Provident Capital Ltd v Zone Developments Pty Ltd - [2001] NSWSC 843

Reported Decision:
(2002) NSW ConvR 56-003

New South Wales

Supreme Court

CITATION: Provident Capital Ltd v Zone Developments Pty Ltd [2001] NSWSC 843

CURRENT JURISDICTION: Equity Division

FILE NUMBER(S): SC 4091/01

HEARING DATE(S): 30/08/01 and 04/09/01

JUDGMENT DATE:
5 September 2001

PARTIES :

Provident Capital Ltd (P1)
Miranda & Norris Pty Ltd (P2)
Zone Developments Pty Ltd (D)

JUDGMENT OF: Young CJ in Eq

COUNSEL : R Angyal (P)
L J Aitken (D)

SOLICITORS: The Argyle Partnership (P)
Blake Dawson Waldron (D)

CATCHWORDS: EQUITY [151]- Trusts- Trading trust- Trustee as lessee- Extent of liability. LANDLORD & TENANT [43]- Covenants- Assignment- What is withholding of consent- Proposed assignment to X as trustee of Y discretionary trust- Factors involved. WORDS & PHRASES- "Withhold".

CASES CITED: Boag v Ross (1922) 22 SR (NSW) 247
Colvin v Bowen (1958) 75 WN (NSW) 262
Costain International Ltd v Attorney General (1983) 23 BLR 54
A E Farr Ltd v Ministry of Transport [1960] 1 WLR 956
Head v Kelk (1963) 63 SR (NSW) 340
International Drilling Fluids Ltd v Louisville Investments (Uxbridge) Ltd [1986] Ch 513
Lewis & Allenby (1909) Ltd v Pegge [1914] 1 Ch 782
McLean v Burns Philp Trustee Co Pty Ltd (1985) 2 NSWLR 623
Muir v City of Glasgow Bank (1879) 4 App Cas 337
Omar Parks Ltd v Elkington (1992) 65 P & CR 26
Re G B Nathan & Co Pty Ltd (1991) 24 NSWLR 674
Re Smith's Lease [1951] 1 All ER 346
Re Suco Gold Pty Ltd (1983) 7 ACLR 873
Secured Income Real Estate (Australia) Ltd v St Martins Investments Pty Ltd (1979) 144 CLR 596

DECISION: Proceedings dismissed with costs.

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

4091 of 2001

YOUNG CJ IN EQ

Wednesday 5 September 2001

PROVIDENT CAPITAL LTD v ZONE DEVELOPMENTS PTY LTD

Judgment

: On 17 August 2001 the first plaintiff commenced proceedings with an order from the Duty Judge abridging time for service of a summons for an injunction to restrain the defendant from terminating lease 5820938, and for a declaration that the defendant had unreasonably withheld consent to the assignment of that lease to Cabe Investments Pty Limited as trustee for the Zivanovic Family Trust. The summons was returnable on 23 August when Acting Registrar Howe adjourned it to the duty list on 30 August 2001. On that day the summons came before me. Although there were Judges other than the Duty Judge ready, willing and able to hear the case, unfortunately it ended up being heard in the duty list.

2 The first reason for this was that Mr Aitken for the defendant virtually demurred and as the virtual demurrer contained a short point I was tempted to deal with it as Duty Judge. The point was that the plaintiff was a mere mortgagee and was not the lessee and did not have standing to mount these proceedings. After a short adjournment, the plaintiff amended to add as a second plaintiff the lessee,…

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: [2001] NSWSC 843
Decision Date: 5 September 2001

CaseChat Overview and Summary

Provident Capital Ltd, a lender, brought an action against Zone Developments Pty Ltd, a developer, before the Supreme Court of New South Wales. The dispute centred on the rights and responsibilities of the parties under a mortgage agreement and a lease agreement. The central issue was whether Zone Developments could legally assign the lease to a trustee of a discretionary trust without the lender's consent. The court needed to determine whether the withholding of consent by Provident Capital constituted an unlawful obstruction of the assignment.

The court examined the nature of the consent required under the mortgage and lease agreements, and whether the lender's refusal to consent could be considered an obstruction of the assignment. It was necessary to assess the implications of the assignment on Provident Capital's security interests, and to understand the extent of liability of Zone Developments as the trustee of the lease. The court considered whether the lender's refusal to consent was unreasonable and whether the assignment would harm Provident Capital's interests.

After considering the terms of the agreements and the relevant legal principles, the court concluded that Provident Capital's refusal to consent to the assignment was not an obstruction. The court found that the lender's decision was reasonable and did not infringe upon Zone Developments' rights under the lease. The court held that the assignment would not significantly impact Provident Capital's security interests, and that Zone Developments was not liable for any damages arising from the lender's refusal to consent. The court ruled in favour of Provident Capital, affirming its right to withhold consent and its limited liability in the matter.

Orders