Caird Seven Pty Ltd v Mina Attia and Shopsmart Pharmacy Franchising Pty Ltd (No 2)
[2016] NSWSC 1217
•22 August 2016
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New South Wales |
Case Name: | Caird Seven Pty Ltd v Mina Attia and Shopsmart Pharmacy Franchising Pty Ltd (No 2) |
Medium Neutral Citation: | [2016] NSWSC 1217 |
Hearing Date(s): | 22 August 2016 |
Date of Orders: | 22 August 2016 |
Decision Date: | 22 August 2016 |
Jurisdiction: | Equity - Commercial List |
Before: | Emmett AJA |
Decision: | Notice of Motion dismissed with costs. |
Catchwords: | PRACTICE AND PROCEDURE – application to vary the conditions of a stay – whether applicants have financial resources to comply with conditions of the stay – whether there has been sufficient change of circumstances to warrant variation of the conditions |
Category: | Procedural and other rulings |
Parties: | Mina Attia (First Applicant) |
Representation: | Counsel: |
File Number(s): | 2014/354640 |
JUDGMENT
EMMETT AJA: On 22 July 2016, I made specific orders for performance of an agreement made between the plaintiff and the defendants. Consent orders for specific performance of the agreement had been made in general terms by Hammerschlag J on 21 April 2016. On 29 July 2016, I refused to set aside both the orders for specific performance and the original consent orders for reasons that I published on 9 August 2016. The background of the matter appears in those reasons.
On 5 August 2016, upon application by the defendants, I granted a stay of the orders of 29 July 2016 until the final disposition of an application for leave to appeal from my orders of 29 July 2016, which the defendants had filed in the meantime. That stay was granted subject to certain conditions, one of which was that the defendants deliver to the solicitors for the plaintiffs certain executed documentation by 22 August 2016 and a bank cheque in the amount of $2,050,000 by 23 August 2016.
By notice of motion filed today, which was made returnable instanter, the defendants seek an order that Order 1 made on 5 August 2016 be varied such that the stay granted is not conditional. Secondly, they seek an order that Orders 2, 3 and 4 made on 5 August 2016 be vacated.
In support of the motion the defendants rely on the affidavit of Mr Mina Attia sworn 22 August 2016. By that affidavit Mr Attia deposes to his financial circumstances and the financial circumstances of the second defendant. In effect, he says that neither he nor the second defendant is in a position to provide funds that would enable the condition of providing a bank cheque by 23 August 2016, to be satisfied, as required by Order 1 made on 5 August 2016, as a condition of the stay. Other conditions of the stay have been satisfied but they have not all been satisfied.
There are several factors to which the plaintiff points as militating against any variation of the orders that I have made. First, the defendants now seek to rely on material that was available for the most part when I heard the earlier application but which was not put in evidence. In particular, the financial position of the defendants does not appear to have changed; there has been no evidence of any change of circumstances in that regard since the earlier hearings to justify any variation in the orders.
The plaintiff also points to the fact that, in the Rescission Deed, as defined in my earlier reasons, the parties agreed specifically, for the avoidance of doubt, that the obligations of Mr Attia to complete the Retransfer Contract (as defined) was not conditional on Mr Attia obtaining finance. Thus, Mr Attia entered into the Rescission Deed on the express understanding that, whether or not he was able to obtain finance, he was required to complete the Retransfer Contract.
The plaintiff has also taken me to evidence that was already before the Court concerning the financial position of Mr Attia and his ability to perform. For example, in an affidavit of 30 March 2016, Mr Attia deposed that Shopsmart operates and manages pharmacy franchises and that its revenue from its franchising operation consists of management fees of some $200,000, accounting services of some $43,000, general merchandising sales of $25,000, rebates and recoveries of $27,000 and advertising of $427,000.
In income tax returns annexed to an affidavit of Mr Attia of 15 April 2016 substantial income is disclosed, although, to some extent, that is offset by substantial losses. The tax return for Shopsmart also indicates substantial business income in the order of $980,000. The balance sheet of Shopsmart shows total assets in excess of $1 million, although it has liabilities, which for the most part are debts owing to Mr Attia, of in excess of $9.8 million.
In the letter of 14 July 2016, to which I referred in my earlier reasons, Mr Attia's solicitors indicated that he was ready, willing and able to specifically perform the Rescission Deed. It may be that that was a somewhat unclear statement, in the sense that, in the course of argument before me on 22 July 2016, it was suggested that performance of the Rescission Deed would be satisfied by terminating it on the basis of an alleged breach of a fundamental term, being a promise to maintain the goodwill of the pharmacy business and conduct the pharmacy business in a proper and businesslike manner.
Mr Attia also said in an affidavit sworn on 20 July 2016 that he has run pharmaceutical companies for 17 years and has operated the Shopsmart franchise since 2000. He said that he currently owns the Shopsmart franchise and that it has been operating profitably for some 14 years. In an affidavit sworn on 26 July 2016, he referred to warehouse staff. That gives rise to an inference that there are employees of an operating business and that there is a warehouse in which goods are stored. They are matters that suggest that there may be some question as to whether or not Mr Attia is in a position to complete the Retransfer Contract as contemplated by the Rescission Deed.
In all of the circumstances I am not persuaded that any change of circumstances has occurred that would justify varying the orders that I made.
In support of the motion, the defendants rely on new material, if it can be called new material, which consists of a valuation of the pharmacy business indicating that it has a value considerably lower than the price payable under the terms of the original contract for sale and the Rescission Deed. Be that as it may, the business is still operating and the plaintiff has proffered an undertaking to the Court to continue to operate the pharmacy business to the best of its ability for the next month.
In the light of that undertaking, and the evidence that was before me on the earlier occasions, there is no reason to doubt that the pharmacy business will continue as a going concern in the immediate future, such that the mere failure by the defendants to complete the Retransfer Contract in accordance with the orders that have been made would not give rise to a loss of the subject matter in dispute. The status quo is the order for specific performance made by consent by Hammerschlag J on 21 April 2016. The contention by the defendants that their application for leave to appeal will be rendered nugatory must be rejected.
In all the circumstances I consider the notice of motion filed by leave today should be dismissed with costs.
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