Tinyow v Lee - [2006] NSWCA 80

New South Wales

Court of Appeal

CITATION: TINYOW v LEE and Another [2006] NSWCA 80

HEARING DATE(S): 31 March 2006

JUDGMENT DATE:
13 April 2006

JUDGMENT OF: Handley JA at 1; Santow JA at 2; Ipp JA at 63

DECISION: (1) Appeal allowed. ; (2) The orders of the trial judge are set aside. ; (3) There will be a verdict for the appellant and judgment in the sum of $55,000 against the first respondent and in the sum of $65,000 against the second respondent, together with interest pursuant to s83A of the District Court Act 1973 from 9 August 2004. ; (4) The respondents are to pay the appellant’s costs of the appeal and of the proceedings in the District Court. ; (5) The respondents are each to have a certificate under the Suitors’ Fund Act 1951.

CATCHWORDS: CONTRACT – Breach of contract – In an arrangement to prop up a company in serious financial difficulties, oral promises were made by two minority shareholders (respondents) to pay $70,000 each to a third shareholder (appellant) who in return would acquire the respondents’ shares without payment, accept their resignation as directors (which he did) and ‘give releases’ to each respondent. Whether agreement was to pay the contribution to the company and not the appellant such that no damage had been established – Whether consideration given by appellant who had discharged company’s debts thereby providing substantial equivalent to a release from guarantees of those debts to bank though only bank could give actual release from guarantee – difference between consideration bargained for and consideration by way of practical benefit or accepting detriment.

CASES CITED: Musumeci v Winadell Pty Ltd (1994) 34 NSWLR 723
Upper Hunter County District Council v Australian Chilling & Freezing Co Ltd (1968) 118 CLR 429
Williams v Roffey Bros & Nicholls (Contractors) Ltd [1991] 1 QB 1

PARTIES: Walter TINYOW (Appellant)
Thomas Ping Kwan LEE (First Respondent)
Willie Man Tak WONG (Second Respondent)

FILE NUMBER(S): CA 41126/04

COUNSEL: K E LEOTTA (Appellant)
A J O’BRIEN (Respondents)

SOLICITORS: Raymond Lee & Co (Appellant)
Pigott Stinson Ratner Thom (Respondents)

LOWER COURT JURISDICTION: District Court

LOWER COURT FILE NUMBER(S): DC9050/01; DC9051/01

LOWER COURT JUDICIAL OFFICER: Bishop DCJ

CA 41126/04
DC 9051/01
DC 9050/01

HANDLEY JA
SANTOW JA
IPP JA
13 APRIL 2006

Walter TINYOW v Thomas Ping Kwan LEE and Another

Judgment

1 HANDLEY JA: I agree with Santow JA.

2 SANTOW JA:

INTRODUCTION

3 The appellant in return was to acquire the respondents’ shares without payment, and accept their resignation…

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.

Continue reading Tinyow v Lee

Details

AGLC: Tinyow v Lee [2006] NSWCA 80
Case: [2006] NSWCA 80
Decision Date: 13 April 2006

CaseChat Overview and Summary

In *Tinyow v Lee*, the appellant, a shareholder, brought proceedings against the respondents, also shareholders, for breach of an oral agreement. The agreement arose in the context of rescuing a company facing severe financial difficulties. The appellant alleged that the respondents had promised to pay him $70,000 each. In return, the appellant was to acquire the respondents' shares without payment, accept their resignations as directors, and provide them with releases. The appellant had indeed accepted the resignations.

The central legal issues before the Court of Appeal were whether the oral promises constituted a binding agreement to pay the appellant personally, or whether the payments were intended for the company, thereby meaning no damage had been established by the appellant. Further, the court had to determine whether the appellant had provided sufficient consideration for the respondents' promises, particularly in light of the appellant discharging the company's debts, which provided a substantial equivalent to a release from guarantees to the bank, even though only the bank could grant an actual release. The court considered the distinction between consideration that is bargained for and consideration that arises from a practical benefit or the acceptance of a detriment.

The Court of Appeal found that the oral agreement was for the respondents to pay the appellant personally, not the company. The court held that the appellant had provided sufficient consideration by accepting the respondents' resignations as directors and by discharging the company's debts, which conferred a practical benefit on the respondents by relieving them of their guarantees. The court concluded that the appellant had suffered damage as a result of the respondents' breach.

Consequently, the appeal was allowed, and the orders of the trial judge were set aside. A verdict was entered for the appellant, with judgment in the sum of $55,000 against the first respondent and $65,000 against the second respondent, together with interest. The respondents were ordered to pay the appellant's costs of the appeal and the District Court proceedings, and each respondent was granted a certificate under the Suitors’ Fund Act 1951.

Orders

Orders of the court

(1) Appeal allowed. ; (2) The orders of the trial judge are set aside. ; (3) There will be a verdict for the appellant and judgment in the sum of $55,000 against the first respondent and in the sum of $65,000 against the second respondent, together with interest pursuant to s83A of the District Court Act 1973 from 9 August 2004. ; (4) The respondents are to pay the appellant’s costs of the appeal and of the proceedings in the District Court. ; (5) The respondents are each to have a certificate under the Suitors’ Fund Act 1951.

Background

Background to the litigation

Full text does not contain this section.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

Full text does not contain this section.

Ratio Decidendi

Legal Principle Established

Full text does not contain this section.

CITATION:	TINYOW v LEE and Another [2006] NSWCA 80
HEARING DATE(S):	31 March 2006
JUDGMENT DATE:	13 April 2006
JUDGMENT OF:	Handley JA at 1; Santow JA at 2; Ipp JA at 63
DECISION:	(1) Appeal allowed. ; (2) The orders of the trial judge are set aside. ; (3) There will be a verdict for the appellant and judgment in the sum of $55,000 against the first respondent and in the sum of $65,000 against the second respondent, together with interest pursuant to s83A of the District Court Act 1973 from 9 August 2004. ; (4) The respondents are to pay the appellant’s costs of the appeal and of the proceedings in the District Court. ; (5) The respondents are each to have a certificate under the Suitors’ Fund Act 1951.
CATCHWORDS:	CONTRACT – Breach of contract – In an arrangement to prop up a company in serious financial difficulties, oral promises were made by two minority shareholders (respondents) to pay $70,000 each to a third shareholder (appellant) who in return would acquire the respondents’ shares without payment, accept their resignation as directors (which he did) and ‘give releases’ to each respondent. Whether agreement was to pay the contribution to the company and not the appellant such that no damage had been established – Whether consideration given by appellant who had discharged company’s debts thereby providing substantial equivalent to a release from guarantees of those debts to bank though only bank could give actual release from guarantee – difference between consideration bargained for and consideration by way of practical benefit or accepting detriment.
CASES CITED:	Musumeci v Winadell Pty Ltd (1994) 34 NSWLR 723 Upper Hunter County District Council v Australian Chilling & Freezing Co Ltd (1968) 118 CLR 429 Williams v Roffey Bros & Nicholls (Contractors) Ltd [1991] 1 QB 1
PARTIES:	Walter TINYOW (Appellant) Thomas Ping Kwan LEE (First Respondent) Willie Man Tak WONG (Second Respondent)
FILE NUMBER(S):	CA 41126/04
COUNSEL:	K E LEOTTA (Appellant) A J O’BRIEN (Respondents)
SOLICITORS:	Raymond Lee & Co (Appellant) Pigott Stinson Ratner Thom (Respondents)
LOWER COURT JURISDICTION:	District Court
LOWER COURT FILE NUMBER(S):	DC9050/01; DC9051/01
LOWER COURT JUDICIAL OFFICER:	Bishop DCJ