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Evagelakos v UPG 318 Pty Ltd

Evagelakos v UPG 318 Pty Ltd

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Case Copied 20 September 2024 35 min read

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Supreme Court

New South Wales

Medium Neutral Citation: Evagelakos v UPG 318 Pty Ltd [2024] NSWSC 1179
Hearing dates: 14 August 2024
Date of orders: 20 September 2024
Decision date: 20 September 2024
Jurisdiction: Equity - Expedition List
Before: Rees J
Decision:
Refuse order for specific performance against guarantor.

Catchwords:
SPECIFIC PERFORMANCE – contract for sale of land for $20.6 million – purchaser is special purpose vehicle with $100 issued share capital – sole director of purchaser guarantees “observance by the Purchaser” of the contract’s terms – whether specific performance available against guarantor – principles at [21]-[30] – guarantor did not undertake to render performance if the purchaser did not.
INDEMNITIES – guarantor agrees to indemnify vendor “from and against all damages and losses” arising from breach of contract – whether vendor entitled to specific performance against guarantor to pay the balance of the purchase price – “damages and losses” does not mean the balance of the purchase price – specific performance of indemnity not warranted where damages are adequate remedy and the only obligation of the indemnifier in any event.
WORDS AND PHRASES – “observe” – “observation” – at [37]-[42].

Cases Cited:
Allcott Hire Pty Ltd v Silk [2016] NSWSC 1135
Andar Transport Pty Ltd v Brambles Ltd [2004] HCA 28
Ankar Pty Ltd & Arnick Holdings Ltd v National Westminster Finance (Australia) Ltd (1987) 162 CLR 549
Ayling v Wade [1961] 2 All ER 399
Bowman Development Corp Pty Ltd v Young Forever Property Pty Ltd (No 2) [2020] QDC 073
Brighton Automotive Holdings Pty Ltd v Honda Australia Pty Ltd (No 2) [2024] VSC 262
Burns v MAN Automotive (Aust) Pty Ltd (1986) 161 CLR 653; [1986] HCA 81
Canty v Paperlinx Australia Pty Ltd [2014] NSWCA 309
Chapmans Ltd v Australian Stock Exchange Limited (1996) 67 FCR 402
Commercial Bank of Australia Ltd v Colonial Finance Mortgage & Investment & Guarantee Corporation Ltd (1906) 4 CLR 57
Erect Safe Scaffolding (Australia) Pty Ltd v Sutton (2008) 72 NSWLR 1
Fairborne Pty Ltd v Strata Store Noosa Pty Ltd [2009] QSC 250
Firma C-Trade SA v Newcastle Protection & Indemnity Association [1991] 2 AC 1
Gujarat NRE India Pty Ltd v Wollongong Coal Ltd [2018] NSWSC 1459
Jowitt v Callaghan (1938) 38 SR (NSW) 512
Koufos v C Czarnikow Ltd (The Heron II) [1969] 1 AC 350
McFarlane v Reffold (2013) 116 SASR 83; [2013] SASCFC 31
McIntosh v Dalwood (No 3) (1930) 30 SR (NSW) 332
McIntosh v Dalwood (No 4) (1930) 30 SR (NSW) 415
Moschi v Lep Air Services Ltd [1973] AC 331
Newman v McNicol (1938) 38 SR (NSW) 609
Paolucci v Makedyn Pty Ltd (2021) 20 BPR 41,749
Paterson v Pongrass Group Operations Pty Ltd [2011] NSWSC 1588
R v Patel; Ex parte Attorney-General (Qld) [2011] QCA 81
Reckitt v Cody [1920] 2 Ch 452
Ryan v UPG 322 Pty Ltd [2023] NSWSC 1293
Scenic Tours Pty Ltd (2020) 268 CLR 326
Silver v Dome Resources NL (2007)…

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: [2024] NSWSC 1179
Decision Date: 20 September 2024

CaseChat Overview and Summary

In the case of Evagelakos v UPG 318 Pty Ltd, the court was presented with a dispute concerning the sale of land valued at $20.6 million. The purchaser, UPG 318 Pty Ltd, a special purpose vehicle with a nominal share capital of $100, had entered into a contract for sale with the vendor, Evagelakos. The sole director of UPG 318 Pty Ltd had provided a guarantee that the purchaser would observe the terms of the contract. The vendor sought specific performance of the contract against both the purchaser and the guarantor, as well as an order for specific performance of the indemnity clause.

The primary legal issues addressed by the court were whether specific performance could be granted against the guarantor who had guaranteed the purchaser's performance and whether the indemnity clause could be specifically enforced to compel the guarantor to pay the balance of the purchase price. The court examined the principles of equity and contract law to determine the enforceability of these clauses. The court held that the guarantor's obligation was not to perform the contract if the purchaser failed to do so, but rather to indemnify the vendor from any damages and losses arising from a breach of contract by the purchaser. The court found that specific performance of the indemnity clause was not warranted because the vendor had an adequate remedy in damages and the guarantor's obligation was limited to indemnifying the vendor.

The court's reasoning was that the guarantor had not undertaken to perform the contract if the purchaser did not, and therefore, the guarantor could not be compelled to specifically perform the contract. Additionally, the court clarified the meaning of the words "observe" and "observation" in the context of the guarantee. The court held that these terms did not imply a direct obligation to perform the contract but rather an obligation to ensure compliance by the purchaser. Consequently, the court denied the vendor's request for specific performance against the guarantor, both in terms of the contract and the indemnity clause.

The final orders of the court were that specific performance could not be granted against the guarantor, and the vendor's claim for specific performance of the indemnity clause was dismissed. The court's decision emphasised the importance of distinguishing between guarantees of performance and guarantees of indemnity, and the limited circumstances in which specific performance may be available.

Orders