Wilson v Webb[1997] QDC 190

BEFORE HIS HONOUR JUDGE DALY

8TH AUGUST, 1997

BETWEEN:

AND:

DATE OF HEARING: 1/8/97 6/8/97

Judgment: 8/8/97

CIVIL JURISDICTION

BEFORE HIS HONOUR JUDGE DALY

8TH AUGUST 1997

BETWEEN:

AND:

REASONS FOR JUDGMENT

This is an application for an interlocutory mandatory injunction.

Whilst at the interlocutory stage it is usually undesirable to say much about the facts of the matter, it is in this case necessary to do so in view of the contentions raised. I observe that the facts to which I refer are not findings made after full consideration of oral evidence but merely extracted from the affidavit material upon which there was limited cross-examination. I was asked by the plaintiffs' counsel to reject one assertion in the affidavit of Mr. Keith Webb but I discern no basis upon which I can, at present, take that course.

The plaintiffs are the owners of a shopping centre at 471, Varley Street, Yorkeys Knob. By a lease dated 28th September, 1993 (“the lease”) they let two shops of an area of 168 m² (“the premises”) to the defendants. The defendants operated on the premises a minimart supermarket business. Other tenants of the shopping centre operate other businesses. The supermarket is the anchor business for the shopping centre.

In February 1997 Mr. Webb, an accountant who acts for the defendants, had meetings with the proprietors of a shopping centre being developed at 453-455 Varley Street, Yorkeys Knob (“the alternative premises”). For various reasons set out in Mr. Webb's affidavit the defendants found the alternative premises more attractive and accepted that, if the alternative premises were operated as a supermarket by a competitor, their business on the premises would suffer. Negotiations for a lease of the alternative premises took place. The plaintiffs must have heard of negotiations because correspondence took place between solicitors in which it was indicated that the plaintiffs insisted on the defendants remaining in the premises. It is correct to say that by letters of 29th May, 1997 and 13th June, 1997 it was stated that the defendants did not, at that time, intend to vacate the premises.

On approximately 12th June, 1997 the defendants reached agreement on the terms of a lease for the alternative premises. A lease was executed of those premises on the 19th June, 1997. At the end of June or early July, as a result of a further analysis of the financial aspects by Mr. Webb, the defendants decided to cease operation at the premises and operate only from the alternative premises. Their plans thereunto had been to operate on a scaled down basis at the premises. On the 27th July, 1997 they ceased to operate on the premises. Rent was nevertheless paid on the 1st August, 1997.

The plaint was presented on 31 July, 1997 seeking, amongst other orders, “a mandatory injunction compelling the Defendants to operate a supermarket at the premises”. This application was filed the same day apparently seeking final orders although a draft of the orders sought tendered at the hearing makes it clear that the orders now sought are interlocutory and do not include a declaration.

To a traditional lawyer the proposition that a court would grant an injunction to compel a person to carry out a continuing activity not definable by way of a clear final result is somewhat startling. It is, however, submitted that the law as developed in Queensland enables such a course to be adopted and, further, this is a proper case in which such a course should be adopted on an interlocutory basis.

The obligations of the defendants are contained in the lease. Clause 10 provides:—

Item G of the second schedule provides:—

Clause 11 provides:—

Clause 12(b) is also relied upon by the plaintiffs but I accept the defendants' contention that the inter-relationship of 12(a) and 12(b) is such as to render 12(b) of little assistance in this matter.

The three matters which fall for consideration in respect of an interlocutory mandatory injunction are:—

(See Active Leisure (Sports) Pty. Ltd. -v- Sportsman's Australia Limited [1991] 1 Qd.R 301).

Counsels' submissions concerned the second and third points, it being accepted that there was a serious question to be tried. I will consider first the third question, that is, whether the plaintiffs have shown “the high degree of assurance” therein referred to?

As we have seen, the plaintiffs' rights depend upon the clauses of the lease earlier set out. There are disputes as to the interpretation of the relevant clauses. Indeed counsel for the defendants goes so far as to contend that the purported agreement may be void for uncertainty. He also submits that the words “If any trade or business service industry is conducted in the leased premises” are such as to qualify any reference to opening times and that, therefore, the defendants are at liberty to conduct no business on the premises and not open at all. The plaintiffs' counsel submits that, reading the clauses together and giving business efficacy to the agreement, would result in an interpretation that the defendants must run a supermarket on the premises and must therefore remain open for appropriate hours. As counsel for the defendants points out with some force nothing is, however, said about the level of business to be maintained. I must observe that, even without more, tenable rival contentions such as these as to the interpretation of the relevant clauses give one cause for concern when looking for the high degree of assurance required.

I remarked earlier that the traditional view has been that mandatory injunctions of the kind here sought are not readily granted by the courts. That is a view recently re-established in England and Wales by the House of Lords in Co-operative Insurance Society Limited -v- Argyll Stores (Judgment delivered on 21st May, 1997) (“Argyll”) reversing a contrary view expressed by the Court of Appeal ( (1996) 3 All E.R. 286). In that case the appellants closed their supermarket in the respondent's shopping centre. A similar lease was the basis of the obligation to keep open but the obligation was there more clear cut as there were no qualifying words in the relevant clause. Breach of covenant was found to exist. The Court of Appeal considered a mandatory injunction requiring continued occupation and trading would lie; the House of Lords unanimously reversed that decision upon what, if I might respectfully say so, seem to me eminently cogent grounds. The considerations to which Lord Hoffman refers in his judgment for maintaining what he describes as “the settled practice” would seem equally applicable to this case. This, then, is persuasive precedent of an high order which would have to be considered at trial and, if followed, would defeat the plaintiffs' claim for a mandatory injunction.

It is submitted that that precedent would not be followed in Queensland in this matter and, in effect, that the Queensland courts would prefer the approach adopted by the English Court of Appeal as Queensland law has already developed along similar lines to those adopted by that court. Reliance is placed upon Gillespie -v- Whiteoak [1989] 1 Qd R 284. In that case the defendant sold to the plaintiffs computerized advertizing businesses. There was an express covenant that the defendant would, inter alia, repair the software involved and update or develop it when he updated and developed any of the systems to “guarantee ongoing operation of the software”. The evidence was that the defendant was the only person who had the necessary expertise to carry out or supervize those tasks. A mandatory injunction was sought to compel performance of the covenant. At pages 287 and 288 Carter J said:—

The relief sought was granted.

On analysis, then, this is a case falling within the category where a result is to be achieved rather than where there is a requirement for the defendant to carry out an activity over an extended period of time. That distinction was recognized in Argyll's case by Lord Hoffman where, indeed, repairing covenants are expressly alluded to; it being observed that in appropriate circumstances specific performance of such a covenant will be ordered.

This is entirely in agreement with the analysis of Carter J and Gillespie does not therefore indicate any departure from the current English authority. I do not consider the decision of Anderson J of Supreme Court of Western Australia in Claremont Shopping Centre Pty. Ltd. -v- Country Clothing Pty. Ltd. 8 May 1997 Civ. 1401 of 1997 of any great assistance in view of the fact that His Honour with, in my view understandable, reluctance felt compelled to follow the Court of Appeal in Argyll. The distinguished authors of Meagher, Gummow and Lehane Equity, Doctrines and Remedies are, it is correct to say, critical of some aspects of the English legal authorities on this aspect of the law but without their considered view of Argyll I have difficulty in assuming that their criticism would extend to the well established principles discussed in that case.

It is also correct to say that there are some factual differences between Argyll and this case; it would be surprizing if there were not. But it does not seem to me that those factual differences are of such a character as to require a different approach in principal. On the basis that the approach adopted in Argyll would be likely to be adopted at the trial of this matter I cannot conclude that I am persuaded to the requisite degree that at such a trial it will appear that an interlocutory mandatory injunction was rightly granted even without adding the concerns which I have expressed about the conflicting arguments as to interpretation. The combination of both considerations would reinforce that conclusion.

In those circumstances it is not strictly necessary for me to consider the balance of convenience. However in case a different view should be taken of the matters to which I have already referred, I will say something about that issue. First, are damages an adequate remedy? Three matters are relied upon in submitting they are not. First, “that the value of the shopping centre will be seriously impaired without the anchor tenants and the consequential departure of minor tenants”. Even written thus it is clear that the submission involves matters of (a) the liability of the defendants for such diminution in value and (b) the quantum of the diminution. This, then, is a matter which can be met by damages. The second is the capacity of the defendants to pay damages which are, of course, restricted to an amount within the jurisdiction of this court. Whilst there is some indication that the defendants do not have cash reserves or the ability to borrow the amount of $243,800.00 for a specified purpose (see Webb para.24) it does not follow that they have not got assets sufficient to meet a judgment or ability to borrow to meet a judgment. To make any satisfactory finding as sought by the plaintiffs would involve an assessment of what is, in the case of persons engaged in a commercial venture, no doubt a complicated financial position. Such an assessment, at this stage, is not a practical course.

The third matter is that the assessment of damages would involve a trial with a “difficult and complex assessment of damages” and the plaintiffs should not be put to the “inconvenience” of prosecuting such a trial. The House of Lords took the contrary view that the issue of a mandatory injunction in these circumstances would involve “heavy and expensivc...litigation” whereas “an award of damages, on the other hand, brings the litigation to an end”. With respect, I prefer the view expressed by the House of Lords. I am of the view that damages are an adequate remedy.

Questions of hardship were also discussed. In view of the conclusion I have reached as to damages, hardship becomes an unimportant matter. If the plaintiffs have an adequate remedy in damages, imposition of a requirement on the defendants to re-enter and run a business must in itself be an unwarranted hardship. One also observes that the potential for the defendants to run a minimal business on the premises and yet remain arguably within their obligations would not meet the hardships the plaintiffs claim they suffer.

The plaintiffs' counsel also referred to the necessity to enforce “commercial morality”. As the English courts have clearly demonstrated in Argyll “commercial morality” is an elusive concept and even courts exercising equitable jurisdiction need a degree of clarity in the application of concepts. Hence, as the House of Lords suggest, one should detect, for example, a “gross breach of personal faith, or attempts to use the threat of non-performance as blackmail, in which the needs of justice will override all the considerations which support settled practice”. I am unable to detect conduct which can be so categorized in this case.

As to this court moving closer to the civil law systems of France, Germany and Scotland in respect of such orders, my acquaintanceship with one of those systems would lead me to respectfully concur with the words of Lord Clyde in Argyll that I should wish to reserve my opinion on the approach to be adopted by those systems.

I would not be satisfied in the circumstances, were it necessary to consider the matter, that the balance of convenience in this case favours the orders sought.

I therefore decline to make the orders sought and dismiss the plaintiff's summons insofar as it seeks interlocutory orders.