Core Building Group Pty Ltd v Dickson Developments; Precinct 1 Pty Ltd (No 2) - [2023] ACTSC 221

SUPREME COURT OF THE AUSTRALIAN CAPITAL TERRITORY

Case Title:	Core Building Group Pty Ltd v Dickson Developments Precinct 1 Pty Ltd (No 2)
Citation:	[2023] ACTSC 221
Hearing Date:	11 August 2023
Decision Date:	11 August 2023
Before:	Mossop J
Decision:	See [56].
Catchwords:	FREEZING ORDERS – Freezing orders sought against two companies – where each company is a special purpose vehicle for a construction project – where each company called upon security bonds provided by builder – plaintiff fears dissipation of assets in order to frustrate potential judgment – freezing orders granted on an interim basis at prior hearing – whether freezing orders should continue against each of the companies – where each company has put on evidence as to what steps have been taken with the money from the bonds called upon – evidence less than forthcoming – whether there exists a good arguable claim against each company – freezing order continued against second plaintiff – freezing order discontinued against first plaintiff
Legislation Cited:	Building and Construction Industry (Security of Payment) Act 2009 (ACT) Court Procedures Rules 2006 (ACT), r 743
Parties:	Core Building Group Pty Ltd (Plaintiff) Dickson Developments Precinct 1 Pty Ltd (First Defendant) Dickson Developments Precinct 5 Pty Ltd (Second Defendant)
Representation:	Counsel D Cook SC with W Chan (Plaintiff) B Buckland (First and Second Defendant)
Solicitors Crisp Law (Plaintiff) HFW Australia (First and Second Defendant)
File Number:	SC 309 of 2023

MOSSOP J:

Introduction

1․Shortly before 5pm on 28 July 2023 I made freezing orders in relation to the assets of two companies, Dickson Developments Precinct 5 Pty Ltd (DDP5) and Dickson Developments Precinct 1 Pty Ltd (DDP1).
2․DDP5 is a special purpose development company responsible for a development known as Mulberry.
3․DDP1 is a special purpose development company responsible for a development known as Kashmir.
4․Both companies are members of what is referred to in the evidence as the Art Group of companies. Both companies have contracts with the plaintiff, Core Building Group Pty Ltd (Core).
5․Those contracts are substantial. The Mulberry Project involves construction of 370 apartments with a contract headline figure of $89,995,922.
6․The Kashmir project involves the construction of 141 apartments with a headline figure of $37,200,000.
7․Both developers are, through a chain of $1 or $2 companies, controlled by Johnny Roso and Elisa Roso. The director of each of DDP5 and DDP1 is Johnny Roso.
8․The construction projects have, unfortunately, reached the stage where both parties are expanding the scope of their disputes and the prospect is that multiple disputes will have to be resolved in accordance with the Building and Construction Industry (Security of Payment) Act 2009 (ACT) (SOP Act), the dispute resolution provisions of the contract, or by a court.
9․The freezing orders made on 28 July 2023 were made on an ex parte basis. Although the defendant parties appeared and counsel made some limited submissions on that occasion, orders were made for a limited time only in order to permit the defendants the opportunity to put…

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: [2023] ACTSC 221
Decision Date

CaseChat Overview and Summary

In the Supreme Court of the Australian Capital Territory, Core Building Group Pty Ltd (the plaintiff) sought to continue interim freezing orders against Dickson Developments Precinct 5 Pty Ltd and Dickson Developments Precinct 1 Pty Ltd (the defendants), which had been made to prevent the dissipation of assets that could be used to satisfy a potential judgment in the plaintiff's favour. The court had to decide whether the freezing orders should be continued against each defendant.

The court assessed the likelihood of success on the merits and the risk of dissipation of assets for each defendant. Regarding DDP5, the court found that the plaintiff had a good arguable claim that DDP5 was estopped from calling upon the security bond, and that there was a significant risk that the assets would be dissipated. Therefore, the freezing order was continued against DDP5. However, for DDP1, the court found that the plaintiff's claims were within the usual scope of the contractual dispute, and there was no evidence of dissipation of assets. Therefore, the freezing order was discharged against DDP1.

The court's reasoning was based on the evidence presented, including the defendants' failure to provide clear explanations of their transactions and the use of the funds obtained from the security bonds. The court also considered the contractual arrangements and the allocation of risk between the parties. The court concluded that continuing the freezing order against DDP5 was necessary to prevent the dissipation of assets, while discharging the order against DDP1 would not interfere with the usual operation of the contract.

The final orders of the court were that the freezing order against DDP1 was discharged, while the freezing order against DDP5 was continued but would be discharged if the plaintiff did not commence proceedings seeking final relief by a specified date. The parties were also granted liberty to apply for variations to the freezing order. The court reserved questions of costs and listed the proceedings for a future hearing. Additionally, the court ordered that certain individuals and another company be joined as parties to the proceedings and granted the defendants first access to certain documents produced by third parties.

Orders