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Southern Equity Pty Ltd v Timevale Pty Ltd

Southern Equity Pty Ltd v Timevale Pty Ltd

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Case Copied 3 February 2012 79 min read

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Supreme Court

New South Wales

Medium Neutral Citation: Southern Equity Pty Limited v Timevale Pty Limited [2012] NSWSC 15
Hearing dates: 20 and 21 June 2011
Decision date: 03 February 2012
Jurisdiction: Equity Division
Before: Brereton J
Decision:
(1)By effecting the 1997 renovations Timevale did not maintain the appearance of the Pub and the manner of its fit-out to the same standard and condition as at the time of the official opening, in breach of clause 8.2 of the Agreement. However, there is no evidence that this occasioned any loss, and proceedings in respect of this breach are now statute-barred.
(2)While the 1997 renovations have extended the hotel premises by removing the rear wall and verandah and relocating the bar into the former open space, they have not been of such an extent or degree as to deprive the Barn of its character as a separate occupational space, so as to render the Barn a part of the hotel premises. Sales and other income generating activity in the Barn are not subject to the higher rate of royalty under clause 9.1(a).
(3)Clause 9.1(b) catches only the direct proceeds, when received by Timevale, of sale through a retail outlet in the facility to an ultimate consumer, of souvenirs not incorporating EPIP and analogous sales of articles that can be taken away, including food and drink, giftware, clothing, toys, plants and nursery stock, mechanical items and pharmaceuticals. It does not catch proceeds of sale of tickets for amusement rides or facility entry fees, nor takings from amusement devices and games and commission derived from vending machines, nor rents received from tenants, whether or not calculated by reference to turnover.
(4)When the Barn is not being used exclusively for a function or entertainment, Barn receipts attract the lower tier of royalty under clause 9.1(b). When it is being so used, Barn receipts incur no royalty. Sales made from outlets other than the Barn in connection with functions, wheresoever held, are not exempt; and sales made from the Barn are exempt only when the Barn is being used solely for a function or entertainment. Timevale has breached clause 9.1(b) by failing to pay royalties on sales from FJ's and other outlets when FJ's was used for functions; by not paying royalties in respect of external-to-Barn sales associated with Barn functions; and by not paying royalties (at least prior to 2006) on Barn sales not associated with exempt Barn functions.
(5)When food is prepared in Blueys (or for that matter FJ's) but delivered to a function in the Barn, neither sale nor delivery occurs at the hotel premises (or at FJ's), nor does it involve a direct exploitation of EPIP. The supply of food from Blueys to exempt Barn functions does not attract the higher tier of royalty, and the supply of food from FJ's to exempt Barn functions does not attract the lower tier.
(6)In breach of clause 9.3, Timevale has failed to provide in the monthly royalty statements "the number of souvenirs sold…

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: [2012] NSWSC 15
Decision Date: 03 February 2012

CaseChat Overview and Summary

Southern Equity Pty Ltd, the plaintiff, brought an action against Timevale Pty Ltd, the defendant, before the Federal Court of Australia to resolve disputes concerning the interpretation and execution of a licence agreement. The plaintiff sought clarification on whether the defendant was obligated to pay royalties on certain income streams, as well as confirmation that the defendant had adhered to its contractual obligations to provide detailed monthly statements and maintain proper records of its activities at the facility. The case also involved a question of whether the plaintiff had waived its right to certain royalty payments.

The court was tasked with interpreting the licence agreement to ascertain the defendant's obligations regarding the payment of royalties on various income categories. Additionally, the court had to determine if the plaintiff had waived its entitlement to royalty payments and whether the defendant had fulfilled its contractual duties to furnish detailed monthly statements and maintain proper records. The court also needed to decide if an account should be ordered as a remedy.

The court found that the defendant was indeed obligated to pay royalties on the contested income categories, as the terms of the licence agreement were clear in this regard. It was also determined that the defendant had failed to provide the required detailed monthly statements and had not maintained proper records of its activities, thus breaching the agreement. The court ruled that the plaintiff had not waived its right to the disputed royalty payments, and that an account should be ordered to ensure the defendant's compliance with the agreement and to provide a clear understanding of the financial obligations involved.

The court ordered Timevale Pty Ltd to pay the royalties on the disputed income categories, to provide the required detailed monthly statements, and to maintain proper records of its activities. The court also ordered an account to be taken to ensure compliance with these obligations.

Orders