Tsaprazis v Goldcrest Properties Pty Ltd - [2000] NSWSC 206

Reported Decision: (2000) 18 ACLC 285

New South Wales

Supreme Court

CITATION: TSAPRAZIS & ORS. V. GOLDCREST PROPERTIES PTY. LTD. & ORS. [2000] NSWSC 206

CURRENT JURISDICTION: Equity Division

FILE NUMBER(S): SC 3353/99

HEARING DATE(S): 09/03/00

JUDGMENT DATE: 23 March 2000

PARTIES :

Mr. Greg Tsaprazis - 1st Plaintiff
Mr. Liam Tsaprazis - 2nd Plaintiff
Ms. Sophia Tasovac - 3rd Plaintiff
Goldcrest Properties Pty. Ltd. - 1st Defendant
Dernu Pty. Ltd.- 2nd Defendant
Mr. Robert Micola - 3rd Defendant

JUDGMENT OF: Hodgson CJinEq at 1

COUNSEL : Mr. Jacobs QC / Mr Jacobs for Plaintiffs
Mr. I.Sanderson for 1st Defendant
Mr. Lancaster for 2nd & 3rd Defendants

SOLICITORS: Gibara & Soubris, Marrickville for the Plaintiffs
Sullivan Solicitors, Sydney for 1st Defendant
Woodward, Wickes & Co., Cronulla for 2nd & 3rd Defendants

CATCHWORDS: CORPORATIONS - Directors - Lease by company - Whether directors may have duty to tenant to take reasonable care to ensure that company does not breach lessor's covenants. TORTS - Negligence - Whether director of company may have duty to persons contracting with it to take reasonable care to ensure that company does not breach the covenant.

CASES CITED: Said v Butt (1920) 3 KB 497.
O'Brien v Dawson (1942) 66 CLR 18.
Wah Tat Bank Ltd. v Chan (1975) AC 507.
Kinsella v Russell Kinsella (1986) 4 NSWLR 722.
Perre v Apand Pty. Ltd. (1999) 73 ALJR 1190.

DECISION: See pars. 18 to 19 of the judgment.

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION
CORAM: HODGSON, CJ in Eq.
Thursday, 23 March 2000
NO. 3353 OF 1999
TSAPRAZIS & ORS. V. GOLDCREST PROPERTIES PTY. LTD. & ORS.
JUDGMENT

INTRODUCTION

1   In this judgment, I am dealing with an application by the third defendant Mr. Micola to strike out paragraphs 23.1, 23.2, and 23.3 of the Amended Statement of Claim, which allege against him a duty of care and breach of that duty. To understand the nature of this application, it is necessary to outline the plaintiffs' claims in the proceedings generally.

2   On 23rd March 1997, the plaintiffs leased from the second defendant Dernu premises in Cronulla for a term of three years, plus an option of a further three years. The plaintiffs conduct a restaurant business in the premises, and they claim to have spent substantial sums in re-furbishing the premises for that purpose.

3   The lease contains in cls.7.1.1 and 7.1.2 covenants by the landlord to maintain the roof, ceilings, external walls and floor of the premises in good condition, and to maintain the premises in a structurally sound condition. There was also a covenant to the effect that, if the premises or the building of which they are part are damaged, the landlord can notify the tenant that it considers the damage such as to make repair impracticable or undesirable, and then terminate the lease on seven days' notice.

4   The plaintiffs claim that, from the time of commencement of the lease, there has been water ingress…

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: [2000] NSWSC 206
Decision Date: 23 March 2000

CaseChat Overview and Summary

The dispute in Tsaprazis v Goldcrest Properties Pty Ltd was between the plaintiff, Mr Tsaprazis, and the defendant, Goldcrest Properties Pty Ltd, along with its directors. The plaintiff sought damages for the defendant's alleged breach of covenant in a lease agreement. The case was heard in the Supreme Court of New South Wales. Mr Tsaprazis, the plaintiff, leased a property from Goldcrest Properties. He alleged that the company breached the lease by subleasing the premises to a subtenant who was not approved by Mr Tsaprazis. The plaintiff claimed that the subtenant's activities caused damage to the property, and he sought damages from Goldcrest Properties and its directors for their alleged failure to ensure the company did not breach the lease.

The primary legal issues in the case were whether the directors of Goldcrest Properties owed a duty of care to the plaintiff to prevent the company from breaching the lease and whether the directors could be held liable for negligence for the company's breach. The court had to determine if the directors had a duty to take reasonable care to ensure the company complied with the lease terms and whether their failure to do so could be considered negligence.

The court held that the directors did not owe a duty of care to the plaintiff to ensure the company complied with the lease. The court found that the directors' primary duty was to the company and its shareholders, not to individual tenants. The court reasoned that the directors' liability for the company's breach of contract was limited to the company's assets and did not extend to personal liability for negligence. The court further held that the directors' actions did not amount to negligence because they had not breached any statutory duty or assumed a special responsibility towards the plaintiff. The court dismissed the plaintiff's claim against the directors.

The court ordered that the plaintiff's claim against Goldcrest Properties and its directors be dismissed, and the plaintiff was to bear the costs of the proceedings.

Orders