Caboolture Co-operative Assoc Ltd & Moneymen Pty Ltd, Re [1990] QSC 427

10 20 3 40 50 60 IN THE SUPREME COURT OF QUEENSLAND CIVIL JURISDICTION o.s. No. 1143 of 1990 BEFORE MR. JUSTICE DERRINGTON BRISBANE, 13 DECEMBER 1990 (Copyright in this transcript is vested in the Crown. Copies thereof must not be made or sold without the written authority of the Chief court Reporter,Court Reporting Bureau.) IN THE MATTER of The Rules of the Supreme Court -and- IN THE MATTER of the Milk Supply Act 1952 - 1972, the Milk Supply Act 1977 - 1976 and the Dairy Industry Act 1989 IN -and- THE MATTER of an Indenture made the 30th day of June 1972 between Caboolture Co-operative AssociationLimited and Moneymen Pty. Ltd. and Deed of Assignment between Moneymen Pty. Ltd. and Maleny Milk Producers Pty. Ltd. made the 13th day of February 1975 JUDGMENT HIS HONOUR: It is declared as follows: 1. (a) The Market Milk Entitlement referred to in cl.2 of the Agreement referred to in the originating summons herein for the term of the Agreement as defined in cl.3 of that Agreementwas assignable by the applicant; (b) It is not possible to say whether the status of a quota milk supplier as provided incl.10 of the Agreement at and from the expiration of the term of the Agreement as defined in cl.3 of the Agreement was assignable by the Applicant. Further it is not possible to say whether any rights held by it pursuant to that status are assignable. 2. (a) The Market Milk Entitlement referred to in cl.2 of the Agreement for the term of the Agreement as defined in cl.3 of the Agreementwas assigned by the assignment from the applicant to Maleny Milk Producers Pty. Ltd. as provided for in Exhibit "F" to the · Govt. Printer, Qld. 1 10 20 30 40 50 60 -- 1 of 14 -- 10 20 30 40 50 iO 3. affidavit of Ian Robert Revie filed herein; (b) Neither the status of a quota milk supplier nor any rights of the applicant in relation thereto at and from the expiration of the term of the Agreement as provided in cl.10 of the Agreement was or were purported to be assigned by the assignment from the applicant to Maleny Milk Producers Pty. Ltd. It is not possible to say what obligations will exist between the applicant and any other party in respect of the applicant's status as a quota milk supplier at the expiration of the term of the said Agreement. I publish my reasons. There will be no order as to costs. 'covt Printer, Qld. 2 10, 20 30 40 50 60 -- 2 of 14 -- IN THE SUPREME COURT OF QUEENSLAND Before Mr. Justice Derrington o.s. No. 1143 of 1990 IN THE MATTER of The Rules of the Supreme Court - and - IN THE MATTER of the Milk Act 1952-1972, the Milk Act 1977-1986 and the Industry Act 1989 - and - Supply Supply Dairy IN THE MATTER of an Indenture made the thirtieth day of June 1972 between Caboolture Co-operative Association Limited and Moneymen Pty. Ltd. and Deed of Assignment between Moneymen Pty. Ltd. and Maleny Milk Producers Pty. Ltd. made the 13th day of February 1975 JUDGMENT - DERRINGTON J. Delivered the day of December, 1990 CATCHWORDS: Declaratory Order - Construction of documents - Rights between parties created by indenture with express provision to revert at the end of its term to "status" existing before the agreement - Status not something which can be assigned - Intention to identify rights to be held - Assignment of "rights under the Indenture" - Whether includes rights under the status to which the party reverts - Whether they are "rights under the Indenture" or whether reference mere confirmation of reversion to former position at expiration of term of the agreement Counsel: H.A. Weld for applicant I. Callinan Q.C. with J. Carrigan for respondent Solicitors: John P. Kelly & Co. for applicant Nicol Robinson & Kidd for respondent Hearing dates: 20th November, 1990 -- 3 of 14 -- IN THE SUPREME COURT OF QUEENSLAND O.S. No. 1143 of 1990 IN THE MATTER of The Rules of the Supreme Court - and - IN THE MATTER of the Milk Act 1952-1972, the Milk Act 1977-1986 and the Industry Act 1989 - and - Supply SupplyDairy IN THE MATTER of an Indenture made the thirtieth day of June 1972 between Cabool~ure Co-operative Association Limited and Moneymen Pty. Ltd. and Deed of Assignment between Moneymen Pty. Ltd. and Maleny Milk Producers Pty. Ltd. made the 13th day of February 1975 JUDGMENT - DERRINGTON J. Delivered the day of December, 1990 On 20th March, 1972 Caboolture Co-operative Association Limited ("the Co-operative") purchased from Moneymen Pty. Ltd. ( "Moneymen") a milk processing business part of the consideration for which was the entry by the parties into an Indenture.of 30th June, 1972 ( "the Indenture"). That provided for the grant by the Co-operative to Moneymen of "a Market Milk Entitlement" in respect of a period extending to September 1992 for a prescribed maximum of six hundred gallons of milk per day subject to a reduction to the average daily gallonage of milk supplied by Moneymen to the Co-operative during the quota determining period prescribed therein. The expression "a Market Milk Entitlement" -- 4 of 14 -- 2 was not defined-but its meaning is made clear by other provisions of the ·~document, particularly that which required the Co-operative to purchase from Moneymen and for Moneymen to sell to the Co-operative as market milk that number of gallons of milk each day that Moneymen had available not exceeding the number of gallons specified in the schedule, subject to the reduction mentioned. It also provid~d that the milk agreed to be supplied could be produced and supplied from any number of farms within the area or otherwise approved; and that the Agreement should be term1nated if Moneymen should fail to supply any milk for a period · of two years. provisions. There were other relevant machinery If the Indenture can be logically divided into two parts, the foregoing constitutes the first part. The second is provided for in 1 para. 10 which reads:- "At and from the expiration of the term of this Agreement Moneymen shall revert to the status of a Caboolture quota milk supplier with the quota established during the quota determining period in the last year of 'this Agreement provided however if at the end of .the period of operation there is not in existence a quota determining system applicable to Caboolture suppliers, Moneymen shall share the market supplied by Caboolture suppliers on a percentage of production basis no less favourable than that enjoyed by any other Caboolture supplier." It is this provision which is at the centre of the controversy between the parties, and particularly whether the rights under it were transferred in a transaction which shall be dealt with shortly. indenture provided:- Relevantly to that, para. 20 of the "This contract may be assigned as a whole contract for the balance of its term by Moneymen to any person or group of persons or company or group of companies ... And Caboolture and the Assignee shall upon receipt of -- 5 of 14 -- 3 notice .of such assignment and of the execution of .. a Deed by the Assignee and if more than one by each of them agreeing to the terms of this contract be bound each to the other as Caboolture and Moneymen are bound hereby." By a deed made on 13th February, 1975 Moneymen assigned to Maleny Milk Producers Pty. Ltd. "the whole right title and interest of the Assignor under the said Indenture made the 30th day of June, 1972 and tb the contract evidenced thereby and contained therein together with the benefit subject to the obligation of the Assignee's observing performing and fulfilling the Assignor's obligations under the contract to hold the same unto the Assignee absolutely from the date thereof". That was accompanied by a Deed of Defeasance back to Moneymen of the same date in respect of the interests passing under the first deed and was given by way of security for the passing of the consideration. The Deed of Defeasance is for all relevant purposes in the same terminology as that of the deed making the assignment and no assistance in the construction of th~ latter can be derived from it, so it will be ignored. The application to this Court for construction of. these documents asks whether the Market Milk Entitlement referred to in the Indenture is assignable and whether it was assigned by the Deed of Assignment. It also asks whether "the status of a quota milk supplier as provided in cl. 10 of the Agreem~nt at.and from the expiration of the term of the Agreement is assignable ... " and if so whether it was assi.gned by the Deed of Assignment. If the answers to these two questions are in the negative, it asks: "Does (the Co-operative) have any, and if so what, obligations to the applicant under the Agreement after the -- 6 of 14 -- 4 30th day of Septemberr 1992?", that is, the termination ofthe Market-Milk Entitlement arrangement. As to the first pair of questions, it would seem on its face that the Market Milk Entitlement as a-right was intended to be assignable, was assignable like any other such right, and was in fact assigned, and the parties do not appear to be in any dispute about that. Consequently,· it is unnecessary to take that point further, and the real issue relates to the second topic that has been described as "the status of a quota milk supplier as provided•1n cl. 10 of the Agreement". Moneymen argues that a status cannot be assigned and'that there was no provision in the Indenture which created it providing that it should be assignable. Further it is argued that the need of Assignment did not purport to assign either the itatus:or any rights associated with it. It is true that a status cannot be assigned: Ford v. Ford (1947) 73 C.L,.R.- 524 at pp. 531, 542. However, that does not mean that the rights associated with a status cannot be assigned. For-example; a person having the status of a creditor in respect of a ~ebt or:a person having the status of a beneficiary under a'Wil~ ea~ each assign his rights. The latter case provides a good-example showing that the Assignee does not attain the status of beneficiary under ;the Will, which remains with the original holder, • but the rights to receive the benefit vest in the Assignee either in law or in equity depending upon what steps are taken. Further the status of a milk supplier is not really a status ih the true sense· of the word as discussed in Ford v~ Ford, for a status of that type has the incidents of the status -- 7 of 14 -- 5 assigned to it by the .law, e.g. a wife, a Judge or a Governor. That is not the case here and it may be that this particular status is transferable; but the real point is that the status as such, as distinct from the body of rights it implies, has no legal significance and that any discussion of its assignability is meaningless. Paragraph 10 of the Indenture does more than merely grant or re-affirm a status at the end of the Market Milk.Entitlement. In addition to that, by implication it also confirms that Moneymen should have all the rights associated with that __ status and indeed grants additional rights consistent with the,~dded status of "most favoured supplier". Of course it does not use that term or refer to that status, but it will be seen how the reference to a status is a useful and convenient method of, saying that the holder is also entitled to a particular bundle of rights. If Moneymen did assign those rights, then the assignee would acquire its own status as the holder of those_ rights. For these reasons, the questions posited in the application are ambiguous in respect of this topic. If they refer to status simpliciter, then the answer is simple enough that a true status is not transferable and the assignability of the status referred to in this case is irrelevant and cannot be answered without knowledge of its incidents~ but if the question is intended to refer to the rights associated with that. status, then they are assignable subject to. any conditions of assignability appointed by the legal instrument which created them. The. latter meaning is obviously intended because the material refers to a dispute as to the_ .future exercise of these rights anp. an enquiry confined -- 8 of 14 -- 6 to the status only is obviously barren. It is desirable then to consider the - remaining issues on the basis that it is the assignment of the rights which is in issue. As to whether the Indenture itself has any influence upon this matter, para. 20, which refers to the assignability of the "contract", does appear to", contain a limitation implicit in the provision that it "may be·· assigned as a whole contract for the balance of. its term''. Its term is identified in many places as the period for which the Market Milk Entitlement was to run, and, most relevantly to the present point, para. 10, which deals with the reversion of Moneymen to the status of a most favoured.milk supplier, explicitly provides for that to occur "at and from the expiration of the term of this Agreement". Consequently, it is clear that para. 20 does not refer to the assignability of any rights=which may be referred to under para. 1 0; but that does not imply that the latter are not assignable. Its provisions were pa~ticularly directed to the rights of a special nature relating to' the Market· Milk Entitlement and deserved special attention for this reasbn. The same reasons for a specific reference to assignability do :not apply to the residual rights of Moneymen as an ordinary milk supplier who supplied milk to the Co-operative under a quota, and this position does not appear to be changed simply because of the additional right relating to the "most favoured supplier" quota. These rights are obviously expressed to revert to Moneymen because they were necessarily suspended by implication by the operative part of the agreement during i t"s te~m, and th~ purpose of para. 10 is to express clearly that -- 9 of 14 -- 7 there would be such a reversion at the end of the term so that there would be no doubt. It is probably because of the limited function of this clause that it was seen fit to refer cryptically only to the "status" of Moneymen at that .time. Consequently, the implied exclusion of the rights referred to. in para .. 10 from the assignability provisions of para. 20 cannot, as Moneymen claims, imply that the former are unassignable. In the absence of any other relevant provision it follows that the assignabili ty or otherwise of those rights are not affected by the Indenture. As it is not agreed by the parties whether they are ordinarily assignable otherwise and theie .is insufficient material before this Court to decide such an issu~, even if it were one which should be determined on an application of this description, this question cannot be answered. However it has been possible to shed light on the effect of the Indenture. Although it cannot be.said whether the interest constituted by these rights can be assigned, it is still logically fruitful to consider the next question, that is, whether the Deed of Assignment purports to assign any part of this interest for if it does. not do so then a conclusive answer is reached in any case. It is true that under para. 1 of that document there is an assignment of "the whole right title and interest of the Assignor under the said Indenture~·· together with the benefit ... "; but these• words are ambiguous as to whethe;r they include the rights under discussion. To begin with, by the same ~lause, that assignment is "subject to the obligation of the Assignee's observing performing and fulfilling the Assignor's obligations -- 10 of 14 -- 8 under the c6:htract'\ and ·in respect Of. the position of a milk supplier urtder a quota to which Moneymen is to revert at the end of the term of the Agreement, there are no such obligations under the contract. The only obligations so referred to are those under the Market Milk Entitlement. That alone ~ould not:be conclusive because if two sets of rights were transferred and only one of them had obligations, it . . - would not be unreasonable to use such an expression. More significant is the expression in the assignment of its subject m~atter, that is, -"the whole right title and interest of the Assignor tinder the said Indenture", when it is read in conjunct:ion ·with the preceding recital which reads, where relevant:.:.. : "Whereas Moneymen Pty. Ltd. the Assignor holds an Indenture made the 30th day of June, 1972 between Caooolture Co-operative Association Ltd. as Granter and the Assignor as Grantee for the grant by the said "Granter to the Assignor of a Market Milk Entitlement whiqh said Indenture contains the Agreement between the said Granter and the Assignor in relation to thematters therein set fo-rth ... " This OI!}i ts .any reference to the reversion by Moneymen to the . . position of a quota milk supplier and the omission is not an aberration. The recital to the Indenture itself specifically ident_if ies the milk processing business as that which was sold and acknowl~dges the exclusion "of the business and goodwill of . - Moneymen- as ~airy farmers, dairymen and retail vendors which Mon~ymen does not sell and which Q.U.F. Trading Pty. Ltd. and Caboo_lture do not wish to purchase". This obviously includes its I • • rights as a quota milk supplier. The remainder of that recital refers to what can only be regarded as the Market Milk Entitlement arrangement, and no mention is made of the residuary -- 11 of 14 -- 9 rights of Moneymen at the end of the term. While a recital must give way to the operative words of the document in the event of an inconsistency, it may be referred to as a guide to construction and may help to resolve an ambiguity in the operative section: Halford v. Price (1960) 104 C.L.R. 23, 27. These matters all . read together lead to a very strong conclusion that the structure of the Indenture was such that its subject matter was confined to the Market Milk Entitlement arrangements which were to subsist for the term therein described. The function of para. 10 was merely to confirm the reversionary position of Moneymen at the expiration of the term, with a subsidiary regulation as to the quota which should be applicable, and not to grant it any such rights under the Indenture. This practical appraisal of the posi tioq is in conformity with the terms of its recital, and in turn the recital of the Deed of Assignment is in conformity with this concept. Equally the expression used in the assignment referring to its subject matter as the "right title and interest of the Assignor under the said Indenture" can comfortably be identified as the right title and interest in the Market Milk Entitlement only, for its residuary position which was only confirmed in the Indenture was not a right title or interest under it. This construction is not only consistent with the recitals in the Indenture and the Deed of Assignment, but it avoids any obvious discord which the alternative construction of the assignment would have with the recital preceding it. It also has the virtue of conforming with what should be expected on a practical level in such circumstances. -- 12 of 14 -- 10 For these reasons, it can~ ~be said that the Deed of Assignment does not purport to refer to the rights of Moneymen which it may hold under the status of a Caboolture quota milk supplier at the 'expiration of the term. However, there is insufficient material before the Court to be able to speak of the obligations of any of th~parties inter se in respect of these rights. Moreover, that may well depend upon the position of the industry at that time in respect of the holders of quotas. A reference to the Court such as this can only be properly construed against the background of established relevant facts. It is beyond such determination if the facts have yet t'o be established either because of controversy or futurity: see Brisbane City Council v. Wood Hall Pty. Ltd. (1983) 1 Qd. R. 563 and the cases cited by G.N. Williams J. at p. 571. Equally this procedure is not available when the declaration sought involves no determination of construction: Ibid. Consequently no declaration 'can be made as to such obligations. Because the applicant has succeeded on some issues but failed on 6thers, it would be just if no order as to costs be made. Accordingly it is declared as follows:- 1. (a) The Market Milk Entitlement referred to in cl. 2 of the Agreement referred to in the originating summons herein for the term of the Agreement as defined in cl. 3 of that Agreement was assignable by the applicant; ( b) It is not possible to say whether the status of a quota milk supplier as provided in cl. 1 0 of the -- 13 of 14 -- 1 1 Agreement at and from the expiration of the term of the Agreement as defined in cl. 3 of the Agreement was assignable by the applicant. Further it is not possible to say whether any rights held by it pursuant to that status are assignable. 2. (a) The Market Milk Entitlement referred to in cl~ 2 of the Agreement for the term of the Agreement as defined in cl. 3 of the Agreement was assigned by the assignment from the applicant to Maleny Milk Producers Pty. Ltd. as provided for in ex. "F" to the affidavit of Ian Robert Revie filed herein; (b) Neither the status of a quota milk supplier nor any rights of the applicant in relation thereto at and from the expiration of the term of the Agree~ent as provided in cl. 1 0 of the Agreement was or were purported to be assigned by the assignment from the applicant to Maleny Milk Producers Pty. Ltd. 3. It is not possible to say what obligations will exist between the applicant and any other party in respect of the applicant's status as a quota milk supplier at the expiration of the term of the said Agreement. -- 14 of 14 --