LDT O'Brien Property Group Pty Ltd v Trustworthy Nominees Pty Ltd (No 2)
[2024] NSWSC 1688
•25 November 2024
Supreme Court
New South Wales
Medium Neutral Citation: LDT O’Brien Property Group Pty Ltd v Trustworthy Nominees Pty Ltd (No 2) [2024] NSWSC 1688 Hearing dates: 25 November 2024 Date of orders: 25 November 2024 Decision date: 25 November 2024 Jurisdiction: Equity - Real Property List Before: Peden J Decision: At [29]
Catchwords: CIVIL PROCEDURE — Court administration — Court powers — Power of court to determine questions about compromises and settlements
CONTRACTS — Duress — Illegitimate pressure — Whether settlement deed was affected by duress
Legislation Cited: Civil Procedure Act 2005 (NSW) s 73
Cases Cited: Crescendo Management Pty Ltd v Westpac Banking Corporation (1988) 19 NSWLR 40
LDT O'Brien Property Group Pty Ltd v Trustworthy Nominees Pty Ltd [2023] NSWSC 1100
Category: Principal judgment Parties: LDT O’Brien Property Group Pty Ltd (first plaintiff)
The Original Ettamogah Pub Pty Ltd (second Plaintiff)
Southern Equity Pty Ltd (third plaintiff)
Trustworthy Nominees Pty Ltd (first defendant)
Edward River Hotel Pty Ltd (second defendant)
Keith William Blackney (third defendant)Representation: Counsel:
Solicitors:
L O’Brien (litigant in person) with J Burns (McKenzie friend) (first plaintiff)
T Di‑Francesco (first defendant)
HWL Ebsworth Lawyers (first defendant)
File Number(s): 2021/00236010 Publication restriction: Nil
ex tempore judgment (revised)
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Before the Court is a question of whether a settlement deed between the plaintiffs and the first defendant, Trustworthy Nominees Pty Ltd (Trustworthy), is binding between the parties or not.
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Today, Mr O'Brien has appeared on behalf of the plaintiffs, the plaintiffs' former solicitors having been granted leave to cease to act for the plaintiffs on 13 November 2024. At the commencement of the hearing, the process was explained to Mr O'Brien, and he was given an opportunity to make the submissions he wished and to rely upon the documentation he had provided to the Court and to Trustworthy.
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This matter has been on foot for some time. Much of the procedural history was described by Ball J in LDT O'Brien Property Group Pty Ltd v Trustworthy Nominees Pty Ltd [2023] NSWSC 1100, up until the date of that decision, which was 2 September 2023. His Honour, there, was dealing with a notice of motion, whereby the plaintiffs sought a number of orders, including:
That order 6 of the orders made by Rein J on 2 December 2021 be vacated; and
That further defendants be joined to the proceedings and leave be granted to serve a second further amended statement of claim.
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In dealing with those matters, his Honour set out at a high level the factual contest between the parties. The following is a quote of various paragraphs from that judgment:
The first plaintiff, LDT O'Brien Property Group Pty Ltd (LDT), is the owner of a parcel of land in Table Top, New South Wales (the Property) on which is situated a number of buildings including the original Ettamogah Pub. Mr Leigh O'Brien is the sole director and shareholder of LDT. Either LDT or the second plaintiff, The Original Ettamogah Pub Pty Ltd (OEP), which is also controlled by Mr O'Brien, operated a hotel and restaurant on the Property. The third plaintiff, Southern Equity Pty Ltd (Southern Equity), another company controlled by Mr O'Brien, is said to own intellectual property relating to the hotel including certain trademarks and the copyright in certain cartoons, drawings and art works. It is alleged in these proceedings that LDT and OEP have been granted the exclusive rights to use the marks and exploit the material in which copyright subsists.
At various dates in 2015, the first defendant, Trustworthy Nominees Pty Ltd (Trustworthy), lent LDT a total amount of $1,448,500.00. The loans were secured by a registered first mortgage over the Property and rights set out in documents described as "General Security Agreements". In addition, Mr O'Brien gave guarantees in respect of the loans.
LDT defaulted under the loan agreements and following the issue of notices under s 57(2)(b) of the Real Property Act 1900 (NSW) and s 111(2) of the Conveyancing Act 1919 (NSW), it entered into possession of the Property.
On or about 25 May 2021, Trustworthy entered into a management agreement (the Management Agreement) with the second defendant, Edward River Hotel Pty Ltd (ERH), a company controlled by the third defendant, Mr Keith Blackney, to operate the hotel pending its sale. Mr Blackney had in the past managed the hotel on behalf of LDT. At some stage, he and Mr O'Brien had a falling out.
On 18 August 2021, the plaintiffs, who at that time were unrepresented, commenced these proceedings claiming the following relief:
1. The first plaintiff and second plaintiff claims damages for loss of rents and for loss of income from the sales of food, beverages, retail brewery sales and gaming from the Ettamogah Pub, Albury and shops from 2015 to date and continuing;
2. The third plaintiff claims damages for breaches of copyright, trademarks and intellectual property by the unauthorised sale of its merchandise;
3. That the first, second and third defendants account to the first plaintiff for the initial payment of lone moneys from the third defendant to the first defendant and for all payment of moneys thereafter into and out of the account held by the first defendant;
4. The first, second and third defendants pay to the first plaintiff the proceeds owed to the first plaintiff from the sales of land in the subdivision at 563 Burma Road, Table Top, NSW 2640.
By an amended statement of claim filed on 31 August 2021, the plaintiffs sought "on an urgent basis" relief including the following:
1. The Third to Sixth Defendants, their employees, successors and assigns (Defendants) vacate Part Folio identifier 11/1211459 being The Ettamogah Pub Albury and Associated buildings at 561 Burma Road Table Top NSW 2640 (Pub) forthwith.
2. The Third to Sixth Defendants be restrained from removing any stock, chattels, equipment, or vehicles from the Pub.
3. The Third to Sixth Defendants be restrained from re entering the Pub.
4. The Third to Sixth Defendants be restrained from coming within 500 metres of the Pub.
On 11 October 2021, Trustworthy filed a cross-claim against LDT and Mr O'Brien claiming a declaration that it was at all times from 16 December 2020 entitled to possession of the Property and ancillary orders giving effect to that declaration. Trustworthy also makes a claim personally against Mr O'Brien under the guarantee he had given. It appears that LDT and Mr O'Brien take issue with the amount claimed by Trustworthy. LDT also apparently maintains that the notices served on it do not comply withs 57(2)(b) of the Real Property Act and s 111(2) of the Conveyancing Act, although the basis for that contention is unclear.
On 29 October 2021, the first and second defendants filed a notice of motion seeking an order that the plaintiffs' claim be struck out and that judgment be entered in their favour on their crossclaim. That motion came before Rein J on 2 December 2021. Following comments from his Honour, the Court relevantly made the following orders by consent:
1 The plaintiffs' Amended Statement of Claim is struck out pursuant to r.14.28 of the UCPR 2005, subject to Order 2 below.
2 On or before 17 December 2021, the plaintiffs shall file and serve:
a. Any further amended statement of claim.
b. Any defence to the First Cross-claim.
3 …
4 …
5 Pending further Order, the Third Defendant [then, a reference to Trustworthy] shall have possession of the land at 561 Burma Road, Tabletop NSW 2640 (Property).
6 Pending further Order, the Sixth Defendant [then a reference to ERH] shall manage The Ettamogah Pub (Pub) located at the Property for and on behalf of the Third Defendant.
7 Pending further Order, Harry Flood shall on 24 hours' notice to the Fourth Defendant [then a reference to Mr Blackney] be entitled (but not with a frequency of more than once weekly) to inspect the Property and the records of the Sixth Defendant's trading activities pursuant to Order 6 above.
8 Pending further Order, and without admission as to liability to do so, the Third Defendant pay all statutory costs and utilities necessary for the Sixth Defendant to trade pursuant to Order 6 above, with any such costs that are attributable to the First Plaintiff in its capacity as the registered proprietor of the Property being added to any indebtedness of the First Plaintiff to the Third Defendant, or otherwise being a debt of the First Plaintiff to the Third Defendant.
9 …
10 …
11 …
In accordance with the Rein J's orders, the plaintiffs filed a further amended statement of claim. The effect of the amendments was to delete all claims other than a claim that Trustworthy, ERH and Mr Blackney have breached (and continue to breach) the intellectual property belonging to Southern Equity.
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Sometime after Trustworthy took possession of the Property, the business of the hotel was moved to another building on the Property, known as the "Barn", and the names under which the hotel trades have been changed to "Table Top Hotel", "The table Top Pub" and "Ettamogah". ERH and Cupid have registered various business names including "The table Top Pub", "Ettamogah Village", "Table Top Hotel" and "TABLE TOP HOTEL (FORMERLY ETTAMOGAH PUB)". It appears that the hotel business was moved to another building on the Property because the original hotel building was difficult to heat and cool. More significantly, it did not comply with relevant fire regulations and the cost of making it compliant were substantial. It appears that ERH has changed the names under which the business trades in response to the allegation that the defendants have infringed the intellectual property of Southern Equity.
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... Trustworthy had taken possession of the Property as mortgagee. Although its rights to do so are disputed, there was no dispute that it should remain in possession pending determination of the case. There was also no dispute that an hotel and restaurant should continue to be operated on the Property on behalf of Trustworthy. As Rein J pointed out to the parties at the time, that that business should continue to operate was for the benefit of both Trustworthy and LDT, since it would help preserve the value of the Property and the value of the hotel business itself. In that context, what is important is that the business operate. It seems unimportant if ERH chooses to use another associated
company to provide the services necessary to operate the business. And it seems irrelevant if ERH chooses to pay the whole of the revenue generated by the business to an associated company, since, under the terms of the Management Agreement, ERH is entitled to all the revenue and must bear all the expenses of the business. In that context, many of the matters about which the plaintiffs complain are not breaches of Order 6.
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His Honour concluded, for various reasons set out, that there was insufficient reason to vacate Order 6. However, the amended pleading was allowed.
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There is no dispute here that the parties signed a deed of settlement and release and exchanged copies by their solicitors. The plaintiffs' lawyers sent a signed copy to Trustworthy's lawyers at 10pm on 12 November 2024. Trustworthy's lawyers sent a counterpart signed copy at 5.30pm on 13 November 2024. Trustworthy appears to have immediately commenced performing its obligations under the deed, including by providing the Court with consent orders consistent with the deed and issuing a notice to the manager, terminating the management agreement.
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There is no dispute that the parties intended to resolve these proceedings against each other. In fact, Mr O'Brien told the Court on the morning of 13 November 2024 that he had signed documents to resolve the matter the night before and that his solicitor was doing an "excellent job". On that day, Mr O'Brien expressly agreed that the plaintiff's solicitors ought be granted leave to cease acting.
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However, by 15 November 2024, Mr O'Brien appears to no longer have wanted to be bound by the deed and, on 17 November 2024, he filed an affidavit in which he alleged that the deed was procured by "duress and bullying".
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The law of duress was explained to Mr O'Brien by reference to the written submissions of Trustworthy, which he had received earlier. It was explained that, for an allegation of duress to succeed, there must be impermissible or unlawful conduct that pressures the person to sign a document. McHugh JA explained duress in Crescendo Management Pty Ltd v Westpac Banking Corporation (1988) 19 NSWLR 40 at 45-6 as follows:
... The rationale of the doctrine of economic duress is that the law will not give effect to an apparent consent which was induced by pressure exercised upon one party by another party when the law regards that pressure as illegitimate.
A person who is the subject of duress usually knows only too well what he is doing. But he chooses to submit to the demand or pressure rather than take an alternative course of action. The proper approach in my opinion is to ask whether any applied pressure induced the victim to enter into the contract and then ask whether that pressure went beyond what the law is prepared to countenance as legitimate? Pressure will be illegitimate if it consists of unlawful threats or amounts to unconscionable conduct. But the categories are not closed. Even overwhelming pressure, not amounting to unconscionable conduct, however, will not necessarily constitute economic duress.
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Mr O'Brien in his oral submissions identified the particular duress as relating predominantly to Trustworthy having installed Mr Blackney and his company as the manager of the pub business at the property. He described that in various ways, but considered that event and Trustworthy's management through Mr Blackney's company as the reason why the plaintiffs have suffered losses as alleged and why he has been incredibly stressed by the litigation over many years.
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I do not accept that Mr O'Brien's decision to have the deed signed was the result of duress, for the following reasons.
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First, the final resolution was the result of negotiations over many months through the parties' lawyers. Mr O'Brien accepted that the email sent by his solicitors on 19 July 2024 accurately set out his concerns and was sent with his instructions. Having listed Mr O'Brien's concerns about the operation of the pub and the appointment of Mr Blackney and his company to manage the pub, including issues of fire safety insurance, Trustworthy's refusal to accept an offer in November 2020, the work and cost required to reinstate the kitchens and alleged loss of royalties, the email made an offer in view of those concerns that the plaintiffs pay Trustworthy $1.125 million "in full and final settlement of this proceeding". It was stated that this was "more than reasonable in the circumstances".
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Notably, the parties agreed to the terms of the settlement deed in dispute here, that required the plaintiffs to pay Trustworthy $1.250 million, which was not a great deal more than Mr O'Brien's July 2024 offer. Further, I note that the July 2024 offer did not make settlement conditional upon inspection or valuation, though it did seek access for trades people to inspect to quote on works for the following week.
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The evidence reveals that, between 19 July 2024 and the final version of the settlement deed, there were extensive communications between the lawyers as to the particular terms of the deed. It was not the case that Trustworthy did not compromise; both sides amended the deed until they landed on the final version that was acceptable to them all.
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Secondly, I do not accept Mr O'Brien's oral assertions from the Bar table that he told his solicitors he did not want to pay Trustworthy any money. Those statements are inconsistent with:
All the correspondence flowing between the parties' solicitors, which referenced a payment of various sizes by the plaintiffs to Trustworthy.
Mr O'Brien's statement to the Court on 13 November 2024 that his solicitors were doing an excellent job in the settlement negotiations.
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Further, Mr O'Brien's oral assertions were unsupported by any documented communication between Mr O'Brien and his solicitors before signing the deed. In circumstances where his solicitors' files had been subpoenaed and contained 151 emails and 41 file notes, over which privilege has been claimed, Mr O'Brien could have chosen to waive privilege to demonstrate his assertion that he instructed his lawyers he did not want to pay the money in the deed. He has chosen not to do so. His various affidavits and annexed documents do not refer to any complaint concerning his lawyers at any time.
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I do not accept the unsubstantiated criticisms of any lawyers involved in the negotiations that could lead to a conclusion that they acted without instructions or contrary to their clients' interests or that there was some form of collusion between the parties' lawyers.
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Thirdly, I do not accept that Mr O'Brien did not understand the nature of the agreement in the deed. It came some four months after his solicitors made the first offer in evidence, and after three mediations. Mr O'Brien is an experienced businessman who understands concepts of intellectual property, ways of licencing that property and the operation of a pub business. He has further been involved in the sale of various properties. He is a director of various companies and was prepared to give a personal guarantee in relation to a loan secured by mortgage. I consider Mr O'Brien understood the deed would have the effect of either entitling his entities to purchase back the property from its mortgagee as is for a particular sum, or, alternatively, he was agreeing not to interfere with the mortgagee selling the secured asset.
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I consider it is for that reason that Mr O'Brien told the Court that he had entered into the deed "in good faith" and that the allegation of duress is in essence a belated regret only. Such a conclusion is consistent with Mr O'Brien's statement to the Court on 18 November 2024, that he thought it was "unfair" because, after signing the deed, he was told "We can't fund this".
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Fourthly, I reject Mr O'Brien's suggestion that he was somehow misled because he either had not inspected the property for four years or that he only belatedly found out the pub would not be returned to him as a going concern, and therefore he was unable to obtain finance to fund the settlement.
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The evidence discloses that at the time of the execution of the deed, Mr O'Brien was aware of:
The debt Trustworthy asserted was owing;
His own investigations as to Trustworthy's calculations of those debts;
The value of the property as at December 2023; and
The possible value of the plaintiffs' claimed losses from being excluded from the property while Mr Blackney's company was managing the pub.
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Further, from December 2021, pursuant to Rein J's orders, Mr O'Brien was entitled to have a Mr Flood inspect the premises and the records of the pub business once a week. The deed also includes an entitlement for the plaintiffs to carry out a valuation, but after the execution of the deed, and not before. Rather than seeking an inspection or valuation for the purposes of agreeing to the deed, cl 7 of the deed contains warranties, including those at 7.1 to 7.4:
The parties to this Deed warrant that they:
7.1 have taken independent legal advice as to the nature, effect and extent of this Deed;
7.2 have received all such information and explanation as may have been sought or required or considered might required [sic] from each other;
7.3 have made such further and other enquiries as considered necessary, desirable or requisite;
7.4 have not brought, instituted, filed, commenced or caused to be commenced any Claim or other claim against each other save for the claims in the Proceedings;
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I reject Mr O'Brien's submission that an inspection or valuation would, as a matter of construction, fall outside the meaning of those subclauses. Therefore, I consider by those subclauses the plaintiffs were warranting to Trustworthy that they had all of the information they required when executing the deed.
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Further, there is no provision in the deed concerning the state of the pub building and the business located on the property. That is despite the fact that the July 2024 offer listed Mr O'Brien's concerns about those matters. I note that there is no pleading concerning those matters, and instead the pleading only concerns claims for breaches of intellectual property rights. Therefore, even if the final hearing had commenced today, Trustworthy was not going to be facing any claim that it was liable for matters raised in the July 2024 email or orally by Mr O'Brien.
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Trustworthy has ostensibly complied with various requirements in the deed following its execution, including issuing a notice to the managing company to vacate the property and terminating the management agreement of May 2021. Pursuant to that agreement, Trustworthy agreed pursuant to cl 13 to sell the listed equipment of the manager at a reasonable price on any sale of the property. However, the management agreement does not deal with any stock or property beyond that listed. It is not apparent why the outgoing manager would not be entitled to remove its own goods. It is unclear why Mr O'Brien asserts that the manager seeking to remove its property amounts to a fact that vitiates his consent to the deed.
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In conclusion, I therefore reject that Mr O'Brien is entitled to have the deed declared void for duress. For completeness, I note that the Court does not have a discretionary power to amend the deed to extend the time for payment of the agreed settlement sum, with or without the further conditions sought by Mr O'Brien in the current circumstances. Instead, the parties have agreed to compromise their claims with express releases, on particular terms they considered commercial and sensible and on legal advice.
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For those reasons, I do not accept Mr O'Brien has made good the allegation of duress. Instead, I consider it appropriate to make orders in the form of those sought in the notice of motion numbered 1 through to 5, which give effect to the terms of the deed.
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Trustworthy also seeks its costs of the notice of motion. Mr O'Brien submitted that he ought not be liable for the costs of the motion in circumstances where Trustworthy has access to the property to enforce its security. However, in circumstances where Trustworthy has been successful on a motion that was only necessary because of Mr O'Brien's assertion that the deed was unenforceable, I consider it appropriate to make such an order as sought in prayer for relief in the motion number 6.
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The Court therefore makes the following orders:
A declaration or order pursuant to section 73 of the Civil Procedure Act 2005 (NSW) (CPA), that the Deed of Settlement and Release dated 13 November 2024 which was executed by the plaintiffs, the cross- defendants, the first defendant and the cross-claimant (the Deed of Settlement) is binding as between those parties.
A further declaration or order pursuant to section 73 of the CPA, that the whole of the proceedings have been compromised and settled between the plaintiffs and the first defendant, and also between the cross claimant and the cross-defendants, on the terms set out in the Deed of Settlement.
An order pursuant to section 73 of the CPA, that the proceeding as against the first defendant is dismissed without a right of reinstatement and that there be no order as to costs as between the plaintiffs and the first defendant.
A further order pursuant to section 73 of the CPA, that if the cross defendants pay to the cross-claimant, in full, the sum of $1,250,000 by 20 December 2024, then the Court orders that the Cross-Claim be wholly dismissed with no order as to costs.
Further orders pursuant to section 73 of the CPA, that if the cross defendants do not pay to the cross-claimant, in full, the sum of $1,250,000 by 20 December 2024, then the Court orders in respect of the Cross-Claim:
The Defence of the first cross-defendant and the second cross defendant dated 17 December 2021 and filed in the Cross-Claim proceeding on 18 December 2021 is struck-out;
The cross-defendants are jointly and severally liable to the cross claimant in the sum of $1,250,000 (less any amounts paid by the cross-defendants to the cross-claimant between 13 November 2024 and 20 December 2024) under the mortgages with NSW Land Registry Dealings AJ880888, AJ880889, AJ880951 and AJ880952 registered on the title to Lot 11 in Deposited Plan 1211450 (known as 561 Burma Road, Table Top NSW 2640);
The cross-claimant is to exercise its power of sale as Mortgagee in Possession of all that piece of land being Lot 11 in Deposited Plan 1211450 and being the whole of the land contained in Certificate of Title Folio 11/1211450 and known as 561 Burma Road, Table Top, NSW 2640 (Property) with all attendant duties at law, and cause the sale of the Property;
Within 7 days of the sale of the Property, the cross-claimant is to provide an account of the net sale proceeds of the Property to the cross-defendants;
There be no order as to costs in respect of the Cross-Claim; and
The Cross-Claim is otherwise dismissed.
The plaintiffs and the cross-defendants are to pay the first defendant/cross-claimant’s costs of this notice of motion.
List the proceedings for further directions on 6 December 2024.
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Decision last updated: 30 April 2025
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