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Chan v Tan

Chan v Tan

Case [2020] NSWSC 428 22 April 2020

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Supreme Court

New South Wales

Amendment notes

Medium Neutral Citation: Chan v Tan [2020] NSWSC 428
Hearing dates: 30, 31 March; 1, 2 and 3 April 2020; further written submissions ending 6 April 2020
Date of orders: 22 April 2020
Decision date: 22 April 2020
Jurisdiction: Equity
Before: Parker J
Decision:
See at [158]

Catchwords:
CONTRACTS – construction – interpretation – joint venture deed – subsequent deed conditional on rescission of existing deed – delivery in escrow – whether subsequent deed came into force – whether termination under subsequent deed valid

CONTRACTS – construction – interpretation – joint venture deed – termination conditional on non-occurrence of event by certain date – inconsistency – omission of words by construction under Fitzgerald v Masters principle
EQUITY – fiduciary duties – fiduciary relationships – parties to joint venture – breach of obligations – director of company party to joint venture – whether director liable as accessory to the company’s breach of fiduciary obligation
Legislation Cited: Competition and Consumer Act 2010 (Cth) Sch 2 – Australian Consumer Law, ss 21, 236
Cases Cited: Alcatel Australia Ltd v Scarcella (1998) 44 NSWLR 349
Alleyne v Darcy (1854) 4 I Ch R 199
Barnes v Addy (1874) LR 9 Ch App 244
Bowker v Burdekin (1843) 11 M & W 128; 152 ER 744
Eaves v Hickson (1861) 30 Beav 136; 54 ER 840
Farah Constructions Pty Limited v Say-Dee Pty Limited (2007) 230 CLR 89
Fitzgerald v Masters (1956) 95 CLR 420
Fyler v Fyler (1841) 3 Beav 550; 49 ER 216
Hall v Bainbridge (1848) 12 QB 698; 116 ER 1032
Royal Brunei Airlines Sdn Bhd v Tan [1995] 2 AC 378
Segboer v AJ Richardson Properties Pty Ltd [2012] NSWCA 253
Category: Principal judgment
Parties: Edward Pei-Ying Chan (First Plaintiff)
Grace Ying Ju Chen (Second Plaintiff)
Joo Kee Tan (First Defendant)
Pittmore Pty Limited (Second Defendant)
Representation:
Counsel:
HK Insall SC (Plaintiffs)
J Van Aalst (Defendants)
Solicitors:
Wight & Strickland (Plaintiffs)
David Kam & Co Solicitors (Defendants)

File Number(s): 2017/195651
Publication restriction: Nil

Judgment

These proceedings concern a joint venture for the redevelopment of two adjacent properties at Willoughby. I will refer to the properties as Number 15 and Number 17 (their street numbers).
The first plaintiff, Edward Pei-Ying Chan, is the owner of Number 15. The second plaintiff, Grace Ying Ju Chen, is his wife. Ms Chen is an architect and uses the name Grace Chen professionally. In these proceedings she was referred to as Mrs Chan.
In 2013, the council planning rules governing the properties changed. The Chans wished to take advantage of the change and build a four storey apartment block. Number 15 was not big enough to permit this. The Chans came up with the idea of acquiring Number 17 and redeveloping the two properties in a joint venture, and negotiated an agreement in principle to purchase Number 17 from its owner.
The first defendant, Joo Kee Tan, is a property developer with whom Mrs Chan had previously…

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.

Continue reading Chan v Tan

Details

AGLC: Chan v Tan [2020] NSWSC 428
Case: [2020] NSWSC 428
Decision Date: 22 April 2020

CaseChat Overview and Summary

The parties in this case were Chan and Tan, engaged in a joint venture that was governed by a joint venture deed. A subsequent deed was created, which was contingent on the rescission of the original deed. The dispute arose when the subsequent deed was delivered into escrow, leading to a question of whether it had come into force and whether any termination under it was valid. The court was also tasked with interpreting the original deed, specifically a clause that set out conditions for termination, and determining whether there was an inconsistency between clauses and if the omission of certain words could be rectified under the Fitzgerald v Masters principle. Additionally, the court considered whether the director of a company, who was a party to the joint venture, could be held liable as an accessory to the company's breach of fiduciary obligations.

The legal issues before the court involved the interpretation of the joint venture deeds, the conditions under which the subsequent deed could come into force, and whether the termination clause in the original deed was valid. The court had to decide if the subsequent deed was activated by its delivery into escrow and if the termination of the joint venture under this deed was lawful. Further, the court examined the interpretation of the termination clause in the original deed, assessing whether there was an inconsistency in the terms and if any omitted words could be added under established legal principles. Finally, the court considered the potential liability of the director as an accessory to any breach of fiduciary duty by the company.

The court found that the subsequent deed did not come into force upon delivery into escrow and that any termination under it was not valid. The court interpreted the original deed, concluding that there was no inconsistency between the clauses, and that the omission of certain words could not be rectified under the Fitzgerald v Masters principle. Regarding the director's potential liability, the court determined that he could be held liable as an accessory to the company’s breach of fiduciary obligation. The court’s reasoning was based on a detailed analysis of the contractual terms and the legal principles governing fiduciary duties and the interpretation of deeds.

The final orders of the court were that the subsequent deed did not become effective upon delivery into escrow and any termination under it was invalid. The court also upheld the interpretation of the original deed as it stood, without any amendments. Finally, the director was held liable as an accessory to the company's breach of fiduciary obligation. This decision clarified the conditions for the activation of the subsequent deed and confirmed the potential for individual liability in cases of fiduciary breaches by joint venture companies.

Orders