Bensons Funds Management Pty Ltd v Body in Balance Chiropractic Pty Ltd
[2015] VSC 280
•22 June 2015
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMON LAW DIVISION
JUDICIAL REVIEW AND APPEALS LIST
S CI 2015 01692
| BENSONS FUNDS MANAGEMENT PTY LTD (ACN 121 715 937) | Applicant |
| v | |
| BODY IN BALANCE CHIROPRACTIC PTY LTD (ACN 120 371 897) | Respondent |
---
JUDGE: | CROFT J |
WHERE HELD: | Melbourne |
DATE OF HEARING: | 5 June 2015 |
DATE OF JUDGMENT: | 22 June 2015 |
CASE MAY BE CITED AS: | Bensons Funds Management Pty Ltd v Body in Balance Chiropractic Pty Ltd |
MEDIUM NEUTRAL CITATION: | [2015] VSC 280 |
---
PRACTICE AND PROCEDURE – Leave to appeal interlocutory decision of the Victorian Civil and Administrative Tribunal involving the exercise of discretion – Application to vary interlocutory injunction to require personal undertaking as to damages – Victorian Civil and Administrative Tribunal Act 1998 s 148(1) – Supreme Court (Miscellaneous Civil Proceedings) Rules 2008 r 4.06 – Environment East Gippsland Inc v VicForests (No 2) [2009] VSC 421.
RETAIL LEASES – Redevelopment affecting leased premises – Cf Retail Leases Act 2003 s 56 – Nature of injunctive relief.
---
APPEARANCES: | Counsel | Solicitors |
| For the Applicant | Mr P.D. Crutchfield QC and Mr C.A. Connor | Tony Hargreaves & Partners |
| For the Respondent | Mr G.J. McEwen | Mr P.G. Richards |
TABLE OF CONTENTS
Introduction......................................................................................................................................... 1
The appeal application....................................................................................................... 1
Principles applicable with respect to appeals.......................................................................... 3
Appeals in interlocutory proceedings involving the exercise of discretion............................ 5
Factual matters.................................................................................................................................... 7
Application to vary the injunction................................................................................................ 11
Principles applicable to undertakings as to damages............................................................... 14
Were errors of law made by VCAT?............................................................................................. 19
Wednesbury unreasonableness...................................................................................................... 26
Conclusions and orders.................................................................................................................. 27
HIS HONOUR:
Introduction
This is an application by Bensons Funds Management Pty Ltd (“Bensons”) for leave to appeal from an order of the Victorian Civil and Administrative Tribunal (“the Tribunal” or “VCAT”) on questions of law pursuant to s 148(1)(b) of the Victorian Civil and Administrative Tribunal Act 1998 (“the VCAT Act”).
Pursuant to s 148(2) of the VCAT Act, an application for leave to appeal must be made no later than 28 days after the day of the order of the Tribunal and in accordance with the rules of the Supreme Court.
The order of VCAT, the subject of the leave to appeal application, was made by a single member on 19 March 2015 (“the Tribunal Reasons”).[1] It is not in issue that the application for leave to appeal was brought within the period prescribed in r 4.06 of the Supreme Court (Miscellaneous Civil Proceedings) Rules 2008 (“the Chapter II Rules”) by Originating Motion filed on 16 April 2015. A sealed copy of the Originating Motion was, on that date, served on the Registrar of VCAT, and on the Respondent, Body In Balance Chiropractic Pty Ltd (“Body in Balance”), and on Dr Bianca Beaumont.
[1]Body in Balance Pty Ltd v Bensons Funds Management Pty Ltd (Unreported, Victorian Civil and Administrative Tribunal, Member L. Rowland, 19 March 2015).
On 23 April 2015, pursuant to r 4.08 of the Chapter II Rules, Bensons applied on Summons for the leave sought in the Originating Motion and served the Summons and a copy of the affidavit in support by Peter Anthony Brown, sworn 22 April 2015 (“the Brown Affidavit”), on Body in Balance. The Summons was returnable and heard on 5 June 2015.
The appeal application
Bensons submit the following questions and grounds in its Proposed Notice of Appeal:[2]
D. Questions of law
4.Whether VCAT, in declining to vary the interim injunction by requiring a personal undertaking as to damages from the sole director and shareholder of the respondent, erred in law by failing to apply the general legal principle that an adequate undertaking as to damages is the price of the grant of an injunction.
5.Whether VCAT, in declining to vary the interim injunction, erred in law by relying on the matters set out in paragraph [19] of the reasons for decision as these matters were irrelevant to the determination of the application to vary the interim injunction by requiring a personal undertaking as to damages from the sole director and shareholder of the respondent.
6.Whether VCAT erred in law on 19 March 2015 by taking into account as a finding that VCAT had made on 8 December 2014 when VCAT in fact had made no such finding, namely that the director was not required to give an undertaking as to damages and that the undertaking by the tenant was sufficient.
[2]Brown Affidavit, Exhibit “PAB-18”, Proposed Notice of Appeal [4]–[12].
E.Grounds of appeal
7.VCAT erred in law by failing to apply the general legal principle that an adequate undertaking as to damages is the price of the grant of an interim injunction.
8.VCAT erred in law by taking into account irrelevant matters as set out in paragraph [19] of the reasons for decision.
9.VCAT erred in law by taking into account a finding that had not been made on 8 December 2014, namely that the respondent’s director was not required to give an undertaking as to damages and that the undertaking by the respondent was sufficient.
10.Having found that the existing undertaking by the respondent was inadequate, VCAT erred in law by dismissing the landlord’s application for a variation of the interim injunction, in that it was a decision that no reasonable decision maker could have reached.
11.VCAT erred in law by finding that if a personal undertaking from the sole director and shareholder of the respondent was required, it would unreasonably expose the director to a very substantial claim by the appellant.
12.VCAT erred in law by finding that if a personal undertaking from the sole director and shareholder of the respondent was required, it would undermine the respondent’s ability to pursue its rights under the lease.
With respect to these questions and on the basis of the grounds set out in the Proposed Notice of Appeal, Bensons seek the following substantive orders (in addition to costs of the leave to appeal application and the appeal):[3]
F.Orders sought
13.An order pursuant to s 148(7)(a) of the Victorian Civil and Administrative Tribunal Act 1998 setting aside the order made on 19 March 2015 dismissing the application for variation of the injunction.
14.An order pursuant to s 148(7)(b) of the Victorian Civil and Administrative Tribunal Act 1998 granting the application for the variation of the injunction in the terms sought by the appellant.
15.Alternatively, an order remitting the proceeding to VCAT to be heard and decided again, without the hearing of further evidence, by a differently constituted tribunal.
[3]Brown Affidavit, Exhibit “PAB-18”, Proposed Notice of Appeal [13]–[15].
Principles applicable with respect to appeals
Section 148(1) of the VCAT Act provides:
(1)A party to a proceeding may appeal on a question of law from an order of the Tribunal in the proceeding—
(a)if the Tribunal was constituted for the purpose of making the order by the President or a Vice President, whether with or without others, to the Court of Appeal with leave of the Court of Appeal; or
(b)in any other case, to the Trial Division of the Supreme Court with leave of the Trial Division.
It follows from these provisions that any appeal is dependent upon two important qualifications. First, that the appeal be on a question of law and second, that the Court gives leave to appeal. The legislative policy underlying these provisions is that “VCAT decisions should not generally be disturbed where cases have been decided in that forum other than on questions of law and where there is something about the decision bearing upon the question of law which warrants a grant of leave to appeal.”[4] It follows that “[t]his Court is not entitled to enter into the fact finding exercise which the legislature has deliberately entrusted to a specialist tribunal.”[5]
[4]Commissioner of State Revenue v Frost (2011) 83 ATR 832 at 834 [5], referring to Secretary to the Department of Premier and Cabinet v Hulls [1999] 3 VR 331 at 335–6; Myers v Medical Practitioners Board (Vic) (2007) 18 VR 48 at 55–6 [28].
[5]Boucher v Dandenong Ranges Steiner School Inc (2005) 145 LGERA 21 at 26 [15], referring to Spurling v Development Underwriting (Vic) Pty Ltd [1973] VR 1; Whitehorse City Council v Golden Ridge Investments Pty Ltd [2005] VSCA 198.
In an application for leave to appeal under s 148 of the VCAT Act, Phillips JA said in Secretary to theDepartment of Premier and Cabinet v Hulls:[6]
[6][1999] 3 VR 331 at 335 [8]–[10] (Tadgell and Batt JJA concurring) (“Hulls”).
8… The discretion to grant leave, which is conferred by the statute in untrammelled terms, cannot be fettered, and should not be fettered, by judicial decision. From time to time a case will arise in which any preconceived guidelines will be found not wholly sufficient. In the end, whether leave is granted or not must always depend upon the justice of the case, as it appears to the court from whom leave is sought.
9… Because an appeal under s 148 lies only on a question of law it follows that if leave is to be granted the applicant must at least identify a question of law (as distinct from a question of fact) and a question of law which is important to the appeal’s succeeding or failing. …
10On the other hand, on an application for leave to appeal it cannot be expected that error below will be established: that is for the appeal itself. Something less must be sufficient on the application for leave to appeal and ordinarily the applicant will be required to show that there is a real or significant argument to be put that error exists. In other contexts, this has sometimes been called “a prima facie case”, or “an arguable case”, but these are no more than attempts to describe the degree to which an applicant must satisfy the court from which leave is sought that there is a real or significant argument, in favour of the applicant, on the question of law which is identified. …
The decision in Hulls, including the dicta of Phillips JA, has been followed and applied in a variety of subsequent decisions.[7] Moreover, it follows from these authorities and the provisions of s 148 of the VCAT Act that the requirement is for “leave” and not “special leave”. Additionally, in relation to s 148 of the VCAT Act, the High Court observed in Osland v Secretary to the Department of Justice:[8]
Despite the description of proceedings under the section as an “appeal”, it confers original not appellate jurisdiction; the proceedings are “in the nature of judicial review”.
[7]See, eg, Myers v Medical Practitioners’ Board of Victoria (2007) 18 VR 48 at 55–6 [28]–[31]; Commissioner of State Revenue (Vic) v Kameel Pty Ltd [2015] VSC 229 and the cases to which reference is made at [10]–[12].
[8](2010) 241 CLR 320 at 331–2 [18]; citing Roy Morgan Research Centre Pty Ltd v Commissioner of State Revenue (Vic) (2001) 207 CLR 72 at 79 [15].
In relation to the question of leave generally, Body in Balance contends that the application for leave to appeal should be refused because refusal would impose no substantial injustice or, alternatively, Bensons does not, in substance, have a prima facie case on appeal.[9] In any event, the parties agreed that in the interests of expedition and savings in costs, it was desirable that the application for leave to appeal and the appeal be heard together. This was, however, clearly on the basis that this did not involve any concession on the part of Body in Balance that leave to appeal should be granted.
[9]See Outline of Submissions on Behalf of Respondent (5 June 2015) [1], referring to r 4.09(2) of the Chapter II Rules.
For the reasons which follow, if there were no issues with respect to the interlocutory nature of the orders of the Tribunal which are challenged, I would be of the opinion that the application for leave to appeal should be granted because, as contended by Bensons, a prima facie case on appeal has been established in terms of the authorities to which reference has been made. More particularly, I am satisfied that the Proposed Notice of Appeal does raise questions of law which would found a sufficiently arguable case on the part of Bensons, as discussed in Hulls, to justify entertaining the appeal.[10] Nevertheless, for the further reasons which follow, I am not satisfied that any relevant error of law on the part of the Tribunal has occurred which would provide any basis for the orders sought by Bensons on appeal. Having formed this view, it does not follow that, as submitted by Body in Balance, refusing leave to appeal would impose no substantial injustice in terms of r 4.09(2) of the Chapter II Rules. Putting aside issues of hindsight — having considered the case on appeal advanced by Bensons — it would, in my view, be a substantial injustice to a party, namely Bensons, not to grant leave and to properly consider its case on appeal. That the appeal fails is not to the point in this context.
[10]Secretary to the Department of Premier and Cabinet v Hulls [1999] 3 VR 331 at 335–6.
Appeals in interlocutory proceedings involving the exercise of discretion
It is the case that, as submitted by Bensons, the natural inclination of the courts is to avoid the fragmentation of a proceeding. Thus, in Niemann v Electronic Industries Ltd the Full Court held that an applicant for leave to appeal from an interlocutory order must show, not only that there is sufficient doubt about the correctness of the decision under review, but also that substantial injustice would be done by leaving the decision unreversed.[11] Bensons submit that in the present case, it is critical for the question of the extent of the undertaking as to damages to be determined before the hearing of the main proceeding in the Tribunal. It is, it is said, in the interests of both parties that they know the position in relation to this issue before the commencement of the hearing at the Tribunal on 10 August 2015.
[11][1978] VR 431 at 441–2.
In Bradto Pty Ltd v Victoria the Court of Appeal summarised the principles to be applied in relation to an application for leave to appeal from an interlocutory order under s 148 of the VCAT Act:[12]
[12](2006) 15 VR 65 at 67 [3]–[4] (citations omitted).
[3]The tribunal’s order in each case being interlocutory, the respective applicants must show that:
(a)the order was wrong or attended with sufficient doubt to justify a grant of leave; and
(b)substantial injustice would be done if the decision was allowed to stand.
[4]Further, since the decision whether or not to grant an interlocutory injunction is an exercise of discretion, the application for leave must be considered by reference to the well-settled principles of law which must be applied by an appellate court when reviewing the exercise of judicial discretion. The applicants must, in short, identify error of law. …
Moreover, in the High Court in House v R, Dixon, Evatt and McTiernan JJ in their joint judgment said:[13]
The manner in which an appeal against an exercise of discretion should be determined is governed by established principles. It is not enough that the judges composing the appellate court consider that, if they had been in the position of the primary judge, they would have taken a different course. It must appear that some error has been made in exercising the discretion. If the judge acts upon a wrong principle, if he allows extraneous or irrelevant matters to guide or affect him, if he mistakes the facts, if he does not take into account some material consideration, then his determination should be reviewed and the appellate court may exercise its own discretion in substitution for his if it has the materials for doing so. It may not appear how the primary judge has reached the result embodied in his order, but, if upon the facts it is unreasonable or plainly unjust, the appellate court may infer that in some way there has been a failure properly to exercise the discretion which the law reposes in the court of first instance. In such a case, although the nature of the error may not be discoverable, the exercise of the discretion is reviewed on the ground that a substantial wrong has in fact occurred.
These principles have been commonly applied in relation to appeals on a question of law under s 148 of the VCAT Act.[14]
[13](1936) 55 CLR 499 at 504–5.
[14] See, eg, Metricon Homes Pty Ltd v Hooper [2015] VSC 110, [147]–[148].
I do not take Body in Balance to be contending otherwise with respect to the question of appeals in interlocutory proceedings involving an exercise of discretion as, indeed, its opening contention is that the application should be refused because refusal would impose no substantial injustice; though with reference to r 4.09(2) of the Chapter II Rules. Although, for the reasons indicated, I would be prepared to grant leave as sought by Bensons, in general terms and assuming there were no issues with respect to the interlocutory nature of the relevant orders, that is not the position with respect to these orders. On the basis of the authorities to which reference has been made in the context of applications for leave to appeal interlocutory orders, I am of the view that leave to appeal should be refused in this case. For the reasons which follow, I am of the view that the interlocutory order, the dismissal of the application by Bensons for variation of the terms upon which the interim injunction was granted, is neither wrong nor attended with sufficient doubt to justify a grant of leave and nor would substantial injustice be done if the decision of the Tribunal was allowed to stand.
Factual matters
The dispute in the VCAT proceeding is between Bensons as the landlord and Body in Balance as the tenant of premises at 4/787 Dandenong Road, East Malvern (“the premises”). The premises were leased to Body in Balance by a lease dated 25 May 2010 which was for a term of five years commencing 10 June 2010, together with a further option for five years (“the Lease”). The premises is part of a complex comprising four tenancies and approximately 78 car spaces. Bensons, as the landlord, owns the entire complex. Body in Balance claims that it did, by Notice dated 9 December 2014, exercise the option to renew the Lease for a further five year term.
It appears from the Tribunal Reasons that some time before 2012, Bensons decided to redevelop the entire complex into a 32 storey, 322 apartment complex. This position appears to be uncontroversial and to apply with respect to a site, which includes the premises, situated at the corner of Dandenong Road and Toronga Road, East Malvern.
On 26 November 2014, Bensons served a Notice of Breach under s 146 of the Property Law Act 1958 alleging a failure by Body in Balance to take out insurance policies that fully complied with the insurance requirements under the terms of the Lease.[15] In its submissions, Bensons say, and this position does not appear to be in contention, that Body in Balance did not rectify the alleged defaults, but, rather contended in the Tribunal proceedings that under the provisions of the Insurance Contracts Act 1984 (Cth) the landlord was protected in any event and, further, that it was impossible for anyone to obtain an insurance policy that complied with these covenants in the Lease. In the course of argument in these proceedings, it was submitted that this difficulty with the form of the Lease — a standard form Law Institute of Victoria commercial lease — was to be or had been rectified by revisions to the now standard form Law Institute commercial lease currently available. In any event, there was no evidence in this respect and the submissions do not take these proceedings any further, other than to reinforce the contention by Body in Balance that the allegations of breaches of the insurance covenants of the Lease are highly technical, to say the least. This does appear to be the position taken by the Tribunal on 19 March 2015:[16]
4On 26 November 2014 the landlord served upon the tenant a notice of breach alleging a breach of clauses 2.3.1 to 2.3.4 of the lease. The insurance policy taken out by the tenant covers the risks required by the lease, but the policy does not technically comply with the exact wording of the lease. For example, the policy does not strictly conform to the lease in that it does not require the insurer to give 21 days written notice of cancellation to the landlord before cancelling or refusing to renew the policy.
5According to the tenant, a policy with the precise wording required by the lease cannot be procured because insurers adopt the wording and requirements of the Insurance Contracts Act 1984 (Cth) rather than the wording contained [in] the 2006 version of the standard law institute commercial lease. The tenant asserts that every endeavour has been made to secure a policy which strictly complies with clauses 2.3.1 to 2.3.4 of the lease, but none can be obtained. The landlord has not identified any insurance policy which it says would comply with the lease.
It does not appear from the Tribunal Reasons or from the submissions in the current proceeding before the Court that issues of relief against forfeiture were raised with respect to these alleged breaches or subsequent breaches; the latter of which I will come to in due course.
[15]See cl 2.3.1 to 2.3.4 of the Lease.
[16]Tribunal Reasons, [4]–[5].
In any event, on 8 December 2014, Body in Balance obtained an interim injunction from the Tribunal restraining Bensons from taking possession of the premises, on the bases indicated in the Tribunal Reasons:[17]
[17]Tribunal Reasons, [7]–[8].
7On 8 November 2014 the tenant made application to the Tribunal for an interim injunction preventing the landlord from re-entering the rented premises and therefore determining the lease pursuant to the section 146 notice.
8The application was heard before me. Appropriately, the landlord did not oppose the interim injunction. The usual undertaking as to damages was given by the tenant. At the conclusion of the hearing, the landlord requested that the undertaking as to damages be extended to Dr Beaumont. At that point, I did not require Dr Beaumont to give an undertaking as to damages. Reasons were not articulated in the hearing but my view then was that undertaking by the tenant was sufficient for the following reasons:
(a)The landlord is not seeking to enforce any right under the lease, instead the landlord seeks to terminate the lease;
(b)A hearing date had been set for 17 March 2015, well before the expiration of the first term of the lease;
(c)The tenant has a strongly arguable case;
(d)The landlord has delayed in alleging a breach of the lease;
(e)A personal undertaking by Dr Beaumont unreasonably exposes her to the risk of a very substantial claim by the landlord. The landlord having made a commercial decision to develop land which is subject to a lease, is a risk the landlord has assumed, not the tenant’s guarantor.
As Bensons observed in its submissions, the Tribunal required the usual undertaking as to damages from Body in Balance, the tenant, but did not accede to the request by Bensons to extend the undertaking as to damages to include Dr Beaumont, even though, as Bensons submitted, the tenant was a company of limited liability and that Dr Beaumont was a guarantor under the lease and the sole director and shareholder of Body in Balance. The Tribunal’s response was to the effect that Dr Beaumont was not a party to the proceeding, and that Bensons could make an application to extend the undertaking as to damages at a later date after Dr Beaumont had been given notice.[18]
[18]See Transcript, Body in Balance Pty Ltd v Bensons Funds Management Pty Ltd (Victorian Civil and Administrative Tribunal, BP745/2014, Member L. Rowland, 8 December 2014) 27–8.
On 18 December 2014, Bensons, as landlord, served a second Notice of Breach under s 146 of the Property Law Act 1958. The grounds relied upon in this Notice are the tenant’s failure to obtain a permit for car-parking and a permit for the erection of signage. The latter alleged breach, as Bensons say, has been remedied by the tenant and is no longer in issue. In relation to the earlier alleged breach, Bensons contend that Body in Balance is in breach of the City of Stonnington Planning Scheme, and therefore the Lease, by not supplying the requisite car-parking spaces to operate the chiropractic business at the premises. On 19 December 2014, undertakings protecting the status quo similar to those given at the injunction hearing on 8 December 2014 were formally exchanged between the solicitors for the landlord, Bensons, and the tenant, Body in Balance, respectively.
On 31 December 2014, as a result of the application by Body in Balance to the City of Stonnington, a planning permit was obtained to reduce the car space requirement with respect to the tenancy to zero on the basis that the complex provided ample parking. Bensons, as landlord, now challenge the planning permit granted to the tenant in this respect in the VCAT Planning List on the grounds of serious misstatement by the tenant.[19] In its submissions in the current proceedings before the Court, Bensons says that it has initiated an appeal in VCAT,[20] to overturn the granting of the permit by the City of Stonnington “on the grounds that it was obtained by a material misstatement or concealment of fact, including the tenant’s contentions that the landlord had been notified of the application and that the tenant had incontrovertible car parking entitlements at the premises.”[21] The VCAT appeal with respect to the permit is listed for hearing on 23 July 2015. Again, neither the Tribunal Reasons nor the submissions in the proceedings currently before the Court make any reference to the possibility of an application for relief against forfeiture with respect to any of the breaches the subject of the second Notice.
[19]See Tribunal Reasons, [13].
[20]VCAT No. P129/2015.
[21]Outline on Submissions on Behalf of the Applicant (1 June 2015) [12].
As a final observation with respect to these background factual matters, I observe that the Lease does not contain any provision for its termination on the ground that the landlord seeks to demolish the premises as part of a redevelopment of the building or site of which it forms a part. It is also noted that, had the Lease contained a provision of this nature, the position may well have been that the provisions of s 56 of the Retail Leases Act 2003 may have operated to resolve a dispute of the present kind and in the course of such resolution provide compensation to the tenant whose premises was demolished.[22]
[22]See Croft and Hay, Retail Leases Victoria (LexisNexis, at 27) [70,025].
Application to vary the injunction
On 5 February 2015, Bensons filed an application for a variation of the injunction made by the Tribunal on 8 December 2014 so as to require, in addition to the undertaking by Body in Balance, the tenant company, as to damages, an undertaking as to damages from Dr Beaumont as the guarantor under the lease and the sole director and shareholder of Body in Balance. The application, which was heard by the Tribunal on 4 March 2015, was opposed by Dr Beaumont, counsel for whom informed the Tribunal that she was unwilling to give the undertaking.
In relation to this application and the matters put before the Tribunal at its hearing, Bensons make the following submissions in the current proceedings before the Court:[23]
[23]Outline of Submissions on Behalf of the Applicant (1 June 2015) [14]–[17] (citations omitted).
14.This application was heard on 4 March 2015 by the same member who had heard the application on 8 December … [2014] for the interim injunction.
15.At this hearing, Bensons relied on three affidavits, two sworn by its solicitor, Peter Anthony Brown, the first dated 5 February 2015 and a supplementary affidavit dated 9 February 2015, whilst the third affidavit was sworn on 27 February 2015 by Richard Francis Curtis, the Managing Director of Bensons.
16.In opposition to the landlord’s application for the variation of the undertaking, Body In Balance at the hearing on 4 March 2015 relied on two affidavits of Bianca Jane Beaumont, the first sworn 20 February 2015 and a supplementary affidavit sworn 3 March 2015.
17. At the hearing on 4 March 2015, Bensons, in essence, contended that:
(i)Bianca Beaumont is and at all relevant times has been the sole director and shareholder of Body in Balance.
(ii)Bensons had entered into the lease with Body in Balance subject to its director, Dr. Beaumont, providing a personal guarantee. The bargain between the parties has always contemplated that Dr. Beaumont would guarantee the performance of the lessee’s obligations.
(iii)According to ASIC records, Body in Balance has four $1.00 shares which are unpaid.
(iv)ASIC records reveal that there is no record of annual returns or financial reports having been lodged.
(v)Based on the formal records, Body in Balance does not appear to own any real property or have recourse to any assets of substance.
(vi)For these reasons, Bensons has reason to believe that Body in Balance may not have the capacity to answer its undertaking as to damages.
(vii)This was confirmed by the fact that the tax returns provided by the tenant as part of the discovery process reveal that the taxable income of the tenant for both its East Malvern and Richmond clinics for the following years was:–
Year ending 30 June 2011
$2,414
Year ending 30 June 2012
$16,233
Year ending 30 June 2013
$29,036
Year ending 30 June 2014
(-$8,031)
Total
$39,652
(viii)This financial position was in stark contrast to the tenant’s claim in the Further Amended Points of Claim dated 1 February 2015 that the average net profit for the East Malvern clinic alone for the three year period 1 June 2011 to 30 June 2014 was $116,734 per annum.
(ix)Bensons is concerned that unless the guarantor under the lease, Dr. Beaumont, provides a personal undertaking as to damages, the existing undertaking from her corporate entity appears to be worthless.
As indicated in the Bensons submissions which have been set out, the Tribunal, which was constituted by the same Member as heard the 8 December 2014 application, declined to accede to Bensons’ application to vary the basis upon which the injunction was granted on 8 December 2014. Rather, the Tribunal reaffirmed the Tribunal’s Reasons with respect to the basis upon which the injunction had earlier been granted.[24] Thus, the Tribunal said:[25]
[24]As to the reasons with respect to the basis upon which the injunction was granted on 8 December 2014, see Tribunal Reasons, [8]. See above [17].
[25]Tribunal Reasons, [14]–[20].
14As a consequence of the service of the further section 146 notice, the claim has expanded. On 22 January 2015 the Tribunal increased the hearing time allowed from 1 to 3 days.
15However, at the directions hearing on 4 March 2015 the landlord agitated for an adjournment of the 17 March 2015 hearing to enable the planning permit appeal to proceed first.
16The landlord contends that as the VCAT proceedings will be now be delayed, the costs of delaying the building project will be substantial. The landlord estimates the costs at $5,000 per day. The landlord contends that the financial statements of the tenant proves it does not have the means to satisfy a damages claim of $5,000 per day or any significant sum and therefore Dr Beaumont should be required to give a personal undertaking as to damages.
17At the conclusion of the hearing for variation of the injunction, the decision was reserved with the matter referred to immediate compulsory conference and further directions.
18Senior Member Levine vacated the hearing date of 17 March 2015 pending the hearing and determination of the planning appeal.
19I find, having regard to the financial statements tendered, that the tenant has limited resources and will be unable to meet a large damages award. However, I refuse the landlord’s application for variation of the undertaking to include an undertaking by Dr Beaumont for the reasons set out in paragraph 8 above and additionally because the requirement for a personal undertaking by Dr Beaumont will undermine the tenant’s ability to pursue its rights under the lease.
20For these reasons the application to require Dr Beaumont to provide a personal undertaking is refused.
Principles applicable to undertakings as to damages
It is uncontroversial that the Tribunal has power to require an undertaking as to damages under s 123(5) of the VCAT Act when it grants an interim injunction. It follows that the same principles are applicable with respect to the exercise of the Tribunal’s discretion under these provisions as apply to the exercise of discretion in similar circumstances by the courts. I turn now to the applicable principles.
In King v Colac Otway Shire Council,[26] the Tribunal cited the well-known Full Court decision in National Australia Bank Ltd v Bond Brewing Holdings Ltd,[27] noting that the starting point is as follows:[28]
29.It is well accepted that except in exceptional circumstances an undertaking as to damages is a condition precedent to the granting of an interlocutory injunction. It is well considered that if there is no undertaking as to damages and if at the full hearing of an issue it is found against the applicant then the respondent is left with no remedy.
30.This was considered in National Australia Bank Ltd v Bond Brewing Holdings Ltd:[29]
The usual undertaking as to damages is the price that must be paid by almost every applicant for an interim or interlocutory injunction. An injunction will by its nature require a person to do or abstain from doing some act and so is by its nature an order with a tendency to prejudice the person to whom it is directed. The practice of requiring the undertaking recognises that, the injunction being only interim or interlocutory and so the rights of the parties not having been finally determined, it may at a later stage appear that the applicant should in fairness compensate the party enjoined for the harm he has suffered.
[26][2000] VCAT 523.
[27][1991] 1 VR 386.
[28][2000] VCAT 523, [29]–[30].
[29][1991] 1 VR 386 at 559–60 (citations omitted).
It is clear that an undertaking as to damages is usually the “price” of an interlocutory injunction and may include persons who are not parties to the dispute; and, additionally, in an appropriate case, the court or tribunal may require as a condition for the grant of the interlocutory injunction that an undertaking as to damages be properly secured.[30] It is important in considering the undertaking as to damages to keep in mind that it is the “price” of interlocutory injunctive relief in circumstances as thought appropriate by the court or tribunal. As such, it is open to a court or tribunal to require as the “price” that an undertaking or undertakings be given by a person or persons who are not parties to the proceeding and, or alternatively, that the undertaking be secured. This is not to say, however, that the court or tribunal is ordering or requiring that person or persons to give a personal undertaking or security. The requirement is the “price” which, if not met, will mean that the interlocutory injunction will not be granted. It is an important distinction.
[30]John D. Heydon et al, Meagher, Gummow and Lehane’s Equity Doctrines and Remedies (LexisNexis, 5th ed, 2015) 774 [21–410].
In ENRC Marketing AG v OJSC “Magnitogorsk Metallurgical Kombinat”,[31] Rares J said that the provision of security can be required as a condition of the court acting on an undertaking as to damages given by a person who does not appear to have sufficiently disclosed a substantive financial basis on which to meet any liability on the undertaking in the event that it is called upon. In so doing, his Honour cited a late 19th century New South Wales equity decision:[32]
Long ago, in Myring v Beale, Simpson CJ in Eq said that:[33]
[T]his Court ought not to be satisfied with an undertaking which may possibly prove to be illusory. The Court of Equity imposes this undertaking on a plaintiff as a condition of his injunction, and it ought to see that the condition is not a mere form, as it would be in cases where the plaintiff is out of the jurisdiction, especially where there is no evidence that the plaintiffs have any property in the jurisdiction.
Similar views were expressed more recently in Golf Lynx v Golf Scene Pty Ltd;[34] Hotline Communications Ltd v Hinkley;[35] and J Aron & Co v Newmont Yandal Operations Pty Ltd.[36]
[31](2011) 285 ALR 444 at 446 [11]–[12] (“ENRC Marketing”).
[32](2011) 285 ALR 444 at 446 [12].
[33](1899) 20 NSWLR 6 at 7.
[34](1984) 75 FLR 303 at 313.
[35](1999) 44 IPR 445 at 456–7 [36]–[39].
[36](2003) 47 ACSR 243 at 247–8 [16]–[17]. See also Ian C.F. Spry, The Principles of Equitable Remedies (Lawbook Co, 9th ed, 2014) 502–3.
In the passages from Dr Spry’s work on equitable remedies to which reference was made by Rares J in ENRC Marketing, the following statement of general principle appears:[37]
If, in view of inadequacy of the plaintiff’s financial resources, there is a substantial doubt whether the defendant will be adequately protected by an undertaking by him, the court ordinarily requires either that security be provided for the undertaking or that an undertaking be given by some other person, with security if appropriate.
[37]Ian C.F. Spry, The Principles of Equitable Remedies (Lawbook Co, 9th ed, 2014) 502–3 (citations omitted).
The principles with respect to the granting or requiring an undertaking as to damages were also summarised by Refshauge J in Financial Integrity Group Pty Ltd v Farmer (No 3).[38] His Honour observed that the resources of the party offering the undertaking must be sufficient and available to meet any damages awarded as a result, or security may be required. As the cases do indicate, however, the exercise of the discretion depends upon the particular circumstances of the case. In a case involving public interest considerations, J. Forrest J considered the relevant principles with reference to authority in Environment East Gippsland Inc v VicForests (No 2).[39] His Honour’s consideration of these principles is not confined solely to the public interest context of that case and, consequently, their statement and application is relevant in the present circumstances. J. Forrest J said:[40]
[38][2014] ACTSC 75, [16].
[39][2009] VSC 421 (“Environment East Gippsland”).
[40]Environment East Gippsland Inc v VicForests (No 2) [2009] VSC 421, [12]–[18].
12In Air Express Ltd v Ansett Transport Industries (Operations) Pty Ltd,[41] Gibbs J said regarding the purpose of requiring an undertaking as to damages when granting an interlocutory injunction:
[41](1981) 146 CLR 249 at 311–12. For a brief account of the history of the practice of extracting an undertaking as to damages, see F Hoffmann-La Roche & Co v Secretary of State for Trade and Industry [1975] AC 295 at 360.
The object of requiring a plaintiff who seeks an interlocutory injunction to enter into an undertaking of this kind is to attempt to ensure that a defendant will receive compensation for any loss which he suffers by reason of the grant of the injunction if it appears in the event that the plaintiff was not entitled to obtain it. The insistence upon the giving of an undertaking is a very important, if not essential, means of preventing injustice from being done by the court when it makes an order at an interlocutory stage, before the rights of the parties have been finally determined. The court has a discretion not to enforce such an undertaking, but unless the defendant has been guilty of conduct that would render it inequitable to enforce the undertaking it would seem just, speaking generally, that a plaintiff who has failed on the merits should recompense the defendant for the damage that he has suffered as the result of the making of the interlocutory order.
13Subsequently, in Combet v Commonwealth, Heydon J said:[42]
[42]Transcript, Combet v Commonwealth [2005] HCATrans 459, p 36. See also Air Express Ltd v Ansett Transport Industries (Operations) Pty Ltd (1981) 146 CLR 249 at 318–19. See also First Netcom Pty Ltd v Telstra Corp Ltd (2000) 179 ALR 725 at 731 [22].
In my judgment, the Court will almost always decline to grant an interlocutory injunction unless the plaintiff undertakes to the Court to pay any damages which the Court may later assess as necessary to compensate the defendant for any harm caused by the interlocutory injunction in the event that the Court at the final hearing refuses to grant a final injunction. The importance of the undertaking is that without it a defendant ultimately successful at the final hearing would not be able to recover damages for any loss suffered by complying with the interlocutory injunction.
14In First Netcom Pty Ltd v Telstra Corp Ltd, in relation to the provision of security where the undertaking may be of dubious value, the Full Court of the Federal Court said:[43]
[43](2000) 179 ALR 725 at 732 [23]–[24] (citations omitted).
However, since its terms are a matter for the discretionary judgment of the court, its provisions will be moulded so as to fit the circumstances of the case at hand. These circumstances may include the likelihood of the plaintiff’s insolvency, which might produce an inability to discharge any liability to the party enjoined pending a final hearing that might accrue under the undertaking. In that event, the court is required to exercise its judgment as to what is appropriate in order to ensure the reality of adequate compensation, and not merely an empty form of compensation, to a party who is ultimately successful.
In such a case the court may stipulate a further condition in connection with the undertaking, in the event that the plaintiff should elect to give the undertaking, and thus secure the injunction. The extra condition could be that any contingent liability under the undertaking be appropriately secured. Again, the plaintiff can elect to comply with this condition or decline to do so, but must accept the consequences of its election.
15In Wells Fargo Bank Northwest National Association v Victoria Aircraft Leasing Ltd (No 2),[44] Dodds-Streeton J noted that a condition relating to an undertaking (be it the undertaking simpliciter or the undertaking with appropriate security) could not be imposed retrospectively and that:[45]
[44][2004] VSC 341, [130]–[133].
[45]Wells Fargo Bank Northwest National Association v Victoria Aircraft Leasing Ltd (No 2) [2004] VSC 341, [132].
All a court may do is refuse the injunction if the undertaking is declined. It cannot require the provision of security, but may refuse an injunction if security or other relevant condition is declined.
16In most cases it will be necessary for a plaintiff to provide the undertaking or, where applicable, security. However, there are cases where exceptional circumstances will mandate dispensing with either the undertaking or security. In Blue Wedges Inc v Port of Melbourne Corp Mandie J, when speaking of the provision of an undertaking said:[46]
In my opinion a fundamental consideration on this application for an interlocutory injunction is that no viable undertaking as to damages is or can be offered by the plaintiff. Such an undertaking is required save in exceptional circumstances. It is convenient to refer to, and I adopt, what was most recently said in that regard in the High Court by Heydon J in Combet v Commonwealth of Australia.[47] I can conceive that in some circumstances an interlocutory injunction might be granted without requiring the usual undertaking as to damages if there was a manifest breach of the law threatened. It might then be in the public interest to grant such an injunction without requiring the usual undertaking as to damages. Likewise if there was a proven danger of irremediable harm or serious damage an interlocutory injunction might perhaps be granted in some circumstances without the undertaking being required.
17I think the same principle must apply where the worth of any undertaking is seriously in issue and the question of appropriate security is raised; namely, are there exceptional circumstances which warrant departure from the general rule that a party, either by undertaking alone or with security, ensures that its opponent will not be out of pocket if the primary claim fails.
18Of course the granting of an injunction and its terms necessarily depend upon the nature of the case being considered. In determining whether exceptional circumstances have been shown, the Court will examine the strength of the plaintiff’s case on a prima facie basis while ensuring such considerations do not inhibit the function of the trial judge. The Court will also examine the nature of the damage which the plaintiff seeks to prevent or will suffer if the injunction is not granted, and, in the context of this litigation, whether there is an issue of public importance or public interest that would count against ordering security over and above the undertaking.
[46][2005] VSC 305 [11].
[47]Transcript, Combet v Commonwealth [2005] HCATrans 459, pp 36–9 [1530]–[1645].
Of particular importance is J. Forrest J’s reference to examination of the nature of the damage which the plaintiff seeks to prevent or will suffer if the injunction is not granted.[48] In examining these matters, J. Forrest J said:[49]
[48]See Environment East Gippsland Inc v VicForests (No 2) [2009] VSC 421, [17].
[49][2009] VSC 421, [23]–[24] (citations omitted).
23Mr MacDonald’s estimate of the loss of profits is based upon an inability to harvest the timber this year or early next year. His estimate is untested, but, more importantly, the question of the level of loss, assuming that harvesting can occur next year, is couched in conclusionary and what appears to be only partially substantiated opinion. For instance, Mr MacDonald swears, in relation to the losses:
It is unlikely that VicForests will ever be able to recover these losses.
The substantiation for this opinion seems to be contained in paragraph [8] of his second affidavit:
This profit is not recovered in subsequent financial years as it is dependent on both customers being willing to accept any shortfall in subsequent years and VicForests’ ability to produce additional volume over and above base contract commitments in subsequent financial years.
Mr MacDonald refers to a discussion with one of his customers who apparently asserted that “some customers” have opted to obtain saw logs from alternative suppliers. The further elaboration in paragraphs [6]–[8] of his third affidavit does not assist me in identifying the basis for his figures. Indeed, the email attached to Ms Bleyer’s most recent affidavit (untested as it is) indicates that there may be an issue as to the amount of sawn logs to be harvested from the coupes.
24This combination of hearsay, untested and somewhat difficult to follow supposition is, I think, unconvincing as to the level of loss.
Were errors of law made by VCAT?
In Mildura Rural City Council v VABDS Developments Pty Ltd, Kyrou J summarised the appropriate approach as follows:[50]
In considering whether the VCAT’s Reasons for a decision disclose an error of law, the Court does not scrutinise those reasons over-zealously with a view to finding error. Reasons for decision have to be read fairly and particular parts have to be read in the context of the reasons as a whole and the manner in which the parties conducted the proceeding. In reviewing the VCAT’s Reasons for decision, the Court can have regard not only to what the VCAT expressly stated but also to the inferences that necessarily arise from what it expressly stated.
[50](2012) 193 LGERA 185 at 196 [40] (citations omitted).
In the Tribunal Reasons for dismissing Benson’s application to require the extension of the undertaking as to damages to Dr Beaumont, the Member referred to the hearing on 8 December 2014 and gave reasons for declining to impose the requirement of a personal undertaking by Dr Beaumont as a condition for the grant of the injunction.[51] The Tribunal Member then summarised the events relating to the dispute that had occurred since the making of the interim injunction on 8 December 2014, noting that the claim had expanded and the hearing time had been increased from one to three days.[52]
[51]Tribunal Reasons, [8]. See above [17].
[52]Tribunal Reasons, [9]–[16].
Referring to the Tribunal Reasons, Bensons makes specific reference to part of those reasons which have been set out previously, but which it is helpful to set out again in the present context:[53]
[53]Tribunal Reasons, [19]. See above [24].
19I find, having regard to the financial statements tendered, that the tenant has limited resources and will be unable to meet a large damages award. However, I refuse the landlord’s application for variation of the undertaking to include an undertaking by Dr Beaumont for the reasons set out in paragraph 8 above and additionally because the requirement for a personal undertaking by Dr Beaumont will undermine the tenant’s ability to pursue its rights under the lease.
With reference to this statement by the Member, Bensons submits that an examination of the transcript of the hearing on 8 December 2014 reveals that the Member’s response to the request by Bensons for the extension of the undertaking as to damages was limited to stating:[54]
Well if you’d … [made] that application on notice we could have dealt with it today but she’s not a party strictly joined to this proceeding … .
Moreover, Bensons submit that at no time during the hearing of the application on 4 March 2015 did the Member alert Bensons to the fact that on 8 December 2014 she had previously formed the view, albeit unarticulated, that the undertaking by the tenant company was sufficient. Consequently, Bensons says that it was not given any opportunity to respond to the five reasons proffered in paragraph [8] of the Tribunal Reasons.[55] In any event, Bensons submits that none of the five reasons set out in that paragraph are capable of supporting the decision which was made not to require the tenant’s undertaking to be secured by the personal undertaking of its sole director and shareholder.
[54]See Transcript, Body in Balance Pty Ltd v Bensons Funds Management Pty Ltd (Victorian Civil and Administrative Tribunal, BP745/2014, Member L. Rowland, 8 December 2014) 27–8.
[55]See above [17].
Additionally, Bensons submits that when the Member said that a personal undertaking from Dr Beaumont would “undermine the tenant’s ability to pursue its rights under the lease”,[56] the Member seemingly had in mind the matters deposed to by Dr Beaumont that she “was not personally in a financial position to provide the personal undertaking”.[57] Bensons also submits that although neither Body in Balance nor Dr Beaumont put on any evidence to establish her personal impecuniosity, if that was the intention, even if it is true, not only does it not provide any reason to refuse the application, but rather supports the application because such a personal undertaking would not have any negative impact on Dr Beaumont’s assets. In relation to this aspect, Bensons make reference to the following statement of Campbell J in Varley v Varley:[58]
[56]Tribunal Reasons [19]. See above [24].
[57]Brown Affidavit, Exhibit “PAB-12”.
[58][2006] NSWSC 1025, [62]–[63].
[62]The decision in Allen v Jambo Holdings Ltd[59] has been followed by Ipp J in the Supreme Court of Western Australia in Custom Credit Corp Ltd v Whitehall Holdings Pty Ltd.[60] The relevant portion of his Honour’s judgment can most readily be found quoted in the decision of Davies AJ in Circaz Pty Ltd v Manolidis.[61] Ipp J said:[62]
[59][1980] 2 All ER 502.
[60](Unreported, Supreme Court of Western Australia, Ipp J, 7 April 1992).
[61](2003) 45 ACSR 542 at 546–7 [12].
[62]Custom Credit Corp Ltd v Whitehall Holdings Pty Ltd (Unreported, Supreme Court of Western Australia, Ipp J, 7 April 1992) at 23.
The fact that an undertaking as to damages has little or no value is not conclusive as to the result of an application for an interlocutory injunction. It is only a factor which must be borne in mind.[63]
[63]Allen v Jambo Holdings Ltd [1980] 2 All ER 502 at 506.
[63]Ipp J then set out the passages from the judgments of Lord Denning MR and Shaw LJ that I have earlier set out, and continued:[64]
It is of course desirable for an applicant for an interlocutory injunction to provide undertakings as to damages which are of value. Nevertheless, where there is a serious issue to be tried, and when those who stand behind the applicant company have offered undertakings so that the applicant has done the best it can to provide appropriate undertakings, justice may well require the grant of an injunction even though the undertakings are of little or no value.
In my view the paramount consideration is embodied in the remarks of Bowen LJ in Cowell v Taylor, where he said:[65]
The general rule is that poverty is no bar to a litigant, that, from time immemorial, has been the rule at common law, and also, I believe, in equity.
[64]Custom Credit Corp Ltd v Whitehall Holdings Pty Ltd (Unreported, Supreme Court of Western Australia, Ipp J, 7 April 1992) at 23–4.
[65](1885) 31 Ch D 34 at 38.
In support of this position, Bensons also make reference to Goater v Commonwealth Bank of Australia where Ward JA, after stating the well-known principle that the usual undertaking as to damages is required in every case where an interlocutory injunction is sought, unless there are exceptional circumstances, further said:[66]
As to the possible exception for impoverished plaintiffs, the learned authors of … [Meagher, Gummow and Lehane’s Equity Doctrines and Remedies[67]] refer to Dein v Bealey[68] and Szentessy v Woo Ran (Australia) Pty Ltd (No 1).[69] They go on to express the hope that these cases not be followed with any enthusiasm lest the res publica be held to ransom by paupers, referring to Smith v R where it was said that poverty is a practical misfortune not a legal privilege.[70]
[66][2014] NSWCA 265, [94].
[67]John D. Heydon et al, Meagher, Gummow and Lehane’s Equity Doctrines and Remedies (LexisNexis, 5th ed, 2015) 774 [21–410].
[68][1960] NSWR 385.
[69](1985) 82 FLR 298.
[70](1991) 25 NSWLR 1.
Body in Balance, the tenant, does not take issue with the principles applicable with respect to the granting of interlocutory injunctive relief but, rather, relies particularly on the approach of J. Forrest J in the Environment East Gippsland[71] case which, in effect, requires some testing of the proposition or allegation by a party seeking interlocutory injunctive relief that, with reference to the landlord’s reliance upon the decision in Myring v Beale,[72] it is sufficient that some damage may be suffered as a result of the grant of the interlocutory injunction. This is not, in my view, as Bensons contended to “invert” the evidentiary onus or the test more generally for the purpose of exercising the discretion with respect to an undertaking as to damages and thereby throw the onus to establish that damage would be suffered on the party seeking the interlocutory relief. Rather, I do, with respect, adopt the approach of J. Forrest J in the Environment East Gippsland case, which is that the court or tribunal must examine the evidence in support of the proposition that damage “may” be suffered. This is, after all, the basis for requiring the “price” for the interlocutory injunctive relief, as is clear from the authorities to which reference has been made. It follows that this basis cannot be something that relies upon mere speculation as to the possibility of loss.
[71]Environment East Gippsland Inc v VicForests (No 2) [2009] VSC 421.
[72](1899) 20 NSWLR 6 at 7. See above [28].
In this vein, Body in Balance submits that there is no proper basis to the claim by Bensons that damages may arise by reason of the grant of the injunction. More particularly, it submits:[73]
[73]Outline of Submissions on Behalf of Respondent (5 June 2015) [2]–[8] (emphasis in original and citations omitted).
2.The starting point is the applicant’s claim as to damages arising by reason of the grant of the injunction. From this flows the applicant’s contention that the respondent’s usual undertaking as to damages is inadequate. In exhibit PAB-9 to Mr Brown’s affidavit sworn 22 April 2015 and filed in this application, there is exhibited his affidavit sworn 5 February 2015 as solicitor for the applicant and filed in the VCAT proceeding. Paragraph 26(j) is expressed in these terms, including the preamble:
I am informed by Rick Curtis, the Managing Director of the respondent and I verily believe as follows:
…
(j) The major costs of the delay will be the salary and staff costs, the cost of own funds and the cost of funding the existing first mortgage. Bank interest and holding costs to NAB alone are currently in excess of $2,000 per day with the total delay costs estimated at more than $5,000 per day.
3.This estimate is untested. It is unsubstantiated. It is couched in conclusionary terms. It is the evidence of a solicitor acting as intermediary for his client. The solicitor’s affidavit in this respect could not be tested. Mr Curtis filed an affidavit below sworn 27 February 2015, some three weeks after his solicitor’s affidavit. Mr Curtis in 7 pages of sworn affidavit did not so much as verify his instructions reposed in paragraph 26(j) of Mr Brown’s affidavit of 5 February, let alone seek to substantiate the estimate per day of $5K.
4.This combination of hearsay, untested and unsubstantiated supposition is unconvincing. Yet is the applicant’s springboard in this matter. It was for the applicant below to prove this estimate, not for the respondent to disprove it. It was the applicant which sought the variation of the terms of the injunction by attacking the adequacy of the security in view of its estimate of its claim for damages.
5.Second, there is the question of whether the claimed damages flow from the injunction. The respondent contends they do not. The lease commenced on 2 June 2010 for a term of 5 years and conferred an option of one further term of 5 years. Lawful occupation of the premises therefore stands to be enjoyed by the respondent as tenant until 2 June 2020. The applicant conflates damages which stand to flow from the grant of the injunction with damages which stand to flow from the delay to the Vanguard project due to being bound by the bargain it struck in entering the lease. In this respect, the respondent refers to paragraph 26 of Mr Brown’s affidavit sworn 5 February 2015 filed below; paragraphs 6 (at p 7), 9(b) and 10 esp of Mr Curtis’ affidavit sworn 27 February 2015 filed below; and the supplementary affidavit of Bianca Jane Beaumont sworn 3 March 2015 and filed below, paras 5 to 22, and 27 (exhibit PAB-13 to Mr Brown’s affidavit) and her affidavit sworn 20 February 2015, paras 4 to 20 (exhibit PAB-12 to Mr Brown’s affidavit). Ms Beaumont deposed in para 11 of her first affidavit, amongst other things:
The Respondent’s asserted right to possession of the Premises is not prohibited by the injunctions, but depends upon its success in defending this proceeding from the Tenant’s lawful entitlement to remain in occupation until 2 June 2020.
6.Ms Beaumont deposes, amongst other things, that the applicant has not served the two other remaining tenants with 6 months notice of intended demolition. (There is no such demolition clause in the respondent’s lease). Further, according to the critical path deposed to in the affidavit of Mr Curtis, their vacant possession is not required until December 2015. Ms Beaumont in her second affidavit deposed that there was nothing in Mr Curtis identification of a critical path which was impeded by the injunction.
7.Further, Ms Beaumont in her first affidavit deposed as to how the applicant had a marketing suite on site for the sale of touted apartments to be built on site, with a launch in 2015; a website existed earlier in 2014 in China promoting the sale of apartments to be built at the site (exhibits BJB-6 and 7); and the appointment of Marshall White, estate agents, to market “off the plan” sales. Further, on Benson’s website Vanguard Malvern is promoted as an apartment building to be launched in 2015.
8.The VCAT final hearing was originally fixed for 17 March 2015. It has now been refixed for 10 August 2015. This was because of the landlord’s insistence that the VCAT proceeding initiated by it contesting the validity of the planning permit issued on 31 December 2014 to the tenant, be hear[d] first and separately. It is fixed for hearing on 23 July 2015. The alleged breaches otherwise are fixed for hearing on 10 August 2015.
In my view, on bases set out in the Body in Balance submissions in this respect, both in terms of the propositions and reasoning, and the material upon which reliance is placed, sufficient doubt is cast on the proposition that damage “may” flow from the grant of the injunction as to render the requirement of a personal undertaking from Dr Beaumont unnecessary. Adopting the words of J. Forrest J in the Environment East Gippsland case, I regard the evidence relied upon by Bensons in support of its position as a “combination of hearsay, untested and somewhat difficult to follow supposition”.[74] Consequently, I am not satisfied that damage may be suffered as a result of the grant of the interlocutory injunction and the refusal of the Tribunal to extend the undertaking as to damages as sought by Bensons.
[74]Environment East Gippsland Inc v VicForests (No 2) [2009] VSC 421, [24].
Other matters raised by Body in Balance in support of its position go to the question of the nature of the breaches of the Lease alleged and also the contention that the alleged breaches are for the ulterior or collateral purpose of removing the tenant, despite the bargain made between the parties as landlord and tenant.[75] These issues are, however, in my view, matters going to the merits of the Tribunal proceeding, a proceeding which has not yet been heard, other than in terms of the interlocutory applications to which reference has been made. The Tribunal has expressed the view that the tenant has a “strongly arguable case”.[76] On the material before the Court in the current proceedings, there is, in my view, no reason to doubt this view of the Tribunal, reached, as it was, in the course of interlocutory proceedings. But, again I stress, that is not a matter presently before the Court.
[75]See Outline of Submissions on Behalf of Respondent (5 June 2015) [9]–[13].
[76]Tribunal Reasons, [8].
The final proposition advanced in support of its position by Body in Balance is that it does have sufficient means to meet any damages that flow from the injunction, as distinct from the applicant’s “unsubstantiated estimate of $5K per day”; adding that it is “difficult to identify any likelihood of damages from the injunction”.[77] It is not necessary, having regard to the views already expressed in these reasons, to examine further Bensons’ estimate of losses at the rate of $5,000 per day. Evidence was led before the Tribunal in relation to the financial resources of the tenant company and reference was made to tax returns for the 2013 and 2014 income years, which do show that there is a basis for the contentions by Body in Balance that there is real income and assets in its hands. In any event, having regard to the position I have reached with respect to the threshold issues with respect to the grant or otherwise of interlocutory relief without the personal undertaking from Dr Beaumont, it is not necessary to visit the Tribunal’s findings with respect to the financial statements tendered by Body in Balance.
Wednesbury unreasonableness
[77]Outline of Submissions on Behalf of Respondent (5 June 2015) [14].
Also, with regards to Wednesbury unreasonableness,[78] Bensons rely upon the statement of this ground for challenge as articulated in Cromwell Property Securities Ltd v Financial Ombudsman Service Ltd, where Warren CJ and Osborn JA said:[79]
More recently, the High Court has examined Wednesbury unreasonableness in order to clarify the nature of the test. In Minister for Immigration and Citizenship v Li, Hayne, Kiefel and Bell JJ made plain that Wednesbury unreasonableness does not simply catch decisions that are bizarre or irrational, the court has to look at whether the decision was unreasonable in a legal sense.[80] The central issue for a court should be whether the decision lacks an evident and intelligible justification:[81]
Unreasonableness is a conclusion which may be applied to a decision which lacks an evident and intelligible justification.
[78]Named after Associated Provincial Picture Houses Ltd v Wednesbury Corporation [1948] 1 KB 223.
[79](2014) 313 ALR 469 at 494 [97] (citations omitted).
[80](2013) 249 CLR 332.
[81]Minister for Immigration and Citizenship v Li (2013) 249 CLR 332 at 367 [76].
For the preceding reasons, I reject the basis for the application of this principle. In my opinion, as the preceding reasons indicate, the decision of the Tribunal is a decision with evident and intelligible justification.
Conclusions and orders
For the preceding reasons, I am of the opinion that leave to appeal should be refused but that if leave were granted, the proposed grounds of appeal are not made out. Consequently, there is no basis for granting any of the relief sought by Bensons in these proceedings.
The parties are to bring in orders to give effect to these reasons. The question of costs is reserved.
5
4
0