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mar910007

IN THE SUPREME COURT
OF THE NORTHERN TERRITORY OF AUSTRALIA

No. 866 of 1988

BETWEEN:

KEITH W SKINNER as Receiver of EPITOMA PTY LIMITED f Receiver
and Manager Appointed)
First Plaintiff
AND:

EPITOMA PTY LIMITED (Receiver

(

and Manager Appointed)
Second Plaintiff
AND

S G ALLAN (NT) PTY LIMITED
First Defendant
AND:
MANFRED HOCHWALLNER
Second Defendant

CORAM:	MARTIN J.

REASONS FOR JUDGMENT
(	(Delivered 11 March 1991)

The first plaintiff applies to be released from the usual undertakings as to damages given by him when he sought an interlocutory injunction and to be discharged from the suit as a party.	It appears he was appointed  as Receiver and Manager of all of the assets and undertakings of the second plaintiff by a Deed of Appointment dated 29 November

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1988 pursuant to a registered debenture charge between Westpac Banking Corporation Limited as encumbrancee and the second plaintiff as encumbrancer.	He caused these proceedings to be commenced on 30 November 1988 in that capacity.	The endorsement on the writ asserted that the assets and undertaking of the second plaintiff included property known as "Point Stuart Abattoir" together with fixtures, fittings, improvements, plant and equipment located at that place and goes on to assert that:
(	The first defendant was the lessee of the abattoir pursuant to the Memorandum of Lease between the
second plaintiff as lessor and the first defendant as lessee and that it was at that time in possession of the abattoir.

The first defendant had not made any payment of rental under the lease for a period in excess of 3 months and that as a result the plaintiff's say
(	they had power to re-enter the abattoir by virtue
of the provisions of the lease, the debenture, the Deed of Appointment and s. 192 - III of the Real Property Act.

The second defendant was a servant of the first defendant and a principal of an associated company (the name of which was unknown to the plaintiffs)

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which had for several months been negotiating with the second plaintiff for the purchase of the abattoir.

The defendants had unlawfully removed or caused or permitted to be removed from the abattoir certain tools, plant and equipment being part of the assets of the second plaintiff, and the plaintiffs apprehended that further such plant and equipment
would be removed unless the defendants were
(
restrained 'from doing so by the Court.

The relief sought by the plaintiffs was an order pursuant to the Real Property Act that the first defendant give up possession of the abattoir, a declaration that the first or, in the alternative, the second plaintiff was entitled to possession of the abattoir and all fixtures, fittings, improvements, plant and equipment ("the
equipment"), payment of arrears of rental, damages for
(		breach of lease, damages for conversion and trespass in respect of the equipment, distress for rent in respect of certain property of the first defendant, being meat then
located at the abattoir, temporary and permanent injunctions restraining the defendants and each of them from damaging, removing, disposing of or howsoever interfering with any of the equipment located at the abattoir, and costs.	On the same date the plaintiffs caused an ex parte interlocutory

summons to be issued seeking the restraining orders referred to in the writ and consequential procedural orders.	That summons came before a Judge of this Court on that day when, upon the first plaintiff giving the usual undertaking as to damages, the restraining order was made to have effect until 5pm on 8 December 1988.	The period of the restraint was extended until 12 December 1988 when counsel representing both plaintiffs and the defendants appeared before the Judge and, upon the usual undertaking as to damages being given by
the first plaintiff, the restraining order made on 30
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November 1988 was continued pending the hearing of the
action or until further order.

In his affidavit of 30 November  1988, relied upon in support of the application for interlocutory relief, the first plaintiff deposed that his Sydney solicitors had informed him that he would have to give an undertaking as to damages in support of the application for the injunction,
that the nature of the undertaking had been explained to him
(	and that he understood it.	He went on to say in the affidavit "I now give this undertaking to this honourable
Court".

On 22 December 1988 orders were made as to the future conduct of the proceedings in these terms:

That the plaintiffs file a Statement of Claim by 14 January 1989.

The defendants file their defence and/or counter claim by 28 January 1989.

Mutual discovery of documents be given by 14 February 1989.

Interrogatories be delivered by 14 March 1989.

Answers to interrogatories be filed by 7 April 1989.

The matter thereafter be remitted to the Master to fix a date for hearing.

The plaintiff did not comply with the first of  those orders leading the defendant to seek orders that the proceedings be dismissed for want of prosecution, that the defendants have judgment against the plaintiffs and that the interim injunction be dissolved.

On 2 March 1989 it was ordered that the time in which the steps were to be taken be extended:

The plaintiffs file their Statement of Claim by 2 March 1989.

The defendants file their defence and/or counter claim by 10 March 1989,

Mutual discovery of documents be given by 24 March
1989.

Interrogatories be delivered by 14 April 1989,
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Answers to interrogatories be filed by 28 April
1989.

Those orders were not complied with either.
However, when the Statement of Claim was delivered (when is not clear) it expanded on the claims as set out in the endorsement upon the writ.	In general terms the Defence, filed on 20 April 1989, denied the contractual arrangements alleged by the plaintiff as to the first defendant's occupation of the abattoirs, and joined issue as to the ownership of the equipment.		The first defendant brought a counterclaim upon the basis that the items in dispute were  at all material times lawfully in its possession with the authority of the owners, and alleged that since 29 November 1988 or thereabouts, the first and second plaintiffs wrongly refused to permit the first defendant to remove those items

from the abattoir premises, that the plaintiffs wrongfully deprived the first defendant of the use and enjoyment of those items, and had wrongfully detained the same from the first defendant in consequence whereof the first defendant suffered loss and damage.	Leaving aside the obvious error
as to the party seeking the relief as set out on p. 7 of the Defence, the first defendant sought a declaration that it
was entitled to possession of the things in dispute, an
injunction restraining the plaintiffs from selling, disposing of or in other way dealing with those things
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without the consent of the first defendant, an order that
those things be delivered up to the first defendant or payment of their value and damages for their detention and/or conversion. The injunction was not pursued.

On 19 September 1989 the first plaintiff filed the summons in which he sought orders that he be released from the undertaking as to damages and that he be discharged as a
party in the proceedings.	The summons came before the
C	Master on three occasions and in October 1989 was adjourned
sine die.	It appears that the uncertainty concerning the position of the first plaintiff and the application made by him may have given rise to some difficulties and delays in the further conduct of the proceedings, but disputes as to discovery were still going on in May 1990.	The first and second plaintiffs each produced a list of documents by way of discovery on 21 June 1990.

On 24 May 1990 the plaintiffs filed a summons (I disregard the fact that it is said to be an application by the "Defendants") in which they sought orders that the defendant, S G Allan (NT) Pty Limited, give security for costs.	That summons was returned before me on 31 May when the matter was adjourned with a view to having a date fixed for hearing.	It did not surface in Court again until 17 December at which time the application that the Receiver be discharged was also listed for hearing.
(
At the conclusion of the argument I dismissed the

application for security for costs and said I would give reasons later.	I will be brief.	The plaintiffs were aware of the defendants' counterclaim in April 1989, thus placing them in a position where sec11ri ty for costs might be claimed.	They were aware prior to that time that the defendant was experiencing some financial difficulty (see the affidavit of Matthew Keeley sworn 30 November 1988), and
it has been open to them at all times to make further
(		searches in the Office of the Commissioner of Corporate Affairs to see if any information may have been filed by the
defendant updating the return as at 30 June 1986 exhibited to that affidavit.	The first defendant concedes it has no assets in the Northern Territory and that it is not trading.

Its managing director, Mr Allan, deposes in an affidavit of 2 August 1990 as to facts and circumstances

which on the face of them show that the first defendant's financial position has been at least contributed to by the effect of the injunction obtained by the plaintiff.
Shortly, he claims the equipment and other things which the defendant was restrained from moving from the abattoir were to be put to good use in Victoria, and the inability to carry out that plan caused the first defendant to suffer loss.	Furthermore, applications for security for costs should be made promptly, a company against whom such an
order might be made should not be left to incur the expense
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of engaging in litigation, and then be met with an

application whereby all the costs which it has incurred may turn out to be of no avail because it is unable to proceed further.	This application was not made until over 12 months after the counterclaim.	I also note that in so far as the first defendant is without assets in the Northern Territory, the equipment, the subject of these proceedings, was in the Northern Territory and it was as a result of agreement between the plaintiffs and the first defendant that the same was sold.		The plaintiff can hardly complain about that.
For these reasons I refused the application that the first defendant provide security for costs.

There is much evidence as to negotiations between the parties as to what was to happen to the proceeds of the sale, $400,000, but I am quite unable to decide in that evidence that any contract was concluded between them.	For

these purposes, all of that evidence is irrelevant.	Where the money is is not disclosed.

I now turn to the question of whether or not the first plaintiff should be removed as a party and discharged from his undertaking as to damages.	Mr Skinner was appointed as Receiver and Manager of the second plaintiff pursuant to its securities on 29 November 1988.	The
proceedings were commenced by him the following day when the
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ex parte injunction was obtained, he having first given the undertaking as to damages.

By letter dated 22 November 1990 Westpac informed the secretary of the second plaintiff that sufficient assets had been realised to fully clear the Bank's indebtedness, final payment having been received on 8 August 1989.	The Bank requested that the receivership administration be
concluded without further delay.	Mr Skinner says that the
(	funds to satisfy the secured debt of the Bank were obtained from realisation of assets of companies related to the
second plaintiff, also placed in receivership.	The proceeds of the sale of the abattoir have not been taken by the secured creditor.	Mr Skinner, in an affidavit of 11 May 1990, says that as a consequence of these factors it is his desire and that of the second plaintiff and of Westpac that his receivership of the second plaintiff and the other companies be terminated so that the second plaintiff should

revert to the full control of its directors.	He goes on to assert that this should desirably include their assuming full responsibility for these proceedings and, impliedly at least, responsibility in respect of the undertaking.	He goes on to say that Westpac's debt having now been satisfied he is an unnecessary party to the proceedings and his continued involvement is likely to unnecessarily increase the costs which will be borne by the ultimately unsuccessful
(	party.	He added that the proceedings can and should be
continued effectively by the second plaintiff which owned the abattoir and which claims to own the assets in question in the proceedings.

The defendants not only seek recovery of the goods or their value, but as well, such damages as may flow from the granting of the injunction.	It is doubtful, to say the least, that the second plaintiff has ever given an
undertaking as to damages and, in any event, on such
(		evidence as is available its liabilities far outweigh its assets.	The Bank, through the appointment of the Receiver,
sought to protect assets which it considered to be subject to its security.	He now seeks to be released from the undertaking given to secure the advantage of the injunction simply because the debt owing to the Bank has been paid.	A brief history of progress in the matter has been outlined above.	They should have progressed more quickly.	If lack of progress on the plaintiffs' part has been in any way due

to difficulties arising because of Mr Skinner's position, or between him and the second plaintiff, then the defendant is not to be prejudiced as a result of that.	An undertaking as to damages is the price to be paid by a plaintiff for the benefit of obtaining an interim or interlocutory injunction. There is no reason why a Receiver who has given such an undertaking to secure the injunction should be released from the undertaking or discharged as a party simply because the creditor who appointed him has been paid.
(
The nature and purpose of the undertaking given by
an applicant for an injunction is discussed by Aikin J. in Air Express Limited v Ansett Transport Industries (Operations) Pty Ltd (1979) 146 CLR 249 at 260 and in the appeal from that decision (1981) 146 CLR commencing at
p. 309, specially in the reasons for Gibbs J. commencing at
p. 311.	It is of the very essence of the Court's jurisdiction in respect of interlocutory injunctions to
attempt to ensure that a defendant will receive compensation
(	for any loss which he suffers by reason of the grant of the
injunction if it appears in the event that the plaintiff was not entitled to obtain it.	"The insistence upon the giving of an undertaking is a very important, if not an essential, means of preventing injustice from being done by the Court when it makes an order in an interlocutory stage, before the rights of the parties have been finally determined".	It is the circumstances as they exist or are said to exist at the

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time that an interlocutory injunction is sought, and the need to provide the defendant with such protection as the Court may then afford him which is of importance.	That there may be a change in circumstances giving rise to a plaintiff having a lesser interest in maintaining the action than was held when the injunction was granted does not lessen the Court's duty to maintain, as best it can, protection for the potentially innocent defendant.

(		The Receiver's application to be discharged from his undertaking and removed as a party is dismissed.

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