Plaintiff v Defendant

"The directors of Bayley Views have agreed the vehicular access, which is common to both properties, will be designated as common property with a Right of Way Access Easement over the designated area. Should the Council resolve to issue a planning permit as proposed the directors would agree to the inclusion of a permit condition that would give legal effect to the above agreement."

5 Mr Roberts, at the time, was a director of both companies. There were also other directors of Bayley Views, being Jennifer Anne Barnett, Phillip John Boyle and Justin Peter Mastores. It is alleged by the plaintiff that the latter three directors were party to the agreement that is the subject of the dispute.

6 It transpired that, on 16 January 2003, the City of Stonnington issued planning permit No. 0522/02 over the Bayley Walk land, which included a Condition No.13 requiring proof to the satisfaction of the City of Stonnington that permanent rights of title had been granted in relation to the easement over the Bayley Views land.

7 In building an access ramp over the Bayley Views land, Bayley Views alleges that, in accordance with representations made in 2002, it positioned a concrete post and lintel access point adjacent to and leading onto the Bayley Walk land from the Bayley Views access ramp. It was said that whilst the concrete post and lintel access needed to be opened up to give actual access, its very construction demonstrated part performance of the agreement between the plaintiff and the defendant, namely to grant an easement. It was also said that the physical existence of the structure confirmed the representation by Bayley Views that it would grant the necessary easement in order to satisfy and comply with Condition 13 imposed under the planning permit by the City of Stonnington.

8 In any event, a disagreement occurred between Bayley Walk and Bayley Views as to whether there was an agreement and its ambit. The disagreement came to be ventilated in 2003.

9 On 24 July 2003, the board of Bayley Views met. Initially Mr Roberts was present, but when discussion was reached on the point of the easement, he excused himself from the meeting and the discussion ensued in his absence. The minutes of the meeting state that it was resolved that there be an agreement as to the provision of the easement, however the specific terms of the grant were critical and the agreement was subject to those terms being resolved.

10 It was submitted for the plaintiff that, in any event, Bayley Walk and Bayley Views accepted these terms. The minutes of the meeting of 24 July 2003, also recorded the following:

• That those conditions were only part of the ultimate terms and conditions;

• That the Chairman of each company had to sign off on the eventual agreement;

• That consideration had to be resolved between the parties and determined by an independent expert;

• That the agreement was subject to a s.173 agreement under the Planning and Environment Act with the City of Stonnington;

• That any easement was connected into the existing planning permit;

• That access, usage and signage had to be agreed between the parties;

• That maintenance, security, alterations and the like were to be agreed upon;

• That the defendant's access to parking spaces on the plaintiff's site had to be resolved; and

11 On 6 October 2003, there was a further meeting of the board of Bayley Views. Present at that meeting were Ms Barnett, Mr Boyle and Mr Roberts. The other directors, Mrs Foster and Mr Mastores, were absent. The minutes of that meeting were exhibited to the affidavit of Mr Roberts sworn 22 May 2006. They indicate that Ms Barnett was requested to draft a letter to Bayley Walk advising that Bayley Views had "agreed to the easement request subject to the terms and conditions discussed at the 24th July 2003 meeting of the Board". Ms Barnett was further requested to "ensure that a formal agreement between Bayley Walk and Bayley Views [was] drafted".

12 It transpired that, by mid-November 2003, Mr Roberts had ceased to hold any office or interest in Bayley Views. It is alleged by the plaintiff that, at about this time, the defendant began to change its position or attitude in relation to the alleged agreement.

13 Correspondence that ensued, principally from Ms Barnett, did not resolve the matter of the alleged easement. In December 2003, it was alleged by the plaintiff that as a result of discussions in October and November of that year and the exchange of correspondence, any agreement, if it did not exist as at July 2003, alternatively existed as at October 2003.

14 By September 2004, it appears that Mr Roberts was dissatisfied with the situation and, notably, 11 months after the alleged events of October 2003, sought to assert the existence of the easement. He purported in correspondence to state that he accepted the terms. The precise terms that were being accepted in the letter are not altogether clear. It was criticised in the course of submission before me that this action by Mr Roberts demonstrated that there was no certainty as to the terms of the agreement and, indeed, it demonstrated that there was no agreement at all.

15 By December 2004, those associated with the two companies had ceased their relationship and Ms Barnett allegedly informed Bayley Walk that from her perspective there was no agreement to grant an easement. Thereafter, correspondence ensued between solicitors for both parties.

16 The case as put to the Court on the application was that the plaintiff had a cause of action lying in contract based upon Masters v. Cameron,[1] and that the contract had been breached; or alternatively, that representations had been made by the defendant to the plaintiff arising from the correspondence, but in particular, from the meetings of July and October 2003. It was alleged that arising from the representations, those acting for the defendant had represented that an easement would be granted to the plaintiff as already described. In those circumstances, it was alleged that the representations constituted misleading and deceptive conduct or, alternatively, gave rise to an equitable estoppel.

17 Broadly stated, these are the facts of the matter and the case as put by the plaintiff. The facts and circumstances are set out more fully in the affidavit for the plaintiff of Mr Roberts, already adverted to, and also the affidavit of Paul Maurice Henri Somers, sworn 24 May 2006 and the exhibits thereto, and also the affidavit of Jennifer Anne Barnett, sworn 24 May 2006, filed on behalf of the defendant together with exhibits.

18 At the commencement of the hearing, Mr Robins of counsel, who appeared for the plaintiff, provided to the Court, without objection, relevant documents. The first was a letter dated 15 May 2006 from the National Australia Bank addressed to Ms Barnett of Bayley Views. It recited that, in accordance with her instructions, the bank had received the proceeds of sale of the property at 615 Dandenong Road, Armadale, in the amount of $11,300,709.38.

19 The letter describes that in accordance with the instructions of Ms Barnett, the proceeds had been dispersed, approximately $1.8 million to pay out a bills facility, a further $4 million to pay out another bills facility, approximately $5.4 million allocated to the business cheque account of Bayley Views, and a settlement fee of $150.

20 The other document handed up to the Court was a letter addressed to Wilmoth Field Warne, the plaintiff's solicitors, from Coadys, the defendant's solicitors, dated 24 May 2006. For convenience, I quote the letter as follows:

"We refer to previous correspondence in this matter and advise that the amount of funds currently in our client's bank account amount to $425,114.60. Our client has not deducted any monies from the account since the making of the Order on Friday 15 May, but there is approximately $95,618.00 to be paid to the third parties referred to in the Order of 15 May. This money represents not only the balance of sale proceeds, but also payment of rental, etc. received by the Company to 22 May 2006. The balance of the proceeds of sale, in fact, only constitute the sum of $23,059.38 of the amount in the account at the present time."

21 The Court was also provided, again without objection, a copy of a title search for the relevant land, revealing that the land had been sold for consideration of $11,510,000. The transfer was lodged on 16 May 2006.

22 In the course of submissions, Mr Marantelli of counsel, who appeared for the defendant, took me to a number of matters to demonstrate that there was no, or insufficient, evidence for the plaintiff to be able to demonstrate that there was an agreement, in particular an agreement for the purposes of Masters v. Cameron. He also took me through the material to make out the submission that the representations alleged by the plaintiff were insufficient and inadequately particularised.

23 Mr Marantelli took me to the affidavit of Mr Roberts and directed my attention to the relevant paragraphs of that affidavit. He drew a comparison between the contents of the affidavit and the general endorsement on the writ, to demonstrate that the allegations in the endorsement were not made out for the purposes of the affidavit. To use the expression contained in his written submission: "Mr Roberts has been a little coy in his affidavit."

24 The other complaint made on behalf of the defendant against the plaintiff is the delay in bringing this application. This was the matter of some discussion between the bench and Mr Robins in the course of submissions. To state matters briefly, it can be put against the plaintiff that, notwithstanding a letter from the solicitors for the defendant in December 2004, the plaintiff took no action and allowed the sale of the property to proceed in 2006. Mr Marantelli put quite forcefully that the plaintiff, through Mr Roberts, had known of the proposed sale of the property since approximately February 2006 and had taken no steps to complain or to stay the sale of the property.

25 The complaint is further made, and indeed this was a matter I raised in the course of argument with Mr Robins, that it lies against the plaintiff that it had not come to court earlier. Mr Robins responded to the suggested criticism by saying that if it had come to court earlier, it would have been, in all likelihood, unsuccessful, because the plaintiff was not in a position of knowledge of dissipation or potential dissipation of proceeds of sale until on or after 16 May 2006.

26 The test to be applied in relation to the granting of a Mareva order has been considered by the High Court in Cardile v. LED Builders Pty Ltd.[2] In this Court, an overview of the relevant authorities and principles was considered by Redlich J in Victoria University of Technology v. Wilson.[3] In that matter, at paragraph 24, his Honour stated as follows:

"To maintain a Mareva or asset preservation order, as described by Kirby J in Cardile v. LED Builders Pty Ltd, a plaintiff must show that it has a good arguable cause of action and that there is a real risk of dissipation of assets that the defendant has within the jurisdiction, such that any judgment would not be satisfied. ... The power to grant the order is part of the inherent jurisdiction of the court to prevent the frustration of its process. ... The court will not by injunction require a defendant to give security to a plaintiff's claim. ... A mere claim by the plaintiff that the defendants intend to place assets beyond the plaintiff's reach will be insufficient. ... The function of the Mareva order is to reduce the risk of an unscrupulous defendant seeking to render itself judgment-proof or to dispose of assets in a manner prejudicial to the plaintiff's ability to satisfy any potential judgment in the action. ... The court will look to the effect rather than the purpose of the defendant's conduct in determining whether the court's processes are likely to be abused or frustrated. ... The court's power to make such orders is discretionary but, like other injunctive relief, the balance of convenience between the parties must also be considered. ... The granting of the Mareva order, even to an innocent plaintiff, can wreak havoc with the defendant's business. ... Consequently, a higher degree of caution is required when the court is invited to make such orders. ... It is a drastic order which should not lightly be granted." [footnotes omitted]

27 More recently, the Court of Appeal, in Bradto Pty Ltd v. State of Victoria,[4] considered the appropriate test in granting an interlocutory injunction, whether the injunction be prohibitory or mandatory and whether the injunction be tantamount to final relief or only intermittent in relief. Prior to the decision in Bradto, it was seemingly uncertain in Victoria whether a different test should be applied when seeking an interlocutory mandatory injunction, and whether a different test should be applied when seeking an interlocutory injunction that was tantamount to final relief than when seeking an interlocutory prohibitory injunction.

28 It seems from Bradto that in seeking either a mandatory or an injunction tantamount to final relief, tests have been applied that are more onerous than, or in addition to, those applied in the case of merely prohibitory injunctions. Bradto abolished the different tests for different categories of injunction and seems to suggest that a single test should now be applied in all cases where an interlocutory injunction is sought. Bradto seems to establish further that in determining whether to grant an interlocutory injunction, a court should take whichever course appears to carry "the lower risk of injustice", should it eventuate that the interlocutory decision not be conciliatory with the final determination of the matter at trial.

29 Bradto also clarified that the question as to what course carries the lower risk of injustice is informed by, amongst other things, the well-established and interrelated considerations of: (1) whether there is a serious question to be tried at trial and the likelihood of the plaintiff succeeding at trial; and (2) where the balance of convenience lies as between the parties.

30 Turning first of all to the matter of whether there is a serious question to be tried, the first matter alleged by the plaintiff is that there was a binding and certain agreement. I accept the submissions of Mr Marantelli that the case of the plaintiff is weak as to an agreement under Masters v. Cameron. It would follow, therefore, that the plaintiff would face difficulties in demonstrating that there was a serious question to be tried on the basis of the material presently before me. However, that is not the end of the matter. There is the question of the representations allegedly made. The test does not require the plaintiff to make out its case, merely to demonstrate that there is a serious question to be tried, or in other words, that it has an arguable case.

31 Mr Marantelli took me through the various documents and, in particular, the minutes of the meetings of July and October 2003. However, there are matters deposed to in the affidavit of Mr Roberts that are refuted in the affidavit of Ms Barnett. Ultimately, there are critical events that would be necessarily the subject of viva voce evidence at trial and necessarily cross-examination. Of itself, the affidavit of Mr Roberts is not entirely satisfactory. It is very limited in terms of specificity with respect to the representations that are alleged. Be that as it may, I am satisfied on the material before me that there is at least an arguable case and that there is a serious question to be tried with respect to the claim lying in misleading and deceptive conduct and equitable estoppel. But, of course, there remains the question of the balance of convenience.

32 It was conceded in the course of argument by Mr Marantelli that the primary functional purpose of the defendant company has been completed with the sale of the property. It was further acknowledged and conceded for the plaintiff that the company was no doubt a single purpose company. There was no resistance or suggestion that the proceeds of the sale would not be distributed and dissipated absent an order of this Court. Rather than approaching the matter that way, the case of the defendant was put on the basis that there was no serious question to be tried and that, accordingly, the issue of the dissipation of the assets, in effect, did not arise.

33 In the course of submissions, Mr Robins referred to the judgment in Harrison & Partners Construction Pty Ltd v. Jevena Pty Ltd.[5] Mr Robins relied upon the judgment in Harrison to support an argument that, in this case, the focus should be on the result of the defendant's activity and not the intent which might accompany its dissipation of the proceeds of sale. Quite properly, Mr Robins did not suggest that there was any conduct of an improper or fraudulent nature on the part of the defendant. Rather it was said that unless ordered not to do so, it was apparent that the defendant would proceed to dispose of the proceeds of sale.

34 There was the question of the relief ultimately sought at trial by the plaintiff. The amount of money sought to be frozen by virtue of the Mareva order is at least $400,000 to be retained in a bank account. In his affidavit, Mr Roberts deposed that the loss and damage of the plaintiff was in the order of $600,000 to $700,000. He exhibited to his affidavit a document setting out the costs described as being associated with "Bayley Walk (Malvern Project)".

35 Mr Marantelli drew my attention to the fact that the sum listed in the document, whilst totalling the amount of $4,257,132, was principally made up of sums incurred prior to 2004. He took me through the document and demonstrated that most of the amounts were in the order of $4,000 or less and ultimately amounted to approximately $20,000. In particular, Mr Marantelli drew my attention to an item described as "bill interest" in the amount of $511,413. Mr Marantelli was critical of the plaintiff's case that, in terms of the damage that was suffered allegedly by the plaintiff, it was unsatisfactorily particularised or quantified for the purposes of this application.

36 I turn then to my conclusions in this matter. For the reasons I have stated, there is a serious question to be tried as to the matter of the representations alleged by Mr Roberts in his affidavit. That being so, there is then the question of the balance of convenience.

37 For the defendant, it can be plainly stated that it has conducted itself so that it has responded to enquiries and correspondence from the plaintiff, including the letter of Coadys of December 2004. The response has not been acted upon by Mr Roberts on behalf of Bayley Walk, or indeed by Bayley Walk itself.

38 It might also be said against the plaintiff that it has failed to avail itself of the opportunity to put the defendant on notice at an earlier time as to the position with respect to the sale and its call upon the proceeds of sale.

39 In light of the observations of the Court of Appeal in Bradto, there is the question in the exercise of the discretion as to the course which appears to carry the lower risk of injustice, should it eventuate that the interlocutory decision not be conciliatory with the final determination of the matter at trial. It is not apparent to me that there is injustice that will lie so far as the plaintiff is concerned. Insofar as there may potentially be dissipation, that is a matter about which the plaintiff could and ought have resolved by way of taking action at an earlier period in time. That leads me to the matter of delay.

40 In the course of submissions, Mr Robins relied quite forcefully on the principle, well known at law, that delay of itself is not sufficient.[6] Necessarily it needs to be demonstrated that there will be prejudice to the other party even where there has been delay. In the circumstances of this matter, I am satisfied, on the face of the material before me, that there would prejudice to the defendant if the injunction was granted, by virtue of the fact that it acted to sell its property, at least since the beginning of 2006, when the plaintiff could have taken action if it had wished to do so. Any prejudice the plaintiff might suffer if an injunction is not granted is of its own making. Its delay is critical.

41 Weighing all matters up, it seems to me that the balance of convenience, in any event, lies with the defendant and that the plaintiff fails to make out its case on this point.

42 Accordingly, I consider that the injunction should not be granted as sought by the plaintiff and, insofar as necessary, I would dissolve any orders made previously.

[1] [1954] HCA 72; (1954) 91 CLR 353.

[2] (1999) 198 CLR 380.

[3] [2003] VSC 299.

[4] [2006] VSCA 89.

[5] [2005] NSWSC 1225; (2006) 225 ALR 369 at 377.

[6] I.C.F. Spry, The Principles of Equitable Remedies: Specific Performance, Injunctions, Rectification and Equitable Damages (first published 1971, 4th ed, 1990) 478-83.