Wright v Christ College Trust
[2006] TASSC 107
•15 December 2006
[2006] TASSC 107
CITATION: Wright v Christ College Trust [2006] TASSC 107
PARTIES: WRIGHT, David
WRIGHT, Susan
v
CHRIST COLLEGE TRUST
TITLE OF COURT: SUPREME COURT OF TASMANIA
JURISDICTION: ORIGINAL
FILE NO/S: 508/2006
DELIVERED ON: 15 December 2006
DELIVERED AT: Hobart
HEARING DATE: 11 December 2006
JUDGMENT OF: Tennent J
CATCHWORDS:
Equity – Equitable remedies – Injunction – Interlocutory injunction – Serious question to be tried – Other cases – Contract terminated – Injunction sought to restrain defendant from acting upon termination – Principles to be applied – Prima facie case – Balance of convenience – Damages adequate remedy.
Markham and Henray Pty Ltd v Commonwealth Bank of Australia and Rees A51/1991; Beecham Group Ltd v Bristol Laboratories Pty Ltd (1967-1968) 118 CLR 618, applied.
Mersey Steel and Iron Co, Ltd v Naylor, Benzon & Co [1881 - 1885] All ER 365, referred to.
Aust Dig Equity [336]
REPRESENTATION:
Counsel:
Plaintiffs: A I Gaggin
Defendant: A B Walker
Solicitors:
Plaintiffs: Murdoch Clarke
Defendant: Dobson, Mitchell & Allport
Judgment Number: [2006] TASSC 107
Number of paragraphs: 30
Serial No 107/2006
File No 508/2005
DAVID WRIGHT and SUSAN WRIGHT v CHRIST COLLEGE TRUST
REASONS FOR JUDGMENT TENNENT J
15 December 2006
The plaintiffs have instituted proceedings by which they seek a declaration that a termination of a contract by the defendant was unlawful and specific performance of that contract.
Pending determination of their claim, they seek an injunction preventing the defendant from acting upon the termination.
Early in 2006 the plaintiffs sought to enrol their two sons at the Hutchins School ("the school"). The defendant operates the school. By letter dated 21 April 2006, the school offered places for the plaintiffs' sons. Acceptance of that offer was required to be completed by a certain date. The plaintiffs were asked to sign and return the enrolment forms and pay an enrolment deposit. The letter of offer stated:
"The parent(s)/guardian will complete and sign the enclosed enrolment forms which forms the basis of a contract between the school and the parent(s)/guardian named."
Under the heading "Business arrangements" in the Enrolment Forms there appeared the words:
"By signing this Enrolment Form parents agree:
·To pay all fees rendered and charges levied in accordance with decisions of the Board of Management."
The enrolment of the plaintiffs' sons was initially to commence on Tuesday 25 April 2006. It did not start on that date because the plaintiffs did not pay the enrolment deposit. The school allowed the boys to start at the school on 3 May having received a letter from the male plaintiff's employer to the effect it would pay the enrolment deposit. The deposit remained unpaid and the school suspended the enrolment between 9 and 16 May.
On 26 April 2006 an invoice for first terms fees had been rendered payable immediately. That also was not paid when due.
On 2 May 2006 the plaintiffs purchased school uniforms for their sons from the school uniform shop. The cost was $1,183.05. The cheque tendered in payment was post-dated, the shop agreeing to accept that arrangement because of assurances given by the female plaintiff. However, when the cheque was presented it was dishonoured and the school incurred a dishonour fee.
On 17 May 2006 the school wrote to the male plaintiff confirming receipt of funds to pay for the uniforms, the dishonour fee and the enrolment deposit. It also rendered a further account for first term fees. The account stated the amount was due and payable on or before 23 May. On 18 May an invoice for second term fees was rendered in the amount of $6,458.55, which set out that amount was due and payable by 15 June 2006. On 24 May the school wrote to the plaintiffs about their failure to pay the full amount of the invoice of 17 May, the plaintiffs having paid only $1,192.55.
On 26 May the school wrote again to the male plaintiff about fees. On 14 June the school received a letter from solicitors for the plaintiffs offering to pay fees for the rest of the year by monthly instalments commencing 1 July 2006. The school accepted the proposal subject to the payments being made by way of direct debit. The direct debit form was not returned to the school until 30 June. The school attempted to utilise the form without success. On 6 July the plaintiffs' solicitors advised the school there were difficulties with funds which was why the direct debit would not work.
During July and August the plaintiffs made and then did not adhere to further fee payment proposals. They paid some fees and the enrolment of their sons was suspended for a period.
In September 2006, the defendant rendered an account to the plaintiffs for the third term fees for their sons and those fees were due and payable on or before 2 October 2006. The fees were not paid.
On 9 October the plaintiffs were advised by the defendant that it would enter into a payment arrangement, but that unless fees were paid, they needed to consider alternative schooling arrangements for their children.
Over the next days the parties attempted to negotiate a payment arrangement. At no stage was an agreement reached, nor did the plaintiffs make payments in accordance with proposals they made.
On 19 October the defendant gave notice of its intention to terminate its agreement with the plaintiffs, effective 12 December 2006, the last day of the school year. The plaintiffs made some small payments in reduction of their debt, but no proposal which was acceptable to the defendant.
The plaintiffs' substantive claim and their interlocutory application for an injunction were filed with the court on 6 December. The interlocutory application was supported by three affidavits, one by each of the plaintiffs and one by the male plaintiff's current employer. In the last-mentioned affidavit, the employer undertook to guarantee the payment of school fees for 2006 and 2007. The plaintiffs paid the balance of the 2006 fees on 8 December.
By their affidavits, the plaintiffs gave an undertaking as to damages. There was no material put before the Court as to the plaintiffs' capacity to satisfy such an undertaking were it ever called upon.
Counsel for the plaintiffs conceded that as at 19 October 2006, the plaintiffs were in breach of their contract with the defendant as a consequence of the non-payment of fees. However, he submitted that the breach was not a fundamental breach, such that it entitled the defendant to terminate the contract. He submitted the plaintiffs, at all times, intended to pay the fees. The defendant would only have been entitled to terminate the contract were the plaintiffs to have taken the position they would not pay the fees.
Counsel for the plaintiffs submitted that the evidence before the Court demonstrated a consistent wish on the part of the plaintiffs to maintain their sons' enrolment at the school and repeated statements of their intention to pay the fees. In those circumstances the defendant was not entitled to terminate the agreement with the plaintiffs when it did and the plaintiffs had established a prima facie case that the termination was unlawful. The plaintiffs were therefore entitled to the injunctive relief sought.
In Markham and Henray Pty Ltd v Commonwealth Bank of Australia and Rees A51/1991, Zeeman J said:
"A preliminary question which requires consideration is what it is that the relevant applicant needs to show in order to obtain the relief sought. In Beecham Group Ltd v Bristol Laboratories Pty Ltd (1967-1968) 118 CLR 618, at 622-623, the Full High Court expressed the following statements of principle:
'The Court addresses itself in all cases, patent as well as other, to two main inquiries. 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: ... How strong the probability needs to be depends, no doubt, upon the nature of the rights he asserts and the practical consequences likely to flow from the order he seeks. ... 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.'
The second of those inquiries referred to by the court may be divided into two distinct requirements: (a) that the applicant will suffer irreparable injury for which damages will not provide adequate compensation unless the injunction is granted; and (b) that the balance of convenience favours the granting of an injunction."
The first question therefore to be answered is, have the plaintiffs made out a prima facie case? The plaintiffs' substantive proceedings arise in contract. The terms of the contract are not in dispute. That the plaintiffs were in breach of that contract as at the date the defendant issued a notice of termination is not in dispute. The issue is the nature of the breach and whether it entitled the defendant to terminate the contract. Counsel for the plaintiffs referred to Mersey Steel and Iron Co, Ltd v Naylor, Benzon & Co [1881 - 1885] All ER 365. It was held in that case that:
"… to determine whether one party to a contract was relieved from its future performance by the conduct of the other the circumstances of the case and the conduct of the other party must be examined to see whether that conduct amounted to a renunciation, an absolute refusal, to perform the contract such as would amount to rescission if he had the power to rescind, and in the present case the respondents had not been guilty of such conduct; moreover, the contract was for the sale and purchase of the total quantity of steel mentioned therein and not for a number of individual deliveries, and so, in the absence of express words, the payment by the respondents forthwith for one delivery was not a condition precedent to the delivery of the next instalment; therefore, the appellants were not released from the contract, and were liable to the respondents for its breach."
Counsel submitted that the breach in this case did not amount to a "renunciation, an absolute refusal, to perform the contract such as would amount to rescission if he had the power to rescind …".
What counsel for the plaintiffs submitted was that the defendant had acted too early and that it was reasonable for the plaintiffs to at least have to the end of the year to pay the fees. Had they not paid the fees by then, their conduct might have amounted to a breach entitling the defendant to terminate the contract. With respect, by that argument, counsel is not seeking an examination of the conduct of the parties to determine whether it might fall within the scope of Mersey's case (supra). He is seeking to import into this contract a condition which has never existed, namely that the parents agree to pay all fees, not when they fall due but "by the end of each school year".
The defendant operates a business. It enters into contracts with parents to provide a service and parents agree to pay fees for that service. It is an express term of the contract entered into that such fees are payable as and when they fall due.
The defendant, in forming the decision to terminate as it did, was entitled to consider its past relationship with the plaintiffs to assess the likelihood of its receiving fees due. The plaintiffs' history was of failure to make payments when due, failure to adhere to payment arrangements and a dishonoured cheque. There was a breach of the contract by the plaintiffs and in those circumstances the defendant was entitled to act upon it.
I am of the view no prima facie case has been made out sufficient to warrant the granting of any injunction.
Although it is perhaps unnecessary, I will address the other factors about which submissions were made. This is not a case where damages would be an adequate remedy to the plaintiffs. The outcome they practically seek is to have their sons remain at the school. As to the balance of convenience, if the injunction is granted, the defendant will, in effect, be required to allow the plaintiffs' sons to continue at the school until the substantive proceedings are dealt with. Fees will be incurred which the plaintiffs will have an obligation to pay. The plaintiffs' past history as to payment of fees has been problematic. The defendant's situation as to any contract and recovery of future fees will also be problematic because it now knows that the plaintiffs are both undischarged bankrupts.
That the plaintiffs were undischarged bankrupts was only communicated to the school on 28 October 2006. It was not disclosed by the plaintiffs in their affidavit material and, as became apparent in cross-examination, the male plaintiff appeared to be unaware that his capacity to enter into certain contracts was restricted unless he advised the person with whom he was to enter such contract of his status as a bankrupt.
Much reliance was placed by counsel for the plaintiffs on the "guarantee" offered by Mr Aufder-Heide. However, the offer contained in Mr Aufder-Heide's affidavit does not constitute anything which the defendant can enforce. There is no agreement between he and the defendant and the defendant cannot be obliged to enter into such an agreement. In any event, such offer relates only to 2007 school fees which may not be adequate because this matter may not be resolved in that time frame. It should also be noted that the male plaintiff has already had more than one employer since his arrival in Tasmania this year and promises made by his first employer were not honoured when made.
The situation in which the plaintiffs' children have been placed is extremely unfortunate. However, it is one created wholly by their parents' actions. The plaintiffs had adequate warning that their children might not be allowed to continue at the school such that they could have made alternative arrangements for their sons' schooling. The plaintiffs chose not to make any such arrangements.
The balance of convenience cannot, in those circumstances, favour the granting of the injunction.
In all the circumstances the application for injunctive relief will be dismissed.
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