Aysun Pty Ltd v Cregan

The appeal and cross-appeal before the Court of Appeal of New South Wales concerned a dispute arising from the sale of a business. The plaintiff, Aysun Pty Ltd, was the purchaser, and the defendants, Mr. and Mrs. Cregan, were the vendors. The dispute centred on whether the vendors had breached a condition of the standard form contract for sale of business, specifically clause 10, which contained promises regarding the business's compliance with regulatory requirements.

The primary legal issues before the court were: first, the proper construction of the vendors' promise under clause 10 of the contract, which stated the business "has complied" with relevant regulatory requirements; and second, whether any breach of this promise caused loss to the purchaser. The purchaser alleged that the vendors had not enforced a limit on the number of patrons, and that this failure constituted a breach of the compliance promise. The purchaser further contended that this breach caused them loss when the regulatory authority subsequently enforced the patron limit.

The court's reasoning focused on the plain meaning of the contractual language and the principle of giving commercial contracts a businesslike construction. It held that the phrase "has complied" referred to a state of affairs at the time of the contract and did not impose an ongoing obligation to enforce existing regulations. The court found that the vendors' failure to enforce the patron limit was not a breach of the promise that the business *had complied* with regulations. Furthermore, even if there had been a breach, the court determined that it was not causally connected to the loss suffered by the purchaser, as the loss arose from the subsequent enforcement of the limit by the regulatory authority, not from the prior non-enforcement by the vendors. The court also noted that new arguments raised on appeal, which could have been met by evidence at trial, would generally not be permitted.

The Court of Appeal allowed the cross-appeal, setting aside the orders of the District Court and entering judgment for the defendants. The plaintiff was ordered to pay the defendants' costs. The original appeal was dismissed, with the appellant ordered to pay the respondents' costs of the appeal and cross-appeal. The cross-respondent was granted a certificate under the Suitors' Fund Act 1951 (NSW) for the costs of the cross-appeal, subject to qualification.