Al Jabriah Metals Trading Limited v Mass (Australia) Pty Limited & Ors [2008] ACTSC 28 (11 April 2008)

Last Updated: 7 May 2008

AL JABRIAH METALS TRADING LIMITED v MASS (AUSTRALIA) PTY LIMITED (ACN 108 657 012) & MACANDDRU PTY LIMITED (ACN 110 489 097) trading as ATLAS GLOBAL LOGISTICS & DHRUV BAJAJ trading as TRADE AND OUTSOURCE & DEVELOPMENTS CAMDEN PTY LIMITED (ACN 111 546 966)

[2008] ACTSC 28 (11 April 2008)

PRACTICE AND PROCEDURE - COSTS - costs of application for interlocutory injunction - no substantive proceedings yet commenced - costs reserved with liberty to apply

JT Stratford & Son Limited v Lindley (No 2) [1969] 3 All ER 1122

Australian Securities Commission v Aust-Home Investments Limited [1993] FCA 585; (1993) 44 FCR 194

Injunctions: A Practical Handbook, Burns, (Law Book Company Limited, 1988)

Injunctions: Law and Practice, Jacobs, McCarthy and Neggo, (Thomson Lawbook Co., 2005)

No. SC 252 of 2008

Judge: Master Harper

Supreme Court of the ACT

Date: 11 April 2008

IN THE SUPREME COURT OF THE )

) No. SC 252 of 2008

AUSTRALIAN CAPITAL TERRITORY )

BETWEEN: AL JABRIAH METALS TRADING LIMITED

Plaintiff

AND: MASS (AUSTRALIA) PTY LIMITED (ACN 108 657 012)

First Defendant

AND: MACANDDRU PTY LIMITED (ACN 110 489 097) trading as GLOBAL LOGISTICS

Second Defendant

AND: DHRUV BAJAJ trading as TRADE AND OUTSOURCE

Third Defendant

AND: DEVELOPMENTS CAMDEN PTY LIMITED (ACN 111 546 966)

Fourth Defendant

ORDER

Judge: Master Harper

Date: 11 April 2008

Place: Canberra

THE COURT ORDERS THAT:

1. The costs of the application be reserved.

2. Each party have liberty to apply on seven days' notice.

1. 1. On 28 March 2008 the plaintiff's solicitors commenced these proceedings by originating application. Preliminary orders were sought that service on the defendants be dispensed with and that the application be returnable immediately. The application came before me for hearing on the same day. Fortuitously I handed down on the same morning reasons for a decision in an unrelated proceeding to which the first defendant was a party, and the present application came to the attention of the first defendant's solicitors and counsel. Thus although it had been the intention of the plaintiff's solicitors and counsel to seek an injunction ex parte, at least so far as the first defendant was concerned the application was transformed into a contested application for an interlocutory injunction.

2. The substantive orders sought by the plaintiff were as follows:

(a) that the first defendant be restrained from transferring ownership, title or possession of, or otherwise delivering up to any person, two cranes (each identified by make, model and registration number), other than the delivery of the cranes to the second defendant for the purpose of the second defendant retaining possession, custody and control of the cranes at Port Kembla in New South Wales.

(b) that the second defendant be restrained from delivering up possession of the cranes or loading or facilitating the loading of the cranes onto any vessel.

(c) that the first defendant be restrained from disposing of, encumbering or dealing in any way with the proceeds of any purported sale of the cranes.

(d) that the first defendant deliver up to the plaintiff a copy of any written contract for the sale of the cranes.

(e) that the third defendant be restrained from disposing of or dealing with the cranes or removing them from Australia.

3. The second defendant is a shipping agent.

4. The third defendant is (and was at that stage suspected to be) the purchaser of the cranes.

5. The application was supported by an affidavit of Mr R S Sethi, who described himself as the purchase manager of the plaintiff, a company registered in the United Arab Emirates. He deposed that he was authorised by the plaintiff to purchase industrial equipment in Australia, including second-hand cranes. The plaintiff company according to Mr Sethi has been in business for eighteen years and has thirty-two staff. It is engaged in the purchase and sale around the world of scrap metal and industrial equipment including cranes.

6. Mr Sethi became aware in mid-February 2008 that the first defendant, a Canberra-based company, had two cranes for sale. There was another interested buyer but Mr Sethi was told that whoever put down a deposit first would be the buyer. He came to Canberra on 23 February 2008 to inspect the cranes. He spoke to Mr R Arnold, who told him that he was the business manager of the first defendant. Mr Arnold told him that another company had agreed to buy the cranes but that "no funds had been provided so that agreement was no longer on foot." Mr Sethi and Mr Arnold agreed on a price of $435,000, to be paid in instalments, and Mr Sethi paid a cash deposit of $35,000. At Mr Arnold's request the plaintiff transferred $150,000 to a bank account in Vietnam on 25 February, and the following day Mr Sethi paid a further $100,000 to Mr Arnold in cash in Sydney. The terms of the sale were set out somewhat cryptically in an invoice on the first defendant's letterhead addressed to the plaintiff.

7. Subsequently difficulties arose between the plaintiff and the first defendant, which it is unnecessary for me to record in detail. On 12 March 2008 the first defendant purported to terminate the agreement. The plaintiff did not accept the purported termination and told the first defendant so. On 13 March Mr Sethi received an email from Mr Anderson of the second defendant. Mr Anderson had been contacted by Wallenius Wilhelmsen, a shipping company, and told that there was legal action involving the cranes. He mentioned the third defendant, Trade and Outsource, as being involved. He asked to be informed what was happening and said that he did not want any dispute to become his problem. He said that the next vessel on which the cranes could be shipped was leaving Port Kembla on 5 April. Mr Anderson made it clear that his company was in the business of transporting cranes, not buying or selling them, and that he did not want to get involved in any dispute about the purchase or sale of the cranes.

8. Mr Sethi deposed that he was aware that the third defendant was engaged in the business of buying cranes for export to India and Dubai. He believed that the first defendant had purported to sell the cranes to the third defendant in breach of its contractual obligations to the plaintiff, and that they were to be shipped out of Australia on 5 April. He also deposed that the plaintiff had entered into a contract with a company in Dubai to sell the cranes to it, so that the plaintiff would be exposed to a liability in damages if it was unable to deliver the cranes as it had agreed. He expressed his belief that if the plaintiff defaulted on that contract, it would suffer significant damage to its reputation and goodwill in the industry. The construction industry in Dubai was close-knit and any such default was likely to become widely known among the plaintiff's existing and potential customers and suppliers.

9. During the course of the hearing I was provided with documentation which confirmed that the third defendant had commenced proceedings in the Victorian district registry of the Federal Court of Australia against the first defendant, a related company Developments Camden Pty Limited ACN 111 546 966, and the shipping line. Consent orders had been made in that matter by North J on 14 March 2008 designed to preserve the status quo until the matter was next before the Court on 15 April.

10. After hearing submissions from counsel on 28 March, I was persuaded that, subject to the plaintiff giving the usual undertaking as to damages, it was appropriate to grant relief until 2 April when the matter could be further considered. That date was set in the knowledge that the cranes had not yet left Port Kembla and would not be doing so in any event prior to 5 April. I was informed by counsel for the first defendant that its case was the cranes were owned by Developments Camden Pty Limited. I ordered that that company be joined as a defendant. I stood the application over to 2 April and in the interim made orders generally as sought by the plaintiff in the originating application.

11. When the matter came before me on 2 April, I was informed by counsel for the plaintiff and counsel for the first and fourth defendants that the parties accepted that the sale to the third defendant had been completed. I discharged by consent the restraining orders made the previous Friday. I sighted a minute of order signed by Melbourne solicitors for the third defendant, and with the plaintiff's agreement dismissed the proceedings against the third defendant with costs. I stood the matter over until the following day.

12. By 3 April 2008, affidavits had been made by Mr SJ Gavagna, managing partner of Goodman Law, the solicitors for the first defendant, and Mr HJ Kay a solicitor employed by that firm; and also by Mr WJG McCarthy, a partner with Bradley Allen, the solicitors for the plaintiff. I became aware that on 5 March, a Melbourne firm of solicitors acting for the third defendant had written to the solicitors to the first defendant asserting that a binding contract had been made between the first defendant and the third defendant for the sale of the cranes on 19 February 2008. They had said that they had instructions to commence proceedings for injunctive relief, specific performance and damages.

13. The second defendant has not appeared. A restraining order was made against the second defendant on 28 March and discharged on 2 April. It is unnecessary for any other orders to be made as between the plaintiff and the second defendant.

14. On 3 April 2008, counsel for the first defendant handed up a bank cheque for $437,330.00 for payment into court and payment out to the plaintiff's solicitors, this being a refund of the amounts paid by the plaintiff towards the purchase, with some interest.

15. The only remaining issue was that of the costs of the proceedings as between the plaintiff and the first and fourth defendants. Counsel for the plaintiff submitted that, in the light of the information available to the plaintiff on 28 March, the application for asset preservation and ancillary orders was soundly based and properly made and, in effect, that the first defendant had brought the proceedings on itself by failing to keep the plaintiff fully informed about its dealings with the third defendant.

16. Counsel for the first and fourth defendants submitted that his clients should have an order for costs against the plaintiff, for the reason that the application and supporting affidavit material had been inadequate to justify the interlocutory relief sought.

17. As Mr NR Burns says in Injunctions: A Practical Handbook (Law Book Company Limited, 1988) at pp 22-23, there are no fixed rules governing the exercise of a court's discretion in making an order for costs after a contested hearing for an interlocutory injunction. The result in each case will depend on the particular circumstances, the issues litigated on the interlocutory application, and the result. Among the possible orders are an immediate order for costs; an order that the costs of the application be costs in the cause; an order that the costs of the application be either the plaintiff's or defendant's costs in the cause; or an order that the parties pay their own costs. Burns refers to the longstanding reluctance of Courts to finally determining an entitlement to costs on an interlocutory application, the interlocutory order not being a prediction of the final result, and being made on incomplete evidence after a short hearing. As he says, in many cases it would be unjust to make a final order about costs, although there has been a tendency to favour the successful party in a contested hearing to the extent that that party will recover interlocutory costs if finally successful.

18. The texts deal with the issues which arise as to costs where an injunction is dissolved prior to final hearing, where injunctive relief is continued until the hearing, and where, following the grant of interlocutory injunctive relief, the matter is not litigated to finality: see for example Injunctions: Law and Practice, Jacobs, McCarthy and Neggo, Thomson Lawbook Co., 2005 at paragraph 15.200 - 15.500.

19. In the present matter, relief has not been sought at an interlocutory stage in litigation expected to continue until finality. The only proceeding before the Court is the application for injunctive relief, although it is by its nature of an interlocutory kind. Counsel for the plaintiff informs me that the plaintiff intends, now that it is clear that the cranes have gone, to proceed against the first and fourth defendants for damages for breach of contract.

20. Whilst it is generally desirable to make an order which disposes of costs so that they do not need to be revisited, perhaps by another judicial officer and perhaps well into the future, it seems to me that the present case is one where the material does not enable me to make a decision which is fair to the parties as to where the costs of the application should fall. It is rarely appropriate for a court to attempt to determine for itself the likely outcome of a case on its merits had it gone to trial. The court will not go into theoretical prospects of success merely to determine the issue of costs: JT Stratford & Son Limited v Lindley (No 2) [1969] 3 All ER 1122. This is particularly relevant where a trial on the merits would involve complex factual matters where credit could be in issue: Australian Securities Commission v Aust-Home Investments Limited [1993] FCA 585; (1993) 44 FCR 194.

21. In the circumstances I propose to reserve the costs of the application. It seems to me most likely that the ultimate appropriate order will be that the costs follow the event in the proposed action for damages for breach of contract, but it may be that facts will emerge in the course of that action which will make such an order unfair or inappropriate.

22. I recognise that such an action may not be pursued to finality. For that reason I grant liberty to any party to apply on seven days' notice in relation to the costs of these proceedings.

I certify that the preceding twenty-two (22) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Master.

Associate:

Date: 11 April 2008

Counsel for the plaintiff: Mr SM Whybrow

Solicitors for the plaintiff: Bradley Allen

Counsel for the first and fourth defendants: Mr GJ Blank

Solicitors for the first and forth defendants: Goodman Law

Date of hearing: 3 April 2008

Date of judgment: 11 April 2008