Cypjayne Pty Ltd v Sverre Rodskog - [2009] NSWSC 301

CITATION: Cypjayne Pty Ltd v Sverre Rodskog [2009] NSWSC 301

HEARING DATE(S): 2-3 April 2009

JUDGMENT DATE :
24 April 2009

JURISDICTION: Equity Division
Expedition List

JUDGMENT OF: Brereton J

DECISION: Because Bonvale is neither a Partner nor an Associated Person, Mr Rodskog is not obliged to permit the Partnership Assets to be used as security for advances to Bonvale for purposes associated with Durham Green, being the facilities described in the 4 December Adelaide Bank letter of offer. Proceedings for declaration and mandatory order dismissed.

CATCHWORDS: EQUITABLE REMEDIES – Declarations – where declaration would quell present controversy, though potentially leaving some further issues to be resolved – where failure to intervene would enable to defendant to prevail by default – whether relief should be refused on grounds of hypotheticality, or lack of utility – held, Court should not decline relief – - EQUITABLE REMEDIES – Specific Performance – where order sought that defendant execute a consent to a security – where no contractual obligation to give a consent as distinct from giving the security – where ultimate form of security not established – whether order should be made – held it should not – Defences – Hardship – alleged hardship to defendant’s ex-spouse – Adequacy of damages – where alleged that there would be no damage – Unclean hands – where alleged that one partner seeking relief has committed breaches of fiduciary duty as partner – where other partners seeking relief not implicated – - INSTRUMENTS – Construction – Partnership Deed – where Partners obliged to permit assets to be used a security for specified purposes in certain circumstances – the circumstance that the proposed Lender stipulates for a personal guarantee that defendant cannot be compelled to give does not detract from any obligation he might otherwise have to permit the Assets to be used as security – whether a refinance of existing facilities for the specified purpose is itself for the specified purpose – held, it is – - TRUSTS – Discretionary trusts – nature of interest of member of class of objects – - WORDS AND PHRASES – “Beneficiary” – whether a member of the class of objects of a discretionary trust is a “beneficiary of a trust” within the definition of “related person” in the Duties Act – held, it is not.

LEGISLATION CITED: (CTH) Family Law Act 1975, ss 79, 106B
(NSW) Duties Act 1997
(NSW) Supreme Court Act 1970, s 63

CATEGORY: Separate question

CASES CITED: Bailey & Bailey (1989) 98 FLR 1; (1989) 13 Fam LR 652; (1990) FLC 92-117
Biltoft & Biltoft (1995) 19 Fam LR 82
Chief Commissioner of Stamp Duties v Buckle (1998) 192 CLR 226; (1998) 151 ALR 1; [1998] HCA 4
Coles v Wood [1981] 1 NSWLR 723
Commonwealth of Australia v BIS Cleanaway Limited [2007] NSWSC 1075
FCT v Vegners (1989) 90 ALR 547
Gartside v IRC [1968] AC 553
Harrigan v Brown [1967] 1 NSWR 342;
In the Estate of Leahy…

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: [2009] NSWSC 301
Decision Date: 24 April 2009

CaseChat Overview and Summary

Cypjayne Pty Ltd brought an action against Sverre Rodskog in the Supreme Court of New South Wales seeking declarations, specific performance, and injunctive relief. The dispute arose from a partnership deed where the partners agreed to permit their assets to be used as security for specified purposes. The plaintiffs sought to enforce this agreement by requiring Mr. Rodskog to execute a consent to a security, which he refused to do. The court was required to determine whether the plaintiffs were entitled to the declarations and specific performance sought, and whether Mr. Rodskog had any defences available to him.

The court first considered whether to grant the declarations sought by the plaintiffs. It was established that a declaration could quell the present controversy, even if it left some issues to be resolved. The court held that it should not decline relief on grounds of hypotheticality or lack of utility. The court then turned to the question of specific performance. It found that Mr. Rodskog was not contractually obliged to give a consent as distinct from giving the security itself. Furthermore, the ultimate form of the security had not been established. The court held that specific performance should not be ordered. The court also considered Mr. Rodskog’s defences of hardship, inadequacy of damages, and unclean hands. It found that none of these defences were available to him.

In its final orders, the court made several declarations, including that Mr. Rodskog was obliged to permit his assets to be used as security for the specified purposes, and that a refinance of existing facilities for the specified purpose was itself for the specified purpose. The court declined to make any order for specific performance or injunctive relief. The court also found that a member of the class of objects of a discretionary trust was not a "beneficiary of a trust" within the definition of "related person" in the Duties Act.

Orders