Aaron Range Pty Ltd v Wilquay Pty Ltd & Ors [1993] QSC 432

TRANSCRIPT OF PROCEEDINGS (Copyright in this transcript is vested in the Crown. Copies thereof must not be made or <>old without the written authority of the Director. State Reporting Bureau.) '(~) / SUPREME COURT OF QUEENSLAND CIVIL JURISDICTION 0 CULLINANE J No 161 of 1993 AARON RANGE PTY LTD and WILQUAY PTY LTD 0 and ROBERT KENNEDY VENNARD 0 and CHERYL ANNE VENNARD and GLEN MALCOLM FINLAYSON TOWNSVILLE .. DATE 25/11/93 JUDGMENT 1 I / ./ // J I ./ ;/ / ;!/ Plaintiff First Defendant Second Defendant Third Defendant Fourth Defendant _____ ... ___ ___t_._l._t:'.t ..........__ _l:J. .... __ 1_"···-~_.._.~ .... _, ... __ ,.":"..__ .. _ .... -- __ .. c_,_ ..,.,..,___ D ... .:.,..L.- --- _L-. <~nnn :r-; __ ~..._ ..... __ ....._._(l~_\ "'-~~- 6 ~ ~ 11 r:·..... ,._,;_._.: 1 ..... __ • Jl_~, __ .,_.,_:"'! ~_1:_1_1_______ _ _ -- 1 of 8 -- 251193 ~, .. ,'\) ~~IS HONOUR: In this matter the plaintiff seeks interlocutory relief in the form of a restraining order preventing the defendants from entering or remaining upon certain lands. The plaintiff claims to be the owner of the land in equity pursuant to a contract of 26 October 1993. The vendor under that contract is a company which has the same directors as the plaintiff but differing shareholdings. The first defendant and the second defendant claim to be entitled also as owners in equity of the land pursuant to a contract with the National Australia Bank Limited as mortgagee. This contract is said to be evidenced by correspondence passing between the bank and the second defendant and especially by a letter of 10 November 1992 addressed to the second defendant. By a subsequent letter the second defendant sought to nominate the first defendant as purchaser but there was no response from the bank to this. I should add that this plaintiff asserts a lien over a crop of mangos, was granted by the vendor to the plaintiff to secure certain moneys. This lien was granted some time after the contract relied upon was entered into. Neither contract has been completed. A number of caveats have been lodged as appears from the material which has been filed. The land has a mango plantation upon it. There is in progress now a harvest of a substantial crop of mangos. The second defendant has been in possession of the land since about the time of the alleged agreement with the bank and has been responsible for the irrigation and maintenance of the trees. He has expended, according to his affidavits, 2 10 20 Cl 0 30 50 60 -- 2 of 8 -- -"· b 0 0 0 251193 substantial sums of money on the maintenance of the trees and the production of the crop. He has arranged for the harvest to commence. These proceedings were then instituted and certain orders have been made and undertakings given to enable the harvest to proceed. It appears that negotiations were entered into between the National Australia Bank Limited and a company Unicorn Limited in late 1991 with a view to having an assignment of the securities held by the bank over these and other liens made to that company. According to an affidavit of Mr Dobs-Higginson, a director of Unicorn Limited, an agreement in this regard was reached and is evidenced in a letter of 6 December 1991 annexed to his affidavit. It is said that Unicorn Limited assigned its rights under this agreement with the bank, to Horticultural Strategic Investments Limited, the sole shareholder of the plaintiff. In evidence before me it was said that the plaintiff has been appointed by Horticultural Strategic Investments Limited as agent in Australia for the purposes of this transaction and carrying it into effect. There is now litigation between the plaintiff and the bank over this matter. Evidence before me shows correspondence between the bank and Unicorn Limited about this matter with the bank stating in a letter of 30 November 1992 that it does not intend to proceed with the sale. This is what precipitated the litigation which has been instituted in the Supreme Court of Victoria and it will be noted that this 3 10 20 30 40 50 60 -- 3 of 8 -- 251193 letter is dated some two days after the contract relied upon by the first and second defendant. The facts which I have referred to about the mango crop and the first defendant's role in it would tend to militate strongly in favour, so far as these proceedings are concerned, of maintaining the status quo in the absence of special circumstances. It is said on behalf of the plaintiff that the defendants have no arguable claim to the land or to put it another way that it is clear that their claim must file. I should refer to the second defendant because on the material before me it does not appear that the first defendant has ever been accepted by the bank as a purchaser of the land from it. For the plaintiff it is said that this is so because the only evidence of any compliance with section 84 of the Property Law Act by the bank, as mortgagee, is a document headed "Formal Demand" which is Exhibit C to an affidavit of Anthony Loftus sworn on 24 November 1993. The mortgage is part of Exhibit A to the affidavit of Janet Mary Clarke sworn on 25 November 1993. It seems clear that the mortgage secures moneys payable on demand. It is said that the only evidence of the moneys becoming due is the formal demand and that this cannot at the same time constitute the means by which the moneys become payable, and a notice for the purposes of section 84 which notice must post-date any relevant default. 4 ,• C) 10 20 C( 0 30 0 40 0 50 60 -- 4 of 8 -- ,.- 0 0 0 0 ----------~------------------- ---- I think this argument can be accepted as correct. On the material before me there is no evidence of any antecedent default nor I think can it be inferred. Although the South Australian legislation is in somewhat different terms to the Queensland legislation, I think the judgment of the Supreme Court of that State in State Bank of South Australia and Jaltes 1988 49 SASR 307 is equally applicable to the Queensland provision. I therefore proceed upon the basis that in relation to this aspect of the matter, so far as the material before me is concerned, the plaintiff's argument is correct. However it is necessary to consider another provision of the Property Law Act namely section 87. Section 87 provides as follows: "Where a conveyance is made, and exercise of the power of sale conferred by this Act, the title of the purchaser shall not be impeachable on the ground: (a) that no case has arisen to authorise the sale; or (b) that due notice was not given; or (c) that leave of the Court when so required was not obtained; and (d) whether the mortgage was made before or after the commencement of this Act, that the power was otherwise improperly or irregularly exercised; 10 20 30 ..tO and a purchaser is not either before or on conveyance so concerned to see or inquire. Whether a case has arisen to authorise the sale, or due notice has been given, orthe power is otherwise properly and regularly exercised that any person indemnified by an unauthorised orimproper or irregular exercise of power shall has his remedy in damages against the person exercising thepower." 5 60 -- 5 of 8 -- .. , 251193 The first part of this provision, of course, has no application because the contract has not proceeded to conveyance. So far as the second part is concerned on its face the purpose of the provision is to disentitle the purchaser from demanding proof from the mortgagee that the 10 power of sale is exercisable and has been properly exercised, and deprives the purchaser of a defence to an action for specific performance based upon the ground that the mortgagee has refused to answer questions on this subject. 20 0 It is, however, accepted that these provisions have to be read subject to questions of notice and that the rights, and the position of the purchaser, may be affected by notice on 0 the part of the purchaser of any of the matters referred to in section 87 or any want of good faith on the part of the 30 person exercising the power of sale. In the present case, it can be assumed that the second 0 defendant now has notice but there is nothing to suggest that any such notice existed as at the time of the contract. There is a body of authority which is to the effect that 40 0 after a contract has been entered into a mortgagee will only be restrained if he exercises his powers in bad faith. See Waring v. London and Manchester Assurance eo 1935 Chancery 310 and Forsayth v. Blundell 1973 129 CLR 477. There is 50 authority to the contrary and in Forsayth v. Blundell, Barwick CJ left the question open. 60 6 -- 6 of 8 -- '> "251193 However, it seems to me that for present purposes when considering whether an interlocutory injunction ought to be granted, I ought not to assume that there will necessarily be any action by the mortgagor to prevent completion of the contract, even though the interests of the plaintiff and the 10 mortgagor are associated, nor should I assume that the mortgagor would be able to establish bad faith on the part of the mortgagee, nor should I assume that view of the authorities which is most favourable to the mortgagor. 0 For present purposes, I am prepared to accept that the second defendant has an arguable case. It was contended that the 0 plaintiff also does not make out an arguable case because it is said that unless the assignment that I have already referred to is carried into effect it will not be able to complete the sale. 0 I do not make this assumption. I have assumed that the plaintiff also has an arguable case. For reasons that I have already canvassed I think the balance of convenience strongly 0 .10 favours maintaining the status quo until the question of who is entitled to the land can be resolved. This is something which I might say ought to take place as soon as possible but it is complicated by the fact that there is other litigation on foot and there are other parties who clearly have an 50 interest in this matter who are not before the Court in these proceedings. In addition to the bank it may well be that the mortgagor who is the vendor to the plaintiff may also now have an interest in the matter generally. 60 7 -- 7 of 8 -- 251193 The harvest is continuing and no steps ought to be taken which would prevent that occurring. I propose therefore to refuse to grant the interlocutory relief sought, but I am prepared to make orders which would 10 have the effect of having the net proceeds of the crop paid into a trust account to be held until the resolution of litigation between the parties. I might say in doing so I would express the view that the () 20 '----- second defendant ought to be entitled to have deducted from the gross proceeds the expenses associated with the production and harvesting of the crop. Now I am prepared to c=) leave it to the parties the question of formulating an order in appropriate terms and perhaps making some provision for 30 certifying that deductions are properly made. c=) I will give liberty to apply and I will reserve the costs to the trial Judge. 40 0 50 60 8 -- 8 of 8 --