Supreme Court New South Wales Medium Neutral Citation: Michelle Lena Parker as Administrator of the estate of the late Peggy Lynette Lenin v Kurt Stephen Braune Peggy Lynette Lenin v City Commercial Realty Pty Limited [2014] NSWSC 170 Hearing dates: 3 March 2014 Decision date: 03 March 2014 Jurisdiction: Equity Division - Commercial List Before: Sackar J Decision: Paragraphs 33 and 34 Category: Principal judgment Parties: Michelle Lena Parker as Administrator of the estate of the late Peggy Lynette Lenin v Kurt Stephen Braune Peggy Lynette Lenin v City Commercial Realty Pty Limited Representation: B Burke Christoper Price File Number(s): 2008/290399 2011/413370 Judgment Ex Tempore 1Two sets of proceeding were before the Court today, and were heard together. 2In the 2008 proceedings, the plaintiff by way of the second further amended summons filed on 8 October 2013 sought unpaid rent and outgoings, interest and costs from Mr Kurt Braune and Raykur Building Group Pty Ltd (Raykur). 3In the 2011 proceedings, the plaintiff by way of the amended summons filed on 8 October 2013 sought damages for breach of contract, interest and costs from City Commercial Realty Pty Ltd (City Commercial) and Mr Kurt Braune. 4In both proceedings, the plaintiff sought relief against a company and its sole director, Mr Kurt Braune, as guarantor under an agreement made with the plaintiff. By reason of City Commercial being in liquidation, the claim for relief was only pressed against Mr Braune in the 2011 proceedings. The 2008 Proceedings (2008/290399) - the lease proceedings 5The 2008 proceedings were commenced by Mrs Lenin against Mr Kurt Braune (first defendant in these proceedings) and Raykur (second defendant in these proceedings) in relation to unpaid moneys under a lease dated 1 April 2004 (the Lease). 6The plaintiff, Mrs Lenin, passed away last year. Michelle Parker (administrator of her estate) was joined as plaintiff in substitution as a result of orders made by Hammerschlag J on 4 October 2013. 7Raykur is alleged to have stopped paying rent under the lease in 2005, with its last payment occurring on 23 September 2005. Mr Braune is the sole director of the second defendant. 8Mrs Lenin claims rent and outgoings from 1 October 2005, and interest. This is sought from Raykur, or alternatively Mr Braune as guarantor. 9Raykur and Mr Braune also filed a cross-claim on 12 June 2008 naming Mrs Lenin and Mr Michael Lenin as cross-defendants. A Commercial List Cross-Claim Response was filed for Mr and Mrs Lenin on 19 December 2008. The cross claim asserts a surrender of the lease, a claim of misleading and deceptive conduct under section 42 of the Fair Trading Act and the assertion of a breach of a duty of care owed by Mr and Mrs Lenin. 10The defendants denied liability for the rent and outgoings after October 2005 on the basis that Mr Lenin made statements or entered into an agreement that resulted in the surrendering or termination of the lease. No evidence, however, has been served in this respect or indeed on behalf of any defendant in these proceedings or the purchase proceedings. 2011 Proceedings (2011/413370) - the Purchase Proceedings 11In the 2011 proceedings, the plaintiff claims damages for breach of contract from the first defendant, or from the second defendant on the basis of a guarantee. 12The first defendant, City Commercial, and the second defendant, Mr Kurt Braune (City Commercial's sole director), do not appear to be represented. 13The dispute concerns the liability of the first defendant as the purchaser of 3 units at Manly from the plaintiff under a Contract for the Sale of Land dated 3 April 2009 (the Contract) arising from the plaintiff's exercise of a put option under a Put and Call Agreement dated 23 March 2004 (the Agreement). The plaintiff also asserts that Mr Braune is liable as the guarantor (under the Agreement) of City Commercial's obligations. 14The issues include the amount of loss and damage, whether the first defendant is liable for this amount, and whether the second defendant is liable as guarantor. 15The parties entered into a Put and Call Agreement on 23 March 2004, including consideration of $100,000 for a Call Option (an option to purchase exercisable by City Commercial) and $1 for a Put Option (an option in favour of Lenin to require purchase by City Commercial). The proposed contract was annexed to the agreement, including the price of $2 million. 16In the short outline of submissions it is suggested that the consideration paid for the Call Option was in fact $100. The cheque for the sum of $99 and letter that appear in Exhibit PLL-01 at pages 206-208 support this view. 17The Agreement also included the intended grant of a lease to Raykur, which is the subject of the 2008 proceedings discussed above. 18The second defendant guaranteed the payment of all moneys under the Agreement or the Contract, the compliance with all purchasers' obligations, and incidental costs such as legal fees, damages and interest at 12% per annum. 19The call option expired at 5pm on 23 March 2009. The put option could only be exercised if the call option had expired, and itself expired at 5pm on 7 April 2009. 20The put option was exercised by Mrs Lenin on 3 April 2009 by delivering a written notice and a copy of the contract, in accordance with the Agreement. 21The first defendant did not return an executed version of the contract and the deposit as required. 22The property was sold on or about 28 August 2009 for $1.375m to a third party. 23City Commercial went into liquidation on or about 5 July 2013. 24Mrs Lenin filed a Commercial List statement on 23 December 2011, to which the defendants filed a Response on 7 March 2012. In accordance with orders following the death of Mrs Lenin, her executor was substituted but otherwise the List Statement was unchanged. No further response was filed. 25The Response, filed for the defendants by solicitors who later ceased to act, disputes that the document dated 23 March 2004 (referred to as the 'Put and Call Option Agreement' or Agreement) recorded a binding agreement on the basis it was not a genuine record of any agreement, was a sham, was not intended to create legal relations and whether any consideration was given for the purported covenants. 26They allege that the plaintiff held the premises as trustee or nominee of her husband, Mr Michael Lenin, and that Mr Lenin and Mr Braune had been friends for many years. They assert that Mr Lenin represented he would not seek to enforce the agreement said to be recorded in the Agreement and the defendants relied on this assumption to their detriment. Consideration 27No evidence has been filed by any defendant in either proceeding as to the merits of the plaintiff's claims. 28The matters were fixed for hearing today by virtue of orders made on 4 October 2013. The solicitor for the plaintiff notified the relevant parties of that date in a letter dated 10 October 2013. 29There was a further directions hearing on 29 November 2013 at which there was no appearance on the part of any defendant. 30At the hearing before me today, there was no appearance on the part of any defendant. 31Having considered the evidence of Mrs Lenin, which is unchallenged, and having been taken through the relevant documentation by counsel for the plaintiff, I am satisfied that the plaintiff's case on liability is made out. 32Having further considered the materials advanced in relation to the claims against the defendants in each matter, in particular the schedule which explains each of the claims and any interest claimed thereon, I am also satisfied the claim on damages in each matter has been appropriately quantified and proved. 33Accordingly, in the 2008 proceedings numbered 2008/00290399 I order that judgment be entered for the plaintiff in the sum of $1,694,908.54 as against the first and second defendants. I also order that the cross-summons be dismissed and that the defendants are to pay the costs of the plaintiff. 34In the 2011 proceedings numbered 2011/00413370 I order that judgment be entered for the plaintiff in the sum of $1,167,912.28 as against the second defendant. I also order that the second defendant is to pay the costs of the plaintiff. ********** DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 03 March 2014