Nicholson v Hilldove Pty Ltd (No 3)
[2013] VSC 500
•30 September 2013
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMERCIAL AND EQUITY DIVISION
COMMERCIAL COURT
No. S CI 2013 2198
BETWEEN
| JOHN DAVID NICHOLSON | Plaintiff |
| and | |
| HILLDOVE PTY LTD (ACN 114 760 771) | First Defendant |
| and | |
| TERRABRIDGE PTY LTD (ACN 115 615 097) | Second Defendant |
| and | |
| BENJAMIN PATRICK NIALL | Third Defendant |
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JUDGE: | SIFRIS J | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 2, 3 and 16 September 2013 | |
DATE OF JUDGMENT: | 30 September 2013 | |
CASE MAY BE CITED AS: | Nicholson v Hilldove Pty Ltd & Ors (No 3) | |
MEDIUM NEUTRAL CITATION: | [2013] VSC 500 | |
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CONTRACT – Repudiation – Damages – Alleged loss of opportunity to nominate purchaser – No damages established – Nominal damages for repudiation of contract.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Dr K Hanscombe SC Ms K Bowshell | Williams Winter Solicitors |
| For the Defendants | Mr T Woodward SC Mr J Mereine | Minter Ellison |
HIS HONOUR:
Introduction
On 14 December 2012 I published my reasons for concluding that the plaintiff (‘Nicholson’) had entered into a binding and enforceable agreement (‘the Agreement’) with the first defendant (‘Hilldove’) on 15 December 2011 in relation to the purchase by Nicholson of the Crown Hotel in Lilydale from Hilldove.[1]
[1]Nicholson v Hilldove Pty Ltd & Ors [2012] VSC 598 (‘the Judgment’). This Judgment (No 3) must be read together with the Judgment.
I do not propose to rehearse the facts and I will assume familiarity with the Judgment. Definitions and terms used in these reasons are the same as those used in the Judgment.
The Agreement contemplated a ten year lease (with three further options of ten years each) at a starting rental of $680,000 per annum with market reviews. The landlord, Terrabridge Pty Ltd (‘Terrabridge’), the second defendant in this proceeding, was not a party to the Agreement. It was not suggested by Nicholson that there was any obligation on the part of Terrabridge (whether promissory or representational) to grant a lease whether on the terms contemplated or at all. Rather, it was pleaded and submitted that there was an implied term of the Agreement that Hilldove, as a party related to Terrabridge, would procure the contemplated lease. It was further alleged that Hilldove had made representations to such effect.
It was held that there was no such implied term and that Hilldove had not made any representations to the effect alleged. [2]
[2]Ibid [127], [133]-[135].
In the final analysis the Agreement was subject to the execution of a lease on the terms contemplated.[3] However there was no obligation on the part of Terrabridge or Hilldove to grant or procure such a lease. It was a matter for negotiation between the parties. Clearly Nicholson has lost the opportunity to negotiate such a lease. Without a lease he would not have gone ahead with the purchase of the Crown Hotel.
[3]On 7 May 2013 I dismissed an application by Nicholson to re-open the case on the grounds that there was evidence of an existing lease and that this constituted fresh evidence that required investigation. The application was dismissed and is not relevant to this part of the case (Nicholson v Hilldove & Ors (No 2) [2013] VSC 231).
Taking the view that there was no binding and enforceable agreement, Hilldove sold the Crown Hotel to David John Tomsic (‘Tomsic’) or nominee on or about 7 February 2012. Terrabridge sold the freehold to interests associated with Tomsic.
Nicholson elected to pursue a claim for damages against Hilldove for breach or repudiation of the Agreement. The Judgment dealt with liability only. On 2, 3 and 16 September 2013, I heard the damages part of the case.
Damages
The basis of the claim
In my opinion Nicholson has failed to establish any loss and damage arising out of the repudiation of the Agreement by Hilldove.
The original claim for damages was not particularised. This claim, as an alternative to specific performance, assumed and was predicated on the finding by the Court of a binding lease with a term of 10 years and three further options to renew of 10 years each. When the trial commenced, Nicholson sought to rely on an expert report in relation to the value of the Crown Hotel business. However, I ruled that the trial would proceed on liability only. The claim for specific performance was not ultimately pressed.
I held that there was no binding lease and that the Agreement was subject to the negotiation of a lease. On this basis the only loss was the loss of opportunity to negotiate a lease within the parameters set out in the Agreement. On the evidence this was most unlikely.
The final formulation for the damages[4] claim is in paragraph 24C of the Amended Statement of Claim. It is in the following terms:
24C. By reason of the breach of agreement set out in paragraph 24, the plaintiff has suffered loss and damage.
PARTICULARS
In the circumstances found by the Court on 14 December 2012 and 7 May 2013 to exist, the plaintiff’s loss is the loss of the opportunity to sell the Heads of Agreement to the highest bidder who was able to operate the business by way of the plaintiff nominating that person as purchaser of the business.
At least one person able to operate the business was prepared to pay $1,000,000 to the plaintiff if the plaintiff would nominate him as the purchaser of the business.
[4]This formulation was never raised during the liability stage of the trial.
The defence to paragraph 24C is in the following terms:
24C. It denies each allegation in paragraph 24C and says further that:
(a)at all material times, the plaintiff was proposing to nominate Eden Hotels Pty Ltd (“Eden”) as purchaser under the Heads of Agreement (trial transcript at T54);
(b)if Eden was unwilling or unable to be nominated as purchaser under the Heads of Agreement (which is not admitted), the plaintiff would have nominated an alternative purchaser, which is likely to have been a related entity of Eden and/or Dominion Hotel Group Pty Ltd and/or a director of either or both of them.
It is necessary to assess what would have happened if Hilldove had not repudiated the Agreement by the sale of the Crown Hotel to interests associated with Tomsic. Nicholson is entitled to be placed in the same situation with respect to damages, as if the contract had been performed.[5] He is not however entitled to be placed in a better position.[6] What Nicholson would have done and what income, if any, he would have derived from any nomination forms part of this assessment.
[5]Tabcorp Holdings Ltd v Bowen Investments Pty Ltd (2009) 236 CLR 272, 286 [13].
[6]The Commonwealth of Australia v Amann Aviation Pty Ltd [1991] 174 CLR 64, 82.
There is no dispute that Nicholson was entitled to nominate a purchaser. The remaining question is whether the evidence establishes that any party was prepared to pay Nicholson for such nomination.
In my opinion Nicholson has failed to establish that any party was prepared to pay any amount for such nomination as purchaser under the Agreement. There is simply no evidence to such effect. Further, the evidence establishes that it is more probable than not that Nicholson would have nominated the Eden Hotel Group Pty Ltd (‘Eden Hotels’) without receiving any payment for such nomination.
Dominion
Damian Page Elliot (‘Elliot’), a director of Dominion Hotel Group Pty Ltd (‘Dominion’), gave evidence. He said that in December 2011 he advised Nicholson that Dominion had decided not to pursue the Crown Hotel and indeed was looking to sell down its hospitality holdings. This is confirmed by the minutes of a meeting of the board of directors of Dominion held on 15 December 2011. Nicholson was present at the meeting. Dominion was therefore not a contender for any nomination.
Eden Hotels
It is clear on the evidence and admitted by Nicholson that Eden Hotels was the most likely nominee. The resolution by the board of Dominion not to acquire any further hotels other than the Cross Keys Hotel, led to the establishment of Eden Hotels by those directors and members of Dominion that wished to continue acquiring hotels.
Eden Hotels was registered on 9 January 2012. Its principal place of business until 26 January 2013 was the same offices that Nicholson worked from in Flinders Lane. They were also the offices of Dominion.
In early January 2012 Eden Hotels commenced the preparation of a memorandum. The final version of the memorandum is dated 15 January 2012 (‘Eden Memorandum’).
The purpose of the Eden Memorandum was to ‘seek investment to facilitate the acquisition of a number of hotels’.[7] Further, in paragraph 1.1 it is stated that ‘Eden Hotels has entered agreements to acquire the Tankerville Arms … and the Crown in Lilydale’. In paragraph 3 of the Eden Memorandum, the words ‘proposed to purchases [sic]’ are used and in describing the Crown Hotel and the Tankerville Arms Hotel (‘the Tankerville Arms’) under the section ‘Hotel Overview’ the words ‘will be acquired’ are used.
[7]Eden Memorandum, paragraph 1.1.
In cross-examination during the first stage of the trial in this proceeding, Nicholson conceded that he had read the Eden Memorandum and was satisfied with its accuracy.[8] He said that he had some input into the preparation of the document. Nicholson denied that the relevant wording indicated that there was no binding agreement. Nicholson gave evidence that the reference to ‘will be acquired’ was a reference to settlement taking place. To some extent the line of questions proceeded without any reference to that part of paragraph 1.1 of the Eden Memorandum referring to the present. This is not meant as a criticism but rather to note (as stated in the Judgment) that the Eden Memorandum itself is consistent with what Nicholson understood the position to be.[9]
[8]Nicholson v Hilldove Pty Ltd & Ors [2012] VSC 598 [92].
[9]Ibid [92]-[93].
I accepted Nicholson’s evidence and held that the language used in the Eden Memorandum is not inconsistent with the parties having entered into a binding Agreement. I said that the words ‘proposed’ and ‘will’ must be considered in the context of the earlier words ‘has entered into’ and the structure of the transaction, namely the contemplated ‘formal Contract’ and the various conditions attaching to the transaction which were required to be complied with or satisfied before settlement.
Under the third heading ‘Acquisitions’ the Eden Memorandum is in the following terms:
It is proposed to purchase at least 2 existing gaming venues (Crown and Tankerville) and a third subject to the raising of sufficient equity. In addition to the purchase of these hotels it is proposed to enter into a Joint Venture to acquire 50 EGM’s at the Grandview Hotel.
Gregory Raymond Dunstan (‘Dunstan’), a director of both Dominion and Eden Hotels, agreed that the statement referred to in paragraph 23 was correct and represented the intention of Eden Hotels.
There are numerous other paragraphs in the Eden Memorandum that evidence the intention of Eden Hotels to acquire the Crown Hotel and identify and evaluate further opportunities. Item 4 in paragraph 3 deals with ‘Other Opportunities’. Item 7 of paragraph 3 deals with ‘Funding’ and includes the Crown Hotel at an acquisition cost of $6,000,000. Item 7 also deals with ‘Equity’ and refers to the ‘committed funding’ of $5,500,000 by the ‘initial shareholders’. A further $3,200,000 was sought. Item 8 gives a forecast of the financial performance of the three hotels (the Crown Hotel, the Tankerville Arms and a ‘Hotel 3’).
However, well prior to the Eden Memorandum of 15 January 2012, and in fact prior to 15 December 2011, the date of the Agreement and the Dominion board meeting, Nicholson, upon the registration of Eden Hotels, sent an email to Dunstan. The email is dated 12 December 2011. Attached to the email is a spreadsheet headed ‘Eden Hotel Group’. The spreadsheet deals with much financial information in relation to the proposed acquisition by Eden Hotels of four hotels, namely, the Cross Keys, the Tankerville Arms, the Crown and Grandview Hotels. The financial information includes the proposed purchase price (other than for the Grandview Hotel) and equity required. In relation to the Crown Hotel the purchase price is stated as $6,000,000, the price referred to in the Agreement which was concluded three days after the email and spreadsheet. In the email Nicholson expressed the view that raising funds should not be an issue. The email was not discovered by Nicholson.
On 11 January 2012 Dunstan sent Nicholson a spreadsheet for Nicholson to review and, if necessary, amend. Projections in relation to the Crown Hotel were included in the spreadsheet.
On 12 January 2012 Nicholson sent an email to Lucas Smith (‘Smith’) copied to Tony Jackson (‘Jackson’). The subject was ‘EHG’ and an excel spreadsheet in relation to ‘Eden Hotels Group 3 Venues’ was attached. The spreadsheet is headed ‘Projected Profit and Loss’ and includes the Crown Hotel, the Cross Keys and the Tankerville Arms. In the email Nicholson invites Smith to delete the Cross Keys and ‘just do it [a three-way analysis] with 2 venues’ and also to ‘[f]orget about Grandview and Club for this exercise’. Relevantly and most significantly the Crown Hotel was included.
On 23 January 2012 Nicholson sent a further email to Dunstan. The subject of the email is ‘Eden H G 3 Way’. Nicholson attached a spreadsheet that he ‘spent all weekend putting … together’. The spreadsheet is a 10 year projection in relation to Eden Hotels and deals with profit and loss, cash flow, balance sheet, equity value and bank covenant calculations. In the email Nicholson states that ‘[i]t looks like it is now complete’ and ‘[i]t is tight for a while but plenty of cash in bank’. In the spreadsheet the Crown Hotel is referred to first, then the Tankerville Arms and then ‘Hotel 3’ and ‘Hotel 4’.
There was no point in Nicholson nominating Eden Hotels or progressing the acquisition of the Crown Hotel because it, together with the freehold, had been sold to interests associated with Tomsic in February 2012 and the matter was the subject of correspondence between solicitors for Nicholson (Williams Winter Solicitors) and solicitors for Hilldove (Minter Ellison). Effectively the acquisition was on hold because of the alleged repudiation by Hilldove.
The question is what would have happened if Hilldove had not repudiated the Agreement by the sale to interests associated with Tomsic. In these circumstances there is every reason to believe and it is certainly more probable than not[10] – as the events to this point and subsequently demonstrate – that Nicholson would have nominated Eden Hotels. Everything was on track for such a nomination and on the evidence it is inconceivable that it would not have taken place.
[10]Sellers v Adelaide Petroleum NL and Others (1994) 179 CLR 332, 353; Crown Insurance Services Pty Ltd v National Mutual Life Association of Asia Ltd [2005] VSCA 218 [9].
In late January 2012 Eden Hotels progressed the acquisition of the Tankerville Arms in terms of its strategy and the timeline identified in the Eden Memorandum and subsequent documents. Although the Crown Hotel was to be the companion acquisition, for the reasons previously stated, that acquisition did not progress.
By letter dated 23 January 2012 Williams Winter Solicitors wrote to the lawyers for the vendor of the Tankerville Arms (Rigby Cooke Lawyers) making certain comments on the proposed agreement. The purchaser was referred to as Eden Hotels. Prior to sending the letter, a draft was sent to Nicholson for his approval. Paragraph 8 of the letter referred to guarantees to be given by five individuals in the sum of $500,000 each. The proposed guarantors were Jackson, Dunstan, Elliot, Daniel El Fahkri (‘El Fahkri’) and Nicholson.
On 22 February 2012 Williams Winter Solicitors wrote to Minter Ellison referring to previous correspondence and the binding Heads of Agreement in relation to the Crown Hotel and calling for ‘a Contract of Sale for consideration by our client’. Minter Ellison denied there was a binding agreement and no Contract of Sale was forthcoming. Nicholson then commenced this proceeding. Had the Contract of Sale proceeded it is more probable than not that, as he did with the Tankerville Arms, Nicholson would have nominated Eden Hotels.
On 24 February 2012 Nicholson participated in a phone conference in relation to the proposed acquisition of the Grandview Hotel.
On 9 March 2012 Nicholson advised Dunstan that he had ‘been offered $500K to walk from Cross Keys’. The rest of the email is in the following terms:
I thought I would say $1 mil for Cross Keys and Crown.
Thoughts?
On 16 March 2012 Nicholson received a copy of the signed Heads of Agreement in relation to the Cross Keys Hotel. The vendor was DE Hotels Pty Ltd a subsidiary of Dominion and the purchaser was Tomsic and/or Nominee. The Heads of Agreement are dated 16 March 2012.
On 28 March 2012 Nicholson sent an email to Dunstan giving an estimate of the equity requirements ‘if everything fell our way’. The attachment was a spreadsheet in relation to Eden Hotels. In the spreadsheet four hotels are referred to: the Crown and Grandview Hotels, the Tankerville Arms and the Knox Tavern. The acquisition price in relation to the Crown Hotel is referred to as $6,000,000. The subject matter of the email is ‘EHG’ and the spreadsheet is referred to as ‘EHG Equity Required’. Accordingly, it is relevant to note that as at 28 March 2012 Nicholson, in a spreadsheet prepared by him, specifically included the Crown Hotel as part of the Eden Hotels portfolio when assessing the group’s equity requirements.
On 16 April 2012 Nicholson sent an email to Dunstan, Elliot and El Fahkri in relation to the Knox Tavern. In the email Nicholson refers to the fact that ‘[o]ur offer of $3.35 mil was tendered.’ Further in the email Nicholson advises that the offer was rejected as the vendors were insisting on a purchase price of $4,000,000. Again it is clear from the email that Nicholson was referring to the acquisition of the Knox Tavern by Eden Hotels. In the 10 year projection spreadsheet prepared by Nicholson in late January 2012, the acquisition of two additional hotels (‘Hotel 3’ and ‘Hotel 4’) is contemplated.
On 18 April 2012 Nicholson sent an urgent email to Elizabeth Edwards (‘Edwards’) at Williams Winter Solicitors in relation to the acquisition of the Tankerville Arms. In the email Nicholson advises that ‘[w]e do not want to lose this deal’. Reference is also made to the fact that a contract had been in existence for close to a week.
On 26 April 2012 Nicholson sent an email to Stephen Cropley of Cropley Commercial in relation to the Knox Tavern. In the email Nicholson advised that ‘we will be prepared to increase our offer to $3.5 mil’.
On 30 April 2012 Dunstan sent an email to Nicholson asking Nicholson to complete ‘the Knox tables and secondly review the Crown and Tank’. In the email Dunstan further advised that there was a need to be consistent with the model and paper prepared by Nicholson a week earlier. In the attached table Dunstan sets out figures in relation to the Crown and Cross Keys Hotels, the Tankerville Arms and the Knox Tavern.
On 8 May 2012 Heads of Agreement were entered into between Whitvan Pty Ltd, ATF Lone Star Tavern Unit Trust trading as Knox Tavern and John Nicholson and/or nominee in relation to the Knox Tavern. The purchase price was $3,500,000. In an email to Edwards dated 10 May 2012 in relation to the Knox Tavern, Nicholson advised that he would nominate Eden Hotels as the purchaser of the Knox Tavern. The nomination of Eden Hotels by Nicholson is entirely consistent with the inclusion of the Knox Tavern in the portfolio of hotels to be acquired by Eden Hotels. Of course, the Crown Hotel was also, together with the Tankerville Arms, a hotel to be included in the initial portfolio of Eden Hotels.
On 30 May 2012 Edwards sent an email to Nicholson confirming that the current tenant of the Knox Tavern had discussed with the landlord the proposed assignment of the lease to Eden Hotels. In the email Edwards suggested that a meeting be arranged. In his reply dated 5 June 2012 Nicholson advised that he would bring Antony Spielvogel (‘Spielvogel’) with him because he would be ‘running the operations for Eden’.
On 11 June 2012 Spielvogel prepared a further spreadsheet in relation to Eden Hotels. The spreadsheet was sent by Spielvogel to Nicholson by email. In the email Spielvogel wrote:
Had a go at amending Greg’s spreadsheet to try and more accurately reflect where we are right now and include some of our discussions re my options and shares in lieu of salary till settlement.
Further, in the email Spielvogel advised as follows:
Obviously we will also all know more about any further equity that may be required once the Crown case has been heard and hopefully settled – depending on the settlement amount it is likely no additional funds may be required as discussed
In the spreadsheet Spielvogel refers to Eden Hotels and includes the Tankerville Arms, the Knox Tavern and the Grandview Hotel. The Crown Hotel is included in the spreadsheet but no figures are set out. By this stage it was obvious and well known to Nicholson and the directors of Eden Hotels that the Crown Hotel had been sold to interests associated with Tomsic and that Hilldove was denying that there was an enforceable agreement between Hilldove and Nicholson. The email and spreadsheet were not discovered by Nicholson.
On and from 4 July 2012 various information packs in relation to Eden Hotels were prepared primarily for the purpose of obtaining funding. It is not necessary to refer to all of the information packs. However, of relevance is the fact that in each information pack reference is made to the acquisition by Eden Hotels of the Tankerville Arms and the Knox Tavern. There are some variations between the different information packs prepared but these are not relevant for present purposes.[11]
[11]In July 2012 there was both a bank information pack that referred to the acquisition of the Tankerville Arms and the Knox Tavern and an information pack that, in addition to the Tankerville Arms and the Knox Tavern, referred to the acquisition of ‘The Windemere and City Family hotels in Bendigo’.
On 13 July 2012 Nicholson sent an email to Edwards in relation to the Tankerville Arms. In the email Nicholson referred to the cost of the Tankerville Arms and the source of funding for the acquisition.
On 19 July 2012 an email was sent to Nicholson and copied to Edwards. The email was from Sharon Ewington (‘Ewington’) of Williams Winter Solicitors. In the email Ewington advised that in order to complete the relevant forms in relation to the application for a venue operator’s licence in respect of the Tankerville Arms she needed to know ‘which investors will have control over Eden by virtue of the number of shares they will hold in Eden.’
On 20 July 2012 Spielvogel sent a further spreadsheet to Nicholson and Dunstan. The subject matter of the email is ‘Eden Information’ and an attachment to the email was a spreadsheet referred to as ‘Eden Hotel Group 3 Way 10 Year Projection_2 Venues’. The venues referred to are the Tankerville Arms and the Knox Tavern. However, Spielvogel prepared and attached to the email a further spreadsheet (‘Eden Model 20 July 2012’) that he referred to in the email as an ‘updated Summary Financial Model which incorporated all 4 pubs and various shareholdings’. The pubs referred to in this ‘Summary Financial Model’ included the Tankerville Arms, the Knox Tavern, the Grandview, Windermere and City Family Hotels. In the spreadsheet, under ‘Current Equity’, a figure of $1,000,000 appears under the heading ‘Crown Settlement’, referring to anticipated proceeds of the present case.
A final matter of relevance is the fact that, through its subsidiary, Grandview Hotel Victoria Pty Ltd, Eden Hotels progressed the acquisition of the Grandview Hotel to add to its portfolio. On 16 October 2012 its application for approval of a venue operator’s licence for 50 Electronic Gaming Machines was granted. In paragraph 40 of its decision the Victorian Commission for Gambling and Liquor Regulation said
Mr Spielvogel gave evidence that the directors of the Eden Hotel Group, through their association with the Dominion Hotel Group, have been involved with and have experience in managing venues with gaming facilities. Mr Spielvogel told the Commission that the Dominion Hotel Group currently operates 11 gaming venues in Victoria. Mr Spielvogel gave evidence that the Eden Hotel Group plans to purchase an additional 4 venues, with a total of 205 EGMs, to add to its portfolio.
It is unnecessary to progress the chronology any further. It is sufficient to note that on and from July 2012 further discussions and negotiations took place in relation to the acquisition of the Knox Tavern by Eden Hotels. Ultimately the transaction did not proceed. However, of relevance is the fact that Eden Hotels was at all stages proposed to be the purchaser of the Knox Tavern consistent with the Eden Memorandum and the subsequent correspondence in relation to the putting together of a portfolio of hotels. The same position applies in relation to the Tankerville Arms. In relation to the Grandview Hotel, as pointed out, the evidence suggests that application was made for the relevant venue operator’s licence but the matter did not progress further.
In my opinion, having regard to this detailed chronology of the facts, it is more probable than not, and I find, that Nicholson would have nominated Eden Hotels had the matter proceeded to the execution of a Contract of Sale. The evidence suggests that this was always contemplated and expected. The Crown Hotel was always intended to be part of the portfolio of Eden Hotels from the outset. The Crown Hotel was referred to in the original Eden Memorandum and continued to be included in subsequent models, budgets and spreadsheets for many months. The Crown Hotel would almost certainly have been dealt with on the same basis as the Tankerville Arms and the Knox Tavern. The conclusion is inescapable and is supported by the evidence of both Nicholson and Dunstan.
Nicholson said that the Crown Hotel was a much better buy than the Tankerville Arms because ‘it’s $1 million cheaper and makes more money’. Nicholson regarded the Crown Hotel as the best acquisition. He said that he did not want the deal to go to anyone else and most probably would have nominated Eden Hotels and sought a venue operator’s licence if Hilldove had performed the Agreement. Nicholson’s evidence was confirmed by Dunstan. Dunstan said that Eden Hotels had earmarked the Crown Hotel and Tankerville Arms as its first acquisitions. He said that as with the Tankerville Arms, he expected Nicholson to nominate Eden Hotels as the purchaser of the Crown Hotel. He also said that Eden Hotels in effect had the ‘first right of refusal on the deals that he [Nicholson] has’.
Further, there is no evidence that Eden Hotels would have paid Nicholson for the nomination. In fact, the evidence, such as it is, points the other way. No payment was made to Nicholson in relation to the nomination of Eden Hotels as purchaser of the Knox Tavern and there is no basis at all to conclude, and indeed it was not even suggested, that any payment would have been made by Eden Hotels in respect of its nomination as purchaser of the Crown Hotel.
Tomsic
The only person able to pay $1,000,000 for the nomination was Tomsic. The remaining questions are whether the evidence establishes that in circumstances where Hilldove was performing the Agreement, it is more probable than not that he would have paid it, that Nicholson would have turned his back on Eden Hotels as his contemplated and expected nominee and that he would have received the sum as his sole and absolute property.
Tomsic also gave evidence. He said that if his contract to buy the Crown Hotel was not enforceable he would have been prepared to pay Nicholson $1,000,000 for the Agreement. He had previously offered Nicholson $750,000 for the right to be nominated as purchaser of the Cross Keys Hotel and regarded the Crown Hotel as a more profitable venue. Nicholson gave evidence that he would have accepted the sum of $1,000,000 for the Crown Hotel nomination whether or not Tomsic proceeded with the $750,000 in respect of Cross Keys.
The question is whether Tomsic would have paid the sum of $1,000,000 in circumstances where there was no lease in relation to the Crown Hotel. Would he have paid $1,000,000 simply for the right to negotiate a lease. Although this was not specifically put to him, in my opinion and based on his evidence, it is more probable than not that he would not have done so. In evidence he said that he would have got his solicitors to look over the Agreement and the lease and more importantly that if there was no lease there was no business.
In any event, as pointed out, the matter would never have got to this stage because had Hilldove not repudiated the Agreement, Nicholson would have nominated Eden Hotels. Nicholson was only prepared to entertain an offer because Hilldove denied that the Agreement was enforceable. Had Hilldove admitted that the Agreement was enforceable, Nicholson would have nominated Eden Hotels. It was not specifically put to him that despite having an enforceable Agreement he would have nominated a purchaser other than Eden Hotels and kept the proceeds derived from such nomination. I am not surprised that the matter was not specifically put to him because such a course would have totally undermined everything Eden Hotels was – with the extensive involvement of Nicholson – trying to achieve. It would not have happened and I would not have believed any assertion to the contrary.[12] Despite some prevarication and evasiveness, Nicholson conceded that in the hypothetical situation referred to he would most probably have nominated Eden Hotels.
[12]It was also not specifically put to Dunstan. One can only imagine what his answer would have been.
Finally, and in any event, I am far from satisfied that in the event that Tomsic was prepared to pay $1,000,000 for the right to negotiate a lease – a matter not specifically put to him - that such amount would have in the circumstances been retained by Nicholson. Eden Hotels would have been extremely and justifiably concerned by such a nomination and may well have taken the matter further.
Finally, I will refrain from making findings in relation to the suggested oral agreement between Eden Hotels and Nicholson to the effect (broadly) that in consideration for Eden Hotels paying for Nicholson’s costs of this proceeding it would receive the first $1,000,000 of any settlement. It is not necessary to deal with this issue and I do not propose to do so.
Conclusion and disposition
Accordingly, in my opinion, Nicholson has failed to make out his claim for damages. However, he is entitled to nominal damages for the repudiation of the Agreement by Hilldove.
I will hear from the parties as to the amount of any such award, the precise form of order and costs.
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