FEDERAL COURT OF AUSTRALIA

Sensis Pty Ltd v Bivami Pty Ltd [2012] FCA 1365

THE COURT ORDERS THAT:

1.    Australian Executor Trustees Limited as custodian for Hyperion Properties Syndicates Limited is joined as a party to the proceedings.

2.    The interim injunctions granted by Rares J and myself on 12 and 13 November 2012 respectively are dissolved.

3.    Leave is granted for AETL to file a cross-claim in the form attached to the amended interlocutory application filed in Court on 29 November 2012.

4.    The applicants’ interlocutory application filed on 19 November 2012 is dismissed.

5.    The proceedings are listed for further directions on 11 December 2012 at 9:30 am.

6.    Costs are reserved.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

1    The Court is asked to determine the following interlocutory applications:

(a)    Australian Executor Trustees Limited (“AETL”) as custodian for Hyperion Property Syndicates Ltd (“Hyperion”) seeks to be joined as a party in the proceedings;

(b)    if joined as a party, AETL seeks the dissolution of the ex parte interim injunctions granted by Rares J on 12 November 2012 and the further interim injunctions granted by me by consent on 13 November;

(c)    if joined as a party, AETL seeks leave to file a cross-claim; and

(d)    the applicants seek to have one or more questions separately heard and determined.

Background facts

2    The proceedings relate to a dispute concerning a lease and a related banker’s undertaking in respect of property situated at 1-7 Waterloo Road, Macquarie Park (“the premises”). A lease was originally signed in 1999 between Bivami Pty Ltd (“Bivami”), as lessor, and Universal Press Pty Ltd (“Universal”), as lessee (“the Lease”). It had a term of 10 years commencing on 30 July 1999. On 3 June 2003, Universal changed its name to Universal Publishers Pty Ltd (but, for convenience, I shall continue to refer to it as Universal). In December 2004, Universal’s share capital was acquired by Sensis Pty Ltd (“Sensis”), a wholly owned subsidiary of Telstra Corporation Limited (“Telstra”).

3    On 3 July 2006, Bivami sold the premises to AETL. AETL is a corporate trustee providing custody services for property syndicates for which the responsible entity is Hyperion. AETL remains the registered proprietor of the premises. On 9 September 2009, Sensis sold the share capital in Universal to a company called Hardie Grant Publishing Pty Ltd (“Hardie Grant”).

4    When the lease expired on 29 June 2009, Universal did not take up an option to renew. Universal vacated the premises.

5    Hyperion and Universal are in dispute as to whether Universal breached certain terms of the lease. In particular, Hyperion alleges that Universal failed to make good the premises in accordance with its obligations under the lease (“make good claims”) and also failed to remediate the premises as required under the lease (“remediation claim”). On 8 November 2012, AETL commenced proceedings in the Supreme Court of New South Wales against Universal seeking damages in the amount of approximately $2.7 million in respect of the alleged breaches of the lease.

6    On 9 November 2012, Telstra was notified by Westpac that Bivami had called on a banker’s undertaking in respect of the premises. The banker’s undertaking is dated 9 February 2006 (“the banker’s undertaking”). It relates to the premises and is expressed to be in favour of Bivami. It appears that the banker’s undertaking was arranged by Universal in compliance with certain requirements under clause 19 of the Lease, which I shall set out shortly. It is convenient to note at this point, however, that it appears that the banker’s undertaking replaced an earlier bank guarantee dated 30 July 1999 in favour of Bivami. That bank guarantee was given by the National Australia Bank Limited (“NAB”) at the request of Universal. It appears from an undated letter on Bivami’s letterhead and addressed to Universal that Universal changed banks from NAB to Westpac and replaced the NAB bank guarantee with the Westpac banker’s undertaking. This appears to have occurred in early 2006 and prior to AETL acquiring the premises in July 2006.

7    Clause 19 of the Lease is in the following terms:

19.1    The Lessee shall deliver to the Lessor, on or before execution of this Lease, an unconditional Bank Guarantee to the amount specified in Item 16 to secure the Lessee's obligations under this Lease and losses and damages suffered by the Lessor pursuant to breach by the Lessee or termination of the Lease arising from such breach together with a copy of the Power/s of Attorney pursuant to which it is singed (sic).

19.2    The amount of the Bank Guarantee shall be increased after any Review Date to an amount equal to twelve months of the Rent agreed or determined following a Rent review and the Lessor’s estimate of the Outgoings payable by the Lessee for the same period of twelve months . The Lessee will lodge with the Lessor a further or replacement Bank Guarantee to cover the difference between the Rent and estimated Outgoings payable over a period of twelve months and the amount currently held as Bank Guarantee within 21 days of the Rent being agreed or determined pursuant to the provisions of Clause 4.3. If there is a change in the person’s who are the Lessor, the Lessee shall on the Lessor’s request provide a substitute Bank Guarantee in favour of the then current Lessor.

19.3    The Bank Guarantee shall be in a form acceptable to the Lessor.

19.4    In the event that the Lessee:

19.4.1.1    defaults in the payment of Rent or in the performance or compliance of any other obligations under this Lease; or

19.4.1.2    breaches of any other obligation, term, condition or covenant under the Lease,

the Lessor is hereby authorised to demand that the guaranteeing bank pay to the Lessor such amount that (in the reasonable opinion of the Lessor) may be due to the Lessor as a result of such default, breach or non-observance by the Lessee or termination of the Lease pursuant to it.

19.5    The Lessor shall be entitled to recover Rent and damages for breach of covenant or arising from termination of this Lease without being limited to the amount secured under the Bank Guarantee.

19.6    Any demand made shall not in any way be deemed to constitute a waiver by the Lessor of any default, breach or non-observance by the Lessee and shall not prejudice any other right of the Lessor arising from such default, breach or non-observance.

19.7    Should any amount of the Bank Guarantee be demanded from time to time by the Lessor as aforesaid then the Lessee shall upon demand by the Lessor and within twenty-one (21)days from the date thereof provide to the Lessor a further Bank Guarantee for the amount so demanded (in a form acceptable to the Lessor) in order to reinstate the amount of the Bank Guarantee to an amount equal to the amount shown in Item 16, or to any amount equal to Rent for the number of months specified in Item 6.

19.8    The Lessor shall return to the Lessee the Bank Guarantee three months after expiry or termination of this Lease subject to the Lessee vacating the Premises and otherwise complying with its Obligations under the provisions of this Part have come into operation.

8    The following relevant definitions in clause 1.2 of the Lease should also be noted (which definitions are stated to apply unless the context otherwise requires):

1.2.1    “Bank Guarantee” means an unconditional undertaking or guarantee from an Australian bank in favour of the Lessor in a form and content acceptable to the Lessor to enable the Lessor to be paid on demand an amount up to the sum referred to in Item 16 in total in one or more drawings and containing no expiry date.

…

1.2.17    “Lessor” means the person referred to as the Lessor on the front page of this Lease and includes his successors and assigns or, being a person, his executors, administrators and assigns and where not repugnant to the context, the Lessor’s servants and agents.

9    Under the banker’s undertaking referred to above, Westpac unconditionally undertook to pay on demand any sums demanded by Bivami as the “Favouree” in relation to the premises up to a maximum sum of $632,000. The undertaking continues until the occurrence of the first of the following events:

(a)    Westpac receiving written notification from Bivami that the amount covered by the undertaking is no longer required by Bivami; or

(b)    the undertaking being returned to Westpac; or

(c)    Westpac paying some or all of the capped amount.

10    The banker’s undertaking in favour of Bivami as Favouree contains the following statements:

Should Westpac be notified in writing purporting to be signed by or for and on behalf of the Favouree that the Favouree desires payment to be made of the whole or any part or parts of the Sum, it is unconditionally agreed that such payment or payments will be made to the Favouree forthwith without reference to the Applicant and notwithstanding any notice given by the Applicant to Westpac not to pay the same. Provision always that Westpac may at any time without being required to do so pay to the Favouree the Sum less any amount or amounts it may previously have paid under this undertaking or such lesser sum as may be required and specified by the Favouree and thereupon the liability of Westpac hereunder shall immediately cease and determine.

The Favouree shall not assign or transfer all or any part of its rights under this undertaking without the prior written consent of Westpac.

Should Westpac in its discretion consent to the assignment or transfer of this undertaking then, unless the context requires otherwise, the words “Favouree” shall include each such assignee or transferee.

Proceedings before Justice Rares

11    On 12 November 2012, the applicants urgently sought ex parte relief, including interlocutory injunctions directed to both Bivami and Westpac. His Honour was informed by the applicants, both orally and in written submissions that, while the lease made provision for a substituting guarantee to be obtained upon request by a transferee of the reversion, no such request had been made. In particular, the applicants’ outline of submissions contained the following statements:

11.2    No substitute bank guarantee was sought at the time of transfer of the property to AETL.

11.3    Accordingly, it appears that the current registered proprietor (or its ultimate owner) has prevailed on Bivami to call upon the guarantee in circumstances where it can have no legitimate entitlement to do so.

12    As will emerge further below, AETL contends that these statements were erroneous and that the interim injunctions should now be dissolved on two grounds, namely material non-disclosure and that they ought to have been joined as party from the outset.

13    On the giving of the usual undertaking as to damages, Rares J granted interim injunctive relief in the form described below:

1.    Up to and including 13 November 2012:

a.    Bivami Pty Ltd (ACN 003 020 166) (Bivami), by itself, its servants and agents be restrained from making any demand in writing upon Westpac Banking Corporation Limited (ACN 007 457 141) (Westpac) pursuant to the Banker’s Undertaking given by Westpac to Bivami dated 9 February 2006 (Banker’s Undertaking);

b.    Westpac, by itself, its servants and agents be restrained from making any payment pursuant to the Banker’s Undertaking.

Proceedings on 13 and 20 November 2012

14    The proceedings came before me on 13 November 2012. By consent the interim injunctive orders were continued until further order and the matter was set down for further directions on 20 November 2012.

15    On 20 November 2012, Mr Newlinds SC announced his appearance on behalf of AETL and indicated that his client wished to be joined as a party and have the interim injunctions dissolved. To accommodate Counsels’ availability, I stood the matter over to 29 November 2012 for hearing of AETL’s interlocutory applications, as well as an interlocutory application by the applicants seeking to have certain questions heard and determined as separate questions.

16    I shall now deal with each of those interlocutory applications.

Joinder of AETL

17    AETL argued that it ought to have been joined as a party to the proceedings from the outset as it was said that it was a party whose rights were “directly affected” (see News Limited v Australian Rugby Football League Limited (1996) 64 FCR 410 at 524 and John Alexander’s Clubs Pty Limited v White City Tennis Club Limited (2010) 241 CLR 1 at [131]). It argued that its rights and interests were directly affected by the interim injunctions because their effect was “to preclude Hyperion from exercising the entitlement to call on the bank guarantee which clause 19 of the Lease confers on it as Lessor”. Further, it claimed that the effect of the injunctions was to restrain Bivami from carrying out its obligations under a contract of sale dated 14 February 2006 with AETL and that AETL needed to be joined in order for there to be a genuine contradictor. The applicants neither consented to, nor opposed, AETL’s application for joinder.

18    In order to understand AETL’s argument, it is necessary to say something about the contract of sale between Bivami and AETL.

19    The entirety of that contract of sale was not in evidence, but the following extract was provided as an annexure to an affidavit sworn 14 November 2012 by Hyperion’s solicitor, Mr Bavin:

18.    THE VENDOR will use its best endeavours both prior to and after completion to obtain from the Lessee a Bank Guarantee in the same terms as the Bank Guarantee attached to this contract excepting that it would name the Purchaser as the “beneficiary” of that bank guarantee. In the event of the Vendor not being able to obtain such substituted Bank Guarantee by Completion Date then the Vendor will on each and every occasion after Completion Date that the Purchaser in writing requests the Vendor to do so, call upon the National Australia Bank Limited pursuant to the terms of the current Guarantee to pay to the Vendor such amounts as the Purchaser requests pursuant to a default/defaults by the Lessee under the Lease, subject only to the Purchaser on each such occasion indemnifying the Vendor in writing for and against any actions, damages and costs commenced by the Lessee against the Vendor claiming that no default had occurred which gave to the Vendor or to the Purchaser the right to call upon the Bank Guarantee.

20    Although there is a reference in clause 18 to a bank guarantee being attached to the contract of sale, no such attachment was put in evidence. Accordingly, the Court was not in a position to resolve the doubt created by the reference in clause 18 to that bank guarantee being related to NAB (and not Westpac). Mr Newlinds SC submitted that the reference was a typographical error and he declined to put into evidence a full copy of the contract of sale.

21    The power of the Court to order that a person be joined as a party to proceedings is dealt with in rule 9.05 of the Federal Court Rules 2011 (“2011 FCRs”). Relevantly, rule 9.05(1) and 9.05(3) are in the following terms:

(1)    A party may apply to the Court for an order that a person be joined as a party to the proceeding if the person:

    (a)    ought to have been joined as a party to the proceeding; or

    (b)    is a person:

        (i)    whose cooperation might be required to enforce a judgment; or

        (ii)    whose joinder is necessary to ensure that each issue in dispute in the proceeding is able to be heard and finally determined; or

(iii)    who should be joined as a party in order to enable determination of a related dispute and, as a result, avoid multiplicity of proceedings.

…

(3)    If a person is joined as a party under this rule, the start date of the proceedings for the person is the date on which the order is made.

…

22    In circumstances where, before trial, a person seeks to be joined as a party, the focus should be on the orders which are sought in the proceedings. As noted above, the applicants seek both final and interlocutory injunctive relief which in terms directly impacts upon Bivami and Westpac in respect of the banker’s undertaking. On one view, therefore, it might be thought that the impact on AETL is only indirect and is focused on its commercial, rather than its legal, interests. Such interests are not sufficient to engage rule 9.05(1)(a), having regard to the following passage from the Full Court’s decision in News Limited at 525:

Where, before trial, a question arises whether a necessary party has been joined, attention should be directed to the orders sought in the proceedings. It is the effect of the orders upon the third party that must be determined. The test is not whether the conduct of the third party is raised in the pleadings between the existing parties, or whether the third party is a party to a contract, the meaning or effect of which is pleaded as a matter relevant to the ascertainment of the rights between those parties. Where the question arises after final orders have been made in the proceedings, the inquiry must be directed to the orders actually made, or which, on appeal it is contended should be made…

23    In my opinion, AETL has not established a right to be joined as a party under rule 9.05(1)(a). AETL is contending that it, as Lessor, has an entitlement to call on the bank guarantee under clause 19 of the Lease and that the exercise of that entitlement is precluded by the interim injunction. I understand this submission is directed to the fact that the current interim injunctions operate to restrain Westpac from making any payment pursuant to the banker’s undertaking (whether to Bivami or any other person who might seek to call on the undertaking, including I presume AETL). I have some difficulty with that submission because, as Mr Newlinds SC accepted, the banker’s undertaking is in favour of Bivami alone, and not AETL. As I understand matters, that is the reason why AETL has required Bivami to make a call on the banker’s undertaking in accordance with clause 18 of the contract of sale between Bivami and AETL. AETL has not itself made that call because the banker’s undertaking is not in its favour, but rather is in favour of Bivami. In my view AETL has not brought itself within rule 9.05(1)(a).

24    For the following reasons, however, I consider that AETL should now be joined as a party under rule 9.05(1)(b)(ii) and/or (iii). First, as Mr Newlinds SC pointed out, the call was made by Bivami in accordance with its obligations under clause 18 of the contract of sale. Bivami has no interest in making the call otherwise than to comply with its contractual obligations to AETL. I agree that, in those circumstances, there will be no genuine contradictor to the applicants’ claim unless AETL is joined. To date, Bivami has taken a limited role in the proceedings. In my view, such joinder is necessary in order to ensure that all issues in dispute in the proceedings are able to be heard and finally determined in a proper manner.

25    Secondly, and related to the first point, AETL seeks leave to file a cross-claim against Universal in which it seeks an order that Universal deliver to it a bank guarantee in the amount of $936,000. Briefly stated, the proposed cross-claim will rely on various correspondence in June 2006 and July 2007, the effect of which according to AETL is that a request was in fact made by it under clause 19.2 of the lease for a substitute bank guarantee to be provided in its favour and for a higher amount than the banker’s undertaking. AETL says that Universal also promised that it would obtain a replacement bank guarantee in AETL’s favour. As will be developed below, it is this correspondence which lies at the heart of AETL’s contention that there was a material non-disclosure before Rares J. Although there are proceedings on foot in the New South Wales Supreme Court between AETL and Universal, it seems to me that the proposed cross-claim could conveniently be heard and determined in the context of the proceedings here and thereby avoid any further multiplicity of proceedings.

26    Thirdly, as Mr Newlinds SC submits, the applicants’ proceedings here could appropriately be characterised as a construction suit. The applicants’ case raises inter alia various issues concerning the proper construction of provisions in the Lease, such as clause 19. The proper construction and operation of that clause will arise for determination not only under the applicants’ proceedings, but also under AETL’s proposed cross-claim. In those circumstances, it is appropriate that the current Lessor be heard as a party on such matters.

27    For all these reasons, I consider that an order should be made joining AETL as a party. In accordance with rule 9.05(3) the order is effective from the date it is made.

Should the interim injunctions be dissolved?

28    Under its amended interlocutory application, AETL seeks inter alia to have the interim injunctions dissolved or set aside ab initio on the grounds that they were made without joining AETL as a party, and also on the grounds of material non-disclosure. I will deal with each of those matters in turn.

(a)    Non-joinder of AETL

29    For the reasons given above, even though I consider that AETL ought now be joined as a party in the proceedings, the applicants were not obliged to join AETL as a party from the outset. Accordingly, the interim injunctions should not be set aside on this basis.

(b)    Material non-disclosure

30    AETL relies on the oral and written submissions made on behalf of the applicants to Rares J concerning the issue whether a substitute bank guarantee had been requested in favour of AETL in connection with the reversion. I have set out in [11] relevant extracts from the applicants’ written submissions before Rares J. In oral address to his Honour, the applicants’ senior counsel also stated that: “The lease made provision for a substituting guarantee to be obtained, if so requested, in favour of any transferee of the reversion. That didn’t occur”.

31    The applicants acknowledge that those statements were erroneous. Their solicitor, Mr Pagent, gave evidence that this occurred because he made an incorrect assumption that no such request had been made. He said that he had not been specifically instructed by his clients that no such request had been made. He accepts that his assumption was made inappropriately. He also says that his error did not result from any misleading conduct by the applicants, nor from any deliberate attempt by the applicants to mislead the Court. I accept that evidence (noting that Mr Pagent was not cross-examined). I should add, however, that even though I find that the non-disclosure was not deliberate, that does not necessarily mean that there should be no consequences in terms of the interim injunctive relief affected by the non-disclosure. I will return to that matter below.

32    The applicants also contend that the non-disclosure was not material. For the following reasons I do not accept that submission. First, a reasonable inference could be drawn that the applicants themselves regarded the issue whether or not a substitute bank guarantee had been requested to be a material matter because, as noted above, the issue was the subject of specific written and oral submissions made by them to Rares J.

33    Secondly, in circumstances where the applicants, in opposing the call on the banker’s undertaking were alleging unconscionability on the part of Bivami, their own earlier conduct in not providing a substitute bank guarantee in accordance with the correspondence referred to in [25] above was at least potentially relevant to the question whether or not interim injunctive relief ought to have been granted. As AETL points out, the applicants’ failure to provide a new bank guarantee in favour of it as new owner, meant that AETL was driven to rely upon the terms of the contract of sale with Bivami in requiring the undertaking to be called upon. AETL also alleges under its proposed cross-claim that, in light of the correspondence outlined in [25] above, Universal was obliged to provide it with a replacement bank guarantee in the total sum of $936,000.

34    The applicants submit that AETL waived its rights to rely upon that correspondence in circumstances where it did nothing to enforce the promises made therein and was apparently content to proceed without any bank guarantee because it was told by Universal’s agent that a bank guarantee wasn’t needed because of Telstra’s involvement via Sensis. I do not need to resolve those matters now. I find that, because of the non-disclosure, Rares J may have been misled on a material matter relating to the applicants’ own conduct and arguable responsibility for bringing about the state of affairs which resulted in Bivami calling upon the banker's undertaking. These matters may have influenced the exercise of Rares J’s discretion and also the Court’s decision on 13 November 2012 to, in effect, continue the interim injunctive relief, notwithstanding that the orders were made by consent. I do not accept the applicants’ submission that the correspondence outlined in [25] above which has now emerged was not reasonably relevant to the discretion to grant interlocutory injunctive relief. Nor do I accept that the oral written submissions made on behalf of the applicants on the issue whether a request had been made for a substitute bank guarantee were not material to the decision to grant and continue the interim injunctive relief.

35    The importance of the duty of a party seeking interim injunctive relief on an ex parte basis to place all relevant matters before the Court is well established. As the Full Court observed in Town & Country Sport Resorts (Holdings) Pty Ltd v Partnership Pacific Limited (1988) 20 FCR 540 at 543:

The rationale behind the principle is clear; it is of the utmost importance in the due administration of law that the Courts and the public are able to have confidence that an ex parte order has been made only after the party obtaining it has complied with its duty to disclose all relevant facts.

36    I see no good reason why I should exercise a residual discretion to maintain the interim injunctive orders even though there has been a material non-disclosure (see Thomas A Edison Limited v Bullock (1912) 15 CLR 679 at 682 and Eurogold Limited v Oxus Holdings (Malta) Limited [2007] FCA 811 at [30]-[35]). Although I do not need to determine the matter at this stage, I believe there is some force in AETL’s submission that, if the banker's undertaking is paid (and having regard to the amended undertaking to the Court which I describe below), Sensis and Universal are generally in the same position as if Universal had provided the substitute bank guarantee in accordance with the promise it arguably made in the correspondence set out in [25] above.

37    For all these reasons, I consider that the interim injunctions ordered by Rares J and myself should be dissolved. I appreciate that the orders made by Rares J were expressed to expire on 13 November 2012. But I consider it appropriate in all the circumstances that those orders should also be dissolved formally.

38    The applicants say that, if the interim injunctive orders are dissolved on the basis of material non-disclosure, fresh interim injunctions should be granted preserving the status quo pending the hearing and determination of the proceedings (see Barneys Blu-Crete Pty Ltd v Australian Workers’ Union (1979) 43 FLR 463 at 474-475). They say that they have an arguable case and that the balance of convenience weighs in their favour in restraining Westpac from making any payment to Bivami in respect of the banker's undertaking.

39    I am prepared to accept that there is a serious question to be tried in respect of Bivami’s entitlement to call upon the banker's undertaking when it is no longer the Lessor of the premises and having regard to the effect and operation of s 117 of the Conveyancing Act 1919 (NSW). I am also prepared to accept that there is a serious question to be tried as to whether Bivami has breached an implied negative stipulation in the Lease and/or engaged in unconscionable conduct contrary to s 20 of the Australian Consumer Law.

40    In my view, however, the balance of convenience weighs against and not in the applicants’ favour. The applicants raised doubts about Bivami’s capacity to repay the amount of the banker's undertaking in the event that the applicants succeed. But Hyperion has provided an amended written undertaking to the Court in the following terms:

Hyperion Property Syndicates Limited undertakes that upon Australian Executor Trustees Limited (AETL) receiving the proceeds of Westpac Bankers Undertaking dated 9 February 2006 it will direct AETL to account for those monies against any claim for damages it is found or agreed is due to it or AETL by Universal Publishers Pty Limited for breach of the Lease dated 30 July 1999 relating to the Premises known as 1-7 Waterloo Street Macquarie Park NSW and will direct AETL to account to Sensis Pty Limited or as it may direct for any amount in excess of any such damages.

41    The applicants submit that the Court should not take any undertaking from Hyperion into account because it is not a party to the proceedings. But as AETL pointed out in reply, rule 39.21 of the 2011 FCRs contemplates that undertakings may be given by and enforced against non-parties.

42    The applicants also contend that relevance should attach to Bivami’s position as stated in a short written submission made by it in respect of the undertaking originally proposed by Hyperion. Bivami elected not to make any direct submission in respect of the then proposed undertaking and said that its decision not to do so should not be construed as an admission that Bivami is obligated to pay Hyperion the proceeds of the banker’s undertaking. In my view, the applicants misstate the effect of Bivami’s brief submission. I read that submission as saying no more than that Bivami considers that any contractual obligation it has under the contract of sale is owed to AETL and not Hyperion. Bivami subsequently confirmed that its submission was limited and that it was not suggesting that it was entitled to retain the proceeds of the banker’s undertaking for itself.

43    Accordingly, for all those reasons, I consider that Hyperion’s amended undertaking to the Court tips the balance of convenience firmly in favour of AETL in the context of the applicants’ application for a fresh interim injunction. I decline to make fresh restraining orders.

AETL’s cross-claim

44    As noted above, AETL seeks leave to file a cross-claim against Universal. The applicants oppose leave on the basis that any such cross-claim is more appropriately dealt with in the Supreme Court proceedings. I do not agree. The subject matter of the cross-claim relates to Universal’s alleged obligation to provide AETL with a substitute bank guarantee. The cross-claim may also have some bearing on the applicants’ entitlement to relief and its allegations of unconscionability. I will grant leave to file the cross-claim in the form attached to the amended interlocutory application filed in Court on 29 November 2012.

Should any separate questions be heard and determined?

45    The applicants seek an order that one or more of three proposed questions be heard and determined separately under rule 30.01 of the 2011 FCRs. In support of their application, they rely upon a statement of facts which was said to be agreed, but that was prior to AETL being joined as a party to the proceedings. AETL opposes the hearing of any separate questions. The three proposed questions are as follows:

1.    Whether, as a matter of the proper construction of the Lease, including by virtue of the operation of s 117 of the Conveyancing Act 1919 (NSW), or otherwise, Bivami had any entitlement as of 8 November 2012 to call upon the Bank Guarantee.

2.    Whether by calling on the Bank Guarantee Bivami is in breach of a negative stipulation not to call upon the Bank Guarantee.

3.    Whether by calling upon the Bank Guarantee on 8 November 2012, and thereafter by failing to countermand or withdraw that call, Bivami has acted in contravention of s 20 of the Australian Consumer Law.

46    In my view, it is premature to order that any of the proposed questions be heard separately and in advance of the proceedings. Having regard to the nature of the matters relied upon by the applicants in resisting the banker's undertaking being paid to Bivami, I consider that it is appropriate to defer consideration of the possibility of there being separate questions until the pleadings have closed. Only then will the Court be in a position to fully understand the nature of the issues in dispute and assess whether it is appropriate to seek to formulate any questions for separate determination. The inappropriateness of making any such determination at present is highlighted by the fact that AETL does not support the previously agreed statement of facts and draws attention to a number of other matters which it says would need to be added, including the correspondence described in [25] above. I also consider that AETL’s cross-claim raises new issues which are not accommodated by the proposed questions, which further highlights the prematurity and inappropriateness of ordering separate questions.

Future conduct of the proceedings

47    The proceedings should now take their normal course. I am not prepared at this stage to accept Mr Newlinds SC’s contention that the Court lacks jurisdiction to entertain the proceedings on the basis that the applicants’ claims under the Australian Consumer Law are colourable. In my view that aspect of the applicants’ case is at least arguable.

48    I will list the matter for further directions on 11 December 2012. The parties should seek to agree short minutes of order dealing with the future conduct of the proceedings, including the cross-claim. They should also seek to agree what, if any, orders for costs should be made in the light of my reasons above in respect of the various interlocutory applications.

49    I make the following orders:

1.    Australian Executor Trustees Limited as custodian for Hyperion Properties Syndicates Limited is joined as a party to the proceedings.

2.    The interim injunctions granted by Rares J and myself on 12 and 13 November 2012 respectively are dissolved.

3.    Leave is granted for AETL to file a cross-claim in the form attached to the amended interlocutory application filed in Court on 29 November 2012.

4.    The applicants’ interlocutory application filed on 19 November 2012 is dismissed.

5.    The proceedings are listed for further directions on 11 December 2012 at 9:30 am.

6.    Costs are reserved.

Associate:

Dated:    3 December 2012