EW Blanch Pty Ltd v Cooper

Case [2005] NSWCA 217
CITATION:

EW Blanch Pty Ltd & Anor v Cooper & Anor [2005] NSWCA 217
HEARING DATE(S):

6 & 7 June 2005
 
JUDGMENT DATE: 


26 August 2005

JUDGMENT OF:

Giles JA at 1; Bryson JA at 132; Brownie AJA at 133
DECISION:

Appeal dismissed with costs. Liberty to apply within fourteen days for different order(s) in consequence of the entitlement to nominal damages.
CATCHWORDS:

Share sale agreement - company conducted insurance broking business - principally CTP and TPPD cover for taxi operators - cover mostly placed with particular underwriter - purchaser aware underwriter said would no longer deal with broker - underwriter then entered into agency agreement with broker - vendor told purchaser that relationship with underwriter "back on track" - purchase went ahead - underwriter complained broker not accounting for premiums in timely manner - terminated agency agreement - brokerage income dried up - business collapsed - WHETHER misleading or deceptive conduct in telling purchaser relationship back on track - on facts, no - WHETHER under terms of sale agreement providing for adjustment in price according to brokerage income purchaser entitled to payment of money - adjustment terms provided for preparation of Specified Accounts and adjustment according to the Specified Accounts - Specified Accounts not prepared - on construction of sale agreement, no entitlement to payment - WHETHER breaches of warranties in sale agreement as to capacity to account for premiums as required by agency agreement - construction of agency agreement - no breach - WHETHER breach of warranty in sale agreement as to unusual or onerous provision - time for accounting for premiums unusual - but breach in that respect not shown to have caused loss - entitlement to nominal damages only. D
CASES CITED:

Arcos Ltd v EA Ronaasen & Son [1933] AC 470;
Hunter Resources Ltd v Melville (1987) 164 CLR 234;
Tricontinental Corporation Ltd v HDFI Ltd (1990) 21 NSWLR 689.
PARTIES:

E W Blanch Pty Ltd - First Appellant
Robert Ashley cooper - First Respondent
Maco Consultants Pty Ltd - Second Respondent

FILE NUMBER(S):

CA 40695/04
COUNSEL:

S Robb QC & J Hogan-Doran - Appellants
J Kelly SC & T Duggan - Respondents
SOLICITORS:

Cutler Hughes & Harris - Appellants
Rutter Morgan, Wallsend - Respondents

LOWER COURT JURISDICTION:

Supreme Court - Equity Division

LOWER COURT FILE NUMBER(S):

SC 50163/01

LOWER COURT JUDICIAL OFFICER:

Bergin J



                          CA 40695/04
                          SC 50163/01

                          GILES JA
                          BRYSON JA
                          BROWNIE AJA

                          Friday 26 August 2005
E W BLANCH PTY LTD & ANOR v COOPER & ANOR
Judgment

1 GILES JA: By a share sale agreement dated 24 December 1999 (“the sale agreement”) Swire Blanch (Australia) Pty Ltd, now E W Blanch Pty Ltd (“Blanch”), purchased from Mr Robert Cooper the issued capital in Michael V Mahoney Insurance Brokers Pty Ltd, now ACN 002 544 569 Pty Ltd (“Mahoney”). Blanch caused Mahoney to lease from Mr Cooper’s company Maco Consulting Pty Ltd (“Maco”) the premises in Newcastle at which Mahoney conducted business.

2 In the proceedings Blanch claimed from…

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AGLC
EW Blanch Pty Ltd v Cooper [2005] NSWCA 217
Case
[2005] NSWCA 217
Decision Date

CaseChat Overview and Summary

EW Blanch Pty Ltd (the vendor) appealed from a decision of the Supreme Court of New South Wales concerning a share sale agreement for an insurance broking business. The business primarily dealt with compulsory third-party (CTP) and third-party property damage (TPPD) cover for taxi operators, with most of this cover placed with a particular underwriter. The purchaser was aware that this underwriter had indicated it would no longer deal with the vendor. However, following the execution of the sale agreement, the underwriter entered into an agency agreement with the vendor. The vendor then informed the purchaser that the relationship with the underwriter was "back on track." Subsequently, the underwriter terminated the agency agreement due to the vendor's alleged failure to account for premiums promptly, leading to the collapse of the business.

The primary legal issues before the Court of Appeal were whether the vendor engaged in misleading or deceptive conduct by stating the relationship with the underwriter was "back on track," whether the purchaser was entitled to a price adjustment under the sale agreement based on brokerage income, whether the vendor breached warranties regarding its capacity to account for premiums as required by the agency agreement, and whether the vendor breached a warranty concerning unusual or onerous provisions in the agency agreement.

The Court of Appeal held that there was no misleading or deceptive conduct, as the vendor genuinely believed the relationship was improving at the time of the statement. Regarding the price adjustment, the court found that the sale agreement stipulated that any adjustment was contingent on the preparation of "Specified Accounts," which had not occurred, thus precluding any entitlement to payment. The court also determined that there was no breach of warranty concerning the capacity to account for premiums, as the vendor's accounting practices, while potentially problematic, did not constitute a breach of the agency agreement's requirements. Finally, while the time for accounting for premiums was considered unusual, the court found no causal link between this provision and any loss suffered by the purchaser, entitling the purchaser only to nominal damages.

The appeal was dismissed with costs, though liberty was granted to apply within fourteen days for different orders concerning the entitlement to nominal damages.

Orders

Orders of the court

Appeal dismissed with costs. Liberty to apply within fourteen days for different order(s) in consequence of the entitlement to nominal damages.

Background

Background to the litigation

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Evidence

Evidence Before The Court

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Decision

Reasons for decision

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Ratio Decidendi

Legal Principle Established

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