Marina Cove Pty Ltd v Pearl Hill Pty Ltd

[2009] VSC 621

IN THE SUPREME COURT OF VICTORIA Not Restricted

AT MELBOURNE

COMMERCIAL AND EQUITY DIVISION

No. SCI 2009 of 10094

IN THE MATTER of s 90(3) of the Transfer of Land Act 1958

and

IN THE MATTER of Caveats No. AG443075W, AG7569991P, AG757005T, AG757017L, AG7570222T, AG757025M, AG757042M & AG747453P

BETWEEN

MARINA COVE PTY LTD (RECEIVERS & MANAGERS APPOINTED) (ADMINISTRATORS APPOINTED) ACN 098 177 916	Plaintiff
and
PEARL HILL PTY LTD ACN 115 918 959 (AND OTHERS ACCORDING TO THE SCHEDULE ATTACHED)	Defendants

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JUDGE:	CAVANOUGH J
WHERE HELD:	Melbourne
DATE OF HEARING:	14 December 2009
DATE OF JUDGMENT:	14 December 2009 (Ex tempore oral reasons).  Revised for publication 22 December 2009
CASE MAY BE CITED AS:	Marina Cove Pty Ltd v Pearl Hill Pty Ltd
MEDIUM NEUTRAL CITATION:	[2009] VSC 621

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REAL PROPERTY – Removal of caveats - Large residential project – Building contract between developer and builder – Disputes arising – Heads of agreement entered into to settle disputes – Including provision for acquisition by builder of certain proposed lots – Further disputes - Caveat lodged by builder - Heads of agreement thereafter terminated by builder’s acceptance of alleged repudiation - Developer later goes into receivership and administration – Further caveats lodged by companies associated with builder based on disputed contracts of sale - Application by developer for removal of caveats – No relevant accrued rights – No relevant estoppel - Caveators unable to establish serious question to be tried as to continuing proprietary rights in the land – Caveats ordered to be removed.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr I Martindale SC	Deacons
For the Defendants	Mr M Sifris SC Mr O Bigos	Hoeys Lawyers

HIS HONOUR:

1. The plaintiff (“Marina Cove”) is a property developer.  It is now in liquidation.  The first defendant (“Pearl Hill”) is a company controlled by Carmen Nino Mimmo (“Mr Mimmo”).  It is a commercial builder.  The other 7 defendants are companies associated with Mr Mimmo or members of his family.  Under a building contract entered into in 2005, Marina Cove engaged Pearl Hill to construct residential units on proposed lots as part of a large development project near Mount Martha.  Marina Cove encountered financial difficulties.  Disputes arose between Marina Cove and Pearl Hill.  On 21 October 2008 they executed a written agreement designed to settle their differences (referred to in this proceeding as “the heads of agreement”).  The heads of agreement envisaged, among numerous other things, that Pearl Hill[1] would acquire from Marina Cove 33 of the proposed lots on stated terms, including that the total price would be $15 million plus GST.  In April 2009, by reference to the heads of agreement, Pearl Hill lodged a caveat in respect of so much of the land registered in the name of Marina Cove as was intended to be subdivided into the 33 proposed lots.

   [1]It was later agreed or confirmed that Pearl Hill could appoint nominees to acquire some of the units.

1. In September 2009 the other defendant companies lodged caveats in relation to various parts of the same land, representing 18 of the same 33 proposed lots.  Those (further) caveats were lodged by reference to 18 individual forms of contract for the sale of real estate.  The caveators allege that each such form of contract had been duly executed on behalf of Marina Cove in December 2008.  In each of the 18 forms of contract, the consideration for the sale of the land was expressed to be “nil”.  At some stage the parties had indeed contemplated executing 18 contracts with a consideration of “nil” each and a further 15 contracts with a consideration of $1 million plus GST each.  There is no suggestion that the 15 contemplated contracts were ever executed.  For its part, Marina Cove alleges that any signatures purporting to be appended on its behalf to the 18 forms of contract were forged.  That is not a dispute that can be resolved in the present proceeding.

1. Marina Cove now applies to have the caveats removed, on certain other grounds.  The relevant principles are common ground.[2]

   [2]See, eg, Australian Natives’ Association Friendly Society v Peball Pty Ltd (1993) V Conv R 54-482 at 65, 611 (Eames J); Goldstraw v Goldstraw [2002] VSC 491 (Dodds-Streeton J).

1. Having listened to everything that has been said and having read a great deal of material since this matter was referred to me on Friday 11 December 2009, it seems to me that the caveators have not discharged the onus that lies on them to justify the continuation of their respective caveats. 

1. The principal reason for my conclusion is that the caveators have not shown a serious question to be tried as to the current existence of any relevant proprietary rights residing in them.  In turn, my view in that regard is principally based on the lack of any effective answer that they or their counsel have been able to provide to the apparent impact of the correspondence between the parties of late May 2009, in particular the letter from Marina Cove to Mr Mimmo of Pearl Hill of 13 May 2009 and the responding letter from Pearl Hill to Marina Cove of 20 May 2009.

1. I will read out what Mr Mimmo for Pearl Hill said in that letter of 20 May 2009, which was prepared carefully and, apparently, with some legal input.  It says (omitting formal parts):

“We refer to the heads of agreement dated 21 October 2008 and your letter dated 13 May 2009.  In your letter you make it clear you are terminating the heads of agreement.  You have no right to do so as Pearl Hill Pty Ltd had not repudiated same.  In fact, Pearl Hill had made it abundantly clear to you that it was ready, willing and able to perform its obligations under the heads of agreement.

As you are aware we initiated Supreme Court proceedings in an effort to resolve amongst other things the dispute regarding our right of set-off in respect of the deposit and were seeking specific performance.

By unilaterally terminating the heads of agreement as you have done, you have clearly evinced an intention not to be bound by the heads of agreement and you have repudiated the heads of agreement.  Take notice therefore that Pearl Hill accepts your repudiation and regards the heads of agreement as being at an end.”

1. Shortly after that, in early June 2009, the solicitors for Pearl Hill sent an email to this Court in response to a request from the Court that they provide information about the further progress of the proceeding referred to in Pearl Hill’s letter, being a proceeding (no 6288 of 2009) which Pearl Hill had brought against Marina Cove in the Building Cases List of this Court in April 2009, and in which Pearl Hill had relied on the heads of agreement.  The solicitors for Pearl Hill said this in the email (omitting formal parts):

“Subsequent to our client, Pearl Hill Pty Ltd, issuing the proceedings, the defendant, Marina Cove Pty Ltd, has purported to terminate the agreements upon which the proceedings were based.  Our client has accepted that conduct as repudiatory (whilst Marina Cove Pty Ltd alleges our client’s conduct was repudiatory).  It follows therefore that our client will be significantly amending its claim against the defendant.  Gadens Lawyers[3] have been advised that these amendments will be necessary and that they should await service of the amended statement of claim before preparing their statement of defence.

We anticipate that the amended statement of claim will be ready for filing and service in approximately 30 days.

In light of the above, we would not yet recommend the date for the Resources Conference be scheduled.”

[3]Gadens Lawyers were acting for Marina Cove in proceeding no 6288 of 2009.

1. So, if any confirmation of the termination of the agreement were needed, that email provided it.  It made very clear the position of Pearl Hill, which was obviously shared by Marina Cove, that the heads of agreement had come to an end.[4]  Consistently with this, Pearl Hill was asserting that it needed to reframe its statement of claim.  All of this was happening at a time when it had not once been asserted on behalf of Pearl Hill that there had been any actual signing or execution on behalf of Marina Cove of any contracts of sale pursuant to the heads of agreement.  It was only after Marina Cove went into receivership and administration that that assertion was made for the first time.

   [4]Compare Laurinda Pty Ltd v Capalaba Park Shopping Centre Pty Limited (1989) 166 CLR 623 at 647-8 (Brennan J), 657-8 (Deane and Dawson JJ); Sopov v Kane Constructions [2007] VSCA 257 at [7]-[15].

1. The Commonwealth Bank is the major secured creditor of Marina Cove.  It caused Marina Cove to go into receivership and administration in August 2009.  Since then the Bank’s solicitors, Deacons, have relevantly acted for Marina Cove.  It is true that Deacons have recently written letters to Pearl Hill’s solicitors asserting that Marina Cove was entitled to terminate the heads of agreement due to defaults by Pearl Hill, and purporting to do so.  However, in my view, this is not significantly inconsistent with the critical correspondence that I have already referred to.  It is almost certainly due to the fact that Deacons were not fully on top of all of the voluminous correspondence that had previously passed between the parties.  That was the explanation given by Mr Martindale SC, for Marina Cove, from the Bar table on instructions from Deacons.  Mr Sifris SC, for Pearl Hill, very fairly acknowledges that that is a likely explanation.  He does not require this aspect of the matter to be further verified by affidavit or on oath.

1. It seems to me that everything follows from the circumstance that the parties were ad idem about the termination of the heads of agreement in May/June 2009.  There is no merit in Pearl Hill’s suggestion that it retained relevant “accrued rights” arising from or pursuant to the heads of agreement.[5]  Any proprietary rights of Pearl Hill or of the other caveators in the land in question did not survive the termination.  Nor can I see any strength at all in the suggestion made on behalf of Pearl Hill that estoppel can somehow come to its aid or to the aid of the nominee companies.  As Mr Martindale submits in his reply, nothing has been done by Marina Cove since the termination of the heads of agreement that could give rise to any estoppel against Marina Cove.  At most there has simply been debate between solicitors about the rights and entitlements of the respective parties.

   [5]Compare Erden Aged Care No 1 Pty Ltd v Lettieri [2008] VSC 471 at [23]-[24] (Kyrou J).

1. There is no need to deal in depth with the debate before me about the fact that the 18 forms of contract on which the nominees relied were expressed to provide for sales for no consideration.  To pick up the phrase that I think is now accepted on all sides as appropriately describing the circumstances, this was an “all or nothing transaction”.  Plainly there was no intention that any party should acquire any of these lots for no consideration at all independently of the fate of the other 18 lots.  Rather, there was an overall arrangement under the heads of agreement whereby some $15 million plus GST would be payable for the 33 lots.  It is quite artificial to divide the (contemplated) contracts up and to treat them as giving rise to separate claims to be considered independently of the overall arrangement set up by the heads of agreement.

1. It is unnecessary to go into Marina Cove’s other arguments as to why there is no serious question to be tried; and it would probably be undesirable to do so, given the nature of the allegations that are made in this matter

1. Nor do I need to say anything about the balance of convenience, given that, in my view, the defendants have not shown that there is a serious question to be tried.  In any event, there is at least some force in the matters that have been put forward on behalf of Marina Cove as warranting it being set free now, as the registered proprietor of the land, to market the land as it sees fit.  The project has apparently been held up for some time.  The peak selling season is approaching.  No doubt some further steps will need to be taken to finalise the relevant plans of subdivision.  The plaintiff will need to get on with its marketing.  It will understandably wish to get rid of any notion that may be abroad that there is a cloud over its title as registered proprietor.

1. In all of these circumstances, I have reached the firm view that the caveats should all be removed.

1. I will hear the parties as to costs.

1. [Discussion ensued as to costs].

1. The defendants will be ordered to pay the plaintiff’s costs of this proceeding on a party-party basis.

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