Shartale Pty Ltd v Drayton Pty Ltd & Ors [2008] NSWSC 237

New South Wales Supreme Court

CITATION : Shartale Pty Ltd v Drayton Pty Ltd & Ors [2008] NSWSC 237

HEARING DATE(S) : 14/03/08

JUDGMENT DATE : 19 March 2008

JURISDICTION : Equity Division Commercial List

JUDGMENT OF : Einstein J

DECISION : Cross claim to be allowed save as to particulars (2), (3), (4), (5) and (6) to paragraph 19 on contract count.

CATCHWORDS : Pleadings - General Steel - Particular

LEGISLATION CITED : Fair Trading Act 1989 (NSW) Water Act 1912 (NSW)

CATEGORY : Procedural and other rulings

CASES CITED : General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125

Drayton Pty Ltd (Cross Claimant ) Ronald Johannes Breckwoldt (Putative Cross Defendant) PARTIES : Ann Marie Breckwoldt (Putative Cross Defendant)

FILE NUMBER(S) : SC 50092/07

COUNSEL : Mr M Holmes QC, Mr R Lovas (Applicant) Mr P Braham (Proposed Cross Defendants)

SOLICITORS : Everingham Solomons (Defendant and Proposed Cross Claimant) Sparke Helmore (Proposed Cross Defendants)

IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION COMMERCIAL LIST

Einstein J

Wednesday 19 March 2008

50092/07 Shartale Pty Ltd v Drayton Pty Ltd & Ors JUDGMENT The notice of motion 1 There is before the Court a notice of motion filed on 10 March 2008 pursuant to which the first cross claimant, Drayton Pty Ltd, moves the Court for leave to file and proceed upon a proposed second cross claim [although the notice of motion purports to be a motion also pursued by Mr and Mrs Stokes the sole directors of Drayton as second and third cross claimant's it was made clear during the hearing of the motion that it was only Drayton Pty Ltd which was the moving party for the relevant leave. This notwithstanding, the cross claim regularly refers to the cross claimants]. 2 The litigation is somewhat complex. It concerns the respective rights and obligations of the parties arising through transactions whereunder Drayton as occupier and registered proprietor of land known as Dunmore at Manila in New South Wales, contracted to sell that property. It was a large property in respect of which the registered proprietor as occupier, had been issued with and held three irrigation licences under the Water Act 1912 in respect of the land to take and use water from the Namoi River and Halls Creek. 3 It is pertinent in understanding the issues to note that under the Act, the holder of an irrigation licence may, with the approval of the Water Administration Ministerial Corporation, transfer part of the annual volume entitlement to a transferee. 4 It appears that at some time prior to 14 January 2003, Drayton agreed with the plaintiff, Shartale Pty Ltd to transfer to it 75% of the approximate annual volume entitlement under the three irrigation licences, being approximately 1837 ML. The plaintiff contends that it entered into a deed on 23 December 2003 with the first defendant as vendor, whereunder the vendor agreed to sell to the plaintiff, part of an annual allocation of the Drayton's total allocation of water rights. 5 There were apparently a number of dealings between the plaintiff and the first defendant whereunder contemporaneously with the deed and pursuant to its terms, the first defendant leased to the plaintiff as lessee, part of the property having an area of approximately 10 acres. Also contemporaneously with the lease, the plaintiff in its capacity as lessee, granted a non-exclusive licence to the first defendant to enter into possession and occupation of the land the subject of the lease for the use of farming and grazing operations. It is said to have been a term of the deed that the first defendant do all such things as should be necessary on its part to be performed in order to give effect to the assignment by the first defendant to the plaintiff of the plaintiff's allocation. Also the deed is said to have provided a prohibition upon the defendant such that it would not be entitled to complete any sale, assignment, lease, transfer or trust of any arrangement relating to the property or possession thereof unless any proposed assignee, purchaser, lessee or trustee had first entered into an agreement with the plaintiff to perform the obligations of the first defendant pursuant to the deed that was to have been performed, in particular but not limited to, the transfer by the first defendant to the plaintiff of the plaintiff's allocation. 6 On or about 17 December 2003 Drayton as vendor and the proposed cross defendants, Mr and Mrs Breckwoldt, entered into a contract for the sale of the freehold including an entitlement to 612 ML of the annual volume entitlement under the three irrigation licences. Importantly this contract included the following provisions: