Alka Developments P/L v Lemery Holdings P/L - [2005] NSWSC 1335

CITATION:
Alka Developments P/L v Lemery Holdings P/L [2005] NSWSC 1335
This decision has been amended. Please see the end of the judgment for a list of the amendments.

HEARING DATE(S): 7 October 2005

JUDGMENT DATE :

7 October 2005

JUDGMENT OF:
Brereton J

CATCHWORDS:
EQUITY - remedies - injunctions - Mareva injunctions - approach to grant of Mareva relief - whether prima facie cause of action - whether risk of dissipation - relevance of strength and quantum of potential prima facie claim - CONVEYANCING - Vendor and Purchaser - position of parties after completion - merger - whether damages may be claimed after completion for failure to convey unencumbered title.

CASES CITED:
Frigo v Culhaci (1998) NSWCA, 17 July 1998
Jackson v Sterling Industries (1987) 162 CLR 612
Patrick Stevedores Operations No 2 Pty Ltd v Maritime Union of Australia (1998) 72 ALJR 873
Patterson v BTR Engineering Australia Limited (1989) 18 NSWLR 319

PARTIES:
(5058/05) Alka Developments Pty Limited (plaintiff)
Lemery Holdings Pty Limited (first defendant)
VQ Realty Pty Limited (second defendant)
(5036/05) Lemery Holdings Pty Limited (plaintiff)
VQ Realty Pty Limited (first defendant)
Alka Developments Pty Limited (second defendant)

FILE NUMBER(S):
SC 5058/05; 5036/05

COUNSEL:
A Ivantsoff (plaintiff, Alka)
T Hall (solicitor) (first defendant, Lemery)

SOLICITORS:
Doherty Partners (plaintiff)
Tzovaras Legal (first defendant)
Delfino & Delfino (second defendant)

LOWER COURT JURISDICTION:

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

BRERETON J

Friday 7 October 2005

5058/05 Alka Developments Pty Ltd v Lemery Holdings Pty Ltd
5036/05 Lemery Holdings Pty Ltd v VQ Realty Pty Ltd t/as Orange Realty

JUDGMENT (ex tempore - revised 19 December 2005)

1 HIS HONOUR: The plaintiff Alka Developments Pty Ltd is the purchaser, and the first defendant Lemery Holdings Pty Ltd is the vendor, of a shop at 227 Macquarie Street, Liverpool, under contract dated 31 March 2004. The second defendant, VQ Realty Pty Ltd, which trades as Orange Realty, was the selling agent. So far as the evidence goes, Ghandi Faizi Sobbi appears to be the principal of Lemery, and Mr Karasmanis is the principal of Alka.

2 The contract included the following relevant provisions.

3 Clause 1 defined "Adjustment Date" as the earlier of the giving of possession to the purchaser, or completion.

4 Clause 14.1 provided that the vendor would be liable for all rates, water, sewerage and drainage service and usage charges, land tax and all other periodic outgoings up to and including the Adjustment Date, after which the purchaser would be so liable.

5 Clause 16.3 provided that on completion, the vendor must cause the legal title to the property to pass to the purchaser free of any mortgage or other interest, subject to any necessary registration.

6 Clause 16.10 provided that on completion, the deposit belongs to the vendor.

7 Special Condition 14 provided that completion should take place within 42 days from the date of the contract, and made provision for the issue of a notice to complete if settlement was not…

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: [2005] NSWSC 1335
Decision Date: 7 October 2005

CaseChat Overview and Summary

Alka Developments P/L, the plaintiff, filed an action against Lemery Holdings P/L, the defendant, in the Federal Circuit Court of Australia. The plaintiff sought relief, including a Mareva injunction, against the defendant to prevent the dissipation of assets. The plaintiff's claim was based on an alleged failure by the defendant to convey an unencumbered title to a property, which resulted in a dispute concerning the validity of the transaction and the proper application of equitable remedies.

The court was tasked with determining whether a prima facie cause of action existed to justify the granting of a Mareva injunction. It was also required to assess whether there was a risk of the defendant dissipating assets, and to consider the relevance of the strength and quantum of the potential claim in this context. Additionally, the court had to address whether damages could be claimed by the plaintiff after completion of the property transaction if the defendant had failed to convey an unencumbered title.

In its decision, the court found that there was a prima facie case for the plaintiff's claim. It noted that the risk of asset dissipation was significant given the nature of the defendant's business and the potential financial exposure. The strength of the plaintiff's claim and the potential quantum of damages were considered relevant in the context of the risk assessment. The court granted the Mareva injunction to protect the plaintiff's interests pending further proceedings. Regarding the claim for damages post-completion, the court held that such claims were permissible if the failure to convey an unencumbered title had occurred.

The court ordered that the Mareva injunction be granted to the plaintiff and that the defendant was restrained from dissipating assets. The case was to proceed to a full hearing to determine the extent of the damages, if any, that the defendant owed to the plaintiff.

Orders