(Consolidated by Orders dated 13 March 1998 and 22 March 2000)

Injunctions - Application for mandatory injunction to partially discharge mortgage - Test to be applied in deciding whether to grant mandatory injunction

Injunctions - Application for mandatory injunction - Test to be applied in deciding whether to grant mandatory injunction - Reliance of strength of plaintiff's case for final relief - Strength of plaintiff's case for final relief may affect balance of convenience

Injunctions - Application for mandatory injunction - Application for injunction successful - Turns on own facts

Amann Aviation Pty Ltd v Commonwealth [1990] FCA 55; (1990) 22 FCR 527

Australian Competition and Consumer Commission v C G Berbatis Holdings Pty Ltd [2000] FCA 2; (2000) 169 ALR 324

Barnes v Hay (1988) 12 NSWLR 337

Clay v Clay [1999] WASCA 8; (1999) 20 WAR 427

Cooper Brookes (Wollongong) Pty Ltd v Commissioner of Taxation (Cth) [1981] HCA 26; (1981) 147 CLR 297

Dalecoast Pty Ltd v Guardian International Pty Ltd [1999] WASC 11

DTR Nominees Pty Ltd v Mona Homes Pty Ltd [1978] HCA 12; (1978) 138 CLR 423

Evans Marshall & Co Ltd v Bertola SA [1973] 1 WLR 349

Foran v Wight [1989] HCA 51; (1989) 168 CLR 385

Giumelli v Giumelli [1999] HCA 10; (1999) 161 ALR 473

Godfrey Constructions Pty Ltd v Kanangra Park Pty Ltd [1972] HCA 36; (1972) 128 CLR 529

Green v Bestobell Industries Pty Ltd [1982] WAR 1

Holland v Wiltshire [1954] HCA 42; (1954) 90 CLR 409

Latec Investments Ltd v Hotel Terrigal Pty Ltd (In Liq) [1965] HCA 17; (1965) 113 CLR 265

Laurinda Pty Ltd v Capalaba Park Shopping Centre Pty Ltd [1989] HCA 23; (1989) 166 CLR 623

McDermott v Black [1940] HCA 4; (1940) 63 CLR 161

Nissho Iwai (Aust) Ltd v Oskar [1984] WAR 53

NRMA Ltd v Morgan [1999] NSWSC 407; (1999) 31 ACSR 435

Progressive Mailing House Pty Ltd v Tabali Pty Ltd [1985] HCA 14; (1985) 157 CLR 17

Project Blue Sky v Australian Broadcasting Authority [1998] HCA 28; (1998) 194 CLR 355

Quint v Robertson (1985) 3 NSWLR 398

Re Real Estate and Business Agents Supervisory Board; ex parte Cohen [1999] WASCA 47; (1999) 21 WAR 158

Royal Brunei Airlines Sdn Bhd v Tan [1995] UKPC 4; [1995] 2 AC 378

Shevill v Builders' Licensing Board [1982] HCA 47; (1982) 149 CLR 620

Simto Resources Ltd v Normandy Capital Ltd [1993] FCA 293; (1993) 43 FCR 78

Summers v Commonwealth [1918] HCA 33; (1918) 25 CLR 144

World Series Cricket Pty Ltd v Parish (1977) 16 ALR 181

1 STEYTLER J: This is an application for an injunction brought by the plaintiff ("Temwood") against the first defendant ("AAA").

2 The injunction is sought in proceedings which have come before me on a number of occasions.

3 Temwood is the owner of land at Singleton Beach in Western Australia known as Bayshore Gardens Estate. By a deed dated 18 September 1991, to which the parties have referred as "the First Management Agreement", Temwood appointed AAA to act as its consultant with respect to the development of the land. Clause 5.1(3) of that agreement provided for the payment to AAA by Temwood, inter alia, of a management fee comprising 3.5 per cent of the contract sum for each contract let to advance the development, subject to certain limited exclusions. It also provided for a termination fee to be paid on termination of the services of AAA under that agreement unless that termination should occur because of the default of AAA as set out in cl 17.4 of the agreement. The termination fee was 4 per cent of the current market value (as defined in the agreement) of the land as at the date of termination together with interest thereon from the date of termination until payment at the overdraft rate charged by AAA's bankers. The agreement also provided for the granting to AAA by Temwood of a first registered mortgage over the land in order to secure payment of all moneys payable by Temwood to AAA pursuant to the First Management Agreement.

4 The mortgage referred to in that agreement was executed by Temwood and AAA in December 1993. Clause 21 of the mortgage reads as follows:

"21. MORTGAGOR'S RIGHT TO PARTIAL DISCHARGE OF THIS MORTGAGE

21.1 The Mortgagor and Mortgagee each hereby acknowledge that the Mortgagor in its development of the Mortgaged Land will be entitled to a partial discharge of this Mortgage with the intention that the Mortgagor may offer for sale individual lots in the subdivision freed and discharged from this Mortgage. It is the intention of the Mortgagor to develop the Mortgaged Land in Stages and that the Mortgagee will discharge this Mortgage by Stages when the Plan of Subdivision in respect of one Stage is in registrable form and able to be lodged for registration in the Land Titles Office Perth. This Mortgage shall be a continuing security for the remainder of the Mortgaged Land for the duration of the Consultancy Agreement.

21.2 The Mortgagor has the right to require the Mortgagee to discharge this Mortgage in respect to part only of the Mortgaged Land at any time following the satisfaction by the Mortgagor of each and every of the following conditions:-

(i) the Mortgagor having first received a Plan of Subdivision for a Stage of the development being in registrable form being part of the Mortgaged Land with the consent of the Council of the City of Rockingham to that plan of subdivision; and

(ii) the Mortgagor having served upon the Mortgagee a notice calling upon the Mortgagee to execute a form of Discharge of Mortgage being a partial discharge of this Mortgage for a Stage of the development together with a copy of the said Council's consent attached thereto. This notice will state the date of receipt by the Mortgagor or on the Mortgagor's behalf of the said Council's consent; and

(iii) the Mortgagor having paid to the Mortgagee all accounts rendered by the Mortgagee to the Mortgagor pursuant to the Consultancy Agreement prior to the date of receipt of that Notice by the Mortgagee from the Mortgagor; and

(iv) the Mortgagor paying the Mortgagees cost for such discharge of this Mortgage for part of the Mortgaged Land.

THEN the Mortgagee will execute a discharge of this Mortgage for such part of the Mortgaged Land the subject of that Stage of the development within three (3) business days of receipt by the Mortgagee of that Notice from the Mortgagor and the Mortgagee will deliver that Discharge to the Mortgagor or as the Mortgagor may direct. 'Business Day' means a day in Perth when Banks are generally open for business.

21.3 The Mortgagor shall secure to the Mortgagee the moneys payable by the Mortgagor to the Mortgagee pursuant to the Consultancy Agreement for so long as any moneys may be payable by the Mortgagor to the Mortgagee pursuant to the Consultancy Agreement. As between the Mortgagor or Mortgagee upon execution by the Mortgagee of a discharge of mortgage as to part of the Mortgaged Land the land as described in that partial discharge will be freed from this Mortgage but the personal covenant of the Mortgagor shall in no way be released or discharged.

21.4 The Mortgagee will not lodge a caveat to be noted on any Certificate of Title to be issued or issued following registration of a Plan of Subdivision for a Stage of the development of the Mortgaged Land."

5 Temwood and AAA (and others) have since become embroiled in bitterly fought litigation arising out of events leading up to and subsequent to the making of the First Management Agreement and the execution of the mortgage. Included amongst the matters in dispute are Temwood's allegations that the second defendant ("Mr Oliver") embarked upon a fraudulent and dishonest design, while he was a director of Temwood, to cause Temwood to enter into what was said to be the improvident (for Temwood) First Management Agreement to its detriment and to the advantage of AAA, of which he is and was at all material times a director and shareholder. AAA is alleged to have dishonestly, or knowingly, participated in and been party to Mr Oliver's breaches of fiduciary and statutory duties. In its writ and statement of claim Temwood claims, upon various grounds, inter alia, an injunction requiring AAA forthwith to discharge the mortgage and, by way of alternative relief, a declaration that AAA holds the benefit of the mortgage on constructive trust for Temwood.

6 Temwood and AAA are in agreement that the First Management Agreement has been terminated. However they are in dispute as to the circumstances in which it came to be terminated. Temwood says that AAA has repudiated it and that Temwood has accepted that repudiation. AAA says that Temwood has repudiated it and that AAA has accepted that repudiation.

7 The dispute as regards the termination of the First Management Agreement arose out of the rendering of an invoice by AAA by which it sought payment from Temwood of an amount of $192,500. AAA's contentions in support of its claim to entitlement of that sum are set out in an affidavit sworn by Mr Oliver on 20 March 2000. He has referred to an invoice rendered to Temwood by AAA dated 13 June 1994 which included a component for arranging bank finance for the development of the land by way of a loan from BankWest Ltd ("BankWest") in an amount of $5,500,000. He considered that "on a strict but proper interpretation of the first management agreement" AAA was entitled to charge 3.5 per cent of the amount of finance obtained from BankWest "through AAA's negotiations". This amounted to $192,500. His contention is that the BankWest loan was a "contract let to advance the Development" of the land within the meaning of cl 5.1(3) of the First Management Agreement. However, he said, he decided that, although AAA was entitled to this amount of $192,500, it would only charge Temwood $15,000 for its services in arranging the bank loan. That is consequently the only amount which was included, in that respect, in the invoice dated 13 June 1994. He said that, at the time at which finance was arranged, he and AAA were performing a number of services for Temwood which were outside the scope of the First Management Agreement. He said that he hoped that, because he and AAA had acted in "a reasonable way in rendering an account in relation to the BankWest finance of only $15,000", he "hoped [that] Temwood would in turn act reasonably in providing ... [him] with proper remuneration in relation to the additional work which ... [he] was doing for ... [it]".

8 He said that a meeting was subsequently held between himself on behalf of AAA and representatives of Temwood. Those representatives, he said, told him that Temwood denied any liability to pay to AAA any amount at all in respect of the raising of finance but that it would pay to AAA an amount of $10,000 "as a gesture of appreciation for the work which had been done". He said that AAA did not agree to accept this sum in full and final settlement of its claim but that it did accept the sum "for arranging the BankWest finance, on the understanding that AAA would be properly remunerated for additional work done in the future". However, he said, Temwood did not pay AAA for work performed outside the scope of the First Management Agreement (or, indeed, outside that of a second management agreement which was later made between the parties). That being so, he said, AAA "was no longer bound by ... [its] offer to Temwood not to charge for the BankWest finance in accordance with the first management agreement". He consequently rendered, on behalf of AAA, an invoice dated 19 August 1999 in the sum of $192,500. This, he said, was done when, in the course of reviewing his files in or about July or August 1999, it came to his attention that AAA "had not resolved the issue of the non payment of ... [its] invoice for arranging the BankWest finance".

9 The rendering of that invoice provoked an immediate and angry response. By a letter dated 27 August 1999 (drafted by its solicitors but signed by its executive director) Temwood contended that the making of the claim in the invoice amounted to a repudiation of the First Management Agreement. It said that AAA was not entitled to payment of the sum of $192,500 for a variety of reasons. One was that any payment would be "illegal and in contravention of s 43 of the Finance Brokers Control Act 1975" because AAA was not a licensed finance broker. Another was that the loan from BankWest to Temwood was not a "Contract let to advance the Development" for the purposes of cl 5.1(3) of the First Management Agreement. This argument was said to be supported by the proposition that, if the First Management Agreement was to be construed in the manner contended for by AAA, that agreement would provide for AAA to be paid 3.5 per cent of the amount of any finance approved and a further 3.5 per cent when that finance was expended under contracts made with contractors. It was said that this could patently not have been the parties' intention. The letter also referred to the fact that the reference, in cl 5.1(3) of the First Management Agreement, to 3.5 per cent of the "contract sum for each contract let to advance the Development" must be read together with cl 5.2 thereof, which provides that the contract sum there referred to "means the sum payable to a Contractor pursuant to a contract ... ". It contended that BankWest could not be described as a "Contractor". Temwood also raised an argument of estoppel. Although it did not, in the letter, assert that a compromise had been reached in respect of the amount of the fee (as it did in the course of submissions before me), it did say, in the letter, that its "list of reasons" was not exhaustive.

10 The letter went on to say that the making of the claim for payment of $192,500, in circumstances in which AAA was not entitled to that sum, amounted to a repudiation of the First Management Agreement. It demanded that AAA withdraw its invoice by 4.00 pm on the following Tuesday (the letter having been faxed to AAA on a Friday). It said that if AAA did not do so, Temwood would "elect whether or not to accept ... [its] repudiation".

11 The invoice was not withdrawn by AAA and no response was made by the appointed deadline. On 1 September 1999 Temwood sent to AAA a letter in which it said that it accepted AAA's repudiation.

12 That provoked a response by AAA by way of a letter dated 2 September 1999. In that letter it denied that its rendering of the 19 August invoice constituted a repudiation of the First Management Agreement. However, it said, Temwood's letter of 1 September 1990 constituted "a clear repudiation of the First Management Agreement". It said that it accepted that repudiation and terminated the First Management Agreement.

13 Arising out of all of this AAA claims that it is entitled to the termination fee provided for by the First Management Agreement but Temwood disputes that this is so. The amount of that fee is said to be a sum of $392,000 plus interest to 12 November 1999 in an amount of $7,075.33. The sum of $392,000 equates to 4 per cent of $9,800,000, this last figure being the value of the land referred to in the First Management Agreement as valued by a licensed valuer, K Johnson & Associates.

14 The mortgage to which I have earlier referred attaches to four categories of land. The first is what has been referred to as the "Stage 2B land". This comprises 18 residential lots. The second comprises what has been referred to as the "retirement village land". The second of the management agreements made between Temwood and AAA provided for Temwood to develop or sell an area of land as a retirement village and this is that land. The third category is land described as the "north-east sector land". This comprises a large area of as yet undivided residential lots. The fourth category comprises the balance of the mortgaged land.

15 Temwood has entered into contracts for the sale of some lots falling within the Stage 2B land, subject to various conditions, one of which is the ability to give title. It has also received an offer to purchase the whole of the retirement village land, on various conditions. It has contracted to sell the whole of the north-east sector land to another developer, also upon various conditions.

16 On 11 October 1999 Temwood obtained a valuation of land included within the mortgage from a licensed valuer, Christie Whyte Moore. This land was valued at $9,600,000. The land so valued included the retirement village land (which was valued at $895,160, discounted by 8 per cent over two years because of the likelihood of a deferred sale, giving a value of $751,934.40), the north-east sector land (which was valued at $2,150,000) and land in stages 2A and 2B (which was valued at $450,000). The valuation also encompassed a retail site which was valued at $650,000 and land including what was described as "Group Housing land areas 1 and 2" and a hotel site, which land and site were valued at $2,868,000, reduced by 8 per cent per annum over two years, giving rise to a total of $2,409,120. The valuation did not include other land owned by Temwood but not subject to the mortgage, including unsold residential lots and a shopping and medical centre.

17 Before leaving the mortgage and the land to which it attaches I should mention that the National Australia Bank Ltd ("the bank") has a mortgage over the same land securing moneys advanced by it to Temwood (it seems that it took over responsibility for the financing of the development from BankWest). The bank has priority under its mortgage over that given in favour of AAA up to an amount of $5,500,000. On 31 January 2000 it was owed by Temwood an amount of $3,459,393 although the facility afforded by it to Temwood is a "come and go" facility enabling Temwood to borrow money up to the total sum of $5,500,000.

18 That brings me to the present dispute. Temwood wants AAA to provide partial discharges of the mortgage so as to enable it to sell the first three categories of land to which I have referred. However, AAA refuses to do so. It says that it is entitled to payment, by Temwood, of an amount which was accepted to be around $657,325, if AAA should succeed at trial in all of its contentions. This comprises the invoiced sum of $192,500, the termination fee and interest amounting to $399,075.33, an amount of $2,000 in respect of the cost of obtaining a valuation in order to calculate the termination fee, interest on the termination fee from 13 November 1999 estimated at a maximum of $55,000 (allowing for in excess of 18 months interest) and an as yet unquantified amount comprising 3.5 per cent of the value of various contracts which are said to have been let to advance the development but in respect of which AAA has received no payment (which amount both parties appeared content to assume, at least for present purposes, would not be more than $8,750). AAA says that, because it has not been paid these sums (Temwood denies liability to pay any part of them), it will not give any discharges. AAA relies, in that respect, on cl 21.2(iii) of the mortgage (set out above). AAA also points out that the sale of the north-east sector land in an undeveloped state is not contemplated by the terms of the mortgage which assume only the sale of developed lots in stages (see, for example, cl 21.1 and cl 21.2(ii)). This last point was not disputed by Temwood.

19 The terms of the injunction which has consequently been sought by Temwood in its chamber summons are as follows:

"[that] ... AAA ... , whether by itself, its officers, servants, agents or otherwise be restrained, and an injunction is hereby granted restraining it, from not providing partial discharges of registered mortgage number F453301 ('the Mortgage') discharging from all moneys secured by the Mortgage the land contained in Land Titles Office diagram numbers 99129 [the first of the categories of land referred to above] and 99345 [the second of the categories of land referred to above] and the land the subject of the contract between the plaintiff and Eastview Nominees Pty Ltd ... [the "North-east Sector Land"] subject to:-

1.1 ... [Temwood] complying with clauses 21.1(i) and 21.1(ii) of the Mortgage with respect to each partial discharge; and

1.2 with respect to the land contained in Land Titles Office diagram number 99129 and the North-east Sector Land, the plaintiff procuring a reduction in the priority the National Australia Bank Ltd ('the Bank') has over AAA by an amount equal to the net proceeds of sale of those areas of land, rounded to the nearest $10,000.00 and delivering to AAA an instrument executed by the Bank agreeing to that reduction."

20 This curious formulation of the terms of the injunction (cast, as it is, as a restraint preventing AAA from "not providing partial discharges") is presumably the product of a hope that the restraint will be seen as a prohibitory injunction and not a mandatory injunction. That hope is misplaced. The injunction sought by Temwood is plainly a mandatory injunction. The form in which it has been drafted cannot alter its substance.

21 The distinction is, in any event, not necessarily significant. Kennedy J, in Cash Converters Pty Ltd v Hila Pty Ltd (1993) 9 WAR 471 at 483, has referred to the relevant authorities in the following way:

"In Shepherd Homes Ltd v Sandham [1971] Ch 340 at 351, Megarry J, in a passage which was approved by the Court of Appeal in Locabail International Finance Ltd v Agroexport (The Seahawk) [1986] 1 WLR 657 at 664, said:

'Third, on motion, as contrasted with the trial, the court is far more reluctant to grant a mandatory injunction than it would be to grant a comparable prohibitory injunction. In a normal case the court must, inter alia, feel a high degree of assurance that at the trial it would appear that the injunction was rightly granted; this is a higher standard than is required for a prohibitory injunction.'

This statement was accepted by Hoffman J in Films Rover International Ltd v Cannon Film Sales Ltd [1987] 1 WLR 670 at 680 - 681; [1986] 3 All ER 772 at 781, as being another way of saying that the features which justify describing an injunction as 'mandatory' will usually also have the consequence of creating a greater risk of injustice if it is granted rather than withheld at the interlocutory stage unless the court feels a 'high degree of assurance' that the plaintiff would be able to establish his right at a trial. He continued:

'I have taken the liberty of reformulating the proposition in this way in order to bring out two points. The first is to show that semantic arguments over whether the injunction as formulated can properly be classified as mandatory or prohibitory are barren. The question of substance is whether the granting of the injunction would carry that higher risk of injustice which is normally associated with the grant of a mandatory injunction.' "

I adopt these remarks and, in particular, those of Hoffman J in Films Rover International Ltd v Cannon Film Sales Ltd [1987] 1 WLR 670 at 680 - 1.

22 It is now well settled that the test for the grant of an interlocutory injunction is whether there is a serious question to be tried and, if so, whether the balance of convenience favours the grant of the injunction (see, for example, Patrick Stevedores Operations No 2 Pty Ltd v Maritime Union of Australia [No 3] [1998] HCA 30; (1998) 195 CLR 1 at 24). While the court "does not undertake a preliminary trial, and give or withhold interlocutory relief upon a forecast as to the ultimate result of the case" (Beecham Group Ltd v Bristol Laboratories Pty Ltd [1968] HCA 1; (1968) 118 CLR 618 at 622 and Cash Converters, above, at 483), it will sometimes be desirable, in assessing the balance of convenience, for the court to evaluate the strength of the plaintiff's case for final relief. (See Cash Converters, above, at 483; Brayson Motors Pty Ltd (In Liq) v Commissioner of Taxation (Cth) (1983) 57 ALJR 288 at 292; Bullock v Federated Furnishing Trades Society of Australia [1985] FCA 19; (1985) 5 FCR 464 at 472 and South Sydney District Rugby League Football Club Ltd v News Ltd [1999] FCA 1710; (1999) 169 ALR 120 at 127). It is in this last context that the remarks quoted by Kennedy J in Cash Converters, to which I have earlier referred, were made.

23 I should also refer to what has been said by "Spry : Equitable Remedies", 5th ed, p 572, as follows:

".... On all interlocutory applications the hardship or prejudice that may ensue if relief is granted or if conversely it is refused is weighed with other relevant considerations, including the strength of the plaintiff's case (see generally American Cynamid Co v Ethicon Ltd [1975] UKHL 1; [1975] AC 396 ....); and although the court acts with caution, a mandatory order is made if the balance of justice so requires. But when the plaintiff is seeking on an interlocutory application an order for the specific performance of part or all of the defendant's obligations under a contract, being relief that is ordinarily granted only at the final hearing, that relief is, at least in the absence of special circumstances, granted only if its refusal would give rise to disproportionate prejudice or hardship to the plaintiff, as against the prejudice or hardship that its grant will cause the defendant (Films Rover International Ltd v Cannon Film Sales Ltd [1987] 1 WLR 670). Since account is taken of the strength of the plaintiff's case, the more probable it appears that he will succeed at the final hearing or in other relevant proceedings, the less reluctance to intervene will be shown by the court (Locabail International Finance Ltd v Agroexport [1986] 1 WLR 657)."

(See also "Meagher, Gummow and Lehane : Equity doctrines and remedies", 3rd ed, pars 2178 and 2179).

24 I am, in this case, satisfied that there is a serious question to be tried as regards Temwood's entitlement to obtain the relief which it seeks in relation to the mortgage. There is enough, in the materials before me, to establish this in respect of Temwood's contentions as regards AAA's allegedly dishonest or knowing participation in breaches of fiduciary and statutory duty by Mr Oliver. Indeed, this was not disputed on behalf of AAA. Rather, it sought to contend only that Temwood's argument in this respect was weak. This last contention was essentially based upon a submission that Temwood will have considerable difficulty in establishing that the First Management Agreement was an improvident transaction for it to enter into.

25 It is simply not open to me, at this early stage, to reach any sensible conclusion on that question in the absence of evidence as to the circumstances in which the First Management Agreement was made and as to the consequences, for Temwood, of its making. I am not, in the absence of additional evidence, prepared to categorise Temwood's contentions in this respect as "weak". It claims to be able to demonstrate that the fees payable by it to AAA under the First Management Agreement were substantially increased with successive drafts of that agreement and also that the manner of calculating fees payable by Temwood to AAA had been changed from a percentage of the net profit earned from the development to a percentage of the amount payable under each contract let to advance the development (regardless of whether or not AAA played any part in the letting of that contract), with the consequence that the amount payable to AAA would increase if the costs incurred by Temwood increased. Temwood contends that this fee was payable for what was only a limited range of services leaving the prospect open that AAA would claim additional fees for a range of necessary services falling outside the terms of the First Management Agreement. Moreover Temwood alleges that the circumstances in which the substantial termination fee was to be payable by it were changed from those limited to Temwood not implementing the development, or the shares in Temwood being sold, to circumstances extending to termination by Temwood of AAA's services for any reason other than various limited matters of default. It also refers to a provision of the agreement to the effect that AAA's liability for the proper discharge of its duties is excluded except where it arises directly from AAA's bad faith or wilful or gross negligence. While it may, of course, turn out to be the case that these features of the First Management Agreement, and others which have been referred to on behalf of Temwood, were, when considered in the whole context of that agreement and in the light of the surrounding circumstances, not sufficient to render that agreement improvident, I do not accept the submission advanced on behalf of AAA that the admittedly triable issue in this respect is one which is based upon so weak a case as to affect the balance of convenience in favour of AAA.

26 Neither was it disputed that there is a triable issue as regards the question of repudiation of the First Management Agreement and, consequently, as regards AAA's entitlement to payment of the termination fee. However each party contended that the other's submissions in this respect were tenuous at best. Without repeating what I have said above as regards the rival contentions of the parties I need say no more, at this stage, than that I am not persuaded that either party's contentions are so weak, on the evidence as it stands, as materially to affect the balance of convenience.

27 I should mention that Temwood sought to contend that AAA's claim of entitlement to the sum of $192,500 is so tenuous as to be virtually hopeless. Although it seems, from a relatively brief examination of the rival contentions of the parties in this respect in the light of the limited evidence presently available to me, that there are substantial difficulties in AAA's path in pursuing this claim I am not prepared, at this stage, to say that these difficulties are incapable of being overcome.

28 Consequently it seems to me that I should approach the question of the balance of convenience upon the basis that there is a triable issue as regards Temwood's contentions in respect of its entitlement to have the mortgage discharged and that I am unable, at this stage, to categorise its case in that respect as either strong or weak. I propose to proceed also upon the basis that, while AAA appears to face problems in respect of its claimed entitlement to payment of the sum of $192,500, there is a triable issue (albeit difficult) in that respect and also as regards its entitlement to the balance of the moneys claimed by it in its counterclaim.

29 It follows that the question for decision is whether, in these circumstances, the grant of a mandatory injunction in the terms sought will have the consequence of creating a greater risk of injustice if it is granted rather than withheld at this interlocutory stage.

30 I do not consider that it will. Rather, as it seems to me, the refusal of the injunction will, to use the words of Spry, above at 572, give rise to a disproportionate prejudice or hardship to Temwood as against the prejudice or hardship that its grant will cause AAA.

31 Without the grant of the injunction Temwood will either be forced to satisfy AAA's claims in full (and AAA, which has a $2 share capital, has not to date responded to a request that it provide a copy of its audited accounts to Temwood's solicitors in order that Temwood can determine whether or not AAA is able to meet any damages awarded against it) or abandon the sales which it has made or hopes to make in the immediate future.

32 It is not disputed that those sale are to be made, in each case, at a reasonable price. Neither was it disputed that, if the transactions into which Temwood now wishes to enter are implemented and if the mortgage is discharged to that extent, there will remain subject to the mortgage land to a total value of about $6,209,120, according to the valuation which has been provided to Temwood (and that valuation seems to put a similar value on the whole of the land the subject of the mortgage to that put on it by AAA's valuer, K Johnson & Associates). Nor is it disputed that, upon completion of the proposed sales, the debt due by Temwood to the bank will, on the strength of an undertaking given on behalf of Temwood, be reduced by the amount of the net proceeds of sale from the amount of $3,459,393 owing at 31 January 2000. The gross sale price in respect of the retirement village land is $889,000 (which reasonably compares with the valuation prepared by Christie, Whyte, Moore) and the gross sale price for the north-east sector land is $2,700,000 (which compares favourably to the valuation). These sales will consequently produce a net sum to be paid to the bank of around $3,500,000, thereby reducing the amount owing by Temwood to the bank to nil, although Temwood, in its submissions, preferred to suggest that there should remain a priority in favour of the bank of $2 million (presumably because of the prospect that further sums will or might be borrowed by Temwood under the "come and go" facility).

33 However, if it be assumed that the bank's mortgage will have priority over that of AAA up to a sum of $2 million AAA will be left, after the proposed sales, with security which is presently valued at $4,209,120 in respect of its total claims of around $657,325. That compares favourably with the position in which AAA presently finds itself on the valuation of Christie, Whyte, Moore. As matters stand there is land subject to AAA's mortgage which is valued at $9,600,000 but the bank has priority up to $5,500,000, leaving AAA with a security worth $4,100,000.

34 It was acknowledged by Mr McKerracher QC, who appeared on behalf of AAA, that the mortgage upon which AAA relies was intended to operate as a security only and not as a means of enforcing payment of outstanding invoices against threat of bringing the whole development to a halt. He was consequently content to argue his case as regards the balance of convenience solely upon the basis that, if the injunction is granted, AAA's security will be weakened and he acknowledged that the question of the adequacy of the security was, as he put it, "probably the most important consideration in the application". He raised, in this respect, the spectre of Temwood's insolvency which, he said, might be accompanied by a "fire sale" of its assets, including the land.

35 I am not persuaded that there is, on the evidence before me, any real threat that Temwood will go into liquidation. While it may be so that, as Mr Oliver has said in an affidavit filed in opposition to Temwood's application, Temwood's liabilities exceed its assets by $1,000.000, there is simply nothing to suggest that those who stand behind Temwood (and Goldcore Investments Ltd, the sole owner of its shares, is also its largest creditor, being owed some $9,500,000 by Temwood) have any intention of abandoning it should the projects in which it is involved lead it to operate at a loss. However, even if that should be wrong, it is difficult to see why, on the evidence as it stands, the balance of the land secured by the mortgage should, in the event of Temwood's liquidation, be sold at so low a price as to result in AAA not being paid out in full, should it establish all of its claims. As matters stand the land which will remain subject to the mortgage is valued at more than six times the amount of the maximum claim which might presently be advanced by AAA. There is no evidence before me to suggest that, on a "fire" sale (whether in two years' time, as posited by Mr McKerracher, or at any other time), the land which will remain subject to the mortgage will be sold at a price significantly less than the amount at which it is presently valued. Certainly there is nothing to suggest that it will be sold at a price which will leave AAA inadequately secured.

36 Mr McKerracher also expressed what seemed to me to be an entirely reasonable concern that the evidence is silent as regards the question how the bank's priority will be reduced to $2 million and pointed to the fact that there is no evidence from the bank in this respect. However, it seems to me that this is a concern which can adequately be catered for by the terms of any injunction which might be ordered.

37 Finally, in this respect, Mr McKerracher pointed to the conditional nature of the proposed sales. While the various sales are subject to a number of conditions, I am unable to accept that there is anything in them which should affect the balance of convenience. They are, for the most part, conditions which might ordinarily be found in sales of this kind and they will either be satisfied or they will not. Once again, the terms of any injunction which might be ordered can cater for the possibility that conditions might not be satisfied.

38 On the other hand, Temwood has produced evidence (in the form of an affidavit sworn by Mr Bruce Chin, its executive director) to the effect that, if it cannot sell the Stage 2B land, the retirement village land and the north-east sector land, it will incur substantial ongoing financing costs (running into some hundreds of dollars per day) in respect of each of those areas of land as well as land tax and maintenance charges which will be incurred if the proposed sales do not go through. There is, of course, also the risk that if these proposed sales fall through other sales at a similar price will not be achieved. Finally, in this respect, Mr Chin has deposed to the fact that if an injunction is not granted AAA will be unable to sell any of the mortgaged land at all and that this would irreparably damage its reputation and cause it to lose the benefit of marketing to date and to incur additional costs in later recommencing its business of selling the land.

39 While Mr Chin does not address the question of Temwood's ability to proceed with the sales by paying out AAA's claims, he has placed evidence before the court, mentioned above, to the effect that AAA has only a $2 paid up share capital and that it has, to date, declined to make available to Temwood's solicitors copies of its audited accounts. Mr Chin does not address, either, the prospect of the provision of alternative security for the payment of AAA's claims, as, for example, by way of the provision of a bank guarantee or payment into court. However no point was sought to be made by AAA in this respect and it seems to me that conditions of this kind are unnecessary having regard for the fact that AAA will, on the evidence as it stands, remain more than adequately secured if the interlocutory relief is granted.

40 It consequently seems to me, as I have said, that there will be a greater risk of injustice if the injunction is refused than will be the case if it is granted, even having regard for its mandatory nature.

41 I consequently propose to grant the injunction in the terms sought but only subject to being satisfied that the bank will have no greater priority than the sum of $2 million to which I have referred and subject also to the satisfactory completion of the contracts of sale to which I have referred. I propose also to give to AAA liberty to apply to dissolve or vary the injunction on 48 hours' written notice to Temwood's solicitors should circumstances alter.