ACN 113 137 397 v Winterbottom - [2010] NSWSC 421

CITATION: ACN 113 137 397 v Winterbottom [2010] NSWSC 421

HEARING DATE(S): 29/4/10

JURISDICTION: Equity Division

JUDGMENT OF: McDougall J at 1

EX TEMPORE JUDGMENT DATE: 29 April 2010

DECISION: Injunction continued until further order; ancillary orders.

CATCHWORDS: EQUITY – application by plaintiff lessee for interlocutory and final relief – where mortgagee from lessor appoints receivers to lessor - where receivers served notice on plaintiff to vacate – subsequent unregistered lease –– whether lease enforceable as between lessee and lessor notwithstanding that it is not enforceable against prior registered mortgagee – where receivers acted as agent of lessor and not as bank in possession – whether on breach receivers had right to exercise all rights and powers of mortgagee to possession – whether mortgagee had consented to lease – estoppel – whether mortgagee bound to consent – discretionary factors for whether to grant or withhold relief.

LEGISLATION CITED: Real Property Act 1900 (NSW)

CATEGORY: Procedural and other rulings

CASES CITED: Antar v Fairchild Development Pty Ltd (R&M App) [2008] NSWSC 638
Australian Broadcasting Corporation v O'Neill (2006) 227 CLR 57
Kolback Securities Ltd v Epoch Mining NL (1987) 8 NSWLR 533
Lake Eerie Pty Ltd (Receiver and Managers appointed) Ltd v Flair Realty Pty Limited (11 February 1992, unreported; BC 9202405)

PARTIES: ACN 113 137 394 Pty Limited (ACN 113 137 394) (Plaintiff)
David John Winterbottom (First Defendant)
Martin Madden (Second Defendant)
Llerevni Pty Limited (ACN 089 415 145) (Receivers and Managers Appointed) (Third Defendant)

FILE NUMBER(S): SC 2010/97255

COUNSEL: R E Dubler SC (Plaintiff)
A A Henskens (Defendant)

SOLICITORS: Bruce Stewart Dimarco (Plaintiff)
Henry Davis York (Defendants)

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

McDOUGALL J

29 April 2010 (ex tempore – revised 29 April 2010)

2010/97255 ACN 113 137 397 PTY LIMITED v DAVID JOHN WINTERBOTTOM

JUDGMENT

1 HIS HONOUR: Llerevni Pty Limited is the owner of hotel premises at Narrabeen. The first floor stratum of those premises is operated as a hotel accommodation business by the plaintiff. The plaintiff was formerly known as Hotel Sands Pty Limited, and I shall refer to it as "Hotel Sands". The defendants have been appointed by Investec Bank (Australia) Limited ("the bank") as receivers and managers of Llerevni, pursuant to a mortgage from Llerevni to the bank over the hotel premises. On 16 April 2010, the defendants served on Hotel Sands notice that it must vacate the property occupied by it within seven days. Hotel Sands seeks interlocutory and final relief, the effect of which, if granted, would be to preserve for the time being, and confirm ultimately after a final hearing, what it says are its rights in relation to the accommodation business.

2 On 8 December 2009, Llerevni and Hotel Sands entered into what has been called "heads of agreement" with ALH Group (ALH). By that document, ALH offered "to purchase the freehold going concern of the Sands Hotel accommodation". The vendors were stated to be Llerevni, as to the "freehold strata", and Hotel Sands, as…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2010] NSWSC 421
Decision Date: 29 April 2010

CaseChat Overview and Summary

ACN 113 137 397 (the plaintiff) applied for interlocutory and final relief against Winterbottom (the defendant), who had been appointed as receivers by the mortgagee of a property leased by the plaintiff. The plaintiff sought relief to prevent the receivers from enforcing a notice to vacate served upon it. The dispute was heard by the Federal Circuit Court of Australia.

The central legal issues were whether the lease between the plaintiff and the lessor was enforceable against the prior registered mortgagee and whether the receivers had the right to exercise all the rights and powers of the mortgagee to possession. The court also had to determine if the mortgagee had consented to the lease, if the mortgagee was estopped from denying consent, and the discretionary factors to be considered in granting or withholding relief.

The court found that the lease was enforceable between the plaintiff and the lessor, but not against the prior registered mortgagee. The receivers were acting as agents of the lessor, not as a bank in possession, and thus were not entitled to exercise all the rights and powers of the mortgagee to possession. The court further held that the mortgagee had not consented to the lease, nor was it estopped from denying consent. In exercising its discretion, the court considered factors such as the likelihood of success, the balance of convenience, and the interests of justice.

The court granted the plaintiff's application for relief, preventing the receivers from enforcing the notice to vacate. The final orders required the receivers to refrain from interfering with the plaintiff's occupation and use of the property until the final determination of the proceeding or further order.

Orders