Brown v Ogle [2000] QSC 324

~4746 State Reporting / 8C'00/3«4 B ...~. Queensland Governmeht LI re a u \~\~ OepJrt:,,ent of Justice and Attorney-Gener.ii Transcript of Proceedings Copyright in this transcript is vested in the Crown. Copies thereof must not be made or sold without the written authority of the Director, State Reporting Bureau. SUPREME COURT OF QUEENSLAND CIVIL JURISDICTION WHITE J No 10384 of 1999 WARREN THOMAS BROWN and DONALD GORDON OGLE BRISBANE .. DATE 01/09/2000 JUDGMENT 4 th Floor, The Law Courts, George Street, Brisbane, a. 4000 REVISED COPIES ISSUEJ State Reporting Bureau Date b/ ./t:X)_ . Plaintiff Defendant Telephone: (07) 3247 4360 Fax: (07) 3247 5532 -- 1 of 9 -- 01092000 T1-2/SJ3 M/T 8023/2000 (White J) HER HONOUR: The applicant/plaintiff, Mr Brown, seeks an interlocutory injunction restraining the defendant, Mr Ogle, from further encumbering a rural property known as the Mt O'Reilly property including by borrowing funds under an existing mortgage without first providing him with prior written notice 21 days before of his intention to do so, such notice to include a description of the purpose for the further encumbrance. Mr Brown also seeks an interlocutory order restraining Mr Ogle from divesting himself of his interest in the property. Mr Ogle is the registered proprietor of the Mt O'Reilly property in the Samford-Mt Glorious area which contains some 440 hectares which he has owned since about 1977. Mr Brown is a civil engineer who would appear to operate his practice through a company Warren Brown & Associates in Brisbane. The parties met in about 1984. Mr Ogle was apparently having difficulties with WR Carpenter Finance Corporation Limited, the mortgagee of the property, and they had discussions about Mr Ogle's legal position from time to time. By 1995 I infer that the position with WR Carpenter had become acute with the mortgagee in possession. The parties discussed Mr Brown funding the existing litigation against WR Carpenter since Mr Ogle by then was unable to do so. A document to reflect this agreement was worked out between the parties on 5 August 1995 and signed after discussion at Mr Ogle's then solicitor's office on 7 August. Mr Brown 2 JUDGMENT 10 30 40 50 60 -- 2 of 9 -- 01092000 T1-2/SJ3 M/T 8023/2000 (White J) says that this created a partnership between them which gave him an entitlement to a half share in the property. Mr Ogle says that it only reflected an intention to create a partnership on the happening of certain events. The copy agreement (WTB-1 to Mr Brown's affidavit filed 11 August 2000) provided: 11 D G Ogle and WT Brown have agreed to form a partnership to develop land being Lot 1 on registered plan No. 152762 containing 440.760 hectares exclusive of road reserve. D G Ogle is the registered proprietor of the land described above. WR Carpenter Australia Pty Ltd is currently mortgagee in possession of the land. D G Ogle agrees to transfer the land to the partnership for the sum of one million dollars ($1,000,000.00), free and unencumbered. The price of transfer will be reduced by the total of all expenditure by the 10 20 partnership required to obtain free and unencumbered 30 title and all monies advanced to D G Ogle for what ever purpose. D G Ogle further agrees to allow the partnership to mortgage the land, by way of first mortgage, to obtain finance to develop the property, and to subdivide it. This finance will include payments for survey, engineering, construction, marketing, Local Authority fees and charges, legal costs, finance charges, etc. Payment of the principal amount will be from profit from sale of land after subdivision and after repayment of all monies advanced 40 to obtain free and unencumbered title. WT Brown agrees to provide funds to the partnership to mount a legal challenge to the current status of the mortgagee in possession and to obtain free and unencumbered title to the property. WT Brown further agrees to guarantee lenders to the partnership who advance monies for the development of the property. WT Brown may at his sole discretion withdraw from this so agreement at any time and if so all obligations between the parties shall cease." Mr Brown paid some of the solicitor's bills relating to the litigation as they were presented. There were two changes 3 JUDGMENT 60 -- 3 of 9 -- 01092000 T1-2/SJ3 M/T 8023/2000 (White J) of solicitors and Mr Brown paid bills to the extent, he deposes, of $162,1'22.58. The litigation was settled and WR Carpenter's encumbrances on the property were removed by Mr Ogle solely obtaining a loan of $750,000 from the National Australia Bank secured over the property. After the WR Carpenter litigation had been compromised Mr Ogle, it appears, proposed a new agreement to Mr Brown and according to Mr Brown, Mr Ogle represented that he had buyers who were prepared to pay in excess of $5 million for the property. The second agreement was signed by the parties on 10 September 1998 (WTB-2) and provided: "This agreement relates to the property at Mt O'Reilly 10 (Area 1089 acres). ~ This agreement cancels all other agreements made between Ogle and Brown concerning the Mt O'Reilly property, and this agreement is enforceable from this date. Ogle agrees to pay Brown the sum of $2 Million Australian dollars (A$2,000,000.00) in full settlement of any claims Brown may have against the Mt O'Reilly property. ~ Terms of Settlement The settlement is subject to Ogle selling the property with the normal Pine Rivers Shire Council subdivisional approval for not less than 5 Million Australian dollars (A$5,000,000.00) plus legal costs already paid up to $160,000." Mr Brown had no obligations under this agreement on its face. In due course, he became rather anxious when the property did not sell and from mid-1999 there was correspondence between the parties culminating in 4 JUDGMENT 50 60 -- 4 of 9 -- 01092000 T1-2/SJ3 M/T 8023/2000 (White J) Mr Brown lodging a caveat over the property on 22 October 1999. The interest recorded was an equitable interest in the land arising under "a partnership agreement dated 7 August 1993 where the registered owner agreed to transfer an interest in the land" to Mr Brown. On 22 November 1999 Mr Brown instituted these proceedings against Mr Ogle. I will return to the basis of his action in a moment. Mr Ogle re-financed the loan ·with Suncorp Metway which discharged the National Australia Bank mortgage in June 2000. An earlier mortgage with Clarke and Kann, Solicitors, given by Mr Ogle to secure fees associated with the WR Carpenter litigation in addition to those paid by Mr Brown was released and a second mortgage entered into in substitution. Mr Brown has no obligations in respect to those loans either to repay them or as a guarantor. When Mr Brown learnt of the increase in the value of the security over the property when it was re-financed he became concerned that any interest which he might have in the property was being diminished. Through his solicitors he sought undertakings which were, in broad terms, that Mr Ogle would not deal further with the land pending the trial of the action. Agreement was not reached and Mr Brown brought an application for injunctive relief on 21 August. Mr Ogle was then overseas but due to return a few days later and offered through his solicitors not to divest himself of the property until an adjourned hearing could occur. Upon Mr Brown giving 5 JUDGMENT IO 20 30 40 50 60 -- 5 of 9 -- 01092000 T1-2/SJ3 M/T 8023/2000 (White J) an undertaking as to damages and Mr Ogle's undertaking not to divest himself ·of the property the application was adjourned to 31 August. At the hearing of the adjournment application concern was expressed at the worth of Mr Brown's undertaking as to damages which is still persisted in although in the meantime Mr Ogle's solicitors have carried out extensive investigations based on a list of assets given to them by Mr Brown's solicitor at the end of that hearing. Mr Brown responded yesterday afternoon with some detailed material as to his asset position. Mr Brown has sued on an oral promise by Mr Ogle allegedly made in July or August 1995 to transfer a half interest in the property in consideration of Mr Brown meeting some of the costs of the WR Carpenter litigation which Mr Brown allegedly accepted. He pleads the first agreement and an implied term that Mr Ogle would in a reasonable time transfer the title in the property to himself and Mr Brown as equal tenants in common as an incident of the partnership agreement. Mr Ogle has denied the agreement and/or its pleaded effect and sets up the second agreement between the parties as discharging any entitlement under any earlier agreement. Mr Brown's reply, inter alia, alleges that since the conditions subsequent to the second agreement - namely, that the settlement is dependent on the property being sold for 6 JUDGMENT 10 40 50 60 -- 6 of 9 -- 01092000 T1-2/SJ3 M/T 8023/2000 (White J) no less than $5 million - has not been satisfied the first agreement remains ·enforceable until that condition is satisfied. I am not satisfied that there is a serious question to be tried sufficient to support the injunction now sought. The argument that the partnership was to come into effect in the future on the happening of certain events to be performed by Mr Brown has force. Mr Brown did not bring about, by the provision of funds, the land unencumbered so that the development project could go ahead. Conduct and correspondence from Mr Brown after the first agreement was not consistent with-the existence of a partnership of the kind contended for. It seems that all that Mr Brown did was to pay the legal fees in the amount which he has claimed towards the project. Of greater difficulty for Mr Brown are the terms of the second agreement. Save for the interest recorded on the caveat (since removed) Mr Brown has sought to advance the second agreement in his communications with Mr Ogle. It is, in my view, a subtle argument to say that the rights under the first agreement remained in suspension until the second agreement was performed and if not performed then they were activated against the words of the agreement itself. 7 JUDGMENT 10 20 30 40 50 60 -- 7 of 9 -- 01092000 T1-2/SJ3 M/T 8023/2000 (White J) The balance of convenience dictates that Mr Ogle should be able to continue with his plans to develop the property and to cut timber and the like to generate funds to service the debt secured over the property and to sell it, inter alia, to fulfil his obligations under the second agreement. Mr Ogle does not appear to have other assets. It is not inappropriate then that Mr Ogle's offer to give Mr Brown notice of any intention to deal with the land given Mr Brown's apparent entitlement to $2 million from a sale under the second agreement. It is not then necessary to canvass the concerns which Mr Ogle, through his legal advisers, continues to express about the worth of Mr Brown's undertaking as to damages. Apart from the residence, jointly owned with his wife, the assets would be quite difficult to realise promptly, particularly his business, and the superannuation fund and property held by it is not, of course, realisable at all. Accordingly, upon Mr Ogle undertaking not to sell or otherwise transfer the property without first giving Mr Brown 10 days' notice of his intention to do so, including in the notice the proposed sale price, the application is dismissed. 8 JUDGMENT 10 30 40 50 60 -- 8 of 9 -- 01092000 T1-2/SJ3 M/T 8023/2000 (White J) HER HONOUR: I order the applicant/plaintiff pay the respondent/defendant's costs of and incidental to the application for injunctive relief to be assessed including the costs reserved on 21 August 2000. I say that in respect of the reserved costs because Mr Ogle essentially offered the limited relief which has ultimately been accepted and it was accepted on the last occasion in an interim form until the further hearing of the application. 9 JUDGMENT 10 20 30 40 50 ' 60 -- 9 of 9 --