New South Wales Supreme Court CITATION : Kyong Holdings Pty Ltd v Anqueline Pty Ltd [2010] NSWSC 588 HEARING DATE(S) : 1 June 2010 JURISDICTION : Equity Division JUDGMENT OF : Lindgren AJ EX TEMPORE JUDGMENT DATE : 2 June 2010 DECISION : Notice of Motion for vacation of hearing date dismissed with costs. Orders and directions made for preparation for hearing. LEGISLATION CITED : Civil Procedure Act 2005 (NSW), ss 56ff Superannuation Industry (Supervision) Act 1993 (Cth) Kyong Holdings Pty Limited (Plaintiff) Anqueline Pty Limited (First Defendant) Paul Zaslavsky (Second Defendant) Estate Operations Pty Limited (Third Defendant) Anqueline Pty Limited (First Cross-Claimant) PARTIES : Paul Zaslavsky (Second Cross-Claimant) Estate Operations Pty Limited (Third Cross-Claimant) Kyong Holdings Pty Limited (First Cross-Defendant) David Pacanowski (Second Cross-Defendant) Maxine Pacanowski (Third Cross Defendant) Capricorn Developments Pty Limited (Fourth Cross-Defendant) FILE NUMBER(S) : SC 2009/288267 COUNSEL : B Zipser (Plaintiff/Cross Defendants) M Gollan (Defendants/Cross-Claimants) SOLICITORS : Charles G Roth (Plaintiff/Cross-Defendants) Galloways (Defendants/Cross-Claimants) IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION LINDGREN AJ Wednesday 2 June 2010 2009/288267 – KYONG HOLDINGS PTY LTD v ANQUELINE PTY LTD JUDGMENT 1 HIS HONOUR: Introduction By notice of motion filed on 31 May 2010 the plaintiff/cross-defendants seek the following orders: (1) The hearing date on 11 June 2010 is vacated; (2) The plaintiff/cross-defendants have leave to join Smartsuper Pty Ltd as a party to the proceedings and file a cross-claim by 21 June 2010; (3) The plaintiff/cross-defendants have leave to file and serve by 3 August 2010 any further amended statement of claim and amended defence to the cross-claim; (4) The plaintiff/cross-defendants have leave to join CB Richard Ellis Pty Ltd as a party to the proceedings and file a cross-claim by 3 August 2010; (5) In the alternative to 2, 3 and 4, the plaintiff/cross-defendants have leave to file and serve by 3 August 2010 a notice of motion seeking leave to amend its pleadings and join Smartsuper Pty Ltd and/or CB Richard Ellis Pty Ltd or such of them as it considers appropriate as parties to the proceedings; (6) The plaintiff/cross-defendants are to pay the costs of the defendants/cross-claimants thrown away by the vacation of the hearing date; (7) The matter is listed for further directions on … August 2010. 2 The hearing of the motion occupied nearly the whole of yesterday. At the conclusion of the hearing I indicated to the parties that I proposed not to vacate the hearing date of 11 June 2010 and I asked counsel for the parties to seek to agree on short minutes of order for the filing and service of affidavits on behalf of the plaintiff/cross-defendants in time for the hearing on 11 June. Parties 3 The plaintiff is Kyong Holdings Pty Ltd (Kyong), a company associated with David Pacanowski and Maxine Pacanowski. Other companies associated with them are DHP Pty Ltd (DHP) and Capricorn Developments Pty Ltd (Capricorn). 4 The defendants are Anqueline Pty Ltd (Anqueline) and Paul Zaslavsky, with which Anqueline is associated, and another of his companies, Estate Operations Pty Ltd (Estate Operations). 5 The three defendants have brought a cross-claim against Kyong, Mr and Mrs Pacanowski and Capricorn. DHP is not a party to the proceeding, although it featured in the dealings that gave rise to the proceeding. Dealings between the parties 6 The following is a brief summary of the dealings that have given rise to the litigation, based largely on an affidavit made on 31 May 2010 by Charles George Roth, the solicitor for the plaintiff/cross-defendants in support of the motion, and an affidavit filed yesterday by Mr Zaslavsky on behalf of the defendants/cross-claimants in opposition to the motion. 7 Mr Zaslavsky describes himself as a "property developer". The parties' dealings relate to a property at 74 Edinburgh Road, Marrickville (the Property), that was owned by a company called ACCP Industrial Pty Ltd (ACCP). Apparently the Property was on the books of a Mr Danas, who was employed by CB Richard Ellis Pty Ltd (CB Richard Ellis), Commercial Real Estate Agents. Through Mr Danas, Mr Zaslavsky had dealings with ACCP. 8 Mr Zaslavsky had negotiations with Mr Pacanowski. Broadly, it was agreed that one of Mr Pacanowski's companies would contract to purchase the Property from ACCP, but subject to a certain subdivision approval by the local council, and if the approval was granted and the contract proceeded to completion, Mr Zaslavsky was to be paid a "consulting fee" equal to $45.00 times the number of square metres of the Property as approved for subdivision. 9 At the hearing it was said that the consulting fee in fact amounted to some $1,200,000. Of this amount $200,000 was to be paid to Kalfus Legal upon signature of the contractual documents. Kalfus Legal had been instructed by Mr Zaslavsky to prepare those documents. 10 Initially the purchaser nominated by Mr Pacanowski was to be Makawe Pty Ltd, but this was changed to DHP. A first "heads of agreement" document was entered into by, relevantly, DHP and Anqueline on 6 December 2007. 11 This was followed by discussions between, relevantly, Mr Pacanowski and Andrew Bloore of Smartsuper Pty Ltd (Smartsuper). Apparently as a result of advice given by Mr Bloore, Mr Pacanowski decided to change the purchaser to Kyong. 12 Accordingly, on or about 20 December 2007: (1) Substitute Heads of Agreement were entered into between, relevantly, Anqueline and Kyong (I will call this document "the Heads"); (2) Kyong entered into a contract to purchase the property from ACCP; (3) Kyong or someone on its behalf paid $200,000 to Kalfus Legal. 13 Clause 1.3(e) and clause 11 of the Heads assume importance. Clause 1.3(e) provided that upon notice being given by Charles G Roth (the solicitor for Kyong) of rescission of the contract for the sale of the Property, the amount of $200,000 was to be repaid to Kyong with the interest that it had earned. 14 Clause 11 provided that each party to the Heads was to act in good faith towards all the other parties and to use its best endeavours to comply with the spirit and intention of the Heads. 15 According to Mr Roth's affidavit, on 16 September 2008 Mr Roth and Mr Pacanowski met with Geoff Stein, a lawyer with expertise in superannuation law. Mr Stein advised that if Kyong purchased the Property, the superannuation fund of which it was trustee would be a non-complying superannuation fund under the Superannuation Industry (Supervision) Act 1993 (Cth). Accordingly, Mr Pacanowski instructed Mr Roth to consider ways of substituting a different purchaser in place of Kyong. It was decided that the existing contract of sale of land between ACCP and Kyong should be rescinded and replaced with a contract of sale between ACCP and a new purchaser. 16 On 20 March 2009: (1) Kyong and ACCP entered into a deed of rescission; (2) ACCP and Capricorn entered into a substituted contract of sale of land; (3) The latter was settled on the same date, 20 March 2009; and (4) demand was made on Kalfus Legal that it refund the $200,000 to Kyong. This proceeding 17 Kyong commenced this proceeding against Marcel Kalfus trading as "Kalfus Legal" on 3 April 2009. Mr Kalfus paid the sum of $200,000 into court. Anqueline and Mr Zaslavsky were substituted for Mr Kalfus as defendants. 18 Kyong's pleading is currently found in an amended statement of claim filed on 6 May 2009. It seeks a declaration that Kyong is entitled to the sum of $200,000 that Mr Kalfus had paid into court, and payment of that sum to Kyong together with interest and costs. 19 By a statement of cross-claim filed on 4 June 2009 the cross-claimants seek damages for breach of implied terms of the Heads. The implied terms pleaded are that the parties would act in good faith and do all things necessary to enable the other parties to have the benefit of the Heads, and would do nothing to deprive the other parties of the benefit of the Heads. The statement of claim does not plead clause 11 of the Heads although Mr Rofe's affidavit in para 5(a) refers to that clause. 20 The breach alleged arises from the fact that Kyong and the other cross-defendants participated in the rescission of the Heads. 21 The amount of damages for breach of contract may be in the order of $1,200,000, although it was said on the hearing that in addition Mr Zaslavsky may have suffered an additional loss. The present motion 22 I turn now to the present motion and the grounds on which the plaintiff/cross-defendants rely. 23 At a directions hearing on 22 April 2010 the proceeding was listed for hearing on 11 June 2010 for one day. On the evening of the previous day, 21 April, Mr Roth received Mr Zaslavsky's affidavit of that date constituting the evidence of the defendants in answer to the plaintiff's claim and the evidence of the cross-claimants on their cross-claim. Mr Roth states that at the time of consenting to the orders made on 22 April 2010, he had not discussed with Mr Pacanowski or with counsel the content of Mr Zaslavsky's affidavit which had been served on him the previous evening. 24 The grounds on which the plaintiff/cross-defendants rely are: (a) they wish to put on affidavit evidence in response to Mr Zaslavsky's affidavit and will not be able to do so by 11 June 2010; (b) they may wish to claim against the cross-claimants and against CB Richard Ellis for misleading and deceptive conduct; (c) they will wish to sue Smartsuper and its employee Andrew Bloore for negligent advice. 25 The significance of (b) and (c) includes a desire to join additional parties so that all issues may be resolved in this present proceeding. 26 I will deal with the three grounds in turn. (a) Additional Evidence 27 Paragraph 36 of Mr Roth's affidavit describes the additional affidavit evidence in the following terms: "a) There may be an affidavit from Geoff Stein setting out the advice he gave or that he believed he would have given in conference with Mr Pacanowski and me on 16 September 2008. b) There should be an affidavit from Mr Pacanowski concerning various matters, including the instructions he gave for Kyong to cause the Contract for Sale to be rescinded and the reason he gave those instructions. c) There should be an affidavit from me concerning various matters, including advice I gave Mr Pacanowski in the second half of 2008 on the risk of double stamp duty and the basis of that advice." 28 Mr Roth states that it would be "very difficult" to prepare this evidence by 11 June 2010. I am not persuaded that it would be. 29 It will be appreciated that the evidence described by Mr Roth is concerned to show the commercial reasons underlying the rescission. 30 Mr Roth also refers (in paragraph 33) to the possibility of expert evidence concerning the correctness of the positions on superannuation and double stamp duty that were taken as supporting the rescission and the substitution of Capricorn for Kyong as purchaser. 31 Counsel did not attempt to show that this evidence was relevant, but said that he accepted that he would have to come to a view very soon. In the circumstances I am unpersuaded by this factor. 32 In summary, the hearing date should not be vacated on account of the desire to put on further affidavit evidence. (b) The Possible Claim For Misrepresentation 33 Apparently this claim is that both Mr Zaslavsky and CB Richard Ellis (through Mr Danas) told Mr Pacanowski that he could get $3,500 per square metre and that Mr Pacanowski was induced by this representation to contract in the form of the contract for the sale of land and the initial Heads of Agreement and later the Heads. The plaintiff/cross-defendants say that they need to obtain valuation advice to know if this representation was false. Only if the advice is that the true value was less than $3,500 per square metre will they wish to sue. Accordingly, it is not known at present whether this claim will eventuate. 34 The defendants/cross-claimants through their counsel undertook to the Court that if the claim ever does eventuate, they would not seek to rely on an Anshun estoppel. 35 The claim, if it eventuates, can be pursued in separate proceedings in due course. It does not persuade me to vacate the hearing date. (c) The Claim Against Smartsuper and Andrew Bloore 36 This claim can also be pursued in a separate proceeding. General 37 Counsel for the plaintiff/cross-defendants took me carefully and painstakingly through section 56 and following sections of the Civil Procedure Act 2005 (NSW) and authorities on their proper construction. I have carefully considered those provisions and the cases to which counsel referred, including his three-page written submission. I mean no disrespect to him by not summarising his submissions. 38 I am simply not persuaded that any injustice will be suffered by the plaintiff/cross-defendants if the fixture remains. 39 There would in fact be an injustice to the defendants/cross-claimants if this were not to happen because there would be a lack of resolution of their long outstanding claim for a substantial sum. The further delay, which would not be minor in view of the joinder of additional parties, necessarily involves an element of injustice. 40 In these circumstances, it is consistent with the "overriding purpose" set out in s 56 of the Act that the hearing proceed on 11 June. 41 I have taken into account the desirability of having all issues connected with the same dispute, where possible, resolved in the one proceeding. This objective is consistent with s 56 of the Civil Procedure Act 2005. But, in my view, this is outweighed by the consideration here that there is no injustice to the cross-defendants and there is injustice to the cross-claimants if the hearing date were to be vacated. Orders 42 Counsel for the parties have agreed on orders to be made to prepare the matter for hearing and the orders on which they have agreed are orders 3, 4, 5, 6 and 7 below. The Court orders that: 1. The motion brought by the plaintiff/cross-defendants by notice of motion filed on 31 May 2010 be dismissed. 2. The plaintiff/cross-defendants pay the defendants'/cross-claimants' costs of the motion. 3. Plaintiff/cross-defendants to serve evidence on cross-claim other than affidavit of Geoff Stein by 10am on 7 June 2010. 4. Plaintiff/cross-defendants to serve any affidavit of Geoff Stein by 12pm on 8 June 2010. 5. Plaintiff/cross-defendants to give discovery of documents in paragraph (d) of letter of defendants' solicitor dated 7 December 2009 by 10am on 7 June 2010. 6. Parties to comply with order 7 of Usual Order for Hearing by 4pm on 9 June 2010. 7. Parties to comply with order 6 of Usual Order for Hearing by 10am on 10 June 2010. ***************** DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. 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