Legal Research
Cases
Helmos Enterprises Pty Ltd v Jaylor Pty Ltd

Helmos Enterprises Pty Ltd v Jaylor Pty Ltd

Link copied

Case Copied 8 July 2005 46 min read

Contents

On this page

NEW SOUTH WALES COURT OF APPEAL

CITATION: Helmos Enterprises Pty Ltd v Jaylor Pty Ltd [2005] NSWCA 235

FILE NUMBER(S):
40350/04

HEARING DATE(S): 13/04/05

JUDGMENT DATE: 08/07/2005

PARTIES:
Helmos Enterprises Pty Limited (A)
Jaylor Pty Limited (R1)
Kingsley's Australian Steakhouse Pty Limited (R2)

JUDGMENT OF: Hodgson JA Young CJ in Eq Stein AJA

LOWER COURT JURISDICTION: Supreme Court - Equity Division

LOWER COURT FILE NUMBER(S): 4814/02

LOWER COURT JUDICIAL OFFICER: Brownie AJ

COUNSEL:
S D Rares SC and P Dowdy (A)
M Walton SC and M S White (R)

SOLICITORS:
Bray Jackson & Co (A)
Diamond Peisah & Co (R)

CATCHWORDS:
CONTRACT-Commercial contracts- Plaintiff seeking to purchase two restaurants- First purchase completed- Second purchase not completed- Seven aspects of deal unclear- In circumstances contract in fourth class of Masters v Cameron- How court deals with problems of incomplete contract.

LEGISLATION CITED:
Liquor Act 1982
Retail Leases Act 1994, ss 39, 41, 41A
Trade Practices Act 1974 (Cth)

DECISION:
Orders: (1) Appeal allowed with costs; (2) Orders of Brownie AJ set aside; (3) Cross appeal dismissed with costs; (4) Remit issue of quantum of damages to the Equity Division; (5) Costs of the first trial referred to the Judge or Associate Justice who hears the second trial.

JUDGMENT:

IN THE SUPREME COURT
OF NEW SOUTH WALES
COURT OF APPEAL

CA 40350/04
SC 4814/02
HODGSON JA
YOUNG CJ in EQ
STEIN AJA
Friday 8 July 2005

HELMOS ENTERPRISES PTY LIMITED v JAYLOR PTY LIMITED

FACTS

The plaintiff sought to buy two restaurants, one in the City and one at Woolloomooloo.
The City restaurant was owned by K. K owned half of the Woolloomooloo restaurant with J.
The purchase of the City restaurant was completed. J objected to completing the purchase of the Woolloomooloo restaurant on the grounds that there was no contract, but merely an intention to enter into a contract and that if there were a contract it was void for incompleteness on seven major points.
The trial judge upheld the latter point and held that there was no contract.
The trial was split, but in an informal way so that no evidence of damage was led.
The Court of Appeal held that there was a contract. The issue as to whether the plaintiff could recover damages for breach was questionable. The Court considered that because of this fact, the costs of the first trial should await the result of the further hearing.
The Court also made observations as to the need for precision when splitting trials.

IN THE SUPREME COURT
OF NEW SOUTH WALES
COURT OF APPEAL

CA 40350/04
SC 4814/02
HODGSON JA
YOUNG CJ in EQ
STEIN AJA
Friday 8 July 2005

HELMOS ENTERPRISES PTY LIMITED v JAYLOR PTY LIMITED

Judgment

HODGSON JA: On 14 April 2004, Brownie AJ gave judgment in proceedings in which the appellant (Helmos) had claimed damages against the first respondent (Jaylor) and the second respondent (Kingsley’s) for breaches of contracts, namely a contract for the purchase by Helmos of Jaylor’s share in a company…

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.

Keep reading for free

Create a free CaseChat account to read Helmos Enterprises Pty Ltd v Jaylor Pty Ltd and more:

Read every judgment in full
Ask AI and get answers linked to paragraphs
See how each paragraph was cited in later cases
Download judgments as PDF or Word

Continue with Google

One click creates your free account or signs you in.

By continuing you agree to the Terms and Privacy Policy.

Details

Case: [2005] NSWCA 235
Decision Date: 8 July 2005

CaseChat Overview and Summary

Helmos Enterprises Pty Ltd (Helmos) sought to purchase two restaurants from Jaylor Pty Ltd (Jaylor). The first purchase was completed, but the second was not. Helmos alleged that Jaylor repudiated the contract and claimed damages for breach of contract and misleading conduct under the Trade Practices Act. The primary judge found that while the parties intended to enter into binding contractual relationships, the transactions did not create binding contracts due to significant unresolved issues, and therefore dismissed Helmos's claims.

The legal issues before the court were whether the parties intended to be immediately bound by their exchanges in January and April 2002, or only upon the execution of a more formal agreement, and whether the identified outstanding matters rendered the contract incomplete and thus unenforceable. The court was required to determine the intention of the parties by objectively ascertaining their words in light of the surrounding circumstances, and to consider how such cases fall within the established classes of agreements outlined in *Masters v Cameron*.

The court applied the principles from *Masters v Cameron* and subsequent cases, including *Baulkham Hills Private Hospital Pty Ltd v GR Securities Pty Ltd*, which recognised a fourth class of contract where parties are content to be bound immediately while expecting to make a further contract with additional terms. The court found that the primary judge erred in concluding that the seven identified points were too uncertain to form a binding contract. Instead, these points were considered matters of mechanics capable of being worked out, and the parties' intention was to be bound immediately, even though a more formal agreement was contemplated.

The appeal was allowed, the orders of the primary judge were set aside, and the cross-appeal was dismissed. The issue of the quantum of damages was remitted to the Equity Division for determination, and costs were awarded accordingly.

Orders

Orders of the court

Orders: (1) Appeal allowed with costs; (2) Orders of Brownie AJ set aside; (3) Cross appeal dismissed with costs; (4) Remit issue of quantum of damages to the Equity Division; (5) Costs of the first trial referred to the Judge or Associate Justice who hears the second trial.

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

YOUNG CJ

On 16 April 2003, Helmos purported to accept repudiations of contracts, and it continued with the proceedings as a claim for damages for breach of contract. In the proceedings, Helmos also claimed damages for misleading conduct under the Trade Practices Act. DECISION OF PRIMARY JUDGE On 10 September 2003 the matter was set down for hearing on the basis of liability only. During the hearing before the primary judge, on 16 March 2004 he made the following order:By consent I order that there be separately determined all questions relating to the liability of any party and that all questions of damages be deferred until after determination of all questions concerning liability. The primary judge held that, in the transactions relied on by Helmos, the parties did intend to enter into binding contractual relationships, whilst contemplating that there would be a further more formal agreement reached, possibly containing other terms. However, he considered that the transactions did not create binding contracts, because there was still too much to be worked out, particularly in relation to Helmos’s insistence that there be a fresh joint venture arrangement through a new company. The primary judge listed seven points:1.The assignment or grant of a lease to the new company, and adjustment of guarantees of the lease.2.The circumstance that Helmos did not want to purchase Jaylor’s share in Crabhouse, as contemplated by the agreement with Jaylor.3.Replacement of a licence to Crabhouse for storage of certain materials.4.Replacement of a berthing facility agreement.5.Dealing with chattels under hire purchase to Crabhouse, and guarantees of the hire purchase agreements.6.Arrangement of a new licensee under the Liquor Act.7.The terms of a new joint venture agreement with a new manager. The primary judge also rejected the Trade Practices Act claim, and accordingly gave judgment for the defendants.APPEAL AND CROSS-APPEAL In its appeal, Helmos challenged the view of the primary judge, on the basis that his seven points were merely matters of “mechanics”, capable of being worked out without the need for further agreement between the parties. In its cross-appeal (which more properly should be regarded as a Notice of Contention), Jaylor and Kingsley’s contended that the primary judge was in error in finding an intention to create legal relations.DISPOSAL OF APPEAL I agree with Young CJ in Eq. that the appeal should be allowed and the cross-appeal should be dismissed and, subject to what I say below, I agree substantially with his reasons. In my opinion, where an order is made for separate determination of questions concerning liability, it is highly desirable that it be made clear at that time whether or not, as part of that hearing, a party seeking damages must establish (at least on a prima facie basis) an entitlement to some substantial damages, so that a further hearing to assess those damages serves a useful purpose: see National Engineering Pty. Ltd. v. Chilco Enterprises Pty. Ltd. [2001] NSWCA 291 at [1], [5]-[8].

Ratio Decidendi

Legal Principle Established

Established by: YOUNG CJ

Before considering this point in detail, I must note that it is important to realise that this issue (as to whether the parties intended to be bound immediately by the January and April 2002 exchanges or whether they only intended to be bound once a more formal agreement had been executed) is a wholly separate issue to the question of completeness or uncertainty. This is so, although the two are often related because similar evidence is usually looked at when determining each; see eg Australian Broadcasting Corporation v XIVth Commonwealth Games Ltd (1988) 18 NSWLR 540 at 548. As is well known, the High Court in Masters v Cameron (1954) 91 CLR 353 at 360, said that cases of the present type may belong to one of three classes. The three classes set out were:1. Where the parties have reached final agreement on the terms of their contract and agree to be immediately bound but wish to restate those terms in a fuller or more precise way in a formal document;2. Where the parties have reached final agreement on all the terms and intend not to depart in any way from them but the performance of some part of the contract is made conditional on the execution of a formal contract;3. Where the parties intend there not to be a concluded contract unless and until a formal document is executed. The vital question is always what the parties intended by the words they have used. In a case where the parties have expressly or impliedly indicated that there will be a further agreement, it is a question of construction whether the execution of a further contract is a condition of the bargain or else is merely an expression of the desire of the parties as to how their transaction will be completed: Von Hatzfeldt-Wildenburg v Alexander [1912] 1 Ch 284, 289. Each case turns on its own facts. In Baulkham Hills Private Hospital Pty Ltd v GR Securities Pty Ltd (1986) 40 NSWLR 622, 628, MH McLelland J said:"There is in reality a fourth class additional to the three mentioned in Masters v Cameron ... namely, '... one in which the parties were content to be bound immediately and exclusively by the terms which they had agreed upon whilst expecting to make a further contract in substitution for the first contract, containing, by consent, additional terms.' "The words quoted derive from Sinclair, Scott &Co v Naughton (1929) 43 CLR 310 at 317. McLelland J's decision was affirmed in this Court as GR Securities Pty Ltd v Baulkham Hills Private Hospital Pty Ltd (1986) 40 NSWLR 631. The court there consisted of Kirby P, Glass and McHugh JJA. The lastmentioned gave the leading judgment with which the other two judges noted their agreement. At page 634, McHugh JA said:"The decisive issue is always the intention of the parties which must be objectively ascertained from the terms of the document when read in the light of surrounding circumstances … . If the terms of a document indicate that the parties intended to be bound immediately, effect must be given to that intention irrespective of the subject matter, magnitude or complexity of the transaction.Even when a document recording the terms of the parties' agreement specifically refers to the execution of a formal contract, the parties may be immediately bound."His Honour then cited with approval the passage from Sinclair's case cited by McLelland J.