Kastro Pty Ltd v ABD Holdings Pty Ltd - [2008] NSWSC 1291

CITATION: Kastro Pty Ltd v ABD Holdings Pty Ltd [2008] NSWSC 1291

HEARING DATE(S): 14 November 2008

JURISDICTION: Equity Division
Duty List

JUDGMENT OF: Brereton J

EX TEMPORE JUDGMENT DATE: 14 November 2008

DECISION: Application by purchaser for continuation of interlocutory injunction declined.

CATCHWORDS: CONTRACTS – general contractual principles – construction and interpretation of contracts – application by purchaser to continue interlocutory injunction restraining vendor from claiming payment pursuant to bank guarantee – where vendor had entered into heads of agreement with a potential tenant prior to exchange of contracts – where prospective tenant decided before settlement not to enter into lease – where contract required vendor to notify purchaser of proposed dealings with leasehold – whether heads of agreement amounted to agreement to lease or equitable lease – whether arguable case for final relief demonstrated by purchaser

CATEGORY: Procedural and other rulings

CASES CITED: Blackburn Developments No 19 Pty Ltd v Downs Surgical (Australia) Pty Ltd (1974) 2 BPR 9141
Gobblers Inc Pty Limited v Stevens (1993) NSW ConvR 55-665
Hali Retail Stores Pty Ltd v Hafaz [2007] NSWSC 412
Kassabian & Rawstron Investments Pty Ltd v Lagonicos (1993) NSW ConvR 55-690
Landsmiths Pty Ltd v Hall [1999] NSWSC 735 ; (1999) 9 BPR 17,057
Long v Piper [2001] NSWCA 342; [2002] ANZ ConvR 43; (2002) NSW ConvR 56-000
Longpocket Investments Pty Ltd v Hoadley (1985) 3 BPR 9606
Sydney Harbour Casino Holdings Pty Ltd v NMBE Pty Ltd (1998) 9 BPR 16,679

PARTIES: Kastro Pty Ltd (plaintiff)
ABD Holdings Pty Ltd (defendant)

FILE NUMBER(S): SC 5583/08

COUNSEL: R T McKeand SC (plaintiff)
J Stoljar SC w J A C Potts (defendant)

SOLICITORS: Herbert Geer (plaintiff)
Matthews Solicitors (defendant)

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION
DUTY LIST

Brereton J

Friday, 14 November 2008

5583/08 Kastro Pty Ltd v ABD Holdings Pty Ltd

JUDGMENT (ex tempore)

1 HIS HONOUR: The plaintiff Kastro Pty Ltd is the purchaser and the defendant ABD Holdings Pty Ltd is the vendor of lot 66, 7 Towns Place, Walsh Bay, under Contract for Sale between them dated 21 August 2008 for a price of $2,500,000. The deposit was by way of bank guarantee. Kastro claims to have terminated the contract for breach of contract by ABD. ABD contends that Kastro’s purported termination was a repudiation and that it has itself terminated on account of that repudiation. On 10 November 2008, Kastro obtained from Windeyer J, sitting as Duty Judge, an ex parte injunction restraining ABD until and including today from making demand for payment pursuant to the bank guarantee. Before me is Kastro's application for continuation of that injunction on an interlocutory basis, which ABD opposes.

2 The contract contained the following relevant standard condition:

10 Restrictions on rights of purchaser

10.1 The purchaser cannot make a claim or requisition or rescind or terminate in respect of -

…

10.1.5 a promise, representation, or statement about this contract, the property or the title, not set out or…

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: [2008] NSWSC 1291
Decision Date: 14 November 2008

CaseChat Overview and Summary

The parties in this case, Kastro Pty Ltd and ABD Holdings Pty Ltd, were involved in a contractual dispute regarding the interpretation of a heads of agreement that was entered into prior to the exchange of contracts. The dispute was heard in the Supreme Court of New South Wales. The purchaser, Kastro Pty Ltd, sought to continue an interlocutory injunction that restrained the vendor, ABD Holdings Pty Ltd, from claiming payment pursuant to a bank guarantee. The vendor had entered into the heads of agreement with a potential tenant before the exchange of contracts, but the prospective tenant decided not to enter into the lease before settlement. The contract required the vendor to notify the purchaser of any proposed dealings with a leasehold. The purchaser argued that the heads of agreement amounted to an agreement to lease or an equitable lease, and sought to demonstrate an arguable case for final relief.

The central legal issues before the court were whether the heads of agreement amounted to an agreement to lease or an equitable lease, and whether the purchaser had demonstrated an arguable case for final relief. The court needed to determine the nature of the heads of agreement and whether it could be considered a binding contract or an equitable interest in the property. Additionally, the court needed to assess whether the purchaser had established a prima facie case for the continuation of the interlocutory injunction, which would require a balance of convenience to favour the purchaser.

The court found that the heads of agreement did not amount to an agreement to lease or an equitable lease, as it was not a binding contract and did not confer any equitable interest in the property. The court held that the heads of agreement was a preliminary understanding between the vendor and the potential tenant, which did not create any legal obligations. The court also found that the purchaser had not demonstrated an arguable case for final relief, as the heads of agreement did not confer any rights or obligations on the purchaser. Consequently, the court lifted the interlocutory injunction, allowing the vendor to claim payment pursuant to the bank guarantee.

The final orders of the court were to lift the interlocutory injunction and dismiss the purchaser's application for a final injunction. The court held that the heads of agreement did not create any legal obligations or confer any equitable interest on the purchaser, and therefore, the purchaser had not demonstrated an arguable case for final relief. The vendor was permitted to claim payment pursuant to the bank guarantee, and the interlocutory injunction was lifted.

Orders