Hera Project Pty Ltd v Bisognin & Anor [2016] VSC 591 (3 October 2016); prohibitive and mandatory injunctive relief, defence of hardship, undertaking as to damages

October 16, 2016 |

Applications for injunctive relief are not uncommon in the commercial division of the superior courts.  In Hera Project Pty Ltd v Bisognin & Anor [2016] VSC 591 Justice McCaulay considered an application arising relating to a contract of sale of land.

FACTS

His Honour described the events leading up to this application was being “long and convoluted”[9].  He was not wrong.

The Bisognins own a parcel of rural land known as 1 Adrian Street Cranbourne East. On 29 February 2012 they sold the southern portion of the land to a company, Joslin Street SA Developments Pty Ltd, for $3.6 million. That portion was a lot on an unregistered plan of subdivision. To complete the sale, it was necessary for the plan of subdivision to be registered [10].

In mid-2013, Joslin nominated Hera Project to be the ‘substitute purchaser’. Hera Project sued in late 2013 to compel the Bisognins to perform various aspects of the contract. That matter was settled in late 2014 on the basis that the parties  enter into a new contract of sale for the sale of the same portion of land to Hera Project. The contract required the registration of the plan of subdivision before settlement could occur. A special condition in the contract  was supposed to provide that if the plan of subdivision was not registered by 25 August 2015, either party could end the contract by notice in writing. The meaning and effect of that provision became contentious [11].

In August 2015 the Bisognins commenced a proceeding to obtain answers to three questions:

  1. whether the deposit payable by Hera Project was due upon the certification of the plan of subdivision by the local council or only upon the registration of the plan of subdivision by the registrar of titles. On 24 August 2015 Cameron J held that it was the latter [12];
  2. whether special condition 8 enabled either party to terminate the contract if the plan of subdivision was not registered by 25 August 2015[13]; and
  3. whether the contract required the Bisognins to make payments of money to the public authorities to secure the registration of the plan of subdivision [13].

The court stated that if the plan of subdivision was not registered by 25 August 2015, special condition 8 allowed either party to end the contract by notice in writing to the other [15] but extended to 31 August 2016 the date upon which either party could terminate the contract if the plan of subdivision was not registered.

The orders, at [17], made by the Court was:

  1. During the period of extension of time, the plaintiffs are to use their ‘best endeavours’ to co-operate with the defendant and do all acts and things necessary to give effect to the approval of the plan of subdivision and give effect to the Urban Design Framework (as approved by the City of Casey) as required by special condition 10, including:

(a) satisfying the conditions of the planning permit issued on 11 June 2015 by entering into the agreements with the relevant referral authorities, the Responsible Authority and the relevant telecommunications service provider in a timely way in respect of both lots on the plan of subdivision;(b) making arrangements with their mortgagee to produce the duplicate Certificate of Title at the Land Titles Office (at the cost of the defendant); and

(c) promptly paying any Growth Areas Infrastructure Contribution Payment,

with a view to assisting the defendant to obtain the statement of compliance and thereby procure the registration of the plan.

Since those orders were made the parties returned to the court debating whether the Bisognins were in breach. Hera Project unsuccessfully asked the court for specific orders that the Bisognins make particular payments of moneys to the water and sewerage authorities to secure the registration of the plan of subdivision [18]. Bisognins did not make payments to the public authorities in order to obtain the statement of compliance necessary to secure the registration of the plan of subdivision. The Bisognins appealed the Court’s Order in that proceeding to the Court of Appeal.

Fearing that the Bisognins would give notice of the termination of contract on 25 August 2016, Hera Project commenced this proceeding. [20]

DECISION

When considering:

  • whether to award specific performance as final relief after the trial of an action and where the defence of hardship is based on a purchaser’s difficulty in raising finance to complete a contract of sale of land involves a balancing exercise;
  • the competing hardship of the applicant for the remedy

the court considered that the mere difficulty or inconvenience in finding the purchase money is unlikely, of itself, to sustain the defence of hardship [23].

The same principles  apply where the defence of hardship relates to vendor who claims incapacity to complete [24].

The court found that  Bisognins would need to show more to convince a court that they face more than mere difficulty or financial inconvenience in obtaining funds to pay the public authorities [25].

The court considered the critical and determinative issue is where the balance of convenience lies [26] and quoted Bradto Pty Ltd v State of Victoria where the Court of Appeal stated:

..the flexibility and adaptability of the remedy of injunction as an instrument of justice will be best served by the adoption of the Hoffman approach. That is, whether the relief sought is prohibitory or mandatory, the court should take whichever course appears to carry the lower risk of injustice if it should turn out to have been ‘wrong’, in the sense of granting an injunction to a party who fails to establish his right at the trial, or in failing to grant an injunction to a party who succeeds at trial.

Mandatory injunction

The court found that the lower risk of injustice favours not making any mandatory order[29]. It was not in dispute that the total amounts the Bisognins would have to pay to the authorities would be in the order of $750,000. The court stated that for them to do so would likely rely them to enter loan agreements with lenders [30].

The issue for the court was:

  • if it was to order that the Bisognins pay the moneys, and they obeyed that order, the plan of subdivision would likely be registered and the sale completed. There would be no impediment to the transfer of land taking place; however
  • if the court was wrong in making such an order because the Court of Appeal later upholds the Bisognins’ appeal or because Hera Project would not have obtained an order for specific performance after a trial there would be no means of getting the land back for the Bisognins [31]
  • whether the orders being sought would finally determine the controversy without a trial and the Bisognins’ appeal would be rendered moot [32].

The court considered that that there would not be significant consequences for Hera Project if the Court made the orders sought.  While it spent money which it borrowed the overall delays in completing the sale of this piece of land since 2012 had many and varied causes of which the Hera Project was partly to blame. In the court’s view further delay was not a compelling factor [34].

The court took the view that if  the application for mandatory injunction was dismissed and Hera Project defeated the Bisognins’ appeal with the prohibitory injunction in place, Hera Project could still seek specific performance at trial [35].

The key to the reasoning of the court was  was that any adverse consequence to Hera Project would not have the same irreversible quality as the adverse consequence to the Bisognins.

The Court refused to order any mandatory injunction as sought by Hera Project [36].

Prohibitory injunction

Hera Project had already given undertakings as to damages in the usual form in support of the interim injunction that was previously ordered [38]. While it proffered the same undertaking for the continuance of the injunction it is a company with only a nominal amount of paid up capital and no evidence of assets other than its interest in the land the subject of the proceeding.

The critical issue was the ‘sufficiency’ of that undertaking that is in question. His Honour stated that whether the undertaking as to damages was likely to be sufficient to enable the enjoined party enforce an award of damages if such an award is later granted, is to be considered as part of the totality of factors when determining the balance of convenience. It was not a step that is considered separately from or before weighing that balance [39]

The Court found that notwithstanding that Hera Project failed to produce evidence that it could satisfy its undertaking the prohibitory injunction should nevertheless be continued because the Bisognins should not be permitted the opportunity to terminate the contract while Hera Project holds the benefit of a previous court order [40].

ISSUE

Court’s are understandably cautious of making orders for mandatory interim injunctions where they deal with the critical matters in controversy in the proceeding.  Such matters are normally regarded as being the proper province of the trial judge, who will consider evidence beyond affidavits which are drafted in support of the application.

 

One Response to “Hera Project Pty Ltd v Bisognin & Anor [2016] VSC 591 (3 October 2016); prohibitive and mandatory injunctive relief, defence of hardship, undertaking as to damages”

  1. Hera Project Pty Ltd v Bisognin & Anor [2016] VSC 591 (3 October 2016); prohibitive and mandatory injunctive relief, defence of hardship, undertaking as to damages | Australian Law Blogs

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