Golden Eagle Property Group Pty Ltd v GGPG Pty Ltd
[2022] QCA 56
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- Notable Unreported Decision
- Appeal Determined (QCA)
- Golden Eagle Property Group Pty Ltd v GGPG Pty Ltd[2022] QCA 56
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Golden Eagle Property Group Pty Ltd v GGPG Pty Ltd[2022] QCA 56
Golden Eagle Property Group Pty Ltd v GGPG Pty Ltd[2022] QCA 56
[2022] QCA 56
COURT OF APPEAL
SOFRONOFF P
MORRISON JA
BODDICE J
Appeal No 4170 of 2022
SC No 3647 of 2022
GOLDEN EAGLE PROPERTY GROUP PTY LTDFirst Appellant
ACN 614 218 852
DAVID ALEXANDER JOHN WHITEMANSecond Appellant
v
GGPG PTY LTD
ACN 609 675 505
(RECEIVER AND MANAGER APPOINTED)Respondent
BRISBANE
THURSDAY, 14 APRIL 2022
JUDGMENT
SOFRONOFF P: The appellant company is the subject of an injunction granted on the 8th of April by Justice Williams and it has sought an urgent hearing of its appeal seeking to have those orders set aside. The relevant facts as established by the respondent’s evidence can be summarised as follows. The respondent company is one of a group of companies that has conducted a land development business. Two of its directors are Mr Clancy and Mr So. Mr Whiteman, who is the second appellant, was employed by the respondent and had the job of finding land suitable for the corporate group to develop.
One of its current projects involves the development of a large residential subdivision at Park Ridge. There is a parcel of land at 202 Park Ridge Road that is not owned by any of the group companies and which lies adjacent to the proposed development. It was a piece of land that the respondent would have been interested in buying during the ordinary course of its business before recent events and it was the job of Mr Whiteman to find such prospective development sites and to negotiate a possible acquisition by a company in the group.
In March 2020 a real estate agent holding a commission to sell the land at 202 Park Ridge Road approached Mr Whiteman and negotiations began between them. Mr Whiteman received some instructions about the negotiations from Mr Clancy. In September 2020 Mr Whiteman and the agent agreed to a possible sale upon the terms that were then put into a deed, which was then executed by the owners of the land and the first appellant. The first appellant is a company that was incorporated to acquire some development land to be used by the group. Mr Whiteman is its sole director.
It is clear from the face of the deed that was entered into that the first appellant was interested in buying the land for development. That is so because the deed was conditional upon the first appellant’s carrying out of a due diligence investigation that was expressed in clause 1 to be in respect of the buyers proposed development of the property. Also clause 3 provided a means by which the first appellant could proceed with a development application even before becoming the registered proprietor of the land.
By clause 4 of the deed the vendors granted the first appellant an option to buy the land upon defined terms and at a defined price. Clause 4.2 provided that the option had to be exercised by notice in writing delivered before 5 pm on the day 18 months after the date of the deed. That day is today. Clause 7 is central to this appeal and it provides as follows:
“7 Nominee
7.1 How to make a nomination
- (a)If the Buyer wishes to nominate a Nominee, a Nominee Notice must be delivered to the Seller prior to or at the time of exercising the Call Option, duly completed by the Nominee.
7.2 Buyer may not otherwise nominate
The Buyer may only nominate a Nominee by complying with clause 7.1.
7.3 Effect of nomination
If the Buyer makes a nomination under clause 7.1 then on and from the date the Seller receives the Nominee Notice:
- (a)The Buyer has no further entitlement to the Security Deposit; and
- (b)The Buyer remains liable for any default it may have made under this deed;”.
Clause 4.2(b)(4) provided that if the first appellant made such a nomination, then it would be its nominee that would be liable to complete the resulting contract. No liability would attach to the first appellant except for any labilities for breach of contract committed before the option was exercised. See clause 7.
After the first appellant entered into the deed receivers were appointed to the respondent. Mr Whiteman’s employment ceased, however the deed remained on foot and Mr Whiteman and the first appellant contend that they are free to deal with the interest created by the deed without interference from the respondent. In view of that attitude, the respondent sought an injunction to compel the first appellant to exercise its rights under clause 7 to nominate the respondent as the buyer of the land under the deed and to exercise the options.
The result of that order if it was to be performed would be that the respondent would undertake liability as purchaser from the vendors of the land. The first appellant would then have no further liability to the vendors. In order to justify a grant of an interlocutory injunction the respondent had to demonstrate that it had a cause of action against the appellants that would justify the grant of interlocutory relief.
The degree to which the existence of such a right has to be established to the satisfaction of a Judge has been explained in various ways in the authorities. In substance, enough has to be shown to demonstrate that the right arguably exists and that its existence has been demonstrated to a degree that would justify maintaining the status quo by a suitable order until the applicant for the injunction has a chance to prove its case at trial. The degree of satisfaction that a Judge must feel in relation to the proof of the existence of the right will vary depending upon the degree to which the proposed injunction could interfere with the respondent’s freedom to exercise its own legal rights. That is why an intrusive mandatory injunction will usually require a greater degree of proof by an applicant for an injunction than a less intrusive negative restraining injunction.
The respondent contended before Justice Williams that the evidence that it had put forward demonstrated that the first appellant held its right under the deed for the benefit of the respondent. That was so, it was submitted, because Mr Clancy and Mr Williams owed duties of good faith to the respondent because they were, respectively, a director and an employee of the respondents and because the opportunity to buy the land had come to them as part of their conduct of the business on behalf of the respondent. It was submitted that their duty was, as a consequence, to benefit the respondent and not themselves. The respondent points to the use of the first appellant company as the vehicle for the transaction. That was a company that was incorporated to be used in the course of the business of development of the group and, in particular, of the respondent.
In those circumstances it was open to Justice Williams to conclude that the respondent as applicant for relief by way of injunction had proved the existence of a cause of action to support an injunction. However, as I have said, final satisfaction about that matter would depend upon the nature of the remedy that was sought and the degree to which a grant of relief would interfere with the first appellant’s and Mr Whiteman’s exercise of their respective legal rights.
Justice Williams made orders requiring the first appellant to exercise its right of nomination under clause 7 by nominating a certain company, Park Ridge 180 Pty Ltd, as the proposed purchaser pursuant to clause 7. The order was to be conditioned upon certain undertakings given by the respondent, by Park Ridge 180 Pty Ltd and by the receiver of the respondent, Mr Watters. These were, in summary: (a) to exercise the call option in the name of Park Ridge 180 Pty Ltd, (b) to complete the resulting contract, (c) not to transfer or encumber the land until trial, earlier order or with the consent of the parties, (d) to offer the usual undertaking as to damages.
These orders would seem to be sufficient to ensure that the land stays within the control of the parties. Such an order preserves the availability of the land for the respondent’s possible benefit, but it also preserves it for the benefit of the first appellant and Mr Whiteman. Of course, the order would prevent the first appellant from immediately trying to profit from ownership of the land, say by development or by resale, but that is why an undertaking to pay damages has been required and why it was given. If the appellants are ultimately successful, they could apply for and obtain an order requiring that the nominee company transfer the land to the first appellant.
The appellants contend that Justice Williams erred in granting the order. First, the appellants submitted to her Honour that performance of the order would extinguish the first appellant’s rights under the option. So it will, but the exercise of the rights under clause 4 and clause 7 are not the issue. The entitlement to ownership of the land is the issue, and that entitlement will be preserved by the order. Second, the appellants submitted that this is an order that will have a final effect, and because that is so, the respondent had to satisfy the Judge of the existence of its case to a high degree before an order should be made.[1] The right to nominate and the right to exercise the option will be extinguished upon the performance of the order, as Mr Beecham of Queen’s Counsel, who appeared for the appellants, correctly submitted, but as I have said they are not the crucial rights. What is crucial is the identity of the registered proprietor of the land who is free to profit from the development. The order allows for the determination of that crucial legal issue at trial by preserving the status quo, which is that neither party exercises a right to use up the land by development and resale.
Third, the appellants submitted that damages would be an adequate remedy. It is true that in some cases, land purchased for development, as was this land, is like any other commodity and that damages would be an adequate remedy. The question whether damages would be an adequate remedy is an issue for consideration when assessing the balance of convenience. As such, a conclusion about that issue involves a judgment by the Judge at first instance that is not an exercise of discretion, but it is akin to an exercise of discretion. It is a matter on which an appellate court should not gainsay a trial Judge without good reason. To some degree, the appellants are correct in their submission that the land here is nothing more than a commodity. However, the land was said by the respondent to have a quality of uniqueness because of its position next to the respondent’s existing development. Her Honour had to decide that question, and her Honour’s conclusion about that question has not been shown to have been wrong.
Fourth, the appellants submit that the evidence of Mr Whiteman proved that one of the directors of the respondent, Mr So, had expressly indicated a lack of interest on the part of that company and of any other company in the group in purchasing the land for corporate business. It was submitted that Mr So gave several indications verbally to Mr Whiteman that the respondent was not in a position to buy any land, including this land. The appellants submit that this evidence was not contradicted or challenged. The appellants acknowledged in paragraph 27 of their written outline that the respondent had demonstrated a prima facie cause of action, but, they submitted, the respondent has not proved it to a high degree of assurance, and it is that standard that is applicable in a case in which interlocutory relief is de facto final relief. For the reasons that I have already given, this is not that kind of case. The relevant final relief is ownership of the land. The option is merely a mechanism towards that end, and the option as a mechanism towards that end has now been replaced by the orders made by Justice Williams.
Further, in the present case the appellants also submit that the evidence given by Mr Whiteman to that effect has not been contradicted or explained by Mr So. In a case like the present, on the evidence as it was exchanged between the parties, it must have been plain to the appellants that the respondent was asserting that Mr So had not given or purported to have given his consent to this transaction, expressly or implicitly. In those circumstances, it would have been a waste of time and money in the context of an application for urgent injunctive relief for the respondent to have led evidence to contradict Mr Whiteman’s evidence. In any event, her Honour took into account the failure to lead any evidence in response to Mr Whiteman’s evidence that was a matter for her Honour to consider and to weigh as to its significance.
Fifth, the appellants submitted that the evidence of the respondent’s ability to complete the purchase was unsatisfactory. That argument cannot be maintained. Mr Watters, the receiver, an officer of the Court, has undertaken to the Court that the contract will be completed. In the absence of a credible attack upon Mr Watters’ credit on that point, there is no reason to doubt the value of his undertaking or that he will ensure that the contract is completed. In any event, that was a matter for Justice Williams to assess and about which her Honour had to make a finding. The issues raised by the appellants were agitated before her Honour, and the significance of the evidence of receivership in that respect, the weight to be given to it, and the findings that the evidence justified were matters for her Honour to consider.
Sixth, the appellants submitted that the vendors might have a right to terminate the deed or the ensuing contract made pursuant to the option. That seems to be true, although the matter is not beyond argument, because of a statutory provision upon which the respondent relied, namely, s 434J of the Corporations Act 2001 (Cth). It is not obvious to me why a willing vendor would terminate a perfectly good contract, the performance and completion of which is underwritten by a solemn undertaking given by an officer of the Court to the Court. Certainly, if such evidence existed it was for the appellants to have led it. Mr Beecham QC submitted that the vendors might wish to terminate the contract in order to sell to another person at a higher price, but it is the first appellant who has a commercial relationship with the vendors by reason of the contract. It is the appellants who had an interest in urging this as a matter of fact to be taken into account by her Honour. As a consequence, it is the appellants who would be expected to lead evidence about this subject if the risks existed. It may be, as Mr Beecham pointed out, that the vendors will not show their hand at this point or have yet not made up their mind. If that were so, then evidence of that fact could have been led. In the result, while it has been demonstrated that there is a good arguable case that a risk of termination arises as a consequence of the orders made, the degree of that risk has not been demonstrated. In any case, this too was a matter for her Honour to consider in the exercise of her discretion, and the existence of the risk was pointed out to her Honour, although her Honour was not given the benefit of the whole argument as it was presented to the Court of Appeal. Nothing turns upon that, because it was a matter to raise before the Judge considering the grant of an injunction, and not a new matter to be raised on appeal. In those circumstances, I would not be prepared to infer the existence of a material risk that her Honour has overlooked.
Eighth, the appellants submitted that in the absence of an injunction, once the first appellant exercises the option, the respondent could seek appropriate relief against OFG Proprietary Limited, who is the appellant’s proposed nominee, or Mr Clancy. It could request undertakings from those parties or it could sue OFG or, indeed, Mr Clancy and Mr Whiteman for damages. Whether the respondent has any rights against OFG was not argued and is not known. That is a company which Mr Beecham informed the Court is owned and controlled by Mr Clancy. It was recently incorporated. In any a case, why relief should await the event of the completion of the contract by OFG Pty Ltd has not been satisfactorily explained, in my opinion, and nor has the appellant’s failure to offer undertakings to her Honour that might also have secured the status quo.
Mr Beecham also pointed to the existence of a caveat that has been lodged by the respondent to prevent further dealings with the land. However, in my respectful opinion, a caveat is not as comprehensive a form of relief as the orders made by Justice Williams. For example, a caveat would not prevent a development application being sought and granted, nor would it prevent the owner of the land doing work on the land that it might be difficult to undo. In short, the caveat could not prevent steps being taken on the land which might later be difficult to undo and which might not suit the respondent’s ultimate plans for the land if it succeeds at the trial.
In short, the appellants offered nothing to the learned Judge that might have given her Honour confidence that, without relief, the land would still be preserved in its present state pending trial. The position of the appellant was that the deed should be allowed to take its course and that the respondent should attempt to get whatever remedies it might get after a contract has been entered into between OFG Pty Ltd and the vendors. Her Honour considered that doing nothing would be unsatisfactory. That was a matter for her Honour’s discretion. No error has been shown in her Honour’s conclusion to that effect to the form of the order, which requires that the first appellant exercise its contractual power in one way, the appellants did not suggest any useful alterative. For these reasons, in my view, the exercise of discretion by Justice Williams has not been demonstrated to be erroneous and I would dismiss the appeal.
MORRISON JA: I agree.
BODDICE J: I agree.
SOFRONOFF P: The orders of the Court are:
- The appeal is dismissed.
- The appellants pay the respondent’s costs of the appeal on the standard basis.
- Order 2 of the orders made by Justice Williams on 8 April 2022 be varied so that the paragraph 2 is deleted and instead there is the following:
As soon as practical and, in any case, by noon on Thursday 14 April 2022, the second respondent sign the nominee notice in the form of the document tendered by the respondent at the hearing of the appeal on 14 April 2022 and marked exhibit 1 and deliver it to the solicitors for the respondent.
Footnotes
[1]The appellants cited: Stacks Managed Investments Ltd v Tolteca Pty Ltd [2015] QSC 234, Bond J; Samsung C & T Corporation v Laing O'Rourke Australia Construction Pty Ltd [2015] WASC 83, Edelman J; Australian Broadcasting Company v O'Neil (2006) 227 CLR 57; [2006] HCA 46.