Ralkon Agricultural Company Pty Ltd v Aboriginal Development Commission

[1986] FCA 78

IN THE FEDERAL COURT OF AUSTRALIA )

)

SOUTH AUSTRALIA DISTRICT REGISTRY	)	~ 0 . ~ 5 0	of 1981
)

DIVISION	GENERAL	)
B E T W E E N :
RALKON AGRICULTURAL COMPANY PTY. LIMITED

Applicant

- and -

ABORIGINAL DEVELOPMENT

COMMISSION and POINT McLEAY

COMMUNITY COUNCIL INC.

Respondents

MINUTE OF ORDER

JUDGE MAKING	ORDER	FISHER J.
WERE MADE	ADELAIDE
DATE OF ORDER	7 MARCH 1986

THE COURT ORDERS THAT:

1. application The by the Aboriginal Development

Commission, by notice	of motion filed on 22 February
1985, be dismissed.

2 . The Aboriginal Development Commission pay to Ralkon

Agricultural Company Pty. Limited its costs of this

application the same to be taxed if not agreed.

Note: Settlement and entry	of orders is dealt with in Order	36 of
the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA	) )
SOUTH AUSTRALIA DISTRICT REGISTRY	)
) No. G50 of 1981

DIVISION	GENERAL	)
B E T W E E N :
RALKON AGRICULWL COMPANY PTY. LIMITED

Applicant

- and -

ABORIGINAL DEVELOPMENT

COMMISSION and POINT McLEAY

COMMUNITY COUNCIL INC.

Respondents

7 March 1986

REASONS FOR JUDGMENT

FISHER J. : This is a further chapter in the long running and

bitter confllct between the applicant Ralkon Agricultural Company

Pty. Limited ("Ralkon") and the respondent Aboriginal Development

Commlssion ("the Commission"). The particular matter before me

at this tlme arlses out of a Notice of Motion filed by the

Commission on 22 February 1985. The Commlssion and the Point

McLeay Community Council Inc. ("the Community Council") each

sought by separate Notices of Motion to restrain Ralkon in effect

from dealing in any way with Its assets pending determination and

satisfaction by Ralkon of its obligation to pay the costs of

earlier proceedings. It is necessary to recapitulate some of the

2 .

history of these proceedings.

On 29 February 1984 I dismissed Ralkon’s appllcation

made pursuant to the Admlnistrative Declsions Judicial Review Act

1977 for a ludiclal review of the decision of the Commission

pursuant to 5 . 2 8 of the Aboriqlnal Land Commission Act 1980 to

grant a lease of certain land to the Community Council. Ralkon

was and had been for some time farming this land and it sought

that the lease be granted to it. The validity of the decision to

grant in the clrcumstances the lease to the Community Councll was

central to the proceedings. Ralkon appealed against my declsion which appeal was on 14 December 1984 dismissed by a Full Court of this Court. Ralkon was on each occas1on directed to pay the costs of the respondents. The proceedings at first instance are

reported in C19843 1 F.C.R.	210 and on appeal in (1985) 57	A.L.R.
143.

On 21 February 1985 the Commission and the Community

Council each commenced proceedings against Ralkon in the Supreme

Court seeking restraining orders similar in form t those

previously mentloned as sought by the notice of motion filed in

this Court. Affidavits filed in support referred to the fact

that each of the respondents had lodged or were about to lodge in

this Court bills of costs for taxation wherein very substantial

sums were claimed. On 22 February 1985 Mohr J. made orders

discharging interim ex parte orders made on the previous day and

made further orders in the following terms:

L

3 .

"1. Discharge the Order of 21st February, 1985.

2. Mareva injunction granted to the plaintiff in

respect of $91,859.51 together with accumulated

interest standing to the credit of the defendant

with the Commonwealth Bank Finance Corporation as

evidenced by exhibit 'IMH2' to the affidavit of

Ian Macklntosh Hillock filed on 22nd February 1985;

3. Further consideration adjourned."

Ralkon opposed the making of these orders.

On 6 March 1985 I made an order on the notlce of motion

which is presently before me to the effect that Ralkon be

restrained from paying any sum of money by way of dividend to its

shareholders and in particular to the holders of residents'

preference shares. Ralkon did not oppose the making of this

order. I refrained from making the other restraining orders

sought by the Commission and also by the Community Council. In

his affidavit filed on 26 February 1985 in opposition to the

notice of motion Ian Mackintosh Hillock ("Mr. Hillock"), the

manager of Ralkon, deposed to the facts that Ralkon had deposited

the sum of $91,859.51 at call with the Commonwealth Bank Finance

Corporation to cover its contingent liability relating to the costs of the respondents. This sum was the subject of the Mareva

injunction made on	2 2 February 1985 by Mohr S. in the Supreme
Court.

On 4 July 1985 the Commission instituted proceedings in

the Supreme Court seeking to evict Ralkon from portion of the

4.

land which it was farming. On 4 December 1985 these proceedings

were dismissed and the Commission was ordered	to pay Ralkon’s
costs.

On 11 December 1985 Ralkon applied to the Supreme Court

to discharge the Mareva injunction made on 22 February 1985 by

Mohr J. On 15 January 1986 Bollen J. discharged the Injunction,

which discharge was opposed by the Commission. The affidavits

filed by both parties to this appllcatlon were exhibited to

further affidavits filed in relation to the aspects of the matter

now before me. In his reasons for judgment Bollen J. stated that

he recognized that Ralkon had “put aside monies against its

expected costs In the Federal Court proceedings but despite the

emphasis which Mr. Debelle, counsel for the Commission, gives to

that I cannot regard that that money is that	w ich 1s protected
by the injunctlon as relevant”.

The taxation of the Commission’s costs in the

proceedings ln this Court commenced on 18 July 1984 and was heard on a number of occasions during the balance of that year and

durlng 1985. The taxation concluded on 10 January 1986 and the

Commission‘s bill was cast at $103,323.75. However no

certiflcate of taxatlon has been issued as Ralkon has applied to

the taxlng officer pursuant to Order 6 2 Rule 42 of the Rules of

this Court to reconsider his decision in respect of a substantial

number of items in the Commlssion’s bill of coats. Reasons for

his declsion on the reconsideration were sought from that officer

5.

pursuant to Order 62 Rule 43(b).

Prior to the notice of motion coming on agam before me

on 17 January 1986 certain correspondence passed between Ralkon

and the Commission.

On 8 January 1986 the solicitors to the Commission wrote

a letter in the following terms to Ralkon's solicitors.

DELIVERY	"HAND	WME:267724:SG
Messrs. Daenke O'Donovan,	8th January, 1986
33 Franklin Street,
ADELAIDE S.A. 5000	Att: Mr. Daenke
Dear Sirs,

Ralkon Agricultural Co. Pty. Ltd.

Supreme Court Action No. 569 of-

We refer to prevlous Court hearings in this

matter.

We are of the view that since your client seeks to

be relieved of the order made by Mr. Justice Mohr on

22nd February 1985, it is appropriate that our clients

have the opportunity to inspect your clients cattle.

Accordingly we ask whether your client is prepared to

allow an inspection of the cattle on the lands

currently occupied by Ralkon on 48 hours notice. We

cannot be more specific as to the date until we have

been able to arrange for an agricultural	consultant to
conduct the inspection.

We would be obliged if you could respond to this letter

by 4 p . m . on Friday 10th January 1986.

Yours faithfully,"

Finlaysons.

On 14 January the solicitors to the Commission wrote to

Ralkon the following further letter -

6.

"Messrs Daenke O'Donovan,

33 Franklin Street,

Adelalde, S.A. 5000	14th January, 1986
Dear Sirs,

Ralkon Aqricultural Companv Ptv. Ltd:

Federal Court Costs

We refer to previous communications In this

matter.

We would be obliged If your client would answer

the following questions concerning this matter by	4.00
p.m. on Wednesday 15th January 1985.

1. How does your client intend to pay the costs

awarded agalnst it in Federal Court Actions No. G50

of 1981 and G9 of 19841

2 .

What does your client intend to d with the

$91,159.51 on deposit with the Commonwealth Bank

Finance Corporation Limited now that the Supreme

Court Injunction restraining any dealings with the

same has been discharged.

In addition, we would be obliged if your client

could provide us with a copy of the document creating

the charge over Ralkon's stock referred to in the

affidavit of Mr. W.M. Ericson sworn 18th December 1985

and filed in Supreme Court action No. 569 of 1985.

Yours faithfully ,

(Signed Finlaysons)"

Ralkon's solicitors replied on 15 January in the

following terms -

"15th January, 1986

JAD:SB

Yr.Ref: WME 267724 SG

Finlaysons,

Barristers & Solicitors,

DX 152.

ADELAIDE. Dear Sir,

!

7.

RE: ABORIGINAL DEVELOPMENT COMMISSION

RALKON AGRICULTURAL. COMPANY PTY. LTD.

FEDERAL COURT ACTION NO. G50 of 1981. (Costs)

We refer to your letter to us of 14th January, 1986

which was delivered about 10.00 am. on 15th January,

1986 and seeks a reply by 4.00 pm. on that day.

Our instructions are that our client will be in a

posltion to meet its obligations for costs	a and when
they fall due.

It is of no concern to your cllent how our client

intends to meet those costs or what our client does

wlth any specific funds. Your client is a creditor for

an as yet undetermined sum and when the amount 1s

determined by the granting of the appropriate

certiflcate, our instructlons, are that the llability

will be met.

The incessant demand, for lnformation on our cllent's

affairs shows in the wrlter's view, a paranoia about

Ralkon whlch is not seen in the ordinary creditor/debtor relationship even, from the writer's

experience, those which go to Court.

In his reasons for ludqment on Ralkon's application o discharge the Mareva in]unction in the Supreme Court Mr. Justice Bollen said:

I . . . It seems to me that a proper understanding

of them (Ralkon's financial statements) would

lead one to say that the defendant would be able

to continue trading and meet the costs'.

Your client's further demands for information is	a
waste of tlme and costs for all parties.

We have received your subsequent letter dated the 15th motion is to be relisted in the Federal Court on

Friday, 17th January, 1986.

All senior counsel engaged at various times by Ralkon

who have an understanding of the complex background of

the matter are at present on leave.

Mr. Mansfleld Q.C. will be available on Wednesday 22nd

January, 1986. It seems a waste of time and costs to

brlef new counsel in the matter.

Please advise if your client will agree to the matter

being taken from the list of 17 January, 1986 and

relisted on 22nd January 1986 or to an adjournment

8.

until that date.

Would you also please advise what specific orders your client seeks on its renewed application.

We expect your answer to these requests by

12 noon on

Thursday, 16th January, 1986.

Yours faithfully,

DAENKE O'DONOVAN

J . A. DAENKE"

On 16 January the Commission's solicitors delivered the

following letter to Ralkon's solicitors.

"Messrs. Daenke O'Donovan, WME:267724

Barristers & Solicitors,	JAD:	SB
33 Franklin Street,

ADELAIDE. S.A. 5000	16th January,	1986
Dear Sirs,

Aboriginal Development Commission

Ralkon Agricultural Company Pty. Ltd.

Federal Court Action No. G50 of 1981

We acknowledge receipt of your letter dated 15th

January 1986.

Contrary to the opinion expressed in your letter,

our client's request for information stems only from a

concern that It will be paid the very substantial

amount of costs due to it. That concern was

accentuated by your client's successful application to

discharge the order of Mr. Justice Mohr which prevented

any disposition by your client of the sum of $91,859.51

expressly set aside by your client to meet its

liability for costs. Your client's application to

discharge can only cause our cllent to suspect that

your client may dispose of the only cash asset

avallable to meet the liability for costs.

In the light of the fact that the Balance Sheet of Ralkon indicates that its current liabilities and the liability for taxed costs exceed its cash assets, your client's refusal to state what it intends to do wlth

the sum of $91,859.51 coupled with its refusal to

indicate how it will discharge the liability for costs

9.

does nothing to dissipate our cllent's concern.

In these circumstances, our client has no

alternative but to proceed with the applicatlon on 17th

January 1986. The orders our cllent seeks are referred

to in Mr. Ericson's affidavit sworn	on 15th January
1986.

Our client is prepared to consent to an

adjournment of the application until 22nd January, if

you undertake on behalf of your client by	4.30 p.m.
today :

(a)	that your client has no less than 2,093 head of cattle,
(b)

that your client will not sell, encumber, cattle until 25th January 1986,

(C)	that the sum of $91,859.51 remains on deposlt
or at call and your client will not dispose of
or In any way deal with the said sum until 23rd
January 1986,
(d)	your client will permit our client to enter
land occupied by it for the purpose of counting
and inspecting the cattle owned by your client.

Yours faithfully,"

Finlaysons.

The nature of the Commission's concern is readily

apparent in this correspondence.

When the application was renewed on 17 January 1986 counsel for Ralkon accepted my suggestion that his client file an

affidavit dealing wlth the matters of concern to the Commission

and, in particular, Ralkon's dealing with the sum of $91,859.51

consequent upon the discharge of the injunction relating thereto.

This affidavit was filed on 21 January 1986 and sworn by Ian

10.

Mackintosh Hillock, the manager of Ralkon, who was subsequently

subjected to a searching cross-examination by counsel for the

Commission. He gave details of the manner in which Ralkon had

dealt with the sum of $91,859.51 consequent upon its release by

Bollen J., the number of cattle on hand and their value, and the number sold slnce 1 July 1985 and the proceeds thereof. He

reiterated that Ralkon had the means and the intention to pay the

legal costs when finally assessed. The balance sheet and profit

and loss account and livestock account of Ralkon as at 30 June

1985 were exhlblted to the affidavit of Graham Douglas Perrln,

Ralkon's accountant, who deposed to the fact that there had not

been any substantial change In the total asset position of

Ralkon between 1 July and 30 November 1985.

Counsel for the Commission contended in the first

Instance that Ralkon should be restrained from dealing with its

assets in any way pending final assessment and payment of the

legal costs due to the Commission. However his submission

ultimately was that it was appropriate that until that time the

company should be restrained from dealing with its assets

otherwlse than in the course of its business.

In so contending reliance was placed upon two

authorities which not only confirmed the jurisdiction of the

courts, but also indicated circumstances In which it was

appropriate to exercise the jurlsdiction. Counsel withdrew any

suggestion that he was in effect seeking a Mareva order,

11.

contending that these two authoritles sufficiently established

his client's entitlement to the order he sought, which he

labelled as a "Faith Panton order".

The earller authority was that of Cummins v Perkins

C18993 1 Ch 16. It established, both at first instance and o

appeal, that the Court had jurisdiction to protect by in~unction,

or by appointment of a receiver, the fund out of which costs were

payable. The facts upon which the Courts relied in exercising

thls ~urisdictlon are important. The action of a married woman

was dlsmlssed, and costs were ordered to be taxed and paid out of

her separate property. Her only separate property consisted of a

share to which she was entitled under a will. The married woman

resisted the payment of costs out of this share and in the words

of Kekewich J. "snaps her fingers at the defendants, telling them

to get their costs when and as they can". Kekewich J. was of

opinion that she should not have her share in full whilst the

costs were outstanding and appointed the defendants as receivers

of her share. At the time of making this order the costs had not

been taxed.

The Court of Appeal dismissed the appeal, Lindley M.R.

saying at	page 19:
"It appears to me that the order of Kekewich J. is
founded upon perfectly intelligible and sound
principles... The learned ludge was of opinion that
this fund was in danger - that is to say, that the
plaintiff was in a position to get it and would do so,
and if she obtained possession of it the defendants
would not get thelr c o s t s . Thereupon the learned judge
did that which I think he had ample jurisdictlon to do

- he appointed a receiver to protect that share and to

preserve it, In order that it may be applied in

accordance with the ludgment which the defendants had

obtalned" .

The other member of the Court, Chitty L.J., agreed.

Faith Panton Propertv v Hodqetts and Anor. C19813 2 All

E.R. 877, the other authority relied upon by counsel for the

Commisslon, 1s to the same effect. The clrcumstances were that

there was ~udgment for the plaintiffs with costs to be taxed.

These costs had not been taxed at the date of the application for

an injunction, which application was made both under the Mareva

jurlsdiction and the Supreme Court Act. The trial judge refused

to grant the injunction but an appeal was allowed. The Appeal

Court applied Cummlns v Perkins supra, and made n order under

the relevant sectlon of the SurJreme Court Act restraining the

defendants from dealing with their assets. Again the

circumstances in which the Court considered it proper to exercise

Its jurisdiction were important. Waller L.J. said at page 880:

"The first defendant has sald that he intends to go

bankrupt, and has said falsely that he had an offer

from a substantial company for his assets. He then

said after that that he had received another offer and

accepted It and that he has spent the purchase money.

He has told the plaintiffs' solicitors that he intends

to sell hls copyright and patents to a substantial

company; he also has said that moulds which are

estimated to be worth One thousand pounds each are In

his possession but that he had sold them in March 1979

on terms that he was allowed to remain in possession

of them.

At page 882 he said:

"Are the circumstances of this case such that an

injunction should be granted? The defendant has shown

by his behaviour that he intends to divest himself of

his assets if he can. He has shown a lack of frankness

13.

to the court in not disclosing to whom he has sold some

of hls assets when asked by thls court. The hearing

before Foster S. was for contempt of court and more

serious consequences mlght have followed. In my

judgment thls is a case where the court should ensure

so far as posslble that its orders are not thwarted,

and I would grant an Injunction as prayed until after

the costs have been taxed and paid.

I have arrlved at this conclusion differing from

Vinelott J. with reluctance. He accepted that where

there was a substantial ~udgment, not finally

quantified, an Injunction mlght be granted but came to

the conclusion that thls was not such a case. There

has, however, been fuller argument before this court

and in particular we have been referred to a number of

cases which were not before Vinelott J. Furthermore as

I have mentioned above there has been before this court a lack of frankness."

Brandon L.J. said at page 884 of the circumstances which

justified the exercise of discretion:

"I am further of the oplnion that, having regard to the

peculiar, inconsistent and ambivalent conduct of the

first defendant with regard to what dispositions, If

any, he has made of the alleged copyright, moulds and

patent, the court should exercise its discretion by

granting the first injunction asked for by the

plaintiffs ln the present action."

Counsel for Ralkon accepted these statements of the law

and did not dlspute the jurisdiction of the Court to make the

orders which the Commission seeks. However he contends, rightly

in my opinion, that in the clrcumstances of this matter an

exercise of discretion to grant an injunction is not warranted.

Put at its highest level, the case of the Commission is

that the intervention of the Court is warranted because there is some doubt as to the number of cattle at present on Ralkon's property and because the values placed on its assets In its

14.

balance sheet indicate that there is at least a likelihood that

the costs wlll not be paid in full.

On the matter of stock numbers M . Hillock gave evidence

and was cross-examined. This evidence was very unsatisfactory if

I was obliged to make a finding as to the number at present held.

A Mr. Thomas made an independent stock count of 1,429 on 28 March

1985 but Mr. Hillock stated that there were more on the property

at that date than stated in Mr. Thomas' report. The livestock

account as at 30 June 1985, which formed portion of Ralkon's

audited accounts, showed 2,093 on hand at that date. The manner

in whlch Mr. Hillock arrived at that figure did not glve me

confidence in its correctness. However a stock mortgage was

granted by Ralkon to Dalgety Farmers Limited ("Dalgety") on 22

July 1985, wherein the stock numbers were stated as 1,862. Mr.

Hillock said that at that time an Inspection was made by an

officer of Dalgety. The security provided that Ralkon would not

remove stock from its property and only sell in each instance

with the consent of Dalgety. In the livestock account the stock

on hand at 30 June 1985 were valued at $100 each and this figure

was carrled to the balance sheet. However sales made by Ralkon

since that date indicate hat the average market value of each

cattle sold would not be l ss than $260. It follows in my view

that, despite the uncertainty concerning the number of stock presently on hand, thelr market value would be at least double the figure shown In the balance sheet.

15.

The Commission's concern regarding the dealing by Ralkon wlth the sum deposited with the Commonwealth Bank Finance Company

which it said was held to meet its liability for legal costs,

appeared on the evidence to be un~ustified. Mr. Hillock deposed

in his affidavit to the fact that it was dealt with in the

following manner and this evidence was not challenged. An amount

of $20,000 was placed on term deposit with the Commonwealth Bank,

as an addition to $60,000 already held on deposit as security for

the overdraft which on 21 January 1986 stood at approxlmately

$15,000. An amount of $15,000 was paid to Dalgety in reduction

of the amount secured by stock mortgage which after the payment

stood at approximately $85,000. Finally all trade creditors were

paid.

Very generally the principal assets of Ralkon at the

time of hearing were as follows; it had $80,000 on deposit with

the Commonwealth Bank and cattle at a conservatively estimated

market value of $400,000. Its principal liabilities were stated

by counsel for the Commission to be $136,500 being $85,000 under

the stock mortgage, $19,000 lent by the Department of

Agriculture, $15,000 on bank overdraft and $7,000 being a

provision in the accounts for long-service leave. On these

figures the balance sheet would show a substantial excess of

assets over liabilities, and conslderably more than necessary to

meet the liability of $100,000 or thereabouts estimated as the

Commission's taxed costs. It is proper to mention at this stage

that the respondent Polnt McLeay Community Council Inc. does not

propose to claim the legal costs which it is entitled to have

paid by Ralkon.

A number of comments can be made on these clrcumstances.

Even accepting that stock numbers and the price which they mlght ultimately reach on sale are somewhat uncertain, it can not be

said, as counsel for the Commlsslon stated, that Ralkon 1s

Insolvent and unlikely to be able to meet Its obligation to pay

legal costs when they are ultlmately assessed. Moreover Ralkon

has always acknowledged this obligation and has stated that it

will meet it at the appropriate time. In no way can it be said

that it has "snapped its fingers" at the Commission in respect of

the payment of costs. It has merely reacted, perhaps excessively

strongly, to the Commission's request for information.

Furthermore its counsel was not able to point to any authorlty

which would justify making an order such as he sought on the

ground that Ralkon might be insolvent or otherwise not in a

posltion to pay the costs at the appropriate time.

The Commission was concerned that Ralkon might take some

action in relation to its assets, otherwise than in the ordinary

course of its business, which would or might put payment of the

costs in full at risk. However it could not pomt to or

indicate what action it feared might be taken in this regard.

There is nothlng to suggest that In the past year Ralkon has

dealt with its assets otherwise than in the ordinary course of

business and such is the continuing obligation of its directors

17.

and officers. Dalgety has control of the most substantial asset

under its stock mortgage and Ralkon's financial affairs are

supervised by competent accountants, one of whom swore an

affidavlt deposmg to the proper conduct of Ralkon's affairs

between 1 July and 30 November 1985.

It is my opinion that there 1s no evldence whlch would

warrant the exercise of my discretion. "he facts differ greatly

from those In the two cases relied upon by counsel for the

Commission. The most that could be said was, in his words, that

the conduct of Ralkon was "ambivalent". Even if in any way it

was, which I do not find, it would not justify making the order

sought on this occasion.

The Commlssion's application for an injunctlon

restraining Ralkon from dealing with its assets otherwise than in

the ordinary course of its business until the legal costs are

paid must be dismlssed with costs.

I certify that this and

the16 preceding pages

are a true copy of the

Reasons for Judgment of

Mr Justice Flsher.

Associate &&W

Dated: 7 March 1986.