Playup Australia Pty Ltd v Kay - [2019] NSWSC 771

Supreme Court

New South Wales

Medium Neutral Citation: Playup Australia Pty Ltd v Kay [2019] NSWSC 771
Hearing dates: 3 - 5 June 2019; further written submissions 12 June and 21 June 2019
Decision date: 25 June 2019
Jurisdiction: Equity - Commercial List
Before: Stevenson J
Decision:
Clause 4.3(b) of the Share Sale and Purchase Agreement of 23 March 2018 not engaged; plaintiff entitled to declaratory relief to that effect

Catchwords:
CONTRACTS – construction and interpretation – share sale agreement – whether the purchaser’s obligation to make deferred payments dependent on seller’s obligation to ensure adjustments made on completion – where parties agreed time was of the essence in relation to the purchaser’s obligation to make the deferred payments – whether parties agreed that the “Date of Completion” was a different date to “Completion” – whether seller no longer bound by restraints and warranties in the agreement

EQUITY – equitable remedies – relief against penalties – clause in share sale agreement provided that restraints and warranties made by defendant are void if payment not made within seven days of due date – whether that clause is a penalty and unenforceable
EQUITY – equitable remedies – relief against forfeiture – non-proprietary rights in the form of restraints and warranties conferred by agreement – whether purchaser should have relief against forfeiture of those rights
Legislation Cited: Corporations Act 2001 (Cth)
Cases Cited: AMEV-UDC Finance Ltd v Austin (1986) 162 CLR 170; [1986] HCA 63
Andrews v Australia and New Zealand Banking Group Ltd (2012) 247 CLR 205; [2012] HCA 30
Arab Bank Australia Ltd v Sayde Developments Pty Ltd (2016) 93 NSWLR 231; [2016] NSWCA 328
Australia Capital Financial Management Pty Ltd v Linfield Developments Pty Ltd; Guan v Linfield Developments Pty Ltd [2017] NSWCA 99
Burton v Palmer [1980] 2 NSWLR 878
Cavendish Square Holding BV v Makdessi; ParkingEye Ltd v Beavis [2015] 3 WLR 1373; [2015] UKSC 67
Clydebank Engineering & Shipbuilding Company Ltd v Castaneda [1905] AC 6
Dunlop Pneumatic Tyre Co Ltd v New Garage and Motor Co Ltd [1915] AC 79
Grocon Constructions (QLD) Pty Ltd v Juniper Developer (No 2) Pty Ltd [2015] QCA 291
Hillam v Iacullo (2015) 90 NSWLR 422; [2015] NSWCA 196
Multiplex Constructions Pty Ltd v Abgarus Pty Ltd (1992) 33 NSWLR 504
Newcombe v Newcombe (1934) 34 SR (NSW) 446
Paciocco v Australia and New Zealand Banking Group Ltd (2015) 236 FCR 199; [2015] FCAFC 50
Paciocco v Australia and New Zealand Banking Group Ltd (2016) 258 CLR 525; [2016] HCA 28
Ringrow Pty Ltd v BP Australia Pty Ltd (2005) 224 CLR 656; [2005] HCA 71
Tito v Waddell (No 2) [1977] 2 WLR 496; [1977] Ch 106
Texts Cited: J D Heydon, Heydon on Contract (2019, Thomson Reuters)
J D Heydon, M J Leeming and P G Turner, Meagher, Gummow & Lehane’s Equity: Doctrines & Remedies (5th ed, 2015, LexisNexis Butterworths)
J W Carter, Carter on Contract (2014, LexisNexis)
Category: Principal…

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: [2019] NSWSC 771
Decision Date: 25 June 2019

CaseChat Overview and Summary

The case of Playup Australia Pty Ltd v Kay involved a dispute between a purchaser and a seller in relation to a share sale agreement. The central issue was whether the purchaser's obligation to make deferred payments was contingent upon the seller fulfilling certain obligations at completion. Additionally, the court considered whether the parties had agreed to different dates for the "Date of Completion" and "Completion," and whether the seller's obligations under the agreement were discharged upon completion.

The legal issues before the court included the construction and interpretation of the share sale agreement, particularly the terms relating to deferred payments, the date of completion, and the seller's post-completion obligations. The court also needed to determine whether a clause in the agreement that voided restraints and warranties if payments were not made within seven days was a penalty, and if the purchaser was entitled to relief against forfeiture of non-proprietary rights conferred by the agreement.

In its reasoning, the court held that the purchaser's obligation to make deferred payments was not contingent upon the seller fulfilling certain obligations at completion. It also found that the parties had not agreed to different dates for the "Date of Completion" and "Completion." Furthermore, the court determined that the clause voiding restraints and warranties if payments were not made within seven days constituted a penalty and was therefore unenforceable. Finally, the court found that the purchaser was entitled to relief against forfeiture of the non-proprietary rights conferred by the agreement.

The final orders of the court were that the purchaser's obligation to make deferred payments was not contingent on the seller's obligations, and that the seller remained bound by the restraints and warranties in the agreement. The penalty clause was declared unenforceable, and the purchaser was granted relief against forfeiture of the non-proprietary rights.

Orders