The High Court dismissed a $703,300 summary judgment claim against builder Frederick van der Sande; a full court hearing is needed to sort out disputed facts. Mr van der Sande alleges KJ Syms Trust, financier for their failed joint venture building company, changed the rules, reneged on promises to clear joint venture debts and did not honour a ‘stand still’ agreement promising not to sue.
Their joint venture was established in 2011: accountant, the late Kelvin Syms providing funding through his KJ Syms No. 2 Trust; Mr van der Sande handling construction of residential property. Mr Syms died in 2014. New trustees took control of the funding side.
Evidence was given of disputes arising over the accounting treatment of ‘management fees’ after Mr Syms death. Project manager Fordsan Construction Ltd, controlled by Mr van der Sande, was receiving monthly management fees. The new trustees changed past practice, treating the fees as an advance, repayable by Fordsan if no joint venture profits eventuated. The supposed debt was secured with a general security agreement over joint venture assets. With a debt of $703,300 having accrued, the trustees triggered their security in 2017, appointing a receiver and sued Mr van der Sande as guarantor of Fordsan’s debt.
Associate judge Sargisson put the case on hold. The joint venture agreement states management fees are absorbed into Mr van der Sande’s profit share, should joint venture profits eventuate. It does not say management fees are repayable advances. There is also a dispute over the status of a 2017 ‘stand still’ agreement in which Mr van der Sande agreed money was owing and the trustees agreed not take immediate action to recover the debt; payments were re-scheduled for fixed dates with a six month delay. Mr van der Sande said he signed only after the trustees agreed to pay creditors direct for construction work. Creditors were not paid, he said. Trustees did not sign the ‘stand still’ agreement. They appointed receivers to recover the disputed debt within a month of Mr van der Sande’s signature.
Stellar Homes Ltd v. Fordsan Construction Ltd – High Court (23.08.19)
19.153