Lakomy v Accounting TEK Property Investment Pty Limited [2021] NSWSC 1152

Supreme Court New South Wales

Medium Neutral Citation: Lakomy v Accounting TEK Property Investment Pty Limited [2021] NSWSC 1152 Hearing dates: 23 and 24 August 2021 Decision date: 10 September 2021 Jurisdiction: Equity - Commercial List Before: Hammerschlag J Decision: (1) Summons dismissed (2) Declaration that the third plaintiff/first cross-defendant engaged in conduct that was misleading or deceptive or likely to mislead or deceive Catchwords: CONTRACT – where a defendant company (the first party) executes a written instrument (subscription agreement) and delivers it to the plaintiff company (the second party) on conditions that the second party will not do anything with it unless it hears from the first party that it may and the first party is misled into signing it by the misrepresentation that it is "not a proper document" and nothing would happen if it were signed – HELD – subscription agreement not binding – CONTRACT – terms – implied term – whether the subscription agreement included an implied term that the first party would not have to pay unless an investor made funds available – HELD – term not to be implied as not necessary to give the subscription agreement business efficacy – CONTRACT – performance – breach – readiness, willingness and ability to perform – where the first party's obligations to subscribe and pay for shares under the subscription agreement are interdependent with the second party's obligations to pass certain resolutions, issue shares and deliver documents and the second party does not tender performance – HELD – the second party cannot assert breach by the first party of its obligations where the second party was not ready, willing and able to perform – the second party has no right to recover from the first party – CONTRACT – discharge/abandonment – where parties execute another contract in substitution for the subscription agreement – HELD – if the subscription agreement was binding, it was discharged – CONTRACT – damages – quantification of loss – where second party's obligation was to issue shares in return for money – whether it sufficiently quantified its loss – HELD – if it were otherwise entitled to succeed, loss sufficiently quantified CONSUMER LAW – Competition and Consumer Act 2010 (Cth) s 139B, sch 2 ss 4(1), 18(1) – misrepresentations by the second party that the subscription agreement was "not a proper document", that nothing would happen if the first party signed it and that the natural person making the misrepresentation would do nothing with it until he heard from the signatory – authority of the natural person making the misrepresentation – HELD – second party engaged in conduct that was misleading or deceptive or likely to mislead or deceive – appropriate to make a declaration EQUITY – estoppel – where subscription agreement is signed on common understanding or convention that the first party will not have to subscribe and pay for shares unless funds are obtained from an offshore investor – funds not obtained – second party seeks to enforce agreement – HELD – such conduct is an attempt unconscionably to depart from the common assumption or convention and the second party is estopped from so acting Legislation Cited: Competition and Consumer Act 2010 (Cth) Corporations Act 2001 (Cth) Cases Cited: Bendigo and Adelaide Bank v Pickard [2019] SASC 123 BP Refinery (Westernport) Pty Ltd v Shire of Hastings [1977] UKPCHCA 1; (1994) 180 CLR 266 Briginshaw v Briginshaw (1938) 60 CLR 336 Codelfa Construction Pty Ltd v State Rail Authority of NSW (1982) 149 CLR 337 F.J. & P.N. Curran Pty Ltd v Almond Investors Land Pty Ltd [2019] VSCA 236 Foran v Wight (1989) 168 CLR 385 Helton v Allen (1940) 63 CLR 691 Johnson Matthey Ltd v A C Rochester Overseas Corp (1990) 23 NSWLR 190 L'Estrange v F Graucob Ltd [1934] 2 KB 394 Pilmer v Duke Group Ltd (In Liq) (2001) 207 CLR 165 Rejfek v McElroy (1965) 112 CLR 517 Ronnoc Finance v Spectrum Network Systems Ltd (1997) 45 NSWLR 624 Sunbird Plaza Pty Ltd v Maloney (1988) 166 CLR 245 Toll (FGCT) Pty Limited v Alphapharm Pty Limited (2014) 219 CLR 165 Watson v Foxman (1995) 49 NSWLR 315 Wittet v State Bank of New South Wales (1991) 23 NSWLR 146 Category: Principal judgment Parties: Andre Lakomy and Alan Walker as Liquidators for EnergyLink Holdings Pty Limited (In Liquidation) – First and Second Plaintiffs/Second Cross-Defendant EnergyLink Holdings Pty Limited (In Liquidation) – Third Plaintiff/First Cross-Defendant Accounting TEK Property Investment Pty Limited – Defendant/Cross-Claimant Representation: Counsel: J. Sleight – Plaintiffs/Cross-Defendants D. Sulan with T. Rogan – Defendant/Cross-Claimant