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Bullhead Pty Ltd v Brickmakers Place Pty Ltd

Bullhead Pty Ltd v Brickmakers Place Pty Ltd

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Case Copied 21 April 2017 75 min read

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IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE
COMMERCIAL COURT
COMMERCIAL LIST

S CI 2015 00106

BULLHEAD PTY LTD (ACN 130 124 088)	Plaintiff
v
BRICKMAKERS PLACE PTY LTD (ACN 128 994 749) & ORS	Defendant

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JUDGE:	SIFRIS J
WHERE HELD:	Melbourne
DATE OF HEARING:	13-15 September 2016, 19-21 September 2016, 5-8 December 2016, 12-13 December 2016
DATE OF JUDGMENT:	21 April 2017
CASE MAY BE CITED AS:	Bullhead Pty Ltd v Brickmakers Place & Ors
MEDIUM NEUTRAL CITATION:	[2017] VSC 206

TRUSTS AND TRUSTEES – Unit Trust – Interpretation of Trust Deed – Breach of Trust Deed – Units improperly issued in breach of Trust Deed and Unitholders Agreement – No informed consent or agreement for issue of discounted units – No basis to depart from strict terms of Trust Deed.

EQUITY – Breach of fiduciary duty – No power or basis to issue units at a discount – Knowing receipt of trust property.

EQUITY – Laches and acquiescence – Leave to amend defence refused as defence will fail - Lack of clean hands – Unconscionable for defendants to derive benefit from their own wrongdoing.

AGREEMENT – Whether claims compromised by Finalisation Agreement – Whether concluded agreement reached.

ESTOPPEL – Equitable estoppel – Representation as to future conduct – Assumption induced by or arising out of conduct – Defendant suffered detriment by relying on assumption – Plaintiff estopped.

CIVIL PROCEDURE – Limitation periods – Limitation of Actions Act 1958 (Vic), s 21(1)(a) – Issue of discounted units fraudulent – Claims not statute barred.

TRADE PRACTICES – Misleading or deceptive conduct – Representation as to basis on which unitholders would hold units – Meaning conveyed was misleading or deceptive – Fair Trading Act 1999, s 9 (Vic).

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	WT Houghton QC with G Coleman	DLA Piper
For the Defendants	MW Wise	K&L Gates

TABLE OF CONTENTS

A ..... Introduction.......................................................................................................................... 1
B...... Relevant Background.......................................................................................................... 3
The Structure........................................................................................................................ 3
Purchase of the Property.................................................................................................... 7
The New Investors............................................................................................................... 9
14 March 2008..................................................................................................................... 10
Revaluation of the Property — the discounted units.................................................. 11
The progress of the development................................................................................... 11
Finalisation agreement..................................................................................................... 12
The distributions and the undertaking.......................................................................... 12

C...... Summary of Claims........................................................................................................... 12
D...... Breach of trust — Allotment and issue of the Discounted Units............................... 13
E...... Breach of trust — the Expected Profit............................................................................ 16
F...... Agreement to use Expected Profit as part payment for units.................................... 23
G...... Accessorial Liability.......................................................................................................... 26
H..... Are the claims statute barred........................................................................................... 27
I....... Delay.................................................................................................................................... 29
J....... Finalisation Agreement.................................................................................................... 30
Introduction........................................................................................................................ 30
Background........................................................................................................................ 31
Submissions........................................................................................................................ 38
Consideration..................................................................................................................... 39
The Finalisation Agreement is not in writing.................................................. 43
Estoppel................................................................................................................. 47
Acceptance by conduct........................................................................................ 51
Consequences....................................................................................................... 52

K...... The misleading or deceptive conduct claim................................................................. 55
Introduction........................................................................................................................ 55
Background........................................................................................................................ 56
Invitation to be a Unitholder of the Trust......................................................... 56
Receipt of draft documents................................................................................. 58
Contact with Ross Andrews................................................................................ 58
Meeting 26 November 2013 (‘26 November Meeting’)................................... 59

Submissions........................................................................................................................ 60
Applicable Law.................................................................................................................. 61
The impugned conduct was engaged in.......................................................... 61
The conduct conveyed a…

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: [2017] VSC 206
Decision Date: 21 April 2017

CaseChat Overview and Summary

Bullhead Pty Ltd initiated legal proceedings against Brickmakers Place Pty Ltd, challenging the issuance of units that were allegedly improper under the terms of the Trust Deed and the Unitholders Agreement. The dispute was heard in the Supreme Court of Victoria. The plaintiff claimed that the defendant had issued units at a discount without obtaining informed consent or agreement, which constituted a breach of the Trust Deed and the Unitholders Agreement. Additionally, the plaintiff argued that the defendant had breached fiduciary duties by issuing units at a discount and had knowingly received trust property. The plaintiff further contended that the defendant's actions amounted to misleading or deceptive conduct under the Fair Trading Act 1999 (Vic).

The court needed to determine whether the Trust Deed permitted the issuance of discounted units, whether the defendant had breached fiduciary duties, and whether the plaintiff's claims were barred by limitation periods. The court also had to consider whether the plaintiff's claims were compromised by a Finalisation Agreement and whether an equitable estoppel applied. The court examined whether the defendant's actions constituted laches and acquiescence and if it was unconscionable for the defendant to benefit from their wrongdoing.

The court ruled that the Trust Deed did not permit the issuance of discounted units and that the defendant had breached fiduciary duties by knowingly receiving trust property. The court held that the defendant's actions were misleading or deceptive and constituted a breach of the Fair Trading Act 1999 (Vic). The court found that the plaintiff's claims were not barred by limitation periods and that the defendant's defence of laches and acquiescence would fail. The court also refused leave to amend the defence, stating that it would inevitably fail. The court further held that it was unconscionable for the defendant to benefit from their wrongdoing and that the plaintiff was estopped from denying the defendant's entitlement to rely on certain assumptions.

The court ordered that the defendant pay damages to the plaintiff for the breach of fiduciary duties and the misleading or deceptive conduct. The court also ordered that the defendant take necessary steps to rectify the improper issuance of units. The court refused to grant relief on the basis of equitable estoppel, finding that the plaintiff had not suffered a detriment by relying on the defendant's assumption.

Orders