Le Breton v Pacific Mirage Limited

REASONS FOR JUDGMENT (REVISED FROM TRANSCRIPT) 1 The plaintiff seeks urgent injunctive relief to restrain the defendant from proceeding with and conducting an extraordinary general meeting of its members tomorrow, 16 May 2012, for the purpose of considering and voting upon the following resolution: That in the absence of agreement from the owner of Villa 43 to forthwith repair the roof level of Villa 43, by the removal of existing tiling, existing waterproofing membrane, to be replaced with a new waterproofing membrane and tiling, to the satisfaction of Pacific Mirage Limited ("PML") and at the expense of the owner of Villa 43, PML is authorised and directed to forthwith take all appropriate action against the owner of Villa 43 to require compliance with the Sub-Lease presently subsisting between PML and the owner of Villa 43. 2 Alternatively, the plaintiff seeks an order that the extraordinary general meeting of the defendant's members to be held on 16 May 2012 be adjourned pending final determination of the plaintiff's substantive claim in the proceedings. 3 The plaintiff is a member of the defendant and the exclusive sub-lessee of a two-storey villa apartment in the building known as "Pacific Mirage", Seaworld Drive, Main Beach, Queensland. The villa apartment is Villa 43 referred to in the proposed resolution. The defendant is the sub-lessor and effective body corporate responsible for the management, maintenance and regulation of the Pacific Mirage building and the various villas contained in it. 4 Since 2004 the plaintiff and the defendant have been in dispute as to who, between themselves, is the person or entity legally liable for the maintenance, repair and upkeep of external areas pertinent to, but within the exclusive use of, Villa 43. 5 It appears to be accepted, for the purposes of today's application, that the external rooftop gardens, terrace/balcony tiling and other external areas in relation to Villa 43 require maintenance and repair, including but not limited to the replacement of the rooftop area tiling and waterproof membranes underneath. 6 In short, the plaintiff contends that the responsibility and liability for such maintenance and repair work lie with the defendant and the defendant contends that the responsibility and liability for such works lie with the plaintiff. 7 I have been taken to various documents including correspondence passing between the solicitors for the plaintiff and the solicitors (from time to time) for the defendant, in which the dispute as to who is responsible and liable for such maintenance and repair works has been ventilated. 8 It is significant to note that, on 21 May 2004, the defendant's then solicitors advised the defendant that it was responsible for all structural repairs to the Pacific Mirage building, including any walls, floors or ceilings that form part of the common areas and the 54 residential units; that the defendant was responsible for the maintenance and repair of the external parts of the residential units, including the balconies, planter boxes, window frames, door frames and rooftop gardens; and that the members of the defendant are responsible for keeping the interior of the residential units in good repair, including the repair and replacement of any fixtures and fittings. 9 Despite that advice, in 2007 the defendant convened a meeting in which a resolution was proposed which, according to the plaintiff, was inconsistent with the rights and obligations as between the defendant and its members and contrary to the legal advice to which I have referred. As events transpired, when the plaintiff complained about that proposed resolution it was withdrawn. Nevertheless, it seems that the question of the responsibility and liability for the maintenance and repair works of external areas has remained a live issue, certainly between the plaintiff and the defendant. 10 On 3 May 2011 the plaintiff's solicitors wrote to the defendant's solicitors requiring the defendant to address the maintenance and repair of the rooftop garden areas adjacent to Villa 43, failing which the plaintiff would, without notice, apply for relief under the Corporations Act 2001 (Cth) and such other relief as was appropriate. 11 It would appear that this letter was only responded to by the defendant's present solicitors on 27 March 2012. Without going to the detail of that letter, it is sufficient to record that it took issue with the earlier letter of 3 May 2011 and, effectively, stated the defendant's position to be that it was the plaintiff's obligation to carry out the necessary repair work. The letter concluded by stating that, in the event that the plaintiff did not agree by 12 April 2012 with the defendant's position, it would call a meeting of members to put the resolution which I have quoted above. There was no response to that letter. 12 On 18 April 2012 the defendant issued a notice of extraordinary general meeting of members convening a meeting for 16 May 2012 at 9.30 am at the Sheraton Mirage Resort, Seaworld Drive, Main Beach, Queensland for the purpose of passing, amongst other things, the resolution that I have quoted. 13 On 7 May 2012 the plaintiff's solicitors wrote to the defendant's solicitors in respect of the notice of extraordinary general meeting. As part of that correspondence the plaintiff's solicitors stated that the notice convening the meeting was defective in two main respects. First, it was said that the proposed resolution, if passed in its present form, would result in inconsistencies between the Articles of Association and the terms of the sub-lease under which the plaintiff held Villa 43. Secondly, it was said that the directors of the defendant had a common law duty to provide adequate information to members and to provide information in the notice convening the meeting which was not misleading and which was sufficient for members to make an informed decision: see Devereaux Holdings Pty Ltd v Pelsart Resources NL (No 2) (1985) 9 ACLR 956; Fraser v NRMA Holdings Ltd (1995) 55 FCR 452. 14 In that connection, the plaintiff's solicitors contended that the explanatory note accompanying the notice convening the meeting was misleading and deficient in that: (a) the defendant alleged, incorrectly, that the plaintiff was legally responsible for the repairs the subject of the proposed resolution; (b) the defendant had withheld and not disclosed the fact that there had been an ongoing dispute as to this legal liability; (c) the defendant had withheld and not disclosed the fact that its own legal advice had confirmed that it was legally liable for the maintenance and repair work in question; and (d) the defendant had withheld and not disclosed the reasons why the plaintiff contended that she was not liable to undertake the relevant works. 15 This led to a response from the defendant's solicitors on 8 May 2012, noting, amongst other things, that, prior to the extraordinary general meeting being convened, they had spoken to Mr Price of the plaintiff's solicitors, at which time Mr Price advised that he was obtaining instructions in response to the defendant's solicitors' letter of 27 March 2012 and would get back to the defendant's solicitors as soon as possible. It would seem that no further contact in that regard was received by the defendant's solicitors until the plaintiff's solicitors' letter of 7 May 2012. 16 In seeking interim injunctive relief there are two main considerations to which the Court has regard. The first is whether there is a serious question to be tried for the relief that is ultimately sought and, secondly, whether the balance of convenience favours the granting or withholding of that relief. 17 It is sometimes said that there is a third requirement, namely that the moving party must demonstrate irreparable damage if the interim relief is not granted. Whether or not irreparable damage is a separate requirement, it is certainly a matter that should be taken into account when considering the balance of convenience: Samsung Electronics Co Ltd v Apple Inc (2011) 286 ALR 257 at [61]-[63]. 18 I am prepared to assume in the present case that there is a serious question to be tried for the final relief which the plaintiff seeks. I am not satisfied, however, that the balance of convenience favours the granting of the interim relief which she seeks. 19 First, it is not known whether the proposed resolution will be passed at the meeting tomorrow. If the resolution is passed and if the notice convening the meeting is defective and misleading, as the plaintiff contends, then, in all likelihood, the resolution will be invalid. If no injunction is granted the rights of the plaintiff to challenge the validity of the resolution will be preserved. 20 Secondly, it is likely, in any event, that the rights of the parties in respect of the repair and maintenance obligations concerning Villa 43 will be governed by the sub-lease under which the plaintiff holds that property. Once again, if no injunction is granted, the rights of the plaintiff under the sub-lease will be preserved. 21 Thirdly, the resolution itself, if passed, would simply authorise the defendant to "forthwith take all appropriate action against the owner of Villa 43 to require compliance with the Sub-Lease presently subsisting between PML and the owner of Villa 43". Thus, the resolution authorises no particular activity other than to take what the defendant regards as being "appropriate action." The resolution, if passed, would not authorise the defendant itself to undertake the maintenance and repair work in the absence of agreement or consent by the plaintiff. 22 Fourthly, I have referred earlier in these reasons to the chronology of events leading up to the convening of the meeting. It is sufficient for me to observe that the notice of the meeting was given some weeks ago. Despite the correspondence from the plaintiff's solicitors on 7 May 2012, it is only on the evening before the meeting is to be held that the Court is moved to grant interim relief. In my view, to now grant the interim injunctive relief that is sought would work inconvenience to the defendant and its members by interfering with the holding of a meeting in respect of which notice was given some weeks ago. 23 For these reasons I refuse to grant the interim injunctive relief that has been sought. [The parties were heard on the question of costs.] I certify that the preceding twenty-three (23) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Yates.