Waterwood Hotel Management Pty Ltd v KOP International Pty Ltd & Anor. [2015] NSWSC 852

Supreme Court New South Wales

Medium Neutral Citation: Waterwood Hotel Management Pty Ltd v KOP International Pty Ltd & Anor. [2015] NSWSC 852 Hearing dates: 18 June 2015 Date of orders: 30 June 2015 Decision date: 30 June 2015 Jurisdiction: Equity Division Before: Kunc J Decision: Ex parte injunctions discharged Catchwords: INJUNCTIONS – Purported lease of business and land – Lessor had no title to assets of business – Whether ex parte injunction should be continued – Whether damages an adequate remedy Cases Cited: Harrington v Harrington Services Pty Ltd (in liq) [2002] NSWSC 859; (2002) 11 BPR 20,211 The South Yarra Project Pty Ltd v Gentsis [1985] VR 29 Texts Cited: McGregor on Damages, Sweet & Maxwell, Thomson Reuters, 2014 N. Seddon, Seddon on Deeds, The Federation Press, 2015 Norton on Deeds, Sweet & Maxwell Ltd, London, 1928 Category: Procedural and other rulings Parties: Waterwood Hotel Management Pty Ltd ACN 603 620 702 (Plaintiff) KOP International Pty Ltd ACN 161 720 636 as Trustee for KOP Investment Trust ABN 77 331 076 903 (First Defendant) MOOT Hotel Management Pty Ltd ACN 168 791 008 Representation: Counsel: S. Burchett and F. Santisi (Plaintiff) G. Sirtes SC and N. Carney (Defendants)

Solicitors: Summit Legal ( Plaintiff) Juris Cor Legal (Defendants) File Number(s): 2015/175980 Publication restriction: No

Judgment

Summary 1. It was once said that abstract art confused people, causing them to say "things don't look like that". To the considerable misfortune of the parties to these proceedings, the same could be said of the documents which give rise to their dispute. While the general nature of the commercial transaction they are intended to bring about may be easy to imagine, it is difficult to see how they do so in fact or law. This judgment resolves whether that difficulty, or some other reason, precludes the plaintiff ("Waterwood") from maintaining ex parte interlocutory relief originally granted to it in the circumstances described in the next paragraphs. 2. These proceedings came before me in the Duty List after hours on Friday, 12 June 2015. They concern the ownership and operation of a function centre known as the "Newport Mirage Hotel" (the "Business") located on the land known as 2 Queens Parade, Newport (the "Land"), directly across the road from the well-known Newport Arms Hotel. 3. The case presented for urgent relief at the ex parte hearing was to the effect that Waterwood was the lessee of the Land and the Business. On Friday, 5 June 2015 persons representing one or both of the defendants purported to re-enter and take possession of the Land and the Business without apparent cause. The Court was taken to correspondence which made only very vague allegations of breach of the arrangement between the parties. Counsel for Waterwood assured the Court that no rent was outstanding. There was said to be special urgency because on the following Sunday a well-advertised wedding expo was to be held at the Business with a view to generating orders that would be an important feature of the Business for the year ahead. The successful conduct of that expo was threatened unless Waterwood was let back into the Business. 4. By reason of the lack of specificity of the allegations of breach, Waterwood's confident statement to the Court through its counsel that no rent was owing and because of the threat to the wedding expo, upon Waterwood giving the usual undertaking as to damages and undertaking to keep proper accounts in respect of the operation of the Business, the Court made ex parte orders (the "ex parte orders") which included: 5. The defendants by themselves, their employees and agents forthwith permit the plaintiff by itself, its employees and agents to re-enter and take possession of the premises at 2 Queens Parade West, Newport and to operate the business thereon known as "Newport Mirage Hotel" and thereafter to permit the plaintiff by itself, its employees and agents to remain in possession of those premises and to operate the said business until further order. 6. The defendants by themselves, their employees and agents be restrained from interfering with the possession of the aforementioned premises and the operation of the aforementioned business by the plaintiff by itself, its employees and agents until further order. 1. The proceedings returned to Court at 2.00pm on Monday, 15 June 2015. The defendants appeared and filed in Court a notice of motion seeking to have the ex parte orders dismissed (the "defendants' motion"). The defendants' motion also included prayers for relief: 6. That Errol Aneslem De Fontaine is appointed by This Honourable Court as independent manager, to oversee the operations and management of Newport Mirage during these proceedings. 7. Further or in the alternative, that an independent Administrator be appointed to oversee the financial management of Newport Mirage during these proceedings. 1. The matter returned to Court the next day and further directions were made for the hearing of the defendants' motion. That hearing then occupied the entire day on Thursday, 18 June 2015. At that hearing Mr S Burchett of Counsel appeared with Mr F Santisi of Counsel for Waterwood. Mr G Sirtes of Senior Counsel appeared with Mr N Carney of Counsel for the defendants. The Court reserved its decision. 2. At the hearing of the defendants' motion, Senior Counsel for the defendants conceded, correctly, that there was no jurisdictional basis for the Court to make the orders sought in paragraphs 6 and 7 of the defendants' motion (see paragraph [5] above). The defendants confined their case to pressing for the ex parte orders to be discharged. They also submitted that the statement of claim should be struck out with leave to replead. 3. Waterwood submitted that the ex parte orders should continue undisturbed and also sought an additional order: That the defendants reinstate the plaintiff's director, Lit Moon Lye, as a signatory of the bank trading account of the second defendant, repay into that account any moneys taken from it by the defendants (otherwise than in payment of any just debts of the hotel business) since 5 June 2015, facilitate and not hinder the plaintiff's said director from operating upon that account for the benefit of the Hotel business pending further order. 1. Upon a proper examination of all the material presented by the parties at the hearing of the defendants' motion, it became apparent that this case is nowhere near as straightforward as it was originally presented to the Court at the ex parte hearing. In making that observation the Court intends no criticism of those who appeared at that first, urgent occasion. Nevertheless, the Court has concluded that the ex parte orders should be discharged because: 1. Waterwood has failed to demonstrate that there is a serious question to be tried as to its entitlement to the Business in circumstances where the party which purported to grant Waterwood a lease over the Business did not own the assets which comprise the Business. 2. Damages are an adequate remedy. 3. Even if, assuming in Waterwood's favour, the HLA gave it the right to occupy the Land, there is no utility in allowing it back in when it had failed to show a serious question to be tried as to its entitlement to the Business. 4. The somewhat unusual arrangements which the parties have made in relation to the bank account of the Business requires a degree of co-operation which, in the exercise of its discretion, the Court will not enforce because relations between the parties have broken down. 5. Furthermore, as a matter of discretion the Court declines relief having regard to the position of third parties: first, employees who would be placed in the potentially invidious position of being directed in their duties by persons who do not represent their employer and, second, those who contract with Waterwood in the belief Waterwood is entitled to operate the Business. 6. Finally, there is a real doubt in the Court's mind as to Waterwood's capacity to meet the undertaking as to damages, even when a further, personal undertaking was also proffered by its director, Mr Lye.