Classic Cars (Essendon) Pty Ltd v Ward Motors Pty Ltd
[2000] VSC 131
•5 April 2000
| SUPREME COURT OF VICTORIA | |
| PRACTICE COURT | Not Restricted |
No. 4691 of 2000
| CLASSIC CARS (ESSENDON) PTY. LTD. | Plaintiff |
| v. | |
| WARD MOTORS PTY. LTD. | Defendant |
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JUDGE: | BEACH, J. | |
WHERE HELD: | MELBOURNE | |
DATE OF HEARING: | 4 APRIL 2000 | |
DATE OF JUDGMENT: | 5 APRIL 2000 | |
CASE MAY BE CITED AS: | CLASSIC CARS (ESSENDON) PTY. LTD. v. WARD MOTORS PTY. LTD. | |
MEDIUM NEUTRAL CITATION: | [2000] VSC 131 | |
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CATCHWORDS: Interlocutory Injunction – Serious issue to be tried – Agreement for sale of motor franchise – Balance of convenience in favour of plaintiff.
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APPEARANCES: | Counsel | Solicitors |
For the Plaintiff | Mr. M.A. Robins | Maddock Lonie & Chisholm |
| For the Defendant | Mr. J. Tsalanidis | Marshall & Dent |
HIS HONOUR:
This is an application by the plaintiff, Classic Cars (Essendon) Pty Ltd, for an interlocutory injunction restraining the defendant, Ward Motors Pty Ltd, from disposing of its Honda motor vehicle dealership franchise operated by it at 574 Doncaster Road, Doncaster and 5 Rose Street, Doncaster (the franchise) pending the trial and determination of the proceeding.
The case for the plaintiff is that by heads of agreement executed by the parties on 10 February 2000 the defendant agreed to sell the franchise to the plaintiff for the sum of $1,100,000 in respect of the goodwill of the franchise and the plant and equipment associated with it at a price to be determined by an independent valuation.
The case for the defendant is that although it executed the heads of agreement that day and received from the plaintiff a cheque for $55,000 in respect of the deposit for the sale of the franchise, no concluded agreement was ever arrived at by the parties and any claim by the plaintiff for specific performance of the heads of agreement must fail; further, that any agreement by the parties was subject to the approval of the defendant's solicitor and that that approval has never been given. In so far as the deposit of $55,000 is concerned, the defendant did never bank the plaintiff's cheque and has now returned the cheque to the plaintiff.
The details of the negotiations between the parties, both before and after the heads of agreement were signed by them on 10 February, are set out in the affidavits filed by the parties in support of and in opposition to the application and in the many exhibits to those affidavits. No useful purpose would be served by detailing them in my reasons for judgment.
Suffice it to say that there are a number of conflicts in the parties' accounts of those negotiations, conflicts which can only be determined at a full trial of the proceeding.
What I can say, however, is that in my opinion there is a serious issue to be tried in the proceeding. It would seem to me that if one has regard to the negotiations which took place between the parties prior to 10 February 2000, on 10 February and subsequent to that date, it is strongly arguable that the parties did come to a concluded agreement in respect of the principal aspects of the sale of the franchise and that all that remained was the "fine tuning" of some of the minor details.
The payment of the deposit by the plaintiff and the retention of it by the defendant until such time as this proceeding was filed in the court by the plaintiff are consistent with such a view of the matter.
As to the point concerning the approval of the contract by the defendant's solicitor, I say that in my opinion it is arguable that if such approval was not given expressly, it was given impliedly by the defendant's solicitor during the later course of the negotiations.
I point in that regard to the final paragraph in the letter of 3 March 2000 from the defendant's solicitor to the plaintiff's solicitor, which reads:
"Nevertheless we are instructed to re-draft the Sale Agreement and shall, in due course, provide you with a copy of the same for your consideration" -
and paragraph 3 of the affidavit of the plaintiff's solicitor sworn 3 April 2000, which reads:
"3.I refer to paragraph 5 of the Affidavit of Guy Israeli sworn 30 March 2000 and confirm that on 7th March, 2000 I had a telephone conversation with Mr Israeli of Messrs Marshall & Dent. I asked Mr Israeli words to the effect of 'what is going on with the contract?' He replied with words to the effect 'I have been very busy with another matter, however I am working on it now and you will receive it tomorrow afternoon.' Mr Israeli did not refer to any matter in relation to his instructions and left me in no doubt that I was to receive the contract the following day."
As to the balance of convenience, in the circumstances of this case I consider that it is very much in favour of the plaintiff. If the defendant is not restrained in the manner sought and sells the franchise to a third party, the plaintiff will lose the benefit of its bargain and it may be a very difficult matter to quantify its loss in terms of damages.
It was argued on behalf of the defendant that that should not be so, that in view of the content of the affidavit of its accountant, Brett Fowler, any damage suffered by the plaintiff should be easily capable of assessment.
I do not accept that proposition.
The plaintiff's claim is for specific performance. For the plaintiff to only recover damages would in my opinion be an inadequate remedy. In that regard I refer to the observations of Windeyer, J. in Coulls v. Bagot's Executor and Trust Co Ltd (1966-1967) 119 C.L.R.460. At p.503 His Honour said:
"This agreement can be regarded as specifically enforceable because of the interests in land involved. That suffices, in this case, but I would be prepared to go further. The decision in Beswick v. Beswick points out the way and, as at present advised, I would follow it. I do not think it is really a new way, although it is perhaps now more easily seen. It seems to me that contracts to pay money or transfer property to a third person are always, or at all events very often, contracts for breach of which damages would be an inadequate remedy - all the more so if it be right (I do not think it is) that damages recoverable by the promisee are only nominal. Nominal or substantial, the question seems to be the same, for when specific relief is given in lieu of damages it is because the remedy, damages, cannot satisfy the demands of justice.
'The Court', said Lord Selborne, 'gives specific performance instead of damages only when it can by that means do more perfect and complete justice': Wilson v. Northampton and Banbury Junction Railway Co.
Lord Erskine in Alley v. Deschamps said of the doctrine of specific performance:
'This Court assumed the jurisdiction upon this simple principle; that the party had a legal right to the performance of the contract; to which right the courts of law, whose jurisdiction did not extend beyond damages, had not the means of giving effect.'
Complete and perfect justice to a promisee may well require that a promisor perform his promise to pay money or transfer property to a third party. I see no reason why specific performance should not be had in such cases - but of course not where the promise was to render some personal service. There is no reason today for limiting by particular categories, rather than by general principle, the cases in which orders for specific performance will be made. The days are long past when the common law courts looked with jealousy upon what they thought was a usurpation by the Chancery Court of their jurisdiction."
See also the decision of Brooking, J., as he then was, in ANZ Executors and Trustees Ltd v. Humes Ltd and Anor [1990] V.R.605, in particular at p.629 et seq.
On the other hand the defendant has not adduced any evidence that it is desirous of selling the franchise to a third party, and although one may have one's suspicions in that regard, in the absence of evidence to that effect one is justified in concluding that, so far as that aspect of the matter is concerned, the defendant will suffer no prejudice by being restrained in the manner sought by the plaintiff pending the hearing and determination of the proceeding - all the more so when I propose in a moment to order that the proceeding have a speedy trial.
A matter advanced on behalf of the defendant in opposition to the plaintiff's application is the contention that if an injunction is granted it may have the effect of crystallizing a charge over the defendant's assets given by it to Inchcape Wholesale Finance Australia Limited.
The clause in the charge relied upon by counsel for the defendant in support of that contention is clause 8.2(a), which reads:
"Every floating charge created under or pursuant to this charge shall automatically crystallize ipso facto upon the happening of any one or more of the following events without the necessity for any notice or demand or intervention by the Mortgagee:
(a)(Unauthorised sale) if the Company or any guarantor company shall, without the prior written consent of the Mortgagee, sell or part with possession of the whole or the major part of its undertaking or attempt or purport to do so."
In my opinion the injunction could not possibly have that effect. What could cause the defendant difficulty in that regard is the negotiations that the parties engaged in leading up to the execution of the heads of agreement and then the institution of this proceeding.
If Inchcape took the view that those negotiations constituted an attempt on the part of the defendant to sell the franchise, then it would follow that the charge has already crystallized
I refer in that connection to the use of the words "automatically crystallize ipso facto" and "sell or attempt or purport to" in the clause in question.
If pursuant to that clause the charge has already crystallized, there is nothing this court has done to produce that result.
At all events, whatever the present situation is concerning the charge, no injunction granted by this court can have the effect of crystallizing it.
Mr Robins, do you repeat the undertaking as to damages on behalf of the plaintiff?
MR ROBINS: I do, Your Honour.
HIS HONOUR: That undertaking as to damages having been given, I make the following orders in the matter:
1.I order that until the trial and determination of this proceeding or further order the defendant by its servants or agents or howsoever otherwise not –
(a) (i) sell,
(ii) transfer,
(iii) assign,
(iv) further encumber, or
(v)otherwise deal with the ownership and/or its legal and/or beneficial interest in the Honda motor vehicle dealership franchise operated by the defendant at 574 Doncaster Road, Doncaster and 5 Rose Street, Doncaster and/or any lease of real property associated therewith; and
(b) (i) sell,
(ii) transfer,
(iii) assign,
(iv) further encumber, or
(v)otherwise deal with the stock, plant and equipment, spare parts and/or other property used in the operation of the Honda motor vehicle dealership franchise operated by the defendant at 574 Doncaster Road, Doncaster and 5 Rose Street, Doncaster, other than in the ordinary course of business of operating a motor vehicle dealership.
2.I order that subject to any order of the trial judge to the contrary, the trial of this proceeding be by affidavit.
3.I order that any further affidavits upon which the plaintiff intends to rely be filed and served by 19 April 2000.
4.I order that any further affidavits upon which the defendant intends to rely be filed and served by 10 May 2000.
5.I refer the proceeding to the Listing Master to enable a date to be fixed for the trial of the proceeding after 10 May 2000 and request the Listing Master to give the proceeding such priority as she considers appropriate.
6.I direct that this order be prepared by the solicitors for the plaintiff and within 24 hours be brought to me for authentication.
7.I direct that a copy of this order be served on the associate to the Listing Master within seven days of its authentication.
8. I reserve to the parties liberty to apply.
9. I reserve the costs of the application.
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