FEDERAL COURT OF AUSTRALIA
MCL Pty Ltd v The Agency Group Australia Ltd (No 3) [2021] FCA 1241
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- Case
- [2021] FCA 1241
- Decision Date
CaseChat Overview and Summary
The court was required to determine whether the cross-claimant exercised its contractual right to withdraw from the agreement, and if so, whether this triggered the cross-respondent's liability to pay fees. The court also had to decide whether the liability for payment of fees arose upon entry into the agreement or if the agreement was void due to mutual abandonment.
The court found that the cross-claimant did not exercise its contractual right to withdraw from the agreement, as the circumstances that would have allowed for withdrawal did not arise. However, the court held that the cross-respondent was still liable to pay certain fees as per the agreement. The court also ruled that the agreement was not void due to mutual abandonment, as there was no evidence to support this claim. The application was allowed to a limited extent, with specific orders to be determined on the papers.
In conclusion, the court determined that the cross-respondent was liable to pay certain fees as per the agreement, but did not exercise its contractual right to withdraw, and the agreement was not void due to mutual abandonment. The final orders are to be determined on the papers, with specific timelines provided for the parties to file their submissions and affidavits.
Orders
Orders of the court
1. Within 21 days each of the parties do file a minute of the orders sought to give effect to the reasons for judgment together with an outline of submissions of no more than five pages and any further affidavit on the questions of interest and costs.
2. Within 10 days thereafter each party do file any submissions in reply of no more than five pages together with any further affidavit on the questions of interest and costs.
3. Subject to further order, the final orders be determined on the papers.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
Background
Background to the litigation
Full text does not contain this section.
Evidence
Evidence Before The Court
Full text does not contain this section.
Decision
Reasons for decision
Full text does not contain this section.
Ratio Decidendi
Legal Principle Established
As to Loan document preparation, the Standard Terms and Condition provide (cl 5(a) and (b)):At your expense we will instruct our solicitor to prepare all loan and security documentation ('the Formal Loan Documents') which will contain the provisions that we require.By signing the Offer you authorise us to instruct our solicitor to proceed with the preparation of the loan documentation and acknowledge that all fees, costs and outlays charged by our solicitor are immediately payable by you upon demand by our solicitor, even if the loan does not proceed for any reason whatsoever (including withdrawal by the Lender). As to Upfront Fees, the Standard Terms and Conditions provide (cl 7):a)We require you to pay the non-refundable Upfront Fees upon signing the Offer.b)If we agree to defer the Upfront Fees until drawdown of the loan, the Upfront Fees are payable by you whether or not the loan proceeds (whether or not it is you or us that withdraws from this loan).c)Valuations and Formal Loan Documents may not be ordered until the Upfront Fees are paid by you (or deferred in accordance with the preceding paragraph). As to Withdrawal of the offer by MCL, the Standard Terms and Conditions provide (cl 8):(a) We may withdraw or revoke the Offer at any time if:i.settlement is not affected [sic] within 7 days of acceptance of this Offer;ii.circumstances or facts arise or come to our attention which, in our opinion may be prejudicial to our interests or result in a situation where it would, in our opinion, be uncommercial to provide the loan pursuant to the Offer.b)You agree that we shall incur no liability whatsoever to you if we withdraw or revoke the Offer. At this point it may be noted that the terms of cl 8 do not confer a general contractual right on the part of MCL to withdraw. Instead, cl 8 takes the form of specifying particular circumstances in which MCL 'may' (that is, at its discretion) withdraw or revoke the Offer. It is clear from its terms that cl 8 is dealing with instances that include where MCL withdraws after the Offer has been accepted because it refers to withdrawal within seven days of acceptance of the Offer. The use of the term 'withdraw' does suggest that cl 8 is conferring a unilateral right, despite acceptance of the Offer, to bring to an end the effect of its acceptance. It appears that the potential to 'revoke' the Offer would apply even before acceptance. The provision (unlike most of the provisions in the Standard Terms and Conditions) appears to be using the term Offer in both senses (the offer extended by the sending of the letter and the Offer being the agreement brought into existence by its acceptance). In consequence, cl 8(b) would operate to relieve MCL of any liability where there was a revocation of the Offer before its acceptance. It must be doubtful whether, in the particular circumstances of this case, the right specified in cl 8(a)(i) would arise because of the express provision in the Term Sheet that Financial Close is '31 March 2020 and subject to the conditions of this Offer' (being a date many weeks after acceptance). However, that is not an aspect that was in issue between the parties because no reliance was placed by MCL upon the terms of cl 8(a)(i). Rather, the claim made by MCL was that it was entitled to withdraw under cl 8(a)(ii) and that it did so.