Dasame Developments Pty Ltd v Pakenham Racing Club Inc
[2019] VSC 816
•11 December 2019
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMERCIAL LIST
S ECI 2019 01816
BETWEEN:
| DASAME DEVELOPMENTS PTY LTD (ACN 166 128 838) | First Plaintiff |
| EQUINETRAIN PTY LTD (ACN 600 892 868) | Second Plaintiff |
| v | |
| PAKENHAM RACING CLUB INC (ACN 148 534 801) | Defendant |
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JUDGE: | Macaulay J |
WHERE HELD: | Melbourne |
DATE OF HEARING: | 10 December 2019 |
DATE OF JUDGMENT: | 11 December 2019 |
CASE MAY BE CITED AS: | Dasame Developments Pty Ltd & Ors v Pakenham Racing Club Inc |
MEDIUM NEUTRAL CITATION: | [2019] VSC 816 |
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INJUNCTION – Application for interlocutory injunction – Refused.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiffs | R Dalton QC with G Jegatheesan | Aitken Partners |
| For the Defendant | M Borsky QC with A Cameron and P Annabell | Duffy & Simon |
HIS HONOUR:
On 20 January 2016 Dasame Developments Pty Ltd, the first named plaintiff, entered a contract of sale to buy a parcel of land from Pakenham Racing Club Inc (PRC), the defendant. That parcel (about 5 acres) was set within a much larger area (608 acres) owned by PRC on which it had constructed a new race track. The sale, settled in May 2017, was made to enable Dasame to construct an equine training centre at the track (‘the training centre’). By a separate contract made the same day (‘Exclusivity Deed’), PRC granted Dasame the exclusive right to supply specified horse rehabilitation and training services for horse trainers at the racetrack for a period of 10 years. Dasame incorporated a separate company, Equinetrain Pty Ltd, to conduct the training centre.
In this proceeding, Dasame and Equinetrain claim damages and permanent injunctions against PRC. The injunctions are to restrain PRC from constructing an equine pool and other facilities at particular locations at the racetrack that are claimed to be remote from the plaintiffs’ training centre. Doing so, the plaintiffs claim, will jeopardise the viability of the training centre.
In this application Dasame and Equinetrain seek interlocutory injunctions to restrain PRC from:
(a) constructing or permitting the construction of, the equine pool in the location depicted in the “Revised Master plan” (which is Annexure B to the amended statement of claim dated 12 November 2019 filed in this proceeding) or at a similar location depicted in exhibit JD-25 to the affidavit of Jacob Michael Dwyer affirmed 5 December 2019; and/or
(b) otherwise departing from the location of the equine pool depicted in the “Masterplan” (which is Annexure A to the amended statement of claim dated 12 November 2019 filed in this proceeding).
The causes of action set out in the plaintiffs’ amended statement of claim are breach of contract, equitable estoppel and misleading and deceptive conduct in contravention of the Australian Consumer Law. By the claim for breach of contract the plaintiffs allege that, if PRC builds the equine pool and facilities in a location other than as depicted in the Masterplan, it will breach certain obligations under the Exclusivity Deed, namely those of acting in good faith (clause 9) and doing all necessary things to give full effect to the deed (clause 20).
Each of the causes of action rely, in substance, upon a common substratum of factual allegations. Those allegations are that, before the contracts were made and before Dasame and Equinetrain commenced to invest in buying the land and constructing the training facility, PRC represented, and thereby induced the plaintiffs to assume, that the racecourse would be constructed in accordance with the Masterplan. The estoppel claim also relies upon representations made between entry into the contracts, in January 2016, and October 2018.
It appears that the principal customer-base envisaged for the training centre is the cohort of horse trainers who stable their horses elsewhere but bring them to train at the racetrack on a day to day basis. For that reason, say the plaintiffs, it is critical to their business that those trainers can bring their horses to a float car-park near stripping stalls that are available for daily use, both of which are near to the training centre. This, they say, is what the Masterplan showed would be the case.
According to Masterplan, infrastructure conducive to daily trainers bringing their horses near to the training centre, and thus advantageous for its business, would be built in close proximity to where the training centre was to be situated. That is to say, an equine training pool, stripping stalls and parking for horse floats would all be constructed, conveniently, adjacent to the new training centre. If built according to the Masterplan, the training centre would be in the middle of the ‘horse action’.
Moreover, and equally importantly, if the infrastructure is not to be built as depicted in the Masterplan, but re-arranged in a way that would block access for visiting trainers to the training centre, the centre would be isolated from its customer-base.
In October 2018 PRC released a Revised Masterplan. Under that revised plan, compared with what was shown in the Masterplan, the equine pool will be built over the area where the stripping stalls were to be and the stripping stalls will be built further to the north, away from the centre. According to the plaintiffs, the necessary implication from that revision is that no horse-float park will be built near the centre and vehicular access to the centre will be blocked on training days.
Vehicle access to the centre will be blocked, it is said, because the access for horses being walked to the pool will, logically, be via an east-west running lane known as ‘Bourke St’. Bourke St must also be used (or crossed) by vehicles going north to south to get to the training centre, but it cannot be used for both horses and cars. According to the plaintiffs, if these events and consequences were to occur their training centre would no longer be near the ‘horse action’, indeed will become land-locked, and their business will not be viable.
There is no term in the contract of sale or Exclusivity Deed by which PRC explicitly promises that it would construct the racecourse in accordance with a particular version of the Masterplan. Nor is there any written representation to that effect. Indeed, the contract of sale only obliges PRC to construct a particular horse bridge and associated paths and allows it to defer the construction of certain horse walkways (cls 20, 21), but otherwise contains a typical ‘whole contract’ clause by which Dasame acknowledges it has not relied on any warranty or representation that is not in the contract (cl 3.1). Unsurprisingly, PRC argues, with some force, it is problematic for the plaintiffs’ case that, having addressed contractual obligations to build infrastructure, the parties did not stipulate that PRC must build facilities as shown on the Masterplan.
Nevertheless, the plaintiffs point to a chain of communications before 20 January 2016 which, they allege, informs the content of PRC’s good faith obligation under the Exclusivity Deed. Further, those communications together with additional communications after January 2016, and the plaintiffs’ reliance upon them, make it unconscionable for PRC to construct the equine pool, car parking facilities and stripping stalls anywhere other than as depicted on the Masterplan, or to interfere with vehicle access to its centre on training days.
The plaintiffs say that to date they have invested $3.4 million in buying the land and building the training centre and are currently paying overheads of $15,000 a month for maintaining the centre. The centre, however, has not yet commenced to operate. Indeed, the plaintiffs say they do not propose to open the training centre for business unless and until PRC builds the infrastructure depicted on the Masterplan; ie. the equine pool, stripping stalls and car float park, each in the locations shown.
By its defence in this proceeding, PRC denies that it made the representations which the plaintiffs allege, and further denies that in choosing to modify its Masterplan it has breached or will breach any of the agreements or is acting unconscionably. During submissions, and by reference to various exhibits, PRC argued that there were numerous different plans shown to the plaintiffs over time, many of which did not depict any pool, stripping stalls or float car park in the locations relied upon by the plaintiffs. Through its solicitors, on 14 November 2019 PRC informed the plaintiffs of its intention to proceed to construct the equine training pool in the location depicted in its Revised Masterplan unless restrained by the court from doing so. That letter has prompted this application.
To succeed in its application for an interlocutory injunction the plaintiffs must show that there is a serious question to be tried; that the balance of convenience favours the grant of the injunction; that damages would not be an adequate remedy; and that they have proffered an appropriate undertaking as to damages.
Although there are respectable arguments against the merits of the plaintiffs’ claims, those arguments are not so strong as to preclude a finding that there is a serious question to be tried. PRC did not press for such a finding. The affidavit material filed by the parties shows that there are significant factual issues to be determined at trial, and scope for substantial debate about what might be inferred from the primary facts as found. Nevertheless, it must be said, in the absence of a clear contractual obligation to build in accordance with a particular Masterplan, or of any explicit representation that PRC would do so, the plaintiffs face some hurdles.
In my view, however, the plaintiffs’ greater problems lie in respect of the balance of convenience and why damages would not be an adequate remedy should they not be granted an injunction yet ultimately succeed at trial.
Precluding PRC from constructing its racecourse facilities in the way it wishes is a serious imposition on its freedom to develop its land as it sees fit. It has secured funding from Racing Victoria (‘RV’) to build the equine pool and wishes to complete the project this summer – the optimal season for pool construction -- with RV as the project administrator. Not doing so now, and awaiting the outcome of a trial, will cause a likely delay of at least 12 months, possibly more if the outcome is not known before summer of 2020/2021. Its client base, the more long-term trainers, and its funder, RV, want the pool built as soon as possible. PRC asserts that it faces the prospect of reputational damage and potential loss of custom if it does not meet the needs of its present trainers. I accept it has plausible grounds for those concerns.
On the other hand, it is not entirely clear what the commercial effect will be upon the plaintiffs of having those facilities built further away from the training centre than where the plaintiffs would like them to be. In fact, given that the plaintiffs say they will not commence operation of the training centre until the pool, stripping stalls and float car park are built, simply restraining PRC from building the pool elsewhere will not enable them to commence business, let alone make it viable.
Since this application is solely concerned with the construction of the pool, refusing the injunction will not directly cause the plaintiffs any detriment. For their detriment, the plaintiffs rely upon what they presume will be a chain of effects set off by building the pool over the area where the stripping stalls were to be. That is, a chain of events that will foreclose the prospect that stripping stalls and a car park will be built close to the centre, and likely also to lead to the isolation of the centre from its customers on training days because of the resulting impediment to vehicle access to the centre via Bourke St.
In response, PRC argues that the plaintiffs’ detriment is wholly speculative. It remains possible that in time, as the demand arises, it will build facilities, including stripping stalls and a car park, in a location that will enhance the plaintiffs’ centre. As the plaintiffs point out, however, PRC does not commit itself to any alternative construction arrangement that would meet their concerns. But making that observation only draws attention back to the fact that, apart from any obligation that might arise due to the representations and alleged reliance which the plaintiffs assert (which will be the subject of the trial), PRC has no obligation to the plaintiffs to build the facilities in any particular location, in any particular time frame, or at all.
Seen this way, the plaintiffs’ alleged detriment, should the injunction not be granted, is indirect and does involve a degree of speculation. Their immediate detriment, not being able to conduct a viable business, is more the product of having invested money and built a centre that, seemingly, depends on the construction of surrounding infrastructure without having the benefit of any clear enforceable entitlement to have it built.
If the plaintiffs’ business ultimately does fail (which at this stage may not be a foregone conclusion), or does poorly, the plaintiffs will have to show that the reason for that failure or poor financial performance has got something to do with the construction of the equine pool and other facilities in positions other than as represented on the Masterplan, rather than something else.
Furthermore, I am not persuaded that damages would be an inadequate remedy for the plaintiffs should they ultimately establish their claim. PRC has substantial assets and would likely be able to meet any damages award. Indeed, if ordered to do so, it has the financial resources to relocate the equine pool. I reach that view notwithstanding the plaintiffs’ argument that their damages may be difficult to assess due to ‘complexities and imponderables’.
At this stage, in assessing the relative prospects of injustice consequent upon granting or not granting the injunction,[1] I am impressed with more certainty as to an injustice to be suffered by PRC by granting it, should PRC ultimately succeed in the proceeding, than any injustice to be suffered by the plaintiffs if I do not and the opposite result obtains.
[1]Bradto Pty Ltd v State of Victoria (2006) 15 VR 65 [35].
PRC also relied upon what it characterised as delay by the plaintiffs in bringing this interlocutory application. I was not persuaded that the plaintiffs have engaged in unexplained or unreasonable delay.
Nevertheless, taking into account the apparent, relative strengths of the argument on the questions to be tried and the balance of convenience, including the adequacy of damages as a remedy, I am not persuaded it is appropriate to exercise my discretion in favour of granting the injunctions sought.
For these reasons I refuse the plaintiffs’ applications.
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