Ducksbury v Cairns Plywoods Pty Ltd

The defendant developer marketed a residential development as overlooking parkland and represented that it had no plans to develop the parkland. Those representations were false. The representations contravened the prohibition on misleading and deceptive conduct in the Australian Consumer Law. Justice Henry was required to consider whether to award damages or grant an injunction prohibiting the defendant from developing the parkland. His Honour opted for the latter. That was because, in weighing the comparative appropriateness of those remedies, his Honour considered damages to be an inadequate remedy because the buyers would never have purchased the lots had the representations not been made in the first place. Rather, for Henry J, an injunction was a more adequate form of relief because it restored the buyers to the position that the defendant represented they would enjoy in purchasing the lots – that their lots would overlook the parkland. Because the injunction had the practical effect of forcing the defendant to honour its representations, Henry J granted the injunction restraining the defendant from developing the parkland.

Henry J

28 November 2024

Background

The defendant, a developer, marketed residential lots for sale in a real estate development. In doing so, it represented that it had no plans to develop parkland behind those residential lots, marketing that the development would consist of houses overlooking the parkland in order to obtain a higher price for the lots on which those houses were to be built. These representations were false, and the defendant was actually planning to develop the parkland behind the lots into further residential lots. After learning of the defendant’s intentions, the plaintiffs brought the present proceedings seeking either an injunction or damages. [1]–[4], [44].

At trial, Henry J found that the defendant’s representations were misleading or deceptive within the meaning of the Australian Consumer Law (“ACL”) because the representations had the tendency to induce prospective purchasers of the lots to wrongly believe that the lots would continue to overlook the parkland which would entice them to purchase the lots, despite the defendant intending to develop that parkland and therefore deprive the lots of their parkland views. [110], [114], [116], [119], [123], [127]–[128]. Justice Henry also found that the purchasers relied on those misleading or deceptive representations to their detriment because the purchasers would not have bought the lots had they known, contrary to the representations, that the defendant was intending to turn the parkland into residential lots when the parkland motivated their purchase in the first place. [170], [177], [182], [186], [197].

In those circumstances, Henry J was required to consider whether the appropriate form of relief was an injunction or damages.

Should an injunction be granted?

The plaintiffs sought an injunction pursuant to s 232 ACL as their primary form of relief and they sought damages in the alternative. Section 232 provides that a court “may grant an injunction, in such terms as the court considers appropriate, if the court is satisfied that a person has engaged, or is proposing to engage, in conduct that constitutes” inter alia misleading or deceptive conduct. The proposed injunction would have precluded the defendant from developing the parkland into lots, requiring the land not to be used other than as parkland or as vacant grassland, and preventing it from being disposed of other than by transferring it to the Tablelands Regional Council. The effect of that injunction was to make the lots consistent with what had been represented in inducing the purchases. [218]–[221].

Justice Henry considered that s 232 ACL conferred very wide powers to restrain a person from engaging in conduct or to require them to do an act. His Honour referred to Gummow J’s observation in ICI Australia Operations Pty Ltd v Trade Practices Commission (1992) 38 FCR 248, 267 (“ICI”) that the breadth of s 232 ACL has the effect of allowing injunctions to be granted “in circumstances where, under the general law, there ordinarily would be a good answer to an application for injunctive relief”. His Honour adopted the observations of Lockhart J, with whom French J agreed, in ICI, 256 that s 232 was designed to ensure that on proof of the contravention enlivening its application, “the court should be given the widest possible injunctive powers, devoid of traditional constraints, though the power must be exercised judicially and sensibly”. His Honour thought it clear that a proper purpose to exercise the power would include marking the Court’s disapproval of the contravener’s conduct: Ethicon Sàrl v Gill (2021) 288 FCR 338, 545 [916]. Therefore, Henry J concluded that these considerations highlight that injunctive relief under s 232 is wider than injunctive relief at common law and in equity. In determining whether a s 232 injunction is a more appropriate form of relief than damages, his Honour considered that the relevant task is to weigh the comparative appropriateness of those remedies as forms of relief against the adverse consequences caused by the contravention. [222]–[226].

In performing that exercise, Henry J concluded that the injunction would be able to deliver the outcome intended without problematic side effects. [239]. Justice Henry described the present circumstances as the buyers having “ended up stuck with ownership of property they would not have bought but for the developer’s contraventions of the law” and that the defendant did not want the purchasers to know of their intentions to develop the parkland because the purchasers would not pay as much for the land. [231]. In those circumstances, the proposed injunction only sought to effectively restore the status quo that the defendant led the purchasers to believe: that is, that the parkland would remain parkland. This would leave the defendant in the same position it was in when it made the representations which induced the purchases. [232]. In Henry J’s view, the deployment of an injunction to that end was consistent with the statutory scheme of the ACL as the injunction would be calculated to restoring the buyers to the position prevailing at the time of the sale as represented by the defendant. [233].

Against that, although the injunction would deprive the defendant of the opportunity to profit from developing the parkland, that did not make the relief more materially oppressive than the financial impact of an award of damages because the defendant has already profited from its contravening representations by receiving a materially higher sale price from buyers than would have been achieved but for its deceit. In Henry J’s view, either an injunction or damages would carry adverse consequences for the developer, but they were consequences of the developer’s own wrongdoing. His Honour considered damages to be inadequate because had the representations not been made, the buyers would never have bought the lots such that damages could not restore the buyers to a position where they did not buy the lots. Rather, Henry J held that an injunction was appropriate because it restored the buyers to the position the defendant represented they would enjoy in inducing them to purchase the lots; that is, that their lots would overlook the parkland. In this way, the injunction was a more adequate form of relief in the circumstances because it had the effect of forcing the developer to honour its promises in what it represented. [239], [241]–[243].

Disposition

Judgment was given for the plaintiffs and the injunction in the terms sought was granted. [244], [327].

A Lukacs