Amato v JAS Property Developments Pty Ltd (No 3)
[2020] VSC 480
•6 August 2020
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
PRACTICE COURT
S ECI 2020 01587
| CONCETTINA CATERINA AMATO | Plaintiff |
| v | |
| JAS PROPERTY DEVELOPMENTS PTY LTD (ACN 601 245 363) (as Trustee for the JAS PROPERTY UNIT TRUST) | First Defendant |
| - and - | |
| JAS INVESTORS PTY LTD (ACN 602 104 978) | Second Defendant |
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JUDGE: | McMillan J |
WHERE HELD: | Melbourne |
DATE OF HEARING: | 21 July 2020 |
DATE OF JUDGMENT: | 6 August 2020 |
CASE MAY BE CITED AS: | Amato v JAS Property Developments Pty Ltd & Anor (No 3) |
MEDIUM NEUTRAL CITATION: | [2020] VSC 480 |
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INJUNCTION — Application for extension of interlocutory injunction — Contract of sale of property between plaintiff and first defendant — Licence to occupy pending settlement of sale — Second defendant as mortgagee over property intends to exercise power of sale — Notice to vacate issued to plaintiff — Whether serious question to be tried as to second defendant’s knowledge and involvement in contract of sale and licence — Whether balance of convenience favours continuation of injunction — Extension granted — Australian Broadcasting Corporation v O’Neill (2006) 227 CLR 57.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr P Bingham | Falcone & Adams |
| For the First Defendant | No appearance | |
| For the Second Defendant | Mr P Van Eps | Catcher Legal Pty Ltd |
HER HONOUR:
On 8 May 2020, the Honourable Justice Forbes granted an interim injunction restraining the defendants from evicting the plaintiff from Apartment 303 of a multi-unit residential property development at 6 Queen Street, Blackburn (‘Apartment 303’). On the return of the proceeding in the Practice Court on 21 July 2020, orders were made extending the injunction until the hearing and determination of the proceeding. The following reasons are given for the Court’s decision.
Background
The relevant background is set out in the reasons given by Forbes J dated 11 May 2020.[1]
[1]Amato v JAS Property Developments (No 2) (Supreme Court of Victoria, Forbes J, 11 May 2020).
By way of brief summary, the plaintiff and first defendant entered into a contract of sale of Apartment 303 dated 26 October 2018. By agreement between them, the plaintiff was entitled to occupy the property prior to settlement. A dispute arose between the plaintiff and the first defendant with regard to certain work to be completed on Apartment 303 pursuant to the contract of sale, as well as work required to repair damage that occurred as a result of defective air conditioning pipes. The plaintiff withheld funds for the settlement of the sale pending remedial work, but remains prepared to settle once that work is complete. The plaintiff commenced this proceeding on 31 March 2020 in relation to the defects dispute.
The second defendant is the corporate trustee of the JAS Investors Unit Trust. It helped finance the development by way of a loan to the first defendant secured by mortgage over the development. The first defendant defaulted on the loan and a notice of default was issued. By letter to the plaintiff’s solicitors dated 20 April 2020, the second defendant said that it expected the first defendant would yield up possession of all properties the subject of the mortgage, including Apartment 303.
On 30 April 2020, the second defendant served a notice to vacate upon the plaintiff’s solicitors, requiring her to vacate the property by noon on 8 May 2020. The second defendant described itself as a ‘mortgagee in possession’ in the notice. The plaintiff subsequently applied for an order restraining eviction and joining the second defendant to the extant proceeding.
Procedural history
The plaintiff’s application was heard by Forbes J in the Practice Court on 8 May 2020. The second defendant was represented by Mr Van Eps of counsel. The second defendant consented to be joined to the proceeding, but opposed the grant of an injunction restraining the eviction of the plaintiff from Apartment 303.
Forbes J granted an injunction restraining the defendants, until 4.00pm on 5 June 2020 or further order of the Court, from evicting the plaintiff from Apartment 303 or otherwise interfering with her occupation thereof. Her Honour further ordered that the second defendant attend a judicial mediation listed on 21 May 2020 and that the summons be adjourned to 5 June 2020. In her reasons for judgment, Forbes J stated:
I am satisfied that there is a dispute as to whether the defects alleged render the apartment not in accordance with the plans and so not in accordance with the contract of sale. I am also satisfied that there is a serious question to be tried as to whether JAS Investors was aware of the contract of sale, the licence to occupy, the defects and dispute surrounding their rectification, and as such is not entitled to evict the plaintiff or take steps to resell the apartment to a third party.
The plaintiff has also satisfied me that the balance of convenience favours the grant of an injunction. The apartment is her home. She is in occupation under a licence granted and still on foot from the first defendant. The licence to occupy was confirmed on 14 April 2020 in circumstances where the Victorian government has declared a State of Emergency and the Chief Health Officer has made restricted activity and stay at home directions to restrict the spread of Covid-19, requiring people to remain in their ordinary place of residence unless leaving for one or more specified authorised reasons. I accept that damages will not be an adequate remedy for the consequences of enforcing the Notice to Vacate particularly at present given the heightened community health risk for older people (the plaintiff is aged 64).[2]
[2]Ibid, [10]–[11].
On 11 May 2020 the plaintiff filed an amended originating motion, joining the second defendant.
Following settlement negotiations, the parties agreed to extend the injunction. Pursuant to orders of Judicial Registrar Matthews, the injunction was extended by consent to 21 July 2020. The Judicial Registrar ordered that if the parties could not agree to the further extension of the injunction, subject to any further order of the Court, it should be determined on the papers by the judge sitting in the Practice Court on or before 21 July 2020.
Notwithstanding the order that the extension be determined on the papers, the proceeding returned before the Court on 21 July 2020. The proceeding was heard via video-link and counsel for both parties were provided the opportunity to expand upon their written submissions. The Court then reserved its decision in order to further consider the papers. Later that day, the Court contacted the parties by email informing them that an extension of the injunction would be granted.
Submissions
The plaintiff and second defendant each filed detailed written submissions in advance of the hearing on 21 July 2020. The plaintiff relied upon the evidence that was before Forbes J on 8 May 2020, as well as an additional affidavit of the plaintiff sworn 9 July 2020. The second defendant relied upon an affidavit of Mr David Ryan, director, sworn 9 July 2020.
The first defendant did not file any evidence or submissions, nor did it make an appearance on 21 July 2020.
The submissions of both parties raised issues concerning the admissibility of the evidence before the Court. Objections of that sort are normally dealt with at the trial of the proceeding, rather than at an interlocutory stage.[3] Although the Court did not adjudicate on the parties’ objections, they were given due regard when weighing the evidence before it.
Second defendant’s submissions
[3]American Cyanamid Co v Ethicon Ltd [1975] AC 396, 407–8 (Lord Diplock).
The second defendant submits that the injunction should not be extended as there is no serious question to be tried. It says that the plaintiff’s case relies upon two misconceptions which undermine its viability:
(a) First, that the plaintiff erroneously treats the first and second defendants as the same entity. The second defendant says that it is ‘demonstratively clear’ that the first defendant and the second defendant are separate entities, and that the second defendant is exercising its power of sale under the loan agreement for the purpose of obtaining repayment of the loan. Although the second defendant accepts that it was aware of the contract of sale, it denies any awareness of the licence or of the dispute between the plaintiff and first defendant.
(b) Secondly, the licence relied upon by the plaintiff cannot support the injunctive relief sought on an ongoing basis. By reference to the decision of the High Court in Cowell v Rosehill Racecourse Co Ltd,[4] the second defendant submits that the licence can be determined by the second defendant, and the plaintiff transformed into a trespasser, even if that determination involves a breach of contract. On that basis, it is said that whether or not the first or second defendants are in breach of the contract is entirely irrelevant to the availability of injunctive relief.
[4](1937) 56 CLR 605.
The second defendant did not address the balance of convenience in any material way in its submissions, save for the submission that it would be ‘intolerable’ for the plaintiff to remain in possession of the property until the determination of the proceeding. It says that damages are an adequate remedy in the event of the plaintiff’s success in respect of any of her rights under the contract of sale. The second defendant submits further that the plaintiff has had ample time to secure alternative accommodation since the date of the notice to vacate.
Finally, the second defendant says that it was not provided an opportunity to adequately prepare or file evidence in advance of the hearing before Forbes J on 8 May 2020 and, therefore, the decision made by Forbes J was made on the basis of incomplete evidence. The second defendant submits that Forbes J acknowledged this by granting only a temporary injunction.
Plaintiff’s submissions
The plaintiff maintains that there is a serious question to be tried, and that the balance of convenience supports the continuation of the injunction. She says that there is clearly a genuine dispute between the parties, and an awareness of the second defendant of the relevant facts. She says that there is clear evidence of links between the first and second defendant, including that a former director of the second defendant, Mr Adrian Buscombe, was deeply involved with the contract of sale and licence for early occupation of the apartment. At the hearing, counsel also submitted that the JAS Investors Unit Trusts Unit Holders Agreement clearly demonstrates a partnership between them. The plaintiff says that the assertion of the second defendant that there are no further links between it and the contract of sale is a matter to be tested at trial following proper disclosure of documents and testing of evidence in cross-examination.
The plaintiff says that the issue for determination at the trial is whether the second defendant consented to the grant of the licence, and whether the licence in this case was coupled with a grant of a proprietary interest in the property. She submits that the second defendant’s reliance upon Cowell v Rosehill Racecourse is misconceived. In that case, the High Court distinguished between a proprietary interest in land created by a contract relating to its possession or enjoyment, and a contractual right to use land under certain conditions, with the owner retaining possession over it. Although the latter may be revocable, where the licence is clearly granted in aid of a proprietary interest the plaintiff says that it is not revocable at will. The plaintiff submits that in this case she holds an equitable interest in the property arising from the contract of sale as well as her expenditure of money repairing the defects. She says that her interest is only revocable on settlement or termination of the contract. The plaintiff referred to several other authorities which she says support that position.
The plaintiff further submits that the balance of convenience remains with the extension of the injunction. She submits that the current COVID-19 pandemic is a factor that ought to weigh heavily upon the exercise of the Court’s discretion in light of public health advice and government policy requiring as many persons as possible to remain within their home, as well as her advanced age of 64 years. Further, the plaintiff says that she has made a significant investment in the property, which investment she would lose if the injunction were removed.
The plaintiff confirmed that she remains ready, willing and able to settle the sale when the outstanding defects are rectified. She also confirmed her willingness to give the usual undertaking as to damages.
Applicable principles
The applicable principles relating to the grant of an interlocutory injunction are not in dispute between the parties. Stated briefly, in order to justify the grant or continuation of an interlocutory injunction, the applicant must satisfy the Court that:
(a) there exists a serious question to be tried, or prima facie case, in relation to their entitlement to relief in the underlying proceeding;
(b) he or she will suffer irreparable injury for which damages will not be adequate compensation; and
(c) the balance of convenience favours the granting of an injunction.[5]
[5]Australian Broadcasting Corporation v O’Neill (2006) 227 CLR 57.
The relevant touchstone in assessing whether there exists a serious question to be tried was described by Gummow and Hayne JJ in Australian Broadcasting Corporation v O’Neill as being ‘sufficient that the plaintiff show a sufficient likelihood of success to justify in the circumstances the preservation of the status quo pending the trial.’[6] That is, something less than showing that it is more probable than not that the plaintiff would succeed at trial.
[6]Ibid, 82 [65].
Consideration
The existence of a serious question to be tried was determined by Forbes J in her orders dated 8 May 2020 and subsequent reasons for judgment. Her Honour was satisfied that there existed a genuine dispute as to whether the defects alleged by the plaintiff render the apartment not in accordance with the contract of sale, as well as whether the second defendant had knowledge of the contract of sale, licence to occupy, the defects, or the surrounding dispute. Her Honour made those findings with the benefit of submissions from counsel on behalf of the second defendant, notwithstanding late service, and acknowledged that it had not been afforded the opportunity to file responsive evidence.
In any event, the further material filed by the second defendant since 8 May 2020 does not cast any doubt upon the existence of a serious question to be tried in relation to the plaintiff’s claim for relief. There remain questions as to the second defendant’s knowledge of the contract of sale and the licence, as well as the proper construction of the licence itself — in particular through the involvement of Mr Buscombe. Those questions were not wholly disposed of by Mr Ryan’s affidavit and it is not proper that they be answered at an interlocutory stage, rather they should be determined at trial following discovery and cross-examination of witnesses.
The Court is also satisfied that the balance of convenience has not shifted from the plaintiff since the determination of Forbes J on 8 May 2020. Mr Ryan’s affidavit did not contain any evidence relevant to the balance of convenience. Save for the submission that it would be ‘intolerable’ for the status quo to remain, the second defendant did not expand on that issue in any material way. In contrast, the plaintiff would suffer significant prejudice if the injunction were to be removed. Apartment 303 is her home, she has paid significant funds by way of deposit and repair of defects and intends to settle the contract of sale once the remaining defects are repaired.
It cannot be disregarded that the plaintiff is aged 64, and that the present COVID-19 pandemic presents a heightened risk for those in her age group. Current health advice and government policy is that people must remain in their ordinary place of residence. The defendant’s submission that the plaintiff has had ample time to find an alternative place to live is not sufficient to displace the balance, particularly in light of the unprecedented circumstances. The plaintiff having confirmed her undertaking as to damages, the Court is satisfied that the balance of convenience favours the continuation of the injunction until the hearing and determination of this proceeding.
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