Petrovski v Port Properties Pty Limited and Anor [2002] NSWSC 976

New South Wales Supreme Court

CITATION : Petrovski v Port Properties Pty Limited and Anor [2002] NSWSC 976 CURRENT JURISDICTION: Equity Division FILE NUMBER(S) : SC 3245/00 HEARING DATE(S) : 09/09/02; 08/10/02 JUDGMENT DATE : 23 October 2002

PARTIES : Cventan Petrovski v Port Properties and Vasko Dimovski JUDGMENT OF : Acting Justice Macready at 1

COUNSEL : J. Wilson for plaintiff R.F. Wilkins for 2nd defendant SOLICITORS : Gibson Owen Lawyer, Inc for plaintiff Nikolovski Lawyers for 2nd defendant CATCHWORDS : Companies. Constitution. Determination of area which the Articles of Association of a company give a right to occupy. Orders made. No matter of principle. Damages. Circumstances in which a court will order an enquiry as to damages. No order made. CASES CITED : Enkelmann v Glissan (1982) 2 BPR 9640 Frank Davies Pty Ltd v Container Haulage Group Pty Ltd [No 2] (1989) 98 FLR 324. DECISION : Paragraph 21

- 1 - IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION

Acting Justice Macready

Wednesday 23 October 2002

3245/2000 Cvetan Petrovski v Port Properties Pty Limited and Vasko Dimovski JUDGMENT 1 His Honour: This is a claim by the plaintiff seeking declarations in respect of the right to occupy an area at the back of premises 81-83 Wentworth Street, Port Kembla. The plaintiff is the owner of shares numbered 1-6650 in the first defendant. The first defendant owns the property and, pursuant to its Articles of Association, rights of occupation are given to shareholders in respect of defined areas. The second defendant is the holder of shares No 11,601-13,100 in the first defendant. The first defendant has submitted to such orders as the Court might make apart from costs. The matter has involved a contest between the plaintiff and the second defendant as to which of them, pursuant to the ownership of the share parcels, has the right to occupy the room in dispute. 2 Both the plaintiff and the second defendant have purchased their disputed shares in recent years. The plaintiff purchased his on 30 December 1997 and the premises in respect of which he obtained occupation at that stage were used as a pizza shop. 3 The second defendant purchased a group of shares on 20 December 1977 which shares were numbered 8851 -- 11600 and entitle him to occupy what is known as the barber's shop. He has carried on businesses as a barber in that shop since that time. He purchased his group of shares 11,601 - 13,100 in 1995 and it is in respect of this holding that there is a dispute. 4 There is a plan attached to the summons by reference to which one can understand the areas in question. The plaintiff has occupied the area shown as "Pizza" of 91 sq m. The defendant from 1995 has had occupation of the area described as "vacant" adjoining the pizza area having an area of 26 sq m and in addition the disputed area of 8 sq m. It is this 8 sq m in respect of which the dispute exists. A copy of the plan is attached. 5 It is apparent that in the past both groups of shares were held in common ownership from time to time and the various changes to the physical structure of the building may have occurred in such periods. The provisions of the Articles of Association of the first defendant 6 The first defendant was incorporated on 4 August 1960 and its Articles of Association provide in clause 6 for entitlement to occupation and the obligation to pay rent in respect of certain portions of the building. The relevant part of the article is as follows: -- "The holding of the group of shares the denoting numbers of which appear in the third column hereunder shall, (subject as hereinafter provided in these articles of association) entail upon the holder for the time being thereof the obligation and the right to the rental by him of the portion of the building the short description of which portion appears in the fourth column hereunder at such rent and upon such terms and conditions of tenancy as the board may from time to time determine……………" 7 In respect of Group 1 shares being shares numbered 1-6650, the short description of portion of the building is as follows: -- "Premises at present occupied by F.T.J. Campbell Pty. Limited" 8 In respect of Group 4, being shares 11,601-13,100, the short description of portion of the building is: -- "Premises formerly known as "the library"" 9 The property was formerly known as 67/69 Wentworth Street, Port Kembla. Prior to incorporation of the company the property was owned by Mrs Agnes Pratt and it was transferred to the first defendant by transfer dated 21 September 1960. There is no date recorded in the allotment journal as to the date the shares were allotted but it is apparent that in respect of Group One shares they were allotted to FTJ Campbell Pty Ltd. It is likely that the shares were allotted about the time of purchase by the company of the property from Mrs Pratt. The entitlement under Article 6. 10 Is apparent that in respect of Group 1 shares the entitlement is ascertained from the description which relates to the then present occupation of the part of the building by FTJ Campbell Pty Ltd. A lease to that company had been given by Mrs Pratt for a period commencing on 1 July 1956 for five years and the lease is registered on the Certificate of Title. The description of the subject of the devise is as follows: -- "The lock-up shop known as No 69 Wentworth Street, Port Kembla" 11 The evidence indicates that this lease was in force in August and September of 1960. The entitlement granted by the ownership of shares is thus determined by the description of the premises which were the subject of this lease. The lease did not have a plan attached to it as it was not required at the date of the lease. It is thus a matter of looking at what evidence is available to determine what area was occupied by the lock-up shop No 69 during 1960. The building in question was erected many years ago. Some witnesses and experts put it in the 1940s or early 1950s. Plans in evidence showed the building to have been erected prior to 1958. It is apparent from some of the expert evidence given by builders and engineers that the disputed area has undergone changes over the period of time since the building was erected. There is evidence of the removal of an original brick wall which divided in half the disputed area. It is also clear on the evidence that a partition has been erected across the entrance to the disputed area. 12 I turn to a consideration of the evidence that goes to the area occupied by the company in 1960. Mrs Audrey Jackson was a sales assistant in the pastry shop which was operated by the late Francis Thomas John Campbell. Apparently the pastry shop operated from the late 1950s to the early 1960s and Mrs Jackson was employed during the period from 1960 to 1962. She gave evidence of the area that was occupied by the pastry shop and it is clear from her evidence that the pastry shop occupied the area that included the disputed area. Cross-examination of Mrs Jackson demonstrated that she had a clear recollection of the area in question as she spent a lot of time in that part of the shop. 13 On 20 October 1964 the Group 1 shares held by FTJ Campbell Pty Ltd were transferred to Andrew Holdings Pty Limited. This apparently was the company of a Mr Ron Callaghan who then operated a real estate business from the premises. There is evidence from two people who were employed in the business at that stage. Mrs Callaghan, the widow of the late Mr Callaghan, was employed in the business between 1964 and 1969 when it was operated by Mr Callaghan. She also gave evidence that the disputed area was also part of the area occupied by the business. The disputed area had been converted into an office which Mr Callaghan initially occupied. There was a partition and a door which separated the disputed area from the rest of the real estate office. In 1968 Andrew Holdings Pty Limited purchased the Group 4 shares which relate to the library. At that stage there was a change in the occupation and two doorways were constructed into the library. One was from the disputed area and the other was from the main part of the office. Mr Callaghan moved into the library area which was changed to an office area and another employee, Mr Ian King, moved into what was formerly Mr Callaghan's office. 14 Another important piece of evidence which goes to establishing the general occupation of the building was given by Mr William Dale. In the period from 1944 to 1962 he lived in a house which was immediately behind the block of offices. Between 1949 and 1954 he worked as an apprentice hairdresser for Jack O'Brien who occupied the barber's shop. He gave evidence that during the period from 1944 to 1962 he frequently visited the library in the premises. He gave evidence which identified the area occupied by "the library" as that which I have earlier described which excluded the disputed area. There was only one entrance and that was in the wall which faced towards Wentworth Street. It had two windows looking out the side of the building to the south-east. Importantly his evidence demonstrates the occupation of the library in a way which excluded the disputed area and accordingly it supports the other evidence to which I have referred. 15 In 1975 both the Group 1 and Group 4 shares were purchased by a company, Cranta Pty Limited. That company held those shares until 1977 when they were both purchased by Dusan and Sandra Stanley. At that time the library area was apparently leased to a company for storage and the balance of the area was used for Mr Stanley's travel business. In 1989 the Group 1 shares were sold to the Marsala sisters who operated a pizza area. It is apparent that they were given occupation of premises that excluded the disputed area. Mr Stanley retained possession of the disputed area and the library until the library shares were sold by them to Mr Dimovski, the defendant. 16 The plaintiff purchased the Group 1 shares from the Marsala sisters in 1997 and continued to operate the pizza shop. He himself operated it for some months and then sold the business to his head employee. He still retains the shares. 17 There is also some evidence from Mr Peter Josevski who was employed by Mr Stanley in the years 1978 to 1980. He gave evidence that the premises actually occupied by the travel agency was the area which included the disputed area but not the library. That is consistent with Mr Stanley's evidence that the library area was rented out at that time. 18 The various changes that occurred after the 1960s are only important in that they indicate how the occupation changed and how the unfortunate circumstance that this case represents occurred. On the evidence before me the second defendant was informed that in buying shares he would have a right to both the library and the disputed area. His actions subsequently confirm this. As I have mentioned he proceeded with a conversion of the area to a bed-sit unit so that it could be let. Unfortunately this dispute has meant that the first defendant has not given him consent to letting the bed-sit until the ownership question is resolved. There is nothing in the evidence before me that could suggest that the present plaintiff stood by and allowed the work to proceed knowing that the shares might not have given the right to occupy the disputed area. There was, of course, no cross-claim by the second defendant against the plaintiff in this regard. 19 All I have to determine is what area the owner of the Group 1 shares is entitled to occupy. It clearly is the area of the shop which comprises the area indicated by "PIZZA" on the plan attached to the summons and the disputed area of 8 sq m. 20 In the summons the plaintiff made a claim for an inquiry into the amount of damages suffered or sustained by reason of the second defendant's wrongful occupation of the area. Before an order is made for an inquiry as to damages, the Court must be satisfied that it is proper to direct such an inquiry and ordinarily the Court will not be so satisfied unless there is before the Court evidence of damage, or there are circumstances indicative of a probability of damage; see Enkelmann v Glissan (1982) 2 BPR 9640 and Frank Davies Pty Ltd v Container Haulage Group Pty Ltd [No 2] (1989) 98 FLR 324. No evidence was led before me of the existence of the damage the plaintiff suffered. It became plain in cross-examination of the plaintiff that shortly after the purchase of the shop he sold the business to his employee. There is no evidence of what the arrangements are for that person's occupation or payments to be made to the plaintiff. Even on a prima facie level the business has been operating in the same area for many years. The addition of another 8 sq m to the back of the premises are unlikely to increase profits even if the plaintiff might have some part of such profits. No evidence of the rental value of the disputed area was tendered. It is hard to imagine it would have a rental value on its own. In the circumstances I am not satisfied that the plaintiff has demonstrated an entitlement to damages sufficient to justify the holding of an inquiry as to damages. The only person who suffered damage is the second defendant. 21 In this matter I make orders 1 and 2 in the summons and I will hear submissions as to costs at a time which is convenient to all parties.