CTI Joint Venture Company Pty Ltd v CRI Chatswood Pty Ltd

d Respondent) Allens Arthur Robinson (Fourth Respondent) Not represented (Fifth Respondent) File Number(s): 40255 of 2011

EX TEMPORE Judgment 1HIS HONOUR : By a statement of claim filed on 24 March 2011, the applicant commenced proceedings pursuant to s 123 of the Environmental Planning and Assessment Act 1979 (the EPA Act). It seeks orders both to remedy present breaches and to restrain apprehended breaches of that Act. 2The applicant's claim has its genesis in a development consent granted under Pt 4 of the EPA Act on 22 August 2005 (the consent). That consent authorised the re-development of a substantial parcel of land adjacent to and over the Chatswood Railway Station. Included among the components of development that were the subject of the consent were a substantial commercial car park and three residential towers. 3In order to accommodate both the various components of development as well as disparate ownership of those components, the conditions of the consent also contemplated that the site to which it related would be subdivided by stratum subdivision. Condition A2 of the consent identified the subdivision plan pursuant to which that aspect of the development was to be carried out. A further condition of consent numbered E2 required the creation of easements benefiting lots to be created by the intended subdivision. 4The applicant has acquired several lots in Deposited Plan 1094273, that being the subdivision created in purported compliance with the consent. One of those lots is known as lot 107. That lot adjoins lot 105 which is presently owned by the third and fourth respondents. Pursuant to contractual rights granted by the third and fourth respondents, the details of which are not presently necessary to be recited, the first respondent has nominated the second respondent as the purchaser of lot 105. The purchase of that lot by the second respondent is ready for completion. 5The applicant seeks interlocutory relief to restrain completion of that sale. It is the application for that relief which is presently before me. 6The applicant claims that the subdivision creating lots 105 and 107 was not effected in accordance with condition A2 of the consent. Further, upon registration of the relevant deposited plan, the easements required to be created by condition E2 of the consent were, so it is submitted, not in fact created. Thus, the applicant claims that the subdivision, which required development consent under the EPA Act, has not been effected in accordance with the consent. This has the consequence that development represented by the present subdivision has been carried out in breach of s 76A(1) of the EPA Act. 7Preparation and registration of the plan of subdivision creating lots 105 and 107 was, so the applicant claims, procured by an arrangement among the first, third and fourth respondents. Thus, their joinder in the proceedings. Moreover, it is submitted that if the sale of lot 105 is not restrained pending determination of these proceedings and the second respondent is registered on title as the proprietor of that lot, the applicant may be denied any right to obtain relief, even if it is successful in establishing that the subdivision was effected in breach of the EPA Act (City of Canada Bay Council v F & D Bonaccorso Pty Ltd [2007] NSWCA 351; (2007) 71 NSWLR 424 at 447). 8The principles applicable to the grant of interlocutory relief are not in question in the present application. The respondents accept that there is a serious question to be tried. They also accept that the balance of convenience favours the grant of interlocutory relief, save for one important qualification expressed by the first respondent and supported by the third respondent. That qualification is that the undertaking as to damages offered by the applicant in support of its application for interlocutory relief is not supported by adequate security. It is that qualification and the requirement for provision of security that has been the subject of debate before me. 9The principle that should be considered in the present context is sufficiently set out in the written submissions advanced by the first respondent. It is, relevantly, that an undertaking as to damages is the price that an applicant is usually required to pay in order to obtain an order of the court, restraining an opponent, before the case has been determined on its merits. Reference is made to the observation by the High Court in Air Express Limited v Ansett Transport Industries Operations Pty Ltd [1981] HCA 75; (1981) 146 CLR 249 at 311. 10As is also observed in the written submissions of the respondent, given the stated purpose of the undertaking, its adequacy to meet any potential claim for damage proffered is a relevant and important consideration in an application for interlocutory relief. As such, where the financial capacity of an applicant to meet its undertaking as to damages is in doubt, the Court may conclude that the undertaking should be fortified by security or alternatively that some other entity with sufficient net assets should also provide an undertaking. Reference is made in that regard to the observations of McLelland J in Select Personnel Pty Ltd v Morgan and Banks (1988) 12 IPR 167 at 171. 11As I understand it, the applicant does not seriously contest those statements as expressing principles of general application when an interlocutory injunction is sought. However, in the present context there are qualifications that need to be considered. 12The evidence which founds the factual debate before me is contained in confidential exhibits. It is therefore inappropriate that it be discussed in detail in these reasons. That evidence demonstrates a capacity on the part of the applicant to make a payment in the event that a claim for damages is successfully made out. It is the capacity of the applicant to meet the quantum of damages asserted by the first respondent as potentially payable that is really the issue. The evidence advanced on behalf of the applicant as to its capacity to make a claim is criticised first, by reference to its generality, and second by reference to the circumstance that much of it is contained in documents prepared "in-house" and not with the benefit of work or consideration by an external or independent accountant. 13However that may be, the deponent of the affidavit sworn in support of the financial material, Mr Neil Werrett, was not required for cross-examination upon the content of his affidavit or the material exhibited to it. It is accepted that the evidence adduced does not demonstrate with particularity the exact amount that is available to the applicant at any point in time in the future to meet a nominated commitment. That said, the evidence, so it seems to me, does demonstrate at least three matters identified by the applicant in its submissions. 14First, there are significant sums to the credit of the applicant in a bank account held by one of Australia's major banks. Second, the evidence does demonstrate that there are substantial assets held by the applicant, albeit that the evidence may be said to be inadequate in identifying with precision all of the applicant's assets and liabilities in a way that reflects, in a practical sense, the net amount available on realisation. Suffice it to note that in my assessment of that evidence there would certainly be a significant surplus. Third, there is an entitlement on the part of the applicant to call upon its joint venturers for contribution in accordance with the joint venture agreement that has been tendered before me. The precise quantum able to be called may be attended by some ambiguity but the fact is that the sums identified in the document are very substantial, both in terms of the obligation for minimum contribution and those entitlements upon which the applicant may call. 15In final submissions it was put on behalf of the first respondent that, in reality, its potential losses were, in round figures, approximately $650,000 per month. In light of the directions that I propose to give, it is reasonable to anticipate that these proceedings can be resolved within two months. Having regard to the financial material that has been made available it is conceivable, indeed the evidence would suggest that it is highly probable that should the total sum of $650,000 per month or a total of $1.3 million be called upon, as the first respondent claims, that sum could readily be met from assets presently available to the applicant. 16This is not a case in which it can properly be said that the undertaking proffered by the applicant is worthless. The issue, as I have endeavoured to demonstrate, is whether the worth of the undertaking is so insubstantial that it cannot possibly meet the quantum of any likely claim made on behalf of the respondent. I do not find, on the evidence, that a submission of inadequacy could properly be maintained. 17There are a number of further matters that need to be noticed. First, the demonstration of a precise sum to support an undertaking or indeed the giving of an undertaking at all, is not an absolute precondition, in this Court at least, for the grant of interlocutory relief. Moreover, as was observed by Barrett J in EPP Australia Pty Ltd v Levy [2001] NSWSC 482, when addressing the worth of an undertaking, it is appropriate to take a somewhat realistic approach to financial circumstances, such as those which are presently before me. To apply observations made by his Honour in that judgment (at [38] - [40]), one might reasonably expect, given the nature and size of the development here concerned, together with the value of the land, discerned from the evidence before me, that in the event of a call for payment of damages it is likely that a financial institution would make available such sum as might be required to meet a potential claim of $650,000 per month. It is inconceivable that such a sum would not be made available, even assuming, contrary to the evidence before me, that the applicant company was at the time of claim unable to meet payment from its cash reserves. 18There are two further matters that are relevant to a consideration of the undertaking. Although there is a commercial relationship among the applicant and the respondents, at the heart of this litigation is the lawfulness of action purportedly taken pursuant to a development consent. There is a public interest in ensuring that development is carried out conformably with a development consent, a document that is in the nature of a public document. That factor weighs in the balance when considering the exercise of discretion. 19The second matter that needs to be noticed is this. Even if the applicant is unsuccessful, it does not follow, as a matter of logic or law, that the loss currently claimed of $650,000 per month would necessarily be awarded to the respondents consequent upon the undertaking. What they claim as against what they may be entitled to receive by reason of the undertaking would need to be a matter debated at a later point in time. However, the earlier matters that I have identified are those more importantly bearing upon my decision. 20For those reasons I consider that it is appropriate to grant the interlocutory injunction that is sought. The undertaking as to damages proffered by the applicant, the balance of convenience as well as the accepted position that there is a serious issue to be tried, all favour the grant of this relief. I therefore propose to make an interlocutory order. 21The orders that I make are as follows: