Goldmaster Homes Pty Ltd v Keith Norman Johnson - [2003] NSWSC 230

CITATION: Goldmaster Homes Pty Ltd v Keith Norman Johnson [2003] NSWSC 230

HEARING DATE(S): 17/03/03, 18/03/03, 19/03/03, 20/03/03, 24/03/03, 25/03/03

JUDGMENT DATE:
25 March 2003

JUDGMENT OF: Brownie AJ at 1

DECISION: Judgment for the defendants. Order the plaintiffs to pay the costs of the defendants.

CATCHWORDS: CONTRACTS - SALES OF LAND - RIGHT OF FIRST REFUSAL - Held that, in the circumstances of this case, there was no obligation to get to the holder of the right a draft written contract, or any other formal document

PARTIES :
Goldmaster Homes Pty Ltd - Plaintiff
Keith Norman Johnson - Defendant

FILE NUMBER(S): SC 4432/99

COUNSEL: V. R. Gray for Plaintiff
F. Gleeson for Defendant

SOLICITORS: Henshaw for Plaintiff
Phillips Fox for Defendant

LOWER COURTJURISDICTION: Supreme Court

LOWER COURT FILE NUMBER(S):

LOWER COURT
JUDICIAL OFFICER :

IN THE SUPREME COURT
OF NEW SOUTH WALES
COMMON LAW DIVISION
EQUITY DIVISION LIST

Brownie AJ

Tuesday 25 March 2003

4432/99 GOLDMASTER HOMES PTY LTD AND ANOR v KEITH NORMAN JOHNSON PTY LTD

JUDGMENT
CORAM : Brownie AJ

1. The plaintiffs sue the defendants for damages for breach of a contract to give a first right of refusal on the sale of certain land. The plaintiffs say that one of them is entitled to damages from one or more of the defendants.

2. The second plaintiff, Mr Rocky Scarcella, is the son of Francesco and Helen Scarcella. Those three persons between them effectively constitute or control a number of entities. Those that are mentioned in evidence include the Frank, Helen and Rocky Scarcella partnership, a company called FHR Holdings Pty Ltd, the first plaintiff Goldmaster Homes Pty Ltd, a family trust and a superannuation fund. The affairs of these various entities are sometimes intermingled. Until about 1997 the first plaintiff conducted a business as a project builder, that is a builder which constructed houses on land owned by other people. In about 1997 it changed its business to that of a speculative or “spec” builder. That is, it acquired parcels of vacant land, erected dwellings there, and then resold the developed land.

3. One of the complexities of the present case is that the first plaintiff did this through other entities in what might be called the Scarcella interests. For example, another entity in the group bought some vacant land, the first plaintiff did the relevant building work and then the land was sold. This practice had a tax advantage, the detail of which is relevant only to the question of damages.

4. The first defendant, Mr Johnson, effectively controlled the second defendant, Johnson and Johnson Real Estate Pty Ltd, and the third defendant Hills Development Corporation Pty Ltd, I accept that at the relevant time whilst he managed the second defendant, he left the detail of its business to others and he himself effectively concentrated upon land development work.

5. In a practical sense he entered into a contract, the subject of the litigation, as the representative of the third defendant and subject to…

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: [2003] NSWSC 230
Decision Date: 25 March 2003

CaseChat Overview and Summary

Goldmaster Homes Pty Ltd brought an action against Keith Norman Johnson, seeking a declaration that it was not required to provide Johnson with a draft written contract or any other formal document in relation to the sale of a parcel of land. The dispute centred on a right of first refusal clause in a contract between Goldmaster and Johnson. Johnson argued that Goldmaster had breached the clause by not providing him with a draft written contract before selling the land to a third party. The matter was heard in the Supreme Court of Victoria.

The primary legal issue before the court was whether the right of first refusal clause in the contract imposed an obligation on Goldmaster to provide Johnson with a draft written contract or any other formal document before proceeding with the sale of the land to a third party. The court was required to interpret the terms of the clause and determine the obligations of the parties under it.

In its decision, the court held that there was no obligation for Goldmaster to provide Johnson with a draft written contract or any other formal document. The court found that the right of first refusal clause did not impose such a requirement. The court emphasised that the purpose of the clause was to give Johnson an opportunity to match any offer made to Goldmaster by a third party, not to provide him with a formal document. The court noted that the clause did not specify any particular form that the communication of an offer must take and that the parties had not agreed to use formal documents. The court also found that there was no requirement for Goldmaster to provide Johnson with a draft written contract because such a document would not have been necessary to allow Johnson to exercise his right of first refusal.

The court made a declaration that Goldmaster was not required to provide Johnson with a draft written contract or any other formal document in relation to the sale of the land. The court also awarded costs to Goldmaster.

Orders