Art Vanderlay Pty Ltd v Stewart - [2008] QSC 88

SUPREME COURT OF QUEENSLAND

CITATION:

Art Vanderlay Pty Ltd v Stewart & Anor [2008] QSC 88

PARTIES:

ART VANDERLAY PTY LTD (ACN 097 231 680)
(plaintiff)
v
MARGARET ELIZABETH STEWART
(first defendant)
and
DAVID JOHN O’BRIEN
(second defendant)

FILE NO:

3760/07

DIVISION:

Trial Division

PROCEEDING:

Application

ORIGINATING COURT:

Supreme Court of Queensland

DELIVERED ON:

12 May 2008

DELIVERED AT:

Brisbane

HEARING DATE:

12 December 2008

JUDGE:

Daubney J

ORDER:

Order that:

1. The application for summary judgment be dismissed.

2. The costs of and incidental to the application be reserved.

CATCHWORDS:

PROCEDURE – SUPREME COURT PROCEDURE – QUEENSLAND – PROCEDURE UNDER RULES OF COURT – Summary judgment – where ownership of a group of shares in a company entitled the holder to a leasehold interest in a residential unit – where the defendants agreed to sell their shares to the plaintiff – where the sale conditions provided that the defendants were to use their ‘best endeavours’ to obtain the approval of the directors of the company to the transfer of shares – where the transfer of shares to the plaintiff did not proceed – where the defendants seek summary judgment in respect of the plaintiffs claim for, inter alia, specific performance – whether the plaintiff has no real prospect of successfully establishing that the defendants failed to use their best endeavours to secure the transfer to the plaintiffs

Transfield Pty Ltd v Arlo International Ltd (1980) 144 CLR 83
Manning River Co-Operative Dairy Co Ltd v Shoesmith (1915) 19 CLR 714
Monardo v Complete Hardware Ltd (1990) 20 NSWLR 489
Ozecom v Hudson Investment Group [2007] NSWSC 719

Corporations Act 2001 (Cth)
Uniform Civil Procedure Rules 1999 (Qld)

COUNSEL:

TH Arnold for the applicants
RM Derrington SC with CA Johnstone for the respondents

SOLICITORS:

Macdonald & Michel for the applicants
Hickey Lawyers for the respondents

‘Hume Lodge’ is a complex of seven residential units at Broadbeach on the Gold Coast. Ownership of units within the complex is effectively derived through a scheme colloquially known as ‘company title’. The complex is owned by a company, Hume Lodge Pty Ltd (‘the Company’). The issued shares in the Company are divided into groups, one for each of the units in the complex.[1] The holding of a particular group of shares in the Company confers on the holder the rights to the ‘exclusive occupation and possession of [the] particular unit’.[2] The defendants jointly own 6,500 shares in the Company. They are also the lessees under registered lease no. 601354732 from the Company of the unit to which their shares relate, namely Unit 4 in the complex. The lease is for a term of 99 years from 1 July 1979, and is expressly subject to a requirement that the lessee thereunder continues to hold the specified shares in the company.
[1]Article 6(a).
[2]Article 6(c).

It is not in issue that the shares and the lease entitle the defendants to exclusive possession of Unit 4.

By a written agreement dated 31 January 2007 (‘the Agreement’),…

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: [2008] QSC 88
Decision Date: 12 May 2008

CaseChat Overview and Summary

Art Vanderlay Pty Ltd brought proceedings against Stewart, seeking specific performance of an agreement to transfer shares in a company that granted a leasehold interest in a residential unit. Stewart, who agreed to sell their shares to Art Vanderlay, was required under the sale conditions to use their best endeavours to obtain the approval of the company's directors for the transfer. The share transfer did not proceed, and Stewart now sought summary judgment regarding Art Vanderlay's claim for specific performance. The court was required to determine if Art Vanderlay had any real prospect of successfully establishing that Stewart failed to use their best endeavours to secure the transfer to Art Vanderlay.

The court found that Art Vanderlay had a real prospect of successfully establishing that Stewart failed to use their best endeavours to secure the transfer of shares. The court held that there were factual disputes concerning the extent of Stewart's efforts to obtain the approval of the directors. The court found that there were questions of fact as to whether Stewart had used their best endeavours, and whether they had acted honestly and in good faith. As a result, the court held that Art Vanderlay had a real prospect of success on their claim.

The court dismissed the application for summary judgment, finding that Art Vanderlay had a real prospect of successfully establishing that Stewart failed to use their best endeavours to secure the transfer of shares. The court also held that there were questions of fact as to whether Stewart had acted honestly and in good faith, and therefore, summary judgment was not appropriate. The court reserved the costs of and incidental to the application.

Orders

Orders of the court

Order that:

1. The application for summary judgment be dismissed.

2. The costs of and incidental to the application be reserved.

Background

Background to the litigation

Full text does not contain this section.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

Full text does not contain this section.

Ratio Decidendi

Legal Principle Established

Full text does not contain this section.

CITATION:	Art Vanderlay Pty Ltd v Stewart & Anor [2008] QSC 88
PARTIES:	ART VANDERLAY PTY LTD (ACN 097 231 680) (plaintiff) v MARGARET ELIZABETH STEWART (first defendant) and DAVID JOHN O’BRIEN (second defendant)
FILE NO:	3760/07
DIVISION:	Trial Division
PROCEEDING:	Application
ORIGINATING COURT:	Supreme Court of Queensland
DELIVERED ON:	12 May 2008
DELIVERED AT:	Brisbane
HEARING DATE:	12 December 2008
JUDGE:	Daubney J
ORDER:	Order that: 1. The application for summary judgment be dismissed. 2. The costs of and incidental to the application be reserved.
CATCHWORDS:	PROCEDURE – SUPREME COURT PROCEDURE – QUEENSLAND – PROCEDURE UNDER RULES OF COURT – Summary judgment – where ownership of a group of shares in a company entitled the holder to a leasehold interest in a residential unit – where the defendants agreed to sell their shares to the plaintiff – where the sale conditions provided that the defendants were to use their ‘best endeavours’ to obtain the approval of the directors of the company to the transfer of shares – where the transfer of shares to the plaintiff did not proceed – where the defendants seek summary judgment in respect of the plaintiffs claim for, inter alia, specific performance – whether the plaintiff has no real prospect of successfully establishing that the defendants failed to use their best endeavours to secure the transfer to the plaintiffs Transfield Pty Ltd v Arlo International Ltd (1980) 144 CLR 83 Manning River Co-Operative Dairy Co Ltd v Shoesmith (1915) 19 CLR 714 Monardo v Complete Hardware Ltd (1990) 20 NSWLR 489 Ozecom v Hudson Investment Group [2007] NSWSC 719 Corporations Act 2001 (Cth) Uniform Civil Procedure Rules 1999 (Qld)
COUNSEL:	TH Arnold for the applicants RM Derrington SC with CA Johnstone for the respondents
SOLICITORS:	Macdonald & Michel for the applicants Hickey Lawyers for the respondents