Yu v Brownvalley Investments Pty Ltd

[2010] NSWSC 652

CITATION:	Yu & anor v Brownvalley Investments Pty Ltd & ors [2010] NSWSC 652
HEARING DATE(S):	6 May 2010
JURISDICTION:	Equity Division
JUDGMENT OF:	Brereton J
EX TEMPORE JUDGMENT DATE:	6 May 2010
DECISION:	Orders for payment of costs.
CATCHWORDS:	PROCEDURE – Costs – Bullock and Sanderson orders – consequential orders
CATEGORY:	Consequential orders
CASES CITED:	Yu v Brownvalley Investments Pty Ltd [2010] NSWSC 253
PARTIES:	Na Min Yu (first plaintiff) Jing Qi Yao (second plaintiff) Brownvalley Investments Pty Ltd (first defendant/cross-claimant) Commonwealth Bank of Australia (second defendant/first cross-defendant) Anthony Lawrence Braunthal (third defendant) Wayne Snelson (fourth defendant/third cross-defendant) Helmut Klein-Beernink (fifth defendant/fourth cross-defendant) Luke Atkins (sixth defendant) Ian Burt (seventh defendant) Bai Shan Li (eighth defendant) Michael Lee (ninth defendant) Donald Lehane Smith (tenth defendant) Golden Harvests Co Pty Ltd (eleventh defendant) Global Assets & Resources Pty Ltd (twelfth defendant) Project People Pty Ltd (thirteenth defendant) Golden Harvests Ltd LLC (fourteenth defendant/second cross-defendant)
FILE NUMBER(S):	SC 2008/280505
COUNSEL:	Mr T Morahan (plaintiffs) Mr A Paterson (first defendant) Mr D McLure (second defendant)
SOLICITORS:	Hall Partners (plaintiffs) Fetter Gdanski (first defendant) David Cohen Solicitor (second defendant)

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

BRERETON J

Thursday, 6 May 2010

2008/280505 Na Min Yu v Brownvalley Investments Pty Ltd

JUDGMENT (ex tempore)

1 HIS HONOUR: In this proceeding I gave judgment on 1 April 2010, [Yu v Brownvalley Investments Pty Ltd [2010] NSWSC 253] when I ordered that the interlocutory injunction granted on 10 September 2008, and subsequently continued, be dissolved, and otherwise directed that the parties bring in short minutes to give effect to my reasons for judgment and adjourned the proceedings to a date to be fixed, initially 23 April 2010 but, on the application of the parties, deferred until today.

2 Brownvalley seeks an inquiry as to damages pursuant to the plaintiffs’ undertaking as to damages given on 10 September 2008, when the plaintiffs obtained their interlocutory injunction restraining the Commonwealth Bank from paying on the bank guarantee. Brownvalley has today adduced evidence showing that, had the bank guarantee been paid when it was called on, and but for the injunction would have been paid, the proceeds would have been applied to reduce indebtedness of Brownvalley, with a consequent saving in interest of $51,227.10. The quantum of that claim is not in dispute.

3 It has been argued for the plaintiffs that because Golden Harvests, and potentially Mr Snelson, were the cause of the proceedings and the loss, the plaintiffs should not be held to their undertaking as to damages. However, in circumstances where the plaintiffs obtained an injunction which ultimately they have been held not to have been entitled to, and the surprise of that injunction gave an undertaking as to damages as between these parties, the circumstance that a third party may have been chiefly responsible for the plaintiff’s predicament, is largely beside the point.

4 I have indicated that, as the application for an inquiry as to damages on the undertaking has only arisen today, or very shortly before today, I would be prepared to adjourn it, if it were thought that further time might lead to additional argument, either as to liability or quantum. However, Mr Morahan, who appears today for the plaintiff, has very responsibly indicated that that is improbable, and in those circumstances it is in the interests of the parties that I resolve this question now. Accordingly I will, in addition to the orders previously proposed, give judgment for Brownvalley against the plaintiffs pursuant to the undertaking as to damages in the sum of AUS$51,227.

5 In the substantive judgment, I indicated (in paragraph 62) that the Commonwealth Bank of Australia would have paid on the bank guarantee but for the interlocutory injunction, and might be expected to do so once that injunction was dissolved. For that reason – and I add for that reason only – it was not appropriate to give judgment against the Bank. Consequently upon publication of the substantive judgment, the Commonwealth Bank of Australia was asked to pay on the guarantee. The Bank paid, but paid only $500,000 of the $550,000 sum of the guarantee, withholding the balance, apparently on account of the costs order which I foreshadowed would be made in favour of the Bank against Brownvalley in respect of the cross-claim.

6 In light of, first, of the fundamental nature and commercial character of a bank guarantee as being practically equivalent to cash; secondly, that it was expressed in terms of an unconditional undertaking to pay the sum referred to; thirdly, the manner in which the Bank conducted the proceedings, which was that but for the injunction it would have paid, and that it would abide by the Court’s determination; there is no basis upon which the Bank ought not pay the balance outstanding under the bank guarantee. That is not to say that it might not be entitled to a stay, if it can establish appropriate grounds for one; but as it has declined to pay when the Court has held that the payment was due, it is now appropriate to give judgment against it for the outstanding balance.

7 As I have indicated in the course of argument, the appropriate way of dealing with that is a judgment against the bank jointly and severally with Golden Harvest, Mr Snelson and Mr Helmut Klein-Beernink for the unpaid sum of $50,000, in addition to the other money judgments previously proposed.

8 So far as costs are concerned, it has been pointed out that the orders I previously foreshadowed did not include one that the plaintiffs pay the Bank’s costs of the plaintiffs’ proceedings against the Bank; as those proceedings ultimately failed, it is appropriate that there be an order to that effect. It follows also that the order previously foreshadowed, that Golden Harvests pay the plaintiffs’ costs, including those that the plaintiffs are ordered to pay Brownvalley, should be extended to include the costs that the plaintiffs are ordered to pay the Commonwealth Bank of Australia.

9 Mr Morahan submitted that, in respect of such an order I should make a Sanderson order against Golden Harvests, but in the circumstances where Golden Harvests is a foreign corporation, and its amenability to and capacity to satisfy it are, to say the least, dubious, then in my view a Bullock order, following the strict course of liability, and not the more pragmatic, but in this case potentially un-enforceable, Sanderson order, is appropriate.

10 Mr Morahan has also foreshadowed that there may be an application to reopen the plaintiffs' case against Mr Snelson. I will, on that basis, preserve that possibility for seven days, which in the circumstances will have to be sufficient for the plaintiffs, who have recently changed legal advisers, to consider and determine their course of action.

11 I make the following orders:

1. Give judgment that the fourteenth defendant Golden Harvests Ltd LLC pay the plaintiffs the following sums:

(a) AUS$550,000;
(b) USD$80,000;
(c) AUS$51,227.


2. Give judgment that the plaintiffs pay the cross-claimant Brownvalley Investments Pty Limited the sum of AUS$51,227.

3. Order that the plaintiffs’ claims be otherwise dismissed.

4. Give judgment that the first cross defendant the Commonwealth Bank of Australia, the second cross defendant Golden Harvests Ltd LLC, the third cross-defendant Wayne Snelson, and the fourth cross-defendant Helmut Klein-Beernink, pay the cross-claimant Brownvalley Investments Pty Ltd the sum of $50,000.

5. Give judgment that the fourth cross-defendant Helmut Klein-Beernink pay the cross-claimant Brownvalley Investments Pty Ltd the sum of $150,000.

6. Order that the plaintiffs pay the second defendant Commonwealth Bank of Australia’s costs of their proceedings as against it.

7. Order that the cross-claimant Brownvalley Investments Pty Ltd pay the first cross-defendant Commonwealth Bank of Australia’s costs of the cross claim.

8. Order that the fourth cross-defendant Helmut Klein-Beernink pay the cross-claimant Brownvalley Investments Pty Ltd’s costs of the cross claim.

9. Order that the plaintiffs pay the first defendant’s Brownvalley Investments Pty Ltd’s costs of the proceedings, including the costs that Brownvalley Investments Pty Ltd has been ordered to pay the Commonwealth Bank of Australia.

10. Order that the fourteenth defendant Golden Harvests Ltd LLC pay the plaintiffs’ costs of the proceedings, including the costs that the plaintiffs have been ordered to pay Brownvalley Investments Pty Ltd and the Commonwealth Bank of Australia.

11. Direct that these orders not be entered before 14 May 2010.

12. Reserve liberty to the parties to apply by arrangement with my Associate prior to 14 May 2010 in relation to this judgment.

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