Russo v Resource Developments International Pty Ltd (No 3) - [2003] NSWSC 838

CITATION: Russo v Resource Developments International Pty Ltd (No 3) [2003] NSWSC 838

HEARING DATE(S): 22/07/03

JUDGMENT DATE:
12 September 2003

JURISDICTION:
Equity Division

JUDGMENT OF: Young CJ in Eq

DECISION: The first and fourth defendants are liable to the plaintiff for $658,180.06 and for the costs of these damages proceedings.

CATCHWORDS: CONTRACT [126]- Share sale agreement- Whether still enforceable- Whether frustration by insolvency of subsidiaries- Abandonment- Elements.

LEGISLATION CITED: Frustrated Contracts Act 1978, s 7

CASES CITED: DTR Nominees Pty Ltd v Mona Homes Pty Ltd (1978) 138 CLR 423
De Soysa v De Pless Pol [1912] AC 194
Lindsay v Mahoney (1979) 1 BPR 9584
Summers v The Commonwealth (1918) 25 CLR 144

PARTIES :
Vincenzo Russo (P1)
Merkado Pty Limited (P2)
Resource Developments International Pty Limited (D1)
Premier Resources Limited (D2)
Hy-Tec Industries Pty Limited (D3)
Iyad Rafidi (D4)
Placido Costa (D5)

FILE NUMBER(S): SC 1947/02

COUNSEL: F G Lever SC (P)
B Rayment QC and P Conway (D1 & 4)

SOLICITORS: Bartier Perry (P)
Oliveri Attorneys (D1 & 4)

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

YOUNG CJ in EQ

Friday 12 September 2003

1947/02 – RUSSO v RESOURCE DEVELOPMENTS INTERNATIONAL PTY LTD (NO 3)

JUDGMENT

1 HIS HONOUR: I gave judgment in this matter after a lengthy hearing on 2 April 2003, see [2003] NSWSC 239. I then gave a supplementary judgment on 26 May 2003 dealing with costs, [2003] NSWSC 446. What remains in this case is the determination of the quantum of damages which should be paid by the first and fourth defendants to the plaintiff as a result of my first judgment.

2 On 22 July 2003, I received further evidence on the outstanding issues and heard argument from Mr F Lever SC for the plaintiff, and Mr B W Rayment QC and Ms P Conway for the first and fourth defendants.

3 The plaintiff's claim for damages fall under discrete heads which can be summarised as follows:

A. A claim for $100,000 being the first payment of the purchase price under the share sale agreement of 10 April 2001, clauses 4 and 5.

B. A claim for the second $100,000 due 1 February 2003 under the same clauses.

C. A claim for stamp duty on the agreement for the sale of shares.

4 I will deal with each of these heads of damage in turn.

5 A. The answer of the defendants to this claim is contained in the defence of the first and fourth defendants to the further amended statement of claim filed 18 June 2003 (paras 13-15). Para 13 pleads that prior to February 2003, various companies therein called trading companies, all ceased to trade and two of them had been wound up by the court, as a consequence of which the share sale agreement is a…

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.

Continue reading Russo v Resource Developments International Pty Ltd (No 3)

Details

AGLC: Russo v Resource Developments International Pty Ltd (No 3) [2003] NSWSC 838
Case: [2003] NSWSC 838
Decision Date: 12 September 2003

CaseChat Overview and Summary

The case of Russo v Resource Developments International Pty Ltd (No 3) involved a dispute over the enforceability of a share sale agreement. The plaintiff, Russo, had agreed to sell shares in a company to the defendant, Resource Developments International, but the agreement was complicated by the insolvency of subsidiaries of both parties. The High Court was tasked with determining whether the agreement could still be enforced and whether the insolvency of the subsidiaries constituted a frustration of the contract. Additionally, the court considered whether there had been an abandonment of the agreement.

The central legal issues revolved around the enforceability of the share sale agreement in the face of the insolvency of the subsidiaries. The court had to decide whether the insolvency amounted to a frustrating event that would render the agreement unenforceable, or whether the insolvency was merely a commercial risk that the parties had to bear. Furthermore, the court examined whether there had been an abandonment of the agreement, which could also potentially relieve the parties of their contractual obligations.

The court held that the insolvency of the subsidiaries did not amount to a frustrating event that would render the agreement unenforceable. The insolvency was a risk that the parties had to bear, and it did not go to the root of the contract. The court further found that there was no evidence of an abandonment of the agreement. The parties had continued to engage with the transaction and had not indicated any intention to terminate the agreement. Consequently, the share sale agreement remained enforceable.

In summary, the court ruled that the share sale agreement was still enforceable, and the insolvency of the subsidiaries did not constitute a frustrating event. There was no evidence of an abandonment of the agreement, and thus the parties remained bound by the terms of the contract.

Orders