Harvard Nominees Pty Ltd v Nicoletti

• Jurisdiction: Australia Federal only
• Court: Full Federal Court (Australia)
• Judgment Date: 08 November 2022
• Neutral Citation: [2022] FCAFC 179
• Date: 08 November 2022

Federal Court of Australia

Harvard Nominees Pty Ltd v Nicoletti [2022] FCAFC 179

Appeal from:	Harvard Nominees Pty Ltd v Tiller (No 4) [2022] FCA 105
File number:	WAD 59 of 2022
Judgment of:	BANKS-SMITH, COLVIN AND O'SULLIVAN JJ
Date of judgment:	8 November 2022
Catchwords:	CONSUMER LAW - where on remitter primary judge found that first and second respondents were liable to pay damages arising from loss under the Australian Consumer Law - where primary judge held that the remitter did not disturb first instance findings as to the third respondent and therefore did not order damages against him - where appellant alleges that the primary judge erred in construing the nature and terms of the remittal - where the primary judge properly construed the reasons and orders of the Full Court - appeal dismissed
Cases cited:	Harvard Nominees Pty Ltd v Tiller (No 2) [2020] FCA 604 Harvard Nominees Pty Ltd v Tiller (No 4) [2022] FCA 105 Harvard Nominees Pty Ltd v Tiller [2020] FCAFC 229 Re The Spanish Club Ltd [2015] NSWSC 1858
Division:	General Division
Registry:	Western Australia
National Practice Area:	Commercial and Corporations
Sub-area:	Commercial Contracts, Banking, Finance and Insurance
Number of paragraphs:	110
Date of last submissions:	29 August 2022 (Appellant) 12 September 2022 (Third Respondent)
Date of hearing:	24 August 2022
Counsel for the Applicant:	Mr RC Newlinds SC with Mr TM Rogan
Solicitor for the Applicant:	Hotchkin Hanly Lawyers
Counsel for the Third Respondent:	Mr MD Cuerden SC with Mr AM Freund
Solicitor for the Third Respondent:	Lawton Gillon

ORDERS

		WAD 59 of 2022
BETWEEN:	HARVARD NOMINEES PTY LTD (ACN 008 761 037) Applicant
AND:	GIOVANNI BASILIO NICOLETTI Third Respondent

order made by:	BANKS-SMITH, COLVIN AND O'SULLIVAN JJ
DATE OF ORDER:	8 november 2022

THE COURT ORDERS THAT:

1. The appeal is dismissed.

2. The appellant do pay the third respondent's costs to be assessed on a lump sum basis by a registrar if not agreed.

3. There be liberty to the appellant to apply within 14 days to vary the costs order should it maintain that there should be any different order as to costs.

4. The liberty to apply shall be exercised by filing and serving any submission of no more than three pages stating the costs order sought and the contentions advanced as to why the order should be made together with any affidavit in support.

5. If the liberty is exercised, then the third respondent shall file and serve any submission in response of no more than three pages together with any affidavit.

6. Unless otherwise ordered, any issue as to whether the costs order should be varied shall be determined on the papers.

THE COURT NOTES THAT:

1. These orders do not affect the costs and other consequences of the notices of discontinuance of the whole of the appeal as against each of the first and second respondents.

Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

THE COURT:

1. Harvard Nominees Pty Ltd (Harvard) is controlled by Mr John Caratti. Harvard owns a farm near Esperance in Western Australia known as Warrinup Farm. Together with his brother, Mr Caratti also owns another farm in the area which is known as Howick Farm. At the beginning of 2019, both of the farms (Farms) were leased to Mammoth Investments Pty Ltd (Mammoth), another entity controlled by Mr Caratti. Mammoth had subleased the Farms to Mr Simon Tiller and his wife under long term arrangements (Tiller Lease). The Tillers were behind in the payment of rent and outgoings under the Tiller Lease. There had also been a breakdown in their marriage which had resulted in their separation in March 2018. Mammoth served a default notice.

2. For present purposes, it may be accepted that everyone concerned in the dealings that occurred thereafter thought that the rent payable under the Tiller Lease was very favourable to the Tillers as lessees. Nevertheless, Mr Tiller was under considerable pressure and engaged in conversations with Mr Caratti about a new lease with Dimension Agriculture Pty Ltd (Dimension), a company that he said was going to take over the farming business that, until then, had been carried on by him in partnership with his wife. He explained that he sought the new arrangements by reason of the breakdown in his marriage. Mr Tiller also sought deferral of the payments of rent and outgoings that were then due.

3. At the time of these communications, Mr Tiller had been talking to Mr Giovanni (John) Nicoletti about obtaining further financial backing so that he could continue to operate the Farms. There was considerable animosity between Mr Caratti and Mr Nicoletti such that Mr Caratti was unwilling to be involved in any business dealings with Mr Nicoletti. Indeed, it was said that they hated each other. Mr Tiller was aware of the animosity.

4. In early February 2019, there were discussions between Mr Caratti and Mr Tiller concerning the leases for the Farms. They resulted in new arrangements being concluded and documented by which (a) the lease to Mammoth over Warrinup Farm was surrendered; (b) the lease over Howick farm was assigned to Harvard; (c) the sublease by Mammoth to the Tillers was surrendered; and (d) Harvard leased Warrinup farm and subleased Howick farm to Mr Tiller and Dimension (New Leases). It appears that the arrangements in (a) and (b) by which Harvard came to be the party who could enter into the New Leases were matters in which Mr Tiller and Dimension were not involved. They were internal matters that concerned interests held by members of the Caratti family. They affected the dealings between Mr Caratti and Mr Tiller only in the sense that the New Leases were both to be made with Harvard.

5. The New Leases continued the favourable rental terms of the original Tiller Lease. They also provided for deferred payment of arrears in rent and reimbursement to Harvard of amounts in relation to rates.

6. Harvard claimed that it entered into the instruments recording the new arrangements on the basis of the truth of certain representations made by Mr Tiller and Dimension to the effect that Mr Nicoletti had no involvement, and would have no involvement, in Dimension.

7. In April 2019, Mr Caratti came to know that Mr Nicoletti was involved in Dimension and the activities on the Farms. Harvard's position was that it would not have entered into the New Leases had it known the true position. It claimed to have been misled and asserted in correspondence an entitlement to rescind the New Leases. It proceeded to enter into a new lease in respect of the Farms with a Mr Fowler (Fowler Lease). It was a condition precedent to the Fowler Lease that Harvard was able to secure vacant possession of the Farms by 1 May 2019. The Fowler Lease provided for a much higher rent than was payable under the New Leases (and had been payable under the original Tiller Lease).

8. Unbeknown to Harvard at the time of entry into the Fowler Lease, on 15 February 2019 Mr Tiller and Dimension had executed deeds by which Mr Tiller assigned his interest in the New Leases to Dimension (15 February Deeds). Although Mr Nicoletti was not a director...