Consolidated Constructions Pty Ltd v Bellenville Pty Ltd - [2002] FCA 1513

FEDERAL COURT OF AUSTRALIA
Consolidated Constructions Pty Ltd v Bellenville Pty Ltd
[2002] FCA 1513
PRACTICE AND PROCEDURE – interlocutory orders – Mareva type – asset preservation order – respondent developer incorporated for single purpose development comprising acquisition, major refurbishment ($23 million) and sale of building – paid up capital of $2 – claim by builder for substantial damages for misleading or deceptive conduct – developer sold building before practical completion – developer intended to disburse proceeds to its two shareholders – developer had no other assets – whether necessary to prove purpose to frustrate any judgment which builder might obtain – principles applicable – discretionary considerations.
Jackson v Sterling Industries Ltd (1987) 162 CLR 612 referred to
Riley McKay Pty Ltd v McKay [1982] 1 NSWLR 264 followed
National Australia Bank Ltd v Bond Brewing Holdings Ltd (1990) 169 CLR 271 referred to
Cardile v LED Builders Pty Ltd (1999) 198 CLR 380 applied
Glenwood Management Group Pty Ltd v Mayo (1991) 2 VR 49 referred to
Northcorp Ltd v Allman Properties (Australia) Pty Ltd [1994] 2 Qd R 405 referred to
Hayden v Teplitzky (1997) 74 FCR 7 referred to
Beach Petroleum NL v Johnson (1992) 9 ACSR 404 referred to
CONSOLIDATED CONSTRUCTIONS PTY LTD v
BELLENVILLE PTY LTD & ORS
W 283 of 2002
CARR J
4 DECEMBER 2002
PERTH

IN THE FEDERAL COURT OF AUSTRALIA

WESTERN AUSTRALIA DISTRICT REGISTRY

W283 OF 2002

BETWEEN:

CONSOLIDATED CONSTRUCTIONS PTY LTD
(ACN 008 699 330)
Applicant

AND:

BELLENVILLE PTY LTD (ACN 089 687 114)
First Respondent

MANABROOK PTY LTD (ACN 088 231 743)
Second Respondent

MAB CORPORATION PTY LTD (ACN 065 207 230)
Third Respondent

BABCOCK & BROWN TRANSACTIONS PTY LTD
(ACN 077 901 976)
Fourth Respondent

CENTRO PROPERTIES LIMITED (ACN 006 378 365)
Fifth Respondent

JUDGE:

CARR J

DATE OF ORDER:

4 DECEMBER 2002

WHERE MADE:

PERTH

THE COURT ORDERS THAT:
1.Until further order, the first respondent in whatsoever capacity, be restrained by itself, its directors, officers, servants and agents (including its solicitors) and otherwise howsoever from:

(a)transferring, alienating or otherwise dealing with or disposing of or directing the payment of; or

(b)causing or permitting to be transferred, alienated or otherwise dealt with or disposed of or directed,

three million dollars ($3,000,000) of the unencumbered amount of the proceeds of the sale of the property consisting of 2 adjacent titles namely Lots 1103 and 1104 on Plan 27831 (Certificates of Title Volume 2216 Folio 92, and Volume 2216 Folio 91) (“the property”) in the possession, custody or control of the first respondent in whatsoever capacity pursuant to the contract dated 30 June 2002 of sale and purchase of the property in which CPT Manager Limited ABN 37 054 494 307 as Trustee of the Centro David Jones Sub-Trust is the purchaser of the property, or any other contract of sale and purchase (including without limitation any put and call option) of the property or any part thereof.

2.The costs of this application be reserved pending the hearing and…

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: [2002] FCA 1513
Decision Date: 4 DECEMBER 2002

CaseChat Overview and Summary

Consolidated Constructions Pty Ltd sought an asset preservation order against Bellenville Pty Ltd in relation to $5 million of the proceeds from the sale of a property in Perth. The applicant, a building company, had entered into a contract with Bellenville, a company with a paid-up capital of $2, for the refurbishment and expansion of the David Jones store site. The applicant claimed damages from Bellenville and others in separate proceedings, alleging misleading or deceptive conduct contrary to s 52 of the Trade Practices Act 1974. The applicant estimated its loss to be $5.15 million due to the alleged misleading information about the presence of asbestos in the building. The court had to decide whether Bellenville should be restrained from disposing of $5 million of the proceeds from the sale of the property. The court considered the significant change in the commercial relationship between the parties due to the sale of the building before the completion of the building works and the Contract. The court accepted the applicant's submissions and concluded that the Mareva order should be extended until further order, with the amount involved reduced to $3 million. The court reasoned that it would be appropriate for the figure to be reduced to $3 million, considering all the circumstances. The court made orders restraining Bellenville from transferring, alienating, or disposing of $3 million of the proceeds from the sale of the property, reserving the costs of the application, and granting liberty to any party to apply upon seven days' written notice to the other parties.

Orders

Orders of the court

1. Until further order, the first respondent in whatsoever capacity, be restrained by itself, its directors, officers, servants and agents (including its solicitors) and otherwise howsoever from:

(a) transferring, alienating or otherwise dealing with or disposing of or directing the payment of; or

(b) causing or permitting to be transferred, alienated or otherwise dealt with or disposed of or directed,

three million dollars ($3,000,000) of the unencumbered amount of the proceeds of the sale of the property consisting of 2 adjacent titles namely Lots 1103 and 1104 on Plan 27831 (Certificates of Title Volume 2216 Folio 92, and Volume 2216 Folio 91) (“the property”) in the possession, custody or control of the first respondent in whatsoever capacity pursuant to the contract dated 30 June 2002 of sale and purchase of the property in which CPT Manager Limited ABN 37 054 494 307 as Trustee of the Centro David Jones Sub-Trust is the purchaser of the property, or any other contract of sale and purchase (including without limitation any put and call option) of the property or any part thereof.

2. The costs of this application be reserved pending the hearing and determination of application No W302 of 2002.

3. There be liberty to any party to apply upon seven days written notice to the other parties.

Background

Background to the litigation

This is an application for an asset preservation order of the Mareva type. An interim set of such orders was made on an ex parte basis on 2 October 2002. Those orders, slightly amended, were extended by consent on 9 October 2002 to enable the laying down of a timetable for certain procedural steps and the hearing of the application to take place at a time convenient to the parties and to the Court. The question is whether the first respondent should be ordered not to dispose of an amount of $5 million out of the proceeds of sale by it of a property in the central business district of Perth. FACTUAL AND PROCEDURAL BACKGROUND The applicant is a building company. The first respondent is a company, with a paid up capital of $2, which was incorporated for the purpose of acquiring the adjoining properties which now comprise the site of the “David Jones” store in Perth, to refurbish and expand the then existing store on that site and to sell the completed property. On 26 June 2000, the applicant and the first respondent entered into a contract (“the Contract”) whereby the applicant agreed to carry out the requisite building works for a fixed lump sum guaranteed maximum price of $23,198,470. The applicant has instituted separate proceedings relating to the Contract against the first respondent and others in this Court. I shall refer to those proceedings as “the Principal Application”. In the Principal Application the applicant claims damages from the first respondent and others for losses which it claims to have incurred by entering into and performing the Contract. At this stage the applicant estimates its loss to be $5.15 million. The applicant claims recovery of those damages on the basis that its loss was incurred by the misleading or deceptive conduct of the first respondent (including conduct by persons acting on its behalf), contrary to s 52 of the Trade Practices Act 1974 (Cth) (“the Act”). The essence of the factual background to the applicant’s claims against the first respondent can be distilled as follows. Before the Contract was executed, an incorporated project manager known as Project Planning and Management (WA) Pty Ltd (“PPM”) acting on behalf of the then registered owner of the site, Aherns Holdings Pty Ltd and thereafter acting on behalf of the first respondent, supplied the applicant with certain information relating to the existence of asbestos in the building which was to be refurbished (“the Building”). That information is said to have included the representation that the Building was “a pre-asbestos building” and that there was relatively little asbestos “in the project”. During the tendering process, PPM also referred the applicant to an “Asbestos Report” prepared by a company known as MPL Group Pty Ltd (“the MPL Abestos Report”) which, in summary, stated its findings as follows: · there was a small amount of asbestos in a hard form identified in specific areas in the Building; · the asbestos thus identified was such that it would either be left in situ or that its condition could be monitored; and · the asbestos was not in a form which required immediate removal by experts or which restricted access to any portion of the Building.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

CARR J

I accept the force of Mr Odes’ submissions on this point. There was a significant change in the commercial relationship between the parties which was brought about by the sale of the building before the building works had been completed and the Contract wound up. CONCLUSION After weighing all of the above factors, I have come to the conclusion that the Mareva order should be extended until further order, but that the amount involved should be adjusted downwards. I have spent some considerable time trying to assess what amount is “… at least reasonable in all of the circumstances” – see Cardile at 409. In my view, it would be appropriate for the figure to be reduced to $3 million. There will be orders accordingly.

Ratio Decidendi

Legal Principle Established

Established by: CARR J

Full text does not contain this section.

IN THE FEDERAL COURT OF AUSTRALIA
WESTERN AUSTRALIA DISTRICT REGISTRY	W283 OF 2002

BETWEEN:	CONSOLIDATED CONSTRUCTIONS PTY LTD (ACN 008 699 330) Applicant
AND:	BELLENVILLE PTY LTD (ACN 089 687 114) First Respondent MANABROOK PTY LTD (ACN 088 231 743) Second Respondent MAB CORPORATION PTY LTD (ACN 065 207 230) Third Respondent BABCOCK & BROWN TRANSACTIONS PTY LTD (ACN 077 901 976) Fourth Respondent CENTRO PROPERTIES LIMITED (ACN 006 378 365) Fifth Respondent
JUDGE:	CARR J
DATE OF ORDER:	4 DECEMBER 2002
WHERE MADE:	PERTH