Manos v Maras

Case [2007] SASC 192

SUPREME COURT OF SOUTH AUSTRALIA

(Full Court: Civil)

MANOS & ORS v MARAS & ORS

[2007] SASC 192

Reasons for Decision of The Full Court

(The Honourable Justice Bleby, The Honourable Justice Vanstone and The Honourable Justice Layton)

25 May 2007

PROCEDURE - JUDGMENTS AND ORDERS - IN GENERAL - CLASSIFICATION - FINAL AND INTERLOCUTORY

EQUITY - EQUITABLE REMEDIES - INJUNCTIONS - INTERLOCUTORY INJUNCTIONS

Appeal from interlocutory orders made by a single judge – orders enabling preliminary steps towards possible exercise of time-limited call option to purchase freehold of leased land – disputed entitlement to beneficial ownership of lease and as to whether call option should be exercised – consideration of nature of orders made – whether orders sought are in the nature of an injunction – whether orders directed towards ensuring the preservation of the disputed asset – consideration of alleged delay – consideration of whether non-disclosure warranted orders being set-aside – Appeal dismissed.

APPEAL AND NEW TRIAL - APPEAL -- GENERAL PRINCIPLES - RIGHT OF APPEAL - WHEN APPEAL LIES - FROM INTERLOCUTORY DECISIONS - LEAVE TO APPEAL

Whether permission to appeal necessary – interlocutory orders – consideration of s 50(5) of Supreme Court Act 1935 (SA) – whether orders sought are in the nature of an injunction or amount to a final determination of a substantive right – Held: permission to appeal necessary, but would have been refused.

Supreme Court Act 1935 (SA) s 50; Supreme Court Civil Rules 2006 r 281, 285, referred to.
House v The King (1936) 55 CLR 499; Harris Scarfe Ltd (Receivers & Managers Appointed) (in liquidation) & Ors v Ernst & Young & Ors (No 2) 240 LSJS 17, applied.
Devlin v Collins (1984) 37 SASR 98; Jackson v Sterling Industries Ltd (1987) 162 CLR 612; Australian Broadcasting Corporation v O'Neill (2006) 229 ALR 457; Carlton & United Breweries (NSW) Pty Ltd v Bond Brewing (NSW) Ltd (1987) 76 ALR 633; Thomas A Edison Ltd v Bullock (1912) 15 CLR 679; Gallo v Dawson (1990) 64 ALJR 458; Meagher, Gummow & Lehane's Equity Doctrines and Remedies, 4th edition, considered.

MANOS & ORS v MARAS & ORS
[2007] SASC 192

Full Court:      Bleby, Vanstone and Layton JJ

BLEBY J:

Background

  1. On 20 April 2007 a Judge of this Court made orders by way of directions for the conduct of an action commenced by the first respondent, Mr Maras, and companies which he effectively controls.  The defendants in the action are the first appellant, Mr Manos, three companies which he effectively controls and six other companies, the beneficial ownership of the shares in which is held equally by Mr Maras and Mr Manos.  Those six companies are trustees of various trusts, the units in which are beneficially owned equally by Mr Maras and Mr Manos or by corporate entities which they respectively control.  Included in the orders made by the Judge at first instance were orders authorising Mr Maras to take certain steps on behalf of…

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AGLC
Manos v Maras [2007] SASC 192
Case
[2007] SASC 192
Decision Date

CaseChat Overview and Summary

In Manos v Maras, the Full Court of the Supreme Court of South Australia dealt with an appeal against interlocutory orders that enabled preliminary steps towards exercising a time-limited call option to purchase the freehold of leased land. The dispute centred around the entitlement to beneficial ownership of the lease and whether the call option should be exercised. The parties, Messrs Maras and Manos, had a long-standing business relationship involving various real estate projects in and around Adelaide. Their relationship soured in 2004, leading to a mediation in March 2006 that resulted in a handwritten agreement. However, disagreements arose, prompting the plaintiffs to seek declarations and specific performance orders to enforce the agreement. The court's task was to determine the nature of the orders made and whether they were akin to an injunction or a final determination of a substantive right, which would impact the necessity of permission to appeal under s 50(5) of the Supreme Court Act 1935 (SA).

The court had to decide if the interlocutory orders were in the nature of an injunction or if they amounted to a final determination of a substantive right. This distinction was crucial because, under s 50(5) of the Supreme Court Act, an appeal from an interlocutory order generally requires permission unless the order grants or refuses relief in the nature of an injunction or makes a final determination of a substantive right. The court examined the orders made by the single judge to determine their nature. The orders sought by the plaintiffs were designed to ensure that the lessee’s call option was exercised. Although the respondents acquiesced in these orders, they were not seeking to exclude Mr Manos from taking any action towards exercising the option. Given the urgency required and Mr Manos’s unavailability, it was practical for Mr Maras to act on his behalf.

The court found that the orders were not in the nature of an injunction or a final determination of a substantive right. Instead, they were preliminary steps to ensure the preservation of the disputed asset. The court concluded that permission to appeal would have been refused, as the orders did not meet the criteria for an appeal without permission. The appeal was dismissed, and the appellants were ordered to pay the respondents’ costs of the appeal.

Orders

Orders of the court

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Background

Background to the litigation

On 10 May 2007 Mr Manos and the companies he controls filed a Notice of Appeal against those orders. By direction of the Chief Justice the appeal was listed for hearing as a matter of urgency before the Full Court. The hearing of the appeal took place on 17 May. At the conclusion of the hearing and after a brief recess the Court ordered that the appeal be dismissed and that the appellants pay the respondents’ costs of the appeal. The Court indicated that it would publish reasons at a later date. These are my reasons.Facts This summary of the facts is based on allegations in the plaintiffs’ statement of claim which have been admitted by the defendants or on facts which are extracted from affidavits filed by the parties in support of or in opposition to the applications before the Judge at first instance. Where appropriate I have borrowed from the summary of the facts given by the Judge at first instance in his reasons for making the orders. Since about 1980, Messrs Maras and Manos have been engaged in a business relationship by which they have effectively been partners in a number of projects for the acquisition, development and management of real estate in and around Adelaide. On 8 September 1980 they incorporated a company called Mancorp Investments Pty Ltd. They have been, and still are, the only directors of Mancorp. The shareholders of Mancorp are two companies, each of which is a trustee of a family trust respectively of Mr Maras and Mr Manos. Other companies have been incorporated for the purpose of pursuing the investment in real estate by Messrs Maras and Manos. All those companies are effectively controlled by both these men who have pursued their interest in effect as partners in a business relationship intended to be for the equal benefit of their respective families. There was a third person involved in some of the projects for a short time, but his interests were purchased equally by Messrs Maras and Manos. In 2004, Messrs Maras and Manos decided to bring their joint enterprise to an end. They agreed to terminate their business relationship and, according to Mr Maras, they agreed to divide the properties held by their respective companies. Negotiations floundered. In March 2006 they participated in a mediation which resulted in a handwritten agreement dated 12 March 2006 (“the March Agreement”). On the face of that agreement Messrs Maras and Manos agreed to apportion between them, free of debt, certain named properties in the investment portfolio, to sell two other properties in order to repay debts owed by the group, to refinance one with a view to its eventual sale and equal apportionment of the surplus on sale, and to make a certain cash adjustment to equalise the value of their respective interests. Since the mediation, further difficulties have arisen in the winding up of the business relationship. This has led to Mr Maras and his companies instituting these proceedings. In short, the plaintiffs seek a declaration that the March Agreement constitutes a legally binding and enforceable agreement and seek various orders for specific performance against Mr Manos and his companies designed to implement that agreement. Alternatively, they seek rectification of the agreement to reflect what is alleged to have been the common intention of Maras and Manos in reaching the March Agreement. The plaintiffs also seek an order under s 233(1) of the Corporations Act 2001 (Cth) that Manos take certain action in relation to the affairs of Rundle East and the properties of which it is presently lessee, and that both Manos and Maras procure the transfer to their respective interests of the properties the subject of the March Agreement. Mr Manos alleges that the March Agreement is unenforceable. Alternatively he alleges that obligations under the agreement have been discharged, in that he has acted in good faith and used his best endeavours to attempt to agree, within a reasonable time, matters proposed in the agreement, but that no agreement has been reached. In other words, on his case, there is an unresolved dispute as to entitlements on termination of their business relationship.

Evidence

Evidence Before The Court

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Decision

Reasons for decision

Section 50 of the Supreme Court Act 1935 (SA) relevantly provides:(1)Subject to this section— (a) an appeal lies to the Full Court against a judgment of the court constituted of a single judge; and (b) ……(4)An appeal lies only with the permission of the court— (a) …(b) if the rules provide that the appeal lies by permission of the court.(5) The rules cannot, however, require the court's permission for an appeal if the judgment under appeal—(a) …(b) …(c) grants or refuses relief in the nature of an injunction or the appointment of a receiver; or(d) …(e) makes a final determination of a substantive right.…(6)In this section— judgment includes— (a) an order or direction; and(b) a decision not to make an order or direction. Rule 281 of the Supreme Court Civil Rules 2006 provides:Subject to any statutory provision to the contrary, an appeal to the Court lies by permission of the Court if– (a)the judgment subject to the appeal is–(i) an interlocutory judgment of the Court given by a Judge; or(ii) a judgment given on appeal from an interlocutory judgment; or(iii) …(b)the appeal is limited to a question about costs. It follows that an appeal from an interlocutory order of a Judge requires permission unless the order grants or refuses relief in the nature of an injunction or makes a final determination of a substantive right. As the resolution of the appeal turns to some extent on the effect of the orders made by the Judge, it is convenient to defer until later in these reasons consideration of whether the appeal in this case requires permission. Rule 285 of the Supreme Court Civil Rules provides that permission may be sought in one of two ways. The appellant may include in the notice of appeal a request for the necessary permission, or may, within 14 days after the date of the judgment appealed against, make a separate application for permission to appeal to the court of first instance. Neither course was followed in this case. At the commencement of the hearing of the appeal, the appellants made an oral application for an extension of time within which to apply for permission to appeal and, to the extent necessary, for permission to appeal. The Court indicated that it would consider those applications along with the argument on the appeal.The nature of the orders made As previously noted, the original interlocutory application sought an order that Mr Manos perform or join in the performing of certain actions to ensure that the lessee’s call option was exercised. By acquiescing in the orders made the respondents were not seeking to have Mr Manos excluded from taking any action towards the exercise of the option. In the circumstances it was not surprising that it was Mr Maras who was authorised to give the notice and to negotiate with the lessor. If any action was to be taken, it had to be taken urgently. At the time of the hearing Mr Manos was in China. There was therefore no prejudice to Mr Manos in nominating Mr Maras to act.

Ratio Decidendi

Legal Principle Established

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