Dengold Holdings Pty Ltd v Real Quality
[2014] WASC 108
•31 MARCH 2014
DENGOLD HOLDINGS PTY LTD -v- REAL QUALITY [2014] WASC 108
| SUPREME COURT OF WESTERN AUSTRALIA | Citation No: | [2014] WASC 108 | |
| 31/03/2014 | |||
| Case No: | CIV:1257/2014 | 24 MARCH 2014 | |
| Coram: | BEECH J | 24/03/14 | |
| 8 | Judgment Part: | 1 of 1 | |
| Result: | Interlocutory injunction granted | ||
| B | |||
| PDF Version |
| Parties: | DENGOLD HOLDINGS PTY LTD as trustee for the PANOMARENKO FAMILY TRUST REAL QUALITY as trustee for the FRUIT BARN UNIT TRUST THOMAS GRAHAM SHEEHAN JOHN DOUGLAS SHEEHAN FLOW PTY LTD |
Catchwords: | Injunctions Interlocutory injunction Lease of service station Whether lessor has right to replace all underground tanks after one tank ruptured Whether lessee should be required to permit access for the lessor to replace underground tanks |
Legislation: | Nil |
Case References: | Twinside Pty Ltd v Venetian Nominees Pty Ltd [2008] WASC 110 |
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
- IN CHAMBERS
- Plaintiff
AND
REAL QUALITY as trustee for the FRUIT BARN UNIT TRUST
First Defendant
THOMAS GRAHAM SHEEHAN
Second Defendant
JOHN DOUGLAS SHEEHAN
Third Defendant
FLOW PTY LTD
Fourth Defendant
Catchwords:
Injunctions - Interlocutory injunction - Lease of service station - Whether lessor has right to replace all underground tanks after one tank ruptured - Whether lessee should be required to permit access for the lessor to replace underground tanks
Legislation:
Nil
Result:
Interlocutory injunction granted
Category: B
Representation:
Counsel:
Plaintiff : Mr P Lafferty
First Defendant : Mr W C J Zappia
Second Defendant : Mr W C J Zappia
Third Defendant : Mr W C J Zappia
Fourth Defendant : Mr W C J Zappia
Solicitors:
Plaintiff : Optima Legal
First Defendant : HopgoodGanim
Second Defendant : HopgoodGanim
Third Defendant : HopgoodGanim
Fourth Defendant : HopgoodGanim
Case(s) referred to in judgment(s):
Twinside Pty Ltd v Venetian Nominees Pty Ltd [2008] WASC 110
- BEECH J:
(These reasons were delivered orally, and have been edited from the transcript).
Introduction
1 The fourth defendant applies for an interlocutory injunction requiring the plaintiff to permit the fourth defendant, by its agents, to undertake replacement and remediation works on the fuel tanks at premises leased by the plaintiff from the fourth defendant. For the reasons that follow, I would grant the injunction.
The facts
2 The plaintiff leases the premises from the fourth defendant. Under the lease, the plaintiff uses the premises as a service station and a fruit barn.
3 Clause 5.3(d) of the lease provides, as far as material:
… that the lessor has power, by its agents, and workmen to enter the leased premises after 14 days written notice to carry out any repairs or other works for which the lessor is liable and which the lessor considers it necessary or desirable to carry out.
4 The lease also contains a special cl 9.1(c) by which if the underground tanks need to be replaced at any time other than in consequence of any act, default or admission of the lessee, the lessor shall, at its cost, replace them. Clause 9.1(c) further provides that the lessee shall not be entitled to any compensation or other consideration for any period during which it cannot use the tanks, in consequence of them requiring replacements.
5 In April 2013, there was a rupture of an underground fuel tank. A significant amount of fuel leaked as a result.
6 Over the ensuing months various investigations occurred and reports were prepared. The reports suggest that there is contamination and a need for remediation.
7 In October 2013, the Department of Environment and Conservation classified the premises as contaminated and needing remediation.
8 On 21 November 2013, the fourth defendant's solicitors demanded that the plaintiff commence remediation.
9 On 9 December 2013, the plaintiff's solicitor asserted that the fourth defendant was obliged to remediate the premises and should do so without delay.
10 By letter of 6 January 2014, the fourth defendant's solicitors wrote to the plaintiff's solicitors, advising that the fourth defendant would arrange remediation. The letter stated that all tanks would be replaced because the latest storage tanks systems provide for one tank with multiple compartments.
11 There was further correspondence in January and February.
12 On 21 February 2014, the fourth defendant's solicitors wrote with a revised timeframe for the works, due to the limited availability of the contractor.
13 By letter of 7 March 2014, the fourth defendant's solicitors advised the plaintiff's solicitors that fuel was to be removed by stage 1, not stage 2 as had previously been advised in earlier correspondence.
14 On 13 March 2014, the plaintiff's solicitors advised, for the first time, that the plaintiff was not willing to grant access to the premises. The letter, in effect, complained that the proposal to replace all three fuel tanks and other facets of the proposal would require a shutdown of the plaintiff's business, which could be for a period of not less than 12 days with consequential loss in the range of $145,000 to $175,000. It is that position adopted by the plaintiff in that letter, and subsequently maintained, that necessitates this application.
15 The fourth defendant has adduced evidence of the very limited availability of the contractor who is to replace the underground tanks. The effect of the evidence is that due to the contractor's other commitments, the contractor must either commence work on these premises by no later than 28 March 2014 or the contractor will not be in a position to do so until 22 May 2014.
16 The fourth defendant has also adduced evidence from Mr Hurle. Mr Hurle's report and his affidavit give evidence that, in his opinion, there is a danger of ongoing contamination and possible risk to human and environment health and safety. Included in that is the risk, in his opinion, to surrounding ground water sources and to surrounding vegetable gardens. It is true, as counsel for the plaintiff submits, that the extent of any ongoing risk 11 months after the rupture is not quantified. Nevertheless, Mr Hurle expresses the view that there is an ongoing risk of further adverse effects if remediation does not occur.
Interlocutory injunction: legal principles
17 In determining the injunction application, I apply the principles set out in Twinside Pty Ltd v Venetian Nominees Pty Ltd [2008] WASC 110 [7] - [13].
18 In brief summary, relevant considerations are: whether the applicant for the injunction shown a prima facie case; whether the applicant will suffer injury for which damages will not be adequate compensation; and whether the balance of convenience favours the grant of an injunction. There are questions as to whether the inadequacy of damages is a separate requirement or a consideration. It is not necessary to dwell on that, for the purpose of this application. It should also be borne in mind that the question of a prima facie case and the question of balance of convenience are to be considered together, because they overlap.
The lessor has a prima facie case
19 The position of the plaintiff is that on a proper construction of the lease the fourth defendant lessor is entitled to replace the ruptured tank, but is not entitled to do more than that, and, in particular, is not entitled to replace all three tanks.
20 For the reasons that follow, I am satisfied that the fourth defendant has a prima facie case that it is entitled to enter the premises and replace the underground tanks.
21 The contractual language empowers the lessor to undertake repairs which it the lessor 'considers necessary or desirable'. Counsel for the plaintiff submits that it is implicit in that clause that there must be reasonable grounds for the opinion of the lessor. For the purpose of this application, that proposition can be assumed to be correct. The evidence of Mr Ivory is that the proposed triple compartment underground tank system is the preferred industry choice for new fuel stations and for upgrading existing fuel stations. He also expresses the view that given that the three separate tanks were installed at the same time, it is prudent, given the rupture of one of those tanks, to ensure that the other two tanks are also upgraded to avoid a similar consequence.
22 If that evidence is accepted there is a strong prima facie case that the fourth defendant had reasonable grounds for its view that it was desirable to replace all the tanks.
23 I do not overlook that, in the circumstances of this application, the plaintiff has not had an opportunity to put on competing expert opinion in this respect. Nevertheless, even without expert opinion, there is room for the view that the plaintiff faces some hurdles in making good the proposition that the installation of three new tanks could not, on reasonable grounds, be considered desirable. In my view that arises from the fact that the three tanks were installed together, and one of them has ruptured. In those circumstances there appears to be room for a reasonable view that it is desirable to replace all of them, so as to avoid any rupturing of the other tanks. The circumstances of this case would seem to underline the potentially calamitous consequences of any further rupturing.
The balance of convenience
24 The plaintiff says in the affidavit of its director that it will suffer economic and other loss through the forced shutdown of its business. Loss from the shutdown of both the fuel and non-fuel part of the business is estimated by the plaintiff to be of the order of $150,000 to $170,000. Further, the plaintiff points to fuel in the tanks, worth about $13,400 and fresh produce in the cool rooms worth approximately $25,000.
25 The prospect of loss to the plaintiff from the undertaking by the fourth defendant of the proposed remediation work is, of course, a matter to be weighed in the balance of convenience. The essence of the balance of the convenience assessment involves weighing the risk to the party against whom the injunction is granted, if the injunction turns out to have been wrongly granted against the risk to the applicant if the injunction is refused, and it should turn out at trial that the applicant's claim succeeds. So I weigh the economic loss pointed to by the plaintiff in the balance of convenience.
26 However, in my opinion, the following matters, taken together, outweigh, to a substantial degree, the matters to which the plaintiff points.
27 First, the plaintiff has previously demanded that the fourth defendant rectify the contamination without delay.
28 Secondly, the fourth defendant gave notice by letter of 6 January 2014 that it proposed a remediation by way of replacement of all three tanks. It was not until more than two months later, by letter of 13 March 2014 that the plaintiff expressed concern about that approach.
29 Thirdly, delaying the remediation will not remove adverse business consequences for the plaintiff. Whenever the remediation occurs there will be some degree of business disruption for the plaintiff.
30 Fourthly, on the plaintiff's case, all that the fourth defendant is entitled to do is to replace the one ruptured tank. I accept that it can be inferred that that process will be less disruptive than what is proposed, but the extent of the difference is, on the limited evidence before me, unclear.
31 Fifthly, importantly in my view, the fourth defendant's undertaking as to damages will substantially protect the plaintiff's interests that are engaged by this interlocutory injunction. In other words, if, as the plaintiff anticipates, it suffers the losses of the order that it fears and anticipates, and if at trial the plaintiff succeeds in establishing its construction of the lease, then the fourth defendant will be liable on its undertaking as to damages.
32 Sixthly, public interest and health considerations firmly favour the grant of the injunction. That is because public health considerations and the interests of members of the community in the surrounding areas favour remediation as soon as possible.
33 I mention, at this stage, that there has been delay, perhaps even significant delay by the fourth defendant in taking remediation action. Part of that delay appears to have arisen from a dispute as to who was responsible. In any case, given the nature of the problem that exists and the interests that are at stake, past delay does not, in my opinion, make it just for there to be further delay.
34 Seventhly, it is not in doubt that both of the parties - that is the plaintiff and the fourth defendant as, respectively, the occupier and the owner - are at risk of incurring penalties in respect of the contaminated site. That gives rise to risks to both parties, some of which would, in all likelihood, be difficult to assess if the remediation were further delayed.
Conclusion
35 For those reasons and in those circumstances, in my view, the fourth defendant has a prima facie case, the balance of convenience favours the grant of the injunction, and it would not be just to confine the fourth defendant to a claim for damages. An injunction should be granted requiring the plaintiff to permit the fourth defendant, and its agents, to enter the premises and perform the proposed remediation work.
36 I will hear further from the parties as to the precise terms of any orders and as to any steps that might be taken to minimise the prospect and extent of losses to the plaintiff from this process.
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