Omar v Darul-Iman (WA) Inc
[2013] WASC 311
•20 AUGUST 2013
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
CITATION: OMAR -v- DARUL-IMAN (WA) INC [2013] WASC 311
CORAM: PRITCHARD J
HEARD: 9 APRIL 2013 & 10 JUNE 2013
DELIVERED : 20 AUGUST 2013
FILE NO/S: CIV 1081 of 2012
BETWEEN: ABDUL SULAIMAN BIN OMAR
Plaintiff
AND
DARUL-IMAN (WA) INC
First DefendantIMTIAZ AHMED
Second DefendantFAYYAZ AHMAD RAJA
Third DefendantMAIMUNAH SAIRI
Fourth DefendantSHERIAFAH S AZAH ALJUNIED
Fifth DefendantSITI ARIFF
Sixth DefendantBABY CANCERINA MIRANTHY
Seventh DefendantAZIZ KHAN
Eighth DefendantSYED ALJUNIED
Ninth DefendantKAMALRULZAMAN Z OMAR
Tenth DefendantAHSAN AHMED ANIS
Eleventh DefendantANTON ALEXANDER
Twelfth DefendantRIZWAN ANIS
Thirteenth DefendantOMER ADBELLA CHEWAI
Fourteenth DefendantTANEER CHAUDRY
Fifteenth DefendantABDUL KHALIQ
Sixteenth DefendantWAJAHAT ARIF
Seventeenth DefendantCHAUDRHY MUDDASSAR MEHMOOD
Eighteenth DefendantKHAMZAH ARIP
Nineteenth DefendantFAISAL MUHAMMAD
Twentieth DefendantSHAUKAT HAYAT
Twenty-first DefendantMAHMOOD AHMAD
Twenty-second DefendantMUHAMMAD RASHID MEHMOOD
Twenty-third DefendantABBASALI ZUBERALI
Twenty-fourth DefendantNAIM SAID
Twenty-fifth DefendantAHMAD REDZWAN HASSAN
Twenty-sixth DefendantMOHAMED SALEEM BIN MOHAMED SHARIF
Twenty-seventh DefendantABDULLAH AHMAD SAAID
Twenty-eighth DefendantFAZIDIN AMIR
Twenty-ninth DefendantAZIM AHMAD RAJAH
Thirtieth DefendantMAQSOOD AHMED
Thirty-first DefendantPERVEZ IQBAL CHEEMA
Thirty-second DefendantHERMAN AIDIL BOLDEN
Thirty-third DefendantMOHD AMIRUL SAAID
Thirty-fourth DefendantISMAIL DARDAH
Thirty-fifth DefendantMUHAMMAD ALI FAYYAZ
Thirty-sixth DefendantOMAR RAISUL AS-SALAM SYAH
Thirty-seventh DefendantPSAL LTD
Applicant
Catchwords:
Application for leave to intervene in the proceedings - Application to be joined as a party pursuant to Order 18 rule 6(2) of the Rules of the Supreme Court 1971 (WA) - Application to vary injunction - Terms of the injunction
Legislation:
Rules of the Supreme Court 1971 (WA)
Result:
Application to vary the injunction be granted in part
Category: B
Representation:
Counsel:
Plaintiff: Mr S K Shepherd & Mr R G S Harrison
First Defendant : No appearance
Second Defendant : No appearance
Third Defendant : In person
Fourth Defendant : No appearance
Fifth Defendant : No appearance
Sixth Defendant : No appearance
Seventh Defendant : No appearance
Eighth Defendant : No appearance
Ninth Defendant : No appearance
Tenth Defendant : No appearance
Eleventh Defendant : No appearance
Twelfth Defendant : No appearance
Thirteenth Defendant : No appearance
Fourteenth Defendant : No appearance
Fifteenth Defendant : No appearance
Sixteenth Defendant : No appearance
Seventeenth Defendant : No appearance
Eighteenth Defendant : No appearance
Nineteenth Defendant : No appearance
Twentieth Defendant : No appearance
Twenty-first Defendant : No appearance
Twenty-second Defendant : No appearance
Twenty-third Defendant : No appearance
Twenty-fourth Defendant : No appearance
Twenty-fifth Defendant : No appearance
Twenty-sixth Defendant : No appearance
Twenty-seventh Defendant : No appearance
Twenty-eighth Defendant : No appearance
Twenty-ninth Defendant : No appearance
Thirtieth Defendant : No appearance
Thirty-first Defendant : No appearance
Thirty-second Defendant : No appearance
Thirty-third Defendant : No appearance
Thirty-fourth Defendant : No appearance
Thirty-fifth Defendant : No appearance
Thirty-sixth Defendant : No appearance
Thirty-seventh Defendant : No appearance
Applicant: Mr S Vandongen
Solicitors:
Plaintiff: Tottle Partners
First Defendant : No appearance
Second Defendant : No appearance
Third Defendant : In person
Fourth Defendant : No appearance
Fifth Defendant : No appearance
Sixth Defendant : No appearance
Seventh Defendant : No appearance
Eighth Defendant : No appearance
Ninth Defendant : No appearance
Tenth Defendant : No appearance
Eleventh Defendant : No appearance
Twelfth Defendant : No appearance
Thirteenth Defendant : No appearance
Fourteenth Defendant : No appearance
Fifteenth Defendant : No appearance
Sixteenth Defendant : No appearance
Seventeenth Defendant : No appearance
Eighteenth Defendant : No appearance
Nineteenth Defendant : No appearance
Twentieth Defendant : No appearance
Twenty-first Defendant : No appearance
Twenty-second Defendant : No appearance
Twenty-third Defendant : No appearance
Twenty-fourth Defendant : No appearance
Twenty-fifth Defendant : No appearance
Twenty-sixth Defendant : No appearance
Twenty-seventh Defendant : No appearance
Twenty-eighth Defendant : No appearance
Twenty-ninth Defendant : No appearance
Thirtieth Defendant : No appearance
Thirty-first Defendant : No appearance
Thirty-second Defendant : No appearance
Thirty-third Defendant : No appearance
Thirty-fourth Defendant : No appearance
Thirty-fifth Defendant : No appearance
Thirty-sixth Defendant : No appearance
Thirty-seventh Defendant : No appearance
Applicant: Gadens Lawyers
Case(s) referred to in judgment(s):
Adam P Brown Male Fashions Pty Ltd v Philip Morris Inc (1981) 148 CLR 170
Air Express Ltd v Ansett Transport Industries (Operations) Pty Ltd (1981) 146 CLR 249
Allen v Jambo Holdings Ltd [1980] 2 All ER 502
Austal Ships Pty Ltd and Anor v National Australia Bank and Ors [1999] WASC 211
Cretanor Maritime Co Ltd v Irish Marine Management Ltd [1978] 3 All ER 164
Darul‑Iman v Raja [2010] WASC 299
European Bank Ltd v Evans (2010) 240 CLR 432
F Hoffman‑La Roche and Co AG v Secretary of State for Trade and Industry [1975] AC 295
His Grace Metropolitan Petar v Mitreski [2003] NSWSC 1007
Homestyle Pty Ltd v City of Belmont [1999] WASCA 59
Indoor Holdings v Bennett [2010] WASC 242
Iron Ore Resources Pty Ltd and Royalty Administration Company Pty Ltd v Argyle Iron Ore Pty Ltd [2009] WASC 20
Levy v Victoria (1997) 189 CLR 579
Lewandowski v Lovell (1994) 11 WAR 124
McCleary v DPP (Cth) (1998) 20 WAR 288
News Limited v Australian Rugby Football League Ltd (1996) 64 FCR 410
Pegang Mining Co Ltd v Choong Sam [1969] 2 MLJ 52
Raja v Darul-Iman (No 2) [2011] WASCA 251
Smith Kline and French Laboratories v Secretary Department of Community Services and Health (1989) 98 ALR 366
Smith Kline Beecham Plc v Apotex Europe Ltd [2007] Ch 71
Smith v Commissioners of the Rural and Industries Bank of Western Australia [2009] WASC 100
Tiao v Lai (No 2) [2010] WASCA 189
Vandervell Trustees Ltd v White [1971] AC 912
Willoughby v Clayton Utz [2005] WASC 47
PRITCHARD J: On 17 February 2012, K Martin J granted an urgent interlocutory injunction in these proceedings (the injunction) on the application of Mr Omar. The injunction restrained the Registrar of Titles, until further order of the Court, from registering any dealing with Lot 100 on Deposited Plan 40528, being the whole of the land in Certificate of Title Volume 2574 Folio 794, which is at 20 Smoke Bush Place High Wycombe (the Land). The Land is owned by the third defendant in this action, Mr Raja. Mr Raja has granted a mortgage over the Land to PSAL. PSAL seeks to have that mortgage registered, but is unable to do so as a result of the injunction.
The interlocutory injunction was granted having regard, amongst other things, to the fact that Mr Omar had provided an undertaking to the Court in the usual terms, namely that he would 'pay to any party restrained or affected by the restraints imposed by this interlocutory injunction, or any interim continuation thereof, such compensation as the Court may, in its discretion, consider in the circumstances to be just' (the undertaking).
His Honour ordered that the order granting the interlocutory injunction be served on Mr Raja, on the Registrar of Titles, and on PSAL, as none of those persons had been present or represented at the hearing of the application for the interlocutory injunction.
PSAL subsequently applied for leave to intervene in the proceedings, or alternatively for an order that it be joined as a party to the proceedings pursuant to O 18 r 6(2) of the Rules of the Supreme Court 1971 (WA) (RSC) (the intervention and joinder application). The purpose of that application was to secure for PSAL the benefit of the undertaking. As part of the intervention and joinder application, PSAL sought that Mr Omar provide a further undertaking as to damages, in terms that he would pay to PSAL, being a person restrained or affected by the restraints imposed by the injunction, such compensation as the Court considered in the circumstances to be just, with such compensation to be assessed by the Court or in accordance with directions of the court. In the event that Mr Omar failed to provide such an undertaking, PSAL sought an order that the injunction be discharged.
PSAL subsequently applied for an order that the injunction be discharged, and that a further injunction be granted, in the same terms as the existing injunction, but that the injunction be granted only on satisfaction of two conditions: first that Mr Omar provide a new undertaking as to damages, and secondly that Mr Omar provide sworn evidence of his ability to satisfy any claim (with a minimum amount of $174,464.24) made pursuant to that undertaking. I will refer to this application as the application to vary the injunction. The terms of the undertaking which PSAL submits should be required (the proposed undertaking) are:
The plaintiff undertakes to the Court that he will pay to any party and to PSAL Limited, being persons restrained or affected by the restraints imposed by this interlocutory injunction, such compensation as the court may in its discretion consider in the circumstances to be just, such compensation to be assessed by the court or in accordance with such directions as the court may make and to be paid in such manner as the court may direct. This undertaking has effect from 17 February 2012.
Mr Omar opposes PSAL's applications. Mr Raja and his brother Mr Imtiaz (the second defendant) oppose PSAL's application to be joined as a party in its own right, but support its application to vary the injunction. Mr Raja also supports PSAL's application that Mr Omar be required to provide evidence of his ability to meet any claim for compensation under the undertaking.
For the reasons outlined below, I have determined that the intervention and joinder application should be dismissed. However, I have determined that the injunction should be discharged and a fresh injunction in the same terms issued, conditional upon Mr Omar's providing an undertaking in the terms of the proposed undertaking. I have also concluded that PSAL has not established any basis for requiring Mr Omar to provide evidence of his ability to satisfy any claim made pursuant to the undertaking. Accordingly, I dismiss that part of its application by which PSAL sought an order that Mr Omar provide evidence on oath to confirm that he is able to do so.
In these reasons for decision I deal with the following matters:
1.The history of the matter and of the application for the injunction;
2.The grounds for PSAL's applications;
3.The application for intervention or joinder;
4.Why the application to vary the injunction should be granted in part.
The history of the matter and of the application for the injunction
In support of his application for the injunction, Mr Omar relied upon the affidavit of Mr Ross Harrison sworn 17 February 2012. In support of its applications, PSAL relies on the affidavits of Mr Peter Flanders sworn 19 September 2012 and 19 February 2013, the affidavits of Mr James Scovell sworn 19 February 2013 and 9 April 2013, and the affidavits of Ms Caroline Di Russo sworn 27 November 2012 and 22 April 2013. In addition, in an affidavit sworn 7 November 2012, Mr Raja appeared to oppose PSAL's application to be joined as a party to the proceedings, but supported PSAL's application in so far as it sought to extend the benefit of the undertaking to PSAL.
The matter has a protracted history, which it is necessary to briefly summarise as it is relevant to the submissions made on Mr Omar's behalf in respect of PSAL's application. The following factual history is drawn from the affidavits referred to above. I make no findings about any of the factual matters referred to below. None of these 'facts', or their surrounding circumstances, has been tested in cross examination and, as I explain below, if at some future stage there is an application to enforce the undertaking, there would no doubt need to be a close consideration of some of the precise factual history and how it might bear on any claim or claims for compensation pursuant to the undertaking.
The dispute concerning specific performance of a contract for the sale of the Land
It is not in dispute that, on 19 October 2002, Mr Raja entered into a contract for the sale of the Land to the first defendant, Darul‑Iman (WA) Incorporated (the Contract). On 10 October 2004, Darul‑Iman sent a letter to Mr Raja advising that it did not have sufficient funds to complete its purchase of the Land,[1] and it appears that from 11 October 2004 Mr Raja treated the Contract as having been terminated.[2]
[1] Affidavit of Mr P Flanders, sworn 19 September 2012 (attachment PGF – 1; 'Letter from Darul‑Iman to Raja dated 10 October 2004').
[2] Affidavit of Mr P Flanders, sworn 19 September 2012 (attachment PGF – 2; 'Letter from Raja to Darul‑Iman dated 10 October 2004').
On 18 October 2004, Darul‑Iman lodged a Caveat over the Land (Darul‑Iman's caveat).
On 2 March 2005, Darul‑Iman commenced proceedings against Mr Raja for specific performance of the Contract. Those proceedings are CIV 1241 of 2005. In July 2005, Mr Raja filed a chamber summons in those proceedings, seeking the dismissal of the proceedings on the basis that the solicitors then acting (or purporting to be acting) for Darul‑Iman in CIV 1241 of 2005 had not been retained with its authority. That application was later dismissed by Master Sanderson.[3] Mr Raja appealed that decision to the Court of Appeal.
[3] Darul‑Iman v Raja [2010] WASC 299.
The background to the dispute over specific performance of the Contract, and to Mr Raja's application to challenge the retainer of the solicitors acting for Darul‑Iman, is a long‑standing dispute about the membership and control of Darul‑Iman. Mr Omar and a number of other persons consider that they are the members of Darul‑Iman, and that the office bearers of Darul‑Iman are drawn from their number. Mr Raja, and his brother Mr Imtiaz, and a number of other persons also claim to be members of Darul‑Iman, and claim that the office bearers of Darul‑Iman are drawn from their number.
The loan by PSAL to Mr Raja
It appears that at around the end of 2010 or early in 2011, Mr Raja applied for a loan from PSAL, and proposed to offer four properties he owned, including the Land, as security for that loan. In an affidavit sworn 19 September 2012, Mr Flanders, who is a director of PSAL, said he became aware of the dispute concerning the specific performance of the Contract on 28 January 2011. On 18 February 2011, Mr Raja executed a loan agreement, and a mortgage in favour of PSAL, and PSAL advanced funds to him. On 24 February 2011, PSAL lodged a caveat over the Land (PSAL's Caveat).
The lapse of Darul‑Iman's first caveat and the registration of Darul‑Iman's second caveat
According to the affidavit of Mr Harrison sworn 17 February 2012, sometime in early June 2011, Mr Imtiaz, the second defendant in this action, lodged an application with Landgate to change the address of the caveator (that is, Darul‑Iman) in respect of Darul‑Iman's caveat. Mr Raja then sought the issue of a notice by the Registrar of Titles, pursuant to s 138B of the Transfer of Land Act 1893 (WA) to Darul‑Iman requiring it to apply to this Court within 21 days for an order extending the caveat, failing which the caveat would lapse. According to the affidavit of Mr Harrison sworn 17 February 2012, the notice was sent to Darul‑Iman at the address provided to Landgate by Mr Imtiaz. No action was taken to extend Darul-Iman's caveat and the caveat then lapsed.
The lapse of Darul‑Iman's caveat was subsequently discovered, and following some correspondence between Mr Raja's then solicitors and Mr Omar's solicitors, Mr Raja consented to a new caveat being placed over the Land by Darul‑Iman. That caveat was lodged on 10 June 2011 (Darul‑Iman's second caveat).
According to the affidavit of Mr Flanders sworn 19 September 2012, on 24 August 2011, Mr Raja defaulted in his repayment of the loan from PSAL. On 26 August 2011, Mr Raja executed a further mortgage in favour of PSAL (the Mortgage). On the same day, PSAL attempted to register the Mortgage but was unable to do so because of the existence of Darul-Iman's second caveat over the Land. PSAL then withdrew the Mortgage from registration.
On 17 November 2011, the Court of Appeal delivered its decision upholding Mr Raja's appeal and setting aside the decision of Master Sanderson.[4] However, in its reasons, the Court noted that in order to determine whether Darul‑Iman's application for specific performance of the Contract could proceed, the question which needed to be determined was not whether Darul‑Iman's solicitors had been properly retained but whether the action itself had the authority of Darul‑Iman. Even if the action had not been commenced with Darul‑Iman's authority, it was open to Darul‑Iman to ratify the decision to commence the action. In order to determine whether that ratification could be effected, it would be necessary to ascertain the current membership and office bearers of Darul‑Iman. The Court of Appeal made orders staying the proceedings before Master Sanderson, pending the commencement and resolution of proceedings to determine the present membership and office bearers of Darul‑Iman.
[4] Raja v Darul-Iman (No 2) [2011] WASCA 251.
The present proceedings have been commenced with that objective. The existence and nature of the rights of any party in the Land are not in issue in the present proceedings, and these proceedings will not in any way determine whether the Contract should be specifically performed.
The lapse of Darul‑Iman's second caveat
According to the affidavit of Mr Harrison sworn 17 February 2012, sometime in December 2011, Mr Raja again applied to the Registrar of Titles, pursuant to s 138B of the Transfer of Land Act 1893 (WA), for the issue of a notice to Darul‑Iman in respect of Darul‑Iman's second caveat, and the Registrar of Titles sent a notice to the address which had been provided for Darul‑Iman. That address was Mr Omar's address. In his affidavit, Mr Harrison deposed that Mr Omar did not receive that notice. No application was, therefore, made to this Court for an order extending the operation of Darul‑Iman's caveat and consequently Darul‑Iman's second caveat lapsed on 27 January 2012.
According to Mr Flanders' affidavit sworn 19 September 2012, on 31 January 2012, PSAL conducted a search of the title of the Land and discovered that Darul‑Iman's second caveat had lapsed. Mr Flanders deposed that PSAL had no knowledge of how that caveat came to be removed.
On 31 January 2012, PSAL lodged a withdrawal of PSAL's caveat over the Land, and the Mortgage, for registration.
The application for the injunction
Mr Omar's solicitors subsequently brought an urgent application in the present proceedings seeking the grant of the injunction to prevent the registration of the Mortgage. It appears that the injunction was applied for in the course of the present proceedings because the stay granted by the Court of Appeal prevented the application for the injunction being brought in the course of the proceedings in CIV 1241 of 2005.
The grounds for PSAL's applications
The grounds for the intervention and joinder application, and for the application to vary the injunction, are as follows. PSAL submits that it has an equitable interest in the Land, that it is a person restrained and affected by the restraints imposed by the injunction, that in the circumstances it would be unjust if PSAL were denied the protection of the undertaking as to damages provided by Mr Omar, that PSAL was not heard on the date the injunction was granted, and that the outcome of these proceedings will have a direct effect upon the interests of PSAL.
Having regard to the available affidavit evidence, I accept all of those submissions, save for the last. The outcome of the present proceedings will be a determination of the present membership and office bearers of Darul‑Iman. That in turn may have a bearing on the proceedings in CIV 1241 of 2005. That in turn may have a bearing on whether any specific performance of the Contract could be granted, and if so, that may have a bearing on PSAL's interests, which include exercising a power of sale of the Land, pursuant to the Mortgage. The outcome of the present proceedings will therefore not have any direct effect upon the interests of PSAL. In his supplementary submissions filed in support of the application to vary the injunction, counsel for PSAL accepted that the injunction properly related to the proceedings stayed by the Court of Appeal.
I turn now to consider PSAL's application for leave to intervene or to be joined as a party in the present proceedings.
PSAL's application for leave to intervene or to be joined as a party
At the hearing of the injunction application, the question whether PSAL should be joined as a party to the proceedings was raised by K Martin J, on the basis that its interests in the registration of the Mortgage would be restrained by the grant of the injunction. Counsel for Mr Omar indicated that the orders he sought contemplated that PSAL would be served with a copy of the injunction, and it could then apply to become a party to the proceedings.[5]
[5] ts, 17 February 2012, 8.
In his submissions in support of the intervention or joinder application, counsel for PSAL made clear that PSAL did not seek to intervene in the proceedings for the purpose of taking an active role in the proceedings, but only for the purpose of seeking a modification to the undertaking or the provision of a fresh undertaking.
PSAL submitted that the grant of the injunction had directly affected its right to register the Mortgage, as it otherwise would have been able to do, and that in those circumstances PSAL had a right, or the Court had a discretion, to permit its intervention in the interests of justice.
The Court has power under O 18 r 6 of the RSC to order 'that any person who ought to have been joined as a party or whose presence before the Court is necessary to ensure that all matters in dispute in the case or matter may be effectually and completely determined and adjudicated upon, be added as a party'.
This is not a case where the joinder of PSAL is necessary to ensure that all questions between the parties to the present proceedings are able to be effectually and completely disposed of.[6] A person ought to be added as a party if any order which might be made in the proceedings would directly affect that person's rights against, or liabilities to, a party to the action. Determining whether that is so involves matters of degree, and ultimately judgment, having regard to the practical realities of the case and the nature and value of the rights and liabilities of the third party which might be directly affected.[7] The fact that a third party may benefit financially if a case is decided one way rather than another is not a sufficient ground to entitle that third party to be joined.[8]
[6] Vandervell Trustees Ltd v White [1971] AC 912, 936 (Viscount Dilhorne).
[7] News Limited v Australian Rugby Football League Ltd (1996) 64 FCR 410, 524 - 525 (the Court); Homestyle Pty Ltd v City of Belmont [1999] WASCA 59 [30] - [31] (Templeman J; Malcolm CJ agreeing [1]; Owen J agreeing [2]); Tiao v Lai (No 2) [2010] WASCA 189 [109] ‑ [111] (Buss JA; Owen JA agreeing [131]).
[8] Pegang Mining Co Ltd v Choong Sam [1969] 2 MLJ 52, 55 ‑ 56 (Lord Diplock); Tiao v Lai (No 2) [2010] WASCA 189 [109] ‑ [111] (Buss JA; Owen JA agreeing [131]).
As I have already explained, the substantive issues in dispute in the present proceedings do not concern rights and interests in the Land. PSAL has no direct interest in the membership or office bearers of Darul‑Iman. It does not seek to participate in the present proceedings in any way, beyond ensuring it is protected by the undertaking granted in support of the injunction. As I have explained above, at best the outcome of the substantive issues in the present proceedings may have an indirect bearing on it financially. That is not enough to warrant its joinder as a party,[9] notwithstanding that it is affected by the existence of the injunction which has been granted in these proceedings.
[9] Rogala v Caris Corp Ltd (WASC, Lib No. 5089, 27 September 1983, Burt CJ); Willoughby v Clayton Utz [2005] WASC 47 [57] (Master Newnes).
As for PSAL's application to intervene in the proceedings, the jurisdictional basis for the Court's power to permit a non‑party to intervene lies in its jurisdiction to hear and determine matters falling within its jurisdiction. Where a non‑party's legal rights and interests will be directly affected by the determination of the court, the non‑party will have a right to intervene consistent with basic considerations of procedural fairness. Where the non‑party has only an indirect interest, there is no right to intervene.[10] Instead, the court has a discretion to permit intervention if such intervention would be in the interests of justice.[11] The exercise of the court's discretion will be heavily influenced by the considerations enunciated in O 1 r 2A and r 4B of the RSC.[12]
[10] Levy v Victoria (1997) 189 CLR 579, 603 (Brennan CJ).
[11] Smith v Commissioners of the Rural and Industries Bank of Western Australia [2009] WASC 100 [41] (Martin CJ); Levy v Victoria (1997) 189 CLR 579, 601 ‑ 602 (Brennan CJ).
[12] Smith v Commissioners of the Rural and Industries Bank of Western Australia [2009] WASC 100 [43] (Martin CJ).
PSAL should clearly be heard (as it is being heard) in relation to the terms of the injunction. However, beyond that, in my view, the interests of justice do not warrant PSAL's intervention. PSAL does not wish to be heard in relation to the substantive issues in dispute in the present proceedings. In circumstances where I have concluded that the indirect interest PSAL has in these proceedings, which is confined solely to the impact of the injunction, may be protected by its being heard on its application to vary the injunction, the interests of justice do not warrant it being granted leave to intervene in the proceedings more generally.
I turn, then, to PSAL's application to vary the injunction.
Why the application to vary the injunction should be granted in part
Although PSAL seeks an order that the undertaking be discharged, it seeks an order for a further injunction in the same terms. PSAL does not dispute that a basis exists for the grant of an interlocutory injunction, and in particular that the balance of convenience lies in restraining dealings with the Land until the substantive issues in the proceedings have been determined. It accepts that the registration of the Mortgage would render these proceedings and the proceedings in CIV 1241 of 2005 nugatory. The only issue, from its perspective, concerned the terms of the undertaking required in support of the injunction.
PSAL is not a party to the proceedings, and it was not served with, nor did it have any notice of, nor did it attend, the hearing before K Martin J when the injunction was granted. The terms of the undertaking refer to the payment of compensation to any 'party'. That is a reference to a party to the proceedings.[13] PSAL conceded that because it is not a party to the present proceedings, it does not derive any benefit from the undertaking in its present form.
[13] Indoor Holdings v Bennett [2010] WASC 242 [24] ‑ [26], [35] (Le Miere J).
A third party affected by an injunction may apply to discharge it without being joined as a party.[14] Furthermore, there is no doubt that the Court has jurisdiction to require a party seeking an injunction to give an undertaking for the benefit of third parties affected by the injunction.[15] The Consolidated Practice Directions contemplate that in appropriate cases, the Court may require a modification or extension of the usual undertaking.[16] Accordingly, it is open to PSAL to bring the application to vary the injunction, particularly in circumstances where it was not heard on the initial hearing of the application for the injunction.
[14] Cretanor Maritime Co Ltd v Irish Marine Management Ltd [1978] 3 All ER 164, 174 (Buckley LJ); see also Smith Kline and French Laboratories v Secretary Department of Community Services and Health (1989) 98 ALR 366, 368 (Gummow J).
[15] Indoor Holdings v Bennett [2010] WASC 242 [33] (Le Miere J), citing Smith Kline Beecham Plc v Apotex Europe Ltd [2007] Ch 71 [31] (Jacob LJ, Sir Andrew Morritt C agreeing [127]; Moore‑Bick LJ agreeing [126]).
[16] Consolidated Practice Directions [4.3.4.3].
Mr Omar opposes PSAL's application. The reasons for that opposition can be summarised as follows. First, counsel for Mr Omar submits that PSAL bears the onus of establishing that there exist changed circumstances of sufficient gravity to justify varying the terms of the injunction. He submits PSAL has not done so: K Martin J was aware of the Mortgage and the effect of the injunction upon PSAL's ability to register the Mortgage, and the injunction was granted in those circumstances.
I am unable to accept this submission. It is well established that a party making an application to discharge or vary an interlocutory injunction will need to show evidence of changed circumstances, or the discovery of new facts which could not reasonably have been put before the court at the original hearing, and the effect of which is to demonstrate that the situation in respect of the grant of interlocutory relief is materially different from that which applied when the order was originally made, so that it would be unjust to enforce the injunction in its original terms.[17] Those principles have been applied in cases where a party seeks to discharge an interlocutory injunction entirely, or to substantively vary the terms on which it has been granted. I have not been directed to any authority where the only change sought lies in the terms of the undertaking provided in support of the injunction. Furthermore, although K Martin J did not order that the injunction be granted for a fixed return date to enable the parties affected by it to be heard in relation to whether it should be continued indefinitely, PSAL has not, prior to now, been heard in relation to whether the injunction should be continued. In my view, there is therefore a real question as to whether the principles in relation to applications to vary or discharge an injunction are applicable in this case.
[17] Adam P Brown Male Fashions Pty Ltd v Philip Morris Inc (1981) 148 CLR 170, 178 (Gibbs CJ, Aickin, Wilson & Brennan JJ); Christmas Island Resort Pty Ltd v Casinos Australia International (Christmas Island) Pty Ltd (Unreported, WASC Full Ct, Lib No. 960641, 8 October 1996), 4 - 5 (Murray, Steytler & Parker JJ); His Grace Metropolitan Petar v Mitreski [2003] NSWSC 1007 [13] (Barrett J).
However, even if those principles are applicable, in my view the material put before the Court by PSAL in this application was not before K Martin J when he granted the injunction, and represents new facts which warrant a change to the terms of the undertaking required to support what is, in effect, the continuation of the injunction.
Counsel for Mr Omar says that PSAL's interest was known to K Martin J, and the terms of the Mortgage were before him, when he granted the injunction. However, his Honour was clearly conscious of the fact that PSAL may wish to be heard in relation to the grant of the injunction (and so ordered that PSAL be served with a copy of the Court's orders), and averted to the possibility that PSAL might need to be joined as a defendant.
More significantly for present purposes, his Honour did not have the benefit of the affidavit and submissions now filed on behalf of PSAL in relation to how it may be affected by the injunction, and more particularly, in relation to whether and how it would be able to recover any loss and damage suffered as a result of the injunction, through a claim by Mr Raja for the enforcement of the undertaking.
PSAL submitted that it is directly affected by the injunction, because it is unable to fully enforce its rights under the loan agreement, and the Mortgage, and in particular because it cannot exercise its power of sale under the Mortgage. It also submits that it cannot be said that any damage suffered by PSAL could necessarily be recovered through Mr Raja, who has the benefit of the undertaking. PSAL submits that it would have no ability to compel Mr Raja to seek to enforce the undertaking, should the circumstances arise where a claim for compensation under the undertaking could be made. In the event that Mr Raja did not seek to enforce the undertaking, PSAL submits that it would have no ability to seek to recover its losses, pursuant to the undertaking.
PSAL also submits that if Mr Raja were to become insolvent, his trustee in bankruptcy may not be willing to pursue any claim that might be open to him under the undertaking, particularly given that PSAL would no doubt seek to recover all or part of any funds which were recovered. Furthermore, PSAL submits that in that situation, even if a trustee in bankruptcy were to pursue a damages claim under the undertaking, any damages recovered would be available to all unsecured creditors, rather than to PSAL alone.
In addition, PSAL submits that its ability to recover under the undertaking should not lie in the hands of Mr Raja, when PSAL submits that Mr Raja's conduct may be relevant to questions of causation in relation to PSAL's losses.
It is unnecessary and, in some respects, inappropriate, to make any substantive assessment of these claims, other than to say that for present purposes, I accept that PSAL has identified a basis for its claim that it is a party which is directly affected by the grant of the injunction, who may suffer loss and damage if it is ultimately determined that there was no proper basis for the grant of the injunction on the application of Mr Omar, and who may not necessarily be able to recover its loss or damage through a claim brought by Mr Raja to enforce the undertaking. Those new facts suggest that any undertaking offered in support of the continuation of the undertaking should expressly extend to PSAL.
Counsel for Mr Omar made a number of submissions to the effect that Mr Raja had attempted to circumvent the order for a stay, that it was Mr Raja's conduct which brought about the discharge of Darul‑Iman's second caveat, that Darul‑Iman did not receive notice of that removal, yet because of the dispute over its control, Darul‑Iman was not in a position to dispute service of the notice. Counsel for Mr Omar submitted that in the circumstances Darul‑Iman's second caveat ought never have been removed, that PSAL was not in a position to register the Mortgage while Darul‑Iman's second caveat was in place, that PSAL now seeks to rely on Mr Raja's conduct to improve its position, and that PSAL suffered no prejudice by the existence of the caveat because it took the Mortgage in the knowledge that Darul‑Iman held a prior equitable interest protected by a caveat.
I am not persuaded that the matters referred to warrant dismissal of PSAL's application to vary the injunction, for three reasons. First, in so far as counsel for Mr Omar urged the Court to draw inferences adverse to Mr Raja, those inferences cannot be drawn in circumstances where the application for the injunction, and PSAL's present application, were based on evidence on affidavit. That affidavit evidence has not been the subject of cross examination, and Mr Raja himself did not file an affidavit referring to the factual matters raised in respect of the application.
Secondly, in so far as counsel for Mr Omar submitted that PSAL sought to 'better' its position by bringing the present application, that submission focused on the fact that when PSAL took the Mortgage, it knew it was unable to register that Mortgage because of Darul‑Iman's caveat. However, PSAL was entitled to seek to register the Mortgage at any time after the caveat was discharged. It sought to do so, and it has been prevented from doing so by the existence of the injunction. From that perspective, the present application does not involve PSAL seeking to 'better' its position. Counsel for Mr Omar also submitted that PSAL sought to 'better' its position because it sought an avenue for the recovery, from Mr Omar, of any loss it may suffer, when it presently has no right or entitlement to recover from Mr Omar. That is not a basis for refusing PSAL's application. Undertakings commonly give a party restrained by an injunction a basis for recovering compensation which would not otherwise have existed ‑ that is the very purpose of the undertaking. I would observe however, that on the information presently available, it is difficult to envisage that any loss or damage suffered by PSAL could exceed the loss or damage suffered by Mr Raja as a result of the injunction, nor is it possible to envisage circumstances where both Mr Raja and PSAL could recover under the undertaking for what is arguably loss and damage of the same kind.
Thirdly, the matters relied upon by counsel for Mr Omar may be relevant, and perhaps highly relevant, if Mr Raja, or PSAL, seek to enforce the undertaking at some future stage. The circumstances in which Darul‑Iman's second caveat came to be discharged, any knowledge of those circumstances by Mr Raja and PSAL, and questions of causation of any loss and damage claimed by PSAL, may need to be carefully considered if it makes a claim pursuant to the undertaking.
The fact that these issues may arise for consideration in the future does not warrant the dismissal of PSAL's application.
The fact that an undertaking expressly refers to a party does not necessarily mean that that party will be awarded compensation in the event that an application is made to enforce the undertaking. The Court has a wide discretion in the assessment of damages or compensation under an undertaking. The court will determine the damages or compensation which is just, having regard to all of the circumstances of the case. However, the party seeking to enforce the undertaking is entitled to recover only damages of a kind which could have been foreseen when the injunction was granted,[18] and damages which he or she has sustained by reason of the grant of the injunction. That party will bear the onus of showing that the damage sustained would not have been sustained but for the injunction.[19] The Court's wide discretion in the assessment of compensation includes the discretion not to enforce the undertaking at all, if special circumstances exist.[20] Those special circumstances may include the conduct of the parties who are the beneficiaries of the undertaking if that conduct would render it inequitable to enforce the undertaking.[21]
[18] Air Express Ltd v Ansett Transport Industries (Operations) Pty Ltd (1981) 146 CLR 249, 266 ‑ 267 (Aickin J); European Bank Ltd v Evans (2010) 240 CLR 432, 442 (the Court).
[19] Air Express Ltd v Ansett Transport Industries (Operations) Pty Ltd (1981) 146 CLR 249, 311 ‑ 312 (Gibbs J); Austal Ships Pty Ltd and Anor v National Australia Bank and Ors [1999] WASC 211 (Parker J).
[20] McCleary v DPP (Cth) (1998) 20 WAR 288, 309 (Ipp J).
[21] Air Express Ltd v Ansett Transport Industries (Operations) Pty Ltd (1981) 146 CLR 249, 311 ‑ 312 (Gibbs J), F Hoffman‑La Roche and Co AG v Secretary of State for Trade and Industry [1975] AC 295, 361 (Lord Diplock); McCleary v DPP (Cth) (1998) 20 WAR 288, 309 (Ipp J); Lewandowski v Lovell (1994) 11 WAR 124, 156 (Murray J; Kennedy J agreeing, 128; White J agreeing, 158).
In my view, the injunction should be continued, provided that Mr Omar provides an undertaking in the usual terms, but modified to provide that Mr Omar will pay to any party and to PSAL Limited such compensation as the court considers to be just.
Two issues remain for consideration: the date from which the undertaking should be extended to PSAL, and whether Mr Omar should be required to provide evidence of his ability to satisfy any claim under the undertaking.
The date from which the undertaking should be extended to PSAL
PSAL seeks not only that the undertaking apply to it, but that it apply retrospectively, to the date when the injunction was first granted by K Martin J. In my view, that part of its application should be rejected, for two reasons.
First, the authorities establish that a party seeking an injunction cannot be compelled to provide an undertaking, although the Court may order that an injunction should be granted only if an undertaking is given. In that sense, the undertaking is the 'price' to be paid for the grant of an injunction. Because an undertaking cannot be imposed upon a party, it cannot be imposed retrospectively.[22] In addition, I note that if PSAL had been successful in its application to be joined, that joinder would have operated prospectively only.[23] In that case, the injunction could not operate, retrospectively, to PSAL's benefit.
[22] Indoor Holdings v Bennett [2010] WASC 242 [37] ‑ [40] (Le Miere J), citing Smith Kline Beecham Plc v Apotex Europe Ltd [2006] 1 WLR 872 [38] ‑ [41] (Lewison J); Smith Kline Beecham Plc v Apotex [2007] Ch 71 [24] (Jacob LJ, Moore-Bick LJ & Sir Andrew Morritt C agreeing); Smith Kline and French Laboratories (Australia) Ltd v Secretary Department of Community Services and Health (1989) 89 ALR 366.
[23] Rules of the Supreme Court 1971 (WA) O 18 r 6(2).
Mr Omar opposed PSAL's application to vary the injunction, and has so far declined to indicate whether he is prepared to give an undertaking extending to PSAL, on the basis that he wishes to consider his position once the Court determines PSAL's application. There is thus no indication that Mr Omar is willing to provide an undertaking with a retrospective effect. Absent the agreement of Mr Omar, I do not see how I would have power to make an order requiring him to give an undertaking with retrospective effect.
Furthermore, even if there existed power to require an undertaking with retrospective effect, in my view it would not be just to do so in the present circumstances. PSAL's application for intervention or joinder was made some months after the grant of the injunction, and its application to vary the injunction was not made until over a year after the grant of the injunction, notwithstanding that its solicitors were served with a copy of the injunction and supporting papers, on the day that the injunction was granted.[24] In those circumstances, in my view it would not be just to require that Mr Omar provide an undertaking which operated from the date on which the injunction was originally granted.
Whether Mr Omar should be ordered to provide evidence of his ability to satisfy any claim under the undertaking
[24] Affidavit of Mr P Flanders, sworn 19 September 2012 [29].
Finally, PSAL seeks that the grant of the injunction be conditional on Mr Omar providing an affidavit setting out evidence of his ability to satisfy any claim for compensation (with a minimum value of $174,464.24) made pursuant to the undertaking. PSAL has not provided any evidence (for example, evidence as to whether Mr Omar owns property within Western Australia) to suggest that there is a real question as to whether Mr Omar would be in a position to satisfy any claim for compensation made in reliance on the undertaking. Its only basis for seeking this condition on the grant of the injunction is that it requested that Mr Omar provide PSAL with evidence that he had capacity to satisfy any potential claim made pursuant to the undertaking, and PSAL did not receive any response to that request.
Counsel for PSAL submitted that that failure to respond permitted an inference to be drawn that a claim under the undertaking may not be met. I am unable to agree. In circumstances where Mr Omar opposes the extension of the undertaking to PSAL, and where PSAL is not a party to the action, the more likely inference from Mr Omar's failure to respond is that he is unwilling to provide personal financial information to a non-party to the proceedings, who otherwise has no entitlement to that information.
It is often said that an undertaking is the price to be paid for the grant of an injunction.[25] The giving of an undertaking as to damages is a very important, if not essential, means of preventing injustice before the rights of parties have been finally determined.[26] However, even where the financial position of a plaintiff is such that it is unable to give an undertaking as to damages which has real value, the fact that the undertaking as to damages has little or no value is not conclusive of the result of an application for an interlocutory injunction.[27]
[25] Iron Ore Resources Pty Ltd and Royalty Administration Company Pty Ltd v Argyle Iron Ore Pty Ltd [2009] WASC 20 [40] (Newnes J).
[26] Air Express Ltd v Ansett Transport Industries (Operations) Pty Ltd (1981) 146 CLR 249, 311 (Gibbs J).
[27] Iron Ore Resources Pty Ltd and Royalty Administration Company Pty Ltd v Argyle Iron Ore Pty Ltd [2009] WASC 20 [41] (Newnes J), citing Allen v Jambo Holdings Ltd [1980] 2 All ER 502, 506; Custom Credit Corporation Ltd v Whitehall Holdings Pty Ltd (unreported, WASC, Lib No. 920231, 7 April 1992) [23].
It is not ordinarily the case that before the Court will grant an interlocutory injunction, it will make enquiries as to whether the applicant for the injunction is in a position to meet any claim for compensation which might be made if the undertaking is ultimately relied upon. I note, by way of comparison, that in an application for security for costs under O 25 RSC, an applicant would normally support its application with an affidavit setting out the basis upon which the application falls within O 25, having regard to the sorts of factors relevant to the exercise of the Court's discretion. In the same way, in my view a party concerned about whether an undertaking offered in support of an injunction has any real value should put before the Court evidence of such enquiries as it has been able to make to ascertain whether the party giving the undertaking would be in a position to meet a claim made pursuant to the undertaking. In Iron Ore Resources Pty Ltd and Royalty Administration Company Pty Ltd v Argyle Iron Ore Pty Ltd,[28] which concerned the value of the undertaking offered in support of an injunction, evidence was put before the Court as to the financial position of the plaintiff who provided the undertaking.
[28] Iron Ore Resources Pty Ltd and Royalty Administration Company Pty Ltd v Argyle Iron Ore Pty Ltd [2009] WASC 20.
I note also that in the present case, the injunction was granted on the basis of the undertaking, the injunction has been in place for many months, and no party to the proceedings has raised any question in relation to the value of the undertaking.
In these circumstances, in the absence of any evidence suggesting that any undertaking Mr Omar may provide would not be of any, or any adequate, value, I am not persuaded that the grant of the injunction should be conditional upon the provision of evidence confirming that Mr Omar would be in a position to satisfy any claim for compensation pursuant to the undertaking, should one be made in due course.
Orders
I will hear from the parties as to the form of the orders which should be made. The appropriate course is to give Mr Omar's legal representatives the opportunity to obtain his instructions as to whether he is prepared to offer an undertaking in the following terms in support of the continuation of the injunction:
The plaintiff undertakes to the Court that he will pay to any party and to PSAL Limited, being persons restrained or affected by the restraints imposed by this interlocutory injunction, such compensation as the court may in its discretion consider in the circumstances to be just, such compensation to be assessed by the court or in accordance with such directions as the court may make and to be paid in such manner as the court may direct.
Accordingly, following the publication of these reasons for decision, the matter will be listed two days later for the making of orders. If, on that occasion, counsel for Mr Omar is able to provide the Court with an undertaking from his client in these terms, orders can be made to enable the continuation of the injunction on that basis. If Mr Omar is unwilling to provide an undertaking in these terms, orders can be made for the discharge of the injunction.
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