Australian and Pacific Investment Corporation Pty Ltd v Property Investment Management Ltd

[2011] VSC 44

IN THE SUPREME COURT OF VICTORIA Not Restricted

AT MELBOURNE

COMMERCIAL LAW DIVISION
PRACTICE COURT

No. 0373 of 2011

AUSTRALIAN & PACIFIC INVESTMENT CORPORATION PTY LTD	Plaintiff
V
PROPERTY INVESTMENT MANAGEMENT LTD	Defendant

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JUDGE:	VICKERY J
WHERE HELD:	MELBOURNE
DATE OF HEARING:	2 FEBRUARY 2011
DATE OF RULING:	2 FEBRUARY 2011
CASE MAY BE CITED AS:	AUSTRALIAN & PACIFIC INVESTMENT CORPORATION PTY LTD v PROPERTY INVESTMENT MANAGEMENT LTD
MEDIUM NEUTRAL CITATION:	[2011] VSC 44

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SALE OF LAND – Application for an injunction to delay auction – Discretion of Court as to whether or not to grant injunction – Whether serious case to be tried and whether or not the lower risk of injustice (the balance of convenience) favours injunction - Whether or not the Defendant has the right to waive the right of first refusal.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr C. Harrison SC Mr N. Dragojlovic	Mr John O’Kane Hall and Wilcox
For the Defendant	Mr Davies	Ms Kristy Dorney McMahon Clarke Legal

HIS HONOUR:

1. This case is somewhat complex and I will not go into detail as to the facts or the reasoning because of the time constraints arising from the application being made this afternoon and the which flow from the decision consequences of the decision which I am about to make.  There is to be an auction conducted of the management lot tomorrow.  It is desirable that a decision be made as quickly as possible in relation to the application that is made this afternoon in order for the orderly conduct of the auction to take place and negotiations, if there be any before the auction, be conducted in the light of the known position in terms of this application.  It is therefore desirable that I deliver my reasons in very short compass, in fact, that there be no reasons given in the accepted sense.

1. In this case the central question is whether the defendant, Property Investment Management Limited, which I will call PIML, has the right to waive its right under clause 22.6 of the management agreement.  Clause 22.6 relevantly is in the following terms: 

Glen Bell Pty Ltd [which is now in the hands of receivers] must procure that neither it nor any of its related bodies corporate [which are comprehensively described as the vendor] disposes of the management lot to any person other than the owners or YVG [it is to be noted that YVG has now become the defendant, PIML, through novation] as agent for the owners unless (a) 90 days before the disposal the vendor has offered its interests in the management lot to the owners or YVG [which has become PIML] as agent for the owners on terms no less favourable than the terms of the proposed sale to that other person.

1. I will call that right the right of first refusal.  The question is whether or not PIML has the right to waive the right of first refusal.

1. The facts, as I find them, point strongly to the position that PIML wishes to keep its hand open in terms of waiving that right should commercial considerations within the next 24 hours indicate to it that this is the appropriate course to follow. 

1. I find that there is a triable issue as to whether or not PIML does have the right to waive the right of first refusal conferred by clause 22.6 of the management agreement.  On its face, it would appear to be difficult to construe clause 22.6 as applying to individual owners but nevertheless collectively, in my opinion, there is a triable issue as to whether or not the owners in combination do have a right to exercise a right of first refusal where a private sale is contemplated other than a sale achieved by public auction. 

1. As to the lower risk of injustice or formerly the balance of convenience, I do find that the lower risk of injustice does call for the injunction sought by the plaintiff to be granted and I will so order.

1. The order of the Court will be that the defendant, Property Investment Management Limited, be restrained from waiving, or taking any step towards waiving its right to receive, on behalf of the owners of individual units, an offer of first refusal as contemplated by clause 22.6(a) of the management agreement which is Exhibit WB5 to the affidavit of Vilhelmus Antonios Yoannus Bercamp sworn 1 February 2011.

1. I will only make such an order on the usual undertaking as to damages being given by the plaintiff, Australian Pacific Investment Corporation Pty Ltd.

1. I make the order accordingly that until the trial of the action or further order, the injunction that I have pronounced will run and I accept the undertaking as to damages given by the plaintiff.  I make orders accordingly on that undertaking and reserve costs.

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