Adelaide Bank Ltd v Lucke - [2010] SASC 59

SUPREME COURT OF SOUTH AUSTRALIA
(Applications Under Various Acts or Rules: Civil)
ADELAIDE BANK LIMITED v LUCKE
[2010] SASC 59
Judgment of The Honourable Justice Gray
17 March 2010
EQUITY - EQUITABLE REMEDIES - INJUNCTIONS - INTERLOCUTORY INJUNCTIONS - JURISDICTION AND GENERALLY
EQUITY - EQUITABLE REMEDIES - INJUNCTIONS - INTERLOCUTORY INJUNCTIONS - INJUNCTIONS TO PRESERVE STATUS QUO AND PROPERTY PENDING DETERMINATION OF RIGHTS - OTHER CASES
Application for permission to appeal from decision of District Court Judge dismissing appeal from decision of Master of District Court granting an injunction - whether prima facie case with a probability of success demonstrated - whether preservation of status quo justified - whether balance of convenience favours the granting of an injunction.
Held: permission to appeal granted - appeal dismissed - prima facie case established - status quo pending trial should be preserved - balance of convenience favours granting of injunction - undertaking as to damages provided.
Supreme Court Civil Rules 2006 (SA) r 292, referred to.
Cini & Ors v Pets Paradise Franchising (SA) Pty Ltd & Ors [2008] SASC 287; Norman v Mitchell (1854) 5 De GM & G 648; Preston v Luck (1884) 27 Ch D 497; Municipal Council of Rockdale v Municipal Council of Kogarah (1926) 26 SR (NSW) 552; Beecham Group Ltd v Bristol Laboratories Pty Ltd (1968) 118 CLR 618; Aboriginal Development Commission v Ralkon Agricultural Co Pty Ltd (1987) 15 FCR 159; In re Will of Gilbert (1946) 46 SR (NSW) 318; Adam P Brown Male Fashions Pty Ltd v Philip Morris Inc (1981) 148 CLR 170; Paringa Mining & Exploration Company Plc v North Flinders Mines Ltd & Ors (1988) 165 CLR 452; Williams v Marac Australia Ltd (1985) 5 NSWLR 529; Australian Broadcasting Corporation v Lenah Game Meats Pty Ltd (2001) 208 CLR 199; Heid v Reliance Finance Corporation Pty Ltd (1983) 154 CLR 326; Moffett v Dillon [1999] 2 VR 480; Australian Broadcasting Corporation v O’Neill (2006) 227 CLR 57; Custom Credit Corporation Ltd v Ravi Nominees Pty Ltd (1992) 8 WAR 42, considered.

ADELAIDE BANK LIMITED v LUCKE
[2010] SASC 59
Miscellaneous Appeal
GRAY J:
Introduction

This is an application for permission to appeal.
An injunction was granted by a Master of the District Court. An appeal from that decision was dismissed by a District Court Judge.[1] Permission to appeal from the decision of the District Court Judge is now sought.[2]
[1] Lucke v Cleary & Ors [2009] SADC 137 (Judge Smith).
[2] Pursuant to Supreme Court Civil Rules 2006 (SA) rule 292.
The plaintiff in the primary proceedings and the respondent to this appeal, Paul James Lucke, was in a de facto relationship with the first defendant, Pamela Jeanette Cleary. In or about November 2004, while in that relationship, they entered into a joint venture agreement. Pursuant to the agreement, two properties, known as 22 and 24 Wingfield Street, were purchased in Ms Cleary’s name. Each property was mortgaged to Perpetual Trustees Australia Limited. The intention was to develop the properties with a view to making a profit on their ultimate sale. Mr Lucke expended moneys as well as his own personal efforts in the development and improvement of the properties.
On 21 April 2006, at a time when the relationship between Mr Lucke and Ms Cleary had become strained, Mr Lucke lodged a caveat on the titles to the properties, claiming to be beneficially entitled to an estate and interest in fee simple in both properties in an indefinable share, having contributed to the acquisition, maintenance and improvement of the land. Ms Cleary had notice of the caveat.
On 20 November 2006, following negotiations, Mr Lucke and Ms Cleary entered into a Deed of Settlement with respect to their affairs. The Deed addressed the joint venture agreement in respect of 22 and 24 Wingfield Street. At that time it was contemplated that 24 Wingfield Street would be marketed for sale on the completion of a garage, a driveway and the realignment of the boundary between 22 and 24 Wingfield Street. The Deed contemplated the development of 22 Wingfield Street, but that in any event, the property would be placed on the market for sale within 12 months; that is, by 20 November 2007.
In the event, 24 Wingfield Street was sold. After payment of the mortgage debt and other expenses, the balance of a little more than $8,000.00 was paid to Ms Cleary pursuant to the terms of the Deed. Settlement took place on or about 20 July 2007. At the time of settlement the caveat lodged by Mr Lucke was amended to enable settlement to occur with respect to 24 Wingfield Street; however, the amended caveat remained on the title of 22 Wingfield Street.
On 16 July 2007, allegedly without Mr Lucke’s knowledge, Ms Cleary entered into a contract with Cameron Doble and Victoria Kaminszky, the second and third defendants in the within proceeding, for the sale and purchase of a one half interest in 22 Wingfield Street.
The arrangement between Ms Cleary, Mr Doble and Ms Kaminszky involved a joint venture agreement for the development of 22 Wingfield Street. The sale and purchase and the proposed development costs, were financed by the Adelaide Bank. In all, the Bank advanced about $320,000.00, of which about $90,000.00 was with respect to the proposed development. A transfer of the half interest in 22 Wingfield Street was executed and a mortgage entered into to secure the Bank. Partial settlement was effected. However, Mr Lucke’s caveat precluded the registration of the mortgage to the Bank as a first mortgage, and the transfer to Mr Doble and Ms Kaminszky of the half interest.
On the hearing of the appeal in this Court, it was suggested that the Bank had been misled about the caveat and understood that it would be withdrawn. It was said that the partial settlement that had occurred took place on the expectation of the registration of the first mortgage to the Bank.
District Court Proceedings
The District Court Master was originally confronted with an application by the defendants for an order removing the caveat. Ultimately, the Master agreed that this was appropriate and made a removal order. That aspect of the Master’s order, although initially the subject of a cross-appeal, is no longer challenged. The caveat has been removed. However, Mr Lucke contended that he was entitled to injunctive relief directed to the Registrar-General to restrain the transfer of the half interest in 22 Wingfield Street and the registration of the Bank’s mortgage. The Master concluded that Mr Lucke had made out a prima facie case of an equitable interest in 22 Wingfield Street and that he had an arguable case that his equity had priority over the position of the Bank. The Master considered that the balance of convenience favoured the granting of an injunction.
The following reasons of the Master are of particular relevance to this application:
The first question for determination is does the plaintiff have a caveatable interest? By reference to the pleadings and the submissions made on behalf of the parties the plaintiff clearly had a caveatable interest in the land at the time the first caveat was registered. The interest arose out of the agreement pleaded in paragraph 2 of the [Further Amended Statement of Claim]. I agree with the defendants that that interest created by the agreement was subsumed into the Deed on 20 November 2006. The matters pleaded into issue clear[ly] define a cause of action referable to the Deed. Significantly, the [Further Amended Statement of Claim] at paragraph 6 pleads the effect of the Deed was to dissolve the agreement.
The authorities relied upon by the plaintiff are distinguishable as whilst they involve a consideration of equitable rights and caveatable interests none are concerned with subsequent agreements purporting to resolve all matters between the parties. It is patently clear the purpose of the Deed in this matter by reference to Recitals F and G, clause 11 (which provides for the first defendant releasing the plaintiff upon compliance with clause 10 of the Deed), paragraph 6 of the [Further Amended Statement of Claim] and paragraph 3.1 of the amended defence was to provide for process of development and sale of the land. The plaintiff does have a caveatable interest in 22 but it is pursuant to interests created by the Deed not his equitable interests prior to the execution of the Deed. Accordingly the first caveat no 10449029 is defective as the caveatable interest is described incorrectly.
[Emphasis added]
On 2 October 2009 the Master made the following order:
That the Registrar-General remove caveat no. 10449029 registered over Certificate of Title volume 5992 Folio 341.
That the [sic] upon the plaintiff giving the usual undertaking as to damages the Registrar-General be restrained from registering any and all instruments in respect of Certificate of Title volume 5992 Folio 341 until determination of District Court action no. 1474 of 2007 or further order.
Liberty to the parties and the Registrar-General to apply.
This order was the subject of the appeal to the District Court Judge. The Judge took the view that the right of appeal was circumscribed by Rule 292 of the District Court Civil Rules 2006 and concluded that it was no longer permissible for a District Court Judge to exercise his or her own discretion without regard to the manner in which the Master had exercised her discretion. The District Court Judge added that he could only exercise his own discretion in the event that error could be demonstrated. The Judge took the view that no error had been demonstrated on the part of the Master, adding that any further reasons of his would largely duplicate what the Master had said and as a consequence, he dismissed the appeal without further reasons.
Preliminary Observations on the Application
The parties
The present application has been brought by the fourth defendant in the within proceeding, the Adelaide Bank. The other defendants, Ms Cleary, Mr Doble and Ms Kaminszky appeared at the hearing of the appeal and indicated their support for the position of the Bank, but otherwise took no significant part in the hearing of the appeal. The Registrar-General did not attend on the hearing of the appeal; however, the Court has been informed that the Registrar-General will abide the order of this Court.
The principles
The principles in relation to an application for injunctive relief are well established. [3] A party seeking an interlocutory injunction must first show that he or she has a prima facie case with a probability of success.[4] Probability of success in this context means a sufficient likelihood of success to justify, in the circumstances, the preservation of the status quo. As Gummow and Hayne JJ observed in Australian Broadcasting Corporation v O’Neill:[5]
[I]t is sufficient that the plaintiff show a sufficient likelihood of success to justify in the circumstances the preservation of the status quo pending the trial.
A secondary consideration is whether the balance of convenience favours the granting of an injunction.[6] In determining where the balance lies, the court will contrast the injury a plaintiff is likely to suffer if the injunction is not granted, with the injury to the defendant if it is,[7] in view of all the circumstances of the case.[8] A further issue often considered is whether damages would be an adequate remedy in the circumstances.[9]
[3]    It is instructive to note that the principles in relation to an application for a removal of a caveat mirror those applicable to an application for injunctive relief: Cini & Ors v Pets Paradise Franchising (SA) Pty Ltd & Ors [2008] SASC 287 at [45] (Bleby J).
[4]    Norman v Mitchell (1854) 5 De GM & G 648 at 675 (Turner LJ); Preston v Luck (1884) 27 Ch D 497 at 506 (Cotton LJ); Municipal Council of Rockdale v Municipal Council of Kogarah (1926) 26 SR (NSW) 552.
[5]    Australian Broadcasting Corporation v O’Neill (2006) 227 CLR 57 at [65].
[6]    Australian Broadcasting Corporation v O’Neill (2006) 227 CLR 57.
[7]    Beecham Group Ltd v Bristol Laboratories Pty Ltd (1968) 118 CLR 618.
[8]    Aboriginal Development Commission v Ralkon Agricultural Co Pty Ltd (1987) 15 FCR 159.
[9]    Australian Broadcasting Corporation v O’Neill (2006) 227 CLR 57.
The Adelaide Bank seeks to review an interlocutory discretionary order. This Court is reluctant to allow further appeals with respect to an interlocutory procedural order. As Jordan CJ pointed out in In re Will of FB Gilbert (dec):[10]
I am of opinion that, ... there is a material difference between an exercise of discretion on a point of practice or procedure and an exercise of discretion which determines substantive rights. In the former class of case, if a tight rein were not kept upon interference with the orders of Judges of first instance, the result would be disastrous to the proper administration of justice. The disposal of cases could be delayed interminably, and costs heaped up indefinitely, if a litigant with a long purse or a litigious disposition could, at will, in effect transfer all exercises of discretion in interlocutory applications from a Judge in Chambers to a Court of Appeal.
[10] In re Will of FB Gilbert (dec) (1946) 46 SR (NSW) 318, at 323; see also Adam P Brown Male Fashions Pty Ltd v Philip Morris Inc (1981) 148 CLR 170, pp 177, 180; ParingaMining & Exploration Company Plc v North Flinders Mines Ltd & Ors (1988) 165 CLR 452 at 457.
However, injunctive orders, because of their substantive and material effects, give rise to different considerations than those relevant to appeals on procedural orders. The issues argued on this appeal do raise important questions. If the Bank is correct, an issue of priority would be finally determined.
The approach of the Court
In my view, the proper approach in this Court is that to be followed on the appellate review of a discretionary interlocutory order having substantive and material consequences. In these circumstances, the initial inquiry is to ascertain whether all relevant facts have been considered and whether any immaterial matters have been had regard to. The appellate court is to consider whether any error of law or principle has been identified on the part of the judicial officer under appeal. Further, the appellate court is to assess whether the decision under appeal is so extreme that although error cannot be identified, the court is satisfied that error must have occurred.
My conclusions on this application are reached on an interlocutory consideration of the evidence. The recorded facts are not final or conclusive findings. They are made on the basis of affidavit evidence. It may be that at trial, these interlocutory findings are not made out or are relevantly qualified. These are matters to be addressed by the trial Judge following the hearing of the trial.
An order for early trial
On 3 December 2009, the District Court Judge, when dismissing the appeal from the Master, conditioned that dismissal on the making of an order for an early trial. Apparently, prior to the hearing of the appeal, little had been done to pursue the order for early trial. The parties at appeal hearing however, through their counsel, all enthusiastically embraced the need for an early trial. The parties all indicated their support that Mr Lucke approach the District Court to arrange the fixing of the earliest date available for the hearing of the trial. This Court was informed that subject to the obtaining of evaluation evidence, the matter was ready for trial. The evidence filed with respect to the interlocutory applications in the proceeding thus far, provide an adequate reference to each of the parties cases as well as making a disclosure of all relevant documents. It was anticipated that valuation evidence could be obtained within two to three weeks. It was anticipated that the trial would conclude within one sitting week with the possibility of addresses extending the trial by no more than one or two days. The matter should proceed to an early trial and the proximity of the trial date has some relevance to the appeal. My chambers have now been advised that the trial of the action will probably be listed for hearing in August 2010. There remains the possibility that an earlier date may be fixed. It follows that the interlocutory injunction, if continued, would only have operation for a number of months.
Adequacy of reasons
On appeal, there was a challenge to the adequacy of the District Court Judge’s reasons. However, it was accepted during the course of the appeal that properly understood, the Judge had simply adopted and confirmed the reasons of the Master and in those circumstances, resort could be had to the reasons of the Master as being in effect the reasons of the Judge by adoption.
The Application for Permission
On the hearing of the application in this Court, counsel for the Bank submitted that the Master acted in error in the construction of the Deed of Settlement and the consequent grant of the injunction restraining registration by the Registrar-General of the transfer and mortgage. It was said that a proper reading of the Deed did not allow the conclusion that there was a prima facie case that Mr Lucke either continued to enjoy an equitable interest in 22 Wingfield Street, or that the Deed created any equitable interest. It was contended that Mr Lucke had not shown a case with a sufficient likelihood of success to justify the preservation of the status quo pending trial. Counsel for Mr Lucke challenged this submission and contended that the terms of the Deed and the surrounding circumstances provided a clear evidentiary basis for concluding that there was a prima facie case that Mr Lucke had an equitable interest prior to the execution of the Deed. It was said that this interest was recognised by and alternatively refined by the Deed. Finally it was said in the further alternative that the Deed itself created an equitable interest.
Counsel for the Bank submitted that Mr Lucke’s pleaded case did not assert that the Bank’s interest was subject to Mr Lucke’s interest as outlined in the caveat registered prior to the transfer of 22 Wingfield Street. It was said further that the case pleaded did not assert that the equitable interest claimed by Mr Lucke ranked in priority to the subsequent interests of the Bank, Mr Doble and Ms Kaminszky.
Counsel contended that any equitable interest of Mr Lucke’s existing prior to the execution of the Deed of Settlement was extinguished or alternatively subsumed on entry into the Deed. It was said that the terms of the Deed contemplated the sale of 22 Wingfield Street and the distribution of funds between Mr Lucke and Ms Cleary. It was argued that the Deed further contemplated that Ms Cleary might not cooperate in the development of 22 Wingfield Street, but would pay a premium to Mr Lucke upon sale. These express arrangements were said to extinguish or subsume any equitable interest of Mr Lucke. It was contended that Mr Lucke’s interest in the land was at best vague and uncertain, and could only arise from an alleged implied term of the Deed. It was contended that the suggested implied term that the Deed gave rise to an interest in the land or a sale of the land, was inconsistent with the express terms of the Deed. Finally, counsel argued that even if Mr Lucke could establish a prima facie case of such an interest arising, Mr Lucke still needed to establish that the Bank had actual or constructive knowledge of such an interest.
A prima facie case

In my view, Mr Lucke has made out a sufficient likelihood of success to justify in the circumstances the preservation of the status quo pending trial. The terms of and the circumstances surrounding the Deed give rise to a prima facie case. As the matter is to proceed to trial it is appropriate that I should be brief and circumspect in my reasons for this conclusion.
As discussed above, in November 2006, Mr Lucke and Ms Cleary entered into a Deed of Settlement. The Bank and the purchasers of the half interest in 22 Wingfield Street, Mr Doble and Ms Kaminszky, were not parties to the Deed. The Deed regulated the interests of Mr Lucke and Ms Cleary and addressed the joint venture agreement in respect of 22 and 24 Wingfield Street. The Deed set out the terms on which Mr Lucke and Ms Cleary were to resolve their disputes in relation to the two properties. It is convenient to set out clauses 10 and 12 of the Deed.
Clause 10 of the Deed provided:
24 Wingfield Street
[Ms Cleary] will continue to reside in the house at 24 Wingfield Street until;
The property is sold or;
At the expiration of six (6) months from the date hereof.
which ever is to occur first.
That whilst [Ms Cleary] resides at 24 Wingfield Street she will pay the amount of $200.00 per week, in advance and paid to Caldicott & Co Trust Account for and on behalf of [Mr Lucke] and shall keep the residence in the same state as the property is at present.
24 Wingfield Street will be marketed for the purposes of sale upon the completion of the garage, diveway and land division.
[Mr Lucke] will be responsible for and will indemnify [Ms Cleary] against any mortgage liability owing in respect of 24 Wingfield Street whether past, present or future.
That, within 30 days of the sale of 24 Wingfield Street, [Mr Lucke] will pay to [Ms Cleary] the sum of TWENTY FIVE THOUSAND DOLLARS ($25,000.00) in full and final settlement of [Ms Cleary’s] estate and interest in the property.
[Mr Lucke] will, after the discharge of any mortgage owing on the property and any other expenses associated with the sale of the property, retain the balance of the proceeds of sale 24 Wingfield Street.
22 Wingfield Street
[Mr Lucke] will, at his own costs in all things, continue the development of 22 Wingfield Street.
[Mr Lucke] will be responsible for and will indemnify [Ms Cleary] against any mortgage liability owing in respect of 22 Wingfield Street whether past, present or future.
22 Wingfield Street will be placed on the market at the cost in all things by [Mr Lucke] within 12 months of the date hereof.
Within 30 days of the date of the sale of 22 Wingfield Street [Mr Lucke] shall pay to [Ms Cleary] the sum of SEVENTY FIVE THOUSAND DOLLARS ($75,000.00) together with interest calculated at the rate of 5% per annum, commencing from the date hereof and concluding on the date of payment of the said sum.
Clause 12 of the Deed was in the following terms:
If [Ms Cleary] fails to comply with the terms hereof or if any term is not able to be carried into effect, the following shall occur:-
The properties at 22 and 24 Wingfield Street shall be sold upon such conditions as agreed between the parties or in default of agreement upon such price and such terms as shall be recommended in writing by a certified practising valuer who is a member of the Australian property Institute.
The proceeds of the sale of 22 and 24 Wingfield Street are to be paid into Caldicott & Co Trust Account and dispersed as follows:-
All proper expenses of the sale and transfer of the property including all agent’s fees, commission and brokerage.
Payment of such sum or sums to discharge in its entirety all monies due under Registered Mortgage Number 10120695 and 10321691 to Perpetual Trustees Australia Limited to the full and complete exoneration of [Ms Cleary].
To [Mr Lucke] the sum of ONE HUNDRED AND TWENTY THOUSAND DOLLARS ($120,000.00) in addition to such sums as [Mr Lucke] may reasonably have expended as necessary to prepare the properties for sale in their best light upon production by [Mr Lucke] to [Ms Cleary] of the written advice of a Licenced Land Agent appointed to effect the sale of the properties and receipts in respect of the sums claimed.
The balance of the proceeds of the sale of 22 Wingfield Street and 24 Wingfield Street, after deducting the amounts as referred to in paragraphs 12.2.1-12.2.3 above, to be paid to [Ms Cleary] in full and final settlement of her interest in 22 Wingfield Street and 24 Wingfield Street.
Clause 10 of the Deed as excerpted above provided that on the sale of 24 Wingfield Street, Mr Lucke was to pay Ms Cleary the sum of $25,000.00 in settlement of her interest in that property. Mr Lucke was to retain the balance of the proceeds of sale. Clause 10 further provided that Mr Lucke would continue to develop 22 Wingfield Street and that this property would be put on the market within 12 months of the date of the Deed. On that property’s sale, Mr Lucke was to pay Ms Cleary the sum of $75,000.00 in settlement of her interest in that property. Clause 12 outlined alternative realisation mechanisms in the event that the mechanisms outlined in clause 10 were not complied with.
Prior to the entry into the Deed, it is arguable that Mr Lucke had a caveatable interest in 22 and 24 Wingfield Street. That interest was an equitable interest in those properties arising under a resulting or constructive trust. The Deed arguably acknowledges that interest and provides for the separation and quantification of Mr Lucke and Ms Cleary’s interests according to their joint venture arrangement. The Deed does not expressly extinguish Mr Lucke’s equitable interest. The Deed through Clause 10 separates, defines or quantifies the interests of Mr Lucke and Ms Cleary rather than extinguishing them. As a consequence, it is arguable that at the time of sale of the property, Mr Lucke maintained an equitable interest in the property.
The sale of the half interest in 22 Wingfield Street to Mr Doble and Ms Kaminszky was, it was contended, contrary to Mr Lucke’s rights under the Deed. The 12 month “deadline” by which the property was to be sold as foreshadowed in clause 10 had not expired by July 2007. Prior to this expiry, it is arguable that there was no entitlement for Ms Cleary to proceed under the alternative mechanism provided by clause 12.
The above considerations establish, in my view, a prima facie case on the part of Mr Lucke for relief against Ms Cleary, Mr Doble and Ms Kaminszky. As against the Bank, I have reached the conclusion that Mr Lucke has a prima facie case for interlocutory injunctive relief.
Balance of convenience
The relief sought and obtained by Mr Lucke is an injunction against a non party: the Registrar-General. While the requirement of an underlying cause of action against a party for an injunction is the general rule, there are exceptions. The present case falls within a recognised category of exception. As Callinan J said in Australian Broadcasting Commission v Lenah Game Meats Pty Ltd:[11]
It is true that an underlying cause of action against the person sought to be restrained, is generally necessary to support the grant of an injunction, but there are exceptions. A Registrar-General may be restrained from registering a document in the interests of justice although the plaintiff has no independent cause of action against the Registrar-General (Williams v Marac Australia Ltd (1985) 5 NSWLR 529).
It may well be that Mr Lucke’s arguable claim against Ms Cleary is sufficient to sustain the injunction against the Registrar-General.
[11] Australian Broadcasting Corporation v Lenah Game Meats Pty Ltd (2001) 208 CLR 199 at [285].
To the extent that it is necessary to establish an arguable claim against the Bank, Mr Lucke advances a claim for declaratory relief against the Bank. He seeks a declaration to the effect that his equitable interest ranks in priority to the later equitable interest of the Bank. This is a sufficient claim to support injunctive relief intended to protect the status quo pending resolution of the proceedings. If made out, it also provides sufficient basis for an injunction against the Registrar-General.
It was contended that the balance of convenience did not favour the grant of an injunction. It was argued that the potential detriment to be suffered by the Bank, Mr Doble and Ms Kaminszky as bona fide, innocent third parties at arm’s length, in not being able to register their interests on the title, outweighed any detriment to Mr Lucke. It was said that Mr Lucke’s interest and claim was for a monetary sum upon sale of the land as outlined in the Deed and the protection of this interest did not require injunctive relief. The categorisation of Mr Lucke’s interest as a monetary interest also informed counsel’s contention that damages were an adequate remedy for Mr Lucke. Counsel contended that Mr Lucke’s interest in the proceeds of sale in the property could adequately be compensated by the payment of damages.
Ordinarily in a case such as the present the balance of convenience will favour the party in the position of Mr Lucke. [12] Assuming the establishment of a serious question to be tried as to the existence of a continuing equitable interest, refusal of an injunction would have the effect of destroying for all practical purposes the benefit of that interest. It would prevent Mr Lucke from being able to obtain an order for specific performance of the Deed, and in particular clause 10, so as to give effect to, or vindicate, his equitable interest. This is so whether Mr Lucke’s equitable interest arises under a resulting or constructive trust, or a new or altered interest under the Deed; Ms Cleary’s sale to Mr Doble and Ms Kaminszky, and the creation of the Bank’s mortgage, was inconsistent with either. To refuse an injunction would determine the priority dispute the subject of these proceedings in favour of Mr Doble, Ms Kaminszky and the Bank. It would place those defendants in a better position than they were at settlement, as they would gain registered legal interests as opposed to the merely equitable interests that they had at settlement.
[12] Cini & Ors v Pets Paradise Franchising (SA) Pty Ltd & Ors [2008] SASC 287.
This is a case where the balance of convenience strongly favours injunctive relief. If relief against the Bank were to be refused, Mr Lucke’s claim for priority would be permanently foreclosed. The Bank is able to protect itself against any subsequent dealing in the land by a caveat. So too can the other defendants.
Mr Lucke has, in my view, satisfied the threshold requirement of establishing a serious issue to be tried as to his entitlement to proprietary relief in respect of 22 Wingfield Street. In my view the balance of convenience favours Mr Lucke. It follows that Mr Lucke has established an arguable case to obtain proprietary relief and not simply monetary relief.
Undertaking as to damages
An undertaking as to damages has been proffered by Mr Lucke. While such an undertaking has been viewed as a matter of relevance in relation to the balance of convenience in some cases, the significance of the fact and value of the undertaking will depend upon the circumstances of the case. Neither the fact of an undertaking as to damages, nor proof of its sufficiency to cover all contingencies, are immutable requirements of an injunction, particularly in circumstances such as the present where the potential destruction of a party’s proprietary interest in land is in issue.
Mr Lucke proffered the usual undertaking in this case. His assets, such as they are, are thereby exposed. While bankruptcy proceedings were issued against Mr Lucke in 2008, the Court was informed that the sequestration order and bankruptcy were set aside and annulled. This Court was further informed that the proceedings remain on foot only in the sense that they have been adjourned until June 2010 to give effect to a payment plan which was negotiated between the parties and has now been complied with by Mr Lucke.
I do not consider that on the present evidence any fortification of the undertaking should be ordered.
Conclusion
Permission to appeal is granted. The appeal is dismissed.