Eswood Australia Pty Ltd v Brezcorp Pty Ltd & Obelisk Securities Pty Ltd [2001] QSC 417

. . . (~ Queensland Governm.ent state Rep Orting Bu re au ~~ Dep3Mentoifustlmntl Attorocy-Gt~ral Transcript of Proceedings Copyrighi in this transcript is vested in the Crown. Copies thereof must not be made or sold without the written authority oi the Direcior, Staie Reporting Bureau. SUPREME COURT OF QUEENSLAND CIVIL JURISDICTION HOLMES J No 9272 of 2001 ESWOOD AUSTRALIA PTY LTD (ACN 002 481 521) and BREZCORP PTY LTD (ACN 092 765 770) and OBELISK SECURITIES PTY LTD (ACN 001 450 291) BRISBANE .. DATE 23/10/2001 JUDGMENT h Floor, The Law Courts, George Street, Brisbane, a. 4000 1 REVISED COPIES ISSUED State Reporting Bureau Date]/!1°/ 0/ Applicant First· Respondent Second Respondent Telephone: (07) 3247 436-0 Fax: (07) 3247 5532 -- 1 of 6 -- 23102001 T16/DR26 M/T 2/2001 (Holmes J) HER HONOUR: The applicant, which is one of two mortgagees in possession of a hotel property, seeks the appointment of a receiver under section 246 of the Supreme Court Act 1995 which provides that the Court may appoint a receiver "by an interlocutory order of the Court in all cases in which it shall appear to the Court to be just or convenient that such order should be made". I have been unable, in the short time available, to find any Queensland case in which a receiver has been appointed on an application for final relief. Mr Clother, for the applicant, points to a statement in In re Prytherch which is reported at 1889 42 Chancery Division page 590 at page 600 where this was said: 1 10 20 "No doubt the Court has as large a power at the trial 30 of an action as it would have upon an interlocutory application and those words [the equivalent of section 246] were added there only for the purpose of making it clear that the enactment applies to interlocutory applications." That statement does not really resolve the question of whether section 246 is intended to provide anything other than ancillary relief. If the application for declarations in this case was made to constitute a form of principal relief to which the appointment of a receiver could be ancillary I must say that I do not think that the application for declarations was anything but pointless, and it was not seriously capable of amounting to a real application for principal relief. 2 JUDGMENT 40 50 60 -- 2 of 6 -- 23102001 T16/DR26 M/T 2/2001 (Holmes J) It is not necessary, however, for me to decide the question of whether a receiver may be appointed as the principal form of relief under section 246. I might say, though, in passing that I am not convinced of this correctness of the submission for the second respondent that the power under that section is limited to one of preservation of property so that, in my view, questions of whether the property is in jeopardy are not necessarily to the point. At any rate, coming to the merits of the present application, it is resisted by the co-mortgagee. The mortgagor was served with the application and with notice of this hearing but has not appeared. 1 10 20 Another mortgagee, which holds a third mortgage, the Bank of 30 Western Australia, has no objection to the appointment of receivers. I accept the proposition put by Mr Clothier on the strength of Strong v. Carlisle Press 1893 1 Chancery 268 and Hopkins 40 v. Worcester and Birmingham Canal Proprietors 1893 1 Chancery 268 as to the entitlement to the appointment of a receiver as against a mortgagor, but that does not necessarily assist in determining what is just and convenient as between mortgagees. The second respondent, apart from raising questions as to whether the application is regular, says that a sale which is presently under negotiation will be imperilled by the 3 JUDGMENT 50 60 -- 3 of 6 -- 23102001 T16/DR26 M/T 2/2001 (Holmes J) appointment of receivers, but there is no basis for supposing a marketing campaign cannot be effectively undertaken by both mortgagees if a contract of sale is not entered by 31 October, and that there is no justification for incurring a receiver's fee. The applicant says, on the other hand, that it is losing interest on an advance which it provided to cover fittings for the hotel and, unlike the principal advance, for which 1 10 it has priority out of the sale proceeds, that interest may 20 be irrecoverable. The parties agreed in December 2000 to place the property on the market in March 2001. Both located interested purchasers and both complain of the other's actions. The 30 applicant says that it lost two offers because of the second respondent's failure to act promptly. The respondent rejects that and says that it has the sale on foot, which I have already mentioned, and obtained a plan for a marketing campaign in August of this year which can be put into effect if the sale is not obtained by 31 October. For the applicant, Mr Clothier presses the importance of immediate action to sell the property so that a sale can be obtained by Christmas. I must say that I doubt that the so difference between the time from which a receivor will be in position to take action to sell and the 31 October is likely to prove crucial. The real question, it seems to me, is 4 JUDGMENT 60 -- 4 of 6 -- 23102001 T16/DR26 M/T 2/2001 (Holmes J) whether the applicant is justified in its expressed fears that the respondent will not act effectively and promptly. However, an examination of the material leads me to conclude 1 that there is no reason to suppose the second respondent is 10 in fact any less keen than the applicant to attend promptly to the marketing of the property if the contract of sale currently on foot is not concluded by 31 October. I do not think that there has been any pronounced inertia on the part of the second respondent in the past and I am not satisfied 20 that the attitude of the applicant has always been reasonable. I note, for example, that in a letter of 12 October 2001 from the applicant's solicitor this was said: "We will not 30 be commenting on nor will our client be signing any contract for sale prepared by Quinn & Bock Solicitors." That was in the context of the contract of sale presently being negotiated by the second respondents. That letter does not suggest a cooperative attitude on the part of the applicant. 40 If the question is whether it should be entitled to a receiver because of its unwillingness to work with the second respondent to achieve a sale, the answer must clearly be that the second respondent should not have a receiver so forced upon it for a reason of the applicant's own making. In short, I do not consider that the second respondent has demonstrated an unwillingness or inability to sell the 5 JUDGMENT 60 -- 5 of 6 -- 23102001 T16/DR26 M/T 2/2001 (Holmes J) hotel. I am not convinced that the urgency is such that the appointment of a receiver is necessary simply to effect a marketing campaign a week earlier. Mr Gridiger says he is willing to commence a marketing campaign if the contract of sale is not signed by 31 October immediately thereafter. The Court naturally expects that intimation will be met. Accordingly, I dismiss the application for appointment of receivers. HER HONOUR: I must say that although I did not reach a concluded view on whether the appointment of a receiver was available by way of principal relief if anything I am inclined against that view and it seems to me, as I have said, that the application for declarations was nothing more 1 10 20 30 / { than a peg to hang that application for relief on, and a 4 cr flimsy peg at that. That is an additional factor though in considering whether a costs order ought to be made or not; and I have also adverted to what seems to have been the not entirely cooperative attitude of the applicant. In those circumstances I think that the proper order is that the second respondent should have its costs of and incidental to the application to be assessed on a standard basis. 6 JUDGMENT 50 60 -- 6 of 6 --