New South Wales Supreme Court CITATION : Newcastle Bowling Club v Newcastle City Bowling Club [2002] NSWSC 320 CURRENT JURISDICTION: Equity Division FILE NUMBER(S) : SC 3583/01 HEARING DATE(S) : 12/04/02 JUDGMENT DATE : 12 April 2002 Newcastle Bowling Club (In Liquidation) - Plaintiff PARTIES : Newcastle City Bowling Club Ltd - First Defendant Aabadex General Pty Ltd - Second Defendant JUDGMENT OF : Barrett J COUNSEL : Mr D.A. Allen - Plaintiff Mr R.J.A. Sergi - Defendants SOLICITORS : Catalyst Partners - Plaintiff Mason Lawyers - Defendants CATCHWORDS : EQUITY - injunctions - injunction to preserve subject matter of appeal - subject matter in clear jeopardy if injunction continued - balance of convenience favours withholding of further injunction CASES CITED : Archer v Archer [1999] NSWCA 286 Jesasu Pty Ltd v Minister for Mineral Resources (1987) 11 NSWLR 110 DECISION : Application refused - 5 - IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION BARRETT J FRIDAY 12 APRIL 2002 3583/01 - NEWCASTLE BOWLING CLUB v NEWCASTLE CITY BOWLING CLUB JUDGMENT 1 This application follows in the wake of a decision of Brownie AJ on 6 February 2002 concerning entitlement to a perpetual lease of Crown Land at Newcastle, being the site of a bowling club. His Honour made a declaration that the plaintiff is the registered proprietor of the perpetual leasehold and that the first defendant has no entitlement to occupy the buildings erected on the property. 2 The first defendant has taken steps to appeal. To be more precise, it has filed a holding summons but has not yet filed a summons for appeal. No affidavit in support has been filed. 3 There is in place an order made ex parte on 28 February and continued on 2 April restraining the plaintiff from transferring, disposing of, mortgaging (or increasing any mortgage liability), encumbering, entering into contracts in relation to or dealing with, in any manner whatsoever, the perpetual leasehold. The defendants seek to continue those restraints. The plaintiff opposes such continuation. 4 The plaintiff is in liquidation and the liquidator, in the due course of his administration, wishes to proceed to sell the leasehold property. 5 An added dimension comes from the fact that the Department of Land and Water Conservation, being the department responsible for the administration of the lease on behalf of the Crown, has raised with the liquidator of the plaintiff concerns it has about continuing departures from the terms of the lease. It appears that the lease terms restrict the use of the land to that of a bowling club and that, in the view the Department takes, it is now being used instead as a trading club, without bowling as the principal function. 6 In those circumstances the Department notified the liquidator of the plaintiff, by letter dated 25 February 2002, that the liquidator would be given three months to re-establish the correct use of the site as a bowling club. The letter concluded: "If at the end of May you are unsuccessful, the Department will then have to make serious decisions about the future use of the site." 7 There is evidence of a conversation between the liquidator's representative and an officer of the Department subsequently in which the representative enquired what would happen if reestablishment of the correct use could not be achieved by the end of May. The reported response was: "We will probably cancel the lease and no person will be able to trade at the property." 8 The defendants base their claim for continuation of the injunction on the pendency of the appeal. The decision of the Court of Appeal in Jesasu Pty Ltd v Minister for Mineral Resources (1987) 11 NSWLR 110 is referred to as the source of relevant principles, particularly the statement of the then President, Kirby P, at page 117 quoted at paragraph 99 of the decision in Archer v Archer [1999] NSWCA 286. The relevant passage is as follows: "Where, as here, there is an appeal as of right to this Court, which the appellant has exercised, where no more relief is sought than to preserve the status quo pending the outcome of the appeal, where the appeal appears to raise an arguable point, where no special prejudice is alleged, where the Court could deal with the questions promptly and where the failure to give relief may involve serious (and arguably irreversible) damage to the appellant and loss of valuable rights, the balance of convenience favours the issue of an injunction upon appropriate conditions." 9 I was also referred to the observations of Priestley JA, where the arguable point aspect of the President's passage was described in the words, "at least greater than frivolous or trivial". 10 It is difficult for me to come fully to grips with the prospects on appeal because there is no fully formulated or articulated appeal document. There is, at best, a statement by the applicant's solicitor who says, in his affidavit of 28 March, that he has formed the view that five grounds of appeal may be available. He goes on to describe them briefly. Mr Allen, counsel for the plaintiff, has put it to me that all of those matters are of a uniformly weak kind. I must say that I think there is considerable substance in that view. Added to that, there is the point that Brownie AJ himself said when giving judgment: "It seems to me that the plaintiff has made out its case and has indeed done so quite comfortably." Judges are not in the habit of attaching degrees of success such as that to their conclusions, unless they really mean them. 11 I have considerable doubt as to whether the first element referred to in the passage from the judgment of Kirby P in Jesasu is satisfied. 12 Another matter to which Kirby P refers is whether the court could deal with the questions promptly. There is no evidence here that the matter will be dealt with promptly. The Court of Appeal will, of course, so far as its own actions are concerned, deal with the matter as promptly as the list allows and the actions of the parties make possible. It is in this latter connection that some comment needs to be made. The failure to this point, some nine weeks after his Honour gave judgment, to fully articulate the grounds of appeal and the fact that so far there is only holding action in the Court of Appeal suggests that the appellants, that is to say the present applicants for injunctive relief, are not proceeding with as much despatch as one might have expected or as would be envisaged by the passage of Kirby P's judgment. 13 I then come to what I think is the most compelling point in many ways, which is the question of prejudice and likely damage which goes to the balance of convenience. 14 Given the attitude of the Department and the position - which I do not understand to be contested - that there is failure to comply with the terms of the perpetual lease, the situation is one where it is quite likely that there will be nothing left to fight over if, as has been foreshadowed, the Department, after the end of May, reviews the matter and concludes that the breach of the lease conditions warrants forfeiture of the lease. The plaintiff will then be in a position where it has lost its asset and, if an injunction is in place, has also lost the opportunity to realise that asset in the meantime by sale to someone who can bring the use back into line with the lease terms. 15 In all of circumstances of this case, it seems to me that the balance of convenience favours the plaintiff and that its liquidator should not be constrained from selling the lease if he can find a buyer, particularly since, if something concrete has not been achieved by the end of May, there may well be no lease left, as I have said. 16 The defendants say that they are willing to accommodate this to the extent of an exception to the injunction, allowing the property to be marketed; in other words, that the injunction would not prevent the seeking of buyers and negotiations with buyers or potential buyers. That, to my mind, is scarcely satisfactory in that many people would not bother to become potential buyers if they saw themselves getting into a situation where they might not be able to bring a purchase to fruition because of the existence of a court order. The exception of an ability to treat with potential buyers has a distinctly illusory aspect to it while the ability actually to consummate any sale remains out of reach because of the court order. 17 On the basis, therefore, that it is not at all clear to me that the appeal has the degree of merit which the Jesasu dicta would require, but more particularly because of the factors concerning the balance of convenience that come from the attitude of the department representing the Crown as lessor, I do not consider this case to be an appropriate one for the continuation of injunctive relief sought, even with an exception allowing negotiation with potential buyers. 18 The decision therefore is that the existing orders which are in force until 5 o'clock today should be left to expire and no further injunction will be granted. 19 I direct that the matter be remitted to the Master for the assessment of any damages relevant to the undertaking as to damages. I do not consider this an appropriate case for indemnity costs (as sought by the plaintiff), but the plaintiff is entitled to costs on the ordinary party and party basis and I so order. ********** Last Modified: 04/19/2002 DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.