Sea Acres Rainforest Centre Pty Ltd & Ors. v The State of New South Wales

Robyn Narelle Kennett Fourth Applicant

Manne Serene Ivory Fifth Applicant

RESPONDENT The State of New South Wales FILE NUMBER: IRC 4056 of 2001 CORAM: Haylen J Unfair Contract - Notice of motion seeking interlocutory relief - Jurisdiction of Industrial Relations Commission in Court Session - Principles - scope of power available to protect jurisdiction conferred on Commission in Court Session - Concept of damages as an adequate remedy - Application granted - Industrial Relations Act 1996 (NSW), s 106 CATCHWORDS : Practice and Procedure - Unfair Contract - Notice of Motion seeking interlocutory relief - Jurisdiction of Industrial Relations Commission in Court Session - Scope of power available to protect jurisdiction conferred on Commission in Court Session - Principles - interests of third parties considered - usual undertaking as to damages not sought - absence of usual undertaking as to damages no bar to interlocutory relief - serious issue to try - when status and orders appropriate - Application granted - Industrial Relations Act 1996 (NSW) s 106 LEGISLATION CITED : Industrial Relations Act 1996 (NSW) s 106 Federal Court Act s 23 A v Hayden (1984) 59 ALJR 1 at 5 Allen v Gambo Holdings Ltd [1980] 1 WLR 1252] American Cynanamid Co v Ethicon Ltd [1975] AC 936 at 408 Bowker & anor v Prophecy Technologies Pty Ltd (unreported, NSWIRComm, 26 May 1999) Cameron v Unilever Australia Ltd (unreported, Cahill V-P, 3 June 1997 Cardile v LED Buiildings Pty Ltd (1999) 198 CLR 380 Cayne v Global Natural Resources pl [1984] All ER 225 at 237h per May J City of Melbourne v Hamas & Co. Ltd (1987) 62 LGRA 250 Cocker v Tempest (1841) 7 MW.502 Connelly v Director of Public Prosecutions 1964 AC 1254 at 1301 CSR Limited v Sigma Insurance Australia Ltd (1996 - 1997) 189 CLR 345 Cukeric v David Jones (1996) 70 IR 26 Darvall v NZ Securities Ltd (1990) 21 NSWLR 36 David Jones v Cukeric (1997) 78 IR 430 Economy Shipping Pty Ltd v ADC Building Pty Ltd [1969] 2 NSWR 97 Elliott v Royal Motor Yacht Club of New South Wales, Newcastle Branch (1988) 42 IR 35 Eltran Pty Ltd v Westpac Banking Corporation (1988) 32 FCR 195 at 202 Evans Marshall & Co. Ltd v Bertola SA [1973] 1 All ER 1992 Ferris v Lambton (1905) 22 WN (NSW) 56 at 57 Francom v Mirror Group Newspapers Ltd [1984] 1 WLR 892 CASES CITED : Gibson v Western Sydney Area Health Service (2000) NSWIRComm 13, Peterson J) Jackson v Sterling Industries Ltd (1987) 162 CLR 612 John Fairfax & Sons Ltd v Police Tribnal of New South Wales (1986) 5 NSWLR 465 at 476 Kenoss Contractors Pty Ltd v Allied Constructions Pty Ltd (2001) 104 IR 66 Kerridge v Foley 70 SR (NSW) 251, 1 NSWR 628 Logwon Pty Ltd v Warringah Shire Council (1993] 33 NSWLR 13 at 16 Maharaj v 7 Eleven Stores Pty Ltd (unreported, Peterson J, 4 April 1997) Maiden v New Zealand Natural Pty Ltd (unreported, Hungerford J, 20 June 1997) National Mutual Life Association of Australasia Ltd v GTV Corp Pty Ltd [1989] VR 747 at 764 Nicholas John Holdings Pty Ltd v Australian and New Zealand Banking Group Ltd [1992] 2 VR 715 at 730. O'Brien v Australasian temperance and General Mutual Life Assurance Society Ltd (1891) 24 SALR 12 Patrick Stevedores Operations No 2 Pt Ltd v Maritime Union of Australia (1898) 195 CLR 1 at 42 Polly Peck International plc v Nadir (No 2) [1992] 4 All ER 796 at 785 Project Development Co v KMK Securities Ltd [1982] 1 WLR 1470 at 1471C Sharpe v Rainey (1919) SR (NSW) 96 Shevlin & Anor v JLG Industries (Aust) Pty Ltd (1992) 43 IR 282 Starkey v Mitchforce Pty Limited (2000) 101 IR 177 State Transport Authority v Apex Quarries Ltd [1988] VR 187 TeleTech International Pty Limited v Medical Benefits Fund of Aust. Ltd (No 1) (unreported, NSWIRComm, 28 September 1998) Tringale v Stewardson Stubbs & Collett (1966) 66 SR (NSW) 335 Wheeler v Selbon Pty Ltd t/as Parklands Nursery (1984) 1 NSWLR 55 at 557 HEARING DATES: 08/23/2001 DATE OF JUDGMENT: 09/06/2001

APPLICANTS: Mr R. Reitano of counsel Solicitor: Dennis Vuaran Dibbs Barker Gosling & Co.

LEGAL REPRESENTATIVES: RESPONDENT: Mr S. Benson of counsel Solicitor: Ms Karin Harrison I V Knight Crown Solicitor

•     INDUSTRIAL RELATIONS COMMISSION OF NEW SOUTH WALES
      IN COURT SESSION
  

Matter No IRC 4056 of 2001 SEA ACRES RAINFOREST CENTRE PTY LTD & ORS v THE STATE OF NEW SOUTH WALES Application under s 106 of the Industrial Relations Act 1966 JUDGMENT

1 In this matter the applicants seek orders pursuant to s 106 of the Industrial Relations Act 1996 ("the Act") in relation to a Deed of Assignment dated 3 September 1993 and a lease agreement dated 13 September 1989.

2 For present purposes the relevant facts may be stated as follows. In 1989 the Minister for the Environment entered into a lease with Sea Acres Educational and Tourist Attraction Pty Limited in respect of the Sea Acres Rainforest Centre and Sea Acres Nature Reserve situated on the mid north coast of Port Macquarie. In December 1993 that lease was assigned under a Deed of Assignment to the first applicant with the knowledge and consent of the Minister for the Environment. 3 The second to fifth applicants inclusive are the directors of the first applicant and have jointly and severally guaranteed the financial obligations of the first applicant in respect of the operation of the Centre; they perform work at the Centre and are involved in its daily management. There are a number of people employed, mostly in part-time work, to service the Centre and those who visit it. 4 It is alleged in the Summons that the respondent had made variations and concessions by a reduction in rental payments to the first lessee but these variations and concessions were not transferable upon the assignment of the lease to the first applicant. It is alleged that the applicants were assured by representations made on behalf of the respondent that once the lease was taken over by the first applicant a full financial and commercial assessment would be made of the operation of the Centre in order to arrive at a fair and equitable lease between the parties and that this assessment would be commenced within three months of the assignment of the lease and prior to the time for taking up the option under the lease. The representations are said to include recognition on behalf of the respondent that the business was not sustainable under the terms of the existing lease which were based on unrealistic projections of the operation. The respondent denies that such representations were made. The second to fifth applicants inclusive state that they relied upon these representations in agreeing to operate the Centre and to guarantee the first applicant's obligations under the assigned lease. They understood from representations made by at least two officers of the Service that the terms for a new lease would facilitate a commercially viable operation under which the business would be restored. 5 The lease expired in September 1994 and pursuant to its terms a ten year option period was available to commence on 18 September 1994 and expire on 17 September 2004.

6 There appear to have been some negotiations between the parties resulting in a reduced rental after the first applicant had refused to pay rent for a period of time because of the unsatisfactory terms of the rental arrangement. In December 1994 steps were taken by the respondent to commence a review of the terms and conditions of the lease which included the engagement of an auditor to conduct an independent financial review of the business and also to engage an independent valuer to review the rental. 7 In February 1995 the first applicant provided the respondent with a list of issues to be addressed in the new lease but in June of that year the respondent declined to review those matters. In April 1996 the respondent selected a Sydney valuer to perform a rental evaluation despite the first applicant's concerns as to the appropriateness of the person selected. By February 1997 a valuation report had been prepared but it was called into question by the first applicant and its concerns were discussed in a meeting held in March 1997 and repeated in a letter to the respondent of April 1997. In November 1997 the respondent informed the first applicant that the valuer did not wish to depart from his valuation report in spite of the matters raised by the first applicant. Based on this evaluation the respondent then offered the first applicant terms for a new lease. It appears that over a number of months those terms were discussed from time to time by the parties following the first applicant's indication that the offered terms were unacceptable. There was a period during this time when the first applicant withheld lease payments but those payments were ultimately made when the respondent threatened to commence action to cease the first applicant's occupancy and operation of the premises and declined to further participate in lease negotiations. During 1998 there were further discussions and the first applicant formed the view that certain agreements had been reached in relation to the new lease. By January 1999, however, a further offer from the respondent rejected the matters that the first applicant believed had been agreed in the previous year and proposed terms for the new lease which remained unacceptable to the first applicant. In late October 1999 the respondent delivered a lease for execution by the first applicant which contained terms indicated in earlier correspondence and which were unacceptable to the first applicant. 8 From correspondence tendered by the applicant it appears that the respondent has conducted its negotiations for a new lease on the basis that the term of the lease would be ten years operating from 1994 and would be backdated. That correspondence also indicates that the respondent was of the view that all parties were aware that when the terms were finally settled the new lease may require the applicants to pay an increase in rent retrospectively. This view may, in some way, explain why the respondent was content to allow the first applicant to continue operating the Centre for such a long period without entering into some formal and finalised lease arrangement. 9 In August 2000 solicitors for the applicants wrote to the Director-General of the New South Wales National Parks and Wildlife Service proposing a formal mediation in order to overcome the difficulties being experienced by the parties but also informing the Service that advice had been tendered to the applicants that they had numerous potential causes of action against the Service including actions in equity and under the Contracts Review Act. On 18 November 2000 the Service replied stating that it did not believe that mediation was likely to be productive. A further offer of a lease was then made whereby the lease payments for the first five years would be at a compromised rate but would be increased for the last five years of the lease. The letter concluded by stating that if the offer was not acceptable the Service would consider its legal options in exercising its rights under the lease in order to conclude the matter. On 10 November 2000 the applicants' solicitors wrote to the Minister for the Environment setting out the history of the difficulties concerning the lease for the Centre and seeking the Minister's assistance in resolving the matter. The letter noted that unless certain commercial aspects were taken into account in negotiating the new lease then the applicants would have no choice but to commence legal proceedings. On the same date solicitors acting for the applicants wrote to the Director-General of the Service complaining that the Service had ceased negotiations and were insisting upon terms which were not economically viable or acceptable to the applicants. The letter stated that unless appropriate arrangements were made the applicants would have no choice but to commence legal proceedings whilst noting that the Service itself had threatened legal action if its proposed lease was not accepted by the applicants. 10 On 19 December 2000 the applicant's solicitors again wrote to the Director-General of the Service pointing out that they had received no response to their correspondence of 10 November and announcing that after careful consideration their clients proposed to commence proceedings under s 106 of the Industrial Relations Act, 1996. On 8 January 2001 the acting Director-General of the Service replied to the November and December 2000 correspondence from the applicants' solicitors. After stating the view of the Service on several aspects raised in the correspondence concerning the negotiations the Director-General said that the lease was not open to further negotiation and that the Service was not prepared to allow the occupancy of the Centre to continue without a formal lease. In view of the failure to accept that lease, proceedings would be commenced to secure vacant possession of the premises. 11 On 14 June 2001 the Minister wrote to the applicants noting that at the expiration of the previous lease in September 1994 they had not elected to exercise the option for renewal contained in that lease but had entered negotiations for a new lease. (This view appears to be in conflict with the approach of the Service and its offers of lease terms operating from 1994 for a period of ten years). Because it was clear to the Service that no agreement was able to be reached on a new lease, possession of the land and premises was required and for that purpose a Notice to Quit was served on the applicants with the same correspondence. These proceedings were then commenced by the applicants when a Summons for Relief under s 106 of the Act was filed on 18 June 2001 supported by affidavits sworn on 7 and 13 June 2001. 12 By Notice of Motion filed on 10 July 2001 the applicants sought, inter alia, an order pending the final determination of the proceedings or until further order, that the respondent be restrained from terminating the lease and seizing possession of the premises "currently leased to and occupied by the applicant".

At the hearing of the motion that interlocutory order was opposed by the respondent. SUBMISSIONS 13 In the Summons for Relief under s 106 of the Act the applicants have sought a variety of orders. Orders have been sought declaring void in whole or in part the 1993 deed of assignment and the 1999 lease agreement; orders declaring void in whole or in part the collateral contract or arrangement entered into in about March 1998 where provisional rent was paid on the basis of 6.5 per cent of gross turnover; an order varying in part the contract so as to incorporate new terms set out in a schedule and by deleting from the contract any terms inconsistent with the schedule; a declaration that the applicants are not required to pay the respondent accrued rent at a rate of 6.5 per cent of gross turnover for the first five years of the lease and at the rate of 9 per cent for the next five years of the lease; and an order that the respondent pay an unspecified sum of money in relation to the contract and arrangements as varied by the Court. 14 It is particularly difficult at this early stage of the proceedings to say precisely what is the primary relief available to the applicants. In another context this problem was alluded to by the Full Court of the previous Industrial Court in Nagle v Tilburg and anor (1993) 51 IR 8, especially at 13. Nevertheless, counsel for the applicants argue that the primary relief sought is the variation of the leases and collateral arrangements and emphasise both the difficulty of making an appropriate order for the payment of money and the appropriateness and adequacy of such a remedy. Not surprisingly, counsel for the respondent submits that the primary remedy and the appropriate remedy is for the payment of money. 15 The applicants argue that after seven years of negotiating the terms of a new lease the respondent was moved by mere tactical considerations to initiate the Notice to Quit after the legal representatives for the applicants indicated that their clients had several causes of action, including a cause of action under s 106 of the Act. Until this point, so the applicants argue, the respondent was content to permit the applicants to continue operating the Centre without a formal and concluded lease. The concessions on the lease terms agreed to by the respondent are said to be a recognition that the original lease terms could not be met and a viable business could not operate under them. The applicants also point to the absence of any suggestion of harm done to the respondent during the long period of negotiations over the terms of the new lease and the fact that the respondent has attempted to secure the new lease as if it was the exercise of the option under the previous lease resulting in terms running for a period of ten years from 1994. This approach is also said to absolve the Service from submitting the new lease to a process of open public tender. 16 The applicants submit that their case is not about money although an order for money is sought in the alternative: the principal relief sought is to keep the arrangement on foot in a varied form. Thus the position is similar to the approach adopted by the Court in Starkey v Mitchforce Pty. Limited (2000) 101 IR 177. In that case Hungerford J made final orders varying a tavern lease that was found to be unfair resulting in the applicant enjoying a lease extended by ten years. In that case the applicant was facing ejectment from the tavern. 17 The applicants also rely on evidence that the Centre employs seven persons to assist in the running of the Centre in addition to the second, third, fourth and fifth applicants. The seven employees are essentially part-time but for two of them this work is their sole source of income. The applicants rely upon the judgment of Maidment J in TeleTech International Pty. Limited v Medical Benefits Fund of Aust. Ltd (No.1) (unreported, NSW IRComm, 28 September 1998) submitting that the interests of these third parties are a relevant factor to be taken into account in deciding whether or not an interlocutory order should be made in the terms sought.

18 Although the written submissions for the applicants on the Notice of Motion seemed to suggest otherwise, at the hearing it was made clear that the applicants do not argue that there is some broad and general power to be implied or inherent to the Court as a superior court of record to enable it to grant an injunction on a basis similar to the Equity Division of the Supreme Court. In the oral submissions it was confirmed that the applicants seek no more than the protection of the court's jurisdiction to grant any relief available under s 106 of the Act on the application of principles primarily set out in Darvall v NZ Securities Ltd. (1990) 21 NSWLR 36 and in Kenoss Contractors Pty. Ltd v Allied Constructions Pty Ltd (2001) 104 IR 66. 19 The applicants also emphasise the inadequacy of financial compensation for what they describe as "the irreparable damage to their business and personal financial situation and future prospects and for financial loss that will, to a significant extent, be virtually impossible to measure …" (par 10 of the applicants' outline of submissions). They say that the Court would be involved in the always difficult task of seeking to assess appropriate compensation on a "loss of opportunity/future economic loss" basis involving, inter alia, a consideration as to how long the relationship would or might have survived if the contracts had contained the grievance handling and dispute resolution mechanisms now sought by the applicants. In relation to difficulties associated with quantification, the applicants cited Cukeric v David Jones (1996) 70 IR 26 and David Jones v Cukeric (1997) 78 IR 430 and the judgment in Bowker and anor v Prophency Technologies Pty Ltd (unreported, NSWIRComm, 26 May 1999). This submission was supported by the affidavit evidence of the third applicant, Mr David Kennett. 20 The respondent points out that the orders sought by the applicant presume the existence of a current and effective lease. Counsel for the respondent nevertheless accepts that an order restraining the Service from further proceeding with the Notice to Quit would be an effective order if the legal requirements for such an order are satisfied. In its written submission the respondent argues that the power to grant interlocutory or interim relief in proceedings initiated under s 106 is circumscribed, relying on the judgment of the Wright J, President in Kenoss. It also submits that there is a broad factual similarity between the present case and other decided cases in the Court namely Gibson v Western Sydney Area Health Service ((2000) NSW IRComm 13, Peterson J), Maharaj v 7 Eleven Stores Pty. Ltd (unreported, Peterson J, 4 April 1997), Cameron v Unilever Australia Ltd (unreported, Cahill V-P, 3 June 1997) and Maiden v New Zealand Natural Pty Ltd unreported, Hungerford J, 20 June 1997). 21 In its oral submissions the respondent asserts that after the issuing of the Notice to Quit the applicants were in unlawful possession of the premises. It says that at the centre of the applicants' case is the alleged representations made on behalf of the respondent which would be denied. For the purposes of the Notice of Motion the respondent filed an affidavit indicating that there had been an investigation of the alleged representations but those representations would be denied. The respondent accepts that at least one person identified as being responsible for the alleged representations on behalf of the respondent had not submitted an affidavit for the purposes of the hearing of the Notice of Motion. No detail was provided in the affidavit apart from an assertion based upon unsourced information and belief that the representations would be denied. 22 In particular, the respondent relies upon the judgment of the President in Kenoss and notes that under the authorities cited in that case there is no automatic right in s 106 proceedings for a party to have a particular state of affairs maintained as some sort of status quo. Section 106 does not create any relevant right such as would attract the application of principles applicable in the exercise of the equitable jurisdiction of the Supreme Court. On the respondent's approach the primary relief sought is monetary compensation and in such circumstances there is no justification for any interlocutory relief restraining the respondent from giving effect to its Notice to Quit. 23 In relation to the applicants' reliance on the judgment of Maidment J in TeleTech the respondent submits that the case was wrongly decided especially in respect of the consideration to be given to the interests of third parties. In this particular case, however, the respondent gives an undertaking that it will continue the employment of the seven part-time employees at the Centre on a temporary basis, being for no less than four months during which period the operational needs of the Centre will be reviewed. There was a possibility of ongoing employment for some or all of those employees after the review. The respondent suggests that this undertaking effectively eliminates as a consideration the interests of third parties as dealt with in TeleTech. In clarification of this submission it said that none of the employees would find themselves unemployed without notice; there will be no change for four months and at the end of the review the employees would know whether they would be maintained or not. 24 Counsel for the respondent accepts as a fair description of the situation that over the past seven years, there had been ongoing negotiation but despite the best efforts of all concerned they had not been able to reach agreement on the terms of a new lease. 25 The applicants take issue with the respondent's description that they are in unlawful possession of the property. What is relevant for the purposes of considering whether there is an arguable case is how the respondent had acquired its lawful rights and whether it should be the beneficiary of its own wrong doing or its own unfairness in respect of the applicants; the Court needs to go behind the respondent's assertion of its legal rights and ask how it acquired those rights and if they had been acquired unfairly or unconscionably. That is the relevant consideration. WHAT IS THE EXTENT OF THE IMPLIED POWER OF THE COURT TO MAKE AN ORDER IN THE NATURE OF AN INTERLOCUTARY INJUCTION? 26 In Kenoss the President, Wright J, drew together the various judgments of this Court and its predecessors concerning the jurisdiction and the limits upon the granting of interlocutory injunctions in unfair contract cases. 27 Before embarking upon a consideration of that judgment it is helpful to consider what was said by the members of the High Court in Jackson v Sterling Industries Ltd (1987) 162 CLR 612. In that case the Federal Court had ordered the respondent to pay money into Court as security for the satisfaction of any judgment that may be entered against the respondent in an application made under the Trade Practices Act. The Federal Court Act contained s 23 which permitted the Court to make orders of such kind, including interlocutory orders, and to issue, or direct the issue of writs of such kind, as the Court thought appropriate. The various judgments deal with differences between superior courts of unlimited jurisdiction and superior courts of limited jurisdiction conferred by statute. The Federal Court of Australia is a statutory court of limited jurisdiction as is the Industrial Relations Commission of New South Wales in Court Session. The judgments accepted that in relation to statutory courts it was more appropriate to speak of "implied" powers to grant orders to protect the jurisdiction exercised by that Court rather than to refer to such powers as being "inherent". The debate was also informed by the growth of the Mareva injunction and the controversy about its jurisdictional basis. 28 In their joint judgment, Wilson and Dawson JJ, speaking of the rationale for the extension of the Mareva injunction, stated that it was to be found in the notion that the purpose of the Mareva injunction was to prevent the abuse of the process of the Court by the frustration of its remedies. The joint judgment went on to note that, if the power of a Court to grant injunctions of the Mareva type and associated relief were to be found in its capacity to prevent the abuse of its process, then it was as much to be found in its inherent power as in any statutory power to grant such relief as is "just or convenient" or "appropriate". In their Honours' view the declaration of the Federal Court as a superior court was to be given effect as far as it could be and the implied power carried with it all that was necessary for the proper functioning of that Court, although it did not extend its jurisdiction beyond that which was vested in it (at 619). 29 Deane J noted that initially it was thought that the power of the English High Court of Justice to grant a Mareva injunction was based on a statutory provision similar to s 23 of the Federal Court Act. His Honour went on to state: That general power should, however, now be accepted as an established part of the armoury of a court of law and equity to prevent the abuse or frustration of its process in relation to matters coming within its jurisdiction. That being so, the power to grant such relief in relation to a matter in which the Federal Court has jurisdiction is comprehended by the express grant to that Court by Section 23 of the Federal Court of Australia Act, in relation to such matters, 'to make orders of such kinds, including interlocutory orders and to issue, or direct the issue of, writs of such kinds, as the Court thinks appropriate'. Indeed, even in the absence of the provisions of Section 23, the Federal Court would have possessed power to make such orders in relation to the matters properly before it, as an incident of the general grant to it as a superior court of law and equity of the jurisdiction to deal with such matters. In that regard, I agree with the following comments of Bowen CJ in his judgment of the present matter: In relation to a statutory court such as the Federal Court it is wise to avoid the use of the words "inherent jurisdiction". Nevertheless a statutory court which is expressly given certain jurisdiction and powers must exercise that jurisdiction and those powers. In doing so it must be taken to be given by implication whatever jurisdictional power may be necessary for the exercise of those expressly conferred. The implied power for example to prevent abuse of its process is similar to, if not identical with, inherent power. However, the present problem relates not so much to the existence in the Federal Court of a general incidental power to grant injunctive relief to prevent a defendant disposing of specific assets so as to render nugatory a judgment obtained against him in proceedings within the jurisdiction of the Federal Court. It relates rather to the extent of that general power, and in particular, to whether the actual order which the Federal Court has purported to make in the present case come within it (at 623 - 624). 30 In separate judgments both Toohey J and Gaudron J spoke of the developing circumstances in which the Mareva injunction had been granted and extended. Toohey J noted that the factual situation arising in a given case may not previously have been considered by the courts but notions such as the Mareva injunction were inevitably developed in response to particular circumstances and as their "doctrinal basis" received further definition (at 663). Although their Honours were in dissent on the availability of the particular order made by the Federal Court there under consideration, their comments as to the evolutionary development of the Mareva injunction do not seem to have been questioned by other members of the Court. 31 In dealing with the nature and purpose of the inherent power of a Court, Gaudron J noted that this was explained in Cocker v Tempest (1841) 7 MW.502 Gaudron J at pp 503 - 504 by Alderson B in the following terms: The power of each Court over its own process is unlimited; it is a power incident to all Courts, inferior as well as superior; were it not so, the Court would be obliged to sit still and see its own process abused for the purpose of injustice … The power must be used equitably; but if it be made out that the process of the Court is used against good faith, the Court ought to interfere to prevent it, for the purpose of administering justice.

Her Honour then noted that in Connelly v Director of Public Prosecutions 1964 AC 1254 at 1301, Lord Morris stated that one purpose of inherent power was to "defeat any attempted thwarting of [the Court's] process" (at 638). In the same case Lord Morris said: There can be no doubt that a Court which is endowed with a particular jurisdiction has powers which are necessary to enable it to act effectively within such jurisdiction (at 1301) . This, her Honour noted, was a power that has not traditionally been restricted to defined or closed categories but may be exercised where the administration of justice demands it (at 639, citing Tringali v Stewardson Stubbs & Collett Ltd (1966) 66SR (NSW) 335; Cocker v Tempest; Ferris v Lambton (1905) 22 WN (NSW) 56 at 57). 32 In Kenoss the interlocutory relief sought was to prevent the respondent from calling upon a bank guarantee given by the applicants. The works, which were the subject of the contract and the application under s 106, had been completed prior to the proceedings being commenced. A significant matter in the interlocutory application was the respondent's claim that, in fact, the applicant was indebted to it and had indicated its intention to call on the bank guarantee provided by the applicant. In arguing for interlocutory relief the applicant relied upon the fact that it had only a certain amount of money available in an overdraft account to satisfy the guarantee which was less than the sum of the guarantee and that if the guarantee was exercised the applicant would be technically insolvent. This argument was not found to be persuasive in light of the evidence. 33 In para 37 of the judgment the recent authorities on the power of the Court to grant interlocutory or interim relief in proceedings under s 106 of the Act are set out. In the following paragraphs the President, Wright J, deals with the relevant principles arising from Gibson v Western Sydney Area Health Service. In the course of the judgment in Gibson reference is made to the judgment of Hungerford J in Darvall v NZ Securities Limited (1990) 39 IR 215. In Darvall Hungerford J noted the absence of any explicit grant of power to make interlocutory orders leaving the only basis for such orders in relation to proceedings under s 88F dependent upon whether the making of the order was necessary to prevent the frustration of the Commission's due process. His Honour went on to state: However, as earlier stated, the Commission is empowered by reason of its constitution as a superior court of record, to make interlocutory orders in the protection of its process and so as to ensure that any final orders made may not be frustrated or put at nought. 34 Reference was then made to a further unreported decision of Peterson J in Maharaj v Seven Eleven Stores Pty. Limited where his Honour said that the power, as in a Mareva injunction matter, is to take such steps as are necessary to ensure the Court is not denuded of the capacity to make an effective order. In that case a remedy of compensation was clearly available if the applicant succeeded on the merits and thus the Court's final orders would not be "frustrated or put at nought". The approach in Maharaj was followed by Cahill V-P in Cameron v Unilever Australia Ltd. 35 Next, reference was made to the judgment of Hungerford J in Maiden v New Zealand Natural Pty. Ltd where his Honour set out the reasons why there was no basis for the application of general equitable principles for the granting of injunctions in relation to proceedings under s 88F and s 106. His Honour distinguished the Mareva injunction type cases where an interim injunction may be made as an order designed to prevent an apprehended action on the part of the respondents, which, if not prevented, would or may frustrate the due process of the Court by denying a successful litigant the right to receive the amount of orders which the Court considers just and reasonable in all the circumstances of the case. In so approaching the matter his Honour was adopting what had been said earlier in Wheeler v Selbon Pty Ltd t/as Parklands Nursery (1984) 1 NSWLR 55 at 557. 36 In Kenoss the President recorded the applicant's reliance on two particular cases: the judgment of Maidment J in TeleTech International Pty Ltd v Medical Benefits Fund of Australia Limited (No.1) (unreported, NSWIR Comm 28 September 1998) and TeleTech International Pty Ltd v Medical Benefits Fund of Australia Limited (No 2) [1998] NSWIRComm. 534 and the judgment of Watson J in Elliott v Royal Motor Yacht Club of New South Wales, Newcastle Branch (1988) 42 IR 35. The respondent argued in Kenoss that the judgment of Maidment J in TeleTech was wrong and travelled beyond proper bounds for the granting of interlocutory relief in unfair contract cases and was inconsistent with the principles referred to in Gibson v Western Sydney Area Health Service. 37 In TeleTech Maidment J referred to the joint judgment of Brennan CJ, McHugh, Gummow and Haines JJ in Patrick Stevedores Operations No 2 Pty. Limited v Maritime Union of Australia (1898) 195 CLR 1 at 42 for the principle that where a plaintiff had a prima facie right to a specific relief the Court would weigh the disadvantage or hardship that he would suffer if relief were refused against any hardship or disadvantage that might be caused to a third person or to the public generally if relief were granted. It was said, conversely, detriment that might be caused to third persons or to the public generally if an injunction were refused was to be taken into account. Maidment J then went on to consider the nature of s 106, as he saw it, being primarily directed to the protection of those who had performed the work upon which the Court's jurisdiction was founded. His Honour continued: Thus it might be expected that the jurisdiction of this Court to grant an extension of the life of the contract between the parties, which although not being injunctive relief has a similar effect, is such that the potential detriment to third parties and to the public generally if such relief be refused is a matter which this Court should take into account in the exercise of that jurisdiction.

His Honour saw the primary remedy under s 106 being either the avoidance of an unfair contract or the variation of it to remove the unfairness and that the awarding of monetary compensation was secondary and depended upon that pivotal and primary remedy having been granted. In TeleTech, his Honour thought it was relevant that third parties, namely eighteen employees, who might be retrenched and who might get no benefit out of an ultimate money order made in favour of the applicant, had an interest which was relevant as a consideration in the granting of interlocutory relief, that is, the extension of an existing contract. 38 Wright J, President found it unnecessary to decide whether or not TeleTech was wrongly decided because he was able to discern a material difference in the issues to those which were considered in the line of cases dealt with in Gibson. His Honour thought it was important that Maidment J made it plain that a crucial element in his consideration was the fact that the contract, the subject of the proceedings, was still on foot. In Kenoss the contract had been completed.

The President, Wright J, also did not find it necessary, because of the factual differences between the cases, to deal with the judgment of Watson J in Elliott v Royal Motor Yacht Club of New South Wales, Newcastle Branch . In that case Watson J said: What is sought, simply put, is an interlocutory order under s.88F. It is unnecessary to discuss as a matter of power the Mareva injunction cases, which turn on the frustration of any proceedings before the Commission if such an order were not made. This, in my view, is a different situation where the applicant is seeking an interim order under 88F (1) varying the contract pending determination of the application finally.

In my view there is jurisdiction to make such an interim order if a sufficient case is made out so that a preliminary finding can be made that there is unfairness - whereby the Commission is satisfied that there is sufficient foundation for some interim order to be made [1988) 42 IR 35 at 36.) 39 In the course of argument counsel for the applicants in the present case also referred to the judgment of Marks J in Bowker & anor v Prophecy Technologies Pty Ltd (unreported 26 May 1999; IRC 291 of 1999). In that case former employees, who were the applicants, sought an interlocutory order restraining the continued publication of critical and adverse material about them. The respondent had, by email sent to others, indicated an intention to place certain material on a website making various and serious allegations concerning the proprietary and honesty of the applicants. As a starting point, Marks J accepted that there was an obligation on employers, implied in contracts of employment, not to carry on a dishonest or corrupt business and that each contract of employment contained an implied term to the effect that the employer would not, without reasonable and proper cause, conduct itself in a manner likely to destroy or seriously damage the relationship of confidence and trust between employer and employee. His Honour was prepared to imply such terms on the basis of the recent decision of the House of Lords in Malik v Bank of Credit & Commerce International SA (1998) AC 20. The respondent did not contest the existence of these implied duties and Marks J felt able to form the opinion that the material published by the respondent amounted to unfair conduct because it alleged that the applicants had misconducted themselves in a number of ways. Thus the material published by the respondent on the internet was prima facie in breach of the respondent's obligations to the applicants and clearly identified both of them. At the interlocutory stage of the proceedings no one on behalf of the respondent had proffered any explanation for the conduct. Marks J went on to consider whether the court had jurisdiction to grant the interlocutory relief sought by the applicants commencing with the judgment of the High Court in Jackson v Sterling Industries Ltd. 40 Marks J then considered the judgment of the High Court in CSR Limited v Sigma Insurance Australia Limited (1996 - 1997) 189 CLR 345 where in a joint judgment, Dawson, Toohey, Gaudron, McHugh, Gummow and Kirby JJ said: …The power to stay proceedings on grounds of forum non conveniens is an aspect of the inherent or implied power of which, in the absence of some statutory provision to the same effect, every court must have to prevent its own processes being used to bring about injustice … the counterpart of a court's power to prevent its processes being abused is its power to protect the integrity of those processes once set in motion … and in some cases, it is the counterpart power of protection and that authorises the grant of anti-suit injunctions. 41 Next Marks J considered the joint judgment of Gaudron, McHugh, Gummow and Callinan JJ in Cardile v LED Buildings Pty Ltd (1999) 198 CLR 380 where their Honours said: In these various ways, Courts develop doctrines and remedies outside the injunction as understood in courts of equity, to protect the integrity of its processes once set in motion. The Mareva order for the preservation of assets should be seen as a further development …There is no harm in the use of the term Mareva to identify that development provided the source of remedy is kept in view when considering the form of remedy in each particular case. An anterial question will be whether there is another interlocutory remedy amongst those considered above which will be suitable to meet the case in hand but less extensive in scope .

It was noted that their Honours emphasised that the doctrinal basis of a Mareva order is the inherent power of a court to prevent an abuse or frustration of its process and to ensure the effective exercise of the jurisdiction of the court (see especially the discussion at para 41).

In a separate judgment Kirby J noted that, where a court is endowed with a particular jurisdiction, it enjoys the powers necessary to enable it to act effectively within that jurisdiction; its powers are not ordinarily construed as restricted to defined and closed categories, citing the judgment of Gaudron J in Jackson v Sterling Industries Ltd . His Honour said this was because of the infinite variety of circumstances which may come before the Court and require appropriate orders. Speaking in relation to the powers conferred on the Federal Court by s 23 of the Federal Court Act, Kirby J warned against the attempts of courts and text writers to fashion immutable "principles" to harness statutory powers such as those conferred by s.23. His Honour stated that statutory courts should never stray far from their statutory mandate nor should they forget the general principles which repeatedly emphasise the broad scope of the power conferred on a court and the need to avoid rigid restrictive categories. In a particular case such rigidities could prevent the proper exercise of the court's powers as the Parliament had provided. (See in particular pars 110 - 140). 42 Marks J went on to consider the judgments in Duvall, Maharaj, Maiden, Elliott and TeleTech. His Honour concluded that the court had jurisdiction to grant interlocutory relief in the nature of injunctive orders provided that this was appropriate and consistent with the authorities, that is, provided that any order made was issued consistent with the inherent or implied power of the court to protect its own processes. His Honour adopted the formulation of the relevant principles as set out by Hungerford J in Darvall. Marks J then adopted what he described as the "three stage process" referred to by Hungerford J in Darvall and considered whether there was a serious question to be tried; whether the applicant would suffer irreparable harm for which damages would not be adequate compensation; and finally, the balance of convenience. He relied significantly, for present purposes, on the inadequacy of damages and expressed the opinion that monetary compensation could never satisfactorily recompense persons and business organisations for damage to their reputation. In deciding to grant the interlocutory relief sought his Honour was influenced by the fact that there was no indication that the offending material would be withdrawn from circulation and that the final trial of the matter may be many months away. At the time of determining the proceedings there was no guarantee that the respondent would be able to meet any compensation awarded in favour of the applicant and more importantly the assessment of compensation, being necessarily an imprecise task, would be very difficult because of the difficulty of readily identifying everybody who had read the material and had been adversely influenced against the applicants. Further, his Honour was of the view that to permit such a state of affairs to continue, given the nature and extent of the communications and the failure of the respondent to endeavour to justify them, resulted in the court failing to act in accordance with the provisions of s 163 (1)(c) of the Act, namely, the obligation to act according to equity, good conscience and the substantial merits of the case without regard to technicalities or legal forms. DELIBERATION 43 It is now beyond doubt that the Court may make an order in the nature of a Mareva injunction to protect its own jurisdiction. Such an order will not be limited to freezing assets where a party is otherwise substantially outside the jurisdiction. The circumstances in which such an order may be made are not to be circumscribed or, as Kirby J said in Cardile "hedged by immutable principles".

Similarily, in Patterson v BTR Engineering (Aust) Ltd (1989) 18 NSWLR 319, Rogers AJA, in dealing with the flexibility of Mareva injunctions, said: Particularly in commercial matters, the remedy is one which almost uniquely lends itself to further the purposes of justice. Provided that the application is handled sensitively and with appropriate regard to the rights of the party against whom there may yet be no judgment entered, the Court is able to mould the requirements in a way best suited to meet the exigencies of the particular case. (at 331 ).

The English Courts have expressed the same view. In Polly Peck International plc v Nadir (No.2 ) [1992] 4 All ER 796 at 785, Lord Donaldson said: So far as it lies in their power, the Courts will not permit the course of justice to be frustrated by the defendant taking action, the purpose of which is to render nugatory or less effective any judgment or order which the plaintiff may thereafter obtain. 44 A statutory court which is created as a superior court of record by Parliament, has an implied authority to hold, protect and fullfill the judicial functions so afforded to it (John Fairfax & Sons Ltd v Police Tribunal of New South Wales (1986) 5 NSWLR 465 at 476; Logwon Pty. Ltd v Warringah Shire Council [1993] 33 NSWLR 13 at 16. In Logwon Kirby P stated that to the express powers conferred by such statutes are added a wide penumbrum of powers implied in both the language of the relevant statutes and derived from the nature and purposes of the court as a court.

The Court, in the performance of its functions, will regard its ultimate duty as being to do justice between the parties ( A v Hayden (1984) 59 ALJR 1 @ 5 where Dawson J said: A court ought not to be misled by an over strict application of verbal formulae to depart from its primary duty to complete justice in the cause).

These expressions from various courts emphasise the point that the implied power is not to be treated as a frail species to be availed of in only rare circumstances but rather is a robust and general power providing a variety of remedies directed towards the protection of a court's jurisdiction. 45 The Court must use its discretion to best achieve justice between the parties (Appleton Papers Inc. v Tomasetti Paper Pty. Limited [1983] 3 NSWLR 208). Thus in some cases the Courts have given consideration to whether it is just in all the circumstances that the plaintiff should be confined to the remedy of damages (Evans Marshall & Co. Ltd v Bertola SA [1973] 1 All ER 1992; State Transport Authority v Apex Quarries Ltd [1988] VR 187; City of Melbourne v Hamas & Co. Limited (1987) 62 LGRA 250. 46 The cases make it clear that a Mareva-type injunction or an order to protect the jurisdiction of a court is in a different category to the usual form of injunction. It follows, in my view, that the tests laid down for the granting of interlocutory injunctions may not always be appropriate; the circumstances of the particular case may make some of those tests relevant and in others the requirements of justice will lead the court to place greater weight on other considerations. For instance, in Mareva injunction cases the adequacy or appropriateness of damages is necessarily eliminated as a consideration because the entire purpose of the order is to ensure that assets are not removed from the jurisdiction so as to render the possible orders of the Court nugatory (see Shevlin & Anor v JLG Industries (Aust) Pty. Ltd (1992) 43 IR 282 where Hill J granted a Mareva injunction in s 275 proceedings under the 1991 Act on the basis that there had been established a serious and substantial issue to try; there being an absence of a grave detriment to the public interest; and, on the balance of convenience with no consideration being given to the adequacy of damages). A hallmark of the Mareva injunction is its adaptability. It was on that basis that the judgments in Jackson and Patterson cautioned against the formulation of strict tests which had to be met before such an order could be made. There is no reason to treat as more confined the power of the court to protect its jurisdiction under s 106. 47 It is in this context that some consideration needs to be given to the usual formula that an order in the nature of an injunction should not be granted where damages are appropriate or are regarded as the proper remedy. This approach is not to be confused with an assessment of whether or not damages are "available" - the mere availability of damages as a form of relief may prove to be seriously inadequate and unjust as the sole remedy in particular circumstances. It is rare for damages to be the only available remedy. The traditional question: "Are damages an adequate remedy?" could be rephrased as: "Is it just in all the circumstances that the plaintiff be confined to his remedy in damages?". (per Sacks LJ in Evans Marshall & Co. v Bertola SA [1973] 1 WLR 349 at 379.

The readiness to grant or refuse an injunction varies according to the branch of the law and the nature of the plaintiff's rights that have been infringed. "It is where there is doubt as to the adequacy of the respective remedies in damages available to either party or to both that the question of balance of convenience arises". (per Diplock LJ in American Cynanamid Co v Ethicon Ltd [1975] AC 396 at 408). The consideration is perhaps not best expressed as "the balance of convenience", it is "the balance of the risk of doing an injustice": that is a better description of the process involved ( Cayne v Global Natural Resources plc [1984] All ER 225 at 237h per May J). It has also been described as a "balance of justice " by Sir John Donaldson MR in Francom v Mirror Group Newspapers Ltd [1984] 1 WLR 892. That same approach has been adopted in National Mutual Life Association of Australasia Ltd v GTV Corp Pty Limited [1989] VR 747 @ 764. In American Cyanamid Lord Diplock said: Where other factors appear to be evenly balanced it is a counsel of prudence to take such measures as are calculated to preserve the status quo. (at 408F). 48 In Darvall, Maharaj and Gibson the Court said its power to grant this type of protective order is not to be conditioned or shaped by the nature of the relief sought in the summons. Undoubtedly this is so where a party merely fashions a form of relief to attract the jurisdiction to issue protective orders when the substance of the case and the issues that arise on a consideration of the summons do not support such an approach. It is, however, difficult to see why the nature of the relief sought, if reasonably referrable to the facts pleaded, would not be of considerable significance. A simple refusal to apply for an order for the payment of money or an omission of such an order, by itself, cannot eliminate in all cases consideration of whether such an order is the appropriate order and therefore adequate. The problem with cases brought under s 106 of the Act is that the breadth of the jurisdiction and the width of the orders that might be made often makes it very difficult at an early stage of the proceedings to decide that an order for the payment of the money is both adequate and appropriate to the extent that a protective order in the nature of a Mareva injunction should not issue. 49 The High Court in Jackson v Stirling Industries Ltd and Hungerford J in Darvall pointed to the necessity to protect the Court's jurisdiction to enable it to act effectively within its jurisdiction. The cases have expressed the approach to be adopted in a number of ways: to protect against the frustration of the court's remedies; the need for the court to be given by implication whatever jurisdictional power that may be necessary for the exercise of those powers expressly conferred; to defeat any attempt at thwarting the court's process; the possession of powers which are necessary to enable the court to act effectively within such jurisdiction as is conferred upon it; referrable to the power of a court over its own process which is unlimited; (from Jackson v Sterling); to prevent rendering less effective any judgment or order which may be obtained (Polly Peck); to ensure that any final order that may be made will not be frustrated or put at nought (Darvall); to take such steps as are necessary to ensure the court is not denuded of the capacity to make an effective order (Maharaj); to prevent the denial to a successful litigant of the right to receive the amount of orders which the court considers just and reasonable in all the circumstances of the case (Maiden); and to protect the integrity of the processes of the court once those processes are set in motion (CSR Ltd v Sigma; Cardile). The approach in these cases speak of preserving the whole of the jurisdiction to make orders - they do not contemplate a situation where some available orders or relief are removed from consideration or otherwise rendered inapplicable. The protection, understandably, is of the entire jurisdiction of the court: an interlocutory order will be made if a party takes some step which will render less effective any judgment or order which may be obtained or to overcome any attempted thwarting of the court's process. The jurisdiction invoked by the application in the present case seeks the variation of a lease and Deed of Assignment and/or the creation of a new lease with certain protections to the applicants written into it in circumstances where the arrangement between the parties continues. The summons also seeks in the alternative a money order as compensation. It is far too early in these proceedings to decide that the making of an order for the payment of money is the most appropriate order in this case such that a protective order to preserve the whole of the Court's jurisdiction should not issue. In this case it would be highly unsatisfactory to refuse the applicants' interlocutory order thus effectively reducing the width of the Court's jurisdiction to make suitable orders at the conclusion of the evidence, if such orders are justified. 50 In this case there is no suggestion by the respondent that the Court lacks jurisdiction to entertain the claim for final relief. The lease arrangements require the first applicant to operate the Centre and, in fact, the second to fourth applicants actually work at the Centre. The lease required the active management of the Centre and the employment of sufficient competent and trained staff to operate the business.

If an interlocutory order is not made preventing the respondent from giving full effect to the Notice to Quit then a significant part of the Court's jurisdiction will be effectively removed from the reach of the applicants should they make out a case for final relief. The Court would be left with the only significant power being to order the payment of money in compensation for any unfairness found in the contract. Just as Marks J was able to say in Bowker , I am of the view that money may not satisfactorily recompense these applicants and the business for any damage done to their reputations because of the manner in which they are sought to be removed from the operation of the Centre. The nature of the damage in the two cases is clearly different but the element of damage to business reputation is a relevant factor in the present case. 51 I am also of the view that the interest of third parties, where there is an arrangement still on foot, is a relevant consideration. In Project Development Co. v KMK Securities Ltd [1982] 1 WLR 1470 at 1471C, Parker J stated: It is an essential aspect of the jurisdiction to grant Mareva types of injunction that the position of innocent third parties should be fully protected …

In TeleTech, Maidment J referred to the joint judgment in Patrick Stevedores Operations No. 2 Pty. Limited v Maritime Union of Australia (1998) 195 CLR 1 at 42 for the proposition that detriment that might be caused to third persons or the public generally if an injunction were refused are matters to be taken into account.

In the present case, four of the applicants were guarantors under the assigned lease and work in the operation of the Centre. There are seven other employees who work part-time for the Centre, two of whom appear to have this work as their sole form of employment. While the respondent has undertaken to continue their employment for a period of four months while a review of the operation is undertaken, there is no assurance that employment will be available thereafter. Considering the Court's lists, it is unlikely that a hearing of this matter could be arranged before next year; final orders may not be available for some time after that. Although I do not regard the interests of third parties in this case as being decisive, their interests are a factor to be taken into account and that factor supports, in a modest way, the granting of the interlocutory relief sought by the applicants. 52 In relation to the enquiry as to the adequacy of damages, I have recorded earlier in this judgment the evidence and the submission made by the applicants as to the difficulties surrounding a claim for compensation and how it might be assessed and calculated. The respondent did not directly contest that submission except to assert that the primary remedy sought was compensation and that the payment of money was an adequate remedy. That assertion was not supported by any analysis. It has been said that in determining the balance of convenience weight will be given to the degree of difficulty that the plaintiff faces in proving the quantum of damages at trial (Eltran Pty. Ltd v Westpac Banking Corporation (1988) 32 FCR 195 at 202; Nicholas John Holdings Pty. Ltd v Australian and New Zealand Banking Group Ltd [1992] 2 VR 715 at 730. Further, damages will be regarded as inadequate to the extent that the plaintiff has suffered loss which cannot be taken into account in assessing damages for breach of contract at common law such as loss of goodwill or trade reputation (Evans Marshall & Co v Bertiella SA [1973] 1 WLR 349 at 380). The applicants' evidence is that they will suffer substantial losses if they are removed from the Centre and will also have lost the opportunity of selling the business as a viable concern. For these reasons I am unable to conclude that damages would be an adequate remedy rendering unnecessary the granting of the interlocutory order sought by the applicants. 53 The nature of the dispute in this case may be thought to be unusual, but s 106 of the Act and its predecessors has been used in many and varied circumstances which the law might otherwise regard as being unusual. It is of some relevance therefore that ordinarily the courts have granted an injunction where there is a bona fide dispute as to the amount of rent, albeit granting the order on terms (Sharpe v Rainey (1919) SR (NSW) 96. In Economy Shipping Pty. Ltd v ADC Building Pty. Ltd [1969] 2 NSWR 97, Helsham J was of the view that the defendant should have been aware of the incipient damage to the plaintiff's property and this justified the granting of a mandatory injunction to restore the status quo. These two cases deal with very different circumstances and apply in the general area of injunctive relief but both are examples which demonstrate an underlying approach that is of relevance in the present matter. In both cases justice was done by preserving the status quo. That consideration has considerable force in this case, especially in light of the comments of Lord Diplock in American Cynanamid (at 408) regarding the preservation of the status quo. 54 Applying the conventional test of whether there is a serious issue to try, the evidence to date demonstrates that the applicant took up the unexpired lease on assignment in circumstances where the original lessee was unable to survive financially under the terms and obligations of the lease. The evidence is that this situation was acknowledged by representatives of the Service on behalf of the respondent and an understanding was reached that with some reduction in rent granted to the previous lessee, the applicant could take over the lease and more appropriate financial arrangement negotiated following a review of the Centre's operation prior to the conclusion of the lease. The applicants say that these acknowledgements and representations were instrumental in them taking up the lease on assignment and then over the years committing significant financial resources to building the business. They did so on the understanding that they would have a long term and protected interest in the operation of the Centre. The applicants seek to give effect to these representations by way of variation to the lease and the collateral contract of 1998. The respondent's evidence does not call into question the lack of financial viability of the original lessee. The main thrust of the respondent's evidence was to deny, in a second hand way, the representations alleged by the applicants. The respondent called no evidence from any person identified as making representations to the applicants, but rather relied upon an investigation by an unidentified person who had taken instructions and stated that the alleged representations would be denied. In an evidentiary sense, the balance is in favour of the applicants on this issue. It is supported by some documentary evidence and the common sense of the unlikelihood of the applicants being prepared to enter a lease on assignment where the terms, if not altered, would lead to extreme financial difficulties. The extraordinary feature of this case is that the parties engaged in protracted negotiations spread over some seven years without the benefit of any formal lease, but it is apparent from the evidence filed to date that the respondent regarded the applicants as being appropriate lessees and it was clearly in the respondent's contemplation that the term of the new lease with the applicants would be for ten years. There is some force in the applicants' submission that, when in frustration, their legal representative wrote to the respondent stating that the applicants had several causes of action, including proceedings under s 106 of the Act, the respondent then, and only then, issued the Notice to Quit. While it is possible that the Notice to Quit arose out of genuine frustration on the part of the respondent in failing to reach agreement with the applicants on new lease terms, there is more than a faint suggestion of the Notice to Quit being used as a tactical ploy. 55 The respondent did rely on evidence that the commercial relationship had been soured by the course of the negotiations. Mr Rago, Manager of Business Operations of the Service, was of the opinion that it was impossible to establish a constructive and productive working relationship with the applicants. This opinion was rejected by Mr Kennett, a working director of the first applicant.

No analysis or reasoning accompanied Mr Rago's opinion. It seems however that the parties have worked in a commercial relationship since December 1993 and that the Service would have the applicants continue to operate the Centre if only they would accept the lease terms offered by the Service.

Counsel for the respondent accepted as an accurate description of the situation that despite the best efforts of all concerned they have not been able to reach agreement. This does not indicate a commercial relationship which has collapsed amid rancour or vituperation. Last year's offer of formal mediation by the applicants does not indicate a stance at odds with an ongoing commercial relationship. I am not convinced, especially in the light of the paucity of evidence on the matter, that the business relationsip between the parties has so deteriorated that, as a matter of discretion, the order sought should not be made. 56 In all the circumstances I have formed the view that there is a serious issue to be tried on the applicants' claim for final relief.

In the approach that I prefer it is sufficient in this case to be satisfied that the Summons for Relief is within jurisdiction and that interlocutory relief is warranted in the protection of the Court's ability to grant the width of final relief available under s 106 of the Act. Should it be thought that the conventional tests applicable to interlocutory injunctions should be applied, I am able to state for reasons already outlined that there is a serious question to be tried, that damages are not an adequate or appropriate remedy as the pleadings and evidence presently stand and that the balance of convenience favours the making of an order in the nature sought by the applicants. The long-term operation of the Centre by the applicants strongly suggests that no substantial or any harm is likely to befall the respondent because of the applicants' continuation in possession and operation of the Centre until the application can be heard and determined by the Court. 57 One further matter should be raised that was not addressed by the parties. The applicants have not proffered an undertaking in the usual form as to damages but, importantly, the respondent has not sought such an undertaking. Earlier in this judgment I have explained why I am of the view that many of the traditional requirements and tests which attend the granting of interlocutory injunctions may not be appropriate in all cases when dealing with interlocutory relief in s 106 cases. This appears to be such a case. It is accepted in courts of unlimited jurisdiction that the mere fact that no undertaking as to damages was given would not alone be a ground for discharging the order (O'Brien v Australasian Temperance and General Mutual Life Assurance Society Ltd (1891) 24 SALR 12). Further, an undertaking as to damages is not to be implied where it was not asked for (Kerridge v Foley 70 SR (NSW) 251; [1968] 1 NSWR 628). Consistent with this line of reasoning, the English courts have said that the fact that a plaintiff is legally aided or of limited means, so that the undertaking is largely worthless, does not preclude the grant of an injunction in a proper case (Allen v Gambo Holdings Ltd [1980] 1 WLR 1252). In view of the long relationship between the parties in this case the respondent may well have formed the view that the usual undertaking as to damages was not necessary. In any event, such an undertaking has not been sought and in the circumstances of this case I would not require such an undertaking as a basis for granting interlocutory relief. 58 Finally, there is force in the respondent's submission that the form of the interlocutory order sought by the applicants is defective or inappropriate in that it proceeds on the basis that there is in existence a current and binding lease. Counsel for the respondent frankly accepted, in the course of argument, that an order restraining the respondent from taking any steps to give effect to the Notice to Quit until further order of the Court would be a sufficient and effective order. In the circumstances, I think it preferable that the applicants bring in a Short Minute setting out the interlocutory order they seek having regard to these reasons for judgment. That Short Minute should be served on the respondent and the parties given leave on short notice to have the matter relisted by contacting my Associate to allow the order to be finalised. It may also be appropriate at that time to deal with further directions for the hearing of the matter.

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