Port Kennedy Resorts Pty Ltd v Freehills (A Firm)
[2000] WASC 217
•17 AUGUST 2000
PORT KENNEDY RESORTS PTY LTD & ANOR -v- FREEHILLS (A FIRM) & ORS [2000] WASC 217
| SUPREME COURT OF WESTERN AUSTRALIA | Citation No: | [2000] WASC 217 | |
| Case No: | CIV:1976/2000 | 17 AUGUST 2000 | |
| Coram: | McKECHNIE J | 17/08/00 | |
| 18 | Judgment Part: | 1 of 1 | |
| Result: | Application for injunction dismissed | ||
| PDF Version |
| Parties: | PORT KENNEDY RESORTS PTY LTD FLEURIS PTY LTD FREEHILLS (A FIRM) PAC-ASIA HOLDINGS PTE LTD SIEW TIEN CHOW LIM YUE KHIM MOHAMED JAMIL BIN MOHAMED AMIN HO SWEE HUAT ASIAN CENTURY HOLDINGS INC |
Catchwords: | Allegation of misleading and deceptive conduct in solicitor's letter Mandatory injunction to compel publication of correction Principles applicable Discovery of documents referred to in pleadings and affidavit Not complied with Discretion in granting an injunction Case turns on own facts |
Legislation: | Trade Practices Act 1974 (Cth) Fair Trading Act 1987 (WA) Rules of the Supreme Court, O 26 r 8 |
Case References: | Cardile v LED Builders (1999) 73 ALJR 657 Carruthers v McMillan Partners [1999] WASC 120 Cash Converters Pty Ltd v Hila Pty Ltd (1993) 9 WAR 471 Cayne v Global Natural Resources Pty Ltd [1984] 1 ALL ER 225 Dobree v Hoffman (1996) 18 WAR 36 Janssen-Cilag Pty Ltd v Pfizer Pty Ltd (1992) 37 FCR 526 Robinson v Adshead (1994) 12 WAR 574 Argy v Blunt & Lane Cove Real Estate Pty Ltd (1990) 26 FCR 112 Castlemaine Tooheys v State of South Australia (1986) 161 CLR 148 Demagogue Pty Ltd v Ramensky (1992) 39 FCR 31 Films Rover International Ltd v Cannon Film Sales Ltd [1986] 3 All ER 772 Franich v Swannell (1993) 10 WAR 459 Fraser v NRMA Holdings Ltd (1995) 55 FCR 452 H B Homes Pty Ltd v Beer [1986] 2 Qd R 379 Haynes v Top Slice Deli Pty Ltd (1995) ATPR 46-147 Helco Pty Ltd v O'Haire (1991) 28 FCSR 230 Locabail International Finance v Agroexport [1986] 1 All ER 901 McCarthy v McIntyre [1999] FCA 784 Menmel Pty Ltd v Great Australian Bite Pty Ltd (1997) ATPR 41-553 Parker v Camden London Borough Council [1986] 1 Ch 162 Patrick Stevedores Operations No 2 Pty Ltd v Maritime Union of Australia (1998) 195 CLR 1 Port Kennedy Golf Country Club Pty Ltd v Port Kennedy Resorts Pty Ltd [1999] WASC 253 Port Kennedy Golf Country Club Pty Ltd v Port Kennedy Resorts Pty Ltd [2000] WASC 136 Queensland v Australian Telecommunications Commission (1985) 59 ALR 243 Redland Bricks Ltd v Morris [1970] AC 652 Temwood Holdings Pty Ltd v Asean Australian Assets Pty Ltd [2000] WASC 84 Westminster Brymbo Coal & Coke v Clayton (1867) 36 LJCH 476 |
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
- IN CHAMBERS
- First Plaintiff
FLEURIS PTY LTD
Second Plaintiff
AND
FREEHILLS (A FIRM)
First Defendant
PAC-ASIA HOLDINGS PTE LTD
SIEW TIEN CHOW
LIM YUE KHIM
MOHAMED JAMIL BIN MOHAMED AMIN
HO SWEE HUAT
Second Defendants
ASIAN CENTURY HOLDINGS INC
Third Defendant
Catchwords:
Allegation of misleading and deceptive conduct in solicitor's letter - Mandatory injunction to compel publication of correction - Principles applicable -
(Page 2)
Discovery of documents referred to in pleadings and affidavit - Not complied with - Discretion in granting an injunction - Case turns on own facts
Legislation:
Trade Practices Act 1974 (Cth)
Fair Trading Act 1987 (WA)
Rules of the Supreme Court, O 26 r 8
Result:
Application for injunction dismissed
Representation:
Counsel:
First Plaintiff : Mr D H Solomon & Mr J C Giles
Second Plaintiff : Mr D H Solomon & Mr J C Giles
First Defendant : Mr J Gilmour QC & Mr S M Standing
Second Defendants : Mr J Gilmour QC & Mr S M Standing
Third Defendant : Mr J Gilmour QC & Mr S M Standing
Solicitors:
First Plaintiff : Solomon Brothers
Second Plaintiff : Solomon Brothers
First Defendant : Freehills
Second Defendants : Freehills
Third Defendant : Freehills
Case(s) referred to in judgment(s):
Cardile v LED Builders (1999) 73 ALJR 657
Carruthers v McMillan Partners [1999] WASC 120
Cash Converters Pty Ltd v Hila Pty Ltd (1993) 9 WAR 471
Cayne v Global Natural Resources Pty Ltd [1984] 1 ALL ER 225
(Page 4)
Dobree v Hoffman (1996) 18 WAR 36
Janssen-Cilag Pty Ltd v Pfizer Pty Ltd (1992) 37 FCR 526
Robinson v Adshead (1994) 12 WAR 574
(Page 3)
Case(s) also cited:
Argy v Blunt & Lane Cove Real Estate Pty Ltd (1990) 26 FCR 112
Castlemaine Tooheys v State of South Australia (1986) 161 CLR 148
Demagogue Pty Ltd v Ramensky (1992) 39 FCR 31
Films Rover International Ltd v Cannon Film Sales Ltd [1986] 3 All ER 772
Franich v Swannell (1993) 10 WAR 459
Fraser v NRMA Holdings Ltd (1995) 55 FCR 452
H B Homes Pty Ltd v Beer [1986] 2 Qd R 379
Haynes v Top Slice Deli Pty Ltd (1995) ATPR 46-147
Helco Pty Ltd v O'Haire (1991) 28 FCSR 230
Locabail International Finance v Agroexport [1986] 1 All ER 901
McCarthy v McIntyre [1999] FCA 784
Menmel Pty Ltd v Great Australian Bite Pty Ltd (1997) ATPR 41-553
Parker v Camden London Borough Council [1986] 1 Ch 162
Patrick Stevedores Operations No 2 Pty Ltd v Maritime Union of Australia (1998) 195 CLR 1
Port Kennedy Golf Country Club Pty Ltd v Port Kennedy Resorts Pty Ltd [1999] WASC 253
Port Kennedy Golf Country Club Pty Ltd v Port Kennedy Resorts Pty Ltd [2000] WASC 136
Queensland v Australian Telecommunications Commission (1985) 59 ALR 243
Redland Bricks Ltd v Morris [1970] AC 652
Temwood Holdings Pty Ltd v Asean Australian Assets Pty Ltd [2000] WASC 84
Westminster Brymbo Coal & Coke v Clayton (1867) 36 LJCH 476
(Page 4)
- McKECHNIE J:
Introduction
1 This is an application for a mandatory injunction pursuant to the provisions of the Trade Practices Act and the Fair Trading Act. The parties, Port Kennedy Resorts Pty Ltd (PKR) and Fleuris Pty Ltd (Fleuris), as plaintiffs, and Pac-Asia Holdings Pty Ltd and various individuals, as defendants, are in the middle of a protracted dispute in this Court, aspects of which are being managed as a long cause by Anderson J.
2 Freehills is a firm of solicitors acting generally for the defendants in the disputes. Those pieces of litigation are replete with claims and cross-claim and include, inter alia, applications by the present defendants seeking declarations that they, and not other people, are the proper directors of Port Kennedy Resorts, and claims by Port Kennedy Resorts that a charge by Port Kennedy Resorts in favour of Pac-Asia is invalid on the grounds of illegality and for other reasons.
3 In the course of the litigation the present defendants became aware of a proposal by Port Kennedy Resorts to sublease a golf course said to be part of the assets of Port Kennedy Resorts to a company known as The Golf Club (WA) Ltd whom I will hereafter refer to as The Golf Club.
4 To protect their clients' position on 5 July 2000, Freehills wrote a letter to The Golf Club in the following terms:
"Dear Sirs
Port Kennedy Resorts Pty Ltd
We act for Pac-Asia Holdings Pte Ltd and Messrs Siew Tien Chow, Lim Yue Khim, Mohamed Jamil Bin Mohamed Amin and Ho Swee Huat.
The abovenamed clients are respectively, the chargee, and 4 directors of Port Kennedy Resorts Pty Ltd ('PKR').
Our clients have commenced Supreme Court proceedings in which they contend, (amongst other things) that the abovenamed individuals, and Messrs Richard Lukin, and Gary Sheehan, are the only validly appointed directors of PKR, and that 4 individuals (namely Mr Paul Andrews, Mr John Matheson, Mr Teow Kim Chng and Mr Stephen Marshall), who
(Page 5)
- are currently purporting to act as directors of PKR, are not validly appointed as such, and do not have the lawful right of entitlement to act in that capacity.
Our clients have become aware (arising from an affidavit dated 25 May 2000 sworn by Richard Lukin in opposition to an application to wind up Fleuris Pty Ltd (which holds shares in PKR) that PKR has entered into an agreement to sublease the golf course at the Port Kennedy development to your company.
You should note that our clients hold a fixed charge over all of the present and future undertakings, assets and rights of PKR pursuant to a Deed of Charge dated 1 June 1995. PKR appears to contend that that charge is not valid.
If which, as our clients contend, then by necessary implication and as a matter of law, PKR cannot, in our clients' view, deal with charged property under the Deed of Charge without the consent of our clients.
In light of the above, our clients will maintain that PKR has entered into the transaction with your company without the authority of the lawful board of directors of PKR, and in breach of the abovementioned Deed of Charge. All of our clients reserve all of their rights to claim against your company personally for any loss they may suffer as a result of, or in respect of, the above matters.
Yours faithfully
Freehills
per Steven Standing"
5 It is this letter which forms the basis of the action and of this present application.
The history of the application
6 On 20 July 2000 the plaintiffs, PKR and Fleuris, commenced this action, CIV 1976 of 2000, by seeking by way of final relief:
(Page 6)
- "A. An injunction pursuant to s.74 of the FTA restraining each of the defendants from publishing further material to persons negotiating or dealing with PKR:-
(i) containing representations in the terms contained in the Letter;
(ii) relating to any of the disputes between the plaintiffs and the second and third defendants unless that publication contains a complete and correct summary of the plaintiffs' and defendants' contentions in relation to each dispute referred to in the publication.
B. An injunction pursuant to s.74 of the FTA further or alternatively an order pursuant to s.77 of the FTA requiring Freehills to publish to each of the directors of The Golf Club and to The Golf Club a further letter (the 'Correction Letter') containing:-
(i) a detailed summary of the plaintiffs' contention in their dispute with the second defendants;
(ii) a detailed statement as to which representations in the Letter were misleading or deceptive or likely to mislead or deceive and in what respect those representations were misleading or deceptive;
(iii) a statement that the Correction Letter is published to each recipient by order of this Honourable Court.
C. An injunction restraining ACH prosecuting the winding up of Fleuris (Supreme Court action COR 98 of 2000).
D. Compensation pursuant to s.79 of the FTA from each of the defendants."
7 On 26 July 2000 the plaintiffs filed a chamber summons for mandatory injunction in the following terms:
"1. Time between service and hearing of this application be abridged;
(Page 7)
- 2. The first defendant publish, and an [sic] injunction pursuant to s.74 of the Fair Trading Act 1987 further or alternatively an order pursuant to s.77 of the Fair Trading Act 1987 be granted requiring the first defendant to publish, to each of the directors of The Golf Club (WA) Ltd and to The Golf Club (WA) Ltd a letter (the 'Correction Letter') containing:-
2.1 a detailed summary of the plaintiffs' contentions in their dispute with the second defendant;
2.2 a detailed statement as to which representations in the letter from the first defendant to the directors of The Golf Club (WA) Ltd dated 5 July 2000 were misleading or deceptive or likely to mislead or deceive and in what respect those representations were misleading or deceptive; and
2.3 a statement that the Correction Letter is published to each recipient by order of this Honourable Court.
3. Further or alternatively:-
3.1 the third defendant be restrained, and an injunction be granted restraining the third defendant, from prosecuting the winding up of the second plaintiff, being Supreme Court COR 98 of 2000 until further order;
3.2 COR 98 of 2000 henceforth be case-managed with CIV 1644 of 1999 and this action.
4. Costs."
8 That chamber summons was supported by an affidavit of Mr Lukin which, with annexures, ran to 307 pages, together with a three-page affidavit of Mr Jeremy Giles, a solicitor employed by Solomon Brothers, the solicitors for the plaintiffs.
9 When the matter came before Anderson J on 26 July 2000 he adjourned the proceedings so that, amongst other things, a time could be found for it to be argued. From the fact that the plaintiffs sought orders
(Page 8)
- abridging time on 27 July 2000, I infer the plaintiffs regarded the matter as urgent.
10 In due course the summons was listed for hearing before me on 16 August 2000. On 10 August 2000 the defendants filed an affidavit of Steven Michael Standing in opposition to the injunction. That affidavit with annexures comprised 254 pages. This was followed on Monday, 14 August, by an affidavit of Ho Swee Huat comprising 428 pages and a supplementary nine page affidavit was filed on 15 August 2000.
11 The hearing of this matter commenced on 16 August 2000 and continued on 17 August, today. The plaintiffs have now filed a 25 page supplementary affidavit of Mr Lukin and a five page affidavit from Mr Melville. In other words, in an action which is essentially a side show to the main event, the parties have filed over 1000 pages of affidavit material. Between them they have cited over 30 cases on issues which seem to me, with great respect, to be relatively simple and straightforward.
12 Counsel for the plaintiffs yesterday sought an adjournment on the basis of the late filing of the affidavits or at least of Mr Huat's affidavit. After argument I refused that adjournment but left open the possibility of an adjournment so that counsel might, if necessary, take instructions on one document, a certificate given by his client. In the event Mr Solomon made submissions on the document.
Principles in relation to mandatory injunctions
13 The principles that relate to the exercise of the court's discretion are well settled and were conveniently gathered together by Kennedy J in Cash Converters Pty Ltd v Hila Pty Ltd(1993) 9 WAR 471 at 483. To this general authority may now be added Cardile v LED Builders(1999) 73 ALJR 657.
14 In the case of a statutory power to grant injunctions a judge should also bear in mind the public interest in preventing breaches of the law. In an appropriate case it may be that a mandatory injunction will be granted when the more stringent tests relating to equitable injunctions would perhaps indicate that no order should be made.
15 As against that, a court should be cautious in proceeding with an injunction which will in practical terms determine or largely determine the action as to do so will deprive the defendant of the right to dispute the
(Page 9)
- plaintiff's claim at trial: Caynev Global Natural Resources Pty Ltd [1984] 1 ALL ER 225 per May LJ at 238.
16 For the purposes of determining this application I accept that the plaintiffs, though not the entity to whom the alleged misleading and deceptive communication was made, have standing to seek an injunction and damages if they can in due course demonstrate that the conduct injured them, even though it may have caused no damage to the letter's addressee The Golf Club. The cases in support of this proposition are conveniently gathered together by Lockhart J in Janssen-Cilag Pty Ltd v Pfizer Pty Ltd (1992) 37 FCR 526.
17 I also accept that Freehills, the firm, is capable in its own right of being in breach of the Fair Trading Act provisions which mirror the Trade Practices Act in this regard.
Is the letter misleading and deceptive?
18 The fundamental question is whether, on any reasonable reading, the letter is or is likely to be capable of constituting a misleading or deceptive communication. The plaintiff argues that the letter is misleading or deceptive or likely to mislead or deceive substantially, though not entirely, because of omissions.
19 Silence is a fact and as a fact inferences may be drawn from it. Silence following a representation may lead to an inference that the representation was true: Carruthers v McMillan Partners[1999] WASC 120 at par 127.
20 With this in mind I examine the plaintiffs' submissions against the letter. The plaintiffs argue that there were other facts which ought to have been made known and their absence renders the letter likely to mislead or deceive. These matters are summarised in the statement of claim in paragraphs 9 to 18. I am unable to accept the submissions.
21 It is true that the parties are in deep dispute over fundamental matters such as the legality of deed of charge and the validity of the appointment of certain directors. Those matters will not be resolved until trial and until then all that can be said is that parties have contentions and views.
22 Complaint is made as to the assertion of fact in the second sentence that the clients are respectively the chargee and four directors of PKR. A reasonable reader of the next paragraph would be left in no doubt that the matter is in contention in the Supreme Court. The fact that passages of a
(Page 10)
- statement of claim have been struck out is of little consequence. The action is still extant.
23 Mr Solomon conceded the fourth paragraph which commences "Our clients" was literally true, though he argued that the omission made it misleading. However, I disagree. A reader in the position of a director of The Golf Club will be no more than put on notice that the position of directors of PKR is in contention. A director of The Golf Club would be wise, as happened here, to make further inquiries and seek legal advice.
24 In the circumstances there is nothing likely to mislead or deceive in failing to list the opposing contentions, the letter indicating sufficiently that Freehills' clients' contentions are the subject of legal proceedings.
25 The next portion of the letter deals with the disputed charge. The expression "PKR appears to contend that that charge is not valid" is unfortunate. It is the fact that PKR has commenced proceedings to set aside the charge on various grounds which may or may not, in the end, have substance. They most certainly contend that the charge is void.
26 In the context of the whole of the letter I am of opinion that this sentence, even in combination with the omission of details of PKR's arguments as to the invalidity, is not likely to deceive or mislead. It sufficiently informs the reader that Freehills' clients assert they hold a valid charge and that this assertion is the subject of challenge by PKR even though the challenge is more vigorous than the letter suggests.
27 The fact that it is under challenge is amplified in the final sentence by the expression "our clients will maintain," which indicates a position in respect of a dispute.
28 In my opinion the plaintiffs have failed to establish that there is a serious question to be tried and the application for an injunction should fail.
Balance of convenience
29 However, it may be convenient to deal with some other points raised in the application - balance of convenience and possibility of serious harm. The first and most important matter to my mind is the subsequent correspondence and communications. In order to make out its case for mandatory injunction the plaintiff must point to the possibility of serious harm, incapable of remedy in any other way. Yet based on the subsequent
(Page 11)
- correspondence, any harm caused by the letter of 5 July 2000 would appear to be non-existent.
30 Mr Melville is a director of The Golf Club. He has deposed that the letter caused concerns about having entered into the sublease or entering into other transactions with PKR, including taking an assignment of the head lease. The real point of difficulty appears to be not the letter of 5 July but, as Mr Melville states in a letter to Freehills on 16 August 2000:
"So long as your client challenges directly, or indirectly, the validity of the sub lease we are not in a position to issue the prospectus or let the building contract. …"
31 The position is confirmed by a letter sent from The Golf Club's solicitors, also dated 16 August 2000, to Freehills where it is stated:
"Unless the issue of our clients' clear title can be resolved we shall have no alternative but to advise our clients to reconsider their position."
32 In my opinion any possible loss or damage which might flow to the plaintiffs is not the result of the letter but the defendants' assertion of rights under the deed of charge. On 19 July 2000 The Golf Club's solicitors wrote in response to the letter of 5 July and said:
"On the instructions and information available to us your clients' claim is without foundation. …"
- And further on:
"It is without legal merit."
"With respect, your client seems to have misunderstand [sic] our letter of 5 July 2000, which simply put your client on notice of the fact that there is litigation on foot as to the authority of those persons currently purporting to act as the board of directors of PKR, that our clients contend, in ongoing Court proceedings, to hold a fixed charge over the present and future undertakings, assets and rights of PKR, and that our clients reserve all of their rights. It is a matter for your client to decide
(Page 12)
- what (having now been put on notice of the above) it should do as regards its prospectus and sublease, and any other matters to do with PKR.
Litigation between our clients, and PKR, Fleuris and purported directors of PKR, has been ongoing for more than a year. That litigation (which includes claims by PKR and Fleuris, and our clients) has nothing whatever to do (from our clients' point of view) with any 'commercial advantage', and will be pursued to a conclusion by our clients as they see fit, in vindication of the rights which they claim. It remains to be seen what consequences the existing litigation will have in relation to your client, the sublease, and any other transactions involving PKR."
- The letter next asks a question:
"Somewhat surprisingly, it seems, from the tenor of your letter that your client had not been informed in advance by PKR, or were otherwise unaware, of the matters referred to in our letter of 5 July 2000 - is that in fact the case?"
Telling, in terms of the present application, the letter concluded:
"Please note that our clients are prepared to make available whatever information your client may reasonably request in relation to the existing litigation."
"We were certainly not aware of any of the matters set out in your letter of 5 July 2000. We were aware of an application to wind up Fleuris.
Please provide a copy of the Deed of Charge to Pac Asia Holdings Pty Ltd. If our client is of the view that the charge entitles you to an interest in the transaction, then of course we shall seek instructions from our clients in relation to a provision of the copy of the Deed of Sub-lease."
35 In response, Freehills sent to The Golf Club's solicitors the deed of charge, the Paribas letter referred to in the deed of charge, and a copy of the further amended statement of claim. A combination of the correspondence flowing between Freehills and the solicitors for The Golf Club, coupled with that to which Mr Melville has deposed, leads
(Page 13)
- inexorably to the conclusion that even if the letter of 5 July was misleading or deceptive (contrary to my findings) the deceptive or misleading nature of the letter is now cured.
36 The Golf Club has been given sufficient information, together with the offer of more information if requested, and has taken its own legal advice on the position. The letter of 5 July has had the desired effect, namely to put The Golf Club on notice as to the claim of Freehills' clients and they are now well aware of both the claims of Freehills' clients and the competing or contrary claims of PKR and Fleuris.
37 The statement of claim in this action nowhere pleads that the letter has caused The Golf Club to act towards the plaintiffs in a detrimental way. The most that is pleaded is par 22:
"By reason of the Letter, The Golf Club are reconsidering making an offer to enter into the Head Lease Sale."
38 This plea is insufficient to sustain the kind of possible damage necessary to support a mandatory injunction in these circumstances.
Discovery
39 The defendants to these proceedings submit that relief should be denied until discovery of certain documents is given. I am of the opinion that this argument by itself would not be fatal to the plaintiffs' claim. At the most it would result in an adjournment until compliance. Therefore I required the parties to argue the merits of the injunction. In the event, it becomes strictly unnecessary for me to resolve this issue. However, I should say a few words about it because even if my decision on the substantive matter had been different, I would not have granted an injunction until discovery had been given.
40 Order 26 r 8(2) provides:
"Any party to a cause or matter shall be entitled at any time to serve a notice on any other party in whose pleadings or affidavits reference is made to a document requiring him to produce that document for inspection by the party giving notice."
41 No particular form of notice is specified. The statement of claim in par 7 refers to a head lease and sublease - see also pars 16, 18 and 24.
(Page 14)
- The sale of the head lease is said to be relevant to the loss or damage suffered by Fleuris and PKR.
42 Mr Lukin's affidavit refers to the head lease and sublease, together with a discounted cash flow on the value of a golf course and certain other documents. On 9 August Freehills wrote to Solomon Bros seeking specific discovery as follows:
"(a) documents relating to the negotiations with The Golf Club referred to in paragraph 6 of Lukin's affidavit of 25 July 2000;
(b) documents relating to the discussions, and 'offer to acquire the head lease', referred to in paragraph 15 of Lukin's affidavit;
(c) documents relating to the assertion in paragraph 17 of Lukin's affidavit that 'the sale of the head lease to The Golf Club (WA) Ltd will be for considerably in excess of $1 million, payable at settlement;
(d) documents relating to the 'proposed sale of the head lease … commercial arms length transactions' referred to in paragraph 19 of Lukin's affidavit;
(e) documents relating to the 'discounted cashflow referred to in paragraph 19 of Lukin's affidavit, including the cashflow calculation itself, and the 'proposed sale' referred to in that same paragraph."
43 The response from Solomon Bros denied any obligation to give discovery prior to the hearing of the injunction application:
"Our clients are not obliged to give discovery prior to the hearing of the injunction application. In any event, those documents are not discoverable in relation to an application for relief under sections 74 and 77 of the Fair Trading Act 1987 ('FTA'). Presumably those documents are said by you to be relevant in relation to loss and damage. Loss and damage is not an element of a cause of action under either sections 74 or 77 of the FTA.
Nor, with respect, is the application for final relief. The injunction is only one of a range of remedies sought by our
(Page 15)
- clients. Those remedies are cumulative. Your liability under and the quantum of the other causes of action remains to be determined. Should the injunction be granted and the remedial letter cure the harm which we are instructed has been caused by your letter of 5 July 2000, then the likely loss and damage will be reduced. However, even if that is the case, our clients will have still suffered some loss and damage which is recoverable in the proceedings. The hearing will not be final."
44 Contrary to the assertions in this letter, I am of opinion that Freehills' client had a right to discovery. I adopt the reasoning of Master Adams in Robinson v Adshead (1994) 12 WAR 574 as in general terms apposite to this case. I consider the right arises under O 26 and it is a matter to take into account in exercising a discretion whether or not to grant a mandatory injunction.
45 By itself it may not in a particular case be decisive but it is a relevant matter. I extended to Mr Solomon, who yesterday appeared for the plaintiffs, the opportunity to reconsider the position overnight. The plaintiffs have not discovered the requested documents.
46 In these circumstances where there has been an opportunity for reconsideration, I would regard the failure to give discovery as a relevant circumstance against granting a mandatory injunction if I were otherwise minded to do so.
Hearsay evidence
47 The defendants also objected to certain passages in the affidavits of Mr Lukin and Mr Giles on the basis of hearsay relating to conversations, particularly with Mr Melville, a director of The Golf Club. In the end I decline to rule on this matter. Notwithstanding that the plaintiffs should have foreseen the need to obtain direct evidence, Mr Solomon has freely admitted the fault was his and not that of his client in that he overlooked the need. I am reluctant to punish a client for the oversight of counsel and so gave Mr Solomon the opportunity to file further evidence if he wished. The plaintiffs availed themselves of the opportunity in the two affidavits which were filed today which largely or entirely overcome any defect as to hearsay.
48 There is a further objection to a portion of Mr Lukin's affidavit on the grounds of lack of expertise. In my view that objection is well
(Page 16)
- founded. There is not sufficient material put forward by way of evidence to ground Mr Lukin's expertise to express the opinions he does.
Asian Century Holdings Inc - The Third Defendant
49 The plaintiffs seek further injunctive relief against Asian Century Holdings Inc, the third defendant. This company currently has proceedings on foot to wind up Fleuris Pty Ltd, the second plaintiff.
50 Australian Century Holdings is not named in the Freehills letter of 5 July. That letter, however, states on whose behalf it is written.
51 The statement of claim asserts that the letter was written by Freehills in the course of acting as Australian Century Holdings solicitors. The allegation is particularised as follows:
"(i) Freehills act as solicitors for the second and third defendants;
(ii) ACH is one of two shareholders in Pac-Asia;
(iii) the immediate effect of preventing the Head Lease Sale is to damage Fleuris' prospects of opposing the winding-up application bought by ACH;
(iv) there is no legitimate commercial purpose to the second defendants in preventing the Head Lease Sale; and
(v) Mr Steven Standing, a senior associate in the employ of Freehills, who signed the Letter has conduct of both the proceedings between the second defendants and PKR and Fleuris and the proceedings between ACH and Fleuris,
it is to be inferred that the letter was written in the course of Freehills acting for ACH."
52 The kernel of the particulars is the legitimate commercial purpose referred to. In a portion of the affidavits to which some objection is taken, Mr Lukin details facts which lead him to the conclusion that there was no legitimate commercial purpose to the second defendants in preventing the head lease sale. However I can see a number of commercial reasons why the second defendants may be concerned at the alienation of The Golf Club, particularly where they have not seen the head lease and are not aware of the precise terms of that alienation.
(Page 17)
53 On the standard of satisfaction necessary for me to grant a mandatory injunction I am unable to draw the inference from the pleaded facts, in combination with Mr Lukin's affidavit, that the letter was written by Freehills with apparent authority given by Asian Century Holdings.
54 In any event, Mr Huat has sworn in his affidavit that on 5 July he was not even aware that PKR was negotiating with The Golf Club for the sale of the head lease.
55 In those circumstances there is direct evidence which, even if the inference was available to draw, would contradict the drawing of the inference.
56 Mr Solomon acknowledged that this order against Asian Century Holdings was sought for a limited time to allow compliance with the principal relief, that is, the sending of correcting a letter in terms suggested by his minute of proposed orders. However, in my judgment, no basis whatsoever has been shown for such relief against Asian Century Holdings regardless of the outcome of the application for principal relief.
57 The defendants' application to strike out certain paragraphs in the statement of claim, has not been argued; it having been listed for mention. In the limited way I have dealt with the injunction it is not necessary for me to go further. It is not necessary that this matter be case-managed with the other long causes actions involving the parties. It is distinct. I will therefore adjourn the defendants' summons to strike out and make programming orders.
58 I will adjourn to Anderson J the plaintiffs' application that COR 98 of 2000 henceforth be case-managed with CIV 1644 of 1999 at the plaintiffs' request. Although I note that his Honour has already considered the issue, nevertheless I will reserve it for him. Otherwise the plaintiffs' summons is dismissed.
Costs
59 Each of the defendants seek an order for costs on a solicitor-client or indemnity basis and for a certificate of second counsel. The Chamber summons sought interlocutory relief only against the first defendant and the third defendant. Having regard to the pleaded issues and the relationship between Freehills and the second defendants, I consider that it was necessary for the second defendants to oppose the relief sought in the summons despite the fact that they were not being enjoined. The letter
(Page 18)
- was written on their instructions and if the principal relief sought against Freehills had been successful, the second defendants would have been directly affected.
60 I will now consider the particular position of each group of defendants.
The first defendant
61 On the authority of Dobree v Hoffman (1996) 18 WAR 36 Freehills are not entitled to an order for profit costs. They are, however, entitled to an order for payment for fees and disbursements including fees of second counsel and I so order.
The second defendants
62 I conclude by a narrow margin that the circumstances are not such as to require an order for solicitor and client costs. There will be an order for the plaintiffs to pay the second defendants their costs to be taxed with a certificate for second counsel.
The third defendant
63 Joinder of the third defendant in this action was wholly without merit and high-handed. It is difficult to resist the inference of ulterior motive but I do not base my decision on that point. The facts and available inferences did not justify joinder in this action and the relief sought against the third defendant had no nexus with the alleged misleading and deceptive conduct.
64 The plaintiffs are ordered to pay the third defendant's costs to be taxed on a solicitor/client or indemnity basis with a certificate for second counsel.
2
20
3