Drinkwater as trustee for the Cheryl Drinkwater Trust v Nadinic (No 4)
[2017] NSWSC 301
•24 March 2017
Supreme Court
New South Wales
Medium Neutral Citation: Drinkwater as trustee for the Cheryl Drinkwater Trust v Nadinic (No 4) [2017] NSWSC 301 Hearing dates: 24 March 2017 Decision date: 24 March 2017 Jurisdiction: Equity Before: Stevenson J Decision: Plaintiff’s amended notice of motion is dismissed with costs
Catchwords: CONTRACT – PRACTICE AND PROCEDURE – where court noted agreement between the parties that funds be paid into joint controlled money account until further order of the court – whether court should make further order – proper construction of the agreement Cases Cited: Drinkwater v Nadinic [2016] NSWSC 1364
Drinkwater v Nadinic [2016] NSWSC 1733Category: Procedural and other rulings Parties: Cheryl Drinkwater as trustee for the Cheryl Drinkwater Trust (Plaintiff/Applicant)
Andrew Frane Nadinic (Defendant/Respondent)Representation: Counsel:
Solicitors:
M Ashhurst SC with L D Corbett (Plaintiff/Applicant)
A G Martin (Defendant/Respondent)
Hewitts Commercial Lawyers (Plaintiff/Applicant)
Summer Lawyers (Defendant/Respondent)
File Number(s): SC 2016/242022
EX TEMPORE Judgment
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These proceedings relate to a joint venture between the plaintiff, Ms Drinkwater, and the defendant, Mr Nadinic, for the development of properties owned by Ms Drinkwater.
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Ms Drinkwater and Mr Nadinic fell into dispute.
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They entered into a deed of settlement pursuant to which, Ms Drinkwater agreed, in effect, to purchase Mr Nadinic's interest in the joint venture for $2,050,000. The parties agreed that the sum be paid by 30 June 2016 and be secured by a second registered mortgage over the properties (which were in Ms Drinkwater's name).
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Ms Drinkwater did not make the payment by that date and Mr Nadinic made demand for the payment.
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Ms Drinkwater then brought these proceedings to seek to have the deed of settlement and mortgage set aside on the basis that her entry into those agreements had been induced by Mr Nadinic's misleading or deceptive conduct (being non-disclosure of certain matters).
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Pembroke J heard that claim on 20 and 21 September 2016 and gave judgment on 30 September 2016: see Drinkwater v Nadinic [2016] NSWSC 1364.
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His Honour concluded that Ms Drinkwater was "entitled to succeed in a claim for equitable relief" and invited the parties to confer and agree "on appropriate amendments to the deed of settlement and the mortgage that reflect my findings".
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The parties were unable to reach agreement about those matters but did reach an agreement noted by White J (as his Honour then was) on 7 October 2016.
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That agreement was that the proceeds of sale of four of the lots in the development be paid into a joint controlled monies account in the names of the solicitors for both parties, "and to be held in that account until further order of the Court".
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I am informed that there is some $3.545 million in that account at the moment.
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By amended notice of motion filed by Ms Drinkwater on 9 March 2017, which I heard today in the Applications List, Ms Drinkwater now seeks an order that part of those monies be paid to her. I will return to this below.
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As the parties were not able to agree on what relief should be given following Pembroke J's judgment of 30 September 2016, there was a further hearing before his Honour on 1 December 2016. His Honour delivered judgment on 9 December 2016: See Drinkwater v Nadinic [2016] NSWSC 1733.
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His Honour ordered that the mortgage and deed be set aside and made other ancillary orders.
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Mr Nadinic has appealed against that decision. The hearing of that appeal is fixed for 10 April 2017. On 21 December 2016, Macfarlan JA made an order staying Pembroke J's orders of 9 December 2016, pending the outcome of the appeal.
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Now, by the notice of motion to which I have referred, Ms Drinkwater seeks an order that "the Consent Notation and Orders" made by White J on 7 October 2016, be "amended" to allow, in effect, that there be paid out from the money in the controlled monies account all funds in excess of the amount that (assuming Mr Nadinic is successful in the appeal) could arguably be secured by the mortgage. That amount is something in the order of $2.6 million.
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However, what White J did on 7 October 2016, was to note an agreement between the parties, a term of which was that the funds be held in the account "until further order of the Court". His Honour did not make any order about the funds.
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Thus, what Ms Drinkwater is seeking to do today by her notice of motion, is not to vary an order of the Court but, in effect, to enforce a private agreement (albeit one noted by the Court) that she has with Mr Nadinic.
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Her entitlement to do this depends upon what the parties meant in their agreement when they said the funds should remain in Court "until further order of the Court". That depends upon the proper construction of the agreement.
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As the agreement was reached at a point where Pembroke J had held that Ms Drinkwater was entitled to relief but had not determined that relief, it can be readily accepted that the parties intended those words to mean that the funds would remain in the controlled monies account pending the outcome of the proceedings and that the agreement should be construed accordingly. Mr Martin, who appeared for Mr Nadinic, accepted this must be so.
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But the proceedings have not yet resolved; resolution must await the outcome of the appeal.
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Mr Ashhurst SC, who appeared with Mr Corbett for Ms Drinkwater, submitted that the agreement that the funds remain in the controlled monies account "until further order of the Court" should be construed to mean that either party could apply for a "further order", "if necessary", or "if it could be demonstrated that the defendant had no arguable claim to part of the funds".
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I do not think it would be appropriate for me to come to any conclusion about that matter on an interlocutory application such as this.
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Whether the agreement should be so construed would, or at least may, depend on, amongst other things, the facts mutually known to the parties at the time of the agreement. That would include whether they knew that the funds that were to be paid into the controlled monies account pursuant to their agreement would, or would likely, exceed the amount that Mr Nadinic then contended was due to him. The proper construction of the agreement may also depend on other matters not raised in the motion before me.
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I can see that it may be reasonable between the parties for that part of the funds in the account that exceeds Mr Nadinic's possible entitlement, assuming that he succeeds, to be paid out to Ms Drinkwater.
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But the parties have reached an agreement as to how the funds are to be dealt with and I do not think I can simply make whatever order I think is reasonable in the circumstances. This motion is not the occasion to decide what the agreement means and to, in effect, order that it be enforced.
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For those reasons and with some reluctance, I have come to the conclusion that I should order that the amended notice of motion be dismissed.
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The plaintiff’s amended notice of motion of 9 March 2017 is dismissed with costs.
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Decision last updated: 28 March 2017
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