Thompson v Albarran - [2006] SASC 76

Supreme Court of South Australia
(Civil: Application)
THOMPSON & ORS v ALBARRAN & ORS
Judgment of The Honourable Justice White (ex tempore)
3 March 2006
EQUITY - EQUITABLE REMEDIES - INJUNCTIONS - INTERLOCUTORY INJUNCTIONS
Application for interlocutory injunction restraining until further order the disbursement of proceeds of sale of land, water licence and crops pending determination of proprietary interest - where plaintiffs assert an interest that is a profit a prendre - whether a serious question to be tried - whether balance of convenience favours grant of interlocutory injunction - consideration of discretionary factors - requirement of an undertaking as to damages.
Held: subject to the provision of an undertaking as to damages, appropriate to issue interlocutory injunction - application granted.
Supreme Court Rules 1987 (SA), r 34; Water Resources Act 1997 (SA); Corporations Act 2001 (Cth), s 9, referred to.
Australian Securities Commission v United Tree Farmers (1997) 24 ACSR 94; Australian Softwood Forests v Attorney-General (NSW) (1981) 148 CLR 121; Clos Farming Estate v Easton [2001] NSWSC 525, considered.

THOMPSON & ORS v ALBARRAN & ORS
[2006] SASC 76

WHITE J (ex tempore): I have heard today an application for an interlocutory injunction. The plaintiffs seek an injunction restraining until further order the disbursement of the proceeds of sale of some land, of a water licence and of pistachio nuts which have been grown on the land, pending the determination of their claim to a proprietary interest in the land, the water licence and the pistachio nuts.
There are four plaintiffs. Each of them entered into an investment scheme in 1986 or 1987 for the growing of pistachio nuts. There were numerous other persons who also entered into the same scheme at about the same time. The four plaintiffs have indicated that they bring this action as a representative action for those other persons. They propose seeking orders pursuant to SCR 34 so as to make it a representative action. That has not occurred yet as the proceedings were instituted on 24 February 2006.
The plaintiffs rely upon an affidavit sworn by the first plaintiff, a Mr Thompson and on an affidavit sworn by their solicitor, Mr Daenke. That affidavit material asserts that the circumstances disclosed in Mr Thompson’s affidavit are also (relevantly) the circumstances of the other three plaintiffs and, as I was asked to infer, of the members of the group for whom it is intended that this action be brought as a representative action.
In 1986 and 1987 the plaintiffs and the other members of the group entered into agreements with Perpetual Plantations of Australia Ltd. That company is now Perpetual Plantations of Australia Pty Ltd. I will refer to it as “Perpetual Plantations”.
The 1986 and 1987 agreements permitted the plaintiffs to enter upon identified portions of land at Peebinga (“the Peebinga land”) which was at that time leased by Perpetual Plantations pursuant to a Crown lease. The agreements permitted the plaintiffs to plant, grow, tend, cultivate and harvest pistachio nuts. The agreements were for a term of 50 years with a right of renewal. Perpetual Plantations agreed to supply an adequate amount of water for the growing of pistachios. It seems that at some stage Perpetual Plantations obtained a water licence, which licence I infer was granted pursuant to the provisions of the Water Resources Act1997 (SA)[1].
[1] Water Resources Act 1997 (SA); or its predecessor, Water Resources Act 1990 (SA); or its predecessor Water Resources Act 1976 (SA).
Beyond noting that the agreements permitted the plaintiffs to enter the land for the purposes which I have identified, it is not necessary for the purposes of the present application to describe the content of the agreements in any detail.
Acting pursuant to those agreements, the plaintiffs and the other members of the group paid to Perpetual Plantations an initial capital sum and then proceeded to plant and cultivate pistachio trees on the land. For that purpose the plaintiffs entered into agreements with third parties and made payments from time to time to those third parties and to Perpetual Plantations.
In May 1991 Perpetual Plantations acquired the freehold of the Peebinga land.
In 1993 the plaintiffs entered into agreements with Perpetual Plantations called “Plantation Maintenance Agreements”. In consideration of specified annual payments, Perpetual Plantations agreed to supply, and did supply, services associated with the cultivation and upkeep of the pistachio trees.
The affidavits indicate that it takes approximately five years before pistachio trees bear any fruit and approximately 15 years before they reach maturity. They have a bearing life of approximately 50 years. It can be seen, therefore, that the plaintiffs’ investments were of a long-term nature. All parties must have contemplated that many years would elapse before the investors could obtain any return on their investment.
The plaintiffs assert that the entry into the written agreements and the performance of them to date has resulted in them having an interest in the Peebinga land. The plaintiffs contended that their interest is a profit à prendré, or at least an interest in the nature of a profit à prendré.
In order to understand the position of the defendants, it is necessary to say a little more about intervening events. In 1999 there was a change in the control of Perpetual Plantations. A company named Pegara Pty Ltd became the sole shareholder in Perpetual Plantations. From July 2000 the two directors of Perpetual Plantations have been Donald Brownlie Fleming and his wife Dee Dee Fleming. Mr Fleming and a Mr Platt own the whole of the shares in Pegara Pty Ltd. Beginning in February 2000 Perpetual Plantations has mortgaged its interest in the Peebinga land (which had previously been unencumbered). In February 2000, a mortgage of the land was granted to the National Bank; that mortgage was stamped to $975,000. In 2002 Perpetual Plantations also granted a charge to the National Australia Bank over its water licence. It is not clear to what purpose any monies advanced by the National Australia Bank pursuant to the mortgage or to the charge were applied.
Next, on 9 April 2002, Perpetual Plantations granted a mortgage and charge to Bridgecorp Finance Pty Ltd. The mortgage and the charge to Bridgecorp Finance were stated to be a collateral mortgage supporting an advance to a company called Elan Trading Corporation Pty Ltd. The parties before me agreed that Elan Trading Corporation is a company controlled by the same Mr Fleming, to whom reference was made earlier.
On 10 February 2003 Perpetual Plantations and Mr Fleming and Mrs Fleming lodged with the Australian Securities and Investment Commission (“ASIC”) a document entitled ‘Enforceable Undertaking’. That enforceable undertaking referred to the investor agreements and the right of the investors to produce from the pistachio trees. It referred to the ownership of the land and the pistachio trees remaining with Perpetual Plantations. Perpetual Plantations and Mr and Mrs Fleming undertook, in effect, to take various steps to make the investment scheme involving the plaintiffs conform with the requirements in the Corporations Act 2001 (Cth) concerning managed investment schemes. The undertaking was lodged with ASIC, apparently in response to action taken by it arising from a concern that the investment scheme did not comply with the provisions concerning managed investment schemes contained in the Corporations Act.
In January 2004 Coonawarra Gold Pty Ltd, a company also controlled by Mr Fleming, borrowed money from the defendant Robier Holdings Pty Ltd (“Robier Holdings”). On 19 March 2004 Perpetual Plantations granted a mortgage to Robier Holdings, which was a collateral mortgage, supporting the advance to Coonawarra Gold. At the same time each of the mortgages and charges to the National Australia Bank and to Bridgecorp Finance respectively were discharged. The mortgage and charge to Robier Holdings were each stamped to $4.85 million.
On 8 February 2005 Robier Holdings transferred the mortgage from Perpetual Plantations to Thunder Enterprises Ltd (“Thunder Enterprises”), a company registered in Gibraltar. The charge in favour of Robier Holdings was not transferred and remained with Robier Holdings.
Two days later the mortgage to Robier Holdings was upstamped so as to be able to secure $6 million. The purpose to which the monies secured by the Robier Holdings or Thunder Enterprises mortgage was put is not clear, apart from the discharge of the National Australia Bank and Bridgecorp Finance mortgage and charges. The relationship between Robier Holdings and Thunder Enterprises is unclear, but it seems that they share at least one common director, a Mr Hellier.
On 8 June 2005 the Federal Court made an order that the investment scheme be wound up. A Mr Scott was appointed the liquidator of the scheme. He was authorised to sell the entire assets of the scheme and to administer the net proceeds to the members pro rata, according to their interest. Liberty to apply in relation to any matter arising in the winding up was granted. As I understand it, the scheme has not yet been wound up.
That brings me, then, to the position of the three individual defendants. On 11 November 2005 they were appointed joint receivers and managers of Perpetual Plantations. One week later an administrator of Perpetual Plantations was appointed and on 14 December 2005, following a creditors’ resolution, two liquidators were appointed to Perpetual Plantations.
The receivers and managers of Perpetual Plantations wish to sell the Peebinga land. It is agreed by the parties in these proceedings that it is appropriate that the Peebinga land be sold. The receivers and managers have located a purchaser and intend to proceed with the sale for a sale price of $3.18 million.
I was informed by Mr Anderson, who appeared for the three individual defendants, that subject to the outcome of these proceedings, it has been contemplated that contracts would be exchanged next week and that settlement would take place six weeks later. The receivers and managers naturally wish to know the outcome of the present application before entering into any such contract.
As I have said, the plaintiffs do not object to the sale of the land or, for that matter, of the water rights associated with the land but they do assert an interest in the land and, therefore, in the sale proceeds. They also assert an interest in the proceeds from sale of pistachio nuts grown on the Peebinga land, which Perpetual Plantations presently holds or will hold as a result of sale of the current crop. The plaintiffs assert that they have not received any payment in respect of the sale of pistachio nuts for the last several years.
The plaintiffs are concerned that if the sale goes ahead, the sale proceeds will be disbursed either to Robier Holdings or to Thunder Enterprises. As Thunder Enterprises is registered in Gibraltar, the plaintiffs are concerned that those proceeds may be put beyond their reach, even if it they be found ultimately entitled to an interest in the land and to a portion of the settlement proceeds.
The three individual defendants were represented before me by Mr Anderson and Mr Turner. The two corporate defendants - Robier Holdings and Thunder Enterprises - were not represented at all. I was informed that they have been served with the proceedings. That service occurred by way of email. Mr Anderson acts for Robier Holdings and Thunder Enterprises in other matters and has received instructions from them in relation to these proceedings but did not have instructions to act for them on the present application. He informed me that no point was taken about the form of service. I am satisfied that it is appropriate to proceed in their absence, each being aware of the proceedings and having had an opportunity to be present.
As this is an application for an interlocutory injunction, I must first be satisfied that there is a serious question to be tried. I am so satisfied. I am satisfied that there is a serious question as to whether the plaintiffs do have an interest in the Peebinga land and in the water licence and in any monies held by Perpetual Plantations arising from the sale of pistachio nuts, given that it has been asserted that there has not been any distribution from the sale for some years.
The circumstances disclosed concerning the plaintiffs’ interest in the investment scheme seem to me to be generally similar to those discussed by Finn J in Australian Securities Commission v United Tree Farmers (1997) 24 ACSR 94. Finn J accepted that the investors in the scheme then being considered by him had an interest in the land, although it was not necessary for him to decide whether it was an actual profit à prendre or an interest akin to a profit à prendre. The precise content of a profit à prendre is a matter of some complexity. I refer to the discussion by Mason J in Australian Softwood Forests v Attorney-General (NSW) (1981) 148 CLR 121 at 132-133 and to the discussion by Bryson J in Clos Farming Estate v Easton [2001] NSWSC 525. As this is an interlocutory application, it is not necessary for me to consider that in detail. It is sufficient for me to be satisfied that there is at least a serious issue to be tried on that question. Even if the plaintiffs’ interest falls short of being that profit à prendre, it may still be sufficient to constitute an interest in the land.
I am also satisfied that there is a serious issue to be tried with respect to the interests in the water licence. I do so because I am satisfied that water could only be obtained from the underground basin for the purposes of irrigation for the pistachio nuts pursuant to a licence granted under the Water Resources Act and because the original agreement which the investors entered into required Perpetual Plantations to provide an adequate supply of water. The water licence was the means by which that obligation could be discharged.
I am also satisfied that there is a serious question to be tried as to whether or not the interest of the plaintiffs prevails against the interests of Robier Holdings and Thunder Enterprises, even though they have registered mortgages. I am satisfied that a serious question arises because of the prospect that each had notice of the interest of the individual investors. I refer again to the enforceable undertaking lodged with ASIC. In addition to the undertaking being on the ASIC file concerning Perpetual Plantations it was also available on its website. The plaintiffs submitted that by this means alone, Robier must have been on notice. They relied on the expression of opinions by Mr Daenke of what a reasonably competent solicitor would have done by way of searches in acting for Robier Holdings in the obtaining of the mortgage. Mr Anderson accepted that Robier Holdings had been represented by solicitors, and accepted that it was reasonable for this Court to assume, for the purposes of the present application, that Robier was aware, at the relevant time, of the content of the enforceable undertaking. The enforceable undertaking does not explicitly indicate that the individual investors had an interest in the land and one would have to read it carefully before concluding that they might, but in my opinion it does disclose enough to indicate, at least, a line of inquiry about the existence of such an interest. Whether or not it was sufficient in fact, or should have been sufficient in fact, for Robier Holdings to have appreciated the interest of the individual investors is not a matter which I need presently determine. It is enough that I am satisfied that there is a serious question to be tried about that aspect of the matter. The existence of a common directorship between Robier Holdings and Thunder Enterprises is also sufficient to indicate a serious question to be tried about the latter’s knowledge of the possible interest of the plaintiffs.
I turn then to the balance of convenience. The first matter relied on by the plaintiffs was the prospect that if unrestrained the sale might proceed and the monies be disbursed to the mortgagees, thereby being put beyond the reach of the plaintiffs, so that even if they were ultimately found to have an interest in the Peebinga land which prevailed over that of the mortgagees, that might be of no practical utility for them. In this respect the fact that Thunder Enterprises is incorporated in Gibraltar is relevant. Although it was not necessary of course for the defendants to place evidence before this Court regarding the financial circumstances of Robier Holdings or Thunder Enterprises, the fact of the matter is that they have not done so. I have nothing from which I could infer that they would be able to meet any liability which might ultimately be found against them.
The plaintiffs have sought informally some arrangement with Perpetual Plantations through its receivers and managers for the protection of their interests until the dispute as to their interests in the land can be resolved. No such informal arrangement has been reached.
I note that each of the liquidators of the scheme and of Perpetual Plantations, indicated that they either supported, or at least did not object to, the interlocutory order being made.
The plaintiffs submitted that the defendants would not suffer any prejudice, or at least that there was no evidence of any likely prejudice to them, in the event that the injunctive orders were made, other than the inability to make use of the settlement proceeds pending the determination of their claims.
Mr Anderson advanced a number of matters concerning the balance of convenience. The first was that it was more appropriate for this application to be pursued in the Federal Court and, if made at all, should be made by the liquidator of the investment scheme rather than by individual investors. That was so, he submitted, because of the orders made by Mansfield J in the Federal Court on 8 June 2005 when he ordered the winding up of the investment scheme. Mr Anderson drew attention to the fact that by the orders made on 8 June 2005, an authority was granted to the liquidator to sell the entire assets of the scheme and to distribute the net proceeds to the members of the scheme pro rata to their interests in the scheme. Mr Anderson submitted that that was an express power in the liquidator to take action to sell the Peebinga land. Alternatively, if there was a dispute about the Peebinga land being part of the scheme assets, the liquidator should seek a determination of that question in the Federal Court. Similarly Mr Anderson submitted that the water licence and the sale of the pistachio nuts, should be regarded as assets of the scheme. I consider that Mr Anderson’s submission might be well made with respect to the proceeds from the sale of pistachio nuts.
The position, however, I think is different in respect of the land and in respect of the water licence. It is not at all clear to me that the Peebinga land does constitute a scheme asset or scheme property which could be the subject of action by the scheme liquidator. In saying that, I have particular regard to the definition of ‘scheme property’ contained in s 9 of the Corporations Act. It does not seem to me to be apparent that the land falls within that definition. It is not necessary for me to express a concluded view about that. It is enough that I am satisfied that the position is unclear and it is understandable that neither the scheme liquidator nor the present plaintiffs would wish to pursue the relief which the plaintiffs presently seek in the context of the orders made by Mansfield J.

Furthermore, it seems to me that Mr Anderson’s point is more one directed to the question of which court it is which is appropriate to make orders to the effect sought by the plaintiffs, rather than the appropriateness of the orders themselves. I am not persuaded that the plaintiffs are unable themselves to institute proceedings seeking injunctive relief.
Mr Anderson’s next point was that the present plaintiffs account for an interest in a very small proportion of the Peebinga land. Mr Anderson suggested that their interests aggregated 1.6 hectares in a scheme occupying 225 hectares. It was inappropriate, he submitted, for such minor interests to seek, in effect, to “freeze” the proceeds of sale of the Peebinga land. There is force in that point but, at the same time, I note again that the action brought by the plaintiffs is to be brought on behalf of numerous other individuals. I was told that those individuals both by number and the area of land in which an interest is asserted, account for approximately 30 per cent of the investment scheme. Viewed in that light, the interest which the plaintiffs represent should be regarded, in my view, as being more than insignificant.
Next Mr Anderson drew attention to the attitude of Robier Holdings and Thunder Enterprises as communicated to the receivers and managers. That was that if an injunction was granted, then no sale at all could proceed because they would not agree to release their securities in the absence of the whole of the proceeds of sale (after deduction of sale costs) being released to them. I agree that that is a relevant consideration but I note that neither Robier Holdings or Thunder Enterprises, although named as defendants in these proceedings, have committed themselves on oath to that position. It is unclear whether that is a position adopted by Robier Holdings and Thunder Enterprises for the purposes of these proceedings only, or whether it has an underlying commercial rationale. Mr Anderson did not point to any underlying commercial reason why Robier Holdings or Thunder Enterprises should take that position. Whilst I am not prepared to infer that they would take that position for some ulterior purpose, I do take into account when considering the balance of convenience, that no evidence of any commercial reason for that stance has been provided.
Mr Anderson drew attention to some evidence indicating that the pistachio plantation needs some significant work in the near future. The evidence is that the receivers and managers do not have the resources with which to attend to that work. There is the prospect of further deterioration and degradation of the plantation if the sale does not proceed and that work is not carried out. Again I accept there is force in that consideration. I do not regard it, however, as conclusive. It would seem to me to be a matter which bears upon the commercial judgment required of Robier Holdings and Thunder Enterprises as to whether they take action which would preclude the sale of proceedings.
In summary, I am satisfied that the balance of convenience points in favour of the grant of an injunction.
There remain some discretionary considerations. One fundamental matter is that, so far, the plaintiffs have not proffered any undertaking as to damages. I would not be prepared to grant an injunction at all unless such an undertaking is provided. Given the nature of the action, being a representative action, I understand that there may be difficulties for the individual plaintiffs in providing such an undertaking but, nevertheless, I do not think it an appropriate exercise of the court’s discretion to grant an injunction in its absence.[2] The circumstances in commercial litigation in which an interlocutory injunction will be granted without an undertaking as to damages being provided are likely to be exceptional.[3] This is not such a case.
[2] Air Express Ltd v Ansett Transport Industries (Operations) Pty Ltd (1981) 146 CLR 249 at 311 per Gibbs J.
[3] Blue Wedges Inc v Port of Melbourne Corporation [2005] VSC 305 at [11]-[12] per Mandie J.
Another discretionary consideration is the question of the time which might elapse before this matter can come to trial, and therefore the time during which the injunctions, if made, would continue to operate. Obviously, it is desirable this matter be brought to trial as soon as possible. At the present time no time frame for a hearing can be put in place. I am aware, however, that it might be possible, with the parties’ cooperation, for arrangements to be made for an expedited hearing of the matter.
Mr Anderson submitted that as the interest of the plaintiffs, even as a collective group, could not exceed approximately 30 per cent of the proceeds from the sale of land, 30 per cent of the proceeds from the sale of the water licence, and 30 per cent of the proceeds from the sale of the pistachio nuts, any injunction should be limited to 30 per cent of the proceeds from the sale of those respective items of property.
I consider that there is considerable force in that submission. However, I am not satisfied that the parties have yet addressed all the implications which might arise from an order injuncting disbursement of part only of the proceeds of the sale. Accordingly, I propose to issue an injunction which will have the effect that all the sale proceeds will be required to be paid into court, but I indicate that this is something to which I expect the parties to give further attention prior to the settlement of any sale of the land. It is a matter in respect of which the defendants in particular could exercise the liberty to apply.
In conclusion, subject to the provision of an undertaking as to damages, I am satisfied that it is appropriate to issue injunctive orders as sought by the plaintiffs. I will hear from the parties as to precise form of the orders.