Anthony John Bradstreet v Merrin Developments Pty Ltd - [2017] NSWSC 1559

Supreme Court

New South Wales

Case Name:	Anthony John Bradstreet & Ors v Merrin Developments Pty Ltd & Ors
Medium Neutral Citation:	[2017] NSWSC 1559
Hearing Date(s):	8 November 2017
Date of Orders:	10 November 2017
Decision Date:	10 November 2017
Jurisdiction:	Equity
Before:	Rein J
Decision:	See [27], [36] & [45] - [46]
Catchwords:	EQUITY — Equitable remedies — Injunctions — Whether an interlocutory injunction against the first and second defendants should be discharged or continued in circumstances where the 33 plaintiffs had contracted to buy off the plan, 19 apartments from the first defendant, which had an option to buy the land, but did not proceed with or protect that option and whereupon the second defendant (the alter ego of the first defendant), proceeded to purchase the land with the intention of selling off the plan, all apartments for a higher price than that which the first defendant had agreed – whether the plaintiffs established a prima facie case, based on an alleged breach of s 21 of the Australian Consumer Law (unconscionable conduct), to support the continuation of the injunction – whether there was utility in the injunction being continued– whether the injunction should be discharged because of an alleged lack of worth of value in the plaintiffs’ undertaking as to damages – whether, in providing the undertaking as to damages, the plaintiffs need to establish individually or collectively that they are able to meet a compensation order if they are unsuccessful at the final hearing.
Legislation Cited:	Competition and Consumer Act 2010 (Cth) sch 2 ('Australian Consumer Law') Conveyancing Act 1919 (NSW)
Cases Cited:	Jobema Developments Pty Ltd v Zhu [2016] NSWSC 3 APS Satellite Pty Ltd (formerly known as "SkyMesh Pty Ltd") v IPSTAR AUSTRALIA PTY LTD [2016] NSWSC 1898 Paciocco v Australia and New Zealand Banking Group Ltd (2015) 236 FCR 199 Australian Competition and Consumer Commission (ACCC) v Simply No-Knead (Franchising) Pty Ltd (2000) 104 FCR 253 Bensons Funds Management Pty Ltd v Body in Balance Chiropractic Pty Ltd [2015] VSC 280 Re DPR Futures Ltd [1989] 1 W.L.R. 778 Air Express Ltd v Ansett Transport Industries (Operations) Pty Ltd (1981) 146 CLR 249 Lefta Corp Pty Ltd v Kell & Rigby Holdings Pty Ltd [2011] NSWSC 627 Donnelly v Amalgamated Television Service Pty Ltd (1998) 45 NSWLR 570
Texts Cited:	Meagher, Gummow and Lehane’s Equity: Doctrines & Remedies (Heydon, J; Leeming, M; Turner, P, LexisNexis, 2015) Equitable Remedies (Spry, 2014, 9th Edition, Lawbook Co)
Category:	Principal judgment
Parties:	Anthony John Bradstreet (First Plaintiff) Jennifer Louise Bradstreet (Second Plaintiff) & 31 Ors Merrin Developments Pty Ltd (First Defendant) Beachmere Holdings No 2 Pty Ltd (Second Defendant) & 5 Ors
Representation:	Counsel: J.P Knackstredt (Plaintiffs) H.K Insall SC (Defendants) Solicitors: Macpherson & Kelley Lawyers (Plaintiffs) Duffy Law Group (Defendants)
File Number(s):	2017/272512
Publication Restriction:	Nil

JUDGMENT

In these proceedings 33 plaintiffs entered into 19 separate contracts for the sale of 19 lots in a property development at Warriewood NSW. The vendor in each of…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2017] NSWSC 1559
Decision Date: 10 November 2017

CaseChat Overview and Summary

In the matter of Anthony John Bradstreet and others v Merrin Developments Pty Ltd and others, the dispute before the court was the appropriate remedy for the plaintiffs, who had entered into contracts to purchase apartments off-the-plan from Merrin Developments Pty Ltd. The company had an option to purchase the land but failed to exercise it, allowing Beachmere Property Group, an entity linked to Merrin, to acquire the land. Beachmere intended to sell the apartments at a higher price. The plaintiffs sought to continue an interlocutory injunction against the defendants, arguing a prima facie case of unconscionable conduct under the Australian Consumer Law, and contended that the injunction should not be discharged due to the plaintiffs’ undertaking as to damages. The court was required to decide whether the plaintiffs had established a prima facie case to support the continuation of the injunction, whether there was utility in continuing the injunction, and whether the injunction should be discharged due to an alleged lack of worth in the plaintiffs' undertaking as to damages.

The court found that the plaintiffs had established a prima facie case of unconscionable conduct. It held that the plaintiffs need not individually establish their financial capacity to meet a compensation order if they were unsuccessful at the final hearing, but rather could collectively provide an undertaking as to damages. The court considered that the plaintiffs had paid a significant sum of money to the defendants, providing a form of security, and that the defendants had willingly entered into contracts with the plaintiffs, suggesting that the plaintiffs had the financial means to meet their obligations. The court also found that the risk of the plaintiffs being unable to meet a compensation order was not a conclusive factor against the grant of an injunction. The court determined that the injunction should be continued due to the strength of the plaintiffs' case, the risk taken by the defendants, and the nature of the prima facie case established.

The court dismissed the application to discharge the interlocutory injunction and ordered that the injunction against the defendants be maintained. The court also directed that the defendants pay the plaintiffs' costs of the application, to be taxed if not agreed.

Orders

Orders of the court

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Background

Background to the litigation

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Evidence

Evidence Before The Court

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Decision

Reasons for decision

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Ratio Decidendi

Legal Principle Established

In coming to a view concerning this I regard the following matters as leading to the conclusion that injunctive relief should not be refused because the plaintiffs have failed to provide evidence of their financial position:(1)The plaintiffs have collectively given an undertaking as to damages.(2)As a general rule I think that where there is no evidence or suggestion that a plaintiff does not have the funds to meet a compensation order, the plaintiff is not required to advance a positive case that he or she does hold such funds. Nor has any authority been cited that a plaintiff is required to answer a Notice to Produce calling for extensive documents of an individual’s financial position where there has been no indication that the plaintiff is impecunious or of limited means. It is not without significance in this context that Merrin entered into contracts totalling almost $19 million with these plaintiffs, obviously prepared to accept that they would be able to meet their contractual obligations, with the protection of the deposits against that occurring, and that none of these plaintiffs have taken up Merrin’s assertion that the contract is at an end entitling return of the deposit.(3)The plaintiffs are, with only one exception, individuals.(4)In my view, protection of a defendant is effected by aggregating the resources of the plaintiffs and there is no requirement that each of many must himself or herself be able to meet a compensation order.(5)The plaintiffs have paid a total of $1.6 million to CPM handling the sales for Merrin and, hence, Beachmere, its alter ego. That is a significant sum of money, and provides, effectively, a form of security to the defendants.(6)Whilst there is a possibility of some compensation being required to be paid if the plaintiffs are unsuccessful I am far from satisfied that the figure of $16.9 million advanced by Mr Insall SC is realistic. I say that not only because of the paucity of evidence to support it and the unlikelihood of the project being terminated because of the injunction for the reasons to which I have already referred, but, in addition, it must be appreciated that the loss for which compensation would be ordered is not a loss deriving from the litigation, but can be only from the injunctive relief itself: see Air Express Ltd v Ansett Transport Industries (Operations) Pty Ltd (1981) 146 CLR 249 at p 320 per Stephen J and p 324 - 325 per Mason J. This is closely linked to the point concerning the assessment of risk by Beachmere to which I have also referred.(7)Even were I to be satisfied that there was a risk that if a compensation order were to be made and that the amount would be far more than that which presently seems likely, the absence of financial resources is not conclusive against the grant of injunction, but rather only a factor to be taken into account: see Lefta Corp Pty Ltd v Kell & Rigby Holdings Pty Ltd [2011] NSWSC 627, and see also Donnelly v Amalgamated Television Service Pty Ltd (1998) 45 NSWLR 570.(8)Beachmere, in doing what it has done, must have appreciated that it was taking on a significant risk that the plaintiffs would seek to prevent a loss of their rights to the lots.(9)I need to take into account all matters here including the nature of the prima facie case, and the strength of that case.(10)A further matter is, if Beachmere is confident that it will ultimately succeed in defending the claims by the plaintiffs, than the 19 units will be available for sale at the higher prices, which Beachmere expects to obtain. That confidence will no doubt be communicated to a lender. If Beachmere is not confident of defending the plaintiffs’ claims and that is the reason why Beachmere does not proceed with the project, then its claim that the injunction caused it to terminate the project will very likely be impugned.