Tyndall v AGP [2001] NSWSC 224

New South Wales Supreme Court

CITATION : Tyndall v AGP [2001] NSWSC 224 CURRENT JURISDICTION: Equity Division Commercial List FILE NUMBER(S) : SC 50100/00 HEARING DATE(S) : 16.3.01 JUDGMENT DATE : 30 March 2001

PARTIES : Tyndall Australia Ltd v Australian Growth Properties Ltd JUDGMENT OF : Hunter J

COUNSEL : Applicant/defendant: W G Muddle Respondent/plaintiff: D Hammerschlag SC SOLICITORS : Applicant/defendant: Hunt & Hunt Respondent/plaintiff: Freehills CATCHWORDS : Practice & Procedure - leave to amend defence - alleged futility of amendment - amendment to allege unenforceability of agreement arising out of breach of s1002G Corporations Law LEGISLATION CITED : Trade Practices Act 1974 (Cth) Corporations Law CASES CITED : Yango Pastoral Co Pty Ltd -v- First Chicago Australia Ltd (1978) 139 CLR 410 Australian Breeders Co-operative Society Ltd -v- Jones (1997) 26 ACSR 26 DECISION : Application granted. Plaintiff's costs of and incidental to the amendment be paid by the defendant. Costs of the application be defendant's costs in the cause.

IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION COMMERCIAL LIST HUNTER J FRIDAY 30 MARCH 2001

50100/00 TYNDALL AUSTRALIA LTD -v- AUSTRALIAN GROWTH PROPERTIES LTD REASONS FOR JUDGMENT

1 In these proceedings the plaintiff sues the defendant under an agreement made on 8 January 1998 by which the defendant agreed to purchase from the plaintiff listed units in a trust known as the Global Property Fund. The defendant is the parent company of the manager of that fund. The purchase price was described as $20,271,001.40 "as adjusted in accordance with Clause 2.3". That phrase referred to a provision that payments to the plaintiff under cl 6 of the agreement "shall be taken to be a pro rata increase in the Purchase Price of each unit". Cl 6 provided for payment to the plaintiff of 23.17% of the proceeds of certain litigation, if there had been no prior termination of the agreement in accordance with cl 6.4(b). 2 It is not in dispute that the subject litigation has been settled and the agreement has not been terminated under cl 6. 3 By its defence, the defendant relies on an equitable set off based on its cross claim. That cross claim, so far as is relevant, contends that the plaintiff represented to the defendant that particular assets of the fund had a total value in the order of $50,000,000 "which values were greater than those disclosed in the published accounts of the [fund]". That representation was relied upon to support allegations of misleading conduct and claims for relief, inter alia, under the Trade Practices Act 1974 (Cth). 4 In this application the defendant seeks leave to amend its defence on notice of motion filed 9 March 2001. That application is opposed on the grounds that it is futile to grant leave as the amendment discloses no arguable cause of action. 5 The form of the amendment is not precisely that referred to in the notice of motion. That proposed amendment has been altered in terms of the document entitled Amended Defence, which I have marked for identification 1, and in which, so far as is relevant, the defendant seeks to plead the following further matter: " 4. Further and in the alternative in answer to the whole of the Plaintiff's claim the Defendant says that the Agreement which the Plaintiff seeks to enforce was illegal and/or unenforceable and/or one which the Court will not assist the Plaintiff to enforce because it was intentionally induced by and resulted directly from an illegal act being a breach of Section 1002G(3) of the Corporations Law. Particulars (a) Michael Wilkins was the Managing Director of the Plaintiff and the person charged by the Plaintiff with the responsibility of effecting a sale of the Units. (b ) Donald Fletcher was a director of the Defendant and the person charged by the Defendant with responsibility for a possible purchase of the Units . (c) The Units were securities of a body corporate within the meaning of the Corporations Law . (d) Trading in the Units was permitted on the stock market of a securities exchange, being the Australian Stock Exchange . (e ) Michael Wilkins possessed information being the values of assets of the Trust, as pleaded in paragraph 1 of the Cross Claim, that was not generally available but, if it were generally available, a reasonable person would expect it to have a material effect on the price or value of the Units . (f ) Michael Wilkins in breach of Section 1002G(3) of the Corporations Law communicated or caused to be communicated the said information to Donald Fletcher in or about September and October 1997 as stated in paragraphs 4,5 and 9 of the Statement of Donald Fletcher dated 5 February 2001 . (g) At the time of the said communication Michael Wilkins knew and intended that Donald Fletcher would cause the Defendant to enter into the Agreement, which was an agreement for the purchase of the Units ."