Raine Square appeals: Westgem Investments Pty Ltd v Commonwealth Bank of Australia [2022] WASCA 132
CBA and Lloyds Banking Group (the Financiers) (represented by King & Wood Mallesons, led by James Wang, Stephanie Puris, Emma Kay and Sarah McCauley) have been defending long-running proceedings brought by the developer of the Raine Square development and its related parties. The claims alleged breach of contract, unconscionable conduct, misleading or deceptive conduct and uncommercial transactions whilst the developer was insolvent, as well as other claims.
The Financiers were wholly successful in a trial in the Supreme Court of Western Australia. The plaintiffs appealed the decision. The Court of Appeal published their decision today, which was another comprehensive win for the Financiers, with all appeal grounds being dismissed.
More details on the Raine Square appeals decision
The Raine Square proceedings involve a series of related proceedings arising from the financing of the construction of a commercial high-rise development in Perth, Western Australia, which is known as Raine Square. The finance facility was initially entered in April 2008 (and which was later extended / restated in September 2010). The Financiers (at the relevant time, being Bankwest and BOS International (Australia) Limited) financed the development. The borrower was a special purpose vehicle, Westgem Investments Pty Ltd (Borrower), the sponsors were Perth property developers, Luke Saraceni and Hossean Pourzand (Sponsors), and various other related entities were security providers and guarantors (collectively, the Westgem parties).
Following a default by the Borrower in late December 2010 (when the development was only partly completed), the Financiers appointed receivers in early January 2011, who ultimately completed (and later sold) the development.
From 2012, the Westgem parties commenced multiple proceedings in the Supreme Court of Western Australia against the Financiers (and the receivers), making numerous allegations in relation to the operation of the loan facilities, and the circumstances surrounding the development and sale of Raine Square.
In 2014, Brian Hughes, the liquidator of the Borrower, (Liquidator) commenced proceedings seeking to unwind certain transactions with the Financiers on the basis that the transactions were insolvent and uncommercial transactions within the meaning of the Corporations Act 2001 (Cth).
The four-month trial for the above proceedings was heard by the Supreme Court of Western Australia in 2018 before Tottle J and his Honour’s judgment was handed down in 2020, which was a comprehensive win for the Financiers. The Westgem parties and the Liquidator appealed the trial judgment in respect of the various matters, filing 33 appeal grounds in total. The Financiers refuted each of the 33 appeal grounds and filed notices of contention to affirm Tottle J’s decision on grounds other than those relied on by his Honour.
The appeals were heard on 4 to 8 April 2022 in the Court of Appeal of the Supreme Court of Western Australia by Murphy and Mitchell JJA and Fraser AJA. The judgment published by their Honours today was a comprehensive win for the Financiers, with all 33 of the Westgem parties’ appeal grounds being dismissed.
To see the full appeal judgment, please click here.
