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Aveo Retirement Homes Ltd v Springfield City Group Pty Ltd[2024] QCA 102

Aveo Retirement Homes Ltd v Springfield City Group Pty Ltd[2024] QCA 102

SUPREME COURT OF QUEENSLAND

CITATION:

Aveo Retirement Homes Limited v Springfield City Group Pty Limited [2024] QCA 102

PARTIES:

AVEO RETIREMENT HOMES LIMITED

ACN 061 603 718

(first appellant)

AVEO GROUP LIMITED

ACN 010 729 950

(second appellant)

AVEO SPRINGFIELD PTY LTD

ACN 127 602 886

(third appellant)

v

SPRINGFIELD CITY GROUP PTY LIMITED

ACN 055 714 531

(first respondent)

SPRINGFIELD LAND CORPORATION (NO. 2) PTY LIMITED

ACN 056 462 205

(second respondent)

FILE NO/S:

Appeal No 8231 of 2023

SC No 6872 of 2023

DIVISION:

Court of Appeal

PROCEEDING:

General Civil Appeal

ORIGINATING COURT:

Supreme Court at Brisbane – [2023] QSC 145 (Bradley J)

DELIVERED ON:

31 May 2024

DELIVERED AT:

Brisbane

HEARING DATE:

18 October 2023

JUDGES:

Morrison and Boddice JJA and Williams J

ORDERS:

  1. 1.Grant leave to adduce further evidence on the appeal.
  2. 2.Appeal dismissed.
  3. 3.The appellants pay the respondents’ costs of the appeal.

CATCHWORDS:

APPEAL AND NEW TRIAL – APPEAL – INTERFERENCE WITH DISCRETION OF COURT BELOW – WRONG PRINCIPLE – CONTRACTS – CONSTRUCTION AND INTERPRETATION OF CONTRACTS – where the appellants and respondents entered into a deed that governed the development of a residential community – where the parties fell into dispute over whether the appellants were complying with the terms of the deed – where the deed obliged the appellants to provide a business plan every year – where the respondents rejected the appellants’ business plans and did not accept that they were business plans under the deed – where the deed provided that business plans “materially inconsistent” with certain provisions were not business plans under the deed – where the appellants sought to refer the dispute to expert determination – where the respondents commenced proceedings seeking, inter alia, a declaration that the expert did not have jurisdiction under the deed to decide the dispute – where the appellants successfully applied for an interlocutory injunction restraining the respondents from continuing with the expert determination – where the primary judge considered there was a serious question to be tried as to whether the appellants had acted in good faith when preparing the business plans – whether the primary judge applied the wrong principle when considering if there was a “serious question to be tried”

APPEAL AND NEW TRIAL – APPEAL – INTERFERENCE WITH DISCRETION OF COURT BELOW – CONTRACTS – CONSTRUCTION AND INTERPRETATION OF CONTRACTS – INTERPRETATION OF MISCELLANEOUS CONTRACTS AND OTHER MATTERS – where the primary judge found the business plans were “materially inconsistent” with certain provisions of the deed, such that neither were a business plan for the purpose of the deed – where the primary judge found the respondents’ case had sufficient probability of success to grant the injunction – whether the primary judge erred in finding the respondents’ had a prima facie case

APPEAL AND NEW TRIAL – APPEAL – INTERFERENCE WITH DISCRETION OF COURT BELOW – EQUITABLE REMEDIES – INJUNCTIONS – INTERLOCUTORY INJUNCTIONS – GENERALLY – where the primary judge granted the injunction on the balance of convenience – whether the primary judge erred in finding the potential for irreparable harm – whether the primary judge failed to take relevant considerations into account when looking at the question of wasted costs – whether the primary judge failed to take relevant considerations into account when looking at the question of lost opportunity – whether the primary judge erred in finding the respondents’ delay in bringing the application did not disentitle them to interlocutory relief

Adam P Brown Male Fashions Pty Ltd v Philip Morris Inc (1981) 148 CLR 170; [1981] HCA 39, considered

Australian Broadcasting Corporation v O'Neill (2006) 227 CLR 57; [2006] HCA 46, considered

Barclays Bank Plc v Nylon Capital LLP [2012] 1 All ER (Comm) 912; [2011] EWCA Civ 826, cited

Beecham Group Ltd v Bristol Laboratories Pty Ltd (1968) 118 CLR 618; [1968] HCA 1, cited

Clough v Breen [2020] NSWSC 653, applied

Mineralogy Pty Ltd v Sino Iron Pty Ltd [2018] WASC 305, cited

Springfield City Group Pty Ltd v Aveo Retirement Homes Ltd [2023] QSC 145, cited

Warner-Lambert Co LCC v Apotex Pty Ltd (2014) 311 ALR 632; [2014] FCACF 59, cited

COUNSEL:

A M Pomerenke KC, with E L Hoiberg, for the appellants

D A Savage KC, with D Fawcett, for the respondents

SOLICITORS:

Allens for the appellants

McBride Legal for the respondents

  1. [1]
    MORRISON JA:  Springfield Land Corporation (SLC) is the owner of land in Greater Springfield.  SLC appointed Springfield City Group (SCG) as the master developer of its land.
  2. [2]
    On 11 May 2015 the Springfield parties[1] and the Aveo parties[2] entered into a deed entitled “Sub-Grant Development Deed – Health City” (the Deed).[3]
  3. [3]
    The Deed governs the development by the first appellant (Aveo) of a seniors’ living community in Springfield over the course of 15 years commencing from 1 October 2015 (subject to earlier completion or termination, or alternatively possible extension for a further four years).  The development is within a larger development known as Greater Springfield, of which SLC is the master developer.
  4. [4]
    The parties to the Deed fell into dispute over whether Aveo was complying with its terms.
  5. [5]
    An expert was appointed by the Resolution Institute to consider two matters.
  6. [6]
    The disputes referred to the expert concerned the content of Business Plans which Aveo is required to submit to SLC by 1 October each year for SLC’s approval or rejection.  These annual Business Plans are to be submitted in the context of an obligation on Aveo to “use its reasonable endeavours to implement the Development in accordance with a rolling Business Plan”, as well as an obligation to “ensure ... that the Project ... is carried out ... in accordance with ... the Business Plan.”  The first dispute concerned the 2021 Business Plan.  The second dispute concerned the 2022 Business Plan.  Each annual Business Plan is required to “look forward” to the “Business Plan Period”, which is three years from the date on which Aveo is required to give the Business Plan to SLC.
  7. [7]
    The parties then disagreed whether, on the proper interpretation of the Deed, those matters are within the mandate that the Springfield parties and the Aveo parties agreed to give to the expert.
  8. [8]
    On 6 June 2023, the Springfield parties commenced proceedings in the Supreme Court seeking relief including:
    1. a declaration that neither of the 2021 or 2022 Business Plans is a “Business Plan” for the purpose of the Deed;
    2. a declaration that “the purported appointment” of the expert in each case “was invalid and of no effect”; and
    3. a final injunction restraining the Aveo parties from taking any steps in the expert determinations.
  9. [9]
    The Springfield parties sought an interlocutory injunction to restrain the Aveo parties from participating further in the expert decision process,[4] until the Springfield parties’ claim is decided by the Court.
  10. [10]
    On 29 June 2023, the learned primary judge granted the injunction.[5]
  11. [11]
    Aveo challenges that order, contending:
    1. the learned primary judge applied the wrong principle when considering if there was a “serious question to be tried”;
    2. his Honour should have found that there was no prima facie case, in that the Springfield parties’ case did not have a sufficient probability of success to warrant interrupting the status quo by terminating the ongoing expert determinations and preventing them from reaching their conclusion in a timely manner;
    3. his Honour should have found that damages were an adequate remedy; and
    4. his Honour failed to take into account relevant considerations on the issues of: (i) the Springfield parties’ estimate of costs and (ii) if the injunction was granted but the Aveo parties succeeded at the trial, they would suffer irremediable harm.
  12. [12]
    By a Notice of Contention the Springfield parties support the decision to grant an injunction, contending that there was a serious question to be tried as to whether the Aveo parties had acted in good faith within the meaning of clause 25.1(d) of the Deed when preparing each of the 2021 and 2022 Plans.
  13. [13]
    These reasons explain why the appeal should be dismissed.

The Deed

  1. [14]
    The proper construction of the terms of the Deed is a central consideration on the issues on the appeal.  Part of what follows is adopted from the Reasons below, there being no dispute as to the general terms to be now mentioned.
  2. [15]
    In the Deed the parties recite that Aveo had identified a certain area of SLC’s land (the Development Site) as its preferred site to develop at least 2,500 “Seniors Products” or “Other Accommodation Products”.
  3. [16]
    There are two types of “Seniors Product”.  One is in a retirement village (an RV Product), being an independent living or services unit for persons over 65 (Seniors) under a statutory retirement village scheme.  The other is in a residential aged care facility (an RACF Product), being an independent apartment, unit, room, other independent living space, or a bed within a room, where a person is intended to live and receive personal and nursing care under a statutorily regulated accommodation agreement.  An Other Accommodation Product is a unit within a medium to high density residential complex specifically designed for, and only to be occupied by, Seniors, with personal, nursing and wellbeing care available from an associated aged care facility or a retirement village.
  4. [17]
    The Greater Springfield area is regulated by chapter 7, part 4C of the Planning Act 2016 (Qld), which gives SLC certain rights and obligations in respect of plan applications under the Springfield Structure Plan within the planning scheme for the Ipswich local government area.
  5. [18]
    By the Deed, SLC gave Aveo the right to exercise SLC’s development rights in relation to the Development Site, subject to conditions, for the purpose of undertaking a development (the Development).  The parties agreed the Development is the improvement of the Development Site, consistent with the Development Principles, for the purpose of developing Senior Products, Other Accommodation Products, other buildings consistent with the Development Principles, and ancillary services or facilities, as well as selling, leasing, or retaining those things.
  6. [19]
    In the Deed, the Springfield parties and the Aveo parties described what they were intending to do as “the Project”.  They defined the Project as “the improvement of the Development Site consistent with the Development Principles for the purpose of carrying out the Development.”
  7. [20]
    The parties recorded that their objectives, as parties, in undertaking the Project are to:
  1. “(a)
    develop the Project on the Development Site in accordance with this deed;
  2. (b)
    find the best solution for the development of at least 2,500 Seniors Products and Other Accommodation Products on the Development Site;
  3. (c)
    develop the Development Site as a medium to high density development only and, if relevant Approvals can be procured, increase the development yield above 2,500 Seniors Products and Other Accommodation Products if it is commercially prudent to do so; and
  4. (d)
    optimise the financial return to the parties from the Development of the Seniors Products and Other Accommodation Products, recognising that a party is not to act contrary, or without regard, to its own commercial interests.”
  1. [21]
    Describing these as their “Paramount Objectives”, the parties agreed that they would be achieved by, amongst other things:
  1. “(a)
    undertaking and completing the Development in stages consistent with the Development Principles; [and]
  2. (b)
    delivering at least the Minimum Target of Completed Product that are Seniors Product or Other Accommodation Product in each Development Period”.
  1. [22]
    Each Development Period is a three-year period.  The first was from 1 October 2015 (the Project Commencement Date), the second from 1 October 2018, and the third and current Development Period started on 1 October 2021.
  2. [23]
    The Deed ceases to be in force on the earliest of 1 October 2030 (the Sunset Date),[6] the date the Project is completed to each party’s satisfaction, and the date the Deed is terminated according to its terms or at law.  Between 1 April 2029 and 1 October 2029 (the Negotiation Period), Aveo may request an extension of the Sunset Date for up to four years.  If certain conditions are met, including that at least 2,000 Completed Seniors Products and Other Accommodation Products have been delivered, then the Springfield parties must extend the Sunset Date as requested.

The option and the Sale Contract

  1. [24]
    At the same time as the Deed, the Springfield parties and the Aveo parties executed another deed containing a put and call option for Aveo or its nominee to purchase the Development Site in stages.
  2. [25]
    Between June and September 2015, the first stage lot of the Development Site was identified by Aveo and SLC, surveyed, and a survey plan was registered creating a separate title for it as Lot 35 on SP283554 (Lot 35).  Lot 35 is 5.806 ha in area.  In this process, pursuant to the Deed, Aveo gave SLC a statement advising the 960 Seniors Products were to be constructed by Aveo on Lot 35.  The remainder of the Development Site is Lot 26 on SP283469 (the Balance Development Site).  It is 4.09 ha.
  3. [26]
    On 4 November 2015, SLC exercised the put option.  On or about 25 November 2015, pursuant to a contract of sale (the Sale Contract), SLC transferred Lot 35 to Aveo Nominee as the nominee of Aveo.  In the Sale Contract, SLC and Aveo Nominee specified that the “total number of Seniors Products and Other Accommodation Products to be constructed on [Lot 35] is 960.”
  4. [27]
    By the Sale Contract, Aveo Nominee agreed to pay SLC the purchase price for Lot 35 by instalments.  Aveo Nominee was to pay the instalments at the same time as Aveo was required to pay the “Land Adjustments” under the Deed.  In short, it appears the effect of these agreements is that, if and when Aveo sells a Seniors Product or an Other Accommodation Product built on Lot 35, then Aveo Nominee is to pay to SLC one-960th of the purchase price for Lot 35.

The Business Plan

  1. [28]
    By the Deed, Aveo covenanted to “use its reasonable endeavours to implement the Development in accordance with a rolling Business Plan.”  Aveo bound itself to give the first Business Plan to SLC within eight months of the date of the Deed.[7]  The significance of the Business Plan for the parties’ relationship may be gauged by the agreement of the parties that if a Business Plan was not approved by SLC by 12 months after the date of the Deed, then “any party may terminate this deed by written notice to the other parties.”
  2. [29]
    Aveo also covenanted that it would update the Business Plan on each anniversary of the Project Commencement Date, which was 1 October 2015.  Aveo was to include in the updated Business Plan “a look forward to the Business Plan Period”.  The Business Plan Period is the three-year period commencing on the day the updated Business Plan is due.
  3. [30]
    The parties agreed that each Business Plan Aveo provides to SLC:[8]

“…must demonstrate a commitment on the part of Aveo to progressing the Development in a timely manner having regard to prevailing market conditions and whether the Development will generate a return to Aveo that will satisfy the then current business investment criteria of Aveo for comparable development projects.”

  1. [31]
    Aveo covenanted to “act in Good Faith when preparing each Business Plan.”[9]  The parties agreed that Good Faith means acting:[10]
  1. “(a)
    honestly;
  2. (b)
    reasonably, having regard to the terms of this deed;
  3. (c)
    not arbitrarily or capriciously;
  4. (d)
    without intention to cause harm; and
  5. (e)
    with respect to the intent of the parties’ bargain as a matter of substance and not only form”.
  1. [32]
    However, they agreed that Good Faith “does not require a party to act contrary, or without regard, to its own commercial interests.”
  2. [33]
    By clause 25.5 of the Deed, the parties agreed:

25.5 Approval of a Business Plan

  1. (a)
    Within 10 Business Days of receipt of a Business Plan (including an updated Business Plan), SLC must (acting reasonably) give Aveo written notice that SLC either:
  1. (i)
    approves the Business Plan, in which case the Business Plan will take effect; or
  2. (ii)
    does not approve the Business Plan, in which case SLC must provide reasons for not approving the plan.
  1. (b)
    SLC must act in Good Faith when reviewing a Business Plan and may only give a notice under clause 25.5(a)(ii) if SLC considers (acting reasonably) that:
  1. (i)
    the plan does not meet the requirements of a Business Plan specified in clause 25.3; or
  2. (ii)
    the Business Plan is inconsistent with the Master Area Development Plan, the Development Principles or the requirements of this deed.”

History of the Business Plan

  1. [34]
    On 18 January 2016, Aveo submitted the initial Business Plan dated 15 January 2016, for the Business Plan Period from 1 October 2016 to 1 October 2019.  In it, Aveo stated that the current program for development to be undertaken in the Business Plan Period was that 323 Seniors Products[11] would be completed within the three-year Business Plan Period, as well as 1,900m2 of community facilities and 890m2 of non-accommodation facilities.  It appears SLC approved the initial Business Plan.
  2. [35]
    On 9 December 2017, Aveo submitted a document as an updated Business Plan dated 7 December 2017, for the period from 1 October 2017 to 1 October 2020.  In this document, Aveo detailed its current program for development that 194 Seniors Products[12] would be completed within the three-year Business Plan Period, as well as 1,990m2 of communal facilities and 800m2 of non-accommodation Facilities, and that a total of 410 Seniors Products[13] would be completed by late 2021.  It does not appear that SLC approved this document as a Business Plan.
  3. [36]
    It does not appear Aveo provided an updated Business Plan for the period 1 October 2018 to 1 October 2021.
  4. [37]
    On 21 May 2019, Aveo provided an updated Business Plan, dated that day, for the period 1 October 2019 to 1 October 2022.  In this updated Business Plan, Aveo anticipated 135 Seniors Products[14] would be completed within the three-year Business Plan Period and that a total of 960 Seniors Products[15] would be completed by June 2028.  On 11 June 2019, SLC approved this updated Business Plan.
  5. [38]
    It does not appear that Aveo provided an updated Business Plan for the 1 October 2020 to 1 October 2023 Business Plan Period.

The plans in dispute

  1. [39]
    On 14 March 2022, Aveo provided a document as an updated Business Plan for the period 1 October 2021 to 1 October 2024 (the 2021 Plan).  In it, Aveo tabulated the proposed time frame for completion of the works on the first stage lot.  Aveo planned that 123 Seniors Products[16] would be completed during the Business Plan Period, and that a total of 562 Seniors Products[17] would be completed by 2026.  On 20 June 2022, SLC advised Aveo that the 2021 Plan was not a Business Plan for the purposes of the Deed.  Alternatively, if the 2021 Plan was a Business Plan, SLC advised it was not approved.
  2. [40]
    On 17 October 2022, Aveo gave notice to the Springfield parties that it was in dispute about the non-approval of the 2021 Plan.  On 18 November 2022, Aveo referred the dispute to the Resolution Institute.
  3. [41]
    On 22 November 2022, Aveo provided a document to SLC as an updated Business Plan for the period 1 October 2022 to 1 October 2025 (the 2022 Plan).  In it, Aveo tabulated the proposed time frame for completion of the works on the first stage lot.  Aveo planned that 168 Seniors Products[18] would be completed during the Business Plan Period, and that a total of 562 Seniors Products[19]  would be completed by 2026.
  4. [42]
    On 6 December 2022, SLC advised Aveo that the 2022 Plan was not a Business Plan for the purposes of the Deed.  In the alternative, if the 2022 Plan was a Business Plan, SLC advised it did not approve it.
  5. [43]
    On 8 December 2022, Aveo gave notice to the Springfield parties that it was in dispute about the non-approval of the 2022 Plan.  On 17 January 2023, Aveo referred the dispute to the Resolution Institute.
  6. [44]
    The Resolution Institute appointed the expert to determine each of the two disputes.  On 8 December 2022, the expert was appointed to determine the dispute about the 2021 Plan.  On 31 January 2023, the expert was appointed to determine the dispute about the 2022 Plan.

The mandate of an expert

  1. [45]
    The parties to the Deed agreed to give an expert a mandate by the following parts of cl 25.5:
  1. “(e)
    If SLC gives Aveo a notice under clause 25.5(a)(ii) [not approving the Business Plan], then Aveo may notify SLC within 10 Business Days that Aveo agrees with the notice and clause 25.5(h) will apply.
  2. (f)
    If Aveo does not give SLC a notice under clause 25.5(e) within the period required by that clause, then unless the parties agree in writing otherwise, there is a dispute and Part K will apply to the Dispute as a Directed Dispute.
  3. (g)
    If a matter is referred to dispute resolution under clause 25.5(f), then on resolution of that Dispute, Aveo must promptly give a further Business plan to SLC that is consistent with the outcome of the resolution of the Dispute, unless the dispute resolution determines the Business Plan is in accordance with the requirements of this deed, in which case SLC is taken to have given a notice under clause 25.5(a)(i) [approving the Business Plan].
  4. (h)
    If Aveo agrees with a notice provided in accordance with clause 25.5(a)(ii) [not approving a Business Plan] or an independent expert determines that the notice is in accordance with clause 25.5(b), then Aveo must submit a revised Business Plan to SLC within 10 Business Days and clause 25.5(a) will apply.”
  1. [46]
    By the Deed, the parties agreed to give an expert a mandate to determine, as a Directed Dispute, whether an updated Business Plan submitted by Aveo is:
  1. (a)
    a Business Plan in accordance with the requirements of the Deed; or
  2. (b)
    a Business Plan that, acting in good faith, SLC could consider (acting reasonably):
  1. (i)
    does not meet the requirements of a Business Plan specified in cl 25.3; or
  2. (ii)
    is inconsistent with the Master Area Development Plan, the Development Principles, or the requirements of the Development Deed.
  1. [47]
    The Springfield parties contended that the expert’s mandate did not include determination of these questions with respect to the 2021 Plan and the 2022 Plan, because neither plan is a Business Plan for the purposes of the Deed.

Provisions of the Deed

  1. [48]
    Clause 25.6 was material to the considerations below.  It provides:

25.6 Non-compliant Business Plan

A Business Plan is not a Business Plan for the purposes of this deed, if the details of the Business Plan are materially inconsistent with the requirements of a Business Plan under clause 25.3.”

  1. [49]
    Clause 25.3 of the Deed set out the requirement of a Business Plan, relevantly as follows:[20]

25.3 Requirements of a business plan

Each Business Plan must be consistent with this deed and the Development Principles and must include:

  1. (a)
    an overview of the current status of the Project, …
  2. (b)
    an overview of the Development to occur within the Business Plan Period for the Business Plan, including:
  1. (i)
    the relevant Stages for the Development and the proposed order the Stages will be developed;
  2. (ii)
    the proposed subdivision of the Balance Development Site into Stage Lots (which must include a sketch plan showing the proposed pattern of subdivision);
  3. (iii)
    the construction program for the Development Work to be undertaken during the Business Plan Period, …
  4. (iv)
    the land within the Development Site that is proposed to be used for community purposes such as roads, pedestrian pathways or recreational facilities;
  1. (c)
    a current layout plan of the Development up to the date of the Business Plan…
  2. (d)
    a rolling overview of the proposed Development for the Business Plan Period, including:

  1. (ii)
    the anticipated number and mix for each of, and projected Development Fees for, the RACF Product, RV Product, Other Accommodation Products and Non-Accommodation Facilities to be developed during the Development Period that the Business Plan Period predominantly falls within, which must include at least the Minimum Target for Seniors Products and Other Accommodation Products (in total) for that Development Period; and
  2. (iii)
    the projected rate of sale of Seniors Products and Other Accommodation Products for the Business Plan Period;
  1. (e)
    details of the marketing and other promotional activities that Aveo intends to carry out over the next 12 months in respect of the Project, including indicative marketing budgets, having regard to Aveo’s assessment of prevailing and forecast market conditions;
  2. (f)
    an outline of the steps to be taken by Aveo to implement the Project during the Business Plan Period and strategies to increase the total number of Seniors Products and Other Accommodation Products above 2,500 if there is a commercial justification for doing so; and
  3. (g)
    sufficient material to reasonably support Aveo’s assessment of the demand for Seniors Products and Other Accommodation Products during the Business Plan Period.”

Development Principles

  1. [50]
    At the hearing below, the Springfield parties relied upon Development Principles 3 and 4, which provide:
  1. “3.The Development must be a medium to high density development.
  2. 4.The Development must include at least 2,500 Seniors Products and Other Accommodation Products (in total).”

Ground 1(a)-(c) – application of incorrect principle

  1. [51]
    These grounds contend that the learned primary judge, when considering whether to grant an injunction:[21]
  1. (a)
    applied a test based on whether there was “a serious question to be tried [that] the Springfield parties’ claim … is not frivolous or vexatious”;
  2. (b)
    the learned primary judge referred on more than one occasion to the claim not being “frivolous or vexatious” and as raising “a serious question to be tried”;
  3. (c)
    when his Honour should have applied the test laid down in Australian Broadcasting Corporation v O'Neill,[22] namely whether the Springfield parties had made out “a prima facie case, in the sense that if the evidence remains as it is there is a probability that at the trial of the action [they] will be entitled to relief’, or “a sufficient likelihood of success to justify in the circumstances the preservation of the status quo pending the trial”.
  1. [52]
    It was contended that how strong the probability needed to be meant his Honour had to assess the practical consequences, namely that granting the interlocutory injunction would “in a practical sense determine the substance of the matter in issue”, because the practical effect of granting the injunction would be to forever deprive Aveo of the opportunity to have the disputes as to the 2021 and 2022 Business Plans resolved by expert determination before they are overtaken by the 2023 Business Plan, which was due to be submitted on 1 October 2023.

Consideration

  1. [53]
    It is true to say that the learned primary judge used a form of expression adopting the phrase “serious question to be tried”.  For example:[23]
  1. “[3]
    The Court must decide whether there is a serious question to be tried in respect of the relief the Springfield parties seek by their claim, and whether the balance of convenience favours the grant of interlocutory relief. This decision does not require the resolution of any conflict of evidence or a decision on any difficult question of law. Those are matters for a trial.
  2. [4]
    For the reasons below, I am satisfied there is a serious question to be tried and the balance of convenience favours the making of an interlocutory injunction.”
  1. [54]
    However, a full assessment of his Honour’s reasons shows, in my view, that when that form of words was used it was a shorthand expression of the correct test, which was correctly applied.  Even if that view were incorrect and his Honour misdescribed the test, it makes no difference to the outcome of the appeal for the reason expressed in respect of the substantive grounds, as the correct test was applied.
  2. [55]
    The learned primary judge examined the consistency between the 2021 and 2022 Plans and the Development Principles, which entailed looking at comparative rates of development of Seniors Products and Other Accommodation Products over time.[24]  Having noted the differences between the Plans (168 and 123 products to be completed) and the Development Principles (an average of 406 and 430 products to be completed), his Honour summarised the position thus:[25]
  1. “[54]
    On each of the plans, Aveo would have to complete 1,938 such products (77.52%) in the last three years of the 15-year term. This would require Aveo to complete an average of 646 products per year. Aveo would have to complete Seniors Products and Other Accommodation Products at a rate ten to 15 times higher than it plans to do in the present three-year Development Period.”
  1. [56]
    That disparity was then referred to by his Honour, when expressing a conclusion on the question of the Plans’ consistency with the Development Principles:[26]
  1. “[55]
    Considered in isolation, there is a serious question to be tried as to whether each of the 2021 Plan and the 2022 Plan is so contrary to Development Principle 4 as to make the plan materially inconsistent with the requirements of a Business Plan under cl 25.3. The Springfield parties’ claim, in this respect, is not frivolous or vexatious.”
  1. [57]
    The learned primary judge then turned to the question of whether the 2021 and 2022 Plans included the proposed subdivision of the Balance Development Site into Stage Lots.  As to that his Honour noted that Aveo did not include a proposed subdivision in either Plan.  On the contrary, in each Aveo stated, “Aveo Group have not yet developed a plan for the proposed subdivision of the Balance Development Site into Stage Lots.”[27]  It was the absence of a proposed subdivision plan that led his Honour to conclude that there was a possible breach of the Deed:[28]

“In this way, it appears that every document provided (whether approved or not approved by SLC) has not met a requirement in cl 25.3(b)(ii).”

  1. [58]
    The failure to comply with cl 25.3(b)(ii) was cast in these terms by his Honour:[29]
  1. “[60]
    However, in each of the 2021 and 2022 Plans, the absence of a proposal for subdividing the Balance Development Site into Staged Lots may inform an understanding of the other information in the Plan. As the term of the Development Deed progresses towards its end, Aveo’s failure to comply with the requirement in cl 25.3(b)(ii) in this respect may combine with other inconsistencies alleged by the Springfield parties to render the plan materially inconsistent with the requirements of a Business Plan under cl 25.3.”
  1. [59]
    His Honour’s conclusion was expressed as a combination of the absence of the subdivision plan and the inconsistency with the Development Principle 4:[30]
  1. “[61]
    Considered together with the alleged inconsistency with the chapeau to cl 25.3 (with respect to Development Principle 4) above, there is a serious question to be tried as to whether each of the 2021 and 2022 Plans is relevantly materially inconsistent, and so not a Business Plan for the purposes of the Development Deed.”
  1. [60]
    The learned primary judge then turned to the issue of the Minimum Target for Seniors Products and Other Accommodation Products.  Under the Deed the agreed target was 360 Completed Seniors Products and Other Accommodation Products, whereas the Plans anticipated no more than 123 Seniors Products for the 2021 Plan and 168 Seniors Products for the 2022 Plan, with no Other Accommodation Products.  That led his Honour to conclude that “Aveo anticipated completing a little over a third of the Minimum Target in the 2021 Plan and Aveo anticipated completing a little less than 50% in the 2022 Plan”.[31]  That led his Honour to express his conclusion thus:[32]
  1. “[65]
    In each of the 2021 and the 2022 Plans, Aveo departed from the Minimum Target for Seniors Products and Other Accommodation Products (in total) required by cl 25.3(d)(ii) to a material extent, by planning to complete less than half of the minimum target. The claim of the Springfield parties that each plan is materially inconsistent with the requirements of a Business Plan under cl 25.3 is not frivolous or vexatious. I am satisfied there is a serious question to be tried as to whether each of the 2021 and the 2022 Plans is relevantly materially inconsistent, and so not a Business Plan for the purposes of the Development Deed.”
  1. [61]
    Aveo placed reliance upon paragraphs [55] and [65] of the Reasons below.
  2. [62]
    At the hearing of the application each of the parties submitted that the test was that laid down in established authority.  On behalf of SLC reference was made[33] to Warner-Lambert Co LCC v Apotex Pty Ltd,[34] Mineralogy Pty Ltd v Sino Iron Pty Ltd,[35] Clough v Breen,[36] and Beecham Group Ltd v Bristol Laboratories Pty Ltd.[37]
  3. [63]
    It is sufficient to refer to the cited passage from Clough v Breen:
  1. “[29]
    Drawing on my judgment in In the matter of A Twins Spare Parts Pty Limited [2019] NSWSC 1347 at [14]-[19], on an application for an interlocutory injunction, the question is whether the plaintiff has made out a prima facie case and whether the balance of convenience favours the grant of the injunction. As to whether there is a prima facie case, a plaintiff does not need to show that it is more probable than not that at trial the plaintiff will succeed. It is sufficient to show a sufficient likelihood of success to justify, in the circumstances, the preservation of the status quo pending trial. How strong the probability needs to be depends upon the nature of the rights the plaintiff asserts and the practical consequences likely to flow from the orders the plaintiff seeks: Mineralogy Pty Ltd v Sino Iron Pty Ltd [2016] WASCA 105 at [87].”
  1. [64]
    For the correct test to be applied Aveo rely upon what was said in O'Neill:[38]
  1. “[65]
    The relevant principles in Australia are those explained in Beecham Group Ltd v Bristol Laboratories Pty Ltd. This Court (Kitto, Taylor, Menzies and Owen JJ) said that on such applications the court addresses itself to two main inquiries and continued:

“The first is whether the plaintiff has made out a prima facie case, in the sense that if the evidence remains as it is there is a probability that at the trial of the action the plaintiff will be held entitled to relief ... The second inquiry is ... whether the inconvenience or injury which the plaintiff would be likely to suffer if an injunction were refused outweighs or is outweighed by the injury which the defendant would suffer if an injunction were granted.”

By using the phrase “prima facie case”, their Honours did not mean that the plaintiff must show that it is more probable than not that at trial the plaintiff will succeed; it is sufficient that the plaintiff show a sufficient likelihood of success to justify in the circumstances the preservation of the status quo pending the trial. That this was the sense in which the Court was referring to the notion of a prima facie case is apparent from an observation to that effect made by Kitto J in the course of argument. With reference to the first inquiry, the Court continued, in a statement of central importance for this appeal:

How strong the probability needs to be depends, no doubt, upon the nature of the rights [the plaintiff] asserts and the practical consequences likely to flow from the order he seeks.”

  1. [65]
    As can be seen, Clough v Breen expresses the test in the way O'Neill set down, that is, in the way that Aveo says it should be applied.  The same may be said of Warner-Lambert which set out the same passage from O'Neil.[39]
  2. [66]
    For Aveo, it was submitted to the learned primary judge that the test was that expressed in Beecham Group Ltd v Bristol Laboratories Pty Ltd,[40] and O'Neill, and reliance was also placed on the same passages of Warner-Lambert and Mineralogy.[41]
  3. [67]
    In oral submissions below each side addressed the issue of establishing a “prima facie case”.[42]  So, too, did the learned primary judge.[43]
  4. [68]
    Thus, Aveo’s proposition must be that the learned primary judge, an experienced judge of the Commercial List, either forgot what each side had agreed was the applicable test or went off on a frolic of his own.  In my view, both should be rejected.
  5. [69]
    The test for a prima facie case, stated above in O'Neill, and adopted from Beecham, is whether “the plaintiff has made out a prima facie case, in the sense that if the evidence remains as it is there is a probability that at the trial of the action the plaintiff will be held entitled to relief”.  That is what his Honour was considering when the alleged inconsistencies were examined: see paragraphs [55]-[60] above.  In other words, what his Honour did was to identify the evidence, as it then stood, on each of the alleged inconsistencies, to see if a material inconsistency with the development Principles of the Deed was made out, in the sense that it would lead to SLC being entitled to relief if the evidence remained as it is.
  6. [70]
    In my view, it is plain that the learned primary judge’s use of the phrase “serious question to be tried” was simply the often-used shorthand way of encapsulating the test of whether a prima facie case has been established.  I do not consider that his Honour meant to revert to the test in American Cyanamid Co v Ethicon Ltd,[44] a test neither party supported or advanced.
  7. [71]
    Further, his Honour’s description of a claim as being “not frivolous or vexatious” was, in context, a shorthand way of adverting to that part of the test which looks at whether, if the evidence remains as it is, there is a probability that at the trial of the action the plaintiff will be held entitled to relief.  I consider his Honour was simply saying that a frivolous or vexatious claim would not meet that test.
  8. [72]
    Further, his Honour referred to the “apparent strength of the Springfield parties’ case” as a relevant consideration if the balance of convenience were otherwise evenly balanced.[45]  That is another matter that shows the correct test was applied.
  9. [73]
    These grounds fail.

Ground 1(d)-(f) – no prima facie case

  1. [74]
    Before the learned primary judge, the focus of the contentions on the issue of whether a prima facie case had been established was whether the 2021 and 2022 Business Plans were “materially inconsistent” with clause 25.3 of the Deed, such that neither could be considered to come within the description of a “Business Plan for the purposes of this deed” under clause 25.6.
  2. [75]
    The learned primary judge found that a prima facie case had been established on three separate bases:
    1. as to whether the proposed Business Plans for 2021 and 2022 were “so contrary to Development Principle 4 as to make [them] materially inconsistent with the requirements of a Business Plan under clause 25.3”;[46]
    2. as to whether the 2021 and 2022 Business Plans were “relevantly materially inconsistent” by reason of a failure to include “the proposed subdivision of the Balance Development Site into Stage Lots”;[47] and
    3. by reason of the departure from the “Minimum Target” required by clause 25.3(d)(ii).[48]
  3. [76]
    Aveo challenges the findings on all three.
  4. [77]
    In considering these challenges, it must be borne in mind that the decision below was a discretionary one.  As such this Court should exercise a degree of restraint before interfering.[49]

Contrary to Development Principle 4

  1. [78]
    Aveo contend that the finding should not have been made as it was not pleaded.  As was the case with the learned primary judge, I do not consider that this issue should be resolved on that basis.
  2. [79]
    The statement of claim relevantly pleaded in paragraphs 49-50:[50]
  1. “49.On the proper construction of the Development Deed as a whole:
  1. (a)
    any expert determination referred under clause 54.3(c):
  1. (i)
    cannot determine the Minimum Target under clause 54.3:
  2. (ii)
    can only determine the average annual demand for Seniors Products and Other Accommodation Products on the basis products are medium to high density product that are developed in an economically feasible manner;
  1. (b)
    any resulting adjustment to the Minimum Target pursuant to clause 54:
  1. (i)
    cannot apply to either of the Purported Business Plans;

  1. (ii)
    cannot:
  1. (A)
    purport to reduce Aveo’s obligation to develop at least 2,500 Seniors Products and Other Accommodation Products on the Development Site;

  1. 50.In making the allegations in [49] above, the plaintiffs rely in particular on clauses 1.1 (in particular the definitions of “Business Plan” and “Minimum Target”), 2.2(a) and 2.2(b), 7.1, 14.2, 17(a), 18, 19 and 21, 24.1, 25.3 (in particular its chapeau), 25.6, 41, 47, 49, 51(a), 54 and the Development Principles (in particular Development Principle 3, Development Principle 4 and Development Principle 8) of the Development Deed (alleged in Annexure 1 to this Statement of Claim).”
  1. [80]
    In my view, whilst not as clear as it should have been, that was sufficient to signal that SLC contended that the proper construction of the chapeau of clause 25.3 and Development Principle 4 was that Aveo’s obligation to develop 2,500 Seniors Products and Other Accommodation Products could not be reduced.
  2. [81]
    However, assuming that the claim articulated to the learned primary judge was outside the pleading, that is not determinative.  This was an application for an interlocutory injunction and could be supported on material that went outside the strict bounds of the then current pleading.  Aveo betrayed no particular sense of irony in the fact their own submission on the balance of convenience included that the absence of a claim in the pleading was no obstacle to consideration of the point on the application:[51]

“The plaintiffs’ present failure to plead a claim for damages does not assist them. That failure could be addressed by amendment and could not count in the plaintiffs’ favour on the injunction application.”

  1. [82]
    SLC contended below that there was a material inconsistency with Development Principle 4.[52]  His Honour understood that SLC was advancing that case in support of the claim to make out a prima facie case.[53]
  2. [83]
    Aveo met that contention in oral submissions.[54]  In doing so Aveo submitted that the issue was not pleaded but did not object to it being raised as part of SLC’s case.  Aveo also filed material recording that the notice given by SLC in response to the 2021 and 2022 Plans was based, in part, on inconsistency with the Development Principles.[55]
  3. [84]
    Clause 25.3 provided that the Business Plan “must be consistent with … the Development Principles”.  Development Principle 4 provided:

“The Development must include at least 2,500 Seniors Products and Other Accommodation Products (in total)”

  1. [85]
    Aveo challenges the finding that a prima facie case had been made out on this issue, submitting that Development Principle 4 is a principle directed to the total products over the whole of the “Development Site” (not just the “First Stage Lot”) over the whole of the life of the Development to 2030 (and possibly 2034 if there was to be an extension under clause 4.2).  The submission was, in essence:
  1. (a)
    the primary judge’s finding was, in effect, that it would be very difficult for Aveo to achieve 2,500 total products by 2030, but SLC had not adduced any evidence as to the achievability of this task;
  2. (b)
    his Honour’s approach took no account of considerations such as clause 4.2, which expressly contemplates the possibility that Aveo might reach as few as 2,000 products by 2030, and be entitled to extend the term of the Development to 1 October 2034;
  3. (c)
    the primary judge’s exercise was thus misdirected; and
  4. (d)
    moreover, contrary to the primary judge’s finding in [51] of the Reasons below, there was evidence included in or with each Business Plan by way of a yield analysis identifying that (consistently with Development Principle 4) the total development yield over the life of the development remained higher than 2,500.
  1. [86]
    For several reasons I do not accept those submissions.
  2. [87]
    First, the task carried out by the learned primary judge was to consider whether a prima facie case for relief had been made out, evaluating the evidence as if it were to remain the same at the trial.[56]  The application was not a trial, and final factual findings could not be made.
  3. [88]
    Secondly, his Honour’s reasoning was based upon drawing inferences from, in part, Aveo’s apparent lack of historical development, as to which there was no contest on the evidence.  Aveo’s solicitor swore an affidavit (based on instructions from Aveo’s CEO) setting out the “current status of the project”:[57]
  1. “12As at the date of this affidavit:
  1. (a)
    Aveo has completed the development of three buildings comprising 152 retirement village units on the first Stage Lot. These units are referred to as ‘Seniors Products’ in the Development Deed.
  2. (b)
    Aveo has constructed a wellness centre, primary health services, food and community services and other amenities in Health City.
  3. (c)
    Aveo has sold 56 Seniors Products to members of the public.
  4. (d)
    96 Seniors Products have been completed but not sold.
  5. (e)
    The average annual sales rate from the beginning of 2017 (when Seniors Products were first listed for sale) is approximately 8.3 Seniors Products sold per year.
  6. (f)
    To date, Aveo has spent
  1. (i)
    approximately $4,431,645 on marketing the Seniors Products for sale: and
  2. (ii)
    in excess of $110 million on construction and development costs (including land acquisition costs).”
  1. [89]
    Thus, in 2022, seven years into the life of the Deed, and seven years after the First Stage Lot had been sold to Aveo: (i) only 152 units had been constructed, (ii) only 56 of them had been sold, and (iii) the sales rate was 8.3 Seniors Products per year.
  2. [90]
    The other part of the evidence upon which the learned primary judge based his conclusion was the supposed future development proposed in each Business Plan.
  3. [91]
    Development Principle 4 required that Aveo develop “at least 2,500” products on the Development Site.  The area of the “First Stage Lot” is more than half of that site.  Each of the disputed 2021 and 2022 Business Plans reduced the number of products on the First Stage Lot from 960 to 562.  That meant at least 1,938 products remained to be built on the rest of the Development Site, which was less than half the size of the area where 562 products were scheduled.
  4. [92]
    Thus, the inference available to be drawn as to the effect of each Business Plan was that it was practically impossible to develop 2,500 products before 1 October 2030.  On any reasonable view, that outcome was materially inconsistent with Development Principle 4.
  5. [93]
    Thirdly, the inferences his Honour drew were readily open and, once drawn, were compelling.  Each of the 2021 and 2022 Business Plans meant that Aveo had to develop between 2,033 to 2,180 products in the last five years of the 15-year term and even then, the bulk of those products (1,938) in the last three years.  That was a substantially greater rate of development than the rate tentatively proposed in the Business Plans for the 3-year Development Period commencing 1 October 2021.
  6. [94]
    Fourthly, the yield analysis which Aveo relied upon does not preclude the learned primary judge’s findings.  The yield analysis was that contained in each of the 2021 and 2022 Business Plans.[58]  It went no further than opining that, in theory, it was physically possible to locate the rest of the 2,500 products within the Balance Development Site.  The yield analysis for the Plans was conducted by reference to the Springfield Master Area Development Plan (MADP), and specifically “how the yield and massing exercise responds to the MADP” in four areas: building uses, building locations, building height and justification to 2 level car parking.[59]
  7. [95]
    The yield analysis said nothing about whether that level of development could actually be achieved within the remaining term.  Nor did it speak to what Aveo intended to achieve.  More important in evidentiary terms was the fact that neither Business Plan committed to undertake any further development until all existing products were sold.  The actual sales rate – see paragraph [89] above – offered no comfort whatever in that area.
  8. [96]
    On that basis, the yield analysis added nothing to the actual and proposed progress.
  9. [97]
    Fifthly, Aveo relied upon the learned primary judge’s description that his Honour “was engaging in an exercise of “prediction or speculation”.  It is as well to set out the actual passage in the Reasons, as the submission mis-stated the effect:[60]
  1. “[51]
    The Springfield parties’ submissions involve an element of prediction or speculation about the consequences of Aveo’s short- and medium-term plans on its longer-term obligations. There is no evidence before the Court about the potential rate at which Aveo could complete Seniors Products and Other Accommodation Products over the balance of the term of the Development Deed. There is only the evidence of the Aveo parties about their historical and presently planned rates of completion.”
  1. [98]
    As can be seen, the comment was directed at SLC’s submissions, and immediately followed by the analysis as to:[61]
  1. (a)
    Seniors Products completed in the first two periods, 2015-2018 (152) and 2018-2021 (nil);
  2. (b)
    what was predicted in the Business Plans for 2021-2024, namely under the 2021 Plan (168 at an average of 56 per year) and under the 2022 Plan (123 at an average of 41);
  3. (c)
    how many products were required to meet Development Principle 4; on the 2021 Plan, 2,033 at an average of 406 per year; on the 2022 Plan, 2,180 at an average of 430 per year; and
  4. (d)
    the rate at which Aveo would have to complete products; this was 1,938 products in the last three years of the 15-year term, “a rate ten to 15 times higher than it plans to do in the present three-year Development Period”.
  1. [99]
    His Honour’s exercise involved drawing inferences from known facts, namely the proposed rates in the 2021 and 2022 Business Plans and the actual rate of progress.  That does not warrant the criticism levelled in this part of Aveo’s submissions.
  2. [100]
    Sixthly, clause 4.2 of the Deed does not, in my view, demonstrate error on the part of the learned primary judge.  It provides that Aveo can request an extension of the Sunset Date for four years, and if it does so SLC must grant the extension.  There are conditions attached to that right, including that: (i) “at least 2,000 Completed Products” must have been delivered: clause 4.2(a)(ii); and Aveo is not in breach at the time of the request: clause 4.2(a)(iv).
  3. [101]
    Aveo points to the fact that clause 4.2(a) contemplates that Aveo may have reached as few as 2,000 products by 2030, yet still be able to get an extension.  In my view, recognition of that fact does not erode the inferences drawn from past performance and the limited proposed performance.
  4. [102]
    In any event, clause 4.2 was advanced by Aveo below merely as an indicator of the flexibility in the Deed.[62]  It is therefore difficult for Aveo to mount any criticism of the learned primary judge for failing to advert to it on the issue of prima facie case, even though his Honour was aware of it.[63]

Ground 1(f) - failure to include the proposed subdivision

  1. [103]
    Aveo advanced several submissions as to this point.
  2. [104]
    The first was that the absence of the subdivision plan did not, of itself, lead to material inconsistency because the learned primary judge said that this point “Considered together with” the Development Principle 4 point, raised a prima facie case of material inconsistency.  Therefore, it was said that if the Development Principle 4 point failed to raise a prima facie case, so too would this point fail.
  3. [105]
    The second was that there was a temporal error, reflected in paragraph [60] of the Reasons below, and involving “more unwarranted speculation”.  The learned primary judge held that:
  1. “[60]
    However, in each of the 2021 and 2022 Plans, the absence of a proposal for subdividing the Balance Development Site into Staged Lots may inform an understanding of the other information in the Plan. As the term of the Development Deed progresses towards its end, Aveo’s failure to comply with the requirement in cl 25.3(b)(ii) in this respect may combine with other inconsistencies alleged by the Springfield parties to render the plan materially inconsistent with the requirements of a Business Plan under cl 25.3.”
  1. [106]
    The error was said to be that clause 25.6 of the Deed required that the Business Plans be presently “materially inconsistent”, rather than at some future point.
  2. [107]
    The third was that there was an error in construction.  Clause 25.3(b)(ii) of the Deed only requires an “overview of the Development to occur within the Business Plan Period”, which is the three-year period from the date on which Aveo is required to give the Business Plan to SLC under clause 25.1.  Accordingly, it was said, where (as here) no subdivision is “proposed” within the Business Plan Period, clause 25.3(b)(ii) does not require details of any subdivision to be included.
  3. [108]
    The first submission fails for the reasons explained in respect of the Development Principle 4 point.
  4. [109]
    There is no dispute that the Business Plans did not include Aveo’s proposed subdivision of the Balance Development Site.  Instead, in each Plan Aveo stated, “Aveo Group have not yet developed a plan for the proposed subdivision of the Balance Development Site into Stage Lots.”
  5. [110]
    Clause 25.6 is set out in paragraph [48] above.
  6. [111]
    Clause 25.3 set out the relevant requirements of a “Business Plan”:[64]

Each Business Plan must be consistent with this deed and the Development Principles and must include:

  1. (b)
    an overview of the Development to occur within the Business Plan Period for the Business Plan, including:

  1. (ii)
    the proposed subdivision of the Balance Development Site into Stage Lots (which must include a sketch plan showing the proposed pattern of subdivision)
  1. [112]
    Clause 25.3(b)(ii) must be construed by reference to its text, in context.  Therefore the Deed must be examined for the context.
  2. [113]
    The recitals to the Deed relevantly record:
  1. (a)
    A: SLC owns the development Site;
  2. (b)
    C: Aveo has identified the Development Site as its preferred site to develop at least 2,500 Products;
  3. (c)
    D: SLC agreed to sub-grant to Aveo the right to exercise SLC’s development rights in relation to the Development Site;
  4. (d)
    E: Aveo has a call option to purchase the Development Site in stages;
  5. (e)
    G: as master developer, SLC will have oversight of the Development and will construct roads and provide other external infrastructure for the Development;
  6. (f)
    H: Aveo will ensure that the Development is consistent with the Development Principles;
  7. (g)
    J: Aveo has agreed to pay Development Fees to SLC in respect of all Seniors Products, Other Accommodation Products and Non-Accommodation Facilities that are built and sold on the Development Site; and
  8. (h)
    K: Aveo agreed to advance a loan to SLC under a Deed of Loan, which is repayable from the Development Fees that SLC receives from time to time in respect of RV Product.
  1. [114]
    The term “Development” is defined as including the development of the various products on the Development Site, the ancillary services or facilities, and the sale of products: clause 1.1.
  2. [115]
    Clause 2.1 provides for the paramount objectives of the parties:
  1. 2.1Paramount objectives

The objectives of the parties in undertaking the Project are to:

  1. (a)
    develop the Project on the Development Site in accordance with this deed;
  2. (b)
    find the best solution for the development of at least 2,500 Seniors Products and Other Accommodation Products on the Development Site;
  3. (c)
    develop the Development Site as a medium to high density development only and, if relevant Approvals can be procured, increase the development yield above 2,500 Seniors Products and Other Accommodation Products if it is commercially prudent to do so; and
  4. (d)
    optimise the financial return to the parties from the Development of the Seniors Products and Other Accommodation Products, recognising that a party is not to act contrary, or without regard, to its own commercial interests.”
  1. [116]
    Clause 2.2 then made provision as to how the paramount objectives were to be achieved:
  1. 2.2Achieving the objectives

The parties agree that the Paramount Objectives be achieved by (amongst other things):

  1. (a)
    undertaking and completing the Development in stages consistent with the Development Principles;
  2. (b)
    delivering at least the Minimum Target of Completed Product that are Seniors Product or Other Accommodation Product in each Development Period;
  3. (c)
    strong progressive growth in delivery of Seniors Product and Other Accommodation Product; and
  4. (d)
    Aveo ensuring:
  1. (i)
    the establishment, maintenance and proper and effective resourcing and management of appropriately qualified and experienced project management and sales teams;
  2. (ii)
    the marketing of Seniors Products and Other Accommodation Products; and
  3. (iii)
    the provision of all equipment and resources necessary for paragraphs 2.2(d)(i) and 2.2(d)(ii) to be effective.”
  1. [117]
    By clause 8.1 Aveo had responsibility for the Development, with a view to “completing the Development in a commercial and timely manner”, including:
    1. using all reasonable endeavours to ensure the delivery of the design, specification and construction of the Development consistent with the Development Approvals;
    2. carrying out, or procuring the carrying out, of the Development Works;
    3. marketing and sales of Seniors Products and Other Accommodation Products; and
    4. making any potential changes to the plans or the program that are necessary to progress the Development.
  2. [118]
    Clause 8.2 then obliged Aveo to “ensure that Development Works for each Stage Lot are commenced on or before the day that is four months after completion of the Sale Contract with respect to that Stage Lot”, and “use reasonable endeavours to procure the completion of the Development Works for each Stage Lot.
  3. [119]
    Clause 9.1(a) made SLC responsible for the installation of SLC Infrastructure Work.  Relevantly, by clause 1.1 the term SLC External Infrastructure Work means:

“Services (excluding gas) and Stormwater Connections, to the extent those services and connections are:

  1. (a)
    reasonably required by Aveo for the Development;
  2. (b)
    located outside of the Development Site; and
  3. (c)
    used, or intended to be used, for the purposes of delivering Services (excluding gas) to and from the boundary of the Development Site.”
  1. [120]
    By clause 1.1 the term “Services” means: “electricity, gas or water mains, sewerage mains, telephone cabling and other communications infrastructure”.
  2. [121]
    Clause 14.2 effectively bound SLC and Aveo to not compete with the project:
  1. 14.2Exclusivity arrangements
  1. (a)
    Subject to Aveo performing its Obligations under clause 14.2(b), SLC … must not develop, or enter into any agreement (excluding the Sale Contracts) to procure the development during the Exclusivity Period[65] of Seniors Products or Other Accommodation Products within Health City, without the prior written consent of Aveo (which may be withheld in its sole discretion).
  2. (b)
    Prior to the Sunset Date, Aveo … must not develop, or enter into any agreement to procure the development of, Seniors Products or Other Accommodation Products within the Catchment Area, without the prior written consent of SLC (which may be withheld in its sole discretion.”
  1. [122]
    Clause 15(a) then prohibits SLC from using the Development Site for any purpose which adversely impacts on the project.  Nor could SLC make any application for any development approval in respect of the Development Site (except as required for the performance of SLC’s obligations under the deed), without the prior written approval of Aveo: clause 15(b).  And, clause 15(c) prevented SLC from selling the Development Site, other than under the Deed or Sales Contracts.
  2. [123]
    Under clause 18, SLC had to prepare a Master Area Development Plan (MADP), and Aveo had to give SLC “all material and information” that is requested by SLC for the purpose of preparing the MADP.  Clause 18(c) obliged Aveo to “prepare and give to SLC … an indicative non-binding layout, massing and staging plan for the Project”, within three months after the date of the Deed.
  3. [124]
    Under clause 19, Aveo had to diligently pursue and use reasonable endeavours to obtain Development Approvals, at its cost.  Further, Aveo had to use reasonable endeavours to obtain all Development Approvals for the First Stage of the Development on or before the Development Approval Date (12 months after commencement).  Further, Aveo had to prepare and lodge, at its own cost, the Development Applications: clause 19.2.
  4. [125]
    Under clause 24.1(a), within 30 business days of the Deed Aveo had to give SLC a “sketch plan showing that part of the Development Site that will be the first Stage Lot for the Development”.  That would then lead to SLC doing a Survey Plan for the identified Stage Lot, and if eventually approved that Survey Plan (or an amended version) would be registered: clause 24.1(b)-(j).
  5. [126]
    Clause 24.2 provides that other survey plans had to be done by Aveo:
  1. 24.2Other draft survey plans

Except to the extent a Survey has been approved by Aveo under clause 24.1, at least 40 Business Days prior to the exercise of each Call Option, Aveo (at its own Cost) prepare and give to SLC a draft Survey Plan:

  1. (a)
    that is accordance with the Master Development Plan and the Business Plan;
  2. (b)
    that is consistent with the Development Principles; and
  3. (c)
    for the proposed reconfiguration of the Balance Development Site to create a separate indefeasible title for the next Stage Lot to be the subject of a Call Option.”
  1. [127]
    There was then a process that would lead to such a survey plan being approved, and eventually registered: clauses 24.3-24.5.
  2. [128]
    Clause 25.1 then provides for the Development to be implemented under a Rolling Business Plan:
  1. 25.1Rolling Business Plan
  1. (a)
    Aveo must use its reasonable endeavours to implement the Development in accordance with a rolling Business Plan.
  2. (b)
    Aveo must update the Business Plan on each anniversary of the project Commencement Date, until this deed is terminated or otherwise ends, with a look forward to the Business Plan Period and provide a copy to SLC.
  3. (c)
    Each Business Plan must demonstrate a commitment on the part of Aveo to progressing the Development in a timely manner having regard to prevailing market conditions and business investment criteria of Aveo for comparable development projects.
  4. (d)
    Aveo must act in Good Faith when preparing each Business Plan.”
  1. [129]
    Clause 30 of the Deed set up a Project Review Group (PRG) to facilitate cooperation between SLC and Aveo “in delivery of the Project”.  Clause 31.6 provides that:
  1. 31.6Works program
  1. (a)
    Prior to the commencement of Development Works in a Stage Lot, the PRG Representative for Aveo will provide the PRG Representative for SLC with a:
  1. (i)
    program of the major activities and the various stages and sequencing for the performance of the works; and …”
  1. [130]
    Development Fees attached to each of the products being built: clause 1.1 definition of “Development Fee”.  Within clause 1.1 each Development Fee has a formula by which it is calculated.
  2. [131]
    Clause 35.2 provides that Aveo must pay the Development Fee to SLC in accordance with clause 35.3.  Development Fees are payable within certain time periods from set events, such as the start of operation of an aged care facility, or the grant of an Accommodation Right.  As noted above, the Development Fees are the source of SLC’s repayment of the loan to it by Aveo: Recitals J and K.
  3. [132]
    It is in the context referred to above that one construes clause 25.3.
  4. [133]
    Aveo’s submission depends upon the proper construction of clause 25.3(b)(ii), and in particular, a construction by which no subdivision plan was required to be included under that clause until such time as Aveo decided to propose one.
  5. [134]
    The actual statement in each Plan was that Aveo had “not yet developed a plan for the proposed subdivision of the Balance Development Site into Stage Lots”.
  6. [135]
    The clause requires that:
    1. the Business Plan include “an overview of the Development to occur within the Business Plan Period”;
    2. the overview is to include the proposed subdivision of the Balance Development Site into Stage Lots; and
    3. the proposed subdivision must include a sketch plan showing the proposed pattern of subdivision.
  7. [136]
    Plainly, the overview is not of a state of affairs that already exists.  The overview is of “the Development to occur” in the plan period.  Similarly, the subdivision referred to is not an existing subdivision but one that is “proposed”.  That is reinforced by the fact that the sketch plan that must be included is of “the proposed pattern of subdivision”.
  8. [137]
    It is, in my view, important to notice the different parts of SLC’s land to which clause 25.3 applies.  The first requirement is an overview of Development to occur with the three-year period of the Business Plan.  That refers to the Development Site itself.  The proposed subdivision relates to the Balance Development Site, which is defined as “the Development Site excluding any Stage Lot that has been transferred to Aveo … following completion of Sale Contract”.  At the time of the 2021 and 2022 Business Plans, Lot 35 had been created as the First Stage Lot and transferred to Aveo.  The balance area, owned by SLC, was Lot 26.[66]
  9. [138]
    Consequently, the overview and the proposed subdivision relate to separate lots with different registered proprietors.
  10. [139]
    However, Lot 26 (the Balance Development Site) was the area from which further stage lots would be created as the development under the Deed progressed.  As such, each of SLC and Aveo had a vital interest in what was proposed for it.  The clauses examined above reveal that the development required both SLC and Aveo to cooperate, and each had a particular interest in how the development progressed.  After all, as the Deed provides, SLC was the landowner and Aveo was the developer.  SLC wanted a part of Springfield set up as a “Health City”,[67] and Aveo wanted to build and sell over 2,500 Seniors Products and Other Accommodation Products within that City.[68]  SLC is to receive Development Fees from Aveo, calculated by reference to what is built and sold.[69]
  11. [140]
    Further, the Sale Contract for Lot 35 required SLC to be paid the purchase price by instalments.  The Sale Contract also specified that Lot 35 would have 960 Seniors Products and Other Accommodation Products constructed on it.  Of course, that left 1,540 products left to be constructed.  Given that the total to be built on Lot 35 was the 960, the balance must be intended for stages to be created from Lot 26.
  12. [141]
    Further, as his Honour found, Lot 35 is the larger of the two parts of the Development Site.  From the initial Business Plan, Aveo has planned to develop Lot 35 in five Stage Lots, leaving the Balance Development Site for “Future Stages.[70]
  13. [142]
    The effect of the agreements, as was found by the learned primary judge in a passage not the subject of challenge, was that “if and when Aveo sells a Seniors Product or an Other Accommodation Product built on Lot 35, then Aveo Nominee is to pay to SLC2 one-960th of the purchase price for Lot 35”.[71]  One can infer that such a model would be adopted for subsequent stages on Lot 26.
  14. [143]
    In my view, that compels the conclusion that when clause 25.3(b)(ii) stipulated that the overview would include “the proposed subdivision of [Lot 26] into Stage Lots”, it means that Aveo must have a proposed subdivision to put forward as part of the Business Plan.  It cannot, in my view, mean that Aveo can simply ignore any proposed subdivision for Lot 26, and answer as it did.
  15. [144]
    Neither of the 2021 and 2022 Business Plans contained a proposed subdivision that would meet clause 25.3(b)(ii).  In my respectful view, the learned primary judge was correct to find with respect to those plans, that “it appears that every document provided (whether approved or not approved by SLC) has not met a requirement in cl 25.3(b)(ii)”.[72]
  16. [145]
    The next step in the reasoning by the learned primary judge was to consider whether that inconsistency was a material one.  His Honour held:[73]

“With Aveo still working on the development of the Staged Lots in Lot 35, this inconsistency may not be material.”

  1. [146]
    That, in my view, is why his Honour found that, when considered with the inconsistency concerning Development Principle 4, the clause 25.3(b)(ii) inconsistency was material.  I respectfully agree.

Departure from the “Minimum Target” required by clause 25.3(d)(ii)

  1. [147]
    Aveo’s submission on this point was relevantly that:[74]

“Although [SLC’s] case in this respect may not be “frivolous or vexatious”, that does not mean the plaintiffs have established a prima facie case in the requisite sense. [SLC] failed to plead or otherwise identify the “something more” that rendered this alleged failure material, in circumstances where (as would be expected in a long term contract such as this) the Development Deed builds in flexibility having regard to varying economic and market conditions, the returns the Development will generate for Aveo, and Aveo’s own commercial interests.”

  1. [148]
    In so far as the submission relies on a pleading point, the same considerations apply here as above.  In any event, the statement of claim pleaded facts that raised the issue of material inconsistency in a way sufficient for the purposes of establishing a prima facie case on an application for an interlocutory injunction:
    1. paragraph 29(c) – under the 2021 Business Plan no more than 141 Seniors Products might be developed in the three-year period, being the period under clause 25.3(d)(ii);[75]
    2. paragraph 34(c) – under the 2022 Business Plan no more than 123 Seniors Products might be developed in the three-year period, being the period under clause 25.3(d)(ii);[76]
    3. paragraph 39(c) – in the premises, neither was a Business Plan for the purposes of the Deed, because the anticipated total number of Seniors Products and other Accommodation Products to be developed (no more than 141 and 123) is less than the Minimum Target (360) referred to in cause 25.3(d)(ii);[77] and
    4. paragraph 39(d) and (e) – under the Deed a Business Plan cannot propose less than the Minimum Target because of, inter alia, clause 2.2(b), under which Aveo agreed to achieve the Paramount Objectives by developing at a rate no less than the Minimum Target.[78]
  2. [149]
    The case advanced by SLC at the hearing below was that the Business Plans were materially inconsistent with clause 25.3(d)(ii) because they departed from the Minimum Target.  His Honour understood that to be so.[79]  There is no challenge saying that it was not raised at all, only that the pleading did not allege what it was that made them materially inconsistent.
  3. [150]
    The learned primary judge explained the reasoning by which the finding was made that a prima facie case had been made out that the 2021 and 2022 Business Plans were materially inconsistent with clause 25.3(d)(ii):[80]
    1. the Minimum Target for the relevant Development Period was 360 Completed Seniors Products or Other Accommodation Products;
    2. the 2021 Plan anticipated 123 being developed;
    3. the 2022 Plan anticipated 168;
    4. in neither Plan did Aveo anticipate developing any others;
    5. consequently, Aveo anticipated developing a little over one third of the Minimum Target under the 2021 Plan, and a little less than 50 per cent under the 2022 Plan; and
    6. that departure was material, “by planning to complete less than half of the minimum target”.
  4. [151]
    Clause 25.3(d)(ii) provides that each Business Plan must include:[81]

“the anticipated number and mix for each ofthe RACF Product, RV Product, Other Accommodation Products to be developed during the Development Period that the Business Plan Period predominantly falls within, which must include at least the Minimum Target for Seniors Products and Other Accommodation Products (in total) for that Development Period;”

  1. [152]
    There is no doubt that the 2021 and 2022 Plans encompassed completion of only 123 and 169 Completed Seniors Products or Other Accommodation Products, respectively.  There is no doubt that the Minimum Target in each case was 360 Completed Seniors Products or Other Accommodation Products.
  2. [153]
    No contention was advanced that clause 25.3(d)(ii) did not mandate that each of the 2021 and 2022 Business Plans had to include a number and mix of products such that the Minimum Target was met.  There is no doubt that the 2021 and 2022 Plans did not meet the Minimum Target.
  3. [154]
    The only real question left for his Honour was whether a prima facie case had been made out that the conceded departure is material.  His Honour found it was material because of the degree of departure from the Minimum Target and the absence of any plan to catch up.
  4. [155]
    In my view, that finding was not just open, but almost inevitable, given: (i) the degree of departure from the target, (ii) the absence of any plan to catch up to the target, and (iii) the very slow pace of sales, as to which see paragraphs [88] and [89] above.

Conclusion – prima facie case

  1. [156]
    In my view it has not been demonstrated that the learned primary judge’s finding, that a prima facie case had been established, can be shown to have been in error.

Balance of convenience

  1. [157]
    Aveo contended that no irreparable harm to SLC could be demonstrated and therefore SLC could not establish that the balance of convenience lay with the grant of the injunction.  The focus of Aveo’s submissions was that the only prejudice SLC could point to was wasted costs if the expert were later found to have had no mandate:[82]
  1. “28.The primary judge did not mention the fundamental consideration that, if the plaintiffs succeeded at trial, any determination of the disputes by the expert could have no effect on the plaintiffs’ rights and obligations.
  2. 29.Instead, the sole prejudice relied upon by the primary judge (and the sole prejudice advanced by the plaintiffs) was an assertion that the plaintiffs would suffer the burden of wasted costs were the expert later found to have had no mandate. But this could not warrant an injunction when the plaintiffs would have an adequate remedy in damages.”
  1. [158]
    Aveo contended that error could be shown on three bases: (i) that there was no irreparable harm, (ii) that the learned primary judge had failed to take relevant considerations into account when looking at the question of wasted costs, and (iii) that the learned primary judge had failed to take relevant considerations into account when looking at the question of lost opportunity.

Grounds 2(a)-(g) – no irreparable harm

  1. [159]
    It is important to note the findings of the learned primary judge.  His Honour examined the question of whether the 2021 and 2022 Business Plans were Business Plans for the purpose of the Deed, and the question of the expert’s mandate.  His Honour concluded:[83]
  1. “[70]
    For the purposes of the interlocutory application, I am satisfied that the question – of whether, on the proper interpretation of the Development Deed, each of the 2021 Plan and the 2022 Plan is or is not a Business Plan for the purposes of the deed – is one that is beyond the mandate the parties agreed to give to the expert.”
  1. [160]
    There is no challenge to that finding.  It is in that context that the question of the balance of convenience falls to be considered.  Further, there was no challenge to the worth of SLC’s proffered undertaking as to damages.
  2. [161]
    The learned primary judge commenced consideration of the balance of convenience issue by observing:[84]
  1. “[75]
    Without forming any final or detailed conclusion on the Springfield parties’ relevant claims, it does appear they have a good claim that the extent to which Aveo has departed from the requirements of a Business Plan under cl 25.3 may render the details of each of the 2021 and the 2022 Plans materially inconsistent with those requirements. If the balance of convenience were otherwise evenly balanced, the apparent strength of the Springfield parties’ case would likely favour the grant of an interlocutory injunction.”
  1. [162]
    In my view, the highlighted passage is important when examining this issue.  His Honour found that the strength of SLC’s case favoured the grant of relief.
  2. [163]
    The learned primary judge accepted the evidence of Mr Robson as to the SLC’s estimated costs of running the expert determination (between $570,000 and $1m).[85]  However, the cost was not the basis upon which his Honour determined the balance of convenience issue.  After examining issues to do with the cost of the expert proceedings, his Honour said:[86]
  1. “[81]
    In any event, the expert process is likely to be well-advanced towards a conclusion within three months, if not restrained. If it were to conclude before the Court heard and determined the Springfield parties’ claim, then the efficacy of the expert’s determinations would remain under a cloud. The uncertainty as to whether Aveo’s plans are to take effect under the Development Deed would remain, pending a decision by the Court on the Springfield parties’ claim.
  2. [82]
    The Springfield parties say that under the Development Deed each party is to bear its own costs of the expert determination process.
  3. [83]
    Leaving aside the effect of such an agreement on a process found to have been invalid, the Springfield parties are rightly concerned that they will expend a substantial sum with no or no certain legal effect and with an uncertain prospect of recovering any of the sum.”
  1. [164]
    Contrary to the submission made to this Court by Aveo, that the sole prejudice relied on by the learned primary judge was the wasted costs,[87] the main aspect that was central to his Honour’s assessment was that if the expert process concluded prior to a trial “the efficacy of the expert’s determinations would remain under a cloud”.  As his Honour found, SLC was “rightly concerned” that they would expend substantial sum “with no or no certain legal effect”.
  2. [165]
    In my view, those considerations were warranted. An expert determination is a private contractual mechanism to which parties have agreed.[88] Further, an expert’s determination without a contractual mandate is not “final and binding” on the parties.  In the circumstances any purported determination by the expert would inevitably lead to further litigation. That unsatisfactory outcome is aptly illustrated by what was said in Barclays Bank Plc v Nylon Capital LLP:[89]

“First, whatever the expert decides on jurisdiction, his decision is not final. It can always be challenged, unlike his determination of a matter within his jurisdiction. This is the principle applicable to arbitrations. It would be wasteful and contrary to principle to have any different rule applicable to expert determinations. It would be wasteful because if the expert determined he had no jurisdiction and that was challenged, then the court would have to determine it. If the expert determined he had jurisdiction but in fact the court held he was wrong, then nothing could be more wasteful than the expert entering into a determination of the substance of the dispute when he had no jurisdiction to do so.”

  1. [166]
    His Honour also noted a fact apparently accepted by both parties, namely that SLC “would have no remedy in damages for their costs in the expert process”.[90]  It may be that his Honour’s view of that apparently accepted position was drawn from the fact that under the Deed each party paid their own costs of an expert determination.[91]
  2. [167]
    However, Aveo challenges that finding on appeal, contending that it had submitted that damages would be available.  The full passage is:[92]

“If our learned friends ultimately establish their case at trial that there was a breach of contract in the form of bad faith conduct then it has, at least, this consequence. It would engage the default mechanism in the contract, that is, they could give us a notice of default and require us to remedy it. There’s no evidence that that’s been done. It has not been done.

Assume for the moment that they give us a notice of default and that it’s not remedied. They would then have a breach of contract, which would sound in damages. The damages they would get, consequent upon that, if they prove their bad faith case, would include the wasted costs of the expert determination.”

  1. [168]
    That submission, as the text reveals, was made in respect of a case based on breach of the good faith provision in the Deed.  The learned primary judge told Senior Counsel for Aveo that he need not deal with the “good faith point”.[93]  Notwithstanding that, the submissions continued on the good faith point, including the passage above.
  2. [169]
    No submission was advanced beyond that, and no submission applicable to the position if the completed expert determination process proved to be invalid because the Business Plans were not Business Plans under the Deed.
  3. [170]
    Part K of the Deed made provision for the expert determination.  By clause 52.11 the expert determination process is not an arbitration under the Commercial Arbitration Act 2013 (Qld).  There is, therefore, no power to order costs of the process such as an arbitrator might have.  The Deed gives no express power to the expert to award costs against either party.[94]  Presumably that was the source of SLC’s submission made to his Honour that “Under the deed the parties’ costs in the expert determination are each party’s own costs”,[95] and his Honour’s comment in paragraph [82] of the Reasons.
  4. [171]
    Aveo submits before this Court that the costs of the expert determination, if invalidly invoked, could be recoverable as damages for breach of contract.  However, there was little development of that as a workable solution that would overtop the concern that his Honour held, and reflected in Barclays Bank, that nothing could be more wasteful than the expert entering into a determination of the substance of the dispute when she had no jurisdiction to do so.
  5. [172]
    With respect, I consider that the finding by the learned primary judge cannot be shown to be affected by error.  On the evidence as it stood the parties were likely to expend very significant time and expense (up to $1m by SLC) on the expert determination process when the process and outcome might be rendered completely inconsequential because the current proceedings established that the expert had no jurisdiction.  Assuming SLC’s success in the current proceeding, as against that undoubted wasteful exercise there was the unknown and unquantifiable prospect that damages might be recovered.  There was nothing before his Honour to suggest that such an outcome would not also attract litigation, itself exhibiting the intensity of opposition reflected in the current proceedings.

Ground 2(h) – wasted costs, relevant considerations

  1. [173]
    Aveo attacks the quality of Mr Robson’s estimate of the costs that might be incurred and wasted in the expert determination process.  The submission is similar to one made below.  The learned primary judge considered it.
  2. [174]
    The submissions should be rejected.
  3. [175]
    On an application for an interlocutory injunction the evidence will often not be in a form satisfactory for a trial of the issue.  That Mr Robson had not reviewed all material at that stage is hardly surprising.  Moreover, that fact provides no necessary basis to reject his evidence.  To the point, Mr Robson was not cross-examined on his affidavit evidence.
  4. [176]
    Further, his Honour did not proceed on the basis that all the costs would be wasted.  The central finding was that set out in paragraph [83] of the Reasons: see paragraph [163] above.  It was that SLC will expend a substantial sum with no or no certain legal effect and with an uncertain prospect of recovering any of the sum.
  5. [177]
    The aspect of wasted costs was not the central feature upon which his Honour based his assessment of the balance of convenience.

Ground 2(i) – lost opportunity, relevant considerations

  1. [178]
    Aveo’s submission on this point was, relevantly:[96]
  1. “35.The primary judge failed to take into account as relevant considerations, and to find, that in the event that the injunction were granted but the defendants succeeded at trial: (a) Aveo would be forever deprived of the opportunity to have the content of the 2021 and 2022 Business Plans determined by an expert in accordance with the Development Deed prior to the date for submission of the 2023 Business Plan (1 October 2023); (b) this would be contrary to the parties’ intentions manifested in the Development Deed that the content of annual Business Plans be resolved annually by approval or expert determination in a timely and confidential manner; and (c) the defendants would suffer harm which would be difficult to quantify and for which damages would not be an adequate remedy.
  2. 36.The difficulty of quantification flows from the nature of the process. One evident purpose of having a “rolling” annual Business Plan is to facilitate the shaping of the business year upon year, building progressively on the foundations of what has been determined for the most recent year by approval or expert determination. The matters in issue before the expert travel beyond what would be determined in a proceeding such as the present.
  3. 37.As would be expected, they include confidential and commercially sensitive matters of business judgment. The sophisticated provisions in the Development Deed for resolution of disputes as to the content of annual Business Plans are evidently designed to ensure that disputes as to such matters are resolved promptly by way of a confidential expert determination process.
  4. 38.The injunction means that Aveo will now have to shape the 2023 Business Plan without knowing what the expert would have determined for 2021 or 2022. The fixed reference point will be lost and may be incapable of recreation, hence the difficulty of quantification.”
  1. [179]
    In my respectful view, for several reasons this point should be put to one side.
  2. [180]
    First, by the time this appeal was heard (18 October 2023) the 2023 Plan had been produced.  The postulated prejudice, if it existed, had come and gone.
  3. [181]
    Secondly, there is reason to doubt any real prejudice in any event.  Aveo submitted the 2022 Plan before purporting to refer the 2021 Plan to dispute resolution.  Further, any prejudice of the kind asserted might be seen to be of Aveo’s own making.  It was not until 18 November 2022 that it referred the 2021 Plan to expert determination.
  4. [182]
    Thirdly, further and in any event, if the present position continued beyond 1 October 2023 (when the 2023 Plan was due), the Deed specified the current approved Business Plan continued in force.  In those circumstances the asserted prejudice was of doubtful relevance.
  5. [183]
    Fourthly, SLC proffered undertakings as to damages and Aveo did not dispute their efficacy or worth.
  6. [184]
    Fifthly, this point was not taken before the learned primary judge.

Conclusion on the balance of convenience

  1. [185]
    For the reason expressed above, the finding by the learned primary judge, that the balance of convenience favoured the grant of relief, was open and not affected by error.  One must bear in mind that even if this issue had been more evenly balanced, his Honour made a finding that the strength of SLC’s case would have tipped the balance in favour of granting relief.

Ground 3 – delay

  1. [186]
    The learned primary judge found that there had been delay on SLC’s part, but that:[97]
  1. “[107]
    In the present circumstances, I would not penalise the Springfield parties from delaying this application until it became clear to them that something of commercial significance was at stake. I would not encourage commercial parties to seek relief from the Court for matters that appear to be of little commercial consequence.
  2. [108]
    Having considered the submissions, I do not find that the delay, and its consequence for the Aveo parties, disentitles the Springfield parties to interlocutory relief.”
  1. [187]
    In the course of his Honours consideration of this issue, SLC’s position was referred to by his Honour:[98]
  1. “[103]
    The Springfield parties submit that it was not until they received and considered the Aveo parties’ material and submissions in the expert process that they identified the serious implications of the 2021 and 2022 Plans. This was 18 May 2023. They say it then occurred to them that the 2021 and 2022 Plans may be part of a scheme to delay and perhaps avoid paying the Springfield parties the agreed consideration for the purchase and development of Lot 35.”
  1. [188]
    Aveo challenges the finding in paragraphs [103] and [107] of the Reasons on the basis that there was no evidence to support them and that they do not amount to an adequate explanation for the delay.[99]
  2. [189]
    Paragraph [103] of the Reasons recites SLC’s submission below.  It makes no finding of its own.  Paragraph [107] makes the finding that his Honour would not penalise SLC “for delaying this application until it became clear to them that something of commercial significance was at stake”.  One needs to look at the evidence adduced below for the basis of SLC’s submission and whether his Honour could accept that submission on the hearing of an interlocutory application where no final findings would be made.
  3. [190]
    SLC’s written submissions below relevantly included these matters:[100]
    1. the 2021 Business Plan provided for no more than 562 Seniors products (and no Accommodation Products) would be developed on the First Stage Lot, extending beyond the termination date in October 2025;
    2. the Plan did not explain how to reconcile that with the 2,500 Products requirement, and did not include a subdivision plan for the Balance Development Site (Aveo said it did not have such a plan);
    3. the 2021 Plan went no further than to say that 141 Seniors Products would be developed in the three-year period;
    4. the 2022 Business Plan also provided for no more than 562 Seniors products (and no Accommodation Products) would be developed on the First Stage Lot; it also did not explain how to reconcile that with the 2,500 Products requirement, and did not include a subdivision plan for the Balance Development Site (Aveo said again that it did not have such a plan);
    5. the 2022 Plan went no further than to say that 123 Seniors Products would be developed in the three-year period;
    6. SLC did not approve either Plan, saying it was not a “Business Plan” for the purpose of the Deed;
    7. Aveo sought the appointment of the expert; Aveo’s solicitors wrongly described the dispute as relating to “whether the 2021 Business Plan is based on reasonable assessments of market demand, reasonably considers the economic viability of the Development, and is consistent with relevant planning instruments”;
    8. the expert was appointed by the Resolution Institute;
    9. in the course of the expert process SLC pressed for particulars; Aveo conceded that if the notice of dispute was not a proper notice under the Deed, the expert had no jurisdiction;
    10. on 25 January 2022, Aveo accepted that the expert had no power to determine whether the dispute notice was a valid dispute notice;
    11. on 3 February 2023, the expert deferred Aveo’s provision of particulars until delivery of submissions and evidence;
    12. on 6 April 2023, Aveo delivered an index of documents and submissions;
    13. on 30 March 2023 and 26 April 2023, Aveo requested a review of the Minimum Target under the Deed;
    14. SLC engaged lawyers on 14 April 2023, and those lawyers received the file from SLC’s previous lawyers on 5 May 2023;
    15. Aveo’s submissions included that it was entitled to reduce the Original Yield Figure of 960 products, but it did not have to identify how it would achieve the 2,500 target; the submissions did not reveal any intention to comply with the Minimum Target, or construct anything further before the termination date;
    16. on 18 May 2023, SLC’s lawyers wrote to Aveo’s lawyers raising SLC’s concerns that Aveo was impermissibly seeking to reduce the Original Yield Figure by way of the 2021 and 2022 Business Plans; no satisfactory response was received;
    17. on 29 May 2023, SLC’s lawyers wrote again, seeking to clarify the purported effect of any review of the Minimum Target (including: (1) what the proposed adjustment to the Minimum Target should be; (2) whether any adjustment to the Minimum Target affects the prior Purported Business Plans; and (3) whether any adjustment to the Minimum Target affects Aveo’s payment obligations on termination); no meaningful response was received;
    18. the present proceedings were commended on 6 June 2023; once again a response was sought from Aveo’s lawyers, but not forthcoming; and
    19. on 21 June 2023, SLC’s lawyers sought a response from Aveo as to the purported effect of any review of the Minimum Target (including: (1) what the proposed adjustment to the Minimum Target should be; (2) whether any adjustment to the Minimum Target affects the prior Purported Business Plans; and (3) whether any adjustment to the Minimum Target affects Aveo’s payment obligations on termination); no response was received.
  4. [191]
    That was the evidentiary basis for SLC’s submission that it took action when it became apparent that that the 2021 and 2022 Plans may be part of a scheme to delay and perhaps avoid paying SLC the agreed consideration for the purchase and development of Lot 35.
  5. [192]
    In my view, that was a sufficient evidentiary base, adduced on the making of an application for interlocutory relief, to justify the concern SLC entertained, and to explain that it took action when that concern became apparent.  As the chronology of facts above show, SLC repeatedly asked Aveo to explain how and why the Business Plans complied with clause 25.3 of the Deed.  Aveo refused to do so until it delivered its submissions to the expert on 6 April 2023.[101]  About the same time, Aveo wrote to Springfield purporting to commence the related review of the Minimum Target.  SLC acted promptly thereafter.
  6. [193]
    Aveo pressed on with the expert process notwithstanding that SLC contended the Plans were not Business Plans under the Deed, and therefore invalid, something that the expert could not determine.
  7. [194]
    The expression by the learned primary judge, that SLC took action when it became “clear to them that something of commercial significance was at stake”, was supported by the evidence referred to above.  In the course of submissions below his Honour adverted to the impact of the disputes as to the 2021 and 2022 Plans and the dispute as to changing the Minimum Target, commenting that “the significance of the matter dawned more slowly on the Springfield parties”.  That reveals his Honour’s appreciation of the commercial significance of what Aveo wanted to do, and what Aveo resisted doing.  Senior Counsel’s response for SLC was that “perhaps it’s better to say that it occurred when Mr Robson looked at it and took a different view than Clayton Utz did, perhaps”.[102]
  8. [195]
    It is true to say that no deponent expressed SLC’s state of mind in the terms used by his Honour, but the finding was an inferential one, supported by the evidence adduced on the application.  And, in the face of SLC’s questioning on the issue, Aveo’s absence of a response would have served to highlight the concern.
  9. [196]
    The second aspect of Aveo’s submissions was that the learned primary judge should have characterised the delay as being SLC’s failure to commence proceedings earlier, knowing that Aveo was expending time and money on the expert process:[103]
  1. “(a)
    despite having knowledge of the argument that the proposed Business Plans were not Business Plans for the purposes of the Development Deed because they were “materially inconsistent” within the meaning of cl. 25.6, in January 2023 the plaintiffs elected to challenge the expert’s mandate or jurisdiction on a different basis;  (b) after the expert rejected that challenge on 3 February 2023, it was incumbent on the plaintiffs to commence proceedings in the Supreme Court without delay if they wished to contend that the expert did not have a mandate or jurisdiction; and (c) despite this, the plaintiffs sat by whilst the defendants continued to devote time and resources to the expert process, including by serving evidence and submissions.”
  1. [197]
    I do not accept this submission, for several reasons.
  2. [198]
    First, the learned primary judge was well aware of the evidence that: (i) SLC rejected the Business Plans as being Business Plans under the Deed because of material inconsistency; (ii) the first challenge to the expert’s mandate failed; and (iii) there was then a delay in commencing the current proceedings and at the same time steps taken in the expert process.  However, characterisation of the delay, and in particular who was at fault and whether it was disqualifying delay, was a matter for his Honour’s assessment.  The finding his Honour made, i.e. that the delay was not fatal, was open to his Honour.  That another judge may have characterised it differently is not the test.  There is no demonstrable error in his Honour’s approach.
  3. [199]
    Secondly, his Honour’s finding that SLC did not commence these proceedings “until it became clear to them that something of commercial significance was at stake”, provides a basis for the characterisation of the delay as being explicable and not fatal.
  4. [200]
    Thirdly, the delay prior to commencing the present proceedings is relevant if it caused material prejudice to the other side.  The prejudice that Aveo pointed to was the cost it had expended, and the likely early determination by the expert.  However, that is a two-edged sword.  Aveo persisted with the expert process knowing that:
    1. SLC had rejected the Business Plans as being Business Plans under the Deed because of material inconsistency;
    2. Aveo accepted that the expert had no power to determine whether the dispute notice was a valid dispute notice;
    3. if the Business Plans were not Business Plans under the deed, then the expert had no jurisdiction;
    4. SLC was pressing Aveo for an answer as to how the Business Plans were said to comply with the Deed, and Aveo refused to respond until it delivered its submissions to the expert on 6 April 2023;
    5. SLC was concerned to have a response from Aveo as to its intention on the Minimum Target;
    6. SLC expressed concerns that Aveo was impermissibly seeking to reduce the Original Yield Figure by way of the 2021 and 2022 Business Plans; and
    7. Aveo sought to review the Minimum Target; SLC sought to clarify the purported effect of any review of the Minimum Target including: (1) what the proposed adjustment to the Minimum Target should be; (2) whether any adjustment to the Minimum Target affects the prior Purported Business Plans; and (3) whether any adjustment to the Minimum Target affects Aveo’s payment obligations on termination; no meaningful response was received from Aveo.
  5. [201]
    In the circumstances, any impact on Aveo from it proceeding with the expert process lay in its own decisions, not that of SLC.  Aveo always knew that SLC contended that the Business Plans did not qualify as such under the Deed.  The learned primary judge found as much.[104]
  6. [202]
    The third basis for the challenge to the finding on delay is that the learned primary erred in finding that:[105]

“… it was incumbent on the defendants to seek declaratory relief in the Supreme Court despite: (a) the plaintiffs having mounted a failed challenge to the expert’s mandate or jurisdiction; (b) the plaintiffs appearing to have abandoned any further or other challenge (prior to 18 May 2023; and (c) the provisions of the Development Deed mandating that the disputes be resolved by expert determination.”

  1. [203]
    The relevant finding formed but part of the following passage in the Reasons:[106]
  1. “[102]
    During this period of Springfield’s delay, the Aveo parties incurred about $270,000 in costs putting their evidence and submissions to the expert. If the expert process is found to be invalid, then Aveo will have wasted some (or all) of these costs. The Aveo parties might have avoided incurring these costs, had the Springfield parties sought the interlocutory relief sooner. Of course, the Aveo parties were aware that the Springfield parties contended that the 2021 and 2022 Plans were not Business Plans. The Aveo parties did not seek a declaration or other relief that might have clarified the rights of the parties in this respect. To that extent, the Aveo parties incurred these costs with knowledge that their costs might be wasted.”
  1. [204]
    His Honour did not make the finding that Aveo suggests.  In the passage above his Honour, as part of the overall assessment of the balance of convenience, examined the significance of Aveo’s having expended costs in the expert determination process.  The significance was, as his Honour said, to be viewed in light of the fact that Aveo incurred the costs in the face of SLC’s contention that the Business Plans were not Business Plans under the Deed, and therefore those costs might ultimately be wasted.
  2. [205]
    As part only of that exercise, his Honour observed that Aveo had not sought declaratory relief.  There is no doubt it could have done so, and that doing so was one way to resolve the issues as to the Business Plans.  That was a plain fact to be taken into account.  All his Honour found was, to that extent, Aveo incurred the costs with knowledge that they might be wasted.  The finding was unexceptional.

Conclusion – balance of convenience

  1. [206]
    For the reasons expressed above it has not been demonstrated that the learned primary judge’s finding as to the balance of convenience were affected by error.  This ground fails.

Notice of contention

  1. [207]
    The appeal grounds having failed, there is no need to examine the Notice of Contention.

Application to adduce further evidence

  1. [208]
    SLC applied for leave to adduce further evidence on the appeal.  It consisted of correspondence attached to an affidavit of Mr Robson sworn 27 July 2023 and amended pleadings in the Supreme Court proceedings.  On the hearing before this Court the question of leave was reserved.
  2. [209]
    The material exhibited by Mr Robson consisted of correspondence between the parties between 26 June 2023 and 27 July 2023, that is, subsequent to the decision below.  The pleadings contained amended claims made after the injunction was granted.
  3. [210]
    The evident purpose of the new material was primarily to underpin a submission on damages should this Court find itself re-exercising the discretion (and perhaps the Notice of Contention), going to Aveo’s presumed intention in the 2021 and 2022 Business Plans, and the impact of its conduct on the termination of the Deed and the price paid for the sale of the Stage 1 Lot. The amended pleading asserts that there will be a $40m difference to the purchase price of the Stage 1 Lot.  The amended pleading also corrects a point taken by Aveo, that the pleading did not allege what the material inconsistency was.
  4. [211]
    There was no opposition to the receipt of the new material.  I would grant leave to adduce that material.  However, ultimately the Court did not need to resort to it for the determination of the appeal.

Conclusion and orders

  1. [212]
    For the reasons expressed above the appeal should be dismissed.
  2. [213]
    The orders I propose are:
  1. 1.Grant leave to adduce further evidence on the appeal.
  2. 2.Appeal dismissed.
  3. 3.The appellants pay the respondents’ costs of the appeal.
  1. [214]
    BODDICE JA:  I agree with Morrison JA.
  2. [215]
    WILLIAMS J:  I agree with the reasons and proposed orders of Morrison JA.

Footnotes

[1] SLC and SCG.

[2] The appellants, Aveo Retirement Homes Limited, Aveo Group Limited and Aveo Springfield Pty Ltd.

[3] For ease of reference, in these reasons I intend to refer to the parties as SLC for the Springfield parties, and Aveo for the Aveo parties, unless there is a need to distinguish between entities on the same side.

[4] The process involves two expert determination processes: RI EXP 2022/1579 and RI EXP 2022/1587.

[5] Springfield City Group Pty Ltd v Aveo Retirement Homes Ltd [2023] QSC 145.

[6] The Sunset Date is 15 years after the Project Commencement Date of 1 October 2015.

[7] The Deed, when made by the parties, was dated 11 May 2015.  The first Business Plan would have been due by 10 January 2016.

[8] Clause 25.1(c).

[9] Clause 25.1(d).

[10] Definition, AB 137.

[11] 207 RV Products and 116 RACF Products.

[12] 86 RV Products and 108 RACF Products.

[13] 194 RV Products and 216 RACF Products.

[14] 65 RV Products and 70 RACF Products.

[15] 744 RV Products and 216 RACF Products.

[16] All RACF Products.

[17] 439 RV Products and 123 RACF Products.

[18] 45 RV Products and 123 RACF Products.

[19] 439 RV Products and 123 RACF Products.

[20] Those parts in bold are the clauses upon which the Springfield parties relied.

[21] Appellants’ outline paragraphs 8-11.

[22] (2006) 227 CLR 57; [2006] HCA 46 at [53] (O'Neill).

[23] Reasons below at [3]-[4].

[24] Reasons below at [51]-[54].

[25] Reasons below at [54].

[26] Reasons below at [55].

[27] Reasons below at [57].

[28] Reasons below at [58].

[29] Reasons below at [60].

[30] Reasons below at [61].

[31] Reasons below at [64].

[32] Reasons below at [65].

[33] Submissions at first instance, AB 119-120.

[34] (2014) 311 ALR 632 at [70].

[35] [2018] WASC 305 at [87].

[36] [2020] NSWSC 653 at [29].  Emphasis added.

[37] (1968) 118 CLR 618 at 623 (Beecham).

[38] O'Neill at [65].  Footnotes omitted.

[39] Warner-Lambert at [69].

[40] (1968) 118 CLR 618 at 622–623.

[41] Submissions at first instance, AB 147-148.

[42] SLC: AB 2900 lines 40-45, AB 2918 line 14.  Aveo: AB 2930 line 12, AB 2931 line 45, AB 2937 line 29, AB 2957 line 11, AB 2958 lines 5 and 19, AB 2962 line 31.

[43] AB 2918 line 14, AB 2959 lines 36-41.

[44] [1975] AC 396 at 407.

[45] Reasons below at [75].

[46] Reasons below at [55].

[47] Reasons below at [61].

[48] Reasons below at [65](j).

[49] Adam P Brown Male Fashions Pty Ltd v Philip Morris Inc (1981) 148 CLR 170 at 176-177.

[50] AB 67-68.

[51] Aveo’s outline paragraph 32.

[52] Written submissions below, paragraphs 12, 31, 33, 40-42, 55-57 and 70; oral address, AB 2901-2904.

[53] AB 2904 line 26.

[54] AB 2957-2962.

[55] Affidavit of Mr Ilott, paragraphs 28(a), 31(b) and 42AB 2729-2732.

[56] Beecham at 622-623.

[57] AB 2723-2724, paragraphs 3, 12.

[58] For the 2021 Plan, AB 2033-2037; for the 2022 Plan, AB 2315-2317.

[59] AB 2035, 2021 Plan; AB 2316, 2022 Plan.

[60] Reasons below at [51].

[61] Reasons below at [52]-[54].

[62] AB 2933 lines 1-10.

[63] Reasons below at [49].

[64] Emphasis added.

[65] The Exclusivity Period was 10 years from the commencement date, or termination of the Deed, whichever was earlier: clause 1.1.

[66] Reasons below at [18].

[67] Recitals A and B.

[68] Recitals C-E.

[69] Recitals J-K.

[70] Reasons below at [59].

[71] Reasons below at [20].

[72] Reasons below at [58].

[73] Reasons below at [59].

[74] Outline paragraph 26.  Footnotes omitted.

[75] AB 59.

[76] AB 61.

[77] AB 64.

[78] AB 64-65.

[79] Reasons below at [62].

[80] Reasons below at [63]-[65].

[81] Emphasis added.

[82] Aveo’s outline paragraphs 28-29.

[83] Reasons below at [70].

[84] Reasons below at [75].  Emphasis added.

[85] Reasons below at [77].

[86] Reasons below at [81]-[83].

[87] Aveo’s outline paragraph 29.

[88] Illawarra Community Housing Trust Ltd v MP Park Lane Pty Ltd [2020] NSWSC 751 at [62].

[89] [2011] EWCA Civ 826 at [44].

[90] Reasons below at [84].

[91] See Reasons below at [82].

[92] Aveo’s outline paragraph 31, referring to AB 2932 lines 29-39.

[93] AB 2932 line 12.

[94] And, as part of the expert determination process SLC and Aveo agreed that each parties’ costs of that process would be borne by those parties: AB 2828-2829, Item 11.

[95] AB 2981 lines 44-47.

[96] Aveo’s outline paragraphs 35-36.

[97] Reasons below at [107]-[108].

[98] Reasons below at [103].

[99] Aveo’s outline paragraph 40.

[100] SLC submissions paragraphs 39-49, AB 105-111.

[101] As much was said explicitly by Aveo’s lawyer at a preliminary conference with the expert: AB 2546.

[102] AB 2921 lines 27-33.

[103] Aveo’s outline paragraph 41.  Footnotes omitted.

[104] Reasons below at [102].

[105] Aveo outline paragraph 42.  Footnotes omitted.

[106] Reasons below at [102].

Close

Editorial Notes

  • Published Case Name:

    Aveo Retirement Homes Limited v Springfield City Group Pty Limited

  • Shortened Case Name:

    Aveo Retirement Homes Ltd v Springfield City Group Pty Ltd

  • MNC:

    [2024] QCA 102

  • Court:

    QCA

  • Judge(s):

    Morrison JA, Boddice JA, Williams J

  • Date:

    31 May 2024

Litigation History

EventCitation or FileDateNotes
Primary Judgment[2023] QSC 14529 Jun 2023Proceedings for declaratory and injunctive relief in respect of expert determination process and construction of deed concerning development project; interlocutory injunction granted restraining expert determination process pending final determination of claim: Bradley J.
Appeal Determined (QCA)[2024] QCA 10231 May 2024Leave to adduce further evidence granted; appeal dismissed: Morrison JA (Boddice JA and Williams J agreeing).

Appeal Status

Appeal Determined (QCA)

Cases Cited

Case NameFull CitationFrequency
Adam P Brown Male Fashions Proprietary Limited v Phillip Morris Incorporated (1981) 148 C.L.R 170
2 citations
Adam P Brown Male Fashions Pty Ltd v Philip Morris Inc [1981] HCA 39
1 citation
American Cyanamid Co v Ethicon Ltd (1975) AC 396
1 citation
Australian Broadcasting Corporation v O'Neill (2006 ) 227 CLR 57
2 citations
Australian Broadcasting Corporation v O'Neill (2006) HCA 46
2 citations
Barclays Bank Plc v Nylon Capital LLP [2011] EWCA Civ 826
2 citations
Beecham Group Ltd v Bristol Laboratories Pty Ltd (1968) 118 CLR 618
3 citations
Beecham Group Ltd v Bristol Laboratories Pty Ltd [1968] HCA 1
1 citation
Clough v Breen [2020] NSWSC 653
2 citations
In the matter of A Twins Spare Parts Pty Limited [2019] NSWSC 1347
1 citation
Mineralogy Pty Ltd v Sino Iron Pty Ltd [2016] WASCA 105
1 citation
Mineralogy Pty Ltd v Sino Iron Pty Ltd [2018] WASC 305
2 citations
Springfield City Group Pty Ltd v Aveo Retirement Homes Ltd [2023] QSC 145
3 citations
The Illawarra Community Housing Trust Limited v MP Park Lane Pty Ltd [2020] NSWSC 751
1 citation
Warner-Lambert Co LCC v Apotex Pty Ltd (2014) 311 ALR 632
2 citations

Cases Citing

Case NameFull CitationFrequency
Groupline Constructions Pty Ltd v CDI Lawyers Pty Ltd [2024] QSC 209 2 citations
1

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