Tambakis v Ferluga

Case [2010] SASC 122

SUPREME COURT OF SOUTH AUSTRALIA

(Appeals to a Single Judge)

TAMBAKIS v FERLUGA & ORS

[2010] SASC 122

Judgment of The Honourable Justice Gray

30 April 2010

EQUITY - EQUITABLE REMEDIES - INJUNCTIONS - INTERLOCUTORY INJUNCTIONS - SERIOUS QUESTION TO BE TRIED - PROBABILITY OF SUCCESS

EQUITY - EQUITABLE REMEDIES - INJUNCTIONS - INTERLOCUTORY INJUNCTIONS - BALANCE OF CONVENIENCE

EQUITY - EQUITABLE REMEDIES - INJUNCTIONS - JURISDICTION AND AVAILABILITY OF REMEDY GENERALLY - POWER OF COURT TO AWARD DAMAGES IN ADDITION TO OR IN LIEU OF AN INJUNCTION

Appeal against a decision of a District Court Judge refusing an application for an interlocutory injunction - deposit paid to stakeholder as part of an agreement for the sale and purchase of a second floor apartment at Semaphore - the appellant, as purchaser, sought to restrain the respondents from drawing upon a bank guarantee issued in lieu of a cash deposit - consideration of the role and legal status of stakeholder - whether Judge erred in finding that conveyancer did not hold deposit as a stakeholder - whether Judge erred in refusing the interlocutory injunction - whether Judge erred in finding damages to be an adequate remedy - whether balance of convenience weighed in favour of the grant of an injunction. 

Held: appeal allowed - factual misapprehension on part of the Judge is such as to give rise to the need for this Court to exercise the discretion afresh - stakeholder holds bank guarantee for both the vendors and purchaser pending the outcome of the event contemplated by the contract - damages not necessarily an adequate remedy in the circumstances of this proceeding - balance of convenience clearly favours injunctive relief.

Tambakis v Ferluga & Ors [2009] SADC 122; Ethnic Earth Pty Ltd v Quoin Technology Pty Ltd (in liq) (2004) 89 SASR 337; Burt v Claude Cousins & Co Ltd [1971] 2 QB 426; Sorrell v Finch [1977] AC 728; Skinner v Trustee of the Property of Reed (a bankrupt) [1967] Ch 1194; Harington v Hoggart (1830) 109 ER 902; Wiggins v Lord (1841) 49 ER 248; Hastingwood Property Ltd v Saunders Bearman Anselm (A Firm) [1991] Ch 114; Potters (A Firm) v Loppert [1973] Ch 399; Romanous v Saleh [2008] NSWSC 656; Hairun Chen v Statewide Developments Pty Ltd [2007] NSWSC 518; Wood v Richardson (1840) 49 ER 305; Ampol Petroleum Ltd v Mutton (1952) 53 SR (NSW) 1; Australian Broadcasting Corporation v O’Neill (2006) 227 CLR 57; Norman v Mitchell (1854) 5 De GM & G 648; Preston v Luck (1884) 27 Ch D 497; Municipal Council of Rockdale v Municipal Council of Kogarah (1926) 26 SR (NSW) 552; Beecham Group Ltd v Bristol Laboratories Pty Ltd (1968) 118 CLR 618; Aboriginal Development Commission v Ralkon Agricultural Co Pty Ltd (1987) 15 FCR 159; Kilpatrick Green Pty Ltd v State Supply Board (1991) 56 SASR 591; Zhang v VP302 SPV Pty Ltd (2009) 223 FLR 213

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AGLC
Tambakis v Ferluga [2010] SASC 122
Case
[2010] SASC 122
Decision Date

CaseChat Overview and Summary

The appeal in the case of Tambakis v Ferluga involves a dispute between James Anthony Tambakis, the appellant, and Moreno Ferluga, Susan Lynette Ferluga, Renato Ferluga, Giancarlo Caon, Miriam Caon, and TLT Constructions Pty Ltd, the respondents, concerning the sale and purchase of a second floor apartment at Semaphore, South Australia. The appellant, as the purchaser, sought to restrain the respondents from drawing upon a bank guarantee issued in lieu of a cash deposit. This appeal arises from the District Court Judge's refusal to grant an interlocutory injunction sought by the appellant. The primary action involves allegations of misleading and deceptive conduct by some of the respondents, entitling the appellant to an order that the contract be set aside or rescinded.

The legal issues before the court were whether the conveyancer held the deposit as a stakeholder, whether the District Court Judge erred in refusing the interlocutory injunction, whether the Judge erred in finding damages to be an adequate remedy, and whether the balance of convenience weighed in favour of the grant of an injunction. The court had to determine the role and legal status of the stakeholder, specifically whether the conveyancer held the bank guarantee as a stakeholder in accordance with the terms of the contract. Furthermore, the court had to assess whether the appellant had a prima facie case with a probability of success and whether the balance of convenience favoured the granting of an injunction.

The court found that the District Court Judge misapprehended the facts concerning the role of the stakeholder and concluded that the conveyancer did indeed hold the bank guarantee as a stakeholder. The court considered that it was not appropriate to reach a final view on the nature of the stakeholder's obligation at the interlocutory stage but emphasised that the duty of the stakeholder was informed by the terms of the contract. The court found that the Judge's error in assessing the role of the stakeholder was material and warranted reconsideration of whether an interlocutory injunction should be granted. In applying the principles for interlocutory injunctions, the court found that the appellant had a serious question to be tried and that the balance of convenience favoured the grant of an injunction. The court also concluded that damages would not be an adequate remedy for the appellant's loss, given the unique nature of the property and the contractual context.

The court allowed the appeal and set aside the decision of the District Court Judge, ordering that an interlocutory injunction be granted to the appellant. The interlocutory injunction restrains the respondents from dealing with the bank guarantee until the final determination of the proceedings.

Orders

Orders of the court

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Background

Background to the litigation

This is an appeal against a decision of a District Court Judge to refuse an application for an interlocutory injunction. Background This appeal arises from a contract for sale and purchase entered into on 5 September 2007 between the purchaser James Anthony Tambakis, the plaintiff and appellant, and the vendors Moreno Ferluga, Susan Lynette Ferluga, Renato Ferluga, Giancarlo Caon, Miriam Caon and TLT Constructions Pty Ltd, defendants and respondents. St George Bank Ltd was also joined as defendant and respondent. The contract related to the sale and purchase of an apartment on the second floor of a complex at Semaphore, South Australia, to be constructed in accordance with plans annexed to the contract. Following the construction of the apartment the purchaser challenged the enforceability of the contract. In the primary action, to be heard in the District Court, the purchaser alleges that a number of the respondents engaged in misleading and deceptive conduct, entitling the purchaser to an order that the contract be set aside or rescinded. The decision of the Judge in the District Court related to an application by the purchaser for an interlocutory injunction restraining the vendors from drawing upon a bank guarantee issued by St George Bank. The schedule to the contract provided for a deposit in the amount of $100,000.00. The purchaser satisfied this obligation by a guarantee provided by St George Bank. Clause three of the contract for the sale and purchase, titled “Deposit”, contained the following provisions:(1)The Purchaser shall pay the deposit to the deposit holder at the time or times specified in schedule one. (2)If it is so specified in schedule one the deposit holder shall hold the deposit as stakeholder. Schedule one relevantly provided: From the above, it is clear that the requirement for a cash deposit was substituted by the provision of bank guarantee. It was agreed by all parties that the terms of the contract allowed for the bank guarantee to stand in lieu of the intended cash deposit. It was accepted that the Court should proceed on the basis that whoever held the bank guarantee – in this case, the conveyancer – held it as a stakeholder in accordance with the terms of the contract and in particular schedule one. On 8 October 2009, the purchaser commenced proceedings in the District Court. The substance of the claim is that an agent for the vendors described the apartment as “huge” and had shown the purchaser plans which indicated a significantly larger useable area than that of the apartment finally constructed. Principally, what was sought was a declaration that the purchaser had lawfully repudiated the contract, a declaration that a number of the defendants had engaged in false and misleading conduct, an order that the contract be set aside, and damages for false and misleading conduct. Finally, a permanent injunction was sought restraining the defendants from negotiating or dealing with the bank guarantee. On 8 October 2009, a Judge of the District Court granted an ex parte interim injunction so restraining the defendants. The terms of the Court’s order include the following: Until 5:00 pm on Wednesday the 14th day of October 2009, the first defendant Moreno Ferluga, the second defendant Susan Lynette Ferluga, the third defendant Renato Ferluga, the fourth defendant Giancarlo Caon, the fifth defendant Miriam Caon, the sixth defendant TLT Constructions Pty Ltd…and the seventh defendant St George Bank Limited…whether by themselves and/or itself (and whether by it or their servants or agents) be restrained and an injunction is hereby granted restraining it and them from negotiation or in any way dealing with a guarantee entitled “Banker’s Guarantee” issued by the seventh defendant to the first to sixth defendants on 19 October 2007 at the request of the plaintiff and Michael Simon Tambakis, as customer, a copy of which is annexed hereto and marked with the letter “A” for identification. …Further consideration is adjourned until 2:00 pm on Wednesday the 14th day of October 2009. On 14 October 2009, at a further hearing before the same Judge, the interim injunction was extended until further order. On that occasion all parties except St George Bank were in attendance. Apparently it was intended that the full hearing in regard to the application for an interlocutory injunction would take place shortly thereafter.

Evidence

Evidence Before The Court

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Decision

Reasons for decision

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Ratio Decidendi

Legal Principle Established

It is my view, having regard to the above authorities, the terms of the contract, and the fact that the Court is dealing with a “contract deposit”, whether the deposit is held on trust or under a contractual or quasi-contractual obligation, it is the duty of the stakeholder to hold it in medio pending the outcome of a future event. In this case, the “event” is that contemplated by the terms of the contract, and as such the duty of the stakeholder is informed by those terms. It is not appropriate on the hearing of an appeal with respect to an interlocutory order to reach any final view as to whether the stakeholder acts as a trustee or in some other capacity. Other relevant circumstances may arise at trial. Reconsideration As discussed above, the District Court Judge’s misapprehension of fact is in my view material and of such a nature that it is appropriate for this Court to consider afresh whether an interlocutory injunction should be granted. Interlocutory Injunctions The principles in relation to an application for injunctive relief are well established. The classic test can be drawn from the decision of the High Court in Australian Broadcasting Corporation v O’Neill.[22] A party seeking an interlocutory injunction must first show that he or she has a prima facie case with a probability of success.[23] Probability of success in this context means a sufficient likelihood of success to justify, in the circumstances, the preservation of the status quo pending the trial, not that it is more probable than not that the plaintiff will succeed.[24] [22] Australian Broadcasting Corporation v O’Neill (2006) 227 CLR 57.[23] Norman v Mitchell (1854) 5 De GM & G 648 at 675 (Turner LJ); Preston v Luck (1884) 27 Ch D 497 at 506 (Cotton LJ); Municipal Council of Rockdale v Municipal Council of Kogarah (1926) 26 SR (NSW) 552.[24] Australian Broadcasting Corporation v O’Neill (2006) 227 CLR 57 at 82 (Gummow and Hayne JJ, with whom Gleeson CJ and Crennan J agreed at 68). A further consideration is whether the balance of convenience favours the granting of an injunction.[25] In determining where the balance lies, the court will contrast the injury an applicant is likely to suffer if the injunction is not granted, with the injury to the other party if it is,[26] in view of all the circumstances of the case.[27] A further issue to be considered is whether the applicant would suffer harm for which damages would not be an adequate remedy in the circumstances, if the injunction were not granted.[28][25] Australian Broadcasting Corporation v O’Neill (2006) 227 CLR 57.[26] Beecham Group Ltd v Bristol Laboratories Pty Ltd (1968) 118 CLR 618.[27] Aboriginal Development Commission v Ralkon Agricultural Co Pty Ltd (1987) 15 FCR 159.[28] Australian Broadcasting Corporation v O’Neill (2006) 227 CLR 57; Kilpatrick Green Pty Ltd v State Supply Board (1991) 56 SASR 591. On the hearing before the District Court Judge and on appeal, it was conceded by the defendants that there was a serious question to be tried. This was an appropriate concessionDamages an Adequate Remedy