this in mind, I am inclined to think that I should approach the matter on the basis that the applicant has a significant chance of success in respect of both the claims with which I have dealt.
I have also taken into account that the litigation began late last year, and it is hoped to have it tried some time during the remaining months of this year. There seems to me to be a reasonable chance of achieving that. There are valuations in existence of the security which the bank holds, amounting to $750,000, and the total debt, including interest, appears to be at present in the region of $450,000.
Mr. Morris has made submissions about the adequacy of the margin of the security and, in particular, he has emphasised the circumstance that valuations can sometimes not be realised in practice, and I have taken that into account.
It is, however, plain that to impose a condition as to payment into court, as Mr Morris suggests should be done, would be futile as the applicant could not pay in, and one might as well refuse an injunction rather than impose a condition which one knows is not going to be complied with. Despite what has been said in Inalis v. ~ommonwealth Tradina Bank of Australia (1971-72) 126 C.L.R. 161, and accepting that the High Court there laid down the basic rule, I am inclined to think an injunction should be granted here, but subject to a condition.
The valuations put forward include a unit at the North Coast said to be worth $200,000. It seems to me that the bank should at least be able to recover sums other than those affected by the two matters in respect of which I think the applicant has a case. The condition will therefore be to the effect that the unit be put on the market forthwith. I understood Mr Morris to say that the bank might not insist upon a mortgagee sale, and indeed might prefer a sale by the owner, namely the applicant, and that makes practical sense.
What I have in mind is to so frame the condition that the applicant must forthwith take all reasonable steps to sell the unit on the basis that the whole of the net proceeds goes to the bank. I will give the parties an opportunity to confer as to the precise terms of the condition. Assuming the unit is sold, that will reduce the bank debt and improve its margin of security to something in the region of 50%.
In summary, I will grant an injunction as sought on a condition such as that which I have mentioned, and the costs will
be costs in the proceedings.
I will adjourn the matter till 2.15 tomorrow at which time I will make a final order, and also I will give directions.
May I express appreciation to counsel for their assistance with
this difficult matter; I thought it was very well argued.

I certify that this and the preceding seven pages are a true copy of the reasons for judgment herein of his Honour hi- Justice Pincus.

CL=---

Associate

Date: 20 August 1991

Counsel for the applicant	hi- B J Clarke
Solicitors for the applicant :	Hill & Taylor
Counsel for the respondent	M r A J H Morris
Solicitors for the respondent :	Clarke & Kann
Date of hearing	20 August 1991