In the matter of The Summit Hotel Bondi Beach Pty Ltd (No 3) [2023] NSWSC 630

In the matter of The Summit Hotel Bondi Beach Pty Ltd (No 3) [2023] NSWSC 630

The Court accepted the orders proposed by Terry and Geraldine, with agreed variations and undertakings, because their proposed company-law regime adequately addressed the concern that they could control SHBB's enforcement of the indemnity and mortgage; the additional indemnity to Efrem and more specific wording proposed by Efrem were unnecessary; and, absent findings of breach or wrongdoing, the Macquarie Bank trust account rate was the appropriate interest rate to make the fund whole if the carveout had to be reversed.

Jurisdiction
Australia
Judgment Date
13 June 2023
Procedural Posture
Equity Corporations List; Interlocutory Process for Interim Preservation/freezing Orders / Consequential Orders Following in the Matter of the Summit Hotel Bondi Beach Pty Ltd (no 2) [2023] NSWSC 487
Outcome
Orders will be made in the form proposed by the fourth and fifth defendants, including the agreed variations, subject to the undertakings to be given to the Court.
Legal Topics
['interim Preservation' 'freezing Orders' 'bespoke Freezing Orders' 'undertakings to the Court' 'company Control and Enforcement of Indemnity' 'interest on Indemnity']
['civil Procedure' 'corporations'] ['interim Preservation' 'freezing Orders' 'bespoke Freezing Orders' 'undertakings to the Court' 'company Control and Enforcement of Indemnity' 'interest on Indemnity']

Case Brief

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Procedural Posture

Equity Corporations List; Interlocutory Process for Interim Preservation/freezing Orders / Consequential Orders Following in the Matter of the Summit Hotel Bondi Beach Pty Ltd (no 2) [2023] NSWSC 487

Legal Issues

  1. 1 ["What orders should be made in response to the plaintiffs' interlocutory process filed on 15 February 2023." 'Whether the freezing orders should include a $10,000,000 carveout enabling repayment of a debt recorded as owed by SHBB to Lulubelle, subject to undertakings by Terry and Geraldine.' "Whether Terry and Geraldine should indemnify Efrem as well as SHBB, or whether a company-law regime authorising Efrem to enforce SHBB's indemnity and mortgage was sufficient." 'How the indemnity should describe the circumstances in which repayments to Lulubelle must be repaid.' 'What interest rate should apply to any indemnity obligation in respect of the $10,000,000 carveout.']

Ratio Decidendi

The Court accepted the orders proposed by Terry and Geraldine, with agreed variations and undertakings, because their proposed company-law regime adequately addressed the concern that they could control SHBB's enforcement of the indemnity and mortgage; the additional indemnity to Efrem and more specific wording proposed by Efrem were unnecessary; and, absent findings of breach or wrongdoing, the Macquarie Bank trust account rate was the appropriate interest rate to make the fund whole if the carveout had to be reversed.

Court Disposition

Orders will be made in the form proposed by the fourth and fifth defendants, including the agreed variations, subject to the undertakings to be given to the Court.

Orders

  • ['Bespoke freezing orders will be made in relation to the proceeds of sale of a number of properties, subject to a $10,000,000 carveout enabling Terry and Geraldine to cause SHBB to repay $10,000,000 of a debt recorded as owed to Lulubelle.' 'The carveout is permitted on the basis of undertakings by Terry and...