Bradto Pty Ltd v State of Victoria; Tymbook Pty Ltd v State of Victoria [2006] VSCA 89

Bradto Pty Ltd v State of Victoria; Tymbook Pty Ltd v State of Victoria [2006] VSCA 89 - VSCA 2006 case summary — Zoe

[17]

10 No issue is taken on these applications with the approach adopted. His Honour was satisfied that there was a serious question to be tried, and concluded that the balance of convenience favoured the granting of the injunctions sought.

11 The applicants contend that his Honour fell into error on both counts. We deal first with whether there was a serious question to be tried. In order to get leave to appeal, they need to show that his Honour erred in law in concluding that there was any "serious question to be tried", or at least that sufficient doubt attends his Honour's conclusion (that there was a serious question to be tried) to justify the grant of leave.

12 The "serious question to be tried" test has been applied throughout Australia for more than 20 years.[5] It has been found, in countless cases, to afford an appropriate criterion for determining - at the threshold - whether the claims of the party seeking injunctive relief are of sufficient substance to justify the court's consideration of the exercise of its injunctive power pending trial. (In the same way, a "reasonably arguable" test operates in this Court to filter out unmeritorious applications for leave to appeal against sentence.[6])

13 Whether there is a "serious question to be tried" requires a judgment to be made, for the purpose of which the Court or Tribunal will examine both the legal foundations of the claim(s) made in the proceeding and such of the evidence in support as is exposed on the interlocutory application. Unless upon such examination the court concludes that the applicant's claims are not reasonably arguable, that is, they do not have "any real prospect of succeeding", then the court will ordinarily be satisfied that there is a serious question to be tried.[7]

14 This state of satisfaction will be all the more quickly and confidently arrived at in a case where the applicant's claims are met by cogent counter-arguments from the respondent to the application. In this way, vigorous opposition to an injunction application, intended to show that the applicant's claim is untenable in law and/or on the evidence, will very often do no more than reinforce the court's impression that there are serious questions to be investigated at the trial. It appears from his Honour's reasons[8] that some of the arguments advanced below had precisely this effect. The same occurred on the hearing of these applications.

Prohibitory or mandatory relief?

15 While conceding that there was and is a serious question to be tried, Tymbook argues that the Tribunal was obliged to apply a more stringent test because the injunction sought, although prohibitory in its terms, is mandatory in its effect. This was said to require the Tribunal before granting injunctive relief to feel a "high degree of assurance that at trial it will appear that the injunction was rightly granted."[9]

16 In our view, this submission fails in both respects. That is, we think the injunction was properly characterised as prohibitory. But, even if it was right to say that the injunction was mandatory in substance, this could not have affected the approach to be adopted by the Tribunal. Our reasons are as follows.

17 The full text of the Tribunal's order, including the terms of the undertakings given by the State in each case, is set out as an annexure to these reasons. The relevant part of the order in each case was in the following terms:

[24]

"The principal dilemma about the grant of interlocutory injunctions, whether prohibitory or mandatory, is that there is by definition a risk that the court may make the "wrong" decision, in the sense of granting an injunction to a party who fails to establish his right at the trial (or would fail if there was a trial) or alternatively, in failing to grant an injunction to a party who succeeds (or would succeed) at trial. A fundamental principle is therefore that the court should take whichever course appears to carry the lower risk of injustice if it should turn out to have been "wrong" in the sense I have described.

The passage quoted from Megarry, J. in Shepherd Homes Ltd. v. Sandham, qualified as it was by the words "in a normal case", was plainly intended as a guideline rather than an independent principle. It is another way of saying that the features which justify describing an injunction as 'mandatory' will usually also have the consequence of creating a greater risk of injustice if it is granted rather than withheld at the interlocutory stage unless the court feels a 'high degree of assurance' that the plaintiff would be able to establish his right at a trial.

I have taken the liberty of reformulating the proposition in this way in order to bring out two points. The first is to show that semantic arguments over whether the injunction as formulated can properly be classified as mandatory or prohibitory are barren. The question of substance is whether the granting of the injunction would carry that higher risk of injustice which is normally associated with the grant of a mandatory injunction.

The second point is that in cases in which there can be no dispute about the use of the term 'mandatory' to describe the injunction, the same question of substance will determine whether the case is 'normal' and therefore within the guideline of 'exceptional' and therefore requiring special treatment. If it appears to the court that, exceptionally, the case is one in which withholding a mandatory interlocutory injunction would in fact carry a greater risk of injustice then granting it even though the court does not feel a 'high degree of assurance' about the plaintiff's chances of establishing his right, there cannot be any rational basis for withholding the injunction."[16]

[41]

35 In our view, the flexibility and adaptability of the remedy of injunction as an instrument of justice will be best served by the adoption of the Hoffman approach. That is, whether the relief sought is prohibitory or mandatory, the court should take whichever course appears to carry the lower risk of injustice if it should turn out to have been 'wrong', in the sense of granting an injunction to a party who fails to establish his right at the trial, or in failing to grant an injunction to a party who succeeds at trial.

Injunction amounting to final relief

36 Tymbook also argued - in this Court as it had before the Tribunal - that the grant of the injunction sought by the State was tantamount to giving final judgment against Tymbook. That being so, it was submitted, the Tribunal should not have granted the injunction unless it felt the "high degree of assurance" discussed above.

37 For its part, the State implicitly conceded before the Tribunal that it needed to establish "something more than that there [was] a serious question to be tried", because the interlocutory relief it sought was - at least to a substantial degree - the same as the final relief sought. (As noted earlier, the State seeks permanent injunctions restraining the lessees from preventing the State from gaining access to the Triangle site). The State acknowledged that, in such a case, the Court (or Tribunal) should consider the likelihood of the plaintiff/applicant succeeding at trial.

38 Reference was made (in the State's submission to the Tribunal) to the decision of Gillard, J. in Hartleys Limited v. Martin[40], where his Honour cited what was said by Lord Diplock in NWL Ltd. v. Woods[41] and by the English Court of Appeal in Cayne v. Global Resources Pty. Ltd. [42] and, more recently, in Douglas v. Hello! Ltd. [43]. In Hartleys, where "the practical result of [the] injunction being granted would be that the plaintiff would obtain the whole of its relief"[44], Gillard, J. held that the plaintiff must establish that there was "a degree of likelihood that it will be successful at trial in obtaining a permanent injunction."[45]

39 Once again, we see no necessity for the recognition of a special "rule" for this - different - sub-category of interlocutory injunctions. On the contrary, we think that it must be relevant on every application for an interlocutory injunction to consider the likelihood of the plaintiff succeeding at trial. Not only is such consideration a necessary part of deciding whether there is a serious question to be tried, but the plaintiff's prospects of success will almost always be a factor in the evaluation of the balance of convenience.[46]

40 Thus, in Magna Alloys and Research Pty. Ltd. v. Coffey[47] the Full Court of the Supreme Court of Victoria adopted as "a correct and useful statement of the law"[48] the following passage from the judgment of Lush, J. in Slater Walker Superannuation Pty. Ltd. v. Great Boulder Gold Mines Limited[49]:

[46]

" ... Firstly, I am not satisfied that, if the relief sought was granted, that would effectively constitute the granting of final relief. Whilst the [State] is undertaking that it and its agents will not dig more than 4 bore holes in the demised premises before 31st March 2006, the relief sought is otherwise open-ended. If it ultimately be determined that this interlocutory injunction was wrongly granted, the [State] would then be prevented from gaining further access for its relevant servants and agents. It is also to be remembered that, in relation to any access and examination which would have occurred, the [State] has given the usual undertaking as to damages. It is prepared to give additional undertakings which would have the effect of minimising damage and inconvenience. As previously stated, the granting of the relief sought in the form of an interlocutory injunction will not impinge upon general questions of leasehold and tenure, and the nature of the relief sought is a long way removed from something such as a demolition order or the permanent closure of a business.

Furthermore, as I understand it, Bradto and Tymbook have argued and shall be arguing that their leasehold interests in fact extend for many years into the future. If they succeed in that argument, questions of access and examination pursuant to the key clause may well extend far beyond 1st April 2006, which is currently the ostensible date pursuant to the leases by which they must vacate the premises. If they are incorrect in their argument and the leases expire on 31st March 2006, so that the passage of time would mean that the interlocutory relief practically became final relief, then the likelihood of ultimate success by the [State] may well have to be considered. On the other hand, if that be so, and bearing in mind the balance of convenience, it is very difficult to see what if any damage would occur as a result of examinations of the type sought which would be carried out during the death throes of 50 year leases with 2 months to run. This is particularly so when the undertakings are borne in mind.

Secondly, if the practical effect of granting the interlocutory injunction is in fact to afford final relief and to end the proceeding, the likelihood of the [State] succeeding in the proceeding should be considered. Throughout this ruling I have referred many times to the high degree of assurance of success which, whether or not that be the test, I possess in relation to the various arguments raised on behalf of the [State]. Obviously that is also the case in relation to the application generally. Should it be required, I possess that high degree of assurance that this is a proceeding which shall succeed at trial."

[55]

52 The contention for the applicant lessees is that the first limb is governed by the second, and is to be read down accordingly. The State, on the other hand, argues that the first limb should be given its ordinary meaning, namely, that it confers on the lessor a general right to enter in order to examine "the state and condition" of the premises. The second limb deals with an issue which might - or might not - arise upon the carrying out of such an examination, namely, the identification of defects which the lessee will be required to make good, but the contingency provided for by the second limb does not - cannot - have the effect of limiting the general words in the first limb.

53 It can hardly be doubted that the language of the clause is open to be read in the way the State argues it should be. Indeed, the generality of the language of the first limb would appear to favour that construction. If the construction contended for by the applicants were correct, the general words of the first limb would need to be significantly confined. It is unnecessary for us to say more on this point, save that we see the issue raised by the competing construction arguments as a quintessential "serious question to be tried".

54 Detailed argument was advanced on behalf of the applicants in support of the proposition - uncontroversial in itself - that unauthorised entry into leased premises by a landlord "breaches the covenant for quiet enjoyment and denies the tenant's paramount right of exclusive possession". But the question of the landlord's authority to enter is the serious question to be tried. If, as the State argues, the relevant clause of the lease expressly authorises the entry, those arguments necessarily fall away.

The State is not the lessor

55 Tymbook argued before the Tribunal, and again in this Court, that the State of Victoria could not avail itself of the right of entry conferred by the relevant clause because it was not the lessor. Her Majesty the Queen is the named lessor, and the State is not the Queen, so it was said. It was contended that the Crown, the Governor, the Governor in Council and the State of Victoria were all to be regarded as distinct one from the other.

56 This submission was said to be supported by the provisions of s.38 of the Interpretation of Legislation Act 1984, which provides as follows:

[87]

" ... [The State] has given the usual undertaking. In addition, as part of the orders which it seeks, it gives further undertakings limiting the number of bore holes at each demised premises to 4 prior to the date on which it alleges the leases terminate. It is prepared to undertake to cause as little damage as may be possible and to make good any damage within 8 hours of any examination. It is limiting the hours during which it will seek access on the part of the examiners to between 8.00 am. and 5.00 pm. (It is to be recalled that the businesses operating on each site, and particularly on the Bradto site, are frequently conducted during the evening and night hours). It will give 24 hours written notice of any proposed access. The proposed testing period is "in the order of a week or more" as conceded by Bradto in its written submissions. There is no cogent evidence before me of any loss which is likely to be sustained in relation to either premises. [The State] is not seeking to assert absolute ownership or entitlement in relation to the subject premises. It is not as if it is seeking something in the nature of a demolition order. It is not seeking that its servants or agents enter and burn, pillage and destroy. The contrary is the situation. It is seeking that its servants and agents enter for very limited testing purposes and is giving undertakings and seeking orders which would minimise any inconvenience. As stated, this is in addition to the usual undertaking in relation to damages.

I also accept that there is ample evidence of potential financial detriment to [the State], which detriment might extend to some third parties. This is a substantial project of some importance to [the State]. Delay in the completion of a major project such as this can be expected to be productive of significant loss, and I accept the affidavit material in this regard. I also accept that detriment, and loss of confidence, may be caused to the third parties who are part of the tendering process in relation to the demised premises.

In summary, when the issues of a serious question to be tried and the balance of convenience are considered, the scales seem to me to swing in a most pronounced fashion in favour of the granting of an injunction of the type sought."

At a glance

Court

Decision date

Before

Source

Judgment (107 paragraphs)

Legislation Cited (2)

Cases Cited (16)