Turner v Newport Stage 2A Pty Ltd - [2008] SADC 125

DISTRICT COURT OF SOUTH AUSTRALIA
(Civil)
TURNER v NEWPORT STAGE 2A PTY LTD & ORS
[2008] SADC 125
Judgment of His Honour Judge David Smith
1 October 2008
EQUITY - EQUITABLE REMEDIES - INJUNCTIONS
Application for interlocutory injunction – plaintiff entered into contracts with respectively the first and second defendants to purchase a villa and lease a marina berth in Newport Quays Marina Development – plaintiff alleges that agents of the defendants represented that a lift could be provided to service the three-storey villa – plaintiff alleges that he entered contracts on that basis and paid deposits by way of bank guarantees – the defendants notified the plaintiff that a lift could not be installed – plaintiff purported to rescind the contracts – defendant denied the alleged representation about the lift and refused to accept the rescission – on application for interlocutory injunction discussion of whether plaintiff elected to affirm the contract and thereby precluded the right to seek rescission – also discussion of the extent of knowledge required for an election – discussion of principles applicable to the granting of interlocutory injunctions.
Held – application for interlocutory injunction granted.
Australian Broadcasting Commission v O’Neill (2006) 227 CLR 57, applied.
Castlemaine Tooheys Limited v South Australia [1986] 161 CLR 148; Beecham Group Ltd v Bristol Laboratories Pty Ltd (1968) 118 CLR 618; Kilpatrick v State Supply Board (1991) 56 SASR 591; NWL Ltd v Woods [1979] IWLR 1294; Cayne v Global Natural Resources (1984) 1 All ER 225; State Transport Authority v Apex Quarries Ltd [1988] VR 187; Sargent v ASL Developments Ltd & Ors [1974] 131 CLR 634; Tiplady v Gold Coast Carlton Pty Ltd [1984] 3 FCR 426; Coastal Estates Pty Ltd v Melevende [1965] VR 433; ACMNET Pty Ltd v Ai Tel Pty Ltd [2007] SASC 96; Ewing International L.P. v Ausbulk Ltd (2008) 253 LSJS 195, considered.

TURNER v NEWPORT STAGE 2A PTY LTD & ORS
[2008] SADC 125

This is an application for an interlocutory injunction. The plaintiff seeks orders that the first and second defendants be restrained until the final determination of this action from appropriating two deposits given by him by way of bank guarantees.
The plaintiff entered into two contracts, respectively to purchase a three-storey villa and to lease a marina berth in a development in Port Adelaide known as “Marina Cove Newport Quays”. By reason of his medical condition he required a lift, and alleges that prior to entering into the contracts the defendants, by their sales agent, represented that a lift would be provided at an additional cost of about $15,000. The plaintiff says that acting on that assurance he entered into the purchase contract and the lease on 7 September 2006 and as required provided deposits by way of two bank guarantees.
The purchase price for the villa was $1,221,150 and the deposit was $122,115. The purchase price of the lease of the marina berth was $68,750 and the deposit payable for that was $6,875.
After the execution of the contracts the plaintiff was told that a lift would not and could not be provided. After some negotiations the plaintiff eventually purported to rescind the contract. The rescission was not accepted.
The plaintiff then instituted this action seeking, inter alia, a declaration that the contract was lawfully rescinded by him and orders that the defendants deliver up the bank guarantees.
In respect of this application the defendants contend that the plaintiff:
·by his own evidence has elected to treat the contract as subsisting and as a result he was precluded from exercising his right to rescind:
·has not shown that he has a sufficient likelihood of success to justify the grant of an injunction; and
·has not established that damages would not be an adequate remedy.
The Facts
The material evidence in this application is, the affidavit of the plaintiff affirmed on 29 September 2008, which sets out a chronology of events and relevant documents, and the affidavit of the plaintiff’s solicitors sworn on 25 September 2008 which exhibits the “ASIC” searches for the three defendant companies. I now summarise this evidence.
·Some time prior to September 2006 the plaintiff became interested in purchasing one of the three-storey villas proposed in the Newport Quays development at Port Adelaide. He and his wife attended at the sales office at Port Adelaide.
·At the sales office the plaintiff alleges that he and his wife had discussions with a Mr Travis Barber who was a sales agent for the defendants and, inter alia told Mr Barber:
I have had serious surgery on my knee and spine and I am unable to climb three sets of stairs on a daily basis. Therefore, I can only consider buying this villa if a lift is included.
According to the plaintiff Mr Barber’s response was:
That is not a problem. We have already confirmed we can include a lift for one or two other people.
There were then further discussions about the cost of the installation of the lift and its positioning. Mr Barber told him and his wife that the lift would cost about $15,000. The plaintiff says that he then indicated to Mr Barber that on that basis he was prepared to sign a contract.
·On 6 September 2006 the plaintiff signed a contract and also entered into a related agreement to lease a marina berth.
·The plaintiff arranged for his bank to provide the first and second defendants with Bankers Guarantees for the two deposits. The guarantees were produced on 6 October 2006.
·The contract permitted the deposits to be applied to certain specified expenses and then to the purchase price at settlement.
·The contract also contemplated that the plaintiff could assign his interest in the villa and the marina berth to a third party.
·The plaintiff in accordance with the terms of the contract was permitted to select both the colour and the standard of certain internal finishes in the villa. He and his wife chose “Ginger Premium”, and communicated that choice by an e-mail to Ms Jane Looker of the third defendant dated 19 February 2007. In that e-mail he also confirmed his understanding that a lift would be installed at a cost “...in the order of $15,000...”
·In March 2007 Ms Looker informed the plaintiff by telephone that a lift would not be installed. The plaintiff said that his reply was to the following effect:
In that case I am going to dispose of the villa because it does not comply with what I was told. Please cancel our orders for the fit-out and go back to the standard fit-out.
According to the plaintiff Ms Looker encouraged him to keep the villa assuring him that its value would increase and referred him back to Mr Max Barber another sales agent.
·The plaintiff says that thereafter he endeavoured to make arrangements with Mr Max Barber and Bert Theurens, both sales agents of the defendants, to sell the villa and the marina berth on his behalf.
·On 23 May 2008 the plaintiff wrote to Ms Jelana Kuzman, who was the Customer and Property Services Manager of the first defendant, inter alia, in the following terms:
..............................................
Having been excited at the prospect of living at the Port, I was suddenly forced to think about disposing of the Villa because of my physical restrictions. Also some of our friends are elderly and cannot manage flights of stairs and so our reasons for purchase had been negated without anyone having the courtesy to advise me on this matter. Ms Looker informed me in no uncertain terms that Urban Construct was not in the business of re-sales and so referred me to Max Barber whom she said would refer enquiries direct to me.
Accordingly, I endeavoured to contact Mr Barber. On numerous occasions I left messages on his voice-mail and was not even accorded the courtesy of an acknowledgement, certainly not a return call. It was only after a very direct message from me which reflected my anger at his complete lack of response that he called back. My attempts to contact Mr Barber and others in the sales team extended over many months.
Since that time, also many months ago, I have received no contact whatsoever from your sales team, no referrals of interested parties, no offers of assistance in view of the particular circumstances of the commitments of Urban Construct to me.
All of this seems to me to be most un-professional, most inconsiderate, and very poor public relations by your representative. Further, I understand that none of these people on whose advice and integrity I had relied remain in the employ of Urban Construct.
So I have been left in the invidious position of having to find an independent agent to arrange the assignment of my contract prior to the settlement principally because I had relied upon some misrepresentation at the time of signing the contract documents. Misrepresentations like there are not pleasant and have cost me considerable holding charges and inconvenience etc. I had asked Mr Barber what he considered is the current value of my Villa and he suggested $1.5 mill. But he would not undertake to find an alternative purchaser. There has been a complete lack of assistance since it was discovered that our contract was based on some incorrect information.
Suffice to say that my wife and I are very disappointed. What had started out as an exciting concept for us has been spoilt completely by people whose integrity has turned out to be unreliable and unhelpful. We have been extremely patient during these months but we must now resolve the matter as soon as possible.
I enclose copies of some of the correspondence to which I have referred, and if you require further information please call me or I’d be happy to visit your offices to discuss the matter with your personally.
Yours sincerely
Ross Turner
(the italics are mine and highlight those matters said to indicate that the plaintiff elected to confirm the contracts.)
·By letter dated 28 May 2008 the first defendants replied to the above letter from the plaintiff, inter alia rejecting his allegations about the promised lift.
·Then in two letters, one from the first defendant, dated 27 August, and the other from the solicitors acting for the defendants, dated 29 August 2008, the plaintiff was warned that settlement would be in about mid September 2008.
·The plaintiff and his solicitors then met with representatives of the defendants in an unsuccessful attempt to resolve the matter.
·By letter, dated 4 September 2008, to the defendants, the plaintiff’s solicitors Messers Hunt and Hunt inter alia purported to rescind the contract and the lease. That letter was met with a response from the defendant’s solicitors Messers Finlaysons which, inter alia, did not accept the rescission and denied the misrepresentation.
·The “ASIC” searches reveal the Current Issued Capital of the defendants to be:
·Newport Quays Stage 2A Pty Ltd $10.00
·MC Marina South Ltd $49.00
·Urban Construct Project Marketing Pty Ltd $2.00
Such is a summary of the evidence before me. It emerges wholly from the affidavits of the plaintiff and the plaintiff’s solicitors and the documents exhibited thereto.
Legal Principles – Interlocutory Injunctions – Election
It is trite to point out that an applicant for an interlocutory injunction bears the onus of satisfying the Court that it should be granted. The determination of such an application, given the interlocutory setting, is upon affidavit evidence on the basis that the evidence will remain as it is. (Castlemaine Tooheys Limited v South Australia [1986] 161 CLR 148 per Mason ACJ at 153).
Until the case of Australian Broadcasting Commission v O’Neill (2006) 227 CLR 57 the principles governing interlocutory injunctions were considered to be well settled and were those articulated by Mason ACJ in Castlemaine Tooheys (supra) at 153, namely, that the plaintiff must show:
·That there is a serious question to be tried:
·That the plaintiff is likely to suffer irreparable injury for which damages will be an inadequate remedy: and
·That the balance of convenience favours the grant.
Mason ACJ further suggested that the prima facie test formulated by the High Court in Beecham Group Ltd v Bristol Laboratories Pty Ltd (1968) 118 CLR 618 was not of general application. (see Mason ACJ at 153).
The High Court in ABC v O’Neill (supra) has returned to the test articulated in Beecham. In O’Neill (supra) Gummow and Hayne JJ, with whom Gleeson CJ and Crennan J agreed, said at para [65]:
The relevant principles in Australia are those explained in Beecham Group Ltd v Bristol Laboratories Pty Ltd (83). This Court (Kitto, Taylor, Menzies and Owen JJ) said that on such applications the court addresses itself to two main inquiries and continued (84):
“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 that at the trial of the action the plaintiff will be held entitled to relief … The second inquiry 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 an 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 the trial. That this was the sense in which the Court was referring to the notion of a prima facie case is apparent from an observation to that effect made by Kitto J in the course of argument (85). With reference to the first inquiry, the Court continued, in a statement of central importance for this appeal (86):
“How strong the probability needs to be depends, no doubt, upon the nature of the rights [the plaintiff] asserts and the practical consequences likely to flow from the order he seeks.”
At paragraph 19 Gleeson CJ and Crennan J in O’Neill said:
The principles were discussed, for example, in Chappell v TCN Channel Nine Pty Ltd (25) (a decision referred to by Crawford J in a passage quoted above), National Mutual Life Association of Australasia Ltd v GTV Corporation Pty Ltd (26), and Jakudo Pty Ltd v South Australian Telecasters Ltd (27). As Doyle CJ said in the last-mentioned case, 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 will not be an adequate remedy, and has shown that the balance of convenience favours the granting of an injunction. These are the organizing 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 (28), and their reiteration that the doctrine of the Court established in Beecham Group Ltd v Bristol Laboratories Pty Ltd (29) should be followed (30).
So it is clear that this Court should address itself to the following two inquiries articulated in Beecham as highlighted at paragraph 65 in O’Neill namely:
·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 that at the trial of the action the plaintiff will be held entitled to relief: and
·Whether the inconvenience or injuries which the plaintiff would be likely to suffer if an injunction were refused outweighs or is outweighed by the injury which the defendants would suffer if an injunction were granted.
The defendants’ counsel, as previously indicated, contended that the plaintiff has not established that damages would not be an adequate remedy, and because that was a precondition to the grant of an interlocutory injunction, the application must fail. For that submission counsel relied upon Layton J in Acmnet Pty Ltd v Ai Tel Pty Ltd [2007] SASC 96 at 19-22 and Ewing International L.P. v Ausbulk Ltd (2008) 253 LSJS 195 at 47 in which Her Honour characterised that consideration as a separate and third requirement, which an applicant for an injunction must satisfy. The plaintiff’s counsel responded, that the likelihood of irreparable harm, for which damages would not be an adequate remedy, is subsumed under the general banner of the balance of convenience.
It is clear, particularly now that the High Court, in O’Neill, has directed attention back to the two “inquiries” enunciated in Beecham, that the issue of the likelihood of irreparable detriment by reason of damages not being an adequate remedy, does not stand alone as a third consideration but is one of the considerations to which the Court should have regard, under the heading of balance of convenience. This is not a new notion.
In Kilpatrick v State Supply Board (1991) 56 SASR 591 at 594 King CJ said:
In order to obtain an interlocutory injunction the plaintiff must show that there is a serious question to be tried and that on the balance of convenience it is just that the injunction be granted.
In NWL Ltd v Woods [1979] IWLR 1294 Lord Diplock in his speech at 1306 and 1307 makes it clear that considerations, such as the likelihood of irreparable injury, detriment and whether damages are an adequate remedy, are subsumed under the general banner of balance of convenience. His Lordship said about the concept of balance of convenience as follows:
“Cases of this kind are exceptional, but when they do occur they bring into the balance of convenience an important additional element. In assessing whether what is compendiously called the balance of convenience lies in granting or refusing interlocutory injunctions in actions between parties of undoubted solvency the judge is engaged in weighing the respective risks that injustice may result from his deciding one way rather than the other at a stage when the evidence is incomplete. On the one hand there is the risk that if the interlocutory injunction is refused but the plaintiff succeeds in establishing at the trial his legal right for the protection of which the injunction had been sought he may in the meantime have suffered harm and inconvenience for which an award of money can provide no adequate recompense. On the other hand there is the risk that if the interlocutory injunction is granted but the plaintiff fails at the trial, the defendant may in the meantime have suffered harm and inconvenience which is similarly irrecompensable. The nature and degree of harm and inconvenience that are likely to be sustained in these two events by the defendant and the plaintiff respectively in consequence of the grant or the refusal of the injunction are generally sufficiently disproportionate to bring down, by themselves, the balance on one side or the other; and this is what I understand to be the thrust of the decision of this House in American Cyanamid Co. v. Ethicon Ltd. Where, however, the grant or refusal of the interlocutory injunction will have the practical effect of putting an end to the action because the harm that will have been already caused to the losing party by its grant or its refusal is complete and of a kind for which money cannot constitute any worthwhile recompense, the degree of likelihood that the plaintiff would have succeeded in establishing his right to an injunction if the action had gone to trial, is a factor to be brought into the balance by the judge in weighing the risks that injustice may result from his deciding the application one way rather than the other.”

In Cayne v Global Natural Resources (1984) 1 All ER 225 at 237 May LJ said:
“... the balance that one is seeking to make is more fundamental, more weighty, than mere ‘convenience’. I think that it is quite clear from both cases that, although the phrase may well be substantially less elegant, the ‘balance of the risk of doing an injustice’ better describes the process involved.”
In respect of this question, I refer also to that said by Kaye J in State Transport Authority v Apex Quarries Ltd [1988] VR 187 at 193:
“It was contended on behalf of the defendant that the plaintiff could accept its repudiation and sue for damages.
The proper test in these circumstances is not whether damages would provide the plaintiff with an adequate remedy, but rather the test is as was formulated by Sachs L.J. in Evans Marshall & Co. Ltd. v. Bertola S.A. [1973] 1 W.L.R. 349 at p. 379 and approved and adopted in City of Melbourne v. Hamas Pty. Ltd. (unreported, 20 February 1987) by Tadgell J.: “Is it just, in all the circumstances, that a plaintiff should be confined to his remedy in damages?””
The above cases confirm the view that, whether the plaintiff is likely to suffer harm for which damages will not be an adequate remedy, is a matter to be considered under the balance of convenience and is not necessarily of itself decisive.
To the extent that Layton J in the cases of Acmnet and Ewing has added a third requirement to the “two inquiries”, it is at odds with the High Court decision in O’Neill.
I now turn briefly to the question of election.
Counsel Mr Burnett took me to two cases namely Sargent v ASL Developments Ltd & Ors [1974] 131 CLR 634 and Tiplady v Gold Coast Carlton Pty Ltd [1984] 3 FCR 426.
Defendants’ counsel submitted that, even at this preliminary stage, it was clear that the plaintiff had elected to treat the contract as subsisting and so that should spell the end of at least this application, if not, the claim that there was a lawful rescission. In support of this argument he pointed to the plaintiff’s expressed intention to sell or assign, his interest in the villa and the berth, and the plaintiff’s request, in the March 2007 conversation with Ms Looker, to “please cancel our orders for the fit-out and go back to the standard fit-out”.
In Sargent v ASL Developments Ltd & Ors (supra) contracts for the sale of land provided that, if the subject land was subject to planning schemes other than those disclosed, then either party could rescind by notice in writing to the other. (clause 16). The land turned out to be subject to other planning schemes. At the time of signing the contract the vendors and their solicitors knew of these other schemes and yet thereafter accepted from the purchasers payments of interests, instalments of principal and increased rates, and moreover, joined with the purchasers, in taking steps to bring the land under the operation of the Real Property Act, 1900 (NSW). The vendors then attempted to rescind the contracts. On appeal, eventually to the High Court, all three Justices McTiernan ACJ, Stephen and Mason JJ, dismissed the appeal on the basis that the vendors had elected to treat the contracts as subsisting and therefore were precluded from exercising the right to rescind conferred by clause 16. Stephen J explained the doctrine of election at 641 in the following terms:
It is not by mere delay that it is said that the right of rescission was lost but rather by conduct evincing an intention to keep the contracts on foot at a time when the alternative, but inconsistent, right or rescission had become available. The vendors having two inconsistent rights were, it is said, bound to elect as between them and having elected to treat the contracts as subsisting they were thereafter bound by their election and thus forfeited their right of rescission.
The doctrine of election as between two inconsistent legal rights is well established but certain of its features are not without their obscurities. The doctrine only applies if the rights are inconsistent the one with the other and is it this concurrent existence of inconsistent sets of rights which explains the doctrine; because they are inconsistent neither one may be enjoyed without the extinction of the other and that extinction confers upon the elector the benefit of enjoying the other, a benefit denied to him so long as both remained in existence. As Williston points out (Contracts, 3^rd ed., vol. 5 par.683) the doctrine is not out of harmony with the general rule that a binding surrender of a right requires a sealed release or consideration; by surrendering one right the elector thereby gains an advantage not previously enjoyed, the ability to exercise to the full the other inconsistent right.
Mason J at 655 and 666 explained the doctrine in the following terms:
A person is said to have a right of election when events occur which enable him to exercise alternative and inconsistent rights, i.e. when he has the right to determine an estate or terminate a contract for breach of covenant or contract and the alternative right to insist on the continuation of the estate or the performance of the contract. It matters not whether the right to terminate the contract is conferred by the contract or arises at common law for fundamental breach -- in each instance the alternative right to insist on performance creates a right of election.
Essential to the making of an election is communication to the party affected by words or conduct of the choice thereby made and it is accepted that once an election is made it cannot be retracted (R. v. Paulson (91); Tropical Traders Ltd. v. Goonan (92)). No doubt this rule has been adopted in the interests of certainty and because it has been thought to be fair as between the parties that the person affected is entitled to know where he stands and that the person electing should not have the opportunity of changing his election and subjecting his adversary to different obligations.
A person confronted with a choice between the exercise of alternative and inconsistent rights is not bound to elect at once. He may keep the question open, so long as he does not affirm the contract or continuance of the estate and so long as the delay does not cause prejudice to the other side. An election takes place when the conduct of the party is such that it would be justifiable only if an election had been made one way or the other (Tropical Traders Ltd. v. Goonan (94)). So, words or conduct which do not constitute the exercise of a right conferred by or under a contract and merely involve a recognition of the contract may not amount to an election to affirm the contract.
McTiernan ACJ did not deliver a separate judgment but agreed with Stephen J.
Both Justices Stephen and Mason discussed the vexed question of knowledge and in particular the question of whether the knowledge required for an election is not only:
·full knowledge of the material facts giving the right to rescind; but also
·knowledge that those facts gave rise to a legal choice to either affirm or rescind the contract.
(see Stephen J at 642-644 and Mason J at 656-657).
In the end both Justices decided that, because the contracts in the case before them, by clause 16, gave a right to rescind, the vendors who were deemed to know the terms of their own contract, were as a result also deemed to know of their choice of rights. (see Stephen J at 644 & 645 and Mason J at 658). Accordingly the Court decided that the vendors had both full knowledge of the facts giving them the right to rescind and by the terms of their own contract also knew or were deemed to know of the legal choice those facts gave them.
The case of Sargent is distinguishable because in this matter the right to rescind arises, not by reason of the terms of the contract, but at law.
So Sargent does not compel the conclusion urged on me by counsel for the defendants. Rather both Stephen and Mason JJ specifically shrank from deciding that, in a contractual case, where the contract is silent as to the right to rescind, knowledge of the material facts upon which the right to rescind depends, would, alone, be sufficient. (see Stephen J at 645 and Mason J at 658).
Coastal Estates Pty Ltd v Melevende [1965] VR 433 was referred to by Stephen and Mason JJ in Sargent. In that case the Full Court of the Supreme Court of Victoria concluded that, where the right of rescission for misrepresentation was in question, an election to treat the contract as remaining on foot rather than rescind could only arise if there was knowledge both of the relevant facts and of the inconsistent legal rights from which a choice was to be made. (see Herring CJ at 435 and Scholl J at 443 and Adam J at 453). Though a case involving fraudulent misrepresentation Melevende assists the plaintiff rather than the defendant.
The Federal Court decision of Tiplady v Gold Coast Carlton Pty Ltd (supra) involved a contract for the construction of two penthouse units in a multi-storey development on the Gold Coast. It has factual similarity to this matter in the sense that it was alleged that there was a representation that a private lift would operate to the subject units. In the contracts was a specific provision which entitled the purchasers to terminate if the units were not substantially in accordance with the contract. There was no doubt when the arrangements about the lifts changed that the units were not to be regarded as constructed in accordance with the contract. So the decision in Tiplady which was that the applicant purchasers lost their right to rescind because they elected to affirm the contracts, is distinguishable on the same basis as Sargent.
So, what is left unresolved about this contention of election, is the extent of the knowledge necessary and further, for reasons I will elaborate on in a moment, I am doubtful if the plaintiff has elected even if the restricted view of the knowledge necessary is accepted.
So I turn now to my conclusion as to whether the interlocutory injunction should be granted or not.
Prima Facie Case
The first inquiry 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 that the plaintiff will be entitled to the relief sought.
First of all for the reasons I have made clear, the cases of Sargent and Tiplady do not compel the conclusion that the plaintiff elected to treat the contract as subsisting. What the Justices in Sargent have left open, is the extent of the knowledge which the person, said to have elected, is required to have, where no right to rescind is specifically provided for in the contract. The evidence before me does not address the issue of the extent of the plaintiff’s knowledge. The inference which arguably arises is that he did not realise that he had a right to rescind until about the time of his solicitor’s letter before action on 4 September 2008.
The application of the principles espoused in those cases is, in any event, a matter requiring full argument against a background of all the evidence from both sides. In other words these are issues to be resolved at trial.
Secondly, and in any event, on the evidence as it stands, it is arguable that the so called elective behaviour of the plaintiff amounted to no more than the plaintiff exploring his options as opposed to categorically and unequivocally electing to affirm the contract. In particular the crucial comments by the plaintiff to Ms Looker in March 2007, upon her telling him that the lift would not be installed, and what he said in his letter to Ms Kuzman of 23 May 2008, could be characterised, not as an election to affirm the contract, but rather as “...words or conduct which do not constitute the exercise of a right conferred by or under a contract and merely involve a recognition of the contract...” (see Sargent per Mason J at 656). Indeed the plaintiff was referred to the Sales Agents and it appears that nothing much then happened until driven by the imminence of settlement, the plaintiff through his solicitors purported to rescind the contract and the lease. In all I am of the view that the plaintiff was effectively asking the defendants to take some responsibility for what he claimed had happened.
What remains then is the plaintiff’s evidence of the representations about the lift. The evidence against that is second hand denials from an officer of the defendants and the solicitor of the defendants. There is absent from these denials any positive averment of what was, on the defendants’ case said about the topic.
So, given that the evidence remains as it is, there is an almost classical conferral of a right to rescind at law. It follows therefore that there is prima facie case indicating a probability that the plaintiff will be entitled to the relief sought. In the old parlance there is a serious issue to be tried.
Balance of Convenience
I now turn to the balance of convenience and the allied considerations of irreparable harm and whether damages are or are not an adequate remedy. I am here, as Lord Diplock said in NWL Ltd v Woods (supra at 1306): “... weighing the respective risks that injustice may result from deciding one way or the other when the evidence is incomplete ...”.
If I refrain from making the order, and the plaintiff is ultimately vindicated, then he will, in the meantime, have forfeited $128,990 and so will have lost the use of that money for a period of a year or so whilst he prosecutes this action. During this time he must count on the continuing financial well-being of the defendant corporations whose only disclosed assets are their paid up capital.
On the other hand if I make the orders sought, and the defendants are vindicated, then they will be prejudiced in that that they will not have been able, immediately, to appropriate the deposit monies and apply them to their holding costs for the unit and the marina berth, pending recovery of the losses. So too in this period until trial the defendants must count on the continuance of the plaintiff’s apparent solvency, though, they will eventually have access to the guarantees and be able to resell the villa and the marina berth to defray their losses.
The question posed by Kaye J in State Transport Authority v Apex Quarries Ltd (supra) at 193, namely “...is it just in all the circumstance that a plaintiff should be confined to his remedy in damages?” is particularly relevant in a case such as this where the focus of the application is a deposit or a bank guarantee provided in lieu thereof. The question becomes is it just that the plaintiff, who has given guarantees in lieu of the deposits, be precluded from preventing the defendants calling up the guarantees, pending the final determination of this action, and thereby be confined to his remedy in damages?
It is clear that it would not be just to confine the plaintiff to his remedy in damages. The position of the plaintiff, if the application is refused, would be significantly worse than the position of the defendants, if the application is granted.
In the event that the injunction is refused the plaintiff will be immediately out of pocket in the sum of $128,999 and be left to his remedy against the three corporate defendants whose only assets on the evidence before me are capital of less than $100. In this circumstance the defendants will have appropriated the guarantee monies and will have all the other remedies available to them under the contract including reselling the villa and the lease of the marina berth including proceeding against the plaintiff for any residual losses.
However, in the event that the injunction is granted, the defendant corporations will merely be denied speedy access to the guarantee monies but otherwise will have intact all their rights under the contracts including those I have mentioned above.
The balance of convenience favours the making of the orders sought and the preservation of the status quo.
For these reasons I consider it appropriate to grant the application.
I will hear the parties as to the final terms of any orders, undertakings as to damages, and costs.