St. Clair, L.D. v Newcastle Permanent Building Society Ltd

[1992] FCA 207

mt/ - W -

JUDGMENT NO. ...-....... ...--.

IN THE FEDERAL COURT OF AUSTRALIA )

)

NEW SOUTH WALES DISTRICT REGISTRY ) No G148 of 1992

)

GENERAL DIVISION )

BETWEEN:  LORRAINE DAWN ST. CLAIR
Applicant

m:	NEWCASTLE PERMANENT BUILDING SOCIETY LIMITED
First Respondent
W.L. BRIDGES tradina as W.L. BRIDGES REAL ESTATE
Second Respondent
NICKELBY PTY LIMITED tradina as W.L. BRIDGES REAL ESTATE
Third Respondent
Fourth Responden

LRAM: HILL J PLACE: SYDNEY DATED: 19 MARCH 1992

EX TEMPORE REASONS FOR JUDGMENT

town houses.

The applicant in the present interlocutory proceedings seeks an order restraining the respondents, Newcastle Permanent Building Society Limited and other parties, from selling the property situate at 52 Yarranabbee Road, Darling Point, owned by the applicant, pending it being re-advertised in a way which emphasises that the property is one capable of development by the building upon it of four

The applicant borrowed from the building society a sum of money. At the present time it is said that approximately $3.3 million is secured in favour of the building society upon the property by means of two mortgages. The evidence suggests that the larger of the two mortgages, which accounts for at least two-thirds of the sum, is at an annual interest rate in excess of 17 per cent.

There has been considerable litigation between the parties prior to the present proceedings being commenced. The applicant sought to restrain the building society from going into possession under the mortgages but apparently failed. After going into possession, the building society engaged some of the respondents to sell the property and advertisements were published in the Wentworth Courier on 4 March 1992 and 18 March 1992. Advertising of the property has included the words :

"The oppor tuni ty e x i s t s t o renovate t h i s

home t o i t s original g lory o r develop t h i s 929 square metre (10,000 square f e e t ) b lock with three town houses ( sub jec t t o council approval) Zoned Residential 28."

The applicant tendered in evidence a letter from Wilk Black and CO Pty Limited, architectural services, which is not easy to understand but which suggests that it could be possible, with the consent either of the council or the Land and Environment Court, for there to be a satisfactory development of four units, although there is some suggestion that the size of the units would need to be reduced from an optimum size. Also tendered in evidence is a letter from T.K. Egan Fule, who I assume to be a firm of valuers, in which it is said in the event of a development of four home units having a basic area of 269 square metres the site would realise $800,000 per unit site for each of the four units amounting to $3,200,000. It is said in that letter that if larger units were erected on the land the realisation for the three larger units would be expected to be $900,000 per unit, a total of $2,700,000.

It is not clear whether that figure purports to be a valuation of the land and particularly whether it takes into account the cost of development and compliance with appropriate council requirements.

A further valuation in evidence is that of a Mr

Hecek of 11 June 1991 which values the land at between

$1,500,000 and $1,900,000 allowing for a six month selling

period. That valuation states that for the site to be developed for more than three town houses, approval would be required as the property is just under the council's minimum size requirement. Also in evidence is a valuation of the second respondent valuing the property at between $1,500,000 and $1,650,000. That valuation points to the fact that a nearby property, "Glen-Ascham" in Darling Point, was sold for $2,000,000. Finally, there is a full valuation from T.N. Francis and Associates Pty Limited, Valuers and Real Estate Agents, which values the property in question at $1,650,000 with a best use as a home. That valuation points out that the market at present for town houses would restrict any purchase price if town planning guides were restrictive. It indicates a view that the property would bring a price less than that of

"Glen-Ascham" .

The applicant alleges that the first respondent has
engaged in conduct which is misleading or deceptive or likely
to mislead or deceive, contrary to s.52 of the Trade Practices

1974, by advertising the property as, inter alia, a site for three units. It is said that this is a misrepresentation which is false, the misrepresentation being that the property is not capable of development as a site for four units. It is for this reason that the applicant seeks the aid of the court to defer the sale, pending advertising that is not misleading

of the applicant, will be for the sale of the property as a and deceptive, that is to say advertising, which on the case

development site for four units. I should say at this stage that it would seem to me somewhat dangerous, on the state of the evidence before me, to advertise the property as a site for four units unless council approval had been obtained.

Although the applicant was apparently given an opportunity to seek a development application of the property as the site of four units by the building society some time before the exercise of the power of sale, she has apparently not done so. Nor has she sought to take any action to move the court to enjoin the sale in the approximately six weeks that have passed since the first advertisement was published in the newspaper.

The principles for the grant of interlocutory relief in cases such as the present are not in dispute; it is necessary for an applicant to show that there is an arguable issue to be tried and that the balance of convenience is in favour of the grant of the injunction. These are not two independent matters; they reflect upon each other. To some extent, where the balance of convenience is in favour of granting the injunction, the more leniently the court may look at the issue of whether there is an arguable issue to be

tried.

I must say that I have difficulty in seeing, on the evidence so far as it is before me, that the applicant's case involves anything more than something that is barely arguable. However, I am prepared to assume for present purposes that that is sufficient. The balance of convenience, however, appears to me to be all on the side of the building society.

First, the building society is owed more than it will get back, even on the most optimistic valuation. To defer the sale for a period of six weeks would merely entail the applicant becoming liable for further interest; much of which would accrue at a rate exceeding 17 per cent. The applicant has frankly conceded in the affidavit lodged in support of the application that the total value of her assets, other than any equity that might exist in the property, does not exceed the sum of $15,000. Any undertaking by way of damages would clearly be worthless.

Further, the applicant is obviously unable to comply with the general principle laid down in Inalis v Commonwealth Tradina Bank of Australia (1972) 126 CLR at 161, namely, that interlocutory relief restraining the exercise of the mortgagee's power of sale will not be granted unless the mortgage debt be paid into court ox held in some account pending the outcome of the proceedings. This, of course, is

may be dispensed with. In other cases the court may mould its not an inflexible principle and, if the occasion so warrants,

order so as to require payment in of so much only as will suffice to give adequate protection to the mortgagee, unless the case is one where the appropriate remedy of the applicant sounds in damages only. The cases involving these principles are discussed in a judgment in Muffinarove Ptv Limited v Melridae Minina and Ex~loration Ptv Limited (unreported, 26 September 1991).

The application of those principles in a case such as the present might well warrant the court relieving the applicant from the full impact of them, at least if the applicant were to undertake to pay into court or to the mortgagee the amount of interest that would accrue in the period during which the sale by the mortgagee is deferred, together with some amount which would, at least, compensate the mortgagee for the additional costs that would be incurred in re-advertising and arranging a sale at a later date. No attempt has been made by the applicant to take that course, no doubt because the funds are not available. The present application is one, as I have already indicated, not made until the last moment.

The history of litigation between the parties, so far as I know it from the material before me, or what has been said in court, suggests that every attempt has been made by the applicant to defer the inevitable, given that the

exceeding $3.2 million now owing on the property. I do not applicant admits liability to the building society of a sum suggest in so saying, that the applicant has acted in bad
faith in seeking to exercise her legal rights.

Finally, it was submitted by counsel for the building society that if it were really the case that the Society was party to a misrepresentation by virtue of the advertising, it would be a case where it had acted in bad faith and presumably damages would be an adequate remedy and injunctive relief would be unnecessary.

I am not sure that this argument is correct in the present circumstances. The present proceedings are not taken, as counsel admits, at common law for breach of a mortgagee's duty, whether that be described as being a duty to act in good faith or whether it be described as a duty which gives rise to a claim in negligence. If such a case were brought, a claim in damages would be able to be made. The present is a case brought under s.52 of the Trade Practices Act. For the applicant to have a remedy in damages under S. 82 of the Trade Practices Act flowing out of a breach of s.52, it would be necessary to show that she had suffered damages which resulted from the misleading and deceptive conduct. That would ultimately depend on the amount which the sale of the property brings. It may well be that there would be no damages at all.

I do not, however, in exercising the discretion which I now propose to exercise, take that matter into account adversely to the applicant. The balance of convenience favours the building society; an undertaking as to damages would be useless and no attempt has been made to offer even a moulded form of relief along the lines of Inalis v Commonwealth Tradina Bank. In these circumstances, an injunction should not be granted and I decline so to do.

I direct the applicant to pay the respondents' costs

I certify that this and the
preceding eight (8) pages
are a true copy of the Reasons
for Judgment herein of his Honour

of today.

Mr Justice Hill.

Associate: pd2%w-
Date: 19 March 1992

Counsel and Solicitors	MS M Beazley QC and Mr I Butcher
for Applicant:	instructed by Lyons & Lyons
Counsel and Solicitors	Mr R J Bainton QC instructed by
for Respondents:	Garland Hawthorn Brahe
Dates of Hearing:	19 March 1992
Date Judgment Delivered:	19 March 1992