Dungowan Manly Pty Ltd v McLaughlin

Case [2012] NSWCA 180


Court of Appeal


Supreme Court


New South Wales

Medium Neutral Citation: Dungowan Manly Pty Ltd v McLaughlin [2012] NSWCA 180
Hearing dates:30 April and 1 May 2012
Decision date: 19 June 2012
Before: Bathurst CJ at [1]
Beazley JA at [7]
Macfarlan JA at [10]
Decision:

(1) Appeal dismissed.

(2) Cross-appeal allowed.

(3) Set aside order (2) made at first instance on 16 March 2010.

(4) Direct that within seven days of this Judgment the parties, if they are able to agree on the amount of interest to which the McLaughlins are entitled, lodge with the Court a form of Consent Order indicating the amount of the judgment to be entered in favour of the McLaughlins (in lieu of order (2) made on 16 March 2010), representing the sum of $513,129.45 together with interest from 16 March 2010 to the date of entry of judgment.

(5) If the parties are unable to so agree, they are directed to lodge submissions concerning the judgment that should be entered, as follows:

(a) By the McLaughlins, within 14 days of the date of this judgment;

(b) By the Company, within a further seven days.

(c) By the McLaughlins in reply, within a further seven days.

(6) Order the Company to pay the McLaughlins' costs of the appeal and cross-appeal.

(7) By consent, rescind the leave given to the McLaughlins by order (4) made on 16 March 2010.

[Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.]

Catchwords:

CORPORATIONS - company title residential unit building - major redevelopment undertaken without the consent of two shareholders - whether class rights varied - whether redevelopment materially altered characteristics of building and unit - whether Company validly amended articles of association embodying class rights - whether breach of contract contained in articles of association - whether unequal treatment of respondents in respect of levy constituted oppression - assessment of damages for breach of contract and oppression - whether loss of chance - appropriateness of discounts

PROPERTY LAW - company title residential unit building - class rights embodied in articles of association - whether major redevelopment could be undertaken without consent of two shareholders entitled to occupy one unit
Legislation Cited: Corporations Act 2001
Cases Cited: Artistic Builders Pty Limited v Elliot & Tuthill (Mortgages) Pty Limited [2002] NSWSC 16; 10 BPR 19565
Crumpton v Morrine Hall Pty Limited [1965] NSWR 240
Executor Trustee Australia Ltd v Deloitte Haskins & Sells [1996] SASC 5874; 135 FLR 314
Gambotto v WCP Limited [1995] HCA 12; 182 CLR 432
Dare v Pulham [1982] HCA 70; 148 CLR 658
Houldsworth v City of Glasgow Bank (1880) 5…

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Dungowan Manly Pty Ltd v McLaughlin [2012] NSWCA 180
Case
[2012] NSWCA 180
Decision Date

CaseChat Overview and Summary

In *Dungowan Manly Pty Ltd v McLaughlin*, the New South Wales Court of Appeal considered a dispute between a company that owned a residential unit building and two shareholders, the McLaughlins, who held rights to occupy one unit. The company had undertaken a major redevelopment of the building without the consent of the McLaughlins. The McLaughlins alleged that this redevelopment constituted a variation of their class rights, a breach of contract contained within the company's articles of association, and oppression due to unequal treatment regarding a levy.

The central legal issues before the Court of Appeal were whether the redevelopment materially altered the characteristics of the building and the McLaughlins' unit, whether the company had validly amended its articles of association to permit such redevelopment, and whether the McLaughlins had suffered oppression. The court was also required to consider the assessment of damages for breach of contract and oppression, including the concept of loss of chance and the appropriateness of discounts.

The Court of Appeal found that the redevelopment did not constitute a variation of the McLaughlins' class rights, as the articles of association did not require their consent for such works. However, the court determined that the company had breached its contractual obligations under the articles by undertaking the redevelopment without proper authorisation and that the McLaughlins had been oppressed by the unequal treatment in the imposition of a levy. The court dismissed the company's appeal but allowed the McLaughlins' cross-appeal, setting aside an earlier order regarding damages. The court directed the parties to agree on the amount of interest payable to the McLaughlins, representing a sum of $513,129.45 plus interest, or to make submissions on the matter if agreement could not be reached. The company was ordered to pay the McLaughlins' costs of the appeal and cross-appeal.

Orders

Orders of the court

(1) Appeal dismissed.

(2) Cross-appeal allowed.

(3) Set aside order (2) made at first instance on 16 March 2010.

(4) Direct that within seven days of this Judgment the parties, if they are able to agree on the amount of interest to which the McLaughlins are entitled, lodge with the Court a form of Consent Order indicating the amount of the judgment to be entered in favour of the McLaughlins (in lieu of order (2) made on 16 March 2010), representing the sum of $513,129.45 together with interest from 16 March 2010 to the date of entry of judgment.

(5) If the parties are unable to so agree, they are directed to lodge submissions concerning the judgment that should be entered, as follows:

(a) By the McLaughlins, within 14 days of the date of this judgment;

(b) By the Company, within a further seven days.

(c) By the McLaughlins in reply, within a further seven days.

(6) Order the Company to pay the McLaughlins' costs of the appeal and cross-appeal.

(7) By consent, rescind the leave given to the McLaughlins by order (4) made on 16 March 2010.

[Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.]

Background

Background to the litigation

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Evidence

Evidence Before The Court

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Decision

Reasons for decision

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Ratio Decidendi

Legal Principle Established

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