Theobold v Rebel Converting Pty Ltd
[2008] WASC 85
•24 APRIL 2008
THEOBOLD -v- REBEL CONVERTING PTY LTD [2008] WASC 85
| SUPREME COURT OF WESTERN AUSTRALIA | Citation No: | [2008] WASC 85 | |
| 14/05/2008 | |||
| Case No: | COR:45/2008 | 24 APRIL 2008 | |
| Coram: | MASTER SANDERSON | 24/04/08 | |
| 14 | Judgment Part: | 1 of 1 | |
| Result: | No undertaking required | ||
| B | |||
| PDF Version |
| Parties: | SIMON GUY THEOBOLD As Administrator of REBEL PAPER PTY LTD (In Administration) (ACN 108 422 000) REBEL CONVERTING PTY LTD (ACN 122 122 981) PAUL JOHN MATHEWS HELEN MARCIA KUIPERS |
Catchwords: | Practice and procedure Whether undertaking as to damages required when injunction granted to administrator Turns on own facts |
Legislation: | Nil |
Case References: | Australian Securities and Investments Commission v Prime Life Corporation Ltd [2006] FCA 1072 Australian Securities and Investments Commission v Triton Underwriting Insurance Agency [2003] NSWSC 1145 Bond Brewing Holding Ltd v National Australia Bank Ltd (1990) 1 ACSR 445 Remrose Pty Ltd v Allsilver Holdings Pty Ltd [2005] WASC 251 |
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
- IN CHAMBERS
- Plaintiff
AND
REBEL CONVERTING PTY LTD (ACN 122 122 981)
First Defendant
PAUL JOHN MATHEWS
Firstnamed Second Defendant
HELEN MARCIA KUIPERS
Secondnamed Second Defendant
Catchwords:
Practice and procedure - Whether undertaking as to damages required when injunction granted to administrator - Turns on own facts
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Legislation:
Nil
Result:
No undertaking required
Category: B
Representation:
Counsel:
Plaintiff : Mr J Garas
First Defendant : Mr K L Christensen
Firstnamed Second Defendant : No appearance
Secondnamed Second Defendant : No appearance
Solicitors:
Plaintiff : Minter Ellison
First Defendant : Christensen Vaughan
Firstnamed Second Defendant : No appearance
Secondnamed Second Defendant : No appearance
Case(s) referred to in judgment(s):
Australian Securities and Investments Commission v Prime Life Corporation Ltd [2006] FCA 1072
Australian Securities and Investments Commission v Triton Underwriting Insurance Agency [2003] NSWSC 1145
Bond Brewing Holding Ltd v National Australia Bank Ltd (1990) 1 ACSR 445
Remrose Pty Ltd v Allsilver Holdings Pty Ltd [2005] WASC 251
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1 MASTER SANDERSON: On 14 April 2008 on the plaintiff's application I made the following orders:
1. The first and second defendants do provide the plaintiff with unrestricted access to the principal place of business of Rebel Paper located at 4 Coolibah Way, Bibra Lake, Western Australia (business premises).
2. The first and second defendants shall be restrained from entering onto the business premises, and the second defendants shall only be permitted to enter the business premises at the request of the plaintiff.
3. The parties have liberty to apply on 24 hours' notice.
4. The costs of today be reserved.
2 The plaintiff is the administrator of Rebel Paper Pty Ltd (Rebel Paper). After his appointment and in circumstances I will detail below, he encountered difficulty in gaining access to the premises from which Rebel Paper was operating. The application for the injunction was brought on as a matter of urgency and counsel who appeared for the defendants had limited opportunity to consider the papers. That was the reason for the liberty to apply provision in the orders. At the time of making those orders the plaintiff did not offer and I did not require him to provide an undertaking as to damages. The matter was not mentioned by counsel for the defendants.
3 Pursuant to the liberty to apply provision, the matter came back on for hearing on 24 April 2008. At the hearing, only the first defendant was represented. The second defendants are directors of Rebel Paper. The first-named second defendant is also a director of the first defendant but, as I understand it, he was not made a party to these proceedings in that capacity. I understood that at the first hearing when the injunction was granted counsel then appearing represented all defendants. Perhaps I was mistaken in that belief. Such was the urgency of the matter that no appearances had been filed when the hearing took place. Throughout, the plaintiff has clearly been under the impression that the solicitors involved were acting for all defendants. Perhaps they were, but their instructions at this latest hearing related only to the interests of the first defendant. In any event, the party affected by the injunction is the first defendant and it is appropriate that it should be represented at the hearing.
4 At the hearing, the first defendant did not apply to discharge the injunction. They did, however, seek an order that the plaintiff be required
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- to give an undertaking as to damages. After hearing argument I dismissed the first defendant's application. I indicated that I would give reasons for that decision. These are those reasons.
5 To explain why I did not require the plaintiff to give an undertaking as to damages it is necessary to say something about the facts which gave rise to the granting of the injunction. In support of the application the plaintiff swore an affidavit dated 14 April 2008. The plaintiff also relied upon an affidavit of Rodney James Edgell sworn 4 April 2008. The summary that follows is drawn from these two affidavits.
6 The plaintiff is a registered liquidator. He was appointed by Westpac Banking Corporation pursuant to a registered charge. A copy of the Notice of Appointment, the Certificate of Entry of a Charge and the charge itself, appear as annexures SGT 2 and SGT 3 to the plaintiff's affidavit. The validity of the appointment has not been challenged. Without finally deciding the matter (because I have not heard from the defendants on this issue), there would not seem to be any issue as to the validity of the appointment.
7 The plaintiff was appointed on 27 March 2008.
8 On the day of his appointment the plaintiff attended at Rebel Paper's premises at 4 Coolibah Way, Bibra Lake. He arrived at the premises at approximately 10.50 am and spoke with a person who identified himself as being Luke Mathews (Luke), the son of one of Rebel Paper's directors Paul Mathews (Paul) (being the first-named second defendant). The plaintiff asked Luke if he could speak with Paul and was told that Paul was out collecting the mail. The plaintiff then asked Luke if he could speak to the other director (and secretary) of Rebel Paper Helen Kuipers (Helen). He was told by Luke that Helen was on the premises and that she would see the plaintiff when she was free. After waiting some 20 minutes, Luke then advised the plaintiff that he (the plaintiff) was not allowed access to the premises. The plaintiff advised Luke that he had been appointed an administrator and was therefore entitled to access the premises. The plaintiff handed to Luke a copy of the Notice of Appointment of Administrator. Luke said words to the effect that Rebel Paper had assigned the lease of the premises to the first defendant eight to 10 months ago. Rebel Paper was only occupying the premises pursuant to a sub-lease with the first defendant and the plaintiff was therefore not entitled to be on the premises.
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9 The plaintiff insisted that he did have a right to be on the premises. He requested a copy of the lease, the assignment of the lease and sub-lease documentation. Luke told the plaintiff he did not have copies of the documentation at the premises. The plaintiff then repeated his request to speak with Paul. He was told that Paul was out and would not be back for a few hours. The plaintiff advised Luke that his actions were impeding Rebel Paper's administration. The plaintiff referred to his statutory obligations and said it was imperative that he be given immediate access to the assets, books and records of the company. Luke told the plaintiff that he (Luke) wished to speak to the employees before the plaintiff did. He said he would finish unloading a delivery of goods, speak to the employees briefly and then give the plaintiff access to the assets, books and records. This did not occur.
10 At approximately 11.45 am almost an hour after the plaintiff arrived at the premises, Luke said that the plaintiff would not be given access to the premises. Luke also advised that Helen would not speak to the plaintiff. Luke threatened to call the police if the plaintiff did not leave the premises. Luke also indicated that his solicitor would call the plaintiff's solicitors some time during the course of the day. Thus frustrated, the plaintiff left the premises.
11 The plaintiff then spoke with his solicitors. On his instructions, the solicitors sent a facsimile and an email to the first and second defendants. Copies of those documents are found as annexures SGT 5 and SGT 6 to the plaintiff's affidavit. In the clearest possible terms those documents spell out that the plaintiff is the duly appointed administrator of Rebel Paper. The documents record that the first and second defendants were denying the plaintiff access to the premises and the books and records. The second defendants were reminded of their obligation under s 438C(3) of the Corporations Act 2001 (Cth) to deliver all company records in their possession to the plaintiff within three days of his appointment.
12 On 28 March 2008, the plaintiff's solicitor was advised by a solicitor acting for the second defendants that the second defendants would permit the plaintiff to have access to the premises. Accordingly, the plaintiff attended the premises that morning and spoke with Luke. He was shown an office with a computer and advised that Rebel Paper's creditors' information could be found on the computer. He was not provided with any assistance in locating the information or verifying its completeness. Luke also advised the plaintiff that the plaintiff's access to the premises and computer system was restricted solely to obtaining creditors' information in order to notify them of the plaintiff's appointment and
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- convene a meeting of creditors. Luke refused to provide the plaintiff with Rebel Paper's other books and records such as its debtor files and insurance documents. He also refused to allow the plaintiff access to Rebel Paper's employees or the warehouse. Doing the best he could, the plaintiff obtained a list of the company's creditors and sent to them a circular notifying them of his appointment.
13 To secure the premises and ensure the integrity of Rebel Paper's assets, the plaintiff engaged a security service to conduct regular patrols at the premises. At 6.30 pm on Sunday 30 March, the plaintiff received a phone call from the security service. He was advised that an unidentified male and female were at the premises and were refusing to provide identification. The plaintiff attended at the premises. He was met by the two security guards on patrol. The gates to the premises were locked and the plaintiff called to be let in. Paul walked out of the office and up to the gate but refused to admit the plaintiff. After the plaintiff had identified himself Paul went back to the office and returned approximately five minutes later with Helen. A discussion ensued. Paul and Helen advised the plaintiff they would do nothing to jeopardise Rebel Paper's assets and that he would be provided with full access to the premises, assets and records the following morning.
14 The plaintiff attended and entered the premises at 8.45 am on 31 March. Helen advised the plaintiff that Paul wanted to speak to him before anything further happened. Paul then arrived, apparently, without having spoken to Helen. Paul asked who had admitted the plaintiff. When he was advised that it was Helen he told the plaintiff that he was to leave the premises immediately. Paul said that he and Helen disputed the validity of the plaintiff's appointment as administrator of Rebel Paper and that they were taking legal advice later that morning. A discussion ensued that produced no satisfactory outcome. Paul then escorted the plaintiff from the premises and locked the main door.
15 Approximately one and a half hours later, presumably after discussions with a lawyer, Paul allowed the plaintiff access to the premises. The plaintiff then discussed Rebel Paper's financial situation with Paul and Helen. The plaintiff advised Paul and Helen that he did not believe the business was viable in its current form. The prospect of Paul and Helen continuing to work in the business was discussed. Eventually the plaintiff offered to employ Paul and Helen and pay them $1,000 per week each for their services to Rebel Paper. In return the plaintiff sought an undertaking from both that they would be 100% committed to Rebel Paper's business in order to maximise revenue and ensure the best
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- possible return to Rebel Paper's creditors. Both agreed to the terms of employment. It was arranged that they would commence work at 8.00 am the next morning.
16 The plaintiff arrived at the premises at approximately 8.00 am on 1 April. He arranged for the locks to be changed. At just after 10.00 am he received an email from Paul advising that he was at home and trying to persuade Helen to come into the office. He indicated he would be in the office no later than 11.30 am. He arrived at 2.00 pm. Helen did not attend the premises at all. That afternoon the plaintiff spent approximately two and a half hours discussing Rebel Paper's financial position with Paul, Luke and one Esther Porter, a finance broker assisting Paul. At the conclusion of the meeting the plaintiff advised Paul that he required him to leave the premises at the same time as the plaintiff. The plaintiff indicated that he was the only person who would have keys to the premises. Paul took his time leaving and at one point, after the plaintiff had locked all the doors except the front door, walked to the warehouse and forced a locked door open. The plaintiff and an associate secured that door. The plaintiff then asked Paul for the security code for the alarm to the premises but Paul refused to provide it. Paul then left and so did the plaintiff. The plaintiff locked the gates to the premises behind him.
17 On 2 April 2008, the plaintiff informed the staff at the premises that they were to finish up their work, ship the existing orders and not take any new orders. Paul left the premises at approximately 1.00 pm saying that he would be returning. Luke left the premises at 1.30 pm also saying that he would be returning. In fact, neither returned to the premises that day. Further, Luke departed in a company vehicle which has not since been returned to the premises.
18 On 3 April, the plaintiff attended the premises and after entering locked the gates behind him. At approximately 9.00 am Paul and Luke arrived at the premises. They jumped over the fence and because the doors were locked started banging on the front door to be let in. The plaintiff let them in. Both were extremely aggressive and argumentative. They said words to the effect that they did not believe the plaintiff had a right to be on the premises and that if the plaintiff did not give them keys they would call the police. The plaintiff took legal advice. He then advised both Paul and Luke that he had a right to be on the premises, that he did not require their immediate assistance and he asked them to leave. Paul then telephoned the police. They arrived shortly thereafter. After some discussion the police said that they regarded the issues between the plaintiff and Paul and Luke as a commercial dispute best resolved by the
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- courts. They suggested to Paul and Luke that they leave the premises and instruct their lawyers to contact the plaintiff's lawyers.
19 Paul and Luke refused to leave the premises and commenced performing work at the warehouse. The plaintiff left the premises at approximately 12.30 pm. He left a member of his staff at the premises. The plaintiff was subsequently advised that after completing a small job in the warehouse, Paul and Luke sat in Paul's office. At approximately 4.00 pm they commenced drinking alcohol. They left the premises at the same time as the plaintiff's staff member - approximately 6.00 pm.
20 On 3 April, the plaintiff's solicitor was contacted by a solicitor for the defendants. A meeting was set up for 4 April. That meeting duly took place. As a result of the meeting, the plaintiff agreed to consider a co-occupancy arrangement under which the defendants would be permitted to use Rebel Paper's plant and equipment in return for their payment of Rebel Paper's fixed costs and a share of the profit generated from services rendered using Rebel Paper's machinery. The plaintiff also said that he would prepare a detailed list of matters to which the defendants must attend prior to his agreeing to any co-occupancy arrangement. In particular, the plaintiff required that the defendants agree to provide him with proof that the first defendant had adequate public and products liability and workers' compensation insurance in place. He also required agreement that neither Luke nor Paul would smoke within the office or warehouse on the premises and that they would not consume alcohol within the office or warehouse. No final agreement was reached at the meeting. However, the plaintiff anticipated that some arrangement could be concluded on 7 April. Although no agreement had been reached, Paul, through his solicitor, demanded that he be provided with access to the premises over the weekend of 5 and 6 April. Reluctantly the plaintiff agreed to provide that access. He says that he did so to demonstrate good will and to show his willingness to work reasonably with the defendants in order to find a solution which would be in the creditors' best interests.
21 The plaintiff duly opened the premises at 8.30 am on Saturday 5 April. Luke did not arrive at the premises until 9.30 am. Paul arrived at about 10.00 am. Luke processed two reels of paper using Rebel Paper's equipment. He left the premises at approximately 1.00 pm. At approximately 1.45 pm Paul prepared to leave the premises and asked the plaintiff when he would be leaving. The plaintiff responded that he was still working and would let himself out when he was ready to go. At approximately 1.55 pm Paul started a Harley Davidson motor cycle in the reception area of the premises. He left the motor cycle running for
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- approximately 10 minutes occasionally revving the engine. The effect of Paul's actions was that the office portion of the building became engulfed in exhaust fumes. Paul eventually turned the motor cycle off and left the premises. The plaintiff was unable to continue to work as the office was filled with exhaust fumes. He left the premises.
22 Undeterred by the events of the previous day, the plaintiff again opened the premises at 8.30 am on Sunday 6 April. Luke arrived at the premises about 10.00 am. Paul arrived at about 11.30 am. An unidentified third person also arrived. Luke and this individual commenced using Rebel Paper's equipment. Around midday the plaintiff noticed that a northern roller door on the premises was open. He had not opened the roller door and he had been informed by a staff member that it had been locked on Friday evening. The plaintiff asked Paul how the roller door was open. Paul said he had opened the roller door. When the plaintiff asked Paul what had happened to the padlock on the roller door, he stated that he did not know and the lock was not there when he went to open the roller door. The plaintiff left the premises at around 12.30 pm. He arranged for one of his staff members to attend the premises for the rest of the afternoon to supervise and to lock the premises.
23 At approximately 5.30 pm the plaintiff was phoned by his staff member who had observed Paul and Luke consuming alcohol on the premises. The plaintiff instructed the staff member to ask Paul and Luke to leave the premises at 6.00 pm as it had been agreed. It is not entirely clear what time Paul and Luke left the premises but it was some time after 6.30 pm, contrary to the agreement reached with the plaintiff. Further, Paul and Luke were observed consuming alcohol on the premises.
24 On 7 April, the plaintiff instructed his solicitor to contact the defendants' solicitor. This was done by way of email. The note pointed out that the first defendant was not to use Rebel Paper's equipment without the plaintiff's consent. The plaintiff also indicated that he was still willing to consider proposals which might enhance the return to Rebel Paper's creditors, subject to certain information and assistance being provided by the defendants.
25 On 8 and 9 April, Paul and Luke continued to attend the premises. They continued to operate Rebel Paper's equipment despite the plaintiff's instructions that they were not to do so. Each afternoon Paul and Luke consumed alcohol on the premises. On both evenings Paul and Luke refused to allow the plaintiff's employee to lock up the premises. Paul insisted on placing his own padlocks on the front door and on the gates.
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26 The plaintiff instructed his solicitor to write to the defendants' solicitors again. That was done on 10 April. The note pointed out that the first defendant was continuing to use Rebel Paper's equipment without authority. That being so, the solicitors were advised that the plaintiff would arrange for a technician from Adelaide to attend the premises to disable Rebel Paper's equipment so that it would not be capable of being used pending its sale.
27 On the same day, and on the plaintiff's instructions, Mr Stephen Moore of Associated Stocktaking attended the premises with four of his staff to count Rebel Paper's stock. Paul and Luke were advised that their assistance with the stock count would greatly reduce the time and cost in completing the work. Both Paul and Luke were opposed to a stock count occurring and indicated they would not provide any assistance. They did say that they would make their services available the following day. The plaintiff reluctantly agreed to the count being delayed for one day in the hope that it could be done in an orderly and efficient manner. That hope proved to be ill-founded.
28 At approximately 9.30 am on 11 April, the plaintiff received a call from one of his employees who was at the premises. The employee reported that he was initially unable to access the premises as the padlocks on both gates to the premises had been changed. A security officer from Wormald Security arrived at the premises shortly after the employee and opened the gate. The security officer advised the plaintiff's employee that Wormald Security provided security services to Rebel Paper prior to the plaintiff's appointment as administrator. They had attended the site on 11 April because power to the alarm system had been lost.
29 The plaintiff was further advised that the locks to the building had all been tampered with making most of them unusable. Access was gained to the building because one of the locks, while damaged, was still operational. The internal padlocks on the roller doors had been changed. Power to the premises had been cut.
30 At approximately 10.45 am, the plaintiff was again telephoned by his employee. He was advised that Luke and Paul had arrived at the premises and said words to the effect that the employee had illegally gained access to the premises and was trespassing. Paul and Luke demanded that he leave immediately.
31 The plaintiff attended at the premises at approximately midday and attempted to speak to Paul. Paul told the plaintiff that in his view the
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- plaintiff's staff had illegally gained access to the premises. The plaintiff explained the circumstances in which his employee had gained entry and re-stated he believed he had a statutory right to be on the premises. Paul would have none of it. He was aggressive and abusive. An hour or so later, Stephen Moore arrived. He spoke with Paul and Luke. He was refused entry to the premises. The plaintiff made further attempts to speak with Paul and Luke but these came to nothing. He left the premises at approximately 2.00 pm.
32 Later that same day, the plaintiff was advised by his solicitor that he had spoken with the solicitors for the defendants. The solicitor agreed that the plaintiff had a right to access the premises and had undertaken that the defendants would not use Rebel Paper's stock or equipment.
33 On Saturday 12 April, an employee of the plaintiff attended the premises with one Alex Charov. Mr Charov was employed by a firm known as Australian Paper Equipment. He had been instructed by the plaintiff to make Rebel Paper's largest piece of equipment temporarily inoperable. The procedure being performed by Mr Charov would not damage the machine or detract from its value. The procedure would be completely reversible.
34 At 9.30 am, the plaintiff's employee rang and informed him that Paul had arrived at the premises and reacted very aggressively to his presence. He had also prevented Mr Charov from working on Rebel Paper's equipment. This prompted the plaintiff to again attend at the premises.
35 Upon the plaintiff's arrival at the premises he attempted to speak to Paul. These discussions came to nothing. Eventually Paul escorted the plaintiff off the premises and locked the gate behind him. The plaintiff then called the police. The police spoke to all parties concerned but declined to become involved. The plaintiff and his associates left the premises at approximately 1.00 pm. So far as the plaintiff was aware, Paul was still inside the premises.
36 That is how the matter stood as at the date of the hearing. There is one further matter to which I should make reference. On 3 April, the plaintiff was provided with a document described as 'Assignment Variation and Extension of Lease 4 Coolibah Way, Bibra Lake, Western Australia'. That document appears as annexure SGT 13 to the plaintiff's affidavit. It evidences an assignment of the lease of the premises from Rebel Paper to the first defendant. It is drawn by solicitors and while no detailed argument has been directed at its validity, it is difficult to see why
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- it should not be effective. It would appear then that the first defendant is entitled to occupation of the premises pursuant to the assignment of the lease.
37 Be that as it may, it is also clear that Rebel Paper has a right to occupy the premises. Rebel Paper was being directly invoiced for the rent. Appearing as annexures SGT 14 and SGT 15 to the plaintiff's affidavit are copies of the two most recent rent invoices for the premises. They are addressed to Rebel Paper. Whether Rebel Paper has some form of sub-lease or is occupying the premises pursuant to a licence, is not a matter which presently needs to be resolved. There can be no doubt as to Rebel Paper's entitlement to occupy the premises.
38 In support of its application to have the plaintiff provide an undertaking as to damages, the first defendant filed an affidavit of Luke sworn 23 April 2008. It is a curious document. Luke says that he is a director of the first defendant. He then says (par 3):
The Plaintiff conducts the business of converting paper products supplied by its customers into various shapes and sizes and it conducts its business at the premises in Bibra Lake.
39 There is then annexed to the affidavit a copy of an invoice sent to Amcor Business Services (Amcor) by the first defendant. There then is provided a copy of the sales register for sales of the first defendant to Amcor between 10 October 2006 and 17 March 2008. I was advised by counsel from the bar table that the purpose of this affidavit was to show that the first defendant conducts its business from the premises. If that is so, then the reference to 'the plaintiff' in par 3 is perhaps a mistake. It should be a reference to the first defendant.
40 The affidavit is of more interest for what it does not say rather than for what it says. Luke does not attempt to explain the basis upon which Rebel Paper occupies the premises. That must have been a deliberate decision - it would not have taken much to detail the arrangements. Perhaps more importantly, no issue is taken with the evidence given by the plaintiff which details the role of Luke in frustrating the plaintiff's efforts to perform his task as an administrator. That being so, it is reasonable to assume that Luke accepts the accuracy of everything said by the plaintiff.
41 When considering the grant of the injunction, no consideration was given to whether the order was to be made under s 447A or under the general injunctive power provided by s 1324. In the event and for the
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- purposes of this application, it is of no consequence under which section the order was made. Counsel for the first defendant maintained that in any case an undertaking as to damages was required.
42 Counsel for the first defendant relied on three cases. In Australian Securities and Investments Commission v Triton Underwriting Insurance Agency [2003] NSWSC 1145, Barrett J said:
It seems to me that the statutory nature of the s 1324(4) jurisdiction and the words of the legislation ('Where in the opinion of the Court it is desirable to do so'), mean that the court is not constrained by the traditional methods of equity. But there can be no doubt that those methods represent a sound basis for undertaking a preliminary assessment which should then be reviewed against … the wider question of what is 'desirable' in the statutory context.
43 Hasluck J reached more or less the same conclusion in Remrose Pty Ltd v Allsilver Holdings Pty Ltd [2005] WASC 251. His Honour said:
It emerges from the decided cases that a discretionary power to grant injunctive relief pursuant to a statutory provision (such as s 1324 of the Corporations Act in the present case) must be exercised in accordance with the equitable principles generally applicable to the grant of injunction; that is, if there is a serious question to be tried then the Court must consider the balance of convenience [122].
44 Finally, in Bond Brewing Holding Ltd v National Australia Bank Ltd (1990) 1 ACSR 445, the Supreme Court of Victoria said:
The usual undertaking as to damages is the price that must be paid by almost every applicant for an interim or interlocutory injunction. An injunction will by its nature require a person to do or abstain from doing some act and so by its nature an order with a tendency to prejudice the person to whom it is directed. The practice of requiring the undertaking recognises that, the injunction being only interim or interlocutory … It may at a later state appear the applicant should in fairness compensate the party enjoined for the harm he has suffered (476).
45 Based upon these cases, it is I think fair to say that the starting point when an injunction is to be granted under the statute is that an undertaking as to damages should be provided. That position does not emerge from the statute itself. It arises from the application of general equitable principles. But it is not a hard and fast rule. As the Supreme Court of Victoria Court of Appeal makes clear in the Bond Brewing decision, it is 'almost every applicant', not every applicant who has to provide an undertaking as to damages. The circumstances of the case will dictate as to whether the undertaking will be required.
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46 An example of a case where an undertaking was not required is the decision of Goldberg J in Australian Securities and Investments Commissionv Prime Life Corporation Ltd [2006] FCA 1072. His Honour held that the scope and content of s 601EE(2) (a section analogous to s 447A) was wide enough to permit an order in the nature of an interlocutory injunction to preserve assets of the managed investment scheme for so long as was needed for the liquidator to be in a position to make an informed judgment on how best to deal with the asset. His Honour felt that the order could be made without an undertaking as to damages being provided. It was the facts of the case which were determinative as to whether or not the undertaking ought to be required.
47 It was submitted on behalf of the plaintiff that Rebel Paper had the right to occupy the premises and, in effect, that the assignment of the lease was a sham. This submission was based in part upon the fact that Rebel Paper continued to pay the lease for the premises. No decision on the parties' respective rights can be made in an interlocutory application such as this. As I have indicated above, it is proper at present to proceed on the basis that both Rebel Paper and the first defendant have the right to occupy the premises.
48 This is a point of central importance. Having concluded that the first defendant does have a right of occupancy, the effect of the injunction is to exclude the first defendant and its directors and agents from entering the premises without the consent of the plaintiff. All this in the absence of an undertaking as to damages. In my view, what is decisive in this case is the entirely unacceptable behaviour of Paul and Luke and to a lesser extent Helen. They have actively frustrated the plaintiff in the exercise of his statutory rights. The plaintiff has at all times evidenced a willingness to cooperate with the defendants and his position has not altered. I am satisfied that a shared access regime could be negotiated if the defendants were prepared to behave in a responsible fashion. The terms of the injunction anticipates such an arrangement. But the present exclusion of the first defendant, its directors and agents from the premises, is the only way that the plaintiff can properly undertake his duties. Any loss that is occasioned to the defendants as a consequence of the injunction is a direct result of the defendants' actions and should not in any way expose him to a claim for damages.
49 For these reasons I declined to order that the plaintiff provide an undertaking as to damages.
50 The costs of the application should be reserved.
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