Wolstenholme v Bonshaw Act Pty Ltd
[2024] ACTSC 339
•16 September 2024
SUPREME COURT OF THE AUSTRALIAN CAPITAL TERRITORY
Case Title: | Wolstenholme v Bonshaw ACT Pty Ltd |
Citation: | [2024] ACTSC 339 |
Hearing Dates: | 13, 16 September 2024 |
Decision Date: | 16 September 2024 |
Reasons Date: | 31 October 2024 |
Before: | Taylor J |
Decision: | See [66]. |
Catchwords: | CIVIL LAW – JURISDICTION, PRACTICE AND PROCEDURE – Application for vacation of interlocutory injunction previously granted – injunction restraining sale of property – whether serious question to be tried – whether balance of convenience favours injunctive relief – injunction maintained – orders varied |
Legislation Cited: | Court Procedure Rules 2006 (ACT) rr 732, 733, 1613(a)(c) Corporations Act 2001 (Cth) ss 236, 237 |
Cases Cited: | Australian Broadcasting Corporation v O’Neill [2006] HCA 46; 227 CLR 57 Blue Mirror Pty Ltd v Pegasus Australia Developments Pty Ltd [2021] NSWSC 961 Cambridge Credit Corporation Ltd v Surfers’ Paradise Forests Ltd [1977] Qd R 261 Donnelly v Amalgamated Television Services Pty Ltd (1998) 45 NSWLR 570 Newhart Developments Ltd v Co-Operative Commercial Bank Ltd [1978] QB 814 Ninemia Maritime Corporation v Trave Schiffahrtsgesellschaft mbH & Co KG “The Niedersachen” [1983] 1 WLR 1412; [1984] 1 All ER 398 Oswal v Burrup Fertilisers Pty Ltd [2013] FCAFC 9; 295 ALR 708 Richardson v The Forestry Commission [1988] HCA 10; 164 CLR 261 Rolleston Coal Holdings Pty Ltd v ICRA Rolleston Pty Ltd [2020] QSC 331 |
Parties: | Tarah Louise Wolstenholme ( First Applicant) B & T Investment Group (ACT) Pty Ltd ( Second Applicant) Bonshaw ACT Pty Ltd ( First Respondent) Andrew Hewitt as Receiver of B & T Investment Group (ACT) Pty Ltd ( Second Respondent) Matthew Byrnes as Receiver of B & T Investment Group (ACT) Pty Ltd ( Third Respondent) |
Representation: | Counsel P Walker SC (Senior); J Nottle (Junior) ( First and Second Applicants) B Buckland ( First Respondent) L Edwards (Second and Third Respondents) |
| Solicitors Bradley Allen Love Lawyers ( First and Second Applicants) McGilvray Law ( First Respondent) Piper Alderman (Second and Third Respondents) | |
File Number: | SC 294 of 2024 |
TAYLOR J:
Introduction
1․This is an application in proceeding brought by the First Respondent (Bonshaw ACT). Bonshaw ACT seeks orders vacating an injunction restraining it from terminating a contract with the Second Applicant, B & T Investment Group (ACT) Pty Ltd ACN 668 874 422 (B & T Investment).
2․The proceedings commenced by way of Originating Application on 3 September 2024 and centre on a contract for the sale of land (the Land). The First Applicant (Ms Wolstenholme) on behalf of B & T Investment, applied for and was granted an urgent ex parte injunction restraining Bonshaw ACT from terminating a contract for the sale of the Land with B & T Investment.
3․Granting the urgent ex parte injunction, Loukas-Karlsson J made the following orders:
1. An interlocutory injunction restraining the Respondents from taking any steps to terminate a contract between Bonshaw ACT Pty Ltd CAN 619 991 329 and B & T Investment Group (ACT) Pty Ltd CAN 668 874 422 dated 14 June 2024 for the land described as follows:
Block
Section
Division
12
2233
2234
2235
111
Symonston
Jerrabomberra
Jerrabomberra
Jerrabomberra
pursuant to a notice to complete issues on 12 August 2024.
2. The applicant is to undertake to serve the three respondents by close of business tomorrow.
3. The matter be listed in the Civil Applications List on Friday 6 September 2024 at 9:45am.
4․On 3 September 2024, Ms Wolstenholme gave the usual undertaking as to damages.
5․On 16 September 2024 I determined to vary those orders and indicated that my reasons would follow. The proceedings were to return before me for further mention with the potential for the continuation of the injunction to be re-visited. It seems that any future dates have become unnecessary and in those circumstances, I now produce reasons for the orders I made on 16 September 2024.
The application
6․On 11 September 2024, Bonshaw ACT filed an application in proceeding seeking the vacation of the injunction and costs. The application asserted that there is no serious question to be tried and that the balance of convenience favoured the vacation of the injunction.
7․The Second and Third Respondents, Messrs Hewitt and Byrnes (the Receivers) subsequently filed an application seeking a variation of the orders made on 3 September 2024 so that they could “remain entitled to conduct any and all necessary investigations concerning how to deal with the property subject of the injunction and to conduct negotiations as to possible resolution falling short of terminating the contract”.
8․There is some important background to record.
9․On or around 14 June 2024 B & T Investment entered into a loan agreement with Capital Bridging Finance (CBF) for a total of $5,193,250 which provided a $3,575,000 net amount available to borrow.
10․On 14 June 2024 B & T Investment, through Ms Wolstenholme, entered into a contract for the sale of the Land. The sale amount under the contract was $32,500,000. That day a deposit of $3,250,000 was paid as per the contract.
11․On 12 August 2024 B & T Investment received a notice to complete under the contract from Bonshaw ACT, requiring them to comply with the contract by 25 August 2024.
12․An extension of the deadline on the notice to complete was issued on or around 19 August 2024 to expire at 5:00pm on 3 September 2024.
13․On 20 August 2024 a default notice from CBF was received by Ms Wolstenholme.
14․On 1 September 2024 the Receivers were appointed over all of the assets of B & T Investment. Upon appointment, the Receivers were vested with all of the powers, authorities and discretions set out in the loan agreement between CBF and B & T Investment with respect to all the assets and undertakings (no exceptions) of the security provider, and over any “secured property” as the term was defined in the general security agreement.
15․On 1 September 2024 the Receivers sent an email to Ms Wolstenholme, the sole director of B & T Investment, advising her of the appointment of the Receivers over B & T Investment pursuant to the registered charge held by CBF.
16․The email read:
As a consequence of our appointment I advise that we are in control of all the company’s assets and undertaking and that the powers of the Director(s) are suspended during the receivership period.
Accordingly you are not to act on the company’s behalf during the receivership period unless directed by me or Mr Byrnes and you are not to engage with the vendor in relation to the contract of sale in respect of land to which the company is a party.
17․On 1 September 2024 that email was forwarded to Mr Alexander Anderson, a person the Receivers knew to be connected to B & T Investment and involved with the acquisition of the Land and who had arranged an inspection of the Land on 1 September 2024.
18․In addition, Mr Hewitt, one of the Receivers, advised Mr Alexander:
Dear Alex,
Please see below and attached an email sent to the Director of B & T Investment Group (ACT) Pty Ltd a short time ago.
I understand you are a guarantor of the loan facility provided to the company and have represented the company in relation to its dealings in respect of the contract of sale of the land the company has entered into.
I require you to stop representing the company and refrain from any dealings with the vendor of the land the subject of the contract of sale whilst we establish the position and work to protect the monies advanced by CBF for the deposit on the property.
Should you have any queries please contact my office.
19․That email was not copied to Ms Wolstenholme.
20․On 31 August 2024, Mr Anderson sent an email to Mr Hewitt separate from the above correspondence:
Dear Mr Hewitt,
Please see the attached draft letter concerning tomorrow’s scheduled inspection at 10am with the vendor.
It is a Sunday, and the Director will be required to provide instructions and seek advice from her lawyers.
Kind regards,
Alex
21․On 1 September 2024 Mr Hewitt replied to the email from Mr Anderson, copying in Ms Wolstenholme:
As outlined in my email to the Director and copied to you, we do not want you or Tarah acting on behalf of the company now that we have been appointed as Receivers and Managers.
It is our intention to advise the seller of our appointment on Monday and we will be happy to discuss the issues in this correspondence with the company’s lawyers and then form a view about the best way to proceed bearing in mind the issues raised and the ultimate need to raise over $30m to settle the contract.
22․The affidavit of Mr Hewitt affirmed 11 September 2024 further deposes that:
14. Despite Mr Byrnes and I being appointed as receivers and managers of B&T on 1 September 2024, to date we have not been provided with a Report on Company Activities and Property (ROCAP) from Ms Wolstenholme, noting that the obligation to provide a ROCAP is within 14 days of the appointment of the Receivers, which has not yet expired. Furthermore, to date, apart from B&T’s interest in the contract of sale for the Land, the usual searches conducted by the Receivers have not identified any income or other assets owned by the company.
15. With respect to the secured property of B&T, I am cognisant that it is the duty of the Receivers alone to not only take control of the assets charged in favour of Capital and deal with them in a manner which maximises any recovery of the funds advanced by the lender, but to also, where possible, look to maximise the return available to other priority creditors pursuant to statute, as well as other creditors and members.
16. With respect to our appointment as receivers, the powers vested in Mr Byrnes and I pursuant to the GSA and Corporations Act 2001 (Cth) (CA) include, amongst other things the power to:
(a) do everything B&T’s directors could or might lawfully do (17.2(a) of the GSA);
(b) enter into possession and take control of B7T’s property (section 420 of the CA);
(c) dispose of B&T’s property (section 420 of the CA);
(d) convert B&T’s property into money (section 420 of the CA);
(e) carry on B&T’s business (section 420 of the CA); and
(f) execute any document, bring or defend any proceedings or do any other act in the name of or on behalf of B&T.
17. I am aware that as at 20 August 2024 B&T owed Capital $5, 541, 632.02, with interest continuing to accrue each day.
18. Accordingly, it is the Receivers’ duty with respect to B&T’s contract of sale with Bonshaw ACT Pty Ltd to fully investigate the proposed purchase of the Land and undertake appropriate due diligence regarding:
(a) exploring options for the raising of funds from financiers in the sum of about $32,175,000 to settle the contract of sale and complete the purchase the Land; and
(b) if necessary negotiating a termination of the contract of sale on terms favourable for B&T.
19. As a result of the Orders currently in place, I am unable to engage with Bonshaw ACT Pty Ltd about the possibility of terminating the contract of sale and am therefore stymied in performing my principle [sic] duty of recovering the debt owed to Capital by B&T.
Standing
23․Bonshaw ACT submitted that neither Ms Wolstenholme nor B & T Investment have standing to bring the proceedings in light of the appointment of the Receivers and the interference engaged in with the functions of the Receivers. That interference was said to be revealed by the Receiver’s application in proceeding dated 11 September 2024 and described in the affidavit of Mr Hewitt, extracted above at [14]-[18]. Bonshaw ACT cited Oswal v Burrup Fertilisers Pty Ltd [2013] FCAFC 9; 295 ALR 708 (Oswal) citing Newhart Developments Ltd v Co-Operative Commercial Bank Ltd [1978] QB 814 at [65], where the Court observed:
I see no principle of law or expediency which precludes the directors of a company, as a duly constituted board (and it is not suggested here that they were not a duly constituted board when they took the step of instituting this action) from seeking to enforce the claim, however ill-founded it may be, provided only, of course, that nothing in the course of the proceedings which they institute is going in any way to threaten the interests of the debenture holders.
(Emphasis added).
24․Ms Wolstenholme maintained that the appointment of the Receivers has not extinguished the power of company directors to continue to operate the company and act in the company’s best interest, citing Oswal at [64]:
There is in the debenture deed itself a provision to the effect that the receiver may carry on the business of the company or concur in carrying on its business, which itself demonstrates that there is not a total extinction of the function of the directors. It is only within the scope of its assets which are covered by the debenture, and only in so far as it is necessary to apply those assets in the best possible way in the interests of the debenture holders, that the receiver has a real function. If in the exercise of his discretion he chooses to ignore some asset such as a right of action, or decides that it would be unprofitable from the point of view of the debenture holders to pursue it, there is nothing in any authority which has been cited to us which suggests that it is not then open to the directors of the company to pursue that right of action if they think it would be in the interests of the company. Indeed, in my view, it would be incumbent on them to do so, because notwithstanding that the debenture holders have got the right to be satisfied out of the assets subject to the charge, other creditors are entitled to expect that those concerned with the management of the company should exercise their best efforts to ensure that, when the time comes, they too will find themselves in the position that there is a fund available to pay them, if not in full, at least something of what they are owed.
(Emphasis added).
25․Further, Ms Wolstenholme relied on ss 236-237 of the Corporations Act 2001 (Cth) (the Corporations Act), as entitling her, the sole director of B & T Investment, to a grant of leave to bring the proceedings on behalf of B & T Investment.
26․The relevant sections of the Corporations Act provide:
236 Bringing, or intervening in, proceedings on behalf of a company
(1)A person may bring proceedings on behalf of a company, or intervene in any proceedings to which the company is a party for the purpose of taking responsibility on behalf of the company for those proceedings, or for a particular step in those proceedings (for example, compromising or settling them), if:
(a)the person is:
(i) a member, former member, or person entitled to be registered as a member, of the company or of a related body corporate; or
(ii) an officer or former officer of the company; and
(b)the person is acting with leave granted under section 237.
(2)Proceedings brought on behalf of a company must be brought in the company’s name.
(3)The right of a person at general law to bring, or intervene in, proceedings on behalf of a company is abolished.
Note 1: For the right to inspect company books, see subsections 247A(3) to (6).
Note 2: For the requirements to disclose proceedings and leave applications in the annual directors’ report, see subsections 300(14) and (15).
Note 3: This section does not prevent a person bringing, or intervening in, proceedings on their own behalf in respect of a personal right.
237 Applying for and granting leave
(1)A person referred to in paragraph 236(1)(a) may apply to the Court for leave to bring, or to intervene in, proceedings.
(2)The Court must grant the application if it is satisfied that:
(a)it is probable that the company will not itself bring the proceedings, or properly take responsibility for them, or for the steps in them; and
(b)the applicant is acting in good faith; and
(c)it is in the best interests of the company that the applicant be granted leave; and
(d)if the applicant is applying for leave to bring proceedings—there is a serious question to be tried; and
(e)either:
(i) at least 14 days before making the application, the applicant gave written notice to the company of the intention to apply for leave and of the reasons for applying; or
(ii) it is appropriate to grant leave even though subparagraph (i) is not satisfied.
(3)A rebuttable presumption that granting leave is not in the best interests of the company arises if it is established that:
(a)the proceedings are:
(i) by the company against a third party; or
(ii) by a third party against the company; and
(b)the company has decided:
(i) not to bring the proceedings; or
(ii) not to defend the proceedings; or
(iii) to discontinue, settle or compromise the proceedings; and
(c)all of the directors who participated in that decision:
(i) acted in good faith for a proper purpose; and
(ii) did not have a material personal interest in the decision; and
(iii) informed themselves about the subject matter of the decision to the extent they reasonably believed to be appropriate; and
(iv) rationally believed that the decision was in the best interests of the company.
(v) The director’s belief that the decision was in the best interests of the company is a rational one unless the belief is one that no reasonable person in their position would hold.
27․Ms Wolstenholme highlighted the following as relevant to the grant of leave:
(a)The Receivers had not commenced proceedings by 3 September 2024, being the date the contract would have been terminated but for the action she took to seek the injunction.
(b)There is no evidence Ms Wolstenholme is acting in anything other than good faith and the injunction is in service of the preservation of B & T Investment’s rights under the contract for the sale of the Land.
(c)It is in the best interests of B & T Investments to preserve its interest in the land rather than having its interest extinguished.
(d)There is a serious question to be tried.
(e)To the extent that leave is sought, and 14 days’ notice must be given, the earliest the application could have then been dealt with was 17 September 2024. The urgency of the circumstances and the interest involved are such that it is appropriate to grant leave notwithstanding that there has not been strict compliance with 14 days’ notice.
28․The conduct of Ms Wolstenholme said to amount to “interference” with the functions of the Receivers by Bonshaw ACT was not relied upon by the Receivers to undermine Ms Wolstenholme’s standing. The Receivers did not join the submission advanced by Bonshaw ACT asserting that Ms Wolstenholme did not have standing nor did the Receivers seek orders discharging the injunction. Indeed, the Receivers submitted that the injunctive relief should continue. The Receivers had no objection to leave, if required, being granted to Ms Wolstenholme.
29․I am not persuaded that as the sole director of B & T Investment, Ms Wolstenholme does not have standing where the appointment of the Receivers has not had the effect of entirely extinguishing her functions as a director. If I am wrong and leave is necessary, on the basis of the factors I have identified above, I am satisfied it is appropriate to grant leave to Ms Wolstenholme to bring the proceedings on behalf of B & T Investment.
Test for injunctive relief
30․The test for whether injunctive relief ought to be granted was expressed in Australian Broadcasting Corporation v O’Neill [2006] HCA 46; 227 CLR 57 (ABC v O’Neill) at [19]:
19. …[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 organising principles, to be applied having regard to the nature and circumstances of the case, under which issues of justice and convenience are addressed.
Serious question to be tried
31․There must be a prima facie case, or a “serious question to be tried”. Justice Mustill stated, in Blue Mirror Pty Ltd v Pegasus Australia Developments Pty Ltd [2021] NSWSC 961 (Blue Mirror) at [79], citing Ninemia Maritime Corporation v Trave Schiffahrtsgesellschaft mbH & Co KG “The Niedersachen” [1983] 1 WLR 1412; [1984] 1 All ER 398 at 404, that:
[A] “good arguable case” requires proof “of a case which is more than barely capable of serious argument, and yet not necessarily one which the judge believes to have a better than 50% change of success”.
32․The test a “serious question to be tried” articulated in ABC v O’Neill at [70]–[71] is helpful to consider at the outset:
70. When Beecham and American Cyanamid are read with an understanding of the issues for determination and an appreciation of the similarity in outcome, much of the assumed disparity in principle between them loses its force. There is then no objection to the use of the phrase "serious question" if it is understood as conveying the notion that the seriousness of the question, like the strength of the probability referred to in Beecham, depends upon the considerations emphasised in Beecham.
71. However, a difference between this Court in Beecham and the House of Lords in American Cyanamid lies in the apparent statement by Lord Diplock that, provided the court is satisfied that the plaintiff's claim is not frivolous or vexatious, then there will be a serious question to be tried and this will be sufficient. The critical statement by his Lordship is "[t]he court no doubt must be satisfied that the claim is not frivolous or vexatious; in other words, that there is a serious question to be tried". That was followed by a proposition which appears to reverse matters of onus:
"So unless the material available to the court at the hearing of the application for an interlocutory injunction fails to disclose that the plaintiff has any real prospect of succeeding in his claim for a permanent injunction at the trial, the court should go on to consider whether the balance of convenience lies in favour of granting or refusing the interlocutory relief that is sought." (emphasis added)
Those statements do not accord with the doctrine in this Court as established by Beecham and should not be followed. They obscure the governing consideration that the requisite strength of the probability of ultimate success depends upon the nature of the rights asserted and the practical consequences likely to flow from the interlocutory order sought.
(Footnotes omitted).
33․Ms Wolstenholme asserted various breaches by Bonshaw ACT of the contract of sale for the land, said to render the notice to complete invalid. The injunction prohibiting the termination of the contract of sale was said to be necessary to restrain Bonshaw ACT from terminating the contract for sale, in order to preserve B & T Investment’s interest in the contract until the breaches have been resolved.
34․Ms Wolstenholme identified the following clauses in the contract of the sale of the Land as the foundation of the serious question to be tried:
(f)Clause 18.3 of the contract of sale dictates that Bonshaw ACT must not be in default and be ready, willing and able to complete the contract.
(g)Clause 9.1. of the contract of sale requires Bonshaw ACT to give the B & T Investment vacant possession of the Land upon completion unless otherwise marked in the schedule.
(h)Clause 12.1.2 of the contract of sale requires development approval for any development of the land.
35․Ms Wolstenholme alleged Bonshaw ACT is in breach of the abovementioned clauses in the contract of sale by virtue of the following matters:
(a)There is a shed constructed by the neighbour on the boundary of the Land (the Boundary Shed) in approximately 2016. The structure straddles the boundary of the Land with the neighbouring land.
(b)The Boundary Shed is a structure which requires development and building approval (relying on the report of Mr Justin Whytcross dated 9 September 2024).
(c)The Boundary Shed has not been approved (email from Access Canberra dated 30 August 2024).
(d)Ms Wolstenholme has been refused access to the Land in order to inspect it to determine the true nature and extent of the structures that are known to exist upon it.
36․Ms Wolstenholme submitted that the Boundary Shed is an unapproved structure and represents a breach of the contract by Bonshaw ACT such that the notice to complete is invalidly issued as they cannot give effect to vacant possession or compliance with the contact of sale. Further, there is an issue related to the Boundary Shed that remains unclear, and that is if it was constructed with the Crown lessee’s knowledge it may be held on trust.
The unapproved structures and vacant possession
37․Bonshaw ACT submitted that any existing structures on the Land, including the Boundary Shed, have been known to B & T Investment since 2022, by virtue of investigations undertaken about the Land (referred to in the affidavit of Mr Anderson) and a development application and valuation report (dated 11 July 2024) commissioned by B & T Investment which listed all existing structures on the Land. Bonshaw ACT identified several pre-existing structures (including the Boundary Shed) that existed on the Land when it was purchased by Bonshaw ACT in 2007.
38․Bonshaw ACT submitted (relying on the affidavit of Mr Divya Mahajan affirmed 9 September 2024) that all tenants had vacated the Land by 10 August 2024 and accordingly, vacant possession to the extent that the contract of sale required could be given effect.
39․Bonshaw ACT has not asserted that the Boundary Shed is an approved structure. The contract of sale requires development approval for any development of the land (Clause 12.1.2). Bonshaw ACT contended that the contract of sale for the Land does not create a positive obligation upon them to obtain development approval for existing structures. Rather it was said that if B & T Investment were concerned about approval of pre-existing structures, it could have invoked Clause 6.1 and issued a notice requiring approval prior to completion. The knowledge B & T Investment had of the pre-existing structures and any concern as to their approval status, provided a foundation for them to act under the terms of the contract of sale to that effect. Having determined not to do so, Bonshaw ACT argued, the B & T Investment claim lacks any substance.
40․Bonshaw ACT conceded that the detail of these claims were ultimately issues to be determined at trial. At this stage though the claim was characterised as “very weak, if not hopeless”, and at best “arguable”. This characterisation was said to weigh against the maintenance of the injunction as the balance of convenience did not favour it in circumstances where the injunction represents a significant interference with Bonshaw ACT’s capacity to deal with the Land. Connected to this was the real value of the undertaking offered by B & T Investment, said to be “worthless”.
Balance of convenience
41․As I have already identified at [30], ABC v O’Neill provides support for the proposition that the balance of convenience must favour the granting of injunctive relief. In my view in this instance, it does.
42․Ms Wolstenholme characterises the loss to B & T Investment if the injunction is not maintained, as the loss of a significant opportunity to develop the Land, the value of which is substantial. The Receivers submitted that the characterisation by Ms Wolstenholme of the damage to B & T Investment as “irreparable” if the injunctive relief is discontinued and the contract of sale is terminated permitting the sale of the Land to a third party, was “uncontroversial”, citing Richardson v The Forestry Commission [1988] HCA 10; 164 CLR 261 per Mason CJ at [274]-[276].
43․Relevant to this question is whether B & T Investment are in a position to press on with the purchase of the Land where the injunction prohibits termination of the contract.
44․Annexed to the affidavit of Ms Wolstenholme, is evidence of an offer of finance for $40 million from ‘Blackbird Capital’ to B & T Investment. The offer expires on 30 September 2024 if not accepted. Ms Wolstenholme submitted that the Land represents a unique opportunity and that in this instance damages would be wholly inadequate, depriving B & T Investment of the substantial opportunities arising from the development of the Land.
45․Bonshaw ACT relied on interest in the purchase of the Land by another party and submitted that the loss of the opportunity to pursue the sale of Land with that party is significant and will leave them unable to recover the value of the lost opportunity.
46․The prospect of the sale of the Land to another interested party was only referred to in the affidavit of Ms Mahajan of 9 September 2024. Rightly so, evidence of this potential lost opportunity to sell the Land was described by the Receivers as “thin”.
47․In Ms Mahajan’s affidavit of 16 September 2024, she deposes that the applicants have lost investment opportunities, and that the applicants had planned to invest $20 million from the sale proceeds into other ventures and that their loss is compounded by an ongoing inability to use or sell the Land. Further, Ms Mahajan deposes that due to terminating tenancy agreements on the Land to fulfil vacant possession, the mortgagee has called in the loan and they have been forced to “cash out other investments” to raise the capital to pay the loan.
48․Bonshaw ACT asserted costs already incurred, such as the sale of livestock in anticipation of the sale of the property, and the subsequent re-purchase of equipment and livestock to maintain the land. Additional costs associated with maintaining the Land and fences on the property, including drought and fire risk management and dealing with kangaroos were said by Ms Wolstenholme not to arise from the institution of these proceedings.
49․Likewise, the Receivers submitted that the asserted consequences could not all be said to flow directly from the non-completion of the sale. I agree. Clearly until completion of the contract of sale, Bonshaw ACT would be responsible for the day-to-day costs of maintaining the Land including but not limited to fencing, fire control and animal control.
50․Bonshaw ACT did not disclose the detail of any potential sale of the Land to another interested party on the basis that such detail was commercially sensitive. No attempt was made to put any evidence before the Court outlining the detail of the prospective purchase on a confidential basis. Such a course would operate to respect the sensitivity of any information about the potential sale while providing support for the claim of its existence and the extent of the damage suffered by Bonshaw ACT by the maintenance of the injunctive relief. The prospect of a sale of the Land absent any further detail is not a matter to which I have afforded significant weight.
51․The consequences for B & T Investment if the injunctive relief is not continued and Bonshaw ACT terminate the contract of sale having issued an invalid notice to complete, are such that I am not satisfied damages would be sufficient to mitigate the loss.
52․The inconvenience to date claimed by Bonshaw ACT is to be considered in light of the substantial amount that has already been deposited by B & T Investment in furtherance of the sale of the Land that Bonshaw ACT stand to receive if, ultimately, B & T Investment are unable to finalise the purchase of the Land.
Undertaking as to damages
53․Relevant to the balance of convenience is the value of any undertaking as to damages, per Bowskill J in Rolleston Coal Holdings Pty Ltd v ICRA Rolleston Pty Ltd [2020] QSC 331 (Rolleston) at [56], citing Cambridge Credit Corporation Ltd v Surfers’ Paradise Forests Ltd [1977] Qd R 261 at 264 and Donnelly v Amalgamated Television Services Pty Ltd (1998) 45 NSWLR 570 at 575:
The question is whether the court is satisfied the undertaking offered by the applicant has real value. The lack of worth of an undertaking is a powerful discretionary factor against the grant of an interlocutory injunction.
54․Bonshaw ACT described any undertakings made as to damages as “worthless”, based on the financial position of Ms Wolstenholme and B & T Investment. The material demonstrated Ms Wolstenholme’s limited asset pool from which the undertaking as to damages could be met. The appointment of the Receivers raises the potential for other secured creditors to claim in priority to Bonshaw ACT.
55․Ms Wolstenholme is not the extent of the undertakings offered. In addition to her undertaking, an undertaking for damages was offered by Mr Alexander Anderson in the sum of $350,000 to be paid into Court. A further undertaking was offered by Mr Alexander Reid for the sum of $100,000 to be paid into Court. Mr Reid gave evidence in the proceedings and was subject to cross-examination. He provided evidence of his capacity to pay the nominated amount directly and immediately into Court and indicated an understanding of the consequences of doing so. These combined additional undertakings totalled $450,000 to be paid into Court as security for damages.
56․The possible reasons the Court may order the giving of security for undertakings as to damages were canvassed in Blue Mirror at [86]:
86. The Court will also take into account, in the exercise of its discretion, the adequacy of that undertaking. Akin to the absence of an undertaking, the Court will be less inclined, in the exercise of its discretion, to grant an asset preservation order in circumstances where it is satisfied that a plaintiff does not have the wherewithal to honour its undertaking, either because of practical difficulties the defendant is likely to encounter in enforcing the undertaking or on account of the plaintiff's want of sufficient funds: Carlton and United Breweries (NSW) Pty Ltd v Bond Brewing (NSW) Ltd (1987) 76 ALR 633 at 640; Southern Tableland at 342–3. If the Court is not satisfied that the undertaking proffered by the plaintiff would be sufficient to satisfy losses caused by the Court's order preserving the defendant's assets, then the Court may require security to support that undertaking: Southern Tableland at 343; Re DPR Futures Ltd [1989] 1 WLR 778 at 786.
57․The giving of undertakings is governed by div 2.9.4 of the Court Procedure Rules 2006 (ACT) (the Rules), with rr 732-733 providing:
732 Division 2.9.4 order—damages and undertaking as to damages
(1)Unless there is a good reason, a division 2.9.4 order or ancillary order made until the trial or hearing or until a stated day must not be made without the usual undertaking as to damages having been given.
(2)The usual undertaking as to damages for a division 2.9.4 order or ancillary order applies during an extension of the period of the order.
(3)If the usual undertaking as to damages is contravened, the person in whose favour the undertaking is given may apply to the court for an order for assessment of damages.
Note Pt 6.2 (Applications in proceedings) applies to an application for an order or direction under this rule
(4)If the court finds damages are sustained because of a division 2.9.4 order or ancillary order, it may, at trial or on application by a party, assess damages or give the directions it considers necessary for the assessment of damages.
733 Division 2.9.4 order—other undertakings and security to perform undertaking
(1)The court may require an undertaking from a person approved by the court other than the person applying for the division 2.9.4 order or ancillary order.
(2)The court may require a person who gives an undertaking as to damages under rule 732 (Division 2.9.4 order—damages and undertaking as to damages) to make a payment into court or to give other security, including to the registrar’s satisfaction, for the performance of the undertaking.
(3)In deciding whether to make a requirement under this rule, the court may have regard to any of the matters to which it could have regard in deciding whether to make an order for security for costs and whether it is otherwise reasonable in all the circumstances of the matter to impose the requirement.
Note See r 1902 (Security for costs—discretionary factors).
58․I am satisfied that the combined value of the undertakings is sufficient in the circumstances, noting the following considerations:
(a)The offer of finance to B & T Investment from Blackbird Finance is to expire within a short period.
(b)There is no other avenue of finance currently identified as being realistically available to B & T Investment. B & T Investment are presently in default to CBF, hence the appointment of the Receivers.
(c)The maintenance of the injunction will likely come to a head sooner rather than later in circumstances where, if left without finance, B & T Investment will not be in a position to complete the purchase of the Land.
(d)Bonshaw ACT indicated an intention to apply to the Court for the claim to be expedited.
59․I consider it appropriate to direct that the amounts offered as part of the undertakings as to damages by Messrs Anderson and Reid, be paid into Court as performance for the undertakings as to damages, pursuant to r 733 of the Rules.
Conclusion
60․In Rolleston at [29]-[30] Bowskill J (as her Honour then was) observed:
The first inquiry is whether the applicant has shown that it has 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 applicant will be held entitled to the relief it seeks. For this purpose, the applicant does not have to show that it will probably succeed at trial; it is sufficient that the applicant shows a sufficient likelihood of success to justify in the circumstances the preservation of the status quo pending the trial.
The second inquiry is whether the balance of convenience support the relief claimed – that is, whether the inconvenience or injury which the applicant would be likely to suffer if an injunction were refused outweighs, or is outweighed by, the injury which the respondent would suffer if an injunction were granted. The adequacy of an award of damages and the question of the sufficiency of the usual undertaking are to be considered as part of the totality of the balance of convenience question.
61․The notice issued by Bonshaw ACT to B & T Investment made clear their intention: “should you fail to complete the purchase within the period specified in this notice, the Seller shall terminate the contract…”. The contract of sale requires Bonshaw ACT to not be in default and to be ready, willing and able to complete the contract (Clause 18.3).
62․On the face of the material before me, I am satisfied that the claims mounted by B & T Investment are claims with “sufficient likelihood of success”, such that it would “justify in the circumstances the preservation of the status quo pending the trial”: Rolleston at [29]. The evidence in relation to the existence of at least the Boundary Shed, the sizeable nature of it and the positioning of it such that a substantial portion of it straddles the boundary with the neighbouring property, raises a sufficient likelihood that Bonshaw ACT are not able to complete the purchase in accordance with the contract of sale. Relatedly there is a real question with respect to whether the notice to complete has been validly issued. I do not consider that any knowledge B & T Investment had of the existence of the Boundary Shed when entering the contract of sale for the Land necessarily renders the claim now advanced “hopeless” or “very weak”. I am satisfied that there is a serious question to be tried.
63․The balance of convenience favours the continuation of the injunctive relief. The loss suffered without it is incapable of being met by damages. The circumstances of B & T Investment with respect to financing the purchase of the Land are dynamic with an expiration date looming. The inconvenience to Bonshaw ACT is to a degree speculative in circumstances where there is a claim of a potential alternative sale of the land that may be lost in the meantime, unsupported by any real detail. In the background there is also the prospect of Bonshaw ACT benefiting from the substantial deposit that has been paid by B & T Investment, should the sale fall through arising from B & T Investment being unable to finance it.
64․Accordingly, the application by Bonshaw ACT to discharge the injunction is refused.
65․In those circumstances, Bonshaw ACT did not oppose the orders sought by the Receivers. The application seeking amendment to the orders made on 3 September 2024 is granted.
Orders
66․Accordingly, I made the following orders:
(1)Pursuant to rule 1613(a)(c) of the Court Procedure Rules 2006 (ACT), the Orders made by Justice Loukas-Karlsson on 3 September 2024 (Orders) be varied so that paragraph 1 provides:
“An interlocutory injunction restraining the Respondents from taking any steps to terminate a contract between Bonshaw ACT Pty Ltd ACN 619 991 329 and B & T Investment Group (ACT) Pty Ltd ACN 668 874 422 dated 14 June 2024 for the land described as follows
Block
Section
Division
12
2233
2234
2235
111
Symonston
Jerrabomberra
Jerrabomberra
Jerrabomberra
pursuant to a notice to complete issued on 12 August 2024 (except on application to this Honourable Court, such application to be returnable on seven days’ notice), save that the Second and Third Respondents remain entitled to conduct any and all necessary investigations concerning how to deal with the property described above and to conduct negotiations with any or all parties as to possible resolution falling short of terminating the said contract, or taking any formal action to prejudice the Second Applicant’s rights under the said contract without further order of the Court.”
(2)The injunction expressed in Order 1 is to continue until 5pm on 14 October 2024, unless ended earlier by other order of the Court.
(3)Mr Alexander Reid is to pay into Court the sum of $100,000 as security for the undertaking as to damages caused by Order 1 of the orders of Loukas-Karlsson J of 3 September 2024 and the injunction at Order 1 above by 4pm on 17 September 2024.
(4)Mr Alexander Anderson pay into Court the sum of $350,000 as security for the undertaking as to damages caused by Order 1 of the orders of Loukas-Karlsson J of 3 September 2024 and the injunction at Order 1 above by 4pm on 27 September 2024.
(5)If either of the amounts required to be paid by Orders 3 or 4 above are not paid by the time stated in that order, then the injunction at Order 1 is immediately discharged.
(6)Direct the Applicants to put on evidence of the acceptance, non-acceptance or rejection of the Blackbird Commercial Pty Ltd offer of finance expressed in the letter of offer of 9 September 2024 by 5pm on 3 October 2024.
(7)The matter is listed on 14 October 2024 at 9:30am.
(8)Liberty to apply on 48 hours’ notice.
(9)Costs reserved.
| I certify that the preceding sixty-six [66] numbered paragraphs are a true copy of the Reasons for Judgment of her Honour Justice Taylor. Associate: A Turner Date: 31 October 2024 |
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