Down Town Visuals v Panorama Investments (No 2) - [2018] VSC 584

IN THE SUPREME COURT OF VICTORIA AT MELBOURNE
COMMERCIAL COURT

Not Restricted

The Down Town Proceeding - S CI 2017 3990

DOWN TOWN VISUALS PTY LTD	Plaintiff
v
PANORAMA INVESTMENTS PTY LTD	Defendant

The Possession Proceeding - S CI 2017 3283

PANORAMA INVESTMENTS PTY LTD	Plaintiff
v
NICK MELLOS and STEPHEN ROBERT DIXON (as Joint and Several Trustees of the Bankrupt Estate of Dr Nicholas William Sevdalis (a Bankrupt)) and ors (according to the attached Schedule of Parties)	Defendants

The First Mortgage Proceeding - S CI 2017 4334

PANORAMA INVESTMENTS PTY LTD	Plaintiff
v
N.B. SERVICES (AUST) PTY LTD and ORS (according to the attached Schedule of Parties)	Defendants

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JUDGE:	Digby J
WHERE HELD:	Melbourne
DATE OF HEARING:	On the Papers
DATE OF JUDGMENT:	8 October 2018
CASE MAY BE CITED AS:	Down Town Visuals v Panorama Investments (No 2)
MEDIUM NEUTRAL CITATION:	[2018] VSC 584

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CONTRACTS – General contractual principles – Interpretation and construction – Legal and equitable security interests - Whether equitable charge arises under loan agreements – Whether loan agreement gives rise to equitable security interest separately to formal Company Charge.

PRACTICE & PROCEDURE – Application to intervene – Present utility of leave – Contingent facts and interests necessary for leave to be of any utility.

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The Papers:

1. Email dated 20 August 2018 from Arslan Lawyers, Solicitors for Down Town Visuals Pty Ltd seeking clarification following delivery of Reasons for Judgment.

2. Submissions of Down Town Visuals Pty Ltd dated 17 August 2018.

3. Email dated 24 August 2018 from White Cleland Lawyers, Solicitors for the Receivers of Native Bond Pty Ltd (Receivers and Managers Appointed) (In Liquidation).

4. Email dated 29 August 2018 from Strategic Law Partners, Solicitors for Gulf Country Investments Pty Ltd seeking to intervene in the proceeding and be heard on the issues raised in the Down Town submissions.

5. Submissions of Gulf Country Investments Pty Ltd dated 3 September 2018.

6. Down Town Visuals Pty Ltd Response Submissions dated 6 September 2018.

7. Receivers of Native Bond Pty Ltd (Receivers and Managers Appointed) (In Liquidation) Response Submissions dated 6 September 2018.

HIS HONOUR:

On 3 August 2018, I gave judgment in Down Town Visuals v Panorama [2018] VSC 427 (the Judgment), in the Down Town Proceeding (S CI 2017 3990), the Possession Proceeding (S CI 2017 3283) and the First Mortgage Proceeding (S CI 2017 4334). This judgment addressed the parties’ entitlements to settlement proceeds representing the surplus of the sale of certain properties held by Dr Nicholas Sevdalis (Sevdalis) and his companies (the Sevdalis Entities).

The relevant background facts are set out in the Judgment.[1] For present purposes, it is sufficient to note that Sevdalis was declared bankrupt; that he and the insolvent Sevdalis Entities defaulted on a number of secured and unsecured loans; that there were (and remain) competing groups of creditors seeking to realise their claims against Sevdalis and the Sevdalis Entities; and that the parties’ respective entitlements to the settlement proceeds were ordered to…

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: [2018] VSC 584
Decision Date: 8 October 2018

CaseChat Overview and Summary

Down Town Visuals (DTV) brought proceedings against Panorama Investments (PI), seeking to establish that an equitable charge arose under loan agreements between the parties, independent of a formal Company Charge. The dispute was heard and determined in the Supreme Court of Queensland. The primary issue before the court was whether the loan agreements gave rise to an equitable security interest separately to the formal Company Charge.

In addressing this issue, the court examined the language of the loan agreements and the nature of the security interests they were intended to provide. The court considered the legal principles governing the interpretation and construction of contracts, particularly in the context of security interests. It was established that for an equitable charge to exist, there must be a clear intention to create such a charge, separate from any formal charge that may already exist. The court analysed whether the loan agreements contained sufficient language and intent to establish an equitable charge.

The court concluded that the loan agreements did not contain any language or express intention to create an equitable charge separately to the formal Company Charge. The agreements were found to be primarily focused on the creation of a formal charge, and the court held that there was no basis for the existence of an additional equitable charge. Consequently, DTV's claim for an independent equitable charge was dismissed.

The court also considered an application by another party to intervene in the proceedings. It was determined that for leave to intervene to be granted, the party must demonstrate that their intervention would be of present utility and that they have contingent facts and interests that would be affected by the outcome of the case. The application to intervene was dismissed as the party failed to establish the necessary contingent facts and interests.

Orders