Avenue Prime No.1 Pty Ltd atf Avenue Prime No.1 Unit Trust v Lennox & Ors

Avenue Prime's claim against Mr Levingston

1. Avenue Prime contends that it entered the Deed induced by Mr Levingston's misleading or deceptive conduct.
2. On 16 November 2020 Mr Levingston sent an email to the Associate to Hammerschlag J: "I am the third defendant in the above proceedings. I have copied this email to the plaintiff's lawyer and the first defendant (who is a director of the second defendant). I was originally represented by lawyers who provided evidence on my behalf, but I am now self-represented. I am an undischarged bankrupt, and lack the resources to further defend the proceedings. Without intending any disrespect to the court, I do not intend to appear at the hearing of the matter. I am aware that orders may be made against me in my absence."
3. Mr Levingston did not appear when the matter was on for hearing.
4. Accordingly, Avenue Prime's claim against Mr Levingston proceeded in his absence.
5. Mr Levingston is an undischarged bankrupt. Despite that, Avenue Prime does not require the leave of the court to take a step in the proceedings within the meaning of s 58(3)(b) of the Bankruptcy Act 1966 (Cth), because the claim is not one with respect to a "provable debt". That is because a claim for unliquidated damages arising from misleading or deceptive conduct against a bankrupt as a result of a plaintiff entering into a contract with a third party (in this case, Titanium) is not a debt provable in bankruptcy and can be maintained without leave.
6. Unbeknownst to Avenue Prime, on 13 June 2014, some three years before Titanium entered the Deed with Avenue Prime, Titanium had entered into a similar agreement with a third party, The Avenue Residences Pty Ltd ("Residences"). That document was called "Deed of Nomination of Call Options"("the Residences Deed"). Mr Levingston executed the Residences Deed on behalf of Titanium.
7. By the Residences Deed, Titanium nominated Residences and Residences agreed to accept a nomination of the benefit of Titanium's rights under the Options.
8. That is, by the Residences Deed, Titanium agreed to give Residences the substantially same rights as it later purported to give Avenue Prime under the Deed.
9. The Residences Deed was stated to be "interdependent" on a "Deed of Exclusive Consultation Agreement" between Titanium and Residences and a "Deed of Agency Agreement" made between Titanium and Residences.
10. Under the Deed of Exclusive Consultation Agreement, Residences agreed to pay Titanium a $2.5 million "Consultation" fee if Titanium and the Council entered into an agreement to jointly develop the Avenue Properties and the Carpark.
11. Thereafter, Titanium and Residences entered further agreements which had the effect of securing Residences' rights under the Residences Deed to 22 January 2018 and, if Residences so elected, to 22 January 2019.
12. All these arrangements were in place when Titanium entered the Deed with Avenue Prime on 18 September 2017.
13. Mr Levingston did not disclose Titanium's contractual obligations to Residences at the time that he caused Titanium to enter into the Deed with Avenue Prime.
14. As at the date of the Deed, Mr Levingston was engaged actively in assisting Residences exercise its competing rights to the Options.
15. Mr Levingston was, in effect, "double-dealing" with Residences and Avenue Prime, having caused Titanium to grant both those parties nomination rights under the Options.

Does Mr Levingston's silence constitute misleading or deceptive conduct?

1. Avenue Prime contends, and I have no hesitation in accepting, that Mr Levingston's silence about this critical matter constituted misleading or deceptive conduct on his part. [1] It is obvious that Avenue Prime had a reasonable expectation that Mr Levingston would disclose to it that he had earlier caused Titanium to contract with Residences to provide Residences with the very rights that, by the Deed, Titanium purported to give Avenue Prime. [2]
2. Avenue Prime pleads a "no transaction" case. That is, absent Mr Levingston's misleading or deceptive conduct, Avenue Prime would not have incurred any of the costs that it did in respect of the project and the Deed.
3. Mr Nanxing Lin, a director of Avenue Prime, has deposed that had he known of Residence's nomination rights, he would not have caused Avenue Prime to enter into the Deed.
4. Based on Mr Lin's evidence, I am satisfied that, had Avenue Prime known the arrangements between Titanium and Residences, it would not have entered the Deed. It is obvious that it would not have.
5. Avenue Prime seeks damages against Mr Levingston under s 236 of the Competition and Consumer Act 2010 (Cth), Sch 2 ("ACL").
6. Avenue Prime seeks damages against Mr Levingston both as a principal actor, that is as a person whose personal conduct contravened s18 of the ACL, and also because Mr Levingston was "involved in" the conduct of Titanium, being conduct that contravened s 18 of the ACL.
7. To the extent that such conduct should be attributed to Titanium, Mr Levingston was involved in that conduct.
8. The evidence establishes that as a result of entering into the Deed, Avenue Prime paid: 1. nomination fee of $3 million to Titanium; 2. GST on that sum of $300,000; 3. $166,990 stamp duty on the Deed; and 4. extension fee in respect of the Options of $350,000.
9. The evidence also establishes that Avenue Prime incurred a further $350,000 in associated fees for lawyers, planners, project managers, architects and urban designers.
10. Thus the total amount paid by Avenue Prime by reason of entering into the Deed was $4,166,990.
11. Mr Levingston, in his Response, offered a number of defences to these claims.
12. However, he has decided not to appear and not to seek to make out those defences. In those circumstances it is neither necessary nor appropriate that I express any view about them.

Decision

1. I enter judgment in favour of Avenue Prime against Mr Levingston in the sum of $4,166,990.

Endnotes

1. See for example Fabcot Pty Ltd v Port Macquarie-Hastings Council [2011] NSWCA 167 at [209] (Sackville JA); Demagogue Pty Ltd v Ramensky (1992) 39 FCR 31; [1992] FCA 851 at 32 [3] (Gummow J, with whom Black CJ and Cooper J agreed).
2. Kimberley NZI Finance Ltd v Torero Pty Ltd [1989] FCA 400 at [71] (French J), approved in Demagogue v Ramensky at 41 [34]. DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 09 December 2020