Dib & Anor v Taylor & Ors (No 2)

[2008] NSWSC 503

CITATION:

Dib & Anor v Taylor & Ors (No 2) [2008] NSWSC 503

HEARING DATE(S):

22 May 2008

JURISDICTION:

Equity

JUDGMENT OF:

Jagot AJ

EX TEMPORE JUDGMENT DATE:

22 May 2008

CATCHWORDS:

CORPORATIONS - company co-owner of land with plaintiffs - company sole owner of building on land - apportionment of funds paid into Court after sale of land - valuation of land and building to determine respective entitlements

CATEGORY:

Principal judgment

CASES CITED:

Dib & Anor v Taylor & Ors [2008] NSWSC 493

PARTIES:

FIRST PLAINTIFF
Mohamed Dib

SECOND PLAINTIFF
Sanaa Dib

FIRST DEFENDANT
Barry Taylor

SECOND DEFENDANT
AHJ Group Pty Limited (in liquidation)

THIRD DEFENDANT
Salah Dib

FILE NUMBER(S):

SC 3399 of 2006

COUNSEL:

Mr V R W Gray - plaintiffs
Mr Michael S Henry - second defendant
Mr M France, solicitor - third defendant (costs)

SOLICITORS:

Corporate & Civil Legal - plaintiffs
Turkslegal - second defendant
Watson Mangioni - third defendant

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

Jagot AJ

22 May 2008

3399 of 2006 MOHAMED DIB & ANOR v BARRY TAYLOR & ORS

JUDGMENT

1 HER HONOUR: I delivered judgment yesterday rejecting the plaintiffs’ claim that a binding compromise had been agreed between the parties (Dib & Anor v Taylor & Ors [2008] NSWSC 493). In consequence the remaining issue is the entitlement of the parties to the money paid into Court, being the balance of the proceeds of sale of the land and childcare centre business on a property known as 1412 – 1420 Camden Valley Way, Leppington (being lot 8 in deposited plan 27877).

2 The scope of this dispute, and the evidence relating to it, is narrow. Most facts are agreed. The receiver, Mr Taylor, sold the property and business in two separate contracts on 8 April 2006. The business sale price was $512,500. The property sale price was $1,537,500.

3 The plaintiffs and AHJ Group Pty Limited are co-owners of the property (but not the business, which was wholly owned by AHJ Group). Under a deed dated 2 June 2003 the plaintiffs owned 90% of the land (excluding the building) and the AHJ Group owned 10% of the land (and 100% of the building). The plaintiffs accept that they must account to AHJ Group for the sum of $610,447.37 (representing a loan payment made by AHJ Group to the plaintiffs).

4 The sole remaining issue is the appropriate apportionment between the plaintiffs and the AHJ Group of the funds paid into Court.

5 Mr Looby, valuer, gave expert evidence. In his opinion the property was worth $1,700,000 as at 8 April 2006. He considered the building had a value of $589,835. He had not fully considered the appropriate apportionment if the property value was $1,537,500 (being the sale price in fact achieved at auction). He accepted, however, that this represented the results of an arm’s length transaction and indicated his view that valuations within a range of 10% were simply reflecting an acceptable margin of error.

6 The AHJ Group’s position (based on Mr Looby’s evidence) was that, irrespective of the land value, the building value remained $589,835. The plaintiffs’ position was that it was illogical to apply Mr Looby’s building value of $589,835 to the contract sale price. Mr Looby had calculated that building value by reference to his overall land value. The two could not be separated with the one figure (the building value) somehow remaining fixed and the other (the land value) capable of variation. Accordingly, Mr Looby’s opinions as to value could only properly be reflected by first working out the proportion of the building value to the land value based on his total property value ($1,700,000) and then applying that proportion to the contract sale price.

7 Mr Looby’s oral evidence disclosed that ascribing notional land and building values are not independent exercises. A summation approach to valuation involves an opinion (albeit an informed opinion) about the part of the sale price attributable to the added value of any building on the land. The added value of the building is considered in the context of the sale price in fact achieved (or posited) and not in isolation. It follows that Mr Looby’s building value of $589,835 cannot be treated as fixed.

8 It is perhaps unfortunate that Mr Looby was not instructed to apportion the land and building value by reference to the contract sale price. Although he gave some evidence about the likely results of that exercise he said that he had not fully worked those calculations out and hence his observations in that regard would be less reliable than the balance of his evidence.

9 In these circumstances, the remaining alternative (and the one that best accords with fairness and common sense) is that proffered by the plaintiffs. It is not possible to determine final figures due to the outstanding question of interest earned from 1 January 2008 onwards.

10 However, and, as proposed by the plaintiffs, the relevant proportion of the contract sale price attributable to the land is $994,853 and to the building is $542,647. The parties agreed that the application of these figures would result in the plaintiffs’ net entitlement out of the funds paid into Court being $274,993 (excluding interest).

11 Consistent with the common position of the parties I therefore make the following orders:

(1) The funds paid into Court by the first defendant pursuant to order 2 made on 24 July 2006 are to be paid:
(a) in the sum of $274,993 to Corporate and Civil Legal, as solicitors for the plaintiffs; and
(b) as to the balance (including all accrued interest), to the solicitors for the second defendant and cross-claimants, Turks Legal, by a cheque drawn in favour of “Turks Legal Trust Account”.


(2) The liquidator direct Turks Legal to pay 58.24% of the accrued interest to Corporate and Civil Legal, as solicitors for the plaintiffs, within 7 days of the receipt of the same.

(3) The originating process, statement of claim and amended cross-claim are otherwise dismissed.

(4) The exhibits may be returned.

[The parties addressed on the issue of costs]

(5) The plaintiffs are to pay the third defendant’s costs of and incidental to the statement of claim up to and including the date 7 May 2008, as agreed or assessed.

(6) The plaintiffs are to pay the cross-claimants’ costs of and incidental to the cross-claim up to and including the date 6 May 2008, as agreed or assessed.

(7) The plaintiffs and second defendant are each to pay their own costs of and incidental to the statement of claim.

(8) The costs orders made on 22 May 2008 with respect to the plaintiffs’ notice of motion filed 19 May 2008 and the separate question determined on 21 May 2008 are varied as follows:
(a) order 2: delete the word “defendant’s” and replace with “second defendant’s and cross-claimants’”; and
(b) order 3: delete the word “defendant’s” and replace with “second defendant’s and cross-claimants’”.

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