Wilson Mobile Cranes Pty Ltd v Garry Fulton

[2010] NSWSC 1293

CITATION:	Wilson Mobile Cranes Pty Ltd & Anor v Garry Fulton & Anor [2010] NSWSC 1293
HEARING DATE(S):	25 October 2010, 28 October 2010, 29 October 2010
JUDGMENT DATE :	1 November 2010
JUDGMENT OF:	Slattery J at 1
EX TEMPORE JUDGMENT DATE:	1 November 2010
DECISION:	Upon the plaintiffs giving the usual undertaking as to damages and upon the plaintiffs paying the sum of $120,000 in cleared funds to the defendants:- (1) that the defendants be restrained until further order from: (a) relying upon any asserted lien in relation to the goods referred to in annexure A to the Motion dated 28 February 2010 to secure monies alleged to be owed by the plaintiffs to the defendants; and/or (b) preventing the plaintiffs by their servants or agents from taking reasonable steps to remove the goods referred to in annexure A to the motion from the premises of the defendants. (2) Grant liberty to apply on two days’ notice. (3) Direct that these proceedings be listed before the Expedition Judge at 10am on Friday, 5 November 2010. (4) The district court proceedings will be transferred to the Supreme Court proceedings under s 140(1) of the Uniform Civil Procedure Act. (5) Costs are reserved. (6) Orders are to be entered forthwith.
CATCHWORDS:	EQUITABLE REMEDIES - interlocutory injunction - plaintiffs apply to restrain exercise of a lien claimed over specialised equipment - serious question to be tried found - plaintiffs owe defendants monies in excess of the value of the lien - plaintiffs offer to pay defendants the value of the lien - equipment essential to conduct of plaintiff's business - balance of convenience favours grant of relief on terms - HELD: interlocutory relief granted on terms that the plaintiff pays the defendant the market value of the equipment plus a sum to cover the possibility that the plaintiffs' estimate of the market value of the equipment us wrong.
LEGISLATION CITED:	Warehousemen’s Liens Act 1935, ss 2 and 3
CATEGORY:	Procedural and other rulings
CASES CITED:	Kolback Securities Ltd v Epoch Mining NL (1987) 8 NSWLR 533
PARTIES:	First Plaintiff-Wilson Mobile Cranes Pty Ltd Second Plaintiff-R.W. Pty Limited First Defendant-Garry Fulton Second Defendant- Susan Fulton
FILE NUMBER(S):	SC 2010/353970
COUNSEL:	Plaintiff- A.A. Henskens Defendant-J.J. Johnson, L. Ang
SOLICITORS:	First and Second Plaintiffs-Robert Tomlinson, Herbert Greer First and Second Defendants- Ken Neville Branston, Neville Solicitors

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION
DUTY JUDGE LIST

SLATTERY J

MONDAY, 1 NOVEMBER 2010

2010/353970 WILSON MOBILE CRANES PTY LTD & ANOR v GARRY FULTON & ANOR

EX TEMPORE JUDGMENT

1 HIS HONOUR: These proceedings came before me on the duty list on Thursday 28 October and Friday 29 October. They were heard in parts in the course of a busy list over two days. Due to the press of business on Friday 29 October and the volume of evidence that needed to be read in the proceedings, I indicated that I would give judgment this morning, Monday 1 November 2010.

2 The issues in the proceedings are straightforward, although the evidence is complex. The plaintiffs are operators of a mobile crane hire business. The defendants are transport operators and operators of yard facilities for the transportation, loading, unloading and storage of industrial equipment.

3 The defendants claim a lien over certain parts of the plaintiff's cranes, and to date have kept them at yards they control. The plaintiffs dispute the validity of the lien and seek return of the parts so that they can use them for their crane hire business.

4 Interlocutory relief is now sought. The plaintiffs say there is an immediate threat to their business from the continued claim of the lien by the defendants. This is the interlocutory dispute that I was urged to hear at short notice on Thursday 28 October and Friday 29 October. A little more background is required to determine this matter on an interlocutory basis.

5 I have been presented with a considerable range of evidentiary material in well prepared cases by both sides. So much so that it seems to me that the case is close to readiness for final hearing. As is usual where the Court is giving interlocutory relief it is neither necessary nor desirable for the Court to determine factual issues related to the proposed contest at final hearing.

6 I have however assessed this material to determine if there is a serious question to be tried and where the balance of convenience lies. The short summary below is sufficient for those purposes. It is trite law that in order to successfully obtain an interlocutory injunction of the kind the plaintiffs seek in this case, it is necessary for the plaintiffs to show that there is a serious question to be tried, and that the balance of convenience favours the grant of the injunction sought: Australian Broadcasting Corporation v Lenah Game Meats Pty Ltd [2001] HCA 63; (2001) 208 CLR 199 at [9]-[13], per Gleeson CJ.

The Parties’ Dealings – 2003 to 2010

7 The background facts are the following. Wilson Mobile Cranes Pty Ltd, the first plaintiff, operates a crane hire business. Its principal, Mr Rodney Phillip Wilson, has been in the crane hire business since 1979. The second plaintiff R.W. Pty Limited was incorporated in December 2002 and operated the business as trustee of a family trust until September 2006. After that time R.W. retained ownership of the cranes and associated equipment. Mr Wilson then commenced operating a business of crane hire through Wilson Mobile Cranes.

8 The plaintiffs describe their relationship from October 2006 as one in which RW owns the goods and equipment associated with the business, which it hires to Wilson Mobile Cranes so that it can conduct the crane hire business.

9 The defendants, Mr Garry Fulton and his wife, do not see the relationship between the plaintiffs quite as clearly as this. The correspondence and invoices tendered in evidence show there is a degree of imprecision in the way the plaintiffs have described themselves over time in their dealings with the defendants. Sometimes they appear to deal with the defendants in the name of Wilson Mobile Cranes and at other times in the name of R.W.

10 Of prime interest in the current interlocutory contest is the subject matter of the lien. The equipment in question is best described as crane components. These crane components have been listed in detail in annexure A to the motion now before the Court. Their location and identity I understand from both sides in these proceedings, is not in issue.

11 The plaintiffs say that the equipment is vital to their continuing operations. The equipment comprises most of the operating components of the plaintiffs’ cranes, such as counter weights, jib sections, winches, hook blocks and outrigger plates. These items need to be removed from the plaintiffs’ mobile cranes so the cranes can be transported from place to place for their lifting work. But the components have to be re-attached for the safe and effective operation of the cranes.

12 The crane components are custom made for each crane. The plaintiffs own and operate cranes of 250 and 350 tonne capacity. These cranes are manufactured and imported from Germany. They are difficult to replace in the short term. The components listed in Annexure A can only be replaced for a figure, the evidence suggests, of approximately $1.5 million. Given ordering and delivery response times, replacement equipment could only be delivered within a period of about 12 to 18 months from order.

13 It seems to be undisputed that without these components the plaintiffs cannot operate and R.W. cannot hire its equipment to Wilson Mobile Cranes. In turn Wilson Mobile Cranes cannot hire cranes to the industrial enterprises that need its services.

14 The essential dispute between the parties has its origins in about 2003 or 2004. The cranes were originally kept at certain yards known as Terrys Crane Yards. Then they were moved to a Mr Barry Stimpson's yard at Kemps Creek, which was close to the defendants’ yards.

15 Originally R.W. obtained its transport services primarily from Rex Andrew Transport. In those days Rex Andrews Transport would collect the crane equipment from yards used by R.W. The equipment was loaded on to transport and taken to the various sites to assist in the crane hire. Rex Andrews Transport did not keep the crane components at the yards between jobs.

16 The Fultons saw an opportunity to provide better transport services to the plaintiffs. They also offered to return the crane components and lifting equipment to Barry Stimpson's yard and then at a later time to their own yard.

17 The plaintiffs’ case is that Mr Garry Fulton offered, as part of new arrangements, to keep loading and unloading these crane components, as well as transporting them, for $75 per hour at a single trailer rate and $100 per hour at the double trailer rate. Mr Wilson says he accepted this proposal as essentially a transport proposal rather than one for specific storage.

18 A running account operated between the plaintiffs and the defendants since 2006. The defendants seem somewhat unaware of the changing roles of the first and second plaintiffs. This is not entirely surprising, given the poor communication between the parties about those different roles.

19 Commencing in about 2008 and accelerating through 2009 and 2010, the plaintiffs began to fall badly behind in paying the defendants’ transportation invoices. The plaintiffs promised the defendants to pay those invoices. Most of those payment promises were not honoured. But the plaintiffs’ reply is that there was an agreement for the defendants to wait for some time before payment would be made.

20 The defendants' say the plaintiffs made a series of promises in 2010 that the plaintiffs would pay a then outstanding account of over $500,000. The defendants say that they were promised, approximately $250,000 recently and that sum has also not been paid.

21 The Fultons took action for non payment, commencing proceedings in the District Court of New South Wales against the plaintiffs. They claimed $548,781.43 in respect of outstanding invoices crediting payments of $35,000, making a net claim of $513,781.43. The District Court claim is based on invoices extending over a period between May 2009 and September 2010.

22 The matter came to a head in late September this year. The Fultons first asserted a lien over the crane components after performing a transportation job for Wilson Mobile Cranes for Abbey Group, known as the “Woomargama job”. Mr Wilson says that since then he has been unable to contact the defendants. Whether that is right or not, the dispute intensified from that time resulting in escalating correspondence between their respective solicitors.

23 Although the District Court proceedings were already commenced early in October, the plaintiffs say the defendants issued a set of alternative invoices, for more than just the loading and unloading of components and equipment. These new invoices represented a further amount of $138,000 on account of storage of counterweights and associated crane equipment. These new invoices covered a period of some 84 months, or 7 years.

24 The plaintiffs say that these invoices are not genuine and have been recently created to provide the substantive evidence for the lien which is now claimed. The defendants say that the arrangements they originally made with the plaintiffs clearly involved agreements for storage for hire but that the payment and invoicing for that storage was agreed to be deferred.

25 At one level the late invoicing over a period of seven years looks somewhat suspicious. It comes when the lien, depending on the existence of storage charges, is first asserted. But the defendants deploy a supportable case in response, arguing that there were early discussions about storage and a long standing agreement to defer charging for storage. Which of the plaintiffs and the defendants is right about this contested matter will be determined at final hearing.

26 The plaintiffs’ business is subject to a number of fixed and floating charges to financial institutions. The defendants' counsel highlighted that the plaintiffs have not as yet been required to put on a defence in the District Court proceedings. The plaintiffs submit that the parties agreed for valuable consideration that the sums claimed were not presently due. The defendants dispute this.

27 When asked by the Court whether or not the quantum of the District Court claim was actually disputed by them the plaintiffs were not in a position to give a clear answer. However the plaintiffs say they propose to file a cross-claim in the District Court for alleged consequential losses associated with the Fultons’ claim of the lien. It is said this will constitute a set off of the order of about $250,000 against the defendants’ District Court claim. There is money due to the defendants in the District Court. The amount not the subject of any set off is $250,000.

Serious Question to be Tried

28 There is a serious question to be tried. The summons claims the return of the crane components. It is undisputed that between them the plaintiffs are entitled to possession of the goods. A lien under the Warehousemen's Liens Act 1935, s 3 is claimed by way of defence. Warehousemen’s Liens Act, ss 2 and 3 relevantly provide:-

“2 Definitions

In this Act, unless the context otherwise requires:
Goods shall include personal property of every description that may be deposited with a warehouseman as bailee.
Warehouseman shall mean a person lawfully engaged in the business of storing goods as a bailee for hire.

3 Declaration of warehouseman’s lien

Subject to the provisions of section 5, every warehouseman shall have a lien on goods deposited with him or her for storage, whether deposited by the owner of the goods or by his or her authority, or by any person entrusted with the possession of the goods by the owner or by his or her authority.”

29 The issues that will arise in the proceedings at final hearing are: whether the defendants were engaged in the business of storing goods; whether the defendants were bailees for hire; and, whether the goods were deposited for storage. On each of those matters there is a contest. On each of those matters the plaintiffs point to evidence that would support their contention that no lien exists.

30 On the available evidence the plaintiffs challenge that the Fultons are engaged in the business of storing goods. The success of that argument will depend in part upon the parties' past discussions, as well as upon evidence yet to be adduced about the course of the defendants’ business. There are disputes about the conversations between the parties regarding agreements for storage, and about the agreed mechanisms by which the goods were deposited.

Balance of Convenience

31 The plaintiffs have shown a serious question to be tried. The final question becomes the balance of convenience. This is where the heart of the contest lies. It is exquisitely difficult for both parties.

32 In a situation such as this, where the interlocutory relief sought is almost identical to the final relief the Court is often directed to an assessment of the relative strength of the parties’ cases. The injustice that would be caused to the plaintiff by not granting the injunction is balanced against any injustice to the defendant by granting it. The applicable principles have been well explained by McLelland CJ in Eq in Kolback Securities Ltd v Epoch Mining NL (1987) 8 NSWLR 533, at 536A-D:-

“Apart from this, although normally the Court “does not undertake a preliminary trial, and give or withhold interlocutory relief upon a forecast as to the ultimate result of the case” ( Beecham Group Ltd v Bristol Laboratories Pty Ltd (1968) 118 CLR 618 at 622), there are some kinds of case in which for the purpose of seeing where lies the balance of convenience (or more specifically “the balance of the risk of doing an injustice” — see per May LJ in Cayne v Global Natural Resources plc [1984] 1 All ER 225 at 237, cf per Brennan J in Brayson Motors Pty Ltd v Federal Commissioner of Taxation B (1983) 57 ALJR 288 at 292; 46 ALR 279 at 285), it is desirable for the Court to evaluate the strength of the plaintiff's case for final relief: see, eg, Brayson Motors Pty Ltd v Federal Commissioner of Taxation (at 292; 285); Castlemaine-Tooheys Ltd v South Australia at 682; 559. One class of case to which this applies is where the decision to grant or refuse an interlocutory injunction will in a practical sense determine the substance of the matter in issue: see, eg, NWL Ltd v Woods [1979] 1 WLR 1294 at 1306-1307; [1979] 3 All ER 614 at 625-626 per Lord Diplock; Cayne v Global Natural Resources plc . The present is such a case. The substantial matter in issue is whether Epoch should be permitted to proceed with the issue of non-renounceable rights in accordance with the announcement of 13 March 1987. That will be irrevocably determined in a practical sense by the grant or refusal of an interlocutory injunction.”

33 Here it cannot be said that either the plaintiffs or the defendants have a stronger case. The probabilities of success on the lien issue are evenly balanced. The relative strength of the parties’ cases is not a factor relevant to the balance of convenience.

34 If the injunction is not granted the plaintiffs stand to have their business collapse. If the injunction is granted the Fultons stand to lose what they claim is a genuine lien.

35 There are troubling factors. The plaintiffs’ slow payment to the defendant raises the question of the plaintiffs’ possible insolvency. Even if the second plaintiff RW seems to be solvent, the fact remains that at various times both RW and Wilsons Mobile Cranes appear to have denied any liability to pay the Fultons the sums claimed in the District Court. Just who owes what to the Fultons is a matter about which the plaintiffs are still keeping their cards close to their chest.

36 Balanced against that is the fact that the equipment, the subject of these proceedings, has a peculiar value. The equipment is immensely valuable to the plaintiffs. But in the hands of the defendants is of limited value. At an interlocutory stage the plaintiffs’ evidence on the issue of value is uncontradicted. Their initial evidence was that the crane components in annexure A were worth about $50,000. But by the time the interlocutory proceedings concluded there was evidence that the components were probably worth between $80,000 - $90,000 as scrap metal on the open market.

37 This range represents the total value of the lien. The amount that the defendants claim is due to them is larger. At the conclusion of the evidence and argument on Friday 29 October counsel for the plaintiffs indicated that he had instructions that they would offer to pay $100,000 to the defendants on account of the monies due on various accounts to the defendants if the plaintiffs obtained the Court's equitable intervention. This sum was said to represent the value of the goods that were subject of the lien plus an amount which would cover some interest, some transaction costs, and the uncertainty about the precise market value of the components. The offer was made so that the plaintiffs could satisfy their obligation to do equity in order to obtain equitable relief. Such conditions are commonly imposed on applicants for interlocutory relief in such circumstances in order to do justice between the parties: Forsyth v Blundell (1973) 129 CLR 477 at 505 per Walsh J.

38 In my view this offer is a powerful consideration in determining what is the appropriate course for the Court to take at this stage. The plaintiffs have offered to pay this sum directly to the defendants, rather than simply paying it into Court. Given the way the District Court proceedings have been approached so far by the plaintiffs, this is an unexpected development. The payment would give the defendants the full value of the security they claim.

39 Balancing these factors, in my view the appropriate course is for the Court to grant the injunction. However I am conscious of the fact that the proceedings have been brought on very quickly, although very efficiently by both sides. Counsel on each side have said that the parties have rushed to put evidence together. The injunctive relief should be granted on terms that the plaintiffs make a payment to the defendants based on the market value of the components. In my view a degree of tolerance needs to be built into that market value figure. The figure to be paid to the defendants should be sufficient to cover the fact that the plaintiffs might well turn out to be wrong about the value of the components as scrap. The components may actually be worth more in the defendants' hands than the plaintiffs now say. The appropriate way to protect the defendants against this possibility is to require the plaintiffs to pay the sum of $120,000 to the defendants as a term of the injunctive relief.

Conclusion and Orders

40 Accordingly, I will order that upon the plaintiffs giving the usual undertakings as to damages and upon the plaintiffs paying the sum of $120,000 in cleared funds to the defendant, the defendant will be restrained from relying upon any asserted lien in relation to the goods referred to in annexure A to the plaintiffs’ notice of motion.

41 I am conscious of the fact that if these two parties are to continue to trade with one another that their positions may change at short notice. It is unclear when the matter will come on for hearing. It seems to be appropriate to grant liberty to apply on two days' notice.

42 The parties have discussed in the course of submissions the possibility of listing the matter before the expedition judge. The next expedition list will be held on 5 November 2010. I will list the proceedings before the expedition judge for the parties to seek such relief by way of expedition as they see fit.

43 Counsel on both sides also raised with the Court the issue of the separate District Court and Supreme Court proceedings. For an efficient contest for final relief it seems to me appropriate to transfer the District Court proceedings to this Court so they can be heard together.

44 The orders I make are:-

Upon the plaintiffs giving the usual undertaking as to damages and upon the plaintiffs paying the sum of $120,000 in cleared funds to the defendants:-

(1) that the defendants be restrained until further order from:

(a) relying upon any asserted lien in relation to the goods referred to in annexure A to the Motion dated 28 February 2010 to secure monies alleged to be owed by the plaintiffs to the defendants; and/or

(b) preventing the plaintiffs by their servants or agents from taking reasonable steps to remove the goods referred to in annexure A to the motion from the premises of the defendants.

(2) Grant liberty to apply on two days’ notice.

(3) Direct that these proceedings be listed before the Expedition Judge at 10am on Friday, 5 November 2010.

(4) The district court proceedings will be transferred to the Supreme Court proceedings under s 140(1) of the Uniform Civil Procedure Act .

(5) Costs are reserved.

(6) Orders are to be entered forthwith.

**********