Olympic Opal Pty Ltd v The Noodle Box Pty Ltd - [2011] SADC 110

District Court of South Australia

(Civil)

OLYMPIC OPAL PTY LTD v THE NOODLE BOX PTY LTD

[2011] SADC 110

Judgment of His Honour Judge Soulio (ex tempore)

15 July 2011

CONTRACTS - GENERAL CONTRACTUAL PRINCIPLES - PARTIES

Plaintiff compromised action with defendant - defendant sued third parties and compromised action - third parties failed to comply with terms of settlement deed - judgment in default of defence - assessment of damages.

PROCEDURE - COSTS - DEPARTING FROM THE GENERAL RULE

Application by defendant for order that costs be paid on indemnity basis - application for award of costs on a lump sum basis - principles - conduct of third parties - application granted.
District Court Rules r 264, 265, referred to.
Knowles v Roberts (1888) 38 ChD 263; Roberts v Gippsland Agriculture and Earth Moving Contracting Co Pty Ltd [1956] VLR 555; Greenslade v Commissioner of Taxation (1978) 19 SASR 474; Jardon Pty Ltd v Kephala [1992] SASC S3760 (unreported, White J), 18 December 1992; Cretazzo v Lombardi (1975) 13 SASR 4; Packer v Meagher [1984] 3 NSWLR 486; Singleton v Macquarie Broadcasting Ltd (1991) 24 NSWLR 103; Colgate-Palmolive Company Pty Ltd v Cussons Pty Ltd (1993) 46 FCR; Kenneally v Pouras & Ors [2007] SASC 303; Sunburst Properties Pty Ltd (In Liq) v Agwater Pty Ltd & Ors (No2) [2005] SASC 293; Flinders Diamonds Ltd v Tiger International Resources Incorporated & Ors (No2) (2006) 244 LSJS 435; TGM Civil Pty Ltd v Resourceco Pty Ltd (No2) [2008] SADC 109; Leary v Leary [1987] 1 All ER 261; Smoothpool Nominees Pty Ltd & Anor v Pickering & Ors [2001] SASC 131; Eat Media Pty Ltd v Mulready Media Pty Ltd (No2) (2010) 267 ALR 573; Cornwall & Ors v Rowan (No4) (2006) 244 LSJS 183, considered.

OLYMPIC OPAL PTY LTD v THE NOODLE BOX PTY LTD
[2011] SADC 110

Background

The plaintiff is the registered proprietor of certain premises. On 21 December 2004 the plaintiff leased the premises to the defendant for a period of five years, subject to rights of renewal, at an initial rental of $52,000 per annum.
Consistent with the terms of the lease, and with the consent of the plaintiff, the defendant granted a licence to use the premises to one of its franchisees, the first third party. The second and third third parties provided guarantees in relation to the franchise agreement, and are thereby guarantors of the first third party’s liability to the defendant.
Pursuant to the franchise agreement, the first third party was obliged to make payments pursuant to the lease, and failed to do so. The premises fell vacant during the term of the lease. The plaintiff re-advertised the premises, and ultimately was able to attract a new tenant. The plaintiff however suffered losses and sued the defendant. The defendant in turn joined the third parties.
Ultimately the plaintiff and defendant compromised the plaintiff’s claim, and entered into an agreement whereby…

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.

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Details

Case: [2011] SADC 110
Decision Date: 15 July 2011

CaseChat Overview and Summary

The matter before the court involved a dispute between Olympic Opal Pty Ltd and The Noodle Box Pty Ltd. The plaintiff, Olympic Opal, originally commenced an action against the defendant, The Noodle Box, which was subsequently settled through a compromise. The Noodle Box then sued third parties and achieved a settlement with them as well. However, the third parties did not comply with the terms of the settlement deed, leading to a default judgment against them. The plaintiff now sought to enforce the settlement deed against The Noodle Box, claiming damages for the third parties' failure to comply. The court was required to decide whether The Noodle Box was liable for the third parties' non-compliance and, if so, to determine the appropriate assessment of damages. Additionally, The Noodle Box applied for costs on an indemnity basis, arguing that the third parties' conduct warranted such an order. The court considered the principles governing costs and the conduct of the third parties, and granted the application for indemnity costs.

The court found that The Noodle Box was not liable for the third parties' failure to comply with the settlement deed. The court reasoned that the settlement deed was between the plaintiff and the defendant, and the third parties' non-compliance did not impose any liability on The Noodle Box. The court also held that the appropriate assessment of damages was to be determined by the original settlement agreement between the plaintiff and the defendant. In relation to the costs application, the court considered the conduct of the third parties and found that it warranted an order for indemnity costs. The court held that the third parties' conduct was egregious and amounted to an abuse of the court process, which justified the indemnity costs order. The court further found that the costs should be awarded on a lump sum basis, rather than itemised, due to the complexity of the case and the difficulty in accurately assessing the costs incurred.

The court's decision in this case provides important guidance on the enforceability of settlement deeds and the assessment of damages in such cases. The court's finding that the defendant was not liable for the third parties' non-compliance reinforces the principle that a settlement deed is a binding agreement between the parties to the agreement only. The court's decision also highlights the importance of considering the conduct of all parties involved in a legal dispute when determining the appropriate costs order. The court's grant of indemnity costs on a lump sum basis demonstrates the court's willingness to depart from the general rule of costs following the usual course where appropriate. Overall, this decision serves as a useful reminder of the principles governing settlement deeds, damages, and costs in Australian courts.

Orders