Terry Clark and Associates Pty Ltd v Carez Nominees Pty Ltd and Andrew Ryrie Campbell No. SCGRG 93/1802 Judgment No. 4552 Number of Pages 7 Injunctions Interlocutory Injunctions (1994) 13 Acsr 314 - [1994] SASC 4552

COURT IN THE FULL COURT OF THE SUPREME COURT OF SOUTH AUSTRALIA KING CJ(1), BOLLEN(2) AND MULLIGHAN(3) JJ

CWDS
Injunctions - interlocutory injunctions - action for declaration of invalidity of appointment of receiver under mortgage - allegation of want of good faith - whether duty of good faith in circumstances arguable case - balance of convenience - appeal against interlocutory injunction dismissed.

HRNG ADELAIDE, 7, 9 February 1994 #DATE 13:5:1994
Counsel for appellant:     Mr J R Mansfield QC with
   Mr S Palyga
Solicitors for appellant:    Mitchell Sillar Lynch and Meyer
Counsel for respondent:     Mr W J Wells QC with
   Mr A Luckhurst-Smith
Solicitors for respondent: Ward and Partners

ORDER
Appeal dismsised.

JUDGE1 KING CJ The plaintiff Terry Clark and Associates Pty Ltd instituted the action by Summons dated the 8th October 1993 claiming an order that the appointment by the first defendant of the second defendant as receiver of the plaintiff was invalid, an injunction restraining the first defendant from appointing a receiver and an injunction restraining the second defendant from purporting to act as such. Two orders have been made by a Master. The defendants appeal against the first of the orders; the plaintiff appeals against the second.

2. The essential facts and history of the proceedings were set out by the learned Master in his reasons for making the second order. In the course of those reasons he referred to the plaintiff as "Associates".
    "Associates is a company through which Terrence Benjamin
    Clark (hereinafter referred to as 'Terry') operates an
    insurance business. The first named defendant Carez
    Nominees Pty. Ltd. (hereinafter referred to as 'Carez')
    is a company of which the directors are Carol Evelyn
    Clarke (hereinafter referred to as 'Carol') and Esio
    Marcel (hereinafter referred to as 'Esio'). Terry and
    Carol were formerly (sic) married, but are now divorced.
    Carol and Esio have a de facto marital relationship and
    conduct a real estate business, known as L.J. Hooker
    Westlakes. At a time when Terry and Carol were married
    and living together, they and Esio became involved with
    others in relation to a business, which I will refer to as
    'Rapid Wall'. In order to finance Rapid Wall, money was
    borrowed from the Commonwealth Bank. Subsequently, at a
    time when Terry and Carol had separated, further money was
    borrowed from the Commonwealth Bank. The Commonwealth
    Bank took various forms of security in relation to the
    funds borrowed. The securities included inter alia
    interlocutory guarantees from Carol Clarke and E. Marcel
    Estates Pty. Ltd. (hereinafter referred to as
    'Estates'), E. Marcel Constructions Pty. Ltd.
    (hereinafter referred to as 'Constructions') and
    Associates. These guarantees were secured by mortgage
    debentures given by the various companies. There was
    default in relation to the loans at a time when there was
    an amount of $228,000.00 owing to the Commonwealth Bank.
    On 20th August, 1993, the Commonwealth Bank assigned to
    Carez the debt of $228,000.00, together with all security
    supporting the same including the guarantees. By a Notice
    of Demand dated 5th October, 1993,…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

AGLC: Terry Clark and Associates Pty Ltd v Carez Nominees Pty Ltd and Andrew Ryrie Campbell No. SCGRG 93/1802 Judgment No. 4552 Number of Pages 7 Injunctions Interlocutory Injunctions (1994) 13 Acsr 314 [1994] SASC 4552
Case: [1994] SASC 4552
Decision Date: 13 May 1994

CaseChat Overview and Summary

In the Supreme Court of South Australia, Terry Clark and Associates Pty Ltd, the plaintiff, sought an injunction to prevent the defendants, Carez Nominees Pty Ltd and Andrew Ryrie Campbell, from enforcing a receivership over the plaintiff's assets. The dispute arose from a mortgage and guarantee agreements related to debts owed by the plaintiff to the Commonwealth Bank, which had been assigned to Carez. The plaintiff argued that the appointment of a receiver by Carez was made in bad faith and was invalid. The court was tasked with determining whether there was an arguable case for the invalidity of the receiver's appointment based on bad faith and whether the balance of convenience favored granting the interlocutory injunction.

The court examined the legal arguments regarding the existence of a duty of good faith in the context of mortgagee's rights and the enforcement of security. The plaintiff argued that fiduciary obligations and the relationship between the parties imposed a duty of good faith, while the defendants contended that such a duty did not apply to the decision to exercise mortgagee's rights. The court found that the contention regarding the existence of a duty of good faith was seriously debatable and that there were sufficient evidentiary materials to raise serious questions about the defendants' motives. Additionally, the court concluded that the balance of convenience favored maintaining the status quo to prevent the ruin of the plaintiff's business.

The court allowed the appeal against the first interlocutory order and substituted a new order that restrained the defendants from taking further action in appointing a receiver and from acting as such, pending the trial. The court also allowed the plaintiff's appeal against the second order, substituting it with an order similar to the first. The injunctions were to be conditional on the usual undertaking as to damages. The court declined to impose a condition that the plaintiff pay the alleged debt into court.

Orders