Weston, L.K. v Beaufils, S.W

[1992] FCA 1034

IN THE FEDERAL COURT OF AUSTRALIA	)
1
NEW SOUTH WALES DISTRICT REGISTRY )	No. NG 455 of 1992

1

GENERAL DIVISION 1

BETWEEN:  LAWRENCE KEITH NESTON
Applicant

AND	STEPHEN WAYNE BEAUFILS
First respondent
ANTHONY BROWNLEE
Second respondent
RHONDA BROWNLEE
Third respondent
THE REGISTRAR GENERAL
Fourth respondent
ENTERA PTY LIMITGED
Fifth respondent
RIVERWARD PTY LIMITED
Sixth respondent
OPENBAT PTY LIMITED
Seventh respondent
OPENBRIDGE PTY LIMITED
Eighth respondent
WINGEM PTY LIMITED
Ninth respondent
CREDIT ACCESS CORPORATION PTY LIMITED
Tenth respondent JARRINGTON PTY LIMITED Eleventh respondent HIGHFIELD GROVE PTY LIMITED

Twelfth respondent

CORAM:	Beaumont J.
m:	24 December 1992

EX TEMPORE REASONS FOR JUDGMENT

This matter has been dealt with urgently because a conveyancing settlement has been arranged provisionally for 12 noon today. On 1 September 1992 Morling J., for the reasons he gave, continued some earlier orders I had made in this matter by way of injunction. The orders I had made were on the footing of holding orders without imposing any onus on the respondents to discharge those orders. On 1 September 1992 Morling J heard evidence and full argument from the parties on both sides of the record and for the reasons he gave concluded that, upon the applicant giving the usual undertaking as to damages, the injunctions previously made should continue.

I

On 16 December 1992 I was approached ex parte on
behalf of the applicant to grant further injunctions. he

application was made, I was informed, as a matter of urgency

premises situated 7 - 9 Gerrale Street, Cronulla. ~aving been	in respect of an apprehended discharge of a mortgage of
approached ex parte for orders restraining the discharge of the mortgage, I granted ex parte relief but reserved liberty to any party to apply to discharge or vary the orders I then made.

Subsequently an application was made on behalf of l !

the respondents to vary or discharge the orders and this has	i
proceeded over several days. In accordance with my usual practice, I do not regard the granting of an ex-parte injunction as imposing any obligation upon the respondent to discharge the injunction. Rather, upon the appearance of the respondent, the onus lies upon the applicant to demonstrate, in accordance with the usual principles, that the injunction should be continued upon the iooting that the applicant can show an entitlement to, as it were, a fresh injunction.
As I have indicated, the present matter has proceeded over several days of hearing, not it is true, for the full part of the day on any occasion. An affidavit of Mr Damien Francis Tudehope, solicitor, sworn 16 December, has been relied upon on behalf of the applicant. In the case of the respondents, an affidavit of Anthony John Brownlee, sworn 22 December 1992 has been relied upon. Although Mr Tudehope was not cross-examined, Mr Brownlee was cross-examined at some length. MI Brownlee lives in Queensland and his cross-
examination has not in fact been completed. I have been	informed that it was necessary for business reasons for him to
return to Queensland.
On the last occasion I ordered that Highfield Grove Pty Limited be joined as a 12th respondent to the proceedings. In essence, the applicant's claim is that the funds of his, initially in the sum of $320,000, found their way to Credit Access Corporation Pty Limited, the 10th respondent, and were lent to Highfield Grove Pty Limited on the security of a mortgage over the Cronulla property.
The mortgage is not due for discharge until October 1993 and the applicant seeks on an interlocutory basis to restrain the apprehended discharge of that mortgage. There is evidence, and indeed it is common ground, that it is proposed, unless restrained by order of the Court, to discharge the mortgage and to replace it with another mortgage of more or less the same rate of interest. ~t would appear to be a loan secured on this occasion by a second mortgage, whereas the mortgage granted by Highfield Grove is a first mortgage. There are also questions that have been raised as to the value of the fresh proposed security which I need not detail.
As I have said, Morling J has already dealt with the matter and in his judgment given on 1 September 1992, his Honour indicated that a serious question had arisen for trial
at the final hearing and I need not rehearse that material.	It is not seriously disputed that it is possible to trace from
the sum of $320,000 the loan of $150,000 made to Highfield Grove Pty Limited. The real question in issue at this interlocutory stage, is whether it has been demonstrated, on behalf of the applicant, whether at a final hearing, an injunction would be granted which would extend to Highfield Grove Pty Limited.

M r Gye, who now appears for Highfield Grove Pty

Limited has strenuously argued that there is no association between Mr Beaufils and Highfield Grove. This may be so, although there is at least some evidence to the contrary. I refer in particular to paragraph 7 of Mr Tudehope's affidavit. In a conversation with Mr Heazlewood, Mr. Tudehope recites a conversation that he had from b l r Beaufils who claimed that he was related to Highfield Grove. Moreover, there has been tendered today a letter on the letterhead of Credit Access Corporation Pty Limited dated 13 September 1991, addressed to the directors of Highfield Grove Pty Limited, care of Stephen Beaufils and Associates. But that is not an end of the matter. It is well established that, in appropriate circumstances, an injunction may run against a third party even if no relationship of any particular kind has been demonstrated between the primary parties to the iitigation and that third party. At the very least there is a serious

question to be tried in that connection.

Mr Gye also put a number of submissions on the balance of convenience. He said that Highfield Grove Pty Limited would be prejudiced if it could not proceed with the present arrangements to discharge the mortgage. There is some force in these submissions, but I think that for present purposes, any prejudice should be adequately met by the giving of the usual undertaking as to damages which was previously given and which has now been specifically extended for the benefit of Highfield Grove Pty Limited.

Late in the day a submission was made by Mr Gye that there is a risk that the applicant may not be able to fund the amount of any claim for damages that might have to be met pursuant to an application for compensation under the undertaking as to damages. Under that undertaking, as is usual, the applicant must agree to pay such damages, if any, as the Court orders. It is true that this undertaking and its enforcement are matters of discretion but I think there is a force, indeed considerable force, in the submission put by M r Gye that in the circumstances of this case were the applicant

I to fail in the principal proceedings, the amount to be met pursuant to a claim for compensation made under the undertaking as to damages could be substantial indeed. h his is a matter of some concern especially given the apparent size

of the claim foreshadowed against the applicant on behalf of	the Commissioner of Taxation.
As I have already said this matter is urgent and I propose to deal with it on an emergency footing. In all the circumstances I am of the opinion that the present injunction should be continued upon the usual undertaking as to damages being given. I have already noted that undertaking. The order I previously made was expressed to be made as a matter of form. Until further order I need not then make any further orders. However, as I have already indicated to the ~arties I think that it is appropriate that there be a review of the capacity of the applicant to meet the undertaking as to damages, not only in respect of this matter, in which it would appear the claim, on its face, would not be a large one were the applicant to fail ultimately, but rather with a view to the potential size of a claim being made in respect of the other injunctions in force in this matter.
I therefore grant liberty to any respondent, including Highfield Grove Proprietary ~imited, to apply to discharge or vary any of the injunctions in force in this matter on seven days notice upon the basis that the

, undertaking as to damages in its present unsecured form may be

inadequate.

I certify that this and the preceding six (6)) pages are a true copy of the Reasons

for Judqment herein of his Honour Mr.

Justice ~eaumo

Associate

Dated: 24 December 19 2

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