Lesdor Properties Pty Ltd v Cordon Investments Pty Ltd

Court of Appeal (NSW)|2009-10-12|Before: Hodgson JA, Einstein J

CITATION: Lesdor Properties Pty Ltd v Cordon Investments Pty Ltd [2009] NSWCA 345

DECISION: Notice of Motion dismissed with costs.

CATCHWORDS: PROCEDURE - Orders made pursuant to terms of settlement - Power of court to interpret those orders and to make specific orders giving effect to them.

LEGISLATION CITED: Civil Procedure Act 2005 s 73 Supreme Court Act 1970 s 46

CASES CITED: Phillips v Walsh (1990) 20 NSWLR 206

PARTIES: LESDOR PROPERTIES PTY LIMITED (appellant/ respondent on the motion) CORDON INVESTMENTS PTY LIMITED (respondent/ applicant on the motion)

COUNSEL: T S HALE SC/ M S WHITE (appellant/ respondent on the motion) F CORSARO SC/ B BRADLEY (respondent/ applicant on the motion)

SOLICITORS: Solari & Stock (appellant/ respondent on the motion) Anthony C Simpson & Associates (respondent/ applicant on the motion)

LOWER COURT JURISDICTION: Supreme Court

LOWER COURT DATE OF DECISION: 3 October 2008

LOWER COURT MEDIUM NEUTRAL CITATION: Cordon Investments Pty Ltd v Lesdor Properties Pty Ltd [2008] NSWSC 1006

6 - IN THE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL CA 40344/08

MONDAY 12 OCTOBER 2009 LESDOR PROPERTIES PTY LIMITED v CORDON INVESTMENTS PTY LIMITED Judgment 1 HODGSON JA: The proceedings in which this application arises concern a dispute between the respondent (Lesdor) and the applicant (Cordon) concerning a joint venture in which land owned by Lesdor was to be developed by Cordon. The joint venture between them contemplated that on completion of the development there would be units to be sold. It appears that at some stage Lesdor refused to make available some papers which would permit this to occur, claiming that Cordon had not completed the building. 2 It appears that proceedings were commenced in 2006, and that they have not yet reached a final hearing. An interlocutory application was brought by Cordon with a view to achieving the sale of some of these units, and in October 2008 Einstein J made an order appointing a receiver over some residential units with a view to having them sold. Lesdor sought leave to appeal from that decision. 3 That application for leave was settled on 1 July 2009, and there were consent orders made in the Court of Appeal, including the following order 4: (4) Upon the Plaintiff, by its counsel, giving the usual undertaking as to damages, the Court orders that in relation to the "Residual Lots" as defined in the Deed between the parties dated 2 September 2002 constructed on land situated at 620-633 Kingsway, Miranda: (1) Within 14 7 days, the Defendant is to pay half of the fees payable to Mr Randall of McLennan Steele Smith as set out in that Firm's letter to Solari Legal dated [ 28/5/7 ] in accordance with paragraph 2 of the IMA which is annexed hereto.

(2) Within 28 14 days of receipt of Mr Randall's valuation, and marketing strategy and selling strategy the Defendant nominated real estate agent is to arrange and conduct the sales of the "Residual Lots" in accordance with Mr Randall's marketing and selling strategy.

(3) The Defendant shall not sell any "Residual Lot" below the value ascribed to same by Mr Randall, without the Plaintiffs consent. If the Plaintiff does not consent, the matter will be referred to Mr Randall for his determination as an expert, and such determination shall be final and binding on the parties.

(4) The Defendant shall direct the proceeds of all of the sales and income received in connection with the "Residual Lots (with the exception of Lots 20, 21, and 25) in the Strata Plan towards the payment of the refinancing of the loan facility referred to in paragraph 21(d) of the Affidavit of Leslie Herbert Semken sworn 11 October 2006, after deducting all reasonable costs and expenses, taxes and statutory charges associated with such sales.

(5) The Defendant shall thereafter upon the facility being repaid in full, direct any further proceeds of such sales and income (less outgoings) to be deposited in a controlled monies account in the joint names of the parties managed by the Defendant's solicitors pending further order of the Court or agreement between the parties.

(6) The Defendant shall provide all information concerning GST to be paid by the Defendant in respect of the sale of the "Residual Lots".

(7) Within 28 days, the parties are to agree on the real estate agent responsible for implementing the marketing and selling strategy ("nominated real-estate agent"). If no agreement can be reached, the President of the Real Estate Institute is to nominate an independent real estate agent for that purpose. Such nomination is not to include Raine & Horne (Miranda) or Semken Real Estate or Peter Phillips Real Estate.

(8) Within 7 days each party is to may lodge with Mr Randall written submissions on strategy and values concerning the valuation, marketing and selling strategy to be applied to the "Residual Lots". 4 Following that order the parties submitted a joint memorandum of instructions to Mr Randall, which included the following paragraphs: 3. On 1 April 2009, the Court of Appeal of New South Wales made certain Orders (by consent) concerning proceedings between Lesdor and Cordon a copy of which has previously been provided to you ("the Orders"). To the extent that you were not made aware of these Orders prior to them being made and entered, the parties apologise for not doing so.

Lesdor and Cordon confirm the request contained in the facsimile dated 13 November 2006 from Solari Legal to the President of the Australian Property Institute, namely the appointment of a valuer who is to prepare: 3.1 A valuation of the Residual Lots In the development (which are residential lots) for selling purposes; and

3.2 A marketing and selling strategy for the sale of those residential lots.

Lesdor and Cordon confirm that the Residual Lots which are the subject of this instruction are lots 2, 3, 4, 5, 6, 9, 10, 11, 12, 14, 15, 16, 18, 19, 22, 23, and 28.

Lesdor and Cordon confirm that you will be attending the development on 4 May 2009 at 9:00am.

Lesdor and Cordon request you to frame your valuation towards valuing the subject Residual Lots at current market value with a view to effecting their prompt sale. The valuation should assume the nominated estate agent will comply with the recommended marketing and selling strategy to achieve best possible price for the units to preserve profits from the development.

The Orders made provision for Lesdor and Cordon to make submissions to you concerning the valuation, marketing and selling strategy to be applied to the Residual Lots which they did on 8 April 2009. You are requested to consider such submissions together with all material previously provided to you in the course of preparing your valuation, marketing and selling strategy 5 Mr Randall accepted those instructions, and he produced a valuation of relevant units and also a marketing and selling strategy. In addition to the valuation of units, the marketing and selling strategy included the following features: firstly, a recommendation that, "All outstanding works" be carried out prior to the units being put to the market (see Exhibit ACS, pp 93 and 99); and secondly, the units should then be put on the market at specified values, these being a little above the market value put on them by Mr Randall. The difficulty with this marketing and selling strategy is that the question of what are the "outstanding works" is in dispute, and not likely to be resolved before the final hearing. 6 Before bringing this application, Cordon indicated that it would prepared to purchase the units at Mr Randall's valuation and Lesdor did not agree to this. In this application now before me, Cordon seeks the following orders: 1 Order 4(2) of the Short Minutes of Order made by the Court of Appeal on 1 April 2009 be specifically enforced in that Lesdor Properties Pty Limited be ordered to sell the residual lots to Cordon Investments Pty Limited at the values determined by Mr Randall of McLennan Steele Smith in his report dated 4 May 2009.

2 In the alternative and in order to give effect to the intention of the Short Minutes of Order dated 1 April 2009: (a) an order varying order 4(2) of the Short Minutes of Order to entitle Cordon Investments Pty Limited to purchase the residual lots at the values determined by Mr Randall of McLennan Steele Smith in his report dated 4 May 2009.

(b) An order that Lesdor Properties Pty Limited give effect to that order as varied by selling the residual lots to Cordon Investments Pty Limited at the values determined by Mr Randall of McLennan Steels Smith in his report dated 4 May 2009.

4 Such further or other order as the Court deems appropriate in the circumstances. 7 In my opinion, it is plain that I cannot make order 2. In my opinion, I have no power to do so, and it would, in any event, be inappropriate to vary the terms of the order that was agreed between the parties and then made by the Court of Appeal. 8 As regards order 1, in my opinion it is plain that that order would not be appropriate. The values determined by Mr Randall are, according to the orders of the Court, amounts below which the units must not be sold without consent or determination by Mr Randall as an expert. In my opinion, the order cannot be construed as requiring the sale of those units at those minimum values. 9 There has been further debate before me as to other measures that might appropriately be taken with a view to giving effect to the orders, and some question has arisen as to what power I would have. I note first that s 73 of the Civil Procedure Act 2005, provides as follows: 73 Power of court to determine questions about compromises and settlements

(1) In any proceedings, the court: (a) has and may exercise jurisdiction to determine any question in dispute between the parties to the proceedings as to whether, and on what terms, the proceedings have been compromised or settled between them, and

(b) may make such orders as it considers appropriate to give effect to any such determination.

(2) This section does not limit the jurisdiction that the court may otherwise have in relation to the determination of any such question. 10 It seems clear that section does enable the Court to determine questions in dispute in relation to compromises and settlements, and to make orders to give effect to such determinations. However, it does not appear that that requires the Court to do so in the proceedings in which the settlement or compromise occurred, where the Court considers that separate substantive proceedings would be appropriate in accordance with principles discussed in Phillips v Walsh (1990) 20 NSWLR 206. 11 The orders that might be made under s 73 would probably extend to the making of more specific orders to give effect to the orders actually made in settling the dispute (see Ritchie's Uniform Civil Procedure NSW: Uniform Civil Procedure Rules r 36.16.65), and would probably also extend to the interpretation of the orders made in giving effect to the settlement (see Ritchie's r 36.16.80). 12 However, it is not clear whether it would be appropriate for a single Judge of the Court of Appeal to undertake that role in relation to orders made in the Court of Appeal. Section 46 of the Supreme Court Act 1970 has this provision in that regard: 46 Powers of Judge of Appeal

(2) A Judge of Appeal may exercise the powers of the Court of Appeal: (a) to make an order or give any direction concerning the institution of an appeal or other proceedings in the Court of Appeal, or

(b) to make any order or give any direction in any appeal or other proceedings, but not an order or direction involving the determination or decision of the appeal or other proceedings. 13 In the course of the debate before me, Mr Corsaro SC for Cordon told me he was now instructed to make an offer on behalf of Cordon for the units at the price at which Mr Randall recommended the units be put on the market. Such an offer could give rise to the question whether this would in substance give effect to the terms of the settlement. It could be argued, on the one hand, that the terms required strict compliance with the market strategy and therefore required the carrying out of the outstanding works before the units were sold. It could be argued, on the other hand, that the terms were directed to the achievement of a purpose, namely the obtaining of the best return for the units, and that a sale at the price at which Mr Randall recommended they be put on the market would plainly achieve that purpose, consistently with Mr Randall's valuation and marketing strategy. 14 There could also possibly be a further question, namely a question whether this offer could be put to Mr Randall for him to express a view that in the light of the offer the preferred marketing strategy would be to proceed with that offer. There could be a question whether that too would be giving effect to the terms of the settlement. However, there is a possible problem with that, in that that exercise would appear to go beyond the joint memorandum of instructions to Mr Randall and probably go beyond what is actually contemplated by the terms of settlement. 15 In my opinion, it would not be appropriate for me to attempt to resolve these questions, and in particular the question of construction that I have referred to, on this application. It is not what was sought in the notice of motion, and was not something on the basis of which the parties prepared for this application. Even if s 46 does empower me to determine such a question, it seems to me that I should not do so on this application having regard, as I have said, to what was sought in the notice of motion and the evidence on the basis of which it was sought. 16 That in my opinion does mean that this notice of motion should be dismissed with costs, although I would make it clear that I am not determining the question which I have foreshadowed adversely to Cordon, or making an order that would preclude that question being raised in appropriate proceedings. I do not think it is appropriate for me to decide in these proceedings if s 46 of the Supreme Court Act and s 73 of the Civil Procedure Act would make it appropriate for that question to be decided in an application of this kind, rather than in separate proceedings; but I do express the view that if there were to be proceedings brought to determine that question, it would have to make it clear that was the question in issue. It seems to me that to resolve that question it may be necessary to have some evidence of the background and the circumstances of the reaching of the agreement that gave rise to the order. 17 In any event, for the reasons I have given, in my opinion the notice of motion should be dismissed with costs, and that is order I make. 18 Unless and until some other application is brought, which may or may not be in the Court of Appeal, the Court of Appeal proceedings are really at an end. I order that the cost of this application may be assessed and enforced forthwith. oOo

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