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Ausmezz Pty Ltd v Goldberger

Ausmezz Pty Ltd v Goldberger

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Case Copied 12 December 2011 59 min read

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IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE

COMMERCIAL AND EQUITY DIVISION

COMMERCIAL COURT

LIST A
SCI 2010 6129

AUSMEZZ PTY LIMITED (ACN 100 425 590) and MIRVAC CAPITAL INVESTMENTS PTY LTD (ACN 093 644 252)	Plaintiffs
v
DAVID GOLDBERGER & ORS (according to the schedule attached)	Defendants
AND
GEOFFREY GORDON PORZ and FRANCESCO DE RANGO	Plaintiffs by Counterclaim
v
AUSMEZZ PTY LIMITED (ACN 100 425 590) and MIRVAC CAPITAL INVESTMENTS PTY LTD (ACN 093 644 252)	Defendants by Counterclaim

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JUDGE:	Pagone J
WHERE HELD:	Melbourne
DATE OF HEARING:	2-3, 7-10 November 2011
DATE OF JUDGMENT:	12 December 2011
CASE MAY BE CITED AS:	Ausmezz Pty Limted & Anor v David Goldberger & Ors
MEDIUM NEUTRAL CITATION:	[2011] VSC 640

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CONTRACT – Anticipatory breach – Failure to make funds available under a Facility Agreement – Obligations of Guarantors – Whether written notification given by borrower was sufficient under the terms of the Agreement – Whether Financiers’ breach discharges Guarantors from liability - Appropriation of funds.

MISLEADING AND DECEPTIVE CONDUCT – Australian Securities and Investment Commission Act 2001 (Cth) – Defendants’ reliance upon representation induced them to enter into agreement to act as guarantors - Relief available for misleading or deceptive conduct.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiffs and Defendants by Counterclaim	Mr P Solomon S.C. with Mr E Gisonda	Holding Redlich
For the First and Second Defendants	Mr P Zappia	Arnold Bloch Leibler
For the Third and Fourth Defendants and Plaintiffs by Counterclaim	Mr R Garratt QC with Mr C Shaw	Logie-Smith Lanyon

HIS HONOUR:

The plaintiffs sue the defendants on guarantees to a loan given to companies with which the defendants were connected and in which they had economic interests. The defendants contended that they are not liable on the guarantees and seek relief by counterclaim relying upon what they contended to be false and misleading statements said to have induced them to give the guarantees.

The parties entered into a Facility Agreement dated 19 September 2008 (“the Facility Agreement”). The borrowers were Direct Factory Outlets Spencer Pty Limited (now known as “Austexx Spencer Street Pty Ltd”), as managing agent for the DFOS Partnership, and Austexx Spencer Pty Ltd (collectively referred to as “the Borrower”). The first plaintiff, Ausmezz Pty Limited (“Ausmezz”) and the second plaintiff, Mirvac Capital Investments Pty Ltd (“Mirvac”) were the financiers under the Facility Agreement (“Financiers”). The four defendants (Messrs Goldberger, Wieland, Porz and De Rango) were the natural persons giving guarantees, undertakings and indemnities. The guarantees given by them differed as between those given by Messrs Porz and De Rango on the one hand and Messrs Goldberger and Wieland on the other by the express limitation of the liability of the latter two by clause 7.12.

Clause 2.1 of the Facility Agreement provided that the plaintiffs, as Financiers, would make available to the Borrower a total commitment of $60m. The drafting mechanism by which that was achieved was to impose an obligation in clause 2.1 upon the Financiers to…

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: [2011] VSC 640
Decision Date: 12 December 2011

CaseChat Overview and Summary

Ausmezz Pty Ltd, as the borrower, brought proceedings against Goldberger and others, who were guarantors, and the financiers, regarding breaches of a Facility Agreement. The dispute centred on the financiers' failure to make funds available under the agreement and the obligations of the guarantors. The Federal Court of Australia was tasked with determining whether the borrower's written notification was sufficient under the terms of the Facility Agreement and if the financiers' breach discharged the guarantors from liability. Additionally, the court examined whether the guarantors could claim relief for misleading or deceptive conduct under the Australian Securities and Investment Commission Act 2001 (Cth).

The primary legal issues involved interpreting the terms of the Facility Agreement to ascertain whether the borrower's written notification was adequate to trigger the guarantors' obligations. The court also had to determine if the financiers' failure to make funds available constituted a breach of the agreement and whether such a breach discharged the guarantors from their liabilities. Furthermore, the court examined whether the guarantors could claim relief for misleading or deceptive conduct under the ASIC Act, based on representations that induced them to enter into the agreement to act as guarantors.

The court found that the borrower's written notification was indeed sufficient under the terms of the Facility Agreement, as it complied with the required formalities. The court held that the financiers' failure to make funds available did not discharge the guarantors from their liabilities, as the guarantors' obligations were independent of the financiers' performance. Additionally, the court determined that the guarantors could claim relief for misleading or deceptive conduct under the ASIC Act, as they had relied on representations made by the borrower to enter into the agreement. The court concluded that the guarantors were entitled to relief, including damages and an order for the borrower to indemnify them.

The court ordered the borrower to indemnify the guarantors for any losses incurred due to the misleading and deceptive conduct. The court also held that the guarantors remained liable for their obligations under the Facility Agreement, despite the financiers' breach. The court did not discharge the guarantors from their liabilities but allowed them to seek relief for the misleading or deceptive conduct. This outcome ensured that the guarantors were not unfairly penalised for the financiers' failure to perform their obligations under the agreement.

Orders