Hickinbotham Developments Pty Ltd v Woods - [2005] SASC 215

SUPREME COURT OF SOUTH AUSTRALIA
(Applications Under Various Acts or Rules: Application)
HICKINBOTHAM DEVELOPMENTS PTY LTD v WOODS & ORS
Reasons for Decision of The Honourable Justice Layton
14 June 2005
EQUITY - EQUITABLE REMEDIES - INJUNCTIONS - INTERLOCUTORY INJUNCTIONS - SERIOUS QUESTION TO BE TRIED - GENERALLY
EQUITY - EQUITABLE REMEDIES - INJUNCTIONS - INTERLOCUTORY INJUNCTIONS - BALANCE OF CONVENIENCE
Application for urgent interlocutory relief that the second and third defendants as vendors be restrained from selling, disposing, transferring or otherwise dealing with their interest in land – further order sought that the vendors and the fifth defendant Kentia Developments Pty Ltd be restrained from completing any contract for sale of the land – the fifth defendant opposed the orders sought – consideration of whether there was a tender process - whether it involved a process contract - whether it gave rise to an obligation by the vendors to act fairly – consideration of whether there is a serious question to be tried and where the balance of convenience lies – consideration of whether damages would be an appropriate remedy – whether plaintiff will lose right to challenge contract for sale of land and its loss of chance in the tender process – damages for loss of opportunity considered – application for interlocutory injunction refused.
Trade Practices Act 1974 (Cth); Fair Trading Act 1987 (SA); Supreme Court Act 1935 (SA) s 29, referred to.
Aboriginal Development Commission v Ralkon Agricultural Co Pty Ltd (1987) 15 FCR 159; Australian Broadcasting Corporation v Lenah Game Meats Ltd (2001) 208 CLR 199; Australian Agricultural Co Ltd v AMP Life Ltd [2003] FCA 1038; Blackpool and Flyde Aero Club Ltd v Blackpool Borough Council [1990] 3 All ER 25; Castlemaine Toohey's Ltd v South Australia (1990) 169 CLR 436; Cubic Transportation Systems Inc v State of NSW & Ors [2002] NSWSC 656; Eagle Import Co v Burley (1978) 80 LSJS 419; Hughes Aircraft Systems International v Airservices Australia (1997) 76 FCR 151; Pratt Contractors Ltd v Palmerston North City Council [1995] 1 NZLR 469; Service Station Association Ltd v Berg Bennett & Associates Pty Ltd (1993) 45 FCR 84; Silktone Pty Ltd v Devreal Capital Pty Ltd (1990) 21 NSWLR 317; State Transport Authority v APEX Quarries Ltd [1988] VR 187; Tidy Tea Ltd & Lyons Tetley Ltd v Unilever Tetley Ltd (1995) 32 IPR 405; Queensland Industrial Steel Pty Ltd v Jensen [1987] 2 Qd R 572; Willow Grange Pty Ltd and Anor v Yarra City Council [1998] ANZ ConvR 415, considered.

WORDS AND PHRASES CONSIDERED/DEFINED
"interlocutory injunction"

HICKINBOTHAM DEVELOPMENTS PTY LTD v WOODS & ORS
[2005] SASC 215

LAYTON J: Hickinbotham Developments Pty Ltd (“the plaintiff”) by an inter partes summons, has sought urgent interlocutory relief by court order that Barry Woods and Robert O’Callaghan the first and second defendants (“the vendors”) be restrained from selling, disposing, transferring or otherwise dealing with their interest in land, described in and comprising Register Book Volume 5442 folio 462 at Greenock (“the Land”), until further order. In addition an order is sought that the vendors and Kentia Developments Pty Ltd (“Kentia”) be restrained from completing any contract for the sale of the Land to which they are parties (“the contract”).
At the urgent hearing on Wednesday 8 June 2005, the following evidence was before me, namely,
-Affidavit of Michael Robb Hickinbotham and exhibits sworn on 1 June 2005, filed by the plaintiff;
-Affidavit of Leo Gerard Walsh and exhibits sworn on 1 June 2005, filed by the plaintiff;
-Affidavit of Kenneth Arthur Gaetjens and exhibits sworn on 1 June 2005, filed by the plaintiff;
-Affidavit of Ronald John Chamberlain and exhibits sworn on 7 June 2005, filed by the fifth defendant.
The first defendant was represented by counsel, who indicated that he spoke on behalf of the second defendant. Through their counsel the vendors indicated that they neither agreed to nor opposed the orders sought by the plaintiff, but would abide the decision of the Court and did not wish to be heard.
Counsel for the third defendant Barossa Real Estate Pty Ltd (the vendors agent), and the fourth defendant Peter Ian Fairweather also took the same approach. No evidence was filed on behalf of the vendors or the third defendant and the vendors agent and there was no cross examination of the deponents.
The fifth defendant opposed the orders sought.
The plaintiff gave the usual undertaking as to damages in respect of each of the defendants.
Facts on the material before the Court
Almost all of the facts are undisputed. It is mainly the inferences which can be drawn from those facts and the legal principles to be applied, which are the subject of differing arguments between the plaintiff and Kentia.
The plaintiff is a company involved in various businesses, one of which is acquiring and developing land for residential purposes. As part of its business activity it became interested in the Land which is registered in the names of the vendors. This is an undeveloped parcel of land presently used for growing grapes and is zoned as suitable for residential purposes.
Mr Michael Hickinbotham on behalf of the plaintiff, requested Mr Ken Gaetjens of Gaetjens Real Estate to make inquiries of the Land on behalf of the plaintiff.
Mr Gaetjens deposed that he spoke to Mr Peter Fairweather, who is an employee or agent of the vendors agent. Mr Gaetjens deposes as follows in paragraph 4 of his affidavit:
On or about 10 or 11 February 2005, I had a telephone conversation with Mr Fairweather. Mr Fairweather confirmed that the Land was for sale on a “best offer basis” and that tenders for the purchase of the Land were due to close at 5 pm on Friday 11 February 2005.
This information was in turn conveyed to Mr Hickinbotham who on 11 February 2005 instructed Mr Gaetjens to submit an offer which he did by a letter of offer sent by e-mail. The letter nominated a “one and highest offer” of $1.7 million with a settlement period of 14 days (from the performance of the special condition involving a soil report), with a deposit of $30,000 to be paid within seven days from acceptance of the offer. The soil report condition specified that the offer was conditional upon the purchaser obtaining within 4 months, a report as to the suitability of the soil for residential development. A copy of the letter is exhibit KAG 2 to the affidavit of Mr Gaetjens.
A copy of this e-mail in which this was sent, was not annexed to the affidavit of Mr Gaetjens as his computer malfunctioned and he lost all e-mail communications up to and including 11 February 2005. However, Mr Gaetjens telephoned the office of the fourth defendant and spoke to a person by the name of "Lyn”, who confirmed that she had received the offer sent by e-mail.
On 14 February 2005, being the Monday after the date for tenders had closed, Mr Hickinbotham sent an e-mail to Mr Gaetjens requesting that he add an addendum to the tender to the effect that the plaintiff anticipated it would take some time (possibly five or more years) until it had obtained the relevant approvals and was ready to develop the land. On that basis the plaintiff was prepared to grant the vendors a license to operate and take fruit from the existing vineyard on the land at no charge during the period. A copy of this e-mail is annexed to the affidavit of Mr Hickinbotham as exhibit MRH 1.
Mr Gaetjens e-mailed Mr Fairweather three times on 14 February 2005. The first e-mail advised Mr Fairweather that the plaintiff wished to “add an addendum to the Tender faxed[1] to you on Friday last” and indicated that the plaintiff would “grant a licence [to the vendors] to operate and take fruit from the vineyard at no charge until [the plaintiff was] ready to develop the land” which was indicated as being “possibly 5 or more years.”
[1] I note that the word used was “faxed” as distinct from emailed, but nothing turns on this at this hearing.
A copy of the e-mail is contained in exhibit KAG 3.
On 14 February 2005 Mr Gaetjens sent a second e-mail to Mr Fairweather referring to the first e-mail on the day and asking him to acknowledge receipt of it. A copy of this e-mail is marked as exhibit KAG 4. He did not receive an acknowledgement.
A third e-mail was sent on 14 February 2005 by Mr Gaetjens to Mr Fairweather to clarify that the plaintiff would pay GST on the previous offer made on 11 February 2005 and a copy of that e-mail is marked as exhibit KAG 5.
Mr Gaetjens deposes that prior to sending the first of the e-mails on 14 February 2005, he discussed the subject matter of the first and third e-mails with Mr Fairweather by telephone on two separate occasions on that day. With respect to the topic of the addendum sought to be added by way of the first e‑mail, Mr Gaetjens deposes that he said words to the effect that as the plaintiff,
… will have no use to the land until it is ready to be developed, we propose and in fact request an addendum to our offer to the effect that the vendors will be able to harvest the vineyards until the plaintiff is able to develop the Land.
Mr Gaetjens further deposes that when he spoke with Mr Fairweather on 14 February 2005 in order to clarify the issue of the GST, Mr Fairweather advised him that he had just been about to send an e-mail. Mr Gaetjens said he could now confirm that the plaintiff will pay the GST in addition to the purchase price set out in the previous offer.
Further, factual matters are asserted in the affidavit of Mr Gaetjens as a consequence of having received copies of e-mail and other correspondence passing between the first defendant to Mr Woods and Mr Fairweather being material which Mr Gaetjens understood to have been extracted from the file of Mr Woods (“the Woods material”).
Mr Gaetjens asserts by reference to the Woods material, that by letter dated 11 February 2005, Kentia made an offer to purchase the Land and set out three optional offers. The first being an unconditional offer for $1.450 million. The other two offers were conditional. One was for $1.550 million and the other for $1.750 million with a deduction. All three options offered a $10,000 deposit. A copy of this letter is contained in exhibit KAG 8.
Mr Gaetjens asserts by reference to the Woods material, that Mr Fairweather appears to have forwarded the third e-mail from Mr Gaetjens of 14 February 2005 to Mr Woods but that neither the first e-mail of 14 February 2005, nor its effect, was communicated to Mr Woods.
On 15 February 2005, Mr Gaetjens telephoned Mr Fairweather to advise him that the plaintiff was able to bring the settlement date forward to a period two months after satisfaction of the previous special condition in lieu of four months as previously stated. This was then confirmed in a subsequent e-mail by Mr Gaetjens to Mr Fairweather.
Subsequently, Mr Gaetjens received an e-mail from Mr Fairweather referring to previous e-mails and asking whether Mr Gaetjens had drawn up a condition that he wished Mr Fairweather to present to the vendors of the land. Mr Gaetjens responded to that e-mail on 16 February 2005 suggesting that if the offer was accepted, he would prepare a contract on the standard Real Estate Institute Form. Mr Gaetjens also asked Mr Fairweather whether he (Mr Fairweather) agreed with this proposition, or whether he had any further suggestions. There was no response to that e-mail.
On 17 February 2005, Mr Gaetjens had a further telephone conversation with Mr Fairweather in which Mr Fairweather expressed some concerns with regard to the proposed two-month timeframe in which to obtain a soil report. Mr Gaetjens advised that he would seek further instructions from the plaintiff.
Mr Gaetjens deposes by reference to the Woods material that the vendors agent through “Lynn” sent to Mr Woods a copy of a revised Contract of Sale of the Land and requested the vendors to sign and initial it and return by facsimile. This proposed contract did not name any person as purchaser and did not contain the price but did contain a clause on page 14 referring to a condition that the purchaser will grant to the vendor unconditional access to the land for 5 vintages and referred to soil testing to be done by 23 March 2005. A copy of this document is contained in KAG 13.
The following day 24 February 2005, Mr Woods sent an e-mail to the fourth defendant stating:
there is a new element in this contract that I was unaware of it is the provision on page 14 relating to the Purchaser granting unconditional access to the land for 5 vintages. I have run out of time to deal with this and have referred it to my partners…to deal with.
Also on the copy of the email, there is a handwritten note apparently made by Mr Woods that this was the first time he became aware of the grape retention provision. He asserts in the handwritten note,
I raised it in this e-mail with Fairweather and was told it should not be there and should be removed. As the soil test provision (not the original, so I don’t know where it came from) I can only presume that this was the wrong contract.
A copy of this e-mail and written endorsement is contained in exhibit KAG 14.
On 25 February 2005 a contract between the plaintiff and Kentia was reached and signed, being the last date recorded for the signature of Mr Woods. The other signatories purport to have been signed on 24 February 2005. This contract is unconditional and is expressed to be for a sum of $1.5 million which is greater than the unconditional offer contained in the option letter of Kentia dated 11 February 2005.
Mr Gaetjens deposes that Mr Woods told Mr Dent, a person employed by Gaetjens, that the first time he had heard of the post tender date proposal of the plaintiff that the vendors were able to have the grape harvest for the next five years, was on the 22 of March 2005 during the conversation which he had with him.[2] Further, Mr Gaetjans deposed that between 22 March and 24 March 2005, Mr Woods had expressed to him words to the effect,
if I had known that you on behalf of Hickinbotham had requested an addendum to your offer allowing us to harvest grape crops for five years, there is no way I would have accepted the offer from Kentia Developments Pty Ltd.[3]
[2] Affidavit of Mr Gaetjens sworn 1 June 2005 para 24 and exhibit KAG 16.
[3] Affidavit of Mr Gaetjens sworn 1 June 2005 para 25.
Prior to instituting these proceedings, by letter of 26 May 2005 the solicitors acting on the behalf of the plaintiff wrote to the solicitors acting for Mr Woods seeking inter alia an assurance that by reason of its contents that the vendors would not proceed to settle on any contract with Kentia or any other person until they received correspondence and had provided three business days notice of intention to proceed to settlement. That would give the plaintiff an opportunity to seek an urgent interlocutory injunction if required.
By letter of 31 May 2005, solicitors acting on behalf of Mr Woods indicated that although the first defendant “has some concerns as to the manner in which the sales agent handled aspects of the sale [the first defendant] does not concede that such matters gave a right to any cause of action …or any cause of action which necessarily allows [the plaintiff] to prevent settlement on the contract…”[emphasis added]. However, given the indication that the plaintiff sought an interlocutory application, the first defendant indicated that on the condition the plaintiff proceeded expeditiously, the first defendant would not proceed without further notice to settle on the Land. This was stated to be done for practical reasons only and there was also a requirement for the usual undertaking as to damages. A copy of this letter is contained in exhibit LGW 4.
A similar letter was sent by the plaintiff’s solicitors to Kentia’s solicitors acting on behalf of Kentia indicating that no undertaking as sought by the plaintiff would be given. A copy of this letter is marked exhibit LGW 3.
The plaintiffs claim on the facts
In summary, it is claimed by the plaintiff that the vendors accepted an offer from Kentia when the purchase price offered by the plaintiff exceeded the purchase price accepted and also contained other terms more favourable than that offered by Kentia. Further, the plaintiff claims that the full details of the plaintiff’s offer by the addendum proffered on 14 February 2005, were not communicated to the vendors prior to the vendors acceptance of the offer from Kentia which was set out in the contract.
The plaintiff also submits that the offer of Kentia was not a “best offer” and did not conform with the tender as it contained three offers from Kentia. Further, the current purchase price differs from the original offer indicating that a variation had been accepted by the vendors from Kentia after the tenders closed, but not from the plaintiff.
The fifth defendant’s response on the facts
Kentia filed an affidavit of Ronald John Chamberlain. He deposed that he was the managing director of Kentia, the fifth defendant. Without setting out matters in detail, Mr Chamberlain indicated that his group of companies was first approached during January 2005 by Mr Fairweather who inquired whether the group would be interested in making an offer to purchase the land. This inquiry was repeated again in late January 2005 and Kentia was told by Mr Fairweather that he wanted an offer by Friday 4 February 2005.
Mr Chamberlain telephoned Mr Fairweather on 2 February 2005 and asked for more details concerning the land and he told Mr Fairweather he could not meet the deadline of 4 February 2005 and required an extension of two weeks. He was subsequently told that he could have until 11 February 2005 to put in any offers. He deposed that the offer of Kentia was made on 11 February 2005 as previously referred to above. He also indicated that Mr Fairweather telephoned him a few days later who indicated to him that “the vendors were leaning towards Kentia’s option 1, but was seeking a higher price”. Mr Fairweather invited Kentia to consider increasing the price offered. A further offer was made by Kentia and this was one which was set out in the contract.
The date for settlement was originally 25 May 2005. It was extended until 27 May 2005, but the vendors failed to attend settlement. Mr Chamberlain deposes that Kentia remains ready, willing and able to complete the contract according to its terms and seeks to do so at the earliest possible date.
It can be seen from this description of events given by Kentia, that there was no suggestion of any “tender” process but simply an open invitation to offer to purchase the land and to put the offer in by a specified date and time.
The only factual matter in dispute on the material before me, is whether or not it can be implied from the material before me, that the vendors’ did not know of the addendum tender offer of the plaintiff at the time, as to 5 years to take fruit, when it entered into a contract for sale of the land with Kentia.
Kentia asserts that the Woods material, in particular that the e-mail of 24 February 2005 from Mr Woods to the vendors’ agent, which included the written endorsement, supports the fact that by the time the contract was signed by Mr Woods on 25 February 2005, he did know of the plaintiffs’ additional offer of unconditional access to the land for five vintages.
It is not for a court at the hearing of an interlocutory injunction to endeavour to resolve the opposing factual arguments of the parties gleaned from the material, rather it is to look at whether or not there is a serious issue to be tried by reason of the plaintiff’s contentions on the material before the court. This is qualified if the court assesses that the factual assertions are clearly wrong or untenable on the material before it. This is not the case here.

It is arguable on the affidavit material that the plaintiff was under the impression that there was a tender process on “a best offer basis” by reason of the actions of the vendors’ agent whereas Kentia regarded the process to be nothing more than a simple uncomplicated invitation for offers. The plaintiff does not dispute that Kentia, in effect, was an innocent party and there is a contract between the vendors and Kentia in the terms set out in exhibit RJC 1 being the contract dated 25 February 2005.
There can be no conclusion one way or the other as to the knowledge of Mr Woods at the time when the contract was signed.
Legal criteria for interlocutory injunctions
The criteria for granting interlocutory injunctions depends firstly on whether there is a serious issue to be tried,[4] secondly to the balance of convenience between the parties[5] and thirdly consideration as to whether damages are an adequate remedy.[6]
[4] Castlemaine Toohey’s Ltd v South Australia (1986) 161 CLR 148. The test is not interpreted as requiring the plaintiff to establish a prima facie case Queensland Industrial Steel Pty Ltd v Jensen [1987] 2 Qd R 572.
[5] MLC v Balfours (1979) 23 SASR 82.
[6] Eagle Import Co v Burley (1978) 80 LSJS 419.
The degree of likelihood of success in the action is a factor related to the balance of convenience.
Other factors to which a court should have regard in exercising its jurisdiction are that the court must not give an overly restrictive application to the criteria such that justice is not done in the case[7]. Also, a court must bear in mind that there are a range of cases in which injunctions are sought, varying between those in which the applicant clearly has no arguable case, to those cases where,
…the applicant has had little opportunity to ascertain the facts and to adduce evidence but there is some material to suggest an entitlement to relief. Upon further investigation that material may turn out to be capable of ready refutation or explanation but, in the meantime, it may be appropriate for the court to intervene. Everything must depend upon the circumstances of the case, including the extent to which the applicant has had an opportunity to present the facts to the court and the consequences of granting or of refusing relief.[8]
[7] Aboriginal Development Commission v Ralkon Agricultural Co Pty Ltd (1987) 15 FCR 159.
[8] Australian Agricultural Co Ltd v AMP Life Ltd [2003] FCA 1038 at para 106.
Serious issue to be tried
The issues which emerge for consideration in this case are as follows (“the items”):
1 what was the approach which the vendors used (through their agent) to sell the land? Was there a tender process or was it simply an open invitation to treat? Did the approach taken differ between that which was proffered by the vendors through their agent, to the plaintiff, as distinct from the approach taken in respect of Kentia?
2 if the process offered by the vendors to the plaintiff was a tender process, was it on a “best offer” basis and did it give rise to a “pre-award contract” or a “process contract”?
3 if there was a “process contract”, was there an implied term that the vendors act in good faith and fairly. In particular, was there an implied term that the vendors would give both the plaintiff and Kentia a fair opportunity to further tender and not to negotiate only with Kentia?
4 if there was a tender process which was simply an invitation to treat, or alternatively, if there was no tender process but only an open invitation to treat, was there still an obligation on the vendors’ to act fairly between the plaintiff and Kentia? In particular, was there an obligation to give both the plaintiff and Kentia a fair opportunity to make further offers and not to negotiate only with Kentia?
5 if there was a tender process, was the offer made by Kentia by letter dated 11 February 2005 a non-complying offer as it was not “a best offer” but consisted of three different offers with different conditions.
6 did the vendors’ agent pass the information as to the plaintiff’s addendum of access to the vendors for 5 vintages, to the vendors prior to them signing the contract with Kentia?
7 if the offers which had been submitted by the plaintiff and Kentia had not been modified after the tender date, would the plaintiffs offer be the “best offer”?
8 is the plaintiff able to obtain the remedy which it seeks by way of the final order of the Court[9], namely, a declaration that the contract between the vendors and Kentia is null and void and further that the vendors be required to reopen the tender process?
9 was there any misrepresentation or false and misleading conduct by the vendors’ agent to the plaintiff such as could give rise to remedies under the Trade Practices Act 1974 or the Fair Trading Act 1987.
10 if remedies were appropriate under the above Acts, would that include an order that the contract between the vendors and Kentia is null and void and that the vendors be required to reopen the tender process?
[9] Australian Broadcasting Corp v Lenah Game Meats Ltd (2001) 208 CLR 199.
As can be seen by the identification of the issues, they all depend significantly on three major issues. First, whether or not there was in fact a tender process offered to the plaintiff. Second, whether or not the circumstances gave rise to the obligation by the vendors’ to act fairly so far as the plaintiff is concerned. Thirdly, what relief could the plaintiff obtain by a final judgment, specifically whether a court would declare that the contract with Kentia is null and void, as distinct from granting the plaintiff at best, a remedy by way of damages. Each of these matters concerns a combination of factual and legal issues.
As to the arguments 1, 2, 3, 4, the plaintiff submitted that it was invited by the vendors agent to put in a tender as part of a tender process. The word "tender" was the expression used by the vendors agent and that in turn was used by the plaintiff which expressly indicated that it had put in a "tender". In my view, on the material as it stands, there is a serious issue to be tried as to whether it was a tender process.
The plaintiff argues from that point, that the tender process gave rise to a "process contract", otherwise known as a "pre award contract". It submits that when it complied with the request to put in a tender it put in its "best offer" and that this gave rise to a process contract. The plaintiff relied on the case of Hughes Aircraft Systems International v Airservices Australia[10] in support of its submission
[10] (1997) 76 FCR 151.
The case of Hughes[11], involved a tender process conducted by a statutory corporation which set out its tender in documentation including a specified evaluation criteria and a defined evaluation methodology. It also indicated that an independent auditor would be appointed in relation to the tender process. The tender called for a "best and final offer". In that case the plaintiff argued that upon the filing of its "best and final offer", that in the context of the tender process, this gave rise to more than simply an invitation to treat and in fact resulted in a contractual commitment of the vendors to follow the procedure and criteria set out in the tender document. This argument was accepted by Finn J.
[11] Hughes Aircraft Systems International v Airservices Australia (1997) 76 FCR 151.
Finn J also considered whether or not there was an implied term that the vendor was obliged to exhibit fair dealing in the performance of the process contract. His Honour concluded that there was an implied term that the contract tenderers be given an opportunity to enjoy the fruits of their bids and not to have that opportunity destroyed by unfair dealing by the vendor with another party to the contract.
Finn J also discussed the extent to which an obligation exists to treat parties fairly and whether there was a process contract or not.[12] His Honour particularly was concerned with a tender which was being conducted by a public body. In the course of his reasons, His Honour also expressed a difference of opinion between himself and Gummow J, then of the Federal Court, in Service Station Association Ltd v Berg Bennett & Associates Pty Ltd.[13] Gummow J had expressed his reservations as to whether equitable doctrines should be implied by law in matters related to the quality of contractual performance.
[12] Hughes Aircraft Systems International v Airservices Australia (1997) 76 FCR 151 at 185, 188-197.
[13] (1993) 45 FCR 84.
I observe that the facts in Hughes[14] differ markedly from the present case. There was a tender process which was not challenged, it was elaborate and it involved a public body and concerned "best and final offers". This case has none of those facts.
[14] Hughes Aircraft Systems International v Airservices Australia (1997) 76 FCR 151.
The plaintiff also sought to rely on other authorities all of which concerned formal written tender documents and conditions and those cases involved either government councils or a government department.[15]
[15] Blackpool and Fylde Aero Club Ltd v Blackpool Borough Council [1990] 3 All ER 25; Willow Grange Pty Ltd and Anor v Yarra City Council [1998] ANZ ConvR 415; Cubic Transportation Systems Inc v State of NSW & Ors [2002] NSWSC 656.
In relation to the more general obligation of a vendor to act fairly in relation to an invitation to treat, the plaintiff in this case submits that the obligation on the vendors was to act fairly between the plaintiff and the defendant. This expression of the obligation seems to be suggestive of the consequences of a tender process, when it appears that this was not the process which was offered to or followed by Kentia, on the material before me. Nonetheless, this appears to me that argument 4 is a serious issue to be tried.
In conclusion, in relation to the above issues which have been identified, I consider that there are serious issues to be tried regarding to the two major issues reflected in items 1, 4, 6, 7 and 9.
As to items 2, 3 and 5, I consider that even accepting the plaintiff’s evidence at its best, it is highly unlikely that a court would find that there was a “pre-award contract” or a “process contract” and that the argument of an implied term of such a contract does not arise. The simple expression of the “tender” as stated in the affidavit of Mr Gaetjens comes nowhere near the mark of setting out terms, prerequisites for a conforming tender nor any criteria other than “best offer” whatever that may mean in the context, and the deadline for the offers. These are so unlikely to be successful on the material before me, that I do not consider that they would make out a serious issue to be tried for purposes of founding an interlocutory injunction.
In relation to item 5, given the open nature of the invitation offered to the plaintiff, even if this was the invitation which was offered to Kentia (which does not appear to be the case on the material before me), it is highly unlikely that a court would find the Kentia offer to be nonconforming.
With regard to items 7 and 9, I will deal with these issues when considering the topic of whether a damages award would be adequate.
Balance of convenience
As previously indicated, the balance of convenience requires consideration of the strength or weakness of the case.[16] Whilst I consider that there are serious issues to be tried as indicated above, there are still further considerations as to the strength of the case as well as the effect of the granting of the injunction on the one hand and its refusal on the other, on all of the parties.
[16] Tidy Tea Ltd & Lyons Tetley Ltd v Unilever Australia Ltd (1995) 32 IPR 405 at 416.
There is a helpful analysis of these issues by Sackville J in Australian Agricultural Co Ltd v AMP Life Ltd[17]. This case concerned an application for an interlocutory injunction pursuant to the Trade Practices Act1974 (Cth). The factual circumstances concerned a tender process by the first respondent AMP Life, to dispose of its shareholding in a company called Stanbroke. The successful tenderer was a company referred to as Nebo. The plaintiff asserted in its affidavits in support of an injunction, that it had bid a higher amount but it was not accepted. Each of the two bids were subject to somewhat different conditions. According to the first respondent, Nebo’s bid was superior or at least equivalent, when assessment of risks and other factors related to the respective bids were taken into account. The plaintiff sought an interlocutory injunction to restrain the first respondent from transferring the shares to Nebo.
[17] [2003] FCA 1038.
Sackville J considered in some detail the principles applicable for interlocutory injunctions and in particular whether there was a serious issue to be tried with regard to the offences under the Trade Practices Act 1974. It is also important to note that there were pleadings which the Court had before it as well as written and oral evidence and submissions over a period of three days. There were neither pleadings nor oral evidence in the case before me.
A number of factual and legal issues arose in the case before Sackville J which are similar to the issues in the case at bar. There was reference to whether or not the tender process gave rise to a process contract and what the terms may have been. Sackville J concluded that there was no serious issue to be tried as to whether the first respondent had breached the alleged implied terms of any process contract.
A further issue arose as to whether an injunction should be granted which affected Nebo’s rights. Sackville J noted in paragraph 130 that the plaintiff did not claim to be entitled to an interest in the Stanbroke shares. He concluded that,
[a]t the highest, its claim is to an order requiring AMP Life to repeat Stage 2 of the tender process. If that tender process is repeated [the plaintiff] may or may not be the successful bidder for the Stanbroke Shares. Indeed, under the terms of the tender process….AMP Life would not be bound to select any tenderer. Thus [the plaintiff] does not assert any equitable interest or equity in the Stanbroke Shares.
His Honour also noted in paragraph 131 that on the material before him, AMP Life and Nebo had entered into a binding agreement for the sale and purchase of the Stanbroke Shares. His Honour further noted in paragraph 133 that Nebo was entitled to specific performance of the agreement or the protection of its interest by injunction and accordingly it had an equitable interest in the shares. His Honour concluded that in these circumstances it was difficult to see, assuming good faith, how the plaintiff has an interest
…sufficient to warrant the grant of injunction which would infringe Nebo’s rights under its contract to purchase the Stanbroke Shares.
As can be seen, there is much similarity in the argument being put, although this was being done in the context only of infringements and remedies under the Trade Practices Act 1974, which requires that there be a “sufficient interest” before an injunction can be granted.[18] This specific statutory requirement does not exist at common law although many of the principles that are set out by Sackville J would also be relevant to injunctions at common law.[19]
[18] The Trade Practices Act1974 is an entirely statutory scheme. A person who has standing to make an application for relief under ss80 or 87 must be a person who has a sufficient interest in the conduct of another which is contrary to a provision(s) of the Act. As the power to grant interlocutory injunctions is a statutory power under the Act, it is not at large. See Australian Broadcasting Corporation v Lenah Game Meats Pty Ltd (2001) 208 CLR 199; Gleeson CJ [15-18]; Gummow and Hayne JJ [86-105].
[19] But note Australian Broadcasting Corporation v Lenah Game Meats Pty Ltd (2001) 208 CLR 199 and also s 29 of the Supreme Court Act 1935 (SA).
Sackville J at paragraph 136 dealt with an argument in relation to the potential application of the case of Silktone Pty Ltd v Devreal Capital Pty Ltd.[20] His Honour concluded that the circumstances in the Silktone[21] case differed in that the plaintiff in that case was an equitable mortgagee of shares and was seeking to set aside an improper sale. It was noted that the plaintiff in the case before him had no such equitable interest in the shares.
[20] (1990) 21 NSWLR 317 at 322.
[21] Silktone Pty Ltd v Devreal Capital Pty Ltd (1990) 21 NSWLR 317.
His Honour concluded at paragraph 139 that given the effect of the injunction was to restrain the transfer of shares or Nebo’s rights under its contract with AMP Life, it followed in his view that the plaintiff’s application for an injunction must fail either under sections 80 or 87 of the Trade Practices Act1974.
Whilst these conclusion were reached in the application of the Trade Practices Act1974 and in the context of considering whether there was a serious issue to be tried, it is also to be noted that the plaintiff in this case is also seeking to rely on section 87 of the said Trade Practices Act1974 and is also seeking that the contract between Kentia and the vendors’ be declared null and void. These arguments in the Australian Agricultural[22] case appear apposite specifically in relation to any injunctions sought under the Trade Practices Act 1974 and also are relevant as to whether or not there is a serious issue to be tried. In addition, in my view, they are also relevant to an injunction sought at common law in considering where the balance of convenience lies.[23]
[22] Australian Agricultural Co Ltd v AMP Life Ltd [2003] FCA 1038.
[23] See Australian Broadcasting Corporation v Lenah Game Meats Pty Ltd (2001) 208 CLR 199 and also s 29 of the Supreme Court Act 1935 (SA).
Sackville J continues in the alternative, to consider the aspect of the balance of convenience. He considers this on the assumption that the plaintiff had established that there is a serious issue to be tried and that it had an interest sufficient to grant an injunction affecting Nebo’s rights. He concludes even given those assumptions that the balance of convenience clearly lies against the granting of the injunction. He notes again that the plaintiff did not assert any interest in the shares and claims that it has suffered two forms of loss or damage, being the expenditure on the tender process and the loss of opportunity to tender for the shares. His Honour concludes at paragraph 142,
I think that there must be some doubt as to whether a court would be prepared to grant final orders in the form sought by [the plaintiff], having regard to the need for the court to supervise a tender process that AMP in any event, is not bound to carry out or complete. Assuming, however, that relief can be granted, the upshot would merely be to give [the plaintiff] an opportunity to participate in such a process, where the outcome might be that AMP could simply abandon the process or change the ground rules. Alternatively, of course, another bidder might succeed. If [the plaintiff] is able to show that it has a claim for damages for loss of opportunity to tender, there is no reason in principle why such a claim cannot be quantified. It is true that the calculations will be less than precise, but that difficulty inheres in the nature of the claim for damages for loss of opportunity…
His Honour further notes at paragraph 143 that,
…there would be nothing to prevent [the plaintiff] deciding any time, for its own reasons, not to tender. No doubt the injunction could then be dissolved, but in the meantime AMP would have been restrained without [the plaintiff] being subject to any obligation to maintain its status as a good faith tenderer for the Stanbroke Shares.
These observations by Sackville J as to potential consequences, are also true in this case.

In addition, Sackville J also referred to the evidence before him which established that a delay in completion of the agreement would expose Nebo to significant detriment or risks. They are set out in a number of bullet points. By contrast, in this case no factors were proffered in evidence in the affidavit filed by Kentia. Instead, submissions were made from the bar table, as to the effect of an interlocutory injunction with regard to Kentia. The affidavit of Mr Chamberlain deposes in paragraph 3 that,
The Fifth Defendant has obtained funds to pay the purchase price and associated expenses of purchase from its own resources and the resources of associated companies. No borrowed funds were required. Funds have been removed from investment deposit to pay for the subject land in anticipation of settlement which was due to occur on 25 May 2005.
It is not unreasonable however, to consider that Kentia in putting an unconditional offer, thereby indicating its preparedness to settle without further ado and indeed that is what the affidavit of Mr Chamberlain deposes. On the material before me, the current delay in the settlement date is not as a consequence of the actions of Kentia, but appears, from the affidavit of Mr Chamberlain, to be requested by the vendors.
It can reasonably be inferred that in order to fulfil its contract, Kentia was obliged to quarantine funds and put them on hold, which may also affect its other business activities. Undoubtedly it would wish to progress its development expeditiously, it did not for example suggest that there could be a similar special clause granting access rights to the vendors for vintages over following years. Other than these inferences, I can draw no other inference as to any other detriment or risk that Kentia may suffer from an interlocutory injunction. I also assume that these matters would be addressed to some degree by the undertaking as to damages given by the plaintiff.
The vendors did not put any submissions as to any detriment or benefits. It is not appropriate to make any assumptions as to the detriments and risks on them other than the type of risks referred to by Sackville J in the case of Australian Agricultural Co Ltd[24] in paragraphs 142 and 143. I also note that there is an undertaking as to damages given by the plaintiff in relation to the vendors. No separate detriment or benefit appears relevant to the third defendant and Kentia.
[24] Australian Agricultural Co Ltd v AMP Life Ltd [2003] FCA 1038.
Strength of the issues to be tried
Whilst I consider that there are major issues to be tried as indicated in arguments 1, 4, 6, 7, 9 it is relevant to the balancing of convenience, to have regard to the strength of those issues. Of course I am not deciding whether there is a prima facie case which the plaintiff is able to make on those issues, nor am I deciding these issues as though this was the final evidentiary material in the case. I am simply considering how strong the plaintiff’s case is on the serious issues to be tried.
First, the argument of the plaintiff that it was invited to put in an offer as part of a tender process, seems slim on the basis of the simplicity of the invitation by the vendors agent and the absence of any pre-requisite conditions, terms or criteria other than “best offer” and the tender date. This simple invitation appears to be more characteristic of an open invitation to treat rather than a tender process. Secondly, whilst there is support for a legal proposition that an invitation to treat alone “may give rise to obligations to act fairly”[25], the circumstances in which this principle was endorsed by Finn J’s obiter was expressed in circumstances where the tender process he was considering involving a statutory corporation. Thirdly, on the facts in the present case the “tender” on which the plaintiff fundamentally relies is that which was offered by it as an addendum after the date upon which it thought tenders closed. Fourthly, there is some doubt as to whether it was necessarily the “best offer” when compared with Kentia’s offers either as at the date when the tenders closed, or in comparison with the offer which became the contract between the vendors and Kentia. The offer of the plaintiff was not an unconditional offer and was subject to the condition of a soil test to be performed within 2 months.
[25] Hughes Aircraft Systems International v Airservices Australia (1997) 76 FCR 151 at 185, in turn citing Pratt Contractors Ltd v Palmerston North City Council [1995] 1 NZLR 469,478-479.
Therefore for the above reasons I do not regard the case of the plaintiff in support of its declaration that the contract between the plaintiff was null and void to be a strong case. This argument is an essential stepping stone to ultimate relief sought by the plaintiff, namely a reopening of the tenders, which is likewise not a strong argument.
Damages an adequate remedy
A further consideration is whether the plaintiff will suffer irreparable injury if an injunction is not granted and whether damages are an adequate remedy. Or, to put it another way, is it just in all of the circumstances that the plaintiff should be confined to a remedy in damages only.[26] The plaintiff argues that if there is no grant of an interlocutory injunction, it will lose its right to challenge the contract as null and void and its chance to be the winning tenderer.
[26] State Transport Authority v APEX Quarries Ltd [1998] VR 187.
I consider that the arguments proffered by the plaintiff and my consideration of them, show there are considerable difficulties with its claim for injunctive relief in any final court order, particularly in the circumstances of this case and particularly when there is an innocent buyer. This is not to say that there are not other causes of action and relief which could be sought by the plaintiff against the vendors as a consequence of the actions of the vendors agent. However, these are matters which would if anything, sound in damages for loss of opportunity or for any costs incurred in relation to the tender process. It is true that the proof and quantum of those damages may be difficult to assess, but as Sackville J noted in the Australian Agricultural Co Ltd[27] “… that difficulty inheres in the nature of the claim for damages for loss of opportunity”.
[27] Australian Agricultural Co Ltd v AMP Life Ltd [2003] FCA 1038.
Conclusion
Having considered the three criteria relevant to the granting of an interlocutory injunction, I am not satisfied overall that an interlocutory injunction should be granted. The application for an interlocutory injunction is refused.