Bolton v Fortune Development (Australia) Pty Ltd
[2007] WASC 116
•9 MARCH 2007
BOLTON & ORS -v- FORTUNE DEVELOPMENT (AUSTRALIA) PTY LTD [2007] WASC 116
| SUPREME COURT OF WESTERN AUSTRALIA | Citation No: | [2007] WASC 116 | |
| Case No: | CIV:1225/2007 | 9 MARCH 2007 | |
| Coram: | EM HEENAN J | 8/03/07 | |
| 18 | Judgment Part: | 1 of 1 | |
| Result: | Mareva relief granted | ||
| B | |||
| PDF Version |
| Parties: | JOHN WILLIAM BOLTON NORDINE OCKHUIJSEN LAURENCE ANTHONY HELLMUTH DANIEL FARRIS PACIFIC RESOURCES CORPORATION PTY LTD (ACN 077 501 332) as trustee for THE PACIFIC NUMBER 1 INVESTMENT TRUST and THE PACIFIC NUMBER 2 INVESTMENT TRUST ELSIE JULIA VITALICH FIONA MAYS BRUCE DENNIS MALUISH EILEEN ANNE ENGLISH as trustees for the MASH SUPERFUND ALAN GREEN FREELINK NOMINEES PTY LTD (ABN 87 118 114 702) as trustee for the YWL TRUST PETER BULL LORRAINE BULL CHRISTOPHER BURNS BLISKIN PTY LTD AXIS CORPORATION AUSTRALIA PTY LTD SHARON COATES MICHAEL CARROLL SUZANNE CARROLL as trustees for the CARROLL SUPERANNUATION FUND FORTUNE DEVELOPMENT (AUSTRALIA) PTY LTD (ACN 113 237 764) |
Catchwords: | Interlocutory injunction Mareva relief Contract for sale of home units off the plan Contract subject to condition of defeasance Implied obligation by vendor to use best endeavours to secure compliance with conditions Vendor alleging contract terminated for want of compliance with condition Vendor then re-selling entire property to a third party Risk of disposal of proceeds of sale outside Australia |
Legislation: | Strata Titles Act 1985 (WA) |
Case References: | Perri v Coolangatta Investments Pty Ltd (1982) 149 CLR 537 |
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
- IN CHAMBERS
- First plaintiff
NORDINE OCKHUIJSEN
LAURENCE ANTHONY HELLMUTH
Second plaintiffs
DANIEL FARRIS
Third plaintiff
PACIFIC RESOURCES CORPORATION PTY LTD (ACN 077 501 332) as trustee for THE PACIFIC NUMBER 1 INVESTMENT TRUST and THE PACIFIC NUMBER 2 INVESTMENT TRUST
Fourth plaintiff
ELSIE JULIA VITALICH
Fifth plaintiff
FIONA MAYS
Sixth plaintiff
BRUCE DENNIS MALUISH
EILEEN ANNE ENGLISH as trustees for the
MASH SUPERFUND
Seventh plaintiffs
- ALAN GREEN
Eighth plaintiff
FREELINK NOMINEES PTY LTD
(ABN 87 118 114 702) as trustee for the YWL TRUST
Ninth plaintiff
PETER BULL
LORRAINE BULL
Tenth plaintiffs
CHRISTOPHER BURNS
Eleventh plaintiff
BLISKIN PTY LTD
Twelfth plaintiff
AXIS CORPORATION AUSTRALIA PTY LTD
Thirteenth plaintiff
SHARON COATES
Fourteenth plaintiff
MICHAEL CARROLL
Fifteenth plaintiff
MICHAEL CARROLL
SUZANNE CARROLL as trustees for the CARROLL SUPERANNUATION FUND
Sixteenth plaintiffs
AND
FORTUNE DEVELOPMENT (AUSTRALIA) PTY LTD (ACN 113 237 764)
Defendant
(Page 3)
Catchwords:
Interlocutory injunction - Mareva relief - Contract for sale of home units off the plan - Contract subject to condition of defeasance - Implied obligation by vendor to use best endeavours to secure compliance with conditions - Vendor alleging contract terminated for want of compliance with condition - Vendor then re-selling entire property to a third party - Risk of disposal of proceeds of sale outside Australia
Legislation:
Strata Titles Act 1985 (WA)
Result:
Mareva relief granted
Category: B
Representation:
Counsel:
First plaintiff : Mr A M Prime
Second plaintiffs : Mr A M Prime
Third plaintiff : Mr A M Prime
Fourth plaintiff : Mr A M Prime
Fifth plaintiff : Mr A M Prime
Sixth plaintiff : Mr A M Prime
Seventh plaintiffs : Mr A M Prime
Eighth plaintiff : Mr A M Prime
Ninth plaintiff : Mr A M Prime
Tenth plaintiffs : Mr A M Prime
Eleventh plaintiff : Mr A M Prime
Twelfth plaintiff : Mr A M Prime
Thirteenth plaintiff : Mr A M Prime
Fourteenth plaintiff : Mr A M Prime
Fifteenth plaintiff : Mr A M Prime
Sixteenth plaintiffs : Mr A M Prime
Defendant : Mr M C Goldblatt
(Page 4)
Solicitors:
First plaintiff : McCallum Donovan Sweeney
Second plaintiffs : McCallum Donovan Sweeney
Third plaintiff : McCallum Donovan Sweeney
Fourth plaintiff : McCallum Donovan Sweeney
Fifth plaintiff : McCallum Donovan Sweeney
Sixth plaintiff : McCallum Donovan Sweeney
Seventh plaintiffs : McCallum Donovan Sweeney
Eighth plaintiff : McCallum Donovan Sweeney
Ninth plaintiff : McCallum Donovan Sweeney
Tenth plaintiffs : McCallum Donovan Sweeney
Eleventh plaintiff : McCallum Donovan Sweeney
Twelfth plaintiff : McCallum Donovan Sweeney
Thirteenth plaintiff : McCallum Donovan Sweeney
Fourteenth plaintiff : McCallum Donovan Sweeney
Fifteenth plaintiff : McCallum Donovan Sweeney
Sixteenth plaintiffs : McCallum Donovan Sweeney
Defendant : Freehills
Case(s) referred to in judgment(s):
Perri v Coolangatta Investments Pty Ltd (1982) 149 CLR 537
(Page 5)
1 EM HEENAN J: By a writ of summons issued 7 March 2007, the 16 plaintiffs join their causes of action against the defendant, claiming damages arising out of an alleged breach and wrongful termination of contracts for the sale of land comprising strata title lots in an inner-city development at 150 Fitzgerald Street, North Perth.
2 By a notice of motion, issued concurrently with the writ, the plaintiffs seek Mareva remedies against the defendant to prevent the disposal of the proceeds of the sale of the subject property beyond Australia. I have heard submissions this morning and this afternoon in connection with this claim for Mareva relief.
3 In an affidavit filed by a director of the fourth plaintiff in support of the application for injunctive relief, a contract for the sale of land is exhibited. This is a contract between the defendant and the fourth plaintiff for the sale of unit 5 in this proposed development, for a purchase price of $525,000, payable by a deposit of $26,250 and the balance on settlement, which was to be not later than 30 June 2008. A second contract between the same plaintiff and the defendant for a different unit, unit 9, for the same price and on the same terms and conditions is also exhibited. The evidence is that the deposits under both of these contracts were paid as were the deposits under corresponding contracts by the other plaintiffs.
4 The development at 150 Fitzgerald Street, North Perth is described in annexures to the contract. There is a document entitled "Sales Contract & Disclosure Statement For Strata Titled Lots" at that designated address, containing standard by-laws under the Strata Titles Act 1985 (WA) for the body corporate and other matters relating to the strata title ownership. There is a plan of the proposed strata development showing the units, some 22 units in all, with dimensions and other specifications. There is a set of proposed additional by-laws contained in a "Management Statement" which regulate the use of the strata units by the respective owners. There is also a document indicating the proposed annual and half-yearly levies payable by the strata lot owners, a "Disclosure Statement" and other cognate documents relating to the strata title arrangements.
5 Also part of the contract is a set of special conditions comprising annexure A to the contract documents (pages 55 - 66 in the affidavit before me). It will be necessary for me to return to the significance of those conditions in the events which have arisen. There is then a "Schedule of Finishes" of the proposed building work and evidence
(Page 6)
- confirming payment of the deposits by the fourth plaintiff. There then follows a series of correspondence running from 22 August 2006 to mid February 2007 between the parties or their representatives, containing some other incidental documents dealing with issues which had arisen in relation to the proposed development and disputes which followed. I shall return to those in due course.
6 One of the documents in the correspondence is a letter from the defendant's solicitors to the fourth plaintiff and others, dated 17 January 2007, which appears on page 81 of the affidavit. In this letter the defendant, as vendor, purports to give notice that the contract of sale and purchase has been terminated pursuant to particular contractual clauses and that directions are being given for the purchaser's deposit, together with any accrued interest, to be repaid.
7 The proceedings have progressed this morning on the assumption, which I understand is well-founded, that similar letters of purported termination were sent to each of the purchasers and offers for the return of the deposits were made. I have been told that arrangements have been put in train for the deposits to be repaid with interest in the near future.
8 The situation which arose from sometime in late 2006 was that, having received an intimation that the defendant did not intend to proceed with completion of the contracts, but rather intended to dispose of the property to some third party, the plaintiffs' approved solicitors corresponded with the defendant's solicitors to assert that the contracts remained on foot and binding, and sought assurances that the defendant would take all steps necessary to secure the completion of their performance. As matters developed, the plaintiffs, or some of them through solicitors, threatened to institute proceedings for specific performance of the contracts once it had become apparent that the defendant had renounced any intention to complete by its purported discharge of the contracts.
9 For reasons which will emerge in a moment, the plaintiffs have, after due consideration and advice, decided against pursuing any claims for specific performance and now sue only for damages for alleged breach of contract. The damages, if there is any such entitlement, have not yet been in any way formally quantified. However, the amount would appear to be the difference between the market value of a property of comparable quality and dimensions to that agreed to be sold by the defendant, under conditions in which vacant possession would be provided at or about the time for the completion of these individual contracts (as fixed by these
(Page 7)
- agreements for sale and purchase), and the contract price for the particular property agreed in these several contracts of sale.
10 There is no evidence before me about what those damages might be. The point has been taken by counsel for the defendant that, in the absence of some reliable estimate of the potential scale of the damages recoverable by the plaintiffs in the event that they succeed, it would be inappropriate to grant relief which may tie up a greater degree of capital in the defendant's hands than would be necessary to provide for the satisfaction of any such judgment. There is some force in that submission. However, I think that I should, as a matter of judicial notice, at this point in the proceedings conclude that the probabilities are that in the current notoriously appreciating property market in the Perth metropolitan area, it is likely that a substitute property would be materially more expensive than the price stipulated in these agreements of sale. Therefore, there is likely to be significant damages payable to each of the plaintiffs should they succeed in their action. That tentative conclusion seems to me to be bolstered by the information put before the Court by the fourth plaintiff and explanations offered by the defendant; these being that the project turned out to be more expensive than originally envisaged and therefore potentially sub-economic for the developer. A natural inference from that state of affairs is that units in such a development would have cost more to construct than originally envisaged and that therefore they are likely to be more expensive on the open market.
11 For a combination of those reasons, I shall infer that if the plaintiffs were to succeed in this action, there is a probability that they would receive more than nominal damages. That provides a foundation for proceeding to consider whether there is any entitlement to the relief sought.
12 Having given notice of its asserted termination of the various contracts for purchase and sale of units in the subject development, the defendant proceeded to sell the subject land to a third party. In evidence, as Exhibit A, is a copy of a "Transfer of Land" dated 16 February 2007, by which the defendant transfers to this third party the whole of the subject land for an amount of $2,850,000. It is not disputed that that transfer has been lodged for registration at the Western Australian Land Information Authority and is in the process of dealings so that perhaps already, or if not, very soon, the third party purchaser will have obtained an indefeasible title to that land.
(Page 8)
13 Further, and as a result of an order which I made at the end of argument this morning, the defendant's solicitors have produced a copy of a settlement statement showing the proposed distribution of the proceeds of that sale. This document, Exhibit B, is accompanied by a letter from a settlement agent to the defendant at an address in Singapore. Of the $2,850,000 sale price, plus some adjustments for the apportionment of rates and taxes, the distribution of those proceeds, omitting minor and relatively insignificant amounts, is nearly $59,800 for the agent's commission and settlement fees; $275,000 to Keytown Constructions Pty Ltd ("Keytown Constructions"), which is the builder who had been engaged to undertake the construction, on contract, of the project; and, the balance of $2,508,945.20 to the vendor's bank (OSBC Bank), which among other things holds a first mortgage over the property. It is, therefore, to the net proceeds of the sale, being $2,508,945.20, or so much of it as remains in Australia and accessible, that the plaintiffs direct the focus of this application for injunctive relief.
14 The issue, therefore, clearly enough, is whether or not the plaintiffs can demonstrate an arguable case for damages for alleged breach of contract and, if so, whether they can further demonstrate that there is a sufficiently cogent case that, if not otherwise restrained by interlocutory Mareva relief, the assets of the defendant may be dispersed in such a way as to render more difficult, or perhaps impossible, the effective enforcement of any judgment which may result from these proceedings. This latter aspect of the matter requires consideration of more factors than the mere strength of the plaintiffs' case and I will postpone attention to that for some time.
15 The real point of the case is that the various contracts for the purchase and sale of units in the strata development are subject to the conditions in the contract of sale. These conditions, which I have already alluded to, appear as annexure A of the fourth plaintiff's affidavit (pages 55 to 66). Of particular significance, in this context, is special condition 4, which has the effect, that is accepted on both sides, of making performance of the contracts conditional. It reads:
"4.1. The Seller's acceptance of this Contract is subject to and conditional upon the Seller being granted all Approvals within twelve (12) months of the Date of Contract on terms and conditions to the Seller's absolute satisfaction;
(Page 9)
- 4.2. The Seller's acceptance of this Contract is subject to and conditional upon the Seller entering into contracts for the sale of at least eleven (11) Apartments/Units in the Development within twelve (12) months of the Date of Contract upon terms and conditions to the Seller's absolute satisfaction.
4.3. If the special conditions 4.1 and 4.2 are not satisfied or waived within twelve (12) months of the Date of Contract then the Seller will give the Buyer notice to that effect whereupon this Contract will automatically come to an end. If the Seller does not provide the Buyer with such notice Special Conditions 4.1 and 4.2 will be deemed to be satisfied and this Contract will proceed.
4.4. At any time up to and including thirty (30) days prior to the Settlement Date the Seller may, by notice in writing to the Buyer, terminate this Contract if:
(a) any Authority refuses to issue an Approval;
(b) any Authority imposes a condition on an Approval and the Seller is unable or unwilling in its absolute discretion, to comply with that condition;
(c) the Seller forms the opinion that the Strata Plan will not be registered by the Settlement Date; or
(d) the cost of completing the Development exceeds the estimate provided by the Builder by ten per cent (10%) or more.
4.5 If the Seller terminates this Contract in accordance with Special Condition 4.3 or 4.4 the Seller must repay to the Buyer the Deposit and all other monies, if any, paid by the Buyer under this Contract, without deduction and upon repayment this Contract shall be at an end and cease to have any further effect and neither party shall have any claim against the other."
- It is in reliance upon special condition 4 of the contracts that the defendant has acted in its purported attempts to terminate these contracts.
(Page 10)
16 The basis upon which reliance is placed by the defendant on special condition 4 emerges in several places in the correspondence passing between the parties' solicitors. A convenient summary of the reasons for this reliance is to be found in the letter from the defendant's solicitors of 17 January 2007 (at page 81 of the affidavit). It nominates four points; namely:
"(1) The costs of completing the project exceeds [sic] the original estimate by over 10%;
(2) Our client has not been granted final approval from its bank to finance the Development on terms and conditions to its absolute satisfaction;
(3) In the absence of financing, Housing Indemnity Insurance could not be obtained; and
(4) The building license has not been issued by the local government."
17 In reliance upon all or any of those propositions, notice terminating the contracts was given. I should say a little about contractual provisions such as are contained within special condition 4, which I will, for convenience, describe in this case by the somewhat compendious term as conditions of defeasance.
18 In a contract such as this, it is well accepted that if the fulfilment of a contingent condition is to any extent within the control of a party, that party is bound by implication to cooperate in bringing it about. There are many authorities for that proposition. One discussion of them can be found in the decision of Perri v Coolangatta Investments Pty Ltd (1982) 149 CLR 537. A more compendious discussion of the principles is found in Cheshire and Fifoot's "Law of Contract", 8th ed, LexisNexis Butterworths, Australia, 2002 at [20.7]. Accordingly, for the defendant to be able to rely upon any or all of these conditions of defeasance, it is necessary for it to appear that the defendant has exercised reasonable efforts to co-operate and implement the achievement of those objectives, so far as was within its power or competence to do so. Put a different way, if the plaintiffs can prove, the onus being on them, that the failure to satisfy these conditions of defeasance was due to failures by the defendant to perform its implied duty of co-operation in implementing the steps necessary to secure the performance of contract, the defendant would be unable to rely upon the conditions of defeasance.
(Page 11)
19 Let me turn then to the particular factors which are said to trigger the defendant's right to terminate the contracts on some or all of these grounds. I will come first to the second of the considerations mentioned by the defendant's solicitor in the letter of 17 January; namely, that the defendant has not been granted final approval from its bank to finance the development on terms and conditions to its absolute satisfaction. During the course of argument, this has been conveniently referred to as the inability of the defendant to secure approval for project finance. It must be said at the outset that there is nothing in the express terms of the contracts for the sale of the strata title units, or in the compendious annexures and conditions, which expressly makes the project and the defendant vendor's obligations conditional upon or subject to the grant of project finance. No project financier or category of project financiers is identified or specified. No amount for project finance or for the terms, conditions or duration of the financial accommodation is provided for. Nevertheless, the defendant contends that approval for project finance comes within the terms of cl 4.1 of the special conditions, which I have already stated, and that because project finance was not granted, let alone on terms or conditions to the seller's absolute satisfaction, within 12 months or at all, the defendant is justified in terminating the contracts. This depends on whether or not the project finance can be regarded as a necessary approval within the scope of the conditions of defeasance in special condition 4.
20 Looking simply at special condition 4, the word "Approvals" appears with a capital, and is used consistently with a capital in that entire clause. Clause 4.4 refers to an "Approval" to be issued by an authority or to conditions imposed by an authority on the grant of an "Approval". That implies, and one can well understand the commercial and practical importance of the implication, that what is being spoken of is statutory or other approvals needed to secure permission for the institution or completion of the work, such as local council development approval, zoning approval, a building license and other comparable regulatory requirements. To my mind, the availability of project finance is not of the same character as the approvals which are alluded to in special condition 4, at least in so far as one looks at the terms of special condition 4 itself.
21 Counsel for the defendant contends for a larger meaning of approval and refers specifically to the definition of approvals in cl 1.1 of the special conditions, and I quote:
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- " 'Approvals' means all approvals and consents of any description whatsoever required by the Seller to carry out the Development. It includes but is not limited to all the approvals and consents required to register the Proposed Strata Plan and construct and occupy a Development".
- In the submission of counsel for the defendant this, and the terms of cl 4.1, indicate the most ample meaning for approval, so as to accommodate everything necessary to secure completion of the work. However, I am not able to accept that submission insofar as it extends to the need for project finance.
22 I do not regard the availability of project finance on whatever terms as being an approval of the kind alluded to by this condition. Indeed if the contracts were to be made conditional upon the availability of project finance, it would be far more common and far more meaningful to provide that the contracts would be subject to project finance on terms, necessary to preserve the certainty of the contracts, which would specify the type, duration and cost of the financial accommodation desired.
23 To specify that the term "Approvals" includes project finance leaves the terms of the condition entirely uncertain and unspecified. It is a factor which, in addition to those I have already described, tells against the construction submitted for the defendant. I therefore, at this stage, bearing in mind that this is an interlocutory application, do not accept the submission that special condition 4 allows the contracts to be terminated because of the inability to obtain satisfactory project finance.
24 That brings me to the next ground upon which the defendant relies for the termination of the contracts under special condition 4; that is, that in the absence of financing, housing indemnity insurance could not be obtained. There has been some controversy in the course of the submissions as to what were the reasons which led to the inability to obtain housing indemnity insurance. This minor controversy occurred in the setting where it was acknowledged that the inability to obtain housing indemnity insurance was one of the reasons, perhaps the principal reason, for the failure to obtain the building licence from the requisite local authority.
25 The plaintiffs' case in this respect is that one of the plaintiffs had heard from the builder that it was not possible for him to obtain housing indemnity insurance (and thus the building licence), because the defendant had failed to provide necessary information needed to secure that insurance. The necessary information was never identified or
(Page 13)
- specified. In consequent correspondence between the plaintiffs' representatives and the defendant, issue was taken about the alleged failure of the defendant to provide information of any material kind which led to the inability to obtain housing indemnity insurance. However, the defendant said that the reason for the inability to obtain housing indemnity insurance was that satisfaction finance could not be obtained.
26 That explanation by the defendant appears to be credible. If the project cost could not be settled and the project finance could not be arranged, then the overall cost of the project and the amount upon which any insurer would need to go on risk could not be specified. Therefore, I am prepared to accept, in these circumstances, that the real reason for the inability to obtain housing indemnity insurance was associated with the problems in obtaining project finance.
27 Since there was no suggestion that there was anything inherent in the proposed contract for the building project itself which rendered housing indemnity insurance unavailable, and because I have already concluded that the contracts could not be said to be dependent upon the availability of the project finance, this ground for justifying the purported termination of the contract would also appear to fail. Even if there was another ground, namely, that there was a failure to provide information which was within the competence of the defendant to provide, the failure to do so would constitute a breach of the implied obligation to cooperate and secure the benefit of the contracts. So either way there could be no reliance on this ground to terminate the contracts.
28 The next ground for justifying the termination of the contracts is that the building licence had not been issued by the local government. That is certainly a matter specifically within the scope of special condition 4. However, the only reason suggested for the inability to obtain the building licence was the inability to obtain housing indemnity insurance. And for the same reasons which I have mentioned which prevent that factor from justifying the termination of the contracts, this is a consequence of the same problem. Accordingly, failure to issue the building licence cannot, in my view, be regarded as a basis for terminating the contracts.
29 That leaves the first of the grounds relied upon by the defendant; namely, that the costs of completing the project exceeded the original estimate by over 10 per cent. That invokes cl 4.4(d) of the special conditions, which provides that if the cost of completing the development exceeds the estimate provided by the builder by 10 per cent or more, the contracts may be terminated.
(Page 14)
30 The argument before me proceeded on the basis that the cost of the contract as let to the builder exceeded the original estimate by more than 10 per cent. At page 93 of the affidavit, in a letter from the defendant's solicitor to the Department of Consumer and Employment Protection, it is asserted that on or about 15 February 2006, the cost of constructing the development was estimated at $4,901,000 (original cost estimate). That letter does not itself expressly state, and I am not aware of other evidence before me which expressly states, that that cost estimate was, to use the words, cl 4.4(d), "the estimate provided by the builder," but I shall assume that it was.
31 The defendant points out that, in fact, the construction cost, being the subject of the contract entered into by the builder, Keytown Constructions, was for $5,666,232 - 15.6 per cent higher than the original estimate and hence, apparently, within the scope of cl 4.4(d). That seems to me to be the approach which I should adopt on the limited information presently available to me. Although, out of caution, I should mention my reservations against accepting, as an absolute proposition, whether either of the two figures mentioned is actually the cost of completing the development or the estimate provided by the builder in the sense those phrases are used in cl 4.4(d), but I shall assume that they are.
32 The quotation by the builder for construction costs of $5,666,232 must have been given sometime on or before 25 August 2006 because, in the caveat lodged by the builder against the subject land to protect an interest said to derive from the building contract, it was asserted that there was a building contract between Keytown Constructions and the defendant dated 25 August 2006 (page 79 of the affidavit).
33 It is also the case that in August 2006 the firm, Century 21 Classique Realty, writing on behalf of the defendant to the fourth plaintiff, pointed out that there were problems about the costs of the project and that there had been delay to that point because of a "blow out over the proposed budget" (pages 75 and 76 of the affidavit). The letter refers to a series of possible solutions to deal with the cost overruns, including modifying the quality of the finishes in the units and other minor variations to the standard of the works, which would reduce the overall costs. It goes on to say that the option of cost reduction was "selected by my clients", obviously alluding to the defendant. It continues:
(Page 15)
- "Negotiations commenced with the Architect of Keytown Constructions approximately 2 months ago and I can now advise that the contract for the construction has now been let to Keytown."
34 Now, the situation which arises is whether, in such circumstances, there has been a waiver of the right which existed at that point, and I accept that such a right did apparently exist, for the contracts to be terminated under cl 4.4(d). If the construction costs, as they then were, exceeded the estimate by 10 per cent or more the defendant was in a position to terminate the contracts. However, it did not do so. It entered into a contract and assumed obligations with the builder to construct the works for that elevated price. It was not until nearly four months later, on 17 January 2007, that the purported notices of termination upon this and other grounds were given.
35 It is undesirable for me to make any observations suggesting that I have reached a final view on this matter because the defendant's submissions are that the opportunity to rely on cl 4.4(d), or indeed any provision of special condition 4, endure throughout the entire duration of the contracts, and that a decision to terminate because of escalation of the price beyond the 10 per cent limit could have been taken at a later stage. I accept that it could have been taken at a later stage, and that for there to be a waiver there would need to have been some indication given to the parties that notwithstanding the higher cost the defendant had intended to proceed. The letter from the defendant's agent on 22 August 2006 (page 75 of the affidavit), however, appears to suggest that very thing - that notwithstanding the higher costs, the contract had been entered into. So it appears to me that there is an arguable case, that there has been a waiver of that condition.
36 That being the case, the situation is that I am satisfied that the plaintiffs have shown an arguable case that each of them has a claim for damages, more than nominal damages, against the defendant. The consideration which must now be addressed is whether or not this entitles the plaintiffs to any form of protective relief such as sought by the application for Mareva orders.
37 The evidence in that respect is that the defendant company does not appear to have any real property in Western Australia, other than its former stake in this land. Searches at the Australian Security and Investments Commission register reveal that the defendant company, while registered in this state, has four directors, three of whom are
(Page 16)
- resident in Singapore. It also reveals that the only Australian director has not bought any shares in the company. I have already mentioned that the copy of the certificate of title to the subject land (page 78 of the affidavit) shows that a first registered mortgage is to the OSBC Bank. Further, the settlement statement, Exhibit B, shows that the address of the defendant is 110 Sixth Avenue, Singapore.
38 The settlement statement for the distribution of the proceeds of the sale shows that after the payment of $275,000 dollars to Keytown Constructions, presumably a payment made to end the dispute about the termination of the builder's contract, the remaining $2,508,945.20 is to be paid to the same OSBC Bank. The implication being that the funds can then readily be transmitted to the headquarters of the plaintiff in Singapore, although I acknowledge that that is not necessarily the only possibility.
39 At the end of argument in this case, I adjourned for a short period to allow the defendant's counsel an opportunity to put before the Court further evidence about the defendant's financial position and the availability of other assets in Australia or other obligations which might tell upon the question of whether or not some form of Mareva relief should be granted. The defendant has not availed itself of that opportunity. I accept that a significant reason for that may well be due to difficulties in communication at short notice and perhaps the suddenness of the emergence of this issue. However, it seems to me that I should proceed on the footing that, on the present state of the evidence, there appears to be a high degree of probability that most of the net proceeds of this sale will be transmitted to Singapore.
40 There is no other evidence before me as to the defendant's assets, or for that matter its obligations, or what the impact might be of restricting the use of some or all of the proceeds of this sale. It seems to me that in those circumstances the plaintiffs have made out a case for relief, at least in the short term, of the Mareva variety, and that I should order that the defendant, its servants and agents be restrained and that an injunction be issued restraining them from making any payments from its account in the OSBC Bank from the proceeds of this sale or otherwise until further order, and that the defendant should not charge or encumber its entitlement to those moneys in any way without further order of the Court.
41 Upon further reflection, it seems to me that I should make an order in the terms sought by the plaintiffs as set out in par 3 of their motion, subject, however, to ensuring that the proceeds in that bank account, or
(Page 17)
- proceeds of the sale if elsewhere, may be used to discharge the first registered mortgage.
42 Consequently, the order should be that until further order, the defendant, whether by itself, its officers, servants, agents or otherwise, be restrained, and an injunction be granted restraining it, from removing from the jurisdiction of the Court or otherwise disposing of or dealing with any of the funds, property, moneys (whether on deposit or otherwise and including any credit balance in any account in the name of or held on behalf of or to the order of the defendant) or other assets of the defendant realised from the sale of the property situated at and known as 150 Fitzgerald Street, North Perth, more particularly described as Lot Y226 on deposited plan 222985 and being the whole of the land contained in Certificate of Title Volume 1232, Folio 205. Without limiting the generality of the foregoing, that injunction shall apply specifically to the funds paid to the credit of the defendant with the OSBC Bank, as shown on Exhibit B, the settlement statement of 19 February 2007, comprising $2,508,945.20. However, the terms of this injunction shall not include so much of those moneys as will be necessary to repay, if it has not already been repaid, the first mortgage on the subject property to the same bank which was registered on the title on 1 July 2005.
43 This injunction should endure for 14 days or until further order, with liberty to any party to apply to discharge or to vary the injunction. The injunction is granted on the undertaking as to damages given by one of the plaintiffs, Mr John William Bolton, filed in the Court and dated 13 March 2007, and there will be liberty to apply to seek additional or further undertakings as to damages, or for security of any undertaking, should that be thought necessary.
44 It seems to me that I should also direct that within a period, the length of which I will determine after having heard submissions from counsel, there should be filed an affidavit or affidavits by the defendant describing the extent and value of its assets within the jurisdiction, any such claims which there may be upon those assets, and its operating expenses, if there is to be any application for a variation of the existing injunction. I have in mind a period of 10 days.
45 It seems to me that the costs of the present application should be reserved and that there should be orders providing for the expeditious progress of this action, which would involve the filing of a statement of claim within 10 days; the filing of any defence within a further 10 days; and, an appearance before a Judge in chambers, either myself or in the
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- CMC list, within 21 days. I will invite submissions on all those matters; first, of the proposed 14 day duration of the injunctions; secondly, the time limit for the defendant to put in affidavit evidence as to its financial position, assets and so on; and, thirdly, the duration of the timetable for pleadings.
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