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  4. Nightowl Properties Pty Ltd v BDR No 3 Pty Ltd - [2022] QSC 143

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Nightowl Properties Pty Ltd v BDR No 3 Pty Ltd[2022] QSC 143

Nightowl Properties Pty Ltd v BDR No 3 Pty Ltd[2022] QSC 143

SUPREME COURT OF QUEENSLAND

CITATION:

Nightowl Properties Pty Ltd v BDR No. 3 Pty Ltd [2022] QSC 143

PARTIES:

NIGHTOWL PROPERTIES PTY LTD ACN 126 734 459

(plaintiff)

v

BDR NO. 3 PTY LTD ACN 651 996 879

(defendant)

FILE NO/S:

236 of 2022

DIVISION:

Trial Division

ORIGINATING COURT:

Cairns Supreme Court

DELIVERED ON:

08 July 2022

DELIVERED AT:

Brisbane

APPLICATION DATE:

4 July 2022

JUDGE:

Freeburn J

ORDERS:

  1. The application for summary judgment is dismissed;
  2. The plaintiff give undertakings to the court, by the following three entities, to meet any adverse costs order made against the plaintiff in the proceeding, subject to any further order of the court: Mr Adams, Think Convenience Pty Ltd and Adams Wholesale Pty Ltd;
  3. Pursuant to UCPR 39 this proceeding be transferred to the Brisbane Registry of the court; and
  4. The parties be heard on costs.

CATCHWORDS:

CONTRACT OF LAND – LEASES & TENANCY AGREEMENTS – COMMERCIAL CONTRACT – where parties entered into a heads of agreement – where the heads of agreement was in the form of a table frequently used in commercial leases – where there are some uncertainties raised by the heads of agreement – where the lease documentation was not finalised – whether summary judgment should be granted – whether security for costs should be granted – whether the venue ought to be changed to Brisbane.

COUNSEL:

Mr D de Jersey QC (plaintiff/respondent)

Mr MD Martin QC with Mr DV Ferraro (defendant/applicant)

SOLICITORS:

Preston Law (plaintiff/respondent)

McCullough Robertson Lawyers (defendant/applicant)

REASONS

  1. [1]
    The defendant (BDR) made three applications against the plaintiff (Nightowl): for summary judgment, for security for costs, and for a change of venue to Brisbane. Each are dealt with in turn.

A.  SUMMARY JUDGMENT

The Principles

  1. [2]
    Under UCPR 293, BDR may be entitled to summary judgment if Nightowl has no real prospect of succeeding on all or part of its claim and there is no need for a trial on that claim or part of a claim.[1]  Before granting summary judgment the court must have a high degree of certainty about the ultimate outcome of the proceeding.[2]
  2. [3]
    Expressed another way, summary judgment will only be given in the clearest of cases.[3]

The Heads of Agreement

  1. [4]
    The parties signed a “heads of agreement”, dated 19 November 2021, on 20 and 22 November 2021.  That heads of agreement is quite a comprehensive document. It commences with the words:

Further to our recent conversations we welcome your involvement in the Centre[4] and we are prepared to offer the following commercial terms to Nightowl for ‘Tenancy 1’ to be part of “Morayfield Road Convenience Centre”.

  1. [5]
    The heads of agreement is in the form of a table frequently used in commercial leases, so that it commences:

LESSOR:

BDR No. 3 Pty Ltd (ACN 651 996 879) atf BDR No. 3 Trust or Nominee

LESSOR’S SOLICITOR:

MSJA

LESSEE:

Nightowl Properties Pty Ltd (ACN 126 734 459) Lessee to provide warranty that all operations are held in this entity

(etc.)

  1. [6]
    The document records that BDR is to lease to Nightowl property described as Tenancy 1, at Morayfield Road Convenience Centre, for 10 years at an annual rent of $375,000 per annum for the first year, with annual increases of 3%. The annual reviews are to market rent if the lessee exercises any of the four options, each of five years.  The lessee is to pay certain defined outgoings on a budget basis. The lease was to commence either when Nightowl commenced trading or at the expiration of a four-week fit-out period – whichever was the earlier.
  2. [7]
    Adjacent to the descriptor ‘PERMITTED USE’ is ‘Service Station and Convenience Store’ but also these words: ‘It is the Lessee’s responsibility to obtain necessary permits for the above use’. Similarly, adjacent to the descriptor ‘FITOUT CONTRIBUTION’ are these words:

‘The landlord will contribute towards the lessee’s fit out to a maximum value of $150,000.00 (ex GST). This will be paid at the commencement of trade. This will be dealt with in an incentive deed.’

  1. [8]
    Those last two provisions make clear that any fit-out is the responsibility of the lessee. However, the heads of agreement also refers to the ‘Lessor’s Works’ which are said to be ‘As per attached Scope and Site plan.’ No such document is attached. Conceivably, there could be such a document,[5] or it may be proposed that such a document be prepared. 
  2. [9]
    Access for ‘the Lessee’s works’ is to be given by the lessor four weeks prior to the lease commencement date. Those works are to be performed in accordance with the Lessor’s fitout manual. However, it is not clear what comprises the Lessee’s works. Possibly it was the construction of the service station and convenience store. Ownership of the ‘Full Underground Fuel system’ (presumably to store petrol) was to be transferred to the lessee and was to be maintained by the lessee. That suggests that the ownership of at least that part of the works was to be transferred from the Lessor to the Lessee. But it does not make clear who was responsible for what work. Any building or development approvals are the responsibility of the lessor. 
  3. [10]
    Importantly for present purposes, the heads of agreement does not expressly say whether the intention was that the parties were to be bound immediately.  The agreement does say that the lease and ancillary documents will be prepared by BDR’s solicitor and will be based on the lessor’s standard documents for this property, amended to reflect the terms contained in the heads of agreement. That tends to suggest that what is to follow is procedural rather than substantive.
  4. [11]
    The agreement concludes with these two clauses:

The terms of this document and the negotiations between the parties are strictly confidential. The Lessee must not disclose them to any person other than the Lessee’s professional advisers without the Lessor’s consent.

The Lessor will provide draft documents within 14 days of execution of this Heads of Agreement. The Lessee must execute the lease documentation and return it to the Lessor within 45 days of the date on this agreement with any supporting documentation, including any security deposit and bank guarantee.

  1. [12]
    In the second-last clause, at least, the language suggests that Nightowl is to be immediately bound by the confidentiality obligations.[6] And, if read literally, the last clause appears to exclude any further negotiation and to contemplate that a procedural process which more formally documented what had been agreed in the heads of agreement.
  2. [13]
    That said, looking at the heads of agreement as a whole, it is difficult to discern from that document that the intention of the parties was to be immediately bound. Certainly, the language of the confidentiality obligation appears intended to immediately bind the lessee. The requirement to execute the documentation was probably not intended as a strict obligation that excluded any further negotiation. Certainly, there are some uncertainties raised by the heads of agreement, particularly as to who was to build what. However, uncertainties and difficulties in interpretation, do not necessarily point to the lack of an intention for the document to be immediately binding.

Subsequent Emails

  1. [14]
    Between 22 November 2021 and 8 April 2022, there was email correspondence between the parties.  The first email from BDR to Nightowl enclosed the heads of agreement and said: “As per Wynnum Rd [presumably another site where the parties had entered into a similar arrangement] will prepare and issue docs once fuel provider is nominated.”
  2. [15]
    On 28 January 2022, two months later, another email from BDR to Nightowl said:

“Signed agreement attached.  This is the site on the Main road at Caboolture.  History was you had issues with a fuel provider, we sweetened the deal then I met you on site which you said you liked and would try again.  Let me know if you want any further info.”

  1. [16]
    Nightowl’s representative replied on the same day saying: “All agreed and happy to move forward.  Caltex will be our fuel brand.”
  2. [17]
    Presumably, Nightowl was then waiting for the lease documentation.  Two months later, when they had not arrived, Nightowl’s representative asked BDR’s representative: “Can you please provide an update on this matter?”
  3. [18]
    Again, there was no response.  Grasping the nettle, Nightowl’s representative then followed up saying:

Having reviewed the signed HOA and surrounding correspondence, I note that there is a binding agreement between the parties.  Accordingly, we look forward to receiving draft documents as you suggest, on terms similar to Wynnum West.

  1. [19]
    On 8 April 2022, there was an exchange of letters between the solicitors for both parties.  Nightowl’s solicitors said they intended to perform the heads of agreement and expected that BDR would do the same.  BDR’s solicitors responded saying that no binding agreement existed and that BDR would not perform the heads of agreement.
  2. [20]
    Thus, on the issue of whether the parties intended to be immediately bound, the email correspondence is equivocal.  The parties were certainly pursuing the arrangement, but over time BDR’s initial enthusiasm waned and Nightowl’s initial reticence was replaced with zeal. The problem, though, is that a survey of the emails between the parties sheds little light on whether the parties regarded themselves as bound.

Masters v Cameron

  1. [21]
    Of course, that discussion raises the question of whether this case falls within one of the three categories described in Masters v Cameron,[7] or perhaps the so-called fourth category added by McLelland J in Baulkham Hills Private Hospital Pty Ltd v GR Securities.[8]
  2. [22]
    There is, I should mention, a useful discussion of the categories by Tolhurst, Carter & Peden in a journal article entitled “Masters v Cameron - Again!”.[9] As that article makes clear, the overriding concern is whether or not the parties intended to be bound.  Importantly, the question of fact as to whether the parties intended to be bound is not to be considered in a vacuum.  Thus, in the sale of land context there is a presumption that all negotiations are conducted subject to a contract.
  3. [23]
    During argument, the parties accepted that such a presumption should apply in this context where what was contemplated was 10-year leasehold interest in land – with options. That was a sensible concession. The same considerations apply.
  4. [24]
    Too much should not be made of the presumption, or as Bowskill SJA expressed it in Marbryde Pty Ltd v Mainland Property Holdings No. 8 Pty Ltd:[10] “the expectation of parties in negotiation is that they will not be taken to have made a concluded bargain unless and until a formal contact is executed.”  But that is not an intractable rule, and the decisive issue is always the intention of the parties, which must be objectively ascertained from the factual context.  On that point see the reasons of Keane JA in Moffatt Property Development Group Pty Ltd v Hebron Park Pty Ltd[11] where His Honour explained that whether or not the expectation applies in a particular case depends on the totality of the factual context.
  5. [25]
    And so, at this point, one can see the difficulty for the defendant in applying for summary judgment.  The defendant contends that this is a clear case where the parties signed the heads of agreement with no intention to be bound immediately in circumstances where:
    1. (a)
      the express terms of the heads of agreement do not disclose such an intention;
    2. (b)
      with perhaps one exception relating to confidentiality, it is difficult to discern from the language of the document that the parties intended to be immediately bound or intended to be bound only when a formal lease was signed;
    3. (c)
      the subsequent email correspondence is equivocal and not susceptible of an interpretation that the parties did not intend themselves to be immediately bound; and
    4. (d)
      at trial, the court will have regard to the totality of the factual context, including possible conversations between the parties and their prior similar transaction, as well as the expectation that they were not to be taken to have made a concluded bargain unless and until a formal lease is executed.

Incomplete Agreement?

  1. [26]
    BDR contends that the parties could not have intended to be immediately bound because they did not agree on at least two basic terms - the identity of the parties to the lease, and the specific property that was to be leased. BDR also points out that there are some 36 terms which had not been agreed by the parties.[12]
  2. [27]
    There are different principles at play here. The first is that, for there to be a concluded agreement, it is necessary that the parties have agreed on the essential elements of that agreement. For a new lease or agreement for lease to be enforceable there must be certainty, at least as to parties, term, the demised premises and the rent.[13]
  3. [28]
    The second is that, if there are matters of importance[14] in respect of which the parties have not yet reached agreement, that lack of agreement on those important matters will render it less likely that they intended to be immediately bound.[15]
  4. [29]
    The third is that the more numerous and the more significant the areas in respect of which the parties have failed to reach agreement, the less likely it is that the parties intended to make a concluded bargain. Thus, in Australian Broadcasting Corporation v XIVth Commonwealth Games Ltd Gleeson CJ said:

To say that parties to negotiations have agreed upon sufficient matters to produce the consequence that, perhaps by reference to implied terms or by resort to considerations of reasonableness, a court will treat their consensus as sufficiently comprehensive to be legally binding, is not the same thing as to say that a court will decide that they intended to make a concluded bargain.  Nevertheless, in the ordinary case, as a matter of fact in common sense, other things being equal, the more numerous and significant the areas in respect of which the parties have failed to reach agreement, the slower a court will be to conclude that they had the requisite contractual intention.[16]

  1. [30]
    The fourth is that courts should be astute to uphold commercial bargains.[17] That means that a court can determine the meaning, or it can apply an assumed intention such as requiring things to be done within a reasonable time.
  2. [31]
    However, none of that ought to cloud the central inquiry: did the parties intend to make a concluded bargain? After all, experienced commercial parties might well agree to be bound immediately in circumstances where a short document records only the fundamental terms of a very substantial share transfer or sale of property but on the basis that the formal document will follow. The converse is also true. Parties may not agree to be bound until every detail of their bargain is documented in a formal contract or deed.

BDR’s Arguments on Incompleteness 

  1. [32]
    First, in its written submissions, BDR pointed out that the identity of parties, in each case, included the words “or nominee”. Thus, it was contended that the parties to the lease were not identified. It is an unattractive argument.  It is commonplace for REIQ contracts for the sale of land to specify one or other party as “X, or their nominee”.  It is even more commonplace for options to purchase land to be granted to “X or their nominee” entitling X to nominate another party to exercise the option or to take the benefit of the option.[18]  That often occurs in the land development context because the party with the benefit of the option may wish to incorporate a separate but related company to hold the land.
  2. [33]
    The words “or nominee” are plainly intended to provide a mechanism for the particular party to appoint another related company as the party.  A mechanism whereby one of the parties is to settle further terms, even essential terms, does not render the arrangement between the parties as a mere agreement to agree.[19]
  3. [34]
    Second, BDR argues that the parties to the lease are not agreed because the heads of agreement provides that: “The Lessee entity must be an entity of substance acceptable to the Lessor.”[20] The evident intention of that provision is that any nominee of the lessee must be an entity that BDR is satisfied is a company of substance. Presumably, that is why the provision appears adjacent to the heading/item ‘Guarantees’ and goes on to specify that any corporate lessee that is not a public company must provide guarantees. In any event, difficulties in ascertaining the meaning of contractual provisions like this do not necessarily result in a finding of uncertainty.[21] 
  4. [35]
    Third, BDR contends that the parties have not agreed on the premises to be leased.  The ‘LEASE AREA’ is described as: ‘TENANCY 1 (the Lease will also contain a licence allowing the Tenant unrestricted access to and use of the forecourt area and Tank Farm)’. The ‘PROPERTY ADDRESS’ is described as ‘80-90 Morayfield Rd, & 6-8 Frank St, Caboolture South.’ The ‘NET LETTABLE AREA’ is described as ‘190m2 (subject to final survey).’
  5. [36]
    That description, and the specification of the area to be leased, are likely to be able to be properly identified by the evidence. First, the property address suggests that the area to be leased is likely to be a corner block – with two street frontages. That would make sense for a proposed use as a service station. Second, the specific lettable area of 190m2 (subject to final survey) makes it more likely that the leased area can be identified. Third, the evidence does not establish that identification of the area to be leased will be an impossible task.
  6. [37]
    To the contrary, an email from BDR to Nightowl on 9 July 2021 is as follows:

…we are excited about the strong convenience and shop offer Nightowl could provide to the centre when compared with other fuel retailers. Understanding your requirements we agree to increase the Service Station Shop size to 190sqm which means you take up the middle tenancy in the attached site plan…[22] (emphasis added) 

  1. [38]
    Nightowl responded:

Thanks for the below email and confirming we are good to proceed to HOA [i.e. heads of agreement] based on these figures and AFL’s [presumably agreement for lease] within 45 days of signing of HOA.

  1. [39]
    That exchange rather suggests that the area to be leased can be identified and is shown on a plan attached to the email but is not in evidence as yet.
  2. [40]
    Certainly, there are some details of the transaction that are not settled – such as the details of the construction that either or both parties are to undertake.  They are likely to be important details and may well suggest that the parties did not intend to be immediately bound.  However, much depends on the “totality of the factual context”.[23]  That is difficult to resolve on an application for summary judgment.
  3. [41]
    The problem is that the evidence is necessarily abbreviated for a summary judgment application.  For example, the details of the construction contemplated are not clear, the precise discussions between the parties are not explained, and the relevance of their prior dealings on the Wynnum Road site are not clear. Those details would not necessarily be pleaded, or required to be pleaded, but they are factual context.
  4. [42]
    Certainly, I have the impression that the complexity of the proposed arrangement means that it is likely that they were not intending to be immediately bound.  But that impression is some way short of putting this case in the category of “the clearest of cases”.
  5. [43]
    It follows that summary judgment should be refused.

Specific Performance

  1. [44]
    BDR put its case for summary judgment on a second basis. BDR submitted that the defendant should have summary judgment because the only relief sought by Nightowl was specific performance and, in this case, the remedy of specific performance cannot be ordered because the defendant does not have a legal or equitable interest in the land. BDR contends that it does not have and never had a legal or equitable interest in the land at Caboolture. The land was proposed to be transferred by a third party with a common director via a ‘put and call’ option.
  2. [45]
    First, it is not entirely accurate to say that the only relief claimed by Nightowl was specific performance. The prayer for relief in the present statement of claim is as follows:
    1. (a)
      A declaration that the plaintiff is entitled to have a written agreement to lease made on or about 22 November 2021 between the defendant as lessor and the plaintiff as lessee specifically performed and carried into execution.
    2. (b)
      An order that the written agreement to lease made on or about 22 November 2021 between the defendant as lessor and the plaintiff as lessee be specifically performed and carried into execution.
    3. (c)
      An order that in default of the defendant signing any such document as might be necessary or convenient for the written agreement to lease made on or about 22 November 2021 between the defendant as lessor and the plaintiff as lessee, the Registrar of the Court be empowered to sign any such document in the name and on behalf of the defendant as might be necessary or convenient to procure performance of the said agreement to lease.
    4. (d)
      An order that, pending performance of the written agreement to lease made on or about 22 November 2021 between the defendant as lessor and the plaintiff as lessee, the defendant be restrained from selling, transferring, leasing or otherwise disposing of that part of the defendant’s land at 80-90 Morayfield Road and 6-8 Frank Street Caboolture South as is described and depicted by the defendant as Tenancy 1.
  3. [46]
    And so, whilst it is true that specific performance is at the core of the relief being claimed, there are claims for related relief. That leads to the next issue.
  4. [47]
    Second, in a case like this, the relief claimed ought not be regarded as static. During the course of the proceeding the plaintiff may amend the relief it seeks. Even at the time of judgment, the court may mould the orders to suit the case. That is especially the case where a party seeks specific performance. Such a party will often be permitted to alter the relief – up until the point when the court gives judgment. And, even after a decree of specific performance, the plaintiff might later rescind the contract and seek damages.[24]
  5. [48]
    On an application like this, the court should be alert to the fact that, at trial, a variety of remedies may be available to Nightowl if it proves that there is an enforceable agreement. Specific performance is only one such remedy.
  6. [49]
    Third, as it happens this case is not an attractive candidate for specific performance. Courts do not consistently order specific performance of leases.[25] Here, the effect of an order for specific performance would be to require the parties to continue their relationship as lessor and lessee for 10 years or as much as 30 years if all four option were exercised. And the lease contains elements of fit-out or construction which may themselves require court supervision.[26] It is appreciated, however, that this is a superficial examination of the facts here. The court might, at trial, be convinced to order specific performance depending on the relationship between the parties and the extent to which co-operation is required.  
  7. [50]
    Fourth, naturally enough, when a party applies for summary judgment the focus is on whether there is a high degree of certainty that the plaintiff will succeed on “the plaintiff’s claim”, that is, the cause of action. The focus is not on whether the plaintiff has a clear case for a particular species of relief. Thus, the relief sought is necessarily subsidiary to the plaintiff’s cause of action.
  8. [51]
    Fifth, in any event, and without expressing a concluded view on it, I am not sure that it is correct that a court would refuse to order specific performance on the basis that BDR has put the acquisition of the land is beyond the capacity of BDR. That may or may not be the case depending on the terms of the ‘put and call’ option. Certainly, BDR entered into negotiations with Nightowl on the basis that BDR would acquire the property. Presumably BDR had some right or, at the least, a reasonable expectation by reason of the common director, that it would acquire the property by the time the lease came to be executed and registered.
  9. [52]
    It is possible that the case is analogous to Gall v Mitchell[27] where a father contracted to sell land that was his own as well as land that belonged to his children. Specific performance was awarded against him in so far as the contract related to which he was competent to convey.[28] The court refused specific performance for the land he could not convey, with compensation awarded instead. Equally, it is possible that the precise relationship with the third party may mean the court would require the third party to be heard as to whether the decree would impact the third party or cause hardship to the third party.[29] In some circumstances the fact that hardship might be suffered by a third party can afford as defence to a suit for specific performance.
  10. [53]
    In short, whilst the present owner of the land is a third party it would be surprising if equity could not mould appropriate relief.

B.   SECURITY FOR COSTS

  1. [54]
    Searches reveal that Nightowl owns no property and has nominal paid up capital.  Thus, under s 1335 of the Corporations Act 2001, and under UCPR 671, there is reason to believe that Nightowl would not be able to meet an adverse costs order. That threshold issue was not in dispute. The controversy concerned the form of security and the quantum of any security.
  2. [55]
    Nightowl has offered security.  Undertakings to meet any adverse costs order are offered by:
  1. (a)
    Mr Adams, the sole director of Nightowl;
  1. (b)
    Think Convenience Pty Ltd – the sole shareholder of Nightowl and the trustee of the Nightowl Unit Trust which has significant total equity (see below); and
  1. (c)
    Adams Wholesale Pty Ltd, the sole shareholder of Think Convenience Pty Ltd.

A Worthwhile Undertaking?

  1. [56]
    However, BDR complains that:

“The undertaking offered by a director of the plaintiff and other related entities to meet any adverse costs order is of no assistance in the absence of any evidence of what the director and the related entities are worth.”

  1. [57]
    That is far too strident.  In exercising the discretion to order security for costs, a weighty consideration is that those who stood behind the company have come out from behind the corporate veil.[30] The discretion is informed by that weighty consideration. The courts try to ensure that those who stand to benefit from proceedings also bear the risks of it.
  2. [58]
    Here, in response to BDR’s complaints, Nightowl filed, by leave, a further affidavit which explained that:
    1. (a)
      all the shares in Nightowl Properties Pty Ltd, the plaintiff here, are owned by Think Convenience Pty Ltd;
    2. (b)
      Think Convenience Pty Ltd also owns all the shares in Nightowl (QLD) Pty Ltd;[31]
    3. (c)
      Nightowl (QLD) Pty Ltd is a shareholder of eight different companies;
    4. (d)
      Each of those eight companies owns land in Australia – some 17 parcels of land. 
  3. [59]
    Still BDR was not satisfied. The complaint made during argument was that, of the 17 properties held by those eight companies, only one was not subject to a mortgage. And, it was submitted, there was likely to be cross-collateralisation such that the even the one unencumbered property might not be available to pay any adverse costs order. No doubt, if there had been time, it would then be open to Nightowl to adduce evidence of what was owed in respect of each mortgage. But then the unanswered question would be: what are the group’s other debts? By that mean, the court might be forced into an ever-deepening inquiry into the plaintiff’s assets and liabilities and thus its solvency. 
  4. [60]
    The objective is that the court have some confidence that the undertaking offered is a worthwhile undertaking. The objective is not for the court to undertake some complex analysis to determine the financial position and solvency of the plaintiff and its shareholders.
  5. [61]
    In DIF III Global Co-Investment Fund v BBLP LLC[32] Hargrave J explained that the court’s discretion as to the form of security is to be exercised having regard to these principles:
    1. (a)
      the plaintiff is entitled to propose security in a form least disadvantageous to it;
    2. (b)
      the plaintiff bears a "practical onus" of establishing that the proposed security is adequate and does not impose an "unacceptable disadvantage" on the defendant;
    3. (c)
      in order to be adequate, the proposed security must satisfy the protective object of a security for costs order, namely, to provide a fund or asset against which a successful defendant can readily enforce an order for costs against the plaintiff; and
    4. (d)
      based on these and any other relevant considerations, the Court will determine how justice is best served in the particular circumstances of the case.
  6. [62]
    It is relevant to note that in Bruce Pie and Sons Pty Ltd v R H Mainwaring, English and Peldan[33] McPherson J expected that courts, as a matter of general policy, will encourage arrangements whereby some form of security other than money was furnished, if by that means it can ensure that the order for security does not become an instrument of oppression to the plaintiff.[34]
  7. [63]
    Worthwhile undertakings have advantages over other forms of security. One is that they overcome the problem that the amount of the security might depreciate or diminish, or that the anticipated costs might increase, requiring the plaintiff to make good the deficiency in the amount of the security originally ordered.[35] Another is that they avoid the difficult exercise of estimating the defendant’s likely costs, an issue of some controversy here (see below). A third advantage is that, if the court exercises its discretion that undertakings are the appropriate form of security, then the defendant is afforded an immediate security, rather than a form of security such as cash or a bank guarantee that may take time to arrange.[36]
  8. [64]
    Here, Mr Adams is a businessman who has significant commercial interests.  The defendant does not contend that Mr Adams is a pauper.  The business has some history and the parties have dealt with each other on at least one previous occasion. Indeed, the heads of agreement records that BDR was content to obtain guarantees from Mr Adams and Nightowl Properties Pty Ltd to secure the significant financial and other obligations under the heads of agreement.
  9. [65]
    There is some evidence that Think Convenience Pty Ltd, as trustee of the Nightowl Unit Trust, holds nearly $16.8m in total equity. That sum may or may not be available to meet an adverse costs order. As part of the picture, it does demonstrate that Think Convenience Pty Ltd is a company with significant responsibilities. It is difficult to imagine such a company falling into solvency over a litigation debt of $250,000.
  10. [66]
    And, as explained, one member of the group of companies, wholly owned by Think Convenience Pty Ltd, holds 17 parcels of land.
  11. [67]
    In my view, it is sufficient for the plaintiff to give undertakings to the court by the three entities[37] to meet any adverse costs order made against the plaintiff in the proceeding. On that basis, I would not order a monetary security. The court would accept as sufficient undertakings to the court, subject to further order of the court, that the three entities mentioned will meet any adverse costs order made in the proceedings against the plaintiff. 

Quantum of Security

  1. [68]
    There was a dispute as to the quantum of security that ought to be provided.  Because of the conclusion just reached it is not necessary to resolve that dispute. However, it may be relevant for me to state what level of security would have been ordered if I had not reached that view.
  2. [69]
    BDR seeks security of $250,000 – up to and including the first day of trial.  Nightowl offers $62,000.  The solicitors for both parties have offered starkly different assessments of the likely costs. Nightowl’s solicitor, for example, anticipates that $18,500 will be spent on interlocutory applications.  BDR expects that it will spend $86,500.  For the preparation of evidence the respective figures are $1,860 and $49,500.
  3. [70]
    Neither of the assessments appear to be realistic.  For example, an expenditure of $86,500 for interlocutory applications appears overly pessimistic.  And $1,860 for the preparation of evidence would seem to allow only for the scrawniest of affidavits or the briefest of oral evidence.
  4. [71]
    As Daubney J commented in Aqua Blue (Noosa) Pty Ltd v Soil Surveys Engineering Pty Ltd [2010] QSC 176 at [41] the court is not to engage in an anticipatory assessment of costs.  Approaching the case in a very broad way, and having regard to some evident enthusiasm of the parties to engage in interlocutory skirmishes (these present applications being an example), $150,000 in security for costs to the first day of trial would have been ordered.
  5. [72]
    Of course, that would enable the parties to apply to the court if having incurred some costs, the future costs appear likely to fall short of that figure or to exceed the figure.

C.  CHANGE OF VENUE

  1. [73]
    The defendant seeks an order, pursuant to UCPR 39, for the transfer of this proceeding from the Cairns Registry to the Brisbane Registry.
  2. [74]
    Under UCPR 39 the central question is whether the proceeding can be more conveniently or fairly heard or dealt with in Brisbane. There is no question that a fair trial can be conducted in either city. The issue is convenience.
  3. [75]
    The site the subject of the heads of agreement is in Caboolture, near Brisbane.  The registered offices of both Nightowl and BDR are located in Brisbane.  The principal negotiator for BDR, Mr Burrows, is located in Brisbane.  His counterpart, Mr Adams resides in Cairns. BDR’s lawyers are located in Brisbane and Nightowl’s lawyers are located in Cairns. 
  4. [76]
    The venue of the proceeding is perhaps of less significance than was formerly the case.  That is because Cairns is a two-hour flight from Brisbane. The flights are regular. The court can and frequently does hear interlocutory applications by telephone or by videolink.  The pandemic has accelerated the use of that mode of hearing.  Indeed, an offer was made to have these three applications heard by videolink although the parties declined and appeared in person in Brisbane.  Similarly, the case can be accommodated in the commercial list even if the lawyers are located outside Brisbane.
  5. [77]
    For the trial, the personal attendance of the witnesses and representatives of the parties may be required. A trial in Brisbane will inconvenience the plaintiff. A trial in Cairns will inconvenience the defendant. It is difficult to see that the inconvenience will be significant for either. Certainly, the inconvenience to one party has not been shown to be greater than that for the other party.
  6. [78]
    The evidence does not suggest that any witnesses will be cross-examined for a lengthy period. A significant part of the evidence involves email communications. In so far as the parties will go into evidence as to their conversations, much of that evidence is likely to find its way into witness statements or affidavits.
  7. [79]
    In a real sense though this proceeding has a closer connection with Brisbane than it does to Cairns. The property is near to Brisbane. The property the subject of the parties’ prior dealing is located at Wynnum Road, also near Brisbane. In a sense, Mr Adams has chosen to conduct business in or near Brisbane. In my view that tips what is otherwise a reasonably evenly balanced exercise of discretion.
  8. [80]
    On balance, convenience favours the transfer of the proceeding to Brisbane.

Footnotes

[1]If the two requirements of the rule are satisfied there is still a discretion to give summary judgment. For example, the jurisdiction should not be exercised where a plaintiff can improve its position by proper amendment to the pleading: Chen v ANZ Banking Group Ltd [2001] QSC 43 at [1] per Atkinson J.

[2]See Agar v Hyde (2000) 201 CLR 552 at [57].

[3]DCT v Salcedo [2005] 2 Qd R 232 at [3].

[4]The Centre is identified in the title as the Morayfield Road Convenience Centre.

[5]See later discussion.

[6]That raises the question of whether the intention was that all clauses were intended to be immediately binding, or whether this clause was intended to be immediately binding but the balance was to be binding only in the event that a formal lease was entered into. 

[7](1954) 91 CLR 353.

[8](1986) 40 NSWLR 622 (affirmed by the NSW CA at (1986) 40 NSWLR 631).

[9](2011) 42 VUWLR 49.

[10][2021] QSC 344 at [27].

[11][2009] QCA 60 at [22].

[12]See paragraph 6 of the defence. Three of those 36 items, the principal ones relied on in argument, are expressly discussed below.

[13]Demtear Pty Ltd v Abelian Pty Ltd [2004] QSC 103 at [10] (Muir J).

[14]Matters of importance may well be matters that are not essential to the bargain but are matters that are naturally important in those types of transactions or were regarded as important by the parties in their negotiations.

[15]Geebung Investments Pty Ltd v Varga Group Investments (No. 8) Pty Ltd (1995) 7 BPR 14, 551 at 14,569.

[16](1988) 18 NSWLR 54.

[17]Hillas & Co Ltd v Arcos Ltd (1932) LT 503 at 513; cited by Muir J in Demtear Pty Ltd v Abelian Pty Ltd [2004] QSC 103 at [16].

[18]See, for example, the discussion by Lang in Real Estate Agency Law and Practice in New South Wales (5th ed) at [1205].

[19]See Gibbs J in Godecke v Kirwan (1973) 129 CLR 629 at 646; Rossiter, Principles of Land Contracts & Options in Australia at 9.

[20]Curiously, this appears adjacent to the heading/item ‘GUARANTEES’.

[21]Demtear Pty Ltd v Abelian Pty Ltd [2004] QSC 103 at [13] (Muir J).

[22]See page 61 of the exhibits to Mr Case’s affidavit.

[23]Moffatt Property Development Group Pty Ltd v Hebron Park Pty Ltd [2009] QCA 60 at [22] (Keane JA).

[24]Ogle v Comboyuro Investments Pty Ltd (1976) 136 CLR 444. There is however a requirement that can the leave the court be obtained: Sunbird Plaza Pty Ltd v Maloney (1988) 166 CLR 245 at 260.

[25]See the discussion in Meagher Gummow & Lehane’s Equity: Doctrines and Remedies (4th ed) at [20-145].

[26]Ibid at [20-080].

[27](1924) 35 CLR 222.

[28]See the discussion in Meagher Gummow & Lehane’s Equity: Doctrines and Remedies (4th ed) at [20-110].

[29]Meagher Gummow & Lehane’s Equity: Doctrines and Remedies (4th ed) at [20-110].

[30]Australian Energy and Electrical Holdings Pty Ltd v Isbell [2006] QSC 034 at [15]. In Quick on Costs at [250-370] the fact that an undertaking is offered by those behind the company is described as “a powerful tool to resist a security for costs application.” That powerful tool was successfully deployed in Valeba Pty Ltd v Mulpha Sanctuary Cove (Developments) Pty Ltd [2012] QSC 286 (particularly at [18] and [19]) and JNJ Resources Pty Ltd v Crouch & Lyndon (a firm) (No 2) [2014] QSC 137 at [17]; but it is not a panacea: Quick on Costs at [250-370].

[31]That is what the ASIC search shows. The text of the affidavit says that Nightowl (QLD) Pty Ltd is the 100% shareholder of Think Convenience Pty Ltd, but I assume that is a mistake because the ASIC search shows that the position is the opposite – Think Convenience Pty Ltd holds all the shares in Nightowl (QLD) Pty Ltd.

[32][2016] VSC 401 at [40]; See Quick on Costs at [250.430].

[33][1985] 1 Qd R 401 at 403.

[34]Discussed in Colbran, Security for Costs at [16-27].

[35]That was the situation before McPherson J in Bruce Pie and Sons Pty Ltd v R H Mainwaring, English and Peldan [1985] 1 Qd R 401 at 403.

[36]Frequently the proceeding is stayed pending the provision of the security.

[37]Mr Adams, Think Convenience Pty Ltd and Adams Wholesale Pty Ltd

Close

Editorial Notes

  • Published Case Name:

    Nightowl Properties Pty Ltd v BDR No. 3 Pty Ltd

  • Shortened Case Name:

    Nightowl Properties Pty Ltd v BDR No 3 Pty Ltd

  • MNC:

    [2022] QSC 143

  • Court:

    QSC

  • Judge(s):

    Freeburn J

  • Date:

    08 Jul 2022

  • White Star Case:

    Yes

Appeal Status

Please note, appeal data is presently unavailable for this judgment. This judgment may have been the subject of an appeal.

Cases Cited

Case NameFull CitationFrequency
Agar v Hyde (2000) 201 CLR 552
1 citation
Jump To
Cite 1 - (2000) 201 CLR 552
Aqua Blue (Noosa) Pty Ltd v Soil Surveys Engineering Pty Ltd [2010] QSC 176
1 citation
Jump To
Cite 1 - [2010] QSC 176
Australian Energy and Electrical Holdings Pty Ltd v Isbell [2006] QSC 34
1 citation
Jump To
Cite 1 - [2006] QSC 34
Baulkham Hills Private Hospital Pty Ltd v GR Securities Pty Ltd (1986) 40 NSWLR 622
1 citation
Jump To
Cite 1 - (1986) 40 NSWLR 622
Bruce Pie & Sons Pty Ltd v RH Mainwaring, English and Peldan [1985] 1 Qd R 401
2 citations
Jump To
Cite 1 - [1985] 1 Qd R 401
Cite 2 - [1985] 1 Qd R 401
Chen v Australian & New Zealand Banking Group Ltd [2001] QSC 43
1 citation
Jump To
Cite 1 - [2001] QSC 43
Demtear Pty Ltd v Abelian Pty Ltd [2004] QSC 103
3 citations
Jump To
Cite 1 - [2004] QSC 103
Cite 2 - [2004] QSC 103
Cite 3 - [2004] QSC 103
Deputy Commissioner of Taxation v Salcedo[2005] 2 Qd R 232; [2005] QCA 227
1 citation
Jump To
Cite 1 - [2005] 2 Qd R 232
DIF III Global Co-Investment Fund v BBLP LLC [2016] VSC 401
1 citation
Jump To
Cite 1 - [2016] VSC 401
G R Securities v Baulkham Hills Private Hospital Pty Ltd (1986) 40 NSW LR 631
1 citation
Jump To
Cite 1 - (1986) 40 NSW LR 631
Gall v Mitchell (1924) 35 CLR 222
1 citation
Jump To
Cite 1 - (1924) 35 CLR 222
Geebung Investments Pty Ltd v Varga Group Investments (No. 8) Pty Ltd (1995) 7 BPR 14,551
1 citation
Jump To
Cite 1 - (1995) 7 BPR 14,551
Geebung Investments Pty Ltd v Varga Group Investments (No. 8) Pty Ltd (1988) 18 NSWLR 54
1 citation
Jump To
Cite 1 - (1988) 18 NSWLR 54
Godecke v Kirwan (1973) 129 CLR 629
1 citation
Jump To
Cite 1 - (1973) 129 CLR 629
Hillas & Co Ltd v Arcos Ltd (1932) LT 503
1 citation
Jump To
Cite 1 - (1932) LT 503
JNJ Resources Pty Ltd v Crouch & Lyndon (a firm) (No 2) [2014] QSC 137
1 citation
Jump To
Cite 1 - [2014] QSC 137
Marbryde Pty Ltd v Mainland Property Holdings No 8 Pty Ltd [2021] QSC 344
1 citation
Jump To
Cite 1 - [2021] QSC 344
Masters v Cameron (1954) 91 C.L.R 353
1 citation
Jump To
Cite 1 - (1954) 91 C.L.R 353
Moffatt Property Development Group Pty Ltd v Hebron Park Pty Ltd [2009] QCA 60
2 citations
Jump To
Cite 1 - [2009] QCA 60
Cite 2 - [2009] QCA 60
Ogle v Comboyuro Investments Pty Ltd (1976) 136 CLR 444
1 citation
Jump To
Cite 1 - (1976) 136 CLR 444
R v Willeman (2011) 42 VUWLR 49
1 citation
Jump To
Cite 1 - (2011) 42 VUWLR 49
Sunbird Plaza Pty Ltd v Maloney (1988) 166 CLR 245
1 citation
Jump To
Cite 1 - (1988) 166 CLR 245
Valeba Pty Ltd v Mulpha Sanctuary Cove (Developments) Pty Ltd [2012] QSC 286
1 citation
Jump To
Cite 1 - [2012] QSC 286

Cases Citing

Case NameFull CitationFrequency
Sentinel Property Group Pty Ltd v ABH Hotel Pty Ltd [2022] QSC 165 2 citations
1

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