SAS Realty Developments Pty Ltd and Anor v Quentin Kerr

[2013] HCASL 191

SAS REALTY DEVELOPMENTS PTY LTD & ANOR

v

QUENTIN KERR

[2013] HCASL 191
S77/2013

1. The first applicant, SAS Realty Developments Pty Ltd ("SAS") is a property development company controlled by the second applicant, Sean Shen.  On 25 June 2010 SAS and the respondent, Mr Kerr, signed a joint venture agreement to develop certain land.  Mr Kerr paid $50,000 and committed to paying further sums of $350,000 and $1 million. 

2. In July 2010 Mr Kerr provided Mr Shen with a cheque for $350,000 payable to Sean Shen.  Mr Kerr and Mr Shen signed a document dated 21 July 2010 styled "Agreement between Quentin Kerr to Mr Sean Shen in Joint Venture Agreement", which recorded the payment by Mr Kerr of $400,000 to Mr Shen "as investment fund to SAS".  It provided that Mr Kerr had the right to withdraw the investment fund in the event Mr Shen failed to obtain construction finance in the circumstances specified.  Mr Kerr also paid $145,845 into the SAS bank account.  There was an issue as to whether these funds were a loan by Mr Kerr to SAS as Mr Kerr maintained, or a contribution of working capital under the joint venture agreement.  Mr Kerr subsequently withdrew this sum from the SAS bank account.

3. Another entity, Nazero Constructions Pty Ltd, commenced proceedings in the District Court of New South Wales against SAS for moneys due in relation to building works commenced on the land.  SAS filed a cross-claim against Mr Kerr and Mr Kerr filed cross-claims against both SAS and Mr Shen.  Relevantly, SAS claimed damages for conversion and alternatively restitution for unjust enrichment with respect to the $145,854 withdrawn from its account.  Mr Kerr in his cross‑claims sought the sum of $400,000 as damages for breach of the July agreement or the original joint venture agreement or for misleading and deceptive conduct.

4. Murrell DCJ gave judgment for Mr Kerr on each of his cross-claims.  She dismissed SAS's cross‑claim for $145,854 holding that these monies were loans repayable on call and that Mr Kerr had general authority to draw cheques on the SAS account.

5. SAS and Mr Shen appealed to the Court of Appeal of the Supreme Court of New South Wales (Macfarlan and Ward JJA and Sackar J).  The Court of Appeal concluded that the parties' objective intention with respect to the July agreement was that both Mr Shen and SAS should be bound by the obligation to refund the moneys in the event Mr Shen failed to obtain the construction finance[1].  The most compelling indication that both Mr Shen and SAS were to be bound by the obligation was that Mr Shen signed the document twice, once above his name and once below the title of managing director of SAS[2]. 

   [1]SAS Realty Developments Pty Ltd v Kerr [2013] NSWCA 56 at [78].

   [2]SAS Realty Developments Pty Ltd v Kerr [2013] NSWCA 56 at [81].

6. The Court of Appeal concluded that regardless of whether the $145,854 was correctly characterised as a loan or as capital contribution to the joint venture, the withdrawal of that sum from the SAS account was prima facie authorised under the joint venture agreement[3]. 

   [3]SAS Realty Developments Pty Ltd v Kerr [2013] NSWCA 56 at [97].

7. SAS and Mr Shen apply for special leave to appeal from part of the judgment of the Court of Appeal.  They challenge the rejection of SAS's claim respecting the $145,854 and the finding that Mr Shen was contractually bound to refund the $400,000. 

8. No question of law of public importance is raised by the application.   In order to succeed the applicants would need to overcome concurrent findings of fact.  If special leave to appeal were granted the appeal would have insufficient prospects of success.

9. The application is dismissed.

10. Pursuant to r 41.11.1 we direct the Registrar to draw up, sign and seal an order dismissing the application with costs. 

V.M. Bell
3 December 2013 S.J. Gageler