Atlas Facilities Pty Ltd v Veneziano
[2017] VCC 1569
•1 November 2017
| IN THE COUNTY COURT OF VICTORIA AT MELBOURNE COMMERCIAL DIVISION | Revised Not Restricted Suitable for Publication |
Case No. CI-17-04595
| ATLAS FACILITIES PTY LTD | Plaintiff |
| v | |
| ROCCO VENEZIANO and A.C.N. 150 855 762 PTY LTD and AALIYAH VENEZIANO | First Defendant Second Defendant Third Defendant |
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JUDGE: | HIS HONOUR JUDGE COSGRAVE | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 18 October 2017 | |
DATE OF JUDGMENT: | 1 November 2017 | |
CASE MAY BE CITED AS: | Atlas Facilities Pty Ltd v Veneziano & Ors | |
MEDIUM NEUTRAL CITATION: | [2017] VCC 1569 | |
REASONS FOR RULING
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Legislation Cited: Civil Procedure Act2010 (Vic); County Court General Civil Procedure Rules 2008 (Vic); Penalty Interest Rates Act 1983 (Vic)
Cases Cited:Bahr v Nicolay (1988) 164 CLR 604
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Ms R Zambelli | Logie-Smith Lanyon Lawyers |
| For the Defendant | Mr D Colman | Christopher James Lawyers |
HIS HONOUR:
Nature of application
1 This case concerns whether the plaintiff (“Atlas”) is entitled to final judgment against the first defendant (“Veneziano”) and the second defendant (“the company”) pursuant to Order 22 of the County Court General Civil Procedure Rules 2008 (Vic) and/or section 63 of the Civil Procedure Act 2010 (Vic).
Background
2 In September 2016 various parties, including the parties to this proceeding, entered into a Deed of Settlement and Release (“the Deed”). In general terms, the Deed resolved a dispute which had arisen with respect to a restaurant, wine bar and function room business operated by the company from premises owned by an entity associated with the plaintiff. Veneziano is the sole director of the company. The third defendant is Veneziano’s wife (“Mrs Veneziano”).
3 The parties to the Deed included a company related to Atlas, 150 Clarendon Street Pty Ltd (“Clarendon”), Michael Carrafa and Richard Cauchi, who are the receivers appointed by Atlas to the company.
4 Pursuant to clause 2 of the Deed, Veneziano and the company agreed jointly and severally to pay:
(a) $300,000 on 19 September 2016;
(b) $100,000 on or before 19 September 2017, being the first anniversary of the payment of the first instalment.
5 Clause 5 of the Deed provided, in effect, that if Veneziano or the company defaulted with respect to payment of the settlement sum or any of the instalments, they agreed that Atlas would be entitled, upon giving seven days written notice to Veneziano or the company (as the case may be) to cure the default, to:
(a) immediately issue proceedings against Veneziano and/or the company (as the case may be) for the settlement sum, less any amounts paid in accordance with clause 2 of the Deed;
(b) obtain judgment as if the proceeding were undefended for the settlement sum, plus costs of and incidental to the issuing of the proceedings, enforcement of the deed and obtaining judgment on a full indemnity basis, together with any interest accrued on the unpaid balance of the settlement sum between the date of execution of the Deed and the date of judgment, such interest to be calculated in accordance with the rate prescribed under the Penalty Interest Rates Act1983 (Vic), less any amount which had already been paid to Atlas as at the date of judgment.
6 The terms of the Deed provided that the Deed could be produced to the court as evidence of the irrevocable consent by Veneziano and the company:
(a) to the issuing of proceedings and the entry of judgment;
(b) that the entitlement of Atlas to enter the judgment against Veneziano or the company did not constitute a penalty;
(c) that an affidavit deposing to the breach of the obligations set out in clause 2 by solicitor acting for the landlord would be sufficient evidence of the breach of the obligations under clause 2, the amount of the settlement sum which had been paid or remained outstanding, calculation of the unpaid balance of the settlement sum, the costs of and incidental to issuing proceedings enforcing the Deed and entering judgment on an indemnity basis and interest.
7 Atlas received the first instalment of $300,000 on 19 September 2016.
8 By letter dated 6 September 2017, Atlas’ solicitors wrote to the solicitors for Veneziano and the company reminding them that the second instalment payment of $100,000 was due on 19 September 2017. The letter advised that the plaintiff was committed to enforcing its rights under the Deed and any judgment which it obtained.
9 Veneziano and the company failed to make the second instalment payment on 19 September 2017. On 21 September 2017, the plaintiff’s solicitors wrote to the solicitor for the first and second defendants advising that the payment due had not been made and that the letter constituted the seven days’ notice to those defendants to remedy the breach. The letter stated that if the breach were not rectified within the stipulated time, Atlas would:
(a) exercise all its rights under the Deed, including but not limited to issuing proceedings against Veneziano and the company and obtaining default judgment against them for the full amount of the second instalment, together with the legal costs on an indemnity basis and interest under the Penalty Interest Rates Act;
(b) enforce all its rights under the securities provided by Veneziano and Mrs Veneziano, including but not limited to the second mortgage over the property at Eaglemont and the personal guarantee provided by Mrs Veneziano;
(c) enforce any judgment obtained against Veneziano, the company and/or Mrs Veneziano by commencing bankruptcy and/or winding up proceedings.
10 The defendants did not make the second instalment payment of $100,000.
11 On 4 October 2017, Atlas issued proceedings against the first and second defendants for the unpaid instalment order, together with interest and costs.
12 On about 10 October 2017, Atlas made demand upon Mrs Veneziano as guarantor. It appears that she failed and refused to pay the monies owing by her husband and the company.
13 A few days later, Atlas obtained an order from the court authorising it to join Mrs Veneziano as a third defendant in this proceeding. Atlas duly amended its Writ and Statement of Claim to include its claim against Mrs Veneziano.
14 Atlas contended that having regard to the terms of the Deed and the defendants’ failure to make the instalment payment due under it, the defendants have no reasonable prospect of defending the case and, accordingly, Atlas says that it should obtain judgment immediately.
15 I note in passing that Veneziano and the company are represented by the same solicitor and that Mrs Veneziano is separately represented. It was agreed between Atlas and Mrs Veneziano that the plaintiff’s application against her would be adjourned to 27 October 2017. As a result, the present application for determination is limited to the dispute between Atlas and the first and second defendants.
16 The main argument raised by Veneziano and the company was that under clause 2(b) of the Deed, Atlas was obliged to pay the company $25,000 (inclusive of GST) for wine stock. At the hearing, it was not disputed that Atlas had failed to pay this money to the company.
17 The first and second defendants contended that because the parties’ obligations under the Deed were interdependent, Atlas, who had breached the Deed, could not simultaneously seek to enforce terms of the same Deed against the first and second defendants. Counsel for the first and second defendants referred to no statement of principle from case law or any authoritative text to that effect. He did refer to an excerpt from Carter on Contract (at page 106, 074) where the author said that under the modern law of contract, most promises to pay are presumed to be dependent on prior or concurrent performance and not independent of the other party’s performance.
18 In the circumstances, I decided to give the parties an opportunity to file written submissions on the point.
19 The first and second defendants raised two other arguments in connection with the application. First, they said that they had claims against the receivers for unlawfully taking funds from the company’s bank account in the sum of $36,516.80. It was said that these were monies which the company had specifically set aside to pay certain outgoings to employees and creditors of the business.
20 Further, the company alleged that Atlas had aided and abetted the receivers in connection with this unlawful act.
21 Secondly, the defendants argued that they were not in breach of the Deed because, although they did not pay the $100,000 due on 19 September 2017, they had the option of not doing so, waiting for the default notice and the issue of proceedings which they could then defend in court.
22 As to the argument regarding the receivers, I note that they are not party to this litigation. Even if Veneziano or the company had a good claim against the receivers (and I make no comment on the merits of such a claim), I do not consider that it would be of assistance to the defendants in the present proceeding. The defendants’ material did not set out a detailed basis for the allegations that Atlas aided and abetted the alleged wrongful acts by the receivers.
23 Counsel acknowledged that he was drawing a long bow with respect to the argument raised in paragraph 21. Frankly, I struggled to understand the argument and how it was put. In the circumstances, I do not consider that it has any merit sufficient to overcome the plaintiff’s application.
24 Both parties filed further affidavit material and submissions in accordance with the leave given. I consider that Atlas should have leave to rely upon the third affidavit of Michael Kontoudis sworn 20 October 2017. First it is limited in its scope and in essence responds to matters raised by Veneziano in his affidavit sworn on 17 October 2017. This affidavit was served later than allowed by the rules and the plaintiff had no real opportunity to respond to it. Importantly, the affidavit sets out matters which answer the defendants’ material.
25 Atlas filed an affidavit by its solicitor. The main point addressed in the affidavit was the payment for the wine stock and how it was affected by the business sale agreement (“the BSA”) entered into between Clarendon and the company. The solicitor exhibited documents which indicated that, by reason of the BSA made several days after the Deed, Clarendon, and not Atlas, was obliged to pay $25,000 for the wine stock. This payment was subject to adjustment pursuant to clause 9.2 of the BSA. Clause 9 dealt with adjustments to the purchase price to take account of such things as apportionable outgoings, deposits referrable to customer bookings, the cash or redemption value of vouchers which were unpresented or unused at the completion of the BSA, and prepayments.
26 The plaintiff’s case was that when the statement of adjustments was prepared, accruals exceeded prepayments with the result that, at completion, the company owed Clarendon the sum of $5,876.85. However, Clarendon and the receivers agreed that no money would change hands at completion.
27 In the circumstances, Atlas contended that any obligation to pay $25,000 for the wine stock was properly set off against amounts owing to the purchaser under the BSA.
28 For his part, Veneziano filed an affidavit in which he accepted that he could not require payment of the $25,000 from both Atlas and Clarendon. He acknowledged that such an outcome would amount to double payment. Veneziano also agreed that Atlas was not party to the BSA.
29 Veneziano said that the first time he had seen the receivers’ report was upon receipt of the most recent affidavit from the plaintiff. Veneziano disputed the accuracy of the amounts said to be deposits for functions to be held at the premises. He said that the policy within the company at the time was to take a 10% deposit for such functions. If the amount held were $24,156 as the receivers stated, that meant that total booking revenue anticipated was about $240,000. Veneziano disputed that the business generated that level of income within the timeframe in question. He said that because he had not seen the statement of adjustments previously, he was only able to comment upon it now.
Consideration
30 At the hearing Veneziano and the company submitted that:
(a) Atlas was in breach of the Deed by failing to pay the company $25,000 for the wine stock; and
(b) Atlas was thereby precluded from enforcing its right to payment of the second instalment of $100,000 under the Deed.
31 I consider that the defendants’ submissions are not persuasive.
32 First, Atlas is not in breach of its obligations. Because the parties negotiated the BSA shortly after entering the Deed, by agreement, the obligation to pay $25,000 for the wine stock passed from Atlas to Clarendon. That being so, there was no payment obligation which Atlas could breach.
33 Secondly, the obligation to pay for the wine stock was an obligation to pay the company, not Veneziano. In those circumstances, Veneziano could not derogate from his joint and several obligation under the Deed to pay the sum of $100,000 due in September 2017.
34 Thirdly, even if Atlas breached its obligation to pay $25,000 for the wine stock (which I do not accept), that does not necessarily prevent it from enforcing the Deed provisions relating to payment. Invoking the same text as that referred to by Veneziano at the hearing, Atlas noted that the author of Carter on Contract said:
(a) “[a] dependent contractual obligation is an obligation the duty to perform which is postponed until the occurrence of a condition precedent”; and
(b) “where the parties’ obligations are independent of one another the order of performance is immaterial”.
In my view, the obligation to buy the wine and the obligation to pay the second instalment of $100,000 are independent of each other.
35 There is no sufficient basis in law for Veneziano in particular to avoid his obligation to pay the second instalment of $100,000. In their submissions, the defendants referred to the High Court case of Bahr v Nicolay.[1] There, Mason CJ and Dawson J said that in general, the plaintiff in an action for specific performance must establish that he has performed the contractual obligation to be performed on his part before the commencement of the action and that he is ready and willing to perform his future obligations under the contract. This requirement was said to be not peculiar to specific performance actions. But for a possible exception, which is immaterial in the present circumstances, it was said to apply generally to claims for damages for breach of contract. Their Honours said that the plaintiff does not have to show he complied strictly with all his obligations under the contract or that he is ready and willing to comply strictly with all his future obligations. The readiness and willingness of a plaintiff in litigation relates only to the essential terms of the contract. Thus, even if Atlas and not Clarendon had the obligation to pay the $25,000 for the wine, I regard the obligation as not an essential term. Unlike the terms binding the defendants to pay the instalments of $300,000 and $100,000 respectively, where the contract itself set out the serious consequences of breaching the term, no similar consequences were included in the contract for the failure to pay any moneys due for the wine. In other words, the default provision in the Deed dealing with the non-payment of the two instalments is very important.
[1](1988) 164 CLR 604
Conclusion
36 In the circumstances, I have concluded that Atlas is entitled to judgment against Veneziano and the company. The matters raised by those defendants in their defence were not persuasive. They have no real prospect of success.
37 I order that there be judgment for the plaintiff against the first and second defendants in the sum of $100,000 together with interest in the sum of $11,012.95 and indemnity costs in accordance with the Deed of $15,496.16.
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