Eliana Construction and Developing Group v Assad - [2014] VSC 143

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE

COMMERCIAL AND EQUITY DIVISION

No. 02854 of 2012

ELIANA CONSTRUCTION AND DEVELOPING GROUP PTY LTD	Plaintiff
v
SINOT SAMY ASSAD	Defendant

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JUDGE:	VICKERY J
WHERE HELD:	MELBOURNE
DATES OF HEARING:	11-18 FEBRUARY 2014
DATE OF JUDGMENT:	10 APRIL 2014
CASE MAY BE CITED AS:	ELIANA CONSTRUCTION AND DEVELOPING GROUP v ASSAD
MEDIUM NEUTRAL CITATION:	[2014] VSC 143

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CONTRACT – Oral agreement for residential building project - Whether transaction was a loan or joint venture – Finding of joint venture from the outset of the project – Loan claimed – Finding that no loan agreement entered into from the outset of the project – Settlement of project disputes – Joint venture ceases - Proceeding referred for the taking of accounts and inquiry.

EVIDENCE - Oral agreement for residential building project – Whether transaction was a loan or joint venture -Credit of witnesses found wanting – Findings made largely on contemporaneous documentation - Paucity of documentary evidence of entitlement of liability.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr G Stavris	John Yianoulatos
For the Defendant	Dr M Sharpe	Seoud Solicitors

HIS HONOUR:

Background Facts

The Plaintiff company, Eliana Construction and Development Group Pty Ltd (‘Eliana’) was incorporated in 2008 and carries on business as a builder and developer in the construction of domestic buildings. Magdy Sowiha (‘Mr Sowiha’) is now the sole director and shareholder of Eliana and is a licensed builder. For a time Mr Sowiha’s wife was also a director of Eliana.

The Defendant, Dr Sinot Samy Assad (‘Dr Assad’) is a medical practitioner in active general practice. He regularly pursues other business as a developer of residential properties. Dr Assad is sued in his personal capacity or alternatively in his capacity as the Trustee of the S. Assad Family Trust.

Dr Assad and Mr Sowiha became acquainted with each through their membership of the Egyptian Coptic community in the greater Melbourne area and attending church at St Athanasius Church in Springvale, Victoria. Mr Sowiha and Dr Assad met frequently in informal settings, sharing meals after church, and in each others’ homes. They became good friends.

In May 2008, according to Mr Sowiha, or in September 2008, according to Dr Assad, Mr Sowiha and Dr Assad established a business relationship.

In September 2008, Mr Sowiha’s company Eliana purchased a property at 231 High Street, Lower Templestowe, Victoria (‘the Property’),[1] with the intention of building a block of 11 units (‘the Project’). The purchase price of the Property was $999,999.00. Eliana made a 5% deposit upon signing the Contract of Sale and paid $540,000.00, financed by mortgage, at settlement. Dr Assad contributed $350,000.00 at settlement.
[1]The property is described in Certificate of Title 08079 Folio 320 and Lots 1 and 2 on title plan 677283T.

Dr Assad and Eliana together entered into a loan agreement with the Commonwealth Bank to facilitate the development. Dr Assad and Eliana became registered on the title to the Property as tenants in…

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.

Continue reading Eliana Construction and Developing Group v Assad

Details

AGLC: Eliana Construction and Developing Group v Assad [2014] VSC 143
Case: [2014] VSC 143
Decision Date: 10 APRIL 2014

CaseChat Overview and Summary

Eliana Construction and Developing Group commenced proceedings against Assad, claiming that a residential building project had been conducted as a joint venture and not as a loan as alleged by Assad. The dispute arose out of the construction of a residential building, and the parties disagreed on the nature of their arrangement, with Eliana asserting it was a joint venture and Assad claiming it was a loan. The matter was heard in the Supreme Court of New South Wales.

The central legal issue was determining whether the agreement between the parties was a loan or a joint venture. The court had to consider the nature of the relationship between the parties and the intention behind the agreement. The court needed to ascertain if the evidence supported the claim that the arrangement was a joint venture from the outset, or if it had evolved into a loan at a later stage.

In resolving the dispute, the court found that the evidence did not support the claim of a loan agreement. The credibility of the witnesses was found to be lacking, and the court had to rely heavily on the contemporaneous documentation and the lack of documentary evidence to establish the true nature of the agreement. The court determined that the relationship was a joint venture from the outset of the project. However, the court could not ascertain the precise liabilities of the parties due to the paucity of documentary evidence. Consequently, the court ordered that the matter be referred for the taking of accounts and an inquiry to determine the exact liabilities of the parties in the joint venture.

The court's final order was that the matter be referred for the taking of accounts and an inquiry to determine the exact liabilities of the parties in the joint venture. This decision clarified the nature of the agreement between the parties and provided a pathway for resolving the outstanding disputes between them.

Orders