Bouris v Calvino Franchising Pty Ltd

[2012] VCC 1174

IN THE COUNTY COURT OF VICTORIA Revised
(Not) Restricted

AT MELBOURNE

COMMERCIAL LIST
GENERAL DIVISION

Case No. CI-11-03264

JOHN BOURIS	Plaintiff
v.
CALVINO FRANCHISING PTY LTD & ORS	Defendants

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JUDGE:	His Honour Judge Anderson
WHERE HELD:	Melbourne
DATE OF HEARING:	23 August 2012
DATE OF JUDGMENT:	23 August 2012 (revised 28 August 2012)
CASE MAY BE CITED AS:	Bouris v. Calvino Franchising Pty Ltd & Ors
MEDIUM NEUTRAL CITATION:	[2012] VCC 1174

REASONS FOR JUDGMENT

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Catchwords:            Contract – Agreement for the sale of shares in a business – Payments made to the defendants pursuant to the agreement – Agreement subject to finance – Refusal of the defendants to repay the monies paid – Defendants ordered to pay damages or alternatively to make restitution.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr J. Bouris in person
For the Defendants	No appearance

HIS HONOUR:

1In about June 2010, the plaintiff, John Bouris, and his business partner Con Petropoulos, had discussions about the purchase of a share in the Calvino Coffee Company business. A verbal agreement was negotiated between Mr Petropoulos on behalf of himself and Mr Bouris with the seventh and eight defendants, Walter and Connie Boyle, and their daughter, the ninth defendant, Hannah Neumeister. Pursuant to the agreement, Mr Bouris paid to the first defendant, Calvino Franchising Pty Ltd, sums totalling $500,000. Mr Bouris seeks the return of this sum, together with interest, calculated from the dates upon which he made the payments.

2The defendants have not attended at the trial of the proceeding. The fourth defendant was wound up by order of the Supreme Court of Queensland on 1 December 2011. The proceeding against that company is stayed by operation of the Corporations Act 2001. Mr Bouris has not to date, and does not intend to seek leave to proceed against the company, although he informed me that if judgment were given in his favour, he may pursue the company through the liquidator.

3Mr Bouris has appeared in person today. Both he and the defendants were initially represented by solicitors, although both sets of solicitors have previously obtained leave to file notices of ceasing to act. A statement of claim was attached to the writ and a defence and counterclaim was filed on behalf of the defendants. The defence contains a number of admissions. Apart from those admissions, I have heard oral evidence from Mr Bouris and a number of relevant documents have been tendered.

4The defendants’ defence and counterclaim:

a.admits that the corporate defendants, being the first to sixth defendants “own and operate commercial retail coffee outlet throughout eastern Australia and under the name ‘Calvino Coffee Company’ (‘the Business’)”;

b.admits that in or about July 2010, a contract was entered into with Con Petropoulos “acting on behalf of the plaintiff” for the purchase of shares in the fourth defendant for a total consideration of $2.9m;

c.does not appear to dispute that the plaintiff made payments totalling $500,000, to the defendants or at least to the seventh defendant;

d.asserts “that the defendants are entitled to retain the sum of $500,000”.

5From the evidence that I have heard and received, and taking into account the admissions contained in the defence, I am satisfied that:

a.The verbal agreement reached between the parties in about June or July 2010 related to the purchase of a share in the Calvino Coffee Company business;

b.the agreement was subject to Mr Bouris obtaining finance to pay the balance of the purchase price of $2.9m. This is apparent from the alternative arrangement that was reached, namely that if the finance could not be arranged to purchase a share in the business that Mr Bouris would proceed with the purchase of the franchise business conducted at premises in Officer. This was the reason a lease agreement was drawn up and executed by Mr Bouris and certain of the defendants, both to provide an alternative if finance was not approved and also to provide some security for the moneys advanced by Mr Bouris;

c.Mr Bouris advanced sums totalling $500,000 to the defendants between 29 July 2010 and 25 November 2010.

d.The negotiations were with the seventh, eighth and ninth defendants, Mr and Mrs Boyle and Ms Neumeister. The corporate defendants were the relevant entities involved in the Calvino Coffee Company business. The agreements were reached on behalf of all defendants by persons who had authority to bind the corporate defendants and the moneys paid by Mr Bouris were paid to the defendants in circumstances where, if restitution was required, it would need to be made by all defendants.

e.Mr Bouris was unable to obtain finance to purchase the share in the business. The alternative arrangement, involving the Officer franchise, did not proceed because the relevant documentation was not prepared by the defendants and final agreement could not therefore be reached.

6In the circumstances, I consider that the defendants are each individually obliged to repay to Mr Bouris, the total sum of $500,000 and should be required to pay interest on that sum, payable from the date upon which each amount was advanced. Mr Bouris gave evidence that he incurred interest charges himself in obtaining the money which he paid to the defendants. I consider that these moneys are to be paid either by way of damages for breach of the agreement, namely the defendants’ failure to repay the moneys advanced when finance could not be obtained by Mr Bouris, or alternatively, by the failure by the defendants to effect the alternative arrangement involving the Officer franchise business.

7Further, I consider that it would be unconscionable in the circumstances for the defendants to retain the sum of $500,000, and accordingly restitution of that sum should be made to Mr Bouris, together with interest pursuant to statute.

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Certificate

I certify that these 3 pages are a true copy of the reasons for decision of His Honour Judge Anderson delivered on 23 August 2012 and revised on 28 August 2012.

Dated: 28 August 2012

Caroline Dawes
Associate to His Honour Judge Anderson