Falkingham v Peninsula Kingswood Country Golf Club Ltd [2014] VSCA 235

1 I will ask Garde AJA to deliver the first judgment.

2 By a summons filed yesterday, the appellant, William Falkingham, seeks an interlocutory injunction restraining the respondent from dissipating any proceeds from the sale of the land known as the Kingswood Golf Course in Dingley Village, Melbourne ('the land') pending the hearing and determination of his appeal. The appellant failed to obtain similar relief from the trial judge.

3 The background facts are fully set out in the reasons of the trial judge[1] and in the affidavits relied on by the parties in this application. I will not recite the background facts here.

4 The land has now been sold to an arm's length purchaser following a resolution to that effect passed by the board of directors of the respondent on Thursday 4 September 2014. In making this decision, the evidence is that the board of the respondent received legal advice. It also received real estate advice from Ernst & Young Real Estate Advisory Services.

5 In support of his application, the appellant relies on two affidavits of his solicitor, Mr Pranesh Lal. The respondent relies on the affidavits of Mr Stephen D'Arcy, its solicitor and Mr Gerald Ryan.

6 The principles governing the grant of a restraining order pending the hearing of an appeal are well established and are set out in Australian Broadcasting Commission v O'Neill[2] and Bradto Pty Ltd v Victoria:[3]

1. There must be a serious issue to be determined.

2. The appellant should demonstrate that the order that is sought carries with it the lower risk of injustice if it should later be shown that the order should not have been made.

3. The appellant must show that the balance of convenience is in favour of the grant of an injunction.

7 In this application, Mr O'Bryan SC who appeared with Mr Rosewarne for the respondent, conceded that there was a serious issue to be determined and I proceed on that basis.

8 The respondent is a not-for-profit golf club governed by a board of directors and is a company limited by guarantee. The constituent clubs are, in each case, of high repute and long standing. There is no risk that the proceeds received from the sale of the land will be misappropriated or used other than for golf club purposes. Rather, there is every reason to accept that the proceeds will be put to the purposes of the respondent club albeit the merged club, and used to pay debts, meet obligations and perform works.

9 The appellant seeks to restrain the dissipation of any proceeds from the sale of the land. The injunctive relief sought would be a prohibition of the use of the funds passing to the respondent under the contract between the respondent and the purchaser.

10 There are very significant financial consequences for the club if an injunction is granted which are apparent from the confidential exhibits to Mr Ryan's affidavit to which I will not make specific or detailed reference.[4] The effect on the club of the grant of an injunction would be substantial and serious.

11 The trial judge found that there were two main purposes to be achieved by the respondent through the sale of the land. The first was the repayment of debt. The second was to establish a future fund.[5] The injunction sought would seriously interfere with both purposes and with the affairs of the respondent generally.

12 If an injunction is granted, there are very real risks of significant losses to the respondent. Such an order would affect the financial capacity of the respondent to repay debts and meet its financial obligations. The financial risks of such an order would require that the appellant should put up security in such a sum as would protect the respondent from any loss that might be caused to it by the order. The required undertaking for damages would be large.

13 No evidence is provided at all of the appellant's financial capacity - let alone that the appellant could provide security of the required magnitude.

14 This is an important consideration weighing against the grant of an injunction as the decisions in National Australia Bank v Bond Brewing Holdings Ltd[6] demonstrate.

15 The financial position of the merged club is important. Even if the merger were to be reversed, it is still very important for the members from both constituent clubs that the financial affairs of the merged club be sensibly and soundly administered and that its solvency, trading position and general business viability be preserved. In this respect I refer particularly to the confidential exhibits of Mr Ryan as to the cash flow position of the respondent. These exhibits bear out the need of the club to access these funds. The club's position now is, if anything, even more serious than was the position before the trial judge.

16 In his reasons, the trial judge set out the unchallenged evidence that any injunction restraining the sale of the land might cause substantial financial loss to the respondent and its members.[7]

17 The final consideration is that the appellant is one member of a club of some two thousand members albeit supported by some other members.[8] Management of the affairs of the club rests with the board.

18 It is the appellant who must satisfy this Court that an interlocutory injunction should be granted pending the hearing of the appeal.

19 I am not satisfied that the grant of an interlocutory injunction would bring with it the lower risk of injustice if it should later be shown that it should not have been granted. Nor am I satisfied that the balance of convenience favours the grant of the injunction sought by the appellant.

20 I am not satisfied that an injunction should be granted in the absence of demonstrated capacity on the part of the appellant to give a substantial undertaking.

21 While the hearing of the appeal should be given expedition, I would order that the appellant's summons filed 16 September 2014 be dismissed.

1. The appellant's application for an injunction in relation to the proceeds of the sale of the land is dismissed.

2. The appeal be given such expedition as is practicable.

3. The costs of the appellant's application be costs in the appeal.

[1] Re Peninsula Kingswood Country Golf Club [2014] VSC 437 (Robson J) ('Reasons').

[2] [2006] HCA 46; (2006) 227 CLR 57.

[3] [2006] VSCA 89; (2006) 15 VR 65.

[4] The Court received an undertaking from senior counsel, junior counsel and the solicitor for the appellant that they would use confidential exhibits GPR-4, GPR-5 and GPR-6 to the affidavit of Gerald Patrick Ryan sworn on 16 September 2014 solely for the purpose of this proceeding and not to disclose them to any person other than themselves.

[6] [1990] HCA 10; (1990) 169 CLR 271 and [1991] VicRp 31; [1991] 1 VR 386.