Interlocutory injunction - Agreement to transfer registration of ownership of dredges as security for monies owing - Whether implied term - Transfer to be done within reasonable time - Refusal to transfer - Whether damages an adequate remedy - Balance of convenience - Balance of risk of doing an injustice

Rules of the Supreme Court of Western Australia, O 59 r 9

Supreme Court Act 1935 (WA), s 25(9)

Bond v Larobi Pty Ltd (1992) 6 WAR 489

BP Refinery (Westernport) v Hastings Shire Council (1977) 180 CLR 266

Carlton United Breweries v Bond Brewing (1987) 76 ALR 633

Demagogne Pty Ltd v Ramensky [1992] FCA 557; (1992) 110 ALR 608

HB Homes Pty Ltd v Beer [1986] 2 Qd R 379

Hopkinson v Logan (1839) 5 MW 241

Jericho v Guglielmin [1938] SASR 292

Lindsay Petroleum Co v Hurd (1874) LR 5 PC 221

Parker v Camden London Borough Council [1986] Ch 162

Patrick Stevedores Operations No 2 Pty Ltd v Maritime Union of Australia (No 3) [1998] HCA 30; (1998) 195 CLR 1

Tamplin v James (1880) 15 Ch D 215

Taylor v Johnson [1983] HCA 5; (1983) 151 CLR 422

Westminster Brymbo Coal & Coke Co v Clayton (1867) 36 LJ Ch 476

1 ROBERTS-SMITH J: This application is by chamber summons dated 10 December 2001 for an interlocutory injunction and originally seeking other orders. The summons sought:

1. a declaration that the dredge Sandpiper III, together with all associated equipment and a small dredge, is owned by the plaintiff;

2. an order that the defendants do all things and execute all documents necessary to transfer the registration of the ownership of the Sandpiper III, together with all associated equipment and the small dredge, into the name of the plaintiff;

3. an order that the defendants are to do all things to transfer possession of the Sandpiper III, together with all associated equipment and the small dredge, to the plaintiff;

2 A writ of summons was issued on 10 December 2001. The relief sought on the writ is in precisely the same terms as the relief sought on the chamber summons. The endorsement of claim on the writ asserts that in breach of an agreement in writing dated 13 March 2001 between the plaintiff and the defendants the defendants:

1. have refused and continue to refuse to give possession of the dredge known as the Sandpiper III, together with all associated equipment and the small dredge, to the plaintiff;

2. have refused and continue to refuse to transfer the registration of the ownership of the dredge, together with all associated equipment and the small dredge, into the name of the plaintiff;

3. have dismantled and removed parts of the dredge and have hidden those parts and are thus preventing the plaintiff from entering into any contracts for the use of the dredge.

3 In particular, the plaintiff is unable to enter a contract with Tallwood Nominees Pty Ltd for dredging of the Port Geographe marina and is thereby suffering loss and damage.

4 The plaintiff has filed an undertaking as to damages in the usual form. The application for injunction is supported by the following affidavits, being those of:

(1) Raymond Thomas Meadowcroft sworn on 7 December 20001;

(2) Malcolm Thomas Wardle sworn on 10 December 2001;

(3) Michael Robert Kellett sworn on 7 December 2001;

(5) a further affidavit of Michael Robert Kellett sworn on 18 December 2001;

(6) a further affidavit of Malcolm Thomas Wardle sworn on 18 December 2001; (7) affidavit of Grant Ian Chitty sworn on 18 December 2001; and (8), that of Paul Zorzi sworn on 18 December 2001.

5 The application came on for hearing before me on 19 December 2001. Mr Chitty appeared for the plaintiff applicant. Mr K. Waller appeared on his own behalf. It appears service had not been effected on the defendant respondent Muriel Waller. Mr Waller informed me he had no authority to speak on her behalf as they are separated.

6 At the hearing on 19 December Mr Waller opposed the application. Having only just been served with the applicant's documents, he had not filed any affidavit of his own, nor had he consulted a lawyer. It was apparent from what he told me from the bar table at that time that there were matters of fact he wished to put forward in opposition to the application.

7 Following submissions by Mr Chitty and Mr Waller I adjourned the hearing until 8 January 2002 and gave the parties leave to file further affidavits and made orders that the respondents not further disassemble the vessel Sandpiper III or the small dredge (to which I shall collectively refer as "the dredges"), and not remove them from their then location until further order.

8 Since 19 December the following further materials have been filed: an affidavit of Paul Charles Davis dated 4 January 2002; an affidavit of Kenneth James Waller sworn on 3 January 2002; written submissions from Mr Winburn-Clarke, (who appeared for the respondents on 8 January 2002), and an outline of submissions in reply from Mr Chitty.

9 There is a preliminary point with which I should deal. When the application came before me on 19 December I pointed out to Mr Chitty that no memorandum pursuant to O 59 r 9 of the Rules of the Supreme Court had been filed and I asked him why that was so. He explained that Mr Meadowcroft had met Mr Waller on 9 November 2001 and that in the event Mr Waller had advised the terms proposed to settle the matter were not acceptable and that he would see the applicant in court. On the basis of this Mr Chitty asked for an order waiving the requirements of O 59 r 9.

10 In his affidavit Mr Meadowcroft refers to a meeting on 9 November and subsequent correspondence copies of which are annexed to his affidavit. He concludes in par 10 with the statement that he is informed by his secretary and believes that on 20 November Mr Waller telephoned and informed the plaintiff that the payment terms were not acceptable and he would "see us in court."

11 Notwithstanding that these events predated the issue of the writ, I consider they sufficiently indicate the lack of any reasonable prospect of agreement or settlement, and I am accordingly prepared to order that compliance with the requirements of O 59 r 9 be waived.

12 I turn now to the application itself. At the hearing before me on 19 December, Mr Chitty said the applicant was not proceeding with the claims for interlocutory relief by way of declaration and damages. The application is therefore confined to the relief sought in par 2 and par 3 of the chamber summons which go to the registration of the dredges in the name of the plaintiff and delivery up of possession of them to the plaintiff.

13 I turn now to the case as put on behalf of the applicant. I do not propose in this outline to refer specifically to the particular affidavits or evidence advanced in support of the matters put but rather to give a brief outline of the circumstances asserted.

14 About June 1999 the respondents were the owners of the Sandpiper III dredge but it was out of survey and at the bottom of the harbour at Carnarvon. They approached the applicant with a proposal that the applicant pay for the dredge to be raised and put back into working condition, for it then to be brought to Fremantle and then pay the operating costs of the dredge so that the respondents could use it to undertake dredging contracts and generate income. The profit from those contracts would be shared by the applicant and the respondents. It is asserted that the applicant agreed to the respondents' proposal and at various times advanced significant sums of money pursuant thereto.

15 Again without going into detail of the particular contract or transactions or works, it is asserted by the applicant that the manner in which the respondents executed the various contracts which it undertook with the dredges led to the result that no profit was ever achieved and, in particular, after two unprofitable ventures the applicant sought to secure the respondents' indebtedness to it as a result of which the parties signed a document which has been described as the Heads of Agreement. That document was executed on (or at least, as there is apparently some question about this, is dated) 13 March 2001.

16 It is convenient and I think necessary to set out the terms of that agreement. It is between Total Marine Services Pty Ltd, which I shall describe as TMS, and Kenneth James Waller and Muriel Anne Waller described in the Heads of Agreement document as the owners. The recital states that the owners own a cutter suction dredge known as the Sandpiper III and a smaller dredge known as the small dredge, that they have entered into an agreement with TMS to undertake dredge work and make the Sandpiper III and the small dredge available for hire and reward, that TMS has entered into a partnership with the owners to undertake dredging work for hire and reward and that TMS has loaned funds to the owners to a maximum of $A300,000 to enable the dredges to be repaired and made operational so that dredging work can be undertaken.

17 The body of the agreement then records the agreement in the following terms:

1. the owners agree to repay to Total the full $300,000 in accordance with the following repayment schedule: by the end of March 2000 $50,000, by the end of June 2001 $50,000, by the end of March 2000 $100,00, by the end of March 2003 $100,000;

2. as security for the loan, the owners agree to assign ownership of the Sandpiper III, including all ancillary equipment, dredging pipe and spare parts and the small dredge to TMS;

3. in the event that the owners default by 3 months or more in the payments outlined in cl 1 of this agreement, TMS may take possession of the dredges, ancillary equipment, pipes and spare parts and sell such dredges to recover its loan;

4. if the sale of the dredges realises less than the $300,000 loan, then any shortfall will remain as a debt owing by the owners to TMS;

5. until the full loan is repaid to TMS, the owners will not sell or assign any other interests in the dredges and will keep the dredges insured against loss or damage and maintain them in good serviceable condition;

6. the owners will at all times keep TMS Marine advised of jobs tendered or performed by the two dredges in question.

18 The applicant asserts that notwithstanding the terms of the agreement, the respondents have refused to transfer ownership of the dredge or to pay the expenses which they have incurred. They further assert, as indicated in the endorsement of claim on the writ, that the respondents are both in possession of the dredges and have dismantled them.

19 Before describing the case being advanced on behalf of the respondents I am required to deal with submissions as to certain paragraphs of Mr Waller's affidavit. Mr Chitty raised objection to a number of paragraphs. They included, amongst others, various objections for noncompliance with O 37 r 6(2)(a) of the Rules of the Supreme Court for failing to state the sources or grounds for the deponent's information or belief.

20 I will not deal with them separately here. It is sufficient to say that the objection in respect of par 55 is upheld but the matters otherwise raised, although on occasion deficient in terms of the Rules of the Supreme Court, can be left as going only either to weight or to argument. So far as par 55 is concerned I allow the objection. That paragraph will be amended by deleting the words "I believe the plaintiff has received significantly more income than it has disclosed."

21 That brings me to matters advanced on behalf of the respondents. In his affidavit Paul Davis deposes that he was living at Wickham in the north of Western Australia in November 2000 and obtained employment with TMS. As part of that employment he came back from the Pilbara to work in the Rockingham premises of the male respondent. That was about 11 November 2000.

22 He further deposes that within the first couple of days of commencing employment the male respondent asked him to witness his signature on a document entitled Heads of Agreement. He identifies the document to which I have already referred as the one signed by him as a witness to the signature of the male respondent.

23 He says that was a document signed in November 2000. He says that in March 2001 he was living in Busselton and was working for the applicant at the Port Geographe contract and definitely did not witness the male respondent's signature on any document at that time.

24 It is the contention which is advanced on behalf of the respondents that the document was indeed not signed by them in March but that it had been signed by them some months earlier than that and it was signed, in fact, on behalf of the applicant at a meeting at which Mr Waller was present in March 2001. The point being made is that both parties to that point had proceeded on the basis and understanding that the agreement had been signed by or on behalf of all parties and was in effect from November 2000.

25 Mr Waller's affidavit sworn 3 January 2002 sets out in some considerable detail the history of the respondents association with the applicant. Again, it is not necessary for me, I think, to go into the details. It is sufficient to say that in general terms their relationship involved an arrangement whereby the applicant would advance moneys to the respondents which would enable them, amongst other things, to repair the dredge and make it operational and put it into survey.

26 There were other obligations upon the applicant which Mr Waller asserts were imposed. The relationship between the parties obviously ran into some difficulties. There was dissatisfaction between them as to the performance of their respective obligations and in particular there were disputes as to the financial arrangements which had been put in place and which both parties apparently were taking the view were not being met by the other.

27 This dissatisfaction appears to have culminated probably in about November 1999 when the male respondent indicated to Mr Meadowcroft of the applicant that he wished to dissolve the partnership in which they had been operating, as a result of the problems which had been experienced and, according to Mr Waller, because of what he describes as the plaintiff's methods of operating.

28 There was then a meeting in November 1999 and some discussion as to what amounts were owing. In his affidavit Mr Waller asserts that the amounts said by the applicant to be owing to it failed to take into account various significant financial factors.

29 The outcome of the meeting in November 1999 was, according to Mr Waller, that the partnership would continue but that he would stay on, have control of operations, and employ a dredge operator. That was agreed to in order to resolve particular problems associated with the contract known as the Pier 21 contract.

30 There was, he says, a further meeting about 16 February 2000 where there were further discussions as to the financial position as between the parties. I have had regard to the description of the various contractual matters raised or referred to by Mr Waller in his affidavit involving the relationship between the parties from that point on. Again I note that he asserts that he conveyed to the representatives of the applicant in August 2000 that he wished to dissolve the partnership because of his dissatisfaction with certain aspects of the performance of the applicant.

31 He says at par 20 of his affidavit that in September 2000 he became ill with Guillain-Barre, which is an anti-immune syndrome, as a result of which he became totally paralysed, lost his eyesight, and was placed into the Fremantle Hospital intensive care unit for a number of weeks.

32 He deposes that at the end of September that year he was still extremely ill but discharged himself from hospital. He deposes that some time in October 2000 the applicant entered into a contract with Tallwood Pty Ltd, the owner of the Port Geographe development, and a company associated with Axiom Pty Ltd for dredging to occur at Port Geographe.

33 He then refers to a meeting on 7 November 2000 between himself, Mr Zorzi and Mr Kellett of the applicant. He asserts that at that time it was acknowledged by the applicant that the partnership had been dissolved in August 2000 and that it was necessary to resolve the outstanding debts of the partnership.

34 He asserts at par 26 of his affidavit that in summary, in light of figures previously given by him, the applicant's liability to the respondents was approximately $90,000 and the respondents' liability to the plaintiff for 50 per cent of the operating costs was just short of $60,000, leaving a net amount owing by the applicant to the respondents of approximately $30,000.

35 He deposes further that there was an agreement that the respondents would take over the whole of the partnership debt estimated at $300,000, (but which he says in fact it was $284,168 at that time, excluding amounts which had not been accounted for); that the respondents would retain ownership of the dredge; the Port Geographe contract would be assigned to the respondents or, alternatively, the work would be conducted by them; the respondents would receive the benefit of all other contracts currently on foot or in the process of being negotiated by the former partnership; all payments received by the applicant under the contract would be credited to the respondents' account in reduction of the debt; the respondents would pay certain amounts totalling $300,000, all of which sums would be received from payment made by Tallwood Pty Ltd; if the revenue from the Port Geographe contract was in excess of the repayment schedule the respondents would be entitled to keep the excess, which the applicant would forward to them; and, finally, if the respondents did not pay the instalments in reduction of the dredge then the applicant could repossess the dredge and sell it; a security document - and he mentions a chattel mortgage by way of example - would be prepared by the applicant to reflect that agreement.

36 He asserts that at all times prior to and during the meeting of 7 November 2000 the applicant was aware that the respondents' sole form of income was dredging and that if the respondents were involved with the Port Geographe contract that would be full-time, at least 12 hours a day, and the respondents would be incapable of earning any other income.

37 He then deposes that it was shortly after the meeting of 7 November 2000 that the document entitled Heads of Agreement was drawn up and presented to him. Mr Waller says at par 30 of his affidavit that he raised with Mr Paul Zorzi of the applicant the issue of the reference to the security in that document. He says he wanted to be sure that the point was clear, namely that the dredge would not be transferred unless the sum outstanding by the applicant was clarified and paid and a full accounting of all expenditure was undertaken.

38 He deposes that he asked Zorzi if the agreement was only security and Zorzi said, "Yes, this is only security and will only be utilised in the event you do not repay the debt." Mr Waller says he understood this to mean that only in the event that he did not repay the sums required was it necessary for the ownership of the dredge to be transferred. He deposes that he took the document with him and signed it a few days later in reliance upon Zorzi's comments. He further says that at the time of signing the document he could not read properly due to Guillain-Barre syndrome, and did not appreciate that the payment dates had been changed from June 2002 and June 2003 to March 2002 and March 2003.

39 At par 32 of his affidavit he deposes that shortly after, in November 2000, his wife was admitted to the psychiatric ward at Fremantle Hospital. He says she has since struggled with mental illness and has ceased to have any involvement in the affairs of the respondents, the previous partnership, or this matter.

40 I think those matters are essentially the most significant for the purposes of the application before me although of course in his affidavit Mr Waller goes on to set out, again in some detail, the course of subsequent events and the financial circumstances as he asserts them to be as between the applicant and the respondents.

41 It is sufficient, again for present purposes, to observe that it is contended that there is a significant area of dispute between the parties as to exactly what the financial situation is.

42 The respondents' submissions in respect of the application can be summarised, I think, in the following way. First of all, it is submitted that the orders sought should not be made because they would be in the nature of granting specific performance on an interlocutory basis when specific performance would not be available on the substantive trial. There are a number of matters advanced in support of that submission.

43 It is said, for instance, that it is arguable that the contract is not binding. When I refer to the contract here I am of course referring to the document described as the Heads of Agreement. In support of that proposition, it is asserted on behalf of the respondents that the document is uncertain in its terms and effect, that it reflects a unilateral mistake by the respondents, that there was a misrepresentation by Zorzi, that there was lack of consideration because by the time the Heads of Agreement document was executed the moneys had already been advanced, and that there was undue influence in relation to it because of the bad health of the respondents.

44 It is then said that in any event the evidence would not show that the contract has been breached - or perhaps to put it in a positive way the evidence will show that the contract has not been breached. Mr Winburn-Clarke submitted that on a proper examination of the figures relating to the parties and the various contracts the revenue received by Tallwood and ultimately by the applicant in respect of the Geographe Bay contract would be more than sufficient to meet the respondents' liabilities.

45 The next submission was that damages would be an adequate remedy because the claim itself being advanced by the applicant is essentially one for damages. Finally, Mr Winburn-Clarke contends that the discretionary factors which apply in respect of an application of this kind militate in favour of refusing the application because the greater hardship would be suffered by the respondents rather than the applicant.

46 The respondents, it is submitted, would lose their sole form of income. Also in respect of this ground Mr Winburn-Clarke relies upon the assertions as to the applicant's conduct allegedly misrepresenting the nature of the contract as well as the failure asserted by Mr Waller in his affidavit to provide to sufficient financial information to the respondents.

47 As I say, I think the outline I have just given is a sufficient, albeit broad, outline of the submissions advanced on behalf of the respondents. In a moment I shall deal with the principles which I consider are applicable to this application and in light of the manner in which I intend to do that I do not propose presently to set out separately the submissions being advanced on behalf of the applicant.

48 I will say at this point only that the applicant submits that the rule (if it used to be a rule) that an injunction would not be granted where it would equate to an order for specific performance (even if the situation is one which would require the constant supervision of the court) is a rule which is no longer applicable.

49 In any event it is submitted by Mr Chitty that that is not apposite here because the court, were the order to be made, would be imposing the obligation to register the property and deliver possession of it up only until further order and that position could always be reversed should it become necessary.

50 Mr Chitty for the applicant submits that the principles which govern the power provided by s 25(9) of the Supreme Court Act 1935 (WA) to grant an interlocutory injunction are set out in Cardile v LED Builders Pty Ltd (1999) 198 CLR 380 at 393. He submits that the order must be just and convenient - that is to say, it must be just and convenient to make the order and that the Court must be acting to give effect to rights recognised by law which include the grant of equitable relief to restrain apprehended breaches of the law: Corporation of the City of Enfield v Development Assessment Commission (2000) 169 CLR 400 at 406.

51 I do not consider Cardile to be particularly apt here. That case was about a Mareva order. The majority in the High Court, Gaudron, McHugh, Gummow and Callinan JJ, was concerned to make the point that the term "injunction" has no fixed definition, that its meaning will depend upon the statutory or other context and that the term "Mareva order" should be used in lieu of the term "Mareva injunction" so as to avoid doctrinal confusion; see for example their Honours' judgment at 401.

52 Importantly, for the present application, their Honours noted that the power stated in judicature legislation such as section 25(9) of the Supreme Court Act, being that relied on here to grant an injunction in all cases in which it appears to the Court just and convenient to do so, does not confer an unlimited power to grant injunctive relief; (see 395 ibid). Regard must still be had to the existence of a legal or equitable right which the injunction protects against invasion or threatened invasion or other unconscientious conduct or exercise of legal equitable rights.

53 At 396 their Honours pointed out that the injunction even so remains a discretionary remedy in a particular sense of that term, referring to what Lord Hoffman said in Bristol City Council v Lovell [1998) 1 WLR 446 at 453 concluding with the observation that the discretion is as to the remedy which the Court will provide for the invasion of the plaintiff's rights.

54 I do not think it presently necessary to descend into the juridical or doctrinal theory underlying the injunctive power of the Court. I am content for present purposes to accept the applicant's submission that the various considerations which have been identified as enlivening the power are all reflections of what is necessary to prevent injustice at the interlocutory stage of the proceedings.

55 In Mott v Mount Edon Goldmines (1994) 12 ACLC 319 at 321, the Court summarised the general principles relevant to the grant of an interlocutory injunction in the following way:

(1) the applicant must first satisfy the Court that there is a serious question to be tried.

(2) even if there is a serious question to be tried the court will not grant an injunction if common law damages would be an adequate remedy.

(3) If there is a serious question to be tried and damages would not be an adequate remedy the court then considers whether the balance of convenience lies in favour of granting or refusing the relief sought.

(4) When considering the balance of convenience it is appropriate for the court to take into account the relative strength and weaknesses of the applicant's case.

(5) At the hearing the court should not attempt to decide factual conflicts that arise from the affidavit material and nor should it determine difficult questions of law which require detailed argument.

56 I will deal briefly with the first three of these.

57 That expression is now generally accepted in Australia as an appropriate statement of the relevant test to be applied when considering whether the applicant has some prospect of successfully establishing its claim at trial; Castlemaine Tooheys Ltd v South Australia [1986] HCA 58; (1986) 161 CLR 148 at 153. It is also a consideration which is related to the balance of convenience.

58 In the present case, on the material before me the applicant on the face of it has at least a reasonable prospect of success at trial. I put it no higher than that because it is not necessary to do so and because I am conscious that I am in no position to determine the contested issues of fact and law which could well be raised at trial.

59 Mr Chitty submits that the applicant has confined its present claim to one point; namely, whether on its proper construction there is to be implied in cl 2 of the Heads of Agreement an implied term that the respondents assign ownership of the dredges within a reasonable time and that if that be accepted, the matters urged upon me on behalf of the respondents essentially all fall away. I shall return to this in a moment. It is enough at this point to say that the matters raised support a view that there are serious questions to be tried.

60 That brings me then to the consideration whether damages would be an adequate remedy.

61 I accept the applicant's submission that the proper test here is not simply whether damages will provide it with an adequate remedy but rather whether it would be just in all the circumstances to confine it to that remedy: Evans Marshall and Co Ltd v Bertola SA [1973] 1 WLR 349, State Transport Authority v Apex Quarries Ltd [1988] VicRp 26; [1988] VR 187, but the principle is that if damages would adequately compensate the applicant for any loss that might be sustained as a result of the respondents' actual or threatened violation of its rights and the respondents will be able to pay them, an interlocutory injunction should not normally be granted: London and Blackwell Railway Co v Cross [1886] 31 Ch 354, and American Cyanamid Co v Ethicon Ltd [1975] UKHL 1; [1975] AC 396.

62 It must be borne in mind that an injunction is an equitable remedy and equity will intervene only in circumstances in which there is irremediable damage or irreparable injury: R v Macfarlane [1923] HCA 39; (1923) 32 CLR 518 at 550.

63 The applicant submits that damages are not an adequate remedy in this case for two reasons: first, because the circumstances involve an invasion of the applicant's proprietary rights in the dredges and, secondly, because the respondents would not be able to pay damages. As to the first, the applicant relies upon Beswicke v Alner [1926] VicLawRp 10; [1926] VLR 72 for the proposition that damages would rarely be an adequate remedy for the invasion of proprietary or possessory rights. The proposition so expressed may be readily accepted as correctly reflecting the law. Whether it has application in the circumstances of this case is a different question.

64 In Beswicke v Alner the Full Court of the Supreme Court of Victoria was dealing with a plaintiff who was the registered proprietor of land over which the defendant had a right of carriageway. The plaintiff claimed damages and an injunction restraining the defendant from continuing or repeating the discharge of water collected in certain excavations on adjacent land of the defendant raised by a pump over the plaintiff's land. The defendant had in fact discharged water as alleged and had thereby committed a trespass and invaded the plaintiff's legal proprietary right in respect of the land. The defendant had furthermore expressed the intention from time to time of repeating the act. It was noted that the actual damage proved was negligible.

65 The Full Court held that in the circumstances an award of damages would not afford an adequate remedy and an injunction should be granted. At 76 Cussen J delivering the judgment of the Court said:

"We think, for reasons which are made plain in the authorities shortly to be cited, that in this case an action for damages would not afford an adequate remedy, and that we should give effect to the rule that where the plaintiff has established the invasion of a common law right, and there is ground for believing that without an injunction there is likely to be a repetition of the wrong, he is, in the absence of special circumstances, entitled to an injunction against such repetition."

66 His Honour went on to observe that many cases had been cited to the Court dealing with mandatory injunctions but they were all clearly distinguishable from that case because a mandatory injunction was not there claimed. His Honour referred to a number of authorities relating to injunctions in respect of interference with possessory or proprietary rights.

67 It is I think for present purposes again sufficient to say that the other authorities there referred to all involve circumstances similar to those in Beswicke v Alner itself. The factual situations are set out in particular at 77 to 79 of the report and it can be seen from an examination of them that they are concerned with circumstances generally in which the injuncted party is infringing possessory or proprietary rights to land and threatening to repeat such infringements in circumstances where the infringement itself does not necessarily cause injury or damage compensable in money damages.

68 It is apparent in the present case that the applicant claims a proprietary or possessory right in the dredges. For the moment it is not necessary to be more particular about the nature of the right claimed. However, it is also apparent that the applicant's real or ultimate claim is for the repayment of the money it says is owed by the respondents. Its interest in the dredges is only as security to compel payment of that amount or to provide it by sale of those assets if the respondents default. Thus, since what the applicant is actually seeking in the end result is the payment of money, it cannot be said that damages would not be an adequate remedy in that sense.

69 The second point advanced by Mr Chitty is the applicant's contention that the respondents do not have the capacity to pay damages and so to confine the applicant to that remedy would be unjust. If an applicant wishes to resist a contention that damages would be an adequate remedy on the ground there is a material risk the respondent would not be able to pay them it must do so on admissible and persuasive evidence. It is not enough simply to make the assertion and then require the respondent to establish his or its financial capacity. That is because the onus of making out the case for injunctive relief is on the applicant.

70 Here, the applicant says the evidentiary material before me shows the respondents have not paid any of their share of the outgoings, nor of the debt. What precisely is the financial situation as between the parties, what moneys have been expended, received and paid, seems at least at this stage potentially to be in dispute. Be all that as it may, on the material before me, which includes the facts conceded by Mr Waller that he has removed essential components of the dredge and it has not been working for some time and that he has not earned any income since 12 July 2001, I am satisfied there is a material risk the respondents would not have the capacity to pay damages should the applicant's claim be successful at trial

71 In the circumstances I consider it would be unjust to confine the applicant to its remedy in damages. This consideration also imports an issue of the balance of convenience, to which I now turn.

72 This principle is also aptly referred to as the balance of the risk of doing an injustice: per May LJ in Cayne v Global Natural Resources [1984] 1 All ER 225 at 237. What is to be weighed is the damage the respondents will suffer if the injunction is granted against that which the applicant may suffer if the injunction is refused. This further involves some assessment of the strengths and weaknesses of the applicant's case and consideration of any inconvenience or hardship the respondents may be likely to suffer if the injunction is granted.

73 I return to what I take to be the central proposition advanced by the applicant, namely that there is to be implied in cl 2 of the Heads of Agreement the term that the respondents would transfer the registration of ownership of the dredges to the applicant within a reasonable time.

74 Without in any way expressing a final view on the point but assessing it as I must in the context of this application for interlocutory relief, it seems to me the applicant prima facie has a strong case on this point and on what would flow from it. The execution of the Heads of Agreement document is not disputed, notwithstanding the dispute as to the date of its execution by the applicant. It seems to me that does not give rise to any disadvantage as to the respondents particularly in light of Mr Waller's own evidence that the parties had been proceeding prior to that time on the understanding that the agreement was in force.

75 I accept Mr Chitty's submission that at trial there is a good prospect that the proper construction of the Heads of Agreement would be held to imply the term for which he contends. That would accord with the logic for the dredges being used as security for the loan. The words attributable to Mr Zorzi and complained of by Mr Waller as misleading are not in my view inconsistent with there being such an implied term and indeed looked at in that way would be an accurate statement of the law were the term to be implied.

76 So too if such a term is to be implied then the unilateral mistake relied upon by the respondents would be no more than a misunderstanding by them of the difference between the giving or execution of the security and the enforcement of it. That is not a mistake for which the law will afford a remedy and it would not be a circumstance entitling the respondents to rescind the contract.

77 The matters relied upon by the respondents as to the execution of the agreement, namely, that Mr Waller had lately been ill with Barre's syndrome and that subsequently his wife was committed to a psychiatric institution, are not likely to lend support to their suggested claim of undue influence.

78 The most significant issues to be weighed in balancing the risk of doing an injustice can, I think, be reduced to these. If the injunction is refused the applicant will be denied the security which, there is a good prospect, could in the end be held to be its by right and there is a real risk the respondents would have little or no capacity to pay moneys claimed by the applicant.

79 The applicant contends that debt is currently in the order of $250,000 to $300,000. The respondents say the amount cannot presently be determined but could be either nothing (if there has been no default in payment) or perhaps, as I apprehend it, something approaching $100,000.

80 As against the applicant's claim to prejudice the respondents say there would be none if the applicant is kept to its remedy in damages and execution after trial. It is said that if there is no market for the dredges that would be the position now. Alternatively, if there is a market for the dredges and any other property sold after judgment and execution the only loss to the applicant would be the loss of the use of the funds between the date it would otherwise have sold the dredges and the date of execution - and that would be compensated in interest.

81 On the other hand, if the injunction is granted it is said the respondents would lose their sole source of income which would mean not only financial disaster for them but that there would be no prospect they could pay what is claimed by the applicant. If the respondents retain ownership it is said they will be able to earn an income and, inter alia, pay the applicant what is owed to it, if anything.

82 If the evidence supported the submission made on the respondents' behalf here I would have had no hesitation in refusing the application for the interlocutory injunction if not on the balance of convenience then on discretionary grounds. That is because in that situation the potential prejudice or injustice to the respondents if the injunction were granted would overwhelmingly outweigh that likely to be suffered by the applicant if the injunction were refused.

83 The evidence does not support the respondents' submission. On the evidence as a whole and having regard to the little weight which can be given to Mr Waller's assertions that he would be able to readily obtain and undertake work for the dredges and having regard to the fact that he has not earned income since July 2001, there is no ground for having confidence that the respondents' financial position would improve if the injunction be refused such that they would have an income and there would be money for the applicant.

84 On the contrary, on the material before me there is no reason to think the position would be likely to be other than a continued deterioration in the financial positions of both the applicant and the respondents. On balance, that situation would work a greater injustice against the applicant in all the circumstances.

85 I accept the applicant's submissions in par 12 of the submissions in reply to the respondents' submissions to the effect that if the order sought is not made then the applicant will be deprived of its security in respect of a large sum of money, it will become an unsecured creditor against an impecunious defendant and an award of damages would not be an adequate remedy.

86 I am also mindful that the applicant has given an undertaking in the usual form so that if following trial the applicant's claim were to fail it would be obliged to return ownership of the dredges to the respondents and/or to compensate them in damages for any loss suffered as a consequence of the interlocutory injunction. I have accordingly come to the conclusion that the interlocutory injunction sought should be granted