Le v Nguyen (Civil Dispute)
[2016] ACAT 74
•13 July 2016
ACT CIVIL & ADMINISTRATIVE TRIBUNAL
LE v NGUYEN (Civil Dispute) [2016] ACAT 74
XD 83 of 2016
Catchwords: CIVIL DISPUTE – event of default – rescission of contract – repudiation of contract – question of reimbursement for outfitting, refurbishment and installations prior to completion
Legislation cited: ACT Civil and Administrative Tribunal Act 2008 ss 6, 7, 21
Cases cited:Codelfa Construction Pty Ltd v State Rail Authority of NSW (1982) 149 CLR 337
Maroney v Bullard [2016] ACAT 33
Tribunal: Senior Member W Corby
Date of Orders: 13 July 2016
Date of Reasons for Decision: 13 July 2016
AUSTRALIAN CAPITAL TERRITORY )
CIVIL & ADMINISTRATIVE TRIBUNAL ) XD 83 of 2016
BETWEEN:
THOA KIM THI LE
Applicant
AND:
TOAN NGUYEN
Respondent
TRIBUNAL: Senior Member W Corby
DATE:13 July 2016
ORDER
The Tribunal Orders that:
The application is dismissed.
Carden & Co, Law Practice release the deposit of $75,000 to the respondent within 28 days.
………………………………..
General President L Crebbin for and on behalf of Senior Member W Corby
REASONS FOR DECISION
On 11 January 2015, the applicant Thoa Kim Thi Le (the purchaser) and the respondent Toan Nguyen (the vendor) entered into a written agreement for the sale of a manicure and pedicure business and its assets (the Agreement) for a purchase price of $150,000.
Under the Agreement, the purchaser paid her solicitor, Carden & Co, Law Practice, a 50% deposit on the purchase price, being $75,000 for them to hold as stakeholder.
At the time of the Agreement the vendor operated the business as a franchise, subject to the terms of a franchise agreement between the vendor and ProfessioNAIL – also referred to as ‘Professional Nails’ - (the franchisor). The vendor operated the business from premises in a shopping mall that was the subject of a lease agreement between the franchisor and Westfield (the lessor).
On 12 January 2015, pursuant to a licence under the Agreement, the purchaser occupied the premises and commenced operating the business.
On or before 30 March 2015 and without completing the Agreement, the purchaser vacated the premises and ceased to operate the business.
Arising from her vacating the premises and not completing the Agreement, the purchaser seeks orders that the vendor:
(a)pay compensation for the value of fit-out work undertaken at the premises in January 2015 that was paid for by the purchaser and not removed when the purchaser vacated the premises;
(b)pay compensation for the value of a hot water system installed and paid for by the purchaser prior to the purchaser vacating the premises; and
(c)authorise the return to the purchaser of the deposit of $75,000.
The vendor denies that he is liable to pay the amounts sought by the purchaser and says that the Tribunal should authorise release of the deposit to him.
The Tribunal has jurisdiction to decide this matter under section 21 of the ACT Civil and Administrative Tribunal Act 2008, noting the parties’ agreement for the Tribunal to do so.
What was agreed?
The purchaser gave evidence that prior to the parties signing the Agreement, she and the vendor made a verbal agreement that the purchaser would be required to complete the Agreement only if the purchaser could negotiate and reach agreement with the lessor as to a reduced rent payable under the lease.
The vendor denied this verbal agreement. The vendor says the lease for the premises was between the franchisor and the lessor, and that the vendor did not, and could not have, agreed to the inclusion of this condition because he had no control over the rent payable.
The recitals to the Agreement included:
D. The Vendor and Purchaser agree that the Vendor will be transferring its interest in the Franchise Agreement with Professional Nails to the Purchaser or its Nominee.
E.The Vendor acknowledges and agrees that the sale of the Business is subject to the Conditions Precedent to Completion being satisfied, if these conditions are not satisfied then this Agreement shall be rescinded and the Deposit returned to the Purchaser.
F. …
G.The parties now enter into and agree that this sale and purchase is governed by the terms contained in this Agreement.
The ‘Operative clauses’ included:
Clause 1.1(1) Agreement means this document (including any Schedule or Annexure to it);
…
Clause 1.1(16) Lessor means Westfield or its related entity that entered into the Premises Lease with the Franchisor.
Clause 1.1(21) Premises means Level 1, Shop 113, Westfield Belconnen, Benjamin Way, Belconnen, ACT 2617;
Clause 1.1(22) Premises Lease means the lease for the premises.Clause 1.1(15) Franchise Agreement means the agreement between the vendor and Professional Nails;
…
Clause 20.1 This Agreement:
(1) contains the entire agreement and understanding between the parties on everything connected with the subject matter of this Agreement; and
(2) supersedes any prior agreement or understanding on anything connected with that subject matter.
Clause 20.2 Each party has entered into this Agreement without relying on any representation by any other party or any person purporting to represent that party.
The Agreement described when completion was to occur and set out conditions precedent to completion:
Clause 1.1(8) Completion Date means the date in Item 4 or such other date as agreed between the parties in writing;
…
Item 4 Completion Date The date that the Purchaser or its nominees enters into a franchise agreement with the Franchisor and is granted occupation of the Premises.
…
Clause 1.1(7) Completion means the performance of the acts set out in Clause 6 to be performed on the completion date;
…
Clause 1.1(9) Conditions Precedent to Completion
(a) the vendor successfully effecting the transfer of the Franchise Agreement to the purchaser or its Nominee; and/or
(b) the Franchisor agreeing to the transfer of the Franchise Agreement from the Vendor to the Purchaser or its Nominees, or granting a new franchise agreement to the Purchaser or its Nominee; and/or
(c) the Lessor agreeing to the Purchaser or its Nominee becoming the lessee of the Premises (if applicable); and(d) any other condition required to transfer the Franchise Agreement to the Purchaser or its Nominee.
Clause 6.1 The vendor acknowledges that this agreement is subject to the Conditions Precedent to completion.
Clause 6.2 Notwithstanding anything else contained in this agreement, in the event that the Franchisor does not consent to providing a franchise agreement to the Purchaser, the Deposit must be returned to the Purchaser immediately upon demand and this agreement will be rescinded.
Clause 6.3 The parties must each do all things necessary to obtain the consent referred to in clause 6.1 [sic][1], including the provision of financial references and information to the Franchisor by the Purchaser to the Franchisor’s satisfaction, if required.Clause 6.4 Completion must take place on the Completion Date at a location and time nominated by the Purchaser (or their solicitors).
[1] In the Tribunal’s view clause 6.3 should refer to clause 6.2
Under the Agreement, the vendor granted the purchaser a licence to occupy the premises and operate the business commencing on 12 January 2015 pending completion of the Agreement as follows:
Clause 1.1(18) Licence means the licence granted by the Vendor to the Purchaser to operate the Business from 12 January 2015, subject to the operation of Clause 3 of the Agreement.
…
Clause 3.1 From 12 January 2015, and in consideration for the parties entering into this Agreement, the Vendor grants the Purchaser the Licence to operate the Business.
…
Clause 3.4 The Licence ends on the earlier of:(1) the Purchaser being granted a new franchise agreement and completing this Agreement in accordance with its terms;
(2) the Purchaser not being granted a new franchise agreement by the Franchisor; or
(3) the Purchaser being in breach of this Licence, or this Agreement, and failing to complete this Agreement in accordance with its terms.
Clause 3.5 If the Conditions Precedent to Completion are not satisfied, the Vendor agrees to release the Deposit to the Purchaser, and will provide the Stakeholder with the authority to release the deposit to the Purchaser.
Either party could terminate the written agreement if the other party defaulted provided they had first sent a written default notice to remedy the default within ten business days and the default was not remedied within time. However, the vendor was not required to send a default notice to the purchaser if the purchaser committed an ‘Event of Default’. In those circumstances, the vendor could send a written notice to the purchaser to forfeit the deposit and to terminate the agreement, or to seek specific performance. Events of Default were defined in clause 1.1 (13)(a) – (k), sub-clause (c) of which provided as follows:
Clause 1.1(13) Event of Default means:
(a) …
(b) …
(c) an event occurs or circumstances arise, which, in the reasonable opinion of the other party, is likely to materially and adversely affect the ability of that party to perform all or any of its joint or several obligations under or otherwise to comply with the terms of this Agreement;
Events following execution of the Agreement
From 12 January 2015 the purchaser occupied the premises and operated the business pursuant to the licence.
On 18 March 2015 the purchaser’s solicitor sent a letter to the vendor advising that the lessor did not agree to the purchaser’s rent offer. The letter enclosed an email dated 16 March 2015 from the franchisor to the purchaser’s former business partner that stated:
As per our telephone conversation … rent for Belconnen at $12,500.00 per month inclusive of GST and outgoing is not accepted by Westfield.
The purchaser’s solicitor’s letter then stated:
Sadly this means that our client cannot complete the terms of the Contract with you, and unfortunately, they have to hand the premises and business back to you.
With respect to the Contract, and for your reference, our client cannot fulfill its obligations under clause 1.1(9) (c) and clause 6.1 of the Contract, namely, our client cannot fulfill the conditions precedent to completion. Accordingly the contract between the parties must be rescinded and the premises and the business returned to you.
Our client has indicated that they can hand-back the premises on the morning of Friday 20 March 2015 …With respect to the premises, our client has paid rent up to and including 31 March 2015 – when you take possession of the premises on 20 March 2015, you will be required to reimburse out client the sum of $6,177.80.
Presumably the amount of $6,177.80 related to rent for the premises for the period 21 to 31 March 2015. The letter concluded:
When hand-back is effected, we will return the deposit held in trust to our client.
Our client is genuinely sorry that the Contract cannot be completed and wishes you all the best with the business in the future.
The letter appears to rely on the purchaser’s assertion of the pre-contractual verbal agreement relating to rent negotiations discussed above.[2]
[2] Paragraphs 9-10 above
By letter dated 19 March 2015 the vendor’s solicitor responded as follows:
1. Under no circumstances, [sic] our client will [sic] accept the hand back of the premises and the business;
2. Our client requests you should hold the deposit in the sum of $75,000 in escrow pending finalization of this matter.
3. In the event the purchaser rescinds the contract, our client will claim for damages such as loss of income….[sic]
By letter dated 21 March 2015 the purchaser’s solicitor responded to the vendor’s solicitor as follows:
1. … the lessor, Westfield, has not accepted my client as tenant of the premises, accordingly, the conditions precedent to the Sale of Business Agreement cannot be met, meaning the licence will be terminated and the Sale of Business Agreement between the parties rescinded.
2. Pursuant to clause 3.5 of the Sale of Business Agreement, if the conditions precedent cannot be met, the vendor agrees to release the deposit to the purchaser, and must instruct the stakeholder, namely Carden & Co, to release the deposit back to the purchaser. Accordingly, your client has no contractual right to request that the deposit be held... and the deposit will be released to the purchaser on 31 March 2015.
3. …
4. …
TAKE NOTICE: Our client has paid the rent for the premises and all outgoings in relation to the business up to and including 31 March 2015. On 31 March 2015 they will be handing the keys back to the premises and will cease to operate the business. … pursuant to the Franchise Agreement, [your client]... will be liable to[sic] further costs in relation to their franchise fees, and the continuing premises rent that will be due and owing to the lessor, Westfield.
The vendor gave evidence that shortly after signing the Agreement he provided the purchaser’s solicitor with a draft franchise agreement to be executed between the purchaser and the franchisor. He tendered a copy of the draft.
The purchaser gave evidence that she had never seen a copy of any proposed franchise agreement and had not, before the hearing of this matter, seen the draft as tendered. She claimed that because Mimosa, the company named as the proposed franchisee in the unsigned agreement, was first registered on 12 January 2015, the document was not genuine. The purchaser submitted that the Tribunal should not accept the draft as evidence that the franchisor knew about the proposed sale of the business to the purchaser or agreed to provide a franchise agreement to the purchaser.
On 24 March 2015 the vendor’s solicitor wrote to the purchaser’s solicitor noting that:
... Completion is subject to the Purchaser entering into a franchise agreement with the Franchisor and is granted occupation.
The letter continued:
… Franchise agreement has been prepared a long time ago. In fact they [the franchisor] are ready and willing to enter into the agreement but the Purchaser refused to sign. We have been provided a copy of the Franchise Agreement between the Purchaser and the Franchisor.
It is, therefore, our view that the Purchaser intentionally and deliberately withholds the agreement in order to withdraw from the contract.
Regarding the lease between the lessor and the franchisor, the letter stated:
…the Purchaser is not in a position to negotiate with Westfield. However, to assist your client with their wish for a new lease with a five year term [the Franchisor]... negotiated with Westfield and was granted a new Lease in those terms.
.. the Purchaser requested a substantial reduction in the rent, about $5,000 less than the current rent. This is an unreasonable demand/expectation …
…we note that there is no provision in the [written agreement] ... which provides that completion of this matter is subject [sic] the Lessor [Westfield] accepting a certain figure of rent desired by the Purchaser. Had there been one the Vendor could not have agreed.… when entering into the [written agreement] the Purchaser should have been aware,[sic] of the Franchise Agreement’s Terms and conditions including details of the lease, rent ….[sic] He [sic] accepted these conditions prior to exchanging the Agreement.
The letter contended that the purchaser:
… uses the rent as an excuse to rescind the Agreement.
3. The Purchaser’s actions are detrimental to our client’s business namely, loss of customers, sacking employees and loss of income.
4. …
5. The Agreement was changed [sic[3]] on 11 January 2015. It has been more than 2 months. It is an unreasonable delay.6. We are instructed to issue a Notice to Complete which is .. attached by way of service.
[3] In context this should probably have been ‘exchanged’
Clause 14 provided for a notice to complete as follows:
Clause 14 Notice to Complete
The parties agree that in circumstances justifying the issue of a notice making time of the essence of this Agreement a period of ten (10) Business Days notice is reasonable and sufficient for that purpose.
The vendor gave a Notice to Complete dated 25 March 2015 which stated that the vendor is:
B. …willing and able to complete the transfer of the business in accordance with the terms of the [agreement].
C. The Vendor requires [the purchaser] to pay the balance of the purchase money and complete [the agreement] ...in accordance with its terms, on or before 13 April 2015 and in this respect time is of the essence of the [agreement].
D. The Vendor appoints on or before 3:00pm on 13 April 2015 at the office of [the vendor’s solicitor] .. as the time and place for completion or such other place as they may direct; andE. If [the purchaser] fail[s] to comply with this notice … then [the purchaser] shall be in breach of the [agreement] and the Vendor shall exercise all other rights and remedies as are available to them by reason of [the purchaser’s] breach.
In reply, the purchaser’s solicitor:
(a)advised that the purchaser had not been provided with an ‘offer’ to enter into a franchise agreement with the franchisor;
(b)stated that the lessor and the franchisor have not, as asserted by the vendor’s solicitor, entered into a further lease agreement;
(c)rejected the assertion about the attempts made by the purchaser to ‘negotiate’ a reduced rent;
(d)asserted that Clause 1.1(9)(d) of the written agreement meant that the sale of the business:
may be subject to any other condition [emphasis added], i.e. the purchaser negotiating the costs of the rent with the lessor.
Our client does not accepted [sic] the conditions of the new lease, accordingly, the conditions precedent to completion cannot be completed, and the contract must be rescinded. … Negotiating the costs of the rent fits within the ambit of Clause 1.1(9)(d).
(e)denied that the purchaser’s actions were detrimental to the vendor’s business because in the time the purchaser operated the business under licence the revenue increased from the same period in 2014;
(f)denied that the vendor’s “Notice to Complete is valid and enforceable. Our client cannot complete the conditions precedent” [specifically Clause 1.1(9)(d)]; and
(g)asserted that the licence must therefore be terminated, the agreement must be rescinded and the vendor must authorise return of the deposit to the purchaser.
On 30 March 2015 the purchaser’s solicitor sent a notice of rescission to the vendor and advised that the purchaser had vacated the premises. The notice of rescission:
(a)asserted that the licence granted by the vendor to the purchaser was a ‘sub-licence’ to occupy the premises and operate the business;
(b)referred to clause 21.2.1 of the franchise agreement between the vendor and the franchisor, which prohibited the vendor from sub-licensing the business without the prior written consent of the franchisor; and
(c)asserted that the vendor did not have the franchisor’s consent, thus the sub-license to the Purchaser has no legal force or effect.
For these reasons the purchaser contended she was entitled to rescind the Agreement and that the vendor must authorise return of the deposit to the purchaser.
On 30 March 2015 the purchaser’s solicitor wrote to the franchisor repeating the matters raised in sub-paragraphs 32 (a) to (c) above and demanded that either the vendor or the franchisor resume possession of the premises and the business.
On 8 April 2015 the vendor’s solicitor responded to the purchaser’s notice of rescission. The vendor asserted that the purchaser was obliged to remain in occupation of the premises and operate the business until at least 13 April 2015, the date nominated in the vendor’s notice to complete. The vendor asserted that the purchaser ‘abandoned’ the premises on 30 March 2015 in breach of the agreement. The vendor also asserted:
(a)the franchisor was willing to enter into a franchise agreement with the purchaser;
(b)the lessor ‘agreed to grant a lease’ to the purchaser, but the purchaser’s proposed reduced rental amount was not acceptable to the lessor; and
(c)denies the purchaser’s assertion that the vendor failed to provide required documents prior to executing the written agreement.
The Tribunal’s findings
The Tribunal is satisfied that the Agreement set out all of the contractual terms relevant to the sale of business.[4] Those terms are contained in the 28 ‘operative’ clauses.
[4] Exhibit A1 – Clause 20.1 and 20.2
The Tribunal is not persuaded that the Agreement was subject to a condition that the purchaser would only be obliged to complete the Agreement if the lessor agreed to a reduced rent that was acceptable to the purchaser. This condition is not included in the Agreement, and contradicts clause 20 of the Agreement. The vendor denies that a pre-contractual verbal agreement with this effect was made or that such a term was, or could have been, included.
Whilst the lessor’s consent or approval for the purchaser to occupy the premises may have been required before the Agreement could be completed, per clause 1.1(9)(c), there is no evidence that this consent or approval had not been, or by the completion date would not be, given.
The Tribunal accepts that there was nothing to prevent the purchaser requesting a lower rent in the lease between the franchisor and the lessor, but the fact that the lessor did not agree to a lower rent is not evidence that the lessor did not consent or agree to the purchaser occupying the premises and operating the business.
The Tribunal finds that the Agreement did not include, as a pre-condition to the purchaser’s obligation to complete, that the purchaser and the lessor must agree on an amount of rent for the premises acceptable to the purchaser.[5]
[5] Clause 20 of the Agreement confines that Agreement to its written terms. There is no ambiguity about this aspect of the Agreement which may have required the Tribunal to consider other circumstances – Codelfa Construction Pty Ltd v State Rail Authority of NSW (1982) CLR 337
The 16 March 2015 email from the franchisor to the purchaser’s solicitor supports the conclusion that the franchisor had direct contact with the purchaser and was aware of the purchaser’s request for a reduced rent. Even if the Tribunal accepted the purchaser’s assertion that the vendor did not provide her with the unsigned franchise agreement or the document tendered is not ‘genuine’, it is not evidence (nor is there any other evidence) that the franchisor did not, or would not, agree as required by sub-clauses 1.1(9)(a) and or (b), or would not consent under clause 6.2, to providing a franchise agreement to the purchaser.
Further, clause 6.3 required both parties to do ‘all things necessary’ to obtain the franchisor’s consent. There was no evidence that the parties did so without success.
The Tribunal finds that as at 30 March 2015 clause 6.2 did not operate to allow the purchaser to rescind the contract and demand return of the deposit.
The purchaser asserts that clause 1.1(9)(d), requiring performance of ‘any other condition required to transfer’ the franchise agreement to the purchaser or its nominees, included the condition that the purchaser successfully negotiate a rent reduction with the lessor which had not been met. The Tribunal is not persuaded that there was such a pre-condition.
The purchaser asserts that the vendor was in breach of Clause 1.1(27) and Schedule 2 Clause 4 and Clause 8 of the Agreement by which the vendor warranted it had the legal right and power to enter into the Agreement. The purchaser asserts the vendor lacked that power because:
(a)the vendor was required pursuant to the franchise agreement between the vendor and the franchisor[6] to obtain written consent for the sale from the franchisor and the lessor before the vendor entered into the Agreement and failed to do so;
(b)the lessor would not have approved the grant of the ‘sub-licence’ to the purchaser to occupy the premises and operate the business, given the purchaser’s limited business experience and financial position; and
(c)the vendor failed to provide the purchaser with documents that must be provided in relation to a proposed franchise agreement, including the lease for the premises, which prevented the purchaser from assessing her capacity to meet the franchisee’s obligations including those arising under the lease between the lessor and the franchisor.
[6] Exhibit A2
The Tribunal rejects the submission. These matters, even if they were accepted, and they are not, are procedural issues. They might have been relevant to completion, but they had no bearing on the vendor’s legal right and power to enter into the Agreement.
The Tribunal is satisfied that the circumstances on 18 March 2015 did not provide any basis for the purchaser to terminate the Agreement. Nor could the letter dated 18 March 2015 from the purchaser’s solicitor be characterised as a notice to remedy because successful negotiation of a reduced rent payable to the lessor was not a condition of the Agreement.
In the Tribunal’s view, the letter from the purchaser’s solicitor can only be characterised as an advice to the vendor that the purchaser was no longer willing and, perhaps, able to complete the contract.
On 19 March 2015 the vendor’s solicitor rejected the purchaser’s purported rescission of the Agreement. The vendor advised that he was not willing to accept the ‘hand back’ of the business, did not agree to the release of the deposit to the purchaser and foreshadowed that, if the purchaser did not complete, he would seek damages. The contract was still ‘on foot’.
The purchaser’s notice dated 21 March 2015 relied on the same circumstances as those referred to in the 18 March 2015 letter but asserted that the lessor had not accepted the purchaser as tenant, and therefore the precondition for completion under clause 1.1(9)(c) was not met. This claim fails because there is no evidence that the lessor had acted in that way. All it had done was not agree to a rent reduction.
Although there was no agreed or nominated date for completion of the Agreement, clause 14 allowed either party ‘in circumstances justifying the issue of a notice making time of the essence’ to issue a notice to complete. The vendor issued a notice requiring the purchaser to complete by 13 April 2015.
The Tribunal considers that where the purchaser has twice indicated her unwillingness to complete, the vendor was justified in issuing the notice making ‘time of the essence’ and nominating 13 April 2015 as the completion date.
For the reasons discussed, the Tribunal rejects the purchaser’s submission that preconditions to completion had not been met. The notice to complete was valid.
In order for the purchaser to complete per the notice, she needed to enter into a franchise agreement with the franchisor (Item 4 in the agreement) before 13 April 2015. This did not occur with the result that the contract ended on 13 April 2015. The vendor then became entitled to the deposit per clause 12.5(1).
Although the deposit was 50% of the purchase price, being a significant proportion, the Tribunal notes that the purchaser was at all times legally represented and her solicitors appear to have either drafted or finalised the Agreement.[7] The vendor was not legally represented at the time that the Agreement was signed.
Hot water service
[7] Exhibit A1 – the front page of the agreement has the purchaser’s solicitor’s logo, name and address on it suggesting it is a document either drafted by or finalised by the purchaser’s solicitor
Title and possession of the assets of the business were to pass to the purchaser on completion (clauses 4.1 and 6.5). A hot water service was not included in the list of assets in the Agreement, but a hot water service was installed in the premises at the time the Agreement was signed and was several years old. However, during the licence period the purchaser elected to replace it.
Pursuant to clause 10.1(1) of the Agreement the purchaser was required to obtain the vendor’s written consent to incur “commitments … other than in the ordinary course of business” during the operation of the licence. The vendor had discretion to give, but could not unreasonably withhold, consent. Despite clause 10.1, the purchaser did not obtain the vendor’s written consent to replace the hot water service. The vendor disputes that the hot water service needed to be repaired or replaced and asserts that the purchaser chose to replace the existing hot water service because she wanted a larger system.
Clause 10 of the Agreement provided:
If without default of the Purchaser, this agreement is not completed, then the Vendor must pay to the Purchaser any reasonable amount expended by the Purchaser in complying with the requirement …
The Tribunal rejects the proposition that the vendor is required under clause 10 to pay the purchaser the amount she spent on the new hot water service consequent upon non-completion of the Agreement. First, non-completion was not “without default of the purchaser”. Second, the vendor’s consent to the replacement was not sought or obtained. If the hot water service needed repair or replacement, the vendor may have agreed to a different, and perhaps cheaper, service. Third, during the period of the licence the purchaser was “entitled to the takings and profits” and was required “to pay or bear all outgoings and liabilities of or related to the Business”. In the Tribunal’s view this would include the cost of repair or replacement of the hot water service.
The purchaser’s claim for reimbursement of $1,310 for replacement cost of the hot water service is dismissed.
Fitout
The purchaser, without consent from the vendor, undertook refurbishment and fitout work soon after she commenced operating the business pursuant to the licence in January 2015.
The Tribunal is not satisfied that the vendor is liable to make any payment to the purchaser in relation to the fit out expense. The Tribunal accepts that the vendor was aware of and did not object to the fitout/ refurbishment work undertaken at the premises by the purchaser but does not accept that the vendor is therefore liable for the cost of the work.
The purchaser’s decision to undertake the fitout work was consistent with the parties’ intention that the purchaser had agreed to purchase the business and assets. It is understandable therefore that the vendor did not raise any objection when the purchaser made changes to the premises. However the purchaser then repudiated the contract and vacated the premises without ‘removing’ the work done and ‘making good’. Ordinarily, the purchaser would be liable for this cost regardless of any benefit that the vendor obtained from any improvement to the fit out.[8] It follows that there is no basis for ordering the vendor to pay for this work. The applicant’s claim for compensation of $6,925 for the cost of refurbishment is dismissed.
Respondent’s counter claim
[8] Maroney v Bullard [2016] ACAT 33 at [19]
In his response the vendor foreshadowed a ‘counter claim’ for $89,880 for compensation. However the vendor did not pay the application fee in relation to a counter claim, and there was no evidence brought or submissions made by the vendor in support of it.
In these circumstances, the Tribunal considers that this application and the orders made are confined to the applicant’s application and the orders made dispose of that aspect of the dispute between the parties.
Orders
For these reasons, the Tribunal determines that the application must be dismissed and the purchaser’s solicitor, Carden & Co, Law Practice who acted as the stakeholder for the deposit pending completion of the Agreement must release the deposit to the respondent within 28 days.
………………………………..
General President L Crebbin
for and on behalf of Senior Member W Corby
HEARING DETAILS
FILE NUMBER: | XD 83 of 2016 |
PARTIES, APPLICANT: | Thoa Kim Thi Le |
PARTIES, RESPONDENT: | Toan Nguyen |
COUNSEL APPEARING, APPLICANT | N/A |
COUNSEL APPEARING, RESPONDENT | N/A |
SOLICITORS FOR APPLICANT | N/A |
SOLICITORS FOR RESPONDENT | N/A |
TRIBUNAL MEMBERS: | Senior Member W Corby |
DATES OF HEARING: | 3 March 2016, 5 April 2016 |
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