Coomera Resort Pty Ltd v Kolback Group Ltd, Bond, Landbase Holdings Ltd, Nagano

[1996] QCA 21

IN THE COURT OF APPEAL	[1996] QCA 021
SUPREME COURT OF QUEENSLAND	Appeal No.143 of 1995
Brisbane
Before	Fitzgerald P. McPherson J.A. Mackenzie J.

[Coomera Resort v. Bond]

BETWEEN:

COOMERA RESORT PTY LTD.

(ACN 050 911 156) (Plaintiff) Appellant

AND:

KOLBACK SECURITIES LIMITED

(ACN 010 560 586) (First Defendant)

AND:

KOLBACK GROUP LIMITED

(ACN 003 190 501) (Second Defendant)

AND:

PAUL LEVINSON BOND

(Third Defendant) Respondent

AND:

LANDBASE HOLDINGS LIMITED

(Fourth Defendant)

AND:

YUZO NAGANO

(Fifth Defendant)

AND:

ROBERT ADRIAN PITT

(Sixth Defendant)

AND:

PRD REALTY PTY LTD

(ACN 009 954 956) (Seventh Defendant)

AND:

DONALD DIETZ

(Eighth Defendant)

REASONS FOR JUDGMENT - THE COURT

Judgment delivered 23/02/1996

This is an appeal by Coomera Resort Pty Ltd, the plaintiff in action 1321 of 1994, which, on 23 June

1995, was ordered to provide security, in the sum of $100,000, for the costs of the action of the third

defendant, the present respondent. There is no dispute as to the amount of the security ordered to be

provided, but the appellant has submitted that it ought not have been required to provide security at all.

There are in all eight defendants to the action, which in broad terms relates to a proposal to develop a

property, known as the Coomera Woods land, as a golf course resort and residential complex. With

Foreign Investment Review Board approval, the appellant’s parent company, Hokojitsugyo Co. Ltd

(“Hoko”), acquired the land for that purpose in about 1989/1990. Hoko was incorporated in Japan,

and is controlled by Japanese nationals who are resident there. The appellant and another company,

Big Vision Australia Pty Ltd, are wholly owned subsidiaries of Hoko which were incorporated in

Australia. The respondent, Paul Levinson Bond, was a director of the appellant from 5 April 1991 until

20 November 1992, and of Big Vision Australia from 28 March 1991 until 20 November 1992,

although, to quote the appellant’s Statement of Claim, paragraph 3, “At all material times the decision-

making power in relation to the [appellant] rested with Mr Omura”, the president of Hoko and chairman

of the board of directors of the appellant.

One Yuzo Nagano, another defendant, was an officer of Big Vision and, with the respondent,

established an entity Landbase Holdings Ltd, which is also a defendant.
The first and second defendants in the action are Kolback Securities Limited and its parent, Kolback

Group Limited. The sixth defendant, Robert Adrian Pitt, was a director of each of the Kolback

companies and their authorised agent. The final defendants are a real estate company, PRD Realty Pty

Ltd, and an employee, Donald Dietz.

Again, working from the Statement of Claim, Hoko, which had paid somewhere between $25 and $26

million to acquire the Coomera Woods land and have golf courses designed, sold the land to the

appellant, with Foreign Investment Review Board approval, by about mid-1991. It seems that the

appellant did not pay for the land, but issued shares to satisfy the purchase price. The Foreign

Investment Review Board approval required that construction commence by late 1991, but that has still

not occurred.

According to the Statement of Claim, in late 1991 PRD Realty informed the appellant of a number of

parties interested in purchasing the Coomera Woods land, including the Kolback companies, and

recommended that serious consideration be given to one of them, the defendant, Landbase Holdings

Limited.

The Statement of Claim alleges that a joint venture agreement between the appellant and the Kolback

companies was entered into on or about 9 July 1992, in which the value attributed to the Coomera

Woods land was $20 million. In other documentation, it had been agreed that the appellant would pay

a fee of three per cent of the value attributed to the Coomera Woods land in the joint venture agreement

to PRD Realty. Clause 37 of the joint venture agreement provided that the commission was to be paid
to both PRD Realty and Landbase Holdings.

Again according to the appellant, it entered into the joint venture agreement on the advice and

recommendations of the respondent and Yuzo Nagano who, it alleges, failed to disclose their interests

and the secret commission which their entity, Landbase Holdings, was to receive.

Various paragraphs of the Statement of Claim then go on to allege contraventions of the Trade Practices

Act 1974 (Cth) by various of the defendants, fraud, breach of fiduciary duty, etc., and the appellant

alleges that the joint venture agreement was avoided by it or, in the alternative, seeks an order under

s. 87 of the Trade Practices Act that the joint venture agreement be declared void ab initio.

Alternative claims are also added in the Statement of Claim that the commission clause in the joint

venture agreement is void or, alternatively, unenforceable, and that the appellant has suffered loss, etc.

Another part of the case pleaded in the Statement of Claim alleges that the joint venture between the

appellant and the Kolback companies involved the appellant providing the land and required the

Kolback companies to provide finance; again there are allegations of misrepresentations, breach of

fiduciary duty, breaches of the Trade Practices Act, etc., and it is alleged that the appellant has avoided

the joint venture agreement or is entitled to an order under s. 87 of the Trade Practices Act declaring

the joint venture agreement to be void ab initio.

Other parts of the Statement of Claim seek damages.
We have not attempted to be comprehensive as to the contents of the Statement of Claim, which is a

lengthy document and includes further assertions of, for example, frustration, but what has been said

gives a sufficient indication of the nature and complexity of the legislation.

The appellant’s claim against the respondent is for equitable compensation for breach of fiduciary

obligations and interest pursuant to s. 72 of the Common Law Practice Act 1867.

According to the appellant, it has paid Hoko for the Coomera Woods land, and is entitled to have it

transferred to it and the title deeds and a memorandum of transfer are held in escrow by the solicitor

which had been appointed to act for the joint venture had it proceeded. However, the land has not

been transferred but is held in the name of Hoko, and no explanation has been given, beyond vague

references to the need to pay registration fees. Further, the appellant does not intend the joint venture

to proceed. Conversely, it is plain that the Kolback companies do not oppose the transfer of the land

from Hoko to the appellant; on the contrary, in a counter-claim with their defence to the appellant’s

claims against them, they seek an order compelling the appellant “to do all things necessary to become

registered” of the Coomera Woods land. Further, it seems that a transfer of the land from Hoko might

be required by the Foreign Investment Review Board. However, no matter how strenuous the attempts

made to have counsel for the appellant explain why the Coomera Woods land had not been transferred

to the appellant, or to confirm that it would be transferred - it is now some years overdue and the

appellant claims beneficial ownership of the land - no satisfactory response could be obtained.

The appellant and its parent also have a fund of money in Queensland, but it was accepted for the appellant that that in itself did not provide a reason why an order for security for costs should not be

made; by arrangement with the Kolback companies, the money in the fund is being expended in the

preservation of the Coomera Woods land and the payment of statutory charges, such as rates and land

tax.

Stripped to its essentials, the submission for the appellant was that it has a beneficial interest in the land

based upon its right to have its parent transfer the land to it, and even if the Kolback companies are

correct in their contention that they were entitled to half the value of the land, the remaining half is more

than sufficient to satisfy any order for costs made in favour of the respondent. The present estimate of

the value of the Coomera Woods land is $15 million.

It was argued for the appellant that there is no evidence that Hoko proposes to take steps to put the

Coomera Woods land out of the reach of the respondent if he is successful in his defence of the action

and that, in such circumstances, an order for security should not be made. However, in our opinion,

such a submission overlooks the inferences which were properly open to the Chamber Judge who

ordered security. His Honour was entitled to take into account the circumstance that the registered

proprietor of the land is outside the jurisdiction and that there is a completely unexplained failure to

comply with its obligation to transfer the land to its subsidiary within the jurisdiction, the appellant.

There are obviously many ways in which Hoko could dispose of the land or subject it to security in a

manner which would make it much more difficult, if not impossible, for the respondent to enforce any

order for costs against the appellant in the event that the respondent is successful in the action which the

appellant has commenced against him. There are also other matters to be considered. Hoko obviously “paid” more for the land, and charged the appellant more for the land, than it is presently worth. The

loss is in excess of $10 million. There is no information concerning where the loss will ultimately fall

within Hoko’s group, or whether Hoko, or if that be material, the appellant, can survive financially.

There may be other transactions involving Hoko outside Australia, and it may have pledged the

Coomera Woods land for other purposes. Hoko might have claims against the appellant. The

respondent might be unable to enforce its claim against the appellant without Hoko’s cooperation. The

respondent has no caveatable interest in the land, and it would be obliged to enforce a judgment against

the appellant by winding up or, if the Coomera Woods land ever was transferred to the appellant, by

a writ of execution which would rank in priority after whatever other interests had been registered in the

meantime. These circumstances and the circumstances to which we have earlier made reference, which

we do not need to repeat fully, justify a conclusion that an order for security for costs is necessary to

protect the respondent, particularly when it is impossible to assess the strength of the respective cases.

There is a real risk that a judgment for costs in favour of the respondent would be unenforceable.

We therefore dismiss the appeal with costs. The order made below merely required the appellant to

provide security to the satisfaction of the Registrar, and there are no doubt many ways in which that

could be quite simply done by the appellant with the cooperation of Hoko.

IN THE COURT OF APPEAL

SUPREME COURT OF QUEENSLAND	Appeal No.143 of 1995
Brisbane
[Coomera Resort v. Bond]
BETWEEN:

COOMERA RESORT PTY LTD.

(ACN 050 911 156) (Plaintiff) Appellant

AND:

KOLBACK SECURITIES LIMITED

(ACN 010 560 586) (First Defendant)

AND:

KOLBACK GROUP LIMITED

(ACN 003 190 501) (Second Defendant)

AND:

PAUL LEVINSON BOND

(Third Defendant) Respondent

AND:

LANDBASE HOLDINGS LIMITED

(Fourth Defendant)

AND:

YUZO NAGANO

(Fifth Defendant)

AND:

ROBERT ADRIAN PITT

(Sixth Defendant)

AND:

PRD REALTY PTY LTD

(ACN 009 954 956) (Seventh Defendant)

AND:

DONALD DIETZ

(Eighth Defendant) FITZGERALD P.

MCPHERSON J.A.

MACKENZIE J.

Judgment delivered 23/02/1996

REASONS FOR JUDGMENT - THE COURT

Appeal dismissed with costs

CATCHWORDS:	Appeal against order to provide security - claim for equitable compensation for breach of fiduciary obligations and interest pursuant to s. 72 of the Common Law Practice Act 1867 - security in land considered in which the appellant has only a beneficial interest - security questionable - real risk that a judgment for costs unenforceable
Counsel:	J. Muir Q.C. with him M. Conrick for the Appellant R. Dickson for the Respondent
Solicitors:	Clayton Utz for the Appellant Walsh & Partners for the Respondent
Date(s) of Hearing:	12/02/1996