Court of Appeal
Supreme Court
New South Wales
- Summary available
Medium Neutral Citation: Kay v Playup Australia Pty Ltd [2020] NSWCA 33 Hearing dates: 11 September 2019 Date of orders: 04 March 2020 Decision date: 04 March 2020 Before: Macfarlan JA at [1]
Brereton JA at [2]
Simpson AJA at [132]Decision: 1. Leave to appeal be granted, and the draft notice of appeal stand as the notice of appeal;
2. Leave to cross-appeal be granted, and the draft notice of cross-appeal stand as the notice of cross-appeal;
3. The appeal be allowed;
4. The amended notice of contention be dismissed;
5. The cross-appeal be allowed;
6. Declarations (1), (2), (3) and (4) made in the Equity Division on 5 July 2019 be set aside, and in lieu therefore the Court declares that:
(a) Subclause 4.3(b)(i) and (ii) of the Share Sale and Purchase Agreement relating to Bestbet.com.au Pty Ltd between the plaintiff (as buyer) and the defendant (as seller) dated 23 March 2018 (“Agreement”), is a penalty and unenforceable and of no effect;
(b) in the events which have happened, the restraints imposed on the defendant by the Agreement, and the restraints imposed on the defendant by the Restraint Deed signed, sealed and delivered by the defendant in favour of the plaintiff on or around 7 June 2018, have not been rendered void ab initio by operation of cl 4.3(b)(i) of the Agreement;
(c) in the events which have happened, the Warranties given by the defendant in the Agreement have not been rendered void ab initio by operation of cl 4.3(b)(ii) of the Agreement.
7. Leave be reserved to either party to apply within 14 days in respect of order (5) made in the Equity Division on 5 July 2019.
8. The appellant pay the respondent’s costs of the application for leave to appeal, the appeal, the application for leave to cross-appeal and the cross-appeal.Catchwords: EQUITY – Equitable remedies – Relief against forfeiture – Doctrine confined to proprietary or possessory rights as distinct from mere contractual rights
CONTRACTS – Remedies – Penalty – Doctrine extends beyond payment of a stipulated sum of money to deprivation of contractual rights – Application to deprivation of the benefit of restraint clause and warranties
CONTRACTS – Construction – Interpretation – Dependent and independent obligations – Whether ‘clear words’ are required to find a relation of independency between obligationsCases Cited: AMEV-UDC Finance Ltd v Austin (1986) 162 CLR 170; [1986] HCA 63
Andrews v Australia and New Zealand Banking Group Ltd (2012) 247 CLR 205; [2012] HCA 30
Arab Bank Australia Ltd v Sayde Developments Pty Ltd (2016) 93 NSWLR 231; [2016] NSWCA 328
Auburn Shopping Village Pty Ltd v Nelmeer Hoteliers Pty Ltd (2017) 324 FLR 378; [2017] NSWSC 1230
Auburn Shopping Village Pty Ltd v Nelmeer Hoteliers Pty Ltd (2018) 19 BPR 38,569; [2018] NSWCA 114
Australia Capital Financial Management Pty Ltd v Linfield Developments Pty Ltd; Guan v Linfield Developments Pty Ltd (2017) 18…
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- Case
- [2020] NSWCA 33
- Decision Date
CaseChat Overview and Summary
The court was required to determine whether specific provisions of the Share Sale and Purchase Agreement, which purported to render restraints of trade and warranties void ab initio upon the seller's breach, constituted penalties. Further, the court had to consider the application of the doctrine of relief against forfeiture in this context and whether the obligations within the agreement were dependent or independent.
The Court of Appeal found that the doctrine of relief against forfeiture was confined to proprietary or possessory rights and did not extend to mere contractual rights, thus it was not applicable to the dispute. However, the court held that the doctrine of penalties extended beyond the payment of a stipulated sum to the deprivation of contractual rights, including the benefit of restraint clauses and warranties. The court reasoned that the clauses in question, which automatically voided restraints and warranties upon a breach by the seller, were designed to deter breach rather than to compensate the buyer for loss, and therefore constituted penalties. The court also considered the construction of the agreement, noting that clear words are generally required to establish independency between contractual obligations.
The appeal was allowed, and the cross-appeal was also allowed. The declarations made by the Equity Division were set aside. The Court of Appeal declared that subclauses 4.3(b)(i) and (ii) of the Agreement were penalties and unenforceable. It further declared that the restraints and warranties had not been rendered void ab initio by operation of those clauses. The appellant was ordered to pay the respondent's costs.
Orders
Orders of the court
1. Leave to appeal be granted, and the draft notice of appeal stand as the notice of appeal;
2. Leave to cross-appeal be granted, and the draft notice of cross-appeal stand as the notice of cross-appeal;
3. The appeal be allowed;
4. The amended notice of contention be dismissed;
5. The cross-appeal be allowed;
6. Declarations (1), (2), (3) and (4) made in the Equity Division on 5 July 2019 be set aside, and in lieu therefore the Court declares that:
(a) Subclause 4.3(b)(i) and (ii) of the Share Sale and Purchase Agreement relating to Bestbet.com.au Pty Ltd between the plaintiff (as buyer) and the defendant (as seller) dated 23 March 2018 (“Agreement”), is a penalty and unenforceable and of no effect;
(b) in the events which have happened, the restraints imposed on the defendant by the Agreement, and the restraints imposed on the defendant by the Restraint Deed signed, sealed and delivered by the defendant in favour of the plaintiff on or around 7 June 2018, have not been rendered void ab initio by operation of cl 4.3(b)(i) of the Agreement;
(c) in the events which have happened, the Warranties given by the defendant in the Agreement have not been rendered void ab initio by operation of cl 4.3(b)(ii) of the Agreement.
7. Leave be reserved to either party to apply within 14 days in respect of order (5) made in the Equity Division on 5 July 2019.
8. The appellant pay the respondent’s costs of the application for leave to appeal, the appeal, the application for leave to cross-appeal and the cross-appeal.
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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