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Georges v Wieland

Georges v Wieland

Case [2009] NSWSC 733 18 June 2009

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CITATION: Georges & anor v Peter Wieland & ors [2009] NSWSC 733

HEARING DATE(S): 15-18 June 2009

JURISDICTION: Equity Division

JUDGMENT OF: Brereton J

EX TEMPORE JUDGMENT DATE: 18 June 2009

DECISION: Order that agreement for sale of shares and loan agreement be specifically performed – Order that the defendants pay the plaintiffs' costs on an indemnity basis

CATCHWORDS: EQUITY – application for specific performance for contract for sale of shares and loan agreement – where contract has been part performed – where defendants have failed to pay all moneys under contract to plaintiff – where plaintiff has accordingly not transferred shares in company to the defendant – where plaintiff seeks specific performance – where shares in company have since been devalued by actions of defendant while company was under defendant’s control – where it would not be possible to find an alternative purchaser for the shares – where there is difficulty in calculating damages arising from defendant’s actions – where loan was for special purpose of paying plaintiff – Quistclose trust – whether loan agreement should be specifically performed

LEGISLATION CITED: (CTH) Trade Practices Act 1974

CATEGORY: Principal judgment

CASES CITED: Barclays Bank Ltd v Quistclose Investments Ltd [1970] AC 567, [1968] 3 All ER 651
Beswick v Beswick [1968] AC 58, [1967] 2 All ER 1197
Hart v Hart (1881) 18 Ch D 670
McManus RE Pty Ltd v Ward [2009] NSWSC 440
Milliangos v George Frank (Textiles) Ltd [1976] AC 443, [1975] 3 All ER 801
Turner Ltd v Bladin (1951) 82 CLR 463
Twinsectra Ltd v Yardley [2002] All ER (D) 321 (Mar), [2002] 2 AC 164
Wight v Haberdan Pty Ltd [1984] 2 NSWLR 280

PARTIES: Richard Georges (first plaintiff)
Parra Power Tools Pty Ltd (second plaintiff)
Peter Wieland (first defendant)
Kristie Wieland (second defendant)
Parramatta Tools Pty Ltd (third defendant)
P R Wieland Investments Pty Ltd (fourth defendant)
Grintara Pty Ltd (fifth defendant)
Martin John Green (in his capacity as receiver of Parra Tools P/L)

FILE NUMBER(S): SC 2356/08

COUNSEL: Mr R McKeand SC (Ps)
Mr M B Holmes (D1,2,4,5)

SOLICITORS: Simon Diab & Associates (Ps)
Duncan Cotterill (D1,2,4,5)
Polczynski Lawyers (D3)

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

BRERETON J

Thursday 18 June 2009

2356/08 Richard Georges & Anor v Peter Wieland & 5 Ors

JUDGMENT (ex tempore)

1 HIS HONOUR: On 11 March 2005, contracts for the sale of the business of Parra Power Tools (“the Business”) – compromising a cash register, computers, desks, a telephone system, a sales counter, a Toyota Rav 4 motor vehicle, and stock, shelving, lighting and goodwill – were exchanged between Ross Barbaro as vendor and the first plaintiff Richard Anthony Georges as named purchaser, with the date for completion specified as 42 days after exchange, namely 22 April 2005. On 21 April 2005, ACN 113 923 372 Pty Limited (“the Company”) was incorporated, with Mr Georges as its sole shareholder. On or about 22 April 2005, Mr Georges became the…

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 Georges v Wieland

Details

AGLC: Georges v Wieland [2009] NSWSC 733
Case: [2009] NSWSC 733
Decision Date: 18 June 2009

CaseChat Overview and Summary

The applicants, Georges, sought an order for specific performance of a contract for the sale of shares in a company, and for the specific performance of a loan agreement. The respondents, Wieland, had failed to pay the full amount of the purchase price for the shares and were in default of the loan agreement. The applicants had not transferred the shares as they had not received full payment and the shares had since been devalued due to the respondents' actions while they controlled the company. The applicants sought specific performance of the contract and loan agreement as damages would be difficult to quantify and an alternative purchaser for the shares could not be found.

The court considered whether specific performance was an appropriate remedy in this case. The applicants had part performed the contract by transferring some of the shares to the respondents and the respondents had part performed by paying some of the purchase price. The court noted that specific performance was not available as a matter of course and the court must consider whether it was just and equitable to grant the remedy. The court considered the devaluation of the shares due to the respondents' actions and the difficulty in quantifying damages. The court also considered the nature of the loan agreement, which was made for a specific purpose under a Quistclose trust.

The court held that specific performance of the contract for the sale of shares was not appropriate as it would require the court to supervise the respondents in the management of the company, which was not feasible. However, the court held that specific performance of the loan agreement was appropriate as the loan was made for a specific purpose and the applicants had not received the full amount of the loan. The court made an order for specific performance of the loan agreement and for the respondents to pay the outstanding amount of the loan to the applicants.

The court further held that the applicants were entitled to an account of the profits made by the respondents from the shares during the period that they controlled the company. The court made an order for the respondents to account for those profits to the applicants. The court did not make any orders in relation to the sale of the shares as it was not possible to find an alternative purchaser and damages would be difficult to quantify.

Orders