Chiodo Corporation Pty Ltd v Coolangatta & Tweed Heads Golf Club Ltd

1. By 4:00pm on Monday, 4 December 2023, the applicant is to file an amended version of its originating application and statement of claim, in which references to the Australian Consumer Law (NSW) are replaced with references to the Australian Consumer Law.
2. Until 4:00pm on Monday, 29 January 2024, the respondent is restrained from conducting a vote of members on the special resolution to execute the Proposed Development Agreement in the form attached to the notice of meeting dated 2 November 2023, which is contained at pages 200-202 of exhibit MG-1 to the affidavit of Michael Gough sworn herein on 29 November 2023.
3. The respondent's costs be costs in the cause.
4. There be liberty to apply. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

SNADEN J: 1 The applicant (hereafter, "Chiodo") manages a residential and commercial property development operation. It is presently agitating to become involved in the development of land that is owned by the respondent (hereafter, the "Golf Club") in Tweed Heads, New South Wales. By an originating application dated 28 November 2023, Chiodo moves for relief in respect of what it claims is misleading or deceptive conduct engaged in by the Golf Club in contravention of s 18 of the Australian Consumer Law (comprising Schedule 2 to the Competition and Consumer Act 2010 (Cth)). More pressingly for present purposes, it moves for urgent interlocutory injunctive relief to restrain the Golf Club from holding a meeting of its members that is proposed to transpire later today, Thursday, 30 November 2023. Perhaps more accurately, it moves for relief to restrain the Golf Club from entertaining consideration at that meeting of a special resolution that is proposed for attention at it. 2 That application for interlocutory relief was the subject of an urgent hearing this morning. At that hearing, Chiodo relied upon three affidavits, namely those of Ms Bree McMillan and Mr Paul Anthony Chiodo both sworn on 28 November 2023, and Mr Michael Gough sworn on 29 November 2023. The Golf Club relied upon two affidavits, namely those of Ms Darci Marie Anderson sworn on 29 November 2023, and Mr Simon Chan sworn on 30 November 2023. 3 The dispute that has arisen between the parties is the latest skirmish in a broader dispute that has spanned the last few years. It is not necessary to particularise it in great detail. It suffices to repeat that, at an extraordinary general meeting of the Golf Club's members that is currently scheduled for 7:00pm tonight (Thursday, 30 November 2023 - hereafter, the "EGM"), a special resolution is to be considered. That resolution has its genesis in litigation that Chiodo commenced against the Golf Club in the Supreme Court of Victoria in 2020. That litigation (to which I shall refer hereafter as the "Supreme Court Proceeding") concerned negotiations about - and, so Chiodo put it, an agreement as to - the development of land owned by the Golf Club. The Supreme Court Proceeding was resolved in 2022 by means of written settlement terms, pursuant to which it was agreed that the Golf Club's members (as opposed to its management) would be asked to consider whether or not a development project proposed by Chiodo ought to be approved. The special resolution earlier referred to (hereafter, the "Special Resolution") is directed to that subject. 4 On 11 October 2023 - and pursuant to the written terms of settlement upon which the Supreme Court Proceeding resolved - Chiodo provided to the Golf Club a proposed development plan, a proposed development agreement related to that plan, and an explanatory memorandum that it had prepared by way of summary of what was to be put forward for consideration by the Golf Club's members. That material has been circulated to the Golf Club's members ahead of tonight's EGM. 5 The Golf Club, through the agency of its management, opposes Chiodo's proposal. As a collective, it has engaged, as it must, in efforts to honour the settlement terms into which it entered on the club's behalf; but it has not made (and was not required to make) any attempt to disguise its opposition to what Chiodo proposes. 6 That opposition has assumed a number of forms, key amongst which for present purposes is an explanatory memorandum concerning the Chiodo proposal that was prepared in October 2023 by the Golf Club's lawyers. That document (hereafter, the "GCEM") was also distributed to the Golf Club's members ahead of tonight's EGM. 7 The GCEM contains a number of representations and omissions that Chiodo contends are misleading or deceptive. Chiodo submits that, by circulating it to its members ahead of tonight's meeting, the Golf Club engaged in conduct that contravenes s 18 of the Australian Consumer Law. It is concerned that, if the EGM proceeds as scheduled, the special resolution will fail, in part because of what it says is the misleading or deceptive content of the GCEM. Consequently, it seeks to restrain the EGM from proceeding or to restrain consideration of the special resolution at it. 8 The principles that govern the Court's discretion to grant interlocutory or interim injunctive relief are well-settled and not in dispute. Similarly, there is no doubt that the court has jurisdiction to grant relief of that nature in a matter such as this one. 9 In order to qualify for the relief that it seeks, Chiodo must demonstrate that it has a prima facie case and that the balance of convenience favours the grant of an injunction: Australian Broadcasting Corporation v O'Neill (2006) 227 CLR 57 ("O'Neill"), 81-84 [65]-[72] (Gummow and Hayne JJ, with whom Gleeson CJ and Crennan J agreed). 10 An applicant for an interlocutory injunction needs to establish that their prima facie case has a sufficient likelihood of success to justify the preservation of the status quo pending the trial. The strength of the likelihood depends upon the nature of the rights asserted and the practical consequences likely to flow from the order sought: O'Neill, 81-82 [65] (Gummow and Hayne JJ); Quinn v Overland (2010) 199 IR 40, 50 [45]-[46] (Bromberg J); and AWU v Dee Vee [2012] FCA 988, [17]-[18] (Tracey J). 11 When considering the grant of an interlocutory injunction, the issue of whether an applicant has made out a prima facie case and whether the balance of convenience and justice favours the grant of an injunction are related inquiries. The question of whether there is a serious question or a prima facie case should not be considered in isolation from the balance of convenience: see Samsung Electronics Co. Ltd v Apple Inc. (2011) 217 FCR 238, 261 [67] (Dowsett, Foster and Yates JJ) citing with approval Sigma Pharmaceuticals (Australia) Pty Ltd v Wyeth (2009) 81 IPR 339, 342 [15] (Sundberg J). 12 In Bullock v FFTSA (1985) 5 FCR 464, Woodward J (with whom Smithers and Sweeney JJ relevantly agreed) stated (at 472): Thus an apparently strong claim may lead a court more readily to grant an injunction when the balance of convenience is fairly even. A more doubtful claim (which nevertheless raises "a serious question to be tried") may still attract interlocutory relief if there is a marked balance of convenience in favour of it. 13 Additionally, an applicant for interlocutory injunctive relief must, in showing that the balance of convenience favours that outcome, point to inconvenience for which an award of damages at trial would not be a sufficient remedy: Castlemaine Tooheys Ltd v South Australia (1986) 161 CLR 148, 153 (Mason ACJ); CEPU v Blue Star Pacific (2009) 184 IR 333, 339 (Greenwood J). 14 Lest there be any doubt, the adequacy of an award of damages is not a third consideration that guides the court's discretion to grant or not grant interlocutory injunctive relief. Rather, it forms "…part of the broader balance of convenience question": Liberty Financial Pty Ltd v Jugovic [2021] FCA 607, [283] (Beach J). 15 I turn first to consider whether there exists a prima facie case for injunctive relief. Section 18 of the ACL assumes terms that are notorious: it prohibits conduct engaged in in trade or commerce that is misleading or deceptive or likely to mislead or deceive. 16 Conduct will mislead or deceive or be likely to mislead or deceive if it leads, or has a real prospect of leading, others into error. It may attract that character as much by what it purports to represent as by what is not represented. Here, the conduct of which Chiodo complains inheres in the circulation and content of the GCEM. Attention should, thus, turn to that content. 17 Before that occurs, something should be said of the affidavit material upon which the Golf Club relies. It stresses the efforts that were made before its distribution to members to bring to Chiodo's attention the GCEM's content. It is said - and the court has no reason not to accept, albeit at this untested, interlocutory stage - that Chiodo has had ample opportunity to point out and take steps to correct any misleading or deceptive content in the GCEM. Similarly, it is said that Chiodo has had available to it measures to inform the Golf Club's members of such matters as it has felt obliged to bring to their attention. 18 Although not unimportant and although I take them into account in the exercise of my discretion, those considerations are not central to the court's present task. Of more significance is the content of the GCEM and its susceptibility to the charges that Chiodo now levels against it. 19 The GCEM contains the following representations, namely: 4.12 The Development Agreement makes reference to the draft Plans of Subdivision. These plans are meant to identify the Developer's Land with the intent being that upon registration of the relevant plan of subdivision and subject to the restrictions noted in the next paragraph, the Developer is entitled to exercise the Developer's Land Option to require the Golf Club to transfer ownership of those parcels of land to the Developer. The consideration to be paid by the Developer to the Golf Club in exchange for transferring ownership of those parcels of land is the nominal sum of $1.00 for each parcel. 4.13 The Developer cannot exercise the Developer's Land Option until the following events have occurred:- (a) the Rezoning Effective Date; (b) development consent has been issued by the Tweed Shire Council for undertaking the development of that parcel of land; (c) the Developer has appointed the principal construction contractor for the development of that parcel of land; and (d) the Developer has obtained Development Finance for the development of that parcel of land. … 4.15 There is considerable risk to the Golf Club in transferring ownership of its land to the Developer prior to receiving valuable consideration for that land. 4.16 The Developer's Land includes the land where the Clubhouse is presently situated. … [Later and under the heading, "Summary of Key Risks"] 5.6 Potential for the Developer to assign its rights under the proposed arrangements so there is no certainty as to the party with whom the Golf Club will be dealing with from the start until conclusion of the Development. 20 Chiodo complains that each of those representations contains content that is misleading or deceptive, or likely to mislead or deceive (or that there is a prima facie case that that is so). As to the suggestion that the "Developer's Land includes the land where the Clubhouse is presently situated", it says that the proposed development agreement expressly excludes that land from what Chiodo will be at liberty to acquire if the special resolution passes. The Golf Club denies that it does. It says that the agreement excludes only acquisition of the land upon which a new clubhouse is to be built. 21 It seems to be common ground, whatever might be said of the language in which the proposal is expressed, that Chiodo is not intended to acquire the land upon which the existing or any new clubhouse is or will be situated. Regardless, there is a dispute about how the terms of the proposed agreement might operate (consistently or otherwise with what appears to be that common understanding). I need not make a finding one way or the other at this juncture, but it is apparent to me that the submission that Chiodo advances on this front is at least arguable. 22 Chiodo next complains that the GCEM wrongly implies that the club's members will lose a large parcel of the club's land for nothing more than the nominal sum of $1.00. That is said to be misleading or deceptive conduct, or likely to mislead or deceive, insofar as concerns what is not said: namely, that the proposal is structured in that way to allow the club to realise a substantial development fee without associated financing risks (which are to be assumed by, primarily at least, Chiodo). Chiodo maintains that, by failing to provide the full picture as to the assumption of risk, the GCEM misleads its audience into thinking that the proposed bargain is all in Chiodo's favour. 23 The Golf Club answers that charge by noting that what it has said is factually accurate. It does not dispute that the proposal involves payment of a substantial development fee and notes that as much is recognised within the GCEM. However, it maintains that there is considerable risk attached to the order in which events are proposed to be completed. The transfer of land for nominal value is to occur well prior to the payment of any development fee. That fee will only be paid if the development proceeds in the manner envisaged, without the intervention of circumstances that might hinder, delay or frustrate its progress. It is that chronology of which the Golf Club is concerned, and that concern that it has sought to highlight. Whether or not it is valid is, it says, a matter of commercial opinion. 24 Again, I accept that Chiodo's submission is at least arguable. I hesitate to add that I would not characterise such arguable case as there is as particularly strong; but I accept that there is at least some prospect that the hypothetical lay member of the club might well, upon reading the GCEM, form the view that Chiodo stands to inherit valuable land for almost nothing, with no guarantee that the club itself will later have anything to show for it, including in the form of a substantial development fee. That might suffice to mislead by what is not said (specifically, about the development fee and safeguards that are built into the proposal to ensure that the Golf Club receives it). 25 It is then said that the GCEM is misleading insofar as it suggests that, if the development proposal is approved, Chiodo will, upon satisfaction of the four prerequisites referred to at item 4.13, be able to exercise what is referred to as the Developer's Land Option. That is said to be misleading because the proposal, in fact, envisages a fifth pre-requisite, namely that a subdivision plan be registered first. I do not consider that submission to be compelling. The requirement of a registered subdivision plan is expressly alluded to at 4.12 of the GCEM. The scope for anyone to be misled or deceived in the way that is alleged seems marginal, at best. 26 Finally, Chiodo complains that the GCEM wrongly implies that, under the development proposal, Chiodo may assign its rights unilaterally. By its terms, the proposed development agreement appears to preclude that. The Golf Club submits that, in certain circumstances, that preclusion is tempered by an obligation on its part to not unreasonably refuse any assignment that is requested. Again, it is not necessary (or possible) to resolve the dispute at this juncture. It suffices to note, and I do, that Chiodo's contention is at least arguable. 27 There is also evidence to suggest - although plainly, at this interlocutory juncture, it does not prove, and I am neither able nor asked to find - that the GCEM has had the effect that the Golf Club undoubtedly hoped that it would. Ms McMillan deposes to discussions that she has had with members of the Club, which suggest that enthusiasm for the development proposal has waned somewhat since the GCEM was circulated. Some have made comments to her that suggest their acceptance of that which is said to be untrue. Again, there can be little doubt, in my view, that there exists a prima facie case that the circulation of the GCEM has led, or will or might lead, some members into error. 28 That is so notwithstanding the opportunities that Chiodo appears to have been afforded - and of which it may still, even tonight, avail itself - to correct anything that it thinks is worthy of correction. Those opportunities notwithstanding, it remains the case that there are reasons for suspecting that the GCEM contains arguably misleading or deceptive representations that might lead members to reject the special resolution at tonight's EGM. Importantly, there can be no doubt that correction of those statements at the meeting would not suffice to correct whatever incorrect views might have formed in the minds of members who choose, for whatever reason, not to attend it. 29 Chiodo appears to have grounds for believing that the special resolution will not be approved if the EGM proceeds as scheduled. That is, plainly, a matter of some significance. Once the resolution is proposed for the consideration of the membership, the Golf Club's obligations under the settlement terms that resolved the Supreme Court Proceeding will come to an end. If it fails, any realistic prospect that Chiodo might be involved thereafter in the development of the Golf Club's land will, it seems, similarly evaporate. 30 That observation leads nicely into consideration of the balance of convenience. The inconvenience to Chiodo if interlocutory relief is declined is obvious: it will (or may) be denied the chance to realise a valuable development opportunity. The value attaching to that chance will plainly defy precise calculation (resting, as it inevitably will, upon the complexities that attend estimations of that kind). 31 By contrast, the inconvenience to the Golf Club is minimal if there is any at all. All that is proposed by way of injunctive relief is a postponement of the EGM (or of the consideration of the special resolution that is intended to be its primary subject) for a period of time sufficient for additional information to be provided to the Golf Club's members. No mandatory relief is sought and none will be granted. 32 I accept, then, that Chiodo has established that it has a prima facie case for the relief that is claimed. It appears to be at least arguable, although in some cases not strongly so. It is unnecessary to venture any precise quantification, as I am satisfied also that the balance of convenience favours interlocutory relief. That being so, it is appropriate to grant the relief that is sought and I shall do so. 33 I should wish it to be known that I do not do so lightly. The Golf Club is entitled lawfully to oppose the approval of the Special Resolution and to take steps to that end. Although there is no suggestion of it at this juncture, the court should be careful to ensure that its processes are not used as a device to buy time in the face of what might well, in the fullness of time, prove to be a successful campaign by the club to oppose what is proposed. I certify that the preceding thirty-three (33) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Snaden.