Roma RV Pty Ltd v Mitchcap Pty Ltd

[2022] VSC 715

IN THE SUPREME COURT OF VICTORIA Not Restricted

AT MELBOURNE

COMMERCIAL COURT

S ECI 2022 04624

ROMA RV PTY LTD (ACN 144 025 016)	1st plaintiff
MARK WILLIAM PALMARINI	2nd plaintiff
v
MITCHCAP PTY LTD (ACN 630 819 760)	1st defendant
SHANE JUSTIN CREMIN (IN HIS CAPACITY AS JOINT RECEIVER OF THE FIRST PLAINTIFF)	2nd defendant
BRENT LEIGH MORGAN (IN HIS CAPACITY AS JOINT RECEIVER OF THE FIRST PLAINTIFF)	3rd defendant

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JUDGE:	Elliott J
WHERE HELD:	Melbourne
DATE OF HEARING:	14, 16 November 2022
DATE OF JUDGMENT:	18 November 2022
CASE MAY BE CITED AS:	Roma RV Pty Ltd v Mitchcap Pty Ltd
MEDIUM NEUTRAL CITATION:	[2022] VSC 715

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INTERLOCUTORY INJUNCTION – Secured loan agreement – Bailment of goods – Breaches of agreement – Notices of default – Appointment of receivers – Seizure of goods – Interlocutory application for delivery up of seized goods – Whether appointment of receivers in good faith – Awareness of breaches of agreement – Serious question to be tried – Balance of convenience – Adequacy of damages as a final remedy – Injunction granted on condition amount equating to secured principal debt be paid into court.

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APPEARANCES:	Counsel	Solicitors
For the plaintiffs	M Robins KC and C Twidale	Vernon Da Gama & Associates
For the defendants	C Archibald KC and V Bell	Mills Oakley

HIS HONOUR:

IntroductionA.        

1. An application made by the plaintiffs, Roma RV Pty Ltd (“Roma”) and Mark William Palmarini (“Palmarini”), in proceeding S ECI 2022 4624 (“the Responsive Proceeding”) effectively seeks to unravel recent events adversely affecting their interests.

1. Roma is in the business of selling new and used caravans, including under the name “Roma Caravans”, and has done so for many years.[1]  Roma also has exclusive rights to sell “Alto” caravans manufactured in Canada and exports caravans and motorhomes to a dealer in Oklahoma, United States of America.  Roma operates out of premises it leases at 1870B Hume Highway, Campbellfield, Victoria (“the Campbellfield Premises”).

   [1]The use of the brand “Roma” to sell caravans started with Palmarini’s grandfather.

1. Palmarini is the sole director of Roma.  As a representative of Roma, Palmarini has been a vice president and independent director of the Recreational Vehicle Manufacturers Association of Australia for over 7 years.

1. In mid-2021, Roma entered into a number of agreements with the first defendant, Mitchcap Pty Ltd (“Mitchcap”).  Those agreements included a “Master Purchase, Bailment and Sale Deed” (“the Bailment Deed”)[2] and a “General Security Agreement” (“the Security Agreement”).[3]

   [2]Palmarini was also a party to the Bailment Deed as a guarantor.

   [3]Further detail in relation to these agreements is set out below: see pars 50, 53 below.

1. Mitchcap is also the plaintiff in proceeding S ECI 2022 4410 (“the Initial Proceeding”).  In the Initial Proceeding, Roma is the first defendant and Palmarini is the seventh defendant.  Mitchcap filed a summons in the Initial Proceeding, which originally was returnable on 31 October 2022.  It was later adjourned for further hearing, to be heard at the same time as Roma’s application in the Responsive Proceeding.

1. Mitchcap operates a business as a distribution and dealer finance vendor, by which it enters into agreements relating to the bailment of goods.  As part of any such arrangement, Mitchcap agrees to certain terms about the location and security of any relevant goods, together with the manner in which any proceeds of sale must be held on trust for Mitchcap.

1. Recently, Mitchcap appointed the second and third defendants in the Responsive Proceeding, Shane Justin Cremin (“Cremin”) and Brent Leigh Morgan (both registered liquidators) (together, “the Receivers”) as receivers and managers of Roma.

1. Discovery RV’s Pty Ltd (“Discovery”) is the second defendant in the Initial Proceeding.  Discovery is a company of which Palmarini’s brother, Brendan Palmarini (“Brendan”), is the sole director.  Discovery is also in the business of manufacturing and selling new and used caravans, and has been in business for “the last several years or so”.  Discovery’s showroom is at premises located in Epping (“the Epping Premises”).

1. Mitchcap’s summons filed in the Initial Proceeding sought access to the Campbellfield Premises and the Epping Premises for itself or its authorised agent for the purpose of seizing certain caravans located at those premises.  Orders were also sought restraining Roma, Discovery and others from interfering with Mitchcap’s right of access.  On 31 October 2022, interim orders were made.[4]

   [4]See par 14 below.

1. Although this summons remains on foot, Mitchcap’s contention was that it has effectively been superseded by recent events.  Thus, Mitchcap submitted the real issues for determination presently concerned the orders sought by Roma and Palmarini.

1. Presently, because of the Receivers’ appointment, neither Roma nor Palmarini has access to the Campbellfield Premises.  By a summons filed on 11 November 2022 in the Responsive Proceeding, Roma and Palmarini seek orders requiring possession of the Campbellfield Premises to be delivered up to Roma, together with any chattels removed from the Campbellfield Premises.  Further, upon such delivery up, restraining orders are sought preventing Mitchcap from re-entering the Campbellfield Premises.  Furthermore, orders are sought allowing Roma unrestricted access to its bank account.

1. Affidavits were filed in both proceedings relating to both current applications.  For evidentiary purposes, the parties made no distinction as to which proceeding each affidavit applied.  Therefore, the evidence relied upon was treated by them as evidence in both proceedings.

1. For the reasons below, it is proposed that orders will be made granting Roma interlocutory relief but only on the condition that payment is made into court for the amount of the principal debt claimed by Mitchcap.

A.1         Recent events

1. The Initial Proceeding was instigated by Mitchcap, by applying without notice for interim relief against Roma.[5]  That application came before Garde J on 31 October 2022.  On that day, his Honour ordered:[6]

   [5]In addition to Roma and Discovery, there were originally 4 other defendants, the detail of which is not necessary to refer to presently.

   [6]No controversy was raised before his Honour about whether or not s 123(1) of the Personal Property Securities Act 2009 (Cth) was a source of power within itself; and no submissions in that regard were made on the current applications.  It is unnecessary to address this issue for the purposes of considering the matters to be determined presently.

1.In this order:

a)“Vans” means the following motor vehicles:

i.“Elegance”, with VIN 6T9T21V86KAAKX021;

ii.“Slide Out”, with VIN 6T9T21V86NAAKX019 (019 Van);

iii.“Miniline, with VIN 6T9T21V86NAAKX024;

iv.“Razorback”, with VIN 6T9T21V86NAAKX029;

v.“Miniline”, with VIN 6T9T21V86NAAKX031;

vi.“Razorback 20 TA Ensuite”, with VIN 6T9T21V86NAAKX045; and

vii.“Miniline 14ST”, with VIN 6T9T21V86NAAKX030.

b)“Campbellfield premises” means the land and building located at 72 Glenbarry Road (also known as 1870 Hume Highway), Campbellfield, VIC 3061; and

c)“Epping premises” means the land and building located at 45 Ricky Way Epping, VIC 3076.

2.The proceeding is to continue as if commenced by writ.

3.[Mitchcap] is to file and serve a statement of claim by 4:00pm on Friday 4 November 2022.

4.Pursuant to s 123(1) of the Personal Property Securities Act 2009 (Cth), [Mitchcap] or its authorised agent is granted entry and access to the Campbellfield premises and the Epping premises for the purpose of seizing the Vans.

5.Until 4:00pm on Tuesday 8 November 2022 or further order, [Roma] and [Discovery], including by its officers, employees, agents or assigns, are restrained from interfering or otherwise impeding [Mitchcap]’s access in paragraph 4 above.

6.[Mitchcap] is to serve the originating motion filed 31 October 2022, the summons filed 31 October 2022, the affidavits of Katrina Foster filed 31 October 2022, [Mitchcap]’s outline of submissions filed 31 October 2022 and a copy of these orders on the defendants:

a)within 24 hours after [Mitchcap] takes possession of the Vans; or

b)by 4:00pm on Friday 4 November 2022, whichever is the earliest.

Other matters

7.[Mitchcap]’s summons filed 31 October 2022 is adjourned to 10:30am on Tuesday 8 November 2022 before the Commercial Court Duty Judge.

8.Costs reserved.

1. In making these orders, Garde J noted in “Other matters” that Mitchcap undertook that it would safely secure and retain possession of the caravans as defined in paragraph 1(a) of the orders (“the Vans”) until further order, as well as giving the usual undertaking as to damages.[7]

   [7]Each of the Vans was the subject of a registered purchase money security interest on the Personal Property Securities Register in favour of Mitchcap: Personal Property Securities Act, ss 14, 147, 150.

1. Further, in being satisfied that such an order was appropriate, his Honour observed that the only order he would contemplate making on Mitchcap’s application at that stage was an order for an interim injunction simply to preserve Mitchcap’s position, and the position of the parties more generally, until the defendants had the opportunity to file affidavits and make submissions.  His Honour also noted at the hearing that he was anticipating that Mitchcap would seize the Vans and look after them for the time being.  This proposition was agreed to by the solicitor appearing on behalf of Mitchcap on that occasion.  Further, in giving a brief ruling, Garde J stated that, in addition to the objects referred to above, his Honour’s orders were intended to reduce the risk that exchanges of abuse, violence, or a breach of the peace might occur.

1. His Honour’s last comments no doubt arose out of evidence before him concerning recent events alleged to have occurred.  As part of this ex parte application, Mitchcap adduced evidence of an attempt to seize the Vans on the morning of 28 October 2022.[8]  According to a written report, Mitchcap’s agent met resistance when the attempt was made.  Further, it was reported that the agent was instructed to leave by Palmarini and, upon refusing to do so, Palmarini became heated and abusive.  Further, those representing the agent were accused of trespassing.  The report recorded that the police were called and that before they arrived Palmarini “became physical … again attempting to force the agent from the [Campbellfield Premises]”.

   [8]It was unclear from Mitchcap’s agent’s report whether the agent entered the Campbellfield Premises at 8.00 am or 8.50 am.

1. In an affidavit prepared for a later hearing, Palmarini acknowledged that he asked the agent’s representatives to leave, but flatly denied any inappropriate behaviour.  On the contrary, broadly speaking, his evidence was to the effect that he was confronted by 3 large men who used intimidating tactics against him and others, 1 of them asking Palmarini whether he wanted to fight him.  (This offer was said to have been declined.)  No party sought to cross-examine the opposing parties’ witnesses concerning these competing accounts (or any other matter).

1. Following the orders made by Garde J, at around 8.30 pm on 31 October 2022, agents appointed by Mitchcap attended the Campbellfield Premises to seize the Vans.  Palmarini was able to attend approximately half an hour later.  According to Palmarini, those who seized the Vans assaulted and intimidated him.  He also complained that damage was caused to the Campbellfield Premises and to 2 vintage caravans located in the showroom.  However, the report provided to Mitchcap stated that Palmarini was abusive to both the agents and the police.  Obviously, as with the conflicting accounts referred to above, on an application such as this with contested contradictory evidence, no concluded view can be formed as to whether there was any inappropriate behaviour.  Mitchcap’s agents also attended at the Epping Premises on the night of 31 October 2022 as contemplated by the court orders.

1. Since 31 October 2022, the Vans have been kept by Mitchcap in a secure location.[9]

   [9]But see further par 24 below.

1. Somewhat unsatisfactorily, Mitchcap failed to file a statement of claim by 4.00 pm on 4 November 2022 (as had been ordered).  This was explained on the basis that, by mistake, Palmarini had not been joined as a defendant when the writ was filed.  Mitchcap considered it more appropriate to have leave to join him as a defendant before formulating the basis upon which the allegations were to be made in the Initial Proceeding.[10]  The only relief sought in this statement of claim was against Palmarini in respect of his obligations as guarantor.

   [10]A statement of claim was not filed until 11 November 2022. 

1. On 8 November 2022, the return of the interim order in the Initial Proceeding came before Connock J as the duty judge.[11]  On that occasion, each of Mitchcap, Roma, Discovery and Palmarini were represented.

   [11]The application was heard on 8 November 2022 and there was also a short hearing on 9 November 2022.

1. On 9 November 2022, Connock J prefaced the court orders by noting a number of matters:

A.      Upon [Roma], through its counsel, undertaking to the Court that [Roma] will procure and cause [Roma]’s solicitors, Vernon Da Gama & Associates, to pay $85,000 into the following bank account by 4:00pm on 9 November 2022:

Account Name: Mills Oakley Lawyers Law Practice Trust Account

Bank: Westpac [Details set out]

Account No: [Details set out]

B.      Upon [Mitchcap], through its solicitor, undertaking to the Court that:

a.       on 10 November 2022, and subject to receipt of the payment of $85,000 in paragraph A above (Payment Receipt), [Mitchcap] shall make available for collection by [Roma] or its authorised agent the caravan with VIN 6T9T21V86KAAKX021 (021 Caravan) from 23 Bate Close, Pakenham, Vic 3810 between 9:00AM and 4:00PM, or such other date and time as is agreed in writing between [Mitchcap] and [Roma]; and

b.      within 24 hours of the Payment Receipt, [Mitchcap] shall take steps to remove from the Personal Property Securities Register its security interest, registration number 202209120008237, in the 021 Caravan.

C.      The court was informed by counsel for [Roma] and the solicitor for [Mitchcap] that it has been agreed between [Roma] and [Mitchcap] that the undertakings referred to in paragraphs A and B above are without prejudice to:

a.       [Roma]’s claim that no event of default occurred within the meaning of the Master Purchase, Bailment and Sale Deed dated 30 June 2021 between [Mitchcap] and [Roma] (Bailment Deed) with respect to the 021 Caravan and its contention that [Mitchcap] was never entitled to the $85,000; and

b.      [Mitchcap]’s claim that [Roma] committed events of default within the meaning of the Bailment Deed in relation to the 021 Caravan.

D.         By letter dated 7 November 2022 sent to Mills Oakley by marshalls+dent+wilmoth lawyers, the Court was informed that third defendant did not intend to take any steps in the proceeding and wished to be removed as a party to the proceeding.

E.          By email dated 7 November 2022 sent to Mills Oakley by K&L Gates, the Court was informed that the fourth defendant did not intend to take any steps in the proceeding on the basis that [Mitchcap] discontinue the proceeding against it.

F.          Counsel for the fifth and sixth defendants announced his appearance for those parties but was excused early in the hearing on 8 November 2022 following without prejudice discussions with the parties to enable a proposed settlement agreement to be drawn between the fifth and sixth defendants and [Roma] and [Discovery]. The court was informed that it was anticipated that the fifth and sixth defendants would no longer wish to take part in the proceeding if the settlement terms were agreed and that in those circumstances none of the parties would oppose an order that the fifth and sixth defendants cease to be a party to the proceeding.

G. This order is signed by the judge pursuant to rule 60.02(1)(b) of the Supreme Court (General Civil Procedure) Rules 2015 (Vic).

1. As may be seen from paragraphs A to C above, the key parties had reached an agreement on how to deal with 1 of the Vans, being a caravan with the vehicle identification number ending in 021 (“Van 21”), but without prejudice to the parties’ respective positions.  Before the hearing of the current applications, $85,000 was paid to Mitchcap and Roma had collected Van 21 from Mitchcap.

1. Relevantly, his Honour also ordered:

…

4.Pursuant to rule 9.06(b) of the Rules, [Palmarini] be added as the seventh defendant to the proceeding and the title of the proceeding be amended to reflect that joinder.

5.The date in paragraph 3 of the orders of Justice Garde made on 31 October 2022 (Orders) (by which [Mitchcap] is to file and serve a statement of claim) is extended from 4 November 2022 to 4:00pm on 10 November 2022.

6.By 5:00pm on 10 November 2022, [Mitchcap] file and serve any further affidavit material in support of its summons filed 31 October 2022.

7.By 5:00pm on 11 November 2022, [Roma], [Discovery] and [Palmarini] file and serve any further affidavit material on which they wish to rely.

1. During the course of the hearing before him, Connock J made a number of observations.  These included that Garde J had only sought to secure the Vans on an interim basis so the question of where they should be located on an interlocutory basis could be addressed when all the parties were before the court and the court was provided with fuller information.  Further, during the hearing the following exchange took place:

His Honour:  The suggestion about some balance of convenience that somebody else sell the [Vans], in the absence of agreement, that’s not something the court could order at this stage of the proceeding, is it?  No final rights have been determined.

Mr Angelakis:[12]  I don’t think that’s right, your Honour.  Look, the one alternative – and I’m mindful of the costs associated with this alternative – is the appointment of a court appointed receiver to sell the [V]ans, but I can see that the costs of that process would be out of proportion to the value of – – –

His Honour:  And that’s also final relief in circumstances where the court appointing a receiver in order to allow the [V]ans to be sold or to have them sold would be on the basis of something occurring prior to the determination of any issues about who still has the rights in the [V]an[s] and this is … an interlocutory stage … But do I understand your position to be that, at least now, that you accept, responsibly in my view, that the orders that were made were made on an interim basis so that, on an interlocutory basis, it could be determined what should happen with the [V]ans. Is that accepted?

Mr Angelakis:  Yes.

His Honour:  And your client’s position is that it wishes to maintain a position that the [V]ans should not be returned to [Roma], subject to some undertakings and, therefore, it will be necessary to have the hearing in relation to that issue.

Mr Angelakis: Those are my instructions …

(Emphasis added.)

[12]Appearing on behalf of Mitchcap.

1. There was no suggestion before Connock J that Mitchcap might exercise its contractual rights to appoint a receiver itself (rather than applying to the court for a court-appointed receiver).

1. On 10 November 2022, at approximately 4.30 pm, Mitchcap appointed the Receivers as receivers and managers of Roma.

1. About half an hour later, a solicitor from Mills Oakley attended Roma’s registered office in Hardware Street, Melbourne, Victoria.  The solicitor delivered a notice of default under the Security Agreement (“the Final Notice of Default”), together with a notice of appointment of receivers and managers with respect to the Receivers.

1. The Final Notice of Default, addressed to both Roma and Palmarini, referred to clause 5.1(a) to (d) of the Security Agreement and clause 19.1(a), (b), (g) and (h) of the Bailment Deed.[13]

   [13]See pars 31-32, 50, 53 below.

1. It was stated that Roma was in default of the Security Agreement as follows:

4.In breach of clause 4.1(g) of the [Security Agreement], [y]ou represented and warranted that [y]ou were the absolute legal owner of the Collateral when this was not the case. This includes, but is not limited to the sale of [Van 21] to Kevin Colling, [y]ou have attempted to create or consented to an encumbrance, interest, or security interest in [Van 21] in favour of Mr Colling.

5.You have failed to pay the Secured Money by its due date for payment (clause 5.1(a)). This includes, but is not limited to:

(a)the breaches referred to in 12 and 13 below;

(b)the failure to pay the Purchase Price in accordance with the Notice of Demand provided to [y]ou on 28 October 2022;[14]

[14]A notice of default had also been issued on 28 October 2022: see par 63 below.

6.You have failed to comply with the obligations under the [Security Agreement] and the Bailor [ie, Mitchcap] considers that the failure cannot be remedied (clause 5.1(a)). This includes, but is not limited to, the failure to pay the Secured Money at the times and in the way specified in the Bailment Deed (clause 3.1(a) of the [Security Agreement]). This includes, but is not limited to, the breaches referred to in 12 and 13 below.

7.An [E]vent of [D]efault has occurred under a Transaction Document (i.e. the Bailment Deed) (clause 5.1(c) of the [Security Agreement]), such breaches which are set out below at paragraph 9.

8.You have taken steps which, in the reasonable opinion of the Bailor, have had the result of adversely affecting the value of the Collateral or have placed the Collateral in jeopardy (clause 5.1(l) of the [Security Agreement]). This includes, but it not limited to:

(a)by reason of the sale of [Van 21] to Kevin Colling, [y]ou have attempted to create or consented to an encumbrance, interest, or security interest in [Van 21] in favour of Mr Colling; and

(b)affixing a new VIN, compliance plate and registration plate to [Van 21] without providing notification to the Bailor, which would impact the security registrations that the Bailor had registered over [Van 21].

1. As is apparent from what is set out above, the Final Notice of Default also stated Roma was in default of the Bailment Deed, which was articulated as follows:

9.You are in default under the terms of the Bailment Deed as follows.

10.In breach of clause 6, [y]ou have failed to store the Goods at the Premises. This includes, but is not limited to [Van 21] being located at [the Mount Evelyn Premises][15] on 29 August 2022.

[15]As defined in par 73 below.

11.In breach of clause 7.2, [y]ou did not immediately notify the Bailor of any offer accepted by [y]ou to on sell the Goods to a customer. This includes, but is not limited to:

(a)the failure to notify the bailor of the sale of [Van 21], such sale which appears to have occurred on a date prior to 19 April 2021; and

(b)the failure to notify the Bailor of the sale of the a (sic) “Razorback 18 SA Ensuite” with VIN 6T9T21 V86NAAKX025 (025 Van), such sale which occurred in or around September and October 2022.

12.In breach of clause 7.3, [y]ou have not paid the Purchase Price outstanding (GST [i]nclusive)[16] to the Bailor as required under clause 7.3 of the Bailment Deed. This includes, but it (sic) not limited to:

[16]That is, goods and services tax.

(a)the failure to pay the Purchase Price of the 025 Van to the Bailor; and

(b)the failure to pay the Purchase Price of [Van 21] to the Bailor.

13.In breach of clause 7.4, [y]ou did not apply the proceeds of sale within 2 Business Days in accordance with the provisions of clause 7.4. This includes, but is not limited to:

(a)failure to pay the proceeds of sale of the 025 Van to the Bailor within 2 Business Days; and

(b)failure to pay the purchase price of [Van 21] to the Bailor within 2 Business Days.

14.In breach of clause 12.1(e), by representing and warranting that the purchase price paid by the Bailor for each item of the Goods represents fair market wholesale value and is not greater than the price for which Roma purchased or could have purchased the Goods. This includes, but is not limited to, by submitting to the Bailor a tax invoice bearing the number “00000770” (019 Tax Invoice), representing that the price of $131,818.18 was the fair market wholesale value of the Van with VIN 6T9T21V86NAAKX019 (019 Van), when the 019 Van has been sold on or around 18 February 2021 for an amount of $84,000.

15.In breach of clause 12.1(d), by representing that and warranting upon purchasing the Goods, the Bailor will have title to and be entitled to the possession of the Goods free from all encumbrances and other interest when that was not the case. This includes, but it (sic) not limited to, you representing to the Bailor that, upon purchasing the O19 Van the Bailor would have title to and be entitled to the possession of the 019 Van free from all encumbrances and other interests, when the 019 Van had previously been sold to the Smiths.

16.In breach of clause 12.1(g), [y]ou failed to keep the Goods at the Premises in an “as new” condition and not relocate or use the vehicles without the written consent of the Bailor. This includes, but it (sic) not limited to:

(a)[Van 21] being located at [the Mount Evelyn Premises] on 29 August 2022;

(b)as at 3 November 2022, [Van 21] containing a number of personal effects in [Van 21] including towels, plates, cups and garbage, such that it was not in an “as new” condition; and

(c)[y]ou affixing a new VIN, compliance place and registration plate to [Van 21] without providing notification to the Bailor.

17.In breach of clause 12.1(i), [y]ou used the Goods for a purpose other than being marketed for resale. This includes, but is not limited to, that as at 3 November 2022, [Van 21] containing a number of personal effects in [Van 21] including towels, plates, cups and garbage, such that it is clear that it was used for a purpose other than marketing.

18.In breach of clause 19.1(a), [y]ou have failed to pay any amount payable pursuant to a Transaction Document (19.1(a)). This includes, but is not limited to, the breaches referred to in 12 and 13 above.

19.In breach of clause 19.1(g), [y]ou have created or attempted to create an encumbrance ranking in priority to or equal to the security interest granted to the Bailor. This includes, but is not limited to, by reason of the sale of [Van 21] to Kevin Colling, [y]ou have attempted to create or consented to an encumbrance, interest, or security interest in [Van 21] in favour of Mr Colling.

1. At 5.15 pm on 10 November 2022, Cremin notified the major banks of his appointment and requested that any bank accounts held by them be frozen.  Details of the accounts were sought.  Westpac Banking Corporation identified 2 accounts held by Roma, 1 with a nil balance and the other with a credit balance of $20,651.68.

1. From 5.47 pm until around 8.00 pm, Cremin attended the Campbellfield Premises together with 2 associates and representatives of Grays Online (“Grays”), which is a firm of valuers and auctioneers.  Cremin provided a summary of his attendance.  In short, the locks to the Campbellfield Premises were changed, 5 “recreational vehicles” and a forklift were removed (which were taken by Grays to a secure location).[17]  Cremin also took possession of 2 laptop computers and approximately 2 boxes of books and records.  By his conduct, Cremin effectively assumed control of the Campbellfield Premises and Roma’s business.

   [17]The recreational vehicles taken were caravans in addition to the Vans (which had already been removed).

1. During his attendance, the police were contacted.  Further, he was informed by a Roma employee that an urgent application had been made by Roma to the Supreme Court of Victoria.  Cremin made a number of telephone calls to a partner at Mills Oakley, solicitors for Mitchcap who were also the solicitors acting for the Receivers.  Mills Oakley informed him that it was unaware of any such application.[18]  At some stage, Cremin was handed a telephone by the police who told him that Palmarini’s solicitors were on the telephone.  Cremin’s evidence was that when he told Palmarini’s solicitor who he was, the solicitor hung up.  At around 7.14 pm, Palmarini arrived at the Campbellfield Premises and a number exchanges took place between him, the police, representatives of Grays and Cremin.

   [18]Various attempts were made by a partner of Mills Oakley to contact Roma’s solicitor.  The calls were either not answered or promptly terminated upon the partner stating that Mills Oakley acted for the Receivers.

1. Meanwhile, without notice to Mitchcap, Roma made an application to Connock J for orders in essence preventing Mitchcap and the Receivers on an interim basis from dealing with Roma’s property any further.

1. Late in the evening on 10 November 2022, in addition to accepting the usual undertaking as to damages and an undertaking by Roma and Palmarini to commence a proceeding by writ, Connock J made the following orders in the Responsive Proceeding:

1.Until 5:00pm on 14 November 2022, or further order, [Mitchcap and the Receivers], whether by their servants, agents or howsoever otherwise, be restrained from:

(a)transferring, selling, assigning, using, or removing any property, assets, information, or other material from [Roma]’s business premises, being the land and building at 72 Glenbarry Road (also known as 1870 Hume Highway), Campbellfield VIC 3061 (the Campbellfield Premises);

(b)transferring, selling, assigning, using or otherwise dealing with any property, assets, information, or other material that has been obtained or removed from the Campbellfield Premises by or on behalf of one or more of [Mitchcap and the Receivers] on or after 10 November 2022.

2.By 4:00pm on 11 November 2022, [Roma and Palmarini] shall:

(a)file a generally indorsed writ naming:

(i)[Roma] and [Palmarini] as plaintiffs; and

(ii)[Mitchcap and the Receivers] as defendants; and

(b)file a summons seeking interlocutory relief, made returnable at 10:00am on 14 November 2022 before Justice Connock, and an affidavit in support of that application.

3.[Roma and Palmarini] shall serve the documents referred to in paragraph 2 as soon as possible but in any event no later than 2:00pm on 12 November 2022, including by email to the lawyers acting for [Mitchcap] in proceeding S ECI 2022 04410, being Mills Oakley (attn: Nik Angelakis).

4.Costs are reserved.

5.There is liberty to apply.

1. At approximately 10.00 pm, Cremin received a telephone call from Mills Oakley in which he was told that a court order might be made which could impact the conduct of the receivership.  At 10.23 pm, Mills Oakley received an email attaching a copy of Connock J’s authenticated orders made earlier that evening.[19]

   [19]On the hearing of the current applications, there were some exchanges at the bar table about whether or not Mitchcap had notice of the application made before Connock J on 10 November 2022.  At 9.10 pm on 10 November 2022, Mills Oakley had received an email from Roma’s solicitor advising that an urgent application had been made to the Supreme Court of Victoria returnable that evening.  The email stated that, by the time the solicitors had been informed that Mills Oakley was acting for the Receivers, the court action had already commenced.  The email stated that the solicitor was “quite happy to forward to you the Zoom link should you wish to appear at Court.  A copy of the orders will be forwarded to you as soon as it (sic) is received.”  In any event, no timely proper notice of the application was given and it was common ground that Mitchcap and the Receivers were not given any real opportunity to be heard on that application.

1. At 9.30 am on 11 November 2022, Cremin received an email from Mills Oakley attaching a copy of the orders made the previous evening.  Cremin immediately ceased taking steps in relation to the property obtained at the Campbellfield Premises, including the books and records.  However, Cremin did take further steps such as notifying the Australian Taxation Office of his appointment and obtaining access to Roma’s tax status.[20]

   [20]Cremin was informed that no debt was outstanding to the Australian Taxation Office, but income tax returns had not been filed for the financial years ending 30 June 2021 and 30 June 2022.

1. Cremin also received some information about other creditors of Roma, including Scottish Pacific Trade Ltd (“Scottish Pacific”).  Scottish Pacific has a number of registrations against Roma on the Personal Property Securities Register.  Further, in a telephone discussion with Scottish Pacific’s national manager, Cremin was informed that Scottish Pacific was owed approximately $300,000 in respect of a trade finance facility.  Cremin was told that there was a breach of that facility as an invoice of $84,201.60 was overdue.  Details were sent to Cremin, which included reference to an invoice said to be due and owing on 12 October 2022 for this amount.  The further detail included reference to debts of $163,116.80 due on 16 December 2022 and $54,737.76 due on 9 February 2023.

1. At the hearing on 14 November 2022, Roma’s senior counsel properly acknowledged that on the evidence then before the court there could be no dispute that at the time the Final Notice of Default was served, Roma was in default of its obligations under the Security Agreement.  However, an adjournment was sought in light of the fact that the evidence relating to Scottish Pacific had only been served late the night before (being Sunday night).  Mitchcap and the Receivers’ senior counsel did not resist a short adjournment being granted given the lateness of the service of this further evidence.  The applications were adjourned part-heard on 14 November 2022 to 10.00 am on 16 November 2022, with directions for the filing and service of further affidavits on the issue of whether Roma was indebted to Scottish Pacific.

1. Late on 14 November 2022, Palmarini swore a further affidavit, stating that in May 2022 he entered into a business finance arrangement with Scottish Pacific with an approved limit of $300,000.  He gave evidence of his “understanding” that an invoice issued by Scottish Pacific dated 14 June 2022 was required to be paid in the sum of $78,563.10 by 12 October 2022 or alternatively could be paid 30 days after that time if the amount of $84,201.60 was paid by 11 November 2022.  On the basis of this understanding, he denied any allegation that Roma was in breach of its obligations owed to Scottish Pacific as at 10 November 2022.[21]

   [21]Evidence of Palmarini’s understanding was adduced subject to a limitation (pursuant to s 136 of the Evidence Act 2008 (Vic)) that the evidence was of his state of mind and not evidence of the fact of whether or not the debt was due and owing. Palmarini’s awareness of the position was relevant to whether there had been a breach of cl 3.1(b) of the Security Agreement: see par 53 below.

1. Further, he referred to a telephone discussion held at 3.40 pm on 14 November 2022 and deposed that during this call Scottish Pacific’s “specialised sales manager” agreed that Roma could be given a further grace period until 18 November 2022 to pay the sum of $84,201.60.  As at the time of swearing this affidavit, he gave evidence that Roma had paid $63,202 towards this amount and intended to pay a further $20,999.60 on 15 November 2022.

1. Furthermore, Palmarini swore that no formal demand or notice of default had been issued to Roma by Scottish Pacific.

1. On 15 November 2022, Palmarini filed yet another affidavit in which he swore that Roma had paid “the balance sum” of $21,000 to Scottish Pacific.

1. Also on 15 November 2022, Cremin filed a further affidavit dealing with Roma’s current trading position with Scottish Pacific.  That affidavit exhibited a document titled “Sale Transaction Agreement Buyer” executed by Palmarini on behalf of Roma on 12 May 2022 (“the Scottish Pacific Agreement”).  The recitals referred to an agreement having been made by the “Buyer” to purchase goods from Scottish Pacific on the conditions set out in the Scottish Pacific Agreement.

1. Cremin deposed that he spoke on Microsoft Teams with the national manager, the general manager of specialised finance, the general manager and the specialised sales manager of Scottish Pacific at 9.30 am on 15 November 2022.  He produced a file note of that meeting.  Amongst other things, Scottish Pacific confirmed that the invoice in the amount of $84,201.60 fell due for payment on 12 October 2022 and remained overdue.[22]  Cremin was also told that Scottish Pacific’s specialised sales manager was employed to perform a designated sales position and was not authorised to make an agreement with Roma on Scottish Pacific’s behalf.  Further, the specialised sales manager’s account of the conversation with Palmarini on 14 November 2022 was that Palmarini stated he had spoken previously with another employee of Scottish Pacific (of which the specialised sales manager not aware).  He informed Cremin that Palmarini was told it was expected that the invoice would be paid off as soon as possible and that it was unlikely Scottish Pacific would take action if the debt was paid soon.  He told Cremin that he did not advise Palmarini that he was personally granting a grace period.  He also said that at the time of this conversation he did not realise that Roma was in receivership.

   [22]For completeness, Scottish Pacific indicated that the invoice would have been satisfied by paying the lesser amount if it had been paid on 12 October 2022: see par 42 above.

1. It is unnecessary to set out further what was discussed by Cremin with Scottish Pacific or the terms of the Scottish Pacific Agreement in any detail.  It was accepted by senior counsel for Roma and Palmarini that, despite any understanding of Palmarini to the contrary, the evidence established that Roma was indebted to Scottish Pacific as at and from 12 October 2022 until the payment of $21,000 made on Wednesday 16 November 2022 extinguished the remainder of the total debt of $84,201.60.

A.2         Further background

1. The Bailment Deed provided that Roma, as bailee, might request Mitchcap, as bailor, purchase goods and then place those goods on bailment with Roma for on-sale to Roma’s customers.  If such a request were made, Mitchcap was able to accept the request on the terms set out the Bailment Deed.

1. The Bailment Deed referred to various “Transaction Documents”, including the Security Agreement.  The Bailment Deed included the following terms:

3.Request to Purchase and Bailment Terms

3.1.A request for the Bailor to acquire Goods and place those Goods on bailment with the Bailee will be deemed to have been made by the Bailee on receipt by the Bailor from the party who holds legal title to those Goods (including where that party is the Bailee or a third party financier of the Goods) a lawful tax invoice for the supply of the Goods to the Bailor providing full particulars of those Goods including the correct serial numbers of Goods (“Request”). The Bailee must deliver the Request to the Bailor together with all documentary evidence necessary for proving title to the Goods to the reasonable satisfaction of the Bailor.

3.2.The Bailor is only required to consider a Request from the Bailee if:

(a)the Goods are of a type set out in the Term Sheet;

(b)the Goods are free of any security interest other than a Permitted Security Interest;

(c)if payable, the Purchase Advance has been received by the Bailor;

(d)the Bailment Limit as set out in the Term Sheet will not be exceeded; and

(e)all Guarantees, Bank Guarantees, any security interest over any of the Bailee’s assets or the Goods to which the Bailor has expressly consented to in writing or by way of this Deed or other condition precedent set out in the Term Sheet are satisfied.

…

5.Title of Goods & PPSA security

5.1.The Bailee must ensure and warrants to the Bailor that on its purchase of the Goods the Bailor will be the sole and absolute owner of the Goods the subject of a Request and that the Goods are free of any charge, encumbrance or security interest other than a Permitted Security Interest. The Bailee further warrants that with each Request that it is not aware of any adverse interest or dispute of any kind in relation to the Goods.

5.2.On the Bailor’s acceptance of a Request the Bailee acknowledges and warrants the transfer of full legal and beneficial title and interest in the Goods to the Bailor.

5.3.The Bailee acknowledges and warrants that full legal and beneficial title and interest in the Goods remains with the Bailor until the Bailee has paid all monies and discharged all obligations in respect of the bailment in accordance with this Deed.

5.4.As security for the Bailee’s obligations under this Deed the Bailee grants the Bailor a security interest in the in the (sic) Goods being a Purchase Money Security Interest as that term is defined in section 14 of the PPSA.

5.5.The Bailee consents to the Bailor affecting registration of the security interest on the Personal Property Security Register (sic) “PPSR”. The Bailee must do all things necessary to assist the Bailor and the Bailee must do anything the Bailor requests the Bailee to do to perfect the security interest granted (or deemed to be granted) pursuant to this Deed.

…

5.7.The Bailee must sign documents or do all things necessary to perfect the rights of the Bailor under this Deed and hereby irrevocably appoints the Bailor as its agent and attorney from the date of this document, in the name of Bailee and on its behalf, do anything necessary or desirable in the opinion of the Bailor including to:

(a)give full effect to this Deed;

(b)better secure the Goods to the Bailor in a manner consistent with this this Deed;

(c)sign any document or do anything that may reasonably be required to enforce the rights of the Bailor on default.

6.Undertakings in respect of the Goods

6.1.The Bailee must store the Goods at the Premises set out in the Term Sheet or as otherwise agreed by the parties in writing.

…

7.Marketing and Sale

…

7.2.The Bailee must immediately notify the Bailor of any offer accepted by the Bailee to on sell the Goods to one of its customers.

7.3.Upon sale of the Goods by the Bailee to its customer and receipt of the proceeds of safe, the Bailee will hold the whole of the proceeds of that sale on trust for the Bailor for payment of the Bailment Fees as defined below and as set out in the Term Sheet and must immediately transfer to the Bailor the whole of those proceeds subject to the further provisions below.

7.4.Within 2 Business Days of receipt of the proceeds of sale the Bailor must apply those proceeds towards full payment of the Bailment Fees comprising: the Purchase Price (being the price paid by the Bailor on accepting the Request); any balance outstanding of the Arrangement Fee as specified in the Term Sheet; any Fees, costs or other amounts the Bailee is obliged to pay under this Deed and any Default Penalty Fees payable in accordance with this Deed and at the rate set out in the Term Sheet (collectively the “Bailment Fees”).

…

7.6.Within 2 Business Days of receipt of the proceeds of sale the Bailor must account to the Bailee for any remaining balance of proceeds of the on-sale of the Goods.

7.7.In the event of any shortfall in payment of the Bailment Fees the Bailee must pay the balance of the shortfall within 2 Business Days after the date of the on sale of the Goods.

…

9.Access to Goods

9.1.The Bailee will ensure the Bailor and its agents have access to the Goods without prior notice being given to perform stock checks.

9.2.The Bailee will provide any assistance reasonably required to ensure the Bailor can complete stock checks on the Goods as it sees fit.

…

19.Event of Default

19.1.Each of the following is an event of default “Event of Default” when either the Bailee or any Guarantor:

(a)fails to pay any amount payable to the Bailor pursuant to a Transaction Document; or

(b)makes any representation or warranty in a Transaction Document that is incorrect or misleading in any way; or

…

(g)consents to, creates or attempts to create any encumbrance ranking in priority to or of equal ranking to any security interest granted to the Bailor without the Bailor’s prior written consent; or

(h)fails to comply with any term of a Transaction Document; or

…

19.2.If the Bailor declares that an Event of Default has occurred:[23]

(a)all amounts due and payable by the Bailee to the Bailor pursuant to the terms of a Transaction Document will become immediately due and payable notwithstanding the Bailment Term;

(b)the Bailee irrevocably permits the Bailor or any person authorised by the Bailor in writing upon reasonable notice, to enter the premises of the Bailee or the premises where the Goods are reasonably believed to be held and to inspect, repair, maintain, repossess, remove or carry away the Goods.

(c)the Bailor shall be at liberty, without notice to the Bailee, at the Bailee’s risk and cost, to sell and retain all proceeds from that sale, dispose of, deal with or refuse to deal with the Goods without prejudice to its rights or to bring proceedings against the Bailee; and

(d)this Deed will be terminated but without prejudice to the provisions of subparagraphs (a) to (c) above, which will continue to apply until the Bailor confirms in writing that all amounts due to the Bailor have been received in full.

[23]On 28 October 2022, Mitchcap declared an Event of Default had occurred.  This was relied upon as part of the evidence before each of Garde J, Connock J and me.

1. The Bailment Deed also included a large number of representations and warranties made by Roma, the detail of which is not necessary to set out.

1. Schedule 1 to the Bailment Deed consisted of a term sheet, which identified the “Goods” the subject of the arrangement as new and used caravans.  It also provided that the purchase price may not exceed the arm’s-length wholesale price of the Goods (less any provisions for obsolescence less any rebates or discounts received or available).  The term sheet specified the guarantors as Palmarini and Roma, who respectively were required to enter into a personal guarantee and the Security Agreement.

1. The Security Agreement was entered into by Roma as “Grantor”, Palmarini as “Guarantor”, and Mitchcap as “the Secured Party”, and included the following terms.

1    Definitions and interpretation

Definitions

1.2.In this deed the following definitions apply:

…

Collateral means all the present and after acquired assets and undertaking of the Grantor wherever situated, including each of the following:

(a)All present and after-acquired property of the Grantor.

(b)All present and after-acquired estates and interests in land in which the Grantor has an interest.

(c)All present and after-acquired rights, assets and undertaking of the Grantor in any PPSA retention of title property.

(d)Anything in respect of which the Grantor has, at any time, a sufficient right, interest or power to grant a security interest.

(e)The Grantor’s right of indemnity from the assets of any Trust together with all the assets, undertaking and property that are subject to any Trust including in respect of which the Grantor as trustee of any Trust has at any time a sufficient right, interest or power to grant a security interest.

…

Event of Default means any of the events specified in clause 5.1.

…

Obligations includes the obligations, now or at any time in the future, of the Grantor or the Guarantor (whether by itself or jointly with others) to the Secured Party, including without limitation obligations under any Transaction Document.

…

Receiver means a receiver or receiver and manager appointed under a Security.

…

Secured Money means all money and amounts that the Grantor is or may become liable at any time (actually, prospectively or contingently, whether alone or not and in any capacity) to pay to the Secured Party or a related body corporate (within the meaning of the Corporations Act 2001 (Cth)) on any account or in any way whatever including without limitation moneys owing under or in connection with any Transaction Document. It includes:

(a)amounts in the nature of principal, interest, fees, costs, charges, expenses (whether considered reasonable or unreasonable), duties, indemnities, Guarantee obligations or damages; and

(b)money and amounts which a person would be liable to pay but for that person’s insolvency.

…

Transaction Document means:

(a)this deed;

(b)any Head of Terms entered into between a Transaction Party and the Secured Party;

(c)any Master Purchase, Bailment and Sale Deed (or like agreement) entered into between a Transaction Party and the Secured Party;

(d)any Guarantee and Indemnity entered into between a Transaction Party and the Secured Party;

(e)each Security;

(f)each document which forms part of a document referred to in paragraphs (a) - (e) (inclusive) above;

(g)each document that a Transaction Party and the Secured Party agrees is a Transaction Document; and

(h)each document entered into or given under or in connection with, or for the purpose of amending or novating, any document referred to in a paragraph above.

Transaction Party means:

(a)each Grantor;

(b)the Borrower;

(c)the Guarantor; and

(d)each person who has provided a Security (if any).

…

2    Grant of Security

Grant of Security

2.1The Grantor grants a security interest in the Collateral to the Secured Party to secure payment of the Secured Money and for performance of the Obligations under each Transaction Document to which it is a party.

…

3    General Undertakings

3.1.The Grantor undertakes with the Secured Party that it will:

(a)Secured Money: punctually comply with its Obligations and pay the Secured Money (free from any deduction, set-off or counterclaim) to or as directed by the Secured Party:

(i)at the times and in the way specified in the Transaction Documents; and

(ii)otherwise, immediately on demand;

(b)No Event of Default: ensure that no Event of Default or Potential Event of Default occurs and, if they do occur, the Grantor must ensure that they do not continue and must give notice to the Secured Party as soon as it becomes aware of any Event of Default or Potential Event of Default;

…

4    Representations and warranties

4.1.The Grantor represents and warrants to the Secured Party that:

…

(g)Title: it is the absolute legal owner of the Collateral other than any PPSA retention of title property and except for any part of the Collateral which it holds as trustee of a Trust described in Item 3 of the Schedule, it does not hold any of that property on trust;

…

5    Default

Events which constitute an Event of Default

5.1.An Event of Default occurs (whether it is within the Grantor’s control or not and without the necessity for any demand or notice from the Secured Party) if:

(a)Failure to pay: the Grantor does not pay the Secured Money by its due date for payment;

(b)Breach of Obligations: any Obligation under this deed is not observed by the Grantor (except an obligation to pay the Secured Money on time) and the Secured Party considers:

(i)that the failure cannot be remedied; or

(ii)that the failure can be remedied, but is not remedied by the Grantor within seven days after notice is provided by the Secured Party requiring the failure to be remedied;

(c)Transaction Document: a Transaction Document is terminated or an event of default (howsoever described) specified in a Transaction Document (other than this deed) occurs;

(d)Misrepresentation: any representation or warranty made by the Grantor or a Guarantor in any Transaction Document is not true or is misleading or is incorrect in any material respect;

…

(k)Cross Default: an amount exceeding A$10,000 in aggregate that has been provided to a Transaction Party by way of credit or financial accommodation:

(i)becomes due and payable or capable of being declared due and payable before its stated maturity, expiry or repayment date (other than at the option of the Transaction Party); or

(ii)is not paid when due or within any applicable grace period.

(l)Value of Collateral: the Grantor or the Guarantor does, fails to do or permits the doing of any act with the result that, in the reasonable opinion of the Secured Party, the value of the Collateral is adversely affected or is placed in jeopardy;

…

Consequences if an Event of Default occurs

5.3.Immediately upon the happening of any Event of Default:

(a)this deed becomes enforceable without demand or notice;

(b)the Secured Money becomes immediately due and payable and the Secured Party may demand immediate payment by the Grantor of the Secured Money which includes any money contingently owing to the Secured Party by the Grantor;

…

7    The appointment and powers of a Receiver

To appoint Receivers

7.1.After an Event of Default, the Secured Party may do any one or more of the following:

(a)appoint one or more persons to be a Receiver of all or any of the Collateral, with the powers and rights described in this clause 7;

(b)remove any Receiver; and

(c)appoint another Receiver to replace or in addition to a Receiver.

To appoint more than one Receiver

7.2.If the Secured Party appoints two or more persons to be Receivers, the Secured Party may appoint them to act jointly, severally or jointly and severally. If it is not specified in the instrument of appointment, the Receivers are appointed to act severally.

1. The Security Agreement also set out (in clause 7.5) extensive powers of any receivers appointed, providing that such powers would be in addition to any power conferred by law. 

1. In short, the Security Agreement granted Mitchcap a registrable security interest over the Vans.  Roma undertook to punctually repay any money owing under the Transaction Documents and represented that it was the absolute legal owner of the Vans.  It also undertook not to default under the Security Agreement, whether by failing to make any payment required, breaching any other obligations, terminating any documents forming part of the overall transaction or making a misleading or incorrect representation to Mitchcap.  Notably, in an Event of Default, all moneys owing by Roma were to become immediately due and payable and Mitchcap would be entitled to appoint 1 or more receivers. 

A.3         Earlier notices to Roma, including notices of default

1. Since mid-2021, Roma has used the facility provided under the Bailment Deed to finance numerous caravans.  For the purposes of these applications, it is necessary to focus primarily upon 3 of them.  But before doing so, it is instructive to refer to some notices sent by Mitchcap to Roma.

1. As part of Mitchcap’s risk mitigation strategy, from time to time it conducts audits of bailees to ensure that the goods the subject of any bailment agreement are in the location and condition required.

1. On or around 24 March 2022, Mitchcap was informed by its agent that Palmarini had refused to allow the agent to enter the Campbellfield Premises to audit the caravans bailed to Roma.  According to a report provided by the agent, after Palmarini was told the agent intended to conduct an audit, Palmarini firmly asked him to leave and stated that he had more important things to do.[24]  Palmarini was also alleged to have stated that it was necessary to make an appointment.  In response to a suggestion by the agent that audits were to be conducted unannounced, it was reported that Palmarini responded by stating that the agent was not coming onto the Campbellfield Premises and that if “Mitchcap don’t care about my business, I don’t care”.  The audit report continued:

The auditor left the [Campbellfield Premises] and called me.

This audit is done fortnightly and when we were there two (2) weeks ago it was mid-afternoon Friday and the other owner/partner didn’t have a problem with us being there.

Audit for today is being sent back unfinished.  I will need to get another auditor to attend as the auditor in question will not be keen to go back.

[24]It is unnecessary to refer to what was allegedly said.

1. As a result of these alleged events, Mitchcap issued a formal warning letter to Palmarini indicating that Mitchcap would provide no further funding if there were any further issues.

1. It would appear that after the warning letter, audits were able to continue without any real issues.

1. As a result of the audit in the first week of October 2022, on 13 October 2022 Mitchcap issued a notice of default (in circumstances discussed in more detail below).[25]  Relevantly for present purposes, this notice stated that it constituted a notice of Mitchcap’s requirement that Roma fully comply with the terms of the Bailment Deed.  It also stated that Mitchcap had not waived and was not waving the breach or any Event of Default which might occur after the notice; and did not agree to forbear in relation to any rights or remedies concerning any breaches or Events of Default.  The notice also informed Roma in the event an Event of Default was not remedied, Mitchcap could at its sole and absolute discretion enforce its rights under the Bailment Deed or the “Securities”[26] in accordance with their terms.

   [25]See pars 85-86 below.

   [26]This was defined to include the Security Agreement.

1. There were conflicting accounts as to the status of this notice.  Mitchcap stated it had not communicated to Roma whether it considered the default referred to in the notice to be resolved.  Palmarini gave evidence that the notice “came to be subsequently withdrawn by reason of” a further arrangement.[27]

   [27]See pars 85-86 below.

1. On 28 October 2022 at 8.49 am,[28] Mitchcap served a further notice of default upon Roma.  This document was headed “Notice of demand under the [Bailment Deed]” and also referred to the Security Agreement.  This noticed commenced with:

You have failed to comply with the terms of the Bailment Deed in that you have sold Goods and have not paid the Purchase Price outstanding (GST inclusive) to the Bailor [ie, Mitchcap] as required under clause 7.3 of the Bailment Deed.  Accordingly the terms of the Bailment Deed have not been complied with.  Under the terms of the Bailment Deed failure to pay any amount payable to the Bailor pursuant to a Transaction Document is an Event of Default (clause 19.1(a)).  The breach by you is an Event of Default under the Bailment Deed.

It was then recorded that as a result “all amounts due and payable” by Roma were immediately due and payable.  The notice contained similar wording regarding waiver and forbearance to the 13 October 2022 notice.[29]  However, rather than referring to a purchase price with respect to the caravan expressly the subject of the notice, demand was made for the purchase price of all the Vans, being the “Purchase Price outstanding of $615,500.01” plus fees of $8,285.75, by 12 noon that day, with payment to occur by electronic transfer.  The notice also informed Roma that legal proceedings might be commenced.

[28]The attempt to take possession of the Vans might have commenced prior to the service of the further notice of default: see par 17 above.  The agent appointed by Mitchcap had arrived at the Campbellfield Premises at 8.00 am.  However, it is unclear from the evidence whether the agent entered the premises for the purpose of taking possession of the Vans upon arrival at 8.00 am or later, at 8.50 am.

[29]See par 61 above.

1. Following the 28 October 2022 notice, a considerable amount of correspondence and discussions ensued between Roma and Mitchcap.  In summary, Roma denied any breach, asked for details of evidence being relied upon, and identified the harm that it claimed Mitchcap was causing Roma.

1. As already set out, the next formal notice sent to Roma was the Final Notice of Default.[30]

   [30]See pars 30-32 above.

A.4         Van 19

1. On 7 October 2022, Mitchcap received a letter from lawyers acting on behalf of the fifth and sixth defendants in the Initial Proceeding, Christine Smith and Leigh Smith (“the Smiths”).  Mitchcap was informed that the Smiths placed an order with Discovery for a caravan with a vehicle identification number 6T9T21V86NAAKX019 (“Van 19”).  Although the order had been placed with Discovery, the Smiths stated that they had viewed Van 19 in Roma’s showrooms.  Further, it was stated that the Smiths had agreed to pay $84,000, of which $58,400 had already been paid by way of initial deposit and progress payments.  Mitchcap was informed that despite the Smiths’ considerable efforts, Discovery was yet to provide them with a collection date.  The Smiths’ lawyers expressed concern about Mitchcap’s security interest registered in relation to Van 19.

1. As a result of further investigations carried out by Mitchcap, concern was expressed about whether a fraud had been committed, or at least whether a breach by Roma of the Bailment Deed had occurred.  Without traversing all the relevant evidence, these concerns arose out of the fact that in April 2022 Roma supplied an invoice for Van 19 to Mitchcap in the amount of $131,818.18, which invoice had previously been remitted by Discovery to Roma.[31]  Based on this invoice, Mitchcap had paid this amount to Roma.  Mitchcap adduced evidence that it had not been informed of any sale of Van 19, and that Roma had not accounted to Mitchcap for the sum of $58,400 alleged to have been paid by the Smiths.

   [31]Curiously, this invoice issued by Discovery referred to “Customer-Smith”, but Palmarini swore that this was a mistake and should have read “Customer: Stock”.

1. When these matters were raised with Palmarini, he denied that Roma had any contract with the Smiths and said he did not know them.  He further stated that a fraud had been perpetrated by a Discovery employee with respect to Van 19.  Palmarini suggested that this employee had been purporting to sell vehicles not owned by Discovery and keeping the deposits paid.  According to Mitchcap’s evidence, Palmarini estimated that losses associated with this conduct were in the order of $2.5 to $3 million.

1. Brendan has sworn an affidavit which corroborated the position adopted by Palmarini insofar as he swore that Discovery has no claims, title, security or interest in Van 19 (as well as other caravans in issue).  Brendan also gave evidence that he sold Van 19 to Roma in April 2022 for $145,000.  Further, contrary to what was asserted by the Smiths, Brendan gave evidence that in February 2021 they inspected Van 19 at the Epping Premises and not the Campbellfield Premises.  However, rather than alleging a fraud had been committed, Brendan swore that Van 19 had been sold to the Smiths by Discovery and Discovery had received the sum of $58,400 in part payment.  He also gave evidence that the Smiths had requested various upgrades that increased the cost of Van 19 to $145,000, which the Smiths had refused to pay.  Thus, Discovery’s position was that in April 2022 it made a commercial decision to terminate its arrangements with the Smiths and sell Van 19 to Roma “being the base costs of [Van 19] of $84,000 together with the costs of upgrades”.  Brendan swore that Discovery was willing to account to the Smiths for the amount of $58,400.

1. In addition to Van 19, Brendan’s evidence was that he had sold 6 further brand-new caravans to Roma over which Discovery makes no claim.

1. For completeness, on the question of the alleged fraud by Discovery’s employee, Brendan deposed that in September 2022 he told Palmarini of the fraudulent conduct.  Brendan said the matter was reported to the police.  He swore that the allegations had nothing to do with him and were not related to Van 19 (or Van 21).[32]

   [32]In giving this evidence, Brendan also referred to the other Vans the subject of evidence in these applications.  As to Palmarini’s assertions that the Discovery employee’s fraudulent conduct was connected to Van 19, Palmarini later swore that he had been under a mistaken impression at the time and was subsequently told that this was not the case.

A.5         Van 21

1. There was a considerable body of evidence concerning Van 21.

1. On 21 January 2022, Mitchcap provided finance of $85,000 to Roma referable to Van 21.  As result of an audit conducted on 29 August 2022, Mitchcap says it was informed that Van 21 was not at the Campbellfield Premises, but rather was located at a residential address in Mount Evelyn (“the Mount Evelyn Premises”).[33]  The explanation that was said to have been given as part of the audit process was that Van 21 had an electrical fault which could be confirmed by “Kevin”.  It was further noted that Van 21 was expected to be back “at Epping” (that is, the Epping Premises) by the weekend.  Mitchcap had not consented to the relocation of Van 21.  By the time of the next audit report, Van 21 was located at the Epping Premises.  At this time, Mitchcap decided not to make further enquiries concerning Van 21.

   [33]Being the residential address of Kevin Colling: see par 80 below.

1. Having more recently considered some evidence put forward by Palmarini as part of the current dispute, Mitchcap decided to make enquiries of “Kevin”.  Kevin Colling (“Colling”) agreed to speak with Mitchcap on a number of occasions.  The details of several conversations were before the court.  They culminated in Colling writing to Mitchcap and Mills Oakley on 9 November 2022, complaining about persistent harassment from them and asking not to be contacted further.

1. Two days later Colling swore an affidavit which was filed by Roma and Palmarini.  In that affidavit, Colling deposed that Van 21 was scheduled for delivery to him by Roma on or about 2 November 2022.  However, he explained he did not receive delivery at that time because he was made aware of matters the subject of the Initial Proceeding.

1. Colling gave an account of his dealings with Palmarini commencing in mid-2020,[34] at which time he inspected a caravan (not being Van 21) in Roma’s showroom at the Campbellfield Premises.  He initially paid a deposit for that caravan of $1,000, based on the purchase price of $68,000.  In later discussions with Palmarini, he agreed to some upgrades which increased the price to $73,200.  For the period from 19 February 2021 to 29 April 2021, Colling paid 5 instalments totalling a further $60,400.

   [34]Of course, at this time neither the Bailment Deed nor the Security Agreement were on foot.

1. In January 2022, Colling visited the Campbellfield Premises and spoke with Palmarini.  As a result of those discussions, Palmarini said he would agree to upgrade Colling’s purchase by forgoing his purchase of the existing caravan and agreeing to sell Van 21 for the total price of $85,000.  Colling did not accept the offer at that time, though it appears it was left open by Roma.  Also in January 2022, Colling made a further payment with respect to the existing caravan.

1. According to Colling, it was not until “late September or early October 2022” that he decided to purchase Van 21 and informed Palmarini accordingly.  Colling then made further instalments to complete full payment of the purchase price.  Despite this,[35] Mitchcap was not informed of the sale of Van 21 until late October 2022.  On 28 October 2022, Mitchcap made enquiries about the vehicle identification number of Van 21.[36]  In response, Mitchcap’s evidence was that Palmarini told Mitchcap for the first time that Van 21 had been sold and it was not until 8 November 2022 that Mitchcap was told Colling was the purchaser.  Roma paid the proceeds of that sale to Mitchcap on 10 November 2022.

   [35]See Bailment Deed, cl 7.2: par 50 above.

   [36]See fnn 37-38 below.

1. Palmarini’s account of this conversation included that he told Mitchcap that all Roma’s caravans were at the Campbellfield Premises except for Van 21, which had been sent to Discovery’s workshop at the Epping Premises for repairs prior to delivery scheduled to occur on 2 November 2022.  Palmarini deposed that he also said he “would seek to repay” Mitchcap the purchase price for Van 21 within 2 business days of 2 November 2022.  Palmarini also swore that Mitchcap was aware of the sale “as far back as at early October 2022”.  The basis of this assertion was not clear, but the evidence confirmed the sale had occurred by at least early October 2022.[37]

   [37]For completeness, Palmarini responded with a general denial to the allegation that Roma did not immediately notify Mitchcap of any offer accepted by Roma to on-sell Goods the subject of the Bailment Deed.  This evidence was given in the context of disputing that Van 21 was sold in April 2021.  Not only did Palmarini not directly address the issues arising as a result of the events in October 2022, but the general denial can be afforded little weight in light of the facts that are not in dispute on these applications.

1. As to the alleged presence of Van 21 at the Mount Evelyn Premises, Colling explained Van 21 had not been delivered to him.  He swore that a totally different caravan (but of the same make) had been delivered to his residence for the sole purpose of him checking the height of the caravan to ensure it would fit in his garage.

1. Brendan also gave evidence about Van 21, stating it had been sold by Discovery to Roma “in or about the year 2021”.  He also stated that in early October 2022 Discovery was informed that Van 21 had a potential buyer and that there were issues relating to its lighting system which required repair under product warranty.  As a result of this, Brendan deposed that Van 21 was delivered to the Epping Premises for warranty repairs.

1. Brendan referred to a request on 14 October 2022 for him to address correspondence concerning Van 21 to Mitchcap jointly with Roma.  Pursuant to this request, he confirmed that Van 21 would remain at the Epping Premises until such time that the repairs to Van 21 were completed; and still further upon completion until Roma had notified Mitchcap of its intention to transport Van 21, and Mitchcap had agreed it could be moved.  Brendan also confirmed at that time that Discovery and its security providers had no interest in Van 21.[38]

   [38]Brendan also gave evidence about it being contemplated that the vehicle identification number for Van 21 would be altered so that the last 2 digits read “22”.  He explained that this was consistent with industry practice as Van 21 was being sold in 2022 and there was no requirement to seek permission from VicRoads for this to occur before the vehicle was registered.  In any event, his evidence was that, to date, the number has not been changed or modified.  There was some conflicting evidence suggesting the number had been changed as a result of an audit conducted on 26 October 2022, but there is no suggestion by Mitchcap that this conflict could be resolved on a final basis as part of these interlocutory applications.

1. In late October 2022, Van 21 was still located at the Epping Premises.  On 29 October 2022, a Mitchcap employee was told by Brendan over the telephone that he would speak to Palmarini about surrendering possession of Van 21 to Mitchcap.[39]

   [39]At the time, Mitchcap had security guards located outside the Epping Premises but had stated it was willing to remove them if possession of Van 21 was surrendered.

1. As referred to above,[40] more recently Mitchcap has been paid by Roma for Van 21.

   [40]See par 78 above.

A.6         Van 25

1. An audit conducted on behalf of Mitchcap of the Campbellfield Premises on 7 October 2022 revealed that a caravan had been sold for $85,000 with vehicle identification number 6T9T21V86NAAKX025 (“Van 25”).  Mitchcap had received no funds as a result of this sale.  When Palmarini was contacted, he informed Mitchcap that he only had $20,000 remaining.  He proposed that a newly manufactured caravan be substituted to cover the proceeds that had not been paid to Mitchcap.  Mitchcap’s representative, Kate Foster, allegedly stated that she had no option but to accept this.  Palmarini’s version of the discussion “with Josh”[41] referred to an “agreed … credit swap”.[42]

   [41]A representative of Mitchcap.

   [42]Consistent with this evidence, contemporaneous correspondence records that Palmarini spoke to persons at Mitchcap other than Kate Foster.

1. Thus, in response to this proposal, on 13 October 2022 Mitchcap took security over the new caravan to cover the $65,000 shortfall, but also issued a notice of default (which expressly referred to the issues relating to this transaction).[43]  Further, without providing any detail of any progress, Mitchcap stated that its investigation into these issues is ongoing.

PrinciplesB.         

[43]Opinion evidence was given as to the possibility that the new caravan might have been worth less than $65,000.  However, little or no weight can be attached to this evidence in circumstances where (leaving aside whether or not the deponent was qualified to give such evidence) the manner in which the amount arrived at was not explained at all.

1. The principles applicable to whether or not an interlocutory injunction ought to be granted were not in issue.

1. In general terms, interlocutory relief will not be granted unless there is a serious question to be tried (in the sense that the plaintiff must make out a case that there is a sufficient likelihood of success at trial to justify, in all the relevant circumstances, the preservation of the status quo pending trial) and the balance of convenience favours the granting of the injunction.[44]  In addition, a plaintiff must show it will suffer irreparable injury for which damages will not be adequate compensation.[45]  On the facts of the particular case, there may also be other factors which may be taken into account in the exercise of the court’s discretion.

   [44]Australian Broadcasting Corporation v O'Neill (2006) 227 CLR 57, 68 [19] (Gleeson CJ and Crennan J), 81-82 [65], 83 [70] (Gummow and Hayne JJ).

   [45]Ibid, 68 [19] (Gleeson CJ and Crennan J).

1. As has been observed repeatedly, questions concerning whether there is a serious question to be tried and the balance of convenience are not to be considered in isolation.[46]  Where the case is strong, the requirements with respect to the balance of convenience may be more readily satisfied.  Equally, if the case is of a weaker kind, then the balance of convenience may need to weigh more heavily in favour of the party seeking interlocutory relief.

   [46]Bradto Pty Ltd v Victoria (2006) 15 VR 65, 82 [84] (Maxwell P and Charles JA).

1. With respect to preserving “the status quo”, whether an injunction is characterised as prohibitory or mandatory is not determinative of the outcome.  As was stated in Bradto Pty Ltd v Victoria:[47]

[W]hether the relief sought is prohibitory or mandatory, the court should take whichever course appears to carry the lower risk of injustice if it should turn out to have been “wrong”, in the sense of granting an injunction to a party who fails to establish [her or his] right at the trial, or in failing to grant an injunction to a party who succeeds at trial.

[47]Ibid, 73 [35].

1. In relation to interlocutory relief sought against a secured creditor, further considerations may apply.  A powerful factor in the determination of whether or not an injunction ought to be granted to prevent a secured creditor from exercising its rights is whether or not the debtor is willing and able to pay into court an amount equating to the secured debt (or some other similar arrangement).[48]

   [48]Inglis v Commonwealth Trading Bank of Australia (1971) 126 CLR 161, 164.4-166.3 (Walsh J), and on appeal 169.1 (Barwick CJ, with whom Menzies and Gibbs JJ agreed). See also Andrew Garrett Wine Resorts Pty Ltd v National Australia Bank Ltd (2004) 206 ALR 69, 79-82 [41]-[49] (Besanko J).

1. This “general rule” of requiring the amount secured to be paid into court as a condition of interlocutory relief being granted may be subject to exceptions.  Those exceptions may include when there is doubt as to the right to exercise the power in question, or if the power is being exercised in a manner which is plainly wrong or excessive.[49]  It has been stated that the general rule is not rigid or inflexible and must at times “yield to the interests of justice”.[50]  Such a situation may arise where the power of sale is exercised in bad faith or at least with a lack of good faith.[51]

   [49]El-Saafin v Franek [2018] VSC 450, [60]-[64] (Lyons J) and the cases there cited; Andrew Garrett Wine Resorts Pty Ltd v National Australia Bank Ltd (2004) 206 ALR 69, 81 [48] (Besanko J).

   [50]Equity One Mortgage Fund Ltd v Thompson [2009] VSC 408, [24] (J Forrest J), referred to with approval in El-Saafin v Franek [2018] VSC 450, [64].

   [51]Swann Road Pty Ltd v Sterling and Freeman Advisory Pty Ltd [2019] VSC 136, [24] (Macaulay J) and the cases there cited.

1. Relevantly for present purposes, in the context of the appointment of a receiver, it may be relevant to consider whether the appointment by the secured creditor was in breach of any obligation to exercise good faith in making the appointment.[52]  In particular, it may be relevant to consider whether the appointment was in fact a device used to obtain some advantage or outcome beyond what was appropriate in the circumstances.[53]

   [52]Terry Clark & Associates Pty Ltd v Carez Nominees Pty Ltd (1994) 13 ACSR 314, 317.6 (King CJ), 319.3 (Bollen J), 319.9 (Mullighan J).

   [53]Ibid, 318.3 (King CJ, with whom Bollen and Mullighan JJ agreed).

1. Finally, in the context of considering whether a party to a contract was entitled to act upon a breach, it has long been established that, generally speaking, a party acting upon a particular breach or alleged breach need not be aware of the existence of another breach in order to rely upon that other breach to justify its conduct.[54]  This principle has been applied in the context of exercising a contractual power or right by giving notice upon the happening of a specified event or events,[55] including specifically in relation to a notice of default under securities entitling a secured creditor to appoint receivers and managers.[56]

ConsiderationC.        

[54]Shepherd v Felt and Textiles of Australia Ltd (1931) 45 CLR 359, 370.9-371.3 (Rich J), 373.7 (Starke J), 377.7 (Dixon J). See also Deming No 456 Pty Ltd v Brisbane Unit Development Corporation Pty Ltd (1983) 155 CLR 129, 143.8-144.1 (Mason, Deane and Dawson JJ), which was a case concerning a notice of default with respect to certain statutory requirements that did not give particulars of the alleged failure.

[55]Minion v Graystone Pty Ltd [1990] 1 Qd R 157, 164.4 (McPherson J, with whom Macrossan CJ and Derrington J agreed), referring to Commonwealth Homes & Investment Co Ltd v MacKellar (1939) 63 CLR 351, 378.6 (Dixon J) where in the latter case there was reference to the general rule that, where a legal justification in fact exists for a course taken, it will suffice to support its validity though 1 or more of parties acted for other reasons and in ignorance of the justification’s existence.

[56]Witherspoon v Hutson [2015] QCA 109, [92] (Flanagan J, with whom McMurdo P and Gotterson JA agreed).

1. The evidence incontrovertibly established that, at the time of the appointment of the Receivers, and also when each of the notices of default on 13 and 28 October 2022 and the Final Notice of Default was issued, Roma was in breach of both the Bailment Deed and the Security Agreement, such that an Event of Default had occurred under both these documents.  Mitchcap was therefore entitled to appoint the Receivers as a matter of contract.

1. Such a breach has been established in a number of ways.

1. As was common ground, on 10 November 2022, Roma was indebted to Scottish Pacific in an amount exceeding $10,000 which had been overdue since 12 October 2022.  Such an occurrence was an Event of Default that the Security Agreement expressly covered and entitled Mitchcap to appoint a Receiver.[57]  Further, immediately upon this Event of Default, the Security Agreement became enforceable without demand or notice and the Secured Money became immediately due and payable by Roma.[58]

   [57]Security Agreement, cll 5.1(k), 7.1(a): par 53 above.

   [58]Security Agreement, cl 5.3(a), (b): ibid.

1. In such circumstances, it is of no moment that Mitchcap was unaware of Roma’s indebtedness to Scottish Pacific at the time it chose to appoint the Receivers.  Put simply, there can be no serious question about whether the facts at trial might be found not to support a proper contractual basis for the appointment.

1. Although relevant to the consideration of whether or not interlocutory relief as sought by Roma and Palmarini ought to be granted, with respect to the contractual validity of appointment of the Receivers it is immaterial that Roma has now belatedly paid the previously outstanding debt to Scottish Pacific.  Naturally, such a circumstance does not alter the facts as they stood on 10 November 2022.

1. Although not common ground, there are further facts (about which there could be no serious question to be tried) that established further breaches of the Bailment Deed.

1. In relation to Van 21, even on Roma’s version of events, it was sold in late September or early October 2022.  Roma failed to inform Mitchcap immediately or at all of the sale, until confronted about the position in relation to Van 21 on 28 October 2022.[59]  In the face of unequivocal evidence from Mitchcap that it did not know of any sale, the bare assertion by Palmarini that Mitchcap knew of the sale of Van 21 in early October 2022 cannot be afforded any real weight.  No evidence to demonstrate Mitchcap’s alleged knowledge was adduced by Roma.  Further, no reference was made to that sale before 28 October 2022 in any of the voluminous materials before the court of the parties’ exchanges, including in any notice of default.

   [59]Bailment Deed, cl 7.2: par 50 above.

1. In any event, even if it were considered to be a serious triable issue as to whether or not Roma had immediately notified Mitchcap of the sale of Van 21 in early October 2022 in accordance with clause 7.2 of the Bailment Deed, this issue would be of only marginal assistance to Roma.  Roma received a significant amount of funds which ultimately became the funds for the purchase of Van 21.  Although those funds were not governed by the Bailment Deed when they were referable to another caravan, once it was agreed between Colling and Roma that those funds (together with the remaining funds paid) comprised the purchase price of Van 21, there was a clear and unequivocal obligation to hold those funds on trust for Mitchcap and to apply those funds in accordance with the terms of the Bailment Deed.[60]

   [60]Bailment Deed, cll 7.3, 7.4: ibid.

1. No explanation has been given by Roma or Palmarini (despite ample opportunity to do so) as to why these breaches occurred and were allowed to continue without remedy until late October 2022 and beyond.  Indeed, there was not even an attempt on the evidence to show that steps had been taken to seek to comply with the Bailment Deed in this regard.  A statement by Palmarini on 28 October 2022 to the effect that Roma “would seek to repay” Mitchcap 2 days after 2 November 2022 fell well short of any sort of compliance with the Bailment Deed.

1. It follows that either on the facts known by Mitchcap or those not known, or both, there was a proper contractual basis to appoint the Receivers.

1. That then leads to the question of whether there is a triable issue as to whether Mitchcap acted in good faith in appointing the Receivers such that it weighs in favour of an interlocutory injunction.

1. Roma contended that there was plainly a triable issue as to whether or not what occurred on 10 November 2022 with the appointment of the Receivers was an exercise of good faith.  On this basis, it was submitted the general rule in Inglis v Commonwealth Trading Bank of Australia[61] ought not be applied.  Roma submitted it would be inappropriate to do so as it would be contrary to the interests of justice.

   [61](1971) 126 CLR 161.

1. In submitting that the defaults relied upon by Mitchcap were questionable and historical, and that by 10 November 2022 any issue with Van 21 had been entirely purged, Roma contended that Mitchcap had used the proverbial sledgehammer to crack the walnut.

1. There are a number of obvious responses to these submissions.  Leaving aside what has already been said about the existence of the Events of Default, the submissions do not grapple with the fact that such Events of Default meant that the entirety of the moneys previously advanced by Mitchcap had become due and owing.  Thus, any issue concerning lack good faith must be viewed in light of the fact that Mitchcap was entitled to and had demanded that all such moneys be repaid.

1. Further, nothing that occurred before Garde J or Connock J fettered the ability of Mitchcap to exercise whatever other rights it had under the Bailment Deed or the Security Agreement.  The matters that were raised before their Honours were concerned with what was to occur with respect to the Vans that were to be or had been seized respectively, and could not be understood to curtail Mitchcap’s rights more generally.  So much was made clear by Connock J noting in “Other matters” in the orders made on 9 November 2022 that the parties’ rights were reserved.  Equally, observations that were made concerning a court-appointed receiver were made in the context of the fact that only interim orders had been made at that time.  Again, such observations could not properly be understood to have somehow deprived Mitchcap of any contractual rights it may have had then or subsequently to appoint receivers itself because of a clear entitlement to do so under the Security Agreement.[62]

   [62]As an aside, if it was suggested on behalf of Roma and Palmarini that the Receivers had somehow acted contrary to Connock J’s orders of 10 November 2022, the evidence presently before the court does not establish this.

1. Furthermore, the conduct of appointing the Receivers must be viewed in the context where Mitchcap had direct knowledge of the fact that Roma had not complied with the Bailment Deed on an ongoing basis.  Although I place no weight on Mitchcap’s account of Palmarini’s alleged misconduct at the Campbellfield Premises when Mitchcap’s agents were in attendance either before or after the Receivers’ appointment, what occurred before these events showed unequivocally to Mitchcap that Roma was continuously not complying with its obligations.  Moreover, because of more historical events, what had occurred more recently could not be considered to be a one-off.[63]

   [63]See pars 61, 63, 101-103 above.

1. That now leads to the question of whether there is a serious question to be tried about whether the steps of appointing the Receivers was excessive.  The court has before it vastly different accounts as to what the seized property is worth.  None of the evidence from either side is in a form such that it could properly be taken into account as being admissible in accordance with section 79(1) of the Evidence Act 2008 (Vic). However, rather than invite the court to rule on the admissibility of the evidence,[64] each side sought to contend that little weight could be afforded to the opposing parties’ evidence.  Further, Mitchcap submitted the onus was on Roma to establish that an injunction ought to be granted and that it had failed to discharge that onus.

   [64]Belatedly, in reply submissions, Roma made submissions about the inadmissibility of the evidence relied upon by Mitchcap in this regard but no ruling was sought.

1. Mitchcap’s evidence was that each of the Vans was valued at a particular amount, but it provided no basis for the way in which these amounts were arrived at.  Simply, a spreadsheet was provided itemising 12 caravans and a forklift by year, type, make and model with an amount attributed to each item.  Senior counsel for Mitchcap and the Receivers explained the patent inadequacies concerning this evidence on the basis that his clients had been obstructed by the court orders which prevented the Receivers from dealing with the property seized.  Whatever might be the reason, the evidence still lacks any significant probative value.

1. Turning to the evidence relied upon by Roma, Palmarini swore, without providing any basis, that he estimated the seized assets in the Receivers’ possession had a value of $1.25 million.  Even if this evidence were accepted and treated as proper evidence of the true value of these assets, it would not establish that Mitchcap’s conduct was excessive.  It goes without saying that the sale price that might be realised in the usual course of an ongoing business may be significantly greater than could reasonably be realised by a receiver selling the assets when the business is no longer a going concern.  Thus, whilst the necessary consequence of Palmarini’s evidence must be that it ought not be found that there is not a triable issue on this point, on the evidence presently before the court the case, although the case may succeed, it does not appear to be strong.

1. While dealing with Palmarini’s evidence concerning value, he also swore that he estimated Roma’s business was worth about $10 million.  Again, this was a bare assertion and can only be given little weight.  However, the matters deposed to by Palmarini remain before the court and naturally must still be taken into account.  I will return to this factor in dealing with how Roma’s application for interlocutory relief will be disposed of.

1. On the balance of convenience, I accept Roma’s submissions that if the appointment of the Receivers is allowed to proceed without restriction then very substantial harm will be caused to Roma’s business.  Indeed, as was submitted, the consequences may be catastrophic.

1. Clearly, in the present circumstances, Roma’s business cannot be conducted by Roma or Palmarini and there is no suggestion that the Receivers intend to do so.[65]  That said, the balance of convenience must be considered by reference to, amongst other things, the strength or otherwise of the questions to be tried.  Moreover, the balance of convenience must be considered in the context that Roma freely agreed to enter into its dealings with Mitchcap on the basis that Mitchcap would be a secured creditor entitled to exercise certain rights, including appointing receivers, if an Event of Default were to occur.  For reasons already discussed,[66] I do not accept Roma’s submission that the defaults that have occurred could be properly characterised as technical.  In such circumstances, the course of conduct adopted by Mitchcap in appointing the Receivers was precisely what was contemplated at the time the Bailment Deed and the Security Agreement were entered into.

   [65]The evidence led by the Receivers appears to indicate that the Receivers intended to sell so much of the seized property as would be necessary to cover all amounts outstanding.

   [66]See pars 95-104, 107-108 above.

1. Another factor to be considered is whether or not damages would be an adequate remedy in the event that no injunction was granted and Roma and Palmarini ultimately succeeded at trial.  In this regard, Roma’s submissions must also be accepted.  While undoubtedly a monetary sum could be ascertained as to the value of Roma’s business and its assets, it is unlikely that damages would fully compensate for the destruction or serious depletion of a long-standing family business.

1. Returning to the issue of the provision of security by Roma, it is of considerable significance that, with the payment already made relating to Van 21, the amount that might be paid into court consistent with the general rule in Inglis v Commonwealth Trading Bank of Australia[67] is in the order of $530,000.[68]  This is a relatively modest sum when compared with the values Palmarini has attributed to the property seized and to Roma’s business.  And yet, no such sum, or for that matter no sum at all, has been proffered by Roma in attempting to obtain injunctive relief sought.

   [67](1971) 126 CLR 161.

   [68]The precise amount is $530,500.01.

1. Roma and Palmarini’s senior counsel referred to the fact that Palmarini was “on the hook” because of the guarantee that had been given by him.  In doing so, it was stated that there was “no suggestion that he’s a man … lacking substance or on the verge of insolvency; quite the contrary”.[69]

   [69]Counsel submitted that, in light of these facts, there was “no risk at all” for Mitchcap if the regime set out in the orders made by Connock J on 10 November 2022 were maintained.

1. If the financial position of Palmarini is of substance (there was no evidence about this), and if the seized property and Roma’s business are as valuable as Palmarini has claimed, then it is curious that no payment into court has been made or even offered.  It may be that the very short timeframe for payment in the Final Notice of Default,[70] coupled with the undoubtedly tumultuous events that have occurred on and after 31 October 2022, have been such that Roma and Palmarini have not had sufficient opportunity to put the necessary funds into place.  This is somewhat unsatisfactory given that more than a week has elapsed since Connock J made his interim orders in the Responsive Proceeding.

   [70]See pars 29-34 above.  In accordance with the Security Agreement, the Final Notice of Default explicitly stated that all amounts due and payable were immediately due and payable.

1. Be that as it may, in all the circumstances,[71] it is appropriate to allow the interim order made by Connock J on 10 November 2022 (and extended on 14 and 16 November 2022) to remain in place for a further week to provide Roma with a brief opportunity to pay the principal sum claimed by Mitchcap into court.  Although I have not found that the case against Mitchcap is strong, there are triable issues relating to the appropriateness or otherwise of the appointment of the Receivers.  In addition, the balance of convenience strongly favours Roma if it is capable of and chooses to pay the moneys in question into court.

   [71]These include the fact that if the interlocutory injunction is granted, not only will the payment into court have been made and appropriate undertakings be given by Roma and Palmarini, but Mitchcap will also maintain its security with respect to Roma’s business, as well as having the guarantee in place against Palmarini personally.  In addition to this, Mitchcap has lodged a caveat over Palmarini’s residential property.

1. There was no suggestion that any material prejudice was being suffered by reason of any short-term delay when I reserved my decision less than 48 hours ago.  Thus, there can be no real harm in delaying the outcome of the interlocutory applications for a few more days.  Accordingly, both summonses will be adjourned until 10.00 am next Friday 25 November 2022.

1. In summary, given the serious consequences for Roma if the receivership is allowed to proceed, I have formed the view that an interlocutory injunction ought to be granted as sought by Roma and Palmarini but only if the amount of the secured principal debt is paid into court by 4.00 pm on Thursday, 24 November 2022.  Of course, if Roma informs the court upon delivery of these reasons that it has no intention of paying this amount into court, then its application will be dismissed.

ConclusionD.        

1. Accordingly, subject to submissions on the precise form of orders and undertakings, orders will be made that, upon any payment into court by 4.00 pm on 24 November 2022, the Receivers will be required as soon as practicable to return the seized property to the Campbellfield Premises.  If the payment into court is made, this will have the overall result that the principal sum claimed by Mitchcap will be secured by the payment into court and, in addition, Mitchcap will continue to have the benefit of its secured interest in the Goods the subject of the Transaction Documents.  This will be in addition to the security in place against Palmarini personally.  Naturally, any order will be made subject to liberty to apply, but as things presently stand there can be no question that in these circumstances Mitchcap’s position will be adequately secured until the trial and determination of the issues in this proceeding.[72] 

   [72]See also fn 71 above.