WesTrac Equipment Pty Ltd v Gendredge (Australia) Pty Ltd - [2002] WASC 215

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS

CITATION: WESTRAC EQUIPMENT PTY LTD -v- GENDREDGE (AUSTRALIA) PTY LTD & ORS [2002] WASC 215

CORAM: WHEELER J

HEARD: 7 JUNE 2002

DELIVERED : 7 JUNE 2002

PUBLISHED : 9 SEPTEMBER 2002

FILE NO/S: CIV 1513 of 2002

BETWEEN: WESTRAC EQUIPMENT PTY LTD (ACN 009 342 572)
Plaintiff
AND
GENDREDGE (AUSTRALIA) PTY LTD (ACN 079 991 816)
First Defendant
GENDREDGE PTY LTD (ACN 096 217 971)
Second Defendant
BRIDGE PUMP COMPANY PTY LTD ACN 096 842 018
Third Defendant
BRIDGE ASSET PTY LTD (ACN 009 332 790)
Fourth Defendant

Catchwords:

Interlocutory injunction - Discharge - Turns on own facts

Legislation:

Nil

Result:

Application allowed

Category: B

Representation:

Counsel:

Plaintiff:     Mr J L Sher
First Defendant             :     Mr M L Bennett
Second Defendant         :     Mr M L Bennett
Third Defendant           :     Mr M L Bennett
Fourth Defendant          :     Mr M L Bennett

Solicitors:

Plaintiff:     Corrs Chambers Westgarth
First Defendant             :     Bennett & Co
Second Defendant         :     Bennett & Co
Third Defendant           :     Bennett & Co
Fourth Defendant          :     Bennett & Co

Case(s) referred to in judgment(s):

Adam P Brown Male Fashions Ltd v Philip Morris Inc (1981) 148 CLR 170
Kirklees Borough Council v Wickes Building Supplies Ltd [1991] 4 All ER 240

Case(s) also cited:

Custom Credit Corporation v Whitehall Holdings Pty Ltd, unreported; SCt of WA; Library No 920231; 7April 1992
T A Edison Ltd v Bullock (1912) 15 CLR 679

WHEELER J: On 7 June 2002 this matter came before me and I granted the defendants' application for the injunctions granted by Miller J on 22 April 2002 to be discharged and ordered that the plaintiff pay the defendants' costs of the day in any event. I now publish my reasons for making those orders.
On 19 December 2000 the plaintiff instituted proceedings CIV 2722 of 2000 ("the earlier proceedings") in this Court against the first defendant in this action for damages for breach of a contract for the sale and purchase of two Caterpillar Hydraulic Excavators. The matter was set down for trial to commence on 22 April 2002. The first defendant was not ready to proceed with the hearing on the first day of trial because its counsel had successfully made an application to withdraw as solicitors on the record at an earlier date. The basis of that application had been a lack of instructions from the sole director and shareholder of the first defendant, Mr Henry Ynema. The plaintiff moved for judgment with damages to be assessed, but after discussions with Mr Ynema from the bar table, who asserted that the first defendant had secured the services of another solicitor and wanted to defend the proceedings and assert a counterclaim, Justice Miller indicated that in the interests of justice he would entertain the adjournment application.
Counsel for the plaintiff also made an ex parte application for a mareva injunction to quarantine the proceeds of sale of equipment by an auction that was scheduled to occur the following day, so that the plaintiff would have some security in the event that it obtained a judgment against the first defendant. In addition to the defendant in CIV 2722 of 2000, the plaintiff sought injunctive relief against three related companies as second, third and fourth defendants.
The equipment the subject of the sale by auction was not owned by the first defendant, but by the third defendant. The terms of the proposed injunction also extended to the two other related companies on the basis of an allegation made in the affidavit of a Mr Ryder dated 22 April 2002 that the assets of the related companies appeared to be dispersed among the four companies so that each should be bound by the terms of the restraint. The Ryder affidavit states that Mr Ynema is the sole director of each of the defendants and holds 90 per cent of the shares of the fourth defendant as beneficial owner of the shares. The remaining 10 per cent are owned by a company in which Mr Ynema holds a 50 per cent beneficial interest.
At the time of the application no papers in the proper form had been filed, and only the Ryder affidavit, handed to the Judge by counsel, was before the court in support of the application for relief. His Honour inquired about whether there was a motion on three occasions, and at one stage counsel advised his Honour that "all the papers" were "being prepared as a matter of some urgency". Before his Honour adjourned briefly to read the papers he had before him (which, it appears from the transcript, were various papers from the file in order to determine Mr Ynema's adjournment application, the Ryder affidavit, the plaintiff's submissions in support of the injunction and the opening submissions for the trial), he observed that it was possible for the plaintiff to "move for injunctive relief without formal motion anyway".
Upon his return after a short adjournment his Honour granted the first defendant's adjournment application and proceeded to examine further the merits of the injunction. Miller J invited Mr Ynema to respond on oath to the issues raised by the injunction proceedings. On the basis of all the material before him, Miller J made the following orders:
"1Subject to these orders, until further order the respondents, their servants, agents, employees, attorneys, or any other person or anyone else on their behalf be and are hereby restrained from removing from the State of Western Australia or in any way disposing of or dealing with or diminishing the value of any of, or causing to be disposed of or dealt with or the value to be diminished of, their assets or property, or any part thereof, including future assets and property, or any part thereof, which are situated in Western Australia, whether in their own name, or not or whether solely or jointly owned, whether directly or indirectly, with or without consideration, except as set out in order 2 below.
2Notwithstanding order 1, the third respondent may sell its assets or property at public auction, but all proceeds from any such auction, less auctioneer's fees and any other costs, shall be paid immediately to this Honourable Court and held for the duration of this injunction.
3The respondent may cause this order to cease to have effect if the respondents provide security by paying the sum of $633,554.62 into Court or make provision for security in that sum by some other method agreed with the applicant's solicitors.
4The applicant have leave to produce to this Honourable Court and rely on documents that were provided to it by the first respondent by discovery in Supreme Court Action CIV 2722 of 2000.
5The applicant have leave to produce to this Honourable Court and rely on documents that were provided to it by Caterpillar Financial Australia Limited pursuant to a writ of subpoena dated 3 December 2001 issued in respect of Supreme Court Action CIV 2722 of 2000.
6There be liberty to any party to apply generally on 24 hours written notice to all other parties.
7The costs of this application be reserved.
8Service of this order be dispensed with."
At no time did the plaintiff offer undertakings for potential damages which might be suffered by the defendants. Nor had any undertakings been volunteered by the plaintiff by 7 June 2002 when the matter came before me, although counsel was instructed to provide them "if so directed" by the Court.
Unless the circumstances are exceptional, the failure of the court to require an undertaking will result in the discharge of the injunction on appeal: Kirklees Borough Council v Wickes Building Supplies Ltd [1991] 4 All ER 240. In addition, as Gibbs CJ, Aickin and Brennan JJ said in Adam P Brown Male Fashions Ltd v Philip Morris Inc (1981) 148 CLR 170 at 178:
"A court must remain in control of its interlocutory orders. A further order will be appropriate whenever, inter alia, new facts come into existence or are discovered which render its enforcement unjust. Of course, the changed circumstances must be established by evidence."
The application before me was not an appeal, and it would not be appropriate for me to review the merits of Miller J's decision. However, I do note that his Honour did not advert to the absence of an undertaking as to damages, and no mention of its lack was made by counsel for the plaintiff. It seems to me likely, in those circumstances, that his Honour incorrectly assumed that the usual undertaking was given, since it is to be expected that a Judge taking the unusual step of granting an injunction in the absence of an undertaking would have expressly adverted to that fact.
The defendants submitted that the failure by the plaintiff to draw attention to the absence of any undertaking before Miller J was a breach of its duty of good faith which would justify discharge of the injunction without more. I accept that, in circumstances where Mr Ynema had no legal representative and no notice of the application, it should be treated as if it was in reality an ex parte application. I observe that the failure to draw attention to the absence of the undertaking was unfortunate. However, since an undertaking was, albeit half‑heartedly, offered to me, I considered it desirable to have regard also to the balance of convenience.
Since the making of the orders, the defendants have had the opportunity, by affidavit of Mr Ynema dated 21 May 2002, to not only meet claims made in the Ryder affidavit about both the dissipation of assets and the auction, but also to put before the Court evidence that was not available to Miller J when the orders were made. I was also provided with the affidavit of C Davies sworn 7 June 2002. It was on the basis of this further affidavit evidence that I dealt with the application to discharge the orders.
The further affidavit evidence goes to both the issues of the seriousness of the case to be tried and to the balance of convenience. As to the latter, the evidence is to the effect that the restraint upon the capacity of the defendants to carry on their business for the hiring and sale of equipment would cause harm to the businesses in that:
•The first, second and third defendants were exposed to the risk of losing contracts because the terms of the injunctions effectively meant that they could not operate their businesses at all.
•The second defendant also had its negotiations concerning lucrative and long‑term international contracts, including a multi‑national joint venture arrangement threatened by the restraints imposed by the orders.
•The fourth defendant owns the plant and equipment that is leased by the first, second and third defendants and also provides accounting services to each of them.
•The uncertainty surrounding various contractual negotiations and the inability to engage in ordinary business affected the goodwill of the companies and the security of their employees.
In these circumstances, the financial harm to which the defendants were exposed was far greater than the damages that may be assessed as payable by the first defendant to the plaintiff in the event that the plaintiff is wholly successful in the earlier proceedings. It was my opinion that there was nothing to outweigh the prejudice to the defendants in being restrained from operating their businesses. In my view the further affidavit evidence was material and established that the continuation of the orders rendered their operation and continued enforcement unjust.