Rialto Sports Pty Limited v Cancer Care Associates Pty Limited; Rialto Sports Pty Limited v CCA Estates Pty Limited; Rialto Sports Pty Limited v Davjul Holdings Pty Limited; Rialto Sports Pty Limited v Armman Pty Limited

1. [1]

   The applicants in this matter are Cancer Care Associates Pty Limited, Armmam Pty Limited, CCA Estates Pty Limited and Davjul Holdings Pty Limited (the applicants). The applicants, for whom Mr Weinberger appears, seek the Court’s leave to file four notices of motion, one for each applicant, against Rialto Sports Pty Limited. Each notice of motion seeks orders which include freezing orders, the evident purpose of which is to increase the chances that any judgment entered by this Court in their favour can be met by Rialto Sports Pty Limited, the respondent to the application and the appellant in the appeal to this Court (the respondent).

2. [2]

   Mr Ngo, who appears on behalf of the respondent, has indicated to me that the respondent consents to the proposed orders set out in the notices of motion, with two exceptions, both relating to costs, to which I will return shortly. In his affidavit dated 20 September 2023, Sean Turner, the applicant’s solicitor sets out the background to the matter. It can be briefly summarised.

3. [3]

   The applicants (who are the respondents to the appeal to this Court) are proprietors of commercial lots within a property situated at the Kingsway, Miranda (the Miranda development). Three out of four of the applicants purchased a lot off the plan from the respondent, a property developer.

4. [4]

   The applicants sued the developer for breach of its contractual obligations to provide a property free of defects. On 9 December 2021, the applicants obtained judgments in the District Court of New South Wales for the combined sum of about $1.4 million for damages for defects in their respective lots. The developer appealed. The appeal was dismissed, save to the extent that it was upheld by consent: Rialto Sports Pty Limited v Cancer Care Associates Pty Limited; CCA Estates Pty Limited; Davjul Holdings Pty Limited; Armmam Pty Limited [2022] NSWCA 146. The basis on which the appeal was upheld by consent was, in substance, that the reasons of the Court below were inadequate.

5. [5]

   The only issue following the appeal was the quantum of the applicants’ damages. This Court referred that question for inquiry and report to a referee, Janet Grey. Ms Grey, who delivered her report on 17 April 2023, found that the applicants are collectively entitled to about $1.3 million.

6. [6]

   Each of the applicants filed a notice of motion seeking orders that this Court adopt the report. The developer has not filed a motion seeking a rejection of any part of the report. The applicants’ notices of motion are listed for hearing in this Court before Bell CJ and Gleeson JA on 16 November 2023. The applicable principles which govern consideration by a Court of a report of a referee are conveniently summarised by McDougall J in Chocolate Factory Apartments v Westpoint Finance & Ors [2005] NSWSC 784 at [7]. Paragraphs [7](5)-(8) are of particular relevance to the present case and confirm that the Court, on receipt of a report in these circumstances, does not engage in an investigation into the merits of the report, although it is entitled to exercise a supervisory jurisdiction over the referee’s report.

7. [7]

   Until relatively recently, the respondent was the registered proprietor of Lot 24 in the Miranda development. The evidence adduced on behalf of the applicants indicate that the respondent sold Lot 24 at the end of last year or earlier this year to Santo Peter Tripodina Investments Pty Limited (Tripodina Investments). The evidence adduced on behalf of the applicants indicates that the respondent does not own any other real property in Australia. The registered office of Tripodina Investments is the same registered office and principal place of business as the respondent’s. The sole director of Tripodina Investments is Santo Tripodina. The director of the developer is Adrian Tripodina.

8. [8]

   Tristate Produce Merchants Pty Limited (Tristate) has registered its security interest over “all present and after acquired property” held by the respondent on the Personal Property Security Register. Once again, the principal place of business and registered office of Tristate is the same as that of the developer and Tripodina Investments. The director of Tristate is Santo Tripodina.

9. [9]

   Mr Turner deposed that he became aware of the sale or transfer on 21 August 2023. He acted immediately by communicating with the solicitor for the respondent developer seeking undertakings and an affidavit of assets and liabilities. There was considerable correspondence since that time between the parties during which the respondent’s solicitor allegedly had difficulty obtaining instructions from his client.

10. [10]

    I am satisfied that it is appropriate that the Court make orders in terms of the orders agreed between the parties in order to safeguard the interests of the applicants. As I referred to above, there are two issues relating to the orders sought in the notices of motion.

11. [11]

    In each of the four notices of motion, there is an exception to the freezing order in paragraph 8(a) of the proposed orders (which are annexed to the notices of motion) which provides:

12. [12]

    Mr Ngo submits that the exception should be extended to permit the respondents to pay their legal representatives for costs and expenses already incurred but not yet paid to date with, as I understand it, no monetary limit. Mr Weinberger submits that the allowance of $10,000 for each of the four matters is sufficient and it would not be appropriate for this Court to effectively grant a preference to the respondent’s legal representatives by having a larger carve-out than is provided for in paragraph 8(a) of the annexure.

13. [13]

    I accept Mr Weinberger’s submissions. There would appear to be a very strong indication that the respondent may not be able to meet all its debts, either because of its recent conduct in divesting itself of Lot 24 or by other conduct. If that is the case, it will be a matter, ultimately, for a liquidator or administrator to work out the priorities between unsecured creditors. It would be undesirable for this Court to, in effect, give the legal representatives a preference.

14. [14]

    For these reasons, I am persuaded by Mr Weinberger that an order in the form of 8(a) ought be made.

15. [15]

    The other order sought is that the costs of the application be paid by the respondent. While Mr Ngo formally opposed that order, I understood him, sensibly and correctly, to appreciate that there was nothing much that could be said against it. The applicants gave the respondent ample time to resolve this dispute without their having to incur the costs of preparing notices of motion, affidavits in support and listing the matter for hearing. It was, as I understand it, only today, or very recently, that the respondent indicated that it consented to the orders sought. In these circumstances, the respondent ought be ordered to pay the applicant’s costs of these applications.

Orders

1. [16]

   For the reasons given above, I make the following orders:

   1. (1)

      Leave be granted to file in Court the notice of motion dated 19 September 2023.

   2. (2)

      Make the Orders set out in the Freezing Order annexed and marked “A”. Note that the Freezing Orders are by consent except 8(a).

   3. (3)

      Liberty to restore on 24 hours’ notice for any party.

   4. (4)

      The respondent on the motion to pay the applicants’ costs of the notice of motion.

   5. (5)

      List the matter before Adamson JA at 9.30am on Tuesday, 3 October 2023. Such listing to be vacated upon the applicants’ solicitors notifying the associate to Adamson JA by email that the listing is no longer required.

   6. (6)

      Note the undertakings given by the applicants which are set out in Schedule A to these reasons.