Clark v Rowell Consulting Services Pty Ltd - [2003] WASC 178

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS

CITATION: CLARK -v- ROWELL CONSULTING SERVICES PTY LTD & ANOR [2003] WASC 178

CORAM: BARKER J

HEARD: 15 MAY 2003

DELIVERED : 12 SEPTEMBER 2003

FILE NO/S: CIV 2046 of 2002

BETWEEN: RICHARD MELVILLE CLARK
Plaintiff
AND
ROWELL CONSULTING SERVICES PTY LTD (ACN 001 928 758)
First Defendant
WARWICK HAROLD MITFORD ROWELL
Second Defendant

Catchwords:

Interlocutory injunction - Whether mandatory interlocutory injunction requiring plaintiff to do all things necessary to promptly facilitate the execution, settlement and registration of further subdivision and transfer of subdivisional lots should go - Whether prohibitive interlocutory injunction restraining plaintiff from dealing with property unless such dealing be expressed to be subject to the bylaws of the survey strata scheme and arrangements to facilitate staged development is, in effect, a mandatory injunction and whether such an injunction should go - Whether serious issue to be tried which would entitle plaintiff to interlocutory relief sought - Whether irreparable damage to defendants for which damages would not be adequate compensation - Whether balance of convenience favours injunction - Whether Court may become involved in supervision or administration of ongoing, complex, commercial arrangement

Legislation:

Strata Titles Act 1985 (WA), s 3B(2)(a), s 8A(a)(ii)(I), s 51(1)

Supreme Court Act 1935 (WA)
Town Planning and Development Act 1928 (WA), s 20

Trade Practices Act 1974 (Cth), s 75B, s 82

Result:

Application dismissed

Category: B

Representation:

Counsel:

Plaintiff:     Mr D F Beere
First Defendant             :     Mr M C Hotchkin
Second Defendant         :     Mr M C Hotchkin

Solicitors:

Plaintiff:     Beere May & Meyer
First Defendant             :     Hotchkin Hanly
Second Defendant         :     Hotchkin Hanly

Case(s) referred to in judgment(s):

Businessworld Computers Pty Ltd v Australian Telecommunications Commission (1988) 82 ALR 499
Cash Converters Pty Ltd v Hila Pty Ltd (1993) 9 WAR 471
Castlemaine Tooheys Ltd v South Australia (1986) 161 CLR 148
Clark v Rowell Consulting Services Pty Ltd [2003] WASC 89
Films Rover International Ltd v Cannon Film Sales Ltd (1986) 1 WLR 670
HB Homes Pty Ltd v Beer [1986] 2 Qd R 379
JC Williamson Ltd v Lukey (1931) 45 CLR 282
Redland Bricks Ltd v Morris [1970] AC 652
SDS Corporation Ltd v Pasdonnay Pty Ltd [2002] WASC 276
Secured Income Real Estate (Australia) Ltd v St Martin's Investments Pty Ltd (1979) 144 CLR 596
State of Queensland v Australian Telecommunications Commission (1985) 59 ALR 243

Case(s) also cited:

Hawker De Havilland Ltd v Barabas, unreported; SCt of WA (Anderson J); Library No 920196; 6 April 1992
Hunter Resources Ltd v Eagle Mining Corporation NL, unreported; SCt of WA (Murray J); Library No 950228; 12 May 1995
Idoport Pty Ltd v National Australia Bank Ltd [1999] NSWSC 828
Kwa v Youth Hostels Association of WA (Inc), unreported; SCt of WA (Scott J); Library No 970475; 23 September 1997
Patrick Stevedores Operations No 2 Pty Ltd v Maritime Union of Australia [No 3] (1998) 195 CLR 1
Redman v Southern Cross Broadcasting (Australia) Ltd [2001] WASC 9
Shepherd Homes Ltd v Sandham [1971] Ch 340
State of New South Wales v Banabelle Electrical Pty Ltd (2002) 54 NSWLR 503
United Dominions Corporation Ltd v Brian Pty Ltd (1985) 157 CLR 1

BARKER J: Before me is an application made on behalf of the defendants for interlocutory injunctions of both a mandatory and prohibitive nature against the plaintiff.

Introduction: the written agreement

The main action commenced by the plaintiff and the counterclaim filed by the defendants relate to an agreement between the parties concerning the development of Sussex lot 4208 Biddle Road, Dunsborough, which the parties refer to as "Rosneath Farm", of which the plaintiff is the registered proprietor.
On 14 March 1996, the plaintiff and the first defendant signed a written agreement concerning the development of the land. The written agreement describes the plaintiff as "the Owner" and the first defendant as "the Developer". The terms of the agreement are referred to in more detail below.
In general terms, by the written agreement the first defendant has undertaken to develop the plaintiff's land in accordance with "permaculture principles". By their written agreement, the first defendant is appointed "to do all that is necessary to enable the Owner to sell strata lots on the Property". The role and responsibility of the developer is described by the written agreement as being "all the work necessary for the Owner to sell strata title lots on the Property". The agreement provides that the first defendant will be the "first estate and Body Corporate manager employed by the corporate body of the strata title association".
Accordingly, the written agreement contemplates that the proposed development will be achieved as a form of subdivision pursuant to the Strata Titles Act 1985 (WA). By implication, the agreement also contemplates that subdivision approval to the proposed development will be obtained under the Town Planning and Development Act1928 (WA).
The agreement also touches upon the financing of the proposed development. The first defendant is stated to be responsible for engaging employees, agents, contractors and to "implement the agreed program", but with recommendations from the plaintiff.
The agreement provides that "development funds" are to be provided by the first defendant in respect of a number of matters, including "subdivision expenses" and "possibly for commencing village and farm infrastructure development". The agreement expressly provides that:
"These funds will be at least the nett proceeds from the sale of 20 Onslow Road Shenton Park in the said state less $10,000 which shall be paid into a property development account at Bankwest Dunsborough within one week of the settlement of that sale or before."
The agreement also appears to recognise that, at the time of the making of the written agreement, the first defendant had already contributed to the proposed development to the extent of $75,000, which sum it was entitled to have credited to its capital account.
The agreement contemplates that the first defendant will both be remunerated and receive a "success Fee" for meeting its obligations. Clause 4 of the agreement states that "for the work of selling strata lots and associated tasks" the first defendant will be remunerated at particular rates. It makes particular provision for the "first year", as well as for the two following years and also should the agreement continue beyond three years. This clause also provides that the plaintiff will pay the first defendant a success fee of 10 per cent of the net profit on the sale of each lot, subject to a proviso concerning financial commitments. This clause, by its terms, acknowledges that the first defendant has the task of "selling strata lots".
It is not unreasonable to observe at this point that the written agreement appears not to have been drafted by a solicitor and that, by its terms, it does not appear to address the detailed implementation of the proposed development. For example, the first defendant only is a party to the written agreement with the plaintiff, and the second defendant is not mentioned. Yet, the "investment" of the net proceeds from the sale of 20 Onslow Road, Shenton Park, is an obligation for which the first defendant, on the face of it, could not itself meet as that property was at all material times registered in the names of the second defendant and his wife. Moreover, the reference to the "Developer" is often accompanied by a reference to "his" obligations. Plainly, the agreement was prepared on the basis or understanding that the first defendant would act principally through the second defendant, who was at all material times its director.
It should also be noted at this point that, while the written agreement provides in cl 17 for the consequences of termination of the agreement, it does not contain a provision stating the circumstances in which each party is entitled to terminate it. Clause 4 contemplates that the agreement may continue for a number of years.
The evidence before me shows that, before the written agreement was signed on 14 March 1996, the parties were actively engaged in developing the parameters of the development proposal. The plaintiff had been referred to the defendants and had thereafter proceeded to deal with them because of the second defendant's reputation as a person knowledgeable in the establishment of "permaculture villages". The plaintiff was interested in developing his land as a permaculture village.
In this regard, a short definition of "permaculture", which the parties appear to have agreed upon at material times, is:
"Permaculture consists, in part, of a huge set of practical concepts, applicable from a balcony to a farm, from a city to a wilderness. These concepts enable us to build biological, technical, social and economic infrastructures, which in turn meet our needs for food, energy, shelter, as well as our material and non‑material needs."
Persons who engage in permaculture, referred to by the parties as "permaculturists" [sic], are said to be those who "create and build systems that will sustain present and future generations, by thinking carefully about their environment, their use of resources and how they supply their needs".
It appears that, at material times, the parties to the agreement and the second defendant held the view that land development within the peninsula from Cape Naturaliste to Cape Leeuwin in the south‑west of Western Australia would benefit from permaculture development as an alternative to the forms of development commonly undertaken in that region.

Initial implementation of the written agreement

Following the signing of the written agreement on 14 March 1996, the parties proceeded to act generally under the agreement and to develop the land in accordance with the permaculture proposal.
The parties appear to have agreed that the proposed development should be undertaken pursuant to a survey‑strata scheme approved under the Strata Titles Act. However, to implement such a scheme, it is necessary also to obtain subdivision approval pursuant to s 20 of the Town Planning and Development Act. The Western Australian Planning Commission is the final approval authority in respect of the approvals required under each of these Acts.
The survey‑strata scheme proposed by the parties involved the creation of 70 survey‑strata lots of not particularly large areas, together with a number of common lots. This design was intended to meet the permaculture village concept that underlies the written agreement.
The plaintiff, by the defendants, appears to have obtained the conditional approval of the Western Australia Planning Commission to the survey‑strata subdivision of the plaintiff's land on 20 January 1998. That conditional approval was granted for a period of three years and, so, was due to expire on 20 January 2001. If all of the lots identified in the approved survey‑strata plan were to be formally created, then it would be necessary for all of the conditions of approval to be satisfied by 20 January 2001. If satisfied, the Western Australian Planning Commission would then "clear" the approval and ultimately certificates of title in respect of the 70 survey‑strata lots would issue to the plaintiff.
The second defendant and his wife sold their house and land in Shenton Park to provide capital to meet infrastructure costs, as provided for in the agreement, although there was some delay in effecting that sale and settlement. In the meantime, it appears the defendants took alternative steps to meet the financing obligations that the first defendant had undertaken under the agreement. They obtained funds through the National Australia Bank and the father of the second defendant.
The provision of infrastructure plainly was both an expensive and a critical step in carrying out the physical development proposed and satisfying many of the conditions imposed on subdivision approval.

Staged development

In the period leading up to 20 January 2001, the full implementation of the proposed survey‑strata scheme was slowed. This happened, it appears, because of the difficulties the defendants experienced in financing the infrastructure works needed to clear the conditions of subdivision approval. Nonetheless, much work was done to implement those conditions in respect of part of the land.
As part of the process of implementation, a deed was executed between the plaintiff and the first defendant on the one hand and the Shire of Busselton on the other that required, amongst other things, the plaintiff and the first defendant to record a memorial against the certificates of title for all strata lots concerning the unavailability of conventional reticulated underground power and confirming that the management statement for the strata scheme approved under the Strata Titles Act was that set out in annexure B to the deed.
It also appears that, during this period, following a discussion between the plaintiff and the defendants in early January 1997, the defendants engaged various persons to provide services and materials for the required infrastructure works and reached agreement with them to the effect that the value of their services or materials would be converted into an "equity interest" in the development. In other words, the persons who provided these services and materials would be entitled to a lot or lots within the development once they had been created.
As a result of these steps, at the time of the expiration of the conditional subdivision approval on 20 January 2001, the parties were able to achieve the partial implementation of the proposed development of 70 survey‑strata lots by creating or "clearing" 14 survey‑strata lots and seven common property lots. Thus, at that point, the proposed permaculture village known as Rosneath Farm comprised 14 survey‑strata lots and seven common lots, and was managed by a strata company under the Strata Titles Act.
The establishment of Rosneath Farm in this way meant that, as of about January 2001, the plaintiff was in a position to sell or transfer 14 survey‑strata lots, whereas the initial proposal contemplated 70 such lots. However, the parties intended that thereafter they should continue to undertake the additional infrastructure works required to create a further 56 survey‑strata lots to achieve the initial proposal.
To this end, the parties understood it would be necessary to obtain the further subdivision approval of the Western Australian Planning Commission as well as the further approval of the Commission to the amendment of the survey‑strata scheme. However, under the Strata Titles Act, a survey‑strata scheme can only be changed with the unanimous approval of all members of the strata company, unless the District Court should otherwise order under s 51(1) of the Strata Titles Act.
At that point, it appears arguable from the evidence before me that the parties had agreed to effect a "staged" development of the land and to oblige persons who acquired the initial 14 survey‑strata lots not to vote against the staged approval of the balance of the development in order to achieve the 70 survey‑strata lots initially envisaged by the survey‑strata scheme.
In order to bind purchasers of the survey‑strata lots sold following the first stage of development, the parties appear to have agreed to require purchasers to subscribe to an "agreement to facilitate staged development". This latter agreement appears to have comprised two agreements, the first a "purchaser agreement" and the second a "lender agreement". The purchaser agreement requires the lender agreement to be signed prior to the purchaser taking out a loan over the lot being purchased. The plaintiff, as vendor, was necessarily a party to the agreement to facilitate staged development.
It would seem that the parties hoped that, through the staged development of the land, they would develop sufficient cash flow to finance the subsequent stages of development and to realise their respective objectives and goals, including financial goals.
The second stage of development, if it may be called that, appears to have taken place when further approvals were granted by the Western Australian Planning Commission on 28 March 2002 to facilitate the creation of an additional two survey‑strata lots.
A third, and final, stage of development is presently proposed by an application for approval dated 22 July 2002 to the Western Australian Planning Commission for the subdivision of the balance of the land into 54 additional survey‑strata lots. The parties, including the plaintiff, have supported this application. The Western Australian Planning Commission conditionally approved this application by letter dated 17 January 2003. The approval is subject to a condition, amongst others, requiring those survey‑strata lots not fronting an existing road to be provided with frontage to a constructed subdivisional road connected by a constructed subdivisional road to the local road system. Satisfaction of this condition will no doubt require further infrastructure expense. An appeal has been lodged against this particular condition and is pending in the Town Planning Appeal Tribunal of Western Australia. As a result, this third stage of development has not yet occurred and the proposed additional 54 survey‑strata lots have not yet been created. However, marketing of the proposed lots has been ongoing.

The MacAdam transaction

At the time of hearing this application, a Dr and Mrs MacAdam had offered to purchase "old lot number 62" (as marked on the initial survey‑strata plan) on the understanding that the lot would be created upon the implementation of the third stage of development.
The MacAdams signed a contract for sale of strata title by offer and acceptance in respect of this proposed lot on 5 October 2002. By that document, the MacAdams indicated their preparedness to abide by the "agreement to facilitate staged development", which is annexed to the contract for sale, presented to them by the defendants.
However, unlike on the prior occasions when the plaintiff as vendor has signed such contracts for sale procured by the defendants, the plaintiff, through his solicitors, refused to signify his acceptance of the offer made by the MacAdams. Instead, the solicitors for the plaintiff proposed that the MacAdams should sign a different form of contract for sale of land or strata title by offer and acceptance, one prepared by the plaintiff's solicitors.
The plaintiff's form of contract contained a number of special conditions. Special condition 3.3 provided for the irrevocable appointment by the MacAdams of the plaintiff to vote on the MacAdams' behalf, as members of the strata company, on motions put by the plaintiff for a re‑subdivision of the land the subject of the strata plan, in order to adopt the "eighth schedule plan" referred to in the special conditions. The eighth schedule plan was defined by the special conditions to mean:
"The Plan set out in the Eighth Schedule hereto or any further Plan of re‑subdivision of the Strata Plan with the intent of increasing the size of the Unsold Lots and in some instances relocating such Unsold Lots to other parts of the common property to enable the increase in size of the Unsold Lots as a consequence of the re‑subdivision of the land the subject of the Strata Plan".
Before these reasons were delivered, the solicitors for the defendants advised the Court that the MacAdams had withdrawn their offer and that Orders 2(a) and (b) of the application no longer needed be determined by the Court. However, the solicitors for the defendants effectively submitted that this changed circumstance did not affect the balance of the orders sought.

The essence of the dispute

The nub of the present dispute between the parties is to be found in special condition 3.3 of the plaintiff's proposed contract for sale that the plaintiff had prepared with the MacAdams.
As to the form of contract for sale that the plaintiff insisted upon, the plaintiff stated a desire to reserve to himself the option of changing the survey‑strata plan initially approved in the survey‑strata scheme in January 1998, at least in relation to the unsold lots. His eighth schedule plan shows that, in respect of the land not the subject of the survey‑strata lots, the plaintiff wishes to consider the creation of lots both larger than and located differently from those proposed in the survey‑strata plan approved in January 1998.
The defendants say that the plaintiff only wishes to do this because lots of the size originally proposed are not as popular in the market place as the parties initially thought they would be; that is to say, they are not selling as quickly as the parties may have anticipated. The defendants say that, if the plaintiff were to have his way, the Rosneath Farm permaculture village, as conceived and promoted, will not be implemented. Moreover, the defendants say that, if the plaintiff were to have his way, each person who has thus far acquired a survey‑strata lot on the understanding that, in time, the staged development of the land would produce the permaculture village of 70 survey‑strata lots identified in the survey‑strata scheme approved in January 1998, will not only be disappointed, but will have been enticed to acquire the lot on a false premise.
Thus, there presently is an impasse between the plaintiff and the defendants as to how the agreement between them should be implemented in relation to that portion of the land which has not been subdivided into survey‑strata lots.
The plaintiff, through the form of contract for sale he proposed through his solicitors in respect of the MacAdams, would bind future purchasers of lots to assign to the plaintiff their rights to vote as members of the strata company. The plaintiff believes that, if he obtains authorities from future owners of lots within the third stage of development of the land, he will be in a position to have the requisite majority of votes in the strata company to enable him to apply to the District Court to approve an amendment to the survey‑strata plan, notwithstanding that the members of the strata company are not unanimous in their approval of a proposed change: see ss 51(1) and s 8A(a)(ii)(I) of the Strata Titles Act.
As an aside, it is not clear to me that the plaintiff presently has the power to apply to the District Court under s 51(1) of the Strata Titles Act, or that his longer‑term objective is achievable.
Be that as it may, the plaintiff, in his action against the defendants, does not raise this future development objective as an issue, but complains that the first defendant has not achieved the sale of the proposed survey‑strata lots in the time contemplated by the agreement. The first defendant denies this allegation.
The plaintiff has not purported to terminate the written agreement for any alleged breach, but seeks an order that he is "entitled" to terminate the agreement and/or to damages for its breach.
As a result, all parties accept that the written agreement is still on foot.

The interlocutory relief sought

The development impasse between the parties was exhibited as a legal impasse because the plaintiff, through his solicitors, refused to sign the form of contract for sale signed by Dr and Mrs MacAdam (before it was withdrawn), which the first defendant, in purported performance of its obligations under the agreement, had procured.
As noted above, the form of contract for sale put forward on behalf of the MacAdams was in a form identical to that adopted by the parties on earlier sales and in respect of which the plaintiff had not objected and, indeed, has signed.
It was in these circumstances that the defendants initially sought interlocutory injunctions, of both a mandatory and prohibitive nature, in the following terms:
"Until after judgment in this action, or further Order the Plaintiff:
(a)within 24 hours of the approval by the Department of Planning and Infrastructure of subdivision of lot 62, shall duly execute, by way of acceptance, the Offer and Acceptance from Dr and Mrs MacAdam and return the duly executed Offer and Acceptance forthwith to Hotchkin Hanley (solicitors for the defendants in this action);
(b)shall do all things necessary in order to promptly facilitate registration of the transfer of lot 62 to Dr and Mrs MacAdam;
(c)shall do all things necessary to promptly facilitate the execution, settlement and registration of all documents required to transfer further subdivided lots in Rosneath Farm to any purchasers of such lots, subject to the existing Survey Strata Scheme;
(d)shall be restrained whether by himself, his officers, servants, agents or otherwise from dealing, by way of encumbrance, as defined by section 7 of the Property Law Act 1969, charge or otherwise, with Lot 1 on Strata Plan 35452 Sussex Location 4208 unless such dealing be expressed to be subject to the by‑laws of the Survey Strata Scheme and Agreements to Facilitate Staged Development."
As noted above, the defendants no longer press for relief in terms of pars (a) and (b).

Principles governing grant of an interlocutory injunction

It is generally accepted that the principles governing the grant or refusal of interlocutory injunctions in private law litigation require the moving party to show:
(1)that there is a serious question to be tried or that that party has made out a prima facie case, in the sense that if the evidence remains as it is, there is a probability that at the trial of the action that party will be entitled to relief;
(2)that the party will suffer irreparable injury for which damages will not be an adequate compensation unless an injunction is granted; and
(3)that the balance of convenience favours the granting of an injunction:
Castlemaine Tooheys Ltd v South Australia (1986) 161 CLR 148 at 153 per Mason ACJ.
Additionally, it is plain that only in very rare cases will a mandatory injunction be granted at an interlocutory stage; as I observed in SDS Corporation Ltd v Pasdonnay Pty Ltd [2002] WASC 276 at [13] by reference to the authorities collected there, including Cash Converters Pty Ltd v Hila Pty Ltd (1993) 9 WAR 471 at 483 per Kennedy J. In particular, it is not common to grant a mandatory injunction which would, if granted, effect the major part of the relief in the action. Accordingly, the application should be approached with caution and granted only in a clear case: HB Homes Pty Ltd v Beer [1986] 2 Qd R 379 at 381. Further, a mandatory injunction will only be granted where its terms can be clearly understood: Redland Bricks Ltd v Morris [1970] AC 652 to 667. A Court should not become involved in the supervision of an injunction: JC Williamson Ltd v Lukey (1931) 45 CLR 282. In considering whether or not a mandatory injunction should go at an interlocutory stage, the Court will regard the degree of assurance it feels will appear at trial that the injunction was rightly granted: State of Queensland v Australian Telecommunications Commission (1985) 59 ALR 243 at 245; Cash Converters Pty Ltd v Hila Pty Ltd (supra) at 484 ‑ 485.
However, whether prohibitory or mandatory, the fundamental principle remains in relation to interlocutory injunctions that the Court should take whichever course carries the lower risk of injustice in the event that the party who claims the injunction fails to establish his or her right at trial: Films Rover International Ltd v Cannon Film Sales Ltd (1986) 1 WLR 670 at 680; Businessworld Computers Pty Ltd v Australian Telecommunications Commission (1988) 82 ALR 499, 501 ‑ 504. I also accept, as suggested by the learned authors of Meagher Gummow & Lehane, Equity Doctrines and Remedies, 3rd ed at page 600 par 2178 that, having regard to these authorities:
"In truth, a Judge hearing an application for an interlocutory mandatory injunction must apply exactly the same test as he would in the case of an application for an interlocutory prohibitory injunction, not some different or more exacting test; nor is the fact that the relief sought is mandatory a ground for refusing relief; but in the application of the normal tests, often, but not always, the fact that the relief sought is mandatory will tilt the balance of convenience in the defendant's favour."

Plaintiff's pleaded case

In his statement of claim, the plaintiff more particularly pleads that, on or about 14 March 1996, the plaintiff and the first defendant entered into a partly written and partly oral contract for the development of the land. The plaintiff pleads out what he says is the "objective purpose and aim" of this contract as well as a number of express terms of the contract. To state the matter very generally, the plaintiff says that the first defendant, of which the second defendant is a director, would design, prepare and obtain approval under the Strata Titles Act 1985 (WA) to a survey‑strata plan for the land. The plaintiff also pleads that there are implied terms of the contract, "implied from its true nature and effect and in order to give it business efficacy", which include the implied term that the first defendant will take all reasonable steps to ensure that the sale of all the proposed lots is effected within a reasonable period of time. The plaintiff pleads in the alternative to the implied terms, that it made a collateral oral contract with the first defendant to similar effect. The plaintiff also pleads that the first defendant owes the plaintiff various fiduciary duties concerning the application of profits and funds earned from the development.
The plaintiff claims as against the first defendant:
(1)A declaration that it is entitled to terminate the contract;
(2)an injunction restraining the first defendant from campaigning to solicit votes against "the Proposed Motion from the members of Rosneath Farm"'
(3)an account;
(4)equitable compensation;
(5)a declaration that the first defendant holds on constructive trust for the plaintiff any amount of the "Plaintiff's Share found, as a result of the account being taken to have been misappropriated by the first defendant";
(6)a declaration that the first defendant is indebted to the plaintiff for a sum pleaded in par 49 of the statement of claim;
(7)damages;
(8)damages pursuant to s 82 of the Trade Practices Act;
(9)interest under the Supreme Court Act1935 (WA);
(10)costs.
The plaintiff pleads that the second defendant has engaged in conduct in trade or commerce that breaches the requirements of the Trade Practices Act 1974 (Cth).
As against the second defendant, the plaintiff claims:
(1)damages;
(2)damages pursuant to s 75B and s 82 of the Trade Practices Act;
(3)interest under the Supreme Court Act 1935 (WA);
(4)costs.

Defendants' pleaded case

The defendants initially filed a defence in the action on 4 September 2002. Subsequently, on 20 November 2002, the defendants purported to file a counterclaim in the action. In the purported counterclaim, amongst other things, the defendants plead that the plaintiff and the first defendant, on or about 14 March 1996, entered into an agreement to facilitate the development of "Rosneath Farm" as a "cluster development under a survey‑strata scheme applying permaculture principles" whereby the first defendant was appointed (or was to be appointed) as the manager of the survey‑strata company "with the principal obligation of managing the establishment and maintenance of Rosneath Farm". The defendants plead that the agreement so made contains various express terms, which are pleaded out in the counterclaim. The counterclaim further pleads that, at various times subsequent thereto, the plaintiff and the defendants agreed various matters intended to facilitate the implementation of the agreement, including with respect to capitalisation of financial conclusions and the success fee.
The defendants further plead that the agreement made on or about 14 March 1996 also contains an implied term to the effect that the plaintiff:
"had a duty to reasonably co‑operate with the Defendants to enable them to perform the First Defendant's obligations under the Agreement, and to achieve the purpose of establishing and maintaining Rosneath Farm according to permaculture principles".
The defendants plead that the implied duty to co‑operate requires the plaintiff:
"(a)To promptly sign all documents and do any other things reasonably necessary to effect the subdivision and sale of any part of the plaintiff's land as part of Rosneath Farm;
(b)not to do anything which prejudices any such subdivision or sale of any part of the plaintiff's land as part of Rosneath Farm;
(c)not to do anything without reasonable justification which was likely to, or did, prejudice the proper maintenance of Rosneath Farm according to permaculture principles, or as required by the proprietors acting in accordance with the by‑laws or the sections of the Strata Titles Act concerning their obligations to co‑operate in bringing the survey‑strata scheme to fruition in accordance with approved plans and diagrams."
The defendants also plead that the plaintiff owes each of them a fiduciary duty to act in good faith and in the interests of any and all investors and proprietors and potential proprietors in Rosneath Farm, including the defendants, and that such fiduciary duty requires the plaintiff to do the things particularised in the plea concerning the "duty to co‑operate".
The defendants plead that in breach of the contractual implied duty or the fiduciary duty, the plaintiff has refused or neglected to do a number of things that permit the implementation of the agreement, including:
"(a)In May 2001 refused to sign any document granting a prospective purchaser an option to acquire a lot in Rosneath Farm, which option included payment by the prospective purchaser of a non‑refundable deposit to the First Defendant as trustee for Rosneath Farm, thereby:
(i)limiting the Defendants' opportunity to market lots in Rosneath Farm to members of the public, and
(ii)deprived the Plaintiff and the First Defendant of potential income through the payment by prospective purchasers of non‑refundable deposits.
….
(e)from in or about February 2002, has failed or refused to sign a contract of sale of lot 69 in Rosneath Farm to Murray Edmonds and Jillian Edmonds, although similar in its terms to 13 previous contracts of sale signed by the Plaintiff."
Other alleged breaches of the agreement or fiduciary duty are also pleaded out in the counterclaim.
The defendants seek relief that includes:
"(a)A declaration that the parties are required to distribute any further proceeds of sale of unsold lots in Rosneath Farm in accordance with the terms of the Agreement as varied by the Capitalisation Variation Agreement and the Success Fee Variation;
….
(e)a declaration that the Plaintiff has a duty to reasonably co‑operate with the Defendants and/or to act in good faith which duty includes the following obligations (being those particularised above);
(f)an injunction requiring the Plaintiff to promptly sign all documents and do any other things reasonably necessary to assist the First Defendant to effect any further subdivision of lots in Rosneath Farm and the negotiation and sale of any lot situated within the Plaintiff's land and proposed to be part of Rosneath Farm including without limiting the generality thereof, referring all expressions of interest in acquiring lots intended to form part of the Rosneath Farm received by him to the Defendants for the Defendants on behalf of the Plaintiff to negotiate the sale of any such lot for the purposes of Rosneath Farm."

The Master's decision on the pleadings

A number of pleading points were taken by the parties on applications to strike out the statement of claim, the defence and a proposed amended defence. Master Sanderson dealt with those applications in a decision handed down on 15 May 2003: Clark v Rowell Consulting Services Pty Ltd [2003] WASC 89. The Master refused the defendants' application for extension of time to apply to strike out the statement of claim. However, in his reasons, the Master acknowledged that the statement of claim was not flawless and, indeed, had deficiencies that would benefit from reconsideration by counsel. He also allowed the amendment of the defence, including the incorporation in it of the counterclaim. The Master also acknowledged that there was merit in a number of complaints of the plaintiff about the defendants' pleadings, but considered that, in the complex contractual situation pleaded, there was little point to be served in requiring more precision in the pleading and that the plea in its present form makes clear to the plaintiff the case that is put by the defendants.

Serious question to be tried

The first question that arises is whether or not the defendants can show that there is a serious question to be tried, which would entitle them to the interlocutory relief now sought.
As noted, the defendants rely on the written agreement alleged to have been made by the first defendant and the plaintiff on 14 March 1996. That agreement recites that the plaintiff is "the Owner" of the "property" and that the first defendant - called "the Developer" - is willing and able to undertake the development of the Property in accordance with permaculture principles.
The agreement then provides, so far as is relevant, as follows:
(1)     By cl 1:
"The Developer is appointed to do all that is necessary to enable the Owner to sell strata lots on the Property. This appointment will continue until the specific work scheduled as necessary for the sale of lots has been completed, even though some of this work may take place after the first blocks are sold. The Developer is also appointed to manage the Body Corporate for the first four years of its existence."
(2)     By cl 2:
"All the work necessary for the Owner to sell strata title lots on the Property will be conducted by the Developer within the guidelines established and agreed in advance and in writing from time to time between the Owner and the Developer and as prescribed by the conditions of Planning and Local Government approval and as detailed in any plans, schedules and appendices hereto. The Developer shall be responsible for engaging such employees, agents, contractors and/or subcontractors as are required to implement the agreed program, with recommendations from the Owner."
(3)     By cl 3:
"Development funds are to be provided by the Developer for the construction of an office/residence, for subdivision expenses, and possibly for commencing village and farm infrastructure development. These funds will be at least the nett proceeds from the sale of 20 Onslow Road Shenton Park in the said state less $10,000 which shall be paid into a property development account at Bankwest Dunsborough within one week of the settlement of that sale or before …
Labour material and equipment provided by the Developer for the building of the office/residence will be included as if it were capital provided by the Developer, to a maximum of $60,000, and as agreed with the Owner.
The Developer's contribution is further recognised by a credit to his capital account of $75,000."
(4)     Clause 4 provides for the remuneration of the Developer by                reference to minimum sums or hourly rates in connection with:
" … the work of selling the strata lots and associated tasks."
It further provides that:
"The Owner will pay the Developer a success Fee of 10% of the nett profit on the sale of each lot unless other financial commitments require deferring this payment … "
(5)     Clause 5 provides for the office and accommodation for the                 Developer.
(6)     By cl 6 the "Role and Responsibility of the Owner" are stated to be:
"To provide and maintain the Property for the development unencumbered except as agreed with the Developer, and to pay rates and charges."
(7)     Clause 7 deals with investment by Owner.
(8)     Clause 8 deals with payment of project expenses.
(9)     Clause 9 deals with division of profits and provides that:
"Nett proceeds of sales will be distributed to the Owner and the Developer respectively in proportion to the unimproved capital value of the land as determined by a valuer at the date of the signing of this Agreement for the Owner, and the amount of capital provided by the Developer in the forms described in clauses 3, 4 and 5."
(10)Clause 10 deals with "Corporate Body Management" and provides relevantly that:
"The Developer will be the first estate and Body Corporate manager employed by the corporate body of the strata title association … If accepted by a 2/3 majority of the land owners at that time, the Developer may serve one more term as manager, but must then stand aside for at least ten years."
(11)   Clause 11 deals with "Sale of Strata Lots". It provides:
"When a block is sold there will be two cheques payable. One cheque will go to the Owner, to pay for the land, the development costs, to repay capital and his (and any other investor's) profit. The other will go to the Body Corporate Development Fund."
(12)   Clause 12 deals with "Financial Records and Budgets".
(13)   Clause 13 deals with "Resolution of Disputes".
(14)Clause 14 deals with "Protection of Owner's and Developer's Interests".
(15)   Clause 15 deals with "Section of Lots" and provides:
"Persons and incorporated bodies associated with the Owner have the right to select seven lots and then persons and incorporated bodies associated with the Developer have the right to select up to three lots before lots are released to other buyers. For the purposes of distributing nett profits these lots will be regarded as sold at the market value at the time of transfer … "
(16)   Clause 16 deals with "Copyright".
(17)   Clause 17 is headed "Termination of Agreement" and provides:
"If this Agreement is terminated by the Owner all outstanding fees are to be paid within one month, and within three months, a once off payment of $200,000 and any capital amount invested as above plus 25% interest per annum or part thereof since that capital sum was invested.
If this Agreement is terminated by the Developer it is the Developer's responsibility to arrange for a suitably qualified developer acceptable to the Owner to take over the Developer's responsibilities if required to do so by the Owner … "
(18)   Clause 18 deals with miscellaneous matters.

As noted above, cl 17 of the agreement does not expressly deal with the power of the Owner or the Developer to terminate the agreement, only with the consequences of termination.
The defendants acknowledge that there is little or no express obligation in the agreement dated 14 March 1996 for the plaintiff to sign contracts of sale of the type encapsulated in the MacAdam contract. However, it is contended that it is clear there will be occasions when the plaintiff's signature, as registered proprietor, is required in order to enable the subdivision to proceed and for subdivided lots to be transferred to third parties. For example, the Western Australian Planning Commission will not accept an application for subdivision approval without the signature of the registered proprietor on the land to be subdivided and the transfer of the subdivided lots to a new purchaser cannot be achieved without the signature of the registered proprietor of that lot on the transfer.
Therefore, the defendants contend that, given neither the plaintiff nor the defendants will receive any proceeds of sale for the development, and particularly that the defendants will not receive any proceeds of sale in return for their capitalised remuneration, unless the plaintiff provides his signature to such documents and does whatever else is required to enable the proceeds of sale to be distributed, the fundamental commercial and non‑commercial objectives of the agreement will not be met. It is contended that, in those circumstances, the common law implies a term that the plaintiff must co‑operate by signing such documents.
As an alternative to the contract argument, the defendants also contend that the agreement constitutes a joint venture between the parties. As such, they contend the plaintiff owes the defendants a fiduciary duty to act in good faith in his dealings with them. The defendants contend that such a duty requires the plaintiff to refrain from doing anything which unreasonably prejudices the future development of Rosneath Farm in accordance with the approved by‑laws and survey‑strata plan. They say that the plaintiff at least owes the defendants a fiduciary duty not to prejudice such an objective. It is further contended that, if the plaintiff is required to act in good faith, the plaintiff is also obliged to take positive steps to facilitate the ongoing subdivision of the land. However, it may be remarked that it is one thing to plead a negative or restrictive covenant and another thing to draw from it an obligation to perform a positive act.
The plaintiff alleges that interlocutory relief should be denied for a number of reasons, including that there is no serious issued to be tried. First, it is said that the defendants do not plead that the plaintiff is obliged to sign any offer and acceptance, let alone an offer and acceptance in the form of the previously proposed MacAdam contract. That is, on the face of it, true, but as the plaintiff also recognises, the defendants plead in the counterclaim an implied term or a fiduciary duty that the plaintiff should do all things necessary, including signing all documents reasonably necessary, to effect the sale of any part of the plaintiff's land forming part of the Rosneath Farm.
The plaintiff also contends that, despite the plea concerning the implied term or the fiduciary obligation, there is no plea made by the defendants that there was any obligation on the plaintiff either express or implied to sign a contract of sale in the form proposed by the defendants in respect of the MacAdam contract. That too, on the face of it, is so.
Thus, it is said that the counterclaim does not, as a result, raise any question to be tried which would, if found in the defendants' favour, give rise to the injunctions now sought.
In that context, the plaintiff says that it is pertinent to examine whether the defendants have raised any allegation in the counterclaim that, by virtue of the obligations allegedly imposed on the plaintiff, the plaintiff is in breach of those obligations by failing to accept an offer in the form previously proposed by the MacAdams. The plaintiff says no such allegation was in fact contained in the counterclaim. This is also correct. While reference is made to the MacAdam transaction in par 107(k) of the counterclaim, it does not include any allegation to the effect that the plaintiff refused to sign an offer and acceptance presented to him by the defendants on behalf of the MacAdams in the form which was proposed or at all.
The plaintiff also contends that the allegations that are contained in par 105(a), (c), (d) and (e) of the counterclaim lack particularity in that the prospective purchaser is not named, the lot number is not pleaded, the non‑refundable deposit is not specified and other terms of the option are not pleaded. The plaintiff says that the affidavit of the second defendant filed in support of the defendants' application does not remedy this lack of information and there remains no reference to any of those matters at all. The plaintiff submits that in relation to the MacAdam matter, there was no evidence before the Court of any refusal on the part of the plaintiff to sign any offer and acceptance, only the one procured by the defendants.
As to the prior conduct of the plaintiff in signing contracts for the sale of survey‑strata lots, the plaintiff says that, at its highest, all that can be said is that the plaintiff actually signed contracts of sale in similar form to the MacAdam offer and acceptance in 1999 and 2000, and that there is no allegation that the plaintiff formally or even informally agreed to contracts of sale being executed in that form only. The plaintiff says the same observation can be made in respect of the agreement to facilitate staged development.
As a result of these matters, the plaintiff says that the Court should not be satisfied that there is a serious question to be tried which, if established, will entitle the defendants to a final injunction of the type sought, or that the defendants will suffer irreparable injury for which damages would not adequately compensate them if the injunction is not granted, or that the Court can feel a sufficiently high degree of assurance that if the evidence remains at trial as it is now, the final result by way of permanent injunction will accord with that sought on an interlocutory basis.
In Secured Income Real Estate (Australia) Ltd v St Martin's Investments Pty Ltd (1979) 144 CLR 596, the Court dealt with the general rule that where in a written contract it appears that both parties have agreed that something shall be done which cannot effectually be done unless both concur in doing it, the construction of the contract is that each agrees to do all that is necessary to be done on his part for the carrying out of that thing, though there may be no express words to that effect. In that case, land on which a large office building was erected was sold under a contract of sale. Settlement took place and the purchaser became the registered proprietor of the land. A balance of moneys which was payable by a certain date remained owing after settlement. The contract provided for the reduction of this sum by a formula if the vendor was unable to provide evidence to the purchaser's reasonable satisfaction that aggregate rents under leases of premises in the building had reached a specified figure. It also provided that all leases of the premises after its execution should be approved by the purchaser, but approval was not to be capriciously or arbitrarily withheld. There was no requirement that the purchaser should grant leases after it became the registered proprietor. The Court held that, notwithstanding the draftsman error in requiring the purchaser's approval to leases granted after the date of settlement, the parties' intention was evident and rectification of the agreement was not necessary. It was manifest that the purchaser should do all things reasonably necessary to enable leases to be granted and should not arbitrarily or capriciously prevent the grant of a lease or unlet space in the building. A refusal by the purchaser to grant a lease to the vendor so as to deprive it of a benefit which would otherwise accrue to it under the contract would be arbitrary and capricious, but a refusal to do so on the ground that there were reasonable doubts that the vendor could or would pay the rent promptly would not. The vendor has the onus of proving that refusal was arbitrary or capricious.
So far as the general rule stated above is concerned, Mason J, at 607 ‑ 608, stated:
"It is easy to imply a duty to co‑operate in the doing of acts which are necessary to the performance by the parties or by one of the parties of fundamental obligations under the contract. It is not quite so easy to make the implication when the acts in question are necessary to entitle the other contracting party to a benefit under the contract but are not essential to the performance of that party's obligations and are not fundamental to the contract. Then the question arises whether the contract imposes a duty to co‑operate on the first party or whether it leaves him at liberty to decide for himself whether the acts shall be done, even if the consequence of his decision is to disentitle the other party to a benefit. In such a case, the correct interpretation of the contract depends, as it seems to me, not so much on the application of the general rule of construction as on the intention of the parties as manifested by the contract itself."
Thus, Mason J at 608 considered that provisions of the contract that contemplated that leases would be granted of unlet space between a specified date and the final date for completion of the contract were inconsistent with the hypothesis that the respondent had an unfettered discretion to decide whether a lease would be granted or not.
Similarly, in this case the defendants say that there is an implied contractual duty requiring the plaintiff to sign documents such as the application for subdivision approval from time to time and the transfer of a subdivided lot to a new purchaser, and that he does not have an unfettered discretion to decide whether or not he should. On the face of it, there is considerable force in the defendants' argument.
In answer to that proposition, the plaintiff appears to contend that it is not obliged to accept any particular offer to purchase a survey‑strata lot without question. That much may be acknowledged, but if the defendants can display that a proposed sale is reasonable, the position may well be different. This may be thought to follow, for example, from cl 1 of the written agreement recited above which obliges the first defendant "to do all that is necessary to enable the Owner to sell strata lots on the Property". Further, cl 2 expressly provides that the role and responsibility of the first defendant is to do "all the work necessary for the Owner to sell strata title lots on the Property … "; and cl 4 refers to the first defendant's "work of selling strata titles".
Additionally, it may well be (although this is not pleaded) that, by reference to the course of conduct alleged by the defendants whereby the plaintiff has previously signed similar contracts for sale of survey‑strata lots and proposed survey‑strata lots, an agreement can be inferred that such contracts ordinarily will be signed by the plaintiff unless shown clearly to be unreasonable.
While it is true, as the plaintiff contends, that there is no specific allegation in the defendants' counterclaim to the effect that the plaintiff is obliged to accept an offer in a particular form or of a particular nature or that the plaintiff refused at material times to sign the MacAdam contract, I consider it is arguable that the conduct of the plaintiff, that the defendants complain of in their application, is but an instance of the category of conduct complained of and pleaded. What is pleaded, is that the agreement is subject to an implied term that the plaintiff must meet a duty "to reasonably co‑operate" with the defendants to enable them to perform the first defendant's obligations under the agreement and to achieve the purchase of establishing and maintaining Rosneath Farm according to permaculture principles. However, it may well be, as the Master suggested in his reasons concerning the adequacy of the counterclaim, that further consideration will need to be given to it prior to any trial to ensure that the precise case which the defendants wish to put at trial is sufficiently pleaded.
Nonetheless, I consider the defendants have established there is a serious issue to be tried.

Other factors

Of course, finding that the applicant for an interlocutory injunction has established that there is a serious issue to be tried is not the end of the matter. In the ordinary course of events, it is relevant to consider whether the applicant for relief will suffer irreparable injury for which damages will not be adequate compensation unless the injunction is granted. And even if that matter goes in the applicant's favour, there is a question as to where the balance of convenience lies in any given case. Additionally, in relation to the grant of an interlocutory mandatory injunction, there is the need to consider whether the grant of relief will not, in effect, result in a major part of final relief in the action being granted prior to the resolution of issues seriously in dispute and so, for that reason, should not be granted.
In this instance, I consider that the defendants have established that there is a serious issue to be tried that is at the higher end of a scale of weak to strong. However, I am not satisfied that this is a case where the relief applied for should go. There are a number of reasons for that, each of which is, in the end, difficult to state, particularly as some of the matters overlap.
Initially, the mandatory interlocutory injunctions included those proposed in pars (a) and (b) set out above, which were designed to require the plaintiff to accept the offer made by the MacAdams. Now that the MacAdams have withdrawn their offer and the defendants no longer seek relief in respect of the orders sought in pars (a) and (b), only a mandatory injunction in terms of par (c) remains to be considered. If relief were to be granted in those terms, namely, to "do all things necessary to promptly facilitate the execution of settlement and registration of all documents required to transfer further subdivided lots in Rosneath Farm to any purchasers … ", very little would be achieved. It would be a meaningless requirement without regard to any particular subject matter. It would not be easy to understand what conduct was required of the defendants in order to comply with the requirement.
Further, so far as the question of irreparable damage to the applicant defendants is concerned, I am not satisfied that the failure to have an interlocutory mandatory injunction in terms of par (c) set out above will result in such loss. They will be left in the position where they will need to negotiate with the plaintiff concerning the plaintiff's acceptance of each contract for sale by offer and acceptance that they procure. If the plaintiff refuses to accept a particular offer made, and does so on breach of the agreement between the parties, the defendants (or at least the first defendant) may be in a position to recover damages for breach of contract in that regard.
In my view, if the matter ultimately depended on an assessment of where the balance of convenience lies in a case such as this, I would be inclined to find that the balance of convenience lies in favour of the defendants, in that up until the plaintiff's refusal to accept the offer made by the MacAdams, all other offers made on similar terms have been accepted by the plaintiff and the implementation of the agreement will be made that much harder by reason of the plaintiff's conduct. In that sense, it appears to me that the plaintiff is seeking to change the form of the subdivision initially conceived and approved in January 1998 and as marketed since then, whereas the defendants are seeking to implement the form of development as initially conceived and approved and marketed by them to this point. Of course, the MacAdams' offer has now been withdrawn.
In the end, while I consider the defendants have a strongly arguable case on the matters pleaded against the plaintiff, I consider interlocutory injunctive relief in the form sought in par (c) to be premature and unlikely to assist in the resolution of any matters presently in dispute between the parties.
The defendants say that, although the orders initially sought in respect of the MacAdam transaction and the general nature of the injunction sought pending trial were and is in the nature of mandatory injunctions, they essentially require no more than that the plaintiff sign the necessary documents to effect further subdivisions and transfer of subdivided lots. Accordingly, the defendants submit that they will not require either constant supervision; nor would it be unclear precisely what is required of the plaintiff in order to comply with such an order. They say that, if the plaintiff has a good reason for refusing to sign a contract relevant to a particular term, then he may apply for permission either not to sign or to make a counter‑offer consistent with the approved survey‑strata scheme, if the parties cannot otherwise agree. I understand the submission to be that, in such a case, the "permission" of the Court would be sought.
In my view, the converse is likely to be true. Arguments over what contract terms are reasonable or not, and what contractual terms are appropriate, should, at this stage of the proceedings, be left to the parties. Indeed, the defendants' submission exemplifies why, at this stage of the proceedings, Courts are extremely reluctant to contemplate the grant of interlocutory mandatory injunctions along the lines of the defendants' application. In a dispute such as the present, if the relief sought were granted, there would be a real risk that the Court will become involved in the supervision or administration of what is plainly an ongoing, complex, commercial arrangement between the parties, the terms and implementation of which, as the pleadings and materials before me on this application show, are the subject of considerable dispute.
I also do not consider it appropriate to grant an injunction in terms of par (d) of the application. While the defendants, on the face to it, seek a prohibitive injunction in terms of par (d) to restrain the plaintiff from dealing with Rosneath Farm, the qualification, "unless such dealing be expressed to be subject to the by‑laws of the survey strata scheme and agreements to facilitate staged development", in effect, would result in the injunction being a mandatory injunction. The injunction, if granted in such terms, would require the plaintiff to deal with the land in a particular way.
Thus, for the same reasons set out above, I consider it inappropriate at this stage of the proceedings to grant an injunction in such terms. An injunction in these terms would, in most respects, determine at an interlocutory stage the primary issue outstanding between the parties.

Conclusion

While the case put forward on behalf of the defendants raises serious issues to be tried, and the defendants may well be entitled to injunctive relief should they succeed on their counterclaim at trial, it is not appropriate that interlocutory orders should be granted now.
I am concerned that the grant of such relief now will inappropriately engage the Court pending trial in the ongoing supervision of the performance of a complex commercial arrangement, the terms and implementation of which remain in real dispute between the parties.
I am also not satisfied that any present breach of contract or fiduciary duty pleaded by the defendants, if established, cannot adequately be compensated for by an award of damages or equitable compensation.

In all of these circumstances, while the Court recognises that there are important issues to be tried between the parties, and that some form of external intervention might be appropriate to effect the sensible implementation of the arrangement between the parties concerning the development of the land for the benefit of all concerned, that is not a function that this Court should permit itself to undertake through the grant of injunctions in the terms sought by the defendants in their application before the Court. The parties, of course, are in a position themselves to negotiate a settlement without resort to further litigation and, to that end, to seek mediation of their dispute either with the assistance of a mediator appointed by the Court or privately by the parties.
For these reasons, the application of the defendants for interlocutory injunctions is dismissed.