Aquatic Air Pty Limited v Siewert (No 2)

Aquatic Air Pty Limited sought to enforce an agreement against Siewert, which concerned the acquisition of an equitable interest in a property or its proceeds. The Federal Court of Australia was tasked with determining the nature of the rights granted by the agreement and the remedies available in the context of an interlocutory injunction. The primary issue was whether the agreement created an equitable interest in the property or merely a contractual right to the proceeds of a sale or to acquire the property through a call option. The court held that the agreement only created a contractual right, not an equitable interest, because the mechanisms for acquiring equity in the property had the same expiry date as the contractual rights.

The court also addressed whether an undertaking as to damages was sufficient to prevent the plaintiff from acquiring an equitable interest in land that would otherwise have been exercised under the contractual right. The interlocutory injunction prevented the plaintiff from exercising this right, leading to a quantification of the loss by reference to the price achieved at a later mortgagee sale. The court determined that the undertaking as to damages was adequate and did not prevent the creation of an equitable interest.

The court further considered the set-off of judgments between the parties, where both were entitled to damages – the plaintiff on its claim and the defendant pursuant to the undertaking as to damages. The court held that such judgments could be set off against each other. In assessing costs, the court found that while the plaintiff was partly successful, it had failed on the major part of its case, and thus the plaintiff should pay 80% of the defendants' costs.

Lastly, the court addressed the payment out of funds paid into court by the mortgagee from the proceeds of the sale of the property. Although the plaintiff was prima facie entitled in equity to those funds, the net judgment in favour of the defendant substantially exceeded those funds. The court held that the funds should be paid out to the defendant by analogy with a stop order or garnishee order.