Caird Seven Pty Ltd v Mina Attia and Shopsmart Pharmacy Franchising Pty Ltd (No 3)

By notice of motion filed on 26 August 2016 (the Receivership Motion), Caird Seven Pty Limited (Caird) seeks, relevantly, an order, by way of equitable execution, that Mr David Kerr, partner of RSM Australia Partners, or some other fit and proper person, be appointed receiver over the property of Mr Mina Attia and Shopsmart Pharmacy Franchising Pty Ltd (Shopsmart) for the purpose of satisfying Mr Attia’s and Shopsmart’s obligations under orders made by the Court on 22 July 2016, [1] as varied on 5 August 2016 (together the Orders). The relevant orders made previously in the proceedings are set out in Schedule 1 to these reasons. The circumstances of the making of the Orders and the background to the proceedings are set out in reasons published on 9 August 2016 and 22 August 2016. [2] In these reasons, terms are used as defined in those earlier reasons.

By the Orders, Mr Attia and Shopsmart (together the Defendants) were required to perform the terms of the Rescission Deed made between Caird, of the one part, and Mr Attia and Shopsmart, of the other part. Specifically, by the Orders, Mr Attia was required to provide certain documentation and other things to the solicitors for Caird by 22 August 2016, and to procure a bank cheque in the sum of $2,050,000 for the purposes of enabling completion, by 23 August 2016, of the Retransfer Contract referred to in the Rescission Deed. Finally, Mr Attia and Shopsmart were required, no later than 23 August 2016, to attend and complete settlement of the Retransfer Contract, whereby the Pharmacy Business would be transferred to Mr Attia. While some of the documents required by the Orders have been provided, other documents have not, the bank cheque has not been procured and settlement of the Retransfer Contract has not been completed.

Prayer 1 of the Receivership Motion also contains a statement of charge against the Defendants alleging contempt by reason of their failure to comply with the Orders. At this stage, Caird has not moved for the relief contained in prayer 1, but has limited its claim for relief to prayer 2, which is concerned with the appointment of a receiver and the authorisation of any receiver to sign any documents on behalf of the Defendants to enable completion of the Retransfer Contract to be effected.

The Defendants resist the orders now claimed by Caird on two bases. The first is that the Court does not have power to appoint a receiver in the present circumstances. The second is that, even if the Court does have power, the circumstances of the case are not such as would justify the appointment of a receiver by the Court in the exercise of its discretion.

Under s 67 of the Supreme Court Act 1970 (NSW) (the Supreme Court Act), the Court may, at any stage of proceedings, on terms, appoint a receiver by interlocutory order in any case in which it appears to the Court to be just or convenient to do so. The Defendants contend, however, that s 67 should be construed narrowly such that it is limited to the interim preservation of the subject matter of litigation pending a final resolution of the proceedings and not with the appointment of a receiver as a final order to give effect to a judgment that has been delivered.

The legislative history of s 67 does not support the narrow construction contended for by the Defendants. Its origin is to be found in s 25(8) of the Supreme Court of Judicature Act 1873 (Imp), which relevantly provided as follows:

The Defendants rely on observations made by Ball J in Hall v Foster, [3] which were subsequently cited and approved in obiter comments made by Kunc J. [4] Hall v Foster was concerned with a contract for sale whereby the plaintiffs agreed to buy a property at Port Kembla from the Defendants for a purchase price of $510,000, of which $385,000 was paid as a “deposit”. The sale was conditional upon the registration of a plan of subdivision and the parties agreed to use their best reasonable endeavours to satisfy that condition. Repayment of the deposit was secured by a registered mortgage from the defendants to the plaintiffs. Originally, the plaintiffs claimed specific performance of the contract for sale but ultimately abandoned that relief and obtained judgment on the basis that the defendants had breached their obligation to use best reasonable endeavours to obtain registration of the proposed plan of subdivision. Part of the judgment amount included the amount secured by the mortgage. The balance of the judgment was unsecured.

The plaintiffs took steps to sell the Port Kembla property. Thus, they served a notice under s 57(2) of the Real Property Act 1900 (NSW), commenced proceedings for possession and appointed an agent to sell the property. In the meantime, the defendants took steps to sell the property to the brother of one of the defendants for a price of $1.6 million, although no contract for sale had been signed or exchanged. The plaintiffs alleged that the property had a value of $2.3 million and that the proposed sale to the brother was at an under-value. Ball J held that, while it was not possible to determine the question of value on an interlocutory hearing, there was a serious question to be tried as to whether the property was being sold to the defendant’s brother at an undervalue.

By notice of motion, the plaintiffs sought an order appointing a receiver to the Port Kembla property and, in the alternative, a freezing order restraining the defendants from dealing with the property. Ball J accepted that, although the general rule is that, once final orders have been made, the proceedings cannot be reopened by the Court, the Court still has power to make additional orders for the enforcement of its own judgment. His Honour referred specifically to s 106 of the Civil Procedure Act 2005 (NSW), which provides that a judgment debt may be enforced by means of a writ for the levy of execution on property, by garnishee order or by a charging order. In addition, his Honour observed, the Court has an inherent equitable jurisdiction to enforce judgments, often referred to as “equitable execution”. The plaintiffs relied on s 67 of the Supreme Court Act to support their application for the appointment of the receiver. However, Ball J considered that the wording of s 67 suggested that it is concerned with the interim preservation of the subject matter of the litigation pending a final resolution of the proceedings and not with the appointment of a receiver as a final order to give effect to judgment that has been delivered. His Honour considered that a court should only grant “equitable execution” where the legal remedies available are inadequate.

Ball J concluded that it was not appropriate to appoint a receiver in the case before him because the legal remedies available to the plaintiffs were not inadequate, in that they were able to exercise their powers as first registered mortgagees to sell the Port Kembla property, provided the property was not sold by the defendants. The plaintiffs could be protected against a sale by the defendants by a freezing order. Ball J considered that, if the plaintiffs wished to obtain an order preventing the sale of the property to the defendant’s brother, they should be required to give an undertaking as to damages so as to protect the defendants in the event that the property was ultimately sold for a lower figure than the one that would be realised if the sale to the defendant’s brother proceeded. His Honour therefore considered that the preferable course was to require the plaintiffs to give the usual undertakings to damages. Upon the plaintiffs giving the usual undertakings as to damages, his Honour ordered that the defendants be restrained from encumbering, selling, agreeing to sell, transferring, disposing, or otherwise dealing with the Port Kembla property.

Clearly enough, Hall v Foster is concerned with circumstances quite unlike those presently before me. As Ball J observed, there was a perfectly adequate legal remedy available to the plaintiffs to enforce the money judgment that they had against the defendants. The plaintiffs’ concern was to prevent dissipation of assets before the judgment could be satisfied. Accordingly, a freezing order was appropriate to enable the plaintiffs to exercise their powers as mortgagees. If they did not have that power, the freezing order may well have been appropriate pending the issue of a writ of execution in respect of the Port Kembla property.

In the present case, Caird has the benefit of the Orders made by the Court. The Orders were made by the Court in order to require the performance by the Defendants of the Retransfer Contract. Caird seeks to have the Orders performed in circumstances where, for whatever reason, the Defendants have not obeyed the solemn orders of the Court. Rather, the Orders have been almost wholly ignored.

The Defendants contend, in effect, that there is no simple means whereby Caird can achieve performance of the Orders, other than by entirely indirect means. Thus, they suggest that one means of ensuring compliance would be to press the charges of contempt, on the basis that the fear of punishment may induce the Defendants, who are otherwise recalcitrant, to perform the Orders, as made by the Court. Alternatively, they suggest, Caird could apply to the Court for the termination of the Retransfer Contract and sue for damages for breach of contract with a view to obtaining a money judgment that could be enforced by levy of execution, garnishee order or charging order. While those courses may be open to Caird, they would not be enforcing the Orders. Rather, they would be abandoning the Orders by reason of the Defendants’ non-compliance with them.

I do not consider that the language of s 67 should be construed narrowly in the manner contended for by the Defendants. There is nothing in the language of s 67 to indicate that the power conferred by that provision can only be exercised prior to the making of final orders and that a receiver could not be appointed in order to give effect to final orders made by the Court. A provision conferring jurisdiction on or granting powers to a court should not be construed by implying or imposing limitations that are not found in the express words of the provision. [5] There is nothing in the language of s 67 that would limit the exercise of the power to appoint a receiver to a time prior to the making of final orders.

In any case, the appointment of a receiver in the present circumstances would not be a final order, but would be an interlocutory order, in aid of the Orders, which have already been made. The Orders are specific orders for performance of the Retransfer Contract. It would be an extraordinarily anomalous result for the Court to conclude that it has no power to make interlocutory orders in aid of the final orders that it has made, other than to punish for contempt. Punishment for contempt would not, of itself, achieve performance of the orders. A recalcitrant defendant could take the view that it would rather suffer the punishment than comply with orders of the Court.

A court of equity may, in certain circumstances, appoint a receiver in aid of a money judgment, but only where legal remedies are insufficient. Where property of a judgment debtor is not capable of being reached by a common law process, a court exercising equitable jurisdiction may intervene. For example, where a judgment debtor has an equitable interest in property which could not be reached by common law processes, a court of equity may intervene by appointing a receiver in aid of that judgment. However, that has nothing to do with the enforcement of final orders made by a court exercising equitable jurisdiction. Even in the case of a money judgment, it may be that a receiver will be appointed to legal property on the application of a judgment creditor if it can be shown that, because of special circumstances, other methods of execution would be inadequate or extremely inconvenient. [6]

The Court has a wide jurisdiction to superintend the performance or working out of an order for specific performance. There is no doubt that, where a plaintiff obtains an order for specific performance, the Court may substitute other forms of relief where the decree of specific performance is not complied with. [7] There is no reason in principle why the Court should not have jurisdiction to make such orders as are appropriate to secure the proper performance of orders that it has already made. Once an order for specific performance has been made, the contractual rights of the parties are not superseded. However, the future exercise of those rights is under the control of the Court and, accordingly, the working out of the order for specific performance is under the control of the Court. [8]

There is every reason in principle for concluding that the appointment of a receiver is a step open to the Court to ensure compliance with its orders for the specific performance of a contract. Accordingly, I am satisfied that the Court has jurisdiction and power in the present circumstances to appoint a receiver in aid of the enforcement of the Orders, which are specific orders for performance of the Retransfer Contract.

However, that is not the end of the matter. The next question is whether the Court’s discretion to appoint a receiver should be exercised in the circumstances of the present case.

As noted above, the Defendants have almost entirely failed to comply with the Orders. Having regard to the nature of the Orders, they are not, at this stage, readily susceptible to ordinary methods of execution, such as levy against property, garnishee or charging order. Ultimately, of course, Caird seeks performance of an order for the payment of a sum of money, namely, the purchase price for the retransfer of the Pharmacy Business. However, the obligation to pay the price is conditional or contingent, in the sense that Caird has a concurrent obligation to make Mr Attia the owner of the subject matter of the Retransfer Contract, namely, the Pharmacy Business. There is not yet any debt payable that would be susceptible to any of the remedies available under s 106 of the Civil Procedure Act 2005 (NSW).

The Orders require the Defendants to take steps such as procuring a bank cheque, procuring a bank guarantee and the like. A receiver, armed with powers under r 40.8 of the Uniform Civil Procedure Rules, would be in a position to take the necessary steps on behalf of the Defendants to satisfy the Orders. Thus, a receiver may be able to do that by realisation of assets, borrowing against assets, executing relevant documents on behalf of the Defendants and attending the completion of the Retransfer Contract, at which the respective duties and obligations of the buyer and the seller would be satisfied.

As I shall explain below, there was some suggestion of hardship if the Defendants were required to realise other assets in order to pay the price payable under the Retransfer Contract. However, it was not suggested on behalf of the Defendants that the Orders are impossible of performance. The history of the dispute between the parties and the steps that have been taken on behalf of the Defendants that have thus far frustrated the performance of the Retransfer Contract constitute a significant consideration in the exercise of the discretion to appoint a receiver in the present circumstances. [9]

Further, not only have the Defendants failed to comply with the court order requiring the procurement of a bank cheque in the sum of $2,050,000, they have also failed to comply with other orders requiring the execution of documents. The only justification advanced by the Defendants for their failure to comply with those orders was the assertion that when the “true purpose of the court” cannot be fulfilled then there is “no real utility in complying with the minor [court] orders” that, on their own, would achieve nothing if the main order for the procuring of the cheque could not be complied with. The Defendants’ non-compliance with the other orders and, importantly, the total absence of contrition for non-compliance constitutes a significant consideration in the exercise of the Court’s discretion.

In the circumstances, it is incumbent upon the Defendants to satisfy the Court that the appointment of a receiver would be fruitless or that there is not a real prospect that the appointment of a receiver would serve a useful purpose. [10] Caird points to a number of factors in support of its contention that the Defendants have failed to adduce evidence to support such a conclusion. In response, the Defendants submit that given the current state of Mr Attia and Shopsmart’s finances that there is no real prospect that the appointment of a receiver would usefully advance enforcement of the Orders, particularly the order to procure a bank cheque for $2,050,000, and rather it is likely that appointment of a receiver would remove any realistic prospect of finance being obtained.

Mr Attia has sworn an affidavit in which he says that his only interests in land consist of interests in properties situated at Abbotsford and Glenmore Park. He is the registered proprietor as joint tenant with his wife of both properties. Mr Attia adduced evidence of valuations of the Abbotsford property of $8,250,000 and of the Glenmore Park property of $710,000. However, both properties are subject to mortgages to secure substantial sums owing to bankers and other lenders. Mr Attia says that, while the combined value of both properties on the basis of those valuations is $8,960,000, the combined secured liabilities amount to $6,216,000, leaving a combined equity of approximately $2,744,000. He says that, since he is only one of two joint tenants, his interest is no more than $1,372,000. Therefore, he says, if both properties were sold, he would not have sufficient funds to procure a bank cheque for the sum of $2,050,000 as required by the Orders. Nevertheless, that would be a substantial payment towards the sum of $2,050,000.

Mr Attia also says in his affidavit that he has shares in a number of companies, most of which were set up for new business ventures that have not yet traded. He asserts in his affidavit that, as at 30 June 2015, Shopsmart had total net liabilities of $8,757,262. That sum included a debt due to him of $10,454,639, which is apparently still owing but Shopsmart does not have the funds to repay the debt. Nevertheless, excluding the debt owing to Mr Attia, Shopsmart had net assets of $1,697,377 at 30 June 2015. Mr Attia also refers in his affidavit to proposed arrangements for the opening of two new pharmacies in Eastgardens Shopping Centre by Shopsmart.

The appointment of receiver over Mr Attia’s interest in the two properties owned jointly by Mr Attia and his wife would sever the joint tenancies. There is considerable intertwining of the financial affairs of Mr Attia, Mrs Attia and Shopsmart and the evidence adduced by Mr Attia as to his financial circumstances suggests that there could be some doubt as to whether his interest in the properties is limited to one half. That evidence included bank statements for three loan accounts with National Australia Bank Limited (NAB), secured by a mortgage over the two properties, respectively in the name of Mr Attia, Mr and Mrs Attia and Mrs Attia. The bank statements for all three loan accounts show that all service fees and interest payments for all three loan accounts for the period from late 2015 to mid-2016 were paid from a different NAB account, with account number ending in xx71 (the xx71 NAB Account). The bank statement for the xx71 NAB Account, also in evidence, has the account name “Shopsmart Pharmacy” and is addressed to Shopsmart Pharmacy. That bank statement confirms that multiple payments from that account have been made under the label “INTEREST” and “SERVICE FEE”. Most of the money credited into the xx71 NAB Account from 15 June 2016 to 26 August 2016 (no bank statements preceding that period are in evidence), totalling approximately $50,000, comes from another unnamed account, in transactions labelled “business loan INTERBANK CR COMMONW” [emphasis added].

Mr Attia also provided bank statements for Shopsmart’s bank account with Commonwealth Bank of Australia (CBA) named “SHOPSMART PHARMACY FRANCHISING PL IN TRUST FOR SHOPSMART PHARMACY FRANCHISING UNIT TRUST” (the Shopsmart Account). The financial activity in the Shopsmart Account indicates that it is the main trading account for the Shopsmart business, with sums as large as $2 million going in and out regularly. The Shopsmart Account records multiple debits labelled “Transfer to other Bank Commbank App business loan” [emphasis added] on the dates and in the amounts exactly correlating to the credited money in the xx71 NAB Account. I consider that an inference should be drawn that the money being paid out of the Shopsmart Account under the “business loan” label was transferred into the xx71 NAB Account, which was then used to pay the service fees and interest payments of the three loan accounts in the name of Mr Attia, Mrs Attia, and Mr and Mrs Attia.

Moreover, the bank statements for the Shopsmart Account also record fairly regular payments in the period 10 May 2016 to 29 August 2016 totalling approximately $79,000 in transactions labelled “Transfer to xx6158 CommBank app M Attia” [emphasis added]. Mr Attia in his affidavit stated that he has “one bank account which is shared with [Mrs Attia]” and provided the bank statement for that account. That account with CBA is called “CASH” (the Cash Account). The bank statement is only from the period 1 August 2016 to 31 August 2016, but some of the credits in the Cash Account are labelled “Transfer from xx3446 CommBank app M Attia” [emphasis added], on dates and in amounts that correlate with the “M Attia” debits from the Shopsmart Account.

I consider that an inference should be drawn that regular instalments of money are paid from the Shopsmart Account into the personal bank account of Mr Attia, which, according to his affidavit, is shared with his wife. From that fact, and the payments of interest and service fees of loan accounts held solely and jointly in the name of Mrs Attia, it is clear that Mrs Attia has received the benefit of at least some substantial sums of money from Shopsmart. Accordingly, it cannot necessarily be assumed that the net proceeds of the sale of the two properties would be equally divided between Mr Attia and Mrs Attia. The material presently in evidence would justify a receiver investigating further the extent to which Mrs Attia does in truth have a one half interest in the two properties.

As indicated above, according to Mr Attia’s affidavit, Shopsmart has net assets in the order of $1.7 million, if the debt due to Mr Attia is excluded. However, the bank statements and affidavit of Mr Attia raise questions about the assets of Shopsmart. As noted above, in the period 10 May 2016 to 29 August 2016, there were transferred from the Shopsmart Account to the Cash Account of Mr Attia sums of money totalling approximately $79,000. In the same period amounts totalling approximately $142,000 also appear to have been transferred from the Shopsmart Account in transactions labelled “Transfer to xx2322 Commbank app M Attia Visa” [emphasis added] to a Commonwealth Bank account of Mr Attia’s (according to his affidavit) called “Visa Diamond” [emphasis added]. Despite those payments from the Shopsmart Account to accounts belonging to Mr Attia totalling approximately $221,000 in a period of approximately three month from May 2016 to August 2016, Mr Attia’s affidavit records that “Shopsmart has a book-debt owed to me in excess of $10,000,000 but lacks the money to repay that debt.” [emphasis added]

Additionally, the two largest transactions in the Shopsmart Account, as recorded in the bank statements in evidence, are two debits of $2 million each, made on 27 July 2016 and on 8 August 2016, respectively labelled “Transfer to CBA A/c CommBank app Online holding acc” and “Transfer to CBA A/c CommBank app Hill Online”. The only explanation for those transfers given by Mr Attia in his affidavit, after stating that Shopsmart “has little money in its bank accounts”, is the following:

No further details were provided by Mr Attia as to the nature of either of the $2 million payments by Shopsmart or who the recipients of the payments were. Both payments occurred after the making of the Orders on 22 July 2016. Mr Attia said in his affidavit that the Defendants have recently committed to providing bank guarantees for sums in excess of $260,000 to carry out fit-outs of the two new pharmacies. Minimum annual rent payments of $580,000 are required for each of the pharmacies. That suggests the expectation of substantial sums becoming available to Shopsmart in the near future. It would be open to a receiver to examine all of the assets of Shopsmart to determine whether they are capable of being borrowed against or being realised.

There is also evidence of a further development of a medical centre in Mt Druitt being undertaken by Shopsmart. The value of that development would probably be substantially greater upon completion than it would be in its present partly completed state, even after incurring the expense necessary to complete the development. During oral submissions, the Defendants sought to extend the time for complying with the Orders to 12 December 2016, when the development of the medical centre is scheduled to be finished. Then, the Defendants say, they could use that asset as collateral for a loan to raise the sum of $2,025,000.

Given the history of the Defendants’ failure to comply with orders of the Court, the absence of evidence of any meaningful attempt to comply with the Orders beyond inquiring as to the amount that can be borrowed on security of the Pharmacy Business (with the Defendants instead appearing to operate with a “business as usual” mindset), and the fact that there does in fact appear to be a real prospect of raising the sum of $2,025,000 from the extant assets of Mr Attia and Shopsmart, I am satisfied, subject to three matters, that this is an appropriate case for the appointment of a receiver.

The first matter is the identification of the property to which a receiver should be appointed. The Receivership Motion seeks appointment to all of the property of Mr Attia and Shopsmart. Such an order may go too far. Even in the case of a freezing order, there is normally an exception for living expenses, legal fees and the like.

The second matter is that it will be necessary to specify the powers of the receiver to take control and possession of the Defendants’ property. A convenient way to deal with the question is to confer on the receiver all the powers conferred on receivers under s 420 of the Corporations Act 2001 (Cth).

The third matter is the possibility of adverse consequences that would flow to the detriment not only of the Defendants but also of Caird. Significant fees would be incurred by a receiver in exercising his powers. Further, there are likely to be significant adverse consequences in relation to the mortgages securing borrowings on the Abbotsford and Glenmore Park properties. Those consequences would almost certainly impair the ability of Mr Attia and Shopsmart to continue with the fit-out of the two new pharmacies.

The Defendants also assert that the appointment of a receiver would constitute default under the mortgage over the properties referred to above and would seriously disrupt the Defendants’ business operations and business relationships. They say that, in those circumstances, the appointment of a receiver would create an impediment to the raising of the purchase price of $2,025,000, as opposed to being an effective means of enforcement.

Having regard to the possible consequences of the appointment of a receiver, it is appropriate to delay the making of any order for the appointment of a receiver for a short time, to enable the parties to formulate a specific regime for the realisation of the assets of the Defendants in a fashion that would enable performance of the Orders. Accordingly, I invited further submissions from the parties on possible alternatives to the immediate appointment of a receiver.

One alternative was the formulation of a specific regime for the realisation, in a fashion that would enable the performance of the extant orders of assets of the Defendants, such as the Abbotsford and Glenmore Park properties and the assets of Shopsmart and the shares of Mr Attia in other companies. The other alternative would be to appoint the Registrar to sign all documents and to take all steps required to be taken to perform the Orders, apart from payment of the purchase price. The Retransfer Contract would then be completed, save for the payment of the price and judgment would be entered in favour of Caird against the Defendants for the amount of the purchase price. In the meantime, the payment of the price could be secured by a charging order over the Pharmacy Business as well as over the Abbotsford and Glenmore Park properties, the assets and property of Shopsmart and the shares of Mr Attia in other companies.

Following further argument from the parties, I have concluded that the appropriate course is to defer the appointment of a receiver on the basis of a regime that combines the two alternatives. While the second alternative is the preferable course, an immediate difficulty with that course is that Caird is indebted to Westpac Banking Corporation (Westpac) in the sum of $1.65 million, in respect of the moneys borrowed to purchase the Pharmacy Business. That loan is almost entirely still outstanding and is secured over the assets of the Pharmacy Business. In those circumstances, unless Westpac consented, there would be an impediment to the transfer of the Pharmacy Business without payment of at least a sufficient sum to discharge the loan. It is unlikely that Westpac would consent unless, at least, the loan were novated by the Defendants and, possibly, further security were offered to Westpac by the Defendants. Nevertheless, a proposal along the lines of the second alternative may be possible if it incorporated a novation of the loan by the Defendants. The assumption of that liability by the Defendants would, in substance, constitute a payment to Caird of a very substantial part of the purchase price under the Retransfer Contract. Following further argument from the parties regarding a proposal that combines the two alternatives, the parties agreed upon the terms of orders that reflect such a proposal.

Caird also asks for an order for the costs of the Receivership Motion on the indemnity basis. The Receivership Motion was necessitated by the failure on the part of the Defendants to comply with the Orders, in circumstances where the failure may be regarded as contumelious. Having regard to the outstanding charge of contempt, I make no finding in that regard. Nevertheless, it is clear that, for whatever reason, the Receivership Motion was necessitated by the failure on the part of the Defendants to comply with solemn orders made by the Court after full argument.

The Defendants advanced no proposals for compliance with the Orders, other than to seek an extension, after the commencement of the hearing of the receivership motion. I propose to make orders that have been formulated with a view to avoiding the appointment of a receiver, if possible. However, that course is to be adopted as much for the benefit of Caird as for the Defendants. In all of the circumstances, I consider that Caird should not be out of pocket by reason of having to bring proceedings for the enforcement of the Orders, where no good reason has been advanced for failure by the Defendants to take appropriate steps so as to be in a position to comply with the Orders.

I propose to make orders as set out in schedule 2 to these reasons. Those orders accord with the short orders agreed upon by the parties following my indication of the conclusions that I have reached.