EW Blanch Pty Ltd v Cooper

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.