Australian and Pacific Investment Corporation Pty Ltd & Ors v Jeshing Property Management Pty Ltd [2024] VSC 503 (27 August 2024)

AUSTRALIAN AND PACIFIC INVESTMENT CORPORATION PTY LTD & ORS	Plaintiffs

v

JESHING PROPERTY MANAGEMENT PTY LTD	Defendant

JUDGE:	COSGRAVE J
WHERE HELD:	Melbourne
DATE OF HEARING:	9 August 2024
DATE OF JUDGMENT:	27 August 2024
CASE MAY BE CITED AS:	Australian and Pacific Investment Corporation Pty Ltd & Ors v Jeshing Property Management Pty Ltd
MEDIUM NEUTRAL CITATION:	[2024] VSC 503

Catchwords: INJUNCTION – Interlocutory injunction – Plaintiffs seek interlocutory injunction restraining defendant from interfering with asserted rights to use various golf club facilities – Plaintiffs are investors in managed investment scheme – Scheme included golf club membership for investors – New operator of golf club refusing to honour memberships – Prima facie case against defendant not established – Balance of convenience favours defendant – Injunction refused.

Cases Cited: Australian Broadcasting Corporation v O’Neill [2006] HCA 46; (2006) 227 CLR 57; Beecham Group Ltd v Bristol Laboratorues Pty Ltd (1968) 118 CLR 618; Bradto Pty Ltd v State of Victoria [2006] VSCA 89; Falkingham v Peninsular Kingswood Country Golf Club Ltd [2014] VSCA 235; Waikato (Proprietary) Limited and Anor v Kaplan and Anor [2002] VSC 310; Yimiao Australia v Cyber Intelligence [2023] VSCA 21.

APPEARANCES:	Counsel	Solicitors
For the Plaintiffs	Mr M Galvin KC with Mr J Schulz	Colin Biggers & Paisley

For the Defendant	Dr D I Mence	Peter G Richards

1 By summons filed 8 July 2024, the plaintiffs seek an interlocutory injunction restraining the defendant from interfering with their asserted rights to use various golf club facilities without the payment of any fees.

2 The plaintiffs are room owners and investors in a registered managed investment scheme known as the Heritage Lodge Scheme (“the Scheme”). The Heritage Golf and Country Club (“the Golf Club”) is situated in Chirnside Park, Victoria. It comprises a hotel with 102 strata titled rooms and suites, management and common areas, a club house with restaurant and bar facilities, a car park, a spa and retreat, and two 18 hole golf courses being St John Golf Course and Henley Golf Course. Yarra Valley Golf Pty Ltd (“Yarra Valley Golf”) was the original owner and developer of the land.
3 The Scheme is administered by a responsible entity, currently Vasco Trustees Limited.^[1] Under the Scheme, room owners let their rooms to the hotel pursuant to room management agreements (formerly “lot leases”). The hotel is managed by a hotel manager pursuant to a hotel management agreement with the responsible entity. The hotel manager lets the rooms to Golf Club guests. Scheme members are entitled to a share of the profit derived from the hotel’s accommodation business with a guaranteed minimum profit share in each of the first two years of the operation of the Scheme.^[2]
4 The Scheme was created in 1999. Originally, the responsible entity of the Scheme was YVG Management Pty Limited (“YVG Management”). On 29 September 1999, YVG Management issued and lodged with the Australian Securities and Investments Commission a Prospectus (“Prospectus”) promoting and inviting investment in the Scheme.
5 The Prospectus made representations to potential investors in relation to the operation and benefits of the Scheme. The Prospectus stated that investors had the opportunity to participate in the ownership of the hotel which was to be constructed at the Golf Club. They could do so by purchasing an interest in the Scheme through which they would acquire:^[3]

6 The Prospectus represented to investors that Heritage Lodge Membership entitled members to the same rights and privileges to use the facilities of the Golf Club as life members.^[4] However, it stated that Heritage Lodge Membership attaches to ownership of an interest and cannot be severed from that ownership.^[5]
7 Individuals who bought a room or suite in the hotel were entitled to one Heritage Lodge Membership per room and two Heritage Lodge Memberships per suite.
8 Investors were advised that the Golf Club had undertaken to the responsible entity, by written undertaking dated 29 September 1999 (being the date of the Prospectus), that it would provide Heritage Lodge Memberships to owners on the basis set out in the Prospectus.
9 The holder of a Heritage Lodge Membership must nominate a Primary Golf Designee. That is the person who may take advantage of all Heritage Lodge Membership privileges available to individuals.^[6]
10 The first plaintiff, Australian and Pacific Investment Corporation Pty Ltd (“APIC”), owns lot 131 and lot 112. Lot 131 was settled in 2011 and lot 112 was settled in 2020. The second plaintiff, Yarra Valley Heritage Estate Pty Ltd (“YVHE”), owns 28 rooms at the hotel and 28 interests in the Scheme, each of which were settled in either 2021 or 2022.^[7] Mr Boerkamp, director of the first and second plaintiffs, is the Primary Golf Designee under a Heritage Lodge Membership associated with lot 131 in the hotel.
11 The third plaintiff, Lionel Richards (“Lionel”), and his wife Jennifer Richards (“Jennifer”), are the Primary Golf Designees under the Heritage Lodge Memberships associated with lots 24 and 110. Lionel owns these two lots and settled them in 2016.^[8]
12 The Golf Club is currently operated and controlled by the defendant, Jeshing Property Management Pty Ltd (“Jeshing”).
13 Jeshing’s immediate predecessor was the Heritage Golf and Country Club Pty Ltd (ACN 071 597 905) (“HGCC”). The plaintiffs contended that the Golf Club has previously been owned by other entities.^[9] According to the plaintiffs, previous Golf Club owners have honoured the Heritage Lodge Memberships of room and suite owners by allowing members (and/or Designees) to use the Golf Club facilities free of charge.^[10] Jeshing also honoured these memberships until earlier this year.^[11]
14 On 8 February 2023, Terrence Cooley, the General Manager of the Golf Club wrote to Ann Hamilton, an owner of one of the rooms in the hotel, seeking proof of ownership. She was asked to submit proof of ownership, by way of a current copy of title within a fortnight to avoid having her membership placed on hold. If the title was in the name of a company, trust or other entity or person, she was asked to supply evidence of her direct relationship to the title.^[12] It was not apparent at the hearing whether any other members were sent a similar email to this one.
15 On 4 April 2023, the Golf Club wrote to all Life and Heritage Lodge Members. Heritage Lodge Members were asked to submit their original contract of sale and a current certificate of title. Life members were asked to provide proof of purchase. This was said to be necessary to ensure all members were eligible to play and to avoid any misunderstandings regarding membership status. Members were advised that, once management had approved the required documents, they would be eligible to play at the club. However, until this time, a guest fee would be required to play.^[13]
16 This proceeding arises because of an email distributed by Jeshing to Golf Club room owners on 9 April 2024. The relevant parts of the email read as follows:^[14]

17 Since 1 May 2024, the Golf Club has been turning away Scheme members, or their Designees from playing golf at the St John and Henley golf courses and from utilising the private areas of the clubhouse and related facilities. Heritage Lodge Members and their Designees are also now excluded from participation in Golf Club events and championships.
18 By writ filed 8 July 2024, the plaintiffs seek declarations that the plaintiffs hold Heritage Lodge Memberships and that the defendant’s purported termination of the Heritage Lodge Memberships is invalid. The plaintiffs also seek permanent and interlocutory injunctions restraining the defendant from terminating or interfering with the plaintiffs’ Heritage Lodge Memberships and the plaintiffs’ enjoyment of membership rights.

19 The principles relevant to the grant of interlocutory injunctive relief were summarised by the Victorian Court of Appeal as follows:^[15]

20 To show it has a prima facie case, the plaintiff is not required to show that it is more probable than not it will succeed at trial.^[17] Rather, the plaintiff only needs to show that there is a sufficient likelihood of success at trial to warrant the court preserving the status quo pending resolution.^[18]
21 The question of what level of likelihood the plaintiff must show depends on the nature of the rights asserted and the practical consequences that will flow if the injunction is granted.^[19] It is insufficient for the plaintiff to merely prove that the claim is not frivolous or vexatious.^[20]
22 This test is often characterised as whether or not there is a serious question to be tried. However, the High Court cautioned in Australian Broadcasting Corporation v O’Neill^[21] that when using the term “serious question” the court must bear in mind that it is ultimately a question of the considerations noted in Beecham Group Ltd v Bristol Laboratories Pty Ltd.^[22] The first consideration 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 the plaintiff will be held entitled to relief.^[23] The second consideration is whether the inconvenience or injury the plaintiff would be likely to suffer if an injunction were refused outweighs, or is outweighed by, the injury the defendant would suffer if an injunction were granted.

23 To satisfy the balance of convenience, the plaintiff must demonstrate that it would suffer a greater injury if relief were refused than that which the defendant would suffer if the injunction were granted.^[24]
24 The Court of Appeal in Bradto Pty Ltd v State of Victoria expressed the balance of convenience as being the approach which carries the lower risk of injustice:^[25]

25 To protect against the consequences of the court granting an injunction where the party ultimately fails to establish their right, the plaintiff will generally be required to provide an undertaking as to damages.

26 The plaintiffs must satisfy two criteria to obtain an interlocutory injunction, namely, a prima facie case and the balance of convenience favouring the grant of the injunction. For the reasons which follow, I consider that the Court should not grant the injunction sought.
27 First, the plaintiffs have not established a prime facie case sufficient to justify an injunction.
28 The plaintiffs own rooms in the hotel which forms part of the complex. Those who own hotel rooms are investors in the Scheme. Under the Prospectus, the responsible entity represented that:

29 As noted earlier, Yarra Valley Golf was the initial owner of the land upon which the club was built and the developer. It is related to YVG Management, the responsible entity at the time of the Scheme’s inception.
30 In 2011, Golden Heritage Golf Pty Ltd (“GHG”) entered an agreement with Glenbelle Pty Ltd (receivers and managers appointed) (“Glenbelle”) and Yarra Valley Golf (receivers and managers appointed) to acquire all the land and assets of Glenbelle and Yarra Valley Golf associated with the Golf Club.^[34] GHG also bought all of the issued shares in HGCC. This is the company which entered a lease agreement with Yarra Valley Golf, the developer, under which the developer leased the course to HGCC for a period of 99 years with two options each of 99 years. It appears that HGCC operated the Golf Club from the outset and was the lessee and operator of the golf courses.^[35]
31 In a deed poll dated 11 May 2011 between GHG and the club members, GHG represented and warranted that upon completion of the acquisition agreements, GHG would maintain the then current structure under which the club members hold membership and would ensure that all rights of club members were maintained in accordance with specific terms of the memberships and the operational arrangements as set out in the schedule to the deed. Item 3 of the schedule referred to continued recognition of lodge members and life members who were not required to pay annual dues in perpetuity.
32 The upshot of this arrangement was that investors who had room interests or suite interests continued to have access to the Golf Club and its facilities in the same way as they had had since the inception of the club.
33 In 2024, HGCC went into liquidation. The company initiated a creditors voluntary liquidation because it was insolvent and unable to pay its debts as and when they fell due. The liquidation was crystallised through a resolution passed by creditors on 27 March 2024. The liquidator, Con Kokkinos, was appointed that day. In his initial advice and statutory report to creditors dated 19 April 2024, he wrote:

From this comment, I infer that the assets and business of the liquidated company were sold or transferred to Jeshing.

34 However, the evidence did not disclose the terms of the transfer from the liquidator to Jeshing. Accordingly, the Court simply does not know whether Jeshing, as the transferee, agreed to honour the original undertaking given to the responsible entity by the Golf Club and confirmed in the deed poll by GHG.
35 Given the recent conduct and attitude of Jeshing in terminating or abolishing the category of Heritage Lodge Membership at the Golf Club, it would be surprising if Jeshing gave those members any such assurances.
36 As a result, subject to a couple of provisos, there is no basis to say that the plaintiffs have any enforceable contractual rights against Jeshing. There is no written evidence of Jeshing agreeing with the responsible entity to recognise the interests of room owners or suite owners in so far as it allowed them to use the Golf Club courses and facilities without the payment of any fees, whether annual or green.
37 The first proviso is that the plaintiffs rely upon the liquidator’s report quoted above where he said that the assets of the liquidated company were transferred to Jeshing and Jeshing assumed the liabilities of the company in liquidation. The problem here is that the evidence does not reveal that the transferred liabilities included the rights of Heritage Lodge Members to use the Golf Club and its facilities. There is no reference to an assignment or novation to Jeshing and the plaintiffs did not identify in the documents where the liabilities transferred include Heritage Lodge Members’ rights.
38 The second proviso is that, in argument, the plaintiffs referred to Jeshing in fact recognising the rights of lodge members until 1 May 2024. They argued that Jeshing may be bound by some form of estoppel which now prevents it from subsequently changing its mind and ignoring the owners’ rights under the Scheme. The difficulty here is that the plaintiffs did not plead estoppel but specifically framed their case in contract.
39 In summary, the plaintiffs might have a claim against the responsible entity and/or entities which owned, controlled or operated the Golf Club and made promises when they entered into the Scheme and invested their money. But those entities no longer control the Golf Club and there is no obvious contractual relationship between the plaintiffs and Jeshing which could give rise to an enforceable claim. By framing their case as a contractual claim, the plaintiffs have chosen a weak cause of action especially where there is no clear documentary or oral evidence to support the alleged contractual relationship between the plaintiffs and Jeshing.
40 I acknowledge the position might change after discovery if the transfer documents show that Jeshing agreed to honour the rights of lodge members. I further acknowledge that the plaintiffs may be able to amend their case to claim some form of estoppel against Jeshing if they can establish that it accepted or acquiesced in the assertion of the plaintiffs’ rights. However, until then, I am not satisfied that the plaintiffs have established a prima facie case.
41 On the defendant’s submission, the injunction sought by the plaintiffs is mandatory in nature. This requires the plaintiffs to satisfy the Court that they have a high likelihood of success at trial such that they could convert the interlocutory injunction into a permanent one.^[36] The plaintiffs submit that the injunction sought is prohibitive as it is aimed at restraining Jeshing from taking action to prevent the plaintiffs from exercising their alleged rights. Because of the interference with the prior practice and the plaintiffs’ exercise of their alleged rights, I consider the injunction is more prohibitory in nature. However, I do not consider that the form of the injunction is of great significance in this case. As outlined above, in my view the plaintiffs have not established that they have a sufficiently strong prima facie case worthy of protection. They have failed to meet the lower of the two thresholds on the evidence currently before the Court. They would therefore fail to satisfy the “high likelihood of success at trial” criterion on the case they are currently running.
42 Secondly, I am not satisfied that the balance of convenience favours the grant of the injunction.
43 The plaintiffs argued that currently, they are deprived of the opportunity to exercise their rights which they have enjoyed for many years. This affects their health and social life. By way of contrast, they say that there is no major prejudice to the defendant if the plaintiffs continue to use the Golf Club and its facilities pending the final resolution of this litigation. The plaintiffs are offering the usual undertaking as to damages and submit that, if the defendant ultimately succeed in the litigation, the loss to them arising from the grant of an injunction would be quite limited and easily recoverable from the undertaking.
44 The defendant contends that it will be burdened by record keeping if the injunction is granted. Also, if the defendant succeeds at trial, it would have to pursue the outstanding fees accrued by the plaintiffs and quite likely others who use the golf course and facilities between the time of the grant of injunction and the resolution of the litigation. Jeshing says that it has made an open offer whereby if the plaintiffs pay the annual fees, they will continue to enjoy full membership rights. If the plaintiffs succeed at trial, they will recover those fees as damages.
45 In my opinion, the balance of convenience favours Jeshing. I say this for the following reasons. First, Jeshing made an open offer, acknowledged by the plaintiffs, whereby the plaintiffs can retain their former access to the Golf Club and its related facilities upon payment of the annual Golf Club membership fee. Nowhere in the plaintiffs’ affidavit material did they suggest that they were unable to pay the annual fees or that to do so would impose any particular hardship upon them.
46 Secondly, if the Court grants the injunction, Jeshing could well need to maintain detailed records about the use of the golf courses and facilities until the conclusion of the litigation. As noted before, a room interest includes one Heritage Lodge Membership and each suite interest includes two Heritage Lodge Memberships.^[37] As discussed above, the holder of a Heritage Lodge Membership must nominate a Primary Golf Designee. The identity of the Primary Golf Designee may change from time to time provided the Golf Club has sufficient notice of the change and the designation is not changed more frequently than the club rules allow. The spouse and children of the Primary Golf Designee between the ages of 16 and 23, living at home or attending an educational institution full-time, may be nominated for “Secondary Golf Designee” status. Subject to acceptance by the Golf Club committee and upon payment of an appropriate fee, any Secondary Golf Designee will be entitled to:

47 Members can invite guests to use the club facilities. The member and the Primary Golf Designee shall be responsible for payment of the applicable fees. Apart from restricting any particular guest to four visits in any membership year, there is no explicit limit on the number of guests a member can invite to the club.
48 The affidavit material names three Primary Golf Designees associated with the first and third plaintiffs but provides no information about the position with the 28 room interests held by the second plaintiff. Golf memberships are offered in the following categories: private, corporate, life and Heritage Lodge Membership.^[38] The number of Primary Golf Designees associated with the first three categories is limited to 1,270. The number of Primary Golf Designees associated with Heritage Lodge Memberships is limited to the number of Heritage Lodge units. Where the club membership is issued in the name of a corporate entity, the entity must designate the one, two or three individuals who will have the right to use the golf facilities as Primary Golf Designees.^[39]
49 The plaintiffs did not make clear in the application what the position was regarding the second plaintiff’s interest derived from its 28 rooms. I am not sure how many Primary Golf Designees might arise from this corporate ownership. Suffice to say, it appears there might be up to 84 Primary Golf Designees associated with these rooms if each room has three designees.
50 When allowance is made for the possibility of up to 87 Primary Golf Designees together with ancillary family members and guests, I accept that Jeshing will need to keep detailed records to follow up relevant people for payment if the injunction is granted. Also, I accept the record keeping would need to be clear and the Primary Golf Designee’s paperwork of a reliable standard to correctly monitor the situation with guests and family. This need to monitor and record a multiplicity of visits and transactions by various people places a potentially onerous burden on Jeshing.
51 Thirdly, given the circumstances set out in above,^[40] it will be a time consuming exercise for Jeshing to recover all outstanding fees if it ultimately succeeds in the litigation and is entitled to charge Primary Golf Designees and Secondary Golf Designees fees for use of the club and its facilities. It is quicker, easier and less contentious for Jeshing to simply repay to the plaintiffs the Golf Club membership fees paid by them between now and the conclusion of this litigation in the event that the plaintiffs succeed at trial.
52 The plaintiffs contend that damages would not be an adequate remedy to compensate them for the loss of use of the Golf Club and its facilities. They say that the main loss is a loss of enjoyment of rights, not a purely commercial loss.^[41] While I accept that it is more difficult to put a monetary value on the inability of the plaintiffs to exercise their Golf Club privileges, courts have experience in such matters.
53 I note two things in that context:

54 Finally, as expressed by the Court of Appeal in Bradto Pty Ltd v State of Victoria^[42], the balance of convenience favours the approach which carries the lower risk of injustice if it should turn out the court was ‘wrong’ in its decision about the injunction.^[43] That is, if it were to grant an injunction to a party who fails to establish their right at trial or if it fails to grant an injunction to a party who ultimately succeeds at trial. In the circumstances, and on the evidence currently before the Court, I am satisfied that refusing the injunction carries the lower risk of injustice. As outlined above, the plaintiffs can pay their annual membership fees and continue to enjoy full membership rights. If they are ultimately successful at trial, these membership fees can be recovered as an award of damages. However, if I were to grant the injunction sought now and the plaintiffs are unsuccessful at trial, I accept that the task of record keeping for the defendant and recovery of unpaid fees from a range of persons and entities creates a greater risk of injustice upon final determination of the proceeding.

55 For the reasons set out, I dismiss the plaintiffs’ summons filed 8 July 2024. Subject to hearing from the parties, I propose to order that the costs of the application be costs in the cause. Although I have not granted the plaintiffs’ application, it may be that after a full trial, the Court concludes that the plaintiffs are successful in their claim and, by implication, that the injunction ought to have been granted.
56 The parties should file and serve any written submissions on the issue of costs by 4:00pm on 30 August 2024. The submissions are limited to four A4 pages, a minimum 12-point typeface, 1.5 spacing and 40 mm margins on either side of the page. Any reply submissions are to be filed by 4:00pm on 4 September 2024. The reply submissions are limited to two A4 pages, a minimum 12-point typeface, 1.5 spacing and 40 mm margins on either side of the page. Unless the parties request, or I otherwise consider an oral hearing necessary, I propose to determine the issue of costs on the papers.

BETWEEN:

AUSTRALIAN AND PACIFIC INVESTMENT CORPORATION PTY LTD (ACN 005 445 107)	First plaintiff

YARRA VALLEY HERITAGE ESTATE PTY LTD (ACN 645 561 851)	Second plaintiff

LIONEL SYDNEY RICHARDS	Third plaintiff

- and -

JESHING PROPERTY MANAGEMENT PTY LTD (ACN 617 076 338)	Defendant

^[1] Exhibit WAJB-1 to the Affidavit of Wilhelmus Antonius Joannes Boerkamp filed 8 July 2024 at p. 353.

^[2] Exhibit WAJB-1 to the Affidavit of Wilhelmus Antonius Joannes Boerkamp filed 8 July 2024 at p. 412

^[3] The Heritage Lodge Scheme Prospectus, Exhibit WAJB-1 to the Affidavit of Wilhelmus Antonius Joannes Boerkamp filed 8 July 2024 at p. 410.

^[7] Affidavit of Wilhelmus Antonius Joannes Boerkamp filed 8 July 2024 at [53]-[55].

^[8] Affidavit of Wilhelmus Antonius Joannes Boerkamp filed 8 July 2024 at [56]-[57].

^[9] See paragraph 8 of the Plaintiffs’ Submissions. However, the plaintiffs did not identify any prior owners of the Golf Club save perhaps for Yarra Valley Golf Pty Ltd.

^[12] Exhibit WAJB-1 to the Affidavit of Wilhelmus Antonius Joannes Boerkamp filed 8 July 2024 at p. 2521.

^[16] Their Honours McLeish, Walker and Macauley JJA chose to formulate the prima facie test as a “serious question” per Australian Broadcasting Corporation v O’Neill [2006] HCA 46; (2006) 227 CLR 57 at [70].

^[23] 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 order they seek.

^[25] Bradto Pty Ltd v State of Victoria [2006] VSCA 89 at [35]. This expression of the balance of convenience were reiterated by the Court of Appeal in Falkingham v Peninsular Kingswood Country Golf Club Ltd [2014] VSCA 235.

^[26] The Heritage Lodge Scheme Prospectus, Exhibit WAJB-1 to the Affidavit of Wilhelmus Antonius Joannes Boerkamp filed 8 July 2024 at p. 414.

^[34] The acquisition did not include the hotel reception, restaurant and other facilities forming part of the Heritage Hotel being lot L34 on Plan of Subdivision PS 415064K or Certificate of Title Volume 10650 Folio 046.

^[37] The Heritage Lodge Scheme Prospectus, Exhibit WAJB-1 to the Affidavit of Wilhelmus Antonius Joannes Boerkamp filed 8 July 2024 at p. 429.

^[38] Exhibit WAJB-1 to the Affidavit of Wilhelmus Antonius Joannes Boerkamp filed 8 July 2024 at p. 542.

^[43] Ibid at [35]. This expression of the balance of convenience were reiterated by the Court of Appeal in Falkingham v Peninsular Kingswood Country Golf Club Ltd [2014] VSCA 235.

Supreme Court of Victoria

Australian and Pacific Investment Corporation Pty Ltd & Ors v Jeshing Property Management Pty Ltd [2024] VSC 503 (27 August 2024)