Renner v Gulf Western Corporation Pty Ltd (ACN 009 057 470)
[2005] FCA 463
•1 APRIL 2005
FEDERAL COURT OF AUSTRALIA
Renner v Gulf Western Corporation Pty Ltd (ACN 009 057 470)
[2005] FCA 463MAREVA INJUNCTION – misleading or deceptive conduct – contract for sale of mining leases – termination of contract – claim for damages – title to mining leases held by respondent – claim for interlocutory relief to restrain disposal of mining leases – arguable case – no claim for recovery of leases – whether risk of dissipation of respondent assets – mareva injunction refused
Trade Practices Act 1974 (Cth) s 52
Federal Court of Australia Act 1976 (Cth) s 23Patrick Stevedores Operations (No 2) Pty Ltd v Maritime Union of Australia (1998) 195 CLR 1 cited
Cardile v LED Builders Pty Ltd (1999) 198 CLR 380 citedJENS DIRK RENNER v GULF WESTERN CORPORATION PTY LTD (ACN 009 057 470)
WAD 60 OF 2005FRENCH J
1 APRIL 2005
PERTH
IN THE FEDERAL COURT OF AUSTRALIA
WESTERN AUSTRALIA DISTRICT REGISTRY
WAD60 OF 2005
BETWEEN:
JENS DIRK RENNER
APPLICANTAND:
GULF WESTERN CORPORATION PTY LTD
(ACN 009 057 470)
FIRST RESPONDENTJOHN TELFER
SECOND RESPONDENTJUDGE:
FRENCH J
DATE OF ORDER:
1 APRIL 2005
WHERE MADE:
PERTH
THE COURT ORDERS THAT:
1. The statement of claim to be filed and served on or before 22 April 2005.
2. The defence and any cross-claim to be filed and served by 13 May 2005.
3.The matter be listed for further directions before a Registrar of the Court on 23 May 2005 at which time the question of transfer to the Federal Magistrates Court can be considered.
Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
IN THE FEDERAL COURT OF AUSTRALIA
WESTERN AUSTRALIA DISTRICT REGISTRY
WAD60 OF 2005
BETWEEN:
JENS DIRK RENNER
APPLICANTAND:
GULF WESTERN CORPORATION PTY LTD
(ACN 009 057 470)
FIRST RESPONDENTJOHN TELFER
SECOND RESPONDENT
JUDGE:
FRENCH J
DATE:
1 APRIL 2005
PLACE:
PERTH
REASONS FOR JUDGMENT
On 17 March 2005 there was filed in the Court an application brought by Jens Dirk Renner against Gulf Western Corporation Pty Ltd (Gulf Western) as first respondent and John Telfer as second respondent. The application was said to be for an injunction to prevent the respondents from disposing of assets the subject of a contract which the applicant would allege he was induced to enter by conduct in contravention of s 52 of the Trade Practices Act 1974 (Cth) (the Act).
Under the heading ‘Details of the Claim’ it was said that on the grounds stated in an accompanying affidavit the applicant would claim repayment of money paid by him to the respondents and damages for misleading and deceptive conduct. There was endorsed a claim for interlocutory relief by way of an injunction until further order preventing the respondents, either jointly or severally, disposing of, transferring, charging, assigning, diminishing or dealing with mining leases 20/120 and 20/138, the subject of a business sale contract dated 29 June 2004 executed between the applicant and the respondents. Alternatively, should they either jointly or severally dispose of or otherwise deal with the leases the subject of the contract, the sum of $100,000 be placed in a trust account until determination of the action.
The application is a little curiously worded in that it is described in the first substantive paragraph as an application for an injunction, which is plainly interlocutory in character, and then the substantive relief which follows is a baldly stated claim for repayment of money and damages. In any event, what is foreshadowed is a claim for either repayment of money or damages. What is now sought is, in effect, a mareva injunction in respect of certain mining leases which are the property of the respondents.
In support of his application Mr Renner swore an affidavit on 2 March 2005, filed with the application on 17 March 2005. He stated in the affidavit that on 29 June 2004 he signed an offer to purchase mining leases 20/120 and 20/138 in the Cue area from the co-owners of those leases, Gulf Western and John Telfer for a sum stated to be $600,000. A deposit of $100,000 was payable, $2,000 forthwith and $98,000 upon acceptance. The balance of the purchase price of $500,000 was to be paid in three equal monthly instalments over 24 months.
Under special conditions it was stated that the purchaser was to pay the remainder of the deposit within 21 days of acceptance and the balance of the purchase price within 24 months from acceptance being progress payments equally divided in three-monthly lots. Settlement was to occur once the whole of the purchase price was paid. Any expenses associated with the mine in the interim would be paid by the purchaser. All plant and equipment that was discussed and detailed in an initial meeting would remain on site. Mr Telfer would instruct and familiarise the purchaser with the plant and equipment. They were the essential terms of the sale.
The negotiations leading up to the sale are described by Mr Renner in his affidavit. He saw advertisements in the Sunday Times newspaper, one for a goldmine and the other for an emerald mine. After some discussions with Mr Martin Banning, the sole director of Gulf Western, and putting to one side the possibility of purchasing the goldmine which was priced at $1.5 million, Mr Renner then explored the possibility of purchasing the emerald mine. Mr Banning showed him a brochure which was entitled ‘Telfer Emerald Mine (Formally (sic) Poona Mining) Incorporating The Aga Khan’. It was dated March 2003 and contained the phrase, ‘A detailed description and history of Mining Leases 20/120 and 20/138.’ He perused the brochure in the presence of Mr Banning. Mr Banning made certain statements to him about the mine. He said Mr Banning told him there was nickel, chromium, emerald, sapphires, rubies and alexandrite present and even a goldmine if he wanted to do some goldmining. Mr Banning also allegedly claimed at the time that Gulf Western had an analysis of ore samples from a chromium deposit at the mine which demonstrated a 3 per cent chromium content.
Mr Renner said Mr Banning told him of the rarity and great value of the gemstones, such as rubies and alexandrites that were present at the emerald mine and informed him of the Queen Bee emerald found at the emerald mine. He was seeking a purchase price of $500,000, inclusive of equipment listed in the brochure. According to Mr Renner, Mr Banning told him that the various pits, machinery, camp and airstrip referred to in the brochure were at the emerald mine. One section of the brochure set out expected returns from the production of emeralds. Mr Banning told him if he had control of the relevant tenements comprising the mine he could sit back and take a fee.
Mr Banning allegedly made representations that this was an opportunity that would exceed his expectations and told him that the financial analyses provided in the brochure were very realistic. Mr Renner said he was shown photographs from the landscape of the emerald mine from which he recalled seeing a manager's house, a workers' mess, a water tower and an HD21 35‑tonne bulldozer. He asked Mr Banning if the bulldozer was in working condition and was told it was. He said at no stage was he told that the plant and equipment and other facilities included in the brochure and there listed was out of date or that any of the list of equipment was not present or fully operable. He was also shown 20 to 30 small emeralds and a clump of rock in which several large emeralds were clearly visible. These were said to have been extracted from the tenement 20/120, the Aga Khan tenement.
Mr Banning suggested he meet with Mr Telfer. They met on 18 June 2004. Mr Telfer spoke to him about emeralds he had extracted from the emerald mine, their worth, the Queen Bee emerald, so called, and how to mine emeralds. He also spoke of the existence of untapped resources. He stressed to him how easy it was to extract emeralds and he would be able to extract a huge quantity every month.
According to Mr Renner, Mr Telfer told him if he was to take an interest in the emerald mine he would give him all the help he needed, except for selling emeralds extracted. They discussed the list of plant and other assets. Mr Renner claimed that in the course of discussions Mr Telfer disclosed to him that the excavator was actually not at the mine. It had been damaged and scrapped but he offered to provide a 23-tonne case excavator from the Owen Gully goldmine in lieu and to install a large generator as part of the suggested ‘swap’ arrangement.
It is sufficient for present purposes to say that following signature of the business contract of sale Mr Renner attended the emerald mine and that he allegedly found his expectations disappointed in various respects. Although there is no statement of claim filed yet, it will obviously be alleged that the representations made to him before he signed the business contract were misleading or deceptive.
In the course of his affidavit Mr Renner also said that as a result of the alleged misleading or deceptive conduct and breaches of what he says were both express and implied terms in the contract he suffered loss, specifically but not limited to, the $100,000 which he paid by way of deposit. In breach of the contract it recently came to his attention that the respondents had advertised the emerald mine for resale. He is not aware of the assets of either of them. Given their conduct in having the contract executed, he believes that if the emerald mine were resold there is a real risk that if he is not granted an injunction the respondents will dissipate the funds. If the claim for interlocutory relief is dismissed and should he obtain judgment against either of them for the sum of $100,000 paid by way of the deposit, there would be insufficient moneys available to satisfy any such judgment.
There have been affidavits filed in response by Mr Telfer and Mr Banning. Mr Telfer exhibited to his affidavit a schedule of assets and liabilities which he says shows assets including cash at bank of $12,000, real property of $320,000, leasehold interests in the Telfer emerald mine and the Owens Gully goldmine totalling $1,132,000, plant and equipment said to be located at Cue of $118,000, other vehicles represented by an equity in financed vehicles which he values at $77,600, against liabilities of $155,500 and a contingent and disputed liability to a Mr Ward of $200,000. He goes into some detail in his affidavit to explain various items scheduled in that list of assets and liabilities. He says at [67] - [69] of his affidavit:
‘67..... The Applicant took possession of the Telfer Emerald Mine on or about 1 August 2004 but vacated the mine on or about 17 October 2004. I verily believe that the Applicant does not intend to proceed with the Contract. I deny any wrongdoing in relation to the Contract and therefore intend to defend these proceedings. Further, by reason of the Applicant’s conduct, I regard the Contract at an end on the basis the First Respondent and I have elected to terminate the Contract and attempt to resell the Telfer Emerald Mine to mitigate our loss.
68.Accordingly, the Telfer Emerald Mine has been advertised for sale.
69.The First Respondent and I have been involved in subsequent negotiations for the sale of the Telfer Emerald Mine. However, no contract has been entered.’
He also says that on or about 14 September 2004 he spoke with the applicant at Windmarara and the applicant told him that he was ‘broke’.
Mr Banning filed two affidavits. In his first affidavit, which was sworn on 31 March 2005, he says that the company, Gulf Western, of which he is sole director, has assets comprising its 50% share in the Telfer emerald goldmine which he values at $300,000 and a 50% share in the Owens Gully goldmine which he values at $500,000 and that he has no liabilities. In a supplementary affidavit he deals with the disposition of the deposit and says that it was agreed between the respondents that he would be responsible for the collection of the moneys due under the contract. He received those moneys and then, in ways described in the affidavit, distributed them between himself or his own company and Mr Telfer.
I should observe that in that regard the contract itself was unconditional in the sense that its completion was not contingent upon satisfaction of any finance approval or the sale of any other property and that the $100,000 having been paid and the contract accepted, the $100,000 simply became a part-payment of the purchase price, the balance of the payments due under the contract being calculated to allow a credit for that amount. So at this interlocutory stage, and I express my views provisionally, there is no basis for a finding of any impropriety in the disposition of the $100,000 that was paid.
According to Mr Banning, he says that after payment of $100,000 the next instalment was due on 1 November 2004 for $62,500. In October he spoke with Mr Renner who told him that he was having problems coming up with payment of the full amount. He and Mr Telfer then decided to reduce the amount of the first instalment to $30,000 and he so informed Mr Renner. Despite the agreement to reduce that amount, default was made in payment of the $30,000. The relationship between the parties began to deteriorate.
Mr Banning wrote to Mr Renner and demanded payment of the instalment. No response was received to that letter. Aside from payment of the $100,000, no other payment under the contract was received from Mr Renner except one payment of about $4,000 for rates. Mr Banning says that based on the default in payment and by reason of Mr Renner vacating the mine site, he considered that Mr Renner had shown his intention not to be bound by the contract any further. He had discussed the matter with Mr Telfer and they agreed to treat the contract at an end by reason of Mr Renner's breach.
Mr Banning exhibited correspondence with Mr Renner, in particular his letter of 11 October 2004 in which he said that he and Mr Telfer denied each and every allegation made by Mr Renner against them and that the contract had been explained in a lengthy conversation. Before Mr Renner entered into the contract it was explained, in a lengthy conversation, that information previously provided to him needed updating and that Mr Renner had responded it wasn't necessary as he knew everything there was to know.
What is sought in this case on an interlocutory basis is effectively a mareva injunction with respect to the particular asset, that is, the mineral leases which were the subject of the contract and which Gulf Western and Mr Telfer are now seeking to resell.
The Court has power under s 23 of the Federal Court of Australia Act 1976 (Cth) to grant a mareva injunction. However, it is a power which is not lightly exercised. The criteria are that, firstly, there has to be at least a reasonably arguable case. Sometimes it has been said there has to be a prima facie case. However, in Patrick Stevedores Operations (No 2) Pty Ltd v Maritime Union of Australia (1998) 195 CLR 1 (at 46), Brennan CJ, McHugh, Gummow, Kirby and Hayne JJ said that an applicant has to show a serious question to be tried. In Cardile v LED Builders Pty Ltd (1999) 198 CLR 380 (at 408) Gaudron, McHugh, Gummow and Callinan JJ spoke of a reasonably arguable case on legal as well as factual matters.
I am prepared to accept for the purposes of this claim for interlocutory relief that there is at least an arguable case of misleading or deceptive conduct on the basis of the material put forward in the affidavit of Mr Renner. To say that is not, of course, to express any concluded view about the truth or falsehood or accuracy of what he says in his affidavit. It is a provisional view based on the assumption that if the evidence in the affidavit were accepted and not contested, there would be, at least, an arguable case of misleading or deceptive conduct on the part of the respondents. The respondents of course contest those facts and nothing I say here has any implication for what may be found after a trial and properly tested evidence.
Accepting that there is a reasonably arguable case, the second question is whether there is a risk that the respondents will dissipate their assets in such a way as to frustrate any judgment that might ultimately be obtained against them. That is a risk of which, in this case, there is virtually no evidence apart from what is relied upon as the nature of the conduct which is alleged against the respondents which is said, by implication at least, to involve elements of dishonesty.
There was reference in argument to the doubtful nature and quality of some of the assets which they claim in their evidence as to their asset and liability position, but the grant of the mareva injunction does not depend upon the strength or weakness of the asset position of the respondents. The question is whether there is a risk of dissipation of such assets as there may be in such a way as to frustrate the judgment.
In this case I am not satisfied that the evidence discloses a risk at such a level that would warrant the making of this very dramatic order. It seems reasonably apparent that the parties are at least ad idem on one thing, and that is that the contract is at an end. That seems to be Mr Renner's view and it seems also to be the view of the respondents, although they come at it from different angles and by reason of different causes. That having been said, there is no legal impediment, and none is suggested, to the resale of the leases by the respondents.
That leaves open the question of repayment of purchase moneys and/or damages by reason of either termination of the contract, breach of the contract and for relief from contravention of s 52 of the Act. Not being satisfied that the level of risk of dissipation of assets which would lead to a frustration of the judgments has been shown, I will dismiss the application for the interlocutory relief.
I certify that the preceding twenty-five (25) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice French.
Associate:
Dated: April 2005
Counsel for the Applicant: Mr SB Watters Solicitor for the Applicant: Taylor Linfoot and Holmes Counsel for the First and Second Respondents: Mr MRB Hemery Solicitor for the First and Second Respondents: Talbot Olivier Date of Hearing: 1 April 2005 Date of Judgment: 1 April 2005
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