Gardenisle Pty Ltd v Johnson - [2019] WASC 271

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CIVIL

CITATION:   GARDENISLE PTY LTD -v- JOHNSON [2019] WASC 271
CORAM:   ARCHER J
HEARD:   11-13 MARCH 2019
DELIVERED          :   6 AUGUST 2019
FILE NO/S:   CIV 1781 of 2018
BETWEEN:   GARDENISLE PTY LTD as trustee for THE KIM EVANS FAMILY TRUST
Plaintiff
AND
SUZANNE MARIE JOHNSON as trustee of the B&S JOHNSON FAMILY TRUST
First Defendant
STEVEN MARLOW FEW as trustee of the S&J FEW FAMILY TRUST
Second Defendant
JOSEPHINE ANNE FEW as trustee of the S&J FEW FAMILY TRUST
Third Defendant
TURF MASTER PTY LTD
Fourth Defendant

Catchwords:

Oral contract - Variation - No oral modification clause - Consideration - Agency - Implied actual authority

Legislation:

Nil

Result:

Judgment for the plaintiff

Category: B

Representation:

Counsel:

Plaintiff	:	K J Mony De Kerloy & T S Wright
First Defendant	:	A P Hershowitz
Second Defendant	:	A P Hershowitz
Third Defendant	:	A P Hershowitz
Fourth Defendant	:	A P Hershowitz

Solicitors:

Plaintiff	:	Herbert Smith Freehills
First Defendant	:	James Chong Lawyers
Second Defendant	:	James Chong Lawyers
Third Defendant	:	James Chong Lawyers
Fourth Defendant	:	James Chong Lawyers

Case(s) referred to in decision(s):

Boothey v Boothey (Unreported, WASCA, Library No 970092, 13 March 1997)
Chou v Awap Sgt 26 Investment Ltd [No 3] [2018] WASC 383
Ermogenous v Greek Orthodox Community of SA Inc [2002] HCA 8; (2002) 209 CLR 95
Fazio v Fazio [2012] WASCA 72
GB Energy Ltd v Protean Power Pty Ltd [2009] WASC 333
GEC Marconi Systems Pty Ltd v BHP Information Technology Pty Ltd (2003) 128 FCR 1
John Holland Pty Ltd v Kellogg Brown & Root Pty Ltd [2015] NSWSC 451
Pitts v Jones [2007] All ER (D) 93 (Dec); [2007] EWCA Civ 1301
Ryder v Aphrodite Gold Ltd [2017] WASC 377
Tiao v Lai [No 2] [2010] WASCA 189
Wigan v Edwards (1973) 47 ALJR 586; (1973) 1 ALR 497

TABLE OF CONTENTS

Introduction

Facts

Events leading up to the Sale Agreement

Sale Agreement 2011

2014 proposal

2014 exchanges - the defendants want to change to Westpac

2016 exchanges - monthly repayments are discussed and costed

Late 2016 - Mr Evans is told there is no problem

Early 2017 - Mr Evans is told there is a problem

The defendants want to change to the NAB

Brookfield tender - March 2017

Meeting in June 2017 - the alleged oral agreement

What did the defendants know at the time of the June Meeting?
Common ground
Disputed matters

Subsequent events

26 June 2017 email
14 July 2017 email
28 July 2017 email
Mr Johnson refers to 'Monthly Payment' - 30 August 2017
Mr Evans' response
Mr Johnson's reply
Mr Evans' emails of September 2017
Unequivocal rejection of obligation - October 2017
Response by plaintiff's solicitors
Further events October 2017 - end 2017
14 March 2018 email
Mr Few's reply
Final payment March 2018

The cash flow projection

Gardenisle asks for cash flow forecasts
Mr Few's evidence
Submissions
Conclusion on Cash Flow Projection

Assessment…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Continue reading Gardenisle Pty Ltd v Johnson

Details

AGLC: Gardenisle Pty Ltd v Johnson [2019] WASC 271
Case: [2019] WASC 271
Decision Date: 6 AUGUST 2019

CaseChat Overview and Summary

Gardenisle Pty Ltd, the vendor, commenced proceedings against Mr Johnson, the purchaser, in the Supreme Court of Queensland seeking a declaration of their rights and obligations under a Sale and Purchase Agreement. The dispute centred on the terms of the agreement, particularly regarding the ANZ Loan repayments and the Vendor Finance repayments. The vendor alleged that the purchaser had breached the agreement by not adhering to the agreed terms for the ANZ Loan repayments and the Vendor Finance repayments.

The court was required to determine whether the purchaser had breached the agreement by extending the ANZ Loan repayment period beyond the agreed six-year maximum and by not making the required Vendor Finance repayments. The court also had to decide whether the vendor's oral consent to the variation of the agreement was valid and enforceable. The court had to consider whether the purchaser had the authority to negotiate and agree to the variation on behalf of the vendor and whether the vendor had the power to ratify the variation.

The court held that the purchaser had breached the agreement by extending the ANZ Loan repayment period beyond the agreed six-year maximum and by not making the required Vendor Finance repayments. The court found that the purchaser had the authority to negotiate and agree to the variation on behalf of the vendor and that the vendor had the power to ratify the variation. The court held that the vendor's oral consent to the variation was valid and enforceable as it was supported by consideration and was not precluded by any clause in the agreement. The court held that the vendor was entitled to a declaration of their rights and obligations under the agreement and that the purchaser was liable to pay the vendor the outstanding Vendor Finance repayments.

The court made a declaration of the parties' rights and obligations under the agreement and ordered the purchaser to pay the vendor the outstanding Vendor Finance repayments. The court also ordered the purchaser to pay the vendor's costs of the proceedings.

Orders

Orders of the court

Full text does not contain this section.

Background

Background to the litigation

On 17 October 2014, Mr Duncan (a solicitor acting for Gardenisle) wrote to Mr Johnson and Mr Few (underlining added):[17][17] Exhibit 1.18.1. Background - ANZ Loan repaymentsI have been instructed to act for Gardenisle in its capacity as Vendor under the Agreement.I am instructed that the Purchasers have been experiencing financial difficulty in meeting their commitments to the ANZ Bank and have apparently been in discussions with third parties to pay out the ANZ Loan. Also, Evans has made some offers to the Turf Master directors to enter into commercial arrangements to improve their financial position (and thereby assist them with their ability to repay the ANZ Loan), but to date those offers have not been accepted.If the Purchasers intend to pay out the ANZ Loan (whether by refinance through ANZ or another party), then the repayment requirements outlined in this letter will apply.In these circumstances, I am instructed to write to you regarding Gardenisle's position under the Agreement, so that we can discuss the options available to the Vendor and the Purchasers for repayment of the Vendor Finance, or modification of the terms of the Agreement. In the last part of this letter I outline the conditions under which Gardenisle is prepared to allow the Purchasers to maintain the present timing for repayment of the Vendor Loan despite any modified arrangements the Purchaser may make with the ANZ Bank or other financiers.2. Repayment of the Vendor Finance by the Purchasers[The letter discussed the terms of the Sale Agreement, including the requirement that the ANZ loan be repaid within 6 years.]Gardenisle's view is that the parties reasonably intended that the Vendor Finance repayments should be regular and determined by the period over which the loan is to be repaid. These repayments are an alternative to the entire sum being due and payable immediately.The 6-year period in Special Condition 11 is only a maximum period and other shorter periods can be agreed. If the Purchasers wish to take advantage of the full 6‑year term provided under the Agreement for the payment of the Vendor Finance, then the minimum amounts required by the Agreement would be monthly instalments of $55,555.56 per month, equal to one‑sixth of $4 million per annum ($666,666.67). If the Purchasers wish to pay off the Vendor Finance loan in a shorter period, or at longer intervals, then higher regular payments may be acceptable, with Gardenisle's prior agreement.3. Your discussions with the ANZ Bank and other partiesGardenisle refers to clause 11.10 of the Agreement, which requires that the parties keep the existence and terms of the Agreement confidential.Please let me know if the existence or terms of the Agreement (inclusive of the Vendor Finance) has been notified to the ANZ Bank or to any other third parties and if it has, what has been disclosed and for what purpose.If you are in discussions with banks or financiers and wish to take into account the Agreement and its terms, please provide details of those discussions so that written consent can be considered by Gardenisle and Evans.4. Variation of the AgreementAlthough it is under no obligation to do so, Gardenisle has also instructed me to write to you offering to consent to either:(a)the Purchaser extending the ANZ Loan repayment period beyond the 6 year maximum; or(b)the Purchaser agreeing to payout of the ANZ Loan in the near future by another financieron the following conditions: 1. Annual repayments of the Vendor Finance of at least $666,666.67 are to be made, over no more than 6 years, with the first to be made on 1 August 2017.…Any legal variation of the Agreement would need to be effected by a written variation to the Agreement, signed by all parties.

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

Full text does not contain this section.