Kraguljac v A & B Property Developments Pty Ltd (No 2) - [2008] SASC 301

SUPREME COURT OF SOUTH AUSTRALIA
(Civil: Application)
KRAGULJAC v A & B PROPERTY DEVELOPMENTS PTY LTD (No 2)
[2008] SASC 301
Reasons of Judge Burley a Master of the Supreme Court
6 November 2008
EQUITY - EQUITABLE REMEDIES - INJUNCTIONS - MANDATORY INJUNCTIONS
Contract for sale of land - dispute as to whether contract on foot - contract provides for access to site by plaintiff to obtain environmental assessment - access denied by defendant - plaintiff seeks interlocutory mandatory injunction and other injunctive relief - whether irreparable harm if injunctive relief refused - access to site necessary because inextricably linked with application for finance - in absence of finance likely failure of suit for specific performance - whether other means to avoid potential harm - plaintiff could apply for a split trial - held: no immediate necessity to make orders sought - application refused.
ABC v O'Neill (2006) 227 CLR 57; Jakudo Pty Ltd v South Australian Telecasters Ltd (1997) 60 SASR 440 , applied.
Secured Income Real Estate (Australia) Ltd v St Martins Investments Pty Ltd (1979) 144 CLR at 596, considered.

KRAGULJAC v A & B PROPERTY DEVELOPMENTS PTY LTD (No 2)
[2008] SASC 301

JUDGE BURLEY: These proceedings have been brought by the plaintiff to enforce a contract dated 16 January 2007 for the sale by the defendant to the plaintiff of land known as Lot 21, Jetty Road, Largs Bay (the contract). The defendant has purported to terminate the contract and the plaintiff has lodged a caveat on the title to the land. The defendant has warned the caveat. Earlier this year I dealt with the plaintiff’s application for an order extending the time for removal of the caveat pursuant to the provisions of s 191 of the Real Property Act 1886. On 18 June 2008 I granted that application.
By application dated 19 August 2008 the plaintiff seeks the following orders:
1A mandatory injunction requiring the Defendant to provide the Plaintiff, its agents, servants, contractors, consultants and subcontractors with access to the land comprised in Certificate of Title Volume 5507 Folio 13 described as allotment 21 in File Plan 4493 (“Lot 21”), and allotments 26 (“Lot 26”), 27 (“Lot 27”) and 28 (“Lot 28”) in File Plan 4493 and comprised in Certificate of Title Volume 5966 Folio 445 for the purpose of:
1.1erecting advertising signage relating to the Purchaser’s proposed intention to market the land to prospective tenants and/or Purchasers;
1.2taking prospective tenant’s (sic) and purchasers on to the land to inspect the land; and
1.3undertaking any environmental assessments or building inspections of the land and its improvements.
2An order restraining the Defendant, and an injunction granted restraining the Defendant, whether by its officers, employees, agents or otherwise, until further order, from:
2.1interfering in any way with the free and unrestricted access to and over and egress from, the land the subject of this application in paragraph 1; and
2.2interfering with, or impeding in any way, the Plaintiff or its agents, servants, contractors, consultants and subcontractors in doing anything permitted by this order.
At the commencement of his submissions, Mr Wells QC, counsel for the plaintiff, stated that, although paragraph 1 of the application seeks a mandatory injunction in relation to Allotments 21, 26, 27 and 28 in File Plan 4493, the application would be limited to seeking orders only in relation to Allotment 21. This is consistent with what is pleaded in the plaintiff’s statement of claim, which only seeks relief in relation Allotment 21, although reference is made at paragraph 5 of the statement of claim to three separate written option agreements which, as I understand it, relate to the allotments numbered 26, 27 and 28. None of the relief sought by the plaintiff in the statement of claim relates to those allotments.
The plaintiff relied upon the affidavits sworn by him which are FDN 3, 13, 15, 20 and 26. The defendant relied upon the affidavits of Mr Slipper which are FDN 6, 7, 10 and 23, together with the affidavit of Mr Dyna which is FDN 14.
All of the affidavits were received on the application without objection.
Background Facts
The following is taken from my reasons published on 18 June 2008.
A copy of the contract is Exhibit GK3 to the first affidavit of the plaintiff. The parties used the Law Society form of contract for the sale and purchase of land. The contract price for the land is $6 million. The contract provided for a deposit of $70,000. Paragraph 3 of Annexure A to the contract is as follows:
3 Conditions Precedent
3.1This agreement is subject to the vendor removing all its property, materials and rubbish from the land and upon the vendor levelling all the piles of dirt currently situated on the land as agreed between the parties.
3.2The vendor will use its best endeavours to complete the work contemplated in clause 3.1 above immediately upon the execution of this agreement.
3.3The parties agree that this condition precedent is for the benefit of the purchaser and that subject to 3.4 below, the purchaser may elect to settle the land and undertake to remove any rubbish, materials or property of the vendor from the land.
3.4The vendor agrees to pay the purchaser the costs of removing and disposing or storage (as appropriate) of any rubbish, materials or property of the vendor left on the land after the settlement date.
Paragraph 8 of Annexure A is as follows:
8 Settlement date
8.1Settlement date under this agreement is to be within 90 days from the vendor satisfying the condition precedent pursuant to clauses 3.1 and 3.2 of this agreement, or earlier, as mutually agreed to by both parties.
Before turning to counsels’ submissions, I should mention that the application is brought in the context that the plaintiff seeks the relief set out in Part 2 of the statement of claim as follows:
(1)     A declaration that the purported notice of termination was invalid and of no effect.
(2)    A mandatory injunction requiring the defendant to remove forthwith and without further delay all of its property, materials and rubbish from the land and to level all piles of dirt situated on the land.
(3)A mandatory injunction requiring the defendant to provide access to the land pursuant to the licence granted by special condition 12.
(4)     Orders for specific performance of the contract as follows:
4.1That pursuant to special condition 12 the defendant permit to have access to the land on reasonable notice the plaintiff’s environmental consultants, sales agent and valuers;
4.2That pursuant to special condition 3.1 the defendant remove all of its property, materials and rubbish from the land and level the piles of dirt on the land;
4.3That subsequently the defendant complete the contract in accordance with the terms of the contract, namely 90 days after the defendant clears the land.
This application (and the plaintiff’s claim in paragraph 4.1 of the prayer for relief) rely upon the provisions of special condition 12 of the contract which is as follows:
Access to land before settlement.
12.1 The vendor grants to the purchaser and its servants, agents, contractors and invitees with effect from the date of the agreement a non-exclusive licence to enter upon the land prior to the date of settlement for purpose of:
12.1.1Erecting advertising signage relating to the purchaser’s proposed intention to market the land to prospective tenants and/or purchasers;
12.1.2Taking prospective tenant’s purchasers to inspect the land;
12.1.3Undertaking any Environmental Assessment or building inspections of the property; and
12.1.4Undertaking such renovations or improvements to the land as approved by the vendor at the written request of the purchaser.
12.2 The purchaser agrees not to commence or undertake any works on the land that require or will result in any physical alteration to the land, without first having obtained the prior written approval of the vendor, which approval will not be unreasonably withheld.
12.3 If the agreement is terminated other than due to a fault of the vendor, the purchaser must at its cost:
12.3.1do everything necessary in the reasonable opinion of the vendor to remove any signage or alterations the purchaser has made to the land; and
12.3.2restore the land to its original state as it was prior to the purchaser entering on to it.
12.4 If the purchaser does not comply with clause 12.3 within 2 weeks of the termination of the agreement, the vendor may carry out the removals and restorations to the land.
12.5 The reasonable costs of doing this are recoverable as a debt due by the purchaser to the vendor.
12.6 The purchaser released the vendor from all liability which the vendor might otherwise have for any loss suffered by the purchaser or its employees, servants, agents or contractors on the land during the period of the licence. However, this release does not apply if the loss is caused by the wilful or negligent act or omission of the vendor, its servants, agents or contractors.
12.7 The consideration for the licence is the deposit paid by the purchaser to the vendor pursuant to this agreement.
Clause 12 permits access to the site for a number of purposes, three of which are referred to in paragraph 1 of the application, namely, erecting advertising signage, taking prospective tenants and purchasers on to the land and undertaking any environmental assessments or building inspections.
The defendant resists this application (and the suit for specific performance) on a number of grounds, including the following:
(a)that the contract has not come into force because of the non-fulfilment of a condition precedent; or, alternatively
(b)That is has validly terminated the contract because of the plaintiff’s alleged failure to settle when legally required to do so.
These grounds were canvassed in my earlier reasons. I adhere to the views express therein.
The applicable legal principles.
In ABC v O’Neill (2006) 227 CLR 57 Gummow and Hayne JJ dealt with the principles relating to applications for interlocutory injunctive relief. They said at [65]:
The relevant principles in Australia are those explained in Beecham Group Limited v Bristol Laboratories Pty Ltd (1968) 118 CLR 618. This Court (Kitto, Taylor, Menzies and Owen JJ) said that on such applications the Court addresses itself to two main enquiries and continued (at 622-623):
The first is whether the plaintiff has made out a prima facie case in the sense that if the evidence remains as it is there is a probability at the trial of the action the plaintiff will be held entitled to relief ….. The second enquiry is ….. whether the inconvenience or injury which the plaintiff would be likely to suffer if an injunction were refused outweighs or is outweighed by the injury which the defendant would suffer if the injunction were granted.
By using the phrase “prima facie case”, their Honours did not mean that the plaintiff must show that it is more probable than not that at trial the plaintiff will succeed: it is sufficient that the plaintiff show a sufficient likelihood of success to justify in the circumstances the preservation of the status quo pending trial……
….. With reference to the first enquiry, the Court continued, in a statement of central importance for this appeal (at 622):
How strong the probability needs to be depends, no doubt, upon the rights [the plaintiff] asserts and the practical consequences likely to flow from the order he seeks.
On this topic, Gleeson CJ and Crennan J said in ABC v O’Neill (at [19]):
As Doyle CJ said in Jakudo Pty Ltd v South Australian Telecasters Ltd, (1997) 60 SASR 440 at 442-443 in all applications for an interlocutory injunction, a Court will ask whether the plaintiff has shown that there is a serious question to be tried as to the plaintiff’s entitlement to relief, has shown that the plaintiff is likely to suffer injury for which damages would not be an adequate remedy, and has shown that the balance of convenience favours the granting of an injunction. These are the organising principles to be applied having regard to the nature and circumstances of the case, under which issues of justice and convenience are addressed. We agree with the explanation of these organising principles in the reasons of Gummow and Hayne JJ, and their re-iteration that the doctrine of the Court established in Beecham Group Limited v Bristol Laboratories Pty Ltd should be followed.
It seems to me that, if the first two purposes referred to at paragraph 1.3 of the application were to be taken together but in isolation from the third purpose, even if it is assumed that the plaintiff has established the required prima facie case, the balance of convenience would require the application to be refused because there is not an immediate and pressing necessity, at this stage of the proceedings, for the plaintiff to have access to the land for those purposes. This is just another way of saying that if the plaintiff’s application is to succeed, it would be on the basis, all other things being equal, that there is a present necessity for the plaintiff to have access to the site so that an environmental assessment, and subsequently a valuation may be undertaken.
It is not in dispute that, initially, the defendant gave access to the site to the plaintiff pursuant to special condition 12. The plaintiff’s case is that the defendant has interfered with the plaintiff’s access to the site since early April 2007. The dispute with regard to the site access continued until the end of January this year. Since that time the plaintiff says that the defendant has denied access to the site to him and to consultants engaged by him.
In my earlier reasons I made mention of site access at paragraph [36]. I said:
It is apparent that the plaintiff required access to the land after the contract was signed for two purposes: first, so that an environmental report to be commissioned by the plaintiff could be obtained; and, second, so that a valuation could be obtained by the plaintiff as part of his application to lending institutions for finance. The environmental report was necessary principally because the land had, a number of years ago, been the site for asbestos products. The contract specifically provided for access to the land being taken by the plaintiff and his agents so that an environmental report could be obtained. The express terms of the contract did not make specific mention of access to the land for valuation purposes.
Because special condition 12 did not specifically mention access to the site for the purposes of valuation, it was necessary on the caveat application, as it is on this application, to consider the basis upon which the plaintiff might have access to the site for the purposes of obtaining a valuation. Should a term be implied that access to the site may be taken for valuation purposes? On this question, I said (at [44]):
….. I think the defendant’s contention (to the contrary)is also answered, for the purposes of this application, by the plaintiff’s reliance upon cases such as Secured Income Real Estate (Australia) Ltd v St Martins Investments Pty Ltd (1979) 144 CLR at 596. In that case Mason J said (at 607):
But it is common ground that the contract imposed an implied obligation on each party to do all that was reasonably necessary to secure performance of the contract. As Lord Blackburn said in Mackay v Dick:
As a general rule ….. 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.
It is not to be thought that rule of construction is confined to the imposition of an obligation on one party to co-operate in doing all that is necessary to be done for the performance by the other party of his obligations under the contract. As Griffiths CJ in Butt v M’Donald:
It is a general rule applicable to every contract that each party agrees, by implication, that all such things as are necessary on his part to enable the other party to have the benefit of the contract.
(Citations omitted)
Those cases support the proposition that there is an implied right enabling the plaintiff to have access to the land in furtherance of the purposes of the contract.
I would take this opportunity to make explicit what was implicit in my earlier reasons. A specific term such as Clause 12 carries with it, in the circumstances of this case, the implication that site access is inextricably linked to the ability to obtain a valuation.
I should mention that Mr Ross-Smith, counsel for the defendant, submitted that, if a mandatory injunction is sought, the applicant must demonstrate a high degree of assurance that the order should be made. He relied on various English authorities. Mr Wells submitted that the authorities relied upon by the defendant did not apply in Australia. He said that the position was to be judged by reference to what was said by the High Court in Beecham (cited above) that the strength of the probability (that the applicant will obtain the relief sought at trial) “depends ….. upon the rights the applicant asserts and the practical consequences likely to flow from the order he seeks”. It is not necessary to decide whether the English cases apply because the fate of this application is determined by different considerations, to which I now turn.
The first question to be asked is:
Has the plaintiff demonstrated that order for access to the site should be made now? This question requires a consideration of whether or not, if the orders for access are not made now, the plaintiff will suffer irreparable harm. This remains a necessary consideration: Jakudo Pty Ltd v SouthAustralian Telecaster Ltd (supra). It is only the imminence of irreparable harm which creates the requirement to make an immediate order. This raises what seems to me to be the fundamental point to be addressed on this application.
Even if it is assumed that the plaintiff has established to the required degree (whether by reference to the plaintiff’s or the defendant’s submissions) that it has a right of access to the site, what is the immediate necessity to obtain such access? The plaintiff says that he must have access so that an environmental assessment may be obtained. Such an assessment is an essential part of any application for finance made by the plaintiff to a lending institution. In the absence of such a report he is unable to apply for finance. If he cannot obtain finance he cannot settle on the contract.
For the purposes of this application, I am prepared to accept the cogency of these submissions with one qualification: if an order for immediate access is refused, what is the irreparable harm which would be caused to the plaintiff? The plaintiff says he would lose this action because he could not prove, in support of an order for specific performance, that, at settlement pursuant to such an order, he could, without finance, pay the purchase price. In my opinion, the avoidance of such harm is within the hands of the plaintiff and the harm therefore neither inevitable nor imminent. He could seek orders at trial progressively, commencing with a declaration that the contract remains on foot and ending with an order for specific performance of the contract in the sequence set out in Part 2 of the statement of claim.

Another means to avoid the potential harm would be to seek orders prior to trial that the trial be dealt with in stages: the first part of the trial would be confined to those orders in the prayer for relief which seek a declaration that the termination was invalid and orders for access to the property. If the plaintiff was successful in obtaining such a declaration and orders for access, and if the defendant still refused to settle, specific performance could be sought at a later date. If, on the other hand, the Court decides that the contract has been validly terminated, the plaintiff would not be entitled to any of the other relief sought in the prayer for relief. If the trial were divided into various stages, it is conceivable that the defendant could raise, at the first part of the trial, its contentions that the contract has not come into force or, alternatively, that it has been validly terminated together with the question of damages sustained by it as a result of alleged breaches by the plaintiff. The defendant could seek an order that damages be assessed by a Master.
The fact that it is ultimately the Court which decides whether to deal with a trial in stages makes little difference to the notion that avoidance of the possible harm foreshadowed by the plaintiff is in the hands of the plaintiff. It is arguable that the Court would make an order for a split trial in circumstances where the plaintiff could contend that he is being prevented from raising finance (and therefore from being ready, willing and able to settle) because the defendant had denied him access to the site. In the event that the order for trial of some issues before others was refused, the plaintiff could then say that the avoidance of harm was not within his power. If I am correct in these views, it follows that the plaintiff should have sought orders for a split trial before making this application.
I put these notions to Mr Wells during the course of argument (T.9 et seq). He submitted that an immediate order was necessary because the defendant could, among other things, call for a 90 day settlement which would not enable the plaintiff enough time to have the environmental assessment and a subsequent application for finance completed. This contention does not take account of the consequence that, if the defendant does call upon the plaintiff to settle, it will have abandoned its contentions that no contract has yet come into force or, if it has, the contract has been terminated. In those circumstances the contract must be regarded as being on foot. Clause 12 would be operative. The plaintiff could take access to the site pursuant to that clause.
In addition, in the context that the defendant called for settlement, the plaintiff would not have to apply for an order for specific performance. This removes the necessity for the plaintiff to prove that he is ready, willing and able to settle. The only detriment to the plaintiff would be that, if he cannot obtain an environmental assessment report followed by approval of finance within 90 days of being called upon to settle, he would have to apply for interlocutory relief or, if the matter is close to trial, final relief, preventing the defendant from terminating the contract for failure to settle. In addition, if there is a further termination, the plaintiff continues to be protected by the caveat. These considerations are, in my opinion, a sufficient answer to the plaintiff’s concern. The plaintiff would not be left, as was submitted by Mr Wells, in a position of “unacceptable uncertainty” (T.11/4).
In view of the conclusion to which I have come, it is not necessary to decide the other points raised by counsel relating to the 2 stages referred to in Beecham in respect of applications for interlocutory injunctions. Nevertheless, I think it necessary to say that, even if it is assumed that the plaintiff has made out a prima facie case, for the reasons given by me when dealing with the concept of irreparable harm, the balance of convenience, or balance of injustice, however the concept is phrased, would favour the refusal of the granting of injunctive relief because of other reasonable steps that the plaintiff could take, namely to apply for a split trial, to avoid the anticipated harm. When this is weighed against the invasive access to the land sought by the plaintiff in circumstances where, arguably, there may have been a valid termination of the contract, neither of the orders sought respectively in paragraphs 1 and 2 of the application is justified where reasonable alternatives apply.
For these reasons, the application will be dismissed. I will hear the parties as to costs