Green & Ors v Wilden Pty Ltd & Ors [2005] WASC 83

Green & Ors v Wilden Pty Ltd & Ors [2005] WASC 83 - WASC 2005 case summary — Zoe

[392]

"REPURCHASE OF UNITS

A repurchase request from Benrone Pty Ltd and Callao Pty Ltd was presented to the Directors in accordance with the Trust Deed. The repurchase would take the property to nearly two thirds borrowing. Two thirds borrowings is acceptable to the Trust therefore these units were repurchased by the Trust.

Mr Steinepreis queried the ANZ Bank's involvement with the valuation of the property.

Mr Chesson explained the ANZ Bank's involvement with the valuation of the property. The ANZ have a panel of three valuers - Richard Ellis, Stanton & Co, Ballieu Knight Frank. Rather than charge the Trust with a valuation, Benrone Pty Ltd and Callao Pty Ltd adopted the value used by the Bank's valuer. Benrone Pty Ltd and Callao Pty Ltd paid for the valuation and not the Trust.

The Bonini Family, Green Family and Mrs and Mrs Marshall have also lodged repurchase requests. If all repurchase units presented were paid for by the Trust, the property would exceed the two third borrowing.

In accordance with the Trust Deed, if the repurchase units have not been purchased within ninety (90) days after they have been received by Tace Pty Ltd as trustee for the Summerfield (1987) Unit Trust, Clause 7.5 and 7.6 of the Trust Deed has to be applied. This may necessitate the sale of the shopping centre. The Reserve Price is set under the terms of the Trust Deed. The Trust must adopt a Reserve Price set by an independent qualified valuer nominated by the Australian Institute of Valuers (WA division). The Trust can use the valuation paid for by Benrone Pty Ltd.

MOTION: Moved Mr B Denboer. Seconded Mrs M Kelly.

RESOLVED: 'That Chesson & Co be empowered to sell the property by Auction if the units are not taken up within the ninety days as stipulated in the Trust Deed. The minimum value is to be $6.3million or a higher value. The valuation is to be updated at a date closer to the auction date.'

A Poll was called, 2455 units for, 950 units against. The Bonini Family and Mr Baker representing Mrs Baker abstained from voting."

[1123]

"It is established by authority, both ancient and modern, that the courts will not lend their aid to the enforcement of an incomplete agreement, being no more than an agreement of the parties to agree at some time in the future. Consequently, if the lease provided for a renewal 'at a rental to be agreed' there would clearly be no enforceable agreement. On the other hand, it is also well established that the parties to a contract may leave terms - even essential terms - to be determined by a third person: see the cases cited in Godecke v Kirwan (supra). In the present case, the lease itself provides the entire mechanism for determining the rental for the renewed term. There is no further agreement required of the parties. It is true that if they do agree upon that rental, then there is no occasion to resort to the independent mechanism that the lease provides. But, there being no such agreement, all that is required is that the President name a person to fix a figure being not less than the minimum rental operative during the original term. No formality is required to effect the necessary appointment. Either party may request the President to facilitate the fulfilment of the agreement. It may be assumed that if he declines to do so, or if the person nominated declines to carry out the task assigned to him, then the renewal cannot be effected, and that Wilson's exercise of the option will have been fruitless. Nevertheless, in the circumstances as they stand at present, there is a valid agreement for the renewal of the lease subject to the fixation of a rental for the new term. The fixation of that rental is a condition precedent to the performance of the agreement.

It follows that at this stage an order could not be made for the specific performance of the agreement to grant a further lease: Brown v Heffer (supra). However, in order to give business efficacy to cl 4.01 and 3.05(b) it is necessary to imply a term that, once the conditions specified in cl 4.01 have been performed, both parties will do all that is reasonably necessary to produce (sic) the nomination by the President of an arbitrator."

[1219]

"(a) I concluded that the auditors figures for assets (save for a cost error) and liabilities and as to the number of units in the trust were reliable.

(b) I examined the statement of assets and liabilities as at 3 January 1991. I added up all the assets and established that the value of the total assets and the value of pre payments had been incorrectly cast.

(c) I also noticed that an amount of $140.000.00 had been set aside in relation to the Osborne Park co-op case. I was aware from my earlier dealings with the Shopping Centre that that would have related to the damages payable by Osborne Park Co-Op to Wilden.

(d) I examined the non-current liabilities. From my previous searches of the properties, I was aware that the ANZ Bank had registered mortgage D511819 in respect to the Shopping Centre and mortgage E234349 in respect to Irwin Chambers (as well as mortgage E535901 to the ANZ Bank which was registered on 30 January 1991, being a date after the valuation date). I believed that the non-current liabilities related to those mortgages.

(e) I also examined the estimated selling expenses, which although I thought were a little high and should have been around $80,000.00, nevertheless were in acceptable bounds or "within the ball park".

(f) I also examined the bank penalty interest which I believe would have related to the penalties which the ANZ Bank would impose on Wilden in the event of an early discharge of the mortgages over the shopping Centre and Irwin Chambers.

(g) I noticed that the auditor had stated that there were 1,425 units as at 3 January 1991. There was no reason for me to suspect that that was an incorrect figure.

(h) In relation to the financial statements as a whole, I felt confident in relying on the figures provided by the auditor. In particular, if there were any discrepancies in the figures, I believed the auditor who had prepared the statement and (who had satisfied himself some 22 months after 3 January 1991 that the details contained in the statement were a true reflection of the assets, liabilities and surplus of the trust), would have detailed any errors.

(i) After recalculating the value for total assets and deducting from that value all liabilities, including the selling expenses and bank penalty interest, I calculated a unit per value at $886.82."

[1764]

"The minute that we propose says that there should be an account taken before a registrar that shows what were the recurring charges, costs and ANZ bill facilities incurred by the trust and then whatever sum is owing under the loan units bear interest at the rate and for the periods found on that account to be the costs to the Balga Bazaar Trust but thereafter, if there was no interest or cost payable to the ANZ Bank facility, then the most the court can do is award interest at the prejudgment rate specified in section 32 of the Supreme Court Act.

There is no agreement between the parties for any other interest rate so the court then has a statutory right under section 32 to award interest. That is the formulation in paragraph 15. The answer to that my friend would put up is, 'You have got to calculate it as if the trust had a cost to the ANZ Bank or treat it [sic] as a reimbursement of whatever the trust paid,' and that raises real questions where the trust in respect of the Greens, for example, excluded them as unit holders from any participation or knowledge of what was going on, undertook other refinancing and other borrowing and incurred other charges, whether it's appropriate. Did the Greens ever agree to that? Plainly they didn't even know about it so they never agreed to it.

There wasn't a variation to the original contract pleaded in the counterclaim saying that there should be additional fresh consideration to support a variation to the contract. One hypothesises if we had been told that we are going to be up for interest at NML, whatever that rate may be or whatever charges that may be incurred, would it then have triggered a different response? They are issues that could have been raised and weren't. We are content that the evidence establishes on the pleaded case of the counterclaim there is a claim for reimbursement of the costs paid to the ANZ Bank and as from 1994-95 there was no costs paid to the ANZ Bank. That is the end of the interest at that point save for the court's statutory right."

At a glance

Court

Decision date

Before

Catchwords

Source

Catchwords

Judgment (2078 paragraphs)

Green & Ors v Wilden Pty Ltd & Ors [2005] WASC 83 (10 May 2005)

Legal principles re administration of trusts

The legal principles - The cl 13.4 protective provision

Findings as to the Balga/Chesson remuneration issue

Legal principles re investment agreement issue

Findings as to Balga/Wilden investment agreement issue

General observations re the Balga/Wilden additional units and options issue

Findings as to the Balga/Wilden additional units and options issue

Legal principles - The Balga/Wilden cl 7.4 repurchase request issue

Further observations re the cl 7.4 repurchase request issue

Further evidence/cross-examination of Mr Sanderson

Observations as to the Sanderson independent discretionary judgment issue

General observations as to the Balga/Wilden repurchase procedure/compliance issue

Repurchase request procedure/compliance issues

Findings as to repurchase procedure/compliance issue

Parties

Legislation Cited (4)

Cases Cited (68)