Supreme Court New South Wales Medium Neutral Citation: AMMG Pty Ltd v Arndell [2016] NSWSC 203 Hearing dates: 5 March 2016 Decision date: 05 March 2016 Jurisdiction: Equity - Duty List Before: Black J Decision: Order that Plaintiff's application for interlocutory injunction be dismissed. Order that Plaintiff pay Defendant's costs of the application. Costs to be paid forthwith. Catchwords: PROCEDURE — Interlocutory injunctions — where Plaintiff sought interlocutory injunction restraining Defendant from selling or dealing with property – where no evidence provided regarding Plaintiff's capacity to satisfy an undertaking as to damages – where Plaintiff delayed seeking injunctive relief – whether there is a serious question to be tried – whether balance of convenience warrants grant of interlocutory relief. Cases Cited: - Australian Broadcasting Corporation v O'Neill [2006] HCA 46; (2006) 227 CLR 57 - Ciavarella v Hargraves Secured Investments Ltd [2015] NSWSC 865 - Hallifax Property Corp Pty Ltd v GIFC Ltd (1987) 4 BPR 9708 Category: Principal judgment Parties: AMMG Pty Ltd (Plaintiff) Athol John Arndell (Defendant) Representation: Counsel: R Killalea (solicitor – Plaintiff) I Duffield (solicitor – Defendant) Solicitors: Kazi & Associates (Plaintiff) I E Duffield (Defendant) File Number(s): 2016/71914 JudgmenT – ex tempore 1. By Summons filed today, Saturday 5 March 2016, by leave, the Plaintiff, AMMG Pty Ltd ("AMMG") seeks certain final relief in respect of two alternative claims as to contracts between it and the vendor, Mr Arndell, in respect of a property at National Street, Leichhardt, NSW, and also seeks interim orders. Those interim orders include an order that Mr Arndell be restrained from selling the property, whether by auction or otherwise, restrained from leasing the property, and restrained from advertising the property. It has been confirmed by Mr Killalea, who appears for AMMG, that AMMG offers an undertaking as to damages. There is, however, no evidence as to AMMG's substance, so the Court is not in a position to assess whether AMMG would have the capacity to meet such an undertaking, if it were called upon. I will return to that question below. 2. I should say something further as to how this matter comes to be determined on Saturday 5 March 2016. This morning, the Court was advised that an urgent duty application would be made, seeking interim interlocutory relief, by reason that the property was listed for auction late today, although there is a degree of uncertainty as to whether that listing is at 4.45 pm or 6 pm. It is not material for present purposes which is the case. The application for injunctive relief has therefore been made at the last possible moment, a matter to which I will also return below. 3. I should say something as to the applicable principles, before turning to the evidence. In determining whether an interlocutory injunction should be granted, I should apply the principles set out by the High Court of Australia in Australian Broadcasting Corporation v O'Neill [2006] HCA 46; (2006) 227 CLR 57 at [65], which require that there be established a prima facie case or serious question to be tried in respect of the application, and that damages would not be an adequate remedy, so as to warrant the grant of injunctive relief, and that the balance of convenience favours the grant of an injunction on an interlocutory basis. The considerations whether the applicant has a seriously arguable case for final relief and of the balance of convenience are interrelated; the greater the extent to which the balance of convenience favours the grant of interlocutory relief, the less strong a case for final relief might be required; conversely, the stronger the case for final relief, the less may be required to establish that the balance of convenience favours interlocutory relief. 4. With that background, AMMG seeks to establish that it has a seriously arguable case that a contract came into existence for the sale of the property to it on one of two dates, namely 24 December 2015 or 1 March 2016. I will refer to the matters which occurred on those dates in setting out the history below. 5. There is a degree of common ground between the parties as to the sequence of events, which were set out in a letter from Mr Arndell's solicitor, Mr Duffield, dated 18 February 2016, to which both parties have referred in submissions. Not all of the relevant documents are in evidence, but I will proceed by reference to those documents which are in evidence, in assessing the strength of AMMG's case. It appears that the parties initially entered into a contract for the sale of the relevant property on 10 October 2015; a notice to complete was subsequently issued on 24 November 2015 and not complied with, and Mr Arndell subsequently terminated the contract, and received the amount of $225,000 pursuant to a deposit bond provided by AMMG as purchaser, on 17 December 2015. 6. Subsequently, a series of events occurred, which Mr Duffield characterises as explorations of the ability to enter a new arrangement, by execution and completion of a contract on a specified date. That contract, it appears, would have substantially the same terms as the earlier contracts other than for the fact that it would have been exchanged and completed on the same date. AMMG in turn, in Mr Killalea's able submissions, characterises the matter as the entry into two new contracts, one on 24 December 2015, by events to which I will refer below, and the other on 1 March 2016. 7. Before turning to the events of 24 December 2015 on which AMMG relies, it should be noted that it appears that it was originally thought that AMMG would be in a position to settle, after being given a further opportunity to do so, on a contract provided by the vendor on 21 December 2015, but that did not occur. 8. In Mr Duffield's letter dated 18 February 2016 (Ex A1, 100) he notes that, on 24 December 2015, in consideration of a further payment of $25,000, the vendor irrevocably offered to exchange contracts and settle on 22 January 2016 on terms set out in Mr Duffield's letter of 24 December 2015. Mr Duffield refers to the final paragraph of that letter in his letter dated 18 February 2016, which expressly stated that: "[Mr Arndell] has made every effort to accommodate [AMMG], but it should be understood that if [AMMG] does not exchange and settle on 22 January, [Mr Arndell] will not deal further with [AMMG]." 1. The evidence as to any contract formed on 24 December 2015, on AMMG's case, is incomplete at best. Mr Arndell's submission, which finds support in his solicitor's letter of 18 February, is that the arrangement went no further than an offer to exchange and simultaneously settle a contract, a matter which is supported by the language of paragraph 4 of the letter dated 18 February 2016. AMMG did not tender, because it apparently does not have access to, the letter dated 24 December 2015 so that, if a contract was entered on 24 December 2015, its terms can only be deduced by way of inference. There is some evidence of what those terms may have been, although it may well be incomplete, in an email dated 24 December 2015 from AMMG's then solicitor to an officer of AMMG, which contemplated that the vendor "will enter into a contract", namely that a contract would be entered into at some time in the future, which would be dated and settled on 15 January 2016, and the deposit would be credited to that purchase price, and that certain additional steps would be required, including the payment of a further non-refundable amount of $25,000. That email is consistent with Mr Duffield's account of the terms of the letter, so far as it contemplates, not that a contract was formed for the sale of the property on 24 December, but that a contract would be entered into on a future date, pursuant to the terms of the arrangement entered into on 24 December. 2. That arrangement contemplated, as I have noted, an exchange of contract and settlement, which may initially have been contemplated for 15 January 2016, but subsequently appears to have been contemplated for 22 January 2016. That did not occur, although there is evidence that Mr Arndell's solicitor again communicated with AMMG's solicitor prior to that date to seek to confirm the relevant arrangements and, by email dated 19 January 2016, AMMG's solicitor advised AMMG that he needed to know the amount of funds that the lender would have available on settlement, and also advised AMMG that: "The notice to complete in this matter has only been extended to 22/1/16 after which [Mr Arndell] may elect to terminate the contract." 1. Plainly, AMMG does not now accept that characterisation of the arrangement, and it may be, on Mr Duffield's submission, that Mr Arndell also does not accept that characterisation of the arrangement. In any event, it appears to be common ground that at least at that time, funds were not available to AMMG to settle, and it did not exchange or settle any new contract. 2. At least by 20 January 2016, AMMG's then solicitor had confirmed with AMMG that it had not confirmed its ability to settle and that, if AMMG failed to settle by 22 January 2016, the previous contract had been terminated and AMMG would need to seek orders from the Supreme Court of New South Wales if it sought to set aside the termination and seek specific performance. No such application was made to the Court at that time. 3. Subsequently, Mr Arndell did not cease to deal with AMMG, notwithstanding AMMG's failure to exchange or settle a new contract on 22 January 2016. By letter dated 25 January 2016, Mr Arndell's solicitor advised AMMG's then solicitor that he considered that Mr Arndell had acted reasonably in allowing another opportunity to purchase the property after the contract had been terminated due to AMMG's default and that Mr Arndell: "will now place the property back on the market. Whilst [Mr Arndell] doesn't entirely dismiss the possibility of selling to [AMMG], he is mindful of the time which has been wasted and the costs incurred in preparing for exchanges and settlements when it subsequently became apparent that [AMMG] wasn't in a position to proceed." I quote that statement because it is significant, together with subsequent correspondence to which I will refer, in emphasising the lateness of this application, a matter to which I will return. 1. In early February 2016, discussions were continuing between AMMG's then solicitor and AMMG as to its ability to obtain finance, which it appears had not then been finalised. By a letter dated 18 February 2016 from AMMG's then solicitor to Mr Arndell's solicitor, AMMG's then solicitor referred to AMMG's "difficulties" with finance applications, and sought confirmation that Mr Arndell would agree to proceed to completion of a purchase the next day, 19 February 2016. That completion also did not occur. 2. By the letter dated 18 February 2016 from Mr Arndell's solicitor to AMMG's then solicitor, to which I have referred above, he set out the history of events to that date, referred to contact with a then proposed lender to AMMG which had advised that it was very unlikely that settlement would then take place on a later date, 28 January 2016, and also advised that, before Mr Arndell incurred any further costs incurring a sale to AMMG, it would be necessary for AMMG to provide conclusive evidence that it would be in a position to finalise a purchase. It also noted that an auction had been arranged for 5 March 2016, that is, today. 3. I note that matter because, to the extent that any attempt was to be made to restrain the auction, on the basis of the arguments put before me this afternoon, that application could have been made to the Court at least from mid February 2016. At about that time, it appears that AMMG was considering such an application, because its then solicitor advised it by email dated 18 February 2016 that it would need to provide conclusive evidence that it was in a position to finalise the purchase, and that would likely be required to form part of the evidence in any affidavit if such an application was made to the Court. 4. AMMG relies on what is described as an "unconditional approval" of finance by letter dated 18 February 2016 from another lender to AMMG. I should note, in fairness to AMMG, that those words are not only AMMG's description of that approval, but are that lender's description of it. Regrettably, the document on which AMMG relies falls somewhat short of the description which the lender has given it. First, the document expressly notes that it sets out some of the general terms and conditions of the mortgage, but the full terms of the advance by the lender would be outlined in the mortgage document subject to the loan, which is not in evidence. Second, and perhaps more significantly, the so-called "unconditional approval" also provides that: "If any circumstances occur which, in [the lender's] opinion makes completion of the matter undesirable to us, we have the right to cancel this unconditional offer without being liable for damages." It seems to me that this document does not provide any real evidence of a commitment to lend, because a commitment which can be cancelled, at will of one party, falls short, as a matter of substance, of being a commitment at all. That is of significance, because that document is, as Mr Killalea confirms in submissions, the document on which AMMG relies to establish its ability to complete the purchase of the property today. 1. Further correspondence occurred in respect of a potential further settlement date, including a letter dated 19 February 2016 from AMMG's then solicitor. By letter dated 22 February 2016, Mr Arndell's solicitor reconfirmed the proposition, which he had previously indicated, that it would be necessary for AMMG to provide conclusive evidence that it was in a position to finalise a purchase before Mr Arndell would consider a sale to AMMG. By letter dated 25 February 2016, Mr Arndell's solicitor in turn noted that, if any arrangement which "might be negotiated", apparently contemplating a future arrangement, had not been settled by 5pm on 2 March 2016, Mr Arndell proposed proceeding with the auction and would not entertain any further discussions from AMMG. It also noted that, as a practical matter, any negotiations would need to have been completed by 29 February 2016, and the commencement of negotiations would be conditional upon receiving conclusive evidence that AMMG was in a position to finalise a purchase. 2. It appears, from submissions made by Mr Duffield, Mr Arndell's solicitor, which the parties agreed could be treated as evidence of the fact, that further arrangements were made for a settlement to take place on 1 March 2016, which also did not occur. By letter dated 1 March 2016, which appears to be the document on which AMMG relies to establish its alternate contract of that date, Mr Duffield enclosed the front page of a contract, and a replacement page 3 of the special conditions, and referred to the position "were the parties to reach agreement on the terms of a sale to be exchanged and completed tomorrow". Mr Duffield rightly submits that it is difficult to see how a letter that referred to the possibility that the parties might reach agreement tomorrow could in fact constitute that agreement. It appears that a further settlement was then arranged for 4 March 2016, but was also not completed when AMMG's proposed lender did not attend. 3. I am conscious that there is some correspondence in the period, on which AMMG relies, in which its lender indicates that it is, at least, somewhat closer to settlement. By letter dated 29 February 2016, a solicitor representing AMMG's lender advised that, subject to loan and security documents being in order, and their requirements for settlement being satisfied, they would be in a position to book a settlement within 48 hours of the satisfaction of all requirements. There is subsequent email correspondence which suggests that at least one of those requirements may have been a new contract, and AMMG points to the difficulty of satisfying that condition in the present circumstances. 4. I have set out the events in some detail, because they are relevant to two aspects of the Court's determination in this matter. I will assume, for the purposes of this judgment, without expressing any concluded view, that AMMG may be able to establish a serious question to be tried that a contract came into existence on 24 December 2015, although it seems to me that it would have rather greater difficulty in establishing that the contract was a self-contained contract for the sale of the relevant property. I will also assume that a contract may have come into existence on 1 March 2016, although I have referred to matters above which seem to me strongly to suggest the contrary. Making those assumptions in AMMG's favour, I am nonetheless comfortably satisfied that, even assuming that AMMG could establish a serious question to be tried, the balance of convenience does not favour the grant of injunctive relief. 5. Several matters lead me to form that view. The first is that it seems to me that, as of today, AMMG has not established that it is in fact able to perform the relevant contract, although the correspondence to which I have referred above establishes that it is plainly willing to do so, if a lender would fund it to do so. The history of failed settlements to which I have referred above seems to me to create a strong inference that, notwithstanding all of AMMG's efforts to seek to achieve settlement, it consistently fails to do so. There is no evidence as to AMMG's assets, in its own right, and the fact that it has not proceeded to settlement on numerous occasions suggests that those assets are not sufficient to fund a settlement, without assistance by a third party lender. 6. Second, it seems to me that there is no evidence, and indeed Mr Killalea accepts that there is no evidence, of AMMG's capacity to satisfy an undertaking as to damages. Where a corporate entity offers an undertaking as to damages, in circumstances where substantial damage may be caused by the grant of an interlocutory injunction, it seems to me that part of its case must include establishing at least that there is some prospect that it would have the capacity to perform that undertaking if called upon to do so. There is no evidence in this case of AMMG's capacity to do so. 7. Third, and it seems to me that this matter would be sufficient in itself to decline injunctive relief, the possibility of AMMG seeking injunctive relief has been open to it for at least three weeks and possibly longer. Had it applied three weeks ago, Mr Arndell would have had a fair opportunity to lead evidence in response, and indeed the Court may have been able to proceed to an expedited hearing on a final basis within that time. By bringing an application today, several hours before the auction was due to complete, AMMG would both deprive Mr Arndell of a fair opportunity to lead evidence in response to the application, and would maximise the damage which Mr Arndell would likely suffer if the auction was injuncted. 8. These matters have been recognised in the case law as relevant to the grant of an injunction in these circumstances. In Hallifax Property Corp Pty Ltd v GIFC Ltd (1987) 4 BPR 9708, Young J noted that a mortgagor will always need to be in a position to give an undertaking as to damages, as the price of obtaining an injunction, and it seems to me that that equally extends to a potential purchaser and to a meaningful undertaking as to damages. His Honour noted that the costs of an aborted auction which has been widely advertised will be considerable but that is not the only loss that may be suffered if the case is lost. His Honour notes the risk that a property that is put up to auction and withdrawn may influence the price that is later obtained and that the undertaking of damages would need to extend to that loss. His Honour also noted that lateness of an application to restrain an injunction, and in that case the application was made two days before the auction, not several hours before the auction, was a matter that was relevant to the Court's discretion. His Honour noted that such lateness would operate unfairly, because the defendant would have to put together its case in defence at very short notice, and his Honour also noted that such lateness may lead a court to infer that the applicant has not much faith in its case. It is not necessary for me to draw the latter inference in order to determine this application. It seems to me that the lateness of this application, so far as it maximises the damage that Mr Arndell will suffer by the grant of such relief, is a significant factor in the exercise of the Court's discretion. 9. In Ciavarella v Hargraves Secured Investments Ltd [2015] NSWSC 865, Kunc J also referred to the significance of delay, particularly unexplained delay, in applications of this kind and noted that: "Equity expects applications of this kind to be brought as quickly as possible, not least to give an adequate opportunity for all parties to be heard and their arguments to be properly considered. In the events which have happened, the application was brought at the last possible moment." That was a matter which his Honour treated, as I also treat it, as relevant to the exercise of discretion. 1. I am therefore comfortably satisfied that the application for an interlocutory injunction should be dismissed. I will hear the parties as to any order that should be made in respect of listing the balance of the Summons before the Registrar for further directions and as to the costs of this application. 2. Following delivery of my judgment, I heard the parties as to the next steps in the proceedings and as to costs. Mr Duffield raises a concern that, so far as an order for specific performance is sought, that places Mr Arndell in an impossible position, and submitted that the Court was in a position to determine that application this afternoon. In the ordinary course, the Court does not determine substantive issues in proceedings on a final basis on the first day the proceedings are listed, a fortiori in duty applications heard on Saturday afternoons. I am also by no means convinced that there is any impossibility in Mr Arndell's position. He has not been injuncted from proceeding to an auction and is fully entitled to do so. He is entitled to sell the property and he is entitled to deliver title to a purchaser of the property. If an order for specific performance is later sought, no doubt the Court can then deal with whether the fact that an injunction was not granted, and the sale of the property proceeded to completion, is a barrier to an order for specific performance. In that situation, the Plaintiff may or may not be left to its claim in damages, but that is a matter for the Court to determine at a final hearing, not a matter for me to determine at this stage, and each party can take their own advice in that respect. 3. Mr Duffield, on behalf of Mr Arndell, seeks his costs of this application. Mr Killalea fairly accepts that nothing could be said in opposition to an order for costs on that basis. It seems to me that, subject to hearing from Mr Killalea, the fair order in the circumstances is an order for costs, and an order that those costs be assessed and paid forthwith. I take that view because it seems to me that this is an entirely discrete application, and nothing in the ultimate outcome of the proceedings can have any effect on the order for costs in the relevant circumstances. While orders for costs to be assessed and paid forthwith are not made as a matter of course, it seems to me that the circumstances of this application warrant such an order. 4. The parties have agreed that so far as the balance of the relief sought is concerned, it should be stood over for directions before the Registrar on 10 March 2016. Mr Duffield has foreshadowed a security for costs application, which is a matter that can be addressed by the Registrar at that time, or referred as appropriate for determination by a Judge. No doubt, the parties should also give consideration to whether the proceedings should be referred to the Expedition List, or alternatively to the Real Property List, in a manner that can expedite the hearing. 5. In this matter I make the following orders: 1. The application by the Plaintiff for interim relief as set out in paragraphs 6-8 of the Summons filed on 5 March 2016 be dismissed. 2. The Plaintiff pay the Defendant's costs of the application, as agreed or as assessed, such costs to be paid forthwith. 3. The proceedings be stood over for directions before the Registrar on 10 March 2016. ********** 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: 01 April 2016