Body in Balance Chiropractic Pty Ltd v Jambere Pty Ltd
[2016] VCC 1835
•16 December 2016
| IN THE COUNTY COURT OF VICTORIA AT MELBOURNE COMMERCIAL DIVISION | Revised Not Restricted Suitable for Publication |
| GENERAL LIST |
Case No. CI-15-04600
| BODY IN BALANCE CHIROPRACTIC PTY LTD (ABN 120 371 897) | First Plaintiff |
| and | |
| BIANCA JANE BEAUMONT | Second Plaintiff |
| v | |
| JAMBERE PTY LTD (ACN 164 765 520) | First Defendant |
| and | |
| JANINE MICHELLE RITCHIE | Second Defendant |
| and | |
| DAVID IAN THOMPSON | Third Defendant |
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JUDGE: | HIS HONOUR JUDGE SMITH | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 25, 26 and 31 October 2016 | |
DATE OF JUDGMENT: | 16 December 2016 | |
CASE MAY BE CITED AS: | Body in Balance Chiropractic Pty Ltd & Anor v Jambere Pty Ltd & Ors | |
MEDIUM NEUTRAL CITATION: | [2016] VCC 1835 | |
REASONS FOR JUDGMENT
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Subject: CONTRACT
Catchwords: Contract of sale of business – whether defendant entitled to rescind contract – whether vendor could deliver the business as contracted including its goodwill – whether the plaintiffs’ claim amounted to double recovery – whether specific performance should be ordered – calculation of damages
Legislation Cited: Corporations Act 2001
Cases Cited: Jameson v Central Electricity Generating Board [1999] 1 All ER 193
Judgment: Judgment for the plaintiffs.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiffs | Dr M Sharpe | Peter G Richards |
| For the Defendants | Mr T Sowden | Nicholas O’Donohue & Co |
HIS HONOUR:
Background
1 In 2015, Body in Balance Chiropractic Pty Ltd (“BIB”) and Bianca Jane Beaumont (“Beaumont”) operated a chiropractic practice in Richmond (“the Business”).
2 Beaumont, is a chiropractor who was and is the sole director and shareholder of BIB. I consider that at all relevant times, acts performed and statements made by Beaumont were performed and made for and on behalf of BIB and herself and, for convenience, in these Reasons I shall refer to BIB rather than to it and Beaumont, except where necessary.
3 The second defendant, (“Ritchie”), was a chiropractor who carried on practice in Mount Gambier, South Australia.
4 The third defendant, (“Thompson”), is Ritchie’s partner. He is not a chiropractor, but he managed the Mount Gambier practice. Ritchie and Thompson were directors and shareholders of the first defendant, Jambere Pty Ltd (“Jambere”). At all times relevant to this proceeding, Thompson acted on behalf of Jambere.
5 The events referred to in these Reasons all occurred in 2015 unless otherwise stated. Early in that year, Beaumont decided to sell BIB’s Richmond practice to enable her to spend more time with her young family.
6 At the same time, Ritchie and Thompson were looking to purchase a chiropractic practice in Melbourne. Their accountant had notified them that the Business was for sale.
7 Between March and June, negotiations took place between Beaumont, Ritchie and Thompson concerning the proposed sale and purchase of the Business.
8 On 24 June, the parties formally executed a written Contract for Sale and Purchase of the Business (“the Contract”).[1] The terms of the Contract provided, inter alia, that:
[1]Exhibit N, Joint Court Book (“JCB”) 96
(a) In consideration of payment by Jambere to BIB of the sum of $150,000 (exclusive of GST), BIB sold the Business to Jambere;
(b) The price of $150,000 was to be paid by way of a deposit of $15,000 payable on the date that the Contract was executed, and the balance of the purchase price on settlement.
(c) The date for settlement was defined as meaning 30 June, or such other date as agreed in writing by the parties.
(d) The sale included:
(i)The Assets specified in Schedule 1 of the Contract which included “good-will in the Business”;[2]
(ii)The business name of Body in Balance Chiropractic (Richmond);
(iii)Services connected to the Business premises;
(iv)Any intellectual property specifically relating to the Business;
(v)All licences, permits, approvals and registrations necessary for the Business interest.
[2]Exhibit N, JCB 101, 124
9 Ritchie and Thompson are guarantors of the obligations of Jambere under the Contract.
10 The deposit of $15,000 was not paid on the date of execution of the Contract. Nevertheless, it appears that the parties proceeded, at least for a time following that date, on the basis that the Contract would proceed.
11 Contrary to that anticipation, Jambere has never paid the deposit or the balance of the purchase price, and it has never been involved in the Business. The Business has not been transferred to it.
12 In this proceeding, BIB seeks an order against Jambere for specific performance of the Contract. Alternatively, it claims damages against each of the defendants, being the amount of the deposit of $15,000, together with expenses incurred by BIB in relation to, and consequential upon, the Contract.
13 In addition to the matters set out above, I am satisfied as to the following facts:
(a)As at 24 June, the Business was partly a chiropractic business, but also involved other associated activities, including myotherapy and massage.
(c)Other persons worked at the Business including a qualified chiropractor named Clarence Ho (“Ho”).
(d)Ho was considered by BIB to be a contractor. In October 2011, Ho and BIB had entered into an agreement whereby Ho performed chiropractic services and treatment for BIB patients (“the Services Contract”). It appears that he was remunerated on the basis of the number of clients treated by him. He was not employed by the hour. Effectively, he carried on such duties on a full-time basis from the Richmond premises.
(e) In addition to the Richmond practice, BIB operated another chiropractic practice in East Malvern, which also traded as Body in Balance. Beaumont worked at both of the Richmond and East Malvern practices.
(f)Because Ho was effectively working on a full-time basis at Richmond, and Beaumont on a part-time basis there, treatments conducted by Ho were productive of some 50 to 60 per cent of the income of the business.
(h)It was the intention of Jambere that, once it purchased the Business, it would continue to engage Ho and other staff members in the same manner as they had been engaged by BIB.
(j)The Richmond premises were owned by one Nguyen. BIB had leased those premises for some years leading up to 2015. For the most part, that lease had been a short-term, monthly lease. Shortly before June, BIB entered into an Agreement with Nguyen, whereby the lease was extended for a period of three years. This was done to facilitate the sale of the Business in order that a purchaser would have the security of a three-year tenancy.
(k)It was a term of the Contract that the vendor must obtain for the purchaser, by the date of settlement, a transfer of the lease with the landlord’s written consent, as approved by the purchaser, in writing.
(l)Negotiations took place with Nguyen for the lease to be assigned from BIB to the defendants. Initially, there were some difficulties, in that the landlord appeared unsatisfied to have Jambere’s obligations under the lease guaranteed only by Ritchie. Nguyen required Thompson also to guarantee Jambere’s obligations. After some negotiations, this was agreed to by Nguyen, Jambere, Ritchie and Thompson. Neither party suggested that anything turned upon the delay in obtaining the consent to the transfer of the lease.
(m)Prior to 28 June, Thompson and Ritchie had entered into negotiations with Ho with regard to him continuing to perform chiropractic duties at the Business following the sale of it to Jambere. Jambere had made an offer to Ho but that offer had not been accepted.
(n)On 28 June, Ho sent an email message to BIB which had also been copied to Thompson.[3] It stated, in essence, that:
[3]Exhibit R, JCB 167
(i)Ho had sought legal advice and had been advised that his relationship with BIB was truly one of employer/employee rather than principal and contractor;
(ii)Ho claimed that he was entitled to, but had not received, a number of benefits provided by law for employees, including superannuation in the sum of $35,733 and annual leave entitlements in the sum of $28,409;
(iii)That he was entitled to lodge a complaint to the Fair Work Ombudsman regarding his unpaid entitlements and that he was considering lodging such a complaint by 13 July;
(iv)He proposed that the new owners of the Business provide him with a revised contract of employment that appropriately reflected his engagement, including terms relating to leave and superannuation;
(v)He considered that he may be entitled to further redundancy pay on the transfer of the Business.
(o)On 29 June, Thompson emailed Ho, advising him that Jambere withdrew its proposed offer of a position for him at its future business, Body in Balance in Richmond.[4]
[4]Exhibit S, JCB 175
(p)On 30 June, BIB terminated what it described as Ho’s “independent contractor agreement”.[5]
[5]Exhibit 1, JCB 189
(q)On about 6 July, Beaumont and Thompson met with Ho and a further offer was made by Jambere to Ho regarding his continuing to work at the Business. Ho did not accept that offer, principally because he did not agree to a restraint of trade clause proposed by Jambere.[6]
[6]Exhibit 10, JCB 213
(r)On 13 July, the solicitors for BIB wrote to Ho, stating:
“It has come to our attention that you are using confidential information to solicit clients from Body in Balance Chiropractic Pty Ltd to whom you consulted and on your version of the relationship, were employed.
We feel obliged to remind you that this is a serious breach of a fundamental clause ‘Employment Restrictions’ in your governing Contract with Body in Balance Pty Ltd. and also in breach of section 182 of the Corporations Act 2001 which gives rise to civil liability to my client, and penalties under that Act. We remind you that all clients and client information are the property of Body in Balance Pty Ltd.
If it is found that you have breached your contract, we have been instructed to commence proceedings against you to enforce the restraint. We will immediately seek an injunction refraining you from contacting or treating any of Body in Balance’s clients. We will also be seeking damages to be paid in compensation for any losses suffered by our client as a consequence of the breach and a disgorgement by you of all fees you earn from those clients … .”[7]
[7]Exhibit 2, JCB 232
(s) Two days later, on 15 July, BIB’s solicitors again wrote to Ho in the following terms:
“I am instructed you have solicited at least two clients of Body in Balance Pty Ltd namely Peter McCracken and Anna Pham. This is in flagrant breach of your obligations under the governing contract you entered with Body in Balance Pty Ltd, and as I stated to you yesterday and also in breach of section 182 of the Corporations Act 2001 which gives rise to civil liability to my client, and penalties under the Act.
Further I am now advised that you have commenced employed (sic) in Richmond at Life Chiropractic Studio in further breach of the restraints under the Contract. …
Unless by 1.00 pm on Thursday 16 July 2015 you-
1. Confirm that you will not treat any former clients of Body in Balance Pty Ltd, including those mentioned above;
2. Cease employment at Life Chiropractic Studio –
my (sic) instructions are to immediately commence legal proceedings against you seeking orders restraining you from these breaches, and an accounting of fees received by you, damages and costs. I will do this without further notice to you.”[8]
[8]Exhibit 2, JCB 233
(t)On 16 July, BIB issued and served a County Court generally endorsed writ against Ho (Proceeding No. CI-15-03425). The general endorsement sought an injunction restraining Ho from wrongfully soliciting clients of BIB, treating such clients, using information owned by the plaintiff to his own benefit, converting intellectual property of BIB to his own use, and causing detriment to BIB in breach of s182 and/or s183 of the Corporations Act 2001. It also sought an accounting of profits and damages from him.[9]
[9]Exhibit T, JCB 235
(u)On 17 July, BIB sent an email message to Thompson which put two options to Jambere concerning the Contract:
“OPTION 1 Settle next week, Friday at very latest, no extensions.
Price discounted to $140K
I work until July 30.
OPTION 2 Settle next week, Friday at very latest, no extensions.
Price remains at $150K.
I work until September 3
Let me know what you’d like to do and I will advise the lawyers.”[10]
[10]Exhibit Y, JCB 243
I note that the Friday of the following week was 24 July.
The reference to Beaumont working was a reference to her continuing to work at the Business for the period nominated following settlement.
(v)On Sunday, 19 July, Thompson replied to BIB by way of an email message which stated, inter alia:
“We think OPTION 2 gives us the best chance to keep our house, so OPTION 2 it is.
Having said that, I will be in Adelaide 23rd – 27th July, so the earliest I can physically be in Richmond is July 28th - not sure if that makes a difference to anything from your perspective?
We also want to handle this in whatever way keeps Clarence [Ho] out of the picture for as long as possible e.g. if settlement voids the writ or reduces the chance of anything being upheld, is there another way changeover can be handled? Can your lawyer pls advise on this? Also Clarence still seems to be proudly displaying his Lifestyle Chiro details on Facebook - is this allowed or does he get a certain timeframe to respond or … .?”[11]
[11]Exhibit Y, JCB 242
(w)Later, on 19 July, BIB replied by email message to Thompson stating, in part:
“That all sounds good, so just to sort out logistics.
I think Jeroen should start once you take over…
How many shifts/weeks would you like us to work together?
There will be five weeks of overlap in the practice. Obviously I will continue on the Tuesday, Thursday’s for the next six weeks …
I can continue the Saturday shift throughout the six weeks and handover to whomever you choose whenever you see fit.
…
As for Clarence, I will have to talk to the lawyers about him during the week. I’ll let you know what they say.”[12]
[12]Exhibit Y, JCB 242
(x)On 20 July, Ho issued a General Protections Application Involving Dismissal in the Fair Work Commission (“FWC”).[13] The Application was made against BIB and Jambere. As against BIB, Ho alleged that it had unfairly terminated his contract of employment by letter dated 30 June. As against Jambere, Ho alleged that it had wrongfully withdrawn an offer of engagement by email dated 29 June. He alleged that both the termination and the withdrawal were a consequence of the exercise by him of his workplace rights. Ho alleged that he suffered loss and damage, including financial loss, as a consequence.
[13]Exhibit 3, JCB 245
(y)On 23 July, Thompson emailed a message to BIB.[14] In part, he stated:
[14]Exhibit Z, JCB 298
“It would be nice to think that Clarence will let all this go if you drop the writ, however we see nothing to suggest he is anything other than greedy & manipulative and in any case, it is not acceptable for him to be working around the corner.
… The general drop in patient numbers for a “normal practice is said to be 30%. So being conservative (given he is trying to work nearby & solicit patients), if we lose 30pvpw out of the 100-odd he was seeing, then that’s $80K that we’ve paid for instantly gone.
So needless to say, it is very important he is prevented from working anywhere nearby until we establish his replacement(s).
You have taken steps to avoid this from happening, but unfortunately, the advice from our employment lawyer … is that it is extremely unlikely that the writ/restraints will be upheld if you are no longer the owner of the business, as that contract has ceased.
Given all of the above, surely it is not reasonable to expect us to settle before these issues with Clarence are sorted out, or at the least until he is out of the immediate vicinity for at least 3 months (the most likely restraint period a court will accept for a city practice)? if not, it will leave us far too exposed to financial losses through decreased turnover and law suits form a guy who is nothing more than a thief.
… However we did like the idea of being able to work with you in the practice for a longer period of time as you suggested to assist in limiting damage to the current numbers & build our working relationship for the future.
… it is our legal advice to definitely not settle until Clarence is resolved.”
(My emphasis).
(z)On 11 August, BIB emailed a message to Thompson stating, in part, as follows:
“… What I wanted to know from you is whether you would still like to proceed with the purchase of the business or not?
While the transfer of the lease has been signed and a contract of sale, I don’t want to hold you to something you no longer want. As I see it our options are to proceed with the sale at a discounted price, $130K (the discount being the remedy for the disturbance to the business caused by Clarence [Ho] or if you’d prefer not to proceed then we just need to take care of the costs/deposit.
Either way I will be maintaining the writ against Clarence, the only difference will be the damages that flow from that, being either the discount on the sale price or the total price of the sale.
Let me know what your preference is so that we can proceed either way. I would appreciate it if you could come back to me this week so that I can make the necessary arrangements for the practice during my holiday in September.”[15]
[15]Exhibit BB, JCB 332
(My emphasis).
(aa)On 13 August, Thompson replied to BIB by email in the following terms:
“… After much deliberation we have decided against purchasing the business. This decision sucks on so many levels & after all the costs involved (which will be for nothing in the end), will mean spending another 12 months in the sticks getting our financials back to where they were at the beginning of 2015 instead of being back with our family and friends in Victoria.
…
I know we are in default regarding the deposit (not intentional of course, just the way things rushed into disaster after we signed) & I have no intention of starting yet another shit fight for all our lawyers to make even more money out of, but we have obviously incurred our own costs in our attempt to purchase, so I’d like some idea as to how much you think we’ll be up for from your side?”[16]
[16]Exhibit AA, JCB 333-334
(My emphasis).
(bb)On 18 August, BIB emailed Thompson, stating:
“I have added up the costs incurred by me and the deposit which is quite a sum, $31,885.70 to be exact (I have not calculated & added interest on the overdue deposit).
If this changes your mind about the purchase I understand and will stand by my offer to reduce the sale price by $20,000, meaning you effectively get the business for 100K rather than 150K. If however you stick to your decision to cut your losses, pay the $30K and move on I understand too.”[17]
[17]Exhibit 5, JCB 352A
(cc)On 20 August, Thompson emailed BIB, stating:
“You’re correct, that is quite a sum. Can you please itemise the expenses so we know what’s been included?”[18]
[18]Exhibit CC, JCB 351
(dd)Later, on the same date, BIB emailed Thompson setting out expenses incurred. The amounts were:
“Legal Fees – Peter Richards 11200.00
Legal Fees – Gau (sic) Lau 1085.70
Preparation of Lease Fee - Steveway 1570.00*
Lease Re-Negotiation Fee - Steveway 1600.00
Failed Transfer of Lease Fee - Steveway 1200.00
Deposit 15000.00TOTAL - 31,655.70.”[19]
[19]Exhibit CC, JCB 351
Later, on 20 August, BIB emailed Thompson advising that “the fee of $1,570 should be deducted and replaced by the reduced fee of $1,200. Accordingly the total should be $30,085.70”.[20]
(ee)On 14 August, the County Court Statement of Claim in the Ho proceeding was amended and filed. A Proposed Further Amended Statement of Claim dated 21 August was prepared and served on Ho’s solicitors.[21] It was not, it seems, ever filed with the Court until the date of this trial. Nevertheless the parties here were apparently content to proceed on the basis that the Proposed Further Amendment be treated as the relevant pleading by BIB against Ho. I shall refer to the Further pleading in some detail later in these Reasons.
(ff)In early September, there were settlement negotiations between BIB, Beaumont and Ho. On 4 September, BIB, Beaumont and Ho entered into a Deed of Release (“the Deed”) whereby the three of them entered into mutual releases with regard to BIB’s County Court proceeding against Ho and Ho’s Fair Work Commission proceeding against BIB/Beaumont. [22] It should be noted that Jambere was not a party to the Deed. It was invited to attend the negotiations but declined to do so. The Deed provided that the parties agreed to settle both proceedings. I shall refer to these in some detail later in these Reasons. Pursuant to the Deed, both of those proceedings were discontinued.
The Deed made no provision regarding Ho’s FWC claim as against Jambere. Neither party submitted that anything turned on this.
(gg)Further negotiations between BIB and Jambere were not successful and the current proceeding before the Court was commenced by Writ issued on 28 September.
(hh)BIB’s Richmond practice still operates successfully. It has not been sold.
[20]Exhibit CC, JCB 352
[21]Exhibit W, JCB 356
[22]Exhibit V, JCB 376-383
14 The parties agreed that the facts relating to BIB’s claim in this proceeding were basically not in dispute. What is in dispute is the legal characterisation to be given to those facts.
Alleged inability to deliver the Assets of the Business
15 Jambere alleged that at no time was BIB able to perform its obligations under the Contract, in that it was unable to transfer the assets of the Business, as defined in the Contract, to Jambere. The assets of the Business were defined in the Contact as including its goodwill.
16 Jambere submits that the activities of Ho in breaching his Services Contract damaged or reduced the value of BIB’s goodwill which formed a significant part of the assets it had agreed to purchase.
17 I do not consider that the evidence disclosed that Ho had solicited or stolen any clients from BIB, or that he had misappropriated client lists or intellectual property belonging to BIB.
18 Rather, what was established is that BIB suspected such matters on the basis that a handful of its clients had cancelled their appointments or failed to make anticipated appointments for treatment.
19 I accept that, on the balance of probabilities, Ho was engaged in chiropractic work within 8 kilometres of the Richmond premises and arguably in breach of his Services Contract. However, I do not consider that proof of such a breach leads to the conclusion that BIB was unable to transfer its goodwill or other assets to Jambere in all of the circumstances.
20 The Contract made no mention of any person then working at the Business (whether as an employee or contractor) being required or expected to continue to do so following the sale. I consider that, in the event that any or all of them resigned from BIB, the obligations of Jambere under the Contract would have remained unchanged. Indeed, clause 8.1 of the Contract required BIB to give notice terminating each employee on and from settlement. If Jambere had wished to make the Contract conditional upon Ho (or some other employee or contractor) continuing to work at the business for a nominated time, it could have negotiated for such a term to be included. It did not do so.
21 In addition, whilst Ho may have had a contractual obligation not to work as a chiropractor within 8 kilometres of the Business, that contractual arrangement was with BIB and no-one else.
Amendment to the Contract
22 In any event, even if, contrary to my finding, Jambere might have been entitled to rescind the Contract on the basis of one or more of Ho’s actions, I consider that there was a later amendment to the Contract which removed that entitlement.
23 I find that the Contract was amended by the exchange of email messages between BIB and Thompson on 17 and 19 July.
24 On the latter date, Thompson, on behalf of Jambere and Ritchie, accepted an offer containing amended terms that had been made by BIB in its email message dated 17 July. The offer was put on the basis of two options. Option 1 involved a price of $140,000 and Beaumont working on in the business until 30 July 2015. Option 2 involved a price of $150,000 (the original contract price) and Beaumont working on in the business for a longer period until 3 September.
25 I consider that the email message from Thompson dated 19 July was a clear acceptance of the Option 2 offer. BIB’s message to Thompson later that day is an acknowledgment of that acceptance. Settlement was to occur not later than Friday, 24 July.
26 That amended agreement was entered into at a time when Jambere was well aware of the issues surrounding Ho. That is, Jambere was aware that:
(a) Ho was no longer working at BIB Richmond;
(b) Ho was working as a chiropractor nearby in Richmond and well within the 8-kilometre radius of the Richmond premises specified in his Services Contract;
(c) Ho had not agreed to terms proposed by Jambere for him to continue working at the BIB Richmond business;
(d) Ho had alleged that he had been an employee of BIB rather than a contractor and that he was entitled to superannuation and annual leave benefits; and
(e) BIB had issued proceedings in the County Court against Ho alleging various breaches by Ho of his Services Contract including the suspected breaches referred to previously.
27 I consider that Jambere accepted Option 2 unconditionally. By doing so, it forfeited any right that it may have had to rescind the Contract on the basis that BIB was unable to deliver the assets of the business because of the matters pertaining to Ho.
28 Jambere’s email message dated 23 July is no more than a later request by Jambere to be released from its contractual obligations until the Ho issues were finally “sorted out” – whatever that meant. It was not agreed to by BIB at that time.
Further amendment
29 In any event, I have reached the conclusion that there was yet a further amendment of the contractual arrangements between the parties.
30 I find that the email messages passing between BIB and Thompson on 11 August, 13 August, and 20 August, indicate that the parties had entered into a further arrangement whereby BIB released Jambere from its obligation under the Contract to complete the purchase of the Business if it did not wish to proceed, but that Jambere would remain liable for payment of the deposit and for BIB’s “costs”.
31 Having been advised by BIB that it would not enforce the Contract against Jambere’s will, and having been invited to consider and decide whether it wanted to go on with the purchase, Thompson advised BIB by email on 15 August that Jambere had decided against purchasing the Business. There is no suggestion that Jambere is rescinding the Contract or that it has any grounds to do so. I consider that Thompson’s statement is a direct response to, and acceptance of, the offer by BIB that it would not hold Jambere to its contractual obligation to proceed with the purchase if it did not wish to do so.
32 In his email, Thompson acknowledged that Jambere was liable for the deposit. Further, his request for BIB to provide him with an estimate as to how much it would “be up for from your side” is, I consider, consistent with Jambere accepting that it was responsible for such wasted costs incurred by BIB.
33 By email messages dated 18 and 20 August, BIB advised Thompson of those costs totalling $31,655.70 (later amended to $30,085.70) and provided a break up of that amount. I consider it is clear by that time that BIB has agreed to release Jambere from the balance of the Contract.
34 Thompson made no complaint concerning the costs being claimed. He did not dispute Jambere’s liability to pay that amount.
35 I consider that it is clear that the word “costs” was being used in the sense of expenses incurred by BIB in connection with the Contract. BIB’s breakup of the amount made it clear that it was made up of legal fees and other fees charged by the estate agent in connection with the transfer of the lease of the premises.
36 I am satisfied that there was valuable consideration supporting the further amendment.
37 I consider that the expenses set out in BIB’s message to Thompson dated 20 August were reasonably incurred. It was not suggested at the trial that they were unreasonable.
38 I do not accept that Jambere would be entitled to set off the expenses against the deposit. Here, I consider the agreement was to pay both the deposit and expenses. Neither have been paid.
Specific performance
39 I do not consider that BIB is entitled now to specific performance of the Contract. My finding is that by 13 August, BIB had agreed to release Jambere from its obligation under the Contract to proceed with the purchase.
Damages and the issue of double recovery
40 Jambere submits that, even if it might otherwise have been liable to BIB in damages, principles relating to double recovery prevent BIB from recovering against it at all.
41 It submits that the claim should fail because it should be assumed from the pleadings of BIB in the County Court proceeding brought against Ho, and from the terms of the Deed, that BIB has been fully compensated by Ho in respect of all losses the subject of the claim against him and that such losses included all of the losses now claimed from Jambere in this proceeding.
42 In the proceeding against Ho, BIB alleged that Ho had breached various terms of the Services Contract (variously referred to as the Services Agreement or Services Contract in the pleadings) entered into by Ho and BIB. The Proposed Further Amended Statement of Claim against Ho contains allegations, inter alia, that:
(a) In breach of the Services Contract, Ho had breached his duty of good faith owed to BIB, in that he had contumeliously, wilfully and with malice, acted to cause economic harm to BIB by conduct which put into jeopardy the completion of the Sale Agreement into which BIB had entered with Jambere;[23]
[23]Paragraph 11(a), JCB 362
(b)That on or about 13 August, Jambere had rescinded the Sale Agreement “on the ground that [BIB] had misrepresented the legal relationship of [BIB] and [Ho] as being of independent contractor and not employer and employee as asserted by [Ho] in the Fair Work proceeding issued by him”;[24]
[24]Paragraph 16, JCB 364
(c)The rescission of the Sale Agreement was a direct and temporal consequence of the deliberate, calculated and malicious interference by Ho with the contract between BIB and Jambere.[25]
[25]Paragraph 17, JCB 364
(d)As a consequence, BIB had suffered loss and damage as follows:
“(i) BIB has lost the bargain of the rescinded Sale Agreement
$150,000 Less the amount obtained on a resale particulars of which will be provided.
(ii) BIB has lost, in addition –
(a) Commission of Sales agent
(b) legal and accounting costs
(c) cost of obtaining Landlord’s consent to transfer –
upon resale of the Practise.
Particulars of all the foregoing will be provided.”[26]
[26]Paragraphs 18 and 19, JCB 365-6. No further particulars were provided.
43 In the prayer for relief, BIB claimed from Ho damages pursuant to paragraphs 12, 18, 19 and 21 of that Statement of Claim – that is, for damages caused by the alleged breaches by Ho of the Services Contract including for losses resulting from the alleged rescission of the Contract by Jambere.
44 Jambere submits that, in the current proceeding, BIB’s claim is for loss that was included in BIB’s claim against Ho.
45 In considering whether BIB should be regarded as having recovered all such losses, I consider it relevant to look at what BIB did claim against Ho and what it recovered from him as a consequence of the mutual settlement of proceedings evidenced by the Deed.
46 The settlement with Ho involved the payment by him to BIB of $15,000 as “agreed costs”. I consider that, in this context, “costs” should be interpreted as legal costs of and incidental to the proceeding or part thereof.
47 In the Fair Work proceeding, Ho had claimed from BIB amounts including superannuation and annual leave entitlements. In her evidence at trial, Beaumont stated that she had been advised by a legal specialist in this area of the law that Ho was likely to succeed in that claim.[27] The settlement evidenced by the Deed involved Ho releasing BIB from those claims.
[27]Transcript (“T”) 70, Line (“L”) 25; T110, L21
48 I accept Jambere’s submission that it is not correct to say that, in the settlement, BIB merely received $15,000 (an amount that probably would not have covered its costs of that proceeding). BIB also received the benefit of the release by Ho of the amounts claimed by him in his Fair Work Commission claim and any other claim he may have had against BIB in respect of matters arising out of the Services Contract or his engagement with BIB.
49 On the evidence before me, I do not consider that I am able to determine the respective strengths and weaknesses of the case brought by BIB against Ho or of Ho’s FWC claim. In Jameson v Central Electricity Generating Board,[28] it was said by Lord Hope that the Judge may examine the statement of claim and the terms of settlement in order to identify the subject matter of the first claim and the extent to which the causes of action which were comprised in it have been included within the settlement.[29] The purpose of doing so would be to see if all the plaintiff’s claims were included in the settlement and nothing was excluded from it which could properly form a basis for a further claim against others.
[28][1999] 1 All ER 193
[29]Jameson (supra) at 205
50 Lord Hope stated that:
“What the judge may not do is to allow the plaintiff to open up the question whether the amount which he has agreed to accept from the first concurrent tortfeasor under the settlement represents full value for what has been claimed. That kind of inquiry, if it were to be permitted, could lead to endless litigation as one concurrent tortfeasor after another was sued on the basis that the sums received by the plaintiff in his settlements with those previously sued were open to review by a judge in order to see whether or not the plaintiff had yet full satisfaction for his loss. …The principle of finality requires that there must be an end to litigation.”[30]
[30]Jameson (supra) at 205
51 Nevertheless, in determining whether the first plaintiff is seeking, in reality, double recovery, I consider that the Court can take into account:
(a) The amount BIB received in the settlement;
(b) The value of any releases given to BIB where there were mutual claims;
(c) Whether the terms included any statement or indication that BIB accepted the settlement sum in full and final settlement in respect of its loss the subject of its claim;
(d) Whether BIB expressly or impliedly reserved its right to claim the balance of its loss over and above the settlement sum from a third party; and
(e) Any other matters which may inform as to whether BIB may be seeking to recover a sum greater than its loss.
52 Here, I might assume that Ho’s releases were not valueless to BIB on the basis of Beaumont’s evidence that she had received expert legal advice that Ho was likely to succeed in his FWC claim against BIB.[31] However, the person providing that advice to her was not identified in evidence and, even assuming that the advisor was a legally qualified person, I do not consider that it can be assumed that all legal practitioners give legal advice that is correct.
[31]T70, L25; T110, L21
53 Clause 4.1 of the Deed states:
“Ho acknowledges that all superannuation payments claimed due and owing by BIB have been paid and satisfied by BIB in payments made pursuant to the Services Contract.”[32]
[32]Exhibit V, JCB 335
54 On its face, by that clause, Ho concedes that he has received all superannuation benefits to which he was entitled and that he has no entitlement to anything further. The effect of that clause arguably leads to a conclusion that the value of the release in respect of the superannuation claim is negligible.
55 Whilst there is nothing express in the Deed to state that BIB reserved its right to claim the balance of its loss from another person, I consider that I am able, in all of the circumstances, to conclude that such reservation is implied. In coming to this conclusion, I have taken into account:
(a) the amount received by BIB pursuant to the Deed – $15,000 towards its costs;
(b) the fact that Ho had acknowledged he had no claim for superannuation benefits; and
(c) the fact that there is no statement in the Deed to the effect that BIB is accepting the “agreed costs” in full and final settlement of its losses associated with the Contract.
56 In all of the circumstances, and by reference to the figure involved in the settlement being $15,000 “agreed costs”, I consider that it is clear that BIB did not accept that sum in full satisfaction of its claim so as to prevent it from claiming the balance of its recoverable loss from a third party.
57 Further, for the reasons previously given, I have found that Jambere did not rescind the Contract at any point. Any damages that I award in this proceeding will not be in respect of rescission by Jambere. Rather, I consider that BIB is entitled to recover from Jambere the deposit and expenses it agreed to pay to BIB. I do not consider that such damages are one and the same as were claimed by BIB from Ho. They involve different causes of action and different loss.
58 I consider that the BIB’s claim in this proceeding does not offend the principles of double recovery.
Guarantee
65 The defendants did not dispute that, in the event I found in favour of BIB against Jambere, that Thompson and Ritchie would be liable for Jambere’s debt as guarantors.
Conclusion
59 It follows that there shall be Judgment for the plaintiffs against each of the defendants in a sum equal to the deposit owed by Jambere, together with the wasted costs incurred by BIB described previously.
60 The deposit payable is $15,000.
61 The wasted costs were set out in BIB’s email message to Thompson dated 20 August and, including the deposit, totalled $30,085.70. Included in that sum was an amount of $1,085.70, being fees paid to Gau Lau in respect of the transfer of the lease to Jambere. That sum was omitted from the amount claimed in the Statement of Claim in this proceeding.[33] It is unclear whether the omission was intended or not or whether, given my reasons set out herein, the defendant concedes the amount is recoverable by BIB. Also I note that the fee to Steveway of $1,570 is included in the amounts claimed in paragraph 10 of the Statement of Claim inconsistently with the email from BIB to Thompson dated 20 August.[34]
[33]Paragraph 10, JCB 4
[34]Exhibit CC, at JCB 352
62 I shall hear the parties with regard to the quantum of the wasted expenses, interest, costs and as to any consequential Orders sought.
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