Court of Appeal Supreme Court New South Wales Medium Neutral Citation: Bridge Property Investments Pty Ltd v Garland Lot 3 Pty Ltd [2014] NSWCA 82 Hearing dates: 17 March 2014 Decision date: 17 March 2014 Before: Beazley P at [1]; Macfarlan JA at [3]; Barrett JA at [4] Decision: 1.Grant leave to appeal. 2.Appeal dismissed. 3.Order the appellant to pay the costs of the first, second and third respondents. [Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.] Catchwords: CONTRACTS - construction - deed concerning real estate development project - whether deed prohibits sale of land in absence of financier's consent - whether serious question to be tried as to such construction - EQUITABLE REMEDIES - injunctions - interlocutory injunctions - balance of convenience - relevance of rights and interests of strangers to the contract and the suit - where alleged breach of contract competes with equitable interest in land - where some but not all parties to the contract are parties to the suit - utility of interlocutory restraint - adequacy of damages as a remedy - delay in seeking equitable relief Legislation Cited: Supreme Court Act 1970 (NSW) Cases Cited: Adam P Brown Male Fashions Pty Ltd v Philip Morris Inc [1981] HCA 39; 148 CLR 170 Cayne v Global Natural Resources plc [1984] 1 All ER 225 Miller v Jackson [1977] QB 966 Maythorn v Palmer (1864) 11 LT 261 Patrick Stevedores Operations No 2 Pty Ltd v Maritime Union of Australia (No 3) [1998] HCA 30; 195 CLR 1 Samsung Electronics Co Ltd v Apple Inc [2011] FCAFC 156; 286 ALR 257 Williams v Director General of National Parks and Wildlife Service [2002] NSWCA 176 Zhu v Treasurer of the State of New South Wales [2004] HCA 56; 218 CLR 530 Category: Principal judgment Parties: Bridge Property Investments Pty Ltd (Appellant) Garland Lot 3 Pty Ltd (First Respondent) Garland Lot 4 Pty Ltd (Second Respondent) Ruby Street Project Pty Ltd (Third Respondent) Representation: Counsel: M W Sneddon/K P Tang (Appellant) D R Stack (First and Second Respondents) D D Feller SC (Third Respondent) Solicitors: Atanaskovic Hartnell (Appellant) Kemp Strang (First and Second Respondents) HWL Ebsworth Lawyers (Third Respondent) File Number(s): 2014/62143 Decision under appeal Citation: [2014] NSWSC 253 Date of Decision: 2014-02-26 00:00:00 Before: Robb J File Number(s): 2014/55737 Judgment 1BEAZLEY P: I have had the advantage of reading in draft the reasons of Barrett JA for the Court's orders made on 17 March 2014 granting leave to the applicant to appeal from the judgment and orders of Robb J given on 27 February 2014 but dismissing the appeal. 2As Barrett JA has discussed, a question was raised in this matter as to the proper construction of the contract to which the applicant and the respondents, amongst others, were parties. Whilst the construction favoured by the primary judge is a possible construction of the contract, there is another available construction, as Barrett JA has explained. I agree with his Honour that there was a serious question to be tried as to the proper construction of the contract. However, for the reasons given by Barrett JA, the balance of convenience favoured the dismissal of the application, with the result that the appeal to this Court was dismissed. 3MACFARLAN JA: The reasons given in Barrett JA's judgment reflect my reasons for joining in the making of the orders of 17 March 2014. 4BARRETT JA: On 17 March 2014, the Court heard concurrently and on an expedited basis an application by Bridge Property Investments Pty Ltd ("Bridge") for leave to appeal and, subject to leave being granted, an appeal in respect of an interlocutory judgment of a judge of the Equity Division (Robb J) delivered on 26 February 2014. Also before the Court was a notice of motion by which Ruby Street Project Pty Ltd ("Ruby Street"), a non-party to the Equity Division proceedings, sought to be joined as a party to the appellate proceedings. 5The order for joinder was made at an early stage. Ruby Street then participated in the hearing in this Court. 6At the conclusion of the hearing, the Court ordered that leave to appeal be granted, that the appeal be dismissed and that Bridge pay the costs of all other parties in this Court. The Court's reasons were reserved. My reasons follow. Background 7The application before the primary judge was an application by Bridge (as cross-claimant) for an interlocutory injunction restraining the present first and second respondents (who were the cross-defendants below and are referred to as "the Garland companies") from completing a contract for the sale of land at Zetland (referred to as "Lot 402") to Ruby Street or otherwise selling or disposing of Lot 402. As finally formulated, the claim his Honour dismissed was for an interlocutory restraint of one week's duration only. 8Bridge and the Garland companies were the only parties to the Equity Division proceedings. Bridge had sued the Garland companies on a basis to be mentioned presently. They are among the parties to contractual arrangements under which Bridge provided loan finance to certain companies in relation to a proposed real estate development involving Lot 402 and adjacent land. The relationship between Bridge as lender and other relevant parties, including the Garland companies, is constituted, in part, by a deed made in July 2010. The deed deals, in clause 18.1, with certain matters designated "Lender Consent Matters". Clause 18.1 is as follows: "Subject to clause 4 and the following provisions of this clause 18, each Lender Consent Matter requires the prior written consent of the Lender." 9The "Lender" is Bridge. The expression "Lender Consent Matter" is defined as "each of the matters listed or described in Schedule 4". Among the matters in Schedule 4 are: "(j) (Disposal) approving the Disposal of any Lot other than in the ordinary course of the business of the Project or as contemplated in a Project Document or the Business Plan; (k) (Disposal) sell, transfer, lease license, surrender, forfeit, relinquish or in any other way Dispose of any of any Property other than in the ordinary course of the business of the Project or as contemplated in a Project Document or the Business Plan;" 10Clause 18.2 sets out a procedure to be followed if "a Project Entity or the Development Manager requires the Lender to provide its consent in respect of a Lender Content Matter". 11I shall return to these provisions of the deed. It is sufficient, for the moment, to note that Lot 402 is within both the definition of "Lot" and the definition of "Property" and that the Garland companies are among the parties to the deed designated "Project Entities". 12On 24 December 2013, the Garland companies entered into the contract for the sale of Lot 402 to Ruby Street for a price of $17,415,000 inclusive of GST. The Garland companies informed Bridge of this by letter dated 6 January 2014. They did not proceed under clause 18.2 (or at all) to seek the written consent of Bridge before entering into the contract with Ruby Street. The judge's decision and the challenges to it 13The final relief sought by Bridge in its Equity Division cross-claim is both declaratory and injunctive. The basic contention is that the Garland companies' sale of Lot 402 to Ruby Street without Bridge's consent constitutes a breach of a covenant binding on the Garland companies under the deed and that a permanent injunction restraining completion of the sale should be ordered. 14The primary judge's decision on the application for interlocutory relief was, first, that Bridge had not shown that there was a serious question to be tried on the issue of breach by the Garland companies of provisions of the deed and, second, that, if it had been necessary to consider the balance of convenience, the conclusion would have been that it favoured the Garland companies. 15Bridge contended in this Court that the primary judge erred in concluding that there was no serious question to be tried as to breach of provisions of the deed by the Garland companies. Bridge says that his Honour incorrectly construed the deed. 16Bridge also says that the judge came to a wrong conclusion on the matter of the balance of convenience which, on the view Bridge takes, favoured subjecting the Garland companies to the interim restraint sought. Approach to the claims in this Court 17An appeal against the dismissal of the application for interim restraint requires leave under s 101(2)(e) of the Supreme Court Act 1970 (NSW). In this case, the absence of such restraint means that the Garland companies are free to complete the sale of Lot 402 to Ruby Street. If completion of the sale does, in truth, amount to a breach of the deed, the absence of restraint will have had the effect of removing the subject matter of the substantive Equity Division cross-claim. That of itself was sufficient reason to grant leave to appeal. There are, in this respect, no rigid or exhaustive criteria and the overriding principle remains whether it is in the interests of justice for leave to appeal to be granted: Adam P Brown Male Fashions Pty Ltd v Philip Morris Inc [1981] HCA 39; 148 CLR 170 at 177. 18As to the appeal itself, the guiding principle is supplied by the circumstance that, as was recognised in the same case (also at 177), an interlocutory order for an injunction is a matter of practice and procedure". An appellate court should "exercise particular caution in reviewing" refusal of an interlocutory injunction: Williams v Director General of National Parks and Wildlife Service [2002] NSWCA 176 at [36] per Sheller and Giles JJA. In an appeal against the grant (as distinct from refusal) of such an injunction, the Full Federal Court applied the principle that the decision should be affirmed "unless the appeal court is satisfied that it is clearly wrong": Samsung Electronics Co Ltd v Apple Inc [2011] FCAFC 156; 286 ALR 257 at [39]. 19A particular dimension is, however, added by the fact that the interlocutory order Bridge sought in this Court differed from the order it sought before the primary judge which, as I have said, involved restraint for seven days only. The reason that relatively short restraint was sought came from steps that Bridge had taken to seek from the Garland companies documents it considered material to its assessment of the sale to Ruby Street. Bridge had issued a notice to produce in the Equity Division proceedings requiring the production of documents. When the matter came before the judge, there was no production but early production was foreshadowed. Seven days was seen as a reasonable time to evaluate the documents about to be produced. 20In this Court, however, the interlocutory claim was reformulated as a claim for: "An order that, until 14 April 2014, the first and second respondents by themselves, their employees, servants and agents, be restrained from completing the Proposed Sale [ie, the sale of Lot 402 to Ruby Street under the contract dated 24 December 2013]." 21The date 14 April 2014 was apparently chosen by Bridge because of Bridge's awareness that, under the contract between the Garland Companies and Ruby Street, a right of termination is exercisable if certain things do not happen by that date. The Court has not been favoured with a full copy of the contract. 22The position with respect to production of documents, as outlined to this Court, was obscure. It was said from the bar table that the Garland companies had produced documents informally, that is, not pursuant to the notice to produce. Bridge, for its part, indicated that it was uncertain whether the documents produced were complete and stated that the documents seemed to raise as many questions as they answered. There was no evidence about these matters. 23The judge expressed a concern that the notice to produce might have been used for an impermissible purpose of seeking preliminary discovery with a view to deciding whether a substantive case could be made out. Bridge noted that it had, in any event, rights under clause 18.2 to require documents. The provisions of the deed 24It is necessary to go into the provisions of the deed in some detail. 25There are eleven parties to the deed. The Garland companies are two of three parties designated "Released Guarantors" and two of several designated "Project Entities". Of the other parties, apart from Bridge, two are "New Guarantors", one is "Development Manager", one is "Bartlett", two are "Lot 1 Borrowers" and one is "Lot 2032". 26Before the deed was entered into, several of its parties were already parties to a so-called "Lot 1 - Facility Agreement". Those parties were Bridge, as financier, the Lot 1 Borrowers and the Released Guarantors. By the deed itself, those parties varied the Lot 1 - Facility Agreement in certain ways and other parties consented to the variation. The variation occurred, by force of the deed, on the "Effective Date", being the day on which particular conditions precedent were satisfied. 27Also on the Effective Date, guarantees given in respect of the Lot 1 - Facility Agreement by the Released Guarantors (including the Garland companies) were released by Bridge. Certain charges held by Bridge from parties other than the Garland companies were also released. 28Several ongoing provisions of the deed that became binding on the Garland companies on the Effective Date should be mentioned. 29By clause 8, the Garland companies (and the other Project Entities) promised to ensure that certain moneys generated by the development project were applied in specified ways or, more precisely, were paid to certain other financiers in a specified order of priority in the first instance and then to Bridge and in certain other ways, again according to a scale of priority. In broad terms, claims of secured lenders and certain other third party claims take precedence over the claims of Bridge when it comes to the application of proceeds of the development. 30Clause 9, as it affects the Garland companies as Project Entities, stipulates that, provided they apply relevant proceeds in accordance with clause 8, the Project Entities "do not have any further obligation or Liability to repay or pay the Total Amount Owing" being, in essence, the indebtedness of the parties to whom financial accommodation has been extended by Bridge. 31Clause 17 contains certain undertakings by Project Entities (including the Garland companies), both negative and positive, including covenants not to encumber property, not to incur indebtedness, to maintain insurances and to provide information. 32Then comes clause 18.1 which is set out above. It is followed by clause 18.2, as follows: "(a) If a Project Entity or the Development Manager (in this clause the Project Party) requires the Lender to provide its consent in respect of a Lender Consent Matter, the Project Party must request the Lender's consent in writing (Consent Notice)." (b) The Lender may, within 10 Business Days of receiving a Consent Notice (but not afterwards), request such further or additional explanations, documentation and other information (Additional Information) as the Lender reasonably requires in order to decide whether or not to provide its consent to the relevant Lender Consent Matter, and may within 5 Business Days after receipt of the Additional Information make a further request for Additional Information. (c) The Lender shall communicate its decision on each Lender Consent Matter to the relevant Project Party: (1) subject to 18.2(c)(2), within 11 Business Days after receipt of the relevant Consent Notice; or (2) where it seeks Additional Information in relation to that Consent Notice, within 5 Business Days after receipt of the Additional Information. (d) If the Lender gives notice that it will be withholding its consent to a Lender Consent Matter the subject of a Consent Notice, the parties will act reasonably and try to resolve their differences, failing which either party may refer the matter for resolution in accordance with clause 29. (e) If the Lender does not notify the Project Party in writing whether or not it consents to the relevant lender Consent Matter within the period specified in, and in accordance with, clause 18.2(c), then the Project Party will provide the lender with notification specifying that the Project Party has not been notified of the Lender's determination (Subsequent Consent Notice). If the Lender does not notify the Project Party in writing whether or not it consents to the relevant Lender Consent Matter within 5 Business Days of receiving a Subsequent Consent Notice, then the Lender shall be deemed to have irrevocably consented to the relevant Lender Consent Matter for the purposes of this deed and each other Finance Document." 33An important clause is clause 20.1: "The Lender agrees that each Project Entity (vendor) shall be entitled to enter into a Sale Contract in respect of any Lot, including a strata or community title Lot forming part of the Property, provided that: (a) the sale of the Lot is made on arm's length terms for fair market value; and (b) the whole or any part of the deposit, if any, payable under the Sale Contract and any further instalments of the purchase price payable by the purchaser pursuant to the Sale Contract, is deposited to the relevant Project Account or the vendor's lawyer's trust account or alternatively, such deposit is provided by way of a deposit bond or bank guarantee from a bank or other institution." 34The Garland companies are not borrowers from Bridge. Nor are they any longer guarantors of financial obligations owed by others to Bridge. They have, however, given support to the parties who are borrowers from Bridge, the support being in the form of, first, a promise to Bridge that, if and when they sell property included in the project (which it is accepted includes Lot 402), they will ensure that the net proceeds are applied in accordance with clause 8; and, second, whatever promise is created by clause 18.1 in relation to "Lender Consent Matters". Construction of the deed 35The judge noted that clause 18.1 does not, in terms, forbid the effecting of a "Lender Consent Matter" unless and until Bridge's written consent has been given. Nor does the clause embody any explicit covenant by which any person promises not to effect a Lender Consent Matter unless and until Bridge has given written consent. The judge saw one of the questions of construction before him concerning clause 18.1 as "whether the necessary negative covenant should be implied into the Deed on its proper construction". 36The judge did not answer that question in any explicit way. He did, however, express an opinion that the effecting of a Lender Consent Matter in the absence of Bridge's written consent would be an event of default under clause 21.1; and that upon the happening of such an event, Bridge would be entitled to call up all moneys owing and to enforce its securities. 37An issue of importance considered by the judge is whether the making of the contract for the sale of Lot 402 to Ruby Street was a Lender Consent Matter. It was implicitly accepted that the making of the contract was within the part of either (or both) of items (j) and (k) in Schedule 4 preceding the words "other than". The question was whether the exception or exclusion which, in each case, commences with the words "other than" was attracted. 38The judge held that the "other than" exception or exclusion applied. This was because, on the view his Honour took, the sale was made under authority conferred by clause 20.1 and was therefore "contemplated in" the deed itself, being a "Project Document". 39Bridge says that the judge was wrong to hold that clause 20.1 "trumps" clause 18.1 or, more precisely, to proceed on the basis that the fetter or restriction imposed by clause 18.1, whatever may be its precise nature, did not operate in relation to the sale of Lot 402 to Ruby Street because that sale was authorised by clause 20.1. The interaction of the two provisions must therefore be examined. 40Having regard to the definitions of "Sale Contract" and "Lot" in the deed, clause 20.1 obviously authorises the making of a contract for the sale of the whole or any part of the land involved in the project if the conditions in paragraphs (a) and (b) of the clause are satisfied. Clause 20.1 does not impose any requirement for Bridge's prior consent. Clause 18.1, read with items (j) and (k) of Schedule 4, imposes no consent requirement in relation to a sale that takes place "in the ordinary course of the business of the Project" or "as contemplated in a Project Document or the Business Plan". A harmonious construction of the two provisions not involving the "trumping" of one by the other is therefore available: a contract for sale satisfying the criteria in paragraphs (a) and (b) of clause 20.1 may be entered into without the consent contemplated by clause 18.1, provided that the sale is within the exception to each of paragraphs (j) and (k) of Schedule 4 concerning the ordinary course of business or the contemplation of a Project Document; but otherwise clause 18.1 operates in relation to the sale. In a very broad sense, it might be said that, according to that construction, sales may proceed without Bridge's consent if they are sales in execution of the project in the ordinary course. 41The construction just outlined does not sit entirely happily with one aspect of the deed identified by the judge. The exception or exclusion in each of items (j) and (k) of Schedule 4 puts outside the "Lender Consent Matter" concept an activity otherwise within the relevant description that is "contemplated in a Project Document" - and the deed itself is a "Project Document". This is because the term "Project Document" is defined as meaning each of several documents or classes of documents, including "any Finance Document"; and "Finance Document" is defined as meaning each of several documents one of which is "this deed". 42Returning to the contract for sale of Lot 402 to Ruby Street, there is accordingly a question whether that transaction, being otherwise within item (j) or item (k), is "contemplated in" the deed itself. 43The judge gave this question an unambiguously positive answer by resorting to clause 20.1. I must confess to serious doubts about that conclusion. If correct, it makes clause 18.1 entirely subservient to clause 20.1 even though clause 18.1 is itself expressed to be "subject to" identified provisions which do not include clause 20.1. Inclusion of "this deed" in the defined class "Finance Document" and inclusion of "Finance Document" in the defined class "Project Document" - an expression employed in many ways and for many purposes in the deed - plus references to "Project Document" in the "other than" exceptions in items (j) and (k) of Schedule 4 represents a tenuous and insubstantial foundation for a conclusion that each and every transaction referred to in clause 20.1 is excluded from the operation of clause 18.1. 44The view the judge took about the construction of clause 18.1 and its relationship with clause 20.1 meant that his Honour did not need to decide whether clause 18.1 embodies a promise by each of the Garland companies to Bridge not to do or effect a Lender Consent Matter unless and until Bridge's written consent has been given. Given other provisions, however, it is strongly arguable that that is its meaning. 45This is particularly so having regard to the word "requires" in clauses 18.1 and 18.2(a). As used in both those places, "requires" suggests the existence of a "requirement" for consent the effect of which is that a Lender Consent matter cannot, consistently with the contract terms, be effected in the absence of satisfaction of that "requirement". Consent would not be "required" if the relevant action could be taken without consent. The acknowledgement that consent will be "required" implies prohibition in the absence of consent. There was a serious question to be tried 46In my respectful opinion, there is substantial doubt as to the correctness of the judge's decision on the two central aspects of the construction of the deed, being the interaction of clauses 18.1 and 20.1 and the status of clause 18.1 as a negative covenant. It is strongly arguable that a breach of contract occurred when the Garland companies, not having obtained the prior written consent of Bridge, entered into the contract to sell Lot 402 to Ruby Street. The judge should have found that there was a serious question to be tried on that issue. The balance of convenience 47It is therefore necessary to proceed to the balance of convenience and the question whether the Garland companies will suffer greater hardship through grant of an interlocutory injunction than Bridge will suffer if the injunction is not granted. The court must weigh up the comparative injury that will arise from granting or withholding the temporary injunction, seeking out the major risk of damage and in particular of any irreparable damage. This aspect was referred to in Cayne v Global Natural Resources plc [1984] 1 All ER 225 as "the balance of the risk of doing an injustice". 48In deciding that the balance of convenience favoured refusal of interlocutory relief, the judge took into account a number of factors most of which had regard to the apparent purpose of clause 18.1 which, by necessary implication, is related to Bridge's interest in seeing proceeds of sales of relevant parcels of land not only applied in accordance with clause 8 (and thereby devoted to the reduction of indebtedness according to the order of priority of application there stated) but maintained at commercial levels. The greater the prices achieved for sales of land, the more quickly the indebtedness standing in priority to that of Bridge on the clause 8 scale will be cleared and the more quickly Bridge itself will come into direct enjoyment of sale proceeds by way of reduction of indebtedness owed to it. In addition, of course, there are prospects of loss to Bridge in respect of its indebtedness if sales are made at prices less than those reasonably obtainable. 49The essential purpose of clause 18.1, as it relates to a Lender Consent Matter consisting of a sale, therefore, is a purpose of allowing Bridge to assess the commerciality of the sale and the adequacy of the price at which it is to be made. Provisions within clause 18 as a whole requiring Bridge to act reasonably in relation to requests for consent may well mean that an obligation not to refuse consent unreasonably or capriciously applies and that the central determinant in judging the propriety of any withholding will be whether the price to be obtained meets some general criterion of commercial adequacy. It is not necessary to come to any concluded view on that question and, for reasons to be mentioned presently, I deliberately refrain from doing so. 50The matters to which the primary judge had regard in concluding that the balance of convenience, had it become relevant, would have favoured refusal of interlocutory restraint were as follows: 1. The contract with Ruby Street requires many steps by the Garland companies before completion, including obtaining of novation of existing "off the plan" contracts so that the purchasers thereunder become purchasers from Ruby Street instead of the Garland companies. A prohibition upon the taking of these and other steps towards completion of the sale to Ruby Street might jeopardise that sale and expose the Garland companies to liability for significant damages to Ruby Street. 2. The evidence did not show that, if the sale to Ruby Street were restrained, there was any real prospect that the Garland companies will be able to find an alternative purchaser, let alone a purchaser who would pay more than Ruby Street. 3. While there was evidence that a company called Xsite Solutions Pty Ltd ("Xsite") sent a letter to one of the Garland companies on 8 January 2014 containing what the judge described as a "highly conditional offer" to purchase Lot 204 for $19 million plus GST, that offer was not supported by any evidence as to its genuineness. His Honour also observed that the Xsite offer was "not sufficient to provide any satisfaction that the actual price that was negotiated for the purposes of the contract of sale [to Ruby Street] in an arm's length manner was other than a fair market value". The Xsite letter, although addressed to one of the Garland companies, was put before the court by Bridge. There was no explanation of how Bridge came to have it. The judge expressed a view that the court was "entitled to place some weight on" the fact that Bridge had known about the offer for some unexplained period of time and had not sought to adduce evidence of its seriousness. 4. There was no evidence about the ultimate effect that completion of the Ruby Street contract would have on Bridge's prospects of receiving some or all of the money owed to it. The evidence showed that the borrowers had been in default under their arrangements with Bridge since 31 December 2012. The sequence of applications of proceeds for which the deed provides in clause 8 is referred to at [29] above. The court was not shown that Bridge would receive some partial repayment if a sale of $19 million plus GST was completed - or, for that matter, if the sale to Ruby Street was completed. (The judge could have added that there was no evidence suggesting that Bridge would ever recover anything, even if all the land were sold at its full value). Third party rights 51A matter to which the primary judge made no express reference but which, of its nature, loomed large in any decision on the application for an interlocutory injunction is the interests of Ruby Street, as an obviously affected third party. In Patrick Stevedores Operations No 2 Pty Ltd v Maritime Union of Australia (No 3) [1998] HCA 30; 195 CLR 1, Brennan CJ, McHugh, Gummow, Kirby and Hayne JJ said (at 41): "In applications to grant interlocutory injunctions, the court is concerned to examine and in appropriate cases to protect, pending the trial, the moving party's right to relief against that party's opponent. But the rights of plaintiff and defendant are not the only rights considered in determining where the balance of convenience lies." 52The following statement by Cumming-Bruce LJ in Miller v Jackson [1977] QB 966 at 988 was approved: "Courts of equity will not ordinarily and without special necessity interfere by injunction where the injunction will have the effect of very materially injuring the rights of third persons not before the court." 53In the context of the proceedings before the primary judge, Ruby Street was such a person. There is no suggestion that the contract for the sale of Lot 402 to it is otherwise than a valid and enforceable contract under which Ruby Street has the right to obtain title in due course in return for payment of the balance of the purchase moneys. By virtue of the contract itself, Ruby Street must be regarded as having a presently subsisting equitable interest in Lot 402. Any order restraining the Garland companies from completing the sale would compel them to commit a breach of the contract by refusing to satisfy Ruby Street's right. 54When the matter was before the primary judge, Ruby Street was a stranger to the suit. In deciding whether to grant an injunction, his Honour was bound to consider the injury that the injunction might inflict on such strangers and third parties generally: Maythorn v Palmer (1864) 11 LT 261. His Honour did not do so, as regards Ruby Street. Had he considered the matter, he would have found that Ruby Street, as purchaser under the extant but uncompleted contract for sale, had an equitable interest in the land and that any restraint at all upon the Garland companies in relation to their performance of the contract was, of its very nature, a matter in which Ruby Street had a clear and distinct expectation of being heard. On that basis alone, his Honour should have regarded the balance of convenience as favouring refusal of the interlocutory order. 55Ruby Street became a party to the proceedings at the start of the hearing in this Court. While its non-party status was thereby resolved, it remained a third party as regards Bridge, the Garland companies and their contract; and the competition, if one may call it that, was between Bridge's contractual right against the Garland companies, whatever its precise content may be, and Ruby Street's proprietary right as purchaser under the uncompleted contract with the Garland Companies. Ruby Street's right is "superior" to that of Bridge, in the sense discussed in Zhu v Treasurer of the State of New South Wales [2004] HCA 56; 218 CLR 530 at [133]-[137]. 56Another group of strangers to the suit also deserves consideration. There are, as I have said, eleven parties to the deed. Of these, eight are "Project Entities" recognised by clause 18.2(a) as potential applicants for consent to a Lender Consent Matter. The "Development Manager" is also recognised as such a potential applicant. There are thus seven parties, in addition to Bridge and the Garland Companies, with a clear and direct interest in the question of construction of clause 18.1 and related provisions agitated both before the primary judge and in this Court. The possibility of injury to those parties through denial of an opportunity to make submissions protective of their interests militates clearly against a course that sees any definitive determination of the construction question in proceedings in which they are not parties. Again, the balance of convenience favours refusal of the interlocutory order. Utility of the relief sought 57Of particular importance in assessing the balance of convenience is the utility of the equitable relief Bridge seeks. Let it be assumed that the contract, on its true construction, prohibited the making of the contract for sale to Ruby Street in the absence of Bridge's prior consent and that the Garland companies, not having obtained that consent, breached their contract with Bridge by entering into the contract with Ruby Street. There is no suggestion that Bridge has any right that will be invaded just because Ruby Street in due course becomes the sole owner of the property. Bridge does not have, for example, an option to purchase or a right of pre-emption. Completion of the sale, as such, will not impinge upon the rights of Bridge. The relevant right of Bridge, on the assumption stated, was a right to receive relevant information in advance of the making of the contract so that it might assess the commerciality of the transaction. There is a distinct question as to the positions the parties would occupy if Bridge, having made an unfavourable assessment, refused consent. Would the Garland companies then be precluded forever from proceeding with their proposed sale? 58That question takes us back, I suppose, to matters already canvassed about the true construction of the deed. It will be, in the long run, a question relevant to Bridge's substantive claim for a permanent injunction restraining completion of the sale to Ruby Street. There may well arise, in that connection, questions about the validity of the contractual restraint on alienation effected by clause 18.1, if its correct construction is as I have assumed. 59If there is such a contractual restraint on alienation and it is valid, a question of importance at the interlocutory stage is whether damages would be an adequate remedy for any breach. Since the most that the covenant seems calculated to assure for Bridge is that any sale by the Garland companies should be on commercial terms, the damages flowing from a contravening sale (that is, one made without consent) could not exceed the value of the advantage that Bridge would enjoy in the absence of the contravening sale; that is, the advantage of seeing the property retained by the Garland companies, coupled with the possibility that they might, at some future time, realise it or otherwise turn it to account in some alternative way that either does not attract the requirement for clause 18.1 consent or, if it does, is judged by Bridge to be deserving of that consent. It would, of course, be for Bridge to prove and quantify the damage thus suffered by it. 60There is no reason why Bridge could not prove such damage, assuming that the damage has been suffered through breach of contract consisting of the making of the contract for sale with Ruby Street (or will be suffered through breach consisting of completion of the sale). There is also no reason why damages would not be an adequate remedy for any such breach of contract. Delay 61Finally, there is a question of Bridge's promptness in seeking equitable relief. The Garland companies entered into the contract with Ruby Street on 24 December 2013. They informed Bridge of this on 6 January 2014. Bridge lodged a caveat on the title to Lot 402 more than three weeks later, on 30 January 3014. The Garland companies became aware of the caveat on 3 February 2014 and immediately took action that caused a lapsing notice to issue on 5 February 2014. On 19 February 2014, the Garland companies' solicitors demanded immediate withdrawal of the caveat, failing which an application would be made to the Supreme Court. The Garland companies filed a summons on 21 February 2014 seeking an order that Bridge remove the caveat. The matter came before the primary judge in the Duty List on 25 February 2014. At the start of the hearing, Bridge sought and was granted leave to file the cross-claim seeking final relief by way of declaration and injunction and the interlocutory relief with which these reasons are concerned. Counsel for Bridge accepted at an early stage of the hearing that Bridge had no caveatable interest in Lot 402 and the judge made, by consent and without admissions on the part of Bridge, an order that Bridge withdraw it. The hearing of the application for an interlocutory injunction followed and his Honour reserved judgment and delivered his decision and reasons the next day. 62As this chronology shows, Bridge's response to the notification given to it on 6 January 2014 was to lodge on 30 January 2014 a caveat which, when challenged, it readily acknowledged was unsupportable. Its swift acceptance of that reality suggests that it never expected the caveat to survive challenge. Bridge's application for equitable relief, including urgent interim relief, was not filed until 25 February 2014 when the Garland companies' application in respect of the caveat came before the court. Bridge thus delayed for more than eight weeks in seeking the assistance of equity. So far as the evidence shows, Bridge left the Garland companies in a position where, first, they had no warning for the whole of the period of more than eight weeks that Bridge considered itself to have been a victim of breach of contract and intended to seek injunctive relief and, second, they were led to believe for about the last three weeks of the period that they needed to contend only with a caveat (which, as Bridge itself readily conceded when challenged, was devoid of substance). It may be accepted that, during the period of eight weeks, the Garland companies continued, without intimation from Bridge of its eventually asserted equitable claim, to attend to matters requiring attention for the purpose of bringing the sale to Ruby Street to completion. 63Bridge's unexplained delay could not but work its disadvantage in its claim for interlocutory relief. Other matters 64I have referred at [50] above to other matters that the judge took into account in his assessment of the balance of convenience. Each was, in my opinion, rightly seen as favouring refusal of the interlocutory restraint. Conclusions 65There was a serious question to be tried as to the correct construction of the deed. The construction for which Bridge contended was arguably the correct construction. To that extent, Bridge established a basis for the grant of an interlocutory injunction. 66On the other hand, the balance of convenience strongly favoured dismissal of the interlocutory application. The position of Ruby Street (even after its joinder as a party) and the position of other parties to the deed who were not brought before the Court are sufficient to warrant that conclusion which is, in any event, strengthened by considerations going to the utility of the interlocutory relief sought, the adequacy of damages as a remedy, delay on the part of Bridge and the matters to which the judge gave attention in his consideration of the balance of convenience. 67Bridge failed in this Court to establish a basis for the exercise of discretion in its favour. ********** 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. Decision last updated: 27 March 2014