Mainland Civil Developments Pty Ltd v Zambito Pty Ltd

[2006] NSWSC 1435

CITATION:	Mainland Civil Developments Pty Ltd v Zambito Pty Ltd & Anor [2006] NSWSC 1435
HEARING DATE(S):	08 & 11/12/06
JUDGMENT DATE :	14 December 2006
JURISDICTION:	Equity Division Corporations List
JUDGMENT OF:	White J
EX TEMPORE JUDGMENT DATE:	12/14/2006
DECISION:	See para 53 of judgment.
CATCHWORDS:	CONTRACTS – General contractual principles – Construction and interpretation of contracts – Plaintiff and first defendant entered into joint venture – Pursuant to joint venture, plaintiff and first defendant formed second defendant as corporate vehicle – Second defendant acquired several lots of land in New South Wales – Dispute arose – Plaintiff commenced proceedings for dissolution of joint venture – Proceedings resolved by agreement between plaintiff and first defendant – Agreement entitled each party to specified lots of land – First defendant directed that lots be transferred to nominee – Whether, on proper construction of agreement, first defendant entitled to direct that lots be transferred to nominee – Held that first defendant entitled to make such a direction – Whether, on proper construction of agreement, joint venture was terminated by agreement – Held that joint venture was not terminated - CONTRACTS – General contractual principles – Breach – Anticipatory breach – Whether first defendant committed breach, or anticipatory breach, of joint venture by directing that lots be transferred to nominee – Where transfer of lots to nominee would leave first defendant without assets – Where first defendant remains liable to pay debts incurred by joint venture – Held that nomination an anticipatory breach of contract – Orders made restraining second defendant from transferring lots to first defendant’s nominee.
CASES CITED:	Egmont v Smith (1877) 6 Ch D 469 Norton v Angus (1926) 38 CLR 523 Vickery v Woods (1952) 85 CLR 336 Rands Developments Pty Ltd v Davis (1975) 133 CLR 26 Lord v Trippe (1977) 51 ALJR 574; (1977) 14 ALR 129 Re Davies [1989] 1 Qd R 48 Re Pellick’s Transfer [1987] 1 Qd R 73 Trust Company of Australia Ltd v Commissioner of State Revenue (2003) 197 ALR 297; 51 ALJR 574 Peter Butt, “Purchasers ‘or Nominee’” (1997) 71 ALJ 12 Foran v Wight (1989) 168 CLR 385 Tannous v Mercantile Mutual Insurance Co Ltd [1978] 2 NSWLR 331
PARTIES:	Mainland Civil Developments Pty Ltd v Zambito Pty Ltd & Anor
FILE NUMBER(S):	SC 5305/06
COUNSEL:	Plaintiff: F Kalyk (8/12/06), N J Owens 11/12/06) Defendants: M Luitingh
SOLICITORS:	Plaintiff: KQ Lawyers Defendants: N/A

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

WHITE J

Thursday, 14 December 2006

5305/06 Mainland Civil Developments Pty Ltd v Zambito Pty Ltd & Anor

JUDGMENT

1 HIS HONOUR: The plaintiff, Mainland Civil Developments Pty Ltd (“Mainland”) and the first defendant, Zambito Pty Ltd (“Zambito”), entered into a joint venture for the development and subdivision of land at Burradoo in NSW. Disputes arose which led to proceedings being instituted in 2004 by Mainland for dissolution of the joint venture. The dispute was resolved up to that time by the making of orders by consent on 18 June 2004. The Court noted an agreement between the parties that, to put it broadly, each joint venturer would be entitled to the transfer of specified lots in the subdivision. The present dispute is whether Zambito is entitled to obtain a transfer of three lots to a nominee, Jainti Pty Ltd (“Jainti”). Mainland contends that Zambito has continuing obligations to contribute to the expenses of the joint venture. It says that the effect of the three lots being transferred to Jainti will be that Zambito will have no assets, and will have disabled itself from meeting its obligations under the joint venture agreement. Zambito contends that the joint venture agreement was terminated by the agreement noted in the orders of 18 June 2004.

2 Mainland also contends that whilst Zambito is entitled under the terms of settlement of 18 June 2004 to take a transfer to itself of the three lots, on the proper construction of the agreement it is not entitled to a transfer of the lots to a nominee.

3 The registered proprietor of the lots in question is the second defendant, Yean Street Pty Ltd (“Yean Street”). Yean Street was the vehicle through which Mainland and Zambito have conducted the joint venture.

4 Mainland seeks the following relief:

“ 1. A declaration that on its proper construction, paragraph 4(d) of the agreement noted in the short minutes of order in Supreme Court proceedings no. 3271 of 2006 (scil 2004) does not permit the transfer of lots 8, 11 and 13 to Jainti Pty Ltd in the circumstances of the case
2. An order that the second defendant be restrained from doing or permitting any steps to be taken for the transfer or registration of any transfer of lots 8, 11 and 13 to Jainti Pty Ltd. ”

5 Jainti was not joined as a party to the application. No objection was taken to this. The shareholders of Jainti are substantially the same as the shareholders of Zambito. The director of Jainti is a director of Zambito and swore an affidavit which was read on the application.

6 The following issues arise:

(i) whether, on the proper construction of paragraph 4(d) of the agreement noted in paragraph 4 of the orders made on 18 June 2004, Zambito is not entitled to direct a transfer of lots 8, 11 and 13 to Jainti;

(ii) whether the joint venture agreement was discharged by the agreement noted in the orders of 18 June 2004; and

(iii) if no to both (i) and (ii), whether Zambito has committed a breach, or anticipatory breach, of the joint venture agreement by directing that the three lots be transferred to its nominee, Jainti, such that registration of that transfer from Yean Street to Jainti should be restrained.

Background

7 Each of Mainland and Zambito acquired 50% of the shares in Yean Street. They have equal board representation on Yean Street. Yean Street acquired the land which was developed and subdivided pursuant to the joint venture. It is the transferor of the lots to Jainti.

8 Zambito was described by its director, Mr Sam Morabito, as a “special purpose company formed to be a joint venture partner with Mainland”.

9 On 14 November 2001, Mainland, Zambito and Yean Street entered into a joint venture agreement. Clause 2 provided that the object of the joint venture was the development and completion of a project, being the subdivision of land at Burradoo in accordance with an anticipated development consent and project development plan, and in accordance with a feasibility analysis set out in the agreement. Clause 3 provided:

“ Duration of the Joint Venture
The joint venture commences on the execution of this agreement and will continue until Completion, unless earlier terminated in accordance with the provisions of this agreement. ”

10 “Completion” meant the completion of the Project in accordance with the requirements of the Project Development Plan. The Project Development Plan provided for the securing of the site by exchanging contracts for purchase, the obtaining of amendments to a development approval, the marketing of individual land lots and house and land packages, the completion of the subdivision works, the sale of individual land lots, and the distribution of profits to the joint venture partners in accordance with schedule 1 to the agreement. Schedule 1 provided that the proceeds of the project would be applied by paying all costs, charges and expenses of the project, the repayment of any loans made by a joint venturer together with interest, and the payment of the balance of the proceeds, if any, to the joint venturers in equal shares.

11 Clause 4 provided that Mainland was to carry out the services provided for in Schedule 2. This included supervising and co-ordinating the management of the project as nominee for the “Joint Venture”. Clauses 4(c) and (d) provided:

“ 4. Management of the Project
(c) The Joint Venturers indemnify Mainland in respect of all or any liability or obligation incurred by Mainland arising out of the performance of the Services and other obligations under this agreement.
(d) If, as a requirement of this agreement, Mainland enters into any agreement in relation to the Project, then Mainland does so in its capacity as manager of the Project and as disclosed agent for the Joint Venturers. The Joint Venturers will be responsible for the payment of all fees, progress claims and other money in respect of the Project. ”

12 Clause 6(a)(5) required each joint venturer to do all things reasonably necessary to comply with the agreement. Clause 7 provided for Yean Street to purchase the land and provided that the “Joint Venture” would be liable for all costs incurred by Yean Street in relation to the land. Clause 8 provided:

“ 8. Funding
(a) The Joint Venturers agree that all costs, expenses or outgoings relating to the Joint Venture and incurred in respect to the Project will be borne severally by the Joint Venturers in equal shares. As far as possible, any amount required to acquire the Land or satisfy the working capital requirements of the Joint Venture will be raised by Mainland by borrowing by, or on account of, the Joint Venture on such terms and conditions as Mainland may determine.
(b) if required by Mainland for the purpose as performing its obligations under paragraph (a):
(1) Yean Street will procure that the Land is provided as security on an unlimited recourse basis; and
(2) the Joint Venturers will provide such guarantees or securities as may be required by Mainland.
…
(d) The Joint Venturers will:
(1) be severally liable for all costs, expenses and outgoings relating to the Joint Venture and incurred in relation to the Project which are not covered by the finance raised by Mainland in accordance with paragraph (a); and
(2) contribute to the Joint Venture such amounts as Mainland may from time to time require for the purpose of paying such costs or liabilities. ”

13 Clause 10 provided:

“ 10. Distributions
(a) Upon Completion or the earlier determination of this agreement, the Joint Venturers must procure that a general account is taken of the assets and liabilities of the Joint Venture. The net profit of the Joint Venture will be distributed in accordance with Schedule 1.
(b) Any distribution of the profit of the Joint Venture prior to determination must be based on conservative estimates of future funding requirements of the Project. Such distributions are subject to the following conditions:
(1) if after a distribution it is shown that there is insufficient income to complete the Project; and
(2) if after determination of the Project there is insufficient proceeds to repay any loans made by a Joint Venturer,
then parties to which a distribution have been made must refund the necessary monies. ”

14 Clause 12 provided for the expulsion of a joint venturer and the purchase of the joint venturer’s share in the joint venture if a joint venturer committed an event of default which was not remedied or capable of remedy. Clause 13 conferred pre-emptive rights on a joint venturer if the other joint venturer wished to dispose of its interest. Clause 13(a) provided that a joint venturer must not dispose of an interest in the joint venture to another person other than the other joint venturer, without first offering to sell its joint venture interest to the other remaining joint venturer at a fair value pursuant to that clause. Clauses 12 and 13 were the only provisions providing for the earlier termination of the joint venture prior to its being completed.

15 Clause 20(e) provided:

“ 20. General
…
(e) This agreement is to the benefit of the parties and their successors and assigns. The parties and their successors and assigns are bound by this agreement. A Joint Venturer may only assign its rights and obligations under this agreement after it obtains the written consent of the other Joint Venturer. ”

16 In about May 2004, Mainland commenced proceedings seeking dissolution of the joint venture and the appointment of a receiver for the sale of the joint venture property held by Yean Street. Those proceedings were settled. The settlement was contained in short minutes of order made by consent. Those orders were as follows:

“ By consent the Court orders:
1. Make order 1 in the Plaintiff’s Notice of Motion filed 4 June 2004, save that the reference to Exhibit AJS 3A should be read as Exhibit AJS 3B.
2. Summons and Notice of Motion be otherwise dismissed.
3. There be no order as to costs.
4. Note the agreement between the parties that:
(a) The Second Defendant pay to the Plaintiff the amount of $1.65 m (plus GST) in total in respect of civil works, the balance now due less $0.05 m to be paid in 7 days. [It is noted that $1,347,855.05 plus GST has been paid to date.]
(b) The Plaintiff shall promptly complete the incomplete or defective civil works (the Incomplete works as specified in Annexure L to the affidavit of Antony Joseph Sukkar sworn 3 June 2004) to a reasonable industry standard as certified by the Project Engineer and Surveyor after receiving any relevant submissions from the First Defendant and thereupon shall be entitled to the residual sum of $0.05 m.
(c) The Plaintiff shall be entitled, at its cost, to the transfer of, or at its option, to the net proceeds of the sale of, Lots 6, 7 and 9 to the exclusion of the other parties.
(d) The First Defendant shall be entitled, at its cost, to the DA approved plans and the transfer of, or at its option, the net proceeds of sale of, Lots 8, 11 and 13 to the exclusion of the other parties.
(e) The First Defendant shall complete the internal inter-allotment and external boundary fencing to the project to a design and at a cost reasonably approved by the Plaintiff. The work shall be to the approval of the Project Engineer and Surveyor and at the cost of the Joint Venture.
(f) There be mutual releases between the Plaintiff and the First Defendant.
(g) The Second Defendant shall use its best endeavours to negotiate a 10% deposit in respect of the contract referred to in order 1. ”

17 I was told that order 1 related to a contract for sale made or proposed to be made by Yean Street of a lot described as the “cluster home development lot”. I was told without objection that that transaction did not proceed.

18 On 24 January 2005, the parties entered into a deed to resolve further outstanding issues with respect to the joint venture and the settlement of 18 June 2004. This agreement dealt with rectification work to be carried out by Mainland, the release of moneys to Mainland, and the retention of a certain part of the land by Mainland.

19 On 19 April 2005, Yean Street sold the cluster home development lot to Burradoo Pty Ltd (“Burradoo”), a company associated with Zambito. Zambito and Mainland were entitled to share equally in the net proceeds of sale of the cluster home development lot after deduction of certain agreed debts. The purchase price was adjusted by deducting moneys which would otherwise have been payable by the purchaser to Yean Street for distribution to Zambito. That is to say, Zambito relinquished its interest in the cluster home development lot without receiving payment for it. Burradoo is itself described as a special purpose vehicle formed by Jainti and another party with whom Jainti is associated for the development of the cluster home site.

20 On 29 May 2006, the board of Mainland resolved:

“ 1. The Directors of Yean Street Pty Ltd resolve unanimously that the Directors representing the interests of Mainland Civil Pty Ltd, who are Robert Dahan, Tony Sukkar and Angelo Forte, can execute contracts, negotiable instruments and instruct the company’s solicitors in relation to the sale or transfer of Lots 6, 7 and 9 and the distribution of the nett proceeds of sale of those lots.
2. The Directors of Yean Street Pty Ltd resolve unanimously that the Directors representing the interest of Zambito Pty Ltd who are Frank Morabito and Sam Morabito can execute contracts, negotiable instruments and instruct the company’s solicitors in relation to the sale or transfer of Lots 8, 11 and 13 and the distribution of the nett proceeds of sale of those lots. ”

21 In August 2006, lots 6 and 7 were transferred to Mainland for nominal consideration. Lot 9 was sold to a third party purchaser. I was told, and it was not disputed, that the proceeds of sale of lot 9 were paid to Mainland.

22 A transfer of lots 8, 11 and 13 to Jainti has been executed on behalf of Yean Street by directors of Yean Street who are nominees of Zambito. In so executing the transfer, they have purportedly acted pursuant to the resolution of 29 May 2006.

23 The transfer to Jainti has not been registered. Yean Street’s solicitors, Messrs Deacons, hold the certificates of title to the three lots and hold discharges of mortgages. I understand that they have declined to produce those documents to enable the transfers to be registered because of objections made by Mainland. They have agreed to abide by the order of the Court, save as to costs.

24 Upon registration of the transfer of lots 8, 11 and 13 to Jainti, Yean Street will have disposed of all of the land which it acquired. However, Yean Street still has liabilities. Mr Dahan of Mainland deposed that a number of creditors of Yean Street remain unpaid. He deposes that the joint venturers have been unable to agree on payment. One of the creditors is Colliers International Holdings (Aust) Ltd which has obtained a judgment against Yean Street for $52,865.24. Zambito denies that Yean Street is indebted to Colliers for this amount or at all. However, unless and until the judgment is set aside, there can be no real dispute that Yean Street is liable for that amount. Apart from its legal title to the three lots which are subject to the purported transfer in favour of Jainti, Yean Street’s assets appear to consist only of the choses in action which it has under the joint venture agreement to compel contribution from Mainland and Zambito for the debts it has incurred.

25 Jainti proposes to market and develop the three lots 8, 11 and 13. It seeks registration of the transfer to enable the lots to be marketed and to start construction work.

26 Mainland contends that Zambito has continuing obligations under the joint venture agreement. On the registration of the transfer in favour of Jainti, Yean Street will have no assets except its choses in action under the joint venture agreement. Zambito was incorporated as a special purpose vehicle for the purposes of the joint venture. It should be inferred that it has no assets except its right to distributions under the joint venture agreement, and under the orders of 18 June 2004. However, Zambito relinquished its interest in the cluster home development lot without receiving payment from the transferee. It now proposes to relinquish its interest in lots 8, 11 and 13 to Jainti without consideration. Hence, Mainland contends that Zambito has rendered itself, or proposes to render itself, incapable of performing its remaining obligations under the joint venture agreement.

27 On 11 December 2006, Mainland proposed that to resolve the issues between the parties and to avert any further hearing, pursuant to clause 8(b)(2) of the joint venture agreement, and as a condition of the transfer of its lots, Jainti provide a guarantee of the obligations of Zambito under the joint venture in a form acceptable to Mainland or, alternatively, pursuant to clause 8(b)(2) of the joint venture agreement, and as a condition of the transfer of its lots, Zambito provide an unconditional bank guarantee in favour of Mainland in the sum of $100,000 to be released upon satisfaction by Zambito of its share of all joint venture costs and liabilities, including taxation liabilities. Zambito and Jainti have refused to provide either a guarantee by Jainti or a bank guarantee.

The Proper Construction of Paragraph 4(d) of the Agreement of 18 June 2004

28 I do not accept Mainland’s submissions that on the proper construction of the agreement noted in the orders of 18 June 2004, Zambito is only entitled to a transfer of the three lots to itself, and is not entitled to direct a transfer to a nominee.

29 Where a contract for sale of land is entered into between a vendor and a purchaser, in the absence of special circumstances, it is implicit in the contract that a purchaser may require the land to be transferred either to himself or herself, or to a nominee. “An ordinary contract of sale is not only to convey to the purchaser but to convey as the purchasers shall direct” (Egmont v Smith (1877) 6 Ch D 469 at 474 per Jessel MR; Norton v Angus (1926) 38 CLR 523 at 528; Vickery v Woods (1952) 85 CLR 336 at 343; Rands Developments Pty Ltd v Davis (1975) 133 CLR 26 at 31; Lord v Trippe (1977) 51 ALJR 574 at 582; (1977) 14 ALR 129 at 144; Re Davies [1989] 1 Qd R 48 at 53; Re Pellick’s Transfer [1987] 1 Qd R 73 at 74-75; Trust Company of Australia Ltd v Commissioner of State Revenue (2003) 197 ALR 297; 51 ALJR 574 at [36]; Peter Butt, “Purchasers ‘or Nominee’” (1997) 71 ALJ 12).

30 It was submitted for Mainland that although this was the ordinary rule in the case of a contract of sale, the terms of settlement of 18 June 2004 should be construed having regard to the terms of the joint venture agreement. It was submitted that the joint venture agreement prohibited a joint venturer from assigning its interest under the agreement without the consent of the other joint venturer. However, a nomination does not operate as an assignment. It was also submitted that to allow Zambito to nominate a transferee of the three lots would be to allow it to put it out of its power to meet its obligations under the joint venturer agreement by becoming a corporate shell with no assets to meet its obligations. However, this consideration does not warrant a restrictive reading of clause 4(d), which would not allow Zambito to nominate a third party as transferee of the three lots, in whatever circumstances the transfer was made. Clause 4(d) does not state expressly to whom the transfer of the three lots is to be made. That is, it does not expressly provide that Zambito is to be the transferee. There is no reason to depart from the ordinary implication that the transferee may be Zambito or such person as it might nominate as the transferee.

31 That is not to say that the joint venture agreement may not restrict Zambito’s right to nominate a third party as transferee. Assuming the joint venture agreement remained on foot, then it would be an implied term of the agreement of 18 June 2004 that the parties would not exercise their rights under that agreement in a way which would constitute a breach, or anticipatory breach, of the joint venture agreement. Such a term is necessarily implied in order to give business efficacy to the agreement of 18 June 2004. Any such breach of the joint venture agreement would be liable to be restrained if the transfer was not completed before an injunction was obtained. If an hypothetical bystander were asked whether either party could direct a transfer of lots to a third party leaving it as an empty shell unable to meet any continuing obligations to contribute to expenses of the joint venture, such a suggestion would have been answered “of course not”. The agreement noted in the orders of 18 June 2004 could not have been intended to expose one party to the risk of loss under the joint venture agreement. Hence, if the nomination of Jainti as the transferee was a breach or an anticipatory breach by Zambito of the joint venture agreement, then such a nomination was not authorised by paragraph 4(d) of the terms of settlement. However, the reason such a nomination would not be authorised is because it would be a breach or anticipatory breach of the joint venture agreement, not because paragraph 4(d) should be construed as not authorising the nomination of a third party as a transferee of the lots in any circumstances.

The Joint Venture Agreement was not Terminated

32 Zambito submitted that the joint venture agreement was brought to an end by the agreement noted in the orders of 18 June 2004. It submitted that even if some clauses of the joint venture agreement survived, they could not contradict, undermine, or qualify the terms of settlement. It was submitted for Zambito that:

“ 6. The 18 June 2004 settlement agreement provided for a number of matters and included terms allocating the remaining 6 un-sold sections or lots between the plaintiff (3 lots) and the first defendant (3 lots). In essence, under the 18 June 2004 settlement agreement, the ‘jointly owned’ property of the joint venture (held in the name of Yean Street) became ‘severally owned’ or entitled by the plaintiff and the first defendant. The 14 November 2001 Joint Venture Agreement, of course provided for the property to be held ‘jointly’ by Yean Street for the purposes of the joint venture; that part of the 14 November 2001 Joint Venture Agreement, we submit is superseded and replaced by the 18 June 2004 settlement agreement. From 18 June 2004, Yean Street held the relevant 6 lots ‘severally’ or ‘subject to several entitlements’ for each of the plaintiff and first defendant respectively. From 18 June 2004, each of Mainland and Zambito were entitled to deal with their respective 3 Lots without reference to the other; there was no ‘joint venture’ (or partnership) between the parties in relation to these properties. ”

33 However, the fact that the joint venturers decided on a division of lots between them does not indicate that the joint venture agreement had come to an end. The joint venture agreement provided in clause 3 that it would continue (unless terminated in accordance with that agreement) until completion. Completion included the distribution of profits. Even after distribution of profits, the joint venture agreement had a continued operation to ensure that the joint venturers equally met all of the expenses of the development. The settlement of 18 June 2004 was an agreement as to how the profits of the joint venture would be distributed in specie between the joint venturers. It was an agreement regulating the mode of performance of one part, albeit an important part, of the joint venture agreement. It did not discharge the joint venture agreement.

34 Mainland had sought an order for the dissolution of the joint venture. That application was dismissed by the second order made on 18 June 2004.

35 The orders of 18 June 2004, and the agreement noted in paragraph 4 of those orders, did not expressly provide for the termination of the joint venture agreement. The orders reflect the fact that things remained to be done under the joint venture agreement. Thus, order 1 and the agreement noted in paragraph 4(g) acknowledged that Yean Street proposed to enter into a contract for sale of some of the remaining land. That land was not sold until 2005. However, when it was sold, it was sold by Yean Street. The sale was in furtherance of the joint venture.

36 Moreover, the joint venture involved the settlement of all of the debts incurred in connection with the joint venture. Those debts have not been fully satisfied.

37 Counsel for Zambito also submitted that the agreement of 18 June 2004 that the parties would exchange mutual releases showed that they intended to be released from their obligations to each other under the joint venture agreement. There was no evidence that any further documents were executed containing mutual releases. The scope of the agreement that “there be mutual releases between [Mainland] and [Zambito]” depends on the context of the settlement of 18 June 2004. In my view, that phrase refers to each party releasing the other from liabilities which the other had incurred to the party giving the release up to 18 June 2004. The phrase does not encompass the granting of releases from unknown future claims. Nor does the granting of mutual releases amount to an agreement to terminate the joint venture agreement. The releases would also be impliedly limited to the releases of claims which had led to the dispute that was settled by the orders of 18 June 2004. No liability of either party to Yean Street was released. Again, this is consistent with the continuation of the joint venture.

38 I conclude that the joint venture agreement was not discharged by the agreement made on 18 June 2004. The agreement recorded in order 4 made on 18 June 2004 must be read in light of the joint venture agreement. For the reasons previously given, the rights conferred on Mainland and Zambito under paragraphs 4(c) and (d) are qualified to the extent that the exercise of those rights is subject to the joint venturers not breaching the joint venture agreement in exercising those rights.

39 Zambito argued that in the opening address of counsel for Mainland, counsel identified that that only issue before the Court was whether or not the words of clause 4(b) gave rise to the limitation contended for by the plaintiff. It argued that the plaintiff had not submitted that the joint venture agreement afforded rights of the plaintiff upon which the plaintiff could rely to establish an entitlement that the properties be transferred only to Zambito.

40 It is true that the case was opened on the basis that the issue before the Court was whether, as a matter of construction of clause 4(d), only a transfer to Zambito, and not to its nominee, was permitted. However, the argument ranged more broadly. That was consistent with the terms of relief sought in paragraph 1 of the notice of motion, where Mainland sought a declaration that paragraph 4(d) did not permit the transfer of the three lots to Jainti “in the circumstances of the case”. In an affidavit read in support of the application, Mainland submitted that it was concerned that in the event that the remaining assets of the joint venture were transferred to Jainti, Zambito may be unable to meet joint venture debts and taxation responsibilities when called upon to do so. The relevant paragraphs of the affidavit were inadmissible. However, the question of whether what was proposed was a breach of Zambito’s obligations under the joint venture agreement was raised at the hearing not only in an affidavit relied on by Mainland (and impermissibly in that affidavit), but also in counsel’s submissions. The construction of the joint venture agreement, and in particular, the question whether the joint venture agreement qualified the terms of settlement of 18 June 2004, were addressed by Zambito in its submissions.

Nomination of Jainti was an Anticipatory Breach of the Joint Venture Agreement

41 A party to a contract commits at least an anticipatory breach of contract if he or she disables himself or herself from future performance (Foran v Wight (1989) 168 CLR 385 at 423-424). Zambito remained liable to contribute to 50% of the expenses of the joint venture. This meant it remained liable to contribute to 50% of the debts incurred by Yean Street in carrying out the joint venture. There is no direct evidence of the financial position of Zambito. However, it is a legitimate inference from the fact that it was a special purpose vehicle formed for the purpose of the joint venture that it has no assets other than its entitlement to receive distributions pursuant to the joint venture agreement. The evidence is that all of the profits of the joint venture were distributed between the joint venturers in specie by agreement between the joint venturers. However, Zambito has not sought to retain for itself any of the value to be derived from the transfer of lots to which it was entitled on the in specie distribution of profits.

42 Zambito did not seek to contradict, either by evidence, or in submissions, the inference that on the transfer of the three lots to Jainti, it would be without any assets to meet its obligations under the joint venture agreement. Counsel did submit that Zambito may be able to call on its directors or companies associated with them, such as Jainti, for any moneys which it was liable to pay. However, it was not suggested that Zambito had any right to be indemnified by any person in respect of its liabilities under the joint venture agreement. Rather, its contention was that the joint venture agreement had come to an end.

43 If evidence were available that Zambito could honour its obligations under the joint venture agreement, notwithstanding the transfer of the three lots to Jainti (assuming the joint venture agreement was not discharged), Zambito could be expected to have adduced that evidence. It did not seek to do so. I can therefore more readily draw the inference that Zambito would not be able to honour its obligations under the joint venture agreement if the three lots were transferred to Jainti, unless one or more third parties (such as its directors or Jainti) chose voluntarily to put it in funds to do so. Zambito did not submit to the contrary.

44 In my view, Zambito’s conduct in nominating Jainti as the transferee of the three lots was an anticipatory breach of contract. There was no evidence of any express nomination by Zambito. Rather, the evidence was that the directors of Zambito, who are also directors of Yean Street, and one of whom was a director of Jainti, decided that the transfer should be made to Jainti rather than Zambito. However, the directors of Zambito must be taken to have nominated Jainti as the transferee. If that were not so, Jainti had no colour of right to receive the transfer. However, for the reasons I have given, such a nomination was an anticipatory breach by Zambito of the joint venture agreement.

45 In my view, on its proper construction, paragraph 4(d) of the agreement noted in the orders of 18 June 2004 did not authorise such a nomination if the nomination constituted an anticipatory breach by Zambito of the joint venture agreement.

Should Registration of the Transfer be Restrained?

46 Zambito argued that:

“ The plaintiff now seeks to impose terms upon Zambito to prevent the transfer from Yean Street to Jainti of the three Zambito lots. In our submission, this application is too late. The equitable estate in the lots is being conveyed by the transfer authorised by the resolution of the directors of Yean Street made on or about 29 May 2006. The application may only affect the registration of the legal estate or interest in the Lots. In our submission, there is no proper basis for the equitable and legal estates in the three lots to be held apart. The transfer of the three Zambito lots is in accordance with the 18 June 2004 settlement agreement. ”

47 For the reasons I have given, I do not consider that the purported transfer of the three Zambito lots is in accordance with the 18 June 2004 settlement agreement. Nor do I consider it to have been authorised by the resolution of the directors of Yean Street on the proper construction of that resolution. The directors’ resolution of 29 May 2006 was plainly intended to implement the agreement of 18 June 2004. Only those transfers which were authorised by the agreement of 18 June 2004 were authorised by the resolution. The transfers to Jainti were not so authorised.

48 Jainti is a volunteer. Further, Jainti had notice through its director, who was also a director of Zambito, of all of the facts by reason of which Zambito’s nomination of Jainti was an anticipatory breach of the joint venture agreement, and was not authorised by the agreement of 18 June 2004, or the resolution of directors of Yean Street of 29 May 2006.

49 In these circumstances, I do not accept that Jainti has an equitable estate in the land which it could assert against Yean Street (whose transfer of the land to Jainti was not authorised on the proper construction of the resolution of directors pursuant to which the transfer was purportedly executed), or against Zambito. It may well be that Zambito is the beneficial owner of the three lots. Zambito has not executed a declaration of trust of its beneficial interest in the three lots in favour of Jainti. Jainti is a volunteer. Although this matter was not the subject of any detailed argument, it presently appears to me that as Jainti is a volunteer, there would be nothing to preclude Zambito from having recourse to its beneficial interest in the three lots to satisfy its obligations under the joint venture agreement.

50 It is not appropriate to make the declarations sought in paragraph 1 of the notice of motion. The declaration sought is that paragraph 4(d) of the agreement of 18 June 2006 does not permit the transfer of the three lots to Jainti “in the circumstances of the case”. A declaration should be self-contained so that it is intelligible without reference to extrinsic material, at least where such material is or may be uncertain (Tannous v Mercantile Mutual Insurance Co Ltd [1978] 2 NSWLR 331 at 335, 336-337). As Zambito would be entitled to nominate Jainti as a transferee of the three lots if its doing so did not constitute a breach or anticipatory breach of the joint venture agreement, it is undesirable to make a declaration in the terms sought.

51 However, Mainland is entitled to an order restraining Yean Street from taking any steps to register the transfer of the three lots to Jainti.

52 That order is a final order. However, circumstances may change. For example, if Zambito were to comply with either of the requests made by Mainland in its letter of 11 December 2006, it could not then be said that the continued nomination of Jainti as the transferee of the three lots constituted an anticipatory breach by Zambito of the joint venture agreement. Accordingly, whilst the final injunction should be given, the proceedings should be reserved for further consideration either by myself or by the vacation judge, and there should be liberty to apply to discharge the injunction in the event that circumstances change.

Orders

53 For these reasons, I order that:

1. The second defendant be restrained from dealing or permitting any steps to be taken for the registration of any transfer to Jainti Pty Ltd of lots 8, 11 or 13 referred to in paragraph 4(d) of the orders made on 18 June 2004 in proceedings 3271 of 2004.

2. reserve the proceedings for further consideration and grant liberty to apply on reasonable notice to White J or the vacation judge.

3. order that the first defendant pay the plaintiff’s costs of its notice of motion of 8 December 2006.

4. the notice of motion of 8 December 2006 be otherwise dismissed.

******