West Beach Trust v Profile Events Pty Ltd - [2008] SASC 221

SUPREME COURT OF SOUTH AUSTRALIA
(Magistrates Appeals: Civil)
WEST BEACH TRUST v PROFILE EVENTS PTY LTD
[2008] SASC 221
Judgment of The Honourable Justice White
11 August 2008
EQUITY - EQUITABLE REMEDIES - INJUNCTIONS - INTERLOCUTORY INJUNCTIONS
Appeal against refusal by District Court Judge to discharge interlocutory injunction - whether Court had jurisdiction to determine application to discharge injunction on the ground that the original order was wrongly made - whether error affecting original grant of injunction may only ever be corrected on appeal - where applicant relies upon detriment suffered as well as error in granting injunction - where no undertaking as to damages has been given - whether injunction is a mandatory injunction against the Crown.
Held: Appeal allowed. District Court Judge had jurisdiction to determine application on its merits - application remitted to District Court - not necessary to determine other issues.
Magistrates Court Act 1991 (SA) s 19; Crown Proceedings Act 1992 (SA) s 7; District Court Act 1991 (SA) s 43; Supreme Court Civil Rules 2006 (SA) r 292, referred to.
Commissioner of Police v Channel Seven Adelaide Pty Ltd [2008] SASC 164, applied.
BP Chemicals ANZ Pty Ltd v Manildra Starches Pty Ltd [1997] FCA 1189, distinguished.
Profile Events Pty Ltd v West Beach Trust [2008] SADC 30, discussed.
Brimaud v Honeysett Instant Print Pty Ltd (1988) 217 ALR 44; Adam P Brown Male Fashions Pty Ltd v Philip Morris Inc (1981) 148 CLR 170; Metropolitan Petar v Mitreski [2008] NSWSC 243; Butt v Butt [1987] WLR 1351; Woods v Sheriff of Queensland (1895) QLJ 163; Air Express Pty Ltd v Ansett Transport Industries (Operations) Pty Ltd (1981) 146 CLR 249, considered.

WEST BEACH TRUST v PROFILE EVENTS PTY LTD
[2008] SASC 221
Magistrates Appeal

WHITE J. The West Beach Trust (“the Trust”) appeals against the refusal by a District Court judge to discharge an interlocutory injunction.[1]
[1] Profile Events Pty Ltd v West Beach Trust [2008] SADC 30.
Background Circumstances
The Trust is the owner of certain premises at West Beach. Since December 2001 the plaintiff (the respondent to the appeal) has conducted a function centre business on a portion of those premises. The parties have not entered into a formal lease agreement for the plaintiff’s occupation as they have been in dispute about the terms of a proposed lease. The plaintiff asserts, and the Trust accepts, that it is in possession of the premises under an equitable lease.
By notice dated 5 October 2004 the Trust gave some form of notice of termination of lease. The plaintiff disputed the right of the Trust to terminate the lease. In November 2004 it instituted proceedings in the Magistrates Court seeking, amongst other things, declarations as to its interest as lessee of the premises and “an order restraining the defendant from taking possession of the premises until further order”.
The plaintiff’s application for an interlocutory injunction was heard by the former Chief Magistrate on 7 December 2004. The Chief Magistrate concluded:
In my view this is an appropriate case notwithstanding [counsel for the plaintiff’s] submission and noting his inability to actually give an undertaking, to make the following orders.
The Chief Magistrate then ordered:
1.I direct that the plaintiff company within 28 days pay into Court the sum of $10,566.
2.I direct that the plaintiff continue in occupation of that part of the premises, which it currently enjoys.
3.That the defendant Trust take no action without notice and without application to the Court which might interfere with the capacity with the plaintiff company to trade in that part of the premises which it is currently in possession of, until the further hearing of this matter.
4.That the defendant Trust file and serve a defence to the statement of claim within 35 days.
5.That until further order the plaintiff continue to pay to the defendant Trust, a base rental monthly being one twelfth of $65,000 on the 3rd of each month.
It can be seen that, rather unusually, the former Chief Magistrate did not make the giving of an undertaking as to damages a condition of the grant of the injunction.
So far as I can tell, the orders made on 7 December 2004 have never been drawn up and sealed as formal orders of the Magistrates Court.
On 9 September 2005, on the plaintiff’s application, the action in the Magistrates Court was transferred to the District Court.[2] It has continued in that court ever since.
[2] Magistrates Court Act 1991 (SA), s 19.
On 6 March 2007 the Trust applied to the District Court for, amongst other things, an order discharging the injunction made on 7 December 2004 and an order that the plaintiff surrender possession of the premises. The affidavit accompanying the application indicated that the basis of the application was an assertion that the period of the equitable lease had expired.
On 4 June 2007, the Trust filed an amended application. The amended application sought, in the alternative to the orders originally sought, an order varying the orders of the Magistrates Court so as to provide for rental payments (past and future) to be adjusted for movements in the Consumer Price Index, and an order that the plaintiff “provide an undertaking as to damages in the usual form, nunc pro tunc 7 December 2004”. An affidavit of Ms Duncan filed at the same time was directed principally to the application for an increase in the rental payments. In relation to the order concerning an undertaking as to damages which was sought, Ms Duncan deposed simply:
It would appear that the plaintiff has not provided an undertaking as to damages in support of the injunction obtained by it on 7 December 2004. The defendant seeks an order in terms of paragraph 5 of the amended notice that the plaintiff provide an undertaking as to damages, nunc pro tunc to 7 December 2004.
However, in a later affidavit dated 21 September 2007, Ms Duncan deposed to further matters which were directed to the application for the dissolution of the injunction. I will return to this second affidavit later.
Counsel’s Submissions to the District Court Judge
The application for discharge of the injunction focussed on the third order made by the Magistrate on 7 December 2004. The parties’ submissions do not seem to have addressed directly the second and fifth orders. Perhaps it was considered that the fate of those orders depended upon the outcome of the Trust’s application with respect to the third order.
At the hearing of the amended application, the Trust’s then counsel told the Judge that the Trust sought the discharge of the injunction issued by the Magistrates Court on two bases. First, it was said that the Trust was, for the purposes of the Crown Proceedings Act 1992 (SA) (“CPA”), the Crown. This meant that a mandatory injunction could not be granted against it.[3] The Trust submitted that the third order made by the former Chief Magistrate should, in substance, be characterised as a mandatory injunction because, although expressed in negative terms, it required the Trust to take positive action, i.e., to make the premises available to the plaintiff and to maintain them in a condition suitable for the plaintiff’s activities.
[3] Crown Proceedings Act 1992 (SA), s 7(2).
The plaintiff has not contested the Trust’s claim that it is “the Crown” for the purposes of the CPA. That being so, for the purposes of this appeal, I will assume (without deciding) that the Trust’s claim in that respect is correct.
Secondly, the Trust’s then counsel pointed to the absence of an undertaking as to damages. He submitted:
The second basis is simply as a matter of discretion because the practice of this Court, and, indeed, every court in this country, is to require an undertaking as to damages, and, absent the undertaking as to damages, in my submission, your Honour will exercise the Court’s discretion to dissolve this injunction.
Counsel referred to various matters disclosed in the affidavit material before the District Court and submitted:
[Y]our Honour has evidence of a real prejudice to my client, not a simple prejudice or hardship, which is not being protected by any undertaking as to damages whatsoever ….
In his initial answering submissions the plaintiff’s counsel submitted that the Trust was, in effect, submitting that the injunction should be dissolved because it should not, as a matter of law, have been granted originally.
The Judge adjourned the hearing to 11 February 2008. When the matter resumed, Mr Segal, who appeared for the plaintiff in the District Court as well as on appeal, sought clarification of the matters relied upon by the Trust on its application to discharge the injunction, on the one hand, and the matters relied upon by it for its application to vary the terms of the injunction, on the other. Counsel for the Trust then interrupted to say, in effect, that the application to discharge was made only “on the statutory basis”, i.e., invoking s 72 of the CPA. This statement was somewhat surprising given the twofold bases which had been put forward by counsel on the previous occasion. Nevertheless in his reply counsel appeared to confirm the Trust’s position saying:
My learned friend says he doesn’t really understand … which part of the argument is directed to the discharge and which part is directed to the variation and I thought I had tried to make that clear by saying the only part directed to the discharge is the statutory basis, that is under the Crown Proceedings Act, everything else is directed to the variation.
Consequently Mr Segal, relying upon what the Trust’s counsel had said, addressed, in opposition to the application for the discharge of the injunction, only the submission of the Trust with respect to s 72 of the CPA. While he did address some of the issues which the Trust had raised in relation to the absence of an undertaking as to damages, this was in relation to the Trust’s alternative application for variation of the injunction orders.
The Judge’s Decision
The Judge refused to dissolve the injunction but did vary it so as to require the plaintiff to make increased payments of rent. No appeal is brought against the order of variation.
The Judge cannot have understood the Trust to have been modifying the basis upon which it sought the dissolution of the injunction as her Honour dealt with the application as though it had been made on a twofold basis originally outlined by counsel. That is apparent from the Judge’s summary of the Trust’s claim for dissolution:
The defendant argues for the discharge of the injunction on the basis that s7 of the Crown Proceedings Act 1992 provides that a mandatory injunction cannot be granted against the Crown. It is conceded that this matter was not raised before the Magistrate granting the injunction. It is said that the effect of the injunction is twofold. First it is prohibitory and second it is mandatory in that paragraph 2 compels the defendant to accept the plaintiff as a tenant. The second basis of the application is that the plaintiff has not given an undertaking as to damages and accordingly, it is said that I have discretion to dissolve the injunction.[4]
[4] [2008] SADC 30 at [26].
The Judge’s understanding of the matter is also apparent from her reasons for refusing to discharge the injunction.
Discharge of Injunction
I agree with the plaintiff’s contention that the defendant’s argument in respect to the Crown Proceedings Act 1992 is, in essence, an appeal point that I have no jurisdiction to deal with. If the defendant wishes to pursue this issue then it must do so elsewhere.
It is unusual that an undertaking as to damages was not required at the time the injunction was granted. It does appear however that the learned Chief Magistrate considered this issue. He has indicated in his reasons for decision of 7 December 2004 that there was an inability on the part of the plaintiff’s counsel to give an undertaking. Again, this is a matter that would be the subject of an appeal rather than a matter for this Court.
Accordingly, I refuse the defendant’s application to discharge the injunction[5].
[5] Ibid at [35] – [37].
Decision on Appeal
The Trust is exercising the right of appeal bestowed by s 43 of the District Court Act 1991 (SA). The appeal does not require permission and is to be by way of re-hearing.[6] The Court is to determine the appeal as the justice of the case requires.[7] As I indicated in Commissioner of Police v Channel Seven Adelaide Pty Ltd,[8] I consider the appeal to be a re-hearing on the documents considered at first instance but with the Court having a power to receive further evidence. The Court is to consider whether the decision at first instance ought to be affirmed or overturned in the light of the material before the Court at the time it hears the appeal.
[6] Supreme Court Civil Rules 2006, r 292(1).
[7] Rule 292(2), 292(3)(b).
[8] [2008] SASC 164 at [12].
Although the submissions on appeal ranged over a number of matters, my opinion is that it is not necessary to address them all. That is because the Trust’s application has not been considered on its merits. This means that the appeal should be allowed and that the matter should be remitted for hearing before another Judge of the District Court.
The Judge concluded that she did not have jurisdiction to deal with the Trust’s application for dissolution of the injunction. The Judge said this expressly in relation to the Trust’s submission concerning s 7(2) of the CPA and it is implicit in her conclusion on the Trust’s submission concerning the absence of an undertaking as to damages.[9]
[9] Profile Events v West Beach Trust [2008] SADC 30 at [35] – [36].
In coming to this conclusion, the Judge appears to have relied on an authority to which she was referred by the plaintiff, namely, BP Chemicals ANZ Pty Ltd v Manildra Starches Pty Ltd.[10]In that case Finkelstein J reviewed some principles on which courts act in considering an application to discharge an interlocutory injunction.
First I need to determine the circumstances in which it will be proper for a court, other than a court of appeal, to revoke or vary an interlocutory injunction. There is no doubt that a court has power to revoke or vary any interlocutory order that it has made: Adam P Brown Male Fashions Pty Ltd v Philip Morris Inc & Anor [1981] HCA 39; (1981) 148 CLR 170 at 178. In the case of an order for an interlocutory injunction it is usual for the order to be expressed to be "until further order", as in this case, or, if the order is not so qualified, that qualification will be implied: Chanel Ltd v Woolworth & Co Ltd [1981] 1 WLR 485 at 492. So it is that an application to vary or revoke an interlocutory injunction should be regarded as an exercise of the right conferred by the order itself.
Notwithstanding the fact that a court retains the power of revocation or variation, it has often been said that the power should be "exercised only sparingly": Copping v ANZ McCaughan Ltd (1997) 67 SASR 525 at 569. The cases establish that an applicant must show some good reason for the court to intervene. Good reason will be shown where there has been some significant change of circumstances or where a party has become aware of facts which he or she could not reasonably have known at the time of the hearing: Adam P Brown 148 CLR at 178. Another instance is when there has been a change in the applicable law: Regent Oil Co Ltd v J.T. Leavesley (Lichfield) Ltd [1966] 1 WLR 1210. It might also be appropriate for the court to intervene if it appears that an injunction has an effect that is significantly different from that which was perceived to be its effect when the order was made. A court might also intervene when an injunction causes real and unwarranted harm either to a party or to a stranger to the suit: Cretanor Maritime Co Ltd v Irish Marine Management Ltd [1978] 1 WLR 966. No doubt other circumstances will arise when the power should be exercised. But the jurisdiction to revoke or vary an order should not be exercised when the real basis for the application is that the original order was wrongly made. Such an argument should be addressed to a court of appeal. [Emphasis added].
[10] [1997] FCA 1189.
Counsel for the plaintiff relied upon the sentences which I have emphasised.
In addition to the principles concerning the discharge of interlocutory injunctions stated in BP Chemicals, the following may be added. It has been said that while interlocutory orders do not create any res judicata or estoppel, it “would be conducive to great injustice and enormous waste of judicial time and resources if there [was] no limit on the power of a party to have any interlocutory application or order re-litigated at will.”[11] In general, an interlocutory injunction may be varied or discharged if “new facts come into existence or are discovered which render its enforcement unjust”.[12] The “changed circumstances must be established by evidence”.[13] The “ordinary rule of practice” is that there must be “a material change of circumstances since the original application was heard, or the discovery of new material which could not reasonably have been put before the Court on the hearing of the original application.”[14] These statements of general principle do not “limit the discretion of the Court to review its interlocutory orders when it considers there is justice in so doing”.[15] The “over-riding principle” is that the Court “should do whatever the interests of justice require in the particular circumstances of the case”.[16] Furthermore, the court “must remain in control of its interlocutory orders.”[17]
[11] Brimaud v Honeysett Instant Print Pty Ltd (1988) 217 ALR 44 at 46.
[12] Adam P Brown Male Fashions Pty Ltd v Philip Morris Inc (1981) 148 CLR 170 at 178 per Gibbs CJ, Aickin, Wilson and Brennan JJ.
[13] Ibid.
[14] Brimaud v Honeysett Instant Print Pty Ltd (1987) 217 ALR 44 at 46; Metropolitan Petar v Mitreski [2008] NSWSC 243 at [24].
[15] Metropolitan Petar v Mitreski [2008] NSWSC 243 at [27].
[16] Ibid at [24]; Brimaud v Honeysett Instant Print Pty Ltd (1988) 217 ALR 44 at 46.
[17] Adam P Brown Male Fashions Pty Ltd v Philip Morris Inc (1981) 148 CLR 170 at 178 per Gibbs CJ, Aickin, Wilson and Brennan JJ.
The operation of the principles may vary according to the proximity of the fresh application to the original grant of the interlocutory injunction.[18]
[18] Metropolitan Petar v Mitreski [2008] NSWSC 243 at [28].
Regard must also be had to the terms of the original injunction. It may expressly contemplate the making of an application for variation or discharge.[19] Deficiencies in the manner of expression of the original injunction may also constitute a reason for a court later to discharge or vary it.
[19] See in analogous circumstances Butt v Butt [1987] 1 WLR 1351.
In my respectful opinion, the Judge appears to have misconstrued the effect of the principles stated in BP Chemicals. Insofar as the Judge held that she did not have jurisdiction to determine an appeal from the Magistrates Court order, she was of course correct, but that was not the nature of the proceeding before her. There is no doubt that the District Court had both jurisdiction and power to revoke or vary the injunction made in the Magistrates Court. The action having been transferred from the Magistrates Court, it was to be continued and completed in the District Court as if all the steps taken in the proceedings prior to the transfer had been taken in the District Court.[20] This meant that the District Court had the same powers to vary or discharge the interlocutory injunction as it would have had, had the injunction been granted by the District Court itself.
[20] Magistrates Court Act 1991 (SA) s 19(3).

The final sentences in the passage from the judgment of Finkelstein J quoted above, upon which the Judge appears to have acted, were not statements of principle about the existence of jurisdiction but, instead, of a principle upon which courts act when exercising their jurisdiction.
Further, I do not understand Finkelstein J to be holding that an error affecting the original grant of an interlocutory injunction may only ever be corrected on appeal. In this respect, I do not accept, with respect, the plaintiff’s submissions on appeal. As earlier indicated, courts must remain in control of their own interlocutory orders. If a court is satisfied that it has granted an interlocutory injunction in contravention of a statutory prohibition, I see no reason why it may not correct the position, rather than allowing the unlawful restraint to continue until the defendant can have it corrected on appeal. The belated discovery of a statutory prohibition on the grant of an injunction appears to be analogous to a belated discovery of a relevant fact. That is a circumstance in which a court may dissolve or vary an interlocutory injunction.[21] Similarly, I see no reason why account may not be taken of an apparent error in the original grant of an injunction when that is one of several grounds upon which the defendant seeks its discharge. The principle stated by Finkelstein J will have its most obvious application when the error said to have been made at first instance is one of assessment of the factual circumstances relied upon by the plaintiff, ie, when no new fact or legal principle has been ascertained.
[21] Adam P Brown Male Fashions Pty Ltd v Philip Morris Inc (1981) 148 CLR 170 at 178 per Gibbs CJ, Aickin, Wilson and Brennan JJ; Woods v Sheriff of Queensland (1895) QLJ 163 at 165.
The Judge’s conclusion about the District Court’s jurisdiction meant that the Trust’s application for discharge of the injunction was not considered on its merits.
If it could be said now that the application for discharge of the injunction would, in any event, have been refused, the Judge’s erroneous view about the District Court’s jurisdiction would not require that the present appeal be allowed. That may be the case if it could be said, consistently with the principle stated in BP Chemicals, that the “real basis” for the Trust’s application were contentions which had been canvassed before the former Chief Magistrate. However, it is at least reasonably arguable that the “real basis” of the Trust’s application was not confined in this way. My reason for using the expression “at least reasonably arguable” will be given shortly.
I have already referred to the twofold basis upon which counsel for the Trust originally sought to have the injunction dissolved. The Trust’s submissions on appeal indicated that the Trust still wished to rely upon that same twofold basis. The effect of counsel’s later statements at first instance appears to have been to introduce some confusion or uncertainty into the proceedings. Mr Segal (understandably) took one view of the matter, whereas the Judge took the opposite view. It seems unlikely that the Trust was intending to abandon altogether its application based upon the absence of an undertaking.
So far as I am aware, the plaintiff has not contraverted the Trust’s submission that no regard was had to s 7(2) of the CPA when the matter was before the Chief Magistrate. In other words, it appears to be accepted that the potential significance of s 7(2) has been only belatedly realised.
The decision of the former Chief Magistrate to grant the injunction without an undertaking as to damages is striking. Absent special circumstances, an interlocutory injunction ought not be granted in the absence of such an undertaking.[22] It has been said that the “insistence upon the giving of an undertaking is a very important, if not an essential, means of preventing injustice being done by the court when it makes an order at an interlocutory stage, before the rights of the parties have been finally determined.”[23] The inability of an applicant for an injunction to provide such an undertaking is usually a reason to decline the grant of the interlocutory injunction, rather than a reason for the grant of the injunction unaccompanied by such an undertaking.
[22] Air Express Pty Ltd v Ansett Transport Industries (Operations) Pty Ltd (1981) 146 CLR 249 at 260 per Aickin J.
[23] Ibid at 311 per Gibbs J.
Counsel for the Trust at first instance referred expressly to the detriment which the Trust claims to be suffering as a result of the injunction, and emphasised that that detriment is not protected by any undertaking as to damages. Counsel relied upon the second affidavit of Ms Duncan referred to earlier. Ms Duncan deposed to a number of dealings which the Trust is required to have with the plaintiff while it remains in possession, including dealings concerning maintenance and repair of the premises; the inability of the Trust to plan for a redevelopment, and to redevelop, the premises and the land owned by the Trust which is adjacent to it; the plaintiff having fallen into arrears from time to time in the payment of the required rental; the absence of a request by the plaintiff for a renewal of the equitable lease; concerns about the plaintiff’s inability to meet the costs of the litigation (from which it may be inferred that plaintiff may be unable to pay any damages in respect of the detriments alleged by the Trust); and the ongoing delays in the conduct of the litigation. On its face, counsel’s submissions at first instance and Ms Duncan’s affidavit indicated that the Trust was not relying simply upon an alleged error by the Chief Magistrate in failing to require an undertaking but also on the detriment being suffered in the unusually long period which it is taking for the matter to come to trial. They also indicated that the Trust was not relying simply on a contravention at first instance of s 7(2) of the CPA. If this be correct, consideration of the Trust’s application would not appear to involve any infringement of the principle stated in BP Chemicals, as the Trust is not relying only on an assertion that the original order was wrongly made.
However, it is inappropriate to express a concluded view about these matters. It is sufficient to say that the Trust’s position is at least reasonably arguable. As I indicated earlier, at least in part because of the later submissions of the Trust’s then counsel, the plaintiff did not address these issues at first instance. Nor did Mr Segal address all these issues on the appeal. The plaintiff should be given an opportunity to address the whole of the bases upon which the Trust relies before any final conclusion about the bases of the Trust’s application, and their merits, is made. In my opinion, that is best done in the District Court. The matter should be remitted to the District Court for that purpose.
This means that it is unnecessary and inappropriate to address the remaining issues raised on the appeal. The issues about the proper characterisation of the injunction of 7 December 2004 (i.e., whether mandatory or otherwise), the form of the injunction and whether the qualifying words in the order “without notice and without application to the court” contemplated the kind of application which the Trust has made should all be addressed in the District Court.
Conclusions
In summary, my opinion is that the judge took an erroneous view of the jurisdiction of the District Court in relation to the Trust’s application. This meant that the judge did not determine the application on its merits. Submissions made at first instance by the Trust’s then counsel introduced some uncertainty into the proceedings at first instance, with the effect that the plaintiff did not address all issues. The Trust’s application has not been properly determined at first instance.
I allow the appeal. I set aside the refusal of the District Court Judge to hear the Trust’s application for an order discharging the injunction and an order that the plaintiff surrender possession of the premises. I direct that paragraphs two and three of the Trust’s amended application filed on 4 June 2007 be remitted to the District Court for hearing by another judge. It will be for that judge to consider the effect of any undertaking as to damages which may now be proffered by the plaintiff, including any issues concerning its retrospective effect. I will hear from counsel on the remaining orders which are appropriate.