Beauchum Pty Ltd (ACN 063 095 689) as Trustee for Taylor Thomas Trust v Garland 204 Pty Ltd (ACN 122 766 956) as Trustee of the Garland 204 Lofts Unit Trust [2013] NSWDC 156

District Court New South Wales

Medium Neutral Citation: Beauchum Pty Ltd (ACN 063 095 689) as Trustee for Taylor Thomas Trust v Garland 204 Pty Ltd (ACN 122 766 956) as Trustee of the Garland 204 Lofts Unit Trust [2013] NSWDC 156 Hearing dates: 1 August 2013 Decision date: 16 August 2013 Before: Judge MJ Finnane QC Decision: See paragraph [40] Catchwords: CIVIL - contract law - loan agreement - liability - whether "occupancy" is the same as "occupation" in context of proceedings - drafting of agreement - ambiguity Cases Cited: Codelfa v State Rail Authority of New South Wales (1981-2) 149 CLR 337 Western Export services Inc and others v Jireh International Proprietary Limited [2011] HCA 45 Australian Broadcasting Commission v Australasian Performing Rights Association Ltd (1997) 129 CLR 99 Texts Cited: Cheshire and Fifoot 10th Australian edition Macquarie Dictionary 3rd edition The Oxford Dictionary of English 2nd edition Category: Principal judgment Parties: Beauchum Pty Ltd (ACN 063 095 689) as Trustee for Taylor Thomas Trust (Plaintiff)

Garland 204 Pty Ltd (ACN 122 766 956) as Trustee of the Garland 204 Lofts Unit Trust (Defendant) Representation: J Doyle (Plaintiff) R Potter (Defendant) Jordan Djunda Lawyers (Plaintiff) McArdle Legal (Defendant) File Number(s): 2012/361151

Judgment 1Jenny Aiken and her husband, Peter are the directors of the plaintiff. Mr Aiken is a builder, and his wife is a physiotherapist. 2The directors of the defendant are Janet Pennington and Phillip Bartlett. 3These four people and another man, John Cardassilaris were involved in a development known as the Victoria Park development. 4On 21st May 2007, The Council of the City of Sydney gave development consent to a Development Application (DA) no D/2006/1921. 5The development consent was expressed in the following terms: "Approved Development Construction of a 3 storey mixed use building including 30 residential units and 1000 sqm of ground level retail floor space and creation of a publicly accessible 'piazza' area and one level of basement car parking accessed from Gadigal Avenue" 6The consent was to lapse on 21st May 2009. 7Condition 1 in Schedule 1A was entitled "APPROVED DEVELOPMENT" and gave approval to 10 separate items, each of which was identified by a plan. Each of these items referred to works in the residential units. 8Condition 4 in Schedule 1A Conditions of Consent was in the following terms: "(4) SEPARATE DA REQUIRED FOR RETAIL TENANCIES A separate development application for the use and fit out of each of the ground level retail tenancies and the public piazza area must be submitted for the approval of the Council prior to the use of these areas" 9At the date of the development consent, the units referred to in the DA had been built. The retail tenancies had not been built and the access to the car park had not been finished. One of the problems with the car park was access since it required work to be carried out on adjacent land. 10Conditions 28 -44 in Schedule 1A are concerned with the provision of car parking, the number of spaces for residential, retail, visitors and even bicycles. Condition 33 was in these terms: " SEALING OF CAR PARK The surface of the car park must be sealed to allow safe and clear operation of the car park, appropriately line-marked for spaces and to aid traffic circulation, prior to an Occupation Certificate being issued." ( See also conditions 35 and 36). 11Condition 92 of Schedule 1C is in the following terms: "92 OCCUPATION CERTIFICATE TO BE SUBMITTED An Occupation Certificate must be obtained from the Principal Certifying Authority and a copy submitted to Council prior to commencement of occupation or use of the whole or any part of a new building, an altered portion of, or an extension to an existing building." 12Around May 2007, (according to the affidavit of Mrs Aiken of 27th March 2013) two separate unit trusts were established, the first being the Garland 204 Lofts Unit Trust ( the Lofts trust) and the second being the Garland 204 Retail Unit Trust ( the Retail Trust). The defendant was the trustee of the Lofts Trust and an associated company of the defendant was the trustee of the Retail Trust. 13On 25th July 2008, Mr and Mrs Aiken signed an agreement on behalf of the plaintiff and Mrs Pennington signed this agreement on behalf of the defendant. I am satisfied that the agreement was drafted by lawyers acting for the defendant. Mr and Mrs Aiken signed a document presented to them, but did not have any of their own legal advice. A copy of the agreement is annexed to this judgment. 14The agreement has the following important matters in it.: (1)Loan of $100,000 unsecured (2)Interest rate of 20% per annum (3)Interest to be capitalised and to become payable "on the same date that the loan amount is due."(cl 2.2) (4)"The Borrower may use the Loan Amount for any purpose in the ordinary course of its business/activities, including, without limiting the foregoing, establishment, development and project management costs and expenses."(1.2) (5)There was provision for the offsetting of the loan amount against moneys owing by the lender for units in another two trusts. However, those units were not issued and this provision is irrelevant to the current dispute. (6)The loan amount was to become due and payable on or before " the date which is 3 months after Practical Completion (defined as achievement of occupancy certificate under City of Sydney DA D/2006/1921" upon demand by the lender for repayment in full. 15On 13th July 2009, an interim occupation certificate was issued permitting occupation of the 30 units and the associated basement car parking. 16Frequent claims for repayment were made after 13th July 2009. No payment has been made to date. 17The plaintiff claims its entitlement to the principal sum plus interest, including capitalised interest because 3 months has expired after the issue of the interim occupation certificate. The Defendant admits a liability to repay the sum borrowed plus interest, but says that the amount has not yet become due and payable because there has been no issue of an Occupation Certificate for the whole site. 18At the present time, the area under the units is completely empty. There are no commercial units and none in the process of being built. The defendant is attempting to arrange finance to enable the building of the commercial units and has commitments in principle from a number of businesses that have agreed to lease the commercial units when they are built.