King Network Group Pty Limited v Club of the Clubs Pty Limited [2008] NSWCA 344

New South Wales Court of Appeal

CITATION: King Network Group Pty Limited v Club of the Clubs Pty Limited [2008] NSWCA 344

HEARING DATE(S): 31 March, 1 and 2 April 2008

JUDGMENT DATE: 10 December 2008

JUDGMENT OF: Hodgson JA at 1; Campbell JA at 68; Young CJ in Eq at 74

1. Appeal allowed in part. 2. Order (1) below varied by substituting for the words "each of KNG, Harry Stamoulis and Spiros Stamoulis jointly and severally" the word "KNG". DECISION: 3. Set aside orders (3), (4) and (5) below. 4. Order that payment by KNG to KCOTC of the amount ordered by order (2) below to be paid by COTC to KCOTC to be pro tanto satisfaction of order (1) below, as varied. 5. Cross-appeal dismissed. 6. As regards the costs below and costs of the appeal and restitutionary orders, written submissions are to be provided as follows: submissions from the respondents within seven days, submissions in response from the appellants within a further seven days, and submissions strictly in reply within a further seven days.

CATCHWORDS: CONTRACTS [120]- Parties enter into joint venture for the purchase and development of land- Joint venture agreement provides that the management of the project will be conducted by the Steering Committee except for certain matters, inter alia, any amendment to the joint venture agreement, that are to be determined by the joint venturers personally (clauses 13.2 and 13.3)- An "Overriding Supplementary Joint Venture Agreement" (OSJVA) was procured by the appellants' interests being the majority of the joint venture company that has the effect of expropriating shares of the respondents failing the provision of certain irrevocable bank guarantees by a certain time- Whether trial judge erred in finding that the OSJVA was not within the amending power of the joint venture agreement- Held that clauses 13.2 and 13.3 ought to be construed widely and commercially so as to encapsulate alterations to the joint venture agreement. - EQUITY [247]- Fraud on the power- Whether the trial judge erred in finding that the OSJVA was invalidated under the doctrine of "fraud and power"- Discussions on whether principles in Gambotto v WCP Limited applicable- Traditional fraud on the power not made out as the first appellant was the only joint venturer able and willing to provide guarantees and that the development of the project was no longer feasible- Held that the OSJVA should not be set aside.