Nerang Subdivision Pty Ltd v Hutson - [2024] QCA 174

SUPREME COURT OF QUEENSLAND

CITATION:

Nerang Subdivision Pty Ltd v Hutson [2024] QCA 174

PARTIES:

NERANG SUBDIVISION PTY LTD
ACN 129 469 254
(first appellant)
PACIFIC VIEW FARM (QUEENSLAND) PTY LTD
ACN 114 561 081
(second appellant)
v
ROBERT HUTSON IN HIS CAPACITY AS ADMINISTRATOR OF THE ESTATE OF NANCY ULLMAN LOESKOW
(first respondent)
KANAYA HOLDINGS PTY LTD
ACN 098 864 905
(second respondent)

FILE NO/S:

Appeal No 15540 of 2023
SC No 1209 of 2023

DIVISION:

Court of Appeal

PROCEEDING:

General Civil Appeal

ORIGINATING COURT:

Supreme Court at Brisbane – [2023] QSC 268 (Cooper J)

DELIVERED ON:

17 September 2024

DELIVERED AT:

Brisbane

HEARING DATE:

6 August 2024

JUDGES:

Dalton and Flanagan and Boddice JJA

ORDER:

Appeal dismissed with costs.

CATCHWORDS:

DEEDS – CONTRACTS – CONSTRUCTION AND INTERPRETATION OF CONTRACTS – CREATION OF RELATIONSHIP OF AGENCY – where the appellants, being the Developer and the Project Manager, entered into an agreement with the first respondent (Owner) to develop land to which he had legal title in a representative capacity – where the purpose of the agreement was to facilitate a major (primarily residential) development – where the agreement consisted of a Deed and four Development Leases in identical terms – where the parties to the Development Leases were the Owner and the Project Manager as Tenant and nominee of the Developer – where the agreement granted the Developer and Project Manager full control over (amongst other things) the marketing and sale of Lots, as well as the distribution of proceeds – where the agreement provided that upon sale of Lots, the Developer “will pay” the Owner an amount equivalent to 25% of the sale proceeds (which was termed the “Owner’s Return”), and the Developer was “entitled to receive and be paid” the remaining proceeds (which was termed the “Developer’s Return”) – where the Deed and Development Leases included GST gross-up clauses, which applied in respect of any “payments” or “payment obligations” under the Deed and Development Leases – where the appellants contend that the primary judge was wrong to find that the Developer’s Return was not a payment or a payment obligation, such that it did not engage the GST gross‑up clauses – where the appellants contend that the primary judge should have found that the Project Manager, as Tenant, under the Development Leases was to collect and distribute the proceeds of sale of Lots as agent of the Owner – whether the primary judge’s construction of the Deed and Development Leases was correct

Dial A Dump Industries Pty Ltd v Roads and Maritime Services (2017) 94 NSWLR 554; [2017] NSWCA 73, considered
Electricity Generation Corporation v Woodside Energy Ltd (2014) 251 CLR 640; [2014] HCA 7, cited
International Harvester Co of Australia Pty Ltd v Carrigan’s Hazeldene Pastural Co (1958) 100 CLR 644; [1958] HCA 16, considered
Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd (2015) 256 CLR 104; [2015] HCA 37, cited
Petersen v Moloney (1951) 84…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2024] QCA 174
Decision Date: 17 September 2024

CaseChat Overview and Summary

The case of Nerang Subdivision Pty Ltd v Hutson involved the Developer and Project Manager (appellants) and the Owner (respondent), who was the administrator of the estate of the late Nancy Ulman Loeskow and the registered owner of the land in question. The dispute centred on the interpretation of a Deed and four Development Leases, which governed the development and sale of land. The key issue was whether the Developer's Return, which represented the proceeds from the sale of Lots after the Owner's Return had been deducted, constituted a payment or payment obligation under the agreements, thus triggering the application of GST gross-up clauses. The appellants argued that the Project Manager, as Tenant under the Development Leases, should be considered the agent of the Owner for the purposes of collecting and distributing the proceeds of sale.

The court had to determine whether the primary judge's interpretation of the Deed and Development Leases was correct, particularly in relation to the Project Manager's role and the nature of the Developer's Return. The primary judge concluded that the Developer's Return was not a payment or payment obligation and did not engage the GST gross-up clauses. The court considered the language of the agreements, the roles of the parties, and the commercial purpose of the transactions. It found that the Project Manager's role was not that of an agent collecting proceeds on behalf of the Owner but rather as a party with a proprietary interest in the proceeds. Consequently, the Developer's Return was not a payment or payment obligation, and the GST gross-up clauses did not apply.

In light of the reasoning above, the appeal was dismissed with costs. The court upheld the primary judge's interpretation of the Deed and Development Leases, confirming that the Project Manager was not acting as an agent for the Owner in collecting and distributing the proceeds from the sale of Lots.

Orders

Orders of the court

Appeal dismissed with costs.

Background

Background to the litigation

Before analysing his Honour’s Reasons, it is convenient to briefly outline the relevant factual background which is uncontroversial.Relevant factual background The 312.3 hectares of land (Land) forms part of the estate of the late Nancy Ulman Loeskow. The Owner is the administrator of Ms Loeskow’s estate and, in that capacity, is the registered owner of the Land.[7][7]Reasons, [2]. After Ms Loeskow died on 22 May 2008, her executors entered into the Deed with the Developer on 30 September 2009. After the Owner was appointed as administrator of Ms Loeskow’s estate on 21 September 2018, he acceded to the rights and obligations of the Owner under the Deed.[8][8]Reasons, [17]. The primary judge described the nature and progress of the Project as follows:“[24] In December 2010, the Project Manager applied for approval for a material change of use under the Sustainable Planning Act 2009 (Qld) in relation to a bespoke development code in relation to the Land. The executors of Mrs Loeskow’s estate consented to the making of that application for development approval. The development code provided for:(a)a maximum of 3,500 dwellings, delivered in a range of housing products, including attached housing and detached housing on Lots ranging from 180 square metres to 1,500 square metres;(b)a residential population in the range of 8,000 to 10,000 persons;(c)a village centre with a mixture of residential, commercial, educational, retail and open spaces;(d)an industrial precinct to include land for industrial, manufacturing and storage activities; and(e)a broad continuous corridor that provides central green open space.[25]The application was approved subject to certain conditions in March 2015. Between July 2015 and December 2021, the Project Manager sought and obtained approval for changes to be made to the development approval. The personal representatives of Mrs Loeskow’s estate (initially the executors and later the Administrator) provided their consent to each of these requests to change the development approval.[26]On 23 January 2019, the Project Manager provided the Administrator with a copy of the initial Master Plan for the Project. The Administrator approved that Master Plan on 23 April 2019. That initial Master Plan contemplated that the Development of the Land would yield 2,274 Lots. The Master Plan has been revised on two occasions. The most recent version of the Master Plan in evidence contemplates that the Development of the Land will yield 2,141 Lots.[27]In February 2021, the Project Manager commenced marketing Lots for sale. The Administrator has executed at least 160 contracts for the sale of Lots with a total purchase price of at least $84.5 million. Each sale contract has a price not less than $75,000. At the time of the hearing, title for the Lots had not been issued but the Developer anticipated that would occur in October 2023. The Developer anticipated that the sale contracts which have already been executed are likely to settle before February 2024. Some 24 of the sale contracts contain a sunset date falling before 1 March 2024.[28]The Project is expected to result in the creation of thousands of residential Lots from the Land with sales of those Lots to occur over more than a decade. The Developer expects the Project to generate more than $2 billion in revenue.”The relevant clauses of the Deed and the Development Leases

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

Full text does not contain this section.

Ratio Decidendi

Legal Principle Established

Full text does not contain this section.

CITATION:	Nerang Subdivision Pty Ltd v Hutson [2024] QCA 174
PARTIES:	NERANG SUBDIVISION PTY LTD ACN 129 469 254 (first appellant) PACIFIC VIEW FARM (QUEENSLAND) PTY LTD ACN 114 561 081 (second appellant) v ROBERT HUTSON IN HIS CAPACITY AS ADMINISTRATOR OF THE ESTATE OF NANCY ULLMAN LOESKOW (first respondent) KANAYA HOLDINGS PTY LTD ACN 098 864 905 (second respondent)
FILE NO/S:	Appeal No 15540 of 2023 SC No 1209 of 2023
DIVISION:	Court of Appeal
PROCEEDING:	General Civil Appeal
ORIGINATING COURT:	Supreme Court at Brisbane – [2023] QSC 268 (Cooper J)
DELIVERED ON:	17 September 2024
DELIVERED AT:	Brisbane
HEARING DATE:	6 August 2024
JUDGES:	Dalton and Flanagan and Boddice JJA
ORDER:	Appeal dismissed with costs.
CATCHWORDS:	DEEDS – CONTRACTS – CONSTRUCTION AND INTERPRETATION OF CONTRACTS – CREATION OF RELATIONSHIP OF AGENCY – where the appellants, being the Developer and the Project Manager, entered into an agreement with the first respondent (Owner) to develop land to which he had legal title in a representative capacity – where the purpose of the agreement was to facilitate a major (primarily residential) development – where the agreement consisted of a Deed and four Development Leases in identical terms – where the parties to the Development Leases were the Owner and the Project Manager as Tenant and nominee of the Developer – where the agreement granted the Developer and Project Manager full control over (amongst other things) the marketing and sale of Lots, as well as the distribution of proceeds – where the agreement provided that upon sale of Lots, the Developer “will pay” the Owner an amount equivalent to 25% of the sale proceeds (which was termed the “Owner’s Return”), and the Developer was “entitled to receive and be paid” the remaining proceeds (which was termed the “Developer’s Return”) – where the Deed and Development Leases included GST gross-up clauses, which applied in respect of any “payments” or “payment obligations” under the Deed and Development Leases – where the appellants contend that the primary judge was wrong to find that the Developer’s Return was not a payment or a payment obligation, such that it did not engage the GST gross‑up clauses – where the appellants contend that the primary judge should have found that the Project Manager, as Tenant, under the Development Leases was to collect and distribute the proceeds of sale of Lots as agent of the Owner – whether the primary judge’s construction of the Deed and Development Leases was correct Dial A Dump Industries Pty Ltd v Roads and Maritime Services (2017) 94 NSWLR 554; [2017] NSWCA 73, considered Electricity Generation Corporation v Woodside Energy Ltd (2014) 251 CLR 640; [2014] HCA 7, cited International Harvester Co of Australia Pty Ltd v Carrigan’s Hazeldene Pastural Co (1958) 100 CLR 644; [1958] HCA 16, considered Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd (2015) 256 CLR 104; [2015] HCA 37, cited Petersen v Moloney (1951) 84…