Plaintiff v Defendants

2 Having issued the writ, Hera Project filed a summons for interlocutory relief. It is that summons that is currently before the Court. By that summons Hera Project applies for two types of relief:

(a) an interlocutory injunction to restrain the Bisognins from terminating the contract of sale; and

(b) specific performance, alternatively an interlocutory injunction, requiring the Bisognins to take the steps to execute the contract that are identified in the writ - in substance, those steps require compliance with the requirements of various public authorities to make payments and/or enter agreements in order to enable the registration of the plan of subdivision which will effect the sub-division of the land which has been sold.

3 As the judge sitting in the Practice Court, on 30 August 2016 I made an interim order, without opposition from the Bisognins, restraining them from terminating the contract of sale until further order of the Court. An undertaking as to damages was given by Hera Project in support of that interim injunction. Directions were then given to enable the Bisognins to file evidence in opposition to the application and fixing a date for its further hearing. On 13 September 2016, after the Bisognins had filed responsive affidavit material and Hera Project had filed further affidavit evidence, I heard submissions from the parties. The submissions were directed to two issues:

(a) first, whether the interim injunction granted on 30 August 2016 should be maintained and, if so, whether better security should be given by Hera Project in support of its undertaking as to damages; and

(b) secondly, to determine whether further interlocutory relief of a mandatory kind should be made to compel the Bisognins to take the steps which Hera Project contends they should take in execution of the contract.

4 It is important to emphasise that the relief I am presently concerned with is relief of an interlocutory nature pending the final hearing and determination of the proceeding. I have not heard the trial of the action. Consistently with the nature of the application, evidence was given by way of affidavit only. No deponent was cross examined so the evidence has not been fully tested.

5 In substance, what is sought are two interlocutory injunctions: one prohibitory and the other mandatory. In fact, the dispute has really narrowed down, in circumstances I will explain more fully below, to the question whether I should grant the mandatory injunction. The Bisognins do not resist the continuance of the prohibitory injunction for a certain period of time, although they press for security for the undertaking as to damages as the price of its continuance.

6 Although Hera Project has applied for an order for specific performance, in my view such an application at this stage is misconceived. That type of relief is generally only appropriate after the trial of the proceeding when a court can make findings of fact relevant for the determination of whether the relief should be granted.[1] In this case, those findings would at least involve questions,

(a) whether the Bisognins have failed to use best endeavours to do all acts and things necessary to give effect to the approval of the plan of subdivision and Urban Design Framework (as approved by the City of Casey);

(b) whether the Bisognins would be put to hardship because of the impossibility of them being able to fund the payments of moneys to authorities or by having to enter agreements with authorities without the assurance that Hera Project would be able to complete the contract; and

(c) whether Hera Project is in fact ready, willing and able to complete the contract and pay the balance of purchase price at settlement.

7 Being an application for interlocutory injunctions, the approach I must take is to first consider whether Hera Project has shown that there is a serious question to be tried as to its entitlement to relief on the claim it has made in its writ. Secondly, I should consider where the balance of convenience lies and whether damages would be an adequate remedy in place of an injunction. In deciding whether to grant either or both injunctions, I should consider whether the undertaking as to damages given by Hera Project, without any security, is adequate in all the circumstances.

(a) until further order of the Court, I will order the continuance of the present interlocutory injunction, on the undertaking as to damages given by Hera Project to the Court on 30 August 2016 and re-offered on 13 September 2016, without requiring any specific security for that undertaking; and

(b) I decline to grant any mandatory injunction, still less order specific performance of the contract.

9 The story behind this application is long and convoluted. In fact, this proceeding is one of many that have been filed by one or other of the parties over the difficult history of the sale of this parcel of land. I do not intend to tell that story at any length. It has recently been canvassed in comprehensive detail by Sloss J of this Court in her Honour's reasons for judgment in Bisognin v Hera Project Pty Ltd.[2]

10 In very brief compass the landmark facts and events are as follows. The Bisognins own a parcel of rural land of approximately 5 acres (18,276 square metres) known as 1 Adrian Street Cranbourne East. On 29 February 2012 they sold the southern portion of the land - about 3 acres (12,850 square metres) - to a company, Joslin Street SA Developments Pty Ltd, for $3.6 million. The portion of land that was sold was a lot on an unregistered plan of subdivision. To complete the sale, it was necessary for the plan of subdivision to be registered.

11 In mid-2013, Joslin nominated Hera Project to be the 'substitute purchaser'. Litigation was commenced by Hera Project in late 2013 to compel the Bisognins to perform various aspects of the contract. That litigation was settled in late 2014 with the parties agreeing to enter into a new contract of sale for the sale of the same portion of land to Hera Project. Again, the contract required the registration of the plan of subdivision before settlement could occur. A special condition in the contract (special condition 8) appeared to provide that if the plan of subdivision was not registered by 25 August 2015, either party could end the contract by notice in writing to the other. But, as will be seen, the meaning and effect of that provision became contentious.

12 In August 2015 the Bisognins commenced a proceeding in this Court to obtain answers to three questions which had become disputed. The first related to whether the deposit payable by Hera Project was due upon the certification of the plan of subdivision by the local council or only upon the registration of the plan of subdivision by the registrar of titles. On 24 August 2015 Cameron J held that it was the latter.[3]

13 The second and third questions were the subject of a five day trial before Sloss J in December 2015. Her Honour gave reasons for judgment[4] answering those questions on 4 March 2016. But, as events transpired, orders giving effect to those reasons were not made until 22 June 2016.

14 The second question concerned whether special condition 8 enabled either party to terminate the contract if the plan of subdivision was not registered by 25 August 2015; the third, whether the contract required the Bisognins to make payments of money to the public authorities to secure the registration of the plan of subdivision.

15 Sloss J held that if the plan of subdivision was not registered by 25 August 2015, special condition 8 allowed either party to end the contract by notice in writing to the other. But, for the reasons she explained in her judgment, her Honour extended to 31 August 2016 the date upon which either party could terminate the contract if the plan of subdivision was not registered.

16 In relation to the third question (the Bisognins' obligation to make payments to public authorities) her Honour answered as follows (italics added):

Answer: Yes. The plaintiffs [ie Bisognins], as vendors of a lot on an unregistered plan of subdivision, undertook by special condition 10 of the Contract to use their 'best endeavours to co-operate with the Purchaser, sign all documents, and do all acts and things necessary to give effect to the approval of the Plan of Subdivision and to give effect to the UDF ...'. The planning permit issued by the City of Casey dated 11 June 2015, to allow the two lot subdivision of the 1 Adrian Street land, required the vendor as 'owner of the land' to enter into agreements with the relevant authorities in respect of each of southern lot 2 and northern lot 1 (to be retained by them) for the provision of water supply, drainage, sewerage facilities, electricity and gas services, and telecommunication services (and fibre ready telecommunication facilities) in each case in accordance with the relevant authority's requirements and relevant legislation at the time, and also to ensure that the land is drained to the satisfaction of the Responsible Authority with outfall drainage constructed to provide a legal point of discharge to each allotment. To the extent that entry into any such agreements required the payment of moneys, by way of fees and other charges, and the provision of bond moneys, those were and remain obligations that are to be satisfied by the vendors.

17 Having given that answer, her Honour proceeded to give effect to it by making the following order:

1. During the period of extension of time, the plaintiffs are to use their 'best endeavours' to co-operate with the defendant and do all acts and things necessary to give effect to the approval of the plan of subdivision and give effect to the Urban Design Framework (as approved by the City of Casey) as required by special condition 10, including:

(a) satisfying the conditions of the planning permit issued on 11 June 2015 by entering into the agreements with the relevant referral authorities, the Responsible Authority and the relevant telecommunications service provider in a timely way in respect of both lots on the plan of subdivision;

(b) making arrangements with their mortgagee to produce the duplicate Certificate of Title at the Land Titles Office (at the cost of the defendant); and

(c) promptly paying any Growth Areas Infrastructure Contribution Payment,

with a view to assisting the defendant to obtain the statement of compliance and thereby procure the registration of the plan.

18 Since her Honour handed down her reasons for judgment on 4 March 2016 the parties have been back before her Honour on several further occasions. First, in June 2016 to debate the orders that were appropriate following her Honour's reasons. That hearing led to the making of the orders dated 22 June 2016. Again the parties appeared before her Honour in mid and late July 2016, upon Hera Project's application, debating whether the Bisognins were in breach of her Honour's orders. Hera Project asked her Honour for specific orders that the Bisognins make particular payments of moneys to the water and sewerage authorities to secure the registration of the plan of subdivision. Her Honour was not prepared to vary or add to the orders she had already made on 22 June 2016 (relevantly, as set out above).

19 As the new trigger date for the termination of the contract if the plan of subdivision was not registered drew nearer, Hera Project continued to press the Bisognins to make payments to the public authorities in order to obtain the statement of compliance necessary to secure the registration of the plan of subdivision. Those payments were not made nor were any other alternative means of satisfying the public authorities adopted. So, fearing that the Bisognins would give notice of the termination of contract on 25 August 2016, Hera Project commenced this proceeding and sought the relief I have described above.

20 The final procedural matter to mention is that the Bisognins have now sought to appeal Sloss J's judgment of 22 June 2016. Their application for leave to appeal was out of time at the date it was filed. However, since hearing the argument in this matter the Court has been informed that an extension of time in which to seek leave has been granted by the Court of Appeal and both the application for leave and the appeal itself will now be heard on 9 November 2016. By their appeal the Bisognins will seek to overturn the orders of Sloss J and, in their place, seek an order (or declaration) that Hera Project was in breach of the contract of sale by not registering the plan of subdivision by 31 August 2015. If such an order is obtained, the Bisognins say they will seek to rescind the contract of sale based upon that breach.[5]

21 I do not propose to describe and evaluate the extensive evidence that was put before me in order to convince me that the Bisognins are in breach of their obligations to use best endeavours to do all acts and things necessary to give effect to the approval of the plan of subdivision. It is enough to say that I am satisfied that there is a serious question to be tried on that issue. I would go further and say that as the evidence stands Hera Project would appear to have a strong case.

22 But the evidence is untested. The Bisognins maintain that they have defences to the action for specific performance. First, they rely upon a defence of hardship that would enable them to defeat the action for specific performance. They claim to need to obtain lender's finance to be able to pay the amounts required by the public authorities. But they now say they cannot to do so, despite earlier indicating that they could obtain the required finance including by informing Sloss J on 14 July 2016 that a bank guarantee had been arranged to meet the sums required.

23 The principles to be considered when asked to award specific performance as final relief after the trial of an action, and in particular in relation to the defence of hardship constituted by a purchaser's difficulty in raising finance to complete a contract of sale of land, were identified and discussed by Brereton J in Boyarsky v Taylor.[6] His Honour's conclusions have been approved and applied on a number of occasions since.[7] Brereton J demonstrated that the question of hardship (to the defendant resisting specific performance) involves a balancing exercise, having regard to the competing hardship of the applicant for the remedy.[8] Mere difficulty or inconvenience in finding the purchase money was unlikely, of itself, to sustain the defence of hardship.[9]

24 The same principles that apply in considering the defence of hardship for a purchaser have also been applied in relation to a vendor who claims incapacity to complete.[10]

25 On the evidence to date, it would seem likely that the Bisognins would need to show more to convince a court that they face more than mere difficulty or financial inconvenience in obtaining funds to pay the public authorities. The fact that they chose not to produce more evidence about that issue at the hearing of this application suggests they may have problems in that respect.

26 Further, the Bisognins have called into question the ability of Hera Project to perform its obligation to pay the deposit and the balance of purchase price if and when the plan of subdivision is obtained. Hera Project has a letter of offer of finance from a private lender for the sum of $3.85M, subject to a settlement date (now expired) and the execution of 'agreed loan documentation'. The Bisognins argue that the letter does not constitute a binding obligation on the part of that lender, and contends there is no means of being assured that the particular lender has the wherewithal to lend those monies. Without a loan there is no evidence that Hera Project could itself fund the completion.

27 Beyond what I have just said, it is neither appropriate or necessary that I go further into analysing the strengths and weaknesses of the parties' respective prospects of success on the action for specific performance.

28 The critical - and in my view determinative - issue in this particular matter is the question of the balance of convenience. In Bradto Pty Ltd v State of Victoria[11] the Court of Appeal expressed this consideration in this terms:

In our view, the flexibility and adaptability of the remedy of injunction as an instrument of justice will be best served by the adoption of the Hoffman approach. That is, whether the relief sought is prohibitory or mandatory, the court should take whichever course appears to carry the lower risk of injustice if it should turn out to have been 'wrong', in the sense of granting an injunction to a party who fails to establish his right at the trial, or in failing to grant an injunction to a party who succeeds at trial.

29 When this consideration is weighed, I am firmly of the opinion that the lower risk of injustice favours not making any mandatory order of the type sought. The specific orders sought by Hera Project are as follows:

1. Specific performance, alternatively an interim injunction, requiring the defendants to take the steps set out in paragraph 37 of the Statement of Claim, namely:

A. In relation to South East Water:

(a) forthwith pay or provide (as the case may be) the fees, other charges and bond moneys required by the South East Water Agreement, namely:

• payment of $3,711.98 for provision of potable water, sewer, connection fees and sewerage assets;
• provision of bond of $485,000 for securing connection costs; and
• provision of bond of $21,100 as a warranty bond;

(b) forthwith comply with all parts of the South East Water Agreement which are necessary for South East Water to consent to the issue of the "statement of compliance".

B. In relation to Melbourne Water:

(a) forthwith pay or provide (as the case may be) the fees, other charges and bond moneys required by the Melbourne Water Agreement, namely payment of $231,787 for drainage and storm water;

(b) forthwith either:

(i) comply with all parts of the Melbourne Water Agreement which are necessary for Melbourne Water to consent to the issue of the "statement of compliance"; or

(ii) undertake to Melbourne Water to enter into an agreement under section 173 of the P & E Act with Melbourne Water (and if required the City of Casey) to the effect that Melbourne Water's other (nonfinancial) conditions would be satisfied after the plan of subdivision is registered.

1. In relation to the City of Casey: comply with Permit Condition 7 of the Subdivision Planning Permit by ensuring that the land shown on the endorsed plans is drained to the satisfaction of the City of Casey with outfall drainage constructed to provide a legal point of discharge to each allotment.

1. In relation to the Growth Areas Infrastructure Contribution (GAIC):

(a) forthwith take all necessary steps to organise the ability to pay GAIC promptly upon issue of the "statement of compliance";

(b) after the issue of the aforesaid "statement of compliance", pay GAIC promptly and lodge with the Office of Titles a notice issued by the Commissioner of State Revenue under section 201SZG of the P&E Act.

1. In relation to the lodgement of the application for registration of the plan of subdivision, to procure a "Nomination Request Form" from ANZ (together with production of the Certificate of Title), or other appropriate written consent from ANZ to the registration of the plan of subdivision.

30 It is not disputed that the total amounts the Bisognins would have to pay to the authorities would be in the order of $750,000. To do so they would likely have to enter loan agreements with lenders. More significantly, were I to order that the Bisognins pay the moneys, and they obey that order, the plan of subdivision would likely be registered and the sale completed. There would be no impediment to the transfer of land taking place.

31 But, if I were wrong in making such an order - either because the Court of Appeal later upholds the Bisognins' appeal or because Hera Project would not have obtained an order for specific performance after a trial - there would be no means of getting the land back for the Bisognins. The land is said to be a very valuable piece of land. Its value has probably risen well beyond the sale price. Apparently Hera Project holds an agreement to lease with Woolworths to occupy the land. It therefore appears the land has probable long term commercial value.

32 Potentially, the Bisognins would be made to enter onerous agreements with public authorities, borrow a significant sum of money and then to pay that money out to other parties. Also, were I to make the orders sought by Hera Project, I would, in effect, be making orders that finally determine the controversy, yet without a trial. The Bisognins' appeal of Sloss J's orders would be rendered moot. That appeal is now only six weeks away.

33 The adverse consequences to the Bisognins if I were to make the orders that Hera Project seeks are very apparent.

34 But the same is not so true in relation to Hera Project. Certainly, it has spent money (said to be about $2 million), which it has had to borrow, to get to this point. It is paying interest on the loans. Further, it is concerned whether it will hold Woolworths to the agreement it has obtained and fears increased cost of construction of the project it has planned as time goes on. On that point I would observe that the overall delays in completing the sale of this piece of land since 2012 have had many and varied causes. My reading of the history as set out by Sloss J suggests that Hera Project has not been entirely free of responsibility for some periods of that delay, particularly in the earlier phase. In the scheme of things, the prospect of a further delay until the resolution of the appeal is not a compelling factor.

35 If I am wrong in not ordering a mandatory injunction and Hera Project ultimately defeats the Bisognins' appeal, and the prohibitory injunction remains in place, Hera Project is still left with the ability to press its claim for specific performance at trial. It retains the prospect of having the land transferred to it. Yes, it will probably incur more expense. But the adverse consequence to it does not have the same irreversible quality as the adverse consequence to the Bisognins if I am wrong. Plus, Hera Project has a reasonable chance of recovery against the Bisognins for any damages it suffers if it establishes that the Bisognins breached the contract.

36 In all the circumstances I decline to order any mandatory injunction as sought by Hera Project.

37 As to the prohibitory injunction, as I have stated, subject to the adequacy of the undertaking as to damages, there is no dispute that it should remain in place at least until the hearing of the appeal.

38 Hera Project gave an undertaking as to damages in the usual form in support of the interim injunction that was ordered on 13 September 2016. It has proffered the same undertaking for the continuance of the injunction to which I have just referred. Hera Project did not dispute that it is a company with only a nominal amount of paid up capital and no evidence of assets other than its interest in the land the subject of this dispute. If it ultimately fails in its action, in all likelihood that asset will be worthless. No other security or guarantee of the company's ability to meet the undertaking has been proffered.

39 In those circumstances, the Bisognins rely upon authorities that emphasise the usual requirement that an interlocutory injunction be accompanied by an undertaking from the applicant which will enable the court to award damages should the applicant's case prove to be without merit.[12] Here, that undertaking is in fact offered. But it is the 'sufficiency' of that undertaking that is in question. I take the law to be that the question whether the undertaking as to damages is likely to be sufficient to enable the enjoined party enforce an award of damages if such an award is later granted, is to be considered as part of the totality of factors when determining the balance of convenience.[13] It is not a step that is considered separately from or before weighing that balance. It follows that it is not an inflexible requirement for the grant of an interlocutory injunction.

40 Notwithstanding that Hera Project failed to produce evidence that it could satisfy its undertaking, it is my view that the prohibitory injunction should nevertheless be continued. The Bisognins should not be permitted the opportunity to terminate the contract while Hera Project holds the benefit of Sloss J's order, and while the possibility remains - and I have already commented on the apparent strength of that possibility - that the Bisognins' opportunity has only been achieved due to their own breach of it. As things currently stand, the Bisognins appear to have failed to perform the contract. Apart from an as yet untested contention that Sloss J was in error in her findings, the Bisognins' principal contention for resisting specific performance rests upon establishing hardship in being required to borrow funds to make the required payments. As I have already observed, the hurdle to establish that defence is quite high.

41 It is relevant that I have declined to order a mandatory injunction in part because I think that Hera Project's interests will be appropriately protected, all things being considered, if it is protected from the possibility that the contract of sale will not be terminated without the Court of Appeal dealing with the Bisognin's appeal. If the contract could be terminated in the meantime, it would be unfair to Hera Project who hold the benefit of Sloss J's decision in its favour.

42 In my judgment, taking all matters into account, the justice of the case favours the maintenance of the status quo upon Hera Project's undertaking as to damages in the form it has been proffered.

[1] See for example, Castlecity Pty Ltd v Newvintage Nominees Pty Ltd & Ors [2000] WASC 111 [25]-[28] (Scott J).

[2] [2016] VSC 75.

[3] Bisognin v Hera Project Pty Ltd [2015] VSC 647.

[4] Bisognin v Hera Project Pty Ltd [2016] VSC 75.

[5] Affidavit of Gino Bisognin sworn 7 September 2016, [5].

[6] [2008] NSWSC 1415 ('Boyarsky').

[7] Rasyid v Conrad [2010] NSWSC 134; Lindaning Pty Ltd (Receivers and Managers Appointed) v Dean Goodlock and Michael Gore as trustees of the Gorelock Unit Trust & Ors [2011] QSC 266; Evans & Anor v Robcorp Pty Ltd & Anor [2015] 2 Qd R 111; Wyong v Van Vlymen [2016] NSWSC 161.

[8] Boyarsky [2008] NSWSC 1415 [31].

[9] Boyarsky [2008] NSWSC 1415 [35], citing Pasedina (Holdings) Pty Ltd v Khouri (1977) 1 BPR 9460 (Holland J).

[10] Rasyid v Conrad [2010] NSWSC 134.

[11] [2006] VSCA 89; (2006) 15 VR 65.

[12] For example, Air Express Ltd v Ansett Transport Industries (Operations) Pty Ltd [1981] HCA 75; (1981) 146 CLR 249.

[13] Active Leisure (Sports) Pty Ltd v Sportsman's Australia Limited [1991] 1 Qd R 301.