Landream Melbourne Pty Ltd v Aust & NZ International Investment Group Pty Ltd [2021] NSWSC 650

Supreme Court New South Wales

Medium Neutral Citation: Landream Melbourne Pty Ltd v Aust & NZ International Investment Group Pty Ltd [2021] NSWSC 650 Hearing dates: 13 May 2021 Date of orders: 28 May 2021 Decision date: 28 May 2021 Jurisdiction: Equity - Commercial List Before: Rein J Decision: See [36], [53], [68] and [69] Catchwords: CONTRACTS — Termination — Breach of term – Plaintiff and Defendant entered into an agreement concerning the rezoning and redevelopment of a property owned by the Defendant - the Defendant (on its case) terminated or (on the Plaintiff's case) purported to terminate the agreement on the basis of breach of a clause requiring the Plaintiff to notify the Defendant if there is a "change in control including a change in the majority shareholding of [the Plaintiff] or its parent company without [the Defendant's] approval not to be unreasonably withheld" – in September 2020 the sole shareholder (and sole director) transferred all of his shares to three different companies – consent was not sought prior to the transfer of shares or the appointment of a new director – the Plaintiff contended the Defendant was not entitled to terminate the agreement as on the proper construction of the clause it was not required to notify the Defendant of the change – the Court considered the three alternative constructions of the change in control clause advanced by the Plaintiff – the Court held the requirements of the clause were met and that the change in the majority shareholders without approval entitled the Defendant to terminate. CONTRACTS — Remedies — Liquidated damages — Penalty – in the alternative the Plaintiff contended the change in control clause constitutes a penalty – consideration of whether the provision is a primary or secondary obligation – whether the purpose of the clause was punish the borrower for breach then compel performance – consideration of the principles of Kay v Playup Australia Pty Ltd [2020] NSWCA 33 and Andrews v Australia and New Zealand Banking Group Ltd (2012) 247 CLR 205 and the predominant purpose of the clause – the Court held the change in control clause was not a penalty. CONTRACTS — Termination — Relief against forfeiture – the Plaintiff contended that, if the Defendant was found to be have been entitled to terminate the contract, it should be granted relief against forfeiture – issue of whether the remedy is available in respect of a contractual breach which does not involve a proprietary interest – whilst there were significant consequences for termination for breach, the Court did not find the Defendant's conduct was unconscientious or unconscionable – the Court held no relief against forfeiture should be granted. Cases Cited: Ace Property Holdings Pty Ltd v Australia Postal Corporation [2010] QCA 55 AMCI (IO) Pty Ltd v Aquila Steel Pty Ltd [2007] QSC 238 Andrews v Australia and New Zealand Banking Group Ltd (2012) 247 CLR 205 Auburn Shopping Village Pty Ltd v Nelmeer Hoteliers Pty Ltd (2017) 324 FLR 378 Ayers Rock Skyship Pty Ltd v Voyages Indigenous Tourism Australia Pty Ltd [2019] NSWSC 828 Byrnes v Kendle (2011) 243 CLR 253 Electricity Generation Corp v Woodside Energy Ltd (2014) 251 CLR 640 Fulham Partners LLC v National Australia Bank Ltd [2013] NSWCA 296 Hancock v Rinehart [2015] NSWSC 646 Hendry v Chartsearch Ltd [1998] CLC 1382 JPA Finance Pty Ltd v Gordon Nominees Pty Ltd [2019] VSCA 159 Kay v Playup Australia Pty Ltd [2020] NSWCA 33 Legione v Hateley (1983) 152 CLR 406 Mineralogy Pty Ltd v Sino Iron Pty Ltd [2017] FCAFC 55 Mineralogy Pty Ltd v Sino Iron Pty Ltd (No 6) [2015] FCA 825 New Standard Energy PEL 570 Pty Ltd v Outback Energy Hunter Pty Ltd [2019] SASCFC 132 Nguyen v Valore [2018] NSWSC 1364 Paciocco v Australia and New Zealand Banking Group Ltd (2016) 258 CLR 525 Romanos v Pentagold Investments Pty Ltd (2003) 217 CLR 367 Tanwar Enterprises Pty Ltd v Cauchi (2003) 217 CLR 315 Upper Hunter County District Council v Australian Chilling and Freezing Co Ltd (1967) 118 CLR 429 Texts Cited: J.D. Heydon, M.J. Leeming and P.G. Turner, Meagher, Gummow and Lehane's: Equity Doctrines and Remedies (2015, 5th ed, LexisNexis Butterworths) R. Halson, Liquidated Damages and Penalty Clauses (2018, Oxford University Press) Category: Principal judgment Parties: Landream Melbourne Pty Ltd Aust & NZ International Investment Group Pty Ltd Representation: Counsel: Mr D McLure SC and Mr G Farland (Plaintiff) Mr D Studdy SC and Mr D Robertson (Defendant)