Nguyen v Nguyen
[2012] VCC 1324
•20 September 2012
| IN THE COUNTY COURT OF VICTORIA AT MELBOURNE CIVIL DIVISION | Revised Not Restricted Suitable for Publication |
COMMERCIAL LIST
GENERAL DIVISION
Case No. CI-10-03315
| LE THANH NGUYEN | Plaintiff |
| v | |
| THU THUY NGUYEN | Defendant |
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JUDGE: | HIS HONOUR JUDGE SHELTON | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 12 September 2012 | |
DATE OF JUDGMENT: | 20 September 2012 | |
CASE MAY BE CITED AS: | Nguyen v Nguyen | |
MEDIUM NEUTRAL CITATION: | [2012] VCC 1324 | |
REASONS FOR JUDGMENT
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SUBJECT – CONTRACT
CATCHWORDS – Construction of contract – specific performance – severance of clause in agreement
LEGISLATION CITED – Credit Act 1984, s150A
CASES CITED – IGA Distribution Pty Ltd v King & Taylor Pty Ltd [2002] VSC 440
JUDGMENT – Judgment for the plaintiff against the defendant in the sum of $92,000.00.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr N Pane with Mr M Belmar | Kabo Lawyers |
| For the Defendant | Mr M Black | Luat Tran & Associates |
HIS HONOUR:
1 This proceeding is concerned with the proper construction of Terms of Settlement dated 24 March 2011 (“the March 2011 Agreement”). I note that the parties are not related.
Background
2 On 30 July 2010, the plaintiff issued this proceeding claiming the sum of $270,000.00 plus interest from the defendant. He alleged that between February 2009 and November 2009, he lent the defendant the sum of $273,000.00, that he had foregone the requirement to repay $3,000.00 of this sum, leaving a balance outstanding of $270,000.00. In her Amended Defence dated 25 November 2010, the defendant admits that the sums were advanced to her and that she paid interest to the plaintiff upon the monies outstanding at various rates, which were agreed between them. She pleaded that she was under no obligation to repay the monies lent, relying upon s150A of the Credit Act 1984 and further alleging that the loan contracts between her and the defendant were unconscionable, or alternatively, that she and the plaintiff were involved in a money lending scheme known in the Vietnamese community as a “hui”.
3 The proceeding came on for hearing in this Court on 22 March 2011. After the first day of trial the matter was resolved. Consent Orders were made that the proceeding be struck out with no order as to costs and the March 2011 Agreement was entered into. It read as follows:
“TERMS OF SETTLEMENT
A. The plaintiff commenced proceedings in the County Court in proceeding number CT-I 0-03315 (‘this proceeding’) against the defendant claiming relief as outlined in the Statement of Claim.
B. The defendant commenced proceedings In the Supreme Court in proceeding number SCI-201 1-00075 (‘the Supreme Court proceeding’) seeking withdrawals of caveats lodged by the plaintiff over the defendant’s property.
C. The parties have agreed to settle the matter on the following terms.
IT IS NOW AGREED:
In consideration of the plaintiff’s forbearance to pursue this matter and the defendant’s forbearance to pursue the Supreme Court mailer:
County Court
1. The defendant will pay to the plaintiff the sum of $92,000.00 (‘the defendant’s settlement sum’) in full and final settlement of this proceeding and the Supreme Court proceeding, by payment of same in full on or before 29 September 2011 in accordance with these Terms of Settlement
2. In the event the defendant does not pay the defendant’s settlement sum by 29 September 2011 the plaintiff will take a transfer of the Truong Tien restaurant business located at 246 Springvale Road, Springvale (including all goodwill, plant and equipment) in exchange for payment of the sum of $108,000.00 (‘the plaintiff’s Settlement Sum’) to the defendant, such sum to be payable on 29 October 2011 (‘the Settlement Date’).
3. From the date of these Terms of Settlement to the Settlement Date the defendant must:
(a) carry on the restaurant business in the usual and ordinary course and do all things necessary or desirable to preserve and enhance the Goodwill and not do anything which may damage the Goodwill at any time;
(b) maintain until Settlement Date any existing insurance in relation to the restaurant business and premises;
(c) in the event that there is no existing public risk insurance, obtain and maintain until Settlement Date an insurance cover for public risk for any single event for the amount of $10 million.
4. The defendant warrants that:
(a) there will be a lease covering the restaurant premises and attached moneylender’s premises (‘the head lease’) which has a term commencing 7 April 2011 for a period of four (4) years with one further option of four (4) years;
(b) the commencing rental under the sub-lease of the restaurant premises due to commence 7 April 2011 will be $42,200.00 per annum inclusive of GST;
(c) she will procure a sub-lease of the restaurant premises in the name of the plaintiff or alternatively an assignment of any sub-lease of the restaurant premises to the plaintiff by the Settlement Date.
5.Each party shall, save where otherwise specified in these Terms of Settlement, bear their own costs in relation to the transfer of the restaurant business to the plaintiff.
6. The plaintiff shall be responsible for:
(a) preparation of any paperwork; and
(b) payment of any costs associated with the transfer to the plaintiff of any permits or licences relating to the operation of the restaurant business, including but not limited to the BYO liquor permit and the food premises registration.
7. The defendant shall sign all paperwork reasonably necessary in order to transfer to the plaintiff any permits or licences relating to the operation of the restaurant business, including but not limited to the BYO liquor permit and the food premises registration.
8. All periodical outgoings and expenses in respect of the restaurant business (for example, rent, insurance, electricity, gas and water expenses) must be apportioned as at the Settlement Date between the Defendant and the Plaintiff and the plaintiff’s settlement sum adjusted accordingly.
9. (a) The Plaintiff does not at the Settlement Date assume any debt, liability or obligation of the restaurant business whether known or unknown, fixed or contingent.
(b) Without limiting the generality of this clause, the plaintiff has no liability of any kind for, and the defendant must indemnify the plaintiff against all claims and liabilities that arise from or relate to, the conduct of the restaurant business prior to the Settlement Date.
10. Upon execution of these Terms of Settlement the parties forever release and discharge each other from all actions, suits, proceedings, claims, demands and costs arising out of or in any way relating to the subject matter of the Statement of Claim and the matters pleaded in the Defence, including the set-off pleaded in the Defence.
11. Forthwith upon execution of these Terms of Settlement the parties will file Consent Orders with the Court seeking that the proceeding be struck out with no order as to costs.
12. In the event that the restaurant business is not transferred to the plaintiff on the Settlement Date the plaintiff shall have the right to reinstate the proceeding herein with the Court and obtain judgment for:
(a) specific performance of these Terms of Settlement;
(b) the costs associated with obtaining such orders.
13. In the event that the plaintiff’s settlement sum is not paid by the Settlement Date the defendant shall have the right to reinstate the proceeding herein with the Court and obtain judgment for:
(a) the plaintiff’s settlement sum, less any amount paid by the plaintiff pursuant to these Terms of Settlement;
(b) the costs associated with obtaining such orders.
14. For the purposes of entering judgment pursuant to the preceding clause:
(a) an Affidavit sworn by the relevant party’s solicitors which states that the restaurant business has not been transferred or the plaintiffs settlement sum or part thereof has not been paid, as the case may be, shall be evidence of that fact; and
(b) the relevant party may produce these Terms of Settlement to the Court as evidence of the other party’s consent to judgment being entered.
Supreme Court
15.…
16.…
17.…
Common terms
18. A reference to a party shall include that party’s successors and assigns.
19. Time is of the essence in these Terms of Settlement.
Dated: 29 March 2011
[Executed et cetera].”
4 The sum of $92,000.00 was not paid by the defendant to the plaintiff by 29 September 2011 pursuant to clause 1 of the March 2011 Agreement. The defendant stated that she was unable to make this payment. Therefore, clause 2 became operative. The defendant did not pay the sum of $108,000.00 to the plaintiff and the defendant did not transfer the Truong Tien restaurant business conducted at 246 Springvale Road, Springvale (“the restaurant”) by 29 October 2011. The parties then entered into an agreement on 6 December 2011 (“the December 2011 Agreement”) which read as follows:
“TERMS OF SETTLEMENT
THIS AGREEMENT is made on 6 December 2011
BETWEEN:
LE THANH NGUYEN (‘Le’)
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THU TIIUY THI NGUYEN (‘Thu’)
WHEREAS:
A. Le commenced Proceeding No. CI-l0-03315 in the County Court against Thu, claiming the repayment of certain moneys that had been lent.
B. Thu commenced Proceeding No. SCI-2011-00075 in the Supreme Court seeking withdrawals of caveats lodged by Le over Thu’s property.
C. By Terms of Settlement dated 24 March 2011 entered into by Le and Thu, Le and Thu agreed to settle the County Court proceeding and the Supreme Court proceeding on the conditions set out in those Terms of Settlement.
D. Thu alleges that Le has breached the Terms of Settlement, and Le makes the same allegation against Thu.
E. Thu currently operates a restaurant called Truong Tien Restaurant located at 246 Springvale Road, Springvale (‘the premises’).
F. Pursuant to the Terms of Settlement the Truong Tien Restaurant business was to be transferred to Le by Thu on 29 October 2011 with a payment being made by Le to Thu of $108,000.00.
G. Le and Thu have agreed to resolve the disputes between them on the terms set out herein.
NOW THESE TERMS OF SETTLEMENT WITNESS that in consideration of the mutual promises and undertakings set out herein the parties have agreed as follows:
I. This agreement is conditional upon the following:
(a) agreement being in writing given by the landlord of the premises to the transfer of the sublease of the premises from Thu to Le;
(b) the premises being brought up to a sufficient standard by Thu such that the Health Inspector for the City of Greater Dandenong will certify, on or prior to the settlement date, that the premises may be used as a restaurant.
2. Thu may cease operation of the Truong Tien Restaurant forthwith which for the avoidance of doubt means that it will no longer be open for trade to enable Thu to, in part, comply with her obligations set out in clause I (b) hereof.
3. Thu must continue to make payments of rental owing under the lease of the premises until the settlement date.
4. On 16 January 2012 or such other date as may be agreed in writing between the parties (‘the settlement date’), Le will take a transfer of the sublease of the premises and will take occupation of the ‘premises and will commence the operation of a restaurant business at the premises.
5. In consideration for the promise set out in paragraph 4 hereof, Le will pay to Thu $70,000.00 (inclusive of taxes and charges) by two payments from Le to Thu in the sum of $70,000.00 (‘the settlement sum’), to be paid as follows:
i. $58,000.00 simultaneously with the performance of the obligations set out in paragraph 4 hereof;
ii. the balance of $12,000.00 on or before 16 February 2012.
6. Thu makes no warranty as to the state or condition of the restaurant business and the business is transferred on the basis that Thu will transfer to Le all right, title and interest in the plant and equipment which is located at the business premises as at the date of these Terms of Settlement, and no warranty is made otherwise as to the condition of that plant and equipment.
7. In respect to the transfer of the business:
(1) Thu will be responsible for:
(a) undertaking all works sufficient to bring the premises up to a standard such that they can be approved as suitable premises for the conduct of a restaurant business as set out herein;
(b) preparing all necessary paperwork in respect to obtaining an assignment of sublease of the premises from Thu to Le;
(2) Le shall be responsible for:
(a) payment of the landlord’s legal fees in relation to the assignment of the sublease of the premises;
(b) payment of the disbursement which may be incurred with the Responsible Authority in respect to the transfer of the Food Registration in the sum of $230.00;
(c) preparing all necessary paperwork in respect to obtaining a transfer of the Food Registration from Thu to Le
8. Le shall forthwith provide the following documents to Thu to enable the said documents to be submitted to the landlord to obtain the landlord’s approval of the assignment of the sublease of the premises:
(1) a signed and dated Statement of Assets and Liabilities of Le which must be certified by an accountant;
(2) the name and address and contact numbers of Le and any other person intended to be named as a party to the sublease;
(3) a history of the business experience of Le and any other person intended to be party to the sublease;
(4) a statement as to the proposed permitted use of the premises;
(5) a bond in the sum nominated by the landlord;
(6) the names of three business referees and their three (3) reference letters providing business and financial references of Le and any other person intended to be party to the sublease;
(7) that in the event that the landlord requires a guarantor Le will satisfy such request;
(8) any other document reasonably required by the landlord.
9. Le agrees to be liable for the payment of all rent due to the landlord for the premises after the settlement date.
10. Le does not as at the settlement date assume any debt, liability or obligation of the restaurant business, whether known or unknown, fixed or contingent. Any such liability or liabilities incurred in respect to the operation of the business up until the settlement date remain the liability of Thu.
11. Upon the execution of these Terms of Settlement, subject to clause I hereof, the parties forever release and discharge each other from all claims, suits and proceedings, demands or costs arising out of or in any way associated with the Statements of Claim in the County Court and the Supreme Court and the matters pleaded in defence, including the set-off pleaded in the Defence in the County Court Proceeding, and any liability arising out of the Terms of Settlement dated 24 March 2011.
12. In the event that the settlement sum is not paid by the settlement date, then Thu may immediately institute proceedings for the recovery of the settlement sum or any part thereof outstanding, and Thu may obtain Judgment in such proceeding by the production of these Terms of Settlement and an Affidavit filed by Thu’s solicitors setting out the fact of the default and the amount of the default, and Le agrees that the mere production of these terms of Settlement will evidence his irrevocable consent to the entry of such Judgment.
13. In the interpretation of these Terms of Settlement, time shall be of the essence.
14. The parties agrees [sic] to do all things reasonably necessary to give effect to these terms and which may be reasonably necessary to facilitate the other parties performance of these terms.
15. In the event that either or both of the conditions set out in paragraph 1 hereof are not satisfied, then this agreement will have no force and effect and the parties are free to exercise their rights pursuant to the Terms of Settlement dated 24 March 2011.
[Executed et cetera].”
5 It is common ground that the condition contained in clause 1(a) of the December 2011 Agreement was not satisfied. It is also common ground that therefore, pursuant to clause 15 of the December 2011 Agreement, that Agreement was of “no force and effect” and that the parties’ rights and obligations were governed by the March 2011 Agreement.
6 In February 2012, the defendant applied to reinstate the proceeding. On 22 March 2012, an order was made fixing the matter for trial by way of affidavit. The order set the matter down for trial on 12 September 2002 and required the parties to give seven days’ notice to the other party of any deponent required for cross-examination. No such notice was given and thus the matter proceeded before me on the basis of the following affidavits and exhibits to them:
For the Plaintiff
· Affidavit of plaintiff affirmed 21 June 2012
· Affidavit of Kristoff Laurence Lajoie sworn 10 September 2012
For the Defendant
· Affidavits of defendant sworn 16 February 2012, 10 May 2012 and 6 September 2012
· Affidavit of Luke Luat Thien Tran sworn 12 August 2012.
Discussion and Conclusions
7 The plaintiff seeks an order that the defendant pay him the sum of $92,000.00 pursuant to clause 1 of the March 2011 Terms of Settlement. The defendant seeks an order that pursuant to clause 2 of the March 2011 Agreement, the plaintiff pay her the sum of $108,000.00.
8 A useful starting point is clause 2 of the December 2011 Agreement. The restaurant ceased operating on 6 December 2012, the date of the December 2011 Agreement and has not operated since. Mr Black, who appeared for the defendant, relied upon this clause to justify the defendant’s closing down of the restaurant. He referred to the use of the word “cease” instead of “suspend”. Although the use of the word “suspend” might have been preferable, in my view it is clear from the remainder of clause 2 that the closing of the restaurant is only temporary to enable the defendant to comply with her obligations under clause 1(b) of the December 2011 Agreement. Otherwise, the words in clause 2 after “forthwith” would have no meaning.
9 Clauses 1(b) (and clause 7(1)(a)) are to be read in the context of an order to the defendant under the Food Act 1984 from the City of Greater Dandenong dated 30 November 2011 requiring twenty four items to be attended to prior to 5 December 2011. The order further directed that the restaurant –
“… shall not be used for the sale or the storing of food, serving or supplying for sale of any food until the food premises has been put into a clean and sanitary condition to the satisfaction of an authorised officer.”
10 The defendant states that the restaurant was closed from 1 December 2011, in compliance with this order, until reopened on 5 December 2011. The plaintiff states that he did not receive at the time a copy of the letter of 30 November 2011.
11 A letter of 13 January 2012 from the City of Greater Dandenong to the defendant indicated that an inspection of the restaurant on 5 December 2011 indicated that the order of 30 November 2011 had been complied with. Again, the plaintiff states that he never received a copy of the letter of 13 January 2002 at the time. However, a further report from the City of Greater Dandenong dated 14 February 2012 required a number of items under the heading “Structure Check List” to be completed within thirty days to comply with the Food Standards Code. Further, an email of 27 February 2012 from the City of Greater Dandenong required the defendant to –
“… engage a licensed pest control contractor to eradicate the cockroach infestation inside the premises.”
12 This was done on 28 February 2012.
13 Clauses 1(a) and 7(1)(b) of the December 2011 Agreement indicate that the defendant had not procured a sub-lease or an assignment of a sub-lease of the restaurant as required by clause 4(c) of the March 2011 Agreement.
14 As appears, the plaintiff seeks to rely upon clause 12 of the March 2011 Agreement and the defendant seeks to rely upon clause 13 of that Agreement.
15 I agree with the submission of Mr Pane, who with Mr Belmar appeared on behalf of the plaintiff, that the payment of the sum of $108,000.00 by the defendant pursuant to clause 2 of the March 2011 Agreement is conditional upon the transfer to him of the restaurant as a going concern. Any other interpretation of clauses 2 and 3 of the March 2011 Agreement is, in my view, quite unconscionable.
16 The defendant has failed to continue the operation of the restaurant for over nine months. It was not entitled to close down the restaurant pursuant to clause 2 of the December 2011 Agreement. Clearly there is now no goodwill remaining in the restaurant.
17 Clause 2 of the March 2011 Agreement provides for a transfer of the restaurant “in exchange” for payment of the sum of $108,000.00. The defendant however is no longer in a position to perform its part of this exchange. In a written submission, Mr Black conceded that to require the defendant now to transfer the restaurant to the plaintiff would be a pointless exercise.
18 As submitted by Mr Pane, the defendant is in effect seeking an order for specific performance. Mr Pane relied upon Principles of Equity and Trusts (4th edition) by S Hepburn which defines specific performance as follows:
“Specific performance is an equitable remedy whereby a court will compel a defendant to perform legally enforceable obligations under a contract. The decree is discretionary and, even where jurisdictional pre-requisites are satisfied, a court may refuse to issue the decree if the individual circumstances would make it unfair, harsh or inequitable. Specific performance refers to the actual execution of a contract to which the parties are privy, and the performance must accord with the particular terms and conditions of the contract. In issuing a decree of specific performance equity directs the party in default to do the very thing which he or she has contracted to do.”
19 Here, in my view, it would be unfair and inequitable to grant the relief sought by the defendant. The defendant would receive a windfall of $108,000.00 without being able to perform her part of the bargain envisaged by clause 2 of the March 2011 Agreement by virtue of her own act in closing the restaurant.
20 Mr Pane relied upon IGA Distribution Pty Ltd v King & Taylor Pty Ltd [2002] VSC 440, at paragraph 201:
“As a general rule it may be said that when the court cannot compel specific performance of a contract as a whole, it will not interfere to compel specific performance of part of a contract. But that is not a rule of universal application. If an agreement is severable, or divisible, so that it can be said to be not one contract but several agreements in one document, then one or more of those agreements may, if there is no other objection to a decree, be enforced specifically.”
21 Applying this approach, since the defendant is not in a position to comply with clause 2 of the Agreement of March 2011, I am prepared to sever this clause from the March 2011 Agreement and specifically enforce clause 1 of that Agreement and order that the defendant pay the plaintiff the sum of $92,000.00.
Summary
22 To the extent that it is necessary, I reinstate the proceeding.
23 There will be judgment for the plaintiff against the defendant in the sum of $92,000.00.
24 I will hear from the parties on the question of interest and costs.
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