McInnes v DAVIES (No 2)
[2015] SADC 174
•18 December 2015
DISTRICT COURT OF SOUTH AUSTRALIA
(Civil)
MCINNES v DAVIES & ANOR (No 2)
[2015] SADC 174
Reasons for Decision of Her Honour Judge Tracey
18 December 2015
DAMAGES
Claim for damages pursuant to an undertaking as to damages given in respect of an application for injunction - injunction obtained restraining defendants dealing with their residential property following contract of sale to the plaintiff - whether injunction and undertaking continued until judgment at trial.
Real Property Act 1886 (SA) s 191(j), referred to.
Griffiths & Anor v Lawrence (Unreported, Supreme Court of South Australia, Lander J, 1 May 1995), discussed.
MCINNES v DAVIES & ANOR (No 2)
[2015] SADC 174
By application dated 22 October 2015, the defendants sought compensation in the sum of $39,024.05 for the losses they incurred as a result of an injunction that restrained any dealing with a residential property they owned.
The issue in dispute was confined to the period in which the injunction was in place. After hearing submissions from the parties, I ordered the plaintiff to pay to the defendants the sum of $32,814.05.
I now provide my reasons.
Background
On 3 April 2014 the plaintiff had executed a contract with the defendants to purchase a residential property (‘the property’) owned by the defendants. The contract was subject to finance and when the plaintiff failed to secure finance, the defendants purported to terminate the contract. On the same day, the defendants entered into a contract for the sale of the property to a second purchaser.
On 6 June 2014, the plaintiff lodged a caveat on the property and on 9 June 2014, the defendants granted the second purchaser a licence to occupy the property.
By summons dated 15 July 2014, the plaintiff claimed that the termination was not effective and sought specific performance of the contract and damages by way of remedy. The plaintiff made application to extend the time for removal of the caveat.
On 16 July 2014 Judge Stretton made an order in the following terms:
1Interim injunction restraining any dealing with the land comprising Certificate of Title Register Book Volume 5979 Folio 717, known as 19 Pine Grove, Naracoorte until 5pm on Thursday 17th July 2014.
On 17 July 2014 Judge Stretton made the following orders:
1Matter adjourned until Friday 25 July 2014 at 2.00 pm for leave, by the plaintiff to lodge a new caveat.
2$10,000 paid by plaintiff into trust account of Naracoorte First National Pty Ltd. This money has to be retained in this trust account of that company until further order of this Court.
3Parties to notify Naracoorte First National Pty Ltd of this order.
4Plaintiff to provide a written undertaking as to damages.
Pursuant to those orders, the plaintiff filed the following undertaking as to damages on 22 July 2014:
The plaintiff Joseph Lachlan McInnes hereby undertakes to:
(a) Submit such order (if any) as the court may consider just for the payment of compensation, to be assessed by the court as it may direct, to any person (whether or not a party) affected by the operation of the interlocutory order made by his Honour Judge Stretton on the 16th day of July 2014 and extended on the 17th day of July 2014 or any continuation (with or without variation) of the order;
(b) Pay the compensation referred to in (a) to the person or persons referred to in the order.
On 30 July 2014 Judge Stretton concluded that on the balance of convenience, the caveat should not be extended, nor should a further caveat be issued and on 8 August 2014 he made the following orders:
1. Injunction be extended until further order so long as the plaintiff files a notice of appeal by close of business Tuesday 12 August 2014.
2. That the plaintiff diligently pursue the appeal in as timely a fashion as reasonably practical.
3. That the defendant has liberty to apply on short notice to discharge the injunction if either order 1 or 2 are not strictly complied with.
4. The plaintiff is to pay the defendants’ costs to extend the injunction.
5. Matter is returned to the Masters’ list.
On 22 September 2014 Master Rice ordered:
1. No appearance by plaintiff’s solicitors.
2. Registry to send a copy of today’s order(s) to the plaintiff’s solicitors.
3. An appeal has been lodged from Judge Stretton’s orders of 30 July 2014. It is anticipated to be heard by Nicholson J in late October.
4. I note the defendants’ consent and I so order that the injunction be extended until 14 November 2014.
On 28 October 2014, Justice Stanley heard an appeal in relation to Judge Stretton’s decision. Justice Stanley allowed the appeal, delivering his reasons on 5 December 2014.
By email dated 4 December 2014 the solicitor for the plaintiff communicated with Master Rice’s Chambers in the following terms:
We refer to orders made by Master Rice on the interlocutory summons of 22 September 2014; specifically order three (3) ‘I note the defendants consent and I so order that the injunction be extended until 14/11/14’.
We enclose hearing for the Master’s consideration:
1.Copy of Record; and
2.Notice of Appeal filed on 12 August 2014.
We wish to draw Master Rice’s attention to the order made by Judge Stretton on 8 August 2014, that the; ‘injunction be extended until further order so long as the plaintiff files a notice of appeal by close of business Tuesday 12 August 2014.’
We also note that Justice Stanley intends to deliver judgement (sic) in the appeal on Friday, 5 December 2013 at 2.00 pm. We are raising this as the period referred to in Master Rice’s order has expired and wish to avoid any confusion.
Yours faithfully
The email was copied to the defendants’ solicitors.
Justice Stanley delivered his reasons on 5 December 2014 and made the following orders:
1. The appeal be allowed.
2. Permission granted to the Appellant pursuant to s 191K of the Real Property Act 1886 (SA) to lodge a caveat in respect of his interests in the land described in Certificate of Title Register Book Volume 5979 Folio 717 arising under a contract in writing between the Appellant and the Respondent dated 3 April 2014.
3. The costs of the appeal be adjudicated or agreed and paid by the Respondents to the Appellant.
4. The question of costs of the Appellant’s application dated 15 July 2014 and of the Appellant’s amended application dated 22 July 2014 be reserved for further consideration.
The plaintiff’s claim then proceeded to trial in this Court and on 4 June 2015, I delivered my reasons, dismissing the plaintiff’s claim.
The injunction
The decision to enforce the undertaking as to damages is discretionary. I was referred in submissions to the unreported decision of Lander J in Griffiths & Anor v Lawrence[1] wherein Justice Lander sets out the guidelines associated with an application for the enforcement of an undertaking to pay damages. In particular, I note that the court must first decide whether to exercise the discretion to enforce the undertaking, and then inquire as to what damages flow from the injunction. In the circumstances of this case I have determined that the undertaking given by the plaintiff should be enforced and note that prior to the hearing of the application, the parties came to an agreement in respect of the quantum of the defendants’ claim.
[1] (Unreported, Supreme Court of South Australia, Lander J, 1 May 1995).
The defendants point to the terms of the orders of Judge Stretton on 8 August 2014, whereby the injunction was extended until ‘further order’ on condition the plaintiff filed his notice of appeal by 12 August 2014. The order made by Master Rice extending the injunction until 14 November 2014 was, they submit, made because there was an expectation that the appeal would come on reasonably soon, and a date was given which Master Rice anticipated would be after the resolution of the appeal.
Justice Stanley did not refer to the injunction and made no orders in respect to it. The defendants say that accordingly, the relevant orders were either the order of Judge Stretton made on 8 August or that of Master Rice on 22 September 2014.
Furthermore, the defendants say that the only purpose for the email was to show that the plaintiff had complied with Judge Stretton’s order with respect to the condition. That is, to avoid any confusion, the injunction was in place and the decision on the appeal was to be delivered on 5 December.
It is plain from the defendants’ conduct that they and their solicitors were of the view that the injunction remained in place given they held off settling with the second purchaser until a few days after the plaintiff’s claim was dismissed. Counsel for the defendants’ Mr Ross-Smith, pointed to the perversity of a situation where the defendants would have had available relief under s 191 of the Real Property Act had the plaintiff lodged a caveat in accordance with Justice Stanley’s orders, but not on this argument.
The plaintiff accepted that it may well have been the case that the defendants and their representatives believed the injunction remained in place but argued that the injunction lapsed at midnight on 14 November 2014. Accordingly the plaintiff’s undertaking as to damages ceased to have effect from then on and he was not liable for any losses suffered by the defendants after that date. He argued the relief given by Justice Stanley was that he had permission to lodge a further caveat over the property. As he did not do so, his caveat was removed from the title, while the caveat lodged by the second purchaser remained until she settled on the property. The injunction was an interim injunction to preserve the parties’ position pending the disposition of the Supreme Court appeal. Judge Stretton’s order was an interim injunction until further order and the order was made by Master Rice was that further order. The plaintiff argued that it did not matter what was said in the email. All that can be drawn from the email is that the plaintiff’s solicitors and thereby the plaintiff, assumed the injunction was there to preserve the position pending the appeal and that the appeal was to be handed down within a matter of days. The appeal gave an entirely different protective remedy to the plaintiff, which was the ability to lodge a further caveat. The plaintiff did not lodge the caveat and did not have the protection of it. The undertaking was given only to the extent of an injunction pending the resolution of the appeal before the Supreme Court.
The plaintiff conceded that it may well have been the preferable outcome for the order to have been ‘until further order’, but that was not the order made. Master Rice’s order was made seemingly with the consent of the defendants, fixing a date, but then orders were made by the Supreme Court.
The plaintiff further conceded that had the plaintiff lodged another caveat, the Real Property Act would have provided a remedy to the defendants for having been wrongly affected by that caveat. However the plaintiff did not.
During the course of submissions, counsel for the plaintiff, Ms Clark said that one of the reasons for the email to Master Rice was that a condition of the injunction continuing was that the appeal was to be filed by the close of business on 12 August 2014. The notice of appeal was filed with the court on 12 August however, the court record showed a filing date of 13 August. Ms Clark submitted that it was also for that reason that the plaintiff’s solicitors communicated with Master Rice’s Chambers, because they saw the record of outcome. For this reason, I was urged to be cautious about inferring the plaintiff was seeking a continuation of the injunction until after the matter finalised in that the email said nothing about what was to occur after the disposition of the appeal.
I accept that the order made by Master Rice extending the injunction was unnecessary in that the injunction had been expressed as being ‘until further order’. It seems plain to me however that the extension was made in anticipation of the appeal being resolved, bringing the injunction to an end if the plaintiff’s appeal failed. The orders made by Justice Stanley gave the plaintiff the opportunity to lodge a replacement caveat with no order affecting the injunction. I accept that in the event no caveat was lodged, the injunction must be said to have continued. In this regard, I agree with Mr Ross-Smith’s submission that as Justice Stanley did not fix a time within which the plaintiff was to lodge the caveat, and it would be assumed the lodgement would take some days, it would be reasonable to agree that the injunction would apply for that short period between when the order was made and when the caveat was lodged.
Furthermore, in my view, the purpose for the plaintiff’s solicitors communicating with Master Rice was to make sure the plaintiff continued to be protected by the injunction and for the order of 8 August to continue to apply until the matter finally resolved.
Accordingly it is appropriate to make orders that the defendants have damages pursuant to the plaintiff’s undertaking in the amount of $32,814.05.
0
0
1