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Judgment

1. In these proceedings 33 plaintiffs entered into 19 separate contracts for the sale of 19 lots in a property development at Warriewood NSW. The vendor in each of the contracts is Merrin Development Pty Ltd ("Merrin") and the vendor's agent is CPM Realty ("CPM").
2. The 19 contracts were entered into in mid-2015. They contained special conditions in almost identical terms, and the only relevant terms for present purposes are special conditions 11.1, 15 and 17, which I set out from the contract with the first two plaintiffs (see: Exhibit A1 pp 152 - 155): Strata Plan of Subdivision 11.1 Completion of this Contract is subject to and conditional upon consent to the proposed Strata Plan of Subdivision in accordance with the Plan attached and marked with the letter "A" ("Plan") by the proper authority or authorities and registration of the Plan as required by law. The Vendor agrees to pay such moneys as may be necessary to obtain consent at its own expense and to register the Plan. In the event that registration has not been effected within 24 months from the date of this Contract (or such further period as the parties agree) ("Sunset Date") either party may by notice in writing to the other (but prior to registration) rescind this Contract. Vendor Not Registered Proprietor 15. In the event that the Vendor is not the registered proprietor of the Property as at the date of this Contract then the Vendor warrants that it or its nominee has entered into legally binding obligations to become the registered proprietor of the Property and will be in a position to convey title to the Property to the Purchaser on completion. Caveat 17. 1 The Purchaser must not lodge a caveat in respect of the title to the property of which the Property forms part prior to registration of the Plan and this is an essential term of this Contract. 17.2 If a caveat is lodged by or on behalf of the Purchaser, or any assignee of the interests of the Purchaser under this Contract or any person claiming through or under the Purchaser is recorded on the folio for the property of which the Property forms part, the Purchaser must immediately upon request by the Vendor, remove the caveat and the Purchaser must otherwise complete the Contract notwithstanding that caveat. 17.3 The Purchaser, for valuable consideration, irrevocably appoints the Vendor, and each person nominated by the Vendor, as the Purchasers attorney to withdraw any caveat lodged on the title for the property of which the Property forms part in contravention of this special condition 17. Each contract required the purchaser to pay 10% deposit, for example the contract between Merrin and the first two plaintiffs- the purchase price was $995,000 and a deposit of $99,500 was payable. All of the 33 plaintiffs paid the deposits required, which total some approximately $1.6 million, which amount, it seems to be accepted by all parties, is held by CPM.
3. As at the date of the sale contracts, Merrin was not the registered owner of the land, but it had entered into a call option with the owners of the two parcels of land ("the Vendors") to enable it to purchase the two parcels of land at $3,200,200 and $2,300,000 respectively, i.e. a total of $5.4 million. It entered into a number of extensions of the call options.
4. On 13 December 2016 each of the plaintiffs was notified that there had been difficulties with the development and were asked to extend the sunset date (i.e. a further 24 months from the date of the contracts- making a total of 48 months) and pay an additional $50,000 "to compensate" Merrin for its difficulties and the concomitant costs incurred by it: see Exhibit A1 p 187. The solicitors for the purchasers of Lot 3 replied agreeing to the extension of the sunset clause, but not to payment of an additional $50,000. Presumably all of the 33 plaintiffs responded in the same fashion.
5. On 28 July 2017, Merrin wrote to each of the purchasers stating: Unfortunately we have been unable to maintain our rights with respect to the acquisition of the parcels of land at 53A & 53B Warriewood Road Warriewood. Accordingly we cannot proceed with the development. We will arrange for the agent to return your deposit to you along with any interest earned when it was invested. We apologise for any inconvenience caused. (Emphasis added)
6. On the plaintiffs' case what then occurred was that Merrin did not effectively exercise the option it held, but Beachmere took over negotiation with the Vendors and entered into two contracts for the sale of land as purchaser from the Vendors. It is clear that Beachmere did so with the approval of Merrin and there are some indications that Merrin has provided to Beachmere all relevant approvals for the development obtained by Merrin, and the benefit of whatever work had been done by Merrin in furtherance of the project, said to involve expenditure of some $3.9 million: see Exhibit C.
7. The plaintiffs have issued Notices to Produce to Merrin and Beachmere (see: Exhibit B) seeking documents relating to the negotiations of Merrin and Beachmere with the Vendors and correspondence between them, but these defendants say they have no documents to produce.
8. The two contracts with the Vendors entered into by Beachmere are found at Exhibit A3 pp 2785 - 2856 and pp 2857 - 3048. Deposits were required to be paid in respect of each of those contracts. The purchase price of the two parcels are $5,060,000 and $4,550,000 respectively, a total of $9,610,000.
9. Beachmere maintains that it is entitled to develop the site, build the 39 units envisaged by the Merrin plan of development (and for which Merrin obtained approval), and sell them under new contracts to whomsoever it wants at whatever price it can obtain without any obligation to honour the 33 contracts. It has apparently obtained funding for the venture (see: Exhibit A4 p 3066) and it asserts that the funding is based upon its ability to sell all 39 lots without any obligations owed to the 33 plaintiffs.
10. Beachmere draws attention to the fact that the plaintiffs have no contracts with it. If the plaintiffs have rights against Merrin those rights, it submits, do not affect Beachmere. Merrin's position, as expressed through counsel, seems to be that it has valiantly attempted to progress the development, but the Vendors wanted too much money to extend the period of the option, and it had not become feasible to proceed with the development from Merrin's point of view.
11. When the proceedings commenced Darke J granted an ex parte injunction in favour of the plaintiffs against Merrin, Beachmere Holdings (No 2) Pty Ltd ("Beachmere"), Diversified Property Services Pty Ltd ("DPS"), Strauss Developments Pty Ltd ("SDPL") and against individuals connected with these companies, Mr Brian Wheadon ("Wheadon"), Ms Jacqueline Herps ("Herps") and Mr Ryan Strauss ("Strauss"). The terms of the injunction were varied on 20 October 2017, making it clear that the defendants were not prevented from marketing and selling off the plan any lots other than the plaintiffs' 19 lots, or from completing the purchase of the land from the Vendors.
12. The plaintiffs' claims were framed in various ways, but I do not need to dwell on those, or on the claims against anyone other than Merrin and Beachmere, because the only claim which the plaintiffs press against Merrin and Beachmere, for the purposes of continuation of the injunctive relief previously granted ex parte, is a claim based on what is alleged to be a breach of s 21 of the Competition and Consumer Act 2010 (Cth) sch 2 ('Australian Consumer Law'), that is a claim of unconscionable conduct by Merrin and by, or with the involvement of, Beachmere.
13. Section 21 provides: 21 Unconscionable conduct in connection with goods or services (1) A person must not, in trade or commerce, in connection with: (a) the supply or possible supply of goods or services to a person (other than a listed public company); or (b) the acquisition or possible acquisition of goods or services from a person (other than a listed public company); engage in conduct that is, in all the circumstances, unconscionable. (2) This section does not apply to conduct that is engaged in only because the person engaging in the conduct: (a) institutes legal proceedings in relation to the supply or possible supply, or in relation to the acquisition or possible acquisition; or (b) refers to arbitration a dispute or claim in relation to the supply or possible supply, or in relation to the acquisition or possible acquisition. (3) For the purpose of determining whether a person has contravened subsection (1): (a) the court must not have regard to any circumstances that were not reasonably foreseeable at the time of the alleged contravention; and (b) the court may have regard to conduct engaged in, or circumstances existing, before the commencement of this section. (4) It is the intention of the Parliament that: (a) this section is not limited by the unwritten law relating to unconscionable conduct; and (b) this section is capable of applying to a system of conduct or pattern of behaviour, whether or not a particular individual is identified as having been disadvantaged by the conduct or behaviour; and (c) in considering whether conduct to which a contract relates is unconscionable, a court's consideration of the contract may include consideration of: (i) the terms of the contract; and (ii) the manner in which and the extent to which the contract is carried out; and is not limited to consideration of the circumstances relating to formation of the contract. And s 2 provides that "services" includes: (a) any rights (including rights in relation to, and interests in, real or personal property), benefits, privileges or facilities that are, or are to be, provided, granted or conferred in trade or commerce;
14. The plaintiffs' case is based on the following elements: 1. Merrin and Beachmere are the alter ego of each other. 2. There is no document produced which established that any consideration was paid to Merrin for the right to take over Merrin's interest in the land and become the purchaser from the Vendors, or obtain the benefits obtained by Merrin in relation to the development. The evidence suggests that nothing has been paid or agreed to be paid. 3. There is no reliable evidence of how precisely Beachmere became the purchaser of the land. 4. Section 66ZL of the Conveyancing Act 1919 (NSW) provides: (1) In this section: "off the plan contract" means a contract for the sale of a residential lot (the "subject lot" ) that has not been created at the time that the contract is entered into. "residential lot" means a lot (whether a strata lot or otherwise) that is residential property within the meaning of section 66Q. "sunset clause" means a provision of an off the plan contract that provides for the contract to be rescinded if the subject lot is not created by the sunset date. "sunset date" means the date set out in the off the plan contract as the latest date (subject to any extension provided for in the contract) by which the subject lot must be created. (2) For the purposes of this section, a lot is created when the plan creating the lot becomes a registered plan. (3) A vendor may rescind an off the plan contract under a sunset clause if the subject lot has not been created by the sunset date, but only if: (a) each purchaser under the contract, at any time after being served with the notice under subsection (4), consents in writing to the rescission, or (b) the vendor has obtained an order of the Supreme Court under this section permitting the vendor to rescind the contract under the sunset clause, or (c) the regulations otherwise permit the vendor to rescind the contract under the sunset clause. (4) It is a term of an off the plan contract that a vendor who is proposing to rescind the contract under a sunset clause must serve each purchaser under the contract notice in writing at least 28 days before the proposed rescission that specifies why the vendor is proposing to rescind the contract and the reason for the delay in creating the subject lot. (5) A sunset clause cannot automatically rescind an off the plan contract and, if it purports to do so, it is to be read as if it instead permits the contract to be rescinded on or after the sunset date in accordance with this section. (6) The Supreme Court may on the application of a vendor under an off the plan contract make an order permitting the vendor to rescind the contract under a sunset clause but only if the vendor satisfies the Court that making the order is just and equitable in all the circumstances. (7) In determining whether it is just and equitable in all the circumstances the Court is to take the following into account: (a) the terms of the off the plan contract, (b) whether the vendor has acted unreasonably or in bad faith, (c) the reason for the delay in creating the subject lot, (d) the likely date on which the subject lot will be created, (e) whether the subject lot has increased in value, (f) the effect of the rescission on each purchaser, (g) any other matter that the Court considers to be relevant, (h) any other matter prescribed by the regulations. (8) The vendor is liable to pay the costs of a purchaser in relation to the proceedings for an order under this section unless the vendor satisfies the Court that the purchaser unreasonably withheld consent to the rescission of the off the plan contract under the sunset clause. (9) Nothing in this section limits any right that a purchaser may have to rescind an off the plan contract under a sunset clause. (10) Notice may be served on a purchaser by serving it on a person who is authorised under the off the plan contract as a representative of the purchaser. (11) A provision of an off the plan contract has no effect to the extent that it is inconsistent with this section. (Emphasis added) and what Merrin, with Beachmere's assistance, has done is to attempt to subvert this section. 1. The plaintiffs submit that (4) is strengthened having regard to the fact that no adequate explanation has been offered by any officer of either Merrin or Beachmere for what has occurred, the 19 contracts for sale remain on foot, and Merrin has not returned the deposit monies (as it said it would). I should note that the only evidence which has been put forward is hearsay evidence from the solicitor for the defendants, Mr Julius, and much of what he deposes to is information obtained by him, not from a director of Merrin or Beachmere, but Strauss and a Mr Dean Alcorn ("Alcorn"), neither of whom are officers and who do not appear to be employees of either company. I will say more about Mr Julius' affidavit below. 2. In Jobema Developments Pty Ltd v Zhu [2016] NSWSC 3 Black J held that a developer in a similar position to Merrin had not established that it was just and equitable for that developer to rely on s 66ZL. 3. That the remedies that can be given for a breach of s 21 of the Australian Consumer Law are wide ranging.
15. Mr Knackstredt, of counsel, who appears for the plaintiffs, submits that the material establishes a prima facie case that Merrin, with the assistance of Beachmere, has engaged in unconscionable conduct and that the evidence demonstrates a serious question to be tried.
16. Mr Insall SC, who appears for the defendants, disputes that this is so. He focuses on the evidence from Mr Julius that Merrin could not proceed with the project.
17. The defendants have not filed affidavits from any of Wheadon, Herps, Strauss or Alcorn, who was described on the contracts as Merrin's agent. Mr Julius says that Alcorn and Strauss have told him that they were managing the development on behalf of Merrin and in one of the paragraphs he deposes to having been told something by Wheadon. According to paragraph 32, he was informed by Strauss that Strauss "advised the directors of Merrin that it was not feasible for Merrin to attempt to acquire the properties and carry out the development. However as the Vendors were still willing to negotiate for the sale of the properties, Mr Strauss considered that it would be viable to pursue on behalf of Brian Wheadon Group companies the purchase in the name of second special purpose development vehicle [Beachmere]… to seek to acquire the land".
18. That it was left to person or persons who were not directors of Merrin or Beachmere to decide to give up the project is rather surprising, but in any event, this evidence strongly suggests that the motivation for what occurred, if from within Merrin it was authorised, was to end the obligation of Merrin to sell to the plaintiffs.
19. Mr Insall contended that it was not unconscionable for Merrin not to pay what the Vendors wanted from them to extend the option. Had the project fallen to the ground that may have left the plaintiffs with claims in contract only against Merrin, but Beachmere (operated, like Merrin, it appears by Alcorn and Strauss) was able to enter into contracts with the Vendors and this underscores the strong likelihood that the reason that Merrin permitted this to occur was because Merrin was contractually saddled with the 19 contracts. There is no evidence that Beachmere had any more substance than Merrin and no evidence that Merrin could not have put itself in the same position as Beachmere.
20. That none of the matters in paragraph 30 of Mr Julius' affidavit (see: Exhibit A3 p 1933) proved to be a problem for Beachmere point strongly to the likelihood that the real reason for Merrin handing over the purchase arrangements to Beachmere was to rid the project of the 19 contracts with the plaintiffs.
21. At paragraph 59 of his affidavit, Mr Julius says that "Mr Strauss determined that it would not be viable for Merrin to enter into a contract to buy the Properties." There is no evidence as to how Strauss made that 'determination', on what facts and on what assumptions.
22. There is evidence from Mr Julius that he was told by Strauss and Alcorn and Wheadon that if the plaintiffs were entitled to buy the lots in the project now taken over by Beachmere then no funding would be available. There is no evidence of any calculation having been done and funding sought on the basis that the 19 lots are completed on the prices contained in the 19 contracts and 20 lots are sold at the new prices, and it rather appears from p 2399 that this scenario was not even considered by Alcorn or Strauss. Nor is there any document produced from the lender or sent by the lender to Merrin or Beachmere that could verify the assertions made by Strauss, Alcorn and Wheadon.
23. All of the matters will need to be considered at a final hearing, both on the question of whether the accounts of Alcorn, Strauss and Wheadon are factually reliable, and whether even if they are reliable then they preclude a finding of unconscionable conduct. As has been remarked in relation to the cases cited concerning the finding of unconscionable conduct, all of the circumstances of a case need to be considered: see APS Satellite Pty Ltd (formerly known as "SkyMesh Pty Ltd") v IPSTAR AUSTRALIA PTY LTD [2016] NSWSC 1898, in which I have attempted to summarise the law and principles relating to unconscionable conduct with detailed reference to Paciocco v Australia and New Zealand Banking Group Ltd (2015) 236 FCR 199 and see also Australian Competition and Consumer Commission (ACCC) v Simply No-Knead (Franchising) Pty Ltd (2000) 104 FCR 253, at [30] - [37], and which I take into account in considering the plaintiffs' case.
24. The hearsay nature of the evidence adduced by the defendants, the lack of corroborative documentary evidence, coupled with the fact that much of what is relied on is not even from the directors of Merrin and Beachmere, leave me entirely unpersuaded as to its reliability, both as to the matters going to the impugned conduct and as to the likely risk of damages should the plaintiffs be unsuccessful in the case, in the latter respect see: Bensons Funds Management Pty Ltd v Body in Balance Chiropractic Pty Ltd [2015] VSC 280 at [37]-[39].
25. When a developer sells units off the plan it does so because those sales are likely to enhance its prospects of finance. Both vendor and purchaser take a chance that the market will move up or down, thus making the early sale more attractive or less attractive. That the market has moved up (to the advantage of the purchaser) is not a reason for the developer to escape from the contracts entered into. Nor is the fact that the anticipated profit will be reduced or even eliminated.
26. Mr Insall SC did not challenge the contention that Merrin and Beachmere are the alter ego of each other by reason of the connections between Herps, Wheadon and DPS, and other matters referred to by Mr Knackstredt. His written submission that contracts for the sale of an interest in land were not caught by the Australian Consumer Law was not repeated in oral submissions, no doubt after having regard to the definition of "services", to which I have already referred.
27. I am satisfied that there is a prima facie case, and a strong one at that, that Merrin has engaged in unconscionable conduct with the involvement of Beachmere in that endeavour. It appears to me that it is strongly arguable that Merrin has sought to find a means to avoid the contracts by having Beachmere step into its shoes, with the aim of bringing the plaintiffs' rights to the lots to an end.
28. Mr Insall SC identified two other reasons as to why the injunction should not be continued (Mr Knackstredt accepted that the onus is effectively on the plaintiffs to establish that it should be continued): 1. Inutility. 2. The lack of worth of the plaintiffs' undertaking as to damages.
29. In relation to inutility, Mr Insall SC contends that there is no utility to granting the injunction. This is predicated on the assertion that Beachmere will not be able to obtain finance and will not proceed with the project if it is precluded from selling the 19 lots the subject of contracts with the plaintiffs. The plaintiffs, he points out, cannot obtain an injunction requiring Beachmere to proceed with the project. If Beachmere does not proceed with the project then there will be no lots to fulfil the contracts that the plaintiffs have, even if they are successful in the proceedings.
30. Mr Knackstredt's response to this contention is: 1. There is no reliable evidence that Beachmere could not obtain finance to proceed with the project if the 19 lots cannot be sold now to third parties. There is evidence that finance has been obtained (see: email of 5 October 2017 at p 3066). 2. The assertion, through Mr Julius, that Beachmere could not proceed with the project if the 19 lots are not available for sale at a new price should be rejected. The only evidence as to prospective profit is Exhibit C- it shows a prospective profit of $16.9 million for 39 units. If the 19 units are taken out there would be at least $8.5 million worth of profit. There is no evidence that a lender would not be willing to advance funds for the project with that level of profit. 3. If the injunction is granted neither Beachmere nor Merrin will be precluded from developing the land as envisaged, but they will be precluded from doing so in a way that destroys the rights of the plaintiffs.
31. Dealing with these points, whilst the email of 5 October 2017 established that funding has been obtained by Beachmere it must be assumed that is on the basis that all 39 lots can be sold at the current market prices, however, I agree that the evidence does not convincingly support the contention that the project could not proceed due to an inability to raise funds.
32. The assertion that Beachmere would not proceed is based on the contention that finance would not be available and there is no reliable evidence of that, but rather simply a bald assertion by Strauss and Wheadon, as relayed to Mr Julius. If the assertion is really that Beachmere would not wish to proceed that involves different considerations- much of them linked to the very issue of injunctive relief.
33. I agree that prima facie, on the defendants own calculations contained in Exhibit C, there is a substantial profit margin and a reduction of profit does not mean that the project is unviable, but in any event the relevant comparison is between the projected $16.9 million, with all 39 lots being sold at current market value, and the amount that will be obtained by selling the 20 lots at current market value and the 19 lots at the price for which the plaintiffs have contracted.
34. I calculate from the 19 contracts contained in Exhibits A1 - A3 that the total of purchase prices for the 19 lots is $19,023,000, making an average price for those units of $1,001,210. The unit price used in Exhibit C to project revenue is $1.2 million. The difference between the average price for 39 units of $1.2 million and the average price for the 19 units on the existing contracts is $198,789, making a total differential for the 19 units of $3,776,999.93, which I shall round up to $3.8 million. If Beachmere is successful in defending the proceedings $3.8 million of additional sales (on current price estimates) will be achieved. If Beachmere is not successful the plaintiffs will be able to obtain the 19 lots for $19,023,000, but that revenue will still accrue to Beachmere. I accept that the figures so derived assume that the 19 lots are collectively comparable in price to the 20 lots, but there is no evidence to suggest they are not and the precise figures are not critical to the point.
35. This seems to me to be a relevant matter in assessing how likely it is that funding could not be obtained if the funder proceeds upon the basis that sales of $48 million will be achieved rather than sales of $52 million, with a reduction of prospective profit to $12 million (using the figures in Exhibit C) on the latter scenario. Ironically, the more confident Beachmere is of resisting the plaintiffs' claims, the more likely it would view the outcome as producing the higher profit outcome, although that is Beachmere's assessment, not the lenders.
36. I accept that the injunction, if granted, will not provide complete protection to the plaintiffs since it is possible that Beachmere will not proceed with the contracts for sale with the Vendors into which it has entered into, but I think an injunction offers a degree of protection to the plaintiffs because: 1. Beachmere has already expended $1 million on the land purchase from the Vendors by payment of the deposits. 2. Its alter ego, Merrin, has apparently expended $3.9 million on the project. 3. Beachmere clearly believes that it can sell the 19 units for more than the amount Merrin obtained on the 19 contracts, and there will be no bar to it selling the 20 units for current market price. 4. It seems, therefore, more likely than not that Beachmere will proceed with the project, even with the 19 lots locked in, but that would be even more likely if it is anticipated by Beachmere and the lender that the plaintiffs will not ultimately be successful.
37. I turn now to the question of the undertakings as to damages. It has long been accepted that the circumstances in which a plaintiff will be able to obtain injunctive relief without giving an undertaking as to damages are rare: see Meagher, Gummow and Lehane's Equity: Doctrines & Remedies (Heydon, J; Leeming, M; Turner, P, LexisNexis, 2015) at [21-410].
38. The plaintiffs have collectively given, through their counsel, an undertaking as to damages in the usual form- that is that they accept that if at the final hearing (or any appeal) they are found not to be entitled to relief from the defendants and the defendants have suffered loss or damage as a result of the injunction having been obtained, they they will jointly and severally be liable to compensate the defendants for that loss or damage. I shall, for ease of reference, refer to this as a "compensation order."
39. Mr Insall SC submits that injunctive relief should be refused because: 1. None of the plaintiffs have established that his or her undertaking as to damages is worth anything. 2. Beachmere will not thereby be compensated should the plaintiffs fail in their claims, and it obtains a compensation order.
40. Mr Insall SC submits that if Beachmere cannot obtain funding because no lender is willing to lend the funds required for purchasing the land (the balance due under the two contracts of sale) and construction costs, then Beachmere will not have made the profit of $16.9 million that it expects to make. He submits that: 1. The plaintiffs must establish that they each can meet a compensation order of $16.9 million if they are to obtain injunctive relief which, on this hypothesis, they are otherwise entitled. 2. All of the plaintiffs have refused to provide documents relating to their financial position and this should be viewed as effectively an admission that they cannot, either individually, or collectively, meet such a liability if it were imposed.
41. Mr Knackstredt made a number of points in reply: 1. He submitted that the claim to a loss of $16.9 million is entirely unrealistic for a number of reasons, including that the claimed likely profit is based on Exhibit C, for which there is no evidence as to sources for calculations and funds. 2. He contended that if Beachmere decided not to proceed with the project that will be a decision made by it, not as a result of the injunction. Beachmere could not claim $16.9 million in losses simply because that is what it thought it would make, and the plaintiffs could not be required to establish that they could meet such a large claim 3. He drew attention to a number of authorities and texts, which he submitted establish that where there is more than one plaintiff the undertaking is to be taken as an aggregate undertaking and that the worth of the undertaking must be viewed globally: see Re DPR Futures Ltd [1989] 1 W.L.R. 778 per Millett J at p 786, and see Equitable Remedies (Spry, 2014, 9th Edition, Lawbook Co) at pp 502- 504. 4. He submitted that the assertion by the defendants of a need for financial support for the undertakings was an attempt to shut the plaintiffs out of their legitimate claims and that the Notice to Produce issued by the defendants was of a 'fishing' nature. He submitted that there is nothing to suggest that the plaintiffs (who have all been willing to enter into contracts of approximately $1 million or more and to pay 10% deposit where they will not see the finished unit for a number of years) and to assert that they are not worth anything is fanciful. 5. That the Court needs, in determining whether to grant the injunction, to look at all the circumstances including the nature of the claim and the strength of the case. He pointed out that in some cases Courts are even prepared to dispense with the need for an undertaking as to damages.
42. Mr Insall SC did not provide any real response to the point about aggregation. Assuming that the plaintiffs do have to establish that they can meet an amount for damages flowing from the injunctive relief, I do not think that each plaintiff must establish that he or she alone could do so, for the reasons advanced by Mr Knackstredt. There is no reason, in principle, why a defendant who is entitled to "fortification", as it is sometimes referred to, of an undertaking as to damages will not be protected by the combined resources of a number of plaintiffs. In the related area of security for costs there are many cases where an impecunious plaintiff is permitted to continue a case where a director is joined to the proceedings or the undertaking.
43. Mr Insall SC made the point that when a plaintiff gives an undertaking as to damages it is not limited to what was reasonably foreseeable at the time that the injunction was obtained. He submits that if Beachmere is not able to obtain funding because of the injunction and the plaintiffs fail in their case ultimately they will be liable to compensate Beachmere.
44. If the plaintiffs fail (and it was agreed that either all will succeed or all will fail) Beachmere would not be entitled to the amount referred to in Exhibit C- it would need to establish what the likely profit would have been had the project proceeded. The cost of building, the projection of sales, the likely market conditions and no doubt may other factors, such as lending conditions, would need to be established in order to found a claim that the injunction caused Beachmere loss.
45. In coming to a view concerning this I regard the following matters as leading to the conclusion that injunctive relief should not be refused because the plaintiffs have failed to provide evidence of their financial position: 1. The plaintiffs have collectively given an undertaking as to damages. 2. As a general rule I think that where there is no evidence or suggestion that a plaintiff does not have the funds to meet a compensation order, the plaintiff is not required to advance a positive case that he or she does hold such funds. Nor has any authority been cited that a plaintiff is required to answer a Notice to Produce calling for extensive documents of an individual's financial position where there has been no indication that the plaintiff is impecunious or of limited means. It is not without significance in this context that Merrin entered into contracts totalling almost $19 million with these plaintiffs, obviously prepared to accept that they would be able to meet their contractual obligations, with the protection of the deposits against that occurring, and that none of these plaintiffs have taken up Merrin's assertion that the contract is at an end entitling return of the deposit. 3. The plaintiffs are, with only one exception, individuals. 4. In my view, protection of a defendant is effected by aggregating the resources of the plaintiffs and there is no requirement that each of many must himself or herself be able to meet a compensation order. 5. The plaintiffs have paid a total of $1.6 million to CPM handling the sales for Merrin and, hence, Beachmere, its alter ego. That is a significant sum of money, and provides, effectively, a form of security to the defendants. 6. Whilst there is a possibility of some compensation being required to be paid if the plaintiffs are unsuccessful I am far from satisfied that the figure of $16.9 million advanced by Mr Insall SC is realistic. I say that not only because of the paucity of evidence to support it and the unlikelihood of the project being terminated because of the injunction for the reasons to which I have already referred, but, in addition, it must be appreciated that the loss for which compensation would be ordered is not a loss deriving from the litigation, but can be only from the injunctive relief itself: see Air Express Ltd v Ansett Transport Industries (Operations) Pty Ltd (1981) 146 CLR 249 at p 320 per Stephen J and p 324 - 325 per Mason J. This is closely linked to the point concerning the assessment of risk by Beachmere to which I have also referred. 7. Even were I to be satisfied that there was a risk that if a compensation order were to be made and that the amount would be far more than that which presently seems likely, the absence of financial resources is not conclusive against the grant of injunction, but rather only a factor to be taken into account: see Lefta Corp Pty Ltd v Kell & Rigby Holdings Pty Ltd [2011] NSWSC 627, and see also Donnelly v Amalgamated Television Service Pty Ltd (1998) 45 NSWLR 570. 8. Beachmere, in doing what it has done, must have appreciated that it was taking on a significant risk that the plaintiffs would seek to prevent a loss of their rights to the lots. 9. I need to take into account all matters here including the nature of the prima facie case, and the strength of that case. 10. A further matter is, if Beachmere is confident that it will ultimately succeed in defending the claims by the plaintiffs, than the 19 units will be available for sale at the higher prices, which Beachmere expects to obtain. That confidence will no doubt be communicated to a lender. If Beachmere is not confident of defending the plaintiffs' claims and that is the reason why Beachmere does not proceed with the project, then its claim that the injunction caused it to terminate the project will very likely be impugned.
46. It follows that the injunctive relief previously obtained by the plaintiffs, as amended on 20 October 2017, should not be discharged.
47. I will hear the parties on the issue of costs.