Saha v Be Healthy and Wealthy Pty Ltd

[2015] NSWSC 846

Supreme Court

New South Wales

Medium Neutral Citation:	Saha v Be Healthy & Wealthy Pty Ltd [2015] NSWSC 846
Hearing dates:	26 June 2015
Decision date:	26 June 2015
Jurisdiction:	Common Law
Before:	Fagan J
Decision:	Summons dismissed with costs
Catchwords:	APPEAL – appeal from Local Court – question of law – whether Magistrate provided adequate reasons for decision – legal test applied – misuse of terminology – repudiation or rescission of contract
Legislation Cited:	Local Court Act 2007 (NSW)
Category:	Principal judgment
Parties:	Rathin Saha (Plaintiff) Be Healthy & Wealthy Pty Limited (First Defendant) Sebastian Scandurra (Second Defendant)
Representation:	Counsel: A Moutasallem (Plaintiff) WR Ward (First and Second Defendants)   Solicitors: Sydney BD Lawyers (Plaintiff Philip J King (First and Second Defendants)
File Number(s):	2015/12539

Judgment

1. This is an appeal from a decision of the Local Court in its civil jurisdiction. The appeal has been commenced by Summons, relying upon s 39(1), Local Court Act 2007 (NSW). There is no application under s 40 of that Act for leave to appeal on any ground involving a question of mixed fact and law.

2. The proceedings in the Local Court concerned a contract by which the Plaintiff agreed to purchase a small business from the Defendants. The contract was not completed, in circumstances to be described shortly, and the Plaintiff sought to recover $68,650 which he had paid to the Defendants on account of the purchase price.

3. The relevant business was a pizza shop conducted in leased premises on Anzac Parade, Maroubra. The following facts are generally as found by the Magistrate but include some matters which were common ground on the hearing of the Summons although they may not have been referred to in the Magistrate’s Reasons for Decision handed down on 19 December 2014.

4. The contract for sale was entered into by the Defendants as vendors and the Plaintiff as purchaser on 18 October 2013. The Second Defendant is and was the principal of the First Defendant and he and his daughter, Ms Ige, represented the First Defendant in all of its dealings with the Plaintiff. The contract was partly in writing and partly oral. The written part was a single page standard proforma contract with particulars entered by hand. The price for the business was $90,000 of which $10,000 was required to be paid as a deposit at the time of the contract being entered into. A completion date of 2 December 2013 was specified.

5. The Plaintiff duly paid the deposit to the Defendants’ solicitor. In December 2013 the Plaintiff paid a further $58,650 to the Defendants on account of the price. The Defendants allowed the Plaintiff into possession of the business from 2 December 2013. At about that time a fresh proforma contract was filled out showing that completion was now to take place on 28 January 2014. The balance of the purchase price, $21,350, was required to be paid by that date.

6. The Plaintiff conducted the business from 2 December 2013 until 21 January 2014. On 22 January 2014 the Plaintiff closed up the shop and the next day departed for India.

7. Both the Second Defendant and his wife gave evidence before the Magistrate that on 22 January 2014 the Plaintiff said to them words to the effect “I don’t want the business any more”; “you can sell the business again and we can negotiate”; “I don’t want to sign the lease”. In oral evidence the Plaintiff denied having said these things.

8. At [20] and [22] the Magistrate referred to matters which she thought gave credence to the evidence of the Second Defendant and his wife regarding what the Plaintiff said to them on 22 January 2014. These matters included that the Second Defendant’s account of the conversation was in similar terms to a prior consistent statement he had made in an email to the Plaintiff dated 13 February 2014. The Magistrate also took into account that although the Plaintiff’s wife had allegedly been present on 22 January 2014 she was not called to support the Plaintiff’s denial of the statements attributed to him.

9. Further, at [23] (a) the Magistrate recorded that the Second Defendant had attended his solicitor on 23 January 2014. The solicitor wrote to the Plaintiff’s solicitor on 31 January asserting that the Plaintiff “has expressed to my client no intention to return to Australia to complete the contract”. It is apparent that the Magistrate relied upon this letter of 31 January 2014 as indicating that by that date the Second Defendant had given instructions, consistently with his evidence in the Local Court, that on 22 January 2014 the Plaintiff had expressed an intention not to complete.

10. From 23 January 2014 the Plaintiff remained overseas until 16 March 2014. The business remained closed during that period. The balance of the purchase price was not tendered on 28 January 2014 nor on any subsequent date. The Plaintiff had paid the rent up to 1 February 2014 but when it next fell due on 2 February the Defendants had to pay it in order to avoid default under the lease.

11. The letter of 31 January 2014 from the Defendants’ solicitor foreshadowed that as a result of the Plaintiff’s failure to complete, the Defendants would re-sell the business. Thereby, the Defendants treated the Plaintiff’s conduct as repudiatory and elected to terminate the contract of sale. The business was re-sold by exchange of contracts with a new purchaser on 21 February 2014, at a price of $30,000.

12. At [25] the Magistrate concluded “I cannot be satisfied that it was [the Second Defendant] who illegally rescinded the contract”. The expression “illegally rescinded” was inapposite but elsewhere in the judgment the Magistrate expressly recognised that the issue was whether the Defendants had wrongfully repudiated the contract by purporting to terminate it by their solicitor’s letter of 31 January 2014. For example at [4] the Magistrate set out paragraphs and particulars of the Statement of Claim in which the Plaintiff alleged unlawful termination by the Defendants and asserted that they had erroneously attributed repudiatory conduct to the Plaintiff.

13. On a fair reading of the judgment it is apparent that at [25] the Magistrate intended to be expressing a conclusion that the Plaintiff had not discharged his burden of proving that the Defendants had wrongfully terminated. Taking [20]-[25] together it is clear that that ultimate conclusion rested upon acceptance of the Defendants’ evidence about the events of 22 January 2014, for the reasons discussed at [8] and [9] above.

14. The Plaintiff sought to establish that the Defendants had been in breach of the contract in January and February 2014 and had therefore not been entitled to terminate on the grounds of the alleged repudiatory conduct of the Plaintiff. There was said to have been a breach of an obligation to provide the books and records of the business and a failure of the Defendants to surrender their lease.

15. On 11, 12 and 13 February 2014 the Plaintiff had sent emails to the Second Defendant stating, inter alia:

“I am not buying business unless u give the proper business documents”.

16. At the hearing in the Local Court the Plaintiff did not adduce any evidence to establish that it was a term or condition of the contract that the Defendants should provide business records. The Second Defendant gave evidence that he had told the Plaintiff at about the time the contract was entered into:

“You buy the business as a walk-in walk-out business. You take the business as is with the stock and the training. I am not showing you any books.”

17. The Second Defendant’s daughter gave evidence to the following effect:

“I recall Mr Saha asking about profit and loss statements and I said to Mr Saha words to the effect ‘because of dad’s illness we are not relying on those and we are not offering those, it’s on a walk-in walk-out basis.’”

18. At [18] and [19] of her judgment the Magistrate made clear that she was not persuaded to reject this evidence of the Second Defendant and his daughter. The Magistrate found the evidence to be consistent with and supported by such indications as the documents contained on this topic. She was therefore “not satisfied that [the Plaintiff] has established on the balance of probabilities that the provision of financial records was a precondition to the completion of the contract”.

19. As to surrender of the lease, it is not clear whether there was evidence of any such contractual obligation. The Magistrate made no express finding about that. But if there was such an obligation the Magistrate was not satisfied that the Plaintiff had requested execution of a surrender. That is, implicitly, she therefore was not satisfied that the occasion for performance had arrived, so as to put the Defendants in breach by failing to comply with a request.

20. The Plaintiff said that a surrender had been requested and that it was a necessary preliminary to the Plaintiff himself obtaining a fresh lease. At [7] the Magistrate recorded that the Plaintiff agreed in cross examination he had not instructed his solicitor to contact the Defendants’ solicitor to request execution of a surrender. Further, when the Plaintiff was asked in cross examination to identify the alleged written request for surrender upon which he relied, the Plaintiff produced a document which was no such thing. The Magistrate referred to this in the last sentence of [7] of her reasons.

21. The Second Defendant’s evidence that the Plaintiff had on 22 January 2014 orally communicated an intention not to perform the contract was directly inconsistent with the Plaintiff, at any time up to the Defendants’ letter of termination on 31 January 2014, having requested that the Defendants surrender their lease. From the Magistrate’s discussion of the evidence referred to in this and the preceding paragraph and from her ultimate rejection of the Plaintiff’s case, it is apparent that she was not satisfied the Defendants had been asked to execute a surrender of their lease (or that they had been in breach of contract in relation to such a request) at the time of accepting the Plaintiff’s wrongful repudiation.

22. The first error of law propounded by the Plaintiff is that the Magistrate failed to give adequate reasons for her decision. That ground is not made out. The consideration of her reasons set out above shows that they are at least adequate to explain the basis upon which she found relevant facts. The reasons also disclose the grounds upon which the Magistrate was not satisfied of other facts, the establishment of which was essential to the Plaintiff’s case.

23. With respect to the critical conclusion at [25], despite the inadvertent misuse of terminology it is clear enough that the Magistrate’s reasons for not finding that the Defendants’ termination on 31 January 2014 was wrongful were that the Plaintiff had not disproved that he abandoned the contract on 22 January 2014 and could not prove that the Defendants were themselves in breach. There is really no difficulty in discerning the Magistrate’s reasoning process.

24. The second error of law propounded by the Plaintiff is that at [25] the Magistrate applied a wrong test or asked a wrong question by referring to the concept of rescission. As pointed out at [12] and [13] above this was no more than a slip in terminology. In substance the Magistrate correctly identified that, on the facts as she found them, the Plaintiff had not established wrongful termination by the Defendants.

25. The First Defendant re-sold the business to another purchaser for $30,000 and retained the $68,650 which the Plaintiff had paid. The Plaintiff did not claim in the Local Court that he was entitled to restitution of any amount in the event of rejection of his claim that the Defendants wrongfully terminated (and thereby repudiated) the contract. Certainly no appeal ground has been raised which would require the matter to be considered from that point of view in this Court.

26. For these reasons the orders of the Court are:

1. The Summons is dismissed.

2. Order that the Plaintiff pay the costs of the First and Second Defendants.

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Decision last updated: 29 June 2015