Sensis Pty Ltd v Bivami Pty Ltd

REASONS FOR JUDGMENT 1 The background to this matter is outlined in my judgment dated 3 December 2012 Sensis Pty Ltd v Bivami Pty Ltd [2012] FCA 1365. 2 By an interlocutory application filed in Court on 11 December 2012, the third respondent (AETL) now seeks the following orders: 1. To the extent that it has not already done so, that Bivami Pty Limited as favouree, demand payment from Westpac Banking Corporation Limited under the Banker's Undertaking dated 9 February 2006 (the Banker's Undertaking). 2. That upon demand being made in accordance with Order 1, Westpac Banking Corporation Limited pay the proceeds of the Banker's Undertaking to Bivami Pty Limited. 3. That upon receipt of the proceeds of the Banker's Undertaking from Westpac Banking Corporation Limited, Bivami Pty Limited account to Australian Executor Trustees Limited for all of the proceeds, to be held by it in accordance with the amended undertaking given to the Court on 13 November 2012. 4. The first respondent pay the third respondent's costs of this application. 3 Shortly prior to the matter coming on for hearing before me on 18 December 2012, the third respondent filed and served an outline of written submissions in which it stated that it no longer pressed any claim for interlocutory relief against Westpac. Accordingly, order 2 in the interlocutory application was not pressed. 4 The interlocutory application was opposed by the applicants and the first respondent. 5 When the interlocutory application came on for hearing Mr Newlinds SC, who appeared with Mr Izzo for the third respondent, handed up proposed short minutes of order in which it was stated that Hyperion Properties Syndicates Limited proffered not only the usual undertaking as to damages, but also gave an undertaking in the following terms: Undertaking to the Court to indemnify Bivami Pty Limited against any loss or damage it may suffer as a result of it having called upon the Bankers (sic) Undertaking from Westpac Banking Corporation Limited dated 9 February 2006 and accounting to the third respondent for the proceeds. 6 This additional undertaking was intended to meet an argument that clause 18 of the contract of sale between Bivami and the third respondent dated 14 February 2006 required such an indemnity to be given. The full terms of clause 18 are set out in [19] of the earlier judgment dated 3 December 2012. 7 For the following reasons, I consider that the interlocutory application should be dismissed. 8 First, in substance AETL is seeking a mandatory interlocutory injunction based upon an alleged right arising under clause 18 of the contract of sale or, alternatively, an alleged breach of trust by Bivami. In my view AETL has not demonstrated why damages would not be an adequate remedy (see Castlemaine Tooheys Limited v South Australia (1986) 161 CLR 148 at 153 per Mason CJ). Bivami has made clear that, in the event that it receives funds from Westpac in accordance with the Banker's Undertaking, those funds will be held in a solicitor's controlled money account pending further order or agreement between the parties. AETL contended that damages were an inadequate remedy because AETL had a right under clause 18 of the contract of sale (when read with clause 19 of the Lease) to immediate recourse to a fund of money in the event of an asserted breach of the Lease. It added that the amounts needed to rectify the relevant breaches were likely to be substantial, as is reflected in the fact that its proceedings in the NSW Supreme Court seeks damages in the sum of $2,688,000. I am unable to see how either of those considerations provides an adequate answer to the question as to why damages would not be an sufficient remedy. 9 Secondly, I accept the applicants' submissions to the effect that, if they are correct in contending that Bivami itself has no entitlement to call upon the Banker's Undertaking, the Court would effectively be compelling a breach of contract or, alternatively, unconscionable conduct if it were to grant the interlocutory relief sought. As recorded in [39] of my 3 December 2012 judgment, I found that there is a serious question to be tried in relation to Bivami's entitlement to call upon the Banker's Undertaking. AETL, by its interlocutory application, is effectively seeking relief without there being a final hearing as to the substantive issues in dispute. In my view that is an inappropriate course in the circumstances of this case. I agree with the applicants' contention that the issue of Bivami's entitlement to call upon the Banker's Undertaking should not be determined on the run and in advance of the final hearing in the proceedings, which are still at a very early stage. The pleadings have not closed, nor have the parties had an opportunity to adduce evidence relating to the issues which will have to be determined in respect of both the applicants' originating application and AETL's two cross-claims. The substantive proceedings raise a series of complex legal and factual questions, including the proper construction and application of clause 19 of the Lease (having regard inter alia to s 117 of the Conveyancing Act 1919 (NSW)) and its interaction with clause 18 of the contract of sale as properly construed. 10 Thirdly, I am mindful of the need to exercise "particular caution" in considering whether to grant a mandatory interlocutory injunction. As Jagot J observed in Ringtail Asia Pacific Pty Limited v FTI Technology, LLC [2010] FCA 314 at [10]: I accept the principles applicable to mandatory interlocutory injunctions which the applicants have identified as relevant from the decisions in Businessworld Computers Pty Ltd v Australian Telecommunications Commission (1988) 82 ALR 499 and Australian Rugby Union Ltd v Hospitality Group Pty Ltd [1999] FCA 1136. Those decisions show that while the test is the same (an applicant must show a serious question to be tried and that the balance of convenience favours the grant of relief) applications for mandatory interlocutory injunctions require "particular caution" (Australian Rugby Union v Hospitality Group at [30]). This is because common sense suggests that, until all rights and duties are finally known, requiring a party to do something is likely to carry a greater risk of injustice than requiring a party not to do something as a potentially interim measure. 11 In my view, this is an appropriate case in which the status quo should stand pending the hearing and determination of the substantive issues in dispute in the various proceedings. 12 Fourthly, I do not accept AETL's contention that its entitlement to the interlocutory relief it now seeks is effectively established by the Court's decision on 3 December 2012 dissolving the interlocutory injunctions obtained by the applicants which restrained Bivami from calling on the Banker's Undertaking. Hyperion's amended written undertaking at that time tilted the balance of convenience in favour of lifting the prohibitory interlocutory injunctions. But as the applicants point out, the effect of granting the interlocutory mandatory injunction now sought by AETL would not be to maintain or preserve the status quo, but rather would change the status quo. Westpac stands ready to meet its relevant legal obligations but Bivami has not yet received any funds pursuant to the Banker's Undertaking. As noted above, if it does, it proposes to hold those funds in a solicitor's controlled money account. 13 Finally, as matters stood at the time of the hearing of AETL's interlocutory application, no final relief was sought by it against Bivami. Some of the parties opposing the interlocutory application contended that this was fatal to the application. At the hearing, Mr Newlinds SC indicated that his client was prepared to give an undertaking that it would promptly file and serve a cross-claim seeking final relief against Bivami. Although I did not understand any formal undertaking to be given at that time, the following day AETL filed a second notice and statement of cross-claim seeking various relief against Bivami, including a declaration that it had committed a breach of trust in failing or refusing to collect the proceeds of the call on the Banker's Undertaking and, in the alternative, a declaration that it had breached clause 18 of the contract of sale dated 14 February 2006. 14 AETL filed its interlocutory application on 11 December 2012, one week before it was heard. In their outlines of written submissions filed in advance of the hearing, both the applicants and Bivami drew attention to the fact that no final relief was sought against Bivami. As the moving party, AETL should have taken immediate steps to rectify that state of affairs before the hearing was held so that the other parties had an opportunity to review the precise terms of the final relief sought against Bivami. Even though final relief is now belatedly sought against Bivami, I consider that there are several other reasons, as described above, why AETL's interlocutory application should be dismissed. 15 In accordance with the general rule that costs should follow the event, I see no reason why AETL should not bear the costs of the other parties in respect of its unsuccessful interlocutory application. Although Westpac was aware upon service of AETL's outline of written submissions late on 17 December 2012 that interlocutory relief was no longer being sought against it, I consider it was still reasonable for Westpac to appear at the hearing on 18 December 2012 and to participate in order to protect its interests. 16 I make the following orders: 1. The third respondent's interlocutory application filed 11 December 2012 is dismissed. 2. The third respondent is to pay the costs of the applicants and the first and second respondents in respect of that interlocutory application. I certify that the preceding sixteen (16) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Griffiths.