Padstow Corporation Pty Ltd v Fleming (No 3) [2013] NSWSC 24

Padstow Corporation Pty Ltd v Fleming (No 3) [2013] NSWSC 24

Because no security bond was provided, the guarantor's liability under cl 13 of the lease was unlimited and not capped at three months' rent. Padstow was entitled to diminution in the capital value of the land on sale and loss of rent only until the sale date, with recoverable post-liquidation expenses and damages calculated without GST. Fleming Snr was entitled to damages for breach of cl 6.5 of the Share Agreement equal to the settlement amount paid to Padstow less a 10 per cent discount for the possibility he would not have been released from the guarantee.

Jurisdiction
Australia
Judgment Date
30 January 2013
Procedural Posture
Separate Question in Equity Division Revenue List / Quantum Following Liability Judgment
Outcome
Guarantee held unlimited; Padstow entitled to damages calculated without GST, including diminution in value at sale and loss of rent to sale; Fleming Snr awarded damages of $337,500 against Fleming Jnr; costs awarded against Fleming Jnr; parties directed to bring in short minutes of order.
Legal Topics
['actions Against Surety' 'construction of Guarantee' 'loss of Bargain Damages' 'mitigation' 'gst on Court Awards' 'breach of Share Sale Agreement' 'removal of Guarantor']
['guarantee and Indemnity' 'contract' 'damages' 'taxation'] ['actions Against Surety' 'construction of Guarantee' 'loss of Bargain Damages' 'mitigation' 'gst on Court Awards' 'breach of Share Sale Agreement' 'removal of Guarantor']

Case Brief

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Procedural Posture

Separate Question in Equity Division Revenue List / Quantum Following Liability Judgment

Legal Issues

  1. 1 ["Whether Thomas John Fleming's liability under the lease guarantee was limited to an amount equal to three months' rent or was unlimited unless the security bond was paid." "Whether Padstow's damages should include GST." 'Whether Padstow was entitled to both diminution in value on sale of the land and loss of rent to the end of the lease.' 'Which post-liquidation expenses were recoverable from Thomas John Fleming under the guarantee.' "What damages Thomas Maurice Fleming was entitled to for Thomas John Fleming's breach of cl 6.5 of the Share Sale Agreement."]

Ratio Decidendi

Because no security bond was provided, the guarantor's liability under cl 13 of the lease was unlimited and not capped at three months' rent. Padstow was entitled to diminution in the capital value of the land on sale and loss of rent only until the sale date, with recoverable post-liquidation expenses and damages calculated without GST. Fleming Snr was entitled to damages for breach of cl 6.5 of the Share Agreement equal to the settlement amount paid to Padstow less a 10 per cent discount for the possibility he would not have been released from the guarantee.

Court Disposition

Guarantee held unlimited; Padstow entitled to damages calculated without GST, including diminution in value at sale and loss of rent to sale; Fleming Snr awarded damages of $337,500 against Fleming Jnr; costs awarded against Fleming Jnr; parties directed to bring in short minutes of order.

Orders

  • ["Padstow's damages are to be calculated on the basis that GST is not payable on the court's award." 'Padstow is entitled to diminution in value of the land at sale and loss of rent until the sale of the property, not to the end of the lease.' 'Padstow is entitled to post-liquidation expenses of $89,626.78.' 'Any...