Nu-Fortune Gold Ltd v Roxbury Trading Pty Ltd
[2019] WASC 307
•26 AUGUST 2019
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
CITATION: NU-FORTUNE GOLD LTD -v- ROXBURY TRADING PTY LTD [2019] WASC 307
CORAM: ALLANSON J
HEARD: 20 & 21 AUGUST 2019
DELIVERED : 26 AUGUST 2019
FILE NO/S: CIV 2354 of 2019
BETWEEN: NU-FORTUNE GOLD LTD
First Plaintiff
ECO MINERALS RESEARCH LTD
Second Plaintiff
AND
ROXBURY TRADING PTY LTD
First Defendant
PAUL JAMES KENNEDY
Second Defendant
Catchwords:
Practice and procedure - Interim injunction - Where plaintiffs and defendants party to Sublease - Where defendants purport to give notice terminating lease and re-enter possession - Whether notice complied with requirements of Property Law Act - Whether plaintiffs in default of obligation to pay rent - Whether on proper construction of Sublease plaintiffs obliged to pay rent
Legislation:
Mines Safety and Inspection Act 1994 (WA), s 33
Property Law Act 1969 (WA), s 81
Supreme Court Act 1935 (WA), s 25
Result:
Interim injunction granted
Category: B
Representation:
Counsel:
| First Plaintiff | : | I R Gillon |
| Second Plaintiff | : | I R Gillon |
| First Defendant | : | S Macdonald |
| Second Defendant | : | S Macdonald |
Solicitors:
| First Plaintiff | : | Lawton Gillon |
| Second Plaintiff | : | Lawton Gillon |
| First Defendant | : | Macdonald Rudder |
| Second Defendant | : | Macdonald Rudder |
Case(s) referred to in decision(s):
Action Cycles Pty Ltd (recs & mgrs apptd) v Ross [2011] VSCA 411
Australian Broadcasting Corporation v Lenah Game Meats Pty Ltd [2001] HCA 63; (2001) 208 CLR 199
Australian Broadcasting Corporation v O'Neill [2006] HCA 46; (2006) 227 CLR 57
Beecham Group Ltd v Bristol Laboratories Pty Ltd [1968] HCA 1; (1968) 118 CLR 618
Electricity Generation Corporation v Woodside Energy Ltd [2014] HCA 7; (2014) 251 CLR 640
Rinehart v Hancock Prospecting Pty Ltd; Rinehart v Rinehart [2019] HCA 13
State Transport Authority v Apex Quarries Ltd [1988] VicRp 26; [1988] VR 187
ALLANSON J:
On 20 and 21 August 2019, I heard an application for an urgent interim injunction brought by Nu-Fortune Gold Ltd and Eco Minerals Research Ltd. The defendants are Roxbury Trading Pty Ltd and Paul James Kennedy, a director of Roxbury.
On 21 August 2019, I granted the injunction on an interim basis until 5 September 2019, when the matter can be considered in greater detail and to allow the defendants time to file evidence. I gave only short reasons at the time and said that I would provide more detailed reasons in writing.
Background
The plaintiffs have commenced proceedings in this court against the defendants. By writ of summons filed 1 August 2019, the plaintiffs allege that:
(1)Pursuant to a deed of sublease entered into between Western Australian Mint as landlord, the first defendant as tenant, and the plaintiffs as subtenants the first defendant granted to the plaintiffs a Sublease over two Crown Reserves, commonly known as the Menzies State Battery.[1]
(2)The initial term of the Sublease expires 17 May 2020.[2]
(3)Pursuant to the terms of the Sublease, the plaintiffs are entitled to peaceable and quiet possession without interruption from the first defendant.[3]
(4)In breach of the terms of the deed of Sublease the first defendant has purported to take possession of the Menzies State Battery to the exclusion of the plaintiffs.[4]
[1] Statement of claim [4].
[2] Statement of claim [5].
[3] Statement of claim [6].
[4] Statement of claim [7].
The plaintiffs seek an injunction restraining Roxbury and Mr Kennedy from entering upon the Menzies State Battery, and damages.
On 14 August 2019, the plaintiffs filed a summons for interim injunction, seeking an injunction, until further order, restraining the defendants through their servants or agents from entering upon the Menzies State Battery, and an order to deliver up possession of it to the plaintiffs.
In support of the summons the plaintiffs filed an affidavit of Paul Richard Hanna, sworn 12 August 2019. Mr Hanna is a director of each plaintiff. He deposed, relevantly, as follows:
(1)Mr Hanna, Mr Kennedy, Roslyn May Kennedy, Nu-Fortune and Robert Alan Jacobs, as administrator of Roxbury, entered into Heads of Agreement on or about March 2016 whereby Roxbury would come out of administration and Nu-Fortune would acquire various mineral tenements.[5]
(2)Disputes have arisen between the defendants and the plaintiffs, with the defendants issuing a dispute notice dated 17 May 2019. Those disputes remain unresolved.[6]
(3)By notice dated 28 May 2019, solicitors acting for Roxbury purported to terminate the Sublease.[7]
(4)On 28 June 2019, Mr Hanna was informed by Michael Bourne, the caretaker for Nu-Fortune at the Menzies State Battery, that Mr Kennedy and two others had arrived at the site and informed Mr Bourne that Mr Kennedy was retaking possession.[8]
(5)Mr Hanna was informed by Mr Bourne that Mr Kennedy refused to leave the site, and had informed him that he was staying at one of the residences on the site and would soon commence changing locks and moving chains with the aid of an angle grinder.[9]
(6)On 28 June 2019, Mr Hanna sought assistance from the police, they regarded it as a civil dispute.[10]
[5] Affidavit of Paul Richard Hanna [4].
[6] Affidavit of Paul Richard Hanna [8].
[7] Affidavit of Paul Richard Hanna [12].
[8] Affidavit of Paul Richard Hanna [16].
[9] Affidavit of Paul Richard Hanna [17].
[10] Affidavit of Paul Richard Hanna [18].
Mr Hanna attached relevant documents including the Heads of Agreement;[11] the Lease and Sublease for the Menzies State Battery;[12] correspondence from Mr Kennedy; and a letter to Nu-Fortune, dated 29 July 2019, from the Department of Mines, Industry Regulation and Safety.[13]
[11] Affidavit of Paul Richard Hanna, Attachment D.
[12] Affidavit of Paul Richard Hanna, Attachment E.
[13] Affidavit of Paul Richard Hanna, Attachment M.
By letter dated 10 July 2019, Mr Kennedy denied excluding Mr Bourne or others from the site. He wrote 'I have my own personal quarters on site and have had for the past 20 years'.[14] On 30 July 2019, Mr Kennedy wrote again. He repeated that Nu-Fortune had removed their own locks from the site and surrendered the site to Roxbury. He denied there was a forced removal although he did refer to 'our own locks being fitted'.[15]
[14] Affidavit of Paul Richard Hanna, Attachment J, 94.
[15] Affidavit of Paul Richard Hanna, Attachment L, 97 - 100.
The letter from the Department of Mines, Industry Regulation and Safety followed a site visit on 24 July 2019. It lists a series of defects or breaches of regulation observed, and requires compliance and evidence of compliance by 30 August 2019.
One of the defects notified was that the Nu-Fortune Registered Manager was not in daily control and supervision of the mine site, as required by s 33(3) of the Mines Safety and Inspection Act 1994 (WA). Relevantly, s 33(1) requires the principal employer for a mine to appoint a registered manager for the mine and to subsequently ensure that at all times a registered manager is appointed for the mine. By s 33(3), the registered manager for a mine 'is responsible on a daily basis for the control and supervision of the mine and mining operations at the mine in accordance with this Act'. A person who contravenes s 33 (1) or (3) commits an offence.
Principles on the grant of an interlocutory injunction
The court has power under s 25(9) of the Supreme Court Act 1935 (WA) to grant an interlocutory injunction in all cases in which it appears to be just or convenient that the order be made. The remedy is discretionary, but the discretion is not at large. It is a basic proposition that it is necessary to identify the legal or equitable rights which are to be determined at trial and in respect of which final relief is sought.[16] The court may grant the injunction if it is necessary to maintain the parties' existing position until the determination of those rights at trial.
[16] Australian Broadcasting Corporation v Lenah Game Meats Pty Ltd [2001] HCA 63; (2001) 208 CLR 199.
The considerations to which the court should have regard in an application for the grant of an interlocutory injunction are well established. The court addresses itself to two main inquiries:
(1)whether the applicant has made out a prima facie case in the sense that if the evidence remains as it is, there is a probability that at the trial of the action the plaintiff will be held entitled to relief;
(2)whether the inconvenience or injury which the applicant would be likely to suffer if an injunction were refused, outweighs or is likely to be outweighed by the injury which the respondent would suffer if an injunction was granted.[17]
[17] Beecham Group Ltd v Bristol Laboratories Pty Ltd [1968] HCA 1; (1968) 118 CLR 618, 622 ‑ 623; Australian Broadcasting Corporation v O'Neill [2006] HCA 46; (2006) 227 CLR 57 [65] ‑ [71].
The plaintiffs do not need show it is more probable than not that they will succeed at trial. It is sufficient if they show a sufficient likelihood of success to justify, in the circumstances, the preservation of their rights pending trial. The 'governing consideration' is that the requisite strength of the probability of ultimate success depends upon the nature of the rights asserted and the practical consequences likely to flow from the interlocutory orders sought.[18]
[18] Australian Broadcasting Corporation v O'Neill [71].
The court does not conduct any form of preliminary trial. The task of the court is not to seek to predict the result of a later trial based upon incomplete and untested materials. The court's function is to decide what the application of the organising principles in all the circumstances indicates is the correct balance of justice between the parties pending trial.
Consideration
The plaintiffs' likelihood of success
The notice sent 28 May 2019 stated:
I refer to my client's 17 May 2019 letter sent on behalf of [the first defendant] and others identified in that letter (Dispute Notice).
The Dispute Notice identified, among other things, [the first plaintiff's] failure to pay to my client the $25,000 'Sub-Tenant Bond' (Bond) as required by clause 14.2 of the Menzies State Battery sublease made by my client in 2017 with [the defendants] (Sub-Lease).
The Sub-Lease's clauses 16.3 and 16.5 provide that the parties must do all things necessary to give effect to the Sub-Lease and that time is of the essence.
Despite my client's reminder by its issue of the Dispute Notice to you that [the plaintiffs] have failed to pay the Bond the Bond remains unpaid.
Failure to pay the Bond constitutes an Event of Default and Roxbury is entitled to retake possession of the Menzies Battery and terminate the Sub‑Lease.
Take notice that Roxbury now terminates the Sub‑Lease.[19]
[19] Affidavit of Paul Richard Hanna, Attachment F.
The plaintiff submitted that the notice of termination is not enforceable, by action or otherwise, because it fails to comply with s 81 of the Property Law Act 1969 (WA).
The defendants were given late notice of the summons. On 19 August 2019, they filed and appearance. In an affidavit filed on the morning of 20 August 2019, the day listed for the return of the summons, Terrence William East, a solicitor for the defendants, stated that he had been informed by one of the directors of Roxbury that the plaintiffs had not paid the rent for the Sublease. Section 81(1) does not affect the law relating to re-entry or forfeiture in the case of non-payment of rent.[20]
[20] Property Law Act s 81(9).
The allegation of non-payment of rent had not previously been made in the correspondence between the plaintiffs and Mr Kennedy, or the lawyer formerly acting for the defendants. The defendants relied on non-payment of rent, however, to take the matter outside s 81.
Alternatively, the defendants submitted that the dispute notice sent 17 May 2019 sufficiently complied with s 81.
It is not, in my opinion, reasonably arguable that the letter of 17 May 2019 is a notice that complies with s 81. It is, as it expressly states, a dispute notice, pursuant to cl 15 of a Heads of Agreement between the parties, invoking a mechanism for resolving the issue should a dispute arise between them.
It was not in dispute that the purported notice of termination sent on 28 May 2019 was not enforceable.
The more contentious issue was whether there was, under the Sublease, an obligation to pay rent. The plaintiff submitted that, on its proper construction, there was no obligation.
Under cl 3 of the Lease, Roxbury was required during the term of the Lease to pay to the Lessor in each year the annual rent specified, calculated and payable at the times and in the manner provided for in Item 6 of the Schedule. Item 6, however, did not require payment in each year but an annual rent of one dollar 'payable in full on the Commencement'. The commencement was 19 May 2015.
The Sublease was not entered into until 2017. It provided for a Base Rent, defined in cl 1.1 as 'the amount specified in Item 4 of the schedule, as varied from [time] to time in accordance with this deed'. It was not suggested that the Base Rent had been varied.
Clause 6 of the Sublease set out the covenants of the subtenant, Nu‑Fortune, in favour of Roxbury. Clause 6.1(a) provided:
the Sub‑Tenant is to pay the Base Rent to the Tenant… at the times and in the manner specified in item 4 of the schedule without any deduction or abatement, the Base Rent to be subject to review at the times and in the manner specified in item 5 of the schedule.
Item 4 of the Schedule provided:
From the Commencement Date the Base Rent will be the same as the rent payable by the Tenant to the Landlord under the Head Lease. Such Base Rent is to be paid at the times and in the manner as the rent is payable by the Tenant to the Landlord under the Head Lease.
Item 2 of the schedule, Commencement Date, was left blank.
Counsel for the defendants submitted that, on the proper construction of the Sublease, Nu-Fortune was obliged to pay rent, and I should determine that issue immediately.
A commercial contract should be construed by reference to the language used by the parties, the surrounding circumstances, and the purposes and objects to be secured by the contract.[21] 'No meaningful words, whether in a contract, a statute, a will, a trust, or a conversation, are ever acontextual'.[22]
[21] Electricity Generation Corporation v Woodside Energy Ltd [2014] HCA 7; (2014) 251 CLR 640 [35].
[22] Rinehart v Hancock Prospecting Pty Ltd; Rinehart v Rinehart [2019] HCA 13 [83] (Edelman J).
The rent obligation in the Sublease is tied to the nominal rent in the Lease, and is the rent 'payable' by Roxbury under the Lease. Further, it is to be paid 'at the time and in the manner' that rent is payable by Roxbury.
At the time the Sublease was entered into, there was no rent payable by Roxbury, as its only obligation was on Commencement of the Lease. Further, on a literal construction of Item 4 of the Schedule, the plaintiffs could not pay rent at the time and in the manner it was payable by Roxbury, unless on the grant of a further term.
In my opinion, having regard to the connection between the rent obligation under the Lease and the Sublease, and given the nominal rent amount, the parties' intention was to ensure that Roxbury met and was reimbursed for any ongoing rent obligation, not to indemnify it for rent paid before the Sublease commenced.
Further context to the Lease and Sublease is found in the Heads of Agreement, by which Nu-Fortune was to be incorporated with 30% of its shares held by a 'Kennedy entity'; the DOCA for Roxbury paid out so that control of Roxbury would be returned to Mr Kennedy; Nu‑Fortune was to obtain other tenements; and the Menzies State Battery used for the treatment of ore mined in mining operations at those tenements.[23] Nu-Fortune was also to have the option to treat the Battery Ore Stockpile at the Menzies State Battery, with all costs of treatment to be met by Nu-Fortune.[24]
[23] Heads of Agreement cl G, 4, 6, 7.
[24] Heads of Agreement cl 8.
On the evidence now before me, I believe that the plaintiffs' contention that they had no obligation to pay rent to Roxbury is likely to be correct. I would not, however, make a final decision on that issue without considering other evidence which may be adduced and which may influence the construction of the Sublease.
Balance of convenience
In some cases, the appropriate question on the balance of convenience will be whether damages would provide the applicants with an adequate remedy. In other cases, it may be more appropriate to ask whether it is just in all the circumstances that the applicant should be confined to a remedy in damages.[25] The guiding consideration remains what is necessary to do justice between the parties.
[25] Action Cycles Pty Ltd (recs & mgrs apptd)v Ross [2011] VSCA 411 [30]; citing State Transport Authority v Apex Quarries Ltd [1988] VicRp 26; [1988] VR 187, 193.
In the present case, the plaintiffs are being kept out of possession of land to which, on their case, they have an entitlement pursuant to the Sublease. They may also be liable for failure to comply with the Mines Safety and Inspection Act and the regulations made under that Act, unless the Nu-Fortune Registered Manager is able to resume direct control and supervision of the site and remedy the identified defects from the site visit.
I am satisfied that, on an interim basis, the balance of convenience favours the preservation of the plaintiffs' position. The defendants have not had the opportunity to present evidence regarding the effect of continuing the injunction. The issue will be revisited on 5 September 2019, when the matter is again before me.
I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.
CG
Associate to the Honourable Justice Allanson26 AUGUST 2019
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